Arbitration

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Smith v. Board of Directors of Triad Mfg., Inc., No. 20-2708, __ F.4th __, 2021 WL 4129456 (7th Cir. Sept. 10, 2021) (Before Circuit Judges Kanne, Brennan, and Scudder).

Arbitration is a hot issue in ERISA. Can claims for relief under ERISA be forced into arbitration, and if so, when? In this case the Seventh Circuit has good news and bad news for litigants on both sides.

The case is a putative class action brought by James Smith, an employee of Triad Manufacturing, Inc., alleging that in 2015 Triad and related defendants mismanaged Triad’s ERISA-governed employee stock ownership plan. Specifically, Smith alleged that three members of the board of directors created the plan and sold all of Triad’s stock to the plan, which then plummeted in value. The directors, however, profited from the transaction by providing loans to the plan that required repayment, regardless of Triad’s financial situation. In 2018, defendants amended the plan to include an arbitration provision with a class action waiver that prohibited claimants from seeking a remedy “which has the purpose or effect of providing additional benefits or monetary or other relief to any Eligible Employee, Participant or Beneficiary other than the Claimant.”
Continue Reading Arbitration Provision That Prevents Plan-Wide Relief Unenforceable

There is an embarrassment of riches this week for plan participants, as three cases share the notable decision spotlight.  Two are significant plaintiff wins with respect to mental health coverage under ERISA healthcare plans. The third is an important arbitration decision from the Second Circuit involving a pension plan, also a big win for plan participants.
Continue Reading Three Wins for Participants

This week’s notable decision is Dorman v. Charles Schwab Corp., No. 18-15281, __ F.3d __, 2019 WL 3926990 (9th Cir. Aug. 20, 2019), where the court addressed the question of whether ERISA claims can be subject to mandatory arbitration.  In short, the Court determined that an arbitration agreement in the Schwab Retirement Savings and Investment Plan (“the Plan”) is enforceable.  To get there, the court revisited and overruled prior Ninth Circuit authority.  

By way of background, in Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984), the Ninth Circuit held that exhaustion of arbitration procedures for contractual grievances is not required prior to bringing a statutory claim under ERISA Section 510.  The court reversed and remanded the district court’s decision that the arbitration award on a contractual grievance that was adverse to former employees of the company barred their ERISA claims.
Continue Reading Ninth Circuit Holds that ERISA Claims Can be Subject to Mandatory Individual Arbitration