September 13, 2019

Joan Neri Quoted in PlanAdviser Magazine on Dorman Decision

Joan Neri was quoted in PlanAdviser’s article, “Is Mandatory Arbitration Likelier for ERISA Complaints?” that explored the significance of the Ninth Circuit’s Dorman vs. Charles Schwab Corp. decision with regard to plan arbitration clauses.

The Court found that Schwab could enforce its retirement plan’s arbitration clause requiring participants to file individual claims and to waive class-action claims. The decision, PlanAdviser reports, raises questions that should give plan advisers pause before recommending that their sponsor clients include an arbitration clause in their plan.

Neri told the publication that the case “does not address how a fiduciary breach claim seeking plan-wide relief aligns with the individual recovery sought in arbitration. This is something that advisers and sponsors should continue to watch in the litigation sphere before making any amendments to a plan.”

She explained that the “Ninth Circuit in Dorman focused on whether the plan or the individual had agreed to the arbitration. Because the arbitration provision was in the plan, the court concluded that the plan had expressly agreed that the ERISA claim could be arbitrated. This was a factor that distinguished this decision from the 9th Circuit’s earlier decision in Munro v. University of Southern California in which the arbitration agreement was signed by the individual as part of her employment agreement.”

What Dorman did not address, Neri said, was “how the relief provided in an individual arbitration, i.e. the participant’s individual damages, reconciles with the plan-wide relief for the breach of fiduciary claim. That is the glaring unresolved issue. Can individual arbitration of fiduciary breach claims be forced by a plan? Until this issue is resolved, I am not rushing out to encourage my plan sponsor clients to adopt mandatory arbitration provisions for fiduciary breach claims.”

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