Plaintiff, a participant in a defined contribution retirement plan established by his former employer, filed suit under ERISA against the plan fiduciaries alleging that they breached their duties towards, and caused damages to, the plan. Harrison’s complaint sought various forms of relief, including a declaration that Defendants breached their fiduciary duties, the removal of the current plan trustee, the appointment of a new fiduciary to manage the plan, an order directing the current trustee to restore all losses to the plan, and an order directing Defendants to disgorge the profits they obtained. In response, Defendants moved to compel arbitration, citing a provision of the plan document. The District Court denied that motion, concluding that enforcing the arbitration provision of the plan would prevent Harrison from effectively vindicating the statutory remedies sought in his complaint. On interlocutory appeal, the U.S. Tenth Circuit Court of Appeals affirmed.

“Many of Harrison’s claims are brought under ERISA §1132(a)(2) and seek forms of relief that would benefit the Plan as a whole, rather than Harrison individually. Section 21(b) of the Plan Document, however, is written in a manner intended to foreclose any such plan-wide relief. In other words, Section 21(b) is not problematic because it requires Harrison to arbitrate his claims, but rather because it purports to foreclose a number of remedies that were specifically authorized by Congress in the ERISA provisions cited by Harrison. Because Section 21(b), if enforced, would prevent Harrison from vindicating in the required arbitral forum the statutory causes of action listed in his complaint, we conclude that the effective vindication exception applies in this case. Indeed, it is not clear what remedies Harrison would be left with if Section 21(b) is enforced as written. And, in fact, Section 21(b) effectively prevents any claimant from pursuing the types of claims that Harrison asserts in his complaint.”

 

Harrison v. Envision Management Holding, 59 F.4th 1090 (10^th Cir. 2023).