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Benefits

Court Upholds ERISA Plan’s Forum Selection Clause

EBIA  

EBIA  

Manuel-Clark v. ManpowerGroup Short-Term Disability Plan, 2019 WL 5558406 (E.D.N.C. 2019)

An employer’s short-term disability plan included a provision designating federal court in Milwaukee, Wisconsin, as the appropriate venue and forum for disputes arising under the plan. After submitting a claim for plan benefits, which was denied, an employee in North Carolina sued the employer in federal court in North Carolina. The plan asked the court to dismiss the case, or in the alternative, transfer it to Wisconsin.

Citing ERISA § 502(e)(2), which provides that an action may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, the employee argued that, despite the plan’s forum selection clause, ERISA gave her the right to litigate in her choice of the three venues. The court found, however, that while ERISA sets forth three possible venue options, it does not expressly invalidate forum selection clauses in employee benefit plans (see our Checkpoint article). The employee also maintained that the clause was unenforceable because she was not made aware of it in the benefits denial letter. Explaining that “forum-selection clauses should control except in unusual cases,” the court stated that in the absence of fraud it was irrelevant that she was unaware of the forum selection provision when she filed suit. The court also rejected the employee’s argument that compelling the case to be litigated in Wisconsin contravened ERISA’s legislative intent and public policy by denying the employee “ready access to federal courts.” The court held that the forum selection provision simply directed the litigation to the venue designated in plan documents. Having determined that the forum and venue selection clause was valid and enforceable, the court transferred the case to the Wisconsin court.

EBIA Comment: Including a forum selection clause preselecting the most convenient place for any litigation that may arise can be advantageous to an ERISA plan. Courts typically enforce a plan’s forum selection clause (except in cases of fraud), reasoning that allowing plans to limit claims to a specified forum encourages the establishment of a uniform administrative scheme and uniformity in plan interpretations. For more information, see EBIA’s ERISA Compliance manual at Section XXXVI.J.1 (“Where Can ERISA Suits Be Filed?”). See also EBIA’s 401(k) Plans manual at Section XXXVII.K (“Procedural Issues in ERISA Litigation”) and EBIA’s Self-Insured Health Plans manual at Section XXVI.J (“Litigation Issues”).

Contributing Editors: EBIA Staff.

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