Alex Smith

by Alex Smith

Courts have been mixed regarding the enforceability of arbitration provisions in Employee Retirement Income Security Act (ERISA) retirement plans since the U.S. 9th Circuit Court of Appeals’ 2019 decision in Dorman v. Charles Schwab Corp. Some employers and plan sponsors have considered adding arbitration provisions based on Dorman and the proliferation of ERISA class action lawsuits. Following the decision from the 10th Circuit (whose rulings apply to all Colorado employers) in Harrison v. Envision Management Holding, Inc. Board, however, employers in the 10th Circuit may want to reconsider.

10th Circuit’s decision

In Harrison, the 10th Circuit rejected the enforcement of an employee stock ownership plan’s (ESOP) arbitration provision in a lawsuit filed by a plan participant alleging the ESOP’s fiduciaries overpaid for the employer’s stock, breached numerous ERISA fiduciary duties, and engaged in prohibited transactions.

The 10th Circuit’s ruling focused on the ESOP’s specific arbitration provision, which allowed participants to obtain only individual relief and therefore made it impossible for them to obtain the plan-wide relief under ERISA. As a result, the 10th Circuit concluded the participants couldn’t effectively vindicate their statutory rights under ERISA. Read more >>