Rodriguez v. Plan .

• Decision Date: 09 June 2010
• Docket Number: No. C10-01067 TEH.,C10-01067 TEH.
• Citation: 716 F.Supp.2d 855
• Parties: Anastacio RODRIGUEZ, Plaintiff, v. PEPSICO LONG TERM DISABILITY PLAN, et al., Defendants.
• Court: U.S. District Court — Northern District of California

716 F.Supp.2d 855

Anastacio RODRIGUEZ, Plaintiff,

v.PEPSICO LONG TERM DISABILITY PLAN, et al., Defendants.

No. C10-01067 TEH.

United States District Court,N.D. California.

June 9, 2010.

Michelle Lee Roberts, Cassie Springer-Sullivan, Springer-Sullivan & Roberts LLP, Oakland, CA, for Plaintiff.

Jill Sazama, Boornazian Jensen & Garthe, a Professional Corporation, Oakland, CA, Richard J. Pautler, Thompson Coburn LLP, St. Louis, MO, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO TRANSFER VENUE

THELTON E. HENDERSON, District Judge.

This matter came before the Court on June 7, 2010, on the motion to dismiss or, in the alternative, to transfer venue filed by Defendants PepsiCo Long Term Disability Plan (“LTD Plan”) and PepsiCo Employee Health Care Program (“Health Care Program”) (collectively, “Defendants”). Defendants argue that Plaintiff Anastacio Rodriguez (“Rodriguez” or “Plaintiff”) filed his claim to recover long-term disability benefits in an improper venue, contrary to a forum selection clause requiring that such lawsuits be brought in the United States District Court for the Southern District of New York. Rodriguez contends that the forum selection clause should not be enforced because he did not receive notice of the provision, the clause runs contrary to federal law, and moving the venue to New York would deny him his day in court due to his physical and financial constraints.

For the reasons set forth below, Defendants' motion is GRANTED. This action will be transferred to the Southern District of New York.

BACKGROUND

Rodriguez began working for Frito-Lay, Inc.-a division of PepsiCo, Inc.-in June 2000 as a route sales representative, a position that required him to drive a company truck to locations where he would stock and merchandise Frito-Lay products.

A degenerative lumbar disc disease forced him to cease working in December 2006.

As a result of his condition, Rodriguez was granted 24 months of long-term disability benefits through the LTD Plan, which is an “employee welfare benefit plan” within the meaning of section 3(1) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1002(1). His claim for benefits was terminated as of December 31, 2008 based on the determination by the LTD Plan's claims administrator, Sedgwick CMS (“Sedgwick”), that he did not meet the definition of disability. He appealed that determination on November 24, 2009, but Sedgwick affirmed its original decision by letter dated January 5, 2010. Rodriguez filed this action on March 12, 2010, bringing one claim under ERISA to recover benefits due to him under the LTD Plan and the Health Care Program. See 29 U.S.C. § 1132(a)(1)(B).

Defendants moved to dismiss or to transfer venue on April 12, 2010, based on a forum selection clause. As required by ERISA, 29 U.S.C. § 1102(a)(1), the terms of the LTD Plan are set out in an official plan document, which included the following provision as of January 2007:

6.12 Restriction of Venue

Effective from and after January 1, 2007, any claim or action filed in court or any other tribunal in connection with the Program by or on behalf of a Petitioner (as defined in Section 6.11) shall only be brought or filed in the United States District Court for the Southern District of New York. ¹ , ²

Sloat Aff., Ex. A at 74. A description of the forum selection provision also appeared in a “2007 Summary Plan Description,” which explained the terms of the LTD Plan in plain non-legal language and was available on a benefits website for PepsiCo employees. This motion requires the Court to determine whether the forum selection clause should be enforced.

LEGAL STANDARD

A motion to dismiss based on a forum selection clause is governed by Federal Rule of Civil Procedure 12(b)(3), which allows an action to be dismissed for “improper venue.” See Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir.1996). On a Rule 12(b)(3) motion, “the pleadings need not be accepted as true,” and “the court may consider facts outside of the pleadings.” Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1137 (9th Cir.2004). The Court “must draw all reasonable inferences in favor of the non-moving party and resolve all factual conflicts in favor of the non-moving party.” Id. at 1138. A district court shall, pursuant to 28 U.S.C. § 1406(a), “dismiss, or if it be in the interest of justice, transfer” a case “laying venue in the wrong division or district.”

A forum selection clause is presumptively valid and “should control absent a strong showing that it should be set aside.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972); see also Argueta, 87 F.3d at 325 (“Although Bremen is an admiralty case, its standard has been widely applied to forum selection clauses in general.”). The party opposing the enforcement of a forum selection clause has the burden of showing that it is “ ‘unreasonable’ under the circumstances.” M/S Bremen, 407 U.S. at 10, 92 S.Ct. 1907; see also Manetti-Farrow, Inc. v. Gucci America, Inc., 858 F.2d 509, 514-15 (9th Cir.1988). There are three circumstances under which enforcement of a forum selection clause would be unreasonable: “(1) if the inclusion of the clause in the agreement was the product of fraud or overreaching; (2) if the party wishing to repudiate the clause would effectively be deprived of his day in court were the clause enforced; and (3) if enforcement would contravene a strong public policy of the forum in which suit is brought.” Murphy, 362 F.3d at 1140 (internal citations and quotation marks omitted). Forum selection clauses are also scrutinized for “fundamental fairness,” and may be deemed unfair if inclusion of the clause was motivated by bad faith, if “accession to the forum clause” was obtained “by fraud or overreaching,” or if the party had no notice of the forum provision. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595, 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991). “The party challenging the clause bears a ‘heavy burden of proof’ ” Murphy, 362 F.3d at 1140 (quoting M/S Bremen, 407 U.S. at 17, 92 S.Ct. 1907).

DISCUSSION

The Ninth Circuit has not spoken to the enforceability of forum selection clauses in ERISA plans. The vast majority of district courts to tackle the question have enforced such clauses; ³ a couple have refused. ⁴ Defendants, predictably, urge the Court to flow with the tide of the majority; Rodriguez argues that only the outliers are applicable here. Although Rodriguez acknowledges the presumption in favor of enforcing forum selection clauses, he advances three rationales for overcoming that presumption. First, he contends that he received no notice that the forum selection provision existed until this motion. Second, he argues that the clause contravenes ERISA's venue provision and defies its purpose of guaranteeing access to the federal courts. Finally, Rodriguez alleges that enforcement of the forum selection clause against him would be fundamentally unfair because his disability and limited finances render him unable to travel to New York for the litigation. The Court addresses each argument in turn.

1. Notice of the Forum Selection Clause

Rodriguez claims that the first notice he received of the forum selection clause's existence was Defendants' filing of this motion. Since notice of a forum selection clause is a factor in assessing its fundamental fairness, Carnival Cruise Lines, 499 U.S. at 595, 111 S.Ct. 1522, Rodriguez contends that the lack of notice renders this clause unfair and unenforceable. Defendants respond that this argument is meritless because Rodriguez did have notice of the venue requirement.

The forum selection clause at issue appears in the LTD Plan that became effective on January 1, 2007. Rodriguez and his counsel submitted three requests for documents to Sedgwick, but none of the materials that Sedgwick disclosed included any reference to the forum selection clause. On January 13, 2009, before retaining counsel, Rodriguez faxed Sedgwick a request for the contents of his claim file; the response included no plan documents. His counsel, by letter dated May 19, 2009, requested from Sedgwick “[a]ll Plan documents for the Long-Term Disability Plan, including but not limited to all governing Plan documents and any amendments thereto, all Summary Plan Descriptions and statements of material modification thereto, and any documents distributed to participants which detail or comprise the terms of the Plan.” Springer-Sullivan Decl., Ex. 3 at ROD468. After Sedgwick denied Rodriguez's appeal, his counsel reiterated this request on January 12, 2010. Sedgwick responded to each of counsel's communications, but furnished only the PepsiCo LTD Plan effective January 1, 2000, and the PepsiCo 2006 Benefit Book, neither of which included the forum selection clause. As a result, Rodriguez claims he only became aware of the forum selection clause when the instant motion was filed.

However, Defendants offer two examples of notice that was given or available to Rodriguez before he brought this action. Sedgwick's January 10, 2010 letter denying Plaintiff's appeal explained that, “[u]nder the terms of the Plan, any claim or action filed in court or any other tribunal in connection with the Plan by you or by another individual, person, entity or representative on your behalf shall only be brought or filed in the United States District Court for the Southern District of New York.” Supp. Laser Aff., Ex. A at 4. In addition, notice of the forum selection clause was included in the 2007 Summary Plan Description (“SPD”), which was posted on a PepsiCo employee website and available to LTD Plan participants. The SPD provided, under the heading “Limitations on Actions,” that “[a]ny claim or action relating to disability benefits (including eligibility claims or actions) under the PepsiCo Disability Plan can only be brought in the United States District Court for the Southern...