Opinion ID: 2971885
Heading Depth: 2
Heading Rank: 1

Heading: Wrongful Denial of Benefits (Count II)

Text: Count II of the complaint alleges that Simon was constructively and involuntarily terminated and that Pfizer wrongly failed to respond 13 to his requests for involuntary and Constructive Termination benefits under the ESP. J.A. p. 9-10. To the contrary, Simon’s claims filed internally with Pfizer were being addressed,14 and any disputes regarding the resolution of said claims are clearly governed by the arbitration provisions in the ESP. As noted above, the ESP contains mandatory arbitration provisions governing all claims for benefits for Constructive Termination or Actual Termination for Just Cause. It is undisputed that Simon has refused to proceed to arbitration as required with regard to any of these claims. Under a de novo standard of review, and based on policies favoring arbitration,15 this Court finds that the District Court erred in denying Pfizer’s motion to dismiss with respect to Simon’s claim for benefits under the ESP (Count II) - the subject matter of this claim must be arbitrated pursuant to the ESP under which Simon claims an entitlement to benefits. B. ERISA Section 510 (Count I) and COBRA Claims (Count IV) Next, an inquiry must be made with respect to Simon’s ERISA Section 510 and COBRA claims. Simon claims that the information he accessed on his manager’s computer without authorization (for which conduct he was terminated) was information pertaining to his eligibility for benefits under the ESP. Simon thus argues that he was terminated for attempting to determine his rights and benefits under the ESP in violation of ERISA Section 510, see 29 U.S.C. § 1140, which prohibits employer conduct engaged in for dispute.” See AT & T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 648-51, 106 S.Ct. 1415, 1418-19, 89 L.Ed.2d 648 (1986) (quoting United Steelworkers of America v. Warrior & Gulf Navigation, Co., 363 U.S. at 582-83, 80 S.Ct. at 1353 (1960)). Moreover, in cases involving broad arbitration clauses the [U.S. Supreme] Court has found the presumption of arbitrability “particularly applicable,” and only an express provision excluding a particular grievance from arbitration or “the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.” Id., 475 U.S. at 650, 106 S.Ct. at 1419 (quoting Warrior & Gulf Navigation, 363 U.S. at 584-85); see also International Union, UAW v. United Screw & Bolt Corp., 941 F.2d 466, 472-73 (6th Cir.1991) (finding that the employer had “not satisfied the requirement for forceful evidence to overcome the presumption that the grievances should be arbitrated”). United Steelworkers of America v. Mead Corp., 21 F.3d at 131. 13 Simon claims that this alleged improper denial of benefits is in violation of ERISA. 29 U.S.C. § 1132(a)(1)(B) allows a participant or beneficiary to pursue a civil action to recover benefits due him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan. Id. 14 See supra, pp.6 -7. 15 Consider this excerpt: The Federal Arbitration Act (FAA) provides for the compulsory arbitration of disputes covered by a valid arbitration agreement. 9 U.S.C.§ 2; see also Shearson/American Express, Inc. v. McMahon, 482 U.S. 220, 107 S.Ct. 2332, 96 L.Ed.2d 185 (1987). “By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218, 105 S.Ct. 1238, 84 L.Ed.2d 158 (1985). Furthermore, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.” Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). If the matter at issue can be construed as within the scope of the arbitration agreement, it should be so construed unless the matter is expressly exempted from arbitration by the contract terms. United Steelworkers of Am. v. Mead Corp., 21 F.3d 128, 131 (6th Cir.1994). Eckel v. Equitable Life Assur. Soc. of the U.S., 1 F.Supp.2d 687, 688 (E.D.Mich.1998). No. 03-1192 Simon v. Pfizer Inc. Page 8 the purpose of interfering with an employee’s attainment of benefits. Simon also alleges a COBRA notice violation under 29 U.S.C. §§ 1161, 1166, in that Pfizer was tardy in providing Simon notice of his COBRA rights, elections and benefits. Simon contends that, because these claims arise under ERISA, they are not within the scope of the ESP arbitration mandate. Thus, this Court must tangentially consider the narrow issue of whether ERISA preempts arbitration under the FAA. This narrow issue has not yet been addressed by the Sixth Circuit, see Eckel v. Equitable Life Assur. Soc. of the U.S., 1 F.Supp.2d 687 at 688 (noting that the Sixth Circuit had not yet addressed the issue); however, the majority of courts considering this issue have held that disputes arising under ERISA, including COBRA claims, are subject to arbitration under the FAA. See Kramer v. Smith Barney, 80 F.3d 1080, 1084 (5th Cir.1996); Pritzker v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1115-16 (3d Cir.1993); Bird v. Shearson Lehman/American Express, Inc. 926 F.2d 116, 122 (2d Cir.1991), cert. denied 501 U.S. 1251 (1991); Arnulfo P. Sulit, Inc. v. Dean Witter Reynolds, Inc., 847 F.2d 475, 479 (8th Cir.1988); Peruvian Connection, Ltd. v. Christian, 977 F.Supp. 1107, 1111 (D.Kan.1997); Fabian Fin. Serv. v. Kurt H. Volk, Inc. Profit Sharing Plan, 768 F.Supp. 728, 733-34 (C.D.Cal.1991); Southside Internists Group PC Money Purchase Pension Plan v. Janus Capital Corp., 741 F.Supp. 1536, 1541-42 (N.D.Ala.1990); Glover v. Wolf, Webb, Burk & Campbell, Inc., 731 F.Supp. 292, 293 (N.D.Ill.1990).16 Notwithstanding the foregoing, the following discussion reveals why this issue need not be resolved herein. A longstanding principle of this Circuit is that no matter how strong the federal policy favors arbitration, “arbitration is a matter of contract between the parties, and one cannot be required to submit to arbitration a dispute which it has not agreed to submit to arbitration.” United Steelworkers, Local No. 1617 v. Gen. Fireproofing Co., 464 F.2d 726, 729 (6th Cir.1972). See also AT&T Techs., Inc. v. Communications Workers of America, 475 U.S. 643, 648 (1986) (“[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.”); Bratt Enters., Inc., v. Noble Int’l Ltd., 338 F.3d 609, 612 (6th Cir.2003); Roney & Co. v. Kassab, 981 F.2d 894,897 (6th Cir.1992). This Court has drawn a clear line between the extensive applicability of general arbitration provisions and the more narrow applicability of arbitration clauses tied to specific disputes. When faced with a broad arbitration clause, such as one covering any dispute arising out of an agreement, a court should follow the presumption of arbitration and resolve doubts in favor of arbitration. See Masco Corp. v. Zurich Am. Ins. Co., 382 F.3d 624, 627 (6th Cir.2004). Indeed, in such a case, “only an express provision excluding a specific dispute, or the most forceful evidence of a purpose to exclude the claim from arbitration, will remove the dispute from consideration by the arbitrators.” Id. at 627 (internal quotations and citation omitted). However, when an arbitration clause by its terms extends only to a specific type of dispute, then a court cannot require arbitration on claims that are not included. See Bratts Enters., Inc., 338 F.3d at 613. 16 Simon does not argue to the contrary, but merely cites two out-dated cases in which courts did not require arbitration of ERISA claims: Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir.1984), for the proposition that arbitrators lack the necessary competence to deal with ERISA statutory violations, and McLendon v. Continental Group, Inc., 602 F. Supp. 1492 (D.N.J.1985), for the proposition that ERISA claims deal with the enforcement of substantive rights and thus should not be subject to the same arbitration provisions as govern contractual rights between parties. However, Amaro was discredited by Fabian Financial Services v. Kurt Volk, Inc. Profit Sharing Plan, 768 F. Supp. 728, wherein the court stated: Fabian also cites, as did Graphic Communications, Johnson v. St. Frances Xavier Cabrini Hosp., 910 F.2d 594 (9th Cir.1990). Johnson, too, relied on Amaro and, in particular, Amaro’s expressed distrust of arbitrators’ competence to decide ERISA claims. This rationale for rejection of an arbitration provision appears to contradict express Supreme Court holdings to the contrary. It is true, however, that the Amaro court did not have the benefit of the recent decisions discussed above. For reasons not obvious, the Ninth Circuit decisions have not addressed the several Supreme Court cases relied upon by the Plan and which this Court finds persuasive and binding. Thus, in asserting that an arbitrator cannot interpret ERISA, Fabian finds itself in conflict with, for example, McMahon, where the Supreme Court stated “ ‘we are well past the time when judicial suspicion of the desirability of arbitration and of the competence of arbitral tribunals’ should inhibit enforcement of the Act ‘in controversies based on statutes.’ ” Id. at 731-32 (citations omitted). No. 03-1192 Simon v. Pfizer Inc. Page 9 Passing to the central inquiry, this Court must determine whether the arbitration provisions contained in the ESP herein at issue are broad enough to encompass Simon’s ERISA Section 510 and COBRA claims. The ESP does not contain a general arbitration provision under which the parties agreed to arbitrate all disputes arising from the employment relationship. The arbitration provisions in the ESP are admittedly narrower and are contained specifically in the sections of the document concerning Constructive Termination and Actual Termination. J.A. pp. 52, 53. In other words, only two types of disputes are subject to arbitration under the ESP - disputes regarding the application of Section 20 dealing with Constructive Termination and disputes concerning the application of Section 14 dealing with Termination for Just Cause. Neither of these ESP sections anywhere refers to ERISA or COBRA, and therefore, as an initial matter, it is clear that Simon’s ERISA Section 510 and COBRA claims are not within the scope of any general or specific arbitration provision. Even assuming that Simon’s statutory claims arise from the same factual underpinnings as his claim for wrongful denial of benefits under the ESP, it does not necessarily follow that the ERISA claims must also be arbitrated. The question of whether or not Simon’s ERISA claims share facts with the arbitrable claims is not necessarily determinative of arbitrability of the ERISA claims. Where one claim is specifically covered by an arbitration agreement, and a second claim is not, the arbitrability of the second is governed by the extent to which the second claim is substantially identical to the first. On the one hand, a party cannot avoid arbitration simply by renaming its claims so that they appear facially outside the scope of the arbitration agreement. See Fazio v. Lehman Bros., Inc., 340 F.3d 386, 395 (6th Cir.2003). In order to determine whether such renaming has occurred, a court must examine the underlying facts - when an otherwise arbitrable claim has simply been renamed or recast it will share the same factual basis as the arbitrable claim. However, a claim that is truly outside of an arbitration agreement likewise cannot be forced into arbitration, even though there may be factual allegations in common. In particular, the determination that a claim “require[s] reference” to an arbitrable issue or factual dispute is not determinative. Bratt Enters., Inc., 338 F.3d at 613. Bratt Enterprises is particularly instructive as to how much factual overlap there may be without requiring arbitration of disputes not expressly subject to arbitration. In Bratt Enterprises, the arbitration clause covered disagreements relating to “any of the amounts included in the Closing Balance Sheet” of an asset purchase agreement transaction. Id. at 612-13. The parties ultimately had numerous disputes, and in a lawsuit filed by Bratt Enterprises, the Defendant Noble International, Inc. counterclaimed for breach of contract. Part of the breach of contract claim centered around a provision under which Bratt Enterprises retained accounts payable in excess of $1.2 million. Noble International’s closing balance sheet reflected accounts payable of over $1.8 million, but despite the $1.2 million limit, Bratt Enterprises disputed and sought to avoid payment of the $.6 million difference back to Noble. Because the breach of contract claim by Noble was therefore related to a balance sheet dispute, the district court ordered arbitration on the breach of contract claim in addition to the dispute over the actual accounts payable balance. Id. at 611-13. This Court reversed, holding that [w]hile Noble’s claim would obviously require reference to the closing balance sheet to determine matters of valuation should Noble prevail on this issue, the dispute regarding the validity of the [$1.2 million] limitation provision does not itself involve a “disagree[ment] with any of the amounts included in the Closing Balance Sheet.” . . .Thus, this aspect of Noble’s breach of contract claim is not within the scope of the arbitration clause and is, therefore, not arbitrable. Id. at 613. Nor was this result altered by the fact that ordering arbitration on the dispute over the proper amount of accounts payable and refusing to order arbitration on the breach of contract claim resulted in “piecemeal litigation.” Id. at 613. No. 03-1192 Simon v. Pfizer Inc. Page 10 As noted above, although Simon’s claims are intermingled, this does not support the conclusion that arbitration is necessarily required. Even if Simon were terminated for Just Cause, he would not necessarily be ineligible for COBRA benefits. Although it is true that COBRA expressly excludes termination for “gross misconduct” from the list of qualifying events, it does not follow that a termination for Just Cause under the ESP would necessarily be a termination for gross misconduct. Section 14 of the ESP states that: “‘Termination for Just Cause’ shall mean termination for the commission of a wrongful act such as theft of Company property or alcohol or drug abuse.” J.A. p. 52. This is not synonymous with the definition of gross misconduct, and different courts apply different standards. See, e.g., Chatterjee v. School Dist. of Philadelphia, 170 F.Supp.2d 509, 518 (E.D.Pa. 2001) (recognizing that there is no definition of “gross misconduct”). Therefore, it is possible that the arbitrator could decide that Simon had been terminated for just cause, while, in litigation, a court could determine that Simon had not been terminated for gross misconduct and was, therefore, eligible for COBRA notification and benefits. Returning to the question of whether arbitration is required because of the remaining degree of factual overlap, this case is sufficiently analogous to Bratt Enterprises so that the same result should be reached. Simon’s ERISA Section 510 and COBRA claims require consideration of some factual issues that are subject to arbitration, but the claims have independent legal bases. The Section 510 claim and COBRA claim are not simply claims for violations of the ESP that have been recharacterized in order to avoid arbitration; rather, they are independent claims that are statutorily authorized and that depend upon different legal standards. As discussed above, Simon’s COBRA claim could be resolved in his favor even if he loses the arbitration regarding his ESP claims. In other words, there is no greater degree of issue overlap than was the case in Bratt. In Bratt, the actual amount of the accounts payable could have controlled the entire breach of contract dispute had the arbitrator determined that the amount was equal to the $1.2 million cap and not in excess of it. The amount of recovery that Noble International would be entitled to if it prevailed depended upon the figure the arbitrator assigned to the accounts payable. In this case, as in Bratt, it is appropriate to permit litigation of the independent claims even though they may require some reference to the decision reached by the arbitrator. Only the desire to avoid piecemeal litigation counsels in favor of requiring arbitration, and that desire is legally insufficient under Bratt. Therefore, because Simon’s ERISA Section 510 and COBRA claims are not covered by the arbitration clauses at issue, it is not necessary to address the question of whether ERISA would pre-empt an arbitration clause that did cover those claims. Thus, based on the de novo standard of review, this Court finds that Simon’s ERISA and COBRA claims (Counts I and IV) are not subject to arbitration in this case and, therefore, the District Court did not err in failing to require arbitration with respect to those claims.