Ninth Circuit: ERISA Does Not Bar Forum Selection Clauses

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Aligning itself with other circuit courts that have ruled on the issue, the Ninth Circuit recently held that ERISA does not bar forum selection clauses in benefit plans.  The background of the case and the Ninth Circuit’s ruling are straightforward.  Plaintiff filed a putative class action in the Northern District of California challenging the management of Wells Fargo’s 401(k) plan.  Wells Fargo moved to transfer venue to the District of Minnesota under the 401(k) plan’s forum selection clause.  The California district court granted the motion to transfer and Plaintiff sought a writ of mandamus to stop the transfer.

The Ninth Circuit unequivocally affirmed the transfer.  The Court reasoned that the permissive “may” in ERISA’s venue provision provides three options for a proper venue but mandates none of them.  Moreover, policy considerations support permitting contractual forum selection clauses: the clause at issue does not impinge on “ready access” to the courts (instead, it mandates it) and confining plan-related lawsuits to one jurisdiction furthers ERISA’s goal of uniform administration of benefit plans.

While the Ninth Circuit is certainly not the first to enforce a benefit plan’s forum selection clause (indeed, the Court recognized “near universal” agreement on the issue), this case is significant in two respects.  First, it dampens recent efforts in the lower courts to challenge forum selection clauses in ERISA plans.  It chips away further at prior case law disfavoring such clauses.  Echoing its conclusions in Dorman v. Charles Schwab – a 2019 decision enforcing a mandatory arbitration clause in an ERISA plan – the Court here classified judicial skepticism of forum selection clauses as a “relic” of a past era.

The case is Becker v. United States District Court, No. 20-72805, 2021 U.S. App. LEXIS 9495 (9th Cir. Apr. 1, 2021).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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