N.D. Cal. Enforces North Carolina Choice of Law Provision, Holds California Insurance Code § 10110.6 Does Not Void Discretionary Review

In Farris v. Life Insurance Company of North America, No. 25-cv-04164-RS, 2026 WL 1270071 (N.D. Cal. May 8, 2026), Chief Judge Richard Seeborg granted Defendant Life Insurance Company of North America’s (“LINA”) motion for partial summary judgment, holding that the parties’ North Carolina choice of law provision is enforceable and that California Insurance Code § 10110.6 does not void the policy’s discretionary review provisions. The applicable standard of review is therefore abuse of discretion.

What were the facts and procedural posture?

Plaintiff worked for Lowe’s Companies, Inc. (“Lowe’s”) in California until she became disabled, and she has continued to reside in California. Lowe’s is incorporated in North Carolina. LINA denied Plaintiff’s claim for long-term disability benefits under Lowe’s Long-Term Disability Plan, and Plaintiff filed suit in May 2025. After mediation failed in January 2026, LINA moved for a court order establishing North Carolina as the governing law and abuse of discretion as the standard of review.

LINA issued the at-issue group long-term disability policy to Lowe’s in North Carolina effective September 1, 2013. The cover page of the policy stated that the policy “is issued in North Carolina and shall be governed by its laws” (the “North Carolina Provision”). The Appointment of Claim Fiduciary document and the Certificate of Coverage contained language granting discretionary authority to LINA. The first page of the Certificate also included a notice directed at residents of Arizona, Florida, and Maryland, warning that the policy was governed by North Carolina law and that residents of states other than North Carolina might not receive all of the benefits and protections provided by the laws of their states. There was no equivalent notice directed at California residents.

Is the North Carolina Provision a valid choice of law provision?

Plaintiff argued that the North Carolina Provision was not a bargained-for contractual choice of law clause but rather a declaration that the policy was issued under North Carolina’s regulatory regime. Plaintiff contended that a reasonable layperson would not read the single sentence on the cover page as voiding all other state insurance regulation, and that the Arizona-Florida-Maryland Notice would be unnecessary if the North Carolina Provision already provided notice that other states’ laws would not apply.

The court rejected these arguments. Judge Seeborg held that the statement on the cover page of the policy that the policy “shall be governed by [North Carolina’s] laws” unambiguously reflected a choice of North Carolina law. The court found that the Arizona-Florida-Maryland Notice provided additional warning to residents of those states but did not neutralize the North Carolina Provision.

Is the choice of law provision enforceable such that California Insurance Code § 10110.6 does not apply?

The court applied federal choice of law rules, citing In re Lindsay, 59 F.3d 942, 948 (9th Cir. 1995), and Pilot Life Insurance Co. v. Dedeaux, 481 U.S. 41 (1987). Under Wang Laboratories, Inc. v. Kagan, 990 F.2d 1126, 1128-29 (9th Cir. 1993), a choice of law made by an ERISA contract “should be followed, if not unreasonable or fundamentally unfair” when viewed from the time the contract was made.

The court followed a line of Northern District of California decisions, including Moorhead v. Unum Life Insurance Co. of America, No. 25-CV-01826-HSG, 2026 WL 874398 (N.D. Cal. Mar. 30, 2026), Whitesell v. Liberty Life Assurance Co. of Boston, 650 F. Supp. 3d 832 (N.D. Cal. 2022), and Ehrlich v. Hartford Life & Accident Insurance Co., No. 20-cv-02284-JST, 2021 WL 4472845 (N.D. Cal. May 7, 2021), each of which had rejected the position that a non-California choice of law provision is unreasonable or fundamentally unfair simply because it does not provide for the protection intended by Section 10110.6. The court noted that Rapolla v. Waste Management Employee Benefits Plan, No. 13-CV-02860-JST, 2014 WL 2918863 (N.D. Cal. June 25, 2014), had gone the other way on this issue but observed that the Rapolla court itself later repudiated that decision in Ehrlich for failing to conduct a choice of law analysis and engage with the Ninth Circuit’s instruction in Wang.

The court concluded that North Carolina choice of law was fair and reasonable because Lowe’s is headquartered in North Carolina with hundreds of thousands of employees in states across the country, making uniform application of North Carolina law to each dispute arising under the long-term disability policy reasonable.

What did the court conclude?

The court held that the North Carolina Provision is enforceable as a choice of law provision and that the discretionary review provisions are not voided by Section 10110.6. The choice of law to be applied is North Carolina, and the standard of review is abuse of discretion. The court granted Defendant’s motion.