The Expert's Examiner


NINTH CIRCUIT DENIES INVESTORS' REQUESTS FOR REHEARING AND REHEARING EN BANC IN CASE HOLDING THAT ERISA CLAIMS ARE ARBITRABLE
January 14, 2020

The Ninth Circuit has denied the request for rehearing and rehearing en banc in Dorman v. Charles Schwab Corp., 934 F.3d 1107 (Aug. 20, 2019), a case we covered in SAA 2019-33 (Aug. 28). The Dorman Court overruled a 35-year-old precedent, concluding that intervening Supreme Court rulings signify that ERISA claims are arbitrable. To review, the Ninth Circuit had held in Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984), that claims asserted under Employee Retirement Income Security Act (“ERISA”), could not be compelled to arbitration under the Federal Arbitration Act (“FAA”). The Amaro Court held that: “ERISA mandated ‘minimum standards [for] assuring the equitable character of [ERISA] plans’ that could not be satisfied by arbitral proceedings. 724 F.2d at 752. We reasoned that ‘[a]rbitrators, many of whom are not lawyers, lack the competence of courts to interpret and apply statutes as Congress intended’” (brackets in original). Since 1985, SCOTUS has held more than once that the FAA will prevail over another federal statute, unless the latter expressly bars predispute arbitration agreements (“PDAA”) (see, for example, American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013), and Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018)). The unanimous panel concluded in Dorman that: “In light of intervening Supreme Court case law, including … Italian Colors …, we conclude that our holding in Amaro is no longer good law…. Since Amaro, the Supreme Court has ruled that arbitrators are competent to interpret and apply federal statutes. See, e.g., Am. Express Co., 570 U.S. at 233 (holding that there is nothing unfair about arbitration -- even arbitration on an individual basis -- as long as individuals can vindicate their statutory rights in the arbitral forum). Recently, in Munro v. Univ. of S. Cal., 896 F.3d 1088 (9th Cir. 2018), we noted that ‘there is considerable force’ to the argument that Amaro has been overruled…. We agree” (some citations omitted). As we reported in SAA 2019-36 (Sep. 18), Dorman on September 10 filed a Petition for rehearing and rehearing en banc, arguing that these actions “are warranted because the panel’s August 20, 2019 memorandum opinion conflicts with this Court’s binding precedent and the decisions of at least four other circuit courts of appeals on an issue that is elemental to the enforcement mechanism of [ERISA].” Schwab responded on October 21. The unanimous November 7 Order denying both rehearing requests states: “The full court has been advised of the Petition for Rehearing En Banc and no judge of the court has requested a vote on the Petition for Rehearing En Banc.”

(ed: *We are a bit surprised. **As noted in our original write-up, while a three-judge panel normally cannot overturn Circuit precedent, the Opinion notes an exception where an intervening SCOTUS decision “undermines an existing precedent.” ***For a copy of the original Petition, Reply Brief, or Order, email us at Help@SACArbitration.com.)