“And if the Wind is Right You Can Sail Away and Find Tranquility…” – Unless You Are Forced to Litigate in an Unwanted Forum!

This is the first post by PLUS Blog contributor José M. Jara, a partner at FisherBroyles, LLP. Mr. Jara has over 20 years of ERISA and employee benefits law experience. In the field of employee benefits law, he provides innovative solutions to his clients by incorporating into his guidance a business and practical perspective.  In addition, he understands the triad relationship between the law firm, the client, and the insurance carrier and in litigation matters manages the relationships to produce optimal results for the trio involved.  He has also acted as monitoring counsel and coverage counsel.  


sunset_sailingOver 20 years ago the Supreme Court found that, even though there was unequal bargaining power between the parties, a forum selection clause on cruise tickets was reasonable and valid, requiring a couple from Washington State to litigate in Florida personal injuries sustained on a cruise from L.A. to Mexico. Carnival Cruise Lines, Inc., v. Shute, 499 U.S. 585, 111 S.Ct. 1522, 113 L.Ed. 2d 622 (1991). Recently, a court has held that a forum selection clause added to the company’s retirement plans was invalid because, unlike the plaintiffs in Carnival Cruise Lines — who could have chosen another cruise line for their travels — in this case the plaintiff could not simply have chosen to work for another employer. Dumont v. PepsiCo, Inc., 2016 U.S. Dist. LEXIS 84853 (D. ME., June 29, 2016).

In reaching its decision, the court in Dumont focused on the fact that the plaintiff had worked 31 years for the company, was already vested in his retirement benefits, did not negotiate the terms of the plans, and did not sign off on any clauses in the plans. Thus, when the plan sponsor amended the plans in 2011 to include a forum selection clause, the plaintiff at that time “could [not] have walked away with impunity if [he] did not want to be bound by the forum selection clause.” Dumont, at *13.

In providing broad access to the federal courts, ERISA’s venue provision provides that an action “may be brought in the district (1) where the plan is administered, (2) where the breach took place, or (3) where a defendant resides or may be found. ERISA 502(e)(2). The Court in Dumont noted that the clause “where the breach took place” has been interpreted to mean “where benefit payments are received” and, thus, allowed the plaintiff to keep his claim in Maine.

As with most areas of ERISA, the case law is not settled. In another recent case, a court ruled that ERISA forum selection clauses are not per se invalid and transferred the case to the court designated in the forum selection clause.  Malagoli v. AXA Equitable Life Ins. Co., 2016 U.S. Dist. LEXIS 39112 (S.D.N.Y. Mar. 24, 2016). Yet, in another recent case, a court “decline[d] to endorse the legal fiction that all the terms of ERISA plans are freely negotiated ….” Harris v. BP Corp. N. Am., 2016 U.S. Dist. LEXIS 89593, at *23 (N.D. Ill., July 8, 2016). In doing so, the Court found the forum selection clause unenforceable because, while the language of ERISA 502(e)(2) is ambiguous, ERISA’s overriding purpose of guaranteeing participants ready access to federal courts and legislative history is not. Id. at *25-26.

More often than not, the choice of forum matters. In ERISA cases, it appears that while judges are not against forum selection clauses in ERISA plan documents per se, plan sponsors should nonetheless review their plan documents to assess whether the forum selection clause bears a reasonable relationship to the plan and its participants.

– José M. Jara

Real Estate E&O Policy Exclusions Arising from Bank-Owned Properties

From the 2015 PLUS Conference session “2015 Real Estate E&O Trends,” Mike Smith (Axis Insurance Services), Eric Myers, RPLU (Victor O. Schinnerer & Co.) and Gary Shendell (Shendell & Pollock) discuss the real estate E&O policy exclusions that came about after the flood of bank owned properties in the years after 2008.

The 2016 PLUS Professional Risk Symposium returns to Chicago this April with great sessions relevant to the E&O market, including “Where is the Flag? The Tug of War on E&O Policies.” Don’t miss it – Register today and get in the door at the lowest available rate.

PLUS members can view this entire Conference session in the PLUS Multimedia Library.

January is PLUS Webinar Month

At PLUS HQ we are very excited about two fantastic webinars on tap for this month. Both are free, and promise to bring you the insights and perspectives you expect from PLUS’ educational content.

The first one is scheduled for Tuesday, January 12 at 11 a.m. ET…

What’s Next on the Alternative Asset Manager Risk Horizon
Moderated by Elan Kandel, with panelists Dennis Krause, Neil Lipuma, Machua Millett and Mark Reilly
With equity markets experiencing significant volatility triggered by investor concerns about China’s economy and other uncertainties, investors are increasingly looking to “alternatives” to traditional stocks and bonds to round out their portfolios. Such alternatives include family offices, hedge funds and private equity funds. This webinar will explore the emerging risks and exposures for asset managers in these alternative investment spaces. Register Now

Then, on, Thursday, January 21 at 11 a.m. ET…

Kevin LaCroix Presents the Top D&O Stories of 2015
Based on his popular blog post, The Top Ten D&O Stories of 2015, Kevin LaCroix, RPLU, will discuss the big stories and trends in D&O insurance over the past year. As one of the recognized thought leaders in the industry, Kevin’s insights and perspectives will provide attendees with the knowledge they need to succeed in the highly competitive D&O Insurance marketplace. Don’t miss it!

Again, both of these events are completely free. Don’t miss them – register for one (or both) today!