The Eastern District of Kentucky Enters the Fray, Compels Individual Arbitration
This week, the U.S. District Court for the Eastern District of Kentucky has added to the tangle of decisions addressing the enforceability of individual arbitration clauses in plan documents and employment agreements. In Merrow v. Horizon Bank, the plaintiffs brought a putative class action against Horizon Bank, the independent fiduciary trustee for the P.L. Marketing, Inc. Employee Stock Ownership Plan (the Plan) in which they participated, alleging that the trustee significantly overvalued the employer stock purchased by the Plan and ultimately caused them and the Plan to lose money. Merrow v. Horizon Bank, No. 22-cv-123, 2023 WL 7003231 (E.D. Ky. Oct. 24, 2023). The plaintiffs asserted:
- Violations for fiduciary breach and prohibited transactions under ERISA ' 502(a)(2), seeking losses on behalf of the Plan
- Knowing participation in ERISA violations under ERISA ' 502(a)(3)
The trustee moved to dismiss for lack of subject matter jurisdiction, pointing to the Plan document's mandatory arbitration clause and waiver of class-wide arbitration. Specifically, according to the Plan document:
[e]ach Claimant, whether pursuing a claim for benefits or other relief on behalf of the Plan as a whole, by participating in this Plan, is specifically waiving the right it otherwise would have had to sue the Company, Trustee, the Administrator or any party to whom administration or investment discretion is delegated hereunder in court and to have such claims decided by a judge or jury.
The Plan's class arbitration...
