Simon v. Pfizer Inc.

Citation398 F.3d 765
Decision Date18 February 2005
Docket NumberNo. 03-1192.,03-1192.
PartiesJoseph J. SIMON, Plaintiff-Appellee, v. PFIZER INCORPORATED, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

ARGUED: James P. Flynn, Epstein Becker & Green, Newark, New Jersey, for Appellant. William G. Tishkoff, Ann Arbor, Michigan, for Appellee. ON BRIEF: James P. Flynn, Epstein Becker & Green, Newark, New Jersey, for Appellant. William G. Tishkoff, Ann Arbor, Michigan, for Appellee.

Before: SILER and ROGERS, Circuit Judges; FORESTER, Chief District Judge.*

OPINION

FORESTER, Chief Judge.

The Defendant Pfizer, Inc. ("Pfizer") herein appeals the District Court's ruling on its motion to dismiss the claims of Plaintiff Joseph Simon ("Simon").

Pfizer argues that the District Court erred in failing to dismiss Simon's four-count complaint concerning allegedly improper refusal of, and interference with the attainment of, benefits under the Warner-Lambert Company Enhanced Severance Plan ("ESP") because the ESP mandates that such disputes be decided in an arbitral, not judicial, forum and because Simon failed to exhaust internal administrative remedies. We REVERSE, in part, AFFIRM, in part, and REMAND for the reasons set forth in this opinion.

BACKGROUND

Simon was employed by Warner-Lambert Company ("Warner-Lambert") from 1989 until May of 2002. Prior to the merger of Warner-Lambert and Pfizer in May of 2000, Warner-Lambert adopted the ESP, which was designed to protect the job security of its employees in the event of a merger with another company. The ESP provides for the payment of enhanced severance benefits to certain eligible employees under limited circumstances that result in an "Activation Event" within two years of a "Change in Control." This two-year period is sometimes referred to as the "protected period." An "Activation Event" is either a "Constructive Termination" or an actual termination other than for "Just Cause." A "Change of Control" within the meaning of the ESP occurred when Pfizer and Warner-Lambert merged in May of 2000. Under the ESP, "Termination for Just Cause" is defined as "termination for the commission of a wrongful action such as theft of Company property or alcohol or drug abuse." A "Constructive Termination" is defined, in relevant part, in the ESP as a "substantive change in job duties" or "change in reporting relationship" occurring after a change in control. Under the ESP, the Plan Administrator has the authority to interpret the ESP's terms.

Near the end of the protected period, in May of 2002, Simon was terminated for accessing information contained in his manager's computer without authorization. Simon claims that the information accessed consisted of an organizational chart that he reviewed in an attempt to determine whether he was eligible for Constructive Termination benefits based on a change in his reporting relationship under the ESP. Simon further asserts that he was granted access to the area of the corporate network where he viewed this information and that no Pfizer policies or procedures prohibited his conduct.

On July 8, 2002, Simon submitted a request for benefits under the ESP, alleging Constructive Termination based on an alleged change in reporting relationship and Actual Termination other than for Just Cause. By letter dated July 9, 2002, Simon's attorney notified Pfizer that Simon demanded reinstatement to his position at Pfizer because his termination was, allegedly, in retaliation for, and an interference with, Simon's exercise and attainment of his rights under the ESP. J.A. p. 235.

In order for a plan participant to seek severance benefits under the ESP based on Constructive Termination or to contest a Termination for Just Cause, he must submit his claim(s) to the ESP Plan Administrator. The Plan Administrator reviews all claims and renders a determination through a three-step review process. The review process takes place in this order: (1) the participant completes a Constructive Termination form and files it with the Plan Administrator, who, after an internal review, forwards the claim to the ESP Advisory Group; (2) the participant may appeal to the ESP Administrative Committee; and (3) the participant may appeal to the Senior Vice President of Corporate Human Resources. If the participant is not satisfied with the outcome of this three-step review process, the ESP flow chart indicates that arbitration may be initiated. The chart clearly states that a participant "can proceed to arbitration only if [the participant] ha[s] completed the above three steps of the internal ESP process." J.A. p. 101. Pursuant to the ESP, any unsuccessful participant must submit his or her claim(s) to arbitration before the American Arbitration Association ("AAA") regardless of whether they are claims of Actual Termination for Just Cause1 or Constructive Termination.2 The results of arbitration are binding on Pfizer (and Warner-Lambert) and on the participant. J.A. p. 101.

Simon commenced this suit in the Eastern District of Michigan on September 24, 2002, prior to resolution of his claims in the three-step administrative process. His complaint contains counts for retaliatory discharge and discrimination in violation of ERISA § 510, codified at 29 U.S.C. § 1140 (Count I),3 improper denial of plan benefits (Count II), breach of fiduciary duty in violation of 29 U.S.C. § 1132(a)(3) (Count III), and failure to provide timely and proper notice of COBRA benefits pursuant to 29 U.S.C. §§ 1161, 1166 (Count IV).4 Thereafter, on November 12, 2002, Pfizer filed a motion to dismiss all counts of the complaint based on the ESP's mandatory arbitration provisions and on Simon's failure to exhaust his administrative remedies. Alternatively, Pfizer requested that the District Court stay litigation of Simon's claims until the resolution of his claims filed with Pfizer for benefits under the ESP.

At the time of oral argument on Pfizer's motion to dismiss, Simon's administrative claims filed with Pfizer for benefits (for Constructive Termination and Actual Termination under the ESP) were winding through the three-step administrative process established by the ESP. Pfizer represented to the District Court that the ESP Advisory Group informed Simon by letter dated January 23, 2003, of its decision to deny Simon's claim for benefits based on Constructive Termination, thus completing the first level of review. J.A. pp. 441-443; Pfizer's Motion to Supplement the Record, Exhibit 3. Pfizer further represented that it was continuing to follow the internal review procedures with respect to Simon's claim for benefits based on Actual Termination. J.A. pp. 441-443.

The District Court denied Pfizer's motion to dismiss with respect to all but Count III (breach of fiduciary duty). The District Court refused to require exhaustion of administrative remedies as to Simon's ERISA Section 510 (Count I) and COBRA (Count IV) claims on the basis that said claims are statutory and are thus separate and apart from Simon's claim under the ESP. The court ruled that Simon's failure to exhaust his administrative remedies was excused on the basis of futility for Simon's claim for wrongful denial of ESP benefits (Count II) and also held that arbitration was not required.5 The Court did, however, dismiss Simon's fiduciary duty claim (Count III). Pfizer timely appealed the District Court's ruling, arguing that Simon should be required to both exhaust his administrative remedies and arbitrate his claims.6

On February 19, 2003, Simon filed an administrative appeal from the denial of Constructive Termination benefits. Simon then received a March 17, 2003, letter regarding his Actual Termination claim, advising him of the determination of the ESP Advisory Group (the first level of review) that he had been terminated for Just Cause and was therefore ineligible for benefits under the ESP. Thereafter, the Administrative Committee, at the second level of review, again denied Simon's Constructive Termination claim on June 1, 2003. Simon appealed both his Constructive Termination and Actual Termination claims to the final level of review — Robert Norton, Senior Vice President of Corporate Human Resources — on June 27, 2003, attempting to skip the Administrative Committee review (the second level of review) of his Actual Termination claim. See Pfizer's Motion to Supplement the Record, Exhibit 1-3.

DISCUSSION
1. Appellate Jurisdiction

As an initial matter, we note that this Court has appellate jurisdiction over all "final decisions" of the district courts, 28 U.S.C. § 1291; however, the District Court's partial denial of Pfizer's motion to dismiss is not a "final" order that is appealable under 28 U.S.C. § 1291. See Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 275, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988) (In general, an order denying a motion to dismiss is not final because it "ensures that litigation will continue in the District Court.").7 Notwithstanding, an appeal of such an order may be taken if it falls within the small class of orders that are final for purposes of 28 U.S.C. § 1291 under the "collateral order doctrine" established in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949) (noting that the collateral order doctrine embraces the "small class [of orders] which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated").

An order that does not finally resolve a case fits within the collateral order doctrine if the order: (1) "conclusively determine[s] the disputed question," (2) "resolve[s] an important issue completely separate from the merits of the action," and (3) is "effectively unreviewable on appeal...

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