Nancy Torresen, United States Chief District Judge.
Before the Court is the Defendants' motion to dismiss the Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), or alternatively, to transfer the action to the United States District Court for the Southern District of New York pursuant to 28 U.S.C. § 1404(a) (ECF No. 6). For the reasons stated below, the motion is
The Plaintiff in this action is Frederick Dumont, a retiree living in Fairfield, Maine. Compl. ¶¶ 1, 15 (ECF No. 1). The Defendants are PepsiCo, Inc. (
Dumont began working for Seltzer & Rydholm, Inc. in 1979. Compl. ¶ 11. Pepsi Bottling Group, Inc. purchased Seltzer & Rydholm, Inc. in 2004, and, in 2010, PepsiCo acquired Pepsi Bottling Group, Inc. Compl. ¶¶ 12, 14. For the first twentyseven years and seven months of his employment Dumont worked as a salaried employee, and for approximately the final six years of his employment he worked as an hourly employee. Compl. ¶¶ 11-15. Dumont participated in both the Hourly and Salaried Plans. Compl. ¶ 7. Although the Plans are not in the record, documents attached to the Complaint repeatedly refer to the vested status of his benefits. E.g., Pension Benefit Modeling Statement 4 (ECF No. 1-5) ("Vesting Percentage: 100%"); Apr. 4, 2013 Employer Benefits Statement 1 (ECF No. 1-8) ("Full Vesting Date 12/01/1984").
In 2010, PepsiCo made changes to the Plans. One of these changes was the addition of a forum selection clause. Oct. 1, 2015 Ryan Aff. ¶¶ 3, 5 (
Ryan Aff ¶ 3. PepsiCo distributed notice of this change to participants in December of 2010. Ryan Aff. ¶ 5. Plaintiff retired from PepsiCo after May 31, 2013. Compl. ¶ 27. He now disputes the calculation of his retirement benefits under the Plans.
In Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas, the Supreme Court clarified the appropriate procedural vehicle and standard for enforcement of a "valid" forum selection clause. ___ U.S. ___, 134 S.Ct. 568, 581-83, 187 L.Ed.2d 487 (2013). Where the plaintiff has brought a case in a venue that is considered proper under the general venue statute (28 U.S.C. § 1391) or a more specific statutory venue provision such as that found in the Employee Retirement Income Security Act (
Under 28 U.S.C. § 1404(a), "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." A motion to transfer venue under § 1404(a) "calls on the district court to weigh in the balance a number of case-specific factors."
The issue raised by the Defendants' motion is whether the Plans' forum selection clauses are enforceable against Dumont. Neither the United States Supreme Court nor the First Circuit has yet addressed whether forum selection clauses that channel participants challenging their ERISA benefit determinations to a single, plan-chosen forum are permissible.
Courts have long recognized that plaintiffs hold a "`venue privilege.'" E.g., Atl. Marine, 134 S.Ct. at 581 (quoting Van Dusen v. Barrack, 376 U.S. 612, 635, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964)). This is the unremarkable proposition that a plaintiff gets to choose — consistent with jurisdictional and venue limitations — where to bring suit.
Id. at 582.
Historically, courts have disfavored forum selection clauses. However, M/S Bremen v. Zapata Off-Shore Co. marked a sea change in how courts treat them. 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). In Bremen, the Supreme Court held that a freely-negotiated forum selection clause between two sophisticated international corporations was enforceable. The Court wrote:
Id. at 14, 92 S.Ct. 1907 (footnote omitted). The presumption of enforceability of forum selection clauses "freely entered into between two competent parties" took hold. Id. (citation and internal quotations omitted). Under Bremen, unless the resisting party could show that the forum selection clause was invalid for such reasons as fraud or overreaching, or that enforcement would be unreasonable, unjust or would contravene a strong public policy, the clause would be enforced. Id. at 15, 92 S.Ct. 1907.
In Carnival Cruise Lines, Inc. v. Shute, the Supreme Court "refine[d] the analysis of The Bremen to account for the realities of form passage contracts." 499 U.S. 585, 593, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991). At issue in Shute was a forum selection clause printed on the back of a cruise ship ticket. The Court held that the forum selection clause was enforceable, even though the customer had unequal bargaining power and did not negotiate the terms of the contract. Scrutinizing the clause for "fundamental fairness," the Court noted that the customers "conceded that they were given notice of the forum provision and, therefore, presumably retained
Following Shute and Bremen, the First Circuit upheld the enforcement of a forum selection clause "embedded" in a series of consent forms signed by a patient before a medical procedure. Rivera v. Centro Médico de Turabo, Inc., 575 F.3d 10, 12-13 (1st Cir.2009). While the forum selection clause was a non-negotiated boilerplate provision between parties of unequal bargaining power, the First Circuit reasoned that the patient signed the form days before his procedure and "had the option of going to another hospital." Id. at 22.
The Court's most recent discussion of forum selection clauses is found in Atlantic Marine, where the Court addressed a "valid" forum selection clause and resolved a procedural issue. When a "plaintiff agrees" to a forum selection clause, the Court explained, it has effectively exercised its "venue privilege" and waived its right to challenge the pre-selected forum as inconvenient under 28 U.S.C. § 1404(a). Atl. Marine, 134 S.Ct. at 582.
An important distinction between the controlling forum selection clause cases and this case is that Mr. Dumont never agreed to the forum selection clauses contained in the Plans. As pled, Mr. Dumont did not play a part in the negotiation of the Plans, he did not sign off on the Plans, and he did not agree to the addition of the forum selection clauses in 2010.
Bremen, Shute, and Atlantic Marine, all of which focus on an agreement between the parties, do not fit the situation before me. The Defendants lean heavily on cases from outside of this District and Circuit that have held that forum selection clauses in ERISA plans can be enforced against plan participants. Turning to those authorities, a few patterns appear.
First, some of the decisions cited by the Defendants simply applied the Bremen/Shute/Atlantic Marine presumption of validity without really analyzing whether or why a party that has not agreed to the forum selection clause should lose the plaintiff's venue privilege. E.g., Smith, 769 F.3d at 930; Haughton v. Plan Adm'r of Xerox Corp. Ret. Income Guarantee Plan, 2 F.Supp.3d 928, 933 (W.D.La.2014); Price v. PBG Hourly Pension Plan, 921 F.Supp.2d 764, 770 (E.D.Mich.2013); Vega, 2013 WL 784365, at *3; Scaglione v. Pepsi-Cola Metro. Botteling Co. Inc., 884 F.Supp.2d 642, 643 (N.D.Ohio 2012); Rodriguez, 716 F.Supp.2d at 857-58; Williams v. CIGNA Corp., No. 5:10-cv-00155, 2010 WL 5147257, at *4 (W.D.Ky. Dec. 13, 2010); Klotz, 519 F.Supp.2d at 433-34; Rogal
Some of the cases cited by the Defendants acknowledged that the plaintiffs before them had not agreed to the forum selection clauses, but found it sufficient that they, as ERISA participants, had knowledge of the term. E.g., Loeffelholtz v. Ascension Health, Inc., 34 F.Supp.3d 1187, 1191-92 (M.D.Fla.2014); Smith v. Aegon USA, LLC, 770 F.Supp.2d 809, 811-12 (W.D.Va.2011); Testa v. Becker, No. cv-10-638, 2010 WL 1644883, at *6-7 (C.D.Cal. Apr. 22, 2010). And a couple of courts held that it was not even essential for the participant to have knowledge of the forum selection clause, as long as the employer that negotiated the plan had notice. See Angel Jet Serv., LLC v. Red Dot Bldg. Sys.' Emp. Benefit Plan, No. cv-09-2123, 2010 WL 481420, at *2 (D.Ariz. Feb. 8, 2010); Laasko v. Xerox Corp., 566 F.Supp.2d 1018, 1024 (C.D.Cal.2008). In Schoemann ex rel. Schoemann v. Excellus Health Plan, Inc., 447 F.Supp.2d 1000 (D.Minn.2006), the court stated:
Id. at 1007. The Schoemann court identified the problem, but ultimately concluded that ERISA beneficiaries "must take the bad with the good." Id.
Some of Defendants' cases cite Shute for the proposition that "adhesion," "form," or "unilateral" contracts no longer require arms-length negotiation as a precondition to the enforceability of forum selection clauses. E.g., Conte, 2011 WL 4506623, at *3-4; Angel Jet Serv., 2010 WL 481420, at *1-2; Williams, 2010 WL 5147257, at *4; Sneed, 2008 WL 1929985, at *3. But these cases do not distinguish Shute based on the fact that the Shutes were actually parties to the contract who could have walked away with impunity if they did not want to be bound by the forum selection clause.
It is possible that under principles pertaining to third-party beneficiaries or doctrines of estoppel, the Plaintiff should be forced to live by the terms of the plan as agreed to by the employer and the plan administrator. But the Defendants do not make these arguments or provide the facts or authority necessary to support them. Instead, the Defendants rely on their long list of cases — cases which are not binding precedent, which go beyond the holdings of Bremen and its progeny, and which do not offer satisfactory analysis
Because I find that the Plaintiff did not agree to litigate in the venue contained in the forum selection clause and could not walk away from the Plans with impunity, I will not apply the presumption of validity
Although I am convinced that the Bremen/Shute/Atlantic Marine line of cases is inapplicable here because Dumont never
Under Supreme Court and First Circuit precedent, resolving whether to enforce a forum selection clause requires answering up to four questions:
See Atl. Marine, 134 S.Ct. at 583; Claudio-De León v. Sistema Universitario Ana G. Mendez, 775 F.3d 41, 46-48 (1st Cir.2014); Rivera, 575 F.3d at 17-19.
The Plaintiff argues that the forum selection clause is unreasonable under the circumstances. There are four ways that a forum selection clause may be unreasonable:
Claudio-De León, 775 F.3d at 48-49 (alteration in original) (internal quotations omitted). The Plaintiff focuses his opposition to the forum selection clause on its public policy implications. Pl.'s Opp'n to Defs.' Mot. to Dismiss or Transfer Venue 6 (
The determinative question is whether enforcement of the forum selection clause would contravene a strong public policy of ERISA, as evidenced by the text of the statute, its legislative history, or judicial decision. See M/S Bremen, 407 U.S. at 15, 92 S.Ct. 1907 ("A contractual choice-of-forum clause should be held unenforceable if enforcement would contravene a strong public policy of the forum in which suit is brought, whether declared by statute or by judicial decision.");
Congress enacted ERISA in 1974 in response to public dissatisfaction with poorly funded pension plans, onerous vesting requirements, and labor leader misuse of union benefit funds. James A. Wooten, A Legislative and Political History of ERISA Preemption, Part 1, 14 J. Pension Benefits, 31, 32-33 (Autumn 2006); see also
ERISA's Subchapter I — entitled "Protection of Employee Benefit Rights" sets forth the Congressional findings and contains a declaration of policy. 29 U.S.C. § 1001. In enacting ERISA, Congress found that the "continued well-being and security of millions of employees and their dependents are directly affected by [employee benefit plans]." Id. § 1001(a). Congress further declared that a policy of ERISA was "to protect ... the interests of participants in employee benefit plans and their beneficiaries ... by providing for appropriate remedies, sanctions, and ready access to the Federal Courts." Id. § 1001(b) (emphasis added).
ERISA's regulatory provisions contain a section on Civil Enforcement, which explains when participants may bring suit to enforce their rights under the statute. Id. § 1132. Legislative history reveals that the statute's
H.R. Rep. No. 93-533, at 17 (1973), as reprinted in 1974 U.S.C.C.A.N. 4639, 4655.
As for venue, rather than defaulting to the general venue provision, 28 U.S.C. § 1391, ERISA's Civil Enforcement section contains its own, which provides:
29 U.S.C. § 1132(e)(2). One of the three venue options ERISA lists is the federal district "where the breach took place." Id. Courts have interpreted this option as "the place where payment was to be received." Cole v. Cent. States Se. & Sw. Areas Health & Welfare Fund, 225 F.Supp.2d 96, 98 (D.Mass.2002) (internal citations omitted).
The Supreme Court has considered the enforceability of a forum selection clause that contravened a similar venue statute in the Federal Employers' Liability Act (
Boyd's claim arose under FELA, which "provide[d] that `... an action may be brought in a district court of the United States, in the district of the residence of the defendant, or in which the cause of action arose, or in which the defendant shall be doing business at the time of commencing such action.'" Id. at 265, 70 S.Ct. 26 (quoting 45 U.S.C. § 56 (1947)). The Court determined that "[t]he right to select the forum granted in [FELA's venue provision] is a substantial right. It would thwart the express purpose of the [statute] to sanction defeat of that right by the device at bar." Id. at 266, 70 S.Ct. 26. Even though the special venue provision was permissive ("an action may be brought ..."), it created a "sufficient[ly] substantial[ ]" right for Boyd to bring "suit in any eligible forum." Id. at 265, 70 S.Ct. 26. Thus, the contract limiting Boyd's choice of venue was unenforceable. Id.
In Boyd, even where the plaintiff expressly agreed to a forum selection clause, the Court refused to enforce it on public policy grounds because FELA was a protective statute containing a special venue provision. ERISA is also a protective statute with a special venue provision. Further, one of ERISA's explicit policy goals is to provide "ready access to the Federal Courts." 29 U.S.C. § 1001(b). I conclude that it would be contrary to the public policy of ERISA to enforce the Defendants' unilateral selection of venue, when Dumont, the participant, wishes to pursue his claim for benefits in his home district.
The Defendants resist this conclusion by providing a different explanation for the phrase "ready access to the Federal Courts." They maintain that this phrase simply evidences Congress's concern that litigants be able to file suit in federal, rather than state, courts. Prior to ERISA, they posit, benefit claims were often limited to state court because the requirements of diversity jurisdiction were not satisfied — either because the parties were not diverse, or because the plaintiff's benefit claim did not satisfy the amount in controversy requirement. Defs.' Suppl. Mem. 7 (ECF No. 16-1). But Congress chose the phrase "ready access to the Federal
The adjective "ready" in the term "ready access" in ERISA's policy provision is used in the sense of being "immediately available or at hand: that can be had or used at once." Webster's Third New International Dictionary 1890 (2002).
The "ready" federal court for Dumont is in the District of Maine. And while the Southern District of New York is more convenient than, say, the Southern District of California, the obstacles to an individual employee litigating nearly four hundred miles from his home are considerable. The tasks of securing out-of-state counsel or complying with pro hac vice requirements may be simple for some litigants, but I do not assume they are for Dumont, a retiree living in rural Maine. The federal courts in New York are less "immediately available or at hand" to Dumont than the federal courts in Maine.
If employers had the right to unilaterally eliminate the venue option most convenient for participants and beneficiaries, ERISA's goal of breaking down procedural barriers for those seeking to enforce their rights would be seriously undercut. See Smith, 769 F.3d at 935 (Clay, J., dissenting) (observing that § 1132(e)(2)'s broad jurisdictional grant for benefit claims "is indispensable for many of those individuals whose rights ERISA seeks to protect, since claimants in suits for plan benefits — retirees on a limited budget, sick or disabled workers, widows and other dependents — are often the most vulnerable individuals in our society, and are the least likely to have the financial or other wherewithal to litigate in a distant venue."). The fact that ERISA's venue provision allows participants to file suit where they reside, coupled with the explicit textual statement in favor of "ready access" to federal court, means that enforcement of the forum selection clause is contrary to ERISA's public policy.
The Defendants point out that ERISA is a complex piece of legislation that has multiple policy concerns, including ensuring uniformity, predictability, and efficiency in the administration of plans. Defs.' Suppl. Mem. 1-6; see also Conkright v. Frommert, 559 U.S. 506, 130 S.Ct. 1640, 176 L.Ed.2d 469 (2010). Indeed, ERISA does not mandate that employers offer employee benefit plans, but seeks to encourage them to do so "`by assuring a predictable set of liabilities, under uniform standards of primary conduct and a uniform regime of ultimate remedial orders and awards when a violation has occurred.'" Turner, 2015 WL 225495, at *2
The Defendants maintain that enforcement of forum selection clauses is an important way to promote uniformity. They posit that by requiring that all benefit disputes be adjudicated in one district, plans will be interpreted uniformly. Defs.' Mot. to Dismiss or Transfer 9-10 (ECF No. 6). The Defendants' argument is overstated.
While uniformity, predictability, and efficiency are laudable, practical goals, they are achieved in other ways by ERISA
The Defendants also argue that if Congress had wanted to prohibit forum selection clauses, it could have included an express prohibition. Defs.' Mot. to Dismiss or Transfer 12. A number of courts have also noted this point. E.g., Price v. PBG Hourly Pension Plan, No. 12-15028, 2013 WL 1563573, at *2 (E.D.Mich. Apr. 15, 2013); Rodriguez, 716 F.Supp.2d at 861; Testa, 2010 WL 1644883, at *5; Klotz, 519 F.Supp.2d at 436; Williams, 2010 WL
Finally, the Defendants argue that because courts have enforced arbitration agreements covering ERISA claims, ERISA must also permit the enforcement of forum selection clauses. Defs.' Reply 6 (EFC No. 8). Although this argument has some logical appeal, the Defendants have not cited authority from the Supreme Court or the First Circuit holding that arbitration agreements are enforceable under ERISA. Nor have the Defendants cited any decision where an ERISA plaintiff has been held to an arbitration clause in a comparable factual setting to this case — namely, where a participant in a retirement benefit plan is forced to arbitrate based on a clause added unilaterally to a plan without any negotiation or opportunity to decline the term. See Comer v. Micor, Inc., 436 F.3d 1098, 1103-04 (9th Cir.2006)
For the reasons stated above, the Court
SO ORDERED.
In Merrimon v. Unum Life Insurance Co. of America the First Circuit considered an amicus brief the Department of Labor submitted in a separate litigation. 758 F.3d 46, 54 (1st Cir.2014). Because the DOL spoke "with something less than the force of law, its interpretations [were] entitled to deference `only to the extent that those interpretations ha[d] the `power to persuade.'" Id. at 55 (quoting Christensen v. Harris Cnty., 529 U.S. 576, 587, 120 S.Ct. 1655, 146 L.Ed.2d 621 (2000)). So while it is not dispositive in any way, I note that the DOL has filed an amicus brief in a similar case and argued that enforcement of a forum selection clause that would prevent a participant from bringing suit where he lives would be contrary to ERISA's public policy of providing ready access to federal courts. Brief of the Secretary of Labor as Amicus Curiae in Support of Plaintiff-Appellant, Smith v. Aegon Cos. Pension Plan, 2013 WL 4401190 (6th Cir., Aug. 12, 2013) (No. 13-5492), available at
