As we wrote in a previous On the Subject, the Ninth Circuit Court of Appeals had signaled that it might rehear its August 2019 decisions in Dorman v. The Charles Schwab Corp., in which the Court compelled arbitration of ERISA class-action claims relating to a 401(k) plan. After ordering additional briefing, however, the Ninth Circuit denied the plaintiff’s petition for rehearing, leaving the Court’s decisions unchanged and requiring the plaintiff to arbitrate his ERISA breach-of-fiduciary-duty claims.

In Depth

In previous On the Subjects, we reported on two Ninth Circuit decisions in August 2019 in the Dorman case. We discussed how the decisions required Dorman to submit to arbitration his ERISA fiduciary-breach claims, which challenged investment options in a 401(k) plan, and pursue his claims only as an individual, not on behalf of a class. We reported on the plaintiff’s September 2019 petition to the Ninth Circuit for rehearing by the panel of judges who rendered the decisions or by all the Ninth Circuit judges. We also wrote about the Ninth Circuit’s October 2, 2019, Order that required the defendants to respond to Dorman’s petition for rehearing, and how that Order indicated that the Ninth Circuit might reconsider its prior decisions.

On October 21, 2019, the defendants filed their opposition to the plaintiff’s petition for rehearing, and on November 7, 2019, the Ninth Circuit denied Dorman’s petition and refused to rehear Dorman’s appeal. This means that the Ninth Circuit’s prior decisions remain unchanged, and the plaintiff must either appeal to the United States Supreme Court or submit to arbitration as required by the Ninth Circuit’s August 2019 decisions.

McDermott Thoughts: Our prior On the Subjects explained the importance of the arbitration and class-waiver issues that are raised in the Dorman case. The law on the enforceability of ERISA-claim arbitration provisions, and class-waiver provisions, is unsettled. The Ninth Circuit’s decisions provide support for ERISA sponsors and settlors who believe that disputes would be better handled by individual arbitration rather than in federal court class-action lawsuits.