Sand-Smith v. Liberty Life Assurance Company of Boston

Filing 66

OPINION AND ORDER. Sand-Smith's 55 Motion for contempt is denied. Liberty Life's 58 Motion to stay the judgment is granted with respect to the attorney fees and costs portion. The order for attorney fees and costs is hereby stayed effective upon Liberty Life posting bond in the amount of $28,633.47 plus interest. Liberty Life's motion to stay the judgment is denied with respect to the summary judgment portion. Signed by Judge Susan P. Watters on 12/19/2017. (EMH)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BILLINGS DIVISION

FILED
DEC 1 9 2017
Clerk, U S District Court
District Of Montana
. Billings

THERESA SAND-SMITH,
CV 17-0004-BLG-SPW
Plaintiff,
OPINION AND ORDER

vs.
LIBERTY LIFE ASSURANCE
COMP ANY OF BOSTON,
Defendant.

Before the Court is Plaintiff Theresa Sand-Smith's.motion for contempt
(Doc. 55) and Defendant Liberty Life's motion to stay pending appeal (Doc. 58).
For the foregoing reasons, the Court denies the motion for contempt and grants in
part and denies in part the motion to stay pending appeal.

I.

Procedural history

On December 1, 2016, Sand-Smith filed a complaint seeking clarification of
future benefits under her BRISA plan. Doc. 6. On September 20, 2017, the Court
granted summary judgment to Sand-Smith. Doc. 47. On October 23, 2017, the
Court awarded Sand-Smith attorney fees and costs. Doc. 51. The same day,
judgment was entered in favor of Sand-Smith. Doc. 52. On November 14, 2017,
Sand-Smith filed a motion for contempt on the ground that Liberty Life refused to
reinstate her disability benefits after entry of judgment. Doc. 55. On November
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21, 2017, Liberty Life filed its notice of appeal. Doc. 57. The same day, Liberty
Life filed a motion to stay the Court's judgment pending appeal. Doc. 58.

II.

The Court's summary judgment order

Sand-Smith's complaint sought a narrow clarification of her long term
disability plan. Sand-Smith's disability plan contained a provision that limited
benefits to 24 months if her disability was a mental illness. Sand-Smith argued the
mental illness provision was void because it conflicted with Montana's mental
health parity law, Montana Code Annotated § 33-22-706. The Court granted
summary judgment to Sand-Smith, concluding the plan's mental illness provision
was void "because it conflict[ed] with Montana's mental health parity law." Doc.
47 at 16.

III.

Discussion
A.

Motion for contempt

A district court has wide discretion to enforce its lawful orders through civil
contempt. In re Dual-Deck Video Cassette Recorder Antitrust Litigation, 10 F .3d
693, 695 (9th Cir. 1993). Civil contempt consists of a party's disobedience to a
specific and definite court order by failure to take all reasonable steps within the
party's power to comply. In re Dual-Deck, 10 F.3d at 695. A party should not be
held in contempt if its actions are based on a good faith and reasonable
interpretation of the court's order. In re Dual-Deck, 10 F .3d at 695. Civil

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contempt must be demonstrated with clear and convincing evidence. In re Dua/Deck, 10 F.3d at 695.

Sand-Smith argues Liberty Life should be held in contempt because it
refused to reinstate Sand-Smith's disability benefits after the entry of judgment.
Liberty Life responds it did not refuse to reinstate Sand-Smith's disability benefits,
but instead believed it was entitled to a stay of the judgment pending the outcome
of an appeal.
The Court does not find by clear and convincing evidence that Liberty Life
willfully violated the judgment. Liberty Life's belief that it was entitled to a stay,
while incorrect (as discussed below), was reasonable. Although Liberty's Life
belief should have caused it to file a motion to stay much sooner than it did, the
Court is not convinced Liberty's Life delay amounts to a refusal to comply with
the judgment. The motion for contempt is denied.
B.

Motion to stay

A party may obtain a stay pending appeal by posting a supersedeas bond.
Fed. R. Civ. P. 62(d). A bond protects the prevailing plaintiff from the risk of a
later uncollectible judgment and compensates her for delay in the entry of the final
judgment. N .L.R.B. v. Westphal, 859 F .2d 818, 819 (9th Cir. 1988). However, a
stay by bond has little practical effect when the judgment is not for a sum certain.
Hebert v. Exxon Corp., 953 F.2d 936, 938 (5th Cir. 1992). The circuit courts

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caution the right to a stay by bond should be limited to "money judgments."
Westphal, 859 F.2d at 819; Hebert, 953 F.2d at 938; Robbins v. Pepsi-Cola, 800

F .2d 641, 643-644 (7th Cir. 1986); Donovan v. Fall River Foundry Co. , 696 F .2d
524, 526 (7th Cir. 1982); FTC v. TRW, Inc., 628 F.2d 207,210 n. 3 (D.C. Cir.
1980). A "money judgment" consists of two elements: (1) an identification of the
parties for and against whom judgment is being entered, and (2) a definite and
certain designation of the amount which plaintiff is owed by defendant. Ministry
ofDefense and Support for the Armed Forces of the Islamic Republic ofIran v.
Cubic Defense System, Inc., 665 F.3d 1091, 1101 (9th Cir. 2011) (interpreting 28

U.S.C. § 1961(a)) (citing Penn Terra Ltd. v. Dep't of Envtl. Res., 733 F.2d 267,
275 (3rd Cir. 1984)). "Money judgments" entitle the plaintiff to collect interest if
the judgment is affirmed on appeal. Ministry ofDefense, 665 F .3d at 1102 (citing
28 U.S.C. § 1961(a)).
For purposes of this issue, the judgment consists of two portions: the
award of attorney fees and costs and the summary judgment order. Sand-Smith
agrees the award of attorney fees and costs is a money judgment and concedes
Liberty Life is entitled to a stay of that award upon posting bond.
The summary judgment order, however, is not a money judgment. First, the
summary judgment order does not state, or even refer, to any specified sum of
money owed by Liberty Life to Sand-Smith. The issue decided on summary

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judgment-and the basis for the entire lawsuit-was whether Montana's mental
health parity law voided the mental illness limitation contained in the policy.
Second, although Liberty Life owes and will continue to owe Sand-Smith
money due, in part, to the summary judgment order, the amount is not definite and
certain. As stated in the summary judgment order, Sand-Smith's disability benefits
are welfare benefits, which an employer is "generally free under ERISA, for any
reason at any time, to adopt, modify, or terminate." Doc. 47 at 6 (citing Alday v.
Raytheon Co., 693 F.3d 772, 782 (9th Cir. 2012)). The Montana legislature

repealed and replaced the mental health parity law, upon which this case turned,
effective January 1, 2018. 2017 Mont. Laws Ch. 245 (H.B. 142). The new mental
health parity law applies to plans "offered to, renewed for, or issued to" Montana
residents. 2017 Mont. Laws Ch. 245 (H.B. 142) (amending§ 33-22-701).
Disability insurance is no longer included in the mental health parity law. 201 7
Mont. Laws Ch. 245 (H.B. 142) (repealing§ 33-22-706). The Court will refrain
from issuing an advisory opinion on how Sand-Smith's disability benefits may
change under a renewed 2018 policy with the exact same language as the policy at
issue in this case. See Orzechowski v. Boeing Company Non-Union Long-Term
Disability Plan, Plan Number 625, 856 F.3d 686, 695 (9th Cir. 2017) (holding

California law that regulated policies "offered or renewed" after January 1, 2012,
applied to policy issued in 2011 because the policy was renewed in 2012). Suffice

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to say that the future amount owed by Liberty Life is less than certain due to the
fluid nature of ERISA welfare benefit plans. Liberty Life is not entitled to a stay
by bond of the summary judgment order because the amount due is not definite
and certain. Ministry of Defense, 665 F.3d at 1101.
Nonetheless, district courts possess discretion to stay a decision pending
appeal based on the circumstances of the particular case. Nken v. Holder, 566 U.S.
418, 433 (2009). The traditional test for a stay consists of four factors: (1) whether
the stay applicant has made a strong showing that he is likely to succeed on the
merits; (2) whether the applicant will be irreparably injured absent a stay; (3)
whether issuance of the stay will substantially injure other parties interested in the
proceeding; and (4) where the public interest lies. Hilton v. Braunskill, 481 U.S.
770, 776 (1987). Irreparable harm is a bedrock requirement for a stay. LeivaPerez v. Holder, 640 F .3d 962, 965 (9th Cir. 2011 ). A party that fails to meet the

minimum threshold showing of irreparable harm is not entitled to a stay, regardless
of its showing on the other factors. Leiva-Perez, 640 F .3d at 965.
Irreparable harm requires more than "simply showing some possibility of
irreparable injury." Nken, 556 U.S. at 434. Instead, a party must show
"irreparable harm is probable if the stay is not granted." Leiva-Perez, 640 F.3d at
968. Normally, the mere payment of money is not considered irreparable harm.
See Sampson v. Murray, 415 U.S. 61, 90 (1974). The possibility that adequate

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compensatory or other corrective relief will be available at a later date weighs
heavily against a claim of irreparable harm. Sampson, 415 U.S. at 90. In Montana,
a party may have a restitution or unjust enrichment claim against a party to
"recover what one has lost by the enforcement of a judgment subsequently
reversed." Progressive Direct Ins. v. Stuivenga, 276 P.3d 867, 872 (Mont. 2012).
Here, Liberty Life has not met the threshold showing of irreparable harm.
Normally, the payment of money is not considered irreparable. If this were a case
where the appealing party faced financial hardship, it might present the exception
to the rule. Instead, this case is quite the reverse.

In Liberty Life's own words, it

is "a subsidiary in a multi-billion dollar corporation." Doc. 58 at 3. Attached to
Liberty Life's motion is a 2016 financial overview of the company that reports a
revenue of $38.3 billion dollars. Doc. 58-1 at 7. It is Sand-Smith, the party that
won below, that faces financial hardship without her disability benefits. Doc. 64-1
(Affidavit of Sand-Smith). Should Liberty Life be successful on appeal, it no
doubt has the resources to pursue whatever legal remedies it is entitled to. An
insufficient showing of irreparable injury obviates the need to analyze the other

Hilton factors. Leiva-Perez, 640 F.3d at 965. Liberty Life's motion to stay is
denied with respect to the summary judgment order.

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IV.

Conclusion

Sand-Smith's motion for contempt is denied. Liberty Life's motion to stay
the judgment is granted with respect to the attorney fees and costs portion. The
order for attorney fees and costs is hereby stayed effective upon Liberty Life
posting bond in the amount of $28,633.47 plus interest. Liberty Life's motion to
stay the judgment is denied with respect to the summary judgment portion .

DATED this

..µIS day of December, 201}

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