On August 4, 2025, the Ninth Circuit Court of Appeals held that an employer cannot unilaterally impose arbitration provisions on plan participants through plan amendments. Specifically, the court held that employers cannot bind participants to arbitrate ERISA claims without their express consent and that the plaintiff in the case had not agreed to arbitrate ERISA claims as required under the Federal Arbitration Act (FAA).
Background
The plaintiff in the case, Robert Platt, brought an ERISA class action lawsuit against his employer, Sodexo, regarding a monthly tobacco surcharge imposed on employee health insurance premiums. Specifically, the plaintiff brought claims on behalf of himself and other plan participants to recover losses under ERISA Section 502(a)(1)(B), to enforce the terms of the plan, and to seek equitable relief under Section 502(a)(3) based on the surcharge’s alleged noncompliance with wellness program regulations. The plaintiff also asserted a breach of fiduciary duty claim for losses under ERISA Section 502(a)(2).
However, the defendant employer sought to compel arbitration based on an arbitration provision it had unilaterally added to the plan. The U.S. District Court for the Central District of California denied the defendant’s motion to compel arbitration, holding the arbitration clause was unenforceable because the defendant had unilaterally modified the plan to include the arbitration provision without the plaintiff’s consent. The defendant subsequently appealed the district court’s decision to the Ninth Circuit Court of Appeals.
The Court’s Analysis
The Ninth Circuit affirmed the district court’s denial of the defendant's motion to compel arbitration, holding that arbitration under the FAA requires mutual consent. While the defendant had asserted it provided the plaintiff(s) with adequate notice regarding the binding arbitration in the form of a summary of material modification (SMM) and an email with a link to an updated summary plan description (SPD), the court held that the notice was insufficient and did not constitute mutual assent under California contract law. Furthermore, the court held that ERISA does not provide employers with the power to create binding arbitration agreements with plan participants without their express or implied consent.
The court concluded there was no enforceable arbitration agreement between Platt and Sodexo for claims under Section 502(a)(1)(B) and Section 502(a)(3) but reversed in part the district court’s ruling on the fiduciary claim under Section 502(a)(2). The court remanded the case to the district court for further proceedings consistent with the opinion.
Employer Takeaway
The use of arbitration provisions in employer-sponsored health plans has remained a contentious issue, as courts have demonstrated reticence in applying them to ERISA fiduciary claims. However, the case here highlights the importance of carefully evaluating the inclusion of any such provision in health plans and the degree to which participants must affirmatively consent to arbitration. Employers should always proceed cautiously when considering these types of provisions and should review them with legal counsel before incorporating them into any ERISA-governed benefit plans.
Review the opinion in Platt v. Sodexo, S.A., et al.