Foster v. Sedgwick Claims Management Services, Inc.

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
KELLY FOSTER,
Plaintiff,
v. Civil Action No. 14-1241 (JEB)
SEDGWICK CLAIMS MANAGEMENT
SERVICES, INC., et al.,
Defendants.
MEMORANDUM OPINION
On August 28, 2015, this Court issued a Memorandum Opinion and separate Order
granting summary judgment in favor of Defendants Sedgwick Claims Management Services,
Inc., and Sun Trust Bank’s Short-Term and Long-Term Disability Plans. See ECF Nos. 28-29.
Plaintiff Kelly Foster now moves under Federal Rule of Civil Procedure 59(e) to alter or amend
that judgment and under Rule 15(a) to amend her Complaint. As the arguments and legal
theories she offers are based neither on new or previously unavailable evidence nor on any
intervening change in the law, the Court will deny the Motion.
I. Background
The background of this case is set forth in greater detail in the Court’s Opinion, see
Foster v. Sedgwick Claims Mgmt. Servs., Inc., 2015 WL 5118360 (D.D.C. Aug. 28, 2015), but a
truncated summary of the dispute will suffice here. Plaintiff, a former employee of Sun Trust
Bank, asserts that she suffers from a host of physical conditions – including dry eyes, anxiety,
fatigue, and fibromyalgia – that rendered her “totally disabled” and unable to work. Id. at *1.
She applied for but was denied benefits under the Bank’s Short-Term Disability (STD) Plan, as
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well as its Long-Term Disability (LTD) Plan – the latter of which requires sustained eligibility
for the former, or for Workers’ Compensation, as a precondition of receiving benefits. Id. at *2.
After Sedgwick, the claims administrator for both plans, upheld these denials, Foster filed the
present lawsuit to clarify and enforce her rights under the plans, as permitted by the Employee
Retirement Income Security Act (ERISA). Id.; see also 29 U.S.C. § 1132(a); Compl., ¶¶ 1-4.
Defendants thereafter moved for summary judgment, contending, first, that the STD Plan
was not covered by ERISA, and, second, that Foster was not eligible for benefits under the LTD
Plan. See ECF No. 22 (Def. MSJ) at 1-2. Concurring with both contentions, the Court granted
the Motion.
In its Opinion, the Court began by noting that Foster had unambiguously conceded that
the STD Plan is not governed by ERISA, and that such concession seemed wise given that the
Plan resembled a payroll-practices plan rather than an employee-benefit plan that would be
covered by the statute. See Foster, 2015 WL 5118360, at *3. Her remedy, therefore, would lie,
if at all, in state contract law. Id.
The Court next turned to the LTD Plan, which all parties agreed was governed by
ERISA. Id. at *4. As a threshold matter, Plaintiff had argued that the Court should review her
denial of benefits de novo, but Sedgwick had insisted that a more deferential standard of review
was required. Id. at *4-5. The Court concluded that when a benefits plan such as this one vests
its administrator with the authority to assess a claimant’s eligibility for benefits, such authority is
discretionary and therefore may only be reviewed for abuse of discretion. Id. The Court thus
employed that standard. Id. at *5-7.
In considering the merits, the Court first noted that the LTD Plan requires that claimants
be disabled for a 180-day “waiting period,” during which they (1) may not return to work for
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more than 30 days and (2) must maintain eligibility for STD benefits or Workers’ Compensation.
See ECF No. 22, Exh. 3 (LTD Plan) at 4-5. Sedgwick informed Foster that it denied her request
for LTD benefits because she had failed to satisfy either of the two waiting-period requirements.
See ECF No. 22, Exh. 17 (LTD Denial Letter). Relying on the evidence in the record, the Court
concluded that Sedgwick did not abuse its discretion in deciding that Foster had not proven that
she was entitled to STD benefits throughout the waiting period. See Foster, 2015 WL 5118360,
at *6-7. The Court further concluded, inter alia, that Foster had not presented evidence that a
conflict of interest altered or in any way motivated Sedgwick’s eligibility determination in her
case. Id. at *8.
On September 25, 2015, Plaintiff timely filed the instant Motion for Reconsideration and
for Leave to File an Amended Complaint. See ECF No. 30.
II. Legal Standard
Federal Rule of Civil Procedure 59(e) permits the filing of a motion to alter or amend a
judgment when such motion is filed within 28 days after the judgment’s entry. The Court must
apply a “stringent” standard when evaluating Rule 59(e) motions. See Ciralsky v. CIA, 355 F.3d
661, 673 (D.C. Cir. 2004). “A Rule 59(e) motion is discretionary and need not be granted unless
the district court finds that there is an intervening change of controlling law, the availability of
new evidence, or the need to correct a clear error or prevent manifest injustice.” Firestone v.
Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (internal quotation marks and citation omitted);
see also 11 C. Wright & A. Miller, Fed. Prac. & Proc. Civ. § 2810.1 at 158-62 (3d ed. 2012)
(stating that the “four basic grounds” for Rule 59(e) motion are “manifest errors of law or fact,”
“newly discovered or previously unavailable evidence,” “prevent[ion of] manifest injustice,” and
“intervening change in controlling law”). Critically, Rule 59(e) “is not a vehicle to present a new
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legal theory that was available prior to judgment.” Patton Boggs LLP v. Chevron Corp., 683
F.3d 397, 403 (D.C. Cir. 2012).
III. Analysis
In her Motion for Reconsideration, Foster advances two new theories about the STD
Plan: Abjuring her prior concession that the Plan was not covered by ERISA, she now contends
that it is covered by the statute. Alternatively, she asserts that the STD Plan is so “related” to the
ERISA-covered LTD Plan that ERISA preempts any state-law remedies; as a result, she believes,
her claim lies only under ERISA. She also repeats two previously argued theories about the
LTD Plan – namely, that the Court should have reviewed Sedgwick’s decision to deny her LTD
benefits under a de novo standard, and that Sedgwick improperly labored under a conflict of
interest as the claims administrator for both Plans. Last, Plaintiff asks that the Court permit her
to amend her Complaint to include a claim that Defendants interfered with her rights under these
Plans, in violation of ERISA § 510. See 29 U.S.C. § 1140. The Court will address each of these
issues in turn.
A. STD Plan
Plaintiff devotes the majority of her Motion to the STD Plan. Her two contentions about
that Plan, while presented as alternatives, both assert that Sedgwick’s denial of her claim for
STD benefits should have been evaluated under ERISA. Foster’s first argument, wholly absent
from her summary-judgment briefing, is that although the STD Plan looks like a payroll-
practices plan not governed by ERISA, it actually is an ERISA plan. See Mot. at 6. As a result,
she insists, the Court should have considered whether the denial of STD benefits violated
ERISA. Her second argument, in the alternative, is that the STD Plan “relates to” the ERISA-
governed LTD Plan in such a way as to preempt any state-law relief.
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To begin, the Court must underscore, as do Defendants, that Plaintiff’s position is directly
at odds with her prior express and unequivocal concession that the STD Plan is not governed by
ERISA. See MSJ Opp. at 1 (“Defendants assert and Plaintiff agrees that the Short-Term
Disability Plan (“STD”) is not plan [sic] covered under the Employee Retirement Income
Security Act.”) (emphasis added). Plaintiff has offered no reason why she could not have raised
her new arguments in her summary-judgment submissions, nor has she explained in her current
Motion why she opted to take her earlier position that the Plan is not covered by ERISA and why
she subsequently changed her mind. This omission is problematic for her, as it is well
established that Rule 59(e) motions “may not be used to relitigate old matters, or to raise
arguments or present evidence that could have been raised prior to the entry of judgment.”
Exxon Shipping Co. v. Baker, 554 U.S. 471, 485 n.5 (2008) (internal quotation marks and
citation omitted); see also Patton Boggs LLP v. Chevron Corp., 683 F.3d 397, 403 (D.C. Cir.
2012) (“Rule 59(e) is not a vehicle to present a new legal theory that was available prior to
judgment.”). The Court can ascertain no reason why either of Plaintiff’s current positions was
unavailable to her before judgment, as neither a change in the law nor the discovery of new
evidence appears to have motivated her about-face. As such, her new theories that the STD Plan
is an ERISA plan or is “related” to such a plan do not provide a basis for vacating the Court’s
judgment.
The Court’s analysis could end there. Yet even if the Court were inclined to consider a
contradictory litigation position in a Rule 59(e) motion, it would not be persuaded by Plaintiff’s
new contentions. Her first argument is doomed by her failure to identify any authority
suggesting that if a benefits plan walks like a payroll practice and talks like a payroll practice, it
nevertheless is not such a practice. The determination of whether a plan is an ERISA plan, rather
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than a payroll-practice plan is, obviously, a fact-intensive, multi-factored inquiry. See
Kolkowski v. Goodrich Corp., 448 F.3d 843, 847 (6th Cir. 2006) (“Determining the existence of
an ERISA plan is a question of fact to be answered in light of all the surrounding circumstances
and facts from the point of view of a reasonable person. . . .”). Foster has never undertaken such
an inquiry; neither in her summary-judgment papers nor in her present Motion does she offer a
robust explanation of how all of the “circumstances and facts” of the STD Plan militate in favor
of finding an ERISA plan here.
Even if the STD Plan is not directly covered by ERISA, Plaintiff now argues in the
alternative that it “relates to” the LTD Plan, which is governed by that statute. See Mot. at 10.
As a result, she maintains, relief under ERISA must be available to her, since any state-law
breach-of-contract claim could not survive ERISA’s fairly broad preemption provision, under
which the statute “shall supersede any and all State laws” and causes of action that “relate to any
employee benefit plan.” 29 U.S.C. § 1144(a). The cases Foster marshals in purported support of
her alternative approach, however, find state-law remedies preempted only where they would
overlap with an extant ERISA claim. See, e.g., Aetna Health Inc. v. Davila, 542 U.S. 200, 209
(2004) (“[A]ny state-law cause of action that duplicates, supplements, or supplants the ERISA
civil enforcement remedy conflicts with the clear congressional intent to make the ERISA
remedy exclusive and is therefore pre-empted.”). Indeed, the Supreme Court has been clear that
the “relate to” language in ERISA’s preemption clause only excludes state-law causes of action
in which “the existence of an ERISA plan . . . is a critical factor in establishing liability.”
Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 139-40 (1990). Yet that is not the case here,
for nothing in the LTD Plan would have any bearing on the merits of a breach-of-contract claim
based on the denial of STD benefits.
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Ignoring these nuances, Plaintiff merely asserts that because eligibility under the LTD
Plan, an ERISA plan, incorporates eligibility for the STD Plan, a non-ERISA plan, the two are
“related,” thereby preempting any non-ERISA claims for relief. Of course, since eligibility for
Workers’ Compensation is an alternative path that can also qualify Sun Trust employees for
benefits under the LTD Plan, it is not clear that these Plans are “related” in this way. In any
event, because eligibility for STD benefits is not at all affected by the LTD Plan, no state-law
cause of action based on the STD Plan “relates” to the LTD Plan in such a way that it would
preempted by ERISA. The Court, accordingly, concludes that even if they were not waived as a
result of her concession, neither of Plaintiff’s new theories about the STD Plan provides a basis
for disturbing the Court’s judgment.
B. LTD Plan
Although the lion’s share of Plaintiff’s Motion centers on the STD Plan, it also briefly
addresses the LTD Plan. Foster does not appear to contest the merits of the Court’s decision
with respect to the latter; instead, she states, confusingly, that “There Was No LTD Claim Before
The Court for Review” because “[t]he only issue related to the LTD plan involved whether
Plaintiff was eligible to apply for the benefits.” Mot. at 15. Although the Court does not
precisely follow this argument, it notes that throughout this litigation, Foster has, in fact, pressed
a claim for relief based on the LTD Plan. See Compl., ¶ 23 (“Plaintiff requests that this court
review the denial of benefits in this case and declare that she is entitled to all benefits under the
short and long term disability plans. . . .”) (emphasis added).
Foster next reasserts her contentions that (1) the LTD Plan did not confer discretionary
authority on Sedgwick as its claims administrator, so the standard of review for a claim under
that Plan is de novo; and (2) Sedgwick operated under an “apparent conflict of interest embedded
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in the relationship between the STD Plan and the LTD Plan.” Mot. at 15-16. Both of these
issues were briefed by Plaintiff at the summary-judgment stage and resolved by the Court in its
Memorandum Opinion. See Foster, 2015 WL 5118360, at *4-5 (LTD Plan confers discretionary
authority, so Court reviews only for abuse of discretion), *8 (mere existence of a conflict of
interest insufficient to render denial of benefits unreasonable); see also Opp. at 4-5 (Plaintiff
entitled to de novo review because no discretionary authority to administer the Plans), 17
(conflict of interest). It is therefore unclear why Foster now proclaims that “this issue” of
Sedgwick’s discretionary authority and the attendant standard of review were “never raised by
Plaintiff.” Mot. at 15; see also MSJ at 18 (Defendants’ argument that LTD Plan was subject to
abuse-of-discretion review).
Plaintiff proffers no newly discovered evidence nor any intervening change in the law
meriting reexamination of the Court’s earlier resolution of these issues. Foster belatedly
suggests, in her Reply, that the Court did not rely on the correct documents in interpreting the
Plan, see Reply at 11-14, but she does not identify the documents the Court should have used,
and she further does not explain why she failed to object to the documents introduced by
Defendants or to submit the correct documents at summary judgment. As such, the Court stands
by its determination that the denial of LTD benefits is to be reviewed under a deferential
standard in light of Sedgwick’s discretion to assess entitlement to benefits under that Plan, and
that, under this standard, Sedgwick’s denial of benefits was reasonable. Finally, Plaintiff has not
presented evidence establishing that a conflict of interest undermined the reasonableness of that
decision. Her arguments are “essentially a rehash of the arguments presented to and previously
rejected by this Court” and thus do not warrant vacatur of the final judgment. New York v.
United States, 880 F. Supp. 37, 39 (D.D.C. 1995).
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C. Leave to Amend Complaint
As previously noted, Plaintiff’s Motion for Reconsideration also includes a request for
leave to amend her Complaint. See Mot. at 12. The proposed amendment includes a new cause
of action claiming that Defendants violated Section 510 of ERISA by “interfering with the
attainment of [her] right[s] . . . under the plan[s].” Id.; 29 U.S.C. § 1140.
Leave to amend a complaint after judgment may be granted only after the Court vacates
that judgment. See Ciralsky, 355 F.3d at 673 (“[O]nce a final judgment has been entered, a court
cannot permit an amendment unless the plaintiff first satisfies Rule 59(e)’s more stringent
standard for setting aside that judgment.”) (citing Firestone, 76 F.3d at 1208) (internal quotation
marks omitted); see also Odhiambo v. Republic of Kenya, 947 F. Supp. 2d 30, 40 (D.D.C. 2013)
(applying this standard); Johnson v. District of Columbia, 244 F.R.D. 1, 4 (D.D.C. 2007) (same).
Because Foster has advanced no meritorious ground for vacating the judgment, the Court cannot
grant her request to amend.
As a final note, to the extent that she sought to raise a claim under ERISA § 510 in her
prior Opposition to Defendants’ Motion for Summary Judgment, her brief citation to that
statutory provision, see Opp. at 19, was too cursory to do so. As the D.C. Circuit has often
reiterated, “[A] request for leave [to amend] must be submitted in the form of a written motion.”
Benoit v. U.S. Dept. of Agriculture, 608 F.3d 17, 21 (D.C. Cir. 2010) (citation and internal
quotation marks omitted; second alteration in original). Moreover, “[i]t is well-established in
this district that a plaintiff cannot amend his Complaint in an opposition to a defendant’s motion
for summary judgment.” Jo v. District of Columbia, 582 F. Supp. 2d 51, 64 (D.D.C. 2008);
DMSC, Inc. v. Convera Corp., 479 F. Supp. 2d 68, 84 (D.D.C. 2007) (rejecting plaintiff’s
attempt to broaden claims and thereby amend complaint in opposition to summary-judgment
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motion). In any event, the “interference” claim in Plaintiff’s Opposition asserted that Sun Trust
unlawfully applied a different definition of “disability” in evaluating her Family and Medical
Leave Act claims from what it employed in assessing her STD claim – an assertion the Court
addressed in its prior opinion. See Foster, 2015 WL 5118360, at *8. Then, as now, the Court
saw no need to permit amendment.
IV. Conclusion
As Plaintiff has not met the exacting Rule 59(e) standard for altering the judgment for
Defendants, the Court will deny her Motion. An Order to that effect will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: December 1, 2015
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