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

Filing 79

ORDER AND REASONS STAYING AND ADMINISTRATIVELY closing case pending the resolution of the defendants appeal regarding a related action. Signed by Judge Mary Ann Vial Lemmon.(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 Defendants' Motion to Stay All Proceedings (Doc. #61)
is GRANTED, and this matter is hereby STAYED and ADMINISTRATIVELY CLOSED
pending the resolution of the defendants' appeal regarding a related action in the Court of Appeals
of Hamilton County, Ohio, First Appellate District.
Plaintiffs, Earl E. Owens and Joseph Wayne Espat, are retired former employees of
defendant, The Western & Southern Life Insurance Company. Western & Southern provides
financial services including life and health insurance, retirement savings, and investment products
and services. Both Owens and Espat were participants in the Western & Southern Agency Group
Long Term Incentive and Retirement Plan (the "Plan"), which was "designed to provide an incentive
for selected key field associates of the Western & Southern Agency Group to maximize performance
and remain with the organization." To be eligible for participation in the Plan the employee must
be "in the top 5% of Employees when ranked by annual compensation as measured during the
previous calendar year."
On November 15, 2012 and December 26, 2012, Kim Chiodi, Senior Vice President of
Human Resources for The Western & Southern Financial Group, wrote to Owens and Espat,
respectively, explaining that each 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. The letters directed Owens and Espat to re-pay a certain amount paid to them under the
Plan, plus taxes that the Western & Southern paid on the forfeited amounts.
On March 28, 2013, Western & Southern filed suit against Owens in the Court of Common
Please, Hamilton County, Ohio seeking to recoup the amount Owens forfeited under the Plan. It
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 a plan governed by the Employee Retirement Income Security Act
of 1974 ("ERISA"), and were preempted by 29 U.S.C. § 1144. On May 8, 2014, Western &
Southern appealed that decision to the Court of Appeals of Hamilton County, Ohio, First Appellate
District, arguing that their state law claims are not preempted because the Plan is a top-hat plan. The
appellate court heard oral arguments on November 13, 2014. One of the issues pending on appeal
is whether the Plan is a "top-hat" plan, and the implications of such a designation.
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
under the Plan, which Western and Southern is "refusing to pay . . . without good or lawful cause."
They claim that they did not receive a copy of the plan, were not advised of the administrative
process, and that pursuing administrative remedies would be futile because Western & Southern has
already demanded a return of benefits paid, and instituted litigation against Owens.
Plaintiffs filed a motion for summary judgment arguing that they are entitled to benefits
under the Plan as a matter of law because they were not provided with a summary plan description
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or a copy of the Plan, and were not advised of any provision which would disqualify them from
receiving benefits under the Plan. They also argue that their status as independent agents with other
insurance companies does not violate the Plan's forfeiture provision because they were not
employees of those other insurance companies, and the other insurance companies did not directly
compete with Western & Southern, either because the products offered were different, or the
Western & Southern would have refused coverage for the products sold. Plaintiffs argue that they
were not required to pursue administrative remedies under the Plan because they were never
provided with information regarding such remedies either in the plan documents or notices of
forfeiture.
Defendants filed a motion for summary judgment. They argue that it is clear that plaintiffs
violated the Plan's forfeiture provision by engaging in a competing business. They also argue that
plaintiffs are not entitled to summary judgment because they failed to pursue the administrative
remedies under Section 6.5 of the Plan before filing this suit. Defendants argue that they were not
required to provide the Plan documents or summary plan description to plaintiffs because the Plan
is a "top-hat" plan subject to alternative reporting requirements under 29 C.F.R. § 2520.104-23.
Defendants also filed a motion to stay all proceedings in this case pending a decision from
the Court of Appeals of Hamilton County, Ohio, First Appellate District. They argue that a stay is
warranted because they seek to bring additional claims against plaintiffs, which they contend should
be filed in Ohio. If the appellate court reverses the district court's dismissal, defendants will bring
those claims in the Ohio court, and then move for abstention in this court.
This court finds that a stay is warranted. One of the issues on appeal in the Ohio court is
whether the Plan is a "top-hat" plan, and the implications of such a designation. The Plan's potential

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"top-hat" status affects this court's determination regarding the documents defendants were required
to provide to plaintiffs, which impacts the motions for summary judgment. Because the Ohio suit
was filed first, a stay of this litigation pending a decision of the Court of Appeals of Hamilton
County, Ohio, First Appellate District is appropriate.

22nd
New Orleans, Louisiana, _____ day of January, 2015.

____________________________________
MARY ANN VIAL LEMMON
UNITED STATES DISTRICT JUDGE

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