Ninth Circuit holds that ERISA claims are arbitrable, overruling its own precedent based on later Supreme Court arbitration ruling

The Ninth Circuit has held, in Dorman v. Charles Schwab, that ERISA claims (brought in court in a class action) can be forced out of court and into individual arbitration through an arbitration clause in an amendment to an ERISA 401(k) plan forced on Schwab's employees. Here's how the Ninth Circuit's informal summary explains the decision:

The panel reversed the district court’s order denying defendants’ motion to compel arbitration of claims and remanded in a class action suit brought by a former participant in an ERISA retirement plan, alleging that defendants violated ERISA and breached their fiduciary duties by including certain investment funds in the plan. The panel concluded that Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984), which held that ERISA claims are not arbitrable, is no longer good law in light of intervening Supreme Court case law, including American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013).

Here's the panel's full explanation about why it was okay to overrule its prior precedent:

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. Id. at 1094 n.1. [footnote omitted] We agree.

Generally, a three-judge panel may not overrule a prior decision of the court. Miller v. Gammie, 335 F.3d 889, 899 (9th Cir. 2003) (en banc). If, however, “an intervening Supreme Court decision undermines an existing precedent of the Ninth Circuit, and both cases are closely on point[,]” the three-judge panel may then overrule prior circuit authority. Id. The issue decided by the higher court need not be identical. Id. at 900. The appropriate test is whether the higher court “undercut the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable.” Id.

“[W]here the reasoning or theory of our prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority, a three-judge panel should consider itself bound by the later and controlling authority, and should reject the prior circuit opinion as having been effectively overruled.” Miller, 335 F.3d at 893. The holding in American Express Co. that federal statutory claims are generally arbitrable and arbitrators can competently interpret and apply federal statutes, 570 U.S. at 233, constitutes intervening Supreme Court authority that is irreconcilable with Amaro. Amaro, therefore, is no longer binding precedent.

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