ERISA Class Action Review – 2025

Supreme Court precedent suggesting that an individual claimant aggrieved by a plan-wide breach of fiduciary duty can seek a remedy under § 502(a)(2) solely benefitting their own account. Id. at 404. However, the arbitration provisions in this case would have required claimants like the plaintiff to bring their claims solely in their individual capacity. Id. at 400. This led the Second Circuit to conclude that these provisions took away the “only available statutory vehicle” for vindicating the plaintiff’s statutory rights under § 409(a). Id. at 405. Because these provisions precluded the plaintiff from pursuing remedies on behalf of the plan, they prevented the plaintiff from vindicating his statutory rights and remedies under the ERISA. Id. at 400-01. In addition, the plaintiff in Duke, et al. v. Luxottica U.S. Holdings Corp ., 2024 U.S. Dist. LEXIS 216345 (E.D.N.Y. Nov. 27, 2024), filed a class action on behalf of herself and other similarly-situated individuals against Luxottica U.S. Holdings Corp., Oakley, Inc., the Luxottica Group ERISA Plans Compliance & Investment Committee, and the Luxottica Group Pension Plan, alleging that the defendants violated the ERISA by improperly calculating pension benefits and using outdated actuarial assumptions that resulted in lower annuity payments to Plan participants. The court previously had dismissed the plaintiff’s claims under § 502(a)(2) of the ERISA for lack of standing but did not fully resolve other motions, including the defendants’ motion to compel arbitration of the plaintiff’s § 502(a)(3) claims. The plaintiff subsequently filed a motion for reconsideration, and the court granted in part and denied in part the motion. First, the court agreed with the plaintiff that she had standing to pursue claims under § 502(a)(2) on behalf of the Plan. The court found that the allegations of harm, including the lower annuity payments due to outdated actuarial assumptions, were sufficient to establish standing for the plaintiff to seek relief for the Plan under the ERISA. Furthermore, the court upheld its earlier decision to compel the plaintiff to arbitrate her individual claims under § 502(a)(3). The court clarified that the Summary Plan Description did not override the separate agreement to arbitrate, and there was no clear error in granting arbitration for her individual claims. The court then considered whether the arbitration provision was enforceable as to the plaintiff’s § 502(a)(2) claims. The agreement included a class action waiver and required individual arbitration. The court determined that this provision was unenforceable for the plaintiff’s § 502(a)(2) claims, as the claims were brought in a representative capacity for Plan-wide relief, which could not be arbitrated individually. The defendants argued that § 502(a)(2) only allows remedies for the Plan, not individual participants. The court disagreed. It opined that § 502(a)(2) allows claims on behalf of the Plan to address fiduciary breaches, and that the plaintiff’s claims sought equitable relief that would benefit both the Plan and its beneficiaries. The court also denied the defendants’ request to stay the litigation of the plaintiff’s § 502(a)(2) claims while arbitration proceeded for her § 502(a)(3) claims. The court ruled that the defendants failed to demonstrate sufficient grounds to justify a stay, so the two claims would proceed in parallel, with the § 502(a)(2) claims in court and the § 502(a)(3) claims in arbitration. In Parker, et al. v. Tenneco, Inc. , 114 F.4th 786 (6th Cir. 2024), the Sixth Circuit also invoked the effective vindication doctrine to affirm a district court’s denial of a defendant’s motion to compel arbitration. Id. at 789, 793. Like Cedeno , this case also involved the plaintiffs alleging breaches of fiduciary duties. Id. And, like the Second Circuit in Cedeno , the Sixth Circuit found that § 502(a)(2) contemplates suits in a representative capacity on behalf of a plan as a whole, rather than suits in an individual capacity. Id. at 798. Because the individual arbitration provision in this case eliminated the ability to proceed in this representative capacity, the Sixth Circuit found the provision to be “unenforceable as a prospective waiver of these statutory rights.” Id. Likewise, the district court in Pover, et al. v. Capital Group Cos. Inc ., 2024 U.S. Dist. LEXIS 162378 (C.D. Cal. Aug. 9, 2024), found that an arbitration agreement in a plan’s document was unenforceable under the effective vindication exception. Id. at *34. The plaintiff in this case argued that the arbitration agreement and class action waiver prevented her from recovering plan-wide remedies statutorily established by the ERISA. Id. at *18-19. The defendants argued that an individual plan participant’s recovery necessarily benefits the plan “because an increase to a part is an increase to the whole.” Id. at *20-21. The court rejected the defendants’ argument because the putative class sought to represent thousands of plan participants, and so the effects of the breach would only be “made good” by arbitration if each of those thousands of arbitrations were litigated. Id. at *27. One plaintiff’s pro rata share of recovery would not be “the plan-wide restitution that the ERISA codifies.” Id. Yagy, et al. v. Tetra Technology, Inc ., 2024 U.S. Dist. LEXIS 95670 (C.D. Cal. May 17, 2024), was an exception to the trend of denying motions to compel arbitration in class actions. In that case, the parties did not dispute that the plan contained a valid arbitration agreement which applied to the plaintiff’s claims. Id. at *8-9. Rather, the parties disagreed about the scope of relief available in arbitration. Id. at *9. The defendant argued that the

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