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State or Federal Court


Randy Watson
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Could a plan document require that a claim for benefits (after exhaustion of remedies) be filed in state court rather than federal court?

Or asked this way: May a plan document deprive a federal court of jurisdiction where there is concurrent state court jurisdiction? I doubt it.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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  • 9 months later...

This question is actually a little more interesting than it first seems. It is not a matter of depriving a court of jurisdiction. It is a matter of venue. Courts often uphold choice of venue clauses. Usually venue clauses refer to the state in which the action is brought (whether it be state court or federal court). I have not researched whether a court choice of venue clause works where state and federal courts have concurrent jurisdiction. Take, for example, arbitration. A plan can include a mandatory arbirtration clause - absent the what-I-think-are-invalid DOL claim regulations that prohibit them, but even those don't apply to all plans. If the plan can compel arbitration, why can't it compel a state court venue? I realize the FAA allows arbitration, but assume a court choice of venue clause is otherwise valid? I guess arguably under the claims regulations that could be invalid. After all, Congress passed ERISA to give participant's access to federal court.

I don't know the answer, but these are my quick thoughts.

What state are you in any way? Most plans want to be in federal court. Your plan should too. For example, do you know for sure that the federal rules of discovery under ERISA will apply in your state court? Believe me, the plan wants those federal rules of procedure. But there is no guaranty that reverse-Erie would apply.

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  • 7 months later...
Could a plan document require that a claim for benefits (after exhaustion of remedies) be filed in state court rather than federal court?

I dont see how this is possible because ERISA 502(e)(1) permits concurrent jurisdiction by federal and state courts over benefit claims and the employee can chose a state court to hear the case, subject to removal to federal court by employer. Plan cannot eliminate extent of statutory jurisdiction to hear a case under ERISA any more than it can negate application of fiduciary provisions.

Statutory jurisdiction allowing claims to be heard in state court is different from mandating arbitration under an ERISA plan because there is a federal arbitration statute which like all other federal laws is not preempted by ERISA and the Surpreme court has held that the federal arbitration act applies to all employers engaged in interstate commerce. (I believe it was the Circuit city case). ERISA also applies to employers engage in interstate commerce and the plan is an entity under ERISA.

mjb

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