from the District Court of Cass County, East Central Judicial
District, the Honorable Thomas R. Olson, Judge.
M. Fremstad, Fargo, N.D., for plaintiff and appellant.
Vanessa L. Lystad (argued) and Robert J. Udland (on brief),
Fargo, N.D., for defendant and appellee.
1] Dawn Osborne appeals from the district court's order
granting Brown & Saenger, Inc.'s motion to dismiss
for improper venue. We reverse under N.D.C.C. §
28-04.1-03(5), concluding the forum-selection clause in the
parties' employment agreement violates North Dakota's
public policy against non-compete agreements. The non-compete
clause is unenforceable under N.D.C.C. § 9-08-06 to the
extent it limits Osborne from exercising a lawful profession,
trade, or business in North Dakota.
2] In 2011, Brown hired Osborne as a sales representative in
its Fargo office to sell office supplies to businesses. Brown
is headquartered in South Dakota, but operates as a foreign
business corporation in North Dakota. Osborne signed yearly
employment contracts with Brown. The parties agree that the
2015 Employment Agreement is the controlling contract for
this action, and it was the only one brought before the
3] The two clauses at issue in deciding the motion to dismiss
are the "Agreement Not to Compete"
("non-compete clause") and the "Choice of
Law/Forum" clauses. The non-compete clause states, in
[E]mployee agrees not to engage directly or indirectly,
either personally or as an employee, associate, partner, or
otherwise, or by means of any corporation or other legal
entity, or otherwise, in any business in competition with
Employer and, in addition, not to solicit customers of
Employer for Employee's own benefit or for the benefit of
any third party, during the term of employment and for a
period of two (2) years from the last day of employment,
within a 100 mile radius of employment location.
"Choice of Law/Forum" clause states: "The
parties agree that this agreement is governed by the laws of
the State of South Dakota and that the state circuit court
situated in Minnehaha County, South Dakota, shall be the
exclusive jurisdiction of any disputes relating to this
4] In January 2017, Brown terminated Osborne. Osborne sued
Brown, alleging retaliation, improper deductions, and breach
of contract. Osborne also sought a declaratory judgment
declaring the non-compete clause to be void. Osborne moved
for a preliminary injunction seeking to prevent Brown from
enforcing the covenant-not-to-compete against her. Brown
responded to that motion and moved to dismiss the action for
improper venue. Brown argued the forum-selection clause in
the employment agreement was valid and therefore a North
Dakota court was an improper venue. Brown argued that the
clause required the case to be heard by the South Dakota
court specified in the agreement. The district court, without
ruling on the motion for preliminary injunction, agreed with
Brown and granted the motion to dismiss.
5] Additionally, Brown has sued Osborne in the state circuit
court situated in Minnehaha County, South Dakota, seeking a
preliminary injunction against Osborne restricting her
actions under the non-compete clause.
6] We have not previously addressed the standard of review of
a district court's granting of a N.D.R.Civ.P. 12(b)(3)
motion on the basis of a forum-selection clause. Because Rule
12 is derived from Fed.R.Civ.P. 12, we view federal
interpretations of Fed.R.Civ.P. 12(b)(3) as highly persuasive
authority. See Unemployment Comp. Div. v. Bjornsrud,
261 N.W.2d 396, 398 (N.D. 1977) ("[W]hen we adopted the
Federal Rules of Civil Procedure we did so with knowledge of
the interpretations placed upon them by the Federal courts,
and although we are not compelled ...