Supreme Court Does Not Resolve Circuit Split Involving ERISA and the Federal Arbitration Act

The issue is whether arbitration provisions that waive plan-wide relief are enforceable under ERISA.  The Sixth Circuit ruled against such provisions, while other circuits have upheld them, leading to differing outcomes in similar cases.

Tanika Parker and Andrew Farrier, employees of subsidiaries of Tenneco Inc., were participants in 401(k) retirement savings plans covered by the Employee Retirement Income Security Act (ERISA). 

Parker and Farrier claimed that the fiduciaries breached their duties, causing losses to the plans.  These plans had mandatory individual arbitration provisions. They wanted to sue on behalf of the entire plan to recover these losses and seek other remedies.

The split in the circuit courts arises from the differing interpretations of the relationship between ERISA and the FAA.  The key question is whether ERISA's protections for plan wide reliefs override the FAA's support for enforcing arbitration agreements.

The Sixth Circuit ruled that the arbitration provisions in the 401(k) plans were invalid because they waived the participants' rights to seek plan-wide relief under ERISA. This decision is based on the idea that the arbitration provisions prevented participants from pursuing remedies including recovering losses for the entire plan guaranteed by ERISA.

Other circuit courts have upheld arbitration provisions, even if they include waivers of plan-wide relief, arguing that arbitration agreements should be enforced according to their terms.  These courts believe that the Federal Arbitration Act (FAA) supports the enforcement of arbitration agreements, even if they limit the types of relief that can be sought.

The Supreme Court rejected the petition for certiorari filed by Tenneco.