Employment Law Blog

Friday, November 1, 2019

ERISA Arbitration is Here to Stay

Thirty-five years after deciding that arbitration clauses in employee benefit plans governed by the Employee Retirement Income Security Act of 1974 (“ERISA”) were unenforceable, the U.S. Court of Appeals for the Ninth Circuit became the last circuit to approve the use of mandatory arbitration clauses in ERISA benefit plans.  In this decision, Dorman v. Charles Schwab Corp, the court decided that an ERISA plan could limit participants to the use of individual arbitration as the sole forum for resolving certain benefits claims.

Since 1984, ERISA benefit plans in the Ninth Circuit were subject to the Circuit’s decision in Amaro v. Continental Can Co., which held that mandatory arbitration clauses in such plans were unenforceable.  The Ninth Circuit asserted that these clauses were unenforceable because of arbitrators’ general lack of competence with ERISA issues and that where “there is only a statute to interpret,” it was the job of the judiciary and not an arbitrator.  However, since 1984, the Court Supreme has not only concluded arbitrators are competent to interpret and apply such federal statutes, but that arbitration is not inherently unfair.  Thus, the Dorman Court held that Amaro is no longer good law in light of this intervening Supreme Court case law.


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