February 9, 2023
The Tenth Circuit on Thursday rejected a radiology company’s bid to force into individual arbitration a federal benefits lawsuit from workers who alleged mismanagement of their employee stock ownership plan. The panel upheld an arbitration provision in ESOP plan documents as unenforceable because it blocked remedies under federal benefits law.
A three-judge panel in a 41-page published opinion sided with the workers’ argument — backed up by the U.S. Department of Labor, which participated as amicus on behalf of workers in the case — that an arbitration provision tucked in Envision workers’ ESOP plan documents impermissibly blocked remedies under the Employee Retirement Income Security Act. That triggered the so-called effective vindication doctrine under the Federal Arbitration Act, which permits a court to overrule an arbitration agreement if it blocks a party from being able to bring claims under federal law.
“[We] reject defendants’ arguments and conclude that the district court properly invoked the effective vindication exception to invalidate the arbitration provisions of the plan document,” the panel said.
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U.S. Department of Labor spokesperson Grant Vaught complemented the appellate court’s “thoroughly reasoned” decision in a statement provided to Law360 on Thursday.
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Robert Harrison and the proposed class are represented by Rachana Pathak, John Stokes and Peter K. Stris of Stris and Maher LLP and Mary J. Bortscheller, Ryan Wheeler, Michelle C. Yau and Kai H. Richter of Cohen Milstein Sellers & Toll PLLC.
Read the article on Law360 (subscription required).