Last week, a divided Second Circuit panel affirmed a district court ruling denying a motion to compel arbitration of a putative class action seeking classwide equitable remedies under ERISA for alleged mismanagement of an employee stock ownership plan.  The Second Circuit found the defined contribution plan’s mandatory arbitration clause unenforceable because it limited plaintiff’s ability to assert a claim that would result in any relief other than individual relief, and specifically prevented him from pursuing the plan-wide remedy authorized by ERISA Section 502(a)(2).  The Court’s decision extends the “effective vindication exception” and raises questions about the extent to which plans can force individual arbitration of ERISA claims that apply to an entire plan.  

In Cedeno v. Sasson, 2024 WL 1895053 (2d Cir. May 1, 2024), the plaintiff asserted claims under ERISA Sections 502(a)(2) and 409(a), alleging that defendants breached fiduciary duties by purchasing stock shares for purportedly more than fair market value, saddling the Plan with tens of millions of dollars of debt and decreasing its value. Continue Reading Second Circuit Blocks Use of Arbitration Clause to Prevent Class Action ERISA Claims