Recently, the Eastern District of Kentucky joined the growing list of courts expressing their standpoint on arbitration and class action waiver provisions in ERISA-governed defined contribution plans. This decision came about through the case of Merrow v. Horizon Bank. In its conclusion, the court ruled in favor of the enforceability of such a provision and directed the plaintiffs’ ERISA breach of fiduciary duty and prohibited transaction claims towards arbitration.
The lawsuit in question in the Merrow v. Horizon Bank case involved the Employees Retirement Income Security Act (ERISA) breach of fiduciary duty and prohibited transaction claims. The decision of the Eastern District of Kentucky to compel arbitration places the court amidst other courts tasked with examining arbitration and class action waiver provisions in ERISA-regulated defined contribution plans.
ERISA-governed defined contribution plans primarily involve employees’ retirement plans offered by private industry employers. The inclusion and enforcement of arbitration and class action waiver provisions can pose potentially significant impacts on the way these plans are implemented and managed.
In the wake of this decision, employers and other involved parties may need to reassess how their defined contribution plans operate in line with ERISA guidelines while still ensuring the enforceability of their arbitration and class action waiver provisions.
More details on the court’s decision and its implications can be found on JDSupra, courtesy of Faegre Drinker Biddle & Reath LLP.