Fiduciary defendants in an excessive fee suit have asked for a dismissal based on an arbitration agreement signed by the plaintiff.
Greystar Management Services LP has asked a federal court in Texas to dismiss the suit brought by former employee Sonia Torres. Torres filed suit in May, alleging the fiduciary breaches (and participant consequences) customary to this litigation – that, by loading the plan’s investment menu with actively managed funds, and funds that carried higher expenses than other, comparable options, (some 14,900) plan participants and beneficiaries overpaid by millions of dollars between 2013 and 2017.
The 17-page motion “to compel individual arbitration and dismiss the complaint” filed late last week notes that, in July 2016, Greystar implemented a new policy requiring all new and existing employees to enter into the Arbitration Agreement as a condition of employment with Greystar. The motion states that Greystar employees were given notice of the required Arbitration Agreement by email four times between July and September 2016, and that “to facilitate employees’ review of the Arbitration Agreement, the Information Technologies (‘IT’) department at Greystar created a module on Greystar’s employee training portal through which all employees could review the Agreement in full and either accept or decline the Agreement.”
Termination ‘Cause’
The motion notes that, on Aug. 1, 2016, “as a condition of her continued employment, Ms. Torres logged in to the employee portal using her Greystar credentials and assented to the Arbitration Agreement by clicking ‘I agree’ on the appropriate screen in the portal,” and that she “later confirmed by email to her supervisor that and all other employees at her property had accepted the Agreement.” And in fact, the motion states that Greystar subsequently terminated any employees who had not accepted the Arbitration Agreement by Oct. 1, 2016.
The defendants note that the Arbitration Agreement “requires both Ms. Torres and Greystar to arbitrate any and all legal disputes between the two parties, and it delegates any questions regarding the enforceability or applicability of the Agreement to the arbitrator.” Further, that it states that “all claims must be pursued on an individual basis only,” and contains “an explicit waiver by Ms. Torres of any right to bring a class or collective action against Greystar.”
That said, they note that “in violation of the plain language of the Arbitration Agreement, on May 13, 2019, Ms. Torres filed the instant putative class action in this Court” – and that on Sept. 4, 2019, Greystar “reminded Ms. Torres of her Arbitration Agreement and asked that she withdraw the Complaint and proceed with arbitration, but, to date, Ms. Torres has not done so.”
Ultimately, they argue that “Torres—like all Greystar employees—received notice of the Agreement on no less than four occasions,” that she continued to work at Greystar for more than two years after receiving such notice, “…thereby accepting the modification of the terms of her employment,” and that “because Ms. Torres signed an enforceable arbitration agreement containing a valid delegation clause and class action waiver, this Court should dismiss the Complaint.”
Arbitration ‘Cases’
Just weeks ago, Charles Schwab Corp. prevailed in its appeal of an excessive fee case in the Ninth Circuit – which cited the U.S. Supreme Court’s determination that arbitrators “are competent to interpret and apply federal statutes.” Arbitration clauses have also been raised as a preemption to litigation in at least two of the university 403(b) fee suits (Munro v. Univ. of S. Cal., 896 F.3d 1088 (9th Cir. 2018); also see Arbitration Clause Clips Excessive Fee Suit), as well as several dealing with 401(k)s (see Judge Extends Employment Arbitration Requirement to Claims Against Advisor and Nordstrom Plan Participant Claims 401(k) Plan Fees No Bargain).
