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Compliance December 3, 2018
USC Asks Supreme Court to Weigh in on Arbitration of Retirement Plan Claims
The 9th U.S. Circuit Court of Appeals previously concluded that the challenge to the management of the University of Southern California’s retirement plans fell outside the scope of the arbitration agreements because the claims were brought on behalf of the plans, not the individuals.
Reported by Rebecca Moore
The University of Southern California (USC) has asked the U.S. Supreme Court to determine whether participants who filed a lawsuit challenging the management of the university’s two Employee Retirement Income Security Act (ERISA) retirement plans should be compelled to arbitrate their claims pursuant to an agreement signed with the university.
The plaintiffs in the case were required to sign arbitration agreements as part of their employment contracts. These agreements stated that these employees could only arbitrate claims brought on their own behalf. Denying a motion to compel arbitration, the 9th U.S. Circuit Court of Appeals concluded that the dispute fell outside the scope of the arbitration agreements because the claims were brought on behalf of the ERISA plans, not the individuals.
In a petition for writ of certiorari, USC says the question before the high court is, “Whether an agreement to arbitrate ‘all claims’ that an ERISA plan participant ‘may have’ against a plan fiduciary encompasses a breach-of-fiduciary-duty claim under ERISA § 502(a)(2).”
In its petition, USC says the Supreme Court has repeatedly recognized, and granted certiorari to vindicate, the “liberal federal policy favoring arbitration” embodied in the Federal Arbitration Act (FAA). That policy requires, among other things, that “ambiguities as to the scope of [an] arbitration clause” be “resolved in favor of arbitration.” According to USC, in accordance with the FAA’s statutory objectives, federal courts of appeals apply a presumption in favor of arbitrability and compel arbitration unless it can be said with positive assurance that the dispute is not encompassed by the parties’ agreement to arbitrate.
USC alleges that the 9th Circuit has transformed the FAA’s policy in favor of arbitration into a presumption against arbitration. It says the language of these arbitration agreements is more than adequately broad to encompass respondents’ breach-of-fiduciary-duty claims. “It is therefore impossible to review that expansive language and conclude with ‘positive assurance’ that the parties intended to exclude ERISA breach-of-fiduciary-duty claims from their otherwise-comprehensive arbitration agreements,” USC says in its petition.
In amicus briefs filed with the 9th Circuit, the Charles Schwab Corporation and the U.S. Chamber of Commerce also cited Supreme Court precedent in favor of arbitration.