Bull Hn Information Systems Inc. v. Hutson, CIV. A. 96-10523-RCL.

• Decision Date: 10 November 1997
• Docket Number: No. CIV. A. 96-10523-RCL.,CIV. A. 96-10523-RCL.
• Citation: 983 F.Supp. 284
• Parties: BULL HN INFORMATION SYSTEMS INC., Plaintiff, v. Charles J. HUTSON, Defendant.
• Court: U.S. District Court — District of Massachusetts

983 F.Supp. 284

BULL HN INFORMATION SYSTEMS INC., Plaintiff, v. Charles J. HUTSON, Defendant.

No. CIV. A. 96-10523-RCL.

United States District Court, D. Massachusetts.

November 10, 1997.

David B. Chaffin, Robert T. Nagle, Hare & Chaffin, Boston, MA, for Bull HN Information Systems Inc.

David J. Burgess, Dwyer & Collora, Boston, MA, Nelson G. Harris, Raleigh, NC, for Charles J. Hutson.

Robert C. Paschal, Young, Moore, Henderson & Alvis, Raleigh, NC, for Continental Cas. Co.

Stephen A. Dunn, Emanuel & Emanuel, Raleigh, NC, James J. Ciapciak, Campbell, Campbell & Edwards, Boston, MA, for Metropolitan Life Ins. Co.

Robert T. Nagle, Hare & Chaffin, Boston, MA, for Bull HN Retirement Administration Committee.

OPINION AND ORDER ON APPLICATION TO VACATE ARBITRATION AWARD PURSUANT TO 9 U.S.C. § 10 AND FOR STAY OF FURTHER ARBITRATION PROCEEDINGS AND COMPLAINT FOR DECLARATORY JUDGMENT (#1) AND APPLICATION TO CONFIRM ARBITRATION AWARD AND MOTION TO COMPEL ARBITRATION (#5)

COLLINGS, United States Magistrate Judge.

I. Introduction

This civil action arises out of claims asserted by the defendant Charles J. Hutson ("Hutson") against the plaintiff Bull HN Information Systems Inc. ("Bull HN"). Hutson, a former sales representative for the plaintiff, filed a demand for arbitration in 1995 pursuant to the applicable arbitration provision of a 1990 Sales Compensation Plan ("the Plan") covering Bull HN sales representatives. The defendant contended that Bull HN had not paid him commissions on a particular sale and, in addition, he sought a recalculation of his benefit base, other allegedly unpaid benefits, and payment of additional benefits resulting from the recalculated salary and benefit base. Not only did Bull HN deny that Hutson was entitled to the commissions on the merits, the plaintiff asserted that the claims were time-barred under the limitations provision of the Plan.

In the Phase I Award, the arbitrator determined that the Plan "by its own terms" was not a contract, that Hutson's claims were timely under "any statute of limitation applicable in this matter", and that the defendant was entitled to commissions and bonuses in the amount of $52,605.57 plus interest. Displeased with these determinations, Bull HN instituted the instant action to vacate the Phase I Award, to stay arbitration of Hutson's remaining claims and for declaratory judgment. The defendant countered by filing an application to confirm the arbitration award and to compel arbitration of his outstanding claims.

With the parties' consent, this case has been referred and reassigned to the undersigned for all purposes, including trial and the entry of judgment, pursuant to 28 U.S.C. § 636(c). Both Bull HN and Hutson had filed motions for summary judgment, but they were denied in an Order (#41) dated September 25, 1997. Relying generally on the recent First Circuit decision in Recupero v. New England Telephone and Telegraph, 118 F.3d 820, 834 (1 Cir.1997), the Court concluded that the best way to proceed was to decide the applications on the merits based on the various memoranda filed with respect to the summary judgment motions. A hearing on the merits was held on October 23, 1997, and, at this juncture, the parties' cross-applications are in a posture for decision.

II. The Facts

The historical facts underlying the controversy presented to the arbitrator need only be recited summarily in order to set the stage for the issues now at hand.

Hutson was working as a sales representative for Bull HN, a computer company, in 1990 when he claims he was assigned the North Carolina Agricultural Extension account. Thereafter the defendant asserted that he was due commissions for work that he had done on that account. On October 22, 1991, and again in December of that year, Hutson's wife on his behalf wrote letters to Bull HN wherein she contended that a commission was being withheld and requested arbitration of the dispute under the terms of the Plan. On March 6, 1995, Hutson served a Demand For Arbitration on Bull HN with copies being filed with the American Arbitration Association.

By way of introduction, the Demand read as follows:

The named Claimant [Hutson], a party to an arbitration agreement contained in the Sales Compensation Plan for Individual Contributors, providing for arbitration under the Commercial Arbitration Rules, demands arbitration thereunder.

The arbitration clause contained in the Plan provides:

All disputes which involve claims for $3,000 or more, and which arise out of the participant's course of employment or out of the termination thereof, including but not limited to claims for wrongful termination, infliction of emotional distress and defamation, whether or not such claims are based exclusively on the terms of this Plan, shall be submitted to arbitration in Boston, Massachusetts if the parties are unable to resolve their dispute after good faith efforts. The Commercial Arbitration Rules of the American Arbitration Association shall apply to all aspects of the arbitration between the parties. The parties agree that after arbitration has been initiated, all other civil actions between the parties shall be stayed until the arbitration proceeding is concluded.

In deciding disputes, the arbitrators shall honor the terms and conditions of this Plan and construe said Plan in accordance with the laws of the Commonwealth of Massachusetts. The arbitration decision shall be binding on the parties and be honored by them without resort to any further court proceedings.

Record of the Arbitration Proceeding, Volume I, #11, Exh. 2. After delineating the particulars of his claims, Hutson's claim for relief was drafted as follows:

Pursuant to the terms of the Sales Compensation Plan for Individual Contributors, and pursuant to the North Carolina Wage and Hour Act, the Respondent is indebted to Claimant in a principal amount in excess of $130,000 for commissions, interest, reasonable attorney's fees, and the costs of arbitration. Claimant seeks an award requiring Bull HN to recalculate his salary and benefits and benefits base and to properly thereafter apply said terms to calculate Claimant's benefits; and to rescind the improper changes in Claimant's benefits. Claimant also seeks a declaratory ruling precluding Bull HN from altering his benefits except in accordance with law; and an award of liquidated damages for unpaid wages.

Record of the Arbitration Proceeding, Volume I, #11, Exh. 2. Appended to the Demand was a copy of four provisions of the Plan, to wit, the clause entitled "Arbitration of Certain Disputes" as quoted at length hereinabove; the clause entitled "Controlling Law" which provides that the law of Massachusetts is to govern the Plan; the clause entitled "Limitation of Actions" which provides that claims under the Plan must be brought within "two (2) years after the claim or cause of action has arisen"; and finally the clause entitled "Waivers" which provides that any waiver of any provision of the Plan must be in writing.

In response to the Demand, Bull HN objected to the North Carolina locale on the grounds that "[t]he arbitration clause of the Sales Compensation Plan ("the Plan"), which is accurately quoted in the Demand, states that the claims `shall be submitted to arbitration in Boston, Massachusetts ...'" (#11, Exh. 3) After the numbered paragraphs of the Demand were answered, three defenses were interposed:

1. The claims are barred by the two year limitation period contained in the Plan. Page 41, Paragraph F., "Limitation of Actions". ... The Claimant's alleged lack of competence, which he originally claimed began in October 1990 but now moves back to August 1990, did not exist in any case at the time the sale was made in this case, and does not bar the running of the limitations period.

2. The Plan mandates the application of Massachusetts law, therefore the claims under North Carolina law are improper.

3. The plaintiff's claims for employee benefits are governed by the Employee Retirement Income and Security Act ("ERISA") and as such can only be heard in state or federal court. Specifically, the claims procedure for such employee benefits plans do not provide for arbitration of disputes under such Plans and therefore this tribunal lacks jurisdiction over these claims.

Record of the Arbitration Proceeding, Volume I, #11, Exh. 3. It is clear from the Demand and Bull HN's Answer to it that there was never any dispute between the parties that the provisions of the Plan were controlling, and that any compensation to which Hutson was entitled was to be paid in accordance with the Plan.

On or about July 5, 1995, Bull HN filed an opposition to Hutson's demand for arbitration of the ERISA claims, expounding on its position that ERISA claims are not arbitrable. (# 11, Exh. 4) The following day Hutson filed a memorandum in support of his demand for arbitration. (#11, Exh. 5) On or about August 14, 1995, the arbitrator issued a ruling with respect to the limitation of issues, finding first that caselaw supports the arbitrability of ERISA-related claims pursuant to a valid agreement to arbitrate, and second that the arbitration clause in the Plan was

sufficiently broad to encompass ERISA-related claims that may be supported by Claimant's factual showing at the hearing in this matter, but only if such claims are directly related to the salary, commissions, or other compensation structures established under the Sales Compensation Plan.

Record of the Arbitration Proceeding, Volume I, # 11, Exh. 6. The arbitration hearing began on November 20, 1995 at Boston, Massachusetts; on the afternoon of the second day, the arbitrator began the session by making the following statement;

Before we go on with further cross-examination, the parties had made a request of the arbitrator and the arbitrator, having reviewed the rules, has determined that he can exceed (sic) to that request; that is, to make an interim or, possibly,...