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

Last Updated: March 13 2017
Article by Amy L. Blaisdell and Heather M. Mehta

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 the only circuit court decision to consider the enforceability of forum selection clauses in ERISA plans, which at the time was the Sixth Circuit decision in Smith v. Aegon Cos. Pension Plan, 769 F.3d 922 (6th Circuit 2014). There, the Sixth Circuit correctly observed,

"A majority of courts that have considered this question have upheld the validity of venue selection clauses in ERISA governed plans. These courts reason that if Congress had wanted to prevent private parties from waiving ERISA's venue provision, Congress could have specifically prohibited such action."

The Supreme Court subsequently denied the plaintiff's petition for writ of certiorari in Smith on Jan. 11, 2016, after calling for the views of the solicitor general. At that time, the solicitor general opined:

"We do not believe that the significance of the issue counsels departure from the Court's usual practice of allowing percolation among the courts of appeals. Further percolation would furnish this Court with the perspective of other appellate courts on the legal issue, and also shed light on the practical consequences of the rule adopted by the Sixth Circuit."

Undeterred by the second district court loss in her case and the resounding weight of authority against her position, Clause then filed a petition for writ of mandamus with the U.S. Court of Appeals for the Eighth Circuit. On Sept. 27, 2016, the Eighth Circuit denied the petition. The plaintiff immediately sought rehearing en banc, which was also denied on Oct. 26, 2016.

In November 2016 – just 11 months after the Supreme Court declined certiorari in Smith — Clause filed a petition for a writ of certiorari with the U.S. Supreme Court. The Pension Rights Center filed an amicus brief in support.

The Supreme Court's order denying the petition for certiorari brings an end to the yearlong challenge to the enforceability of forum selection clauses and is the only logical outcome. The only two courts of appeals to address whether forum-selection clauses are enforceable under ERISA — the Sixth and Eighth Circuits — have issued consistent rulings upholding the clauses. Furthermore, the vast majority of district courts also agree with the courts of appeals. The fact that many opinions have been written on the issue with very few diverging from the majority underscores the fact that the Supreme Court got it right.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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