​​Litigation Prevention - Forum Selection Clauses
       >>> see ERISA Plans for their special exhaustion of remedies rules.

       >>> see "Forum Selection Provisions in ERISA Plans" for an excellent 2016 article.

In enrollment or award agreements relating to stock awards and plan benefits (as well as employment agreements), employers should consider reciting that a forum selection clause arises from arm’s length negotiations involving full disclosure of its implications to the affected employee. This is because, in different litigation relating to a stock investment, Delaware’s Supreme Court upheld the issuance of an “anti-suit injunction” to enforce a Delaware forum selection clause because the forum designation arose from “an arm's-length negotiation by experienced and sophisticated parties,” and consequently “it should be honored by the parties and enforced by the courts,” in the absence of a compelling reason. (National Industries Group (Holding) v. Carlyle Investment Management LLC, Del., No. 596, 2012, 5/29/13.)

Delaware Law

  • Forum designation in corporate bylaws discussed in New Challenges and Strategies for Designating Delaware as Jurisdiction for Corporate Disputes (2011.May.11).  See Galaviz v. Berg, ND Cal. (1/3/2011) (refusing to enforce company's designation of Delaware as the sole venue).

News and States Other than DE

2020.05.22 Texas District Court Enforces ERISA Plan's Forum Designation.  As reported by Bloomberg, "A lawsuit involving the employee stock plan of moving company All My Sons Moving & Storage will be heard in the Northern District of Texas because the plan document includes an enforceable provision requiring all litigation to be brought in that court, a federal judge held." See: Coleman v. Brozen, 2020 BL 169587, E.D. Tex., No. 4:19-cv-00705, 5/6/20. 

2017.01.17  "Forum Selection Clauses Won't Get High Court Review".  The BNA article includes the following sentences:

  • In recent months, courts have enforced forum-selection clauses in plans sponsored by NCR Corp., Bank of New York Mellon, AXA Equitable Life Insurance Co., Ascension Health Alliance and Caterpillar Inc.
  • At least one judge recently issued a decision declining to follow suit. In July, an Illinois federal judge refused to enforce a forum-selection clause in a plan sponsored by BP Corp. North America Inc., citing the “strong public policy set forth in ERISA.”

​2016.10.10  California's New Forum Selection Law.  See below for the text of Section 525(a)  of California's newly-enacted Labor Code, which essentially prohibits employers from requiring acceptance of a forum designation provision  “as a condition of employment”. The text quoted in the prior sentence indicated that a forum selection clause should be valid if it appears in an employment agreement or a compensatory plan or policy (or stock award), provided in each case that the employee is free to reject the employer’s offer without terminating employment

Section 925. (a) An employer shall not require an employee who primarily resides and works in California, as a condition of employment, to agree to a provision that would do either of the following:
(1) Require the employee to adjudicate outside of California a claim arising in California.
(2) Deprive the employee of the substantive protection of California law with respect to a controversy arising in California.

​2014.Mar.28  DE Selection Enforced by Other State Courts - see Harvard Law Blog.