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Arbitration Clauses and ERISA


The enforceability of mandatory arbitration clauses as they might relate to ERISA claims remains an unsettled area of law.  In mid-October, the Supreme Court declined to hear two cases—one from the Third Circuit Court of Appeals and the other from the Tenth Circuit Court of Appeals—which dealt with the question of whether mandatory arbitration and class action waivers may be enforced.  Both circuits had found in favor of the plaintiffs and refused to enforce the mandatory arbitration clauses, finding that plan-wide relief is a statutory remedy under ERISA that cannot be waived by individuals.


Later in October, by contrast, a decision issued in the Eastern District of Kentucky upheld both an arbitration clause and a waiver of class arbitration, i.e., all claims would be arbitrated individually and would not be heard on a class or collective basis.  (Merrow et al v. Horizon Bank et al., No. 2:22-cv-123 (E.D. Ky. Oct. 24, 2023).)  While the plaintiffs alleged that the arbitration clause acted as a “prospective waiver” of statutory remedies, the court was not persuaded.  Instead, the District Court found that the plaintiffs’ argument was based on a misinterpretation of the Federal Arbitration Act and the court’s duty to enforce arbitration agreements. Id.  The District Court also found that the arbitration clause contained within the plan document could be distinguished from the arbitration clause at issue in Hawkins v. Cintas Corp., 32 F. 4th 625 (6th Cir. 2022), since the clause in that case was found within employment agreements. Accordingly, the District Court held that it was required to compel arbitration and the matter was stayed pending arbitration.


For now, it remains unsettled amongst the various federal districts whether mandatory arbitration clauses which attempt to direct how a participant may process their ERISA rights are enforceable.  This is an issue plan sponsors and service providers will continue to keep tabs on in the near future.

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