AARP Backs USC Retirement Plan Participants in Arbitration Row

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By Carmen Castro-Pagan

AARP is urging a federal appeals court to hold that the University of Southern California can’t force retirement plan participants to take their claims of fiduciary breach to arbitration.

AARP asked the U.S. Court of Appeals for the Ninth Circuit in a brief filed Jan. 4 to affirm a district court ruling that USC arbitration agreements didn’t extend to claims of fiduciary breach under the Employee Retirement Income Security Act because the agreements weren’t incorporated into the plan nor signed by anyone with authority to bind the plan.

The brief comes two months after the U.S. Chamber of Commerce filed one supporting USC and asking the court to give employers the power to force disputes over employee benefits into arbitration. The issue, which involves whether arbitration clauses in employment agreements extend to ERISA claims, hasn’t been addressed by the Ninth Circuit.

AARP argues that Congress didn’t intend the use of arbitration for claims of fiduciary breach under ERISA. Arbitration is an inappropriate forum for the resolution of ERISA fiduciary breach claims because such claims contemplate relief on behalf of the plan, a remedy arbitration can’t provide, AARP said.

USC’s arbitration agreement also bars participants from proceeding as a class, limiting participants to individual relief—an action that is prohibited by ERISA because it would relieve a breaching fiduciary of liability to the entire plan, the group said.

“Allowing arbitration agreements to limit fiduciary liability would significantly undermine ERISA’s underlying remedial purposes and would inherently conflict with ERISA’s carefully crafted enforcement scheme,” AARP said. If the arbitration agreements are enforced, then every one of the USC plan’s more than 25,000 participants would be forced to file arbitration claims to collect all of the damages the fiduciaries allegedly caused the plan, AARP said.

Schlichter Bogard Denton LLP and Steven M. Goldsobel Law Offices represent the participants. Gibson Dunn & Crutcher LLP represents USC. Mayer Brown LLP represents the Chamber. AARP represents itself.

The case is Munro v. Univ. of S. Calif. , 9th Cir., No. 17-55550, amicus brief filed 1/4/18 .

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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