Caterpillar Health Plan Can Limit Court Choice: 7th Cir.

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

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

To contact the editor responsible for this story: Jo-el J. Meyer at

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