Federal appeals court rules that ERISA plans can include choice of venue provision

Establishing which court will have jurisdiction over an ERISA-governed claim is the first step in litigation.

There are many factors that can influence the outcome of a lawsuit, or may even determine whether a case can even be brought. In ERISA cases, often the first issue that needs to be resolved is where the lawsuit may be filed, known as venue. The Employee Retirement Income Security Act of 1974 is a federal law that governs pension, disability, life and health plans offered by employers.

Many ERISA plans now include a "choice of venue provision." Those plans dictate that if a lawsuit is filed, it may only be heard in a particular district; i.e., venue. There may be several reasons for the choice of forum - it may be where the benefit plan is administered. However, while the choice of venue may be beneficial to the plan administrator, it could be extremely burdensome for aggrieved benefit claimants who may have to file their lawsuits hundreds, if not thousands of miles from where they reside.

Federal Appeals Court rules venue provisions enforceable

A recent case out of the 6 th Circuit Court of Appeals held that choice of venue provisions are enforceable, despite objections made by the U.S. Department of Labor - Smith v. Aegon Companies Pension Plan, 769 F.3d 922 (6 th Cir. 2014). The case arose when a beneficiary of a pension governed under ERISA sued to recover benefits. The District Court in West Virginia where the Plaintiff lived and where the lawsuit was initially filed dismissed the suit, ruling that the action had to be brought in the Federal District Court in Cedar Rapids, Iowa. The plaintiff appealed; and on October 14, 2014 the 6 th Circuit Court of Appeals held that:

  • A majority of courts who have ruled on the issue have upheld venue provisions in ERISA plans
  • There is no specific language in ERISA that prevents venue provisions
  • The brief submitted by the Department of Labor stating that venue provisions were unenforceable was "an expression of mood" and not binding on the court.

As such, the majority opinion ruled that venue provisions are enforceable regardless of the burden and inconvenience placed on the benefit claimant to sue in an unfamiliar location. The decision was not unanimous, however. The dissenting opinion held that restrictions on venue are against ERISA's broad venue provisions and ERISA's overarching goal to eliminate obstacles that prevent a beneficiary from holding plan administrators accountable. The Department of Labor also submitted a brief to the court stating that venue provisions were "incompatible with ERISA."

An experienced ERISA litigation attorney can help

The most recent ruling by the 6 th Court of Appeals is the latest in a string of decisions that allow choice of venue provisions. The U.S. Court of Appeals for the 7 th Circuit has not yet firmly weighed in on the issue, nor is the 7 th Circuit bound by the decisions of the 6 th Circuit, although it may take previous decisions into account when considering the issue for itself. However, in Coleman v. Supervalu, Inc. Short Term Disability Program, 920 F.Supp.2d 901 (N.D.Ill. January 31, 2013), a district judge in the Northern District of Illinois (Chicago) refused to enforce a venue selection clause, finding that the inconvenience to the plaintiff outweighed the plan administrator's choice of forum and holding that to enforce such a provision would violate the public policy behind the ERISA law.

The issue presented in Smith v. Aegon regarding choice of law and venue provisions in ERISA cases is indicative of the complicated nature of ERISA claims. Participants and beneficiaries in ERISA-governed benefits plans who believe their rights have been violated or their claims wrongfully denied should contact an experienced ERISA litigation firm such as DeBofsky, Sherman & Casciari, PC to discuss their legal options and potential litigation.

Keywords: ERISA, insurance, litigation, pension plans