Corey Rosen
Arbitration Clause Upheld in GM Stock Drop Case
In Webb v. Fid. Brokerage Servs., No. 354691 (Mich. Ct. App., 354691, July 29, 2021), a retired employee lost claim for a breach of fiduciary duty after his GM stock dropped within a rollover IRA managed by Fidelity. The retiree, Moses Webb, claimed that in 2009 Fidelity did not adequately respond to his questions about GM’s then-impending bankruptcy, which resulted in him losing all of the $79,000 he had invested. Webb argued that the GM stock he’d purchased throughout his long career at the company was part of an ESOP, and thus subject to the arbitration requirements enforced by ERISA. The trial court could not find evidence to back up this claim because his Fidelity account was a rollover IRA, making it impossible to prove that he purchased the shares outside an ERISA plan. The court did not address this, ruling that an arbitration clause governed his Fidelity IRA and stating that “all parties to this agreement are giving up the right to sue.” The court also noted that Webb needs to file ERISA claims in federal court, not state court.
