Roganti v. Metro. Life Ins. Co.

• Decision Date: 25 September 2013
• Docket Number: No. 12 Civ. 161(PAE).,12 Civ. 161(PAE).
• Citation: 972 F.Supp.2d 658
• Parties: Ronald A. ROGANTI, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, Metropolitan Life Retirement Plan for United States Employees, Savings and Investment Plan for Employees of Metropolitan Life and Participating Affiliates, The Metlife Auxiliary Pension Plan, and the Metropolitan Life Supplemental Auxiliary Savings and Investment Plan, Defendants.
• Court: U.S. District Court — Southern District of New York

972 F.Supp.2d 658

Ronald A. ROGANTI, Plaintiff,

v.METROPOLITAN LIFE INSURANCE COMPANY, Metropolitan Life Retirement Plan for United States Employees, Savings and Investment Plan for Employees of Metropolitan Life and Participating Affiliates, The Metlife Auxiliary Pension Plan, and the Metropolitan Life Supplemental Auxiliary Savings and Investment Plan, Defendants.

No. 12 Civ. 161(PAE).

United States District Court,

S.D. New York.

Sept. 25, 2013.

David George Gabor, Gabor & Gabor, Garden City, NY, for Plaintiff.

John T. Seybert, Michael H. Bernstein, Sedgwick LLP, New York, NY, for Defendants

OPINION & ORDER

PAUL A. ENGELMAYER, District Judge:

This case turns on the construction of a nearly $2.5 million award by an arbitral panel. Plaintiff Ronald A. Roganti claims that the award, in his favor and against his former employer Metropolitan Life Insurance Company (“MetLife”), represented back pay. It was therefore, Roganti claims, a violation of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq. (“ERISA”), for the Plan Administrator of his MetLife pension plan to exclude that award from his historical income in tabulating his pension. Defendants ¹ disagree. They claim the arbitral award represented something other than back pay, although they are elusive as to what that something was. The case initially came before the Court on a motion to dismiss, which was denied as to Roganti's ERISA claims. It is now before this Court for resolution, with the parties having consented to a summary trial on the administrative record. Having carefully considered that record and the assessment of that record by MetLife as Plan Administrator, the Court renders judgment for Roganti, concluding that the arbitral award represented back pay.

I. Background²A. Roganti's Employment with MetLife

The factual background to this controversy is detailed in the Court's Opinion and Order of June 18, 2012, 2012 WL 2324476, in which it granted in part, and denied in part, defendants' motion to dismiss. Dkt. 17 (“MtD Op.”). In brief:

Between 1971 and 2005, Roganti was a Met Life employee, beginning as an Account Representative and later becoming a Vice President. SF ¶ 2. During his tenure, he oversaw R. Roganti & Associates (“RR & A”) and the Tower Agency Group (“TAG”), both of which were sizable subsets of MetLife's New York business. Compl. ¶¶ 15, 17; SOC ¶¶ 8, 10.

In 1999, Roganti's relationship with MetLife began to deteriorate, as he voiced concerns about what he viewed as suspect business practices. SOC ¶ 14. A protracted dispute between Roganti and MetLife followed. Roganti claims that, between 1999 and 2005, MetLife repeatedly disregarded his complaints and came to actively retaliate against him, undermining his authority within RR & A and, ultimately, dissolving TAG. Id. ¶¶ 15, 20, 28–35, 40–44. Roganti claims that MetLife further retaliated against him by reducing his compensation, id. ¶ ¶ 24, 27, 47, 63, 66, with the specific goal of reducing his pension benefits, id. ¶ 1. In March 2005, Roganti retired from MetLife, his annual compensation having dropped precipitously, from $1,506,000 in 2002, to $475,000 in 2003, $383,000 in 2004, and $67,000 in 2005 (through March). AR 2334.

B. Roganti's Arbitration Before FINRA

On July 20, 2004, Roganti filed a Statement of Claim with the National Association of Securities Dealers (“NASD”) in which he sought to arbitrate his disputes with MetLife. SF ¶ 11. Roganti brought claims for breach of contract and quantum meruit, and also alleged violations of ERISA and of the Sarbanes–Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”).³ Articulating varying theories of damages, he sought between $11,483,000 and $32,764,506. SF ¶ 12.

The SOC set out, in two places, the relief Roganti sought. At the outset, the SOC stated: “Roganti seeks back pay, liquidated damages, compensatory and punitive damages, attorneys fees and an accounting.” SOC ¶ 2. And the SOC's concluding “Wherefore” clause demanded an order “directing an accounting of RR & A's revenues and expenses” and awarding “appropriate back pay, front pay and reimbursement for lost benefits ... liquidated damages ... attorneys fees, costs, disbursements and interest ... punitive damages ... [and] such further and additional relief as the Panel may deem just and proper.” Id. ¶ 90. The FINRA panel summarized the relief Roganti was seeking as “unspecified compensatory damages, unspecified punitive damages, an accounting of R. Roganti & Associates' revenues and expenses, appropriate back pay, front pay and reimbursement for lost benefits, attorneys' fees, costs, disbursements, interest, and such further and additional relief as the Panel may deem just and proper.” AR 593–99 (“FINRA Award”).

The FINRA arbitration was conducted between 2004 and 2010, and culminated in a 17–day hearing. SF ¶ 21. On August 28, 2010, the arbitral panel held MetLife liable. In the two paragraphs announcing its determination, it awarded Roganti “compensatory damages in the amount of $2,492,442.07 above [MetLife's] existing pension and benefit obligation to Claimant.” FINRA Award at 2. The panel did not, however, explain how it had arrived at this damages figure, or state concretely for what the Award was intended to compensate Roganti, save to state: “Any and all relief not specifically addressed herein, including punitive damages, is denied.” Id.

C. MetLife's Initial Benefits Determination

On March 24, 2011, Roganti filed a benefits claim with MetLife, in its capacity as the Plan Administrator. AR 590–99. He noted that the nearly $2.5 million arbitral Award was described exclusively as representing “compensatory damages” and did not include punitive damages, legal fees, or other damages. He asked that the Award be treated as compensation for income which MetLife had improperly denied him, and that the award be factored into the calculation of the benefits to which, since his retirement, he had been entitled under his pension plan with MetLife. SF ¶ 24. Under the pension plans applicable to Roganti, his pension was to be based on the average salary of the five non-consecutive years, out of his final 15 years at MetLife, in which he earned the highest salary. AR 1823. Roganti noted that his salary at MetLife had always been treated as benefits-eligible; therefore, he asserted, the FINRA Award, being compensation for income which MetLife had wrongly denied him, should be treated similarly. SF ¶ 24.

In a letter dated June 16, 2011, MetLife denied Roganti's request. AR 618–23. The letter-signed by Karen B. Dudas, MetLife's Director of HR–Global Benefits (“Dudas Letter”)—stated that MetLife had denied the request because the Award did not qualify as benefits—eligible compensation. Dudas gave three reasons for this conclusion. First, Roganti had no longer been employed by MetLife at the time the panel issued the Award; thus the Award, even if it represented back pay, did not meet the Plans' definition of “annual compensation.” AR 620. Second, the panel had not specifically denoted the Award as compensation for lost income; rather, FINRA had broadly termed its award “compensatory damages.” Id. Third, the panel had not identified to which years of Roganti's employment these compensatory damages applied. Thus, Dudas stated, even if the Award represented unpaid benefits-eligible income, it would be impossible for MetLife to tabulate how the Award should affect Roganti's pension benefits. AR 621–22.

On July 20, 2011, Roganti appealed MetLife's decision. SF ¶ 29. On August 30, 2011, MetLife again denied his claim, in a letter signed by Andrew J. Bernstein, Vice President–HR Benefits and Plan Administrator (“First Bernstein Letter”). AR 654–59. Bernstein's letter adopted the reasoning of the Dudas Letter. It reiterated that FINRA had awarded only general “compensatory damages” and had not specified that the Award reflected relief for lost income. Bernstein thus concluded that the Award was not benefits-eligible. AR 655–56, 658–59. Bernstein's letter informed Roganti of his right to appeal under § 502(a) of ERISA. AR 659.D. Roganti's Lawsuit

On January 9, 2012, Roganti filed this lawsuit. Both of his claims challenged MetLife's denial of his request that the FINRA Award be treated as benefits-eligible compensation. In his first cause of action, under SOX, Roganti claimed that, in refusing to so treat the Award, MetLife was again retaliating against him for complaining about MetLife's business practices. Compl. ¶ 177. In his third cause of action, under ERISA, Roganti claimed that MetLife's refusal to treat the Award as benefits-eligible compensation contradicted the terms of the pension plans.⁴Id. ¶¶ 188–89. On March 19, 2012, MetLife moved to dismiss. Dkt. 6.

In a lengthy opinion issued on June 18, 2012, the Court granted that motion in part and denied it in part. The Court dismissed Roganti's SOX claim, because he had failed to exhaust administrative remedies. SeeMtD Op. 9–11. But, as to the ERISA claim, the Court denied the motion to dismiss. The Court held that it was not clear on its face whether the arbitral Award represented back pay, as Roganti argued, or some other unspecified form of compensatory damages, as Met Life argued. Because the Plan Administrator had solely relied on the Award's terse and ambiguous language, and because on a motion to dismiss all inferences were required to be drawn in favor of Roganti, MetLife's motion to dismiss could not be granted. Id. at 14.

The Court then turned to the issue of how to resolve the parties' dispute as to whether the Award represented back pay. Eliciting from the members of the arbitral panel a clarification of the basis for their Award was not a viable option. Id. at 14–15.⁵ Instead, the Court concluded, it was necessary to review the arbitral record to determine, in the context of the evidence and arguments made before the arbitrators, what the Award represented. (The Court noted that, at oral...