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Dorman v. The Charles Schwab Corp.

United States Court of Appeals, Ninth Circuit

August 20, 2019

Michael F. Dorman, individually as a participant in the Schwab Plan Retirement Savings and Investment Plan and on behalf of a class of all those similarly situated, Plaintiff-Appellee,
v.
The Charles Schwab Corporation; Charles Schwab & Co., Inc.; Schwab Retirement Plan Services, Inc.; Charles Schwab Bank; Charles Schwab Investment Management, Inc.; Walter W. Bettinger III; Charles R. Schwab; Joseph R. Martinetto; Martha Tuma; Jay Allen; Dave Callahan; John C. Clark, Defendants-Appellants.

          Argued and Submitted June 14, 2019 San Francisco, California

          Appeal from the United States District Court, No. 4:17-cv-00285-CW, for the Northern District of California Claudia Wilken, District Judge, Presiding

          Howard Shapiro (argued), Stacey C.S. Cerrone, and Tulio D. Chirinos, Proskauer Rose LLP, New Orleans, Louisiana; Myron D. Rumeld, Proskauer Rose LLP, New York, New York; John E. Roberts, Proskauer Rose LLP, Boston, Massachusetts; for Defendants-Appellants.

          James Bloom (argued), Todd M. Schneider, and Kyle G. Bates, Schneider Wallace Cottrell Konecky Wotkyns LLP, Emeryville, California; Todd S. Collins, Eric Lechtzin, Shanon J. Carson, and Ellen T. Noteware, Berger Montague PC, Philadelphia, Pennsylvania; for Plaintiff-Appellee.

          Before: Ronald M. Gould and Sandra S. Ikuta, Circuit Judges, and Benita Y. Pearson, [*] District Judge.

         SUMMARY[**]

         ERISA / Arbitration

         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).

         The panel addressed other issues in a concurrently filed memorandum disposition.

          OPINION

          PEARSON, DISTRICT JUDGE.

         Defendants appeal the district court's denial of their motion to compel individual arbitration in an ERISA action filed by Michael Dorman, a former participant in the Schwab Retirement Savings and Investment Plan (the "Plan"). Dorman participated in a defined contribution 401(k) retirement plan through his employment with Charles Schwab & Co., Inc. ("Schwab"). In 2017, Dorman filed a class action suit in district court alleging that Defendants violated ERISA and breached their fiduciary duties by including Schwab-affiliated investment funds in the Plan- despite the funds' poor performance-to generate fees for Schwab and its affiliates. Defendants moved to compel arbitration pursuant to an arbitration agreement in the Plan. The district court denied the motion, and this interlocutory appeal followed.

         On appeal, Defendants contend that the district court erred by not enforcing the Plan's arbitration agreement. We address these arguments in a concurrently filed memorandum disposition. But before we can reach the parties' specific contentions, we must first address the threshold question of whether ERISA claims can be subject to mandatory arbitration. In so doing, we must revisit our holding in Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984), in which we held that ERISA claims were not arbitrable. In light of intervening Supreme Court case ...


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