Hawkins v. Cintas Corp.

32 F.4th 625

Raymond HAWKINS and Robin Lung, individually and on behalf of all others similarly situated, Plaintiffs-Appellees,

v.CINTAS CORPORATION; Investment Policy Committee; Scott D. Farmer, Board of Directors of Cintas Corporation, Defendants-Appellants.

No. 21-3156

United States Court of Appeals, Sixth Circuit.

Argued: December 9, 2021

Decided and Filed: April 27, 2022

ARGUED: Robert N. Hochman, SIDLEY AUSTIN LLP, Chicago, Illinois, for Appellants. Mark K. Gyandoh, CAPOZZI ADLER, P.C., Harrisburg, Pennsylvania, for Appellees. ON BRIEF: Robert N. Hochman, Mark B. Blocker, Chris K. Meyer, Caroline A. Wong, M. Caroline Wood, SIDLEY AUSTIN LLP, Chicago, Illinois, for Appellants. Mark K. Gyandoh, Donald R. Reavey, Gabrielle Kelerchian, CAPOZZI ADLER, P.C., Harrisburg, Pennsylvania, for Appellees.

Before: BOGGS, GIBBONS, and NALBANDIAN, Circuit Judges.

BOGGS, Circuit Judge.

In deciding whether a case belongs in arbitration, a court typically asks whether the party bringing the claim has agreed to arbitrate. But sometimes it is difficult to discern exactly who is bringing what claim . Here, individual would-be plaintiffs agreed to arbitrate certain claims, but the claim they seek to adjudicate is brought through an unusual procedure on behalf of an abstract entity.

Plaintiffs-Appellees Raymond Hawkins and Robin Lung alleged that their former employer, Appellant Cintas Corporation, breached the fiduciary duties it owed to the company's retirement plan. They brought a putative class action pursuant to § 502(a)(2) of the Employment Retirement Income Security Act of 1974 ("ERISA"). But the Plaintiffs had each signed employment agreements that contained arbitration provisions. Cintas moved to compel arbitration, arguing that the Plaintiffs were bringing individual claims covered by those provisions.

This case presents issues of first impression for this court. The weight of authority and the nature of § 502(a)(2) claims suggest that these claims belong to the plan, not to individual plaintiffs. Therefore, the arbitration provisions in these individual employment agreements—which only establish the Plaintiffs’ consent to arbitration, not the plan's—do not mandate that these claims be arbitrated. Further, the actions of Cintas and the other defendants do not support a conclusion that the plan has consented to arbitration. We therefore affirm the district court's denial of the motion to compel arbitration.

I. BACKGROUND

Appellant Cintas is a national uniform and business-supply company. As with many companies, Cintas has established a retirement plan—the Cintas Partners’ Plan (the "Plan")—for its employees. The Plan is a "defined contribution" plan, meaning that the Plan's sponsor selects a "menu" of investment options in which each participant can invest. Cintas is the Plan's sponsor. Each participant in the Plan maintains an individual account, the value of which is based on the amount contributed, market performance, and associated fees.¹

Under § 402(a)(1) of ERISA, all plans must have one or more fiduciaries responsible for managing and administrating the plan.² 29 U.S.C. § 1102(a)(1). ERISA imposes several duties on these fiduciaries. Two are at issue in this appeal: (1) the duty of loyalty—managing the plan for the best interests of its participants and beneficiaries—and (2) the duty of prudence—managing the plan with the care and skill of a prudent person acting under like circumstances.

Plaintiffs Raymond Hawkins and Robin Lung, who were Cintas employees participating in the Plan, contend that Cintas breached both duties. First, they argue that Cintas offered participants the ability to invest only in actively managed funds, rather than more cost-effective passively managed funds. Second, they claim that Cintas charged the Plan imprudently expensive recordkeeping fees.

Hawkins and Lung sued Cintas, as well the Cintas Investment Policy Committee (which is tasked with administering the Plan) and the Cintas Board of Directors (which appoints members to the committee).³ The suit was brought as a putative class action; Plaintiffs seek to represent all participants in or beneficiaries of the Plan during the class period.

But Plaintiffs entered into multiple employment agreements with Cintas during the course of their employment. While the various agreements differ slightly, all contained materially similar arbitration provisions and a provision preventing class actions.⁴ A representative example of Section 8—the relevant section—includes the following language (with added emphasis):

The rights and claims of Employee covered by this Section 8, including the arbitration provisions below, specifically include but are not limited to all of Employee's rights or claims arising out of or in any way related to Employee's employment with Employer, such as rights or claims arising under the Age Discrimination in Employment Act, as amended, Title VII of the Civil Rights Act of 1964, as amended (including amendments contained in the Civil Rights Act of 1991), the Americans With Disabilities Act, 42 U.S.C. § 1981, the Fair Labor Standards Act, the Employee Retirement Income Security Act , state anti-discrimination statutes, other state or local laws regarding employment, common law theories such as breach of express or implied contract, wrongful discharge defamation, and negligent or intentional infliction of emotional distress.

...

Either party desiring to pursue a claim against the other party will submit to the other party a written request to have such claim, dispute or difference resolved through impartial and confidential arbitration.

...

Except for workers’ compensation claims, unemployment benefits claims, claims for a declaratory judgment or injunctive relief concerning any provision of Section 4 and claims not lawfully subject to arbitration, the impartial arbitration proceeding, as provided above in this Section 8, will be the exclusive, final and binding method of resolving any and all disputes between Employer and Employee.

...

Except as otherwise required under applicable law, Employee and Employer expressly intend and agree that class action and representative action procedures shall not be asserted, nor will they apply, in any arbitration pursuant to this Section 8; Employee and Employer agree that each will not assert class action or representative action claims against the other in arbitration or otherwise; and Employee and Employer shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person.

Arguing that those agreements required Hawkins and Lung to arbitrate these claims, Cintas moved to compel arbitration and stay the federal proceedings. The district court denied both motions. It concluded that the action was brought on behalf of the Plan, and it was therefore irrelevant that Hawkins and Lung had consented to arbitration through their employment agreements. Because the Plan itself did not consent, the court reasoned, the matter was not subject to arbitration. Cintas now timely appeals.

II. ANALYSIS

A

We review a denial of a motion to compel arbitration de novo. Huffman v. Hilltop Cos., LLC , 747 F.3d 391, 394 (6th Cir. 2014). The Federal Arbitration Act, 9 U.S.C. §§ 1 et seq., requires district courts to compel arbitration "on issues as to which an arbitration agreement has been signed." Atkins v. CGI Techs. & Sols., Inc. , 724 F. App'x 383, 389 (6th Cir. 2018) (quoting KPMG LLP v. Cocchi , 565 U.S. 18, 22, 132 S.Ct. 23, 181 L.Ed.2d 323 (2011) (per curiam)). This requirement reflects "an emphatic federal policy in favor of arbitral dispute resolution." Ibid . (quoting KPMG , 565 U.S. at 21, 132 S.Ct. 23 ). Generally, "[a] written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The burden of proving that the claims are unsuited to arbitration rests with the party seeking to prevent arbitration. Green Tree Fin. Corp.-Ala. v. Randolph , 531 U.S. 79, 91, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). Still, that policy must be balanced with "ERISA's policy ... to provide ‘ready access to the Federal courts.’ " Smith v. Aegon Cos. Pension Plan , 769 F.3d 922, 931 (6th Cir. 2014) (quoting 29 U.S.C. § 1001(b) ).

This court has not yet determined whether statutory ERISA claims are subject to arbitration. But "every other circuit to consider the issue" has held that "ERISA claims are generally arbitrable." See Smith v. Bd. of Dirs. of Triad Mfg., Inc. , 13 F.4th 613, 620 (7th Cir. 2021) (collecting cases from the Second, Third, Fifth, Eighth, Ninth, and Tenth Circuits). We need not reach that issue, however, because neither party argues that Plaintiffs’ ERISA claims could not, in theory, be subject to arbitration.

"ERISA imposes high standards of fiduciary duty upon administrators of an ERISA plan." Krohn v. Huron Mem'l Hosp. , 173 F.3d 542, 547 (6th Cir. 1999). Section 502(a) of the statute authorizes civil enforcement actions. 29 U.S.C. § 1132(a). Relevant here, a civil action for breach of those fiduciary duties may be brought "by the Secretary [of Labor], or by a participant, beneficiary or fiduciary." Id. § 1132(a)(2) ; see also LaRue v. DeWolff, Boberg & Assocs., Inc. , 552 U.S. 248, 251, 128 S.Ct. 1020, 169 L.Ed.2d 847 (2008) ("Section 502(a)(2) provides for suits to enforce the liability-creating provisions of § 409, concerning breaches of fiduciary duties that harm plans.").

B

Cintas contends that the Plaintiffs agreed to arbitrate all "rights and claims" relating to their employment, including the ERISA claims at issue here. The breach-of-fiduciary-duty claims and the "right" to assert them "belong," it argues, to the Plaintiffs alone, and therefore this case belongs in arbitration. Plaintiffs...