James Smith v. Board of Directors of Triad Ma

13 F.4th 613

• Court: Court of Appeals for the Seventh Circuit
• Decided: September 10, 2021
• Docket: 20-2708
• Status: Published

Opinion

In the

United States Court of Appeals For the Seventh Circuit ____________________ No. 20-2708 JAMES SMITH, on behalf of himself and all others similarly situated, and on behalf of the Triad Manufacturing, Inc., Employee Stock Ownership Plan, Plaintiff-Appellee,

v.

BOARD OF DIRECTORS OF TRIAD MANUFACTURING, INC., et al., Defendants-Appellants. ____________________

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:20-cv-02350 — Ronald A. Guzmán, Judge. ____________________

ARGUED MARCH 30, 2021 — DECIDED SEPTEMBER 10, 2021 ____________________

Before KANNE, BRENNAN, and SCUDDER, Circuit Judges. BRENNAN, Circuit Judge. In this complex ERISA case, James Smith sued fiduciaries of the retirement plan offered by his former employer, Triad Manufacturing, Inc., for alleged fi- nancial misconduct. Add in a class action, an arbitration pro- vision, and issues of notice and consent to plan amendments, and this lawsuit gets even more complicated. 2 No. 20-2708

The correct resolution here is straightforward, though. The ERISA provisions Smith invokes have individual and plan-wide effect. But the arbitration provision in Triad’s de- fined contribution retirement plan precludes relief that “has the purpose or effect of providing additional benefits or mon- etary or other relief to any Eligible Employee, Participant or Beneficiary other than the Claimant.” Because that provision prohibits relief that ERISA expressly permits, we affirm the district court’s denial of Triad’s motion to compel arbitration or, in the alternative, to dismiss. I A James Smith worked for Triad Manufacturing, Inc., a shelving and fixture company, from 2015 to 2016. 1 As part of his employment, Smith participated in Triad’s Employee Stock Ownership Plan, a defined contribution employee re- tirement plan under the Employee Retirement Income Secu- rity Act. A defined contribution plan allows the employee or the employer (or both) to contribute to the employee’s indi- vidual account (e.g., a 401(k) plan). By contrast, a defined ben- efit plan provides a fixed monthly benefit based on a general pool of assets (e.g., a pension plan). See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 439–40 (1999). ERISA governs both plans. 29 U.S.C. § 1002 (34), (35). Triad’s board of directors, including shareholders David Caito, Robert Hardie, and Michael McCormick, created the plan for its employees in early December 2015. The plan

1We draw the relevant facts from Smith’s complaint and accept those well-pleaded as true in resolving Triad’s motion. We also consider docu- ments, like the plan itself, submitted with that motion. No. 20-2708 3

provides that “[t]he Primary Sponsor reserves the right at any time to modify or amend or terminate the [plan] in whole or in part.” The primary sponsor, per the plan, is Triad through its board. On December 17, 2015, Caito, Hardie, and McCormick sold all of Triad’s stock to the plan, which at $58.05 per share totaled more than $106 million. Triad’s board appointed GreatBanc Trust Company as plan trustee on December 21, 2015, and GreatBanc approved the transaction in short order, seemingly after it had already occurred.2 Notably, the plan’s holdings consisted entirely of Triad stock. Triad’s share price then dropped to $1.85 on December 31, 2015, according to the plan’s financial statements. What had been valued at over $106 million plummeted in two weeks to just under $4 million. But under the plan’s provisions, no participant could sell their shares until they vested—at the earliest, on December 31, 2016, for some employees. As of De- cember 31, 2018, Triad’s share price dipped to less than one dollar per share. Caito, Hardie, and McCormick, though, seem to have ben- efited from the transaction. The plan financed its purchase of their shares through loans provided by the three men. Triad guaranteed these loans, charged against the company’s equity that had just been purchased by the plan. The plan also re- quired Triad to make retirement contributions in amounts no less than necessary to service the loan payments. So Caito,

2 GreatBanc did not move to compel or dismiss with the rest of the de- fendants, but rather answered the complaint. It is not a party to this ap- peal. 4 No. 20-2708

Hardie, and McCormick received repayment on the loans—at least in theory—no matter Triad’s financial situation. On July 17, 2018, Triad’s board, as the plan’s primary sponsor, amended the plan to include an arbitration provision with a class action waiver. That amendment includes a sub- section, “(a) Covered Claims,” requiring binding arbitration for any claim “which arises out of, relates to, or concerns this [plan], including without limitation, any claim for benefits under the [plan]; any claim asserting a breach of, or failure to follow, the [plan]; and any claim asserting a breach of, or fail- ure to follow, any provision of ERISA or the [Internal Reve- nue] Code.” Another subsection—entitled “(b) No Group, Class, or Representative Arbitrations”—warrants emphasis here. That subsection requires, in relevant part, that: • “All Covered Claims must be brought solely in the Claimant’s individual capacity and not in a repre- sentative capacity or on a class, collective, or group basis.”; and • “Each arbitration shall be limited solely to one Claimant’s Covered Claims, and that Claimant may not seek or receive any remedy which has the pur- pose or effect of providing additional benefits or monetary or other relief to any Eligible Employee, Participant or Beneficiary other than the Claimant.” That subsection also, with respect to any claim brought under ERISA § 502(a)(2) to seek appropriate relief under § 409, ex- pressly limits the Claimant’s remedy. What is more, “[i]n the event a court of competent jurisdiction were to find these re- quirements to be unenforceable or invalid, then the entire Ar- bitration Procedure … shall be rendered null and void in all No. 20-2708 5

respects as to the particular claim that is the subject of that court’s ruling.” In other words, the arbitration provision is nonseverable, at least for the claim at issue in its invalidation. Smith, though, contends that he received no notice of this ar- bitration provision before its addition to the plan. 3 B In April 2020, Smith filed a class action complaint against Triad’s board, Caito, Hardie, and McCormick (collectively, the “board defendants”), as well as GreatBanc, under 29 U.S.C. § 1132(a)(2) and (a)(3). The December 2015 transaction between Triad and the plan, according to Smith, violated nu- merous ERISA provisions. Three of the alleged violations are relevant here. In Count II, Smith alleged that the board de- fendants breached their fiduciary duties by failing to monitor fellow fiduciary GreatBanc as plan trustee, in violation of 29 U.S.C. § 1104(a)(1)(A) and (B). 4 Smith alleged in Count IV that the board defendants engaged in prohibited transactions in violation of 29 U.S.C. § 1106(a). And according to Smith in Count V, the board defendants knowingly participated in GreatBanc’s fiduciary violations, in violation of 29 U.S.C. § 1105(a)(1) and (a)(3).

3 According to Smith, the district court made a factual finding that he re- ceived no notice of the arbitration provision. But what the district court said was that a certain argument—that only the plan’s consent matters— “might have more force had defendants offered evidence that plaintiff had received notice of the amendment.” Either way, our resolution of this ap- peal does not turn on this issue. 4 In Count I, Smith alleged that GreatBanc breached its fiduciary duty, in violation of 29 U.S.C. § 1104(a)(1)(A) and (B). In Count III, Smith alleged that GreatBanc engaged in prohibited transactions in violation of 29 U.S.C. § 1106(a). 6 No. 20-2708

Smith’s prayer for relief was wide-ranging. As relevant here, Smith requested that the district court “[r]emove Great- Banc as the Trustee of the Triad [plan] or bar it from serving as a fiduciary of the [plan] in the future” and that it “[a]ppoint a new independent fiduciary to manage the Triad [plan] and order the costs of such independent fiduciary be paid for by Defendants.” He also asked that the district court “[a]ward such other and further relief” under § 1132(a)(2) and/or (a)(3), Federal Rule of Civil Procedure 54(c), “or that is equitable and just.” Based on the class action waiver, the board defendants then moved to compel arbitration or, in the alternative, to dis- miss Smith’s claims under Federal Rules of Civil Procedure 12(b)(3) or (b)(6). The district court denied that motion on two grounds. First, assuming that ERISA claims are generally ar- bitrable—a question this court has not yet addressed—and applying Missouri state law (per the parties’ mutual conten- tion), the district court held that because Smith had not con- sented to the arbitration provision, it could not bind him. Smith’s work with Triad ended in 2016, the arbitration provi- sion came in 2018, and no evidence had been offered that Smith received notice of the amendment. For the district court, it was Smith’s consent, and not the plan’s consent (through the primary sponsor, Triad), that mattered. That court thus rejected the Ninth Circuit’s analysis in Dorman v. Charles Schwab Corp. (Dorman II), 780 F. App’x 510, 513 (9th Cir. 2019) (unpublished memorandum opinion), which No. 20-2708 7

enforced a similar ERISA arbitration provision unilaterally added by the plan sponsor. 5 Second, the district court relied on American Express Co. v. Italian Colors Restaurant to hold the arbitration provision un- enforceable because it prospectively waived Smith’s right to statutory remedies provided by ERISA. 570 U.S. 228, 235–36 (2013). The plan’s arbitration provision, the district court rea- soned, prohibited plan-wide statutory remedies that ERISA permits under §§ 1132(a)(2) and 1109(a), so it could not be en- forced. The district court again disagreed with Dorman II, 780 F. App’x at 515, rejecting the Ninth Circuit’s determination that individualized arbitration for claims concerning a de- fined contribution plan, as here, accorded with ERISA. After the district court denied the motion, this appeal followed. II The board defendants moved to compel arbitration or to dismiss under Rules 12(b)(3) or (b)(6), and we construe their motion as one to compel. See Brickstructures, Inc. v. Coaster Dy- namix, Inc., 952 F.3d 887, 890 (7th Cir. 2020) (noting that “[i]t is the substance of a motion that counts, not its label” when resolving a jurisdictional issue over Rule 12(b)(3) and the Fed- eral Arbitration Act on interlocutory appeal). The standard for reviewing a ruling on a motion to compel arbitration “turns on the procedural posture of that ruling.” Scheurer v. Fromm Fam. Foods LLC, 863 F.3d 748, 751 (7th Cir. 2017). The district court’s resolution here turned on legal, not factual, issues, so our review is de novo. See id. at 751–52. And our

5 The same day the Ninth Circuit issued a companion published case, Dor-

man v. Charles Schwab Corp., 934 F.3d 1107, 1112 (9th Cir. 2019), which we refer to as Dorman I. 8 No. 20-2708

“interpretation of language in a plan governed by ERISA is controlled by federal common law, which draws on general principles of contract interpretation, at least to the extent that those principles are consistent with ERISA.” Schultz v. Aviall, Inc. Long Term Disability Plan, 670 F.3d 834, 838 (7th Cir. 2012). A We begin with the ERISA provisions relevant here. Section 1132(a)(2) provides that a civil action may be brought “by the Secretary [of Labor], or by a participant, beneficiary or fiduci- ary for appropriate relief under section 1109 of this title.” In turn, § 1109(a) imposes liability for any fiduciary who breaches his duties to the plan and holds him “personally lia- ble 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.” That provision also authorizes “other equitable or remedial relief as the court may deem ap- propriate, including removal of such fiduciary.” 29 U.S.C. § 1109(a). Taken together, § 1109(a) creates fiduciary liability, and § 1132(a)(2) allows for its enforcement. In Massachusetts Mutual Life Insurance Co. v. Russell, the Supreme Court examined these provisions in the context of a defined benefit plan. 473 U.S. 134, 136, 139 (1985). A plan par- ticipant in that case sued a fiduciary under § 1132(a) “for ex- tra-contractual compensatory or punitive damages caused by improper or untimely processing” of her plan benefit claims, in violation of § 1109(a). Id. at 136. The Court held that § 1132(a) precluded such individualized relief. Id. at 139–44. Recovery under § 1132(a) for a violation of § 1109, the Court explained, benefits the whole defined benefit plan. Id. at 140. This was because the “principal statutory duties” under No. 20-2708 9

§ 1109(a) are those that “relate to the proper management, ad- ministration, and investment of fund assets, the maintenance of proper records, the disclosure of specified information, and the avoidance of conflicts of interest.” Id. at 143–44 (footnote omitted). In addition, “[a] fair contextual reading of the stat- ute ma[de] it abundantly clear that its draftsmen were primar- ily 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 144 (foot- note omitted). So for the Court, “the entire text of § [1109] persuade[d] [it] that Congress did not intend that section to authorize any relief except for the plan itself.” Id. at 142. Be- cause the plan participant alleged an individualized, and not plan-wide, harm, § 1132(a) provided no viable cause of action. Id. The Court revisited §§ 1132(a) and 1109(a) in LaRue v. DeWolff, Boberg & Associates, Inc., albeit in the defined contri- bution plan context. 552 U.S. 248, 250 (2008). There, a plan par- ticipant alleged that a fiduciary’s misconduct—failing to make certain changes to his 401(k) account—had “‘depleted’ his interest in the [defined contribution plan] by approxi- mately $150,000, and amounted to a breach of fiduciary duty under ERISA.” Id. at 251. The Court held that § 1132(a) permit- ted such individualized relief, distinguishing Russell in the process. Id. at 253–56. “Unlike the defined contribution plan” in LaRue, “the disability plan at issue in Russell did not have individual accounts; it paid a fixed benefit based on a percent- age of the employee’s salary.” Id. at 255. And so “[t]he ‘entire plan’ language in Russell,” the Court noted, “speaks to the im- pact of § 409 on plans that pay defined benefits.” Id. at 255. Put another way, “Russell’s emphasis on protecting the ‘entire plan’ from fiduciary misconduct reflects the former landscape 10 No. 20-2708

of employee benefit plans. That landscape has changed.” Id. at 254. The difference between a defined benefit plan and a de- fined contribution plan was dispositive in LaRue. Id. at 254-55. As the Court explained, “[m]isconduct by the administrators of a defined benefit plan will not affect an individual’s entitle- ment to a defined benefit unless it creates or enhances the risk of default by the entire plan.” Id. at 255. But “[f]or defined contribution plans,” misconduct by a fiduciary “need not threaten the solvency of the entire plan to reduce benefits be- low the amount that participants would otherwise receive.” Id. at 255–56. The defined contribution plan participant in LaRue—unlike the defined benefit plan participant Russell— alleged fiduciary misconduct that fell “squarely within” § 1109, so the Court permitted his claim under § 1132(a). Id. at 253, 256. With Russell cabined to defined benefit plans, LaRue concluded “that although § [1132(a)] does not provide a rem- edy 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. at 256. B Against this backdrop, we begin with a threshold issue: whether ERISA claims are arbitrable as a general matter. Under the Federal Arbitration Act, “[a] written provision in any maritime transaction or a contract evidencing a trans- action involving commerce to settle by arbitration a contro- versy thereafter arising out of such contract or transaction, … shall be valid, irrevocable, and enforceable,” except for “such grounds as exist at law or in equity for the revocation of any No. 20-2708 11

contract.” 9 U.S.C. § 2. The FAA allows a party to an arbitra- tion agreement to petition a federal district court “for an order directing that such arbitration proceed in the manner pro- vided for in such agreement.” Id. § 4. And “[w]hether enforc- ing an agreement to arbitrate or construing an arbitration clause, courts and arbitrators must ‘give effect to the contrac- tual rights and expectations of the parties.’” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 682 (2010) (quoting Volt Info. Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989)). Put differently, we must “enforce arbi- tration agreements according to their terms.” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612, 1621 (2018) (internal quotation marks omitted). The FAA, as the Court said recently, “establishes ‘a liberal federal policy favoring arbitration agreements.’” Id. (quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). Claims under federal statutes are no exception. In Shear- son/American Express, Inc. v. McMahon, the Court explained that “standing alone,” the FAA “mandates enforcement of agreements to arbitrate statutory claims.” 482 U.S. 220, 226 (1987). But “[l]ike any statutory directive,” the FAA’s “man- date may be overridden by a contrary congressional command.” Id. In CompuCredit Corp. v. Greenwood, the Court reiterated this understanding, 565 U.S. 95, 98 (2012), and the Court confirmed it again in Italian Colors. 570 U.S. at 233. In ERISA, we see no “contrary congressional command” precluding arbitration. True, ERISA provides that “the dis- trict courts of the United States shall have exclusive jurisdic- tion of civil actions under this subchapter.” 29 U.S.C. § 1132(e)(1). Yet similar provisions in other statutory schemes have not prevented the Court from permitting arbitration. In 12 No. 20-2708

McMahon, for example, 482 U.S. at 227, the Court enforced an arbitration agreement covering claims under the Securities Exchange Act of 1934, even though per 15 U.S.C. § 78aa “ex- clusive jurisdiction of violations” is granted to “[t]he district courts of the United States.” See also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 632–37 (1985) (en- forcing arbitration agreement for claims under the Clayton Act, which contained similar jurisdictional provision in 15 U.S.C. § 15(a)). As the Court stated later, it has “repeatedly recognized that contractually required arbitration of claims satisfies the statutory prescription of civil liability in court.” CompuCredit Corp., 565 U.S. at 100–01 (collecting cases). Joining every other circuit to consider the issue, we recog- nize that ERISA claims are generally arbitrable. See, e.g., Dor- man I, 934 F.3d at 1112; Williams v. Imhoff, 203 F.3d 758, 767 (10th Cir. 2000); Kramer v. Smith Barney, 80 F.3d 1080, 1084 (5th Cir. 1996); Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1122 (3d Cir. 1993); Bird v. Shearson Lehman/Am. Exp., Inc., 926 F.2d 116, 122 (2d Cir. 1991); Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc., 847 F.2d 475, 478–79 (8th Cir. 1988); see also Simon v. Pfizer Inc., 398 F.3d 765, 774–75 (6th Cir. 2005) (noting, but not deciding, this issue). So the FAA applies with full force to claims under ERISA. See G. Richard Shell, ERISA and Other Federal Employment Statutes: When Is Commer- cial Arbitration an “Adequate Substitute” for the Courts?, 68 TEX. L. REV. 509, 572–73 (1990) (“A careful review of ERISA discloses that, if Congress intended anything with respect to enforcement of the FAA, it intended to preserve the full appli- cation of the FAA in ERISA cases.”). No. 20-2708 13

C The pivotal question here is whether this ERISA arbitra- tion provision is enforceable. We conclude the answer is no. Italian Colors shows the way. In that case, the Court located “no contrary congressional command” precluding arbitration in the Sherman Antitrust Act, upholding an arbitration provi- sion that waived class arbitration. 570 U.S. at 235 (internal quotation marks omitted). That ruling, though, did “not end the case.” Id. Plaintiffs there also “invoke[d] a judge-made exception to the FAA which,” in their words, “serve[d] to har- monize competing federal policies by allowing courts to in- validate agreements that prevent the ‘effective vindication’ of a federal statutory right.” Id. “[N]o economic incentive to pur- sue their antitrust claims individually in arbitration” existed, so enforcement of the class arbitration waiver would bar “ef- fective vindication” of their statutory rights, plaintiffs argued. Id. But that argument left the Court unpersuaded. Id. at 236. The “effective vindication” exception, it explained, “origi- nated as dictum in Mitsubishi Motors.” Id. at 235. As described in Italian Colors, Mitsubishi Motors “expressed a willingness to invalidate, on ‘public policy’ grounds, arbitration agreements that ‘operat[e] … as a prospective waiver of a party’s right to pursue statutory remedies.’” Id. (quoting Mitsubishi Motors, 473 U.S. at 637 n.19 (alteration in original) (emphasis omit- ted)). Willingness, however, did not translate into action; the Court in Mitsubishi Motors upheld the arbitration agreement at issue. 473 U.S. at 637–38. “Subsequent cases” after Mitsubishi Motors “similarly asserted the existence of an ‘effective vindication’ exception,” although they “similarly declined to apply it to invalidate the arbitration agreement at 14 No. 20-2708

issue.” Italian Colors, 570 U.S. at 235 (footnote omitted) (citing 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 273–274 (2009); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 28 (1991)). The Court in Italian Colors likewise declined that invita- tion. There, the class action arbitration waiver “merely limit[ed] arbitration to the two contracting parties,” so “[i]t no more eliminat[ed] those parties’ right to pursue their statu- tory remedy than did federal law before its adoption of the class action for legal relief in 1938.” Italian Colors, 570 U.S. at 236. But Italian Colors did not entirely shut the door to the “effective vindication” exception, explaining that it “would certainly cover a provision in an arbitration agreement forbid- ding the assertion of certain statutory rights.” Id. Although rare, we conclude that is what happened here. Recall that Smith invokes § 1132(a)(2)’s cause of action to seek relief for (alleged) fiduciary breaches under § 1109(a). That re- lief, by statute, includes “such other equitable or remedial re- lief as the court may deem appropriate, including removal of such fiduciary.” 29 U.S.C. § 1109(a). Yet the plan’s arbitration provision, which also contains a class action waiver, pre- cludes a participant from seeking or receiving relief that “has the purpose or effect of providing additional benefits or mon- etary or other relief to any Eligible Employee, Participant or Beneficiary other than the Claimant.” Removal of a fiduci- ary—a remedy expressly contemplated by § 1109(a)—would go beyond just Smith and extend to the entire plan, falling ex- actly within the ambit of relief forbidden under the plan. All this is to say that the plain text of § 1109(a) and the terms of the arbitration provision cannot be reconciled: what the statute permits, the plan precludes. In that way, the plan’s arbitration provision acts as a “prospective waiver of a party’s No. 20-2708 15

right to pursue statutory remedies,” Mitsubishi Motors, 473 U.S. at 637 n.19, so the “effective vindication” exception ap- plies. See Hayes v. Delbert Servs. Corp., 811 F.3d 666, 675 (4th Cir. 2016) (applying “effective vindication” exception when an “arbitration agreement use[d] its ‘choice of law’ provision to waive all of a potential claimant’s federal rights.”). And be- cause the plan’s arbitration provision is nonseverable, no claim under § 1132(a)(2) may be arbitrated. To reiterate, the problem with the plan’s arbitration provi- sion is its prohibition on certain plan-wide remedies, not plan-wide representation. It is not that the plan funnels its participants away from class actions. The Court has blessed that arbitration maneuver many times, including under the National Labor Relations Act in Epic Systems, 138 S. Ct. at 1632, the Sherman Act in Italian Colors, 570 U.S. at 238–39, the Credit Repair Organization Act in CompuCredit, 565 U.S. at 100, and the Age Discrimination in Employment Act in Gilmer, 500 U.S. at 35. Indeed, Epic Systems explained as much. 138 S. Ct. at 1627–28 (collecting these cases). Nor is individu- alized arbitration inherently incompatible with ERISA. Be- cause Smith participated in a defined contribution plan, Larue, and not Russell, governs, and the Court made clear in Larue that § 1132(a) “authorize[s] recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual account.” 552 U.S at 256 (emphasis added); see Rogers v. Baxter Int’l, Inc., 521 F.3d 702, 705 (7th Cir. 2008) (noting that under LaRue, §§ 1132(a)(2) and 409(a) “may be used by the benefi- ciary of a defined-contribution account that suffers a loss, even though other participants are uninjured by the acts said 16 No. 20-2708

to constitute a breach of fiduciary duty”). 6 The bottom line is that our holding turns on the impermissible relief, and not the chosen vehicle, for ERISA claims under the plan here. The board defendants disagree. Turning again to the Ninth Circuit’s decision in Dorman II, they contend that indi- vidualized arbitration can provide Smith and other plan par- ticipants with all the relief available to them under ERISA, and so the plan’s arbitration provision—with its class action waiver—should be enforced. The board defendants also tell us that Smith has not borne his burden in showing that the FAA and ERISA “cannot be harmonized” under Epic Systems, 138 S. Ct. at 1614. The FAA, they assert, must prevail. Smith’s prayer for relief shows the flaws in that thinking. Take for example his request that the district court remove GreatBanc as plan trustee, or that the court appoint a new in- dependent fiduciary. Just like the removal of a fiduciary, the appointment of a new one cannot have anything but a plan- wide effect. The same is true for removing GreatBanc as plan trustee. Both examples would have “the purpose or effect of providing additional benefits or monetary or other relief” to

6 Throughout Smith’s brief he contends that Russell remains relevant to our inquiry in this defined contribution plan context, claiming that it “in- volved a welfare plan, not a defined benefit plan.” But LaRue treated Rus- sell as a defined benefit plan case, and so will we. LaRue, 552 U.S. at 256 (“Consequently, our references to the ‘entire plan’ in Russell, which accu- rately reflect the operation of § [1109] in the defined benefit context, are beside the point in the defined contribution context.”). We place no em- phasis on language in footnote nine of Russell—arguably, dicta—that “[i]nclusion of the Secretary of Labor [in § 1132(a)(2)] is indicative of Con- gress’ intent that actions for breach of fiduciary duty be brought in a repre- sentative capacity on behalf of the plan as a whole.” Russell, 473 U.S. at 142 n.9 (emphasis added). No. 20-2708 17

someone other than Smith, so neither would be permitted un- der the plan’s arbitration provision. In that sense, 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 §§ 1132(a)(2) and 1109(a) expressly permit. What is more, we see no conflict with Dorman II, either. 780 F. App’x at 513–15. The arbitration provision in that case, as far as we can tell, lacked the prob- lematic language present here. Dorman v. Charles Schwab & Co. Inc., No. 17-cv-00285-CW, 2018 WL 467357, at *2 (N.D. Cal. Jan. 18, 2018) (reciting arbitration provision). The plan here is different from the plan in Dorman, and so are the resolutions. In closing, we note the limits of our holding, as well as its lessons. We express no view on whether Smith consented to the arbitration provision, whether he received notice of that provision, or even whether a plan’s sponsor can unilaterally amend the plan to include such a provision. In addition, Smith does not parcel out what relief he seeks under § 1132(a)(2) and what relief he seeks under § 1132(a)(3). In this case, we hold only that the “effective vindication” exception bars application of the plan’s arbitration provision to claims under § 1132(a)(2). Whether Smith’s claims, and those of other plan participants, under § 1132(a)(3) are barred is a question best left for another day. See Cent. States, Se. & Sw. Areas Health & Welfare Fund by Bunte v. Am. Int’l Grp., Inc., 840 F.3d 448, 452–53 (7th Cir. 2016) (thoroughly cataloguing the Supreme Court’s precedents involving relief under § 1132(a)(3)). In the end, the “effective vindication” exception may be rare, but it applies here. 18 No. 20-2708

III For these reasons, we AFFIRM the district court’s denial of the board defendants’ motion to dismiss or compel arbitra- tion.