Goodwin Insights July 15, 2021

Ninth Circuit Upholds Use of a Forum Selection Clause

Key Takeaway: The Ninth Circuit Court of Appeals held that forum selection clauses in governing plan documents are enforceable under ERISA, even where the lawsuit challenges fiduciaries’ management of the plan.

On April 21, 2021, the Ninth Circuit Court of Appeals denied a writ of mandamus filed by a participant in a bank’s 401(k) plan that sought to overturn a district court decision holding that the participant’s lawsuit should be heard in the forum specified in the plan’s governing document. The plaintiff originally filed suit in the Northern District of California, alleging that the defendants violated their fiduciary duties by selecting the bank’s proprietary investments for the plan. Defendants moved to transfer the case to the District of Minnesota (where the plan was administered), invoking a forum selection clause in the plan’s governing document that specified that lawsuits regarding the plan would be heard in that venue. The district court granted that motion, and the plaintiff then filed a writ of mandamus in the Ninth Circuit Court of Appeals seeking to overturn it.

The Ninth Circuit Court of Appeals denied the writ of mandamus, rejecting the plaintiff’s argument that forum selection clauses are contrary to ERISA. The court reasoned that ERISA expressly allows an action to be brought in at least three categories of venues, one of which is where the plan is “administered,” and that the forum selection clause in the plan documents properly selected such a venue. The court further reasoned that forum selection clauses further ERISA’s goals of ensuring uniformity of decisions affecting a plan by funneling all cases involving a plan to a single jurisdiction. Although the plaintiff argued that forum selection clauses undermine ERISA’s goal of providing ready access to federal courts, the court disagreed, explaining that, to the contrary, the clause at-issue guaranteed that any controversy would be heard in a federal court.

The case is In re Yvonne Becker, No. 20-72805, in the United States Court of Appeals for the Ninth Circuit. The decision is available here.