Some people in Washington, D.C., may be aware of a number of recent lawsuits brought by college and university employees against their employers regarding retirement plan mismanagement. In a case involving the University of California, a federal appeals court ruled on July 24 that investors could not be forced to settle their claims in arbitration.
The workers sued the university two years ago, and this ruling represents a win. The U.S. Court of Appeals for the 9th Circuit said that the claim cannot be forced to arbitration because the parties consented to arbitrate claims brought on their own behalf. However, in this case, the claims were on the plans' behalf. This is the 9th Circuit's first time examining the effects of employment arbitration clauses on claims under the Employee Retirement Income Security Act.
The case was highly publicized. A district court had already barred arbitration, and AARP had pressed for the appeals court to affirm this decision. On the other side was the Chamber of Commerce, which said that disputes over employee benefits should be forced into arbitration. USC had tried to argue that the dispute was over individual accounts, but the court ruled that it would be to the benefit of all plans.
This ruling may benefit other workers who are involved in ERISA benefits claims litigation. Employers often try to push for arbitration because it is generally to their advantage. In some cases, workers may have signed contracts that agree to arbitration in employment disputes. Workers who believe their benefits have been mismanaged or that they have been denied their benefits may want to speak to legal counsel about their rights and how they should proceed.