Supreme Court Declines To Take Up Challenge To Validity Of Forum Selection Clauses In ERISA Plans

Author:Mrs Amy Blaisdell and Heather M. Mehta
Profession:Greensfelder, Hemker & Gale, P.C.
 
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The U.S. Supreme Court on Jan. 17 ended a yearlong legal challenge to the enforceability of a forum selection clause in an ERISA-governed benefit plan, when the court denied the plaintiff's petition for writ of certiorari. The case is Clause v. U.S. District Court for the Eastern District of Missouri, 2017 U.S. Dist. LEXIS 719 (Jan. 17, 2017).

The petitioner unsuccessfully opposed transfer, moved for retransfer and twice sought review of the Eighth Circuit before filing her petition for writ of certiorari with the Supreme Court. The plaintiff's petition asked the Supreme Court to determine "whether a contractual forum selection clause can override ERISA's statutory venue provision."

Greensfelder represented the defendants in the case. The order marks the second time in just over a year that the Supreme Court has declined to take up this issue. For ERISA plan sponsors, this underscores the courts' continuing consistency in upholding forum selection clauses.

The path to rejection by the Supreme Court

On Jan. 19, 2016, the U.S. District Court for the District of Arizona entered an order transferring the case to the U.S. District Court for the Eastern District of Missouri pursuant to the mandatory forum selection clause. Notably, the welfare plan at issue is administered in Missouri, and Missouri is also the location of the plan administrator and claims administrator. Accordingly, the court noted, "Here the forum selection clause removes any uncertainty about where jurisdiction lies, thus avoiding confusion regarding venue selection. Moreover since it is arguably more cost efficient for Defendants to litigate in Missouri, those savings could be passed along to the Plan itself."

The District of Arizona further rejected the argument that enforcement of the forum selection clause would "contravene a strong public policy" and rather opined that enforcement of the forum selection clause would further one of the purposes of ERISA - bringing a measure of uniformity in an area where decisions might differ as a result of geographic location.

Two days later, the court physically transferred the case to the Eastern District of Missouri. Plaintiff Clause then moved to retransfer the case back to the District of Arizona. The Eastern District of Missouri denied Clause's motion in May 2016, stating,

"The Court agrees with the Arizona District Court and numerous district and circuit courts have found that ERISA forum selection clauses are enforceable."

The court cited to...

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