August 6, 2025
The Ninth Circuit aligned with several other federal appeals courts when it recently struck down a clause in a food service company’s employee health plan that barred class or representative actions, marking the latest in a series of setbacks for employers looking to push federal benefits suits into solo arbitration.
A three-judge appellate panel on Monday affirmed in part and reversed in part a district court’s July 2023 denial of a motion to compel arbitration from Sodexo in a proposed class action led by Sodexo employee health plan participant Robert Platt, who claimed that a health plan fee assessed against tobacco users violated the Employee Retirement Income Security Act.
Monday’s decision held that a representative action waiver in an arbitration provision tucked into Sodexo’s employee health plan was invalid under the Federal Arbitration Act’s effective vindication doctrine, which allows judges to overrule an arbitration agreement if it blocks a party from being able to bring claims under federal law.
“What it’s really saying is that the plan sponsors can’t get the kind of arbitration that they want, or at least it will be very difficult for them to get what they want,” plaintiff-side attorney Kai Richter, of counsel at Cohen Milstein Sellers & Toll PLLC, said of the Sodexo decision.
The Ninth Circuit’s ruling follows similar findings invoking the effective vindication doctrine to thwart arbitration language in plan documents that purport to block representative relief or action by an individual plan participant. The Sixth Circuit ruled along those lines in October 2024, as did the Second Circuit in May 2024, the Third Circuit in June 2023, the Tenth Circuit in February 2023 and the Seventh Circuit in September 2021.
The Sodexo ruling “confirms the law that was already emerging in other circuits” on how the FAA’s effective vindication doctrine dovetails with ERISA, according to Richter.
“The Representative Nature of ERISA Actions”
The panel’s published decision Monday first affirmed the lower court’s decision to reject Sodexo’s bid to force individual arbitration of ERISA claims for benefits and equitable relief. The panel concluded that under the FAA, consent was required from individual plan participants, which Sodexo hadn’t obtained when it unilaterally amended the plan to add an arbitration clause.
On Platt’s ERISA fiduciary breach claim, the panel reversed the lower court’s denial, finding that because the relevant consenting party for that claim was the plan and not individual participants, Sodexo had obtained consent. But the panel also found the arbitration provision’s representative action waiver triggered effective vindication because it purported to block Platt, the health plan participant who sued on behalf of other participants and the plan itself, from bringing a fiduciary breach claim.
Richter, at Cohen Milstein, said that the court’s finding on effective vindication was “very significant,” because the holding means even when employers make a valid agreement to arbitrate with a benefit plan, “you can’t force a party to litigate in a non-representative capacity.”
“It preserves the representative nature of ERISA actions,” Richter said.
Despite the effective vindication holding, the panel didn’t rule that the entire arbitration provision was invalid, leaving the lower court to determine whether the representative action waiver that ran afoul of the FAA was severable from the rest of the agreement.
Read Compelling ERISA Arbitration No Sure Thing, 9th Circ. Shows.