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Federal Court enforces contractual choice-of-law provision and grants motion to dismiss filed on behalf of Firm client, General Electric International, Inc.

news | September 7, 2010


In one of very few reported cases enforcing a choice-of-law provision in the context of international employment agreements, the United States District Court for the Southern District of New York dismissed a wrongful death lawsuit brought against Firm client General Electric International, Inc. (“GEII”) after finding that the plaintiff’s claims were barred by the exclusive remedy provisions of New York’s workers’ compensation scheme. See McPhee v. General Electric International, Inc., 2010 WL 2911624 (S.D.N.Y. July 12, 2010). In reaching this conclusion, the court determined that the plaintiff’s claims were governed by New York law pursuant to a broad choice-of-law provision contained within an employment agreement signed by the decedent/employee.

The lawsuit was brought by the relatives of a GEII employee who died following a workplace accident in Israel. The terms of the decedent’s work assignment in Israel were set out in a standard GEII employment agreement, which also contained a choice-of-law clause requiring the application of New York law in “any dispute” between the parties. Invoking this choice-of-law provision, GEII filed a motion to dismiss arguing that the plaintiff’s claims should be dismissed as barred by the exclusive remedy provisions of New York’s workers’ compensation scheme. In response, the plaintiff argued that the choice-of-law provision should not be enforced because neither the parties nor the underlying transaction between them had sufficient contacts with the state of New York. In the event the choice-of-law provision was not enforceable, the plaintiff further argued that Israeli law would govern the plaintiff’s claims (given Israel’s status as the locus of the tort/accident).

The Court rejected the plaintiff’s arguments and granted GEII’s motion to dismiss, concluding that GEII’s and the General Electric Company’s shared contacts with the state of New York were sufficient to uphold the choice-of-law provision. In the Court’s words: “In light of Defendant’s substantial presence in New York, the fact that payments to the decedent originated in New York, the substantial connection that Defendant’s parent company has with New York, and the fact that the parties elected to litigate this action in New York, Plaintiff has failed to meet his burden of showing that the choice-of-law clause is unenforceable. That some relevant factors also point to . . . Israel is not relevant, as Defendant has established that the litigation has a ‘reasonable relationship’ to New York.”