Nelson v. SIS Software, LLC
- Donovan Frank
- 0:24-cv-04180
- U.S. District Court · District of Minnesota
- 13
In Nelson v. SIS Software, Judge Frank denied Nelson's default judgment motion and transferred the case to Georgia based on a valid forum-selection clause in his employment agreement.
Employees who sign employment agreements containing forum-selection clauses pointing to out-of-state courts, particularly Minnesota residents who may have expected to litigate in Minnesota; also parties to employment disputes who are considering default judgment motions when a defendant has been slow to appear.
What happened
In Nelson v. SIS Software, LLC (Civil No. 24-4180), Jim Nelson, a Minnesota-based software consultant, sued his former employer SIS Software, LLC after being fired in February 2024. Nelson claimed he was terminated in retaliation for whistleblowing about improper sales tactics, and also alleged fraud, breach of contract, and violations of Minnesota employment statutes. SIS moved to dismiss the case or transfer it to Georgia based on a forum-selection clause in Nelson's employment agreement, while Nelson sought a default judgment because SIS had not responded to his complaint for several months.
The court addressed two competing motions. On the default judgment request, the court found that the delay by SIS was not willful or intentional — partly because there was genuine confusion about which SIS-related entity had been served — the delay was only about five months, Nelson was not shown to have been prejudiced, and SIS had since appeared and was actively defending. On the transfer motion, the court worked through whether the forum-selection clause in Nelson's employment agreement was valid and enforceable, rejecting Nelson's arguments that the agreement was unconscionable, signed under duress, a contract of adhesion, the product of fraud, or contrary to Minnesota public policy. The court found that a 2023 Minnesota law voiding noncompete clauses did not apply here because Nelson's employment agreement only restricted competition during employment — not after — and the remaining clauses were non-disclosure and non-solicitation provisions, which the statute does not cover.
Judge Donovan W. Frank denied Nelson's amended motion for default judgment and granted SIS's alternative motion to transfer, ordering the case sent to the Northern District of Georgia. The court declined to rule on SIS's motion to dismiss, choosing instead to transfer the entire case. The transfer was based on the court's finding that the forum-selection clause pointing to Georgia was valid and enforceable, and that Nelson had not met his burden to overcome it.
The detailed version
- Nelson v. SIS Software, LLC · No. 0:24-cv-04180
- Donovan Frank
- Sept. 26, 2025
Background
Plaintiff Jim Nelson is a Minnesota resident with experience in Enterprise Resource Planning and Enterprise Asset Management (EAM) software. In March 2023, SIS Software, LLC approached Nelson and offered him the position of Senior EAM Industry Consultant, where he would provide consulting services to SIS's clients, particularly a company called Clyde Construction Company. Nelson alleges SIS told him he would be better off working for SIS than going directly to Clyde, and that the role could provide work through his forecasted retirement in 2030.
On April 6, 2023, SIS emailed Nelson a four-page employment agreement and instructed him to return it quickly if he wanted to start the following Monday. Nelson signed and returned the agreement. The agreement contained: (1) a choice-of-law clause selecting Georgia law; (2) a forum-selection clause requiring disputes to be litigated in federal court in Fulton County, Georgia, or the Superior Court of Fulton County; (3) a noncompete clause barring competitive activity during employment; and (4) non-disclosure and non-solicitation clauses effective for two years after termination.
During his employment, Nelson alleges he was assigned duties outside his job description, including sales work, and was pressured to sell software to Clyde that SIS knew was unsuitable for Clyde's needs. Nelson says he reported these concerns to supervisors, who pressured him to conceal information. SIS terminated Nelson's employment on February 8, 2024. Nelson alleges the termination was retaliation for his whistleblowing.
Nelson filed this lawsuit on November 12, 2024, and amended his complaint on November 27, 2024, raising seven claims: (1) wrongful termination for whistleblowing under the Minnesota Whistleblower Act; (2) fraudulent inducement; (3) promissory estoppel; (4) breach of contract; (5) breach of the implied covenant of good faith and fair dealing; (6) violation of the Minnesota Personnel Record Review and Access Act; and (7) declaratory judgment seeking to void the employment agreement or, alternatively, strike the noncompete and forum-selection clauses.
Procedural History
Nelson served the summons and amended complaint on "SIS SOFTWARE, LLC" on February 4, 2025. After SIS did not respond, Nelson applied for a clerk's entry of default, which was entered on May 6, 2025. Nelson then moved for default judgment under Federal Rule of Civil Procedure 55(b). SIS appeared on June 30, 2025 — approximately five months after service — and moved to dismiss under Rule 12(b)(6) (failure to state a claim on which relief can be granted) or, alternatively, to transfer under 28 U.S.C. § 1404(a) (the federal venue transfer statute) based on the forum-selection clause.
Ruling on Default Judgment
The court denied Nelson's amended motion for default judgment. Courts have discretion over default judgments, and default is generally disfavored; courts prefer decisions on the merits. The court looks at factors including prejudice to the moving party, whether the default was clearly established, and whether the non-moving party has appeared.
The court identified four reasons default was inappropriate here:
- Service uncertainty: It was unclear whether the February 4th summons was properly served on SIS because the parties disputed which LLC entity had been named. Multiple related LLCs share the "SIS" name, creating enough confusion that the delay could not be deemed willful or intentional.
- Length of delay: The delay was only about five months, which the court found insufficient to constitute the "contumacious conduct" (deliberate disregard of court rules) required for default judgment.
- No prejudice: Nelson did not demonstrate that he was prejudiced by SIS's delayed appearance.
- Appearance and defense: SIS had appeared and was actively defending the case by the time the motion was decided.
Ruling on Motion to Transfer
The court chose to address only the alternative motion to transfer and expressly declined to address SIS's motion to dismiss. The court applied the three-part test under 28 U.S.C. § 1404(a) as applied when a forum-selection clause is invoked: (1) Is the current venue (District of Minnesota) proper? (2) Is the forum-selection clause valid? (3) Is it enforceable?
Venue
The court found that the District of Minnesota is a proper venue because a substantial part of the events giving rise to Nelson's claims — his hiring and his work for SIS — occurred in Minnesota, where Nelson worked exclusively.
Validity of the Forum-Selection Clause
Forum-selection clauses are presumptively valid and are enforced unless they are unjust, unreasonable, or the product of fraud or overreaching. The plaintiff bears the burden of showing invalidity. Nelson raised four arguments; the court rejected all of them.
1. Validity of the Employment Agreement as a Whole
The court applied Minnesota contract law (which both parties had relied upon) and found the agreement was not unconscionable. The legal standard is whether no clear-thinking person would make or accept the contract. Nelson pointed to being rushed to sign, boilerplate language, unequal bargaining power, lack of explanation about legal differences, and misrepresentation about job duties. The court found these circumstances common in employment agreements and insufficient to meet the unconscionability standard. The court also found no showing that SIS had an affirmative duty to explain each provision or that SIS denied Nelson the opportunity to negotiate or consult a lawyer.
The court also rejected Nelson's claim that the agreement was a contract of adhesion — a take-it-or-leave-it contract where the weaker party has no meaningful choice. Under Minnesota law, a contract of adhesion requires both a great disparity in bargaining power with no opportunity for negotiation AND that the services are a public necessity unavailable elsewhere. Nelson showed some bargaining disparity but did not show that SIS employment was a public necessity or that he could not obtain employment elsewhere.
Nelson's claim of duress also failed. Legal duress requires coercion through physical force or unlawful threats that destroy free will. Nelson alleged no physical force or unlawful threat.
2. Fraud or Overreaching
Nelson argued fraud based on SIS's superior bargaining power, the pressure to sign quickly, and the existence of multiple SIS-named LLCs. The court found that mere disparity in bargaining power or limited time to negotiate does not invalidate a forum-selection clause. Nelson also did not allege he was denied the opportunity to seek more time or to negotiate. The court found no fraud or overreaching.
3. Deprivation of Day in Court
A forum-selection clause can be invalidated if enforcement would deprive a party of their day in court — but inconvenience or inability to afford litigation in the selected forum does not meet this standard. The party must show that proceeding in the contractual forum would be "gravely difficult." Nelson's claimed financial hardship did not meet this threshold under Eighth Circuit precedent.
4. Minnesota Public Policy
Nelson argued that a 2023 Minnesota law banning noncompete clauses in employment agreements entered on or after July 1, 2023 — Minn. Stat. § 181.988 — reflects a strong public policy in favor of adjudicating Minnesota employees' rights in Minnesota courts. That statute also specifically makes forum-selection and choice-of-law clauses voidable by employees who primarily reside and work in Minnesota, but only in the context of noncompete agreements.
The court agreed the statute reflects strong public policy, but found it inapplicable here because Nelson's employment agreement did not contain a noncompete clause as defined by the statute. The statute applies to restrictions on competitive activity after termination of employment. Nelson's noncompete clause only restricted competition during his employment. The remaining post-employment restrictions were non-disclosure and non-solicitation clauses, which the statute does not cover. Therefore, the public policy the statute embodies does not apply to this case, and the forum-selection clause was found valid.
Enforceability
Under Atlantic Marine Construction Co. v. U.S. District Court (2013), when a valid forum-selection clause exists, courts applying § 1404(a) must: (1) disregard the plaintiff's choice of forum; (2) refuse to consider the parties' private interests; and (3) apply the transferee court's choice-of-law rules rather than those of the original venue. Nelson raised no grounds for unenforceability beyond his own private interests, which could not be weighed. The court found the clause enforceable and ordered the case transferred to the Northern District of Georgia.
Disposition
The court denied Nelson's amended motion for default judgment, granted in part SIS's motion to dismiss or transfer (specifically the transfer alternative), and directed the Clerk of Court to transfer the action to the Northern District of Georgia. The motion to dismiss was not ruled upon.
Read the full 13-page opinion on CourtListener, the free public archive maintained by the Free Law Project.