Sixth Circuit Court Upholds Venue Selection Clause in ERISA Plan Document

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By Mark B. Blocker, Esq., Beth J. Dickstein, Esq., Robert A. Ferencz, Esq., and Valerie I. Petein, Esq.

Sidley Austin LLP, Chicago, IL

In Smith v. AEGON Cos. Pension Plan, 769 F.3d 922 (6th Cir. 2014), the Sixth Circuit held (in a 2-1 decision) that venue selection clauses in ERISA pension plan documents are valid and enforceable and bar participant lawsuits in alternate jurisdictions.

Many ERISA plans include provisions that limit the venue in which plaintiffs may bring lawsuits. Venue selection clauses can aid in plan administration through the selection of a jurisdiction convenient to the plan and promote uniformity of plan administration. The venue where a lawsuit is heard can also be important because there are certain issues under ERISA for which the circuit courts are divided.

To date, the majority of district courts that have been asked to determine the enforceability of venue selection clauses have held that such clauses are enforceable. Smith is the first published appellate court decision on this issue.


Prior to his retirement in 2000, Roger Smith worked as an employee of Commonwealth General Corporation (CGC) in Louisville, Kentucky. When CGC agreed to merge with AEGON USA, Inc. ("Aegon"), CGC offered certain employees, including Smith, enhanced retirement benefits if they remained employed through the completion of the merger. Smith retired on March 1, 2000, after the completion of the merger, and the AEGON Companies Pension Plan (the "Plan") paid him both a lump-sum benefit and a monthly benefit. In 2007, the Board of Directors of Aegon amended the Plan to add a provision requiring that all actions in connection with the Plan must be brought in the federal district court in Cedar Rapids, Iowa, where the plan was administered.

In August 2011, the Plan informed Smith that it had been overpaying his benefits during the previous 11 years.  The Plan therefore reduced, and then eliminated, his entire monthly benefit payment to recoup the overpaid amount. Smith filed suit against the Plan in the District Court for the Western of Kentucky, where he resided. The case was dismissed by the district court on the basis of the venue selection clause. Smith appealed.

The Sixth Circuit Court's Opinion

Smith, with amicus support from the Department of Labor, argued that venue selection clauses in ERISA-governed plan documents are not valid because (a) they conflict with ERISA's policy to provide ready access to courts and (b) they are superseded by ERISA's venue provision, which states that an action "may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found."1 Smith and the Department of Labor also argued that the Plan's venue selection clause was not enforceable because it was added seven years after his benefits commenced and therefore was not the product of arms-length bargaining. Smith argued that the original plan document as in effect when he retired should apply to his claim.

The Sixth Circuit rejected all these arguments.  The court held that the Plan's venue selection clause is presumptively valid and enforceable. The court held that ERISA's venue provision in ERISA §502(e)(2) is permissive rather than obligatory, because it provides that a suit "may be brought" in one of several districts. The Plan's venue selection was not inconsistent with the statute because it merely selects one of the statutorily designated places. The court noted, however, that even if the clause had selected a non-statutory venue, the clause would still have controlled, reasoning that the court had previously upheld the validity of mandatory arbitration clauses in ERISA plans, and it would therefore be "illogical to say that, under ERISA, a plan may preclude venue in federal court entirely, but a plan may not channel venue to one particular federal court."2

The court also held that the venue selection clause was not contrary to ERISA's policy to provide "ready access to federal courts."3The court noted that other ERISA policies are furthered by venue selection clauses, such as "encouraging uniformity in the decisions interpreting that plan, which furthers ERISA's goal of enabling employers to establish a uniform administrative scheme so that plans are not subject to different legal obligations in different states."4

The court also held that it did not matter if the venue selection clause was the product of arms-length bargaining.  The court noted that the Supreme Court has recognized the validity of venue selection clauses in other contexts even when those clauses were not the product of an arms-length transaction and that Smith had not argued or shown that the clause would lead to an excessive burden on him. The court also rejected the plaintiff's related argument that the pre-amendment version of the plan should apply to his claims.  The court held that plaintiff's claim was governed by the plan in force at the time his claim arose, which did not occur until 2011, when the Plan informed Smith that it was reducing his benefits payment.

Impact of the Opinion

The court's opinion should enhance the ability of employers to enforce plan provisions governing when and how lawsuits may be brought. Although not cited by the Sixth Circuit, its opinion is consistent with the Supreme Court's recent ruling enforcing a contractual statute of limitations period.5 In that opinion, the Court made clear that ERISA plans are voluntary contractual undertakings and employers can include reasonable terms as part of the plans. This decision may pave the way for other reasonable terms to be included in ERISA plans.

For more information, in the Tax Management Portfolios, see Wagner, 374 T.M., ERISA — Litigation, Procedure, Preemption and Other Title I Issues, and in Tax Practice Series, see ¶5590, Other Laws and Considerations Affecting Employee Benefit Plans.

© 2014 Sidley Austin LLP.

Copyright©2014 by The Bureau of National Affairs, Inc.


 1 29 U.S.C. §1132.

 2Smith v. AEGON Cos. Pension Plan, 769 F.3d 922 (6th Cir. 2014).

 3 29 U.S.C. §1001(b).


 5SeeHeimeshoff v. Hartford Life & Accidental Insurance Co., 134 S. Ct. 604 (2013).

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