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10th Circ. won’t force arbitration in Radiology Co. ESOP Row – Law360


Law360 (February 9, 2023, 7:11 PM EST) — The Tenth Circuit on Thursday rejected a radiology company’s bid to force into individual arbitration a federal benefits lawsuit from workers who alleged mismanagement of their employee stock ownership plan. The panel upheld an arbitration provision in ESOP plan documents as unenforceable because it blocked remedies under federal benefits law.

A three-judge panel in a 41-page published opinion sided with the workers’ argument — backed up by the U.S. Department of Labor, which participated as amicus on behalf of workers in the case — that an arbitration provision tucked in Envision workers’ ESOP plan documents impermissibly blocked remedies under the Employee Retirement Income Security Act. That triggered the so-called effective vindication doctrine under the Federal Arbitration Act, which permits a court to overrule an arbitration agreement if it blocks a party from being able to bring claims under federal law. . . .

John Stokes, an attorney for the ESOP participants, said in an interview after the ruling came out, “We are very pleased with the decision; it is really a total win for our side, for Mr. Harrison.” 

“The court recognized that when you have an arbitration clause, the arbitration clause can’t eliminate the rights and the remedies that the plaintiff would have if they were in court, and that was the problem here,” Stokes said.

“We’ve never argued in these cases that ERISA claims are not subject to arbitration, and the court recognized that. That’s not the problem here,” Stokes added. “The problem is when someone tries to write an arbitration clause that curtails the statute, and curtails the remedies and the protections that Congress included in ERISA to protect participants and ERISA plans.” . . .

Robert Harrison and the proposed class are represented by Rachana Pathak, John Stokes and Peter K. Stris of Stris and Maher LLP and Mary J. Bortscheller, Ryan Wheeler, Michelle C. Yau and Kai H. Richter of Cohen Milstein Sellers & Toll PLLC. . . .

The case is Harrison v. Envision Management Holding Inc. Board et al., case number 22-1098, in the U.S. Court of Appeals for the Tenth Circuit.

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