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Ninth Circuit Decides Not to Rehear Its Decision Requiring Arbitration of ERISA Claims

As we wrote in a previous On the Subject, the Ninth Circuit Court of Appeals had signaled that it might rehear its August 2019 decisions in Dorman v. The Charles Schwab Corp., in which the Court compelled arbitration of ERISA class-action claims relating to a 401(k) plan. After ordering additional briefing, however, the Ninth Circuit denied the plaintiff’s petition for rehearing, leaving the Court’s decisions unchanged and requiring the plaintiff to arbitrate his ERISA breach-of-fiduciary-duty claims.

In Depth


In previous On the Subjects, we reported on two Ninth Circuit decisions in August 2019 in the Dorman case. We discussed how the decisions required Dorman to submit to arbitration his ERISA fiduciary-breach claims, which challenged investment options in a 401(k) plan, and pursue his claims only as an individual, not on behalf of a class. We reported on the plaintiff’s September 2019 petition to the Ninth Circuit for rehearing by the panel of judges who rendered the decisions or by all the Ninth Circuit judges. We also wrote about the Ninth Circuit’s October 2, 2019, Order that required the defendants to respond to Dorman’s petition for rehearing, and how that Order indicated that the Ninth Circuit might reconsider its prior decisions.

On October 21, 2019, the defendants filed their opposition to the plaintiff’s petition for rehearing, and on November 7, 2019, the Ninth Circuit denied Dorman’s petition and refused to rehear Dorman’s appeal. This means that the Ninth Circuit’s prior decisions remain unchanged, and the plaintiff must either appeal to the United States Supreme Court or submit to arbitration as required by the Ninth Circuit’s August 2019 decisions.

McDermott Thoughts: Our prior On the Subjects explained the importance of the arbitration and class-waiver issues that are raised in the Dorman case. The law on the enforceability of ERISA-claim arbitration provisions, and class-waiver provisions, is unsettled. The Ninth Circuit’s decisions provide support for ERISA sponsors and settlors who believe that disputes would be better handled by individual arbitration rather than in federal court class-action lawsuits.

© 2020 McDermott Will & EmeryNational Law Review, Volume IX, Number 346

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About this Author

Theodore Ted M. Becker, Partner, Chicago, Employee Benefits & Executive Compensation, ERISA Litigation,  ESOP Transactions,  Health & Welfare Benefits, Retirement Benefits
Partner

Ted Becker focuses his practice on litigation under the Employee Retirement Income Security Act (ERISA) and related federal and state actions, and defense of government investigations and audits relating to employee benefit, health and welfare, and retirement plans brought by the US Department of Labor, the Internal Revenue Service, and the US Department of Justice. He is a leading voice and nationally recognized practitioner in this complex practice area. He has represented public and private companies that sponsor employee benefit, health and welfare, and retirement plans governed by...

312-984-6934
Partner

Rick Pearl focuses his practice on litigation involving the Employee Retirement Income Security Act of 1974 (ERISA). He represents companies, their benefits committees, plan administrators, fiduciaries, and service providers in complex, class-action litigation and Department of Labor lawsuits, audits, and investigations.  His particular expertise is with actions for breach of fiduciary duty and prohibited transactions.

His litigation experience includes high-profile 401(k)/403(b) lawsuits alleging excessive fees and imprudent investment options and ESOP actions involving valuation issues. 

Rick also helps clients with procurement and renewal of ERISA fiduciary-liability insurance policies. He regularly speaks at national conferences and advises clients on the scope of permissible indemnification agreements under ERISA and state law, and assists with structuring insurance and indemnification programs to protect assets.

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