The panel affirmed the district court’s denial of defendants’ motion to compel arbitration in a case in which Cathy Pover sued her former employer, The Capital Group Companies, Inc., and its fiduciaries on behalf of her employer’s retirement-savings plan, The Capital Retirement Savings Plan (the Plan), alleging that the fiduciaries mismanaged the Plan’s investments.

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The Plan is covered by the Employee Retirement Income Security Act of 1974 (ERISA), which permits plan participants to seek relief on a plan’s behalf for breach of the duties owed by the plan’s fiduciaries. The Plan contract included an arbitration requirement and a waiver by plan participants of any claims brought on “a class, collective, or representative basis.”

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The panel considered the interaction between ERISA, which entitles plan participants to sue for mismanagement of their retirement plan, and the Federal Arbitration Act (FAA), which requires courts to enforce valid agreements to arbitrate. At the intersection of these statutes is the judicially created effective-vindication doctrine that renders unenforceable arbitration agreements that prevent the vindication of statutorily protected rights and remedies.

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Because the Plan’s waiver provision forbids Pover from asserting her rights under ERISA to sue as a representative of the Plan for Plan-wide relief, the panel agreed with the district court that the waiver is unenforceable under the effective-vindication doctrine. Pover alleges fiduciary breaches that fall squarely within the category of duties that ERISA § 409 imposes on plan fiduciaries, and under ERISA § 502(a)(2), Pover is entitled to bring an action on behalf of the Plan to recover any resulting losses as well as such other equitable or remedial relief as the court may deem appropriate. The Plan’s representative-action waiver prevents Pover from enforcing her substantive rights under ERISA because her breach-of-fiduciary-duty claims can only be brought in a representative capacity. Accordingly, the waiver is unenforceable under the effective-vindication doctrine.

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Addressing the severability of the waiver and arbitration provisions, the panel concluded that Pover’s breach-of-fiduciary duty claims must be adjudicated in court rather than arbitration because the Plan’s waiver provision expressly provides that if it “is found to be unenforceable by a court of competent jurisdiction, then any claim on a class, collective, or representative basis shall be filed and adjudicated in a court of competent jurisdiction, and not in arbitration.”

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Dissenting, Judge VanDyke wrote that the majority errs twice over in finding the arbitration clause unenforceable. On the merits, he would hold that the bar on “representative” suits in the arbitration clause’s class-action waiver does not refer to third-party suits on behalf of the Plan. When read in context, that phrase refers to class action or collective “representative” suits only, not principal-agent representative suits like section 502(a)(2) ERISA claims.

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But the panel should not have even reached the issue of arbitrability because the parties expressly agreed to allow an arbitrator to decide threshold questions of arbitrability, expressing their desire to keep courts out of this dispute. Although Capital failed to make that argument before the district court, its failure to do so falls squarely within the exceptions to waiver. Judge VanDyke would have waived waiver and sent the question of arbitrability to the arbitrator.

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https://cdn.ca9.uscourts.gov/datastore/opinions/2026/07/30/24-5298.pdf