This column previously considered the issue of whether the Employee Retirement Income Security Act ("ERISA") allowed plans to require arbitration of ERISA claims ("Part I").1 Part I discussed the competing views of the U.S. Court of Appeals for the Ninth Circuit in Dorman v. Charles Schwab Corp. ("Dorman II")2 and a lower court from the U.S. District Court for the Northern District of Illinois in Smith v. Greatbanc Tr. Co.3
As Part I noted at the time, Smith was pending before the U.S. Court of Appeals for the Seventh Circuit. Since then, the Seventh Circuit issued its decision in Smith v. Board of Directors of Triad Mfg., Inc., affirming the lower court's decision.4 However, as discussed below, the Seventh Circuit's reasoning differs slightly from the lower court in at least one significant respect that is supportive of the idea that ERISA claims can be arbitrated. But in other respects, the Seventh Circuit's decision points to some possible limits on what plan sponsors may require be arbitrated.
The upshot is continued uncertainty that plan sponsors will have to navigate to the extent they wish to require arbitration of ERISA claims.
Background on Arbitration Generally
By way of reminder, whether arbitration can, as a general matter, be required is fully endorsed by the Federal Arbitration Act's5 "liberal federal policy favoring arbitration agreements" because it can provide employees and employers "quicker, more...
