Opposition Brief — Allstate Life Insurance v. Hibma

ett |

No. 96-1476

In The

Supreme Court of the United States

4

October Term, 1996

ALLSTATE LIFE INSURANCE COMPANY,

Petitioner,

v.

MICHAEL HIBMA, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

Court of Appeals of the State of Arizona

RESPONDENTS’ BRIEF IN OPPOSITION

DANIEL R. SALCITO FRANK VERDERAME

HOFMANN, SALCITO & STEVENS Counsel of Record

302 East Coronado Road PLATTNER VERDERAME, P.C.

Phoenix, Arizona 85004 316 East Flower Street

(602) 254-5341 Phoenix, Arizona 85012-2624

(602) 266-2002

Attorneys for Respondents

70979

utz

(800) 3 APPEAL « (800) 5 APPEAL + (800) BRIEF 21 Mnigetat

ervices, inc.

|

i

TABLE OF CONTENTS

Page

WE SEE oc ci sv bak cvecdusiaessuaveaneecans li

Oe ND wkcdactensesccnest eneceesee 1

Pe, FF 4 von boo d0 b2 ec ss canescens |

B. Correction of Misstatements in the Petition ... 3

Ey. SE cusadadneveakskenseevaas 3

Reasons for Denying the Writ .................4.. 3

I. The Decision Below Is An Unpublished State

Court Memorandum Decision And Is Not

Binding On Anyone Except Allstate And The

IL beh eb cucuackunsyeecsaseksuduesse 3

II. The Unpublished Memorandum Decision Will Not

Create Confusion In Arizona Or Otherwise. ... a

Il. The Unpublished State Court Memorandum

Decision Will Not Create Conflict Among The

PRE GUIS. Sa Vewnbdanwiscndcienesees 4

IV. Review Of The Unpublished Decision Will Not

End Perceived Conflict In ERISA’s Plan

RG Seb evi a bb ae On sda kb owneeseead<s 5

V. The Unpublished Arizona Decision Determines

No Federal Questions, But Rather Ends Litigation

ORWOOR TG PONG ccc ccccavscceccess 6

I ia a a 7

ii

Contents

TABLE OF CITATIONS

Cases Cited:

Asarco, Inc. v. Industrial Comm’n, 594 P.2d 107 (Ariz.

Ct. App. 1979), appeal after remand, 619 P.2d 27

Blue Cross/Blue Shield of Florida, Inc. v. Weiner, 543

So.2d 794 (Fla. Ct. App. 1989), review denied, 553

So.2d 1164, cert. denied, 494 U.S. 1028 (1990), aff’d

by abstention in collateral proceeding, 730 F. Supp.

674 (D. Md. 1990), aff’d, 925 F.2d 81 (4th Cir. 1991),

cove, Ganted, FS U.S. SVG CIGSE) «oo on cccsacsss

First Interstate Bank v. Dep’t of Revenue, 916 P.2d 1149

(Ariz. Ct. App. 1995), review denied ............

Fort Halifax Packing Co., Inc. v. Coyne, 482 U.S. 1

GREE én usu ckacunkonndaneégenusataeaneeaaas

Harnischfeger Corp. v. Harbor Ins. Co., 927 F.2d 974

(7th Cir. 1991), rehearing denied, cert. denied, 112 S.

Ct. 189, 502 U.S. 864, 116 L. Ed. 2d 150 .......

Morrison v. Burlington Industries, 282 $.E.2d 458 (N.C.

SES wens bwddnundadkeskacwivasabnbekiekas

People of Territory of Guam v. Yang, 850 F.2d 507 (9th

Ce See. oun ckebescgaeaks deed bene biceess

Page

3,4

iil

Contents

Page

Sayble v. Blue Cross of Southern Calif., 256 Cal. Rptr.

820 (1989), overruled by Marshall v. Bankers Life &

Cas. Ins. Co., 2 Cal. 4th 1045, 10 Cal. Rptr. 2d 72,

cert. denied, 506 U.S. 1000 (1992) ............. 5

Turnbow v. Pacific Mut. Life Ins. Co., 765 P.2d 1160

(Nev. 1988), cert. denied, 490 U.S. 1102 (1989) .. 5

Rule Cited:

Ps ae SG He OD 6 oc ks ce acccdeenssseces 3

|

Respondents, Prescott Glass Corporation, Michael Hibma,

Robert Hibma, and Sharon Hibma, on their own behalf and as

guardians of Michael Hibma, a minor, request that this Court

deny the petition for writ of certiorari seeking review of an

unpublished order of the Arizona Court of Appeals entered

March 14, 1996 and supplemented on May 21, 1996.

STATEMENT OF THE CASE

Respondents respectfully oppose the petition for writ of

certiorari because the order for which review is sought is an

unpublished memorandum decision and is binding only on the

parties thereto, i.e., Allstate and the Hibmas.

A. Procedural History

Respondents own a one-employee business in Prescott,

Arizona. They arranged for group health insurance for the family

and the one employee from Allstate Insurance Company. In

1988, the Hibmas’ son, Michael, was permanently and severely

injured in an accident. In 1989, Allstate terminated coverage of

the Hibmas. The Hibmas sued Allstate in Arizona Superior Court

for breach of contract and bad faith. Allstate contends that this

is an ERISA case and, hence, is preempted. The family contends

that this is a state common law matter. Allstate moved for

summary judgment, which was denied by the trial court. The

Arizona Court of Appeals affirmed in an unpublished opinion

“because that question turns on an unresolved question of fact.”

(Appendix to Petition for Writ of Certiorari, 7a). Before appeal,

the parties entered into a high-low agreement whereby Allstate

was to pay the Hibmas the low figure if the case was governed

by ERISA and the high figure if governed by state law. A

condition of payment for the high figure was that the ERISA

issue had to be decided “on the merits.” Because it was unclear

from the first Court of Appeals opinion whether the ERISA issue

2

was decided “on the merits,” both parties requested clarification

and the court issued a supplemental memorandum opinion.

Resolving any questions of fact in Allstate’s favor, the Court of

Appeals decided the ERISA issue on the merits and in the

Hibmas’ favor. It opined:

We now decide the issue on the merits. We

conclude under the circumstances of this

case, even assuming that Prescott Glass paid

all or part of the premiums for Hull [Prescott

Glass’ sole employee, other than the

Hibmas], ERISA does not apply... .

*. * *&

On the record as it most strongly favors

Allstate in this case, we can say that the

regulatory concerns of ERISA are not

implicated.

Appendix to Petition for Certiorari, 2a-4a.

The Court of Appeals also noted, cumulatively, that the

employer's role was “so negligible, so lacking in anything

meaningful to the enforcement of ERISA policy, that preemption

does not apply in this case.” (Appendix to Petition for Certiorari,

12a).

The Arizona Supreme Court denied Allstate’s petition for

review.

a

3

B. Correction of Misstatements in the Petition

1. Introduction

Petitioner’s introduction overstates the Arizona Court of

Appeals’ holding. The court simply held that ERISA does not

apply “under the circumstances of this case.” (Appendix to

Petition for Writ of Certiorari, 2a). The appellate decision does

not contain the broad language stated in the first sentence of the

Petition’s introduction. In addition, Allstate’s statement that

“(t]he ruling, moreover, was not confined to small or medium-

sized employers; it applies across the board to all employers” is

also incorrect. The ruling was confined to this particular

employer and Allstate.

REASONS FOR DENYING THE WRIT

I.

THE DECISION BELOW IS AN UNPUBLISHED

STATE COURT MEMORANDUM DECISION AND IS NOT

BINDING ON ANYONE EXCEPT ALLSTATE AND THE

HIBMAS.

The Arizona Rules of Civil Appellate Procedure provide

that memorandum decisions are not regarded as precedent and

they are not to be cited except to establish a res judicata defense,

collateral estoppel, or law of the case. Ariz. R. Civ. App. P.

28(c); First Interstate Bank v. Dep't of Revenue, 916 P.2d 1149,

1153 (Ariz. Ct. App. 1995), review denied, (stating that citing

an unpublished decision is improper and declining to consider

the decision); Asarco, Inc. v. Industrial Comm'n, 594 P.2d 107,

110 (Ariz. Ct. App. 1979), appeal after remand, 619 P.2d 27

(holding that memoranda decisions should not be cited as

authority).

4

Further, it is highly unlikely that the result in Hibma would

even occur again given its unique set of facts.

Il.

THE UNPUBLISHED MEMORANDUM DECISION

WILL NOT CREATE CONFUSION IN ARIZONA OR

OTHERWISE.

Arizona courts will not consider the unpublished decision

as precedent. First Interstate Bank, 916 P.2d at 1153; Asarco,

594 P.2d at 110. Other states will not consider an unpublished

Arizona decision as precedent, first, because they will not have

access to it, and, secondly, because state court decisions are not

binding precedent on other states. Morrison v. Burlington

Industries, 282 S.E.2d 458, 470 (N.C. 1981). Therefore,

Petitioner’s claim that review is necessary to resolve confusion

created by the unpublished opinion is unfounded.

Il.

THE UNPUBLISHED STATE COURT MEMORAN-

DUM DECISION WILL NOT CREATE CONFLICT

AMONG THE FEDERAL CIRCUITS.

Federal courts are not required to follow state precedent

unless it is published. Harnischfeger Corp. v. Harbor Ins. Co.,

927 F.2d 974, 976 (7th Cir. 1991), rehearing denied, cert. denied,

112 S. Ct. 189, 502 U.S. 864, 116 L. Ed. 2d 150. Moreover, the

Ninth Circuit does not consider its own unpublished opinions

as precedent. People of Territory of Guam v. Yang, 850 F.2d

507, 511 (9th Cir. 1988). If the Ninth Circuit will not rely on its

own unpublished opinion, it is highly unlikely it will consider

an unpublished state court opinion.

5

IV.

REVIEW OF THE UNPUBLISHED DECISION WILL

NOT END PERCEIVED CONFLICT IN ERISA’S PLAN

COVERAGE.

The decisions cited as evidence of a conflict are misleading,

as is Petitioner’s statement that “Arizona is one of the many

states” expressing dissatisfaction with ERISA. Petitioner cites

cases from seven states. Seven out of fifty hardly constitutes a

majority. Additionally, Petitioner notes that the state decisions

are contrary to the “law in the majority of the circuits.” The

conflict, if any, between state court decisions and the circuit

law could have been resolved on earlier petitions for certiorari;

however, this Court chose not to grant certiorari. Turnbow v.

Pacific Mut. Life Ins. Co., 765 P.2d 1160 (Nev. 1988), cert.

denied, 490 U.S. 1102 (1989); Blue Cross/Blue Shield of Florida,

Inc. v. Weiner, 543 So.2d 794 (Fla. Ct. App. 1989), review denied,

553 So.2d 1164, cert. denied, 494 U.S. 1028 (1990), aff’d by

abstention in collateral proceeding, 730 F. Supp. 674 (D. Md.

- 1990), aff’d, 925 F.2d 81 (4th Cir. 1991), cert. denied, 502 U.S.

816 (1991); Sayble v. Blue Cross of Southern Calif., 256 Cal.

Rptr. 820 (1989), overruled by Marshall v. Bankers Life & Cas.

Ins. Co., 2 Cal. 4th 1045, 10 Cal. Rptr. 2d 72, cert. denied, 506

U.S. 1000 (1992). Any conflict in how courts are determining

the existence of an ERISA plan would have been apparent in

the difference between Weiner and Marshall. Yet, the Court

declined review of both cases.

6

Vv.

THE UNPUBLISHED ARIZONA DECISION

DETERMINES NO FEDERAL QUESTIONS, BUT

RATHER ENDS LITIGATION BETWEEN TWO PARTIES.

Petitioner argues that unless the unpublished Arizona

decision is reversed, it will have “a significant adverse impact

on (literally) millions of insured employee benefit plans across

the country.” This statement is untrue. The only significant

adverse impact of this unpublished decision is on Allstate’s

pocketbook. The “practical effect” of the decision is not to “void

ERISA’s carefully crafted . . . enforcement schemes,” but rather,

to force Allstate to honor its settlement agreement with the

Hibmas. As the Arizona Court of Appeals put it: “The order of

the trial court is affirmed, and under the terms of the agreement

entered into between the parties, the Hibmas are entitled to

payment of the greater amount called for by the agreement.”

(Appendix to Petition for Writ of Certiorari, 4a).

This Court has already provided guidance to employers,

participants, beneficiaries, and administrators on the necessary

elements for ERISA coverage. See Fort Halifax Packing Co.,

Inc. v. Coyne, 482 U.S. 1, 9 (1986). No further guidance from

this Court is needed, especially on a case with a unique factual

background which formed the basis of the settlement agreement

between the parties.

7

CONCLUSION

For the foregoing reasons, the petition for writ of certiorari

should be denied.

Respectfully submitted,

FRANK VERDERAME

Counsel of Record

PLATTNER VERDERAME, P.C.

316 East Flower Street

Phoenix, Arizona 85012-2624

(602) 266-2002

DANIEL R. SALCITO

HOFMANN, SALCITO

& STEVENS

302 East Coronado Road

Phoenix, Arizona 85004

(602) 254-5341

Attorneys for Respondents