High Court 401(k) Suit Bid Targets Key Arbitration Exception (1)

Retirement plan sponsors facing mounting appeals court precedent quashing arbitration clauses that bar class actions are switching strategies, now aiming to dismantle the nearly 40-year-old judicial doctrine behind those cases.

Michigan auto parts maker Tenneco Inc. asked the US Supreme Court last week to reconsider the use in federal benefits law of its “effective vindication” precept, which establishes that litigants’ right to sue supersedes limits set by arbitration agreements.

The effective vindication principle “lacks a Congressional basis or a legal justification,” in the face of public policy that often favors the use of arbitration agreements, Tenneco’s lawyers wrote. They compared ...