Cintas Corporation files Petition for Writ of Certiorari after Sixth Circuit Appeal is Denied

On September 8, 2022, Cintas Corporation (“Cintas” or “Defendants”) filed a petition for a Writ of Certiorari (“Petition”) after the United States Court of Appeals for the Sixth Circuit affirmed the Southern District of Ohio’s denial of a motion to compel arbitration. The Sixth Circuit upheld the District Court’s determination that the defined contribution Cintas Partners’ Plan (the “Plan”) had not consented to arbitration and, therefore, did not fall within the parameters of the arbitration agreement that Plaintiffs had signed.

Plaintiffs claim that Defendants failed to meet their fiduciary obligations under the Employee Retirement Income Security Act of 1974 (“ERISA”) by offering actively managed funds, rather than more cost-effective passively managed funds, and allowing Plan participants to pay excessive recordkeeping fees. In moving to compel arbitration, Defendants argued that because Plaintiffs signed agreements containing arbitration clauses, their claims are subject to binding arbitration. However, the District Court ruled that the Plan did not sign an arbitration agreement, and because the injuries presented are injuries to the Plan as a whole, the claims are not subject to arbitration.

The Sixth Circuit agreed, following the reasoning of the Ninth Circuit’s decision in Munro v. University of Southern California, 896 F.3d 1088 (9^th Cir. 2018). Munro establishes that an employee’s consent to arbitrate does not bar claims under ERISA § 502 because, while these claims are filed by an employee, they are filed on behalf of the plan and the plan did not consent to arbitration.

In their Petition, Defendants point to the recent Viking River Cruises, Inc. v. Moriana decision, in which the Supreme Court held that the plaintiff’s claims under California’s Private Attorneys General Act were preempted by the Federal Arbitration Act and thus subject to arbitration. 142 S. Ct. 1906 (2022). Defendants also claim that the Sixth Circuit misread Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134 (1985), and LaRue v. DeWolff, Boberg & Associates, Inc., 552 U.S. 248 (2008). In Russell, which concerned a defined benefit plan, the Supreme Court reiterated that the plan is the victim of any fiduciary breach, and any relief is available only to the plan. The Russell court further held that an individual’s entitlement would only be impacted if the entire plan was depleted. In contrast, the claims in LaRue concerned a defined contribution plan, and the court held there that fiduciary misconduct could diminish plan assets to the detriment of all individuals.

Defendants’ Petition recognizes the current split among the federal courts of appeals regarding whether an agreement to arbitrate ERISA § 502 claims is enforceable: The Second [1], Fifth and Tenth Circuits have ruled they are arbitrable, and the Sixth and Ninth Circuits have ruled they are not. Accepting the Petition would provide the Supreme Court an opportunity to resolve the split.

Updates will be posted to this blog as the matter progresses. The case caption for this lawsuit is Raymond Hawkins, et al. v. Cintas Corporation, et al. Case No. 1:19-cv-01062, filed in the Southern District of Ohio.

The legal team at Miller Shah LLP has significant experience representing class action ERISA matters. If you have any questions regarding this subject or this post, please contact Alec Berin (ajberin@millershah.com) or Anna D’Agostino (akdagostino@millershah.com). The firm can also be reached toll-free at (866) 540-5505.

[1] Although Cintas cites Bird v. Shearson Lehman/American Express for the proposition that ERISA claims may be arbitrated in the Second Circuit, the more recent ruling in Cooper v. Ruane Cunniff & Goldfarb Inc. held that an employee’s claims against his employer for breach of fiduciary duty were not subject to an arbitration clause. 990 F.3d 173 (2d Cir. 2021). However, the Cooper court based its decision on the language of the specific arbitration clause at issue. Id.