Ninth Circuit Affirms Denial of Motion to Compel Arbitration of ERISA ActionIn Munro v. Univ. of S. Cal., the Ninth Circuit recently affirmed the district court’s denial of a motion to compel arbitration of an ERISA action brought by current and former employees of the University of Southern California (USC). The employees alleged that USC, as administrator of certain employee retirement plans, had breached its fiduciary duties as plan administrator. They sought equitable and monetary relief against USC with regard to the past and future administration of the plans. USC moved to compel arbitration, arguing that each of the employees had signed arbitration agreements in their employment contracts, which required all disputes, including any alleged violations of federal law, between the employees and USC to be arbitrated. The district court denied the motion to compel, finding that the dispute did not fall within the scope of the arbitration clause.

In affirming the decision of the district court, the Ninth Circuit recognized that arbitration clauses have been interpreted broadly under the Federal Arbitration Act where an arbitration clause exists. Nevertheless, the Ninth Circuit focused on the fact that the action was brought on behalf of the retirement plans (and their participants) and not on behalf of the employees as individuals.  The court compared this particular ERISA action to a qui tam claim, and looked to a prior case (U.S. ex rel. Welch v. My Left Foot Children’s Therapy) in which the Ninth Circuit similarly found that a qui tam claim did not fall within the scope of an arbitration clause. Accordingly, the court held that the arbitration clauses, which required employees to arbitrate their own claims against USC, could not be “stretched” to apply to ERISA claims brought by the employees on behalf of the retirement plans.

Notably, in a concluding footnote, the court stated that USC’s argument that one particular Ninth Circuit case (Amaro v. Cont. Can Co.), concerning the arbitrability of ERISA actions, should be overruled based on intervening Supreme Court case law, had “considerable force.” The court noted, however, that it was unnecessary to opine on the continued viability of Amaro because the “claims asserted in this case fall outside the arbitration clauses in the employee agreements[.]”

Given the court’s holding in this action, employers should revisit their employment contracts and consider broadening the arbitration clauses and class action waivers in them to apply specifically to instances where an employee is asserting claims on behalf of an ERISA plan and its participants, and to apply specifically to breach of fiduciary claims asserted by an employee in any capacity against the employer as a plan administrator.