Sullivan-Mestecky v. Verizon Communications Inc. et al
Filing
138
OPINION & ORDER - Upon consideration of plaintiff's objections to Magistrate Judge Shields' 1/23/2017 orders and defendants' responses thereto, and reconsideration of Magistrate Judge Shields' orders, and the evidence and motion papers before her, plaintiff's objections are overruled. SO Ordered by Judge Sandra J. Feuerstein on 7/26/2017. (Tirado, Chelsea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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KRISTINE SULLIVAN-MESTECKY, individually
and as the beneficiary of the life insurance policy of
Kathleen Sullivan, deceased
FILED
CLERK
1:08 pm, Jul 26, 2017
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
Plaintiff,
-against-
14-CV-1835 (SJF)(AYS)
VERIZON COMMUNICATIONS INC., and
PRUDENTIAL INSURANCE COMPANY OF
AMERICA,
OPINION and ORDER
Defendants.
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FEUERSTEIN, District Judge:
Pending before the Court, inter alia, are objections by plaintiff Kristine SullivanMestecky (“plaintiff”) to an order and minute order of the Honorable Anne Y. Shields, United
States Magistrate Judge, both dated January 23, 2017, denying plaintiff’s motions to compel
discovery beyond the administrative record, i.e., to compel defendants Verizon Communications
Inc. (“Verizon”) and Prudential Insurance Company of America (“Prudential”), inter alia, to each
produce a witness for a deposition and to respond to her discovery demands. For the reasons
stated herein, plaintiff’s objections are overruled.
I.
Procedural History
On or about February 7, 2014, plaintiff, individually and as the beneficiary of the life
insurance policy of Kathleen Sullivan (“Sullivan”), deceased, commenced this action against
Verizon, Prudential, Wells Fargo Bank (“Wells Fargo”), Xerox Company (“Xerox”) and Aon
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Hewitt Company (“Hewitt”), in the Supreme Court of the State of New York, County of Nassau
(“the state court”) seeking to recover damages under the doctrine of promissory estoppel and for
breach of contract, breach of a third-party beneficiary contract, tortious interference with
contractual relations, fraud, breach of fiduciary duty, “illegal evasion of insurance claims,”
negligent misrepresentation, breach of the covenant of good faith and fair dealing and violations
of New York Insurance Law § 4226 and New York General Business Law § 349. On or about
March 21, 2014, Verizon, with the consent of all of the other named defendants, removed the
action to this Court pursuant to 28 U.S.C. §§ 1441(a) and 1446 on the basis, inter alia, that this
Court has original jurisdiction under 28 U.S.C. § 1331 and the Employee Retirement Income
Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132.
On September 10, 2014, plaintiff filed an amended complaint asserting the following
claims: (1) to recover life insurance benefits pursuant to Section 502(a)(1)(B) of ERISA, 29
U.S.C. § 1132(a)(1)(B) (“Count I”); (2) for (a) purported equitable relief pursuant to Section
502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3), for breach of fiduciary duties under Section
404(a)(1)(A), (B) and (D) of ERISA, 29 U.S.C. § 1104(a)(1)(A), (B) and (D), and (b) relief for
breach of fiduciary duty under state law (“Count II”); (3) for relief under Section 503 of ERISA,
29 U.S.C. § 1133 (“Count III”); (4) to recover statutory penalties under Section 502(c) of ERISA,
29 U.S.C. § 1132(c) (“Count IV”); and (5) to recover damages under state law and/or federal
common law under the doctrine of promissory estoppel (“Count V”), and for breach of contract
(“Count VI”), breach of a third-party beneficiary contract (“Count VII”), tortious interference
with contractual relations (“Count VIII”), fraud (“Count IX,” “Count X” and “Count XI”), and
negligent misrepresentation (“Count XII”).
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By order dated July 7, 2016, (1) defendants’ motions to dismiss plaintiff’s claims against
them pursuant to Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure were granted to
the extent that (a) plaintiff’s claims pursuant to Sections 502(a)(3) and 503 of ERISA (“Count II”
and “Count III,” respectively) were dismissed in their entirety with prejudice for failure to state a
claim for relief, (b) plaintiff’s Section 502(a)(1)(B) ERISA claim (“Count I”) was dismissed with
prejudice as against Wells Fargo, Xerox and Hewitt for failure to state a claim for relief, (c)
plaintiff’s Section 502(a)(1)(A) ERISA claim (“Count IV”), which was not asserted against
Wells Fargo, was dismissed with prejudice as against Xerox, Hewitt and Prudential for failure to
state a claim for relief, (d) with the exception of plaintiff’s promissory estoppel claim based upon
Verizon’s alleged settlement agreement with Sullivan in 2011 (Count V), plaintiff’s state law
claims (Counts II and VI-XII) were dismissed in their entirety with prejudice as preempted by
ERISA, and (e) plaintiff’s promissory estoppel claim (“Count V”) was dismissed in its entirety
with prejudice for failure to state a claim for relief, except insofar as it was asserted against
Verizon based upon its alleged settlement agreement with Sullivan in 2011; (2) the branch of
Verizon’s motion seeking dismissal of plaintiff’s promissory estoppel claim against it pursuant to
Rule 12(b)(6) of the Federal Rules of Civil Procedure was converted to a motion for summary
judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure and summary judgment
was granted dismissing plaintiff’s promissory estoppel claim (“Count V”) against Verizon in its
entirety; and (3) defendants’ motions were otherwise denied. Thus, only the following claims
remain in this action: (1) plaintiff’s Section 502(a)(1)(B) ERISA claim (“Count I”) against
Verizon and Prudential (collectively, “defendants”) to recover life insurance benefits; and (2)
plaintiff’s Section 502(a)(1)(A) ERISA claim (“Count IV”) against Verizon seeking statutory
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penalties under Section 502(c) of ERISA, 29 U.S.C. § 1132(c). On December 8, 2016, the Clerk
of the Court entered final judgment dismissing, inter alia, plaintiff’s claims against Wells Fargo,
Xerox and Hewitt in their entirety with prejudice pursuant to the July 7, 2016 order and Rule
54(b) of the Federal Rules of Civil Procedure.
On or about July 29, 2016, plaintiff served a “First Request for Production of
Documents” on Prudential.
On or about September 19, 2016, plaintiff served both Prudential and Verizon with a
notice to take the deposition of a witness with knowledge of “(1) The claim for life insurance
and/or other employee benefits by Kathleen Sullivan and Plaintiff; (2) The denial of benefits
and/or partial denial of benefits of the claim for life insurance benefits; (3) The administration of
the employee benefits plan and the defendant’s practices with respect to eligibility requirements
and claims denial; and (4) Income and other incentives with respect to encouraging denial of
claims and appeals determinations.” (Plaintiff’s Memorandum of Law in Support of her Motion
pursuant to Fed. R. Civ. P. 72(a) [“Plf. Obj.”], at 3).
On November 18, 2016, plaintiff filed a motion to compel disclosure pursuant to Rule 37
of the Federal Rules of Civil Procedure, which was automatically referred to Magistrate Judge
Shields pursuant to my individual rules. Specifically, plaintiff sought to compel: (1) the
deposition of witnesses from both Verizon and Prudential who have “knowledge as to the claims
process and conflict information,” (Affirmation of Christopher F. Mestecky, Esq., in support of
plaintiff’s motion to compel [“Mestecky Aff.”], ¶ 2); and (2) Prudential “to provide compliant
responses to Plaintiff’s First Demand for Documents . . . and Prudential’s Rule 26 initial
disclosures dated September 30, 2016 . . . .” (Id.) Plaintiff contended, inter alia, that defendants
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“have generally objected to any discovery outside of the administrative record which was created
following the commencement of this action[,]” and that those “objections are without merit since
[they] utterly failed to follow the administrative claims procedure when it [sic] denied Plaintiff’s
claim for life insurance benefits in January 2013 without providing any decision letter setting
forth the basis of the denial and without providing Plaintiff notice of her administrative appeal
rights.” (Id., ¶ 3; see also Id., ¶ 4; Plaintiff’s Memorandum of Law in Support of her Motion to
Compel Discovery [“Plf. Compel Mem.”], at 3-8). Plaintiff further contended, inter alia, that “as
there is an inherent conflict of interest, issues of contract interpretation, and evidence of an
incomplete claims files, sufficient cause has been established to warrant additional discovery.”
(Mestecky Aff., ¶ 4; Plf. Compel Mem. at 8-17).
On or about November 21, 2016 and December 2, 2016, plaintiff served additional
discovery demands upon Prudential and Verizon.
By order and minute order, both dated January 23, 2017, Magistrate Judge Shields denied
plaintiff’s motions to compel discovery beyond the administrative record and defendants to
respond to her discovery demands.
II.
Discussion
A.
Standard of Review
28 U.S.C. § 636(b)(1)(A) permits a district judge to “designate a magistrate judge to hear
and determine any [nondispositive] pretrial matter,” not otherwise expressly excluded therein.
See Arista Records, LLC v. Doe 3, 604 F.3d 110, 116 (2d Cir. 2010) (“The district court may
designate a magistrate judge to hear and decide a pretrial matter that is ‘not dispositive of a
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party’s claim or defense.’” (quoting Fed. R. Civ. P 72(a))); Fielding v. Tollaksen, 510 F.3d 175,
178 (2d Cir. 2007) (“As a matter of case management, a district judge may refer nondispositive
motions[] . . . to a magistrate judge for decision without the parties’ consent.”) “Matters
concerning discovery generally are considered ‘nondispositive’ of the litigation.” Arista
Records, 604 F.3d at 116 (quoting Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522, 525
(2d Cir. 1990)).
Any party may serve and file objections to a magistrate judge’s order on a nondispositive
pretrial matter within fourteen (14) days after being served with a copy thereof. Fed. R. Civ. P.
72(a). Upon consideration of any timely interposed objections, and “reconsider[ation]” of the
magistrate judge’s order, 28 U.S.C. § 636(b)(1)(A), the district judge must modify or set aside
any part of the order that “is clearly erroneous or is contrary to law.” Fed. R. Civ. P. 72(a); see
also 28 U.S.C. § 636(b)(1)(A). “An order is ‘clearly erroneous’ only if a reviewing court,
considering the entirety of the evidence, is left with the definite and firm conviction that a
mistake has been committed’; an order is ‘contrary to law’ when it fails to apply or misapplies
relevant statutes, case law, or rules of procedure.” Centro De La Comunidad Hispana De Locust
Valley v. Town of Oyster Bay, 954 F. Supp. 2d 127, 139 (E.D.N.Y. 2013) (quotations and
citations omitted); accord Thai Lao Lignite (Thailand) Co., Ltd. v. Government of Lao People’s
Democratic Republic, 924 F. Supp. 2d 508, 512 (S.D.N.Y. 2013). “This standard is highly
deferential, imposes a heavy burden on the objecting party, and only permits reversal where the
magistrate judge abused his discretion.” Ahmed v. T.J. Maxx Corp., 103 F. Supp. 3d 343, 350
(E.D.N.Y. 2015) (quotations and citations omitted); see also Thai Lao Lignite, 924 F. Supp. 2d at
511-12 (“Under [Rule 72(a)’s] highly deferential standard, magistrate judges are afforded broad
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discretion in resolving nondispositive disputes and reversal is appropriate only if their discretion
is abused. . . . The party seeking to overturn a magistrate judge’s decision thus carries a heavy
burden.” (quotations and citation omitted)).
B.
Plaintiff’s Objections
Plaintiff generally “disputes . . . Magistrate Shields’ decision that discovery in this matter
should be limited to the administrative record[,]” (Plf. Obj. at 8), and contends that the January
23, 2017 orders are clearly erroneous and/or contrary to law because plaintiff “has demonstrated
that discovery outside of the administrative record is warranted[,]” (Plf. Obj. at 1), insofar as (1)
“there is an inherent conflict of interest, issues of contract interpretation, and evidence of an
incomplete claims file[,]” (id. at 2); and (2) “[d]efendants unquestionably failed to follow the
claims review procedure under ERISA.” (Id. at 7). Specifically, plaintiff contends, inter alia,
that Magistrate Judge Shields erred: (i) “in denying discovery based on the procedural flaws in
the claims process,” because “[d]efendants have the burden of proof on the issue of entitlement
to a deferential standard [of review],” (id.); (ii) in “fail[ing] to address recent controlling Second
Circuit precedent,” (id.), i.e., Halo v. Yale Health Plan Dir. of Benefits & Records Yale Univ.,
819 F.3d 42 (2d Cir. 2016), and “essentially appl[ying] the ‘substantial compliance’ doctrine by
holding that additional discovery is not warranted regardless of ‘the purported procedural “flaw”’
because ‘Plaintiff’s inquiries were responded to, the reasons for the claims denials through each
level of the claims process were communicated to her, and the administrative review process
afforded Plaintiff[,]’” (Plf. Obj. at 10; see also id. at 15); (iii) “in not ordering additional
discovery at this early stage of an action in which Verizon and Prudential have historically
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refused to provide requested information while simultaneously failing to comply with the claims
procedure under ERISA[,]” (id. at 4-5); (iv) in “limiting discovery to a clearly incomplete
administrative record,” (id. at 5); (v) “in not ordering additional discovery, including discovery as
to those items on which Defendants bear the burden of proof[,]” given that defendants
purportedly “failed to follow the claims review procedure prior to litigation and delayed in
creating an administrative record until approximately two years after the claim denial, only after
litigation was commenced, and with litigation counsel involved[,]” (id. at 7); (vi) in “fail[ing] to
address the evidence produced to date which unequivocally establishes that Defendants blatantly
failed to comply with the ERISA claims review procedures in denying Plaintiff’s claim for
benefits[,]” insofar as “they partially denied Plaintiff’s claim for benefits in January 2013 without
providing Plaintiff a decision letter advising of the basis for the partial denial or advising of her
appeal rights[,] . . . [and] failed and/or refused to gather the necessary information, thereby
intentionally and selectively limiting the information contained in the post-litigation
administrative record[,]” (id. at 8); (vii) in “refus[ing] to compel conflict discovery despite
finding that a structural conflict ‘obviously exists’ since ‘the administrative record is clear that
plaintiff was paid out the benefit under the GLI Plan, and was made ware [sic] of the appropriate
appeals procedures, which Plaintiff availed herself of[,]’” (id. at 14-15); (viii) in “fail[ing] to
address the direct evidence in the record which raises an issue whether an economic conflict
influenced the claim denial on the part of the defendants[,]” (id. at 15); (ix) in denying plaintiff’s
“request for interpretation discovery based upon the fact that Verizon’s interpretation was
‘explained within the administrative record[,]’ . . . because the documents disclosed to date
demonstrate that extrinsic evidence is necessary regarding Defendants’ interpretation of Verizon
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Group Insurance Contract 65-50902-DE . . . ,” (id. at 17); (x) in “fail[ing] to address the fact that
evidence exists showing the administrative record is incomplete[,]” (id. at 18); and (xi) in
“fail[ing] to address Plaintiff’s request that Defendant Prudential comply with its obligations to
produce legally compliant initial disclosures[]” pursuant to Fed. R. Civ. P. 26(a). (Id. at 23).
Upon consideration of plaintiff’s objections to Magistrate Judge Shields’ January 23,
2017 orders and defendants’ responses thereto, and reconsideration of Magistrate Judge Shields’
orders, and the motions and evidence before her, I am not left “with the definite and firm
conviction that a mistake has been committed,” Centro De La Comunidad Hispana, 954 F. Supp.
2d at 139; nor do I find that Magistrate Judge Shields failed to apply or misapplied any relevant
statute or case law, or otherwise abused her discretion.
This Court’s decision in, Murphy v. First Unum Life Ins. Co., No. 15-cv-820, 2016 WL
526243 (E.D.N.Y. Feb. 9, 2016), cited by plaintiff as being contrary to Magistrate Judge Shields’
orders, is distinguishable because there was evidence of more than just a “structural conflict of
interest” in that case, i.e., the defendant also had a history of biased claims administration
suggesting “a higher likelihood” that the conflict of interest affected the benefits decision. Id. at
* 5.
Since the requirement of “a demonstrated conflict of interest, . . . places an affirmative
burden on the plaintiff to establish that the plan administrator was sufficiently conflicted so as to
expand the administrative record[,]” Krizek v. Cigna Grp. Ins., 345 F.3d 91, 97 (2d Cir. 2003)
Krizek, 345 F.3d at 97-98 (emphasis in original; quotations and citation omitted), “merely
alleg[ing] the structural conflict of interest that obviously exists” is insufficient to warrant
additional discovery. Boison v. Insurance Servs. Office, Inc., 829 F. Supp. 2d 151, 160-61
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(E.D.N.Y. 2011) (citing cases); see also Joyner v. Continental Cas. Co., 837 F. Supp. 2d 233,
240-41 (S.D.N.Y. 2011) (“Generalities [about a structural conflict of interest] . . . are insufficient
to show ‘good cause’; plaintiff’s claimed structural conflict of interest must be bolstered by
specific allegations.” (quotations and citation omitted)). Unlike Murphy, plaintiff has not
bolstered her claim of a structural conflict of interest by any specific allegations suggesting a
likelihood that the conflict affected the benefits decision; nor otherwise demonstrated that the
requested discovery would assist her in establishing the good cause necessary to expand the
record on review.
Since plaintiff has not satisfied her heavy burden of demonstrating that Magistrate Judge
Shields’ January 23, 2017 orders are clearly erroneous or contrary to law, her objections are
overruled.
II.
CONCLUSION
Upon consideration of plaintiff’s objections to Magistrate Judge Shields’ January 23,
2017 orders and defendants’ responses thereto, and reconsideration of Magistrate Judge Shields’
orders, and the evidence and motion papers before her, plaintiff’s objections are overruled.
SO ORDERED.
/s/
SANDRA J. FEUERSTEIN
United States District Judge
Dated: July 26, 2017
Central Islip, New York
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