Pfizer Inc v. Uprichard ( 2005 )

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
8-30-2005
Pfizer Inc v. Uprichard
Precedential or Non-Precedential: Precedential
Docket No. 04-2527
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 04-2527
PFIZER INC., a Delaware corporation
v.
MARGARET UPRICHARD, an individual,
Appellant
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 03-cv-01137)
Magistrate Judge: Hon. G. Donald Haneke
Argued May 10, 2005
Before: SLOVITER and FISHER, Circuit Judges, and
POLLAK * , District Judge
(Filed August 30, 2005)
Joseph F. Hardcastle (Argued)
Cintra S. Shober
Hardcastle & Shober
Boston, MA 02111
Attorneys for Appellant
*
Hon. Louis H. Pollak, Senior Judge, United States District
Court for the Eastern District of Pennsylvania, sitting by
designation.
James P. Flynn (Argued)
Of Counsel
Sheila A. Woolson
On the Brief
Epstein Becker & Green, P.C.
Newark, New Jersey 07102
Attorneys for Appellee
OPINION OF THE COURT
SLOVITER, Circuit Judge.
Dr. Margaret Uprichard, who received an arbitration
award of $244,636.25 plus prejudgment interest to be paid by
her former employer appellee Pfizer, Inc., appeals from the
portion of the District Court’s order requiring that she sign
Pfizer’s Settlement and Release Agreement as a condition to
enforcement of the Arbitration Award. At issue is whether a
District Court can impose such a requirement in the context of a
Fed. R. Civ. P. 60(a) proceeding.
I.
In the late 1990s, Dr. Uprichard was employed by the
Warner-Lambert Company as Director of Clinical Research.
Warner-Lambert merged with Pfizer Inc. in the Spring of 2000,
and Uprichard’s title was changed from Director of Clinical
Research to “Local Clinical Leader.” Dissatisfied with her new
position, Uprichard submitted a Constructive Termination
Eligibility Form, claiming a substantive change in job duties, and
a request for severance benefits pursuant to Warner-Lambert’s
Enhanced Severance Plan (“ESP”).
A panel of three arbitrators of the American Arbitration
Association found that Uprichard had suffered constructive
termination and directed Pfizer to pay her severance benefits in
the amount of $ 244,636.25. The arbitration award imposed no
2
restrictions or conditions on the payment of the award, nor did it
discuss the requirement of any settlement or waiver agreement.
Although the arbitration panel retained jurisdiction for forty-five
days “for purposes of resolving any dispute . . . regarding ESP
benefits due under this Award,” App. at 366, neither party
sought to have the award modified in any respect.
In March of 2003, Pfizer filed suit in the United States
District Court for the District of New Jersey seeking to have the
Arbitration Award vacated, claiming that the arbitration panel
awarded relief that “exceeded the . . . authority afforded to it by
the ESP and the parties,” and that such relief reflected “manifest
disregard for the law, the evidence and the intent of the ESP’s
drafters.” App. at 19-20. Pfizer did not include in its complaint
a request to modify the arbitration award to include a
requirement that Uprichard sign a settlement or waiver
agreement.
By Order dated September 26, 2003, the District Court (I)
denied Pfizer’s motion to vacate arbitration award, (ii) allowed
Uprichard’s cross-motion to confirm arbitration award, (iii)
denied Uprichard’s cross-motion for award of attorneys’ fees,
(iv) dismissed Pfizer’s verified complaint with prejudice, and (v)
ordered that judgment be entered in favor of Uprichard in the
amount of $244,636.25 plus pre-judgment interest from
December 16, 2002. The District Court did not discuss or
require any settlement or waiver agreement as a condition of
payment.
Following the September 26, 2003 Order, the parties
stipulated that the amount of prejudgment interest to be paid to
Uprichard was $ 11,353.80. In a letter dated October 3, 2003,
Uprichard informed Pfizer that she would not proceed with an
appeal of the denial of her request for attorneys’ fees and would,
upon receipt of payment of the arbitration award and
prejudgment interest, sign and deliver an agreement that
judgment had been satisfied.
By letter dated October 7, 2003, Pfizer sent Uprichard a
prepared copy of its Settlement and Release Agreement, which
3
included confidentiality and non-disparagement requirements.
Moreover, the Agreement provided that should Uprichard violate
either of these provisions, she would be required to repay to
Pfizer, as “liquidated damages,” all the money paid to her
pursuant to the arbitration award (the “disputed provisions”).1
Pfizer demanded that Uprichard sign the Settlement and Release
Agreement, prepared by Pfizer, as a condition to receiving her
arbitrated award. Following several telephone conversations
1
Specifically, Pfizer’s Settlement and Release Agreement
stated in pertinent part:
I agree not to disclose the existence or terms of this
Release Agreement including but not limited to the
amount I received in exchange for signing the
Release Agreement, to anyone, other than members
of my immediate family, legal counsel and financial
and tax advisors for the purpose of obtaining
professional advice, or as ordered by a court of
competent jurisdiction. I agree that should I act in
violation of this Paragraph, I will repay to Pfizer any
and all monies paid to me under this Release
Agreement. This repayment will be considered
“liquidated damages” and will be the sole amount
the Company will seek for violation of this
Paragraph.
...
I further agree not to make any written or oral
statements injurious to, or of a disparaging nature
about, Pfizer. I agree that should I act in violation of
this Paragraph, I will repay to Pfizer any and all
monies to me under this Release Agreement. This
repayment will be considered “liquidated damages”
and will be the sole amount the Company will seek
for violation of this Paragraph.
App. at 475-76.
4
between the parties discussing the disputed provisions, counsel
for Uprichard sent a letter to Pfizer dated November 4, 2003,
stating that although Uprichard was willing to “execute a release
of any and all remaining claims she may have against Pfizer in
order to expedite payment of the Judgment she obtained,” App.
at 481, she was not willing to sign the specific release proposed
by Pfizer because she claimed that it contained a number of
provisions that went well beyond a general release.2 Id.
Uprichard attached to the November 4, 2003 letter, a signed and
notarized general release, containing none of the disputed
provisions. In subsequent correspondence, Pfizer refused to
accept the release offered by Uprichard.
When it became clear that no agreement would be
reached on the voluntary payment of the severance award, on
March 19, 2004, Uprichard filed a motion pursuant to
Federal Rule of Civil Procedure 60 (a) 3 to correct judgment with
the District Court to include the pre-judgment interest previously
agreed upon. The docket entry accompanying the September 26,
2003 Order inadvertently failed to reflect the District Court’s
grant of pre-judgment interest in Uprichard’s favor, stating only
“judgment entered in the sum of $244,636.25 in favor of deft
Margaret Uprichard and agst pltf Pfizer, Inc.” App. at 6.
Although Pfizer did not dispute Uprichard’s entitlement to pre-
judgment interest, it did claim in response that Uprichard was
required by the ESP to sign a standard release form acceptable to
2
Uprichard also noted that given the present procedural
posture, she was not obligated to provide any release whatsoever
and, if she so chose, could simply execute on the District Court’s
September 26, 2003 judgment in her favor.
3
Rule 60(a) provides:
Clerical Mistakes. Clerical mistakes in judgments,
orders or other parts of the record and errors therein
arising from oversight or omission may be corrected
by the court at any time of its own initiative or on the
motion of any party and after such notice, if any, as
the court orders. . . .
5
Pfizer as a condition to receiving her arbitrated award.
Both parties consented to have a Magistrate Judge hear
the matter.4 Pursuant to 28 U.S.C. § 636(c)(1), a hearing was
held on April 26, 2004. By Order dated April 28, 2004, the
Magistrate Judge corrected the docket sheet to include
$11,353.80 in prejudgment interest, and imposed the
requirement that Uprichard sign Pfizer’s Settlement and Release
Agreement as a condition to receiving her money judgment. The
second paragraph of that Order states:
The Court finds the release form required by the
Plaintiff prior to the payout of monies to the
Defendant is objectively reasonable. Plaintiff shall
not be required to pay over any monies to the
Defendant until such time as that release has been
signed.
App. at 1.
Uprichard filed a timely notice of appeal from the
Magistrate Judge’s Order, arguing that because the Settlement
Agreement requirement was addressed in the context of a Fed.
R. Civ. P. 60(a) motion to correct judgment, the Magistrate
Judge exceeded his authority by substantively amending the
September 26, 2003 Order of the District Court.
II.
A. Jurisdiction
The District Court had diversity jurisdiction under 28
4
By letter dated April 22, 2004, Pfizer stated that “This will
confirm my conversation with Your Honor’s clerk this morning
that Pfizer Inc. agrees to your exercise of jurisdiction in deciding
defendant’s motion to ‘correct’ the order entered by Judge
Greenaway.” App. at 485.
6
U.S.C. § 1332.5 Pfizer argues that we lack jurisdiction to hear
this appeal because the notice of appeal was untimely.
Specifically, Pfizer claims that Uprichard’s obligation to sign
Pfizer’s Settlement and Release Agreement was “inherent” in the
District Court’s September 26, 2003 Order confirming the
Arbitration Award, and therefore, that the thirty-day period to
appeal this obligation, under Fed. R. App. P. 4, began to run as
of September 26, 2003. Thus, according to Pfizer, Uprichard’s
May 26, 2004 notice of appeal, although styled as an appeal
from the Magistrate Judge’s April 28, 2004 Order, was actually
an appeal from the District Court’s September 26, 2003 Order,
and therefore untimely. We reject this argument.
Pfizer’s claim that the Settlement Agreement requirement
was “inherent” in the District Court’s September 26 Order finds
no basis in the record or relevant case law. Neither the
December 16, 2002 arbitration award nor the September 26,
2003 Order of the District Court, confirming the arbitration
award, contained any reference to a settlement and release
agreement, much less required that one be signed as a condition
to obtaining the award. Pfizer cites no case law even suggesting
that a finding of substantive right (namely the requirement of a
settlement agreement) is made implicit or “inherent” in a court’s
holding when the court neither addresses the issue or was even
aware of its existence.
Furthermore, Uprichard was provided a copy Pfizer’s
Settlement Agreement for the first time, by letter dated October
7, 2003 (two weeks after the District Court’s September 26
Order), and it is undisputed that the Settlement Agreement issue
5
The Federal Arbitration Act itself, 9 U.S.C. § 1 et seq.,
does not create federal question jurisdiction. Rather, an
independent basis of jurisdiction is needed. See Moses H. Cone
Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983).
We have previously held that the federal courts have jurisdiction to
adjudicate suits under the FAA pursuant to 28 U.S.C. § 1332. See
Roadway Package Sys., Inc. v. Kayser, 257 F.3d 287, 291 n.1 (3d
Cir. 1991).
7
was adjudicated for the first time in connection with Uprichard’s
Rule 60(a) motion to correct judgment.6
Therefore, we hold that Uprichard’s notice of appeal is
from the Magistrate Judge’s April 28, 2004 Order, and not from
the District Court’s September 26, 2003 Order.7 Because this
notice of appeal was filed within thirty days of the Magistrate
Judge’s Order, it was timely and we have jurisdiction under 28
U.S.C. § 636(c)(3).8
B. Did the Magistrate Judge’s April 28, 2003 Order Exceed his
Authority?
Ordinarily, we review a district court’s decision to grant
or deny a Fed. R. Civ. P. 60(a) motion for an abuse of discretion.
6
Although Pfizer did assert in its pre-hearing brief to the
arbitration panel that Uprichard was required to waive all claims
against Pfizer in order to receive her benefits, the specific issue of
what type of waiver was required was never presented.
Furthermore, notwithstanding Pfizer’s presentation of the issue to
the arbitration panel, the panel did not condition the award on any
waiver of any kind and Pfizer failed to identify the issue when it
sought to vacate the award in the District Court.
7
Indeed, as explored infra, the gravamen of Pfizer’s
argument on the merits is that the Magistrate Judge could impose
a settlement agreement requirement, even in the context of a Rule
60(b) proceeding, because the District Court has “inherent
authority” to enforce its judgments. Implicit in this argument is
that the current appeal concerns the propriety of the Magistrate
Judge’s April 28, 2004 Order, not the District Court’s earlier
September 26, 2003 Order. Counsel for Pfizer conceded as much
at oral argument.
8
Section 636(c)(3) provides that where a Magistrate Judge
is designated with the consent of the parties, the mechanism for
challenging a final order or judgment is by appeal to this court “in
the same manner as an appeal from any other judgment of a district
court.”
8
Perez v. Cucci, 932 F.2d 1058, 1061 (3d Cir. 1991) (“We review
the denial of the City’s Rule 60(a) motion to determine whether
the trial court’s action was arbitrary, fanciful or clearly
unreasonable. Otherwise stated [the City] must show that no
reasonable person would concur in the trial court’s assessment of
the issue under consideration.”) (internal citations and quotations
omitted). However, the issue of whether a District Court has
authority, in the context of a Fed. R. Civ. P. 60(a) motion, to
impose additional substantive requirements not earlier
contemplated by the District Court presents a question of law
subject to plenary review. See generally Mack Trucks, Inc. v.
Int’l Union, UAW, 856 F.2d 579, 584 (3d Cir. 1988); Universal
Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 103 (3d Cir.
1981) (“We must exercise a plenary review of the trial court’s
choice and interpretation of legal precepts and its application of
those precepts to historical facts.”).
Fed R. Civ. P. 60(a), as set forth in note 3, is limited to the
correction of “clerical mistakes”; it encompasses only errors
“mechanical in nature, apparent on the record, and not involving
an error of substantive judgment.” Mack Trucks, 856 F.2d at594 n.16 (internal citations omitted); see also Perez v. Cucci, 932
F.2d at 1062; United States v. Stuart, 392 F.2d 60, 62 (3d Cir.
1968) (“Rule 60(a) is concerned primarily with mistakes which
do not really attack the party’s fundamental right to the judgment
at the time it was entered. It permits the correction of
irregularities which becloud but do not impugn it.”). As stated by
the Fifth Circuit in In re W. Tex. Mktg., 12 F.3d 497, 504-05 (5th
Cir. 1994):
[T]he relevant test for the applicability of Rule
60(a) is whether the change affects substantive
rights of the parties and is therefore beyond the
scope of Rule 60(a) or is instead a clerical error, a
copying or computational mistake, which is
correctable under the Rule. As long as the
intentions of the parties are clearly defined and all
the court need do is employ the judicial eraser to
obliterate a mechanical or mathematical mistake,
the modification will be allowed. If, on the other
9
hand, cerebration or research into the law or
planetary excursions into facts is required, Rule
60(a) will not be available to salvage [a party’s]
blunders. Let it be clearly understood that Rule
60(a) is not a perpetual right to apply different
legal rules or different factual analyses to a case. It
is only mindless and mechanistic mistakes, minor
shifting of facts, and no new additional legal
perambulations which are reachable through Rule
60(a).
see also Barris v. Bob’s Drag Chutes & Safety Equip., Inc., 717
F.2d 52, 55 (3d Cir. 1983) (stating that a Rule 60(a) motion
“does not affect the finality of the original judgment . . . nor does
it toll the time limits within which an appeal must be taken.”).
It is well established that where a party seeks to alter a
judgment to reflect the District Court’s grant of pre-judgment
interest, Rule 60(a) is the proper avenue for making such a
request. Glick v. White Motor Co., 458 F.2d 1287, 1294 (3d Cir.
1972) (holding that once entitlement to pre-judgment interest is
established, addition of pre-judgment interest is “merely a
ministerial act”). Thus the Magistrate Judge had ample authority
to amend the underlying judgment to reflect the stipulated
amount of pre-judgment interest owed to Uprichard.
We conclude, however, that the Magistrate Judge
overstepped his authority under Rule 60(a), and changed the
substantive rights of the parties, by requiring that Uprichard sign
Pfizer’s Settlement Agreement as a condition to receiving her
arbitration award. See, e.g., Mack Trucks, Inc., 856 F.2d at 594
n.16; United States v. Stuart, 392 F.2d at 62. Stated otherwise,
even if Pfizer is correct as a matter of contract law that the ESP
contains such a release requirement (an issue we need not reach
in the present case), a Rule 60(a) motion is not the appropriate
context to impose this requirement for the first time.9
9
Pfizer’s request to substantively amend the judgment
should have been made through a Fed. R. Civ. P. 59(e) motion.
10
As noted above, neither the panel of arbitrators nor the
District Court assessing the arbitrated award imposed the
substantive requirement that Uprichard sign a Settlement and
Release Agreement prepared by Pfizer as a condition to receiving
her arbitrated award. The decision of the arbitration panel
provides only that “Claimant Dr. Margaret J. Uprichard has been
constructively terminated within the meaning of the ESP, and
Pfizer is directed to pay her the severance benefit amount agreed
to in the ‘Stipulation Regarding Benefit Award Calculation,’
namely . . . $244,636.25.” App. at 366. And, while “the panel [ ]
retain[ed] jurisdiction for 45 days . . . for purposes of resolving . .
. any disputes regarding ESP benefits due under th[e] Award,”
id., Pfizer failed to submit any request to the panel to alter the
Award to include a requirement that Uprichard sign its settlement
agreement.
Further, although Pfizer sought to vacate the arbitration
award in the District Court under the Federal Arbitration Act, it
made no attempt to have the award modified to include a
Settlement or Release requirement. Once the District Court
issued its September 26, 2003 Order confirming the Arbitration
Award, the matter was governed by the statutory provision that
“the judgment so entered . . . [had] the same force and effect, in
all respects, as, and [was] subject to all the provisions of law
relating to, a judgment in an action; and it may be enforced as if
it had been rendered in an action in the court in which it is
entered.” 9 U.S.C. § 13; see also Witkowski v. Welch, 173 F.3d
192, 200 (3d Cir. 1999).
Thus, it is evident that the settlement agreement
requirement imposed by the Magistrate Judge was a new
substantive condition never before contemplated by the District
Court. Indeed, when the Magistrate Judge was asked, during the
April 26, 2004 hearing, the basis on which he was imposing such
a requirement, he stated:
Rule 59(e) provides that “[a]ny motion to alter or amend a
judgment shall be filed no later than 10 days after entry of the
judgment.” Id.11
to tell you the truth, when you ask me to cite you a
case or a proposition, I respectfully suggest to you
that I don’t have one because I don’t need one. It’s
common place . . . any litigant who pays any
money ever, under any circumstances, without
getting a piece of paper in exchange that basically
says, this is it, is an imbecile.
App. at 503-05.
Pfizer argues, however, that even if the Magistrate Judge
exceeded the scope of his authority under Rule 60(a), he acted
within his “inherent authority” to “enter appropriate orders to
ensure that [the District Court’s] judgments and prior orders are
properly enforced.” Appellee’s Br. at 28, 30-31. Pfizer is
correct that a district court has inherent authority to ensure that
prevailing parties are able to enforce prior judgments. See, e.g.,
S.E.C. v. Antar, 120 F. Supp. 2d 431, 439 (D.N.J 2000), aff’d 44
Fed. Appx. 548 (3d Cir. 2002) (holding that district court had
authority to reach defendants’ assets in hands of alleged
fraudulent transferees). However, this authority cannot extend to
the imposition of substantive conditions on enforcement not
previously encompassed in the earlier judgment. See Peacock v.
Thomas, 516 U.S. 349, 356-57 (1996) (holding that although the
Court has “approved the exercise of ancillary jurisdiction over a
broad range of supplementary proceedings involving third parties
to assist in the protection and enforcement of federal judgments
. . . [its] recognition of these supplementary proceedings has not,
however, extended beyond attempts to execute, or to guarantee
eventual executability of, a federal judgment”).10
10
The cases cited by Pfizer do not hold otherwise. For
instance, in Columbia Gas v. Enterprise Energy Co., 50 F.3d 233(3d Cir. 1995), the parties entered into a class action settlement
agreement, which the district court approved. 50 F.3d at 235. The
settlement agreement explicitly provided that class members were
entitled to receive their share of the settlement award only after
they executed a release of claims and a supplemental contract. Id.
at 236. We held that given the explicit terms of the settlement
12
III.
For the reasons given above, we hold that the Magistrate
Judge exceeded the scope of his authority by imposing the
requirement that Uprichard sign Pfizer’s Settlement and Release
Agreement as a condition of receiving her arbitration award.
Accordingly, we vacate the second paragraph of the Magistrate
Judge’s April 28, 2004 Order. Because this fully adjudicates the
matter at hand, remand is not necessary.
agreement, individual class members were required to present a
release of claims as a condition to payment. We did not impose a
release requirement where one had not previously and expressly
been agreed to by all parties and incorporated into a prior court
order.
13