I’m glad that the Sixth Circuit has joined other Federal appeals courts in stating that arbitration provisions are invalid as a prospective waiver of rights and remedies guaranteed under ERISA.
In this recent case, Parker v. Tenneco, the participants claimed that plan fiduciaries didn’t use a prudent process for selecting, monitoring, and replacing plan investment options and that fees for managed account services, recordkeeping, and account administration were excessive. The fiduciaries sought to compel arbitration, arguing that the plans contained individual arbitration provisions that required participants to arbitrate their claims on an individual basis rather than suing on behalf of the plans or in a representative capacity (such as in a class action). The trial court sided with the participants, however, ruling that the individual arbitration provision impermissibly limited participants’ substantive rights under ERISA.
While I don’t like frivolous court cases (hello cases against some target date funds), people should have a right to pursue class action claims for excessive fees.
