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. Such clauses can be harmful to Plaintiffs because they have the effect of limiting access to courts, and conflict with ERISA’s venue provision, which provides 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”. 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.
While many district courts have held such clauses enforceable, Smith is the first published appellate court decision on this issue. Smith argued that the clause was unenforceable based on the issues explained above, but the Sixth Circuit rejected all of them. 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.”