Dumont v. Pepsico, Inc.

• Decision Date: 29 June 2016
• Docket Number: Docket No. 1:15-cv-369-NT
• Parties: Frederick J. DUMONT, Plaintiff, v. PEPSICO, INCORPORATED and PepsiCo Administration Committee, Defendants.
• Court: U.S. District Court — District of Maine

192 F.Supp.3d 209

Frederick J. DUMONT, Plaintiff,

v.PEPSICO, INCORPORATED and PepsiCo Administration Committee, Defendants.

Docket No. 1:15-cv-369-NT

United States District Court, D. Maine.

Signed June 29, 2016

Alton C. Stevens, Marden, Dubord, Bernier & Stevens, Waterville, ME, for Plaintiff.

Richard J. Pautler, Thompson Coburn LLP, St. Louis, MO, Randall B. Weill, Preti, Flaherty, Beliveau, & Pachios, LLP, Portland, ME, for Defendants.

ORDER ON DEFENDANTS' MOTION TO DISMISS OR TRANSFER VENUE

Nancy Torresen, United States Chief District Judge

Before the Court is the Defendants' motion to dismiss the Plaintiff's Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6), or alternatively, to transfer the action to the United States District Court for the Southern District of New York pursuant to 28 U.S.C. § 1404(a) (ECF No. 6). For the reasons stated below, the motion is DENIED .

BACKGROUND¹

The Plaintiff in this action is Frederick Dumont, a retiree living in Fairfield, Maine. Compl. ¶¶ 1, 15 (ECF No. 1). The Defendants are PepsiCo, Inc. ("PepsiCo "), a North Carolina corporation authorized to do business in Maine, and the PepsiCo Administrative Committee, which administers the PepsiCo Hourly Employees Retirement Plan ("Hourly Plan ") and the PepsiCo Salaried Employees Retirement Plan ("Salaried Plan ") (together, the "Plans "). Compl. ¶¶ 2-3. This action arises from a dispute regarding the amount of benefits Dumont is owed under the Plans.

Dumont began working for Seltzer & Rydholm, Inc. in 1979. Compl. ¶ 11. Pepsi Bottling Group, Inc. purchased Seltzer & Rydholm, Inc. in 2004, and, in 2010, PepsiCo acquired Pepsi Bottling Group, Inc. Compl. ¶¶ 12, 14. For the first twenty-seven years and seven months of his employment Dumont worked as a salaried employee, and for approximately the final six years of his employment he worked as an hourly employee. Compl. ¶¶ 11-15. Dumont participated in both the Hourly and Salaried Plans. Compl. ¶ 7. Although the Plans are not in the record, documents attached to the Complaint repeatedly refer to the vested status of his benefits. E.g. , Pension Benefit Modeling Statement 4 (ECF No. 1-5) ("Vesting Percentage: 100%"); Apr. 4, 2013 Employer Benefits Statement 1 (ECF No. 1-8) ("Full Vesting Date 12/01/1984").

In 2010, PepsiCo made changes to the Plans. One of these changes was the addition of a forum selection clause. Oct. 1, 2015 Ryan Aff. ¶¶ 3, 5 ("Ryan Aff. ") (ECF No. 6-1). The new forum selection clause in each of the Plans reads as follows:

Any claim or action filed in court or any other tribunal in connection with the Plan by or on behalf of a Petitioner² ... shall only be brought or filed in the United State District Court for the Southern District of New York, effective for claims and actions filed on or after January 1, 2011 ....

Ryan Aff ¶ 3. PepsiCo distributed notice of this change to participants in December of 2010. Ryan Aff. ¶ 5. Plaintiff retired from PepsiCo after May 31, 2013. Compl. ¶ 27. He now disputes the calculation of his retirement benefits under the Plans.

LEGAL STANDARD

In Atlantic Marine Construction Co. v. United States District Court for the Western District of Texas , the Supreme Court clarified the appropriate procedural vehicle and standard for enforcement of a "valid" forum selection clause. ––– U.S. ––––, 134 S.Ct. 568, 581–83, 187 L.Ed.2d 487 (2013). Where the plaintiff has brought a case in a venue that is considered proper under the general venue statute (28 U.S.C. § 1391 ) or a more specific statutory venue provision such as that found in the Employee Retirement Income Security Act ("ERISA ") (29 U.S.C. § 1132(e)(2) ), " ‘federal law, specifically 28 U.S.C. § 1404(a), governs the District Court's decision whether to give effect to the parties' forum-selection clause.’ " Atl. Marine , 134 S.Ct. at 579 (quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 32, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) ).

Under 28 U.S.C. § 1404(a), "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." A motion to transfer venue under § 1404(a)"calls on the district court to weigh in the balance a number of case-specific factors."³ Stewart Org. , 487 U.S. at 29, 108 S.Ct. 2239. "When the parties have agreed to a valid forum-selection clause, a district court should ordinarily transfer the case to the forum specified in that clause." Atl. Marine , 134 S.Ct. at 581. "[W]hen a plaintiff agrees by contract to bring suit only in a specified forum—presumably in exchange for other binding promises by the defendant—the plaintiff has effectively exercised its ‘venue privilege’ before a dispute arises." Id. at 582. "When parties agree to a forum selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves ...." Id.

DISCUSSION

The issue raised by the Defendants' motion is whether the Plans' forum selection clauses are enforceable against Dumont. Neither the United States Supreme Court nor the First Circuit has yet addressed whether forum selection clauses that channel participants challenging their ERISA benefit determinations to a single, plan-chosen forum are permissible.⁴ One appellate court (through a divided panel) has held that forum selection clauses are enforceable in ERISA-governed plans. Smith v. Aegon Cos. Pension Plan , 769 F.3d 922, 932–33 (6th Cir.2014). The majority of district courts to address the issue have likewise held that forum selection clauses are permissible in the ERISA plan context. See, e.g. , Malagoli v. AXA Equitable Life Ins. Co. , No. 14–cv–7180, 2016 WL 1181708, at *2 (S.D.N.Y. Mar. 24, 2016) ; Turner v. Sedgwick Claims Mgmt. Servs., Inc. , No. 7:14–cv–1244, 2015 WL 225495, at *21 (N.D.Ala. Jan. 16, 2015) ; Vega v. Carondelet Health Network , No. cv–12–617, 2013 WL 784365, at *3 (D.Ariz. Feb. 5, 2013) ; Conte v. Ascension Health , No. 11–12074, 2011 WL 4506623, at *4 (E.D.Mich. Sept. 28, 2011) ; Rodriguez v. PepsiCo Long Term Disability Plan , 716 F.Supp.2d 855, 862 (N.D.Cal.2010) ; Sneed v. Wellmark Blue Cross & Blue Shield of Iowa , No. 1:07–cv–292, 2008 WL 1929985, at *3 (E.D.Tenn. Apr. 30, 2008) ; Klotz v. Xerox Corp. , 519 F.Supp.2d 430, 437–38 (S.D.N.Y.2007) ; Schoemann ex rel Schoemann v. Excellus Health Plan, Inc. , 447 F.Supp.2d 1000, 1007 (D.Minn.2006) ; Bernikow v. Xerox Corp. Long – Term Disability Income Plan , No. cv–06–2612, 2006 WL 2536590, at *2 (C.D.Cal. Aug. 29, 2006). Two district courts have held that forum selection clauses are not enforceable against ERISA plan participants. See Coleman v. Supervalu, Inc. Short Term Disability Program , 920 F.Supp.2d 901, 909 (N.D.Ill.2013) ; Nicolas v. MCI Health & Welfare Plan No. 501 , 453 F.Supp.2d 972, 974 (E.D.Tex.2006).

I. The Evolution of Forum Selection Clause Jurisprudence

Courts have long recognized that plaintiffs hold a " ‘venue privilege.’ " E.g. , Atl. Marine, 134 S.Ct. at 581 (quoting Van Dusen v. Barrack , 376 U.S. 612, 635, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964) ). This is the unremarkable proposition that a plaintiff gets to choose—consistent with jurisdictional and venue limitations—where to bring suit.

But when a plaintiff agrees by contract to bring suit only in a specified forum—presumably in exchange for other binding promises by the defendant—the plaintiff has effectively exercised its "venue privilege" before a dispute arises. Only that initial choice deserves deference, and the plaintiff must bear the burden of showing why the court should not transfer the case to the forum to which the parties agreed.

Id. at 582.

Historically, courts have disfavored forum selection clauses. However, M/S Bremen v. Zapata Off – Shore Co. marked a sea change in how courts treat them. 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972). In Bremen , the Supreme Court held that a freely-negotiated forum selection clause between two sophisticated international corporations was enforceable. The Court wrote:

There is strong evidence that the forum clause was a vital part of the agreement, and it would be unrealistic to think that the parties did not conduct their negotiations, including fixing the monetary terms, with the consequences of the forum clause figuring prominently in their calculations.

Id. at 14, 92 S.Ct. 1907 (footnote omitted). The presumption of enforceability of forum selection clauses "freely entered into between two competent parties" took hold. Id. (citation and internal quotations omitted). Under Bremen , unless the resisting party could show that the forum selection clause was invalid for such reasons as fraud or overreaching, or that enforcement would be unreasonable, unjust or would contravene a strong public policy, the clause would be enforced. Id. at 15, 92 S.Ct. 1907.

In Carnival Cruise Lines, Inc. v. Shute , the Supreme Court "refine[d] the analysis of The Bremen to account for the realities of form passage contracts." 499 U.S. 585, 593, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991). At issue in Shute was a forum selection clause printed on the back of a cruise ship ticket. The Court held that the forum selection clause was enforceable, even though the customer had unequal bargaining power and did not negotiate the terms of the contract. Scrutinizing the clause for "fundamental fairness," the Court noted that the customers "conceded that they were given notice of the forum provision and, therefore, presumably retained the option of rejecting the contract with impunity." Id. at 595, 111 S.Ct. 1522.

Following Shute and Bremen , the First Circuit upheld the enforcement of a forum selection clause "embedded" in a series of consent forms signed by a patient before a medical procedure. Rivera v. Centro Médico de Turabo, Inc. , 575 F.3d 10, 12–13 (1st Cir.2009). While the forum selection clause was a non-negotiated...