An arbitration provision in a defined contribution employee benefit plan that prohibited relief on behalf of the plan, allowing relief for only individual participants, is unenforceable, the court held in Williams v. Shapiro, 2025 WL 3625999 (Dec. 15, 2025).
The court ruled that the “effective vindication doctrine” prohibits prospective waivers of statutory rights granted by ERISA, the federal Employee Retirement Income Security Act. Six other circuits have applied that doctrine in similar cases, and no circuits have rejected its application.
The case arose from an ERISA defined contribution plan adopted by an entity affiliated with a law firm. As amended, the plan included an arbitration provision prohibiting actions in a representative capacity or on behalf of a class. Importantly, the plan also included a “poison pill” provision, stating that if a court held any part of the arbitration provision invalid then the entire provision would be null and void. The participants eventually brought a class action challenging sales of stock held by the plan. Among other claims, the plaintiffs accused the defendants of authorizing ERISA-prohibited transactions, along with various forms of breaches of fiduciary duties. The defendants moved to compel arbitration. The district court denied that motion on the ground that ERISA authorizes plan-wide relief, and the arbitration provision specifically prohibited such relief.
On appeal, the defendants argued that the plaintiffs’ statutory rights were sufficiently vindicated in individual arbitration, as required by the provision. The Eleventh Circuit rejected this argument, concluding that the provision required the plaintiffs to forgo substantive rights granted by ERISA. In an opinion by Judge Jordan, the court applied the effective vindication doctrine, which invalidates arbitration provisions that prospectively waive a party’s right to pursue statutory remedies. The court noted that the Supreme Court had set the parameters of that doctrine in Am. Express Co. v Italian Colors Rest., 570 U.S. 228 (2013), without applying it to invalidate the arbitration provision in question there. The doctrine also had been recognized to exist in the Eleventh Circuit’s own decisions. The court held that by prohibiting plan-wide relief the arbitration provision violated the effective vindication doctrine. And because the arbitration provision itself stated that its components were not severable, the entire provision became invalid. In ERISA cases, this decision joins others in significantly limiting the effectiveness of waivers of plan participant suits in a representative capacity.