Second Circuit Weighs In Against ERISA Arbitration

Recently, the Second Circuit became the latest circuit refusing to enforce individual arbitration of an ERISA class action, joining the Third, Seventh, and Tenth Circuits. The Ninth Circuit, by contrast, has held that class action ERISA claims brought on behalf of plans are subject to individual arbitration, with relief limited to the individual plaintiff's claims.

In Cedeno v. Sassson, 100 F.4th 386 (2d Cir. 2024), plan participant Ramon Cedeno sued Argent Trust Company, the trustee of his former employer's employee stock ownership plan ("ESOP"), alleging that Argent breached its fiduciary duties by causing the ESOP to overpay for company stock. Mr. Cedeno sought relief under ERISA Section 502(a)(2), which allows a plan participant to bring a civil action for appropriate relief under Section 409(a). In turn, Section 409 holds fiduciaries personally liable for any losses to the plan resulting from their breaches.