Courts Continue To Scrutinize Arbitration Clauses In ERISA Plans

Seyfarth Synopsis: A recent district court decision highlights the continued uncertainties about what it means to include an arbitration clause in an ERISA plan. While courts generally agree that such clauses are, in theory, enforceable, the extent to which courts will enforce a specific clause remains uncertain given divergent outcomes of decisions regarding motions to compel arbitration.

In Burnett v. Prudent Fiduciary Services LLC, et al., the Plaintiffs (current employees of Western Global Airlines who participated in the Company's employee stock ownership plan ("ESOP")) broadly allege that Defendants caused the ESOP to pay too much for shares of company stock. Plaintiffs assert claims under ERISA, purporting to do so individually, on behalf of a putative class of participants, and as representatives of the ESOP. Plaintiffs seek a number of remedies, including restoration of money to the ESOP as a whole, and removal of the Defendants as fiduciaries.