6th Circuit Finds Participants Don't Have to Arbitrate Excessive Fee Claims

Summary

A defined contribution (DC) plan sponsor can't require participants to resolve their ERISA excessive fee claims through binding arbitration, despite arbitration provisions in the participants' employment agreements, the 6th US Circuit Court of Appeals recently ruled (Hawkins v. Cintas Corp., No. 21-3156 (6th Cir. April 27, 2022)). The court found that the participants brought these fiduciary breach claims not as individuals but as representatives of the plan, which didn't include an arbitration provision and hadn't otherwise agreed to arbitrate. Plan sponsors considering arbitration to manage their ERISA litigation risks may consider reviewing plan terms with legal counsel.