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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

JAMES SMITH, on behalf of himself and

all others similarly situated, and on behalf of 

the TRIAD MANUFACTURING, INC. 

EMPLOYEE STOCK OWNERSHIP PLAN, 

 Plaintiffs, 

vs.

GREATBANC TRUST COMPANY; THE 

BOARD OF DIRECTORS OF TRIAD 

MANUFACTURING, INC.; DAVID 

CAITO; ROBERT HARDIE; and

MICHAEL McCORMICK,

Defendants. 

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NO.: 1:20-CV-02350

JUDGE: GUZMAN

MAG. JUDGE: KIM

TRIAD DEFENDANTS’ REPLY IN SUPPORT 

OF MOTION TO COMPEL ARBITRATION AND/OR DISMISS

Plaintiff’s Response in Opposition to the Motion to Compel Arbitration and/or Dismiss 

filed by the Board of Directors of Triad Manufacturing, Inc, David Caito, Robert Hardie, and 

Michael McCormick (the “Triad Defendants”) offers two contentions to evade the mandatory

arbitration provision in the Triad Manufacturing, Inc. Employee Stock Ownership Plan (the 

“Plan”) document. First, Plaintiff argues that he didn’t individually consent to the mandatory 

arbitration clause. Second, Plaintiff argues that mandatory arbitration would deny him a statutory 

right to obtain class relief on behalf of the Plan under Section 502(a)(2) of the Employee 

Retirement Income Security Act (“ERISA”) (29 U.S.C. § 1132(a)(2)). Plaintiff’s arguments fail

because (1) the Plan consented to arbitration, which is what matters for purposes of Plaintiff’s 

breach of fiduciary duty claims brought on behalf of the Plan; (2) Plaintiff did consent to arbitration 

individually by his continued participation in the Plan; and (3) Plaintiff can obtain the same relief 

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he seeks in this lawsuit through arbitration based on the precedent set forth in LaRue v. DeWolff, 

Boberg & Assocs., 552 U.S. 248 (2008) and its progeny. The Triad Defendants’ motion should, 

therefore, be granted.

ARGUMENT

I. This Is A Case Of First Impression In The Seventh Circuit

As an initial matter, Plaintiff correctly notes that the Triad Defendants have not cited to 

Seventh Circuit precedent on the issue of whether a mandatory arbitration clause included in a 

defined contribution employee benefit plan document is applicable to breach of fiduciary duty 

claims brought on behalf of the employee benefit plan under ERISA §§ 502(a)(2) and (a)(3). Nor 

did Plaintiff. That is because this is an issue of first impression for this Circuit. As a result, 

Plaintiff’s assertion that the lack of Seventh Circuit precedent in the Triad Defendants’ Motion 

should weigh against the Triad Defendants request for relief is erroneous, particularly in light of 

recent and highly persuasive Ninth Circuit authority directly on point.

II. The Plan Consented To Arbitration

Plaintiff principally opposes the Triad Defendants’ motion on the basis that Plaintiff did 

not personally consent to the mandatory arbitration provision in the 2018 Plan amendment. 

However, Plaintiff’s argument wholly ignores that it is the Plan’s consent to arbitration that 

matters for Plaintiff’s breach of fiduciary duty claims, not the individual Plaintiff’s consent. 

Breach of fiduciary duty claims brought on behalf of the Plan under ERISA § 502(a)(2) belong to 

the Plan and not the individual. See Dorman v. Charles Schwab Corp., 780 Fed. Appx. 510, 514

(9th Cir. 2019) (“[h]ere the Plan did consent in the Plan document to arbitrate all ERISA claims”); 

see also Ramos v. Natures Image, Inc., No. 19-7094, 2020 U.S. Dist. LEXIS 88181, at *15 (C.D. 

Cal. Feb. 19, 2020) (quoting Dorman, 780 Fed. Appx. at 513) (further citing Munro v. Univ. of S. 

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Cal., 896 F.3d 1088, 1092 (9th Cir. 2018) (“[i]n both Munro and Dorman, the Ninth Circuit was 

clear: such claims belong to a plan-not an individual”); see also Smith v. Medical Benefit Adm’rs 

Group, Inc., 639 F.3d 277, 282 (7th Cir. 2011) (holding that an ERISA 502(a)(2) claim is brought 

on behalf of the Plan and not the individual). Therefore, “[t]he relevant question is whether the 

Plan agreed to arbitrate the 502(a)(2) claims.” Dorman, 780 Fed. Appx. at 512. Here, it is

undisputed that the Plan agreed to arbitrate the ERISA claims that are the subject of this lawsuit 

through the adoption of the Plan amendment on July 17, 2018. See Dorman, 780 Fed. Appx. at 

514 (granting the defendants’ motion to compel arbitration because “the Plan did consent in the 

Plan document to arbitrate all ERISA claims.”). Accordingly, Plaintiff is required to arbitrate his 

breach of fiduciary duty claims brought under ERISA.1

Plaintiff relies upon two cases in support of his argument that the arbitration clause 

shouldn’t apply: Brown v. Wilmington Trust, N.A., No. 3:17-cv-250, 2018 U.S. Dist. LEXIS 

123656 (S.D. Ohio July 24, 2018) and Coleman v. Reliance Trust Co., No. 4:18-CV-424, 2019 

U.S. Dist. LEXIS 223195 (E.D. Texas Nov. 13, 2019). Those cases are factually and legally 

distinguishable from the Ninth Circuit’s decision in Dorman.

Importantly, the Ohio district court in Brown was persuaded by the California district 

court’s decision in Dorman – a decision later overturned by the Ninth Circuit. Brown, 2018 U.S. 

Dist. LEXIS 123656, at *12-14. Even more critically, the participant in Brown completely cashed 

out of the ESOP before the Plan amendment mandating arbitration was adopted. Id. at *10. This 

led the Brown court to declare that, “[a]lthough plan administrators and employers have broad 

1 Importantly, the Triad Defendants have a duty and requirement to enforce the Plan according to its terms. 

Specifically, “once a plan is established, the administrator’s duty is to see that the plan is maintained pursuant 

to that written instrument.” Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U.S. 99, 108 (2013). That is 

exactly what the Triad Defendants have done via the instant motion.

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discretion to modify the terms of a plan, those modifications do not necessarily bind individuals 

like Plaintiff, who have ceased all participation in the plan and whose cause of action accrued prior 

to the modification.” Id. at *13-14. Only under those narrow “circumstances presented here” did 

the Brown court “conclude[] that Plaintiff is not bound by the Arbitration Procedure.” Id. But 

those are not the circumstances presented in the instant case where Plaintiff continued his 

participation in the Plan after the amendment. As such, the Brown court’s application of an 

overturned legal conclusion to a set of specific and critically different facts is of no relevance here.

Coleman is also factually distinguishable from this case and Dorman. In Coleman, the 

plaintiff only sued the former trustee for the plan, and not the plan administrator or the individual 

fiduciaries of the plan itself. Coleman, 2019 U.S. Dist. LEXIS 223195 at *9. Conversely, in this 

case, Plaintiff has brought suit on behalf of the Plan against the Triad Defendants, who are the 

individual fiduciaries of the Plan itself, for their alleged breach of their responsibilities under the 

terms of the Plan. See ECF No. 1, ¶¶ 22, 51, 96-97, 101, 123, 124, 125, 128, 138. Moreover, in

Coleman the plan amendment imposing mandatory arbitration was adopted after the plan was 

terminated. Coleman, 2019 U.S. Dist. LEXIS 223195, at *41 (stating that the plan was terminated 

in 2017 and on May 18, 2018, the plan was amended to include the arbitration provision). 

Specifically, the settlors of the plan in Coleman attempted to shield themselves from lawsuits in 

court for their misuse of plan assets at a time when the plan no longer existed. Id. Clearly, a plan 

that no longer exists cannot consent to anything, let alone an arbitration clause. In sharp contrast,

the amendment requiring arbitration in this case was adopted three years after the Plan was created 

and while Plaintiff was still a participant in the active Plan. Therefore, Coleman has no application 

here.

Finally, Plaintiff emphasizes that the individual plaintiff in Dorman signed an employment 

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document which provided for mandatory arbitration. However, a review of the Ninth Circuit’s 

decision in Dorman unequivocally reveals that the court’s decision was not premised upon the 

agreement signed by the individual plaintiff; rather, the court solely relied upon the fact that

arbitration was required because the party who consents to an arbitration clause for breach of 

fiduciary duty claims brought on behalf of a plan is the plan itself. Dorman, 780 Fed. Appx. at 

512-514. In fact, the Ninth Circuit’s opinion in Dorman doesn’t even mention the individual 

plaintiff’s employment agreement. Indeed, applying Dorman, the court in Ramos denied a motion 

to compel arbitration brought by a class for relief under ERISA § 502(a)(2) because the employees 

had only signed individual employment agreements that contained arbitration clauses, but did not 

have consent to arbitrate from the plan itself. 2020 U.S. Dist. LEXIS 88181 at *18-19 (C.D. Cal. 

Feb. 19, 2020) (holding “[a]s such, Defendants cannot arbitrate these claims without consent from 

the plan to arbitrate.”). That same rule should equally apply in this case where the Plan has 

consented to arbitration and the breach of fiduciary duty claims brought are for relief on behalf of 

the Plan.

III. Plaintiff Consented to the Arbitration Provision

Even if the Plan’s consent alone is not enough (which the Triad Defendants ardently 

believe it is), Plaintiff did individually consent to the arbitration clause by continuing to participate 

in the Plan after the arbitration amendment was adopted. “A plan participant agrees to be bound 

by a provision in the plan document when he participates in the plan while the provision is in 

effect.” Dorman, 780 Fed. Appx. at 512-513; see also Chappel v. Lab Corp. of Am., 232 F.3d 719, 

723-724 (9th Cir. 2000). This rule is premised upon participation, and for an important reason. 

ERISA benefit plans must be administered according to their terms. 29 U.S.C. § 1102(a)(1) 

(“every employee benefit plan shall be established and maintained pursuant to a written 

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instrument.”). For efficient administration, employee benefit plans must have a way to measure 

whether its participants consent to the terms of the plan document. The only way to perform that

measurement is by acknowledging their agreement to the terms of the plan when they become and 

remain a participant. For that reason, the Plan document is deemed the contract. See e.g., Coley 

v. Pitney Bowes, 34 F.3d 714, 717 (8th Cir. 1994) (characterizing the plan document as a contract).

Here, Plaintiff was employed by Triad in 2015 at the time the ESOP was created and 

continued his participation in the ESOP until 2019. Plaintiff agreed to the terms of the Plan when 

he became a participant in 2015. That agreement included (1) Plaintiff’s consent that that in order 

to withdraw his shares and obtain the money contributed into his account on his behalf, he would 

have a waiting period, and (2) Plaintiff’s consent to the arbitration clause added prior to the 

withdrawal of his shares. Plaintiff could have ceased his participation early and not received any 

money from the Plan, thereby expressing his disagreement with the terms of the Plan. However, 

did not do so in order to receive a monetary benefit.

Plaintiff cannot plead ignorance as to the terms of the Plan document which governed his 

participation. During the four year period that Plaintiff was a participant in the Plan, Plaintiff had 

the enumerated rights set forth in Section 104(b)(4) of ERISA to request Plan documents to better 

understand his rights under the terms of the Plan. 29 U.S.C. § 1024(b)(4). At no time during his 

participation in the Plan did he exercise those rights. Those rights lasted until a substantial period 

of time after the mandatory arbitration clause was adopted via a Plan amendment on July 27, 2018. 

During that period of time, Plaintiff received regular Plan statements which provided his 

total vested balance every year from the date the ESOP was created until he cashed out. Despite 

receiving these statements, Plaintiff waited two years after the Plan adopted the mandatory 

arbitration clause and one year after he cashed out of the Plan to seek any information about the 

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Plan or his rights under it until preparing for this lawsuit. Plaintiff was clearly on notice of certain 

aspects of the Plan, including but not limited to the value of his Plan account.

As a result of both the Plan’s consent and Plaintiff’s consent, the Plan document’s 

mandatory arbitration clause should be applied.

IV. The Plan Document, Not the SPD, Controls

Plaintiff contends that in response to a request for documents from the Plan, he received a 

copy of the Summary Plan Description (“SPD”) which does not contain the same language as the 

Plan document regarding arbitration. However, “[a]n SPD does not determine the enforceable 

terms of the plan.” Colvill v. Life Ins. Co., No. 17-C-1290, 2018 U.S. Dist. LEXIS 145273, at *6 

(E.D. Wis. Aug. 27, 2018) (citing CIGNA Corp. v. Amara, 536 U.S. 421 (2011)). When an SPD 

and a plan document conflict, the plan document governs. See Schwartz v. Prudential Ins. Co.,

450 F.3d 697, 699 (7th Cir. 2006) (quoting Health Cost Controls of Illinois, Inc. v. Washington, 

187 F.3d 703, 711 (7th Cir. 1999) (holding “[w]hen, however, the plan and summary plan 

description conflict, the former governs, being more complete - the original, as it were, which the 

summary plan description excerpts and translates into language that may be imprecise...”).

In this case, it is undisputed that the controlling document is the Plan document. The Plan 

document even states that, “[i]n the case of any conflict between the content of this booklet and 

the content of the plan or the related trust agreement, the terms of the plan or the trust agreement 

will control.” (ECF No. 46-2, PageID#345). Moreover, the SPD provides that arbitration may be 

required for certain claims, and further directs participants to reference the arbitration procedures 

in the Plan document for more information about the arbitration requirements. While the SPD 

contains stock language regarding general ERISA rights that is legally required to be included in 

an SPD, that language does not conflict with the Plan document’s arbitration requirement, which 

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is even referenced in the SPD itself. And even if it did conflict, the terms of the Plan document 

would control.2 The claims and appeals procedures in the SPD as well as in the Plan document 

itself make absolutely clear that arbitration is required for certain specific claims, including those 

asserted by Plaintiff in this case. Therefore, Plaintiff’s argument relating to the SPD is meritless.3

V. Arbitration Does Not Deprive Plaintiff or the Class Of Any Statutory Rights

Finally, Plaintiff incorrectly argues that arbitration is impermissible because it would 

deprive Plaintiff of statutory rights under ERISA § 502(a)(2) to seek class relief on behalf of the 

Plan. However, “[w]hen an individual participant agrees to arbitrate, he does not give up any 

substantive rights that belong to other Plan participants.” Dorman, 780 Fed. Appx. at 514. There 

is nothing that prohibits other Plan participants from seeking the same relief under ERISA § 

502(a)(2) that Plaintiff could seek in arbitration. Put simply, Plan-wide relief can still be achieved 

through individual arbitration. For that precise reason, the Ninth Circuit in Dorman held that the 

class-action waiver in the arbitration clause was valid and did not violate the Plaintiff’s ability to 

seek relief under ERISA § 502(a)(2). Id.

Specifically, the Supreme Court made clear in LaRue that when a claim is made under 

ERISA § 502(a)(2), while “it is the plan and not the individual beneficiaries and participants that 

benefit from winning a claim for breach of fiduciary duty....[ERISA § 502(a)(2)] does authorize 

recovery for fiduciary breaches that impair the value of plan assets in a participant’s individual 

2 It should be noted that the mandatory arbitration clause doesn’t require arbitration of all claims, but only those 

enumerated in the provision itself.

3 Moreover, Plaintiff’s factual contentions regarding receipt of various Plan documents are not properly before the 

Court. Plaintiff attached a Declaration from his attorney purporting to authenticate a letter he personally received 

dated March 27, 2020. (ECF No. 46, PageID#311; ECF No. 46-1; ECF No. 46-2; ECF No 46-3). Plaintiff then uses 

this letter and Declaration to claim that he requested a copy of the Plan document and any effective amendments, but

did not receive those documents in response. Id. The Declaration is, therefore, inadmissible hearsay regarding matters 

not plead or referenced in Plaintiff’s Complaint. Moreover, because Plaintiff did not attach a copy of his request for 

various Plan documents documenting what he actually requested, this Court has no basis upon which to determine 

whether the hearsay assertions in the Declaration are accurate.

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account.” Munro, 896 F.3d at 1093 (quoting LaRue, 552 U.S. at 256). As summarized by the

Seventh Circuit, in the context of a defined contribution plan, “malfeasance by a plan fiduciary 

that adversely affects the value of the assets held in such an account will support a suit under 

sections 409 and 502(a)(2) regardless of whether the wrongdoing affects one account or all 

accounts in the plan.” Smith, 639 F.3d at 283 (citing LaRue, 552 U.S. at 256). The same is true 

here where the Plan is a defined contribution plan (an ESOP) and neither the Plaintiff nor any other 

participant who chooses to seek relief on behalf of the Plan for their individual Plan account under 

ERISA § 502(a)(2) would be denied the opportunity to obtain such relief through individual 

arbitration.

In support of his argument, Plaintiff asserts that the Ninth Circuit’s holding in Dorman

conflicts with the Ninth Circuit’s holding in Munro. Plaintiff further argues that in Munro, the 

Ninth Circuit held that a claim under ERISA § 502(a)(2) “could not be settled for individual relief, 

because it was for relief on behalf of the plan.” Plaintiff’s reading of Munro is clearly incorrect. 

Critically, in Munro, the plan did not consent to arbitration through the plan document. Munro, 

896 F.3d at 1090. Instead, in Munro, each individual plaintiff signed their own individual 

arbitration agreement as part of their employment contract. Id. Thereafter, the employees filed a 

class action lawsuit for breach of fiduciary duty under ERISA § 502(a)(2). The Ninth Circuit held 

that “[b]ecause the parties consented only to arbitrate claims brought on their own behalf, and 

because the Employees’ present claims are brought on behalf of the Plans, we conclude that the 

present dispute falls outside the scope of the agreements.” Munro, 896 F.3d at 1092. The decision 

in Munro actually supports Dorman because in Dorman the Plan itself consented to the arbitration 

and the claims were brought on behalf of the Plan.

Plaintiff’s assertion is also contradicted by Ramos, a recent case from the United States 

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District Court for the Central District of California which analyzes both Dorman and Munro. 

Ramos, 2020 U.S. Dist. LEXIS 88181, at *16. In Ramos, the Court held “[i]n short, Munro and 

Dorman hold that while ERISA claims are arbitrable, a standard employment arbitration 

agreement does not cover claims for breach of fiduciary duty because those claims belong to the 

plan, at least when those claims are brought as part of a class action.” Ramos, 2020 U.S. Dist. 

LEXIS 88181, at *16 (citing Munro, 896 F.3d at 1092) (further citing Dorman, 780 Fed. Appx. at 

513). Finally, in Dorman, the Ninth Circuit even cites to Munro’s observation 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.” Dorman, 780 Fed. Appx. at 514 (citing LaRue, 552 

U.S. at 256); (also citing Munro, 896 F.3d 1093)). Therefore, Plaintiff is incorrect that the law in 

the Ninth Circuit related to this issue is unsettled. On the contrary, it is both well-developed and 

settled.

The precedent from both the Supreme Court and the Ninth Circuit demonstrate that an 

ERISA § 502(a)(2) claim belongs to the Plan whether adjudicated in arbitration or federal court. 

However, an individual plaintiff whose case proceeds in arbitration has all of the same rights under 

ERISA § 502(a)(2) to seek relief on behalf of a plan for his individual account when the plan is a 

defined contribution plan. Therefore, an individual participant in arbitration does not waive or 

relinquish any of the rights of the plan by engaging in individual arbitration. As a result, the classaction waiver in the Plan document’s arbitration provision is valid and enforceable.

CONCLUSION

For the foregoing reasons and those set forth in their initial brief, the Triad Defendants 

respectfully request that this Honorable Court apply the same reasoning utilized by the Ninth 

Circuit and hold that the arbitration clause and class action waiver in the Plan document are 

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enforceable, and enter an Order compelling arbitration, or in the alternative, dismiss this lawsuit 

so the parties may engage in arbitration.

/s/ Matthew D. Grabell – 6312929

FORD & HARRISON, LLP

271 – 17th Street, NW, Suite 1900

Atlanta, GA 30363

mgrabell@fordharrison.com

Telephone: (404) 888-3820

Benjamin P. Fryer

FORD & HARRISON LLP

(admitted pro hac vice)

NC Bar No. 39254

6000 Fairview Road, Suite 1200

Charlotte, NC 28210

bfryer@fordharrison.com 

Telephone: (980) 282-1900

Facsimile: (980) 282-1949

Attorneys for Board of Directors of Triad 

Manufacturing, Inc., David Caito, Robert 

Hardie, and Michael McCormick

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CERTIFICATE OF SERVICE

The undersigned hereby certifies that on today’s date, July 23, 2020, he served a 

copy of the foregoing Triad Defendants Reply in Support of Motion to Compel Arbitration, or in 

the alternative, Dismiss on all parties via operation of the Court’s CM/ECF electronic filing system 

and to all parties unable to receive electronic service, at the address set forth below. In addition, a 

courtesy copy has not been delivered to the Court due to the suspension of Local Rules pursuant 

to the United States for the Northern District of Illinois Fifth Amended General Order 20-0012.

/s/ Matthew D. Grabell – 6312929

FORD & HARRISON, LLP 

271 – 17th Street, NW, Suite 1900

Atlanta, GA 30363

mgrabell@fordharrison.com 

Telephone: (404) 888-3820 

Benjamin P. Fryer 

FORD & HARRISON LLP

(admitted pro hac vice)

NC Bar No. 39254

6000 Fairview Road, Suite 1200

Charlotte, NC 28210

bfryer@fordharrison.com 

Telephone: (980) 282-1900

Facsimile: (980) 282-1949

Attorneys for Board of Directors of Triad 

Manufacturing, Inc., David Caito, Robert 

Hardie, and Michael McCormick

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