896 F.3d 1088
9th Cir.2018Background
- Nine current/former USC employees (plaintiffs) participated in two ERISA plans and sued in a putative class action alleging breaches of fiduciary duty in plan administration.
- Each employee had signed an individual employment arbitration agreement covering "all claims" between the employee and USC, including federal-law claims; five different iterations of the agreement were at issue.
- Plaintiffs sought relief on behalf of the Plans (e.g., accounting, removal of fiduciaries, reformation, measures affecting all participants), not solely individual-account relief.
- USC moved to compel arbitration and to require individual (not class) arbitration; the district court denied the motion, ruling the agreements do not bind the Plans.
- USC appealed the denial of the motion to compel arbitration; the Ninth Circuit reviewed the arbitrability issue de novo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether individual employment arbitration agreements require arbitration of ERISA §502(a)(2) claims brought on behalf of the Plans | Employees: agreements are between employee and USC only; claims on behalf of Plans are not claims the employee "has" against the employer | USC: arbitration clauses broadly cover "all claims," including federal statutory claims and thus include plan-wide ERISA claims | Held: arbitration agreements do not cover ERISA plan-wide §502(a)(2) claims because those claims belong to the Plans, not the employees individually; denial of motion to compel affirmed |
| Whether Welch (qui tam) reasoning applies to ERISA fiduciary suits | Employees: Welch controls—claims that primarily benefit a third party (government or plan) fall outside personal arbitration agreements | USC: attempts to distinguish or minimize Welch; cites LaRue to argue individual-account ERISA claims can be personal | Held: Welch is analogous and dictates that plan-benefit ERISA claims are not within employee-employer arbitration clauses; LaRue does not change outcome because these claims seek plan-wide relief |
| Whether ERISA §409(a)/§502(a)(2) claims are per se inarbitrable (Amaro) | Employees: invoke Amaro to argue ERISA fiduciary claims cannot be arbitrated as a matter of law | USC: urges overturning or limiting Amaro as inconsistent with later Supreme Court arbitration precedent | Held: Court did not decide Amaro's continued viability because it held arbitration clauses did not cover the claims; Amaro left for another day |
| Whether arbitration must be on a class basis | Employees: oppose individual arbitration where claims are plan-wide and brought as class/derivative | USC: seeks individual arbitration and requested class arbitration be denied because parties did not consent | Held: Court did not reach class-arbitration consent issue after finding the agreements did not cover the plan claims |
Key Cases Cited
- United States ex rel. Welch v. My Left Foot Children's Therapy, LLC, 871 F.3d 791 (9th Cir.) (arbitration clause limited to disputes the relator personally possessed; qui tam claims belong to the government)
- LaRue v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248 (2008) (individual may sue for losses to a defined-contribution account, but recovery is for plan assets affecting that account)
- AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) (FAA embodies a liberal federal policy favoring arbitration and enforces arbitration agreements as written)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010) (arbitration is a matter of consent; cannot compel arbitration beyond parties' agreement)
- Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984) (holding that ERISA's equitable standards may not be satisfiable in arbitration; precedent left unresolved by this decision)