ERISA and Arbitration

New - Summer 2018:

  • ERISA Decision. In Munro v USC, the 9th Circuit refused to enforce mandatory arbitration of ERISA claims, but left the door open for reconsideration in view of the Epic decision noted in the next bullet. See this Alert.  
  • Supreme Court Decision.  In Epic Systems v. Lewis, the Supreme Court held in a 5-4 decision that arbitration agreements with class waivers do not violate the National Labor Relations Act (“NLRA”) and are fully enforceable. See thisblog discussion.


Plan sponsors and ERISA fiduciaries may require that ERISA disputes be resolved through mandatory binding arbitration. Shearson/American Express v. McMahon, 482 U.S. 220 (1987).  This case involves claims for plan benefits, as well as for claims involving breach of fiduciary duty and discrimination or interference with ERISA rights. See the following cases enforcing mandatory arbitration -- under the Federal Arbitration Act -- for ERISA claims:

2nd1991Bird v Shearson/Lehman, 926 F. 2d 116
3rd1993Pritzker v. Merrill Lynch, 7 F. 3d 1110
5th1996Kramer v Smith Barney, 80 F. 3d 1080
6th2014Shafer v.Multiband Corp.
Simon v. Pfizer, 2005 U.S. App. LEXIS 2881 (re enhanced severance plan, but no arbitration for COBRA and ERISA 510 claims).

8th1988Sulit v Dean Witter, 847 F. 2d 475





Williams v Imhoff, 203 F. 3d 758


Group Health Plans - Special Rule
Department of Labor FAQ B-6 re Group Health and Disability Benefits and Regulations re Claims Procedures:

  • Do the regulation's limits on the use of pre-dispute arbitration extend to other actions that a participant or beneficiary might pursue with regard to a health care provider or other person or entity?
  • No. The regulation is intended to regulate pre-dispute arbitration only with respect to group health and disability benefits provided under ERISA-covered plans. The regulation is not intended to affect the enforceability of a pre-dispute arbitration agreement with respect to any other claims or disputes. Accordingly, the regulation should not be read to affect the obligation of a participant or beneficiary to arbitrate such other claims and disputes within the scope of the arbitration agreement. See 29 CFR § 2560.503-1(c)(3)(iii).

2014.Jan.07  Arbitration Decision "Wrong" but Binding -- ERISA Trustee's Lose Indemnification.  In the wake of the Supreme Court decisions re internal statutes of limitation, employers should be thinking about how to improve their plan provisions that address claims and litigation. A disadvantage of binding arbitration comes from the 6th Circuit's opinion affirming an arbitrator's invalidation of indemnification agreements for ESOP trustees, even though "The arbitrator's decision would doubtless be reversed if it were a decision under the precedent of this court."  Given an arbitrary and capricious standard of judicial deference for ERISA plan decisions, it must be difficult to swallow aberrant arbitration decisions such as that in Shafer v.Multiband Corp. (6th Cir. 1/6/14).   

2012.June.13  Class Action Waiver Enforced.  An arbitration agreement's broad reference to "any controversy" was first held to require arbitration of ERISA claims, but its silence about allowing class actions in arbitration foreclosed that remedy for an employee group bringing health plan claims. Accordingly, the Middle District of Alabama District Court granted the employer's motion to compel arbitration, in Hornsby v. Macon County Greyhound Park. Here is an excerpt from the decision: 

  • Notably, the arbitration clause here says nothing about classwide arbitration. This silence means that the Alabama default rule, that “classwide arbitration is permitted only when the arbitration agreement provides for it,” kicks in. Taylor, 325 F. Supp. 2d at 1320 n.28. This default rule does not mean that Yarenko and Baker should prevail on their challenge to arbitration. In an analytically similar situation, the Eleventh Circuit has held that arbitration clauses are enforceable even when their application may effectively prevent plaintiffs from pursuing their claims as a class action. See, e.g., Caley, 428 F.3d at 1378.

​Articles re ERISA and Arbitration

  • "Requiem for ERISA Class Actions" - Benefits Law Journal (2012). This comprehensive article begins --
    • "ERISA plan sponsors who adopt mandatory arbitration provisions for employee benefit plan disputes that include a class action waiver may kill off all future ERISA class actions. I know this sounds far fetched, but it isn’t."
  • "Effective Arbitration of ERISA Claims Disputes" - In-house Defense Quarterly (2012). This well-considered article concludes with three pieces of sound advice, namely:
    • "Plan sponsors, administrators, and trustees can ensure the most efficient and effective claims resolution process by following three guidelines. First, have clear plan language that confers discretion on the administrator, follows plan procedures and ERISA regulations during claims processing, and avoids conflicts of interest. Second, have an arbitration provision in the plan that covers all plan disputes, including claim determinations. Third, select an arbitrator experienced in ERISA law and procedures who will make proper decisions about the standard and scope of review."