Owens et al v. Western & Southern Life Insurance Co. et al

Filing 131

ORDER AND REASONS denying 127 Motion for New Trial. Signed by Judge Mary Ann Vial Lemmon on 11/10/16. (cbn)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
EARL E. OWENS AND
JOSEPH WAYNE ESPAT

CIVIL ACTION

VERSUS

NO: 13-4782

THE WESTERN & SOUTHERN LIFE
INSURANCE COMPANY AND
THE WESTERN & SOUTHERN LIFE
INSURANCE LONG TERM
INCENTIVE AND RETENTION PLAN

SECTION: "S" (4)

ORDER AND REASONS
IT IS HEREBY ORDERED that Plaintiffs' Motion for New Trial (Doc. #127) is DENIED.
BACKGROUND
This matter is before the court on plaintiffs' motion for new trial. Plaintiffs, Earl E. Owens
and Joseph Wayne Espat, argue that this court should vacate its September 9, 2016, Order and
Reasons granting summary judgment in favor of defendants, The Western & Southern Life
Insurance Company and The Western & Southern Life Insurance Long Term Incentive and
Retention Plan, because judicial estoppel does not apply. Further, plaintiffs argue that this court
should grant summary judgment in their favor because defendants failed to prove that the Western
& Southern Agency Group Long Term Incentive and Retirement Plan (the "Plan") was a "top-hat"
plan, or alternatively, reopen the matter to allow discovery as to whether the Plan was a "top-hat"
plan.
Plaintiffs are retired former employees of defendant, The Western & Southern Life Insurance
Company ("Western & Southern"). Western & Southern provides financial services including life
and health insurance, retirement savings, and investment products and services. In 2006 and 2008,
Owens and Espat, respectively, first became eligible to participate in the Plan. The Plan includes

a forfeiture provision that provides that payments under the Plan shall be forfeited if, within three
years after termination of employment with Western & Southern, the participant enters into a
competing business or employment, solicits Western & Southern employees, agents or clients to
work for or buy products from a competing business, or acts in any manner that would have
provided grounds for termination for cause if the participant were still employed at Western &
Southern.
In late 2012, Owens and Espat received correspondence from Kim Chiodi, Senior Vice
President of Human Resources for The Western & Southern Financial Group, explaining that each
of them forfeited his rights under the Plan because he "entered into a business relationship or
employment" with other insurance companies within three years after his retirement in violation of
the Plan. The letters directed Owens and Espat to re-pay certain amounts paid to them under the
Plan, plus taxes that the Western & Southern paid on the forfeited amount, by certain dates, and
stated that Western & Southern would "pursue all legal remedies to which [it] may be entitled," if
payments were not received by the appointed dates.
Neither Owens nor Espat responded to the letters. On March 28, 2013, Western & Southern
filed suit against Owens in the Court of Common Pleas, Hamilton County, Ohio seeking to recoup
the amount that it previously paid to Owens that Western & Southern claims Owens forfeited under
the Plan. Western & Southern alleged claims of breach of contract, promissory estoppel and unjust
enrichment. On April 18, 2014, the court dismissed that suit for lack of jurisdiction, finding that
Western & Southern's claims against Owens arose under an ERISA plan and were preempted by 29
U.S.C. § 1144. On May 8, 2014, Western & Southern appealed that decision to the Court of Appeals
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of Hamilton County, Ohio, First Appellate District. The appellate court noted that the parties agreed
that the Plan is a "top-hat" plan1, and affirmed the trial court's decision that Western & Southern's
state-law claims were preempted by ERISA.
On June 12, 2013, Owens and Espat filed this action seeking benefits under the Plan. They
allege that the Plan is governed by ERISA, and that they are entitled to an additional $70,000 each
in unpaid benefits under the Plan, which Western and Southern is "refusing to pay . . . without good
or lawful cause."
In November and December 2014, the parties filed cross-motions for summary judgment.
After considering the motions, the court found that plaintiffs did not exhaust their administrative
remedies, and no exception to the administrative process requirement applied. Thus, the matter was
remanded to the plan administrator for a determination with instructions that plaintiffs must exhaust
all administrative remedies outlined in the Plan. Western & Southern was prohibited from raising
a time limitation defense because it suggested that remand to the plan administrator was appropriate.
The matter was stayed and administratively closed while the plaintiffs pursued the administrative
process.
On August 5, 2015, plaintiffs submitted their claims to the plan administrator. On October
29, 2015, Donald J. Wuebbling, Secretary and Counsel of Western & Southern, wrote to plaintiffs'
counsel to inform him that the plan administrator denied plaintiffs' claims for benefits. The letter
stated that the Plan was a "top-hat" plan and outlined the forfeiture provisions. It also stated that the
plan administrator determined that plaintiffs "engaged in business affiliations with organizations

1

A "top-hat" plan is an ERISA "plan which is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a select group of management or highly compensated
employees.” 29 U.S.C. § 1101(a)(1).

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competitive with the Company within three years of their termination of employment and that had
they engaged in this activity while employed by the Company, their employment would have been
terminated for 'Cause'." Thus, under the Plan, they forfeited their benefits.
Plaintiffs appealed and provided supplemental documentation. On February 25, 2016,
Wuebbling wrote plaintiffs' counsel to inform him that the plan administrator upheld the denial of
benefits.
Thereafter, this court granted plaintiffs' motion to reopen these proceedings, and the parties
filed cross-motions for summary judgment. Western & Southern argued that the plan administrator's
denial of benefits should be upheld because there is substantial evidence in the administrative record
to demonstrate that plaintiffs forfeited their benefits under the Plan by becoming licensed to sell
insurance for other companies. Western & Southern argued that this licensing constitutes two
grounds for forfeiture: engaging in a competitive business and engaging in conduct for which they
would have been terminated for cause had they still been employed by Western & Southern.
Plaintiffs argued that the plan administrator's decision should be vacated because they should
not be bound by the forfeiture provisions of which they were not notified. Plaintiffs also argued that
they did not engage in a competitive business because Western & Southern did not sell the insurance
products that the new companies did or would not have sold to the clients because the clients were
too old to be insured under Western & Southern's insurance products. Western & Southern
contended that plaintiffs notice argument should be rejected because plaintiffs have admitted in this
litigation, and the Ohio court found, that the Plan is a "top-hat" plan which is exempt from ERISA's
notice requirements.

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On September 8, 2016, this court granted Western & Southern's motion for summary
judgment, and denied plaintiffs' motion. The court found that the doctrine of judicial estoppel
prevented plaintiffs from asserting that the Plan was not a "top-hat" plan, because they had admitted
that it was in several prior pleadings, and the Ohio court and this court acknowledged that the Plan
was a "top-hat" plan. The court also found that Western & Southern complied with the alterative
reporting requirement promulgated in 29 C.F.R. § 2520.104-23(b) applicable to "top-hat" plans, and
thus was not required to provide a summary plan description to plaintiffs. Finally, the court found
that the plan administrator did not abuse its discretion in denying plaintiffs' claims for benefits
because it applied a legally correct and reasonable interpretation of the Plan in finding that the
plaintiffs violated the forfeitures clause and denying plaintiffs' claim for benefits.
On September 29, 2016, plaintiffs filed the instant motion for new trial. Plaintiffs argue that
the court erred in finding that judicial estoppel applied with respect to the "top-hat" issue. Plaintiffs
contend that their references to the Plan as a "top-hat" plan in two pleadings were "inadvertent."
They also argue that the Ohio court's statement that the Plan is a "top-hat" plan should be
disregarded because it was not central to that court's holding regarding ERISA preemption and the
"top-hat" issue was not litigated in that court. Further, plaintiffs argue that defendants had the
burden of proving that the Plan is a "top-hat" plan because they asserted the "top-hat" status as an
affirmative defense that exempted the Plan from ERISA's fiduciary requirements. Plaintiffs contend
that defendants did not meet this burden because they did not argue the Plan's "top-hat" status to the
plan administrator. Plaintiffs argue that this court should vacate its September 9, 2016, Order and
Reasons and grant summary judgment in their favor, or alternatively, reopen discovery into the issue
of whether the Plan is a "top-hat" plan.

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Defendants argue that plaintiffs have not demonstrated that reconsideration is appropriate
under Rule 59(e) of the Federal Rules of Civil Procedure, because plaintiffs have not demonstrated
a manifest error of law or fact, or presented any new evidence. They contend that this court properly
noted that plaintiffs stated that the Plan was a "top-hat" plan in two pleadings, and that this court and
the Ohio court accepted that it is.
ANALYSIS
Although plaintiffs title their motion as one for a new trial, they seek reconsideration of this
court's September 9, 2016, Order and Reasons granting summary judgment in defendants' favor.
The Federal Rules of Civil Procedure do not recognize a motion for reconsideration. Bass v. U.S.
Dep’t of Agric., 211 F.3d 959, 962 (5th Cir. 2000). The United States Court of Appeals for the
Fifth Circuit has held nonetheless that if such a motion is filed within twenty-eight days after entry
of the judgment from which relief is being sought, the motion will be treated as motion to alter or
amend under Rule 59(e). Hamilton Plaintiffs v. Williams Plaintiffs, 147 F.3d 367, 371 n. 10 (5th Cir.
1998); see also Fed. R. Civ. P. 59(e). Because plaintiffs filed the instant motion on September 29,
2016, the motion will be subject to the standards for Rule 59(e).
A Rule 59(e) motion calls into question the correctness of a judgment. In re Transtexas Gas
Corp., 303 F.3d 571, 581 (5th Cir. 2002). Rule 59(e) serves "'the narrow purpose of allowing a party
to correct manifest errors of law or fact or to present newly discovered evidence.'" Atchafalaya
Basinkeeper v. Bostick, - - - Fed. Appx. - - -, 2016 WL 4709860, at *3 (5th Cir. Sept. 8, 2016)
(quoting Waltman v. Int'l Paper Co., 875 F.2d 468, 473 (5th Cir. 1989)). Amending a judgment is
appropriate under Rule 59(e): "'(1) where there has been an intervening change in the controlling
law; (2) where the movant presents newly discovered evidence that was previously unavailable; or

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(3) to correct a manifest error of law or fact.'" Berezowsky v. Ojeda, - - - Fed. Appx. - - -, 2016 WL
3254054, at *2 (5th Cir. June 13, 2016) (quoting Demahy v. Schwarz Pharma, Inc., 702 F.3d 177,
182 (5th Cir. 2012)). Because Rule 59(e) has a "narrow purpose," the United States Court of
Appeals for the Fifth Circuit has "observed that '[r]econsideration of a judgment after its entry is an
extraordinary remedy that should be used sparingly.'" Id. (quoting Templet v. HydroChem Inc., 367
F.3d 473, 479 (5th Cir. 2004)). Thus, "a motion for reconsideration 'is not the proper vehicle for
rehashing evidence, legal theories, or arguments that could have been offered or raised before the
entry of judgment.'" Id. (quoting Templet, 367 F.3d at 479).
Plaintiffs have not established that reconsideration is warranted. Instead, plaintiffs re-urge
arguments made in support of their motion for summary judgment and make arguments that they
could and should have raised in response to defendants' raising judicial estoppel in connection with
that motion.
The judicial estoppel doctrine prevents "a party from asserting a position in a legal
proceeding that is contrary to a position previously taken in the same or earlier proceeding." Feder
v. Elec. Data Sys. Corp., 429 F.3d 125, 136 (5th Cir. 2005). Judicial estoppel applies if "(1) the
position of the party against which estoppel is sought is plainly inconsistent with its prior legal
position; (2) the party against which estoppel is sought convinced a court to accept the prior
position; and (3) the party did not act inadvertently." Jethroe v. Omnova Solutions, Inc., 412 F.3d
598, 600 (5th Cir. 2012).
In ruling on the motions for summary judgment, the court found that plaintiffs have taken
the position in multiple pleadings in this litigation that the Plan is a "top-hat" plan. In their
memorandum in opposition to defendants' motion for leave to file a counter-claim (Doc. #45),

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plaintiffs stated that the Plan is a "top-hat" plan. Plaintiffs again stated that the Plan is a "top-hat"
plan in their supplemental memorandum in support of their motion to compel discovery (Doc. #461). This court ruled that the Plan is a "top-hat" plan when it remanded the matter to the plan
administrator (Doc. #99). Because plaintiffs repeatedly stated that the plan is a "top-hat" plan, they
are judicially estopped from changing their position regarding the Plan's "top-hat" status at this point
in the litigation.
After reviewing the record in this case and plaintiffs' repeated assertions concerning the
Plan's status as a "top-hat" plan, the court concluded that judicial estoppel applied to prevent the
plaintiffs from taking the inconsistent position that the Plan is not a "top-hat" plan. Plaintiffs have
not presented any new evidence, demonstrated that there was a manifest error of fact or law or
shown a change in the law that would justify the extraordinary remedy of reconsidering a final
judgment. Therefore, plaintiffs' motion is DENIED.
CONCLUSION
IT IS HEREBY ORDERED that Plaintiffs' Motion for New Trial (Doc. #127) is
DENIED.

10th
New Orleans, Louisiana, _____ day of November, 2016.

____________________________________
MARY ANN VIAL LEMMON
UNITED STATES DISTRICT JUDGE

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