Live Nation 401(k) Plan Escapes Class Suit, Moves to Arbitration

A federal judge has ruled that allegations of fiduciary mismanagement brought by former employees participating in Live Nation Entertainment’s 401(k) plan must be addressed by arbitration rather than in court, effectively ending the plaintiff’s attempts at a class action lawsuit.

U.S. District Judge Percy Anderson’s ruling for arbitration was filed Monday in U.S. District Court for the Central District of California, dismissing attempts by former Live Nation employees Pamela Avecilla and Sean Bailey for a class action.

“The Court concludes that the Plan’s Arbitration Agreement is valid, enforceable, and encompasses Plaintiffs’ individual claims in this action,” Anderson wrote. “The Court also concludes that Plaintiffs waived their right to pursue their class claims. The Court therefore grants Defendants’ Motion to Compel Arbitration and dismisses Plaintiffs’ class claims.”

The plaintiffs filed the complaint in March, alleging that Live Nation’s 401(k) plan and its administrators breached their fiduciary duty by paying excessive fees, failing to offer lower-cost mutual fund shares and failing to offer a less expensive stable value option. In addition, the plaintiffs argue that Live Nation offered a guaranteed income product that carried “unnecessarily high risk” and generated relatively low returns.

The defendants argued to the court that the plan’s arbitration agreement should prevail in the case, Avecilla et al. vs. Live Nation Entertainment et al.

The plaintiffs countered that any arbitration would have to occur with each individual participant and could not be done via class action; further, they argued that participants had not consented to the arbitration agreement and that it should not be enforceable under California law.

The court disagreed, citing a 9th Circuit Court of Appeals ruling that notes “ERISA contains no congressional command against arbitration, therefore an agreement to arbitrate ERISA claims is generally enforceable.” The court also argued that the participants had agreed to the plan’s arbitration agreement and that arbitration is enforceable under ERISA, which supersedes state law.

Live Nation, based in Beverly Hills, California, is a global entertainment company. As of December 31, 2021, its 401(k) plan had 8,974 total participants with account balances and about $769 million in assets, according to the complaint.

Christina Humphrey and Robert Fisher of Christina Humphrey Law PC are representing the plaintiffs in this case. Live Nation did not respond to a request for comment.