[00:00:01] Speaker 01: Good morning, Your Honors. [00:00:01] Speaker 01: May it please the Court, rather pathically for Pamela Avesia and Sean Bailey. [00:00:06] Speaker 01: The District Court's arbitration ruling in this case must be reversed for either of two independent reasons. [00:00:20] Speaker 01: even should have known that an arbitration clause existed. [00:00:24] Speaker 01: And second, the Court refused to consider whether the arbitration clause might be unconscionable. [00:00:29] Speaker 01: That violates two bedrock principles of the Federal Arbitration Act. [00:00:33] Speaker 01: First, that parties can only be compelled to arbitrate when they've agreed to arbitrate. [00:00:38] Speaker 01: And second, that unconscionability is always an available defense to mandatory arbitration. [00:00:45] Speaker 01: Now, to be clear, the court's error, the court's ruling resulted from one common error, which is that it believed that ERISA somehow trumps the FAA, and in particular that ERISA overrides Section 2 of the FAA. [00:01:00] Speaker 01: So I'd like to just start there briefly. [00:01:03] Speaker 02: The only thing- [00:01:14] Speaker 02: participants left before the arbitration clause was added in 2022. [00:01:19] Speaker 02: So how does that adding of the arbitration clause affect those earlier claims? [00:01:30] Speaker 01: had left the plan before the arbitration clause was added. [00:01:35] Speaker 01: Live Nation's position, to be clear, is that it doesn't matter whether or not participants have left a plan or not. [00:01:40] Speaker 01: Their position is that, at any point, if an arbitration clause is added, it can govern all claims that are brought in court, you know, after the arbitration clause is added. [00:01:51] Speaker 01: And we think that's a problem. [00:01:53] Speaker 01: We think that violates the basic agreement requirement of the Federal Arbitration Act. [00:02:02] Speaker 01: answer to that question is, our position is that it's not possible to consent to an arbitration clause if you don't know that it existed. [00:02:09] Speaker 01: And it's deeply problematic to have an arbitration clause that applies to claims that accrued years before the arbitration clause was ever added in the first place. [00:02:20] Speaker 01: So I think that our position there is that it shouldn't control at all. [00:02:26] Speaker 04: I have another threshold question. [00:02:27] Speaker 04: Am I right that all of the claims in this case are on behalf of the plan? [00:02:32] Speaker 01: Yes, sure. [00:02:32] Speaker 01: Well, the 502A2 claims are on behalf of the plan, Your Honor. [00:02:35] Speaker 01: We also proceeded under A3. [00:02:37] Speaker 01: And those are not on behalf of the plan, you're saying? [00:02:40] Speaker 01: No, A3 claims are broader than individual capacity, but here the plaintiffs asserted both A2 and A3 claims. [00:02:46] Speaker 01: And what was the nature of the A3 ones that are in the individual capacity? [00:02:50] Speaker 01: So they're both breach of fiduciary duty claims premised on the same misconduct [00:02:59] Speaker 01: for lapping, but there's two subsections that are available to plaintiffs here. [00:03:03] Speaker 03: Do you agree that the plan itself has consented to the arbitration provision? [00:03:08] Speaker 01: I think we didn't dispute below that the plan consented, Your Honor. [00:03:10] Speaker 01: It's not clear to me that it's always possible to get a plan's consent through amendment, but, and I'm sure we didn't dispute that, so I think that we have to take that as a given. [00:03:18] Speaker 03: So then on that, with respect to that claim, you're really focusing on the unconscionability? [00:03:23] Speaker 01: No, Your Honor. [00:03:30] Speaker 01: requirement of an agreement. [00:03:33] Speaker 01: So in order to have an agreement, it's necessary under this court's precedent in Comer that it's the actual participant who consents, not the plan. [00:03:50] Speaker 01: But it was the participants' consent that was necessary. [00:03:53] Speaker 01: The court didn't allow there to be substitute consent by the trustees. [00:03:58] Speaker 04: So that's a case where- But there, the participants were not a part of the contract at all that was at issue where the arbitration clause was. [00:04:08] Speaker 04: So here, the arbitration clause would be in the agreement that these participants would be part of. [00:04:11] Speaker 04: In Comer, it was a separate agreement that the participants had nothing to do with, with this financial company. [00:04:18] Speaker 01: so that's true your honor but I think I think that the problem here is that when participants don't even have notice that an arbitration clause exists they can't possibly have consented to it you don't have anything you don't have an agreement between a party and a counterparty the plan arbitration provision is [00:04:53] Speaker 04: I have trouble seeing how further consent is needed. [00:04:56] Speaker 04: If there's actually a separate claim that's an individual claim, not on behalf of the plan, then it seems like I understand the argument better why you would need individual consent. [00:05:04] Speaker 04: But can you help me if you, it sounds like you think I'm thinking about that wrong, but can you tell me why? [00:05:07] Speaker 01: Yeah, so I think that the error there, Your Honor, is that an A2 claim is brought, it's true that it's brought on behalf of the plan, but it's brought by the participant. [00:05:16] Speaker 01: And I think that you need [00:05:23] Speaker 01: Do you have any other case that tells us that? [00:05:27] Speaker 01: Well, I think that the Supreme Court FAA cases tell us that you can't infer consent or use substitute consent. [00:05:35] Speaker 01: So here's what I mean by that. [00:05:37] Speaker 01: The Supreme Court has repeatedly rejected the idea that you can somehow infer the existence of an agreement or that you can use state law doctrines that replace an actual agreement between a party and a counterparty. [00:05:50] Speaker 01: And here are what Live Nation is asking for. [00:05:57] Speaker 01: actually want to push back on for a moment, but it's asking you to use what it claims to be a universal Orissa doctrine that there can be a unilaterally imposed plan term. [00:06:06] Speaker 01: The only party that is consented to arbitration here is the plan via the plan sponsor, and that's who's getting sued. [00:06:27] Speaker 01: an agreement that you can even point to. [00:06:29] Speaker 01: I think that's the problem. [00:06:33] Speaker 01: And I don't think that this court, and I take your point here that there was an agreement in the Commer case between the trustees [00:06:42] Speaker 01: But here, you don't even have that underlying agreement, right? [00:06:46] Speaker 01: This court said that there was an agreement, but the participants, it's not, the problem wasn't just that the participants weren't a party to it, it's that they hadn't agreed to arbitration at all. [00:06:55] Speaker 01: The trustees and the participant were actually aligned in that case against Smith Barney. [00:07:00] Speaker 01: Nonetheless, this court said that the trustees consent to arbitration isn't sufficient to- [00:07:24] Speaker 03: that somehow changes the analysis. [00:07:26] Speaker 01: So I do think that's right, Your Honor. [00:07:28] Speaker 01: I think the fact that the participants have the right to bring the A2 claim means that their consent matters as well. [00:07:34] Speaker 03: You have to have planned consent, but also participating consent. [00:07:37] Speaker 03: You're looking to the FAA for that. [00:07:40] Speaker 03: You can't point us to any case that says that the participants also need to consent when they're bringing claims on behalf of the plan when the plan has consented. [00:07:50] Speaker 01: I can't put into a case that where the arbitration provision is located in the plan. [00:07:55] Speaker 01: But Comer was a case where the plaintiffs were assuming on behalf of the plan. [00:07:59] Speaker 01: And this court said that their consent mattered. [00:08:04] Speaker 01: So in Comer, the A-2 claims were on behalf of the plan. [00:08:09] Speaker 01: The trustees in that case were not the defendants. [00:08:11] Speaker 01: It was Smith Barney. [00:08:13] Speaker 01: The trustees had consented to arbitration. [00:08:16] Speaker 01: Smith Barney tried to compel arbitration, and this court said no. [00:08:19] Speaker 01: And then how do you deal with Monroe? [00:08:22] Speaker 01: So in Monroe, this court said that a participant's consent, that doesn't necessarily cover [00:08:29] Speaker 01: The plan's consent. [00:08:31] Speaker 01: I think Comer and Monroe read together tell you that for H.U. [00:08:34] Speaker 01: claims, both the plan has to consent and the participant has to consent. [00:08:39] Speaker 04: Are you reading that into Monroe? [00:08:40] Speaker 04: Because I think Monroe just says, doesn't it just say that when the claim is on behalf of the plan, it's the plan's consent that we need? [00:08:48] Speaker 01: I don't think that's what the court is saying in Monroe, Your Honor. [00:08:50] Speaker 01: I think in Monroe, the question was scope. [00:08:54] Speaker 01: This court held that the arbitration agreement didn't cover the [00:09:01] Speaker 01: And the participants' individual arbitration agreement couldn't cover that 8-2 claim. [00:09:06] Speaker 01: So I think that it wasn't, it was about consent, but it was more about scope than about consent. [00:09:12] Speaker 01: Well, I don't want to say it wasn't about consent, but it was about scope. [00:09:15] Speaker 01: And I don't think the core was whole. [00:09:19] Speaker 01: I don't think that this court could have said that participating consent was irrelevant. [00:09:23] Speaker 01: I think where the court added was that planned consent was relevant. [00:09:27] Speaker 01: In Comer, of course, you had consent from the trustees. [00:09:30] Speaker 01: And in Monroe, there wasn't planned consent. [00:09:34] Speaker 01: So I think each of those two cases, there's a missing piece of consent, and they both matter. [00:09:39] Speaker 03: So I know you wanted to reserve some time. [00:09:47] Speaker 03: then if you don't answer my question, I'll ask you. [00:09:49] Speaker 01: Yeah, absolutely. [00:09:51] Speaker 01: So Judge Anderson ruled that unconscionability is unavailable entirely for plan provisions that mandate arbitration, and that can't be right. [00:09:58] Speaker 01: Arresta specifically in 1144D says that it is not intended to alter or modify other federal statutes, and that includes the FAA. [00:10:07] Speaker 01: The FAA specifically makes arbitration provisions amendment [00:10:15] Speaker 01: state contract law defenses apply as a matter of federal law. [00:10:19] Speaker 01: And so preemption is really not the right doctrine to talk about. [00:10:22] Speaker 01: We should be talking about 1144D, not 1144A. [00:10:25] Speaker 01: The fact that Judge Anderson wouldn't even consider it. [00:10:29] Speaker 03: We agree with you that the unconscionability defense is something that's valid and can be developed. [00:10:36] Speaker 03: What standard applies? [00:10:38] Speaker 03: What is the test? [00:10:41] Speaker 01: So the test is, it's a sliding scale between procedural unconscionability and substantive unconscionability, Your Honor. [00:10:45] Speaker 01: And I think that the place where we agree with Life Nation is that it would be appropriate to remand this to Judge Anderson to consider whether the clause is unconscionable or not. [00:10:55] Speaker 03: But that sliding scale applies, and I can talk to federal common law for the standard with respect to [00:11:08] Speaker 01: I think either one of them is available, but I think state law is a better answer. [00:11:12] Speaker 01: And the reason is that the FAA typically does subject more mandatory arbitration clauses to state law defenses, general state law defenses. [00:11:21] Speaker 01: Here, of course, the plan has a choice of law provision, which is California law. [00:11:25] Speaker 01: And it says to the extent that it's not preempted, California law applies. [00:11:28] Speaker 01: So there's a uniform body of state law that would govern unconscionability challenges to life nation's arbitration provision. [00:11:49] Speaker 01: a federal common law that's been developed on unconscionability. [00:11:54] Speaker 01: I can't point you to a case, Your Honor. [00:11:55] Speaker 01: I do think there's a federal common contract law, though, that this court has recognized it does apply to the Rosa plans. [00:12:00] Speaker 01: And so unconscionability would work. [00:12:02] Speaker 01: And now that I've reached my three minutes, I'm happy to answer any other questions or come back for rebuttal. [00:12:07] Speaker 01: Thank you. [00:12:08] Speaker 01: Let's take our time for rebuttal then. [00:12:09] Speaker 01: Thank you. [00:12:29] Speaker 05: Good morning. [00:12:30] Speaker 05: May it please the court, Sarah Adams on behalf of the Defendants at Police. [00:12:35] Speaker 05: Plaintiff is asking the court to do two things that no court has ever done. [00:12:40] Speaker 05: Number one, hold that a provision in an ERISA plan document is not valid unless each individual plan participant consents to it. [00:12:49] Speaker 05: And number two, apply common law unconscionability doctrines to set aside an ERISA plan term. [00:12:56] Speaker 05: What defendants are asking the court to do, on the other hand, is exactly what this court has already done in Dorman. [00:13:03] Speaker 05: Enforce an individual arbitration provision contained within a 401k plan document. [00:13:08] Speaker 05: Dorman is not distinguishable, so plaintiffs try to brush it off because it's unpublished. [00:13:13] Speaker 05: But the underpinnings of Dorman are published. [00:13:17] Speaker 05: Dorman points to this court's published decision a year prior in Monroe, as your honor mentioned. [00:13:23] Speaker ?: And there, [00:13:25] Speaker 05: The court in Dorman referenced Madron said we recently held that such claims belong to a plan. [00:13:32] Speaker 04: You go to the published authority. [00:13:34] Speaker 04: So if you're going through Dorman, I recommend that that's not going to be very persuasive because unpublished to try to talk about whatever the published authorities are. [00:13:41] Speaker 02: Sure. [00:13:42] Speaker 02: And before you do that, if you could go to my first question, which was why does arbitration apply to claims that arose before the arbitration clause was added in 2022? [00:13:53] Speaker 02: Because [00:13:54] Speaker 02: Under a risk of the plan document controls and so the plan document governs all claims that are brought. [00:14:08] Speaker ?: courts use that kind of language, but that is a similar principle. [00:14:14] Speaker 05: And because the claims belong to the plan, which is what this court told us in Monroe, it doesn't matter when the individual participants came and went. [00:14:25] Speaker 05: Those are the plan's claims, and the plan has consented to have that provision apply as it's stated currently. [00:14:32] Speaker 04: And so this gets to my threshold question then, do you disagree with the statement that some of the claims here are individual claims? [00:14:40] Speaker 04: Your Honor, I think yes, to a degree. [00:14:44] Speaker ?: 502A2 claims, always plan claims. [00:14:47] Speaker ?: 502A3 claims, I think there are occasions when they can be styled individually. [00:14:55] Speaker 05: As plaintiffs' counsel referenced, we're talking about the same operative set of facts. [00:15:00] Speaker 05: They're simply getting, and there wouldn't be duplicative recovery or anything like that. [00:15:05] Speaker 05: We're simply looking at- But the question is, is there non-duplicative recovery? [00:15:08] Speaker 05: in some way. [00:15:09] Speaker 05: So generally 502A3 is thought of as, sometimes it's called a catch-all provision under ERISA, an avenue for equitable relief that might not be available under other provisions. [00:15:23] Speaker 05: So if you look at 502A3 or 29 USC 1132A3 [00:15:39] Speaker 05: which violates any provision of this sub-chapter of ERISA or the plan. [00:15:43] Speaker 05: So that to me sounds like plan-wide remedies being sought if you're going to enjoin whatever practice is at issue, letter B, to obtain other appropriate equitable relief. [00:15:55] Speaker ?: That's a situation where in some cases there could be an individual participant seeking equitable relief. [00:16:03] Speaker ?: that only pertains to them. [00:16:05] Speaker ?: That's not the type of claims that are pled here. [00:16:07] Speaker 04: They're pleading a class that's all inherent in their claims, but affected in the same sort of way. [00:16:13] Speaker 04: So that is how I understood it. [00:16:16] Speaker 04: We can talk a bit more on rebuttal. [00:16:17] Speaker 04: But if it is all claims on behalf of the plan, it seemed like you were not disputing that the plan needed to consent. [00:16:25] Speaker 04: So this question of whether there needs to be consent, I wasn't sure there was disagreement on. [00:16:29] Speaker 04: It was just about who and if it's [00:16:32] Speaker 04: does need to be consent, am I right about that? [00:16:35] Speaker 05: Your Honor, me personally, if I were writing from scratch, that might not be the approach I would take. [00:16:40] Speaker 05: But here in the Ninth Circuit, when we're applying Monroe, then yes, the plan needs to consent, and that's the proper way to look at it. [00:16:49] Speaker 05: And if you look at the facts of Monroe, and counsel is right, and I think it was helpful to point out that what the court Monroe was talking about was the scope of that arbitration provision. [00:17:00] Speaker ?: And there, [00:17:02] Speaker ?: The arbitration provision was contained in employment agreements that the plan participants had outside of the plan. [00:17:11] Speaker 05: And the court said they had obligated them to to arbitrate any claim that the employee had against the university. [00:17:29] Speaker ?: those claims belong to the plan. [00:17:31] Speaker ?: And that is why counsel's statement that you need both types of consent is not correct because the Monroe Court is saying those claims don't belong to the participants. [00:17:43] Speaker 05: So their consent is not required. [00:17:53] Speaker 05: I would like to direct you just to one other point that I think is a little subtle, but I don't want to overlook in the plaintiff's reply brief. [00:18:07] Speaker 05: They've introduced sort of a new idea that the plan provision regarding arbitration can't be treated like other plan provisions under ERISA because this provision violates ERISA and they're referring to the exclusive jurisdiction of the federal courts there. [00:18:22] Speaker 05: But they don't seem to catch the implication of what that means. [00:18:25] Speaker 05: If it violates ERISA to have an arbitration provision in an ERISA plan, then that means ERISA claims aren't arbitrable. [00:18:34] Speaker 05: And that's the exact opposite of what the holding was in the published portion of Dorman. [00:18:39] Speaker 05: And it's opposite to the holding of every other circuit court to ever consider the issue. [00:18:44] Speaker 05: And that cannot be. [00:18:47] Speaker 05: Let me speak briefly to the unconscionability issue. [00:18:51] Speaker 05: And that's the second area where the plaintiffs are asking the court to forge a new path. [00:18:57] Speaker 05: No court has ever struck down an ERISA plan provision on the basis of unconscionability. [00:19:03] Speaker 05: Council couldn't point us to any case where that has ever happened. [00:19:06] Speaker 05: And that's because Orissa completely preempts that type of argument. [00:19:11] Speaker 04: But this isn't a preemption argument. [00:19:13] Speaker 04: Is it because preemption is about preempting state law? [00:19:16] Speaker 04: And I think this would be federal common law, which I think even you acknowledged in your brief. [00:19:21] Speaker 05: It is, if it's state law, it's preempted. [00:19:24] Speaker 05: If you're talking about federal, other types of common law, I would direct the court to the Supreme Court's decision in U.S. [00:19:31] Speaker 05: Airways v. McCutcheon, where the court was faced with a situation concerning whether the equitable defense of unjust enrichment could override an ERISA plan terms. [00:19:42] Speaker 05: And there the court said, no. [00:19:45] Speaker 05: The plan, in short, is at the center of ERISA. [00:19:49] Speaker 05: equitable defenses from overriding plain contract terms helps it to remain there. [00:19:55] Speaker 05: Now this court's never applied that case to unconscionability as opposed to unjust enrichment, but there's no reason that the same analysis shouldn't apply. [00:20:06] Speaker 05: The plan is at the center and ERISA doesn't count it's introducing [00:20:13] Speaker 05: equitable defenses to try to get at the plan document. [00:20:16] Speaker 04: This isn't really about the terms of coverage. [00:20:20] Speaker 04: The arbitration clause is sort of a different type of plan term because it's not really in the core of what ERISA is about and it seems more like it's governed by the FAA. [00:20:37] Speaker 05: substantive and procedural ERISA plan terms is something that is an idea of counsel. [00:20:44] Speaker 05: It's not reflected in the law anywhere, not in ERISA. [00:20:48] Speaker 04: And if you do- It seems like a lot of the things we're talking about today are not really in the law anywhere. [00:20:52] Speaker 04: I mean, some of these are novel questions, so I'm not sure that is really how different than everything else we have to decide today. [00:20:57] Speaker 05: Well, fair enough. [00:20:58] Speaker 05: But I think if you do look at the preemption, the actual preemption case law, you see state law preemption of [00:21:11] Speaker ?: going to bring a claim for benefits. [00:21:13] Speaker ?: So procedural substantive, that's not a distinction that we see in the law, and that really goes back to the fundamental purpose of ERISA. [00:21:22] Speaker 05: Plaintiffs love to talk about how ERISA is meant to protect participants, and that is true. [00:21:27] Speaker 05: That is a purpose, but [00:21:31] Speaker 05: enacting ERISA was to encourage plan sponsors to offer benefit plans in the first place and to do that Congress said we have to get rid of this morass of 50 states of different regulations and laws because what large corporation that covers all those states is ever going to bother to offer a benefit plan if that's what it has to wade through and here when we're looking at questions around individual consent and saying every person has to [00:22:04] Speaker 05: who came maybe before the provision came in, that is just simply unworkable under ERISA. [00:22:11] Speaker 05: For these benefits to be able to be offered to participants, there has to be a level of uniformity, and that's why the Court's construction that it's the plan's consent that matters makes perfect sense and keeps that whole ERISA structure intact. [00:22:24] Speaker 02: But don't we have two federal statutes here that we're trying to reconcile ERISA and the FAA? [00:22:31] Speaker 02: And because of that, ERISA doesn't have any provisions dealing with arbitration, but the FAA does. [00:22:38] Speaker 02: And one of those is that you have to determine if there are any applicable contract defenses, including unconscionability. [00:22:50] Speaker 02: And for that, it references either looking at state law or federal common law. [00:22:57] Speaker 02: And if under the principles of ERISA, [00:23:01] Speaker 02: Shouldn't we be looking at federal common law? [00:23:03] Speaker 02: I don't think so, Your Honor. [00:23:04] Speaker 05: I think what the FAA actually says is an arbitration agreement can be set aside for any of the reasons that exist in law or at equity for setting aside a contract. [00:23:16] Speaker 05: So then I think you have to ask, what kind of contract is this? [00:23:20] Speaker 05: This is a special kind of contract. [00:23:23] Speaker 05: All of the case law that's discussing consent and negotiation and all those things [00:23:29] Speaker 05: In most contracts, that's how the contract is formed. [00:23:32] Speaker 05: In the context of ERISA, and this is how these two statutes are harmonized, in the context of ERISA the contractual arrangement, or if we're going to think of it with that construct, is formed simply because the plan sponsor, like the seller of a trust, establishes it [00:23:52] Speaker ?: is no bargaining in many types of plans. [00:23:54] Speaker ?: There's no opting out in some types of plans. [00:23:56] Speaker ?: There's no even not even a requirement that they do anything or serve in any way to be [00:24:05] Speaker 05: settlor and so the idea that maybe I didn't have notice I didn't understand those don't even enter into it because of the special type of contract that an ERISA plan is and I think in viewed that way there's [00:24:34] Speaker 04: consent counts through the processes that allow amendment but I'm not sure it really addresses the unconscionability because the FAA preserves other defenses and if there's an unconscionability argument why is that not [00:24:51] Speaker 04: about consent. [00:24:52] Speaker 04: It sounded like you were talking about consent, not unconscionability. [00:24:54] Speaker 05: I do think there's some overlap, but there again, I would look at what the Supreme Court's telling us in U.S. [00:24:59] Speaker 05: Airways v. McCutcheon that that's simply not workable in the context of ERISA, that the ERISA plan document has to control, and so we can't bring in individual defenses, because if the question is about [00:25:16] Speaker 05: And the reason we're overlapping with notice is because they're talking about procedural unconscionability. [00:25:22] Speaker 05: So notice and understanding our elements there, that becomes a very individualized determination that is one that simply could not be made under ERISA with respect to tens of thousands of participants. [00:25:34] Speaker 04: Maybe the unconscionability analysis has to be done as to the plan too. [00:25:38] Speaker 04: So why wouldn't it be that the way you look at unconscionability here would be that the procedural aspects [00:25:46] Speaker 04: because they're about the plan and you amend the way you amend or whatever, but then there's still a substantive component. [00:25:52] Speaker 05: Because I think one of the most fundamental precepts of ERISA is that [00:25:57] Speaker 05: As the Supreme Court likes to say, it's a comprehensive and reticulated statute. [00:26:03] Speaker 05: Congress, in enacting ERISA, attempted to occupy the entire field of telling plan sponsors what is going into a plan. [00:26:12] Speaker ?: And when we're talking about saying, well, we don't like the way your arbitration provision works because [00:26:18] Speaker ?: It has this or that feature. [00:26:22] Speaker 05: That is the courts applying other law to upset the uniformity that Congress was trying to achieve in ERISA. [00:26:35] Speaker 04: I guess I'm still having trouble understanding. [00:26:37] Speaker 04: I can understand why you can't have 50 different states laws, but when we're talking about federal common law, so it would be one answer. [00:26:49] Speaker 05: answer your honor I think there are aspects of it that might be but part of that analysis if you have a sliding scale of procedural and substantive unconscionability and when you're talking about plaintiffs are suggesting it's unconscionable that the plan term was added without notice without without [00:27:14] Speaker 05: then you are introducing individualized issues and you would have to do that analysis. [00:27:19] Speaker 04: That is just they're wrong about how they're arguing that part of it, but that doesn't mean the whole unconscionability concept is gone, does it? [00:27:27] Speaker 05: This would be the first court to take that approach if that's the case. [00:27:33] Speaker 02: Has there been a court that hasn't done that? [00:27:36] Speaker 02: Like is there something reaching the opposite conclusion by a court? [00:27:42] Speaker 02: Or is it the first time that any court has considered the issue? [00:27:45] Speaker 05: I believe it's the first specific to unconscionability. [00:27:48] Speaker 05: Other equitable defenses, like the Supreme Court case I mentioned, this would fall along those same lines. [00:27:55] Speaker 03: Are there any other equitable defenses? [00:27:56] Speaker 03: I know you said the unjust enrichment in the kitchen was one. [00:28:00] Speaker 03: What other cases have analogous defenses that may be helpful for us to look at when considering the unconscionability defense? [00:28:10] Speaker 05: I have not seen other equitable defenses raised in reverse of cases for exactly the reasons I'm saying. [00:28:15] Speaker 05: This is the only one that the plaintiffs have brought up here. [00:28:22] Speaker 05: And we would agree on remand. [00:28:23] Speaker 05: My time is up. [00:28:23] Speaker 05: But if there's anything you'd like me to address on the actual substance of the unconscionability issue, I'd be happy to do that. [00:28:30] Speaker 04: Is there any reason? [00:28:31] Speaker 04: It doesn't sound like you disagree that if there needs to be an unconscionability analysis, that it should be done on remand instead of by us. [00:28:41] Speaker 05: That, I do agree, you could, where's my large binder, you do have the information where you could make that determination if you saw fit, but sitting as a court of review, the district court did not analyze any of those issues at all, and I think there's enough complexity and ambiguity in it that it makes sense. [00:29:03] Speaker 05: And also some factual disputes it seems. [00:29:05] Speaker 05: Yes, absolutely, your honor. [00:29:06] Speaker 05: And so I think it would make sense if we're in that situation to go back to the district court in the first instance. [00:29:13] Speaker 05: Thank you very much. [00:29:14] Speaker 05: Thank you. [00:29:29] Speaker 01: So if I could, Your Honors, I'd like to start with what my friend called a new argument, but I don't think is necessarily a new argument that was introduced in reply. [00:29:35] Speaker 01: And the point where I want to start is the interaction between ERISA and the FAA. [00:29:41] Speaker 01: The FAA is the only basis for arbitrating ERISA claims, and it's the sole authority for the existence of a mandatory arbitration provision in an ERISA plan. [00:29:51] Speaker 01: If we were looking only at ERISA, an arbitration provision would not be a legal plan term. [00:29:57] Speaker 01: So the court in McCutchen, U.S. [00:29:58] Speaker 01: Airways, the first step of their analysis was to show that the provision that they were looking at was legal under ERISA. [00:30:14] Speaker 01: or federal common law type defenses were available. [00:30:17] Speaker 01: Here, the first step in the analysis has to be what makes the [00:30:25] Speaker 01: what gives us authority to have an arbitration provision that applies to a risk of claims at all, whether it's in a plan or in an employment agreement or anywhere. [00:30:34] Speaker 01: Because the FAA carries with it the defense of unconscionability, it has to apply here. [00:30:41] Speaker 01: And I take Your Honor's point that perhaps it should be a federal common law rule. [00:30:45] Speaker 01: I do think that it's possible for it to be a rule guided by state law. [00:30:54] Speaker 01: federal common law rule guided by state law would also be a sort of regular way of approaching interpretation of ERISA plans. [00:31:02] Speaker 01: This court in Doughty applied federal common law, and that's post US Airways, to interpret an ERISA plan provision. [00:31:10] Speaker 01: It's not an arbitration provision, which I think is an important distinction that live nation isn't grappling with. [00:31:17] Speaker 01: And so I do think that's why we have to have at least consideration of whether unconscionability applies. [00:31:22] Speaker 01: I want to try again on consent, though, Your Honor. [00:31:24] Speaker 01: And here's how I'm going to take a shot at it, OK? [00:31:27] Speaker 01: The FAA requires the existence of an agreement or a contract. [00:31:31] Speaker 01: There's no reason to allow a special form of a contract or a special contractual arrangement, which is essentially unilateral arbitration, to apply in this instance, because the Supreme Court has pushed back on that repeatedly in the FAA context. [00:31:47] Speaker 01: The Supreme Court does not allow state law doctrines, which displace [00:31:52] Speaker 01: contractual consent doesn't allow those to exist under the FAA. [00:31:55] Speaker 01: There's no reason it would allow a special ERISA rule to displace an agreement requirement either. [00:32:02] Speaker 01: And the reason I think the plan's consent is insufficient, Your Honor, is because the plan's not contracting with anyone. [00:32:09] Speaker 01: The plan is a document and the plan's sponsor has inserted the arbitration [00:32:17] Speaker 01: It's not the plan sponsor and the plan. [00:32:19] Speaker 01: They are one. [00:32:20] Speaker 01: So you really have the unilateral imposition of arbitration, which is unprecedented. [00:32:23] Speaker 04: Though I know you don't think this matters, but can you help me know whether you have a response to the argument that the A3 claim here is really on behalf of the plan? [00:32:33] Speaker 01: Oh, so I think the reason the A3 claim is not on behalf of the plan, Your Honor, is because [00:32:43] Speaker 01: claims are brought in a representative capacity, but A3 claims, even when they're seeking harm to the plan as a whole, they're still, the court has never called those representative capacity claims like, so for example in LaRue most recently, the Supreme Court said A2 claims are representative, but it's never called A3 claims representative, and I may not be understanding your question, so happy to try again. [00:33:07] Speaker 04: Your friend on the other side said A3 claims kind of can come in two forms, and this one is really on behalf of the plan. [00:33:15] Speaker 01: I disagree with that, Your Honor, because I think that the reason that A2 claims are on behalf of the plan is because when you look at 1109, it talks about remedies that flow to the plan, and that's where the representative capacity comes from. [00:33:29] Speaker 01: A3 doesn't have any similar language. [00:33:32] Speaker 01: It talks about a participant being able to bring a claim [00:33:35] Speaker 01: for appropriate equitable relief or injunctive relief. [00:33:38] Speaker 01: So I think that what my friend is doing is conflating the fact that there is plan-wide harm with the capacity in which the claim is brought. [00:33:48] Speaker 01: I don't think that any of the Supreme Court authority which talks about representative capacity ever talks about that in an A3 capacity. [00:33:55] Speaker 01: And I want to say that LaRue distinguishes between A2 and A3 claims. [00:34:01] Speaker 01: And I might have that wrong, Your Honor, but I do think that the court there specified [00:34:09] Speaker 01: Verity also is a place where you could look to distinguish between those kinds of claims. [00:34:13] Speaker 01: I don't think that A3 claims have ever been held by any court to belong to the plan. [00:34:19] Speaker 01: They might redress harm to the plan generally, but I don't think they've ever been held as being brought on behalf of the plan. [00:34:28] Speaker 01: There can be harm to plan assets that's redressed of A3. [00:34:33] Speaker 01: But I think that that's different. [00:34:39] Speaker 04: Thank you both sides for the helpful arguments. [00:34:42] Speaker ?: This case is submitted.