Plaintiffs, current and former employees of the University of Southern California (“USC”), were participants in two USC-sponsored ERISA contribution plans. In order to participate in the plans, individual employees were required to sign arbitration agreements covering all claims between the parties. The arbitration agreements expressly covered claimed violations of federal law, including ERISA. Plaintiffs filed a putative class action against USC alleging breach of fiduciary duty pursuant to ERISA § 502(a)(2). The action sought various forms of equitable relief for the benefit of the plans only, rather than for employees in their individual capacity. USC moved to compel arbitration, arguing that the arbitration agreements prohibited employees from litigating claims on behalf of the ERISA plans. The district court denied USC’s request, and the Ninth Circuit affirmed.
The Ninth Circuit agreed that the arbitration agreements did not encompass breach of fiduciary duty claims filed under ERISA § 502(a)(2). The court compared Plaintiff’s claims to a 2017 decision in which the Ninth Circuit held that an individual arbitration agreement did not extend to a qui tam action filed against an employer by its employee because the claim was filed on behalf of the government under the False Claims Act, not in the employee’s individual capacity. Likewise, the court observed that breach of fiduciary duty claims under § 502(a)(2) are filed for the benefit of the ERISA plan, not any individual participant. Thus, as in the qui tam context, the Ninth Circuit concluded that Plaintiffs’ putative class claims against USC fell outside the scope of the arbitration agreements, as the parties consented only to arbitrate claims filed in an employee’s individual capacity. The court specifically declined to rule, however, that individual agreements to arbitrate ERISA claims are per se unenforceable, leaving that issue for another day.