Mandatory Arbitration In Pension Plans

[Randy Watson]

I see that the DOL claims procedures address mandatory arbitration with respect to group health plans. Does anyone know whether mandatory arbitration provisions are enforceable in pension plans? I know that there are some cases addressing their enforceability in brokerage agreements associated with ERISA plans, but I'm looking for guidance on whether a plan can force a participant to go through mandatory arbitration as part of the claims process. Thanks.

[mbozek]

There was a Supreme Ct decision involving Circuit City (532 US 105) which upheld a mandatory arbitration provision regarding employment matters in an employment agreement that all employees were required to sign on the grounds that arbitration was permitted under the Federal Arbitration Act. Since ERISA does not preempt any other fed law, an employer can impose arbitration under the federal arbitration act to employee benefits. The question is whether the employee has to agree to mandatory arbitration as a condition of employment when hired.

[Randy Watson]

Right. Agreements containing mandatory arbitration clauses are enforceable under the Federal Arbitration Act, even if you are talking about ERISA based claims. However, I don't think we even get to the Federal Arbitration Act when we are talking about a mandatory provision in an ERISA pension plan since there is no "agreement," just a plan document. I want to believe that they are permissible in pension plans, after all, they are permissible in a group health plan.

[KJohnson]

This recent case discusses some of the issues but not a benefits claim directly:

http://pacer.ca6.uscourts.gov/opinions.pdf/05a0078p-06.pdf

Here is a quote

This narrow issue has not yet been addressed by the Sixth Circuit, see Eckel v. Equitable Life Assur. Soc. of the U.S., 1 F.Supp.2d 687 at 688 (noting that the Sixth Circuit had not yet addressed the issue); however, the majority of courts considering this issue have held that disputes arising under ERISA, including COBRA claims, are subject to arbitration under the FAA. See Kramer v. Smith Barney, 80 F.3d 1080, 1084 (5th Cir.1996); Pritzker v. Merrill Lynch, Pierce, enner & Smith, Inc., 7 F.3d 1110, 1115-16 (3d Cir.1993); Bird v. Shearson Lehman/American Express, Inc. 926 F.2d 116, 122 (2d Cir.1991), cert.

denied 501 U.S. 1251 (1991); Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc., 847 F.2d 475, 479 (8th Cir.1988); Peruvian Connection, Ltd. v. Christian, 977 F.Supp. 1107, 1111 (D.Kan.1997); Fabian Fin. Serv. v. Kurt H. Volk, Inc. Profit Sharing Plan, 768 F.Supp. 728, 733-34 (C.D.Cal.1991); Southside Internists

Group PC Money Purchase Pension Plan v. Janus Capital Corp., 741 F.Supp. 1536, 1541-42 (N.D.Ala.1990); Glover v. Wolf, Webb, Burk & Campbell, Inc., 731 F.Supp. 292, 293 (N.D.Ill.1990).16

Notwithstanding the foregoing, the following discussion reveals why this issue need not be resolved herein. A longstanding principle of this Circuit is that no matter how strong the federal policy favors arbitration, “arbitration is a matter of contract between the parties, and one cannot be required to submit to arbitration a dispute which it has not agreed to submit to arbitration.” United Steelworkers, Local No. 1617 v. Gen. Fireproofing Co., 464 F.2d 726, 729 (6th Cir.1972). See also AT&T Techs., Inc. v. Communications Workers of America, 475 U.S. 643, 648 (1986) (“[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”); Bratt Enters., Inc., v. Noble Int’l Ltd., 338 F.3d 609, 612 (6th Cir.2003); Roney & Co. v. Kassab, 981 F.2d 894,897 (6th Cir.1992).

This Court has drawn a clear line between the extensive applicability of general arbitration provisions and the more narrow applicability of arbitration clauses tied to specific disputes. When faced with a broad arbitration clause, such as one covering any dispute arising out of an agreement, a court should follow the

presumption of arbitration and resolve doubts in favor of arbitration. See Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir.2004). Indeed, in such a case, “only an express provision excluding a specific dispute, or the most forceful evidence of a purpose to exclude the claim from arbitration, will remove the dispute from consideration by the arbitrators.” Id. at 627 (internal quotations and citation omitted). However, when an arbitration clause by its terms extends only to a specific type of dispute, then a court cannot require arbitration on claims that are not included. See Bratts Enters., Inc., 338 F.3d at 613.No. 03-1192 Simon v. Pfizer Inc.