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Clause v. Sedgwick Claims Management Services Inc.

United States District Court, D. Arizona

January 15, 2016

Lorna Clause, Plaintiff,
Sedgwick Claims Management Services, Inc., et al., Defendants.


Cindy K. Jorgenson United States District Judge

Pending before the Court is the Motion to Dismiss, or in the Alternative, to Transfer Venue (Doc. 15) filed by Defendants Sedgwick Claims Management Services, Inc. (Sedgwick”) and Ascension Health Alliance (“Ascension”) (collectively, “Defendants”). The Court declines to schedule this matter for argument. See LRCiv 7.2(f); 27A Fed.Proc., L.Ed. § 62:367 ("A district court generally is not required to hold a hearing or oral argument before ruling on a motion.").

Factual and Procedural History[1]

Plaintiff Lorna Sue Clause (“Clause”) was employed as a Patient Care Technician for Carondelet. Because of two shoulder surgeries, calcifying tendonitis, supraspinatus tendon tear shoulder impingement and trapezius pain, Clause has been unable to work since August 2012 as a Patient Care Technician.

Clause applied for disability benefits through the Ascension Long-Term Disability Plan (“Plan”). The Plan is administered through Ascension and Sedgwick provides benefits and performs as the Claim Administrator of the Plan. Clause’s claim for long-term disability benefits was accepted, reflecting an onset of disability by August 2012.

Following an initial termination of benefits and a successful appeal, Clause’s benefits were again terminated on November 18, 2014. By letter of January 8, 2015, Defendants again terminated Clause's benefits without mentioning its previous November 18, 2014, termination letter - the rationale for the termination of benefits was modified.

Clause appealed the termination of her benefits. Defendants confirmed the termination of benefits, but again modified its rationale for the termination of benefits.

Clause initiated this action seeking declaratory relief, to recover benefits and enforce her rights under the Plan, and to obtain equitable relief.[2]

Defendants filed their Motion to Dismiss, or in the Alternative, to Transfer Venue (Docs. 15 and 16).[3] A response and a reply have been filed.

Forum Selection Clause

Defendants claim that venue is improper in this Court because the forum selection clause contained in the Plan identifies the United States District Court for the Eastern District of Missouri as the exclusive venue for any claim “relating to or arising under” the Plan. Motion, Ex. A, § 9.20 (Doc. 16-1). Defendants assert that, absent exceptional circumstances, the forum selection clause is mandatory and must be enforced. Further, Defendants assert Clause has not and cannot show exceptional circumstances. Clause asserts, however, that when Congress has granted a plaintiff the a right to choose venue in a statute, as in the venue provision of the Employee Retirement Income Security Act of 1974 (ERISA), codified at 29 U.S.C. § 1132(e)(2), a defendant may not restrict or alter that statute’s special venue provision through contract.[4]

“The presence of a valid forum-selection clause requires district courts to adjust their usual § 1404(a) analysis in three ways.” Atl. Marine Const. Co., Inc. v. U.S. Dist. Court for W. Dist. of Texas, __ U.S. __, 134 S.Ct. 568, 581, 187 L.Ed.2d 487 (2013). “First, the plaintiffs choice of forum merits no weight ..., as the party defying the forum-selection clause, the plaintiff bears the burden of establishing that transfer to the forum for which the parties bargained is unwarranted.” Id. at 582. Second, the district court should not “consider arguments about the parties' private interests.” Id. “When parties agree to a forum-selection clause, they waive the right to challenge the preselected forum as inconvenient or less convenient for themselves or their witnesses, or for their pursuit of the litigation. A court accordingly must deem the private-interest factors to weigh entirely in favor of the preselected forum.” Id. A district court is to only consider arguments regarding public-interest factors. Id. “Third, when a party bound by a forum-selection clause flouts its contractual obligation and files suit in a different forum, a § 1404(a) transfer of venue will not carry with it the original venue's choice-of-law rules - a factor that in some circumstances may affect public-interest considerations.” Id.

The enforceability of forum selection clauses is governed by federal law. Manetti-Farrow, Inc. v. Gucci Am., Inc., 858 F.2d 509, 513 (9th Cir.1988). 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 (1972); Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 325 (9th Cir. 1996) (“Although Bremen is an admiralty case, its standard has been widely applied to forum selection clauses in general.”). To avoid the application of a forum selection clause, the party opposing its enforcement must show that it is unreasonable under the circumstances. M/S Bremen, 407 U.S. at 10; see also Manetti-Farrow, 858 F.2d at 514-15. The enforcement of a forum selection clause is unreasonable where: (1) the inclusion of the clause in the agreement was the product of fraud or overreaching; (2) the party objecting to the clause would effectively be deprived of his day in court if the clause is enforced; and (3) the enforcement of the clause would “contravene a strong public policy of the forum in which suit is brought.” Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1140 (9th Cir. 2004) (citations omitted). Forum selection clauses are also evaluated for fundamental fairness. To determine whether a forum selection clause is fundamentally fair, and thus enforceable, courts consider the absence of a bad-faith motive, the absence of fraud or overreaching, and notice of the forum provision. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595 (1991); Dempsey v. Norwegian Cruise Line, 972 F.2d 998, 999 (9th Cir.1992)).

In this case, Clause asserts that Defendants concealed an oppressive change of venue clause in the Plan documents to cause participants, including Clause, to lack a judicial remedy without obtaining counsel and engaging in litigation away from their home state. However, information regarding the forum selection clause was not only included in the Plan, Motion, Ex. A, § 9.20 (Doc. 16-1), it was also included in the Summary Plan Description (“SPD”). After discussing administrative remedies, including an appeal of a denial of benefits, the SPD discusses other recourses available to someone seeking to challenge a denial of benefits. The SPD informs the reader he/she has right to bring a civil action under Section 502(a) of ERISA, he/she may have other voluntary alternative dispute resolution options, he/she may contact the U.S. Department ...

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