The U.S. Supreme Court on Jan. 13 declined to review a petition by Tenneco Inc. requesting that a 401(k) plan dispute be governed by arbitration rather than trial, marking the sixth time since 2019 that the court eschewed ruling on similar complaints.
Defined contribution plans and trustees have fought for years, trying to persuade federal judges to support arbitration with little success. As is typical, the justices offered no comment on the petition in Tenneco Inc. et al. vs. Tanika Parker et al.
Like the other plan sponsors and trust companies that have unsuccessfully petitioned the Supreme Court, Tenneco lost at the federal appeals court level.
Although the various ERISA lawsuits’ facts vary, the common theme was the judges’ ruling that arbitration provisions governing individuals didn’t cover participants’ class-action claims as representing retirement plan participants.
ERISA doesn’t prohibit arbitration, but the judges in these cases focused on specific language in plan documents.
Current and former employees of two Tenneco 401(k) plans sued in May 2022 — they later amended their complaint, and the two plans have been consolidated — saying Tenneco, its subsidiaries and fiduciaries charged excessive fees for investments, managed accounts, record keeping and administration. They also criticized inadequate management of the investment lineup.
A federal judge in Detroit rejected Tenneco’s argument for arbitration in August 2023, saying ERISA offers protection to all employees and that "these rights and remedies provided to plans under ERISA may not be taken away by agreement."
The 6th U.S. Circuit Court of Appeals, Cincinnati, affirmed the federal court’s decision in favor of the participants in August 2024. Because Tenneco’s individual arbitration provision represents a waiver of participants’ rights, “the arbitration procedure is unenforceable,” the judges wrote.
Tenneco’s petition to the Supreme Court asserted that some appeals courts have offered conflicting views on when arbitration is permitted. It argued that some lower courts have used “judge-made” interpretations to allow ERISA to supersede guidelines in the Federal Arbitration Act.
Tenneco faced an uphill battle to convince the Supreme Court. After the Cincinnati appeals court sent the case back to the federal District Court to resume consideration, U.S. District Court Judge Judith E. Levy, Ann Arbor, Mich., rejected Tenneco’s request to pause consideration until the Supreme Court had ruled on Tenneco’s petition.
“Their attempts to distinguish their petition from recently rejected, similar petitions fail,” the judge wrote Dec. 6. “Because defendants have not demonstrated a reasonable likelihood that the Supreme Court will grant their petition, they cannot meet their burden of showing that a stay is warranted.”
Tenneco endured one additional indignity. When a party petitions the Supreme Court, the other party usually offers a response unless it waives that right. The attorney for the Tenneco participants waived the right to respond.