PLANADVISER - July/August 2019 - 51

fiduciary fitness
Venue Clauses
Supreme Court won't opine on the provisions' enforceability
A former Pfizer executive recently filed a writ of certiorari-i.e.,
a request for a court to review a case-with the U.S. Supreme
Court, asking it to rule that a forum selection clause in a Pfizer
employee benefit plan governed by the Employee Retirement
Income Security Act (ERISA) is unenforceable. The writ noted
that this view about the provision, which specifies the jurisdiction
in which an ERISA civil litigation will be heard, is also
shared by the Department of Labor (DOL). Still, to date, the
position has failed to persuade a federal court of appeals;
three recently held that the forum selection clauses in such
plans are permissible.
This is the fourth time a writ of certiorari
has been filed with the Supreme Court
on this issue. When the first of these cases,
Smith v. Aegon Companies Pension Plan, came
before the court, it requested the view of
the solicitor general, in the Department of
Justice. This usually indicates that the court
finds the case of interest-though more
recently, a year ago January, it denied such
a petition. The solicitor general agreed with
the DOL that forum selection provisions in
ERISA plans are unenforceable. It recommended,
though, that the court not grant
certiorari until the issue had been further
developed at the circuit level.
Perhaps if a circuit court takes a position contrary to that
should a [transfer] motion be denied. "
This view is also reflected in the Restatement (Second) of
Conflict of Laws, which says, " the parties' agreement as to
the place of the action will be given effect unless it is unfair
or unreasonable. "
On the other hand, ERISA's venue provision states that a
... When ERISA
passed, the
courts didn't
participant may bring suit in any district " [1]where the plan
is administered, [2] where the breach took place, or [3] where
the defendant resides or may be found. " The preceding has
been described as a liberal venue provision designed to give
easy and ready access to the federal courts
and is consistent with the language of ERISA
Section 2(b), " by providing ... ready access to
the federal courts. "
Unfortunately, as drafted, the language
view the clauses
as favorably
as they do
today.
of the 6th, 7th and 8th Circuits, which, in those first three
cases, decided the clause was enforceable, the Supreme
Court will hear it. But, absent a circuit split, it will probably
not grant certiorari. Therefore, though a minority of district
courts side with the DOL, a sponsor may be fairly confident
as to including such a provision in its plan and assuming a
district court will enforce it.
The issue is a close one, though: In the 6th and 7th
Circuit cases, in which the Supreme Court denied certiorari,
dissenting opinions were filed. That means it's entirely
possible that a circuit split might arise. Such an occurrence
would be more likely, however, if the DOL were to issue
regulations setting forth its position on this issue.
Two competing policy interests are at stake with respect
to venue selection clauses. On one hand, as the Supreme
Court stated in Atlantic Marine Construction Co. Inc. v. U.S.
District Court for the Western District of Texas, where " the
parties have agreed to a valid forum selection clause, a
district court should ordinarily transfer the case to the
forum specified in that clause. Only under extraordinary
circumstances unrelated to the convenience of the parties
of ERISA's venue provision is ambiguous. Is
it meant to be a statement of a participant's
rights, or does it merely set forth the range
of venues in which an ERISA civil litigation
may be brought?
As in most litigation contexts, a persuasive
argument can be advanced by either
side. Proponents of enforcing venue clauses
focus on Congressional intent by arguing
that Congress did not specifically prohibit
the clauses. It should be noted, though, that
when ERISA passed, the courts didn't view the clauses as
favorably as they do today. It was only since the middle of
the last decade that they became prevalent in ERISA plans.
Opponents of the clauses point out that Congress intended
to protect participants by giving them three forum options
and that legislators could have added language to ERISA's
venue provision to allow the clauses. Opponents also argue
that enforcing the clauses violates public policy,
in this
instance, barring ERISA plan participants from enforcing
their rights. Even under the favorable Supreme Court decisions
in this area-which hold that, typically, forum selection
clauses are enforceable, public policy would be a basis
for nonenforcement. Proponents of the clauses meanwhile
focus more upon contract law and previous court decisions
with respect to forum selection clauses more generally.
Marcia Wagner is an expert in a variety of employee benefits and
executive compensation areas, including qualified and nonqualified
retirement plans and welfare benefit arrangements. She is a summa
cum laude graduate of Cornell University and Harvard Law School and
has practiced law for 32 years. Wagner is a frequent lecturer and has
authored numerous books and articles.
planadviser.com July-August 2019 | 51
http://www.planadviserdigital.com/planadviser/july_august_2019/TrackLink.action?pageName=51&exitLink=http%3A%2F%2Fplanadviser.com
PLANADVISER - July/August 2019

Table of Contents for the Digital Edition of PLANADVISER - July/August 2019
