A Massachusetts federal judge has refused to release jurisdiction over local wage claims against a Texas employer, overriding jurisdictional arguments and contractual provisions linking aspects of the employment relationship to Texas law and courts.

In Berrey v. Evolve Cellular, Inc., et al., U.S. District Judge Leo Sorokin denied Texas-based Evolve Cellular’s motion to dismiss or transfer former employee Alan Berrey’s lawsuit against them. Sorokin found the suit could proceed in Massachusetts court regardless of forum selection and choice-of-law clauses in some of Berrey’s employment agreements pointing to Texas. The judge cited the company’s Massachusetts contacts and the state’s interest in applying its wage payment protections.

Case background

In 2016, Texas-based technology company Evolve purchased Massachusetts-based Scratch Wireless. As part of the deal, Scratch co-owner Alan Berrey signed an employment contract to join Evolve as an executive vice president working remotely from his Massachusetts home office. Under the initial contract, Berrey’s annual salary would gradually increase to $180,000.

The employment contract specified Texas state law would apply and mentioned arbitration to resolve disputes. Berrey later signed additional agreements (confidentiality, non-compete) with clauses that any lawsuits must be filed in Texas applying Texas law.

In mid-2017, Evolve declined to renew Berrey’s contract and transitioned him to at-will employment. Then, in March 2020, Evolve informed Berrey that 50% of his wages were being deferred, citing COVID-19 financial woes. Berrey believed the deferral to be temporary and outlined his understanding in an email to Evolve leadership. The deferral was extended, however, and by February 2023, Berrey calculated he was owed nearly $262,500 in deferred wages.

In May 2023, Berrey sued Evolve in Massachusetts state court, including two counts of alleged violations of the Massachusetts Wage Act. Evolve countersued Berrey in Texas while trying to get Berrey’s lawsuit dismissed or moved to Texas. A Massachusetts federal judge rejected Evolve’s motions, allowing the wage claims case to proceed locally.

The case for Massachusetts jurisdiction

The court found enough contacts between the defendants and Massachusetts to establish jurisdiction. This included Evolve negotiating and purchasing Berrey’s Scratch Wireless company in Massachusetts and hiring Berrey knowing he would work there.

Moreover, the forum selection and choice-of-law clauses favoring Texas in some of Berrey’s agreements were deemed not applicable to the statutory wage claims brought under Massachusetts law.

The state’s public policy interest in enforcing wage payment protections, and the presumption favoring a plaintiff’s choice of forum, further tipped the scales towards keeping jurisdiction in Massachusetts.

Takeaways for employers

The decision highlights how state courts may strongly favor applying a state Wage Act and retaining jurisdiction when there is an adequate connection between the employment relationship and that state.

Employers should draft choice-of-law clauses carefully to explicitly cover statutory claims if they want to avoid application of a state Wage Act. However, given the state’s interests, even that may not always succeed.