Greystar Moves to Compel Arbitration of ERISA Complaint

Greystar Management Services, L.P. has filed a Motion to Compel Arbitration and Dismiss the Complaint with the U.S. District Court for the Western District of Texas in a case alleging it breached its fiduciary duties under the Employee Retirement Income Security Act (ERISA) by allowing excessive administrative and investment fees to be charged.

Greystar argues that the plaintiff signed a Mutual Agreement to Arbitrate Claims that not only requires arbitration of her claims against Greystar but delegates to the arbitrator the power to decide questions regarding the applicability and enforceability of the agreement. In addition, it says the agreement contains a class action waiver foreclosing the plaintiff from bringing any class or collective action.

According to the motion, in July 2016, Greystar implemented a new policy requiring all new and existing employees to enter into the Arbitration Agreement as a condition of employment with Greystar. All Greystar employees were given notice of the required Arbitration Agreement by email four times between July and September 2016. To facilitate employees’ review of the Arbitration Agreement, the Information Technologies (IT) department at Greystar created a module on Greystar’s employee training portal through which all employees could review the Agreement in full and either accept or decline the Agreement.

The motion further states that on August 1, 2016, as a condition of her continued employment, the plaintiff logged in to the employee portal using her Greystar credentials and assented to the Arbitration Agreement by clicking “I agree” on the appropriate screen in the portal. The plaintiff later confirmed by email to her supervisor that she and all other employees at her property had accepted the agreement. Greystar subsequently terminated any employees who had not accepted the Arbitration Agreement by October 1, 2016.

Specifically, the Agreement provides: “Except for the claims expressly excluded by this Agreement, both you and the Company agree to arbitrate any and all disputes, claims, or controversies (claim) that the Company may have against you, or that you may have against the Company and/or its parent corporation, affiliates, subsidiaries, divisions, officers, directors and agents thereof, which could be brought in a court of law, including, but not limited to, all claims arising out of or relating to your employment with the Company and/or the end of your employment with the Company.”

Greystar adds that the Arbitration Agreement also provides that “all claims must be pursued on an individual basis only,” and contains an explicit waiver by the plaintiff of any right to bring a class or collective action against Greystar.

The company contends that filing the class action lawsuit was in violation of the plain language of the Arbitration Agreement. On September 4, 2019, Greystar reminded her of her Arbitration Agreement and asked that she withdraw the complaint and proceed with arbitration, but she has not.

Greaystar says the Federal Arbitration Act (FAA) sets forth a “strong federal policy in favor of enforcing arbitration agreements.” As a result, “a court’s sole task is to determine whether a valid arbitration agreement has been presented and, to the extent the question is not delegated to the arbitrator, whether the claims alleged are arbitrable,” it adds. “Indeed, this Court’s task is particularly straightforward given that the Arbitration Agreement provides that the arbitrator, rather than a court, should decide questions of arbitrability.”

The move by Greystar comes after the 9th U.S. Circuit Court of Appeals in August issued a ruling in the Michael F. Dorman et al vs. The Charles Schwab Corp. et al case that Schwab could enforce its retirement plan’s arbitration clause requiring participants to file individual claims and to waive class-action claims.

Legal sources have said that the 9th Circuit’s ruling leaves unanswered questions, and arbitration is not the perfect option plan sponsors may think.