Cedeno v. Sasson

21-2891-cv
Cedeno v. Sasson

In the
United States Court of Appeals
For the Second Circuit

August Term 2022

No. 21-2891-cv

RAMON DEJESUS CEDENO,
Plaintiff-Appellee,

v.

RYAN SASSON, ARGENT TRUST CO., DANIEL BLUMKIN, IAN BEHAR, STRATEGIC
FINANCIAL SOLUTIONS, LLC, DUKE ENTERPRISES LLC, TWIST FINANCIAL LLC,
BLAISE INVESTMENTS LLC,
Defendants-Appellants.

Appeal from the United States District Court
for the Southern District of New York
No. 20-cv-9987-JGK
John G. Koeltl, District Judge, Presiding.
(Argued February 2, 2023; Decided May 1, 2024)

Before: LOHIER, MENASHI, and ROBINSON, Circuit Judges.

Defendants-Appellants Argent Trust Company, Ryan Sasson, Daniel
Blumkin, Ian Behar, Strategic Financial Solutions, LLC, Duke Enterprises LLC,
Twist Financial LLC, and Blaise Investments LLC appeal from an order of the
District Court denying their motion to compel arbitration.

Plaintiff Ramon Dejesus Cedeno was an employee of Strategic Financial
Solutions, LLC, and a participant in its Strategic Employee Stock Ownership
Plan, a defined contribution retirement plan. Argent, the trustee for the Plan,
represented the Plan in the purchase of Strategic Family, Inc. from selling
shareholders Sasson, Blumkin, Behar, and their wholly owned LLCs. Cedeno
sued in the United States District Court for the Southern District of New York
under the Employee Retirement Income Security Act (ERISA), alleging the
transaction caused the Plan to incur substantial losses and that Argent breached
fiduciary duties owed to Plan participants and beneficiaries under ERISA.
Cedeno brought claims under ERISA Section 502(a)(2) on behalf of the Plan, and
sought relief including restoration of Plan-wide losses, a surcharge, accounting,
constructive trust on wrongfully held funds, disgorgement of profits from the
transaction, and further equitable relief as the court deemed just.

Defendants moved to compel arbitration under the Federal Arbitration Act
(FAA), pointing to a provision in the Plan’s governing document that required
Plan participants to resolve any claims related to the Plan in arbitration, and
specifically limiting the relief available in the arbitration proceeding to remedies
impacting the participant’s own account and forbidding any relief that would
benefit any other employee, participant, or beneficiary. The District Court
(Koeltl, J.) denied the motion, reasoning that the agreement was unenforceable
because it would prevent Cedeno from effectuating rights guaranteed by
Congress through ERISA, namely, the plan-wide relief available under Section
502(a)(2) to enforce the rights established in ERISA Section 409(a). We agree that
the arbitration provision is unenforceable because it would prevent Cedeno from
pursuing the Plan-wide remedies Sections 409(a) and 502(a)(2) unequivocally
provide. Accordingly, we AFFIRM the decision of the district court.

Judge Menashi dissents in a separate opinion.

PETER K. STRIS (Rachana A. Pathak,
Douglas D. Geyser, John Stokes, Tillman
J. Breckenridge, on the brief), Stris &
Maher LLP, Los Angeles, CA and
Washington, D.C., for Plaintiff-Appellee.

ALYSSA C. GEORGE (Seema Nanda, G.
William Scott, Jeffrey M. Hahn, on the
brief), U.S. Department of Labor, Office

2
of the Solicitor, Washington, D.C., as
Amicus Curiae in support of Plaintiff-
Appellee.

SARAH M. ADAMS (Lars C. Golumbic,
Michael J. Prame, Paul J. Rinefierd, on
the brief), Groom Law Group, Chartered,
Washington, D.C., for Defendant-
Appellant Argent Trust Co.

Jeremy P. Blumenfeld, Margaret M.
McDowell, Jared R. Killeen, Antonia M.
Moran, Michael E. Kenneally, Morgan,
Lewis & Bockius LLP, Philadelphia, PA
and Washington, D.C., for Defendants-
Appellants Ryan Sasson, Daniel Blumkin,
Ian Behar, Duke Enterprises LLC, Twist
Financial LLC, Blaise Investments LLC, and
Strategic Financial Solutions, LLC.

Jennifer B. Dickey, U.S. Chamber
Litigation Center, Washington, D.C.,
Andrew J. Pincus, Archis A.
Parasharami, Daniel E. Jones, Erica A.
White, Nancy G. Ross, Jed W.
Glickstein, Washington, D.C. and
Chicago, IL.

Mark D. Taticchi, Elizabeth M. Casey,
Richard J. Pearl, Faegre Drinker Biddle
& Reath LLP, Philadelphia, PA and
Chicago, IL, for Amici Curiae the ESOP
Association and the American Benefits
Council in support of Defendants-
Appellants.

3
ROBINSON, Circuit Judge:

This case requires us to consider the enforceability under the Federal

Arbitration Act (FAA) of certain provisions in an arbitration agreement that limit

the remedies an employee benefit plan participant or beneficiary can pursue

under Section 502(a)(2) of the Employee Retirement Income Security Act

(ERISA), 29 U.S.C. § 1132(a)(2). Sections 502(a)(2) and 409(a) of ERISA, 29 U.S.C.

§ 1109(a), allow employee benefit plan participants and beneficiaries to seek

equitable relief on behalf of the plan against plan fiduciaries for various statutory

violations and breaches of fiduciary duties, and do not include a distinct set of

remedies directed solely at individuals. The provisions within the parties’

arbitration agreement at issue here, on the other hand, purport to limit

participants or beneficiaries to seeking relief in arbitration solely for the benefit

of their own individual plan accounts, and preclude relief that would benefit

other account holders. At issue is whether those provisions are enforceable

under the FAA.

Plaintiff-Appellee Ramon Dejesus Cedeno sued his former employer,

Defendant-Appellant Strategic Financial Solutions, LLC, along with Defendant-

Appellant Argent Trust Company—the trustee of his Strategic Employee Stock

Ownership Plan (the “Plan”)—and the selling shareholders of Strategic Family,

4
Inc.: Defendants-Appellants Ryan Sasson, Daniel Blumkin, Ian Behar, and their

wholly owned LLCs Duke Enterprises LLC, Twist Financial LLC, and Blaise

Investments LLC (collectively “Defendants”). Cedeno’s primary allegation is

that Argent breached fiduciary duties owed to the Plan in connection with the

Plan’s purchase of shares of Strategic Family for more than fair market value.

Cedeno’s complaint seeks several forms of relief under Section 502(a)(2) of

ERISA, including restoration of Plan-wide losses, surcharge, accounting,

constructive trust on wrongfully held funds, disgorgement of profits gained from

the transaction, and further equitable relief as the court deems necessary.

Defendants moved to compel arbitration, citing a provision in the Plan’s

governing document that required Plan participants to resolve any legal claims

arising out of or relating to the Plan in individualized arbitration. Two

provisions within the arbitration agreement explicitly limited any relief sought

under Section 502(a)(2) of ERISA to the restoration of losses within the

participant’s individual account, and they prohibited any relief that would

benefit any other employee, participant, or beneficiary, or otherwise bind the

Plan, its trustee, or administrators.

The United States District Court for the Southern District of New York

(Koeltl, J.) denied the motion. See Cedeno v. Argent Trust Co., No. 20-cv-9987, 2021

5
WL 5087898 (S.D.N.Y. Nov. 2, 2021). The district court concluded that the

agreement was unenforceable because it would prevent Cedeno from pursuing

remedies under Section 502(a)(2) that were, by their nature, Plan-wide. For the

reasons explained below, we agree with the district court that the contested

provisions within the arbitration agreement are unenforceable because they

amount to prospective waivers of participants’ substantive statutory rights and

remedies under ERISA. Accordingly, we AFFIRM the district court’s denial of

the Defendants’ motion to compel arbitration.

BACKGROUND

I. Facts 1

Ramon Dejesus Cedeno worked as a senior customer service

representative at Strategic Financial Solutions, LLC—a financial services firm—

from 2016 to 2019. He has participated in the Plan since May 1, 2017, the date the

Plan was adopted. An employee stock ownership plan is “a type of pension plan

that invests primarily in the stock of the company that employs the plan

1The facts are drawn from the record before the district court when it adjudicated the
Defendants’ motion to compel arbitration, chiefly Cedeno’s complaint and the exhibits to the
Defendants’ motion. See Nicosia v. Amazon.com, Inc., 834 F.3d 220, 229 (2d Cir. 2016) (“In
deciding motions to compel, courts . . . consider all relevant, admissible, evidence submitted by
the parties and contained in pleadings, depositions, answers to interrogatories, and admissions
on file, together with . . . affidavits.”) (quoting Chambers v. Time Warner, Inc., 282 F.3d 147, 155
(2d Cir. 2002)) (internal quotation marks omitted). Although the truth of Cedeno’s allegations
may be disputed, the content of his allegations and most relevant facts are not.

6
participants.” Fifth Third Bancorp v. Dudenhoeffer, 573 U.S. 409, 412 (2014). The

Plan is subject to ERISA, a federal statute that sets certain minimum standards,

including fiduciary duties, for voluntarily established retirement plans in private

industry. See 29 U.S.C. § 1001.

This case arises from Defendants’ alleged violations of ERISA in

connection with the management of the Plan and implicates several specific Plan

provisions.

A. Defendants’ Alleged Breaches

Because the details of Defendants’ alleged breaches are ancillary to the

issues in this appeal, we include only a general overview. Cedeno’s primary

allegations under Sections 409(a) and 502(a)(2) are that Argent violated its

fiduciary obligations under ERISA in connection with the Plan’s purchase of

shares in Strategic Family (the “Transaction”).

The Transaction involved the following players. As noted above,

Defendant Strategic Financial, LLC is a financial services firm that employed

Cedeno and the Plan’s administrator. Strategic Family, Inc. is Strategic

Financial’s parent company. It is a private company with no public market for

its stock. Defendant Argent Trust Company is an investment management firm

that was the trustee of the Plan through October 31, 2019, when it was replaced

7
as trustee. As trustee, it had “exclusive authority to manage and control the

assets of the Plan and had sole and exclusive discretion to authorize and

negotiate the . . . Transaction on the Plan’s behalf.” App’x 17. Defendants Ryan

Sasson, Daniel Blumkin, and Ian Behar were selling shareholders in the

Transaction via their wholly owned LLCs, Defendants Duke Enterprises LLC,

Twist Financial LLC, and Blaise Investments LLC. These selling shareholders,

who controlled Strategic Family at the time of the Transaction, retained control

afterward by controlling the board of directors and holding leadership positions,

including CEO, President, and Chief Sales Officer.

The Plan’s purchase of the Strategic Family shares was financed through

notes payable by the Plan to the selling shareholders. Cedeno alleges that the

Plan overpaid for the shares by well over one hundred million dollars, allowing

the selling shareholders to “unload their interests in Strategic Family above fair

market value . . . and saddle the Plan with tens of millions of dollars of debt.”

App’x 14-15. As a result, the value of the Plan to its beneficiaries and

participants, including Cedeno, suffered “substantial[ly].” App’x 31.

Argent, as trustee of the Plan, negotiated the Transaction. Cedeno alleges

that Argent violated its fiduciary duties to Plan participants like him by causing

the Plan to overpay for the Strategic Family shares. Argent allegedly accepted

8
unreasonably optimistic financial projections by Strategic Family; conducted

poor due diligence; improperly included a control premium in valuing the shares

rather than applying a control discount, even though the Plan did not assume

control of Strategic Family upon its purchase of the company; and improperly

approved a term that caused the Plan, subsequent to the initial purchase, to

assume an additional obligation of over $100 million for the Strategic Family

stock. Cedeno further alleges that Argent received fees from and an

indemnification agreement with Strategic Family and Strategic Financial, and

that these benefits provided a motive for Argent to accept an inflated value for

Strategic Family’s shares.

B. The Plan

Several features of the Plan are relevant to the issues in this case.

First, the Plan is a “defined contribution plan,” with a separate individual

account for each participant. App’x 21. A defined contribution plan “promises

the participant the value of an individual account at retirement, which is largely

a function of the amounts contributed to that account and the investment

performance of those contributions.” LaRue v. DeWolff, Boberg & Assocs., Inc., 552

U.S. 248, 250 n.1 (2008). In contrast, a “defined benefit plan” “generally promises

the participant a fixed level of retirement income, which is typically based on the

9
employee’s years of service and compensation.” Id. The defined contribution

framework has overtaken the defined benefit paradigm as the more common

type of employee retirement plan. See, e.g., James F. Parker, Revival of Substantive

Equity: Increased Household Risk, Safety Valve Litigation, and Availability of the Stock

Drop Jury, 21 WASH. & LEE J. OF C.R. & SOC. JUST. 425, 433 (2015) (citing Edward

A. Zelinsky, The Defined Contribution Paradigm, 114 YALE L.J. 451, 471 (2004)).

The Plan, adopted in 2017, is governed by the terms of the Plan Document,

subject to the requirements of ERISA. Section 17.10 of the Plan Document is

titled “Mandatory and Binding Arbitration.” App’x 105. The relevant provisions

of Section 17.10 are as follows:

(b) Any claim by a Claimant 2 (i) that arises out of, concerns or relates
to the Plan or the Trust, including without limitation, any claim for
benefits, (ii) asserting a breach of, or failure to follow, the Plan or
Trust; or (iii) asserting a breach of, or failure to follow, any provision
of ERISA . . . including without limitation claims for breach of
fiduciary duty. . . (collectively, “Covered Claims”), shall be settled by
binding arbitration . . . .

(f) All Covered Claims must be brought solely in the Claimant’s
individual capacity and not in a representative capacity or on a class,
collective, or group basis. Each arbitration shall be limited solely to
one Claimant’s Covered Claims and that Claimant may not seek or
receive any remedy that has the purpose or effect of providing

2A “claimant” under the Plan is defined as a “Participant, Beneficiary, or any other person” who
claims entitlement to benefits under the Plan or has unresolved questions about benefits under
the Plan. App’x 104.

10
 additional benefits or monetary or other relief to any Employee,
Participant or Beneficiary other than the Claimant.

(g) If a Covered Claim is brought under ERISA section 502(a)(2) to
seek relief under ERISA section 409, the Claimant’s remedy, if any,
shall be limited to (i) the alleged losses to the Claimant’s Accounts
resulting from the alleged breach of fiduciary duty, (ii) a pro-rated
portion of any profits allegedly made by a fiduciary through the use
of Plan assets where such pro-rated amount is intended to provide a
remedy solely for the benefit of the Claimant’s accounts, or (iii) such
other remedial or equitable relief as the arbitrator deems proper so
long as such remedial or equitable relief does not include or result in
the provision of additional benefits or monetary relief to any
Employee, Participant or Beneficiary other than the Claimant, and is
not binding on the Administrator or the Trustee with respect to any
Employee, Participant or Beneficiary other than the Claimant.

App’x 105-06.

Additionally, Section 17.10(h) includes a non-severability clause which

provides that if a court finds the requirements of Sections 17.10(f) or 17.10(g)

“unenforceable or invalid, then the entire Arbitration Procedure shall be

rendered null and void in all respects.” App’x 106.

II. District Court Proceedings

In 2020, Cedeno filed a class action complaint. In it, he alleged that Argent

breached its fiduciary duties by causing the Plan to enter into the Transaction

and pay more than fair market value for the Strategic Family shares. Among

other provisions of ERISA, Cedeno brought claims for relief under Sections 409

11
and 502(a)(2) based on Argent’s alleged breach of its fiduciary duties. He sought

various forms of relief, including:

• A declaration that Argent breached its fiduciary duties to the Plan under
ERISA;
• An order requiring that each Defendant found to have violated ERISA
make good to the Plan the losses resulting from the breaches of ERISA and
restore any profits made through use of the Plan assets;
• An order requiring Defendants to provide “other appropriate equitable
relief to the Plan and its participants and beneficiaries, including but not
limited to surcharge, providing an accounting for profits, and imposing a
constructive trust and/or equitable lien on any funds wrongfully held by
Defendants;”
• An order requiring that Argent “disgorge any fees it received in
conjunction with its services as Trustee for the Plan” in the Transaction in
addition to any earnings or profits made; and
• “[S]uch other and further relief as the Court deems equitable and just.”

App’x 41-42.

Defendants moved to compel arbitration pursuant to the FAA. They

asserted that Cedeno was bound by the mandatory arbitration provision in

Section 17.10 of the Plan Document. Defendants specifically requested that the

district court compel arbitration “on an individual basis, rather than in a

representative capacity or class, collective, or group basis.” D. Ct. Dkt. No. 60

(Memorandum in Support of Motion to Compel) at 2. Defendants argued that

compelling individual arbitration would “not affect the remedy that [Cedeno]

could personally achieve under ERISA section 502(a)(2),” asserting that Cedeno

12
could, in any event, recover losses only within his individual plan account. See

id. at 18-19 (citing LaRue, 552 U.S. at 256).

The district court denied the Defendants’ motion to compel arbitration.

See Cedeno v. Argent Trust Co., No. 20-cv-9987, 2021 WL 5087898 (S.D.N.Y. Nov. 2,

2021). The court concluded that the arbitration provision acted as a “prospective

waiver[] of [a] statutory right[],” and thus was unenforceable. Id. at *5. The

district court explained that ERISA Section 409(a) provides for restitution to the

entire plan and ERISA Section 502(a)(2) authorizes a plan participant to bring a

civil action to obtain “restitution of the entirety of the loss to the plan.” Id. at *3.

Because the arbitration provision limited Cedeno to recovering losses within his

individual plan account, the provision would impermissibly limit the availability

of Plan-wide remedies explicitly authorized by ERISA, and thus was

unenforceable. Id. at *3-5. The district court further concluded that because the

Plan Document provided that the remedy section of the arbitration provision

was non-severable, the entire arbitration provision was unenforceable. Id. at *6.

Accordingly, the district court denied the Defendants’ motion. Defendants

appealed.

DISCUSSION

13
 We have appellate jurisdiction because the FAA “permits interlocutory

appeals from the denial of a motion to compel arbitration.” Meyer v. Uber Techs.,

Inc., 868 F.3d 66, 72 (2d Cir. 2017) (citing 9 U.S.C. § 16). We review the district

court’s denial of Defendants’ motion to compel arbitration without deference.

See, e.g., id. And the proper interpretation of ERISA and the FAA are questions of

law that we also review without deference. Coan v. Kaufman, 457 F.3d 250, 254

(2d Cir. 2006) (ERISA); Wash. Nat’l Ins. Co. v. OBEX Group LLC, 958 F.3d 126, 136

(2d Cir. 2020) (FAA).

On appeal, Defendants argue that the district court erred by not enforcing

the arbitration agreement. Specifically, they argue that the FAA “requires courts

to enforce arbitration agreements rigorously according to their terms,” including

agreements for individualized arbitration, and that the district court erred in

applying a “theoretical exception to the FAA” in concluding the arbitration

provision here would result in a prospective waiver of participants’ statutory

rights under ERISA. Appellant’s Br. at 16 (citing Epic Sys. Corp. v. Lewis, 138 S.

Ct. 1612, 1623 (2018)). They further argue that the district court “manufactured

a . . . conflict by misreading ERISA [Sections] 502(a)(2) and 409(a) as giving

participants an unwaivable right to pursue recovery on behalf of all other plan

participants as well as themselves,” and that because Section 502(a)(2) claims can

14
be pursued on a “purely individualized basis,” a plan participant’s right to “seek

remedies on behalf of other participants’ accounts . . . is waivable.” Id. at 16-17

(citing LaRue, 552 U.S. at 250).

We disagree. Because Cedeno’s avenue for relief under ERISA is to seek a

plan-wide remedy, and the specific terms of the arbitration agreement seek to

prevent Cedeno from doing so, the agreement is unenforceable. 3 To explain our

conclusion, we consider the Supreme Court’s guidance and our own caselaw

concerning the reach of the FAA, controlling Supreme Court caselaw establishing

the framework that applies to claims under Sections 409(a) and 502(a)(2) of

3We briefly note what is not in dispute on this appeal. Defendants do not dispute the Plan is
subject to ERISA, that Argent is a plan fiduciary under ERISA, and that Cedeno is a plan
participant for purposes of ERISA and therefore can properly bring a Section 502(a)(2) claim.
Nor do Defendants dispute that the relief Cedeno seeks is available under Section 502(a)(2).
Cedeno does not dispute that the arbitration agreement applies to the claims he brings against
the Defendants. He contends only that the challenged provisions are unenforceable. Nor does
Cedeno contend that mandatory binding arbitration provisions cannot be enforced with respect
to ERISA claims in general; this Court has long held that ERISA claims for breach of fiduciary
duty may be remanded to arbitration. See Bird v. Shearson Lehman/Am. Exp., Inc., 926 F.3d 116,
119 (2d Cir. 1991). Cedeno challenges the enforceability of Sections 17.10(f) and 17.10(g) of the
Plan, not the arbitration requirement itself. And finally, neither party disputes that if this Court
concludes that either Section 17.10(f) or 17.10(g) is unenforceable, the entire arbitration
provision would be unenforceable due to the non-severability clause.

Additionally, we note that Cedeno presents an alternate ground for affirmance, namely, that the
arbitration provision is unenforceable because he did not consent to arbitration. See Appellee’s
Br. at 44-49. Because we affirm on the basis that the arbitration provision is unenforceable
insofar as it would prevent Cedeno from vindicating certain statutory remedies under ERISA,
we do not reach this argument.

15
ERISA, and the application of these legal principles to the arbitration provisions

at issue in this case.

I. The Federal Arbitration Act

Under the FAA, “[a] written provision in any . . . contract evidencing a

transaction involving commerce to settle by arbitration a controversy thereafter

arising out of such contract or transaction . . . shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity for the

revocation of any contract.” 9 U.S.C. § 2. The statute was enacted “in response

to widespread judicial hostility to arbitration.” American Express Co. v. Italian

Colors Restaurant, 570 U.S. 228, 232 (2013). To correct this impulse, “courts must

rigorously enforce arbitration agreements according to their terms, including

terms that specify with whom the parties choose to arbitrate their disputes and

the rules under which that arbitration will be conducted.” Id. at 233 (internal

citations, quotation marks, and alterations omitted).

A core concern of the FAA is protecting the enforceability of agreements to

vindicate substantive rights through an arbitral forum using arbitral procedures.

See, e.g., Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974). But the FAA does

not purport to reach agreements to waive substantive rights and remedies, and

courts will invalidate provisions that prevent parties from effectively vindicating

16
their statutory rights. See, e.g., Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth,

Inc., 473 U.S. 614, 637 n.19 (1985); 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 273-74

(2009).

The Supreme Court recently reemphasized that the FAA “does not require

courts to enforce contractual waivers of substantive rights and remedies” in

Viking River Cruises, Inc. v. Moriana. 596 U.S. 639, 653 (2022). The Court

explained:

The FAA’s mandate is to enforce arbitration agreements. And as we have
described it, an arbitration agreement is a specialized kind of forum-
selection clause that posits not only the situs of suit but also the procedure
to be used in resolving the dispute. An arbitration agreement thus does
not alter or abridge substantive rights; it merely changes how those rights
will be processed. And so we have said that by agreeing to arbitrate a
statutory claim, a party does not forego the substantive rights afforded by
the statute; it only submits to their resolution in an arbitral … forum.

Id. (internal quotation marks, brackets, and citations omitted) (emphasis and

alterations in original).

The Court also made it clear that the policy favoring enforcement of

agreements to arbitrate does not automatically extend to enforcement of any

provision within an arbitration agreement. Id. at 1919 n.5. The Court explained

that the basis of the principle that the FAA does not mandate enforcement of

waivers of substantive rights is “that the FAA requires only the enforcement of

17
‘provisions’ to settle a controversy ‘by arbitration,’ and not any provision that

happens to appear in a contract that features an arbitration clause.” Id. (internal

citation omitted); see also Mitsubishi Motors, 473 U.S. at 628 (“By agreeing to

arbitrate a statutory claim, a party does not forgo the substantive rights afforded

by the statute; it only submits to their resolution in an arbitral, rather than a

judicial, forum.”).

For that reason, terms in an arbitration agreement that have the effect of

prospectively waiving a party’s statutory remedies are not enforceable. As the

Court noted in considering an arbitration agreement in Mitsubishi, “[I]n the event

the choice-of-forum and choice-of-law clauses operated in tandem as a

prospective waiver of a party’s right to pursue statutory remedies for antitrust

violations, we would have little hesitation in condemning the agreement as

against public policy.” 473 U.S. at 637 n.19.

Although the Supreme Court has never invalidated a provision in an

arbitration agreement on this basis, it has repeatedly recognized the general

principle that provisions within an arbitration agreement that prevent a party

from effectively vindicating statutory rights are not enforceable. See, e.g., Italian

Colors, 570 U.S. at 235-36, 238 (declining to apply “effective-vindication

exception” to invalidate contractual waiver of class arbitration merely because

18
plaintiff’s cost of individually arbitrating a federal statutory claim exceeded the

potential recovery); 14 Penn Plaza LLC, 556 U.S. at 273-74 (“[A]lthough a

substantive waiver of federally protected civil rights will not be upheld, we are

not positioned to resolve in the first instance whether the [collective bargaining

agreement] allows the Union to prevent respondents from ‘effectively

vindicating’ their ‘federal statutory rights in the arbitral forum.’” (internal

citations omitted)); Green Tree Financial Corp.-Alabama v. Randolph, 531 U.S. 79, 90

(2000) (“[E]ven claims arising under a statute designed to further important

social policies may be arbitrated because so long as the prospective litigant

effectively may vindicate his or her statutory cause of action in the arbitral

forum, the statute serves its functions.” (internal quotation marks and brackets

omitted)); Gilmer v. Interstate/Johnson Lane Corporation, 500 U.S. 20, 28 (1991) (“So

long as the prospective litigant effectively may vindicate his or her statutory

cause of action in the arbitral forum, the statute will continue to serve both its

remedial and deterrent function.” (citing Mitsubishi, 473 U.S. at 637) (internal

quotation marks and brackets omitted)).

This Court has recognized the effective vindication doctrine and applied it

to invalidate arbitration agreements that purport to waive enforcement of federal

statutory rights. See, e.g., Gingras v. Think Finance, Inc., 922 F.3d 112, 127 (2d Cir.

19
2019), cert. denied, 140 S. Ct. 856 (2020). In Gingras, we considered an arbitration

provision in a “payday loan” agreement that provided for application of

Chippewa Cree tribal law to any disputes and that disclaimed the applicability of

any state or federal laws. Id. at 126-27. We noted that “the Supreme Court has

made clear that arbitration agreements that waive a party’s right to pursue

federal statutory remedies are prohibited.” Id. at 127. Recognizing that the

provisions appeared wholly to foreclose the borrowers from vindicating rights

granted by federal and state law, we held that “the just and efficient system of

arbitration intended by Congress when it passed the FAA may not play host to

this sort of farce.” Id. (citing Hayes v. Delbert Servs. Corp., 811 F.3d 666, 674 (4th

Cir. 2016)) (internal quotation marks and brackets omitted). We accordingly

declined to enforce the arbitration agreements because they sought to prevent

borrowers from “pursu[ing], much less vindicat[ing],” federal and state statutory

rights provided by consumer protection laws. Id.

The lesson from these binding decisions—that courts will not enforce

provisions in arbitration agreements that prevent a party from effectively

vindicating their statutory rights and securing their statutory remedies—

critically informs our analysis here.

II. ERISA Section 502(a)(2) Claims

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 At issue in this case is how this lesson applies to Cedeno’s claims under

ERISA Section 502(a)(2). The text of the statute and two Supreme Court

decisions establish a framework for our analysis and inform our conclusion that

ERISA contemplates plan-wide remedies, and only plan-wide remedies, to

address certain breaches of fiduciary duties by plan fiduciaries.

A. ERISA

ERISA Sections 409(a) and 502(a)(2) work in tandem to allow plan

participants to bring civil actions against plan fiduciaries who breach their duties

to the plan. Section 409(a), titled “Liability for breach of fiduciary duty,”

provides:

Any person who is a fiduciary with respect to a plan who breaches
any of the responsibilities, obligations, or duties imposed upon
fiduciaries by this subchapter shall be personally liable to make good
to such plan any losses to the plan resulting from each such breach,
and to restore to such plan any profits of such fiduciary which have
been made through use of assets of the plan by the fiduciary, and shall
be subject to such other equitable or remedial relief as the court may
deem appropriate, including removal of such fiduciary.

29 U.S.C. § 1109(a) (emphases added). Section 502(a)(2), titled “Civil

enforcement,” is essentially the enforcement mechanism of Section 409(a). It

enables the Secretary of Labor or participants, beneficiaries, or fiduciaries of a

21
plan to bring civil actions to seek “appropriate relief” under Section 409. 29

U.S.C. § 1132(a)(2).

These two provisions together establish the vehicle for individual plan

participants to pursue claims based on a plan fiduciary’s breach of its duties

pursuant to Section 409(a). ERISA provides avenues for individual participants

to pursue claims for other kinds of violations by plan fiduciaries. See, e.g., 29

U.S.C. § 1132(a)(1) (allowing civil actions by a participant or beneficiary to

recover benefits due under the plan, to enforce rights under terms of plan, to

clarify rights to future benefits under the plan, or to address plan administrator’s

refusal to supply certain information); id. § 1132(a)(4) (allowing civil actions for

appropriate relief by the Secretary or a participant or beneficiary arising from

violations of plan’s statutory reporting obligations). But the Supreme Court has

repeatedly recognized that Section 502(a)(2) is the enforcement mechanism for

violations of Section 409(a). See, e.g., LaRue, 552 U.S. at 253 (explaining that

statutory duties imposed on fiduciaries pursuant to Section 409(a) relating to

“the proper management, administration, and investment of fund assets” are

enforceable through Section 502(a)(2) (citation and internal quotation marks

omitted)); see also Varity Corp. v. Howe, 516 U.S. 489, 511 (1996) (suggesting that

Section 409(a), which is enforceable by participants and beneficiaries through

22
Section 502(a)(2), reflects “a special congressional concern about plan asset

management”).

B. Massachusetts Mutual Life Insurance Company v. Russell

The foundational case for purposes of the issue here is Massachusetts

Mutual Life Insurance Company v. Russell. 473 U.S. 134 (1985). In Russell, the

Supreme Court concluded that Section 502(a)(2) claims can only be brought to

pursue relief on behalf of a plan, and cannot be used as a mechanism to seek

individual equitable relief for losses arising from the mismanagement of a plan.

Russell, a beneficiary of an ERISA-backed insurance plan, sought to recoup

damages arising from the delayed processing of a medical claim via a Section

502(a)(2) claim. Id. at 136. She specifically argued that the defendants had

violated the fiduciary duties outlined in Section 409(a) when they failed to timely

process her claim, giving her an individual cause of action under Section

502(a)(2). Id. at 138.

The Supreme Court disagreed, holding that although Section 502(a)(2)

authorized a beneficiary to bring an action against a fiduciary who violated

Section 409, any recovery for such an action “inures to the benefit of the plan as a

whole.” Id. at 140. Justice Stevens, writing for the Court, explained that the text

of Section 409 emphasized that the fiduciary was liable “to make good to such

23
plan any losses to the plan . . . and to restore to such plan any profits of such

fiduciary which have been made through use of assets of the plan.” Id. at 140

(quoting 29 U.S.C. § 1109(a)) (alterations and emphases in original). Justice

Stevens continued, “[a] fair contextual reading of the statute makes it abundantly

clear that its [drafters] were primarily concerned with the possible misuse of plan

assets, and with remedies that would protect the entire plan, rather than with the

rights of an individual beneficiary.” Id. at 142. Thus, Russell could not use

Section 502(a)(2) to recoup her personal losses caused by the delayed processing

of her claim, because such losses would benefit her individually, and not the

entire plan. See also Coan, 457 F.3d at 259 (recognizing that section 502(a)(2)

contemplates litigation in a “representative capacity on behalf of the plan,” and

requiring a plaintiff take adequate steps to properly act in such a representative

capacity (quoting Russell, 473 U.S. at 142 n.9)).

C. LaRue v. DeWolff, Boberg & Associates, Inc.

One issue in this case is whether and to what extent the Supreme Court’s

subsequent decision in LaRue casts doubt on the Court’s conclusion that Sections

502(a)(2) and 409(a) together establish a framework pursuant to which a plan

participant aggrieved by a breach of duty by a plan fiduciary may seek remedies

only on behalf of and for the plan.

24
 In LaRue, the Supreme Court allowed a plaintiff to use a Section 502(a)(2)

claim to recover for losses sustained in his individual account within a defined

contribution plan. 552 U.S. at 250. The plaintiff was a participant in a defined

contribution plan that allowed him to “direct the investment of [his]

contributions.” Id. LaRue alleged that defendants failed to make certain changes

to his investments as he directed and that, as a result, his interest in the plan was

depleted by approximately $150,000. Id. at 251. He sought to recoup those losses

through a Section 502(a)(2) claim. Id. The question was whether he could do so.

Justice Stevens—again writing for the Court—held that he could, and that

this result directly flowed from the rationale of Russell. Id. at 250. The Court

explained that the misconduct LaRue alleged fell “squarely” within the category

of breached fiduciary obligations to the plan addressed in Section 409(a), and

thus that LaRue could pursue his claim under Section 502(a)(2). Id. at 253. The

Court distinguished Russell, explaining that the plaintiff there had “received all

the benefits to which she was contractually entitled, but sought consequential

damages arising from a delay in the processing of her claim”—a remedy

unavailable under Section 409(a) because such relief would not benefit the plan.

Id. at 254. In short, a critical distinction between Russell and LaRue was that

Russell did not allege a breach of fiduciary duties as defined in Section 409(a)—

25
that is, fiduciary duties “with respect to a plan”—but LaRue did. 29 U.S.C. §

1109(a) (emphasis added). Consequently, LaRue could pursue a claim through

Section 502(a)(2), whereas Russell could not.

In its discussion, the LaRue court walked back some of the broad language

in Russell that suggested that the only violations cognizable under Section 409(a)

are those that impact the “entire plan.” LaRue, 552 U.S. at 254-55. The Court

explained that “Russell’s emphasis on protecting the ‘entire plan’ from fiduciary

misconduct reflects the former landscape of employee benefit plans.” Id. at 254.

By the time of LaRue, the “landscape [had] changed,” as defined contribution

plans had come to “dominate the retirement plan scene.” Id. at 254-55. “Unlike

the defined contribution plan in this case, the disability plan at issue in Russell

did not have individual accounts; it paid a fixed benefit based on a percentage of

the employee’s salary.” Id. at 255 (citing Russell v. Mass. Mut. Life Ins. Co., 722

F.2d 482, 486 (9th Cir. 1983)). The Court recognized that in contrast to defined

benefit plans, where mismanagement by plan administrators affects an

individual’s entitlement to a defined benefit only if it creates or enhances the risk

of default by the entire plan, in the context of defined contribution plans,

mismanagement of plan assets by plan administrators can injure participants at

the individual account level. Id. The Court continued:

26
 Whether a fiduciary breach diminishes plan assets payable to all
participants and beneficiaries, or only to persons tied to particular
individual accounts, it creates the kind of harms that concerned the
[drafters] of § 409. Consequently, our references to the “entire plan”
in Russell, which accurately reflect the operation of § 409 in the
defined benefit context, are beside the point in the defined
contribution context.

Id. at 256. The Court reinforced its conclusion by pointing to other provisions of

ERISA that indicate that fiduciaries can be liable for losses experienced only at

the individual account level. Id. The Court then concluded: “We therefore hold

that although § 502(a)(2) does not provide a remedy for individual injuries distinct from

plan injuries, that provision does authorize recovery for fiduciary breaches that

impair the value of plan assets in a participant’s individual account.” Id.

(emphasis added).

The LaRue Court thus recognized that Section 409(a) protects against

breaches of fiduciary duty involving the management of assets within defined

contribution plans, whether the injury is felt at the plan level or directly at the

individual account level, and that such breaches are thus actionable under Section

502(a)(2). But the Court also held firm to its conclusion in Russell that even in

such cases, Section 502(a)(2) provides no remedy for “individual injuries distinct

from plan injuries.” Id.

27
 The dissent’s suggestion that LaRue in any way abrogated Russell’s holding

that section 502(a)(2) provides a remedy only for injuries to the plan, dissent at 8

and 15 n.14, is thus squarely at odds with the Supreme Court’s own holding. At

most, LaRue recognized that Section 502(a)(2) provides a remedy for injuries to

the plan that are felt only at an individual account level; the Court did not

suggest that Section 502(a)(2) allows individualized relief for injuries that are felt

at the plan level. 4

We recently affirmed this view in a post-LaRue decision, explaining,

“Sections 502(a)(2) and 409, read together, mean that a plaintiff suing for breach

of fiduciary duty under [Section] 502(a)(2) . . . may seek recovery only for injury done

to the wronged plan.” Cooper v. Ruane Cunniff & Goldfarb Inc., 990 F.3d 173, 180 (2d

Cir. 2021) (citing LaRue, 552 U.S. at 256) (emphasis added); see also Munro v. Univ.

of Southern Cal., 896 F.3d 1088, 1093 (9th Cir. 2018) (“[In LaRue], the [Supreme]

Court made clear that it had not reconsidered its longstanding recognition that it

is the plan, and not the individual beneficiaries and participants, that benefit

4 Defendants’ alleged breach of fiduciary duties here had plan-wide impact; in contrast

to LaRue, the impact of the breach was not felt only at the individual account level. The
Plan’s purchase of Strategic Family shares at above-market rates, saddling the Plan with
millions of dollars of debt, allegedly undermined the value of the Plan “to the substantial
detriment of the Plan and its participants and beneficiaries,” including Cedeno. App’x
31.

28
from a winning claim for breach of fiduciary duty, even when the plan is a

defined contribution plan.”). In sum, nothing about LaRue alters Russell’s

holding that remedies under Section 502(a)(2) are limited to providing relief to

the plan.

III. Application

In light of this legal framework, we conclude that Sections 17.10(f) and (g)

of the arbitration agreement, which waive Cedeno’s statutory remedies under

Sections 409(a) and 502(a)(2), are unenforceable. We are not swayed by

Defendants’ arguments to the contrary, and find support for our view in the

persuasive decisions of sister circuits. Because these provisions within the

arbitration agreement are unenforceable, and in light of the non-severability

provision, we conclude that the arbitration agreement itself is unenforceable.

A. Enforceability of Sections 17.10(f) and (g)

On their face, Sections 17.10(f) and (g) prevent claimants like Cedeno from

pursuing the substantive statutory remedies available to them under Sections

409(a) and 502(a)(2) of ERISA, leaving them without effective avenues for

vindicating their substantive rights under Section 409(a). Because the provisions

operate as a prospective waiver of claimants’ statutory rights and remedies, they

are unenforceable.

29
 Sections 17.10(f) and (g) prevent Cedeno from pursuing remedies on

behalf of the Plan. In particular, Section 17.10(f) requires claimants like Cedeno

to bring their claims solely in their “individual capacity and not in a

representative capacity,” and prohibits them from seeking or receiving “any

remedy that has the purpose or effect of providing additional benefits or

monetary or other relief to any Employee, Participant or Beneficiary other than

the Claimant.” App’x 105. Section 17.10(g) limits a claimant’s remedy to

recovering for the alleged losses to the claimant’s accounts, a pro-rated portion of

the profits allegedly made by a fiduciary through the use of Plan assets, and

other remedial or equitable relief as long as it “does not include or result in the

provision of additional benefits or monetary relief to any Employee, Participant,

or Beneficiary other than the Claimant, and is not binding on the Administrator

or the Trustee with respect to any Employee, Participant or Beneficiary other

than the Claimant.” Id. at 105-06.

These restrictions effectively preclude Cedeno from pursuing the remedies

available to him under Section 502(a)(2) for Defendants’ violations of their

obligations under Section 409(a). As explained above, this Court recognized in

Russell, and reaffirmed in LaRue, that the statutory remedies available to

claimants like Cedeno under Section 502(a)(2) run only to the Plan. See Section II,

30
above. Though Section 409(a) codifies fiduciary duties that protect a plan as a

whole, as well as holders of individual accounts within the plan, the Section

502(a)(2) vehicle for enforcing Section 409(a) provides for only plan-wide

remedies. Russell, 473 U.S. at 142; LaRue, 552 U.S. at 256. If Sections 17.10(f) and

(g) prevent Cedeno from pursuing the statutory plan-wide remedies available

under Section 502(a)(2), then they effectively prevent him from vindicating his

substantive statutory rights under Section 409(a) and remedies under Section

502(a)(2).

And, for the reasons set forth above, if the provisions within the arbitration

agreement operate as a “prospective waiver of [Cedeno’s] right to pursue

statutory remedies” under Sections 409(a) and 502(a)(2), then it follows that they

are unenforceable. Mitsubishi, 473 U.S. at 637 n.19.

B. Response to Defendants’ Arguments

Relying on a line of cases upholding provisions requiring individualized

arbitration rather than proceedings in which claims are aggregated, Defendants

argue that Cedeno has no unwaivable statutory right to pursue collective, as

opposed to individualized, arbitration. They contend that ERISA contains no

“clearly expressed congressional intention” to displace the FAA and create a

right to engage in legal proceedings on a group basis. Appellant’s Br. at 26-35.

31
And they argue that, like the plaintiff in LaRue, Cedeno can effectively vindicate

his statutory rights by pursuing individualized claims for relief that make him

whole without impacting the rights of other participants and beneficiaries.

Defendants’ arguments are unavailing.

1. Waivers of Collective-Action Procedures

Defendants argue that “[a] long series of Supreme Court rulings, involving

a variety of statutory rights, recognizes that agreements to waive the ability to

pursue claims in an aggregated manner—such as through a representative, class

or collective action—must be enforced under the FAA.” Appellant’s Br. at 24

(citing Epic Systems v. Lewis, 138 S. Ct. 1612, 1627-28 (2018); Italian Colors, 570 U.S.

at 233; AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011); Gilmer, 500 U.S.

at 35). They contend that the same result is warranted here, as there is no

unwaivable right to proceed through collective action.

This argument misses the mark for at least two reasons. For one thing,

Cedeno is not asserting a free-floating right to proceed through collective action

for its own sake; he is asserting a right to pursue the full range of statutory

remedies to enforce his substantive statutory rights under Section 409(a). Sections

17.10(f) and (g) do not simply take off the table the means to secure a claimant’s

statutory rights and remedies through collective action, while leaving intact an

32
alternative path through individual arbitration. As we’ve explained, these

provisions, if enforced, would leave claimants like Cedeno without any means of

securing the full range of statutory remedies available to him.

That fact distinguishes this case from the line of authority Defendants rely

upon. For example, in Epic Systems, in the context of claims against employers

under the Fair Labor Standards Act, the Supreme Court upheld an arbitration

agreement that required “individualized arbitration.” 138 S. Ct. at 1620.

Nothing in the Epic Systems decision suggests that the “individualized

arbitration” provision had the effect of waiving any party’s substantive statutory

rights and remedies. Id. at 1628. Similarly, in Italian Colors, the Court enforced a

contractual waiver of class arbitration in the context of a merchant’s antitrust

action against American Express. 570 U.S. at 239. The merchant argued that the

high cost of pursuing such a claim on an individualized basis precluded it from

vindicating its rights. Id. at 231. The Supreme Court disagreed, emphasizing

that the class-action waiver “no more eliminates [the] parties’ right[s] to pursue

their statutory remedy than did federal law before its adoption of the class action

for legal relief in 1938.” Id. at 236 (citations omitted). As in Epic Systems and the

other cases Defendants rely on, in Italian Colors the restrictive arbitration

33
provisions did not effectively eliminate the merchant’s substantive rights and

remedies.

Defendants’ argument misses a second critical point: in considering the

enforceability of provisions in arbitration agreements that prohibit

“representational” arbitration of various sorts, the Supreme Court has not

adopted a one-size-fits-all approach because not all “representational”

arbitration is the same. The Court has recognized a qualitative difference

between waivers of collective-action procedures like class actions, and waivers

that preclude a party from arbitrating in a representational capacity on behalf of a

single absent principal, a point it recently drove home in Viking River. See 596 U.S.

at 656-58.

In Viking River, the Court considered whether, and to what extent, the FAA

preempts a California law that invalidates contractual waivers of the right to

assert representative claims as provided for in California’s Labor Code Private

Attorneys General Act of 2004 (PAGA). Id. at 643. In doing so, the Court

distinguished between two kinds of “representational” claims: those in which a

plaintiff is authorized by statute to act as an agent or proxy of a single

principal—the State, in the case of PAGA—and those in which a representative

plaintiff’s individual claims are a basis to “adjudicate claims of multiple parties

34
at once, instead of in separate suits.” Id. at 654 (quoting Shady Grove Orthopedic

Associates, P.A. v. Allstate Ins. Co., 559 U.S. 393, 408 (2010)) (internal quotation

marks omitted).

The Court explained that in the latter category of representative claims,

including class-action claims, “the changes brought about by the shift from

bilateral arbitration to class-action arbitration are too fundamental to be imposed

on parties without their consent.” Id. at 657 (citation and internal quotation

marks omitted) (emphasis in original). But claims in which a single agent

arbitrates in a representative capacity on behalf of a single principal are a

different matter. The Court explained,

Nothing in the FAA establishes a categorical rule mandating
enforcement of waivers of standing to assert claims on behalf of
absent principals. Non-class representative actions in which a single
agent litigates on behalf of a single principal are part of the basic
architecture of much of substantive law. Familiar examples include
shareholder-derivative suits, wrongful-death actions, trustee actions,
and suits on behalf of infants or incompetent persons. Single-agent,
single-principal suits of this kind necessarily deviate from the strict
ideal of bilateral dispute resolution posited by Viking [River Cruises].
But we have never held that the FAA imposes a duty on States to
render all forms of representative standing waivable by contract. Nor
have we suggested that single-agent, single-principal representative
suits are inconsistent [with] the norm of bilateral arbitration as our
precedents conceive of it.

Id. at 641.

35
 The Court explained that in contrast to class-action arbitration, arbitration

between one party and a single agent acting in a representative capacity on

behalf of an absent principal does not involve a “degree of deviation from

bilateral norms” that is “alien to traditional arbitral practice.” Id. at 658. Thus,

PAGA’s restriction on the enforceability of waivers of representative capacity

litigation on behalf of a single principal—namely, the State of California—was

not preempted by the FAA. Id. at 662-63.

The aspect of PAGA that did run afoul of the FAA was the statute’s built-in

mechanism of claim joinder, which allowed an aggrieved employee to use the

Labor Code violations the employee personally suffered as a basis to join to the

action any claims that could have been raised by the State in an enforcement

proceeding, whether or not those claims were related to the aggrieved

employee’s own grievances. Id. at 659. The Court reasoned that such a rule

would leave parties to choose between an arbitration “in which the range of

issues under consideration is determined by coercion rather than consent” and

forgoing arbitration altogether. Id. at 661. To the extent that California law

provided that PAGA actions could not be divided into individual and non-

individual claims, the Court concluded that rule was preempted and Viking

River Cruises was entitled to compel arbitration of the plaintiff’s individual

36
claims. Id. at 662. Having so concluded, and because PAGA provided no

mechanism to enable a court to adjudicate non-individual claims once the

individual claim has been sent to arbitration, the Court concluded that the non-

individual claims should be dismissed. Id. at 663.

Although Viking River explored the reach of the FAA’s preemption of state

laws prohibiting parties from waiving representational arbitration—a context

distinct from this case—its core insight that from the perspective of the FAA

there is a qualitative difference between arbitrating on behalf of an absent

principal and arbitrating on behalf of a class of individuals is instructive. The

line of cases upholding “individualized arbitration” provisions all deal with the

latter scenario. This case involves the former.

The dissent’s challenges to the analogy between a plaintiff seeking relief

for the plan under Section 502(a)(2) for fiduciary breaches that violate Section

409(a) and specific other kinds of representative litigants miss the point. Dissent

at 10-11. The common thread is that, as in those other cases, a plaintiff seeking

relief under Section 502(a)(2) acts in a representative capacity seeking relief for a

single entity—the plan—as opposed to a collection of individuals. That an

individual must have a personal stake in the relief sought on behalf of the plan to

have Article III standing for a suit under Section 502(a)(2) does not mean the

37
plaintiff therefore litigates in an individual capacity to recover for the plaintiff’s

own individual injuries rather than in a representative capacity to secure relief

for the plan. Dissent at 8-9 (citing Thole v. U.S. Bank, 590 U.S. 538, 543 (2020)).

Neither Thole nor logic suggests otherwise. See id.; 590 U.S. at 546 (noting that

plaintiff participants in a defined-benefit plan did not assert that

mismanagement of the plan put their future pension benefits at risk).

Moreover, the fact that this Court requires that a participant seeking relief

under Section 502(a)(2) “take adequate steps under the circumstances properly to

act in a ‘representative capacity on behalf of the plan,’” reinforces that a Section

502(a)(2) claim is inherently representational. Coan, 457 F.3d at 261 (citation

omitted). It thus makes sense that Cedeno invoked Federal Rule of Civil

Procedure 23 in his complaint even though this is not actually a class action; we

recognized in Coan that compliance with the requirements of Rule 23 is likely

sufficient to properly act in a representative capacity for purposes of a Section

502(a)(2) claims. Id. The dissent asserts that Coan’s holding that a participant

bringing a Section 502(a)(2) claim acts in a representative capacity did not

survive LaRue. Dissent at 15, n.14. That assertion is flatly contradicted by the

Supreme Court’s own holding in LaRue. See pages 27-28, above.

2. Clear Statement of Congressional Intent

38
 In arguing that ERISA contains no “clearly expressed Congressional

intention” to prohibit agreements to engage in individualized arbitration,

Appellant’s Br. at 29, Defendants likewise respond to an argument Cedeno has

not made.

In Epic Systems, the Supreme Court considered an argument that the

National Labor Relations Act (NLRA) overrides the FAA’s ordinary guidance

that provisions in arbitration agreements, including provisions requiring

individualized arbitration, should be enforced according to their terms. 138 S.

Ct. at 1623-30. The Court explained that a party suggesting that two statutes

cannot be harmonized, and that one displaces the other, “bears the heavy burden

of showing a clearly expressed congressional intention that such a result should

follow.” Id. at 1624 (internal quotation marks omitted). It discerned no such

clearly expressed intent in the NLRA. Id. at 1624-27. Rather, the Court explained

the NLRA was silent about any class or collective action procedures required in

litigation or arbitration. Id. at 1628.

The problem for Defendants, and for the dissent, is that Cedeno does not

argue that ERISA and the FAA conflict such that ERISA overrides the FAA.

Instead, he argues that specific provisions in the arbitration agreement prevent

him from vindicating statutory remedies provided by ERISA, making those

39
provisions unenforceable. See Appellee’s Br. at 13-15 (summarizing argument).

As the Supreme Court explained in Italian Colors, after considering whether any

clear congressional command required it to reject the contested waiver of class

arbitration, “Our finding of no ‘contrary congressional command’ does not end

the case.” Id. at 235. The Court went on to consider separately whether the

waiver at issue prevented the aggrieved merchant from effectively vindicating its

statutory rights. Id. at 235-38.

In short, Defendants’ contention that ERISA reflects “no clear

congressional intent” to displace the FAA with respect to matters involving

individualized arbitration is inapposite to Cedeno’s arguments and our analysis.

3. Cedeno’s Individualized Rights and Remedies

Finally, with respect to Defendants’ argument that LaRue suggests that

Cedeno can effectively vindicate his substantive rights if Sections 17.10(f) and (g)

are enforceable, we reiterate that LaRue reinforced, rather than undermined, the

Supreme Court’s holding in Russell that the remedies available under Section

502(a)(2) for fiduciary breaches that violate Section 409(a) inure to the benefit of

the plan, thereby providing only indirect relief to individual plan participants and

beneficiaries. See Section II.C, above. In LaRue, the defendant’s alleged breach

under Section 409(a) caused a loss solely within LaRue’s individual account.

40
Accordingly, the remedy available to him, while directed at the plan, impacted

only LaRue’s individual account within the plan. 552 U.S. at 256. But nothing in

LaRue suggests that an individual claimant like Cedeno who is aggrieved by a

breach of fiduciary duty that has a plan-wide impact can seek a remedy under

Section 502(a)(2) that benefits solely that individual’s account. That notion is

inconsistent with the plain language of Section 409(a), which speaks solely of

injuries to the plan, and flies in the face of the Supreme Court’s reading of the

statute in Russell and LaRue. See 29 U.S.C. § 1109(a); Russell, 473 U.S. at 140-42;

LaRue, 552 U.S. at 256 (“[Section] 502(a)(2) does not provide a remedy for

individual injuries distinct from plan injuries.”).

Moreover, contrary to Defendants’ argument, Cedeno cannot vindicate his

substantive statutory rights if Sections 17.10(f) and (g) are enforceable. Those

provisions take the only available statutory vehicle for vindicating Cedeno’s

rights under Section 409(a)—a suit under Section 502(a)(2) seeking remedies

directed at the Plan—off the table. The alternative enforcement framework

spelled out in the arbitration agreement, which contemplates relief directed

solely at Cedeno’s account within the plan and allows recovery only of Cedeno’s

pro rata shares of a fiduciary’s misbegotten gains, implicitly rests on the fiction

that such a statutory enforcement mechanism exists. It doesn’t. Nothing in

41
Section 409(a) or 502(a)(2) allows a court or arbitral forum to slice and dice

individual plan participants’ and beneficiaries’ injuries resulting from

mismanagement by fiduciaries in the way Sections 17.10(g) and (f) suggest.

And even if there were a mechanism for making Cedeno financially whole

through adjustments only to his individual account within the Plan, contrary to

Defendants’ claims, there is no legal way to provide many of the equitable

remedies allowed by statute and sought by Cedeno without impacting the

accounts of other plan participants and beneficiaries or binding the Plan

Administrator and Trustee vis-à-vis other participants. In addition to seeking

restoration of plan-wide losses, Cedeno is also seeking relief that is by definition

plan-wide, including a surcharge, accounting for profits, the imposition of a

constructive trust on any funds wrongfully held by Defendants, and

disgorgement of fees, earnings, or profits Argent received from the Transaction.

These are plan-wide remedies that fall squarely within the scope of the relief

Sections 409(a) and 502(a)(2) make available to plan participants. See 29 U.S.C. §

1109(a); see also Munro, 896 F.3d at 1093-94 (holding LaRue could not allow

defendants to limit plan participant plaintiffs to individualized relief in

arbitration because “claims brought by the [plaintiffs] arise from alleged

42
fiduciary misconduct as to the Plans in their entireties and are not, as in LaRue,

limited to mismanagement of individual accounts.”).

The dissent’s suggestion that Cedeno could, in fact, secure these kinds of

plan-wide equitable relief in an individualized arbitration makes no sense.

Dissent at 16-17. Echoing the Defendants, the dissent suggests that a plan

participant like Cedeno could secure equitable relief such as replacement of the

plan administrator (relief Cedeno does not seek in this case). But the Defendants

argue (and the dissent suggests) that even an arbitral order for that relief would

not be binding on the administrator or trustee “with respect to someone other

than him.” Oral Argument Transcript at 4; see dissent at 17-18. Whether

Defendants would be precluded from declining to replace the plan administrator

in the context of challenges by other participants would be another question for

another court on another day. Oral Argument Transcript at 7. But ERISA

doesn’t contemplate different plan administrators for different participants

within the same group; “plan administrator” is a unitary position. See 29 U.S.C. §

1002(16)(A) (defining the term “administrator” to mean “the person” specifically

designated by the plan, “the plan sponsor” if no administrator is designated, or

“such other person as the Secretary may by regulation prescribe”). Defendants’

position that Cedeno could secure through individual arbitration equitable relief

43
that is plan-wide in nature, but that is not binding on any other participant, is

thus incoherent.

C. Sister Circuit Decisions

Our conclusion that the challenged provisions in the arbitration agreement

operate as an impermissible prospective waiver of Cedeno’s substantive

statutory rights is bolstered by three decisions from our sister circuits in closely

analogous cases. Each case involved provisions in arbitration agreements

seeking to compel individualized arbitration of Section 502(a)(2) claims and

limiting the remedies available in such arbitrations. Two of those cases involved

language nearly identical to the contested arbitration provisions here.

First, in Smith v. Board of Directors of Triad Manufacturing, Inc., the Seventh

Circuit held that a nearly identical individual arbitration provision could not be

enforced because it would prevent a plaintiff from vindicating statutory rights

guaranteed by ERISA under Section 502(a)(2). 13 F.4th 613, 615 (7th Cir. 2021).

The provision restricted each arbitration solely to a claimant’s claims, and

prohibited claimants from seeking or receiving “any remedy which has the

purpose or effect of providing additional benefits or monetary or other relief to

any Eligible Employee, Participant or Beneficiary other than the Claimant.” Id. at

616. Smith, an employee and beneficiary of his employer’s benefit plan who

44
alleged fiduciary violations, sought “wide-ranging” relief under Section

502(a)(2), including removal of the plan’s trustee, appointment of an

independent fiduciary, and “such other and further relief . . . that is equitable

and just.” Id. at 617 (internal quotation marks omitted).

The Smith court, noting that the effective vindication doctrine applies

where “a provision in an arbitration provision forbid[s] the assertion of certain

statutory rights,” concluded that the arbitration provision at issue had done just

that. Id. at 621 (quoting Italian Colors, 570 U.S. at 236) (internal quotation marks

omitted). The court explained:

Recall that Smith invokes § [502](a)(2)’s cause of action to seek relief
for (alleged) fiduciary breaches under § [409](a). That relief, by statute,
includes “such other equitable or remedial relief as the court may
deem appropriate, including removal of such fiduciary.” Yet the
plan’s arbitration provision, which also contains a class action waiver,
precludes a participant from seeking or receiving relief that “has the
purpose or effect of providing additional benefits or monetary or
other relief to any Eligible Employee, Participant or Beneficiary other
than the Claimant.” Removal of a fiduciary—a remedy expressly
contemplated by § [409](a)—would go beyond just Smith and extend
to the entire plan, falling exactly within the ambit of relief forbidden
under the plan.

Id. at 621 (quoting 29 U.S.C. § 1109(a)). Thus, the arbitration provision acted as a

waiver of Smith’s right to pursue statutory remedies, and the provision could not

be enforced. Id. The Seventh Circuit rejected the defendants’ suggestion that it

45
must “harmonize” the FAA and ERISA in light of the strong federal policy

favoring arbitration, observing, “the conflict in need of harmonization is not

between the FAA and ERISA; it is between ERISA and the plan’s arbitration

provision, which precludes certain remedies that [Sections 502(a)(2) and 409(a)]

expressly permit.” Id. at 622-23.

It is true that Smith is distinguishable insofar as Cedeno does not seek

removal of the plan fiduciary—Argent has already been replaced as the Plan’s

trustee. But Cedeno seeks other forms of plan-wide relief that would either

benefit other participants or bind the Plan’s administrator and trustee as to other

participants, see App’x 41-42, so the reasoning in Smith is on point.

Similarly, in Harrison v. Envision Management Holding, Inc., the Tenth

Circuit held a nearly identical provision within an arbitration agreement was

unenforceable when applied to a Section 502(a)(2) claim. 59 F.4th 1090, 1094

(10th Cir. 2023). 5 Harrison, like Cedeno, was a participant in a defined

contribution retirement plan established by his former employer, for which

Argent also served as trustee. Id. at 1093-94. Harrison alleged that the

defendants, assisted by Argent, financially benefitted from the sale of their

5Harrison was issued after briefing and argument in this case, but the parties addressed its impact
in Rule 28(j) letters before this Court.

46
company to their employee benefit plan for “significantly more than it was

worth, while at the same time leaving the [plan] with a $154.4 million debt.” Id.

at 1095. Harrison sued under Section 502(a)(2), seeking “plan-wide relief on

behalf of the [plan].” Id. at 1095. He specifically sought, among other things, to

enjoin the defendants from future violations of their fiduciary duties, to require

them to disgorge their profits, and to remove Argent and appoint a new trustee.

Id. at 1102. The defendants moved to compel arbitration, again on the basis of a

nearly identical set of arbitration provisions. See id. at 1104-05.

The Tenth Circuit upheld the district court’s denial of the defendants’

motion to compel arbitration. The court explained that the arbitration

provision’s “prohibition on class or collective actions” standing alone did not

invalidate the arbitration agreement, id. at 1106, but it concluded that the

contested arbitration provision effectively prevented Harrison from vindicating

many of the statutory remedies that he sought under [Section] 502(a)(2). Id. at

1101. The court further observed that it was “not clear what remedies Harrison

would be left with” if the arbitration provision was enforced as written. Id. at

1107.

Finally, in Henry on behalf of BSC Ventures Holdings, Inc. Emp. Stock

Ownership Plan v. Wilmington Tr. NA, the Third Circuit likewise declined to

47
enforce a provision in an arbitration agreement requiring individual arbitration

where a plan participant sought plan-wide remedies under Section 502(a)(2). 72

F.4th 499, 505-07 (3d Cir. 2023).

These decisions of our sister circuits reinforce our conclusion that Sections

17.10(f) and (g) are unenforceable with respect to Cedeno’s Section 502(a)(2)

claims. 6

6The parties spend much time in their briefing sparring over the significance of a pair of Ninth
Circuit cases—one published, one not—that seem to point in opposite directions as to the
arbitrability of Section 502(a)(2) claims. Neither case relies on the principle that provisions
preventing a party from effectively vindicating statutory rights and remedies are unenforceable,
but the reasoning in these cases also supports our holding.
In Munro v. University of Southern California, the Ninth Circuit concluded that an
arbitration agreement could not be enforced as to a Section 502(a)(2) claim brought by plaintiffs
seeking to recover plan losses caused by alleged mismanagement of retirement savings plans.
896 F.3d at 1090. The employer-defendant, USC, moved to compel arbitration on an individual
basis, arguing among other things that its employee agreements—not, as here, the plan
document—barred employees from litigating claims on behalf of the plan. Id. at 1091. The
Munro court, analogizing to qui tam suits brought on behalf of the government, held that the
employment agreement limiting employees to arbitrating their own individual claims did not
cover the Section 502(a)(2) claims, which are brought for recovery “only for injury done for the
plan.” 896 F.3d at 1093. Accordingly, it held the arbitration agreement did not apply to the
claims at issue. See also Hawkins v. Cintas Corp., 32 F.4th 625, 634 (6th Cir. 2022), cert. denied, 143
S. Ct. 564 (2023) (employee agreement containing individualized arbitration agreement did not
apply to Section 502(a)(2) claims brought on behalf of employee benefit plan). To the extent
Munro recognizes that Section 502(a)(2) claims brought on behalf of the plan as a whole cannot be
remanded to individualized arbitration, we find it persuasive but not as closely analogous as
Smith, Harrison, and Henry.
In contrast, in Dorman v. Charles Schwab Corporation, the Ninth Circuit concluded that a
district court erred in refusing to compel arbitration of a Section 502(a)(2) claim. 780 F. App’x
510, 512 (9th Cir. 2019). The arbitration provision at issue was within a plan document, and the
Dorman court did not consider an argument invoking the effective vindication doctrine. See 780
F. App’x at 513-14 (finding arbitration agreement enforceable under the FAA because plan
consented to arbitration based on plan document). Because it does not address the primary
argument at issue here, Dorman is not persuasive.

48
 CONCLUSION

For the reasons stated above, we conclude that Sections 17.10(f) and (g) are

unenforceable. Section 17.10(h) of the Plan contains a non-severability clause

providing that if a court finds the requirements of Sections 17.10(f) or 17.10(g)

“unenforceable or invalid, then the entire Arbitration Procedure shall be

rendered null and void in all respects.” App’x 106. Accordingly, we conclude

the entire arbitration provision is null and void, and we AFFIRM the district

court’s order denying the motion to compel arbitration.

49
21-2891
Cedeno v. Sasson

MENASHI, Circuit Judge, dissenting:

The Federal Arbitration Act (“FAA”) provides that arbitration
agreements “shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
contract.” 9 U.S.C. § 2. Through the FAA, Congress established “a
liberal federal policy favoring arbitration agreements.” Moses H. Cone
Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983).
Nonetheless, parties who have agreed to arbitrate sometimes try to
avoid arbitration later by “conjur[ing] conflicts between the
Arbitration Act and other federal statutes.” Epic Sys. Corp. v. Lewis,
584 U.S. 497, 516 (2018). The Supreme Court “has rejected every such
effort to date.” Id.; see id. at 502 (National Labor Relations Act); Am.
Express Co. v. Italian Colors Rest., 570 U.S. 228, 234 (2013) (Sherman
Antitrust Act); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 27
(1991) (Age Discrimination in Employment Act).

And here we are again. This time, the purported conflict is with
the Employee Retirement Income Security Act (“ERISA”). Petitioner
Ramon DeJesus Cedeno argues that the arbitration clause in the
documents governing his ERISA plan prevents him from effectively
vindicating his statutory rights under Section 409(a) of ERISA, which
makes plan fiduciaries liable for the mismanagement of plan assets.
The arbitration clause prohibits Cedeno from bringing a claim in
arbitration “in a representative capacity or on a class, collective, or
group basis,” and it limits his relief under Section 409(a) to remedies
that neither “result in the provision of additional benefits or monetary
relief” to other plan participants nor bind the plan fiduciaries with
respect to other participants. J. App’x 105-06. The court concludes
that, because Cedeno’s only “avenue for relief under ERISA is to seek
a plan-wide remedy, and the specific terms of the arbitration
agreement seek to prevent Cedeno from doing so, the agreement is
unenforceable.” Ante at 15.

I disagree. Enforcing the arbitration agreement would not
diminish Cedeno’s ability to vindicate his statutory rights. The court’s
holding depends on its acceptance of Cedeno’s tendentious reading
of ERISA. The Supreme Court has warned that “we must be alert to
new devices and formulas” by which litigants seek to revive the old
“judicial antagonism toward arbitration.” Epic Sys., 584 U.S. at 509
(citing AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 342 (2011)). The
manufactured conflict between ERISA and the arbitration clause here
is just such a device. I would reject it, and therefore I dissent.

I

This is a straightforward case. The documents governing
Cedeno’s ERISA plan provide that any claim for a breach of fiduciary
duty is to be resolved through binding arbitration. The arbitration
clause requires Cedeno to bring any claims “solely in [his] individual
capacity and not in a representative capacity or on a class, collective
or group basis,” and it limits him to the remedies that are necessary
to redress his individual injuries. J. App’x 105-06. Cedeno
nevertheless brought a lawsuit in federal court—a class-action
lawsuit, no less—asserting a breach of fiduciary duty by Argent, the
trustee of the plan. The district court should have granted the motion
to compel arbitration.

When it enacted the FAA, Congress directed the courts to
“respect and enforce” not only “agreements to arbitrate” but also “the
parties’ chosen arbitration procedures.” Epic Sys., 584 U.S. at 506. We
must respect the parties’ choice “to use individualized [arbitration]
rather than class or collective action procedures.” Id.; see also

2
Concepcion, 563 U.S. at 348 (“[C]lass arbitration, to the extent it is
[imposed] rather than consensual, is inconsistent with the FAA.”).

Had the district court respected and enforced the arbitration
clause, Cedeno would have been able to seek whatever legal or
equitable relief was necessary to make him whole; he simply would
have been required to seek that relief in an individualized arbitration
proceeding. The arbitration clause would have prohibited Cedeno
from pursuing money damages on behalf of other plan participants,
but the Supreme Court has repeatedly held that, pursuant to the FAA,
parties may waive the right to pursue relief on behalf of others
through class arbitration. See Epic Sys., 584 U.S. at 506; Concepcion, 563
U.S. at 348. Under those precedents, the arbitration clause in this case
is enforceable.

Cedeno, however, insists that there is a conflict with ERISA,
and the court agrees. Section 502(a)(2) of ERISA provides that “[a]
civil action may be brought … by the Secretary [of Labor], or by a
participant, beneficiary or fiduciary for appropriate relief under”
Section 409(a). 29 U.S.C. § 1132(a)(2). The court understands Sections
502(a)(2) and 409(a) to require Cedeno to act in a “representative
capacity” on behalf of the plan itself and to seek a “plan-wide
remedy” on its behalf, effectively making Cedeno a guardian ad litem
for the plan (much as a shareholder would represent a corporation in
a derivative suit). Ante at 24. 1 Because the arbitration clause prohibits
Cedeno from asserting claims in a representative capacity, the court

1 See Miller v. Brightstar Asia, Ltd., 43 F.4th 112, 122 (2d Cir. 2022) (explaining
that, in a derivative suit, “the plaintiff-shareholder does not sue for his own
direct benefit or in his own direct right but rather as a guardian ad litem for
the corporation”) (quoting Harry G. Henn, Handbook of the Law of
Corporations and Other Business Enterprises 560 (1961)).

3
concludes that, in this case, the FAA’s mandate to enforce arbitration
agreements conflicts with ERISA, which purportedly does not allow
Cedeno to make claims on his own behalf. 2 The court also interprets
the arbitration clause to prohibit Cedeno from seeking relief that
affects other plan participants in any way, including equitable relief
contemplated by ERISA. The court therefore holds that the arbitration
agreement is “not enforceable” because it “ha[s] the effect of
prospectively waiving [Cedeno’s] statutory remedies.” Ante at 18.

In reaching this conclusion, the court relies on “the ‘effective
vindication’ exception,” a “judge-made exception to the FAA” that
“originated as dictum in Mitsubishi Motors.” Italian Colors, 570 U.S. at
235. 3 As today’s decision describes it, the effective vindication
exception to the FAA means that “terms in an arbitration agreement

2 The court insists that the relevant conflict is “not between the FAA and
ERISA” but “between ERISA and the plan’s arbitration provision.” Ante at
46 (quoting Smith v. Bd. of Dirs. of Triad Mfg., 13 F.4th 613, 622-23 (7th Cir.
2021)). But the FAA requires a court to “‘rigorously enforce’ arbitration
agreements according to their terms.” Italian Colors, 570 U.S. at 232 (quoting
Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985)). So if ERISA
somehow prevents the enforcement of the arbitration clause, it conflicts
with the FAA. Indeed, the court seeks to avoid applying the FAA by relying
on “the ‘effective vindication’ exception,” a “judge-made exception to the
FAA.” Id. at 235 (emphasis added).
3 The Supreme Court in Mitsubishi Motors remarked that if an arbitration
agreement “operated … as a prospective waiver of a party’s right to pursue
statutory remedies, we would have little hesitation in condemning the
agreement as against public policy.” Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 637 n.19 (1985). However, “so long as
the prospective litigant effectively may vindicate its statutory cause of
action in the arbitral forum, the statute will continue to serve both its
remedial and deterrent function,” and public policy would not prevent the
enforcement of the arbitration agreement. Id. at 637.

4
that have the effect of prospectively waiving a party’s statutory
remedies are not enforceable.” Ante at 18. The court concludes that
the arbitration clause prevents Cedeno from vindicating his statutory
rights because it prohibits him from acting in a representative
capacity on behalf of the plan, and it operates as a waiver of statutory
remedies because it prohibits him from seeking equitable relief that
would incidentally benefit other participants.

That is incorrect. Even assuming that there is an “effective
vindication” exception to the FAA—notwithstanding that the
Supreme Court has never applied it—the exception is not implicated
here. A participant in a defined-contribution pension plan, such as
Cedeno, may proceed under Sections 502(a)(2) and 409(a) to seek
relief that benefits only his or her individual account within the plan.
Requiring Cedeno to pursue relief in an arbitral forum does not alter
that substantive right. The court ruminates over the abstract question
of whether Sections 502(a)(2) and 409(a) of ERISA transform an
individual claimant into a representative of the plan. ERISA does no
such thing. But even if it did, nothing would prevent the claimant
from waiving the right to bring a claim as the plan representative and
agreeing to individualized arbitration. In the individualized
procedure contemplated by the arbitration clause, Cedeno could
obtain any legal or equitable remedy that is necessary to make him
whole. Accordingly, I would reverse the district court’s denial of the
motion to compel arbitration.

II

There are three problems with the court’s analysis. First, the
effective vindication exception is a questionable principle of uncertain
legal status. Second, neither Section 502(a)(2) nor Section 409(a) of
ERISA requires Cedeno to act in a representative capacity on behalf

5
of the plan. To the contrary, an ERISA plaintiff represents his own
individual interest. Third, the arbitration clause allows Cedeno to
obtain any legal or equitable relief that is necessary to make him
whole. There is no reason to interpret the clause to prohibit such relief,
even if an equitable remedy would incidentally benefit other plan
participants. Ultimately, there is no conflict between ERISA and the
mandate of the FAA to enforce arbitration agreements.

A

While the Supreme Court has acknowledged the theoretical
possibility of an effective vindication exception to the FAA, it has
always declined to apply the exception whenever litigants have asked
it to do so. See Italian Colors, 570 U.S. at 235-36; 14 Penn Plaza LLC v.
Pyett, 556 U.S. 247, 273-74 (2009); Green Tree Fin. Corp.-Alabama v.
Randolph, 531 U.S. 79, 90-91 (2000); Gilmer, 500 U.S. at 28; Mitsubishi
Motors, 473 U.S. at 636-37. In his concurrence in Italian Colors, Justice
Thomas observed that the purported exception conflicts with “the
plain meaning of the Federal Arbitration Act.” 570 U.S. at 229
(Thomas, J., concurring). It does so because “the FAA requires that an
agreement to arbitrate be enforced unless a party successfully
challenges the formation of the arbitration agreement, such as by
proving fraud or duress.” Id. (quoting Concepcion, 563 U.S. at 353
(Thomas, J., concurring)); see 9 U.S.C. § 2 (providing that an
arbitration agreement “shall be valid, irrevocable, and enforceable,
save upon such grounds as exist at law or in equity for the revocation
of any contract”). And Justice Ginsburg concluded that the Court’s
decision in Italian Colors meant that the effective vindication exception
was no longer relevant. “Although the Court in Italian Colors did not
expressly reject this ‘effective vindication’ principle,” she wrote, “the
Court’s refusal to apply the principle in that case suggests that the

6
principle will no longer apply in any case.” DIRECTV, Inc. v. Imburgia,
577 U.S. 47, 68 n.3 (2015) (Ginsburg, J., dissenting).

To be sure, the Supreme Court appears to have referenced the
exception in a recent case. The Court stated that “the FAA does not
require courts to enforce contractual waivers of substantive rights and
remedies.” Viking River Cruises, Inc. v. Moriana, 596 U.S. 639, 653
(2022). But the Court emphasized that “[a]n arbitration agreement …
does not alter or abridge substantive rights; it merely changes how
those rights will be processed.” Id. (emphasis added). Thus, “by
agreeing to arbitrate a statutory claim, a party does not forgo the
substantive rights afforded by the statute; it only submits to their
resolution in an arbitral forum.” Id. (alterations omitted) (quoting
Preston v. Ferrer, 552 U.S. 346, 359 (2008)). In this way, the Court
clarified that an agreement to arbitrate, by itself, never involves an
impermissible waiver of substantive rights. Rather, what had
previously been described as the effective vindication “exception”
really refers to the principle that “the FAA requires only the
enforcement of provisions to settle a controversy by arbitration, and
not any [substantive] provision that happens to appear in a contract
that features an arbitration clause.” Id. at 653 n.5 (internal quotation
marks, alteration, and citation omitted). In other words, a court must
always enforce agreements to arbitrate; it may decline to enforce
agreements that go beyond arbitration to alter substantive rights.

Given this latest authoritative statement from the Supreme
Court, we should pause before embracing the argument the court
adopts today: that the agreement to proceed by individualized
arbitration would itself so distort the statutory claim as to implicate
the effective vindication exception. Cf. Estle v. IBM Corp., 23 F.4th 210,
214 (2d Cir. 2022) (“[C]ollective action, like arbitration, is a

7
‘procedural mechanism,’ not a substantive right.”) (quoting
Sutherland v. Ernst & Young LLP, 726 F.3d 290, 297 n.6 (2d Cir. 2013)).

B

In this case, the effective vindication exception is a solution in
search of a problem. Both the arbitration clause and ERISA afford
Cedeno the right to seek remedies for harm to himself. Section
502(a)(2) authorizes Cedeno to seek “appropriate relief” for a breach
of fiduciary duty. 29 U.S.C. § 1132(a)(2). Section 409(a) makes the
fiduciary liable “to make good to such plan” any losses resulting from
its breach and for any “other equitable or remedial relief” that a court
“may deem appropriate.” 29 U.S.C. § 1109(a). While Section 409(a)
establishes a fiduciary duty owed to the plan, it does not follow that
the specific parties authorized to sue for breach of that duty—the
Secretary of Labor or “a participant, beneficiary or fiduciary,” id.
§ 1132(a)(2)—must seek relief for the plan as a whole rather than to
remedy their own distinct harms.

In fact, the Supreme Court has specifically held that a
participant in a defined-contribution plan—such as Cedeno—may
sue under Sections 502(a)(2) and 409(a) to recover losses to his own
individual account, without any recovery for other accounts. See
LaRue v. DeWolff, Boberg & Assocs., 552 U.S. 248, 256 (2008). 4 Even in

4 See also Dorman v. Charles Schwab Corp., 780 F. App’x 510, 514 (9th Cir.
2019) (explaining that “the Supreme Court has recognized that [Section
502(a)(2)] claims are inherently individualized when brought in the context
of a defined contribution plan” and that “LaRue stands for the proposition
that a defined contribution plan participant can bring a 502(a)(2) claim for
the plan losses in her own individual account”); Robertson v. Argent Tr. Co.,
No. CV-21-01711, 2022 WL 2967710, at *10 (D. Ariz. July 27, 2022) (“LaRue

8
the defined-benefit context, the Court has held that a plan participant
who sues under Section 502(a)(2) must establish his own concrete
“injury in fact.” Thole v. U.S. Bank N.A., 590 U.S. 538, 543 (2020). Plan
participants do not have “standing as representatives of the plan.” Id. 5
They must seek recovery for their own injuries. If ERISA prohibited a
participant from seeking to remedy his own distinct injuries, this
requirement would make little sense.

As the court notes, there are established forms of “[n]on-class
representative actions in which a single agent litigates on behalf of a
single principal,” such as a shareholder derivative suit, a trustee’s suit
on behalf of a trust, or an action by a guardian ad litem. Ante at 35
(quoting Viking River Cruises, 596 U.S. at 657). Many representative
actions are recognized by statutes or procedural rules. 6 Others, such
as trustee actions against third parties for injuries to the trust or trust
property, are recognized by the common law. 7 But an ERISA suit is
not a representative action. ERISA does not authorize, much less
require, an action in a representative capacity on behalf of the plan.

… authorizes defined contribution plan participants to recover losses from
their individual accounts using § 502(a)(2) of ERISA. That is exactly what
Plaintiff is allowed to do under the Plan.”).
5The dissenters in Thole argued that plan participants should be able to
maintain a “representational suit” to “sue on their plan’s behalf.” Thole, 590
U.S. at 564-65 (Sotomayor, J., dissenting). But that view did not prevail.
6 See, e.g., Fed. R. Civ. P. 23.1 (shareholder derivative suit); N.Y. C.P.L.R.
§ 1202 (guardian ad litem); Cal. Lab. Code § 2698 et seq. (California Labor
Code Private Attorneys General Act of 2004).
7 See Restatement (Third) of Trusts § 107 cmt. b (Am. L. Inst. 2012) (“As
holder of the title to trust property … [and] representative of the trust and
its beneficiaries, the trustee is normally the appropriate person to bring …
an action against a third party on behalf of the trust.”).

9
See Thole, 590 U.S. at 543-44 (explaining that participants have not
“been legally or contractually appointed to represent the plan” and
cannot “assert standing as representatives of the plan itself” but must
seek recovery for individual injuries in fact). To the contrary, LaRue
and Thole make clear that an ERISA plaintiff sues in his own
individual capacity to recover for his own injuries. Courts should be
“‘reluctant to tamper with the enforcement scheme’ embodied in the
statute by extending remedies not specifically authorized by its text,”
Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002)
(quoting Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 147 (1985)),
and the notion that Cedeno must recover only plan-wide remedies is
such an extension.

This lawsuit does not resemble any of the traditional types of
representative actions that the court references. A trustee, for
example, may sue on behalf of a trust. But here, Cedeno is not the
trustee of the plan; at the time of the alleged misconduct, Argent was
the trustee, and Cedeno is suing Argent. Cedeno is effectively a trust
beneficiary, not a trustee, and a trust beneficiary sues a trustee for
breach of trust in his individual capacity as a beneficiary; he does not
do so on behalf of the trust. 8 That is true even when the beneficiary
seeks equitable remedies that affect the administration of the trust. 9

8 See Restatement (Third) of Trusts § 94 (“A suit against a trustee … to
enjoin or redress a breach of trust … may be maintained only by a beneficiary
or by a co-trustee, successor trustee, or other person acting on behalf of one
or more beneficiaries.”) (emphasis added); id. § 94 cmt. b (“A suit to enforce a
private trust ordinarily … may be maintained by any beneficiary whose
rights are or may be adversely affected by the matter(s) at issue.”).
9 See Restatement (Third) of Trusts § 95 cmt. c (explaining that equitable
remedies available in a suit by the beneficiary include “ordering the trustee

10
 The shareholder derivative suit is not an apt analogy either. The
Supreme Court has explained that “the term ‘derivative action’ … has
long been understood to apply only to those actions in which the right
claimed by the shareholder is one the corporation could itself have
enforced in court.” Daily Income Fund, Inc. v. Fox, 464 U.S. 523, 529
(1984). Therefore, “[b]ecause ERISA plans cannot bring suit against
fiduciaries on the plans’ own behalf under section 502, the lawsuits of
individual participants are not derivative.” Coan v. Kaufman, 457 F.3d
250, 258 (2d Cir. 2006). 10 The derivative suit originated as an equitable
remedy that allowed individual shareholders, who lacked standing to
bring an action at law, to assert a cause of action that properly
belonged to the corporation. See Ross v. Bernhard, 396 U.S. 531, 534
(1970). Unlike a shareholder, a participant in an ERISA plan has
individual rights as a plan participant. In a defined contribution plan,
for example, a participant has the right to direct the management of
the assets in his individual account. 11 A participant in an ERISA plan
does not resemble a shareholder.

to account,” “directing the trustee to administer the trust” in accordance
with “the terms of the trust or the powers and duties of the trusteeship,”
“enjoining the trustee to take or refrain from taking certain action(s) or
otherwise to avoid committing a breach of trust,” and “removing the
trustee”).
10 See also Pressroom Unions-Printers League Income Sec. Fund v. Cont’l
Assurance Co., 700 F.2d 889, 893 (2d Cir. 1983) (“In light of the frequent
references in the Act and its legislative history to ‘participants, beneficiaries
and fiduciaries,’ th[e] conclusion [that the plan itself may sue] is
untenable.”) (citations omitted).
11 The plan in this case is an Employee Stock Ownership Plan (“ESOP”),
not a traditional 401(k) plan. As an ESOP, the plan “was designed to invest
primarily in the employer securities of Strategic Family,” and its principal

11
 I recognize that the Supreme Court stated in dicta about forty
years ago that the “[i]nclusion of the Secretary of Labor [in Section
502(a)(2)] is indicative of Congress’ intent that actions for breach of
fiduciary duty be brought in a representative capacity on behalf of the
plan as a whole.” Russell, 473 U.S. at 142 n.9. But the Court clarified in
LaRue that its “references to the ‘entire plan’ in Russell, which
accurately reflect the operation of § 409 in the defined benefit context,
are beside the point in the defined contribution context.” LaRue, 552
U.S. at 256. The “entire plan” language in Russell described the “kind
of harms that concerned the draftsmen of § 409”—namely,
“[m]isconduct by the administrators of a defined benefit plan … [that]
creates or enhances the risk of default by the entire plan.” Id. at 255-
56. “For defined contribution plans, however, fiduciary misconduct
need not threaten the solvency of the entire plan” to create the kind
of injury that Section 409(a) was intended to remedy. Id. at 255.

The lesson of Russell, which the Court clarified and reaffirmed
in LaRue, is that Section 502(a)(2) “does not provide a remedy for
individual injuries distinct from plan injuries.” Id. at 256 (emphasis

asset was Strategic Family’s stock. J. App’x 20-21. In general, the
beneficiaries could not choose how the plan would invest its assets. Id. at 17
(“As Trustee, Argent had exclusive authority to manage and control the
assets of the Plan.”). However, the participants in the plan had some
discretionary rights. For example, participants who were still employed,
were over 55 years old, and had participated in the plan for at least ten years
could “elect to diversify a portion of [their] ESOP Stock Accounts” by
receiving a cash distribution equal to a portion of the value of the stock in
their accounts and investing the cash in other assets. Id. at 225. By contrast,
a shareholder cannot compel the corporation to make a distribution to him.
See 11 Fletcher Cyclopedia of the Law of Corporations § 5321 (September
2023 update) (“The shareholders have no legal right to share in the
corporation’s profits unless the directors declare a dividend … [and] cannot
compel the declaration of dividends by agreement.”).

12
added). In Russell, the plaintiff sought damages resulting from the
plan’s improper delay in processing her claim and paying her the
benefits to which she was entitled. 473 U.S. at 136. She alleged that the
delay “forced [her] disabled husband to cash out her retirement
savings which, in turn, aggravated the psychological condition that
caused [her] back ailment.” Id. at 137. The Court decided that Section
502(a)(2) does not provide a cause of action to remedy injuries
unrelated to the administration of the plan. See id. at 142-43 (“[T]he
principal statutory duties imposed on the trustees relate to the proper
management, administration, and investment of fund assets, the
maintenance of proper records, the disclosure of specified
information, and the avoidance of conflicts of interest.”).

But Section 502(a)(2) “does authorize recovery for fiduciary
breaches that impair the value of plan assets in a participant’s
individual account” because such an individual injury is not
“distinct” from an injury to the plan. LaRue, 552 U.S. at 256 (emphasis
added); see also id. at 262-63 (Thomas, J., concurring in the judgment)
(“Because a defined contribution plan is essentially the sum of its
parts, losses attributable to the account of an individual participant
are necessarily ‘losses to the plan’ for purposes of § 409(a).”). If a
participant can seek relief for his own individual injuries, ERISA does
not prevent him from agreeing to arbitrate his claims on an
individualized basis.

Russell’s “representative capacity” language, like its references
to the “entire plan,” similarly reflected the distinction between
injuries unrelated to plan administration, on the one hand, and
injuries resulting from such administration, on the other. The very
next sentence of footnote 9 in Russell explains that “the common
interest shared by all four classes [of plaintiffs named in Section
502(a)(2)] is in the financial integrity of the plan.” 473 U.S. at 142 n.9.

13
The Court’s point was that Section 502(a)(2) authorizes a remedy only
for financial mismanagement by a plan fiduciary. There is no reason
to believe that the footnote established a new rule requiring a
participant to become a guardian ad litem of the plan itself to proceed
under Section 502(a)(2).

Even Cedeno does not really believe that. Cedeno brought this
lawsuit as a class action under Rule 23, not as a representative suit on
behalf of the plan as an entity. 12 A class action involves the
aggregation of individual claims, not a single claim brought by a
representative on behalf of a single principal. See Fed. R. Civ. P. 23(b)
(providing that “[a] class action may be maintained” if, inter alia,
“prosecuting separate actions by … individual class members” risks
inconsistent adjudications or unfair prejudice to nonparty class
members) (emphasis added). 13 No one disputes that the FAA

12 The court asserts that this lawsuit “is not actually a class action.” Ante at
38. That would appear to be news to Cedeno, who stated in his complaint
that he “brings this action as a class action pursuant to Fed. R. Civ. P. 23(a)
and (b), on behalf of the following class: All participants in the Strategic
ESOP (the ‘Plan’) and the beneficiaries of such participants as of the date of
the December 28, 2017 ESOP Transaction or anytime thereafter.” J. App’x
38.
13 By contrast, an established representative-capacity action on behalf of a
single principal, such as a shareholder derivative action, cannot be brought
as a class action. See F5 Capital v. Pappas, 856 F.3d 61, 76 (2d Cir. 2017)
(holding that the shareholder plaintiffs’ equity-dilution claim “may not
proceed as a class action because the claim belongs to [the corporation], not
its shareholders”) (emphasis added); see also Anwar v. Fairfield Greenwich
Ltd., 676 F. Supp. 2d 285, 297 (S.D.N.Y. 2009) (holding that shareholder
derivative suits are not “mass actions” under the Class Action Fairness Act
because “[a] derivative suit is neither a claim by multiple plaintiffs
consolidated by State court rules, nor a class action in disguise”) (internal
quotation marks omitted).

14
requires a court to enforce a class-action waiver in an arbitration
agreement. See Concepcion, 563 U.S. at 344. Cedeno’s
recharacterization of his attempted class action as a single-principal
representative-capacity suit allows him to evade this rule. And the
court, by excusing Cedeno from his arbitration agreement and
allowing him to proceed in a “representative capacity,” has
authorized an ersatz class action that lacks the “procedural
safeguards” we would require if Cedeno were proceeding under Rule
23. Coan, 457 F.3d at 261. 14

In fact, Cedeno was right the first time. Because a plan
participant proceeds under Section 502(a)(2) in an individual
capacity, his claim can be aggregated with similar actions by other
individual plan participants under Rule 23. Cedeno’s arbitration
agreement preserves his right to pursue his individual claim, but he
must pursue it in the arbitral forum. ERISA does not authorize a
“representative capacity” action that allows Cedeno to avoid both the
requirements of Rule 23 and his own agreement to arbitrate his claim.

14 In Coan v. Kaufman, we held that summary judgment was appropriate
when an ERISA plaintiff had failed to take procedural steps to ensure that
she “represent[ed] adequately the interests of other plan participants” and
thus “properly proceeded in a representative capacity as required by
section 502(a)(2).” 457 F.3d at 262. Coan predated the Supreme Court’s
decisions in LaRue and Thole, and to the extent that it holds a defined
contribution plan participant must proceed in a representative capacity and
seek plan-wide relief, it is no longer good law. However, to the extent that
an ERISA plaintiff chooses to seek class-wide relief, he should proceed under
Rule 23 or join necessary parties under Rule 19, as Coan suggested. See id. at
261.

15
 C

Beyond its representative-capacity theory, the court worries
that “there is no legal way to provide many of the equitable remedies
allowed by statute and sought by Cedeno without impacting the
accounts of other plan participants and beneficiaries or binding the
Plan Administrator and Trustee vis-à-vis other participants.” Ante at
42. The court assumes that the arbitration clause prohibits the award
to Cedeno of any relief with a “plan-wide” effect, “including a
surcharge, accounting for profits, the imposition of a constructive
trust on any funds wrongfully held by Defendants, and disgorgement
of fees, earnings, or profits.” Id.

But Cedeno has not shown—and the defendants deny—that any
equitable relief available under ERISA would be unavailable to
Cedeno in an individualized arbitration. The defendants maintain
that the arbitration clause “does not limit Plaintiff’s ability to seek any
equitable remedies to which he may be entitled on his own behalf.”
Reply Br. 17. And the defendants agreed at oral argument that “if
removal of the fiduciary [or other equitable relief] is necessary to
make Mr. Cedeno whole, to provide him a remedy for his own harm,
… [it is] available in arbitration.” Oral Argument Transcript at 4-5. In
the defendants’ view, the arbitration agreement “only prohibits
providing money to other people.” Id. at 5. It does not prevent Cedeno
from seeking any equitable relief that may be necessary to make him
whole and thereby to vindicate his statutory rights—even if that
equitable relief has an impact on other plan participants. 15 This is the

15 See Robertson, 2022 WL 2967710, at *10 (explaining that “invocation of the
effective vindication doctrine is misplaced” when an arbitration clause
requiring individualized arbitration of fiduciary duty claims under ERISA
does not “preclude[] an individual participant from pursuing equitable

16
most sensible reading of the contractual language. There is no reason
to conclude that any form of relief ERISA envisions would be
categorically denied to Cedeno in arbitration.

The court insists that it is “incoherent” to say that Cedeno could
obtain equitable relief that affects the plan and yet that the order
providing such relief would not bind the plan administrator or trustee
in proceedings with other plan participants. Ante at 44. But that is how
equitable remedies work. If a litigant obtains an injunction requiring
her employer to discontinue a discriminatory employment practice,
for example, the injunction will affect other employees. But the
employer may still argue, in a separate lawsuit by a different
employee, that the second employee is not entitled to the same
remedy. 16 The individualized arbitration process required in this

remedies, such as removal of a fiduciary, that would benefit other
participants”).
16 See, e.g., Martin v. Wilks, 490 U.S. 755, 762 (1989) (“A judgment or decree
among parties to a lawsuit resolves issues as among them, but it does not
conclude the rights of strangers to those proceedings.”); 18A Charles Alan
Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure
§ 4464.1 (3d ed.) (“[N]onmutual claim preclusion continues to be denied in
decisions that probably reflect a general assumption that it is not ordinarily
available.”). The employer is not even necessarily precluded from arguing
in the second lawsuit that the employment practice is not discriminatory.
See 18A Wright, Miller & Kane, supra, § 4465 (“Nonmutual issue preclusion
is not available as a matter of right.”); see also Parklane Hosiery Co., Inc. v.
Shore, 439 U.S. 322, 331 (1979) (explaining that “a trial judge should not
allow the use of offensive collateral estoppel” when the “plaintiff could
easily have joined in the earlier action” or when “the application of
offensive estoppel would be unfair to a defendant”).

17
case parallels this familiar process of case-by-case adjudication. The
court’s idiosyncratic view of equitable relief, by contrast, is novel. 17

Even if it were uncertain that Cedeno could obtain equitable
relief in arbitration that affects other plan participants, that would not
be enough to affirm the judgment in this case. The Supreme Court has
told us that “the proper course is to compel arbitration” when it is
possible that the arbitration agreement might impermissibly limit a
plaintiff’s remedies but “we do not know how the arbitrator will
construe the remedial limitations.” PacifiCare Health Sys., Inc. v. Book,
538 U.S. 401, 407 (2003). “[W]e should not, on the basis of ‘mere
speculation’ that an arbitrator might interpret these ambiguous
agreements in a manner that casts their enforceability into doubt, take
upon ourselves the authority to decide the antecedent question of
how the ambiguity is to be resolved.” Id. at 406-07 (quoting Vimar
Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 541 (1995)).
That approach is consistent with the longstanding “federal policy to
construe liberally arbitration clauses … and to resolve doubts in favor
of arbitration.” Metro Indus. Painting Corp. v. Terminal Constr. Co.,

17 See United States v. Texas, 599 U.S. 670, 693 (2023) (Gorsuch, J., concurring
in the judgment) (“Traditionally, when a federal court finds a remedy
merited, it provides party-specific relief, directing the defendant to take or
not take some action relative to the plaintiff. If the court’s remedial order
affects nonparties, it does so only incidentally.”); Trump v. Hawaii, 585 U.S.
667, 717 (2018) (Thomas, J., concurring) (“[A]s a general rule, American
courts of equity did not provide relief beyond the parties to the case. If their
injunctions advantaged nonparties, that benefit was merely incidental. …
While [some] injunctions benefited third parties, that benefit was merely a
consequence of providing relief to the plaintiff.”); Samuel L. Bray, Multiple
Chancellors: Reforming the National Injunction, 131 Harv. L. Rev. 417, 420
(2017) (noting that the “American practice was that an injunction would
restrain the defendant’s conduct vis-à-vis the plaintiff, not vis-à-vis the
world”).

18
287 F.2d 382, 385 (2d Cir. 1961); see also PacifiCare, 538 U.S. at 407 n.2
(“Given our presumption in favor of arbitration, we think the
preliminary question whether the remedial limitations at issue here
prohibit an award of [remedies available under the statute] is not a
question of arbitrability.”).

Because it is ambiguous—at the very least—whether the
arbitration agreement prevents Cedeno from seeking equitable relief
with plan-wide consequences, the “proper course” would be to
compel arbitration despite Cedeno’s speculation that the arbitrator
might construe the agreement in a way that would call its
enforceability into question. PacifiCare, 538 U.S. at 407.

The case that originated the effective vindication exception,
Mitsubishi Motors, involved a similar situation. In that case, the
parties’ contract provided for arbitration in Japan and specified that
Swiss law would govern the contract. The United States, as amicus
curiae, suggested that if the court compelled arbitration, the Japanese
arbitrator might read the choice-of-law clause “not simply to govern
interpretation of the contract terms, but wholly to displace American
law”—in particular, the Sherman Antitrust Act—“even where it
would otherwise apply.” 473 U.S. at 637 n.19. As the Supreme Court
noted, however, Mitsubishi’s counsel conceded at oral argument that
American antitrust law would apply in arbitration. So the Court
enforced the arbitration agreement and declined to “speculate” as to
whether the arbitrator would apply the Sherman Act “at this stage in
the proceedings, when Mitsubishi seeks to enforce the agreement to

19
arbitrate, not to enforce an award.” Id. The same reasoning should
apply here. 18

III

Even if the court were correct that a plaintiff proceeding under
Section 502(a)(2) is a representative of the plan—and that the
arbitration clause prohibits Cedeno from acting in that capacity—the
district court still erred in refusing to compel arbitration. Pursuant to
the purported effective vindication exception, “the FAA does not
require courts to enforce contractual waivers of substantive rights and
remedies.” Viking River Cruises, 596 U.S. at 653. Thus, for example, a
party cannot waive the right to bring a claim if his civil rights have
been violated. See 14 Penn Plaza, 556 U.S. at 273 (“[A] substantive
waiver of federally protected civil rights will not be upheld.”). In this
case, however, Cedeno does not argue that he has waived any of his
substantive rights. Rather, he argues—and the court agrees—that
because he agreed to arbitrate on an individual basis, he has waived
the right to bring a claim on behalf of the plan to vindicate its
substantive rights. But the effective vindication exception does not
prevent such a waiver.

To the extent that the court relies on Viking River Cruises for the
proposition that the FAA does not allow parties to waive the right to
bring a representative-capacity claim on behalf of another individual
or entity, that reliance is misplaced. In Viking River Cruises, the Court

18 For these reasons, the decisions of other courts that arbitration
agreements should be invalidated because similarly ambiguous language
“prohibits relief that ERISA expressly permits” are not persuasive. Smith,
13 F.4th at 615; see also Henry ex rel. BSC Ventures Hldgs., Inc. Emp. Stock
Ownership Plan v. Wilmington Tr. NA, 72 F.4th 499, 508 (3d Cir. 2023);
Harrison v. Envision Mgmt. Hldg., Inc., 59 F.4th 1090, 1109 (10th Cir. 2023).

20
considered whether the FAA conflicted with a California statute that
gave individual citizens a non-waivable right to bring civil actions as
private attorneys general on behalf of the state. In holding that the
California law and the FAA did not conflict, the Court noted that
“[n]on-class representative actions in which a single agent litigates on
behalf of a single principal”—such as “shareholder-derivative suits,
wrongful-death actions, trustee actions, and suits on behalf of infants
or incompetent persons”—form “part of the basic architecture of
much of substantive law.” 596 U.S. at 657. The Court held that such
actions are not “inconsistent [with] the norm of bilateral arbitration”
in the same way that class actions are. Id. For that reason, California
could prohibit contractual waivers of “representative standing” in
this context without impermissibly interfering with contracting
parties’ ability to choose the comparatively informal and efficient
procedure of bilateral arbitration. Id.

But the fact that states have the authority to ban waivers of
representative standing does not mean that a federal court—on its
own initiative and in the absence of any statutory ban—may itself
decide to prohibit such waivers by refusing to enforce arbitration
agreements.

* * *

The district court should have compelled arbitration because
the effective vindication exception—assuming it exists—is
inapplicable. The court’s opinion cannot be reconciled with our
obligation to enforce an arbitration agreement according to its terms
and to avoid finding conflicts between the FAA and other federal
statutes when possible. I dissent.

21