Second Circuit Rejects Arbitration of ERISA Claims

Courts have increasingly been asked to determine whether arbitration agreements executed by employees apply to claims under ERISA.  In Cooper v. DST Systems, Inc., the Second Circuit just held that an employer’s breach of fiduciary duty claims alleging poor management of a 401(k) Plan’s assets were not subject to an arbitration clause.

The Plaintiff in Cooper executed an employment agreement that required arbitration of all “all legal claims arising out of or related to employment.”  The Second Circuit held that this language was not broad enough to cover the ERISA fiduciary breach claims at issue, instead holding that this clause the Plaintiffs “own employment.”  Although not directly resolving the issue, the Second Circuit’s decision was plainly influenced by concerns that an alternative interpretation of the clause could have been inconsistent with ERISA Section 502(a)(2), which under Second Circuit authority allows participants to recover injuries to the Plan as a whole.  Whether the Second Circuit will allow an employer to mandate arbitration of such claims—in an arbitration that precludes a class action—is a question for another day.

Andrew Holly

Andrew represents clients in a wide range of complex civil matters.

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