ERISA Arbitration and Class Action Waiver Provisions: Recent Court Rulings, Plan Amendments, Employment Agreements

There has been a growing trend to bind participants in ERISA plans to arbitration agreements and waivers of class action claims, either by plan amendment or by employment agreement (or both). This trend has accelerated since the Supreme Court's 2018 ruling in Epic Systems Corp. v. Lewis, which upheld individualized arbitration as consistent with the National Labor Relations Act. While lower courts have generally applied Epic to ERISA claims, the complexities of ERISA have led to some instances in which courts have declined to enforce these provisions.

The Second Circuit’s split 2-1 decision in March 2021 in Cooper v. Ruane Cunniff heightens the need for ERISA and employment counsel, as well as plan sponsors, to understand the opportunities and ramifications of including ERISA-specific provisions. That decision declined to apply a generally applicable employment arbitration agreement to an ERISA breach of fiduciary duty claim, and raised questions about the enforceability of ERISA class action waiver provisions. This is in addition to a split that has emerged regarding enforcement of arbitration agreements and class action waivers found in plan documents: the Ninth Circuit in Dorman v. Charles Schwab compelled arbitration, but two recent district courts in the Seventh Circuit declined to compel arbitration, with the Seventh Circuit soon to weigh in on the issue.

More ERISA class actions were filed in 2020 than in any year in the 45-year history of the statute and 2021 is already on pace to be one of the busiest years ever. Many of the defendants in these cases have never before faced an ERISA class action lawsuit. With a higher volume of lawsuits and a new set of decisions highlighting potential pitfalls in enforcing these provisions, this is an ideal time for plan sponsors and their counsel to re-evaluate their arbitration and class action waiver provisions.

Listen as our panel discusses legal theories and results from recent court rulings, key considerations for plan amendments and employment agreements, and best practices for ERISA and employment counsel and plan sponsors.

1. Overview of Supreme Court decisions on arbitration and class action waiver provisions
2. ERISA-specific issues raised by recent lower court decisions
3. Strategies and considerations for counsel and plan sponsors in drafting enforceable arbitration and class action waiver provisions

The panel will review these and other key issues:

• What explains the divergent results in recent lower court decisions regarding the enforceability of arbitration and class waiver provisions?
• How can plan sponsors ensure their provisions are enforceable?
• How to communicate any changes to employees.
• Best practices in deciding whether to include and how to draft arbitration and class action waiver provisions for ERISA claims.