Fifth Circuit Affirms Order Denying Motion to Compel Arbitration in Employee Pension Plan Dispute
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The United States Court of Appeals for the Fifth Circuit has issued an unpublished opinion stating an accounting firm may not compel a group of hospital workers’ claims over an allegedly underfunded pension plan to arbitration. In Jones v. Singing River Health Servs. Found., et al., No. 16-60263 (5th Cir., January 5, 2017), an accounting firm, KPMG, performed a multiyear financial audit for an employee pension plan sponsored by a hospital, Singing River Health Services (“SRHS”). Prior to performing the audit, KPMG entered into a series of engagement letters with SRHS that contained a provision requiring any disputes arising out of the agreement between the parties to be submitted to arbitration.
Later, a SRHS employee filed a class-action lawsuit (the “Jones class”) against KPMG over the accounting firm’s purported knowledge the pension plan was not sufficiently funded. According to the worker, KPMG was complicit in the plan trustees’ alleged breach of fiduciary duty. In addition, another collective action lawsuit (the “Lowe class”) was filed against KPMG over the same issue. After the two cases were procedurally consolidated, KPMG filed a motion to compel both disputes to arbitration based on the accounting firm’s agreement with SRHS.
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