In Munro v. University of Southern California, No. 17-55550, 2018 U.S. App. LEXIS 20522 (9th Cir. July 24, 2018), the U.S. Court of Appeals for the Ninth Circuit held that employees alleging an ERISA breach of fiduciary duty claim against their employer based on the employer’s administration of defined-contribution plans may not be compelled to arbitrate their collective claims under the terms of the arbitration clause in their employment contracts because their claims were brought on behalf of the plans and not on their own behalf.

The lawsuit was brought by nine current and former USC employees. The employees alleged that USC breached its fiduciary duty under ERISA in administering two defined-contribution plans – the USC Retirement Savings Program and the USC Tax-Deferred Annuity Plan (the “Plans”). The employees sought financial and equitable remedies to benefit the Plans and all affected participants and beneficiaries, including “a determination as to the method of calculating losses, removal of breaching fiduciaries, a full accounting of Plan losses, reformation of the Plans, and an order regarding appropriate future investments.”
Continue Reading Ninth Circuit Holds That Employees’ ERISA Breach of Fiduciary Duty Claim Against Their Employer is Not Subject to the Mandatory Arbitration Clause in Their Employment Contracts

In Prime Healthcare Servs. – Landmark LLC v. United Nurses & Allied Prof’ls, Local 5067, 848 F.3d 41 (1st Cir. 2017), the First Circuit ruled that an arbitration agreement required the arbitrator to determine whether ERISA preempted the claims at issue.

Plaintiff purchased a financially troubled hospital that had a pension plan, and a collective bargaining agreement (CBA) with defendant. The CBA contained a broad arbitration provision. After the acquisition, the pension plan was terminated by the Pension Benefit Guaranty Corp. (PBGC), and the defendant union sought arbitration of its grievance that the termination violated the CBA. Ultimately, the district court ruled that the union’s claims were preempted by ERISA.

The Court noted that courts will determine questions of arbitrability only when there is a dispute of “substantive arbitrability” – whether the parties are bound by an arbitration clause, or whether the particular clause governs a particular type of controversy. “Procedural arbitrability” questions, in contrast, are presumptively determined by the arbitrator; these questions include things like defenses of waiver, delay, or any other procedural rule that grows out of the dispute and bears on its final disposition.
Continue Reading First Circuit rules that ERISA preemption of claim is an arbitrable issue