May 09, 2022

The question of whether employers can short-circuit Employee Retirement Income Security Act class actions by tucking requirements that workers individually arbitrate their claims into plan documents is likely bound for the U.S. Supreme Court, benefits attorneys say.

The Seventh Circuit put a spotlight on this issue in September, when it declared arbitration agreements barring class claims were unenforceable because they limited rights to planwide relief under ERISA.

The court's decision, which involved a company called Triad Manufacturing, contrasts with a 2019 decision out of the Ninth Circuit that allowed Charles Schwab to bar class claims based on arbitration language added to ERISA plan documents.

An ERISA case against Argent Trust Co., currently on appeal to the Second Circuit, hinges on a district court's denial of Argent's motion to kick a proposed class action into arbitration. Workers in that suit allege they were overcharged for company stock.

The Tenth Circuit also has a chance to mull a trial court's denial of a motion to compel arbitration of ERISA claims involving an employee stock ownership plan, in a case involving a company called Envision Management.

Michelle Yau, chair of the benefits practice group at Cohen Milstein Sellers & Toll PLLC, represents the plaintiffs in the Envision case. She said she's keeping an eye on a similar case against Wilmington Trust at the Third Circuit.

"The area of arbitration and class action waivers has been so active," Yau said.

. . .

The Seventh Circuit's 2021 Triad decision was particularly important because it followed the Schwab ruling. The Triad opinion showed how "courts of appeals have been, thus far, recognizing the differences between ERISA planwide claims — [such as] representational claims of the plan — and your average class action," Yau said.

Click trough to read: “ERISA Arbitration Likely Headed For High Court, Attys Say,” Law360.