MetLife Must Count Arbitral Award as Back Pay, Judge Rules
Metropolitan Life Insurance Co. must count as back pay a nearly $2.5 million arbitral award it was ordered to pay a former employee, for the purpose of calculating his pension, a federal judge has ruled, even though the arbitration panel did not explain what exactly the award was for or how it was calculated.
Southern District Judge Paul Engelmayer (See Profile) ruled on Sept. 25 in Roganti v. MetLife, 2:12-cv-00161, that MetLife's decision not to count the award as back pay was arbitrary and capricious, because it failed to offer its own explanation of what the award could be.
The plaintiff, Ronald Roganti, worked for MetLife from 1971 to 2005, first as an account representative and later as a vice president. He oversaw two subsets of MetLife's New York business, R. Roganti & Associates and the Tower Agency Group.
Beginning in 1999, Roganti raised concerns about what he saw as suspect business practices at MetLife. Roganti claims that MetLife retaliated against him, undermining his authority, reducing his compensation and eventually dissolving the Tower Agency Group. In 2002, Roganti was paid more than $1.5 million. In 2004, the last full year he worked at MetLife, he was paid only $383,000. In 2005, he earned $67,000 through March before quitting.
In July 2004, Roganti filed a statement of claim seeking arbitration of his disputes with MetLife. He asserted claims for breach of contract, quantum meruit and violations of the Employee Retirement Income Security Act and the Sarbanes-Oxley Act.
The matter was arbitrated before the Financial Industry Regulatory Authority, which awarded Roganti $2.5 million in 2010. The FINRA decision characterized the award as "compensatory damages," but did not explain how it was calculated.
In March 2011, Roganti filed a benefits claim with MetLife, which acted as the administrator of his retirement plan. He said that the arbitration award should be counted as back pay for the purposes of calculating his pension. MetLife refused to count the award as back pay, saying that it was not described as such and that it was awarded when Roganti was no longer employed at MetLife.
In January 2012, Roganti sued MetLife in the Southern District. Engelmayer dismissed Roganti's Sarbanes-Oxley claim, finding that Roganti had not exhausted his administrative remedies.
However, he found that Roganti's ERISA claim depended entirely on whether the arbitral award was back pay or not, and that answering that question required a review of the arbitral record. Engelmayer said that the plan administrator, MetLife, should conduct that review in the first instance, and remanded the matter to MetLife.
MetLife concluded, based on the record, that the arbitral award already accounted for any improper reduction of Roganti's benefits, and so could not lead to additional benefits.