Smith v. Board of Directors of Triad Manufacturing, Inc.

Dist. Ct. did not err in denying defendants’ motion to compel arbitration of plaintiff’s class action under section 1132(a)(2) of ERISA, alleging that defendants breached their fiduciary duties with respect to certain transactions that defendants-Board members made on behalf of defined contribution employee retirement plan to which plaintiff was member. Ct. of Appeals found that claims under ERISA are generally subject to arbitration. However, Ct. found that plan’s arbitration clause could not be enforced under “effective vindication exception,” where” (1) plan’s arbitration provision, which contained class action waiver, precluded plaintiff from seeking or receiving relief for individuals other than plaintiff; (2) plaintiff sought, among other things, removal of fiduciary under section 1109(a) of ERISA, which would provide relief to others; and (3) instant exception applied, where, as here, arbitration provision acted as prospective waiver of parties right to pursue statutory remedies under ERISA. Also, because plan’s arbitration provision was nonseverable, no claims under section 1132(a)(2) of ERISA could be arbitrated.