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​​ERISA Litigation - Forum Selection Clauses


2017.08.07  Seventh Circuit Agrees with Sixth - Enforceable.  The 7th Circuit held as follows, in In re Mathias: "We ... join the Sixth Circuit in holding that ERISA’s venue provision does not invalidate a forum-selection clause contained in plan documents.


2017.04.10  Forum Selection Clause Upheld for ERISA Plan.  The 7th Circuit has joined the 6th Cir. in holding that ERISA's venue provision, § 1132(e)(2), is permissive, and does not invalidate a forum-selection clause contained in plan documents.  SeeIn re Mathias, which endorses the following rationale:

  • The Sixth Circuit also explained that forum-selection clauses channeling litigation to a particular federal court preserve ready access to federal court, consistent with the general policy expressed in § 1001(b). [Smith v. Aegon Cos. Pension Plan, 769 F.3d 922, 931–34 (6th Cir. 2014), cert. denied, No. 14-1168 (Jan. 11, 2016)], at 931. Finally, the court observed that plan language limiting litigation to a single federal district promotes uniformity in decisions interpreting the plan, thus reducing administrative costs for plan sponsors and beneficiaries alike.3 Id. at 931–32.

See Checklist: Contractual Precautions against Benefit Plan Litigation Risks.


2016.07.08  ERISA Policy Tilts Balance Against Enforcement vs Plan Participants.  A majority of courts have enforced ERISA plan provisions enforcing plan provisions designating specific forums for litigation, and their inclusion can better position plan sponsors to reduce their litigation costs.  An Illinois district court comprehensively reviewed relevant cases in Harris v. BP Corp, and found that enforcement of a forum selection clause against plan participants "contravenes the strong public policy set forth in ERISA  (in contrast to enforcement by "insurers and employers who would be best served by including such a clause in any plan for cost-saving purposes").  The Illinois court explained its decision as follows: "We believe that ERISA's legislative history unquestionably demonstrates that Congress did not intend to allow a plan participant/beneficiary who worked for a company for 30 years in Maine . . .  to be required to litigate his [benefits] claim in Los Angeles."  


2016.Summer  Forum Selection Clauses in ERISA Plans - This excellent article from the Benefits Law Journal begins with the following recap of possible strategies by which employers may limit their ERISA litigation risk and costs:

  • In recent years, in addition to substantive changes to 401(k) plans to increase both the level of participation and the level of contributions, there has been an increased focus on the procedural aspects of all types of employee benefit plans. One such modification has been the addition of internal statutes of limitations,1  shorter than what would otherwise be the applicable state statute of limitations. Another change has been providing an explicit contractual basis for the recovery of overpayments, and a third addition to plans, and the subject of this article,2  has been the inclusion of mandatory forum selection clauses,3  which limit plaintiffs to only one of the three permissible federal venues for ERISA causes of action.4 This article discusses in detail how courts are divided on the issue of the enforceability of forum selection clauses in ERISA plans.

  

2013.Dec.05  Forum Selection Clauses within ERISA Plans . . . Promising Future? 
When it comes to designating a forum for ERISA litigation, and obtaining employee consents to personal jurisdiction there, the real question for employers is "why not"?  Benefit plans may do that, and a recent Supreme Court decision indicates that such forum selection clauses should be enforceable in the absence of extraordinary circumstances.  That Supreme Court case (Atlantic Marine) did not involve ERISA, but a subcontract for federal construction work.  Nevertheless, the Court's reasoning carries over to employers that design and sponsor benefit plans. See the following quote from Justice Alito's opinion: 

  • When parties have contracted in advance to litigate disputes in a particular forum, courts should not unnecessarily disrupt the parties' settled expectations. A forum-selection clause, after all, may have figured centrally in the parties' negotiations and may have affected how they set monetary and other contractual terms; it may, in fact, have been a critical factor in their agreement to do business together in the first place. In all but the most unusual cases, therefore, "the interest of justice" is served by holding parties to their bargain."

See "Forum Selection Clauses in ERISA Plans" (6/3/2013) for 16 district court cases that enforce such clauses, for a heads-up that the Department of Labor disagrees with that, and for analysis reiterating the observations above.2013.May.29  Reciting Key Elements to Justify Forum Designations (DE Sup. Ct.)