Court Holds that USC Cannot Force Employees/Investors in its Retirement Plan to Arbitrate their Breach of Fiduciary Duties Claims

08.06.2018

Employers with retirement plans subject to the Employee Retirement Income Security Act (ERISA) often seek to reduce their potential class action liability for breach of fiduciary duty claims by including mandatory arbitration clauses in employment agreements. University of Southern California (USC) workers challenged the school's management of its plans in federal court several years ago, despite the arbitration clauses in their agreement.

The trial and appellate courts in the case held that the workers could proceed in court despite the arbitration clauses because the case was brought on behalf of the ERISA plans themselves, as opposed to on their own behalf, as they could have. The case drew significant attention from industry groups with the United States Chamber of Commerce supporting USC and the American Association of Retired Persons supporting the plaintiffs.  

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