Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-5_05-cv-00448/USCOURTS-alnd-5_05-cv-00448-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:1441eri - Petition for removal - E.R.I.S.A.

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1

 Doc. no. 3.

2

See court’s order entered on April 25, 2005 (no document number assigned).

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ALABAMA

NORTHEASTERN DIVISION

DARRELL FOWLER, )

an individual, d/b/a FOWLER )

MACHINE TECHNOLOGIES, )

INC., a business entity, )

)

Plaintiff, )

)

vs. ) Civil Action No. CV-05-S-448-NE

)

UNITED HEALTHCARE )

OF ALABAMA, INC., )

)

Defendant. )

MEMORANDUM OPINION

This action is before the court on defendant’s motion to compel arbitration of

all claims asserted by plaintiff, and to stay proceedings herein, pending such

arbitration.1

 The court ordered plaintiff to respond to this motion on or before May

6, 2005,2 but he failed to do so. Even so, the court proceeds to evaluate the merits (or

lack thereof) of defendant’s motion.

The Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA” or “the Act”),

establishes a national policy favoring arbitration of disputes. See, e.g.,

Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987). “[A]ny doubts

FILED

 2005 May-23 PM 03:08

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 5:05-cv-00448-CLS Document 11 Filed 05/23/05 Page 1 of 7
3

See doc. no. 4, Stalinski Declaration, ¶ 2.

4

See doc. no. 4, Ex. A at 1.

5

 Doc. no. 4, Stalinski Declaration, ¶ 2.

6

See doc. no. 1 (Notice of Removal), appended complaint, ¶ 3; see also doc. no. 4, Stalinski

Declaration, ¶ 4.

2

concerning the scope of arbitrable issues should be resolved in favor of arbitration.”

Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25

(1983). “[A]s with any other contract, the parties’ intentions control, but those

intentions are generously construed as to issues of arbitrability.” Mitsubishi Motors

Corporation v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985).

Here, defendant provided health insurance: for the benefit of the employees of

plaintiff’s business (Fowler Machine Technologies) and their dependents; and, as a

part of plaintiff’s group health benefit plan (the “Plan”).3 The Plan was governed by

the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.

(“ERISA”).4

As Claims Administrator, defendant exercised discretion to determine an

individual’s eligibility for coverage, and to otherwise construe the terms of the

insurance policy.5

 Defendant allegedly authorized Heather Chandler, a Plan

beneficiary, to undergo a medical procedure on December 19, 2001.6 Defendant

subsequently denied Ms. Chandler’s claim for reimbursement, however, on the basis

that the insurance policy was terminated prior to the date on which the medical

Case 5:05-cv-00448-CLS Document 11 Filed 05/23/05 Page 2 of 7
7

See doc. no. 4, Stalinski Declaration, ¶¶ 3-4.

8

See doc. no. 1 (Notice of Removal) at appended amended complaint, ¶¶ 10-15.

9

 Doc. no. 4, Ex. A, § 6.2 at 3-4.

10 Doc. no. 4, Ex. A at “Exhibit 1 to Group Policy.” The court could not locate definitions

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treatment was performed.7

 Plaintiff alleges two claims in the amended complaint:

bad faith refusal to pay a valid insurance claim, misrepresentation, and detrimental

reliance; and, in the second count, intentional infliction of emotional distress.8

The insurance contract that forms the basis of the controversy between plaintiff

and defendant included the following provision:

ARTICLE 6 — GENERAL PROVISIONS

. . . .

6.2 Dispute Resolution. IF THE ENROLLING GROUP AND THE

PLAN ARE UNABLE TO RESOLVE A DISPUTE OR IF THE

ENROLLING GROUP WANTS FURTHER REVIEW OF A

DECISION BY THE PLAN, IT MAY SUBMIT THE DISPUTE TO

NON-BINDING MEDIATION AS A PREREQUISITE TO

ARBITRATION. FOR ARBITRATION, THE ENROLLING GROUP

SHALL SUBMIT THE COMPLAINT OR DISPUTE TO BINDING

ARBITRATION, PURSUANT TO THE RULES OF THE AMERICAN

ARBITRATION ASSOCIATION. THIS IS THE ONLY RIGHT THE

ENROLLING GROUP HAS FOR FURTHER CONSIDERATION.

THE MATTER MUST BE SUBMITTED TO BINDING

ARBITRATION WITHIN 1 YEAR OF THE DATE THE FINAL

DECISION WAS FURNISHED TO THE ENROLLING GROUP.9

For purposes of this provision, the “ENROLLING GROUP” was defined as plaintiff

“Fowler Machining and Technology,” and the “PLAN” was defined, in relevant part,

as defendant “United HealthCare of Alabama, Inc.”10

Case 5:05-cv-00448-CLS Document 11 Filed 05/23/05 Page 3 of 7
for the terms “DISPUTE” or “DECISION” in the evidentiary materials submitted by defendant.

11 9 U.S.C. § 4 reads as follows:

A party aggrieved by the alleged failure, neglect, or refusal of another to

arbitrate under a written agreement for arbitration may petition any United States

district court which, save for such agreement, would have jurisdiction under Title 28,

in a civil action or in admiralty of the subject matter of a suit arising out of the

controversy between the parties, for an order directing that such arbitration proceed

in the manner provided for in such agreement. Five days’ notice in writing of such

application shall be served upon the party in default. Service thereof shall be made

in the manner provided by the Federal Rules of Civil Procedure. The court shall hear

the parties, and upon being satisfied that the making of the agreement for arbitration

or the failure to comply therewith is not in issue, the court shall make an order

directing the parties to proceed to arbitration in accordance with the terms of the

agreement. The hearing and proceedings, under such agreement, shall be within the

district in which the petition for an order directing such arbitration is filed. If the

making of the arbitration agreement or the failure, neglect, or refusal to perform the

same be in issue, the court shall proceed summarily to the trial thereof. If no jury

trial be demanded by the party alleged to be in default, or if the matter in dispute is

within admiralty jurisdiction, the court shall hear and determine such issue. Where

such an issue is raised, the party alleged to be in default may, except in cases of

admiralty, on or before the return day of the notice of application, demand a jury trial

of such issue, and upon such demand the court shall make an order referring the issue

or issues to a jury in the manner provided by the Federal Rules of Civil Procedure,

or may specially call a jury for that purpose. If the jury find that no agreement in

writing for arbitration was made or that there is no default in proceeding thereunder,

the proceeding shall be dismissed. If the jury find that an agreement for arbitration

was made in writing and that there is a default in proceeding thereunder, the court

shall make an order summarily directing the parties to proceed with the arbitration

in accordance with the terms thereof. [Emphasis supplied.]

4

The court concludes that the terms of this clause encompass the claims brought

by plaintiff in this action. Accordingly, and pursuant to 9 U.S.C. § 4, the parties will

be ordered to proceed to arbitration of all claims, in accordance with the terms of the

arbitration clause in the parties’ contract.11

The action also will be dismissed, rather than stayed, pending arbitration of the

parties’ claims. Several courts have concluded that section 3 of the Federal

Case 5:05-cv-00448-CLS Document 11 Filed 05/23/05 Page 4 of 7
12 9 U.S.C. § 3 reads as follows:

If any suit or proceeding be brought in any of the courts of the United States

upon any issue referable to arbitration under an agreement in writing for such

arbitration, the court in which such suit is pending, upon being satisfied that the issue

involved in such suit or proceeding is referable to arbitration under such an

agreement, shall on application of one of the parties stay the trial of the action until

such arbitration has been had in accordance with the terms of the agreement,

providing the applicant for the stay is not in default in proceeding with such

arbitration.

5

Arbitration Act, 9 U.S.C. § 3,12 does not preclude dismissal of an action, as opposed

to entering a stay of proceedings, especially where, as here, all of the underlying

claims must be submitted to arbitration. See Alford v. Dean Witter Reynolds, Inc., 975

F.2d 1161, 1164 (5th Cir. 1992); Sparling v. Hoffman Construction Co., Inc., 864 F.2d

635, 638 (9th Cir. 1988); Boyd v. Homes of Legend, 981 F. Supp. 1423, 1443 (M.D.

Ala. 1997); Sea-Land Service, Inc. v. Sea-Land of P.R., Inc., 636 F. Supp. 750, 757

(D. Puerto Rico 1986). In Alford, the Fifth Circuit adopted the reasoning of the

district court in Sea-Land, which found dismissal of the action without prejudice to

be justified in such circumstances:

[W]e do not believe the proper course is to stay the action pending

arbitration. Given our ruling that all issues raised in this action are

arbitrable and must be submitted to arbitration, retaining jurisdiction and

staying the action will serve no purpose. Any post-arbitration remedies

sought by the parties will not entail renewed consideration and

adjudication of the merits of the controversy but would be circumscribed

to a judicial review of the arbitrator’s award in the limited manner

prescribed by law.

Alford, 975 F.2d at 1164 (quoting Sea-Land, 636 F. Supp. at 757). In Boyd, another

Case 5:05-cv-00448-CLS Document 11 Filed 05/23/05 Page 5 of 7
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district court within this Circuit found the Fifth Circuit’s reasoning persuasive,

observing “[d]ismissal better serves the interests of judicial economy.” 981 F. Supp.

at 1443. For the same reasons, this court finds that dismissal, rather than a stay of

proceedings, is appropriate in these circumstances.

Accordingly, it will be ordered that this case is dismissed, but without prejudice

to the parties’ right to pursue their claims in the arbitral forum, and, without prejudice

to either party’s right to seek appropriate relief in this court at the conclusion of

proceedings in the arbitral forum, should that become necessary. Stated differently,

the court will retain jurisdiction for the sole and limited purposes of enforcing,

vacating, or modifying the arbitrator’s award. See 9 U.S.C. §§ 9 – 12. This

memorandum opinion, and accompanying order, will constitute the final judgment of

the court, subject only to the right of either party to petition the court to reinstate this

action for the purpose of invoking this court’s residual jurisdiction. Such

reinstatement, when allowed, will cause the filing date of the reinstated action to relate

back to the date upon which this action was commenced.

An appropriate order will be entered contemporaneously herewith.

DONE this 23rd day of May, 2005.

______________________________

United States District Judge

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