Case Information
*1 Before REAVLEY, ELROD and HAYNES, Circuit Judges.
PER CURIAM:*
Defendant-Appellant (“UBS”) appeals the district court’s denial of its motions to compel arbitration. Former UBS financial advisors and branch managers (the “Plaintiffs”) sued UBS alleging that it violated ERISA by deeming certain funds in the Plaintiffs’ PartnerPlus Plans (collectively, the “PartnerPlus Plan”) forfeited upon their departure from the company. Because the Plaintiffs agreed in the Branch Manager Compensation Plan and Financial Advisor Compensation Plan (collectively, the “Compensation Plan”) to arbitrate their claim, we REVERSE the denial of UBS’s motions to compel arbitration and REMAND for entry of an order compelling arbitration.
I. Factual and Procedural History
During the course of the Plaintiffs’ employment with UBS, the company issued annual Compensation аnd PartnerPlus Plans. The Compensation Plan provides information concerning compensation, benefits, service and merits awards, and financial programs for UBS’s branch managers and financial advisors. The versions of the Compensation Plan relevant to this dispute also contained arbitration and class waiver provisions. Significantly, these provisions are located in an independent section of the Compensation Plan entitled “Arbitration.” Each of the Plaintiffs signed Letters of Understanding and Acknowledgements through which they acknowledged receipt of the Compensation Plan and agreed to be bound by the terms therein.
UBS also issued the PartnerPlus Plan, which is one of the benefits plans described in the Compensation Plan’s summary sections. The PartnerPlus Plan sought “to retain and motivate” certain employees by “providing enhanced financial awards . . . and . . . permitting the voluntary deferral of Compensation for a fixed period of years.” The relevant versions of the PartnerPlus Plan contain an arbitration provision, but they do not contain a class waiver.
The Plaintiffs and UBS made contributions to the PartnerPlus Plan. The Plaintiffs’ contributions vested immediately, but UBS’s contributions began vesting six years after the contribution. In the event that a plan participant separated from UBS, the PartnerPlus Plan provided that the unvested contributions would be forfeited unless there was a “qualifying separation.” A qualifying separation required the plan participant to sign a “separation agreement,” which contained “non-competition, non-solicitation and non- disclosure provisions.”
When the Plaintiffs departed UBS and refused to sign separation agreements, UBS determined that its unvested contributions to the PartnerPlus Plan were forfeited. The Plaintiffs sued UBS, maintaining that the PartnerPlus Plan is an emplоyee retirement plan governed by ERISA and that the vesting and forfeiture provisions violated ERISA. The Plaintiffs requested “all appropriate relief under 29 U.S.C. § 1132(a)(3), including an injunction against any act or practice which violates ERISA.” The Plaintiffs sought to represent two classes of plaintiffs—one group of former branch managers ( Hendricks v. UBS Fin. Servs. , No. 2:12-CV-606 (E.D. Tex.)) and one group оf former financial advisors ( Eddingston v. UBS Fin. Servs. , No. 2:12- CV-422 (E.D. Tex.)).
UBS moved to compel arbitration in both cases. The magistrate judge denied the motions, concluding that the arbitration clause in the PartnerPlus Plan did not require arbitration of the Plaintiffs’ claim because the clause “clearly [did] not extend to the arbitration of class claims.” Further, after assuming for purposes of the motions to compel that the PartnerPlus Plan was a “pension plan” under ERISA, the magistrate judge concluded that the arbitration clause in the Compensation Plan qualified as an “amendment” to the PartnerPlus Plan that did not comport with ERISA’s requirements and, therefore, could not be enforced.
The district court denied reconsideration, and UBS timely appealed. We granted UBS’s motion to consolidate the Hendricks and Eddingston cases. The district court subsequently granted the Plaintiffs’ motions for class certification, and UBS separately filed a petition to appeal the certification ruling which remains pending.
II. Jurisdiction and Standard of Review
We have jurisdiction over the appeal of the district court’s denial of
UBS’s motions to compel arbitration рursuant to 9 U.S.C. § 16.
Green Tree
Fin. Corp.-Ala. v. Randolph
,
III. Discussion
The Federal Arbitration Act (“FAA”) provides that A written provision in . . . a contract evidencing a transactiоn involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and еnforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.
9 U.S.C. § 2. The Plaintiffs do not contend that the contracts in question are
subject to “revocation.” The Supreme Court has repeatedly held that the FAA
“reflect[s] . . . a ‘liberal federal policy favoring arbitration.’”
AT&T Mobility
LLC v. Concepcion
,
Indeed, the FAA “reflects the overarching principle that arbitration is a matter of contract” and requires us to “rigorously enforce arbitration agreements according to their terms.” Am. Exp. Co. v. Italian Colors Rest. , 133 S. Ct. 2304, 2309 (2013) (citation and internal quotation marks omitted). This strong policy favoring arbitration “holds true for claims that allege a violation of a federal statute [such as ERISA], unless the FAA’s mandate has been overridden by a contrary congressional command.” Id. (citation and internal quotation marks omitted).
Against this backdrop, we assess whether “the parties have agreed to
arbitrate a particular claim . . . [by] determin[ing]: (1) whether there is a valid
agreement to arbitrate between the parties; and (2) whether the dispute in
question falls within the scope of that arbitration agreement.”
Pers. Sec. &
Safety Sys. Inc. v. Motorola Inc.
,
A. The Compensation Plan’s Arbitration Clause is a Valid and Enforceable Agreement to Arbitrate
The Compensation Plan’s arbitration clause provides thаt “[w]ith the exception of claims for injunctive relief . . . , any disputes . . . including claims concerning compensation, benefits or other terms or conditions of employment and termination of employment . . . will be determined by arbitration.” Plaintiffs argue that this arbitration clause does not apply to their claim for relief under the PartnerPlus Plan because the Cоmpensation Plan is merely a “summary brochure” that serves only to summarize certain benefit plans, such as the PartnerPlus Plan. As a result, according to the Plaintiffs, the Compensation Plan lacks any enforceable terms and cannot contradict any provisions in the PartnerPlus Plan. Examining the provisions, we conclude as a matter of law that the arbitration provision in the Compensation Plan is not a “summary” of any benefit plan but rather is an independent and enforceable provision.
Nevertheless, the Plaintiffs further urge that the parties’ agreements in the Compensation Plan cannot be enforced because the Compensation Plan conflicts with or improperly seeks to modify the PartnerPlus Plаn in violation of ERISA. They identify three potential conflicts: (1) the Compensation Plan’s arbitration provision applies to “all disputes” except for claims for injunctive relief, whereas the PartnerPlus Plan’s arbitration clause applies only to claims arising out of the PartnerPlus Plan and does not exempt claims for injunctive relief; (2) the PartnerPlus Plan’s аrbitration clause provides for the application of New York law, whereas the Compensation Plan’s provision requires the application of New Jersey law; and (3) the PartnerPlus Plan’s arbitration clause does not include a class waiver whereas the Compensation Plan does.
With regard to the first two “conflicts” alleged by the Plaintiffs, we оbserve that regardless of whether the PartnerPlus Plan qualifies as an ERISA plan, the mere presence of differences between the terms in the PartnerPlus Plan and the Compensation Plan identified by the Plaintiffs does not render one of them void. Both plans can coexist by providing for arbitration based on different scenarios.
Plaintiffs focus primarily on the “cоnflict” in the fact that the
Compensation Plan expressly waives class actions, while the PartnerPlus Plan
does not. Based on the Compensation Plan, UBS argues that the Plaintiffs
must arbitrate individually, rather than proceed on a class basis. The
Plaintiffs maintain that in light of Financial Industry Regulatory Authority
(“FINRA”) Rule 13204(a)(1)’s prohibition against class litigation and the
PartnerPlus Plan’s lack of а class waiver, their claims cannot be arbitrated
and, therefore, must proceed as a class in federal court. We conclude that the
PartnerPlus Plan’s lack of a class waiver does not relieve the Plaintiffs from
their independent obligation to submit their claim to arbitration based on the
Compensation Plan. Nevertheless, having concludеd that the Compensation
Plan’s arbitration provision requires the Plaintiffs to submit their claim to
arbitration, we leave for the FINRA arbitration panel to decide whether the
class waiver requires the Plaintiffs to arbitrate on an individual basis.
See Green Tree Fin. Corp. v. Bazzle
,
B. The Scope of the Compensation Plan’s Arbitration Clause Covers the Plaintiffs’ Claim
Turning to the second prong of the test for compelling arbitration, the parties do not contest that the nature of the dispute between them falls within the Compensation Plan’s arbitration clause. This arbitration clause provides that the parties will arbitrate “any disputes” related to compensation and employment, including disputes under ERISA. The Plaintiffs’ claims arose as a result of their employment with UBS, and they seek to recover compensation they allege is due to them following their departure from UBS. Specifically, the Plaintiffs’ complaint alleges that they are “entitled to recover all amounts to which they [are] entitled under the [PartnerPlus] Plan, including all Firm Cоntributions, Market Interest and Turbo Interest purportedly forfeited by them” following their departure from UBS. Therefore, the Plaintiffs’ compensation claim falls squarely within the scope of the arbitration clause.
However, based on the arbitration clause’s application to “all disputes” except “claims for injunctive relief,” the Plaintiffs argue that their claim is not аrbitrable because they seek in their complaint—in addition to all equitable relief available under § 1132(a)(3)—“an injunction against any act or practice which violates ERISA.” Nonetheless, this exception does not preclude arbitration of the entirety of the Plaintiffs’ claim because the Plaintiffs have not confined the relief they seek to merely an injunction, but rather they seek to recover any relief available under § 1132(a)(3).
Furthermore, as we have previously held in the context of class action
claims for injunctive relief, an injunction is not appropriate when the plaintiff
would not benefit from prospective relief, the plaintiff’s relationship with the
defendant has ended, or thе plaintiff essentially seeks monetary damages.
See,
e.g.
,
Casa Orlando Apartments, Ltd. v. Fed. Nat. Mortg. Ass’n
,
Nevertheless, in light of the Plaintiffs’ broad request for all appropriate
equitable relief under § 1132(a)(3) and our conclusion that the dispute must,
in the first instance, be sent to arbitration, we leave the initial decision of the
scope of arbitration to the arbitration panel.
See Bazzle
, 539 U.S. at 451;
Petrofac
,
IV. Conclusion
The arbitration clause in the Compensation Plan represents a separate and independent agreement between the Plaintiffs and UBS to submit “any disputes” concerning compensation and employment to arbitration. Regardless of whether the arbitration clause in the PartnerPlus Plan would otherwise require arbitratiоn, the arbitration provision in the Compensation Plan is enforceable and its scope covers the Plaintiffs’ claim. Accordingly, we REVERSE the denial of UBS’s motions to compel arbitration and REMAND for entry of an order compelling arbitration.
Notes
[*] Pursuant to 5 TH C IR . R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5 TH C IR . R. 47.5.4.
[1] The Letters of Understanding also include arbitration and class waiver provisions that are substantially similar to the provisions in the Compensation Plan.
[2] UBS’s petition to appeal the district court’s grant of class certification is being held in abeyance pending the outcome of this appeal.
[3] Although arguing that one рlan references New Jersey law and the other New York
law, Plaintiffs fail to explain how these two states’ laws conflict in any way meaningful here
where a violation of federal law is alleged. Thus, we have a “false conflict.”
See Kevin M.
Ehringer Enters., Inc. v. McData Servs. Corp.
,
[4] The arbitration clauses in both the Compensation and PartnerPlus Plans provide that the arbitration should proceed under the FINRA Rules. FINRA Rule 13204(a)(1) provides that a “[c]lass action claim[] may not be arbitrated.” However, there are certain exceptions to this prоvision, including that it does not apply when a “member of the certified or putative class elects not to participate in the class.” See FINRA Rule 13204(a)(4). Having concluded that the arbitration clause in the Compensation Plan requires arbitration, we leave for the arbitrator to determine this rule’s potential effect on the arbitration proceedings.
[5] The named Plaintiffs are no longer employed by UBS and they limit the scope of the class they seek to represent to branch managers and financial advisors “who left the employment” of UBS. Further, the Plaintiffs’ claim is necessarily limited to individuals who have ended their relationship with UBS because the violation of ERISA that they allege only occurs aftеr there has been a non-qualifying separation between UBS and the PartnerPlus Plan participant, which results in UBS determination that certain contributions are forfeited.
[6] The Plaintiffs’ counsel admitted before the district court and during oral argument
before this court that the Plaintiffs’ purpose in this litigation is to secure monetary damages.
It is clear that the Plaintiffs’ clаim at its core is a claim for monetary damages cabined within
a claim for injunctive relief. As the Supreme Court has observed, an injunction requiring a
defendant essentially to pay monetary damages is not a form of relief that was typically
available in equity and, therefore, is not available through § 1132(a)(3).
See Great-W. Life &
Annuity Ins. Co. v. Knudson
,
[7] In the final footnote of their brief, the Plaintiffs exрlain that they argued to the
district court “that even if there had been an agreement to arbitrate 29 U.S.C. § 1132(a)(3)
claims, such an agreement would be barred by the clear congressional command of ERISA.
Whether Congress intended to prohibit the arbitration of
section 1132(a)(3) claims
is
indisputably an open question in this Circuit.” However, the Plaintiffs failed to present any
argument or authorities to this court describing the alleged congressional command under
ERISA that would preclude arbitration of their claim and, therefore, they have waived any
argument on this issue.
See Bridas S.A.P.I.C. v. Gov’t of Turkm.
,