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When a federal court upholds an arbitration award, it may not later require the award winner to sign a release that includes a confidentiality clause as a condition of receiving payment, the 3d U.S. Circuit Court of Appeals has ruled. Pfizer Inc. v. Uprichard, No. 04-2527. A district court’s “authority cannot extend to the imposition of substantive conditions on enforcement not previously encompassed in the earlier judgment,” wrote U.S. Circuit Judge Dolores K. Sloviter on behalf of the court. According to court papers, Margaret Uprichard was working for Warner-Lambert Co. as a director of clinical research when Warner-Lambert merged with Pfizer Inc. in early 2000. After the merger, Uprichard’s job title was changed to “local clinical leader.” Dissatisfied, Uprichard submitted a “constructive termination eligibility form,” claiming a substantive change in job duties, and a request for severance benefits under Warner-Lambert’s enhanced severance plan. The company refused, the dispute went to arbitration and a panel of three arbitrators ruled in favor of Uprichard. The panel found that she had suffered constructive termination and ordered Pfizer to pay her more than $244,000 in severance benefits. Subsequently, the parties appeared to have struck a settlement. They stipulated that Uprichard was entitled to $11,353 in prejudgment interest. Uprichard also told Pfizer that as soon as she was paid, she would sign an agreement saying judgment had been satisfied. Pfizer sent Uprichard a “settlement and release agreement,” which included confidentiality and nondisparagement requirements. The proposed release agreement also stated that if Uprichard violated either of the provisions, she would be required to repay to Pfizer as “liquidated damages” all the money paid to her in the arbitration award. Uprichard told Pfizer that she was willing to “execute a release of any and all remaining claims she may have against Pfizer,” but she was not willing to sign the specific release proposed by Pfizer because it contained a number of provisions that went well beyond a general release. Uprichard went back to court and asked for an amendment to her judgment that added the prejudgment interest she had been already awarded. Pfizer then sought a ruling that Uprichard be required to sign a standard release form as a condition of receiving payment. U.S. Magistrate Judge G. Donald Haneke granted both motions, issuing an order that increased Uprichard’s judgment to more than $255,000, and imposing the requirement that Uprichard sign Pfizer’s settlement and release agreement as a condition of payment. Uprichard appealed, arguing that Haneke had exceeded his authority by adding new provisions to the existing judgment. The 3d Circuit agreed with her, finding that the motion before Haneke was brought under Fed. R. Civ. P. 60(a), which is designed only to allow courts to correct “clerical mistakes.” Adding prejudgment interest is a typical task under Rule 60(a), the court said, but the rule does not empower a court “to impose additional substantive requirements.” The magistrate judge had “overstepped his authority under Rule 60(a), and changed the substantive rights of the parties,” Sloviter wrote. Even if Pfizer were correct in saying that its enhanced severance plan contains such a release requirement, Sloviter found that “a Rule 60(a) motion is not the appropriate context to impose this requirement for the first time.” Sloviter said that the issue of the release hadn’t been raised before. Pfizer had not sought “to have the award modified to include a settlement or release requirement.” As a result, Sloviter concluded, “the settlement agreement requirement imposed by the magistrate judge was a new substantive condition never before contemplated.”

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