The U.S. Supreme Court has again declined to enter the battle over whether ERISA disputes should be handled via arbitration or trial.
The justices on Nov. 4 declined without comment to hear a petition by Argent Trust Co. that a complaint about its role in an employee stock ownership plan should have been addressed by arbitration. The trust company lost at both the federal District Court and federal appeals courts in Argent Trust Co. vs. Ramon Cedeno et al.
This was the fifth time since 2019 that the Supreme Court has declined to review an arbitration vs. trial dispute in cases affecting 401(k) plans and 403(b) plans as well as employee stock ownership plans.
Argent was the former trustee through October 2019 of an ESOP offered by Strategic Financial Services, a financial services firm that employed Cedeno, who has been a plan participant.
Cedeno sued in November 2020 alleging that Argent and other defendants caused the plan to pay more for the company stock than it was worth, according to a court document.
A New York U.S. District Court rejected the request for arbitration in November 2021. The 2nd U.S. Circuit Court of Appeals in New York ruled against Argent in May 2024.
The District Court and appeals court rulings said an arbitration provision in the Strategic Financial governing document was unenforceable because it restricted Cedeno’s complaint to himself rather than for planwide relief under ERISA, Argent told the Supreme Court. Argent argued that some appeals courts have ruled for arbitration in ERISA cases, adding that the Supreme Court should provide a consistent guideline.
