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Arbitration of Fiduciary Breach Claim Cannot Be Compelled by Relying on Individual Employment Agreements

In Hawkins, et al. v. Cintas Corp.No. 21-3156, __ F.4d __ (2022), plaintiffs brought a class action pursuant to Section 502(a)(2) of the Employee Retirement Income Security Act (ERISA), alleging that their former employer and other fiduciaries breached the fiduciary duties owed to the plan. The employer moved to compel arbitration, arguing that the claims must be arbitrated pursuant to the arbitration provisions in employment agreements signed by plaintiffs. The district court denied the employer’s motion to compel arbitration.

On appeal, the Sixth Circuit affirmed, acknowledging that this case presented issues of first impression.  According to the Court:

  • The Sixth Circuit has not yet determined whether ERISA claims are subject to arbitration, but all circuit courts that have considered the issue have held that ERISA claims are generally arbitrable. Nonetheless, because the parties’ failed to argue that ERISA claims could not be arbitrated, the court declined to specifically address that issue.

  • The arbitration agreements—to which only plaintiffs are bound—did not compel arbitration of the Section 502(a)(2) fiduciary breach claims because the claims belong to the plan.

  • Arbitration of these Section 502(a)(2) claims cannot be compelled without the plan’s consent. Plan participants cannot unilaterally bind the plan to an arbitration in the absence of an arbitration provision in the plan or some other manifestation of the plan’s consent to arbitrate. In this case, nothing indicated that the plan consented to arbitration. The court rejected the employer’s argument that it, being the plan sponsor, could consent to arbitration on its behalf.

Hawkins demonstrates the scrutiny placed upon arbitration of ERISA claims. Although employees may have signed a broad arbitration agreement, that does not necessarily mean that certain ERISA claims are subject to arbitration. Employers wanting to ensure that ERISA claims brought on the plan’s behalf are subject to arbitration should review their plan documentation to make sure that it sufficiently manifests the plan’s consent to arbitrate. 

© 2022 Miller, Canfield, Paddock and Stone PLC National Law Review, Volume XII, Number 118
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About this Author

Nhan Ho Employment Lawyer Miller Canfield Law Firm
Associate

Nhan Ho's practice concentrates on employment discrimination, leave rights, and wage and hour litigation and disputes. She regularly counsels employers on their policies and practices to address specific challenges in the workplace. Nhan was previously an intern for the U.S. District Court for the Eastern District of Michigan. 

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    Brian Schwartz Employment Attorney Miller Canfield Law Firm
    Principal

    Brian Schwartz represents management in various aspects of labor and employment counseling and litigation.

    His practice focuses on defending single-plaintiff and class-action lawsuits involving retiree health benefit disputes, employment discrimination (race, gender, and disability discrimination), harassment, and retaliation claims, as well as wage and hour claims, FMLA claims, ERISA disputes, Title IX claims, Freedom of Information Act and due process lawsuits. He also counsels employers on drafting enforceable non-competition, non-solicitation and confidentiality...

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    Samantha A. Kopacz Labor & Employment Attorney Miller, Canfield, Paddock and Stone Troy, MI
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    Samantha Kopacz's practice centers around the design, implementation and administration of employee benefit plans and executive compensation arrangements. Sam has more than a decade of experience representing employers, trustee boards, group health plans, insurance companies, and third-party administrators in regulatory and compliance issues related to qualified and non-qualified retirement plans, health and welfare plans, fringe benefit plans, and executive compensation and incentive programs.

    Sam has extensive experience structuring and advising on defined contribution plans (such...

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    Brian Gallagher Labor & Employment Attorney Miller Canfield Law Firm lansing Michigan
    Senior Counsel

    As an experienced benefits and executive compensation attorney, Brian Gallagher helps employers navigate the complicated and ever-changing legal landscape of ERISA and the Tax Code. Brian works closely with employers of all sizes in many different industries to design and maintain their benefit plans, ensure compliance and develop practical solutions when mistakes inevitably do occur.

    Brian is currently serving as the Treasurer of the Taxation Section of the State Bar of Michigan and previously chaired its Employee Benefits Committee. Named a '...

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