ERISA Claim Challenges Vague Language of FINRA Arbitration Award in order to Include Back Pay as Benefits-Eligible Compensation

Ronald A. Roganti  v .Metropolitan Life Insurance Company, et el, 2012 WL 2324476 (S.D.N.Y.  June 18, 2012)

In a case before the Southern District of New York, Ronald Roganti (“Roganti”), a former employee of the Metropolitan Life Insurance Company (“MetLife”), asserted claims under the Sarbanes–Oxley Act of 2002, 18 U.S.C. § 1514A (“SOX”), and the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132 (“ERISA”). Both claims challenge MetLife’s denial of Roganti’s request that a 2010 Financial Industry Regulatory Authority (“FINRA”) arbitration award be treated as benefits-eligible compensation.  MetLife moved to dismiss both claims on several grounds.  The court granted MetLife’s motion with respect to the SOX claim and denied the motion with respect to the ERISA claim.

Case Background

The underlying dispute in this case arose during Roganti’s employment with MetLife, which lasted from 1971 to 2005.  In 1999, Roganti began to voice concerns regarding allegedly-suspect business practices at MetLife and continued to do so until he terminated his employment in 2005.   Roganti claimed that throughout that time period, MetLife repeatedly disregarded his complaints and actively retaliated against him, including undermining his authority within the business subsets he oversaw and reducing his compensation with the specific purpose of reducing his pension benefits.

In July 2004, Roganti filed his initial Statement of Claim with the National Association of Securities Dealers (“NASD”) to arbitrate his disputes with MetLife.  FINRA, the successor to NASD, appointed a panel of three arbitrators to adjudicate four claims brought by Roganti: (1) the breach of contract claim, based on MetLife’s reduction of Roganti’s compensation; (2) violation of SOX retaliation provisions, based on MetLife’s retaliation against Roganti for reporting questionable business practices; (3) for the value of services rendered by Roganti; and (4) for violating ERISA, on the theory that, in reducing Roganti’s compensation, MetLife also sought to reduce his pension benefits.

In August 2010, the FINRA panel held that MetLife was liable to Roganti for $2,492,442.07 in “compensatory damages … above [MetLife’s] existing pension and benefit obligation to Claimant.” The arbitral award explain neither how the arbitrators arrived at this sum nor for what the award was intended to compensate Roganti. FINRA Docket Number 04-04876.

Benefits Claim

On March 24, 2011, Roganti filed a benefits claim with MetLife, in its capacity as the Plan Administrator, asking that the arbitral 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 which he was entitled to under his pension plan with MetLife. MetLife denied the request for three reasons.

First, only income of current employees was benefits-eligible; therefore, since Roganti was not employed by MetLife when he received the award; therefore, it did not qualify as benefits-eligible compensation.  Second, FINRA broadly termed the award as “compensatory damages” rather than stating it was compensation for lost income.  Finally, the FINRA award did not indicate to which years of Roganti’s employment the award applied; therefore, even if the award represented unpaid income, it would be impossible for MetLife to determine concretely how the award should affect Roganti’s pension benefits. Roganti appealed this decision to MetLife, and MetLife again denied his claim.  Subsequently, Roganti filed SOX and ERISA claims in federal district court.

Because Roganti’s current SOX and ERISA claims are based on the 2011 denial of pension benefits, the court determined that these have not already been dispositioned by the 2010 FINRA arbitration.  Therefore, the court denied MetLife’s motions to dismiss both claims on grounds of res judicata and collateral estoppel.  However, because Roganti did not exhaust administrative remedies before filing his SOX claim in federal district court, the court determined that his SOX claim must be dismissed.

ERISA Claims

Roganti made two claims under ERISA, which creates a private right of action to enforce the provisions of a retirement benefits plan. 29 U.S.C. § 1132(a)(1)(B).  First, he alleged that the FINRA arbitral award compensated him for unpaid wages that resulted from MetLife’s retaliation against him.  Second, he argued that because the award constituted back pay, it must be taken into account in calculating his pension benefits.  The court determined that central to both claims is the issue of whether the FINRA arbitration award constitutes back pay to compensate Roganti for services rendered while he was a MetLife employee, which would properly be included in pension benefits calculations.

The Court’s Decision

Neither the brevity of the FINRA arbitration award nor Roganti’s statement of claims to FINRA provided the court with sufficient clarity to resolve the factual issue of exactly what the award represented. The court, therefore, construed the ambiguity in the award language in the light most favorable to Roganti.  The court concluded that he had met his burden and denied MetLife’s motion to dismiss the ERISA claim.

Because the three-month timeframe to seek clarification from a FINRA arbitration panel pursuant to 9 U.S.C. § 12 had elapsed, the court ordered the ERISA Plan Director to closely review the arbitral record, in the context of the evidence offered and arguments made by both sides at the arbitration, to determine whether or not the award represented back pay for Roganti.  The court found it unacceptable that the initial denials of benefits were based on the terse language of the arbitration award, rather than a more detailed analysis as to what the award amounts represented.


Should you have any questions relating to FINRA, employment, compensation or benefits issues please do not hesitate to contact Attorney Joseph C. Maya in the firm’s Westport office in Fairfield County, Connecticut at 203-221-3100 or at JMaya@Mayalaw.com.