Mancuso v. L'oreal USA, Inc.

Background

Rachael Mancuso, a former IT Cosmetics executive, alleged that L’Oréal USA, Inc. and IT Cosmetics, LLC interfered with her consulting opportunities after she left the defendants’ employment. Mancuso worked largely from her home in South Dakota and attended periodic in-person meetings in Jersey City, where IT Cosmetics was based.

In 2013, Mancuso and IT Cosmetics entered into a Non-Competition and Confidentiality Agreement (the “NCA”). The NCA restricted her competitive work and solicitation of customers for two years after her employment ended and contained a mandatory forum-selection clause requiring disputes relating to the agreement to be heard in New York County, New York, or the United States District Court for the Southern District of New York. L’Oréal acquired IT Cosmetics in 2016, and the court determined that L’Oréal appeared to have assumed IT Cosmetics’ rights under the NCA.

In 2017, Mancuso and L’Oréal entered into an Employee Retention Agreement concerning her continued employment. After Mancuso disclosed that she had obtained consulting work with Glamsquad, the defendants revoked their consulting arrangement with her and threatened to enforce the NCA. The defendants then offered salary and benefits continuation if she rejected the Glamsquad agreement. Mancuso accepted those terms and rescinded the Glamsquad agreement, but she later alleged that the defendants failed to make the first payment and refused to honor the arrangement.

Mancuso’s complaint asserted contract-based claims, a tortious-interference claim, a claim under New Jersey’s Conscientious Employee Protection Act, and a New Jersey wage-and-hour claim. The defendants moved to transfer the case or, alternatively, to dismiss the complaint for failure to state a claim.

Forum-Selection Clause

The court applied New York law to determine the forum-selection clause’s scope. It held that the Retention Agreement did not supersede the NCA because the two agreements addressed different subjects: the Retention Agreement concerned continued employment, while the NCA concerned post-employment restrictions. The Retention Agreement also did not address post-employment restrictions or expressly revoke the NCA.

The court further held that the Separation Agreement modified the NCA rather than replacing it. An email describing the Separation Agreement expressly referred to the NCA and reduced the non-compete period from two years to twelve months. The court concluded that the other NCA terms, including the forum-selection clause, remained in effect. It also rejected Mancuso’s argument that the amendment was invalid because it was not in a separate formal writing, explaining that an email can constitute a signed writing and that Mancuso had alleged that she accepted the terms.

The court found the NCA’s clause mandatory because it required submission to the exclusive jurisdiction and venue of specified New York courts. Mancuso did not argue that enforcing the clause would be unreasonable. The court also concluded that all of her claims related to her ability to work for a competitor and to the alleged breach of the NCA as modified by the Separation Agreement, so the clause covered the claims.

Transfer Analysis

Because the clause controlled, the court applied the modified transfer analysis required when a case is filed contrary to a valid forum-selection clause. It gave no weight to Mancuso’s choice of forum and considered only public-interest factors rather than private convenience factors.

The court found several factors neutral, including enforceability of a judgment, court administration, and the judge’s familiarity with applicable law. Two factors slightly favored New Jersey because IT Cosmetics was based there and Mancuso’s in-person interactions appeared to have occurred there. But the court held that those factors were insufficient to overcome the forum-selection clause. The public-policy factor strongly favored enforcing the clause because both New Jersey and New York favor enforcing contractual provisions, including forum-selection clauses.

Disposition

The court granted the defendants’ motion to transfer and ordered the Clerk’s Office to transfer the matter to the United States District Court for the Southern District of New York. It denied without prejudice the defendants’ alternative request to dismiss under Federal Rule of Civil Procedure 12(b)(6), and it did not reach whether the complaint stated a claim. The court also ordered the Clerk to close the matter.