2002 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-3-2002

In Re Prudential

Precedential or Non-Precedential: Non-Precedential

Docket No. 01-2320

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Recommended Citation

"In Re Prudential " (2002). 2002 Decisions. Paper 550.

http://digitalcommons.law.villanova.edu/thirdcircuit_2002/550
 NOT PRECEDENTIAL 

 UNITED STATES COURT OF APPEALS 

 FOR THE THIRD CIRCUIT 

 ___________ 

 No. 01-2320 

 ___________ 

 IN RE: PRUDENTIAL INSURANCE COMPANY OF AMERICA 

 SALES PRACTICE LITIGATION 

 Paul J. Berrafato, 

 Appellant 

 _______________________________________________ 

 On Appeal from the United States District Court 

 for the District of New Jersey 

 D.C. Civil Action Nos. 99-cv-04641 & 97-cv-05044 

 (Honorable Alfred M. Wolin) 

 ___________________ 

 Submitted Pursuant to Third Circuit LAR 34.1(a) 

 July 15, 2002 

 Before: SCIRICA, ALITO and FUENTES, Circuit Judges 

 (Filed September 3, 2002) 

 __________________ 

 OPINION OF THE COURT 

 __________________ 

 SCIRICA, Circuit Judge. 

 Paul Berrafato appeals from the District Court’s judgment upholding his arbitration 

award. We will affirm. 

 I. 

 Berrafato was employed by Prudential as an insurance sales representative in 1965. 

He was later appointed general manager of a district office, and held that at-will position 

until January 6, 1997. Berrafato was fired in connection with allegations that he 

concealed video tapes from regulatory compliance inspectors, made misrepresentations, 

and refused to answer deposition questions about document destruction in a Prudential 

Sales Practices Litigation matter. Berrafato brought suit against Prudential claiming he 

was entitled to disability and retirement benefits. Prudential responded that Berrafato was 

disqualified from receiving these benefits because he had been terminated for "egregious 

misconduct." 

 Prudential moved to compel arbitration under the rules of the National Association 

of Securities Dealers ("NASD"). Berrafato was registered with the NASD, met the 

definition of an "associated person" under the NASD code, and had signed a Form U-4 

Uniform Application for Securities Industry Registration or Transfer ("Form U-4") 

providing for the arbitration of disputes. On March 10, 1998, the District Court ordered 

Berrafato to arbitrate his claims before the NASD. 

 On November 2, 2000, the NASD arbitration panel rendered its decision. The 
NASD panel held that Prudential’s termination of Berrafato for "egregious misconduct" 

was arbitrary and capricious. The NASD panel ruled in favor of Berrafato on his 

disability and retirement claims but (1) rejected his defamation claim; (2) dismissed his 

ERISA 1140 retaliatory discharge claim; (3) refused to fine Prudential for allegedly 

failing to deliver ERISA plans to him in a timely fashion; and (4) denied his application 

for attorney’s fees and costs. The District Court upheld the arbitration award in its 

entirety and concluded "the decision of the arbitrators [cannot] be said to exhibit ’manifest 

disregard’ of the applicable law, the relevant agreements or the evidence." In re 

Prudential Ins. Co. Sales Practices Litig., No. 954704, slip. op. at 12 (D.N.J. May 11, 

2001). Berrafato appeals. 

 II. 

 A 

 Berrafato contends the District Court erred by not finding "manifest disregard for 

the law" where the NASD panel denied his application for attorneys’ fees and costs, 

denied an ERISA fine, and dismissed his defamation claim without explanation. 

Berrafato also makes unsubstantiated charges of general bias and prejudice against the 

NASD panel and the District Court. 

 B 

 The District Court correctly noted that judicial review of an arbitration award is 

very deferential. The Federal Arbitration Act ("FAA") "limits the court’s role to 

determining whether the parties received a fair and honest hearing on a matter within the 

arbitrators’ authority. The court may not take issue with the arbitrators’ interpretation of 

the contract. Nor can it consider whether the arbitrators committed an error of law." Sun 

Ship, Inc. v. Matson Navigation Co., 785 F.2d 59, 62 (3d Cir. 1986) (citations omitted). 

We have held that 

 an arbitrator’s award must be upheld if the interpretation can in any rational way be 

 derived from the agreement, viewed in the light of its language, its context, and 

 any other indicia of the parties’ intention; only where there is a manifest disregard 

 of the agreement, totally unsupported by principles of contract construction and the 

 law of the shop, may a reviewing court disturb the award. 

U.S. Steel & Carnegie Pension Fund v. McSkimming, 759 F.2d 269, 270-271 (3d Cir. 

1985). 

 We agree with the District Court that none of the FAA grounds for reversing the 

arbitrator’s award are present in this record. The arbitration decision did not exhibit 

"manifest disregard" of the applicable law. 

 III. 

 Berrafato contends he was defamed in a newspaper article by a Prudential 

spokesman who allegedly stated, inter alia, that Berrafato removed tapes from the local 

office in order to avoid regulatory compliance review. The only evidence put before the 

arbitrators was the newspaper article. Berrafato does not cite a single authority in support 

of his argument and fails to make more than a conclusory statement in his brief that he 

was defamed. We see no error. 

 Berrafato also argues that he should have been awarded attorneys’ fees and costs 

under ERISA, 29 U.S.C. 1132(g). But Berrafato concedes the award of attorneys’ fees 

under this statute is discretionary. 29 U.S.C. 1132(g). "[T]here is no presumption that a 

successful plaintiff in an ERISA suit should receive an award in the absence of 

exceptional circumstances." McPhereson v. Employees’ Pension Plan Re-insurance Co., 

33 F.3d 253, 254 (3d Cir. 1994) (citation omitted). We have set forth five factors that 

must be considered when determining whether to grant attorney fees in ERISA cases: (1) 

offending parties’ culpability or bad faith; (2) ability of offending parties to satisfy an 

award of attorneys’ fees; (3) deterrent effect of an award of attorneys’ fees against 

offending parties; (4) benefit conferred on pension plan members as a whole; and (5) 

relative merits of parties’ positions. Id. The District Court carefully evaluated all five 

factors. We find no error in denying attorneys’ fees and costs. 

 The last argument meriting discussion is Berrafato’s claim that the District Court 

erred by not fining Prudential under ERISA for failing to produce a copy of the plan 

document in a timely manner. Berrafato conceded to the District Court that such a fine is 

discretionary. Prudential argued that the plan documents were produced to Berrafato in 
time to avoid any possibility of prejudice. We agree with the District Court that "[i]n 

light of Berrafato’s ultimate victory on the benefits claim, this [avoidance of prejudice 

argument] appears to be correct. Particularly in the absence of a showing of prejudice, 

the arbitrators were within their discretion to decline to fine Prudential." In re Prudential

No. 954704, slip. op. at 19. 

 IV. 

 For the foregoing reasons, we will affirm the District Court’s judgment upholding 

the arbitration award in its entirety. 

TO THE CLERK: 

 Please file the foregoing opinion. 

 /s/ Anthony J. Scirica 

 Circuit Judge 

DATED: September 3, 2002