The United States Supreme Court will not consider Smith vs. AEGON Companies Pension Plan, a case that called into question the viability of a venue selection provision in a retirement plan document.
In that case, a retiree in a defined benefit pension plan in a company that ultimately merged with AEGON had a substantial amount of benefits clawed back after AEGON informed him that he had been receiving more than $1,000 a month in extra retirement benefits for more than 10 years.
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That notice was given in 2011, but in 2007, long after the participant had retired, AEGON amended plan documents to include a venue provision clause, which said participants could only bring a claim against plan sponsors in Federal District Court in Cedar Rapids, Iowa.
The participant sued AEGON in U.S. District Court for the Western District of Kentucky, but the claim was dismissed based on the venue selection provision.
The 6th Circuit Court of Appeals upheld that decision, in spite of an amicus brief filed by Department of Labor Secretary Thomas Perez, who argued that venue selection clauses are incompatible with Employee Retirement Income Security Act.
In the appellate court's split decision ruling in favor of AEGON, the court held that Perez's argument was not made "with the force of law," according to court documents.
ERISA's foundation relies on the face of written documents, and plan sponsors are "generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans," the majority wrote.
The 6th Circuit's dissenting opinion argued that in enacting ERISA, Congress intended to eliminate jurisdictional obstacles to participants' rights to bring claims against fiduciaries.
The question of venue selection provisions was the first of its kind to be heard by the appellate courts.
In a paper published in May 2015, Nancy Ross and Samuel Myler, ERISA attorneys with Mayer Brown, write that venue selection clauses can be a useful form of protection for plan sponsors.
"By including a venue selection clause in their plans, plan sponsors can ensure that challenges over plan administration and benefits decisions proceed in a convenient forum," they write.
"A majority of courts have upheld ERISA plan venue selection clauses," they added.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
