United States District Court, D. Maryland
Xinis United States District Judge
before the Court is a “Petition to Compel Arbitration
and Other Dispute Resolution Procedures, ” ECF No. 1,
pursuant to the 9 U.S.C. § 4 of the Federal Arbitration
Act, filed by Arctic Glacier U.S.A., Inc. (“Arctic
Glacier U.S.A.”) and the Arctic Glacier U.S.A., Inc.
Savings and Retirement Plan (“the Plan, ” and
collectively, “Petitioners”). Respondent
Principal Life Insurance Company (“Respondent”)
opposes the Petition. See ECF No. 7. For the reasons
stated below, the Court orders that this case be transferred
to the United States District Court for the District of
Nebraska, consistent with the arbitration clause in the
Glacier U.S.A. is a Delaware corporation headquartered in the
state of Minnesota and is in the business of providing
packaged ice products. The Plan is a retirement benefits plan
sponsored by Arctic Glacier U.S.A. for their employees.
See Service Agreement, ECF No. 1-1 at 2. Respondent
Principal Life Insurance Company is an Iowa corporation with
its principal place of business also in Iowa, licensed to
conduct business as an insurance company in the state of
Maryland. See ECF No. 1 at 3.
to the Petition, Respondent entered into a Service and
Expense Agreement (the “Agreement”) with Arctic
Glacier International, Inc. as the Plan's original
sponsor, effective January 1, 2011. See Service
Agreement, ECF No. 1-1; see also ECF No. 1 at
The “Duration of Agreement” provision in the
Agreement states that the “Agreement will remain in
effect indefinitely. It will be fully binding on the Parties.
It will also extend to their respective successors and
assigns.” See Service Agreement, ECF No. 1-1
at 8. However, the Agreement also requires that “any
right, title, interest or performance with regard to this
Agreement” may be assigned only with “the express
written agreement of both Parties.” See
Service Agreement, ECF No. 1-1 at 8-9.
acknowledges that there is no one document that expressly
reflects assignment to Artic Glacier U.S.A. and the Plan by
“express written agreement of both Parties” of
the Agreement. Rather Petitioners include in the Petition
documentary evidence supporting that as of July 2012, the
Agreement was assigned from Arctic Glacier International,
Inc. to Arctic Glacier U.S.A. Petitioners specifically
include amendments executed by both parties which changed the
Plan's name from “Arctic Glacier International,
Inc. Savings and Retirement Plan” to “Arctic
Glacier U.S.A., Inc. Savings and Retirement Plan.”
See Adoption Agreement, ECF No. 1-6 at 12; see
also Letter re “Change in Plan Sponsorship,
” ECF No. 1-6 at 5. This Plan amendment, effective July
27, 2012 and prepared by Respondent, expressly provided that
the employer sponsoring the Plan going forward would be
Arctic Glacier U.S.A., and not Arctic Glacier International.
See Adoption Agreement, ECF No. 1-6 at 12.
Petitioners also include Respondent's submission to the
IRS identifying Arctic Glacier U.S.A. as the new employer and
sponsor of the Plan and identifying Arctic Glacier
U.S.A's employees as the Plan participants. See
Principal Financial Group Prototype for Savings Plans, ECF
No. 1-6 at 12.
The Allegations Underlying the Dispute
early 2013, the Plan fiduciaries elected to make various
changes to the Plan's investment options on behalf of
Arctic Glacier U.S.A.'s employee-participants to take
effect on April 1, 2013. See ECF No. 1 at 5.
Pursuant to the Plan changes, unless the Plan's
participants made an alternative selection, the Plan's
participants invested by default in funds which were based
upon a participant's age (“target date
funds”). See Id. The degree of risk exposure
in a particular target date fund is dependent upon the
participant's anticipated retirement date. See
the Employee Retirement Income Security Act of 1974
(“ERISA”), Respondent was required to provide a
Notice of Change of Investment Options (“Notice”)
to Plan participants by no later than March 1, 2013.
See ERISA § 404(c)(4)(C)(i), 29 U.S.C. §
1104(c)(4)(C)(i) (notices required “at least 30 days
and no more than 60 days prior to the effective date of the
change . . . .”). Arctic Glacier U.S.A. provided
Respondent with the names and addresses of the Plan's
participants. See ECF No. 1 at 6; ECF No. 1-4 at 5.
According to the Petition, Respondent failed to provide the
requisite notice and instead sent the notices to
nonparticipants. See ECF No. 1 at 6. Consequently,
on April 1, 2013, the Plan participants had their entire
retirement account balances and additional future
contributions placed into the applicable default target date
funds. See id.
matters worse, say Petitioners, Respondent had no mechanism
in place to catch the error. Accordingly, the Plan
participant funds were misallocated until January 2014. Had
Respondent employed quality control procedures,
“Respondent would have become aware of its failures
and, at a minimum, been able to limit the harm suffered by
the Plan and its participants.” See ECF No. 1
The Dispute Resolution Procedures of the Agreement
Agreement that governs the Plan administration contains an
arbitration provision. The parties do not dispute at this
stage that Respondent's alleged notice failures fall
under the Agreement's arbitration clause. Accordingly,
Arctic Glacier U.S.A. and the Plan contend that
Respondent's refusal to participate in the predicate
resolution procedures per the Agreement justifies this Court
compelling Respondent to submit to arbitration pursuant to
§ 4 of the Federal Arbitration Act (“FAA”).
Agreement's Dispute Resolution clause specifically
describes a three-step procedure of negotiation, mediation,
and then arbitration:
*Negotiation. If the Parties cannot resolve a dispute in the
ordinary course of business, the Party claiming a dispute
against the other shall give the other Notice of that dispute
in writing, stating the nature of the dispute and the
relevant facts, including documentation, and referring to
this article. The other Party will then have 15 calendar days
to make a complete, written response in a Notice to the
other. The Parties will meet to discuss the dispute. If
practicable and mutually desirable, the Parties will meet in
person. If the dispute remains unresolved for any reason
after 60 calendar days following the mailing of the response,
the Parties will then proceed to mediation.
*Mediation. The Parties will, as soon as commercially
reasonable after the 60 calendar day period referred to under
negotiation, above, initiate the mediation process and
endeavor in good faith to settle their dispute by mediation.
Unless the Parties agree to the contrary, the mediation will
conform to the then current Mediation Rules for Commercial
Financial Disputes of the American Arbitration Association or
such similar organization as the Parties may agree. If the
Parties cannot agree on a neutral mediator, one will be
appointed by the American Arbitration Association in
accordance with its mediation rules. Mediation will occur
within 60 days of the initiation of the mediation process.
The Parties will share equally in the Fees and expenses of
the mediator and the cost of the facilities used for the
mediation, but will otherwise bear their respective costs
incurred in connection with the mediation. The mediation
shall be non-binding. If the dispute remains unresolved for
any reason after the completion of the mediation process, the
Parties will then proceed to arbitration.
*Arbitration. If a dispute is to be resolved by arbitration,
the arbitration proceeding will take place in the capital
city of the State, unless the Parties agree to the contrary.
The arbitration will be governed by the Federal Arbitration
Act. . . . The arbitrators must decide the dispute in
accordance with the substantive law which would govern the
dispute had it been litigated in court. This ...