Ninth Circuit Enforces Forum Selection Clause In 401(k) Plan
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On April 1, 2021, the Ninth Circuit became the third circuit
court to conclude that a forum-selection clause in an ERISA 401(k)
plan is enforceable. The Ninth Circuit thus denied a petition
for mandamus seeking to overturn a district court decision
transferring an ERISA action from the Northern District of
California to the District of Minnesota. In re
Becker v. United States Dist. Court, No. 20-72805, __F.3d__
(9th Cir. Apr. 1, 2021).
The plaintiff in the Becker case is a former
Wells Fargo employee and participant in the company’s 401(k)
plan who brought a putative class action against Wells Fargo and
others, alleging that defendants’ inclusion of certain Wells
Fargo-affiliated plan investment alternatives breached their
fiduciary duties of prudence and loyalty and violated ERISA’s
prohibited transaction rules. Despite the plan’s
forum-selection clause, which specifies the District of Minnesota
as the exclusive venue for plan-related disputes, the plaintiff
filed her complaint in the Northern District of California.
Proskauer moved to transfer the case to the District of
Minnesota pursuant to the plan’s forum-selection clause.
The district court granted the motion, reasoning that
forum-selection clauses are presumptively valid and plaintiff did
not meet her “heavy burden” to challenge this one.
After the district court denied plaintiff’s request to stay the
order, she petitioned the Ninth Circuit for a writ of mandamus
compelling the district court to rescind its transfer order.
The Ninth Circuit denied the “extraordinary remedy” of
mandamus, holding that the plan’s forum-selection clause was
enforceable. The Court emphasized the presumptive validity of
forum-selection clauses and reasoned that nothing in ERISA
prohibits plans and participants from agreeing on a forum for
litigating their disputes. The plaintiff had argued that,
because ERISA’s venue provision enumerates three locations
where a suit “may be brought,” any agreement to limit
venue violates the text of ERISA and the statute’s express
purpose of providing plan participants with “ready access to
federal courts.” The Court rejected plaintiff’s
argument and explained that while ERISA’s venue provision
provides that an action “may be brought” in
three specified locations, it did not prevent Wells Fargo and
Becker from agreeing in advance to litigate in just one—the
place where the plan is administered. Furthermore, the
forum-selection clause promoted, rather than hindered, ERISA’s
goal of providing ready access to the federal courts by encouraging
uniformity and guaranteeing a federal forum. The Court also
cited its recent decision enforcing an arbitration provision in a
401(k) plan in Dorman v. Schwab as demonstrating
that plan participants can agree to a preferred forum through
participation in a 401(k) plan. The plan’s
forum-selection clause was therefore enforceable, and the district
court did not clearly err in transferring the case.
Ninth Circuit Enforces Forum Selection Clause In
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