Galli v. PricewaterhouseCoopers LLP Notice/Severance Policy As Amended and…

Background

Susan J. Galli brought five claims under the Employee Retirement Income Security Act of 1974 (ERISA) against the PricewaterhouseCoopers defendants. Count I alleged that the defendants failed to provide a full and fair review of her benefits claim. Count II sought recovery of benefits under the severance plan. Count III alleged interference with benefits, Count IV alleged breach of fiduciary duty, and Count V sought equitable relief for disclosure violations.

Galli was employed by PricewaterhouseCoopers LLP as a Managing Director from August 2014 until April 2017. Her employment agreement provided for three months’ notice of termination. The severance plan stated that a terminated employee would receive the notice period specified in the employment agreement and allowed PricewaterhouseCoopers to provide severance pay instead of notice in its discretion.

The parties disputed what occurred at a January 26, 2017, meeting between Galli and Jeffrey Lavine. PricewaterhouseCoopers asserted that Lavine notified Galli of her termination. Galli asserted that he did not give her termination notice. Her employment ended effective April 7, 2017, and she received a payment of $31,907. She later sought additional severance, including $73,096 representing the difference between three months of base salary and the payment she received, as well as a possible payment of up to $1 million under other plan provisions.

The plan administrator denied her benefits claim and appeal. The final determination concluded that Lavine had notified Galli on January 26 and that the plan did not require written notice. Galli then litigated Count II in court. The defendants separately moved to compel arbitration of Counts I, III, IV, and V.

Summary judgment on the benefits claim

The court reviewed the plan administrator’s decision under the arbitrary-and-capricious standard because the plan gave the administrator discretionary authority to interpret the plan and decide factual questions. Under that standard, a denial of benefits may be overturned only if it was without reason, unsupported by substantial evidence, or legally erroneous.

The court rejected Galli’s argument that the plan required written termination notice. The plan did not define “notice,” and the court held that the word’s ordinary meaning was not limited to written notice. The employment agreement’s provision stating that it could be modified only in a signed writing did not change that conclusion. The court reasoned that the plan referred to the employment agreement only to determine the length of the notice period, and that ending Galli’s employment did not modify the agreement because it expressly allowed employment to end at any time.

The court also held that the administrator reasonably found that Galli received verbal notice at the January 26 meeting. The administrator relied on the meeting and on emails sent by Galli before her termination, including an email referring to her expected departure. The court held that this evidence was sufficient under the deferential standard of review, even though Galli disputed what was said at the meeting and offered a declaration giving another interpretation of the email.

The court rejected Galli’s arguments that the benefits review was procedurally inadequate. It held that the administrator’s determination addressed her claims, identified the relevant plan provisions and evidence, and provided an adequate explanation. The court also found that PricewaterhouseCoopers had provided sufficient access to the relevant administrative record before deciding her appeal.

Arbitration of the other claims

Galli had signed an employment agreement incorporating an arbitration agreement. The arbitration agreement generally covered disputes arising from her employment or separation, including ERISA claims and breach-of-fiduciary-duty claims, but excluded claims for benefits under ERISA that had to be resolved under the plan’s procedures.

Galli did not dispute that she signed the agreements or that the agreements covered Counts I, III, IV, and V. Instead, she argued that the agreements were invalid because PricewaterhouseCoopers had fraudulently induced her to accept employment and sign them.

The court held that this was a challenge to the employment agreements as a whole, not a specific challenge to the arbitration clause. Under the Federal Arbitration Act, an arbitration clause is treated as separate from the larger contract. Because Galli’s challenge was directed at the broader agreements, the court held that the arbitrator—not the court—had to decide it. The court also rejected Galli’s argument that the arbitration agreement reserved this question for the court, explaining that the reservation covered challenges to the arbitration agreement itself, not challenges to the employment agreement as a whole.

Disposition

The court granted the defendants’ motion for summary judgment as to Count II, denied Galli’s cross-motion for summary judgment, and granted the defendants’ motion to compel arbitration of Counts I, III, IV, and V. The Clerk of Court was directed to close the motion at Docket No. 42.