Pension & Benefits News Justices will not take up University of Southern California’s ERISA arbitration question
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Wednesday, March 13, 2019

Justices will not take up University of Southern California’s ERISA arbitration question

By Pension and Benefits Editorial Staff

A university lost its bid for a U.S. Supreme Court review of the U.S. Court of Appeals in San Francisco (CA-9) ruling that employees could not be compelled to arbitrate their fiduciary duty breach claims concerning the university’s administration of two ERISA plans.

On February 19, 2019, the U.S. Supreme Court denied certiorari (Dkt. No. 18-703) on the question of whether an agreement to arbitrate “all claims” that an ERISA plan participant “may have” against a plan fiduciary includes a claim for breach of fiduciary duty under ERISA Sec. 502(a)(2). Thus, the Ninth Circuit’s conclusion will stand in Munro v. University of Southern California that it does not.

In July 2018, the appellate court ruled that university employees could not be compelled to arbitrate their collective claims for breach of fiduciary responsibility against a university for its administration of two ERISA plans. Because the parties consented only to arbitrate claims brought on their own behalf, and because the employees’ presented claims were brought on behalf of the plans, the appellate court concluded that the present dispute fell outside the scope of the arbitration agreements. Thus, under these circumstances, the district court properly denied the university’s motion to compel arbitration.

Isn’t arbitration favored?. In its petition for certiorari, the university pointed out that the Federal Arbitration Act embodies “a liberal federal policy favoring arbitration agreements,” and that the High Court has repeatedly ruled that where there is a valid arbitration agreement, doubts about the scope of an arbitrable issue should be resolved in favor of arbitration. The Ninth Circuit “flipped this well-established rule on its head,” according to the university.

Impact on future cases. The university also asserted, among other things, that the Ninth Circuit’s “artificially narrow reading of the arbitration agreements in this case creates a presumption against arbitration that will have profound practical consequences.” The appellate court has “rendered ERISA breach-of-fiduciary-duty claims non-arbitrable in the absence of explicit contractual language affirming the arbitrability of those specific claims—which is likely to exist in few, if any, employment contracts,” according to the petition.

SOURCE: Dkt. No. 18-703, cert denied, February 19, 2019.

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