Issues & Concerns raised regarding The Enforcement Of Arbitration Agreements Under ERISA

For the past several decades, circuit courts have held onto the opinion that claims that directly come under the Employee Retirement Income Security Act of 1974 (ERISA) are usually arbitrable. But recently, a number of cases have challenged this general scheme and addressed the limits of enforceability of arbitration agreements that come under ERISA.

One such group of cases considers this in connection with claims that come under Section 502(a)(2) of ERISA. This section talks about the alleged breaches of fiduciary duty asserted by participants or beneficiaries as a part of the ERISA plan. The Second, Fifth, and Tenth Circuits held strongly onto the fact that the arbitration agreements are enforceable in relation to claims under ERISA Section 502(a)(2). On the other hand, the Sixth and Ninth Circuits have already imposed restrictions on the arbitrability of such disputes.

Concerning claims under Section 502(a)(2), regarding whether the arbitration agreements are enforceable, the Second, Fifth, and Tenth Circuits pointed out that there’s no basis to depart from established precedent holding, which means the arbitration agreements are generally enforceable under ERISA.

To oppose this, the Ninth and Sixth Circuits are based on the concept that a participant cannot agree to arbitrate the Section 502(a)(2) claims of ERISA because of its derivative nature. The Ninth and Sixth Circuit claims that Section 502(a)(2) is asserted on behalf of the plan, and for the benefit of the plan, a plaintiff who individually may have consented to arbitration cannot unilaterally bind the plan to arbitrate.

The references to the above statement put forward by the Ninth and Sixth can be found in Munro v. University of Southern California, 896 F.3d 1088 (9th Cir. 2018), cert. denied, 139 S. Ct. 1239 (2019) (holding that Section 502(a)(2) claims could not be within the scope of the employees’ agreement to arbitrate all claims against their employer because the Section 502(a)(2) claims were brought on behalf of the plan, and the plaintiffs consented only to arbitrate claims brought on their own behalf).

The U.S. Supreme Court may soon resolve this case if it grants a petition for writ of certiorari recently filed in Cintas, seeking to reverse the Sixth Circuit’s decision.

In their petition, defendants are to point to Supreme Court authority about the enforceability of arbitration agreements in derivative actions. The reference for these can be found in the  Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022) (holding that plaintiff’s claims under California’s Private Attorneys General Act, a similarly derivative cause of action, were preempted by the Federal Arbitration Act (FAA) and are subject to arbitration).

Similar to this incident, another group of cases also questions the enforcement of arbitration clauses to the extent that they would foreclose plan-wide equitable or remedial relief. For example, the Second and Seventh Circuits have already considered this issue and suggest that the arbitration agreements can’t prohibit claimants from obtaining plan-wide equitable or remedial relief through ERISA claims. It is important to have someone available to support in ERISA claim circumstances; an ERISA Benefits Attorney is just the person.

Final Verdict

The Supreme Court may or may not grant a writ of certiorari in Cintas. But what is of focus are the important impacts this decision has on clarifying the extent to which arbitration agreements are enforceable in connection with claims under ERISA Section 502(a)(2). Further, this may continue to be a trend of recent Supreme Court activity in the ERISA context. 

No matter what, the scope of enforceability of arbitration agreements for ERISA claims will always continue to be a matter of concern to monitor, especially as employers and plan sponsors are now facing increased class-action and other claims that come under ERISA.


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