Duane Morris Class Action Review - 2023 - Report - Page 83
state court can be removed to federal courts, among other things. In Adell, et al. v.
Cellco Partnership, 2022 U.S. App. LEXIS 12940 (6th Cir. May 11, 2022), the plaintiff
appealed the district court’s decision granting Verizon’s motion to compel arbitration.
The plaintiff’s class action lawsuit sought to represent two classes. She sought relief on
behalf of the first class in a declaratory judgment action. She asked the court to enter a
declaration that the arbitration clause in the Customer Agreement was not enforceable
as applied to state law claims against the defendant for breach of contract under the
CAFA because of an inherent conflict between arbitration under the FAA and the
CAFA’s express purposes. The Sixth Circuit affirmed. It ruled that the CAFA did not
conflict with the FAA so as to displace it and make the agreement unenforceable. It did
so by applying the Supreme Court’s analysis of a similar question regarding the
National Labor Relations Act that was decided in Epic Systems Corp. v. Lewis, et al.,
138 S. Ct. 1612 (2018). The Sixth Circuit affirmed the district court’s refusal to prevent
arbitration of the plaintiff’s claims on the ground that doing so would undermine the
CAFA (the CAFA does not mention arbitration, and does not provide clear and manifest
congressional intention signaling FAA displacement). The second class sought
damages for breach of contract based on the defendant’s imposition of a monthly
administrative charge. The Sixth Circuit affirmed the district court’s decision and
compelled arbitration because no evidence supported the plaintiff’s claim that her
consent to the agreement was not knowing and voluntary. It also ruled against the
plaintiff on her claim that she could not receive Verizon services and equipment without
waiving her personal Article III rights. The Sixth Circuit agreed with the district court’s
reasoning that because other wireless providers were available to her, the arbitration
agreement was not substantively unconscionable on this ground.
The Employee Retirement Income Security Act (ERISA) is a complex federal statute
that governs retirement plans provided by employers to their employees, among other
related benefits. The Sixth Circuit also considered another issue of first impression this
past year – namely, whether claims brought by plaintiffs under section 502(a)(2) of the
ERISA belong to the retirement plan rather than individual plaintiffs, such that they
cannot be decided in an arbitral forum.
In Hawkins, et al. v. Cintas Corp., 32 F.4th 625 (6th Cir. 2022), the defendant, a national
uniform and business products supplier, established a retirement plan governed by the
ERISA for its employees. The ERISA requires, among other things, that fiduciaries of
retirement plans like Cintas have a duty of loyalty and of prudence in managing the plan
with the care and skill of a prudent person acting under like circumstances. The
plaintiffs, a group of employees of Cintas and holders of individual retirement accounts
under the company’s retirement plan, brought a putative class action alleging that these
fiduciary duties were breached. They specifically alleged that the plan only allowed
actively managed funds, not passively managed funds, thus incurring higher fees. They
also alleged excessive recordkeeping fees were charged to plan participants. Arbitration
agreements the plaintiffs signed when they were hired expressly required arbitration of
any claims arising out of several federal statutes, including the ERISA. Accordingly, the
defendant moved to compel arbitration of the plaintiff’s claims.
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Duane Morris Class Action Review – 2023
