Dorf v. Standard Insurance Company

Filing 97

MEMORANDUM Opinion and Order. Signed by the Honorable Manish S. Shah on 7/15/2016: Dorf's motion for additional findings and amended judgment, 86 , is granted in part. The February 17 oral ruling is modified to include certain additional findin gs set forth in this opinion. The judgment, 82 , remains in favor of Standard. Dorf's objections to Standard's bill of costs are due 8/12/16. Standard's responses to Dorf's objections are due 8/26/16. Notices mailed by Judicial Staff. (psm, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
STEPHEN DORF,
Plaintiff,

No. 13 CV 6479

v.
STANDARD INSURANCE COMPANY,
as successor to MINNESOTA LIFE
INSURANCE COMPANY,

Judge Manish S. Shah

Defendant.
MEMORANDUM OPINION AND ORDER
Plaintiff Stephen Dorf worked as a commodities trader in the soybean-oil pit
of the Chicago Mercantile Exchange, using a tablet computer to trade
simultaneously in both the open outcry and electronic markets. When pain in his
neck rendered him unable to work a full trading day, he sought disability benefits
from his insurer, defendant Standard Insurance Company. Dorf brought this action
after Standard denied his claim, and judgment was entered in Standard’s favor
after a two-day bench trial. [82].1 Dorf moves for additional findings and amended
judgment pursuant to Rules 52(b) and 59(e).
I.

Legal Standard
Rule 52(b) provides that a court, upon a motion of a party, may amend its

findings or make additional findings and may amend the judgment accordingly.
Fed. R. Civ. P. 52(b). “The primary purpose of Rule 52(b) is to enable the appellate

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Bracketed numbers refer to entries on the district court docket.

court to obtain a correct understanding of the factual issues determined by the trial
court as a basis for the conclusions of law and the judgment entered thereon.” 9
Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 2582
(2016). Upon a Rule 59(e) motion, a court may alter or amend a judgment. Fed. R.
Civ. P. 59(e). The rule “enables the court to correct its own errors and thus avoid
unnecessary appellate procedures.” Moro v. Shell Oil Co., 91 F.3d 872, 876 (7th Cir.
1996). Both types of motions “are intended to correct manifest errors of law or fact
or to present newly-discovered evidence.” U.S. ex rel. Russo v. Attorney Gen. of Ill.,
780 F.2d 712, 716 n.4 (7th Cir. 1986). But they are not appropriately used to
relitigate the case using evidence or arguments that were available before judgment
was entered. Id. See also Moro, 91 F.3d at 876; LB Credit Corp. v. Resolution Trust
Corp., 49 F.3d 1263, 1267 (7th Cir. 1995). Rule 59(e) decisions are entrusted to the
district court’s sound judgment. Miller v. Safeco Ins. Co. of Am., 683 F.3d 805, 813
(7th Cir. 2012).
II.

Background
The findings of fact and conclusions of law in this case were set forth in an

oral ruling on February 17, 2016, after a two-day bench trial. [81]; see also [85]. The
following summarizes but does not replace those findings and conclusions.
Plaintiff Stephen Dorf had an insurance policy with defendant Standard
Insurance Company. The policy required that Standard pay Dorf a monthly benefit
if he were continuously disabled for more than 90 days and under the regular care
of a physician for the disabling condition. Dorf would be considered “disabled” if,

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due to sickness or injury, he could not perform the substantial and material duties
of his regular occupation, or those duties which account for a major portion of his
income, and he were unable to earn more than 50% of his prior income.
Dorf stopped working and claimed disability under the policy on April 30,
2012, due to pain related to his spinal stenosis. At that time, he worked as a
commodities trader, primarily in the trading pits of the Chicago Mercantile
Exchange. Dorf was a skilled trader who identified and tracked market trends, and
made trades exploiting arbitrage opportunities between electronic and open outcry
markets, using a tablet computer secured to his body by a harness. In general, his
methodology consisted of monitoring both the open outcry and the electronic
markets, spotting an opportunity for arbitrage between the two, and then making
near-simultaneous trades in both markets. He generated his income trade by trade,
and he did not need to remain in the pit for every minute of the trading day to earn
income. I also found that Dorf’s use of a tablet and harness was a necessary
component to his trading strategy, and hence, a substantial and material duty of his
occupation to some degree. Because the contract tied its definition of disability to
income generation, and Dorf’s income was earned trade by trade, it was necessary
for Dorf to prove that he could not use his tablet and harness to the degree
necessary to make enough profitable trades to earn more than half his income.
Dorf failed to prove that he could not earn more than 50% of his income by
wearing his tablet harness for the reduced amount of time that he was capable of
wearing it. One of his expert witnesses, a physical therapist who evaluated his

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functional capacity in mid-May, testified that Dorf could remain in the stooped
position required to use his tablet for up to roughly two hours and thirty-eight
minutes. Other expert witnesses testified that Dorf’s pain could fluctuate, and Dorf
admitted that it had already subsided to some extent by mid-May. Dorf did not see
a doctor for his pain after May, and he could not prove that he experienced a
sustained level of pain such that he could not perform the substantial and material
duties of his job for the requisite 90-day period of May 1 through August 1, 2012. I
found it likely that working for two hours and thirty-eight minutes out of the threehour-and-forty-five-minute trading day would generate greater than 50% of his
prior income. Accordingly, judgment was entered against him.
III.

Analysis
A.

Additional Findings of Fact

Rule 52(a) requires that a district court set out its findings of fact, and that
requirement is satisfied if the findings “are sufficiently comprehensive to disclose
the steps by which the trial court reached its ultimate conclusion on factual issues.”
Bartsh v. Nw. Airlines, Inc., 831 F.2d 1297, 1304 (7th Cir. 1987). Dorf does not
contest any of the February 17 oral ruling’s findings of fact, but argues that three
additional findings, each related to the duties of a commodities trader in April 2012,
are necessary to fill in significant gaps in the oral ruling’s reasoning and correct
manifest errors of fact and law contained in that ruling. The proposed additional
findings are: 1) a trader did not derive income in a linear manner, but from profit
opportunities that arose sporadically and unpredictably throughout the trading day;

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2) a trader could not predict when a profit opportunity would arise, and needed to
be in the trading pit in order to immediately identify and exploit that opportunity;
and 3) a trader only had a fraction of a second to identify and execute a profitable
trade. He claims that these findings relate to critical issues that serve as the basis
for the judgment, and are consistent with previous findings and with the evidence
on the record.2
Dorf argues that the proposed findings factor heavily into the reasoning
underlying the decision reached in the oral ruling. Central to his argument is the
premise that, in the oral ruling, I concluded that Dorf could have earned at least
50% of his prior earnings by using his tablet for two hours per trading day, and that
my conclusion was based on an implied finding that profitable trading opportunities
are generally present throughout the course of a trading day. This misstates the
oral ruling’s reasoning and seems to misinterpret both my conclusion and the
parties’ relative burdens of proof. I did not find that profit opportunities were
present throughout the trading day, and such a finding is unnecessary to support
the conclusion that Dorf failed to carry his burden to prove that he could not have
earned more than 50% of his prior earnings. A finding that profit opportunities are
not generally present throughout the day, without more, does not help Dorf carry
his burden. I found that Dorf could have spent roughly two hours and thirty-eight
Dorf also argues that the proposed findings should be adopted because Dorf’s testimony
was corroborated by two witnesses who used to work alongside him. Standard notes that
the two witnesses’ opinion testimony on these matters was ruled inadmissible, because they
had not been disclosed as expert witnesses. See [83] at 10–11, Tr. at 10:21–11:1. Dorf
waives any argument to the contrary by failing to address this issue. In any event,
corroboration of a proposed finding is not a reason for a court to make a finding that would
otherwise be unnecessary to reach in support of a judgment or legal conclusion.
2

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minutes per trading day using his tablet in the trading pit, and Dorf did not
provide, and still does not provide, sufficient evidence to show that he could not
have earned greater than 50% of his prior earnings in that time. The oral ruling
satisfied Rule 52(a) because it provided all of the facts necessary to support the
judgment. Dorf does not contest any of the oral ruling’s factual findings, and the
proposed findings do not fill in any gaps in its reasoning. But to the extent that the
findings may clarify the oral ruling for a reviewing court and are consistent with the
evidence, they will be considered.
Dorf claims that the proposed findings of fact are consistent with previous
findings and with the evidence in the record. But that is not so. The first proposed
finding that a trader derived income from profit opportunities that arose
unpredictably throughout the day conflicts with my finding that Dorf was a skilled
trader who studied and tracked the market. It also conflicts with Dorf’s testimony,
referenced in his briefing, that he could predict higher trading volume at certain
times of the day or month. It is true that Dorf did not earn income on an hourly
basis, and that the market and the timing of Dorf’s profit opportunities could be
influenced by certain unpredictable events, and I will make those limited findings.3
But I reiterate my finding that trading time need not be continuous to generate
income. As a result, it is reasonable to infer that Dorf, as a skilled trader and
student of the market, could spend less time trading and earn a reduced amount of
income.
As explained in the February 17 oral ruling, how much influence any event or other factor
had on Dorf’s income is unknown on the record.
3

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Dorf’s second proposed finding—that a trader could not predict when profit
opportunities would arise, and needed to be in the pit to identify and exploit them—
is overbroad. It is reasonable to infer that the timing of any particular trade could
not have been predicted with precision, but not that profit opportunities were
wholly unpredictable. However, I will make the limited finding, consistent with the
oral ruling, that identifying and acting on an arbitrage opportunity between the
open outcry and electronic markets required a trader’s physical presence in the pit.
But plaintiff failed to prove that continuous presence, in a stooped position, for a
full trading day was necessary to hit the 50% of income threshold required to prove
disability.
The third proposed finding is consistent with Dorf’s testimony, but I do not
credit that testimony that he executed trades on his tablet within milliseconds of
identifying a profit opportunity. I will make the limited finding, consistent with the
evidence and the oral ruling, that a trader had to execute trades and exploit profit
opportunities immediately upon identifying them.
The February 17 oral ruling will be amended to include the limited findings
of fact described above.
B.

Amended Judgment

Dorf contends that, based upon the proposed findings of fact, an amended
judgment in his favor is warranted. The limited findings described above do not
necessitate reversing the judgment. But even adopting Dorf’s proposed findings in
full would not result in a reversal. Assuming the profit opportunities were sporadic

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and unpredictable and unevenly distributed, it may still be possible to capture the
majority of those opportunities over time by trading in the pit for the majority of
each trading day (up to his capacity of two hours and thirty-eight minutes), and in
doing so, earn greater than 50% of his prior income. Plaintiff did not prove that this
would be impossible (or even unlikely), and the burden of proof was on Dorf.
Because he did not provide any evidence showing the connection (or lack thereof)
between his income and trading activity, trading volume, market forces, or other
factors, he cannot show by a preponderance of the evidence that he was unable to
earn more than 50% of his prior income, even if his proposed findings were adopted
in full.
Acknowledging this lack of evidence, Dorf argues that his job must be treated
as a unitary whole, and that any reduction of time spent on the trading floor should
be treated as a complete loss of income. He also argues that missing a trading
opportunity could result in losing all of the income earned that day or even over the
course of the preceding months. But Dorf presented no evidence or analysis to
support these arguments, though he had the opportunity to do so, and he does not
contest the finding that he generally laid off his open outcry trades on the electronic
market immediately. He instead compares his income to that of an attorney earning
a contingency fee, which cannot be broken down to reflect accurately how much
should be attributed to each of the attorney’s individual actions. But Dorf does not
cite to anything in the record to prove that impossibility, and he ignores my finding,

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which he does not contest, that he generated income trade by trade, rather than all
at one time.
Sidestepping the policy’s income requirement, Dorf claims that he proved
disability based on the holdings of McFarland v. General American Life Insurance
Co., 149 F.3d 583 (7th Cir. 1998) and Rahman v. Paul Revere Life Insurance Co.,
684 F.Supp. 192 (N.D. Ill. 1988). Neither case involves a policy with a similar
income requirement, so they are inapplicable. Moreover, unlike occupations where
the inability to perform some tasks would materially change the entire occupation,
here, Dorf’s limitation was one of duration, not occupational characteristic. He could
still trade on the floor, spot opportunity, study markets, use his tablet and harness
for two hours and thirty-eight minutes, and trade at home. Whether his limited
ability to trade full-time meant he was unable to earn more than 50% of his income
was at issue here, and he failed to prove his contention.
At trial, Dorf failed to prove that he was continuously disabled under the
policy, and judgment was entered against him. I conclude that no manifest errors of
law or fact would require reversing that judgment.4
IV.

Conclusion
Dorf’s motion for additional findings and amended judgment, [86], is granted

in part. The February 17 oral ruling is modified to include certain additional
findings set forth in this opinion. The judgment, [82], remains in favor of Standard.
Dorf also requests a determination that he satisfied the policy’s separate requirement that
he be under the regular care of a physician. I decline to make any additional findings on
this issue, see [85] at 12, Tr. at 377:2–4, because Dorf failed to prove the threshold issue of
continuous disability.
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Dorf’s objections to Standard’s bill of costs are due 8/12/16. Standard’s responses to
Dorf’s objections are due 8/26/16.
ENTER:
___________________________
Manish S. Shah
United States District Judge
Date: 7/15/2016

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