Court Orders Plan Administrator To Reconsider Pension Benefits Denial

Roganti v. Metropolitan Life Insurance Co., S.D.N.Y., No. 1:12-cv-00161-PAE, 6/18/12

Key Holding: Participant entitled to review of pension benefit calculation.

Key Takeaway: Participant's arbitration award should be included as compensation under plan to extent award included back pay.

A pension plan participant is entitled to a new review of his benefits claim to determine whether a $2.5 million arbitration award he received included back pay that should be treated as compensation for purposes of calculating his pension plan benefits, the U.S. District Court for the Southern District of New York ruled June 18 (Roganti v. Metropolitan Life Insurance Co., S.D.N.Y., No. 1:12-cv-00161-PAE, 6/18/12).

The plan administrator denied the participant's benefits claim, which sought to include the arbitration award in his pension benefits calculation, because the participant was no longer employed by the plan's sponsoring corporation when he received the award and the “award did not qualify as benefits-eligible compensation” under the plan.

Judge Paul A. Engelmayer determined that the participant's arbitration award may have included back pay and ordered the plan administrator to review the arbitration record and make any necessary recalculations to the participant's pension benefits.

Whistleblower Alleges Retaliation.

Ronald A. Roganti worked in various positions for Metropolitan Life Insurance Co. between 1971 and 2005 and participated in several Employee Retirement Income Security Act-governed pension plans. Roganti made several complaints to MetLife between 1999 and 2005 concerning the company's business practices. MetLife allegedly disregarded Roganti's complaints and retaliated against him by reducing his compensation “with the specific purpose of reducing his pension benefits.”

Roganti filed a complaint with the Department of Labor's Occupational Safety and Health Administration in 2003, alleging that MetLife violated the Sarbanes-Oxley Act by retaliating against him for reporting employee misconduct to MetLife's management. OSHA dismissed this complaint after conducting a preliminary investigation.

In 2004, Roganti filed a second Sarbanes-Oxley complaint with OSHA, alleging additional acts of retaliation. Those claims were also dismissed. Roganti also filed a statement of claim with the National Association of Securities Dealers, seeking to arbitrate his disputes with MetLife. NASD initiated arbitration between Roganti and MetLife, and an arbitration panel awarded Roganti $2.5 million in compensatory damages in 2010.

Roganti filed a benefits claim in 2011, requesting that MetLife include the $2.5 million arbitration award in his benefits calculation under the MetLife pension plans. MetLife denied Roganti's request to recalculate benefits on the grounds he was no longer a MetLife employee when he received the award. MetLife also denied Roganti's appeal of the denial.

Roganti sued, alleging that MetLife violated the Sarbanes-Oxley Act by impermissibly retaliating against him when it denied his benefits claim. His lawsuit also included an ERISA claim alleging that MetLife's benefit denial violated the terms of the pension plans. MetLife moved to dismiss the complaint.

ERISA Claim Survives Dismissal.

The court noted that Sarbanes-Oxley provides whistleblower protection to employees who provide information in investigations of securities law violations. Roganti's complaints of unethical conduct by MetLife management qualified him as a Sarbanes-Oxley whistleblower, the court said.

According to the court, “a plaintiff must exhaust certain administrative procedures” before filing a Sarbanes-Oxley claim in district court. The court determined that Roganti failed to exhaust his administrative remedies before filing his complaint and concluded that the Sarbanes-Oxley claim must be dismissed.

The court next addressed Roganti's ERISA claim, which addressed provisions of MetLife's retirement benefits plan. Roganti argued that the arbitration award compensated him for unpaid wages linked to MetLife's alleged retaliation and that the back pay award must be included in his pension benefit calculation. MetLife argued that the plan only uses compensation earned by current employees in its benefit calculation and that Roganti was not a MetLife employee when he received the $2.5 million award.

The court disagreed with MetLife's argument. An arbitration award providing Roganti with back pay for services rendered as a MetLife employee “would properly be included in benefits calculations” under the plan, the court said. The court concluded that “MetLife's improper withholding of benefits-eligible pay during Roganti's employment should not prejudice him in the calculation of pension benefits.”

The court examined the arbitration award to determine what portion represented back pay. The court noted that the arbitrator awarded Roganti approximately $2.5 million “above [MetLife's] existing pension and benefit obligation” but the ruling “says nothing about what the award in fact represented.” Roganti requested from the arbitrator back pay, liquidated damages, attorneys' fees, costs, and compensatory and punitive damages, the court said.

The court determined that “the lack of clarity of the arbitral award” prevented it from resolving “whether the arbitral award represented back pay” and that a closer review of the arbitration record was necessary. The plan administrator erred when it “did not review the arbitral record” before denying Roganti's benefit claim, the court said. The court ordered the plan administrator to review the arbitration record to determine what part of the award “represented benefits-eligible compensation” and to recalculate Roganti's pension benefits accordingly.

Roganti was represented by David G. Gabor of the Wagner Law Group, Boston. MetLife was represented by Michael H. Bernstein of Sedgwick, New York.

The full text of the opinion is at

Copyright 2012, The Bureau of National Affairs, Inc.