Kim Jones Comments on Mandatory Arbitration Clauses and Class Action Waivers in PLANADVISER

In “Are They Legally Binding?” partner Kim Jones commented on mandatory arbitration clauses and class action waivers in ERISA-related litigation.

“Most courts so far have found [these procedures] to be unenforceable. They say [arbitration requirements] violate ERISA by taking away substantive rights from the participants,” said Jones.

She argued that the Supreme Court has upheld arbitration agreements, and “there is nothing special about ERISA.” Participation in a plan is like a contract, and if it contains a class action waiver, then you agreed to waive that right by participating.

Jones added that participants are waiving only their right to sue on behalf of the plan, but are not waiving rights that belong to others, because other participants still retain their individual right to bring suit separately and win an individual judgment for their own account. The notion that individuals may not waive class action rights because those rights justly belong to the plan and are therefore not theirs to waive “is a plaintiff-driven concept” because “you can waive your right to bring a representative action. I don’t think you’re waiving other people’s rights when they can bring their own case,” she said.

Jones noted many plaintiffs are awarded tiny sums of money in class action settlements, sometimes lower than $100, and these cases are “just an easy way to get a settlement for copycat plaintiff attorneys.”

The full article is available to PLANADVISER subscribers.