Supreme Court Seeks Government View In ERISA Case Involving Venue Selection


For the third time this term, the U.S. Supreme Court has asked for the government's view in a case arising under the Employee Retirement Income Security Act (Smith v. Aegon Cos. Pension Plan., U.S., No. 14-1168, invitation to file brief 6/1/15).

This case asks the justices to decide whether an ERISA plan sponsor can limit the courts in which a participant or beneficiary can file suit by including a venue selection clause in the terms of its plan.

Although the Department of Labor has long argued that venue selection clauses are incompatible with ERISA, a split panel of judges on the U.S. Court of Appeals for the Sixth Circuit held last fall that such clauses are valid and enforceable.

The Sixth Circuit's majority opinion was noteworthy for its refusal to extend any deference to the position taken by the Department of Labor in two recent amicus briefs.

Mark D. DeBofsky, a plaintiff-side ERISA attorney with DeBofsky & Associates PC in Chicago, called this case “a case the Supreme Court really should hear.”

Attorneys Emphasize Importance of Case

Both plaintiff- and defense-side attorneys told Bloomberg BNA on June 1 that this case presented important issues warranting Supreme Court review.

Joshua Bachrach, a partner with Wilson Elser Moskowitz Edelman & Dicker LLP's Philadelphia office, said the case underscores the importance of national uniformity with respect to ERISA plans.

“I think it definitely affects the plans themselves in a very big way,” said Bachrach, who represents insurers and plan sponsors. “The Sixth Circuit pointed out that one of the goals of ERISA is uniformity of decision making and plan interpretation. If you have all the cases involving a single plan and how that plan should be interpreted decided by a single district, then there's going to be a greater chance of uniformity than if they're scattered across the country in different jurisdictions.”

Bachrach expressed approval of the Sixth Circuit's decision to enforce the plan's venue selection clause.

“I think this case is important for the plans so that they can have their terms interpreted uniformly, which is the most important part of ERISA,” he said. “The Sixth Circuit's decision allows that to happen.”

DeBofsky, who called the Sixth Circuit's decision “problematic,” emphasized ERISA's goal of enabling plan beneficiaries to “redress their statutory rights closer to where they live and where their attorney of choice may be found.”

“The enforcement of venue selection clauses can impose a huge hardship on claimants seeking to enforce their right to benefits,” DeBofsky said. “In this case, the designated venue was the federal court in Cedar Rapids, Iowa. Mr. Smith lived nowhere near that venue; and the burden of locating counsel and litigating his claim for benefits in Cedar Rapids meant that he would be effectively barred from challenging the benefit denial.”

DeBofsky also took issue with the Sixth Circuit's unwillingness to defer to the Department of Labor's stated position.

In DeBofsky's view, the Sixth Circuit's ruling “undermines the Department's enforcement powers and makes it harder for the Department to protect participants in employee benefit plans and their beneficiaries.”

DeBofsky and Bachrach are not involved in the instant dispute.

Excerpted from a story that ran in Pension & Benefits Daily (06/01/2015).

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