Second Circuit Affirms Retiree’s Right to Pursue Plan Reformation and Litigate Representative ERISA Claims Despite Arbitration Agreement

In Duke v. Luxottica U.S. Holdings Corp., No. 24-3207, —F.4th—-, 2026 WL 303549 (2d Cir. Feb. 5, 2026), the Second Circuit issued a wide-ranging ERISA decision addressing appellate jurisdiction in Federal Arbitration Act (“FAA”) appeals, Article III standing after Thole, the arbitrability of § 502(a)(2) fiduciary-breach claims, and the scope of mandatory stays under the FAA. The court largely affirmed the district court, allowing the plaintiff’s representative ERISA claims to proceed in court.

The plaintiff, a retired participant in a defined benefit pension plan, alleged that plan fiduciaries violated ERISA by using decades-old actuarial assumptions to convert single-life annuities into joint-and-survivor annuities (“JSAs”), resulting in reduced monthly benefits and rendering the plan perpetually noncompliant with ERISA’s actuarial equivalence requirements. She sought relief under ERISA §§ 502(a)(2) and (a)(3), including plan reformation and monetary relief to the plan, and brought her fiduciary-breach claims in a representative capacity despite having signed an agreement requiring individual arbitration.

Appellate Jurisdiction

As a threshold matter, the Second Circuit held that it had jurisdiction to review not only the denial of the motion to compel arbitration and the denial of a stay under FAA § 3, but also the district court’s determination that the plaintiff had Article III standing to pursue relief under § 502(a)(2). The court reasoned that subject-matter jurisdiction—including standing—is reviewable on interlocutory appeal where it underlies an order denying arbitration, and that standing was also “inextricably intertwined” with the arbitrability issues properly before the court.

Article III Standing Under § 502(a)(2)

Turning to standing, the court drew a careful distinction between the forms of relief sought.

First, the court held that the plaintiff had Article III standing to seek plan reformation under § 502(a)(2). The court emphasized that the plaintiff plausibly alleged a concrete injury—reduced monthly benefits—and that reformation of the plan’s actuarial assumptions could redress that injury. The court rejected the defendants’ argument that reformation was categorically unavailable under § 502(a)(2), explaining that disputes over the ultimate availability of such relief go to the merits, not jurisdiction. The court also credited the plaintiff’s theory that the plan itself suffered a cognizable injury through ongoing ERISA noncompliance and potential adverse tax consequences.

However, the court held that the plaintiff lacked standing to seek monetary relief on behalf of the plan, such as restoration of losses or disgorgement. Applying Thole, the court reasoned that because the plaintiff participated in a defined benefit plan, she had no equitable or property interest in plan assets and would not personally benefit from payments made to the plan. As a result, such relief would not redress her injury and failed Article III’s redressability requirement.

Arbitrability and the Effective-Vindication Doctrine

The court next addressed whether the plaintiff could be compelled to individually arbitrate her § 502(a)(2) fiduciary-breach claim. Relying on its recent decisions, including Cedeno, the Second Circuit held that she could not.

The court reaffirmed that § 502(a)(2) claims are inherently representative and must be brought on behalf of the plan. Enforcing an individual-only arbitration clause would therefore operate as a prospective waiver of a statutory remedy, in violation of the effective-vindication doctrine. The court rejected the defendants’ attempts to distinguish prior precedent based on the defined benefit nature of the plan, concluding that the alleged plan-wide ERISA violations could be remedied only through a representative action.

Denial of a Mandatory Stay Under FAA § 3

Finally, the court affirmed the district court’s denial of the defendants’ request for a mandatory stay of the § 502(a)(2) litigation while the plaintiff’s individual § 502(a)(3) claims proceeded in arbitration. The court explained that FAA § 3 mandates stays only for claims that are themselves subject to arbitration. Where, as here, non-arbitrable claims remain pending, the decision whether to stay litigation lies within the district court’s discretion.

The court rejected the defendants’ argument that overlapping factual issues required a stay, reaffirming longstanding Second Circuit precedent that district courts retain docket-management discretion even where arbitrable and non-arbitrable claims arise from the same facts.

The Second Circuit reversed the district court’s ruling only insofar as it held that the plaintiff had Article III standing to seek monetary relief on behalf of the plan under ERISA § 502(a)(2). In all other respects, the court affirmed, leaving in place the district court’s determinations that the plaintiff had standing to seek plan reformation, that her representative § 502(a)(2) claims could not be compelled to individual arbitration, and that a stay of the litigation pending arbitration of individual claims was not required.