You know that many Plans have forum selection clauses. Are they enforceable? YES

When a Plan participant claims they “did not know of a plan amendment,” how do you prove the Participant received notice of the amendment? A new case explains.

Here’s the case of Malagoli v. AXA Equitable Life Insurance Company, __ F.Supp. 3d __ (S.D.N.Y. March 24, 2016)( “‘[A] valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.’” )

FACTS: Malagoli retired from AXA/Equitable in 2004. In 2011, AXA added a forum selection clause requiring all ERISA actions be filed in New Jersey. In 2015, Malagoli sued AXA Equitable Life Insurance in New York, alleging AXA had breached an agreement to allow him to collect commissions while receiving retirement benefits. AXA move to transfer venue to New Jersey because the ERISA-governed retirement plan required suits be filed in New Jersey.

Malagoli argued:

  1. the forum selection clause contradicted ERISA special venue provisions. ERISA provides that ERISA actions 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”;
  2. the 2011 forum selection clause should not apply to him, since he “vested” when he retired in 2004.

DISTRICT COURT HELD: AXA’s MOTION FOR TRANSFER TO NEW JERSEY GRANTED.

  1. “‘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…’” Op. at 2.
  2. But the vast majority of courts have concluded that forum selection clauses are not per se invalid. Op. at 2.
  3. “‘[A] valid forum-selection clause [should be] given controlling weight in all but the most exceptional cases.’” Op. at 2.
  4. “‘Congress provided that an [ERISA] action may be brought in several venues. Congress did not provide that private parties cannot narrow the options to one of these venues.’” Op. at 3. (Italics in original).
  5. “A benefit under an employee benefit plan only “becomes ‘vested’ if the employer has promised not to amend or terminate [the plan].’” Op. at 4.
  6. AXA made no such promise: AXA expressly “reserve[d] the right in its discretion to make from time to time any amendment or amendments to the Plan.” Op. at 4.
  7. For the 2011 amendment to be enforceable, the ERISA administrator must “make reasonable efforts” to ensure each plan participant receives plan documents.
  8. AXA used “reasonable efforts” to notify Malagoli of the amendment that included a forum selection clause because: (a) they presented the Court with an Excel spreadsheet listing all Participants used to mail notices, and Malagoli’s address was on this list; (b) Malagoli concedes his address in this list was accurate; (c) AXA merged the list of 29,125 Participants with the letter announcing the amendment, and assembled them in printed envelopes; (d) a bulk mailing certificate confirms that 29,125 letters were mailed first class on December 27, 2011.