Benefits & Executive Compensation News

USC Presses Need for SCOTUS Review of Retirement Arbitration

Jan. 16, 2019, 2:12 PM

The University of Southern California again pressed the U.S. Supreme Court to affirm employers’ ability to have disputes over their retirement plans sent to arbitration.

A federal appeals court decision denying the school’s bid for arbitration relied on an “artificially narrow, and unduly rigid, approach to arbitrability” that renders fiduciary breach claims involving retirement plans “effectively non-arbitrable,” USC said in a Jan. 15 reply brief. The decision is part of the U.S. Court of Appeals for the Ninth Circuit’s pattern of disregarding the national policy favoring arbitration, USC said.

The Ninth Circuit in 2018 said an arbitration agreement signed by USC employee Allen Munro didn’t prevent him from filing a class action challenging aspects of the school’s retirement plan. That’s because Munro’s fiduciary breach claims were brought on behalf of the retirement plan itself, which didn’t agree to arbitrate, the Ninth Circuit said.

This decision has “far-reaching consequences,” USC argued, because an increasing number of Employee Retirement Income Security Act fiduciary breach lawsuits have been filed in the past few years. The law firm representing the USC workers, Schlichter Bogard & Denton LLP, has filed more than 15 such cases in the past two and a half years, targeting major companies that collectively employ hundreds of thousands of people, USC said.

The case against USC, which claims the school’s retirement plans carried excessive fees and offered bad investment options, has been closely followed.

Earlier this month, the Securities Industry and Financial Markets Association filed a brief asking the court to hear USC’s case and affirm the right to arbitrate. The U.S. Chamber of Commerce supported USC at the appeals court level, and AARP chimed in in support of the employees’ right to litigate.

Gibson Dunn & Crutcher LLP represents USC.

The case is Univ. of S. Calif. v. Munro, U.S., No. 18-703, reply brief 1/15/19.

To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bloomberglaw.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bloomberglaw.com

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