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Ninth Circuit Affirms Denial of Motion to Compel Arbitration of ERISA Action

Posted by Eric Kingsley | Aug 21, 2018 | 0 Comments

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ERISA Arbitration - Claims

Bottom Line

The U.S. Court of Appeals for the Ninth Circuit affirmed a district court's opinion that the University of Southern California could not compel arbitration of ERISA claims brought by its employees despite the fact that the parties entered into a broad arbitration agreement.

Background - ERISA Arbitration

In Munro v. University of Southern California Allen Munro and eight other current and former USC employees participate in both the USC Retirement Savings Program and the USC Tax-Deferred Annuity Plan ("plans"). In this putative class action lawsuit, the employees alleged multiple breaches of fiduciary duty in administration of the Plans.

Each of the individual employees was required to sign an arbitration agreement as part of his/her employment contract. The nine employees signed five different iterations of USC's arbitration agreement. Consistent among the various agreements is an agreement to arbitrate all claims that either the employee or USC has against the other party to the agreement. The agreements expressly cover claims for violations of federal law. In their putative class action lawsuit, the employees sought financial and equitable remedies to benefit the plans and all affected participants and beneficiaries, including but not limited to 1) a determination as to the method of calculating losses, 2) removal of breaching fiduciaries, 3) a full accounting of Plan losses, 4) reformation of the plans, and 5) an order regarding appropriate future investments.

Erisa disability

USC moved to compel arbitration, arguing that the employee agreements bar the employees from litigating their claims on behalf of the plans. USC also requested the district court to compel arbitration on an individual, rather than class basis because the parties did not specifically agree to class arbitration. The district court denied USC's motion, determining that the arbitration agreements, which the employees entered into in their individual capacities, do not bind the plans because the plans did not themselves consent to arbitration of the claims. USC appealed the decision.

Ninth Circuit

On July 24, 2018, the Ninth Circuit affirmed the district court's denial of a motion to compel ERISA arbitration claim brought by the current and former USC employees. The Ninth Circuit focused on the fact that the action was brought on behalf of the retirement plans and their participants and not on behalf of the individual employees. The court compared this particular ERISA action to a qui tam claim, and used a prior case for comparison (U.S. ex rel. Welch v. My Left Foot Children's Therapy). In Welch, the Ninth Circuit similarly found that a qui tam claim did not fall within the scope of an arbitration clause. Accordingly, the court held that the arbitration clauses, which required employees to arbitrate their own claims against USC, could not be “stretched” to apply to ERISA claims brought by the employees on behalf of the retirement plans.

California Employment Law

With significant penalties in effect for ERISA violations, California employers should remain vigilant and informed to ensure compliance with the various employment laws enforced by the Labor Department. Should you have questions about federal laws such ERISA, or any of California's labor laws, don't hesitate to contact experienced California employment lawyers at Kingsley & Kingsley. Feel free to contact us online or call us toll-free at 888-500-8469.

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About the Author

Eric Kingsley

In practice since 1996, the firm's lawyer and co-founder, Eric B. Kingsley, has litigated complex cases and written numerous appeals in state and federal courts on behalf of the California law firm Kingsley & Kingsley, including More than 150 collective actions. Mr. Kingsley focuses his practice ...


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