One way to "sidestep" a Cintas-like dispute, is for sponsors to make sure an arbitration agreement is written into the plan document, he said.
Putting an arbitration agreement in an employee handbook "leads to a greater risk of it not being enforced" in an ERISA complaint, given court rulings on placing arbitration provisions in plan documents, said Nancy Ross, a Chicago-based partner at Mayer Brown LLP.
Ms. Ross, describing federal courts' differing views as "exceptionally confusing," isn't sure if the Supreme Court justices will review the Cintas case. If they are on the fence, they will most likely ask the Department of Labor for its opinion, Ms. Ross said. Justices periodically request opinions from government agencies.
The Labor Department has commented only once in a dispute between a sponsor and a plaintiff over arbitrating an ERISA complaint.
"The Secretary (of Labor) has a substantial interest in ensuring that participants are not forced to arbitrate under agreements that prohibit the plan-wide remedies that ERISA provides," said a DOL amicus brief filed in June in the case of Cedeno vs. Argent Trust Co. et al. now before the 2nd U.S. Circuit Court of Appeals in New York.
The DOL "is not here contending that ERISA claims are categorically non-arbitrable," said the amicus brief, which supported the plaintiff.
However, "a participant cannot be compelled to arbitrate if they are deprived of the full range of ERISA remedies that would be available had they brought the same claim in federal court," the DOL said.
In this case, a U.S. District Court in New York issued a pro-plaintiff ruling in November 2021 saying an employee stock ownership plan's arbitration clause was unenforceable because it didn't protect participants' ERISA rights. A participant in an ESOP run by Strategic Financial Solutions LLC, New York, sued Argent Trust Co., Atlanta, and other fiduciary defendants in November 2020, alleging ERISA violations by purchasing ESOP shares at higher than a fair-market price, thus harming participants' investments.
ERISA attorney Carol I. Buckmann agreed with Ms. Ross that if the justices are interested in the Cintas case, they will first ask for guidance from the DOL.
"The arbitrability of ERISA fiduciary breach claims is a really important federal issue," said Ms. Buckmann, founding partner of the New York law firm Cohen & Buckmann PC. "The court may well decide it is important to clarify the rules and have one nationwide standard."
Ms. Buckmann predicted that if the Supreme Court agrees to hear the Cintas case, " it will end up ruling that ERISA arbitration is permissible and then clarify who must consent."
In the meantime, Ms. Buckmann tells clients who want to compel arbitration of ERISA complaints to put a carefully-worded provision in a retirement plan document.