Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Employers can write terms in their benefit plans that limit the courts in which employees can file lawsuits, a federal appeals court ruled ( In re Mathias , 7th Cir., No. 16-3808, 8/10/17 ).
In upholding a forum selection clause in Caterpillar Inc.'s health plan, the U.S. Court of Appeals for the Seventh Circuit on Aug. 10 became the second federal circuit court to say that these clauses—which require litigation over plan benefits to be brought in the employer’s preferred court—don’t violate the Employee Retirement Income Security Act. The Sixth Circuit reached the same conclusion in a 2014 decision favoring Aegon Cos.
In recent years, courts have enforced forum selection clauses in plans sponsored by NCR Corp., Bank of New York Mellon, AXA Equitable Life Insurance Co., and Ascension Health Alliance. Some courts have ruled differently, declining to enforce these clauses in plans sponsored by PepsiCo Inc. and Supervalu Inc.
Peter K. Stris, a partner with Stris & Maher LLP in Los Angeles and one of the attorneys representing the Caterpillar employee, told Bloomberg BNA that his firm would seek rehearing before all the Seventh Circuit’s judges.
The Labor Department has a long and unsuccessful history of arguing against forum selection clauses in ERISA-governed benefit plans. Despite filing multiple briefs on this topic over the past several years—including in this case and in the Sixth and Eighth circuits—the department lacks a single court victory to show for its efforts.
In the department’s view, forum selection clauses contradict ERISA’s goal of providing workers with “ready access to the Federal courts.”
The Seventh Circuit rejected this in a 2-1 split decision, saying that nothing in ERISA’s venue provision expressly invalidates forum selection clauses. Employers have “significant leeway” in designing benefit plans, and courts have repeatedly affirmed the importance of reliance on a written plan document, the Seventh Circuit said.
Judge Kenneth F. Ripple dissented, saying that a contractual clause forcing an ERISA plan participant to litigate far from home contravenes the “strong public policy” embodied in the statute. Plan participants are in a “unique and difficult position” with respect to these clauses, Ripple said. that’s because they have “ no role in the negotiation or even the acceptance” of plan terms, he said.
Judge Diane S. Sykes wrote the majority opinion, which was joined by Judge William J. Bauer.
Stris & Maher LLP and John M. Gallagher LLC represented the Caterpillar employee. Seyfarth Shaw represented Caterpillar.
To contact the reporter on this story: Jacklyn Wille in Washington at email@example.com
To contact the editor responsible for this story: Jo-el J. Meyer at firstname.lastname@example.org
Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)