Petition for Writ of Certiorari — White v. Metropolitan Life Insurance

/\ Supreme Coutt, U.S.

UW FILED

D1 404 SEP 04 2001

No. 01- OFFICE OF Tr Vic

IN THE

Supreme Court of the United States

WILLIE WHITE and CLARENCE MCCURDY, individually

and on behalf of all persons similarly situated,

Petitioners,

v.

METROPOLITAN LIFE INSURANCE COMPANY, INC.,

SEARS ROEBUCK COMPANY, INC. and ALLSTATE

INSURANCE COMPANY INCORPORATION,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

WILLIAM W. SMITH

Counsel of Record

SMITH & ALSPAUGH, P.C.

Attorneys for Petitioners

1100 Financial Center

505 20th Street North

Birmingham, Alabama 35203

(205) 324-8910

169130 g

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

i

QUESTIONS PRESENTED

The Employee Retirement Income Security Act (“ERISA”)

is a statutory scheme designed to protect employee pensions

and other benefits by providing insurance, specifying certain

plan characteristics in detail and setting forth certain general

fiduciary duties applicable to the management of both

pension and nonpension benefits plans. ERISA further

requires a fiduciary, whether the plan administrator or

employer, to discharge those duties solely in the interest of

the participants and beneficiaries. This Court has interpreted

the provisions of ERISA relating to fiduciary duties to mean

that the fiduciary is obligated to communicate accurate

information to beneficiaries about the terms of the plan,

including terminating and amending the terms, and must not

profit at the expense of the beneficiary.

1. The question presented for review in this regard is

whether the Eleventh Circuit Court of Appeals, in affirming

summary judgment entered by the district court in favor of

the Respondents, failed to heed or apply the principles of

ERISA as interpreted by this Court, when the Respondents

miscommunicated and/or failed to communicate information

about the plan to the Petitioners; altered, amended and

eliminated certain coverage provisions to the detriment of

the Petitioners; and sought to create a substantial financial

hardship on the Petitioners and other similarly situated

persons in the event of total disability.

Rule 56 of the Federal Rules of Civil Procedure provide ————_—

that summary judgment is appropriate only when no genuine

issues of material fact exist. The burden of proof lies with

the movant for a judgment of a matter of law, which is rarely

appropriate when expert testimony is presented to create

factual questions.

il

2. The question presented for review as to this issue is

whether the Eleventh Circuit, in affirming the district court’s

grant of summary judgment in favor of the Respondents,

when the Petitioners submitted an undisputed and

uncontroverted expert opinion demonstrating the multiple

breaches of fiduciary duties by the Respondents in

administering, distributing, altering and eliminating certain

provisions of the long-term disability plan, so far departed

from the well-entrenched rules of federal judicial procedure

that this Court should review the record and the evidence

and reverse the judgment.

ill

LIST OF PARTIES

The parties to this action include Clarence McCurdy and

Willie White, individually, and on behalf of all similarly

situated disabled employees who have received demands

from Metropolitan Life Insuarance Company, Inc. for lump-

sum reimbursements of alleged overpayments of long-term

disability benefits.

———

iv

TABLE OF CONTENTS

Page

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Table of Cited Authorities .................... Vv

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| UCT TOOT CL ETE COT OCCT TOTO ITT 1

Statement of Jurisdiction ..................... l

Statutory Provisions Involved ................. l

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Reasons for Granting the Writ ................. 9

I. The Decision Below Conflicts With ©

Decisions Of This Court. ............... G

_II. The Decision Below Has So Far Departed

From The Usual Course Of Judicial

Proceedings To Warrant This Court’s

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TABLE OF CITED AUTHORITIES

Page

Cases:

Bragdon v. Abbott, 524 U.S. 624, 118 S. Ct. 2196,

$41 L. Bb. 26 SOO CESS) ow ccc ceccasscnsees 13

Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct.

2548, 91 L. Ed. 2d 265 (1986) ............... 13

Childers v. Morgan County Board of Education, 817

P26 1556 (11 Coe. TSG F) oo cern ccwscenvees 17

City of Tuscaloosa v. Harcros Chemicals, Inc., 158

F.30 S48 (11th Cie. 1996)... .cssvcccccsecss 17

Varity Corporation v. Howe, 516 U.S. 489,-116

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Statutes:

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Cited Authorities

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Rules:

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TABLE OF APPENDICES

Page

Appendix A — Per Curiam Order Of The United

States Court Of Appeals For The Eleventh Circuit

Dated And Filed April 30,2001 ............. la

Appendix B — Memorandum Opinion Of The

United States District Court For The Northern

District Of Alabama, Western Division Granting

Summary Judgment Dated And Filed March 31,

2000 And Entered April 3, 2000 ............. 3a

Appendix C — Per Curiam Order Of The United

States Court Of Appeals For The Eleventh Circuit

Denying Petition For Rehearing Dated And Filed

Jame 6, BOG1 occ ccccccccccscccccccscccscces 12a

I

The Petitioners respectfully petition for a writ of

certiorari to review the judgment of the United States Court

of Appeals for the Eleventh Circuit in this case.

OPINIONS BELOW

The district court’s opinion (per U.W. Clemon) granting

the Respondents’ summary judgment motion is not

published, but is reprinted and attached to this brief as

Appendix B. The order of the Eleventh Circuit Court of

Appeals (per curiam) affirming the district court is published

as White v. Metropolitan Life Ins., 254 F.3d 75 (11th Cir.

Apr. 30, 2001), and is attached as Appendix A. The order

denying the application for rehearing, entered on June 6,

2001, is not published and is attached as Appendix C.

STATEMENT OF JURISDICTION

On April 11, 2000, the district court entered an amended

and final summary judgment against the Petitioners and in

favor of the Respondents. The Eleventh Circuit upheld the

district court’s decision on April 30, 2001, and denied

rehearing on June 6, 2001. This Petition is timely filed

pursuant to Supreme Court Rule 13 within 90 days thereof.

This Court has jurisdiction to review the decisions of

the Eleventh Circuit Court of Appeals pursuant to 28 U.S.C.

§ 1254(1).

STATUTORY PROVISIONS INVOLVED

The provisions of the Employee Retirement Income

Security Act, 29 U.S.C. § 1100 et seg. (“ERISA”) relevant

to this petition include the following:

2

29 U.S.C. § 1102(21)(A) defines an ERISA fiduciary

with respect to the plan as “someone who has any

discretionary authority over the administration of the plan.”

29 U.S.C. § 1104(a)(I)(A) & (B) provides that

a fiduciary shall discharge his duties with respect

to a plan solely in the interest of the participants

and beneficiaries ... for the exclusive purpose

of. . . providing benefits to participants and their

beneficiaries ... with the care, skill, prudence,

and diligence under the circumstances then

prevailing that a prudent man acting in a like

capacity and familiar with such matters would use

in the conduct of enterprise of a like character

and with like aims.

29 U.S.C. § 1109(a) prescribes remedies for breaches

of fiduciary duties by stating that “any fiduciary who

breaches its responsibilities shall be personally liable to

return any losses incurred as a result of the breach to the

plan.”

STATEMENT OF THE CASE

This case arises from the granting of summary judgment

in favor of the Respondents, Sears, Roebuck and Company,

Inc. (“Sears”), Allstate Insurance Company, Inc. (“Allstate’’),

and Metropolitan Life Insurance Company, Inc. (“MetLife”),

and against the Petitioners, Clarence McCurdy, Willie White

and other similarly situated class members. Mr. McCurdy

and Mr. White contend that a substantial loss of expected

income in the event of disability has occurred as the result

of the Respondents’ unlawful changes in their long-term

° 3

disability policy. It is alleged that these losses in expected

“income have occurred in hundreds of other instances and

will continue to cause substantial losses of disability income

to hundreds, perhaps thousands, of Sears’ employees in the

future.

Review of the Eleventh Circuit’s judgment by this Court

is necessary to ensure that legal precedent, as it relates to

ERISA fiduciaries, is appropriately applied to the facts of

this case and to remedy the Eleventh Circuit’s abandonment

of well-entrenched legal principles of judicial procedure

regarding summary judgment.

_ 1. Petitioners are participants in a long-term disability

policy of insurance issued by their former employer, Sears,

and governed by ERISA. Initially, Sears provided long-term

disability benefits to its employees through a contract of

insurance underwritten by Allstate until MetLife assumed

coverage in January of 1989. Shortly before January 1989,

Sears submitted a notice to all its employees announcing

that MetLife would be the new insurer of the Sears’ long-

term disability plan. This notice provided that “there would

be no changes in the amount of long-term disability

insurance.” Although neither Mr. McCurdy nor Mr. White

recollect receiving this document, the Sears’ personnel

department assured them that there would be no changes in

coverage. '

In contrast to these representations, however, a close

examination of the MetLife Plan reveals several critical

1. In September of 1994, Mr. McCurdy received a letter from

Sears’ Human Resource Center stating that “your long-term

disability benefits will continue as long as you remain totally

disabled and do not exceed the maximum plan benefit.”

4

changes in coverage. For instance, the MetLife policy

provides that if Social Security benefits are received within

the twelve-month period following cessation of long-term

disability benefits, but the Social Security benefits are not

approved retroactive to the exact time long-term disability

benefits were payable, as determined by MetLife, then the

beneficiary can not receive his long-term “total disability”

benefits. This is true even if the beneficiary was “totally

disabled” and has not worked since his disability. If the Social

Security retroactive award of benefits is only slightly later

than MetLife’s deadline of when long-term disability benefits

are payable, then MetLife is not obligated to pay long-term

disability benefits.’

The following table represents a concise comparison of

significant discrepancies between the Allstate and MetLife

policies:

-_—>

ALLSTATE |

POLICY MetLife POLICY

Criteria for Total | Due to illness or Because of illness

Disability during | injury, Participant is | or injury, Partici-

the first 12 unable to perform [or her job, or any

months after the |the material duties | other job for which

waiting period. j|ofhis orheroccu- |{heor she is fit based

pation with Sears. [on education, train-

ing or experience.

2. An affidavit from Social Security Disability Attorney, Darryl

W. Hunt, advises that on average, Social Security Disability

determinations take at least two and a half years to conclude,

although it is not unusual for a claim to be pending for more than

three years.

Criteria for Total

Disability after

the first twelve

months after the

waiting period.

Due to illness or

injury, Participant is

unable to perform

the material duties

of any gainful occu-

pation for which he

or she is reasonably

fit, based on train-

ing, education or

experience.

Due to illness or

injury, Participant

cannot do his or her

job, or any other

job for which he or

she is fit based on

education, train-

ing or experience,

and the Participant

has been approved

to receive Social

Security disability

benefits either

during the first 12

months of LTD

benefits, or (in the

case of a Social

Security disability

benefit approval

that is retroactive

to the first date of

LTD benefit pay-

ments), during the

12 months after the

LTD benefit is

ceased.

Mr. McCurdy was an employee of Sears for eighteen

years until he became totally disabled in April of 1993 as a

result of a brain tumor.’ He had been a participant in, and

paying premiums on the disability plan, either under the

3. Mr. McCurdy has undergone three brain operations since

April, 1993.

ne ee ee ee

6

Allstate of MetLife policies, for approximately twelve years

before his disability. On or about September 16, 1993, Mr.

McCurdy applied for disability benefits under the MetLife

Plan and began receiving payments each month beginning

on or about October 7, 1993, for the next twenty-four months.

On or about October 7, 1993, Mr. McCurdy received a letter

from MetLife stating that MetLife claimed the right to stop

payment of his long-term disability unless he was approved

to receive Social Security benefits by the end of a twenty-

four month, long-term disability period.

At the end of twenty-four months, Mr. McCurdy had

not received his Social Security Disability benefit decision

and MetLife terminated his benefits in September or October

of 1995. It was not until May of 1996, that Mr. McCurdy

received his Social Security Disability award letter.

Therefore, he was without any financial support, either

through Social Security Disability or the MetLife Disability

Plan, for approximately five months. Once his claim for

Social Security Disability was approved, MetLife informed

Mr. McCurdy by letter that his long-term disability benefits

claim was reinstated effective October 1, 1995. However, a

subsequent letter from MetLife advised him that there had

been an overpayment on his claim in the amount of

$31,872.00 and demanded payment in thirty days.

Similarly, Mr. White, who was an employee of Sears

—fornine years before he became totally disabled in September

of 1992, applied for disability benefits on September 29, 1992

and began receiving monthly benefits. On April 29, 1994,

however, MetLife also informed Mr. White that his award |

of Social Security Disability Insurance had resulted in an |

overpayment of benefits and demanded a lump-sum

reimbursement of $15,658.39. MetLife told Mr. White that

future benefits would be withheld until the money was received.

7

In each instance, Mr. McCurdy and Mr. White received

notices from MetLife that their monthly payments were

reduced to less than $100.00 ($35.00 in the case of Mr.

White), upon the granting of Social Security Disability and

that lump-sum reimbursement payments were required. There

are approximately 1,800 disabled employees who received

these demands from MetLife for lump-sum reimbursements

of “overpayments” and approximately 130,000 Sears

employees bound by the changes in the MetLife Plan for

disability benefits. Since January 1, 1989, fifty-three other

Sears employees have filed suits relating to disability benefits

claimed under the MetLife Policy.

2. The Petitioners contend that MetLife, with Sears’

approval, made material and damaging changes to the

Allstate policy which resulted in substantial loss of expected

income in the event of disability. As a consequence, Mr.

McCurdy and Mr. White filed Complaints along with

Petitions for Class Actions in the Circuit Court of Greene

County, Alabama on September 11, 1996. The Respondents

removed the case to the United States District Court for the

Northern District of Alabama on October 23, 1996, where

the Petitioners amended their Complaints to state claims for

violation of and breach of fiduciary duties under ERISA.

The Petitioners also maintain, among other things, that

altering the requirements for disability and the manner in

which disability claims are administered and reviewed and

eliminating any recovery for partial disability benefits make

the MetLife Plan unconscionable. To support their position,

the Petitioners submitted the affidavit testimony of James

A. Hand, who offered his undisputed expert opinion

regarding the multiple provisions of the MetLife Plan that

are unconscionable. The Petitioners also allege that the

8

MetLife Plan is void ab initio due to the failure of the

Respondents to amend the disability plan without following

the prescribed corporate procedures.

3. The district court rejected all of the Petitioners’

claims, holding that the Sears’ long-term disability plan,

whether administered by Allstate or MetLife, reserved the

right for the administrator to alter, amend or terminate the

terms of the plan. The district court also found to be

significant the fact that both the Allstate and MetLife plans

required repayments of Social Security Disability benefits.

Therefore, in response to the Respondents’ counterclaim, the

lump-sum reimbursements were ordered to be paid by the

Petitioners and final summary judgment was granted as to

all claims against the Respondents.

4. On appeal to the Eleventh Circuit, the Petitioners

sought review of the district court’s final order of judgment

on the grounds that the record contained numerous questions

of fact that remained undisputed by the Respondents and

that the district court’s decision disregarded the law

established by this Court as it applies to ERISA fiduciaries

of employee long-term disability benefit plans. After oral

arguments were made, the Eleventh Circuit affirmed the

district court decision, without an opinion. Application for

rehearing was subsequently denied, again with no opinion.

5. This petition for a writ of certiorari followed.

9

REASONS FOR GRANTING THE WRIT

The petition should be granted for two reasons. First,

the Eleventh Circuit's judgment is in conflict with the holding

of this Court and second, the entry of summary judgment

when the Petitioners presented an uncontroverted expert

affidavit in opposition to the motion, runs afoul of the rules

of federal judicial procedure.

I. The Decision Below Conflicts With Decisions Of This

Court.

MetLife ceased Mr. McCurdy’s benefits for a period of

five months. This right to terminate benefits is in conflict

with the provision describing the maximum benefit period,

which indicates that monthly benefits will be paid

continuously up to a maximum benefit period of age sixty-

two or sixty-five, with no indication that there might be gaps

in the coverage during which benefits would be suspended

because an award of Social Security benefits had not been

obtained.

In Varity Corporation v. Howe, 516 U.S. 489, 116

S. Ct. 1065 (1996), the United States District Court for the

Southern District of lowa (per Donald E. O’Brien, Chief

Judge) entered a preliminary injunction requiring the

defendants to reinstate portions of terminated employee

welfare benefit plan. The district court found that the

employer and owner, acting as ERISA fiduciaries, harmed

plan beneficiaries through deliberate deception. The Court

of Appeals (Lay, Chief Judge) affirmed in part and reversed

in part and subsequently affirmed as modified (per Arnold,

Chief Judge).

10

In Varity, a group of-beneficiaries of a firm’s ERISA ;

benefit plan sued their employer who was acting in the |

Capacity as plan administrator. The employees claimed that

the employer deceived them and led them to voluntarily

withdraw from the ERISA plan and relinquish their plan

benefits. Originally, the employees were beneficiaries of a

plan administered by Massey-Ferguson, a subsidiary of

--~- WVarity Corporation. During a reorganization program, Varity

transferred Massey-Ferguson’s money-losing divisions into

a newly formed subsidiary called the Massey Combines.

During reorganization, Varity induced the Massey-

Ferguson employees to voluntarily “switch employers”,

thereby substituting the new Massey Combines’ benefit plan—

for the former Massey-Ferguson plan in which the employees

were previously enrolled. During a special meeting, Varity

told the employees that in “switching” plans, their benefits

would remain secure and essentially unchanged. It was not

revealed to these employees that from its creation, Massey

Combines was insolvent.

This Court (per Justice Breyer) granted certiorari and

held that: (1) the employer was acting as an ERISA fiduciary

when it misled employees regarding the security of their

benefits if they transferred; (2) the employer violated

fiduciary obligations of ERISA in misleading employees;

and (3) ERISA authorized lawsuits for individualized

equitable relief. With specific reference to the issue of

fiduciary responsibility of a plan administrators, this Court

commented:

ERISA requires a “fiduciary” to “discharge his

duties with respect to a plan solely in the interest

of the participants and beneficiaries.” ERISA

11

§ 404(a). To participate knowingly and significantly

in deceiving a plan’s beneficiaries in order to save

the employer money at the beneficiaries expense

it not to act “solely in the interest of the

participants and beneficiaries.”

Varity, supra, at 1074-75 (citations omitted).

In determining and administering benefits under the

policy in the case at hand, the Respondents were required to

do so in a manner consistent with the best interest of the

plan beneficiaries. Mr. White and Mr. McCurdy were

informed about the new MetLife plan, however, the substance

of this information mistakenly assured that there would be

no change in coverage. The misrepresentation about the

coverage available under the disability plan destroys any

mutuality of agreement between the plan beneficiaries and

plan administrator rendering the MetLife policy void and

the Respondents in breach of their fiduciary duties.

Additionally, the terms of the MetLife policy relating

to the recovery of long-term disability benefits have been

declared ambiguous and confusing to both the plan

administrators and insurance industry experts. The videotape

presented to the Sears’ employees subject to the disability

policies demonstrates the deceptive and misleading tactics

utilized in reference to the reduction of benefits due to

set-offs. The provisions relevant for this appeal were

substantively changed and not appropriately communicated

to Mr. White and Mr. McCurdy, resulting in an ineffective

and unenforceable policy and constitute a violation of the

Respondents’ fiduciary obligation.

12

Furthermore, the undisputed evidence reveals that the

changes in the MetLife insurance policy benefited the

insurance at the expenses of the plan beneficiary. For

example, by recovering the set-offs from Social Security and

Workers’ Compensation, the employee, who is solely

responsible for premium payments to the policy, receives

no meaningful benefit for the years of monthly contributions

to fund the full cost of the benefits. Not only is there little or

no risk to the insurance company because it is guaranteed a

virtual complete recovery of benefits paid, but the lump-sum

payment requirement of the modified MetLife plan imposes

an undue and unjust hardship to the recipient of disability

benefits.

Again, despite the duty to act in the best interest of the

plan beneficiary, the evidence discloses that the Respondents

were aware that these changes in the MetLife policy resulted

in financial difficulties to Sears’ employees. This blatant

disregard of the welfare and security is a violation of ERISA

and unconscionable according to every legal principle of

contract creation and administration and in direct conflict

with the legal principles set forth by this Court in Varity and

its progeny.

The Respondents have made no attempt to distinguish

the Varity opinion. In the present case. the Eleventh Circuit

did not consider or apply the authority established in Varity,

which has been recognized and followed by the majority of

circuits, including the Eleventh Circuit. Therefore, the

judgment of the Eleventh Circuit as it relates to the

responsibilities and obligations of fiduciaries in

administering and determining long-term disability benefits

merits a review by this Court and reversal.

13

Il. The Decision Below Has So Far Departed From The

Usual Course Of Judicial Proceedings To Warrant

This Court’s Supervisory Power.

Summary judgment is proper only if there are no genuine

issue of material fact and the moving party is entitled to a

judgment as a matter of law. Rule 56(c), Federal Rules of

Civil Procedure; Celotex Corp. v. Catrett, 477 U.S. 31 7, 323,

106 S. Ct. 2548, 2552-53, 91 L. Ed. 2d 265 (1986). The

burden rests upon the movant to show there are no genuine

issue of material fact. As this Court has provided, in

reviewing a summary judgment, the unchallenged testimony

provided by the Petitioners must be taken as true. See

Bragdon v. Abbott, 524 U.S. 624, 118 S. Ct. 2196, 2207,

141 L. Ed. 2d 540 (1998).

In this case, the Petitioners submitted undisputed expert

testimony regarding the patently unconscionable provisions

in the MetLife disability policy and lend further support for

the proposition that the Respondents acted in violation of

ERISA by breaching their fiduciary responsibilities.

Specifically, James A. Hand, a certified life underwriter and

insurance consultant with over forty years of experience with

long-term disability contracts, provided his opinions in

opposition to the Respondents’ summary judgment motion.

Based upon his experience, background and training, Mr.

Hand’s conclusions, excerpted in part from his affidavit,

include the following:

1. Even though the printed notices that were

allegedly communicated to the Sears’ employees

indicated that there would be no substantial

change in the policies or benefits when the long-

term disability policy was assumed by MetLife

14

from Allstate, there were substantial and material

changes as follows:

a. MetLife changed the definition

of “Total Disability”.

b. MetLife eliminated any partial

disability benefits.

c. MetLife changed the way in

which the disability claims were

administered in that the Allstate policy

provides that they had the right to

recover excess payments by applying all

or part of future payments until the

excess was recovered MetLife contract

provides that any overpayment must be

made in a lump sum. This difference

could work a substantial hardship on |

employees who had to make

reimbursements. Again, none of this

was ever explained to empioyees until

a claim arose.

2. Further, the communication, in general, to

the higher personnel about the long-term disability

changes were completely inadequate. A letter

from JoAnne Cunningham to Human Resources

Manager, dated 7/9/92, admits confusion, even

at this higher level of communications, about the

effective date of the Social Security off-set

handling.

15

3. Another example of the hardships

perpetrated against the employees, as a result of

the changes made by MetLife, are indicated in a

letter from Marsha Dalton to Human Resources

Manager, dated 5/27/92, wherein it was admitted

that the MetLife system of claim paying caused

the Sears’ employees financial difficulties.

4. Further, the contract involving the MetLife

long-term disability plan is unconscionable for a

number of reasons. The plan is more or less an

obsolete type of plan in that the wording is

ambiguous and confusing to a layman and in many

ways the benefits are illusory because the off-sets

from Social Security and Worker’s Compensation

practically eliminate any meaningful benefit

($35.00 per month minimum is included in the

plan) to employees who are not in a high income

category. The fact that this policy is entirely paid

for by the employee (and no contributions by the

employer) make it further unconscionable because

the employee is paying for something that he

thinks he has (i.e., wage replacement) but because

of the off-sets, he receives virtually nothing and

there is very little risk, if any, to the defendant

insurance companies involved. Therefore, it is my

opinion, that if the employees knew and

completely understood these off-sets and other

provisions, it is highly unlikely that the employees

would pay insurance premiums for such coverage.

5. Another indication of how unconscionable

the MetLife contract is, and one in which the

public good was ignored, is evidenced by the fact

16

that in the custom, trade, and business of writing

long-term disability insurance policies, the usual

practice is for the insurance companies to be paid

back out of future payments in the event that there

is an off-set from Social Security or Worker’s

Compensation. Such was not the case in the

MetLife contract.

6. Additionally, the Allstate contract was

unconscionable because the plan is also obsolete

in that the wording is ambiguous and confusing

and the Worker’s Compensation and Social

Security offsets practically eliminate any

meaningful benefits to employees who are not in

a high income category. Again, the fact that the

employees pay the full cost to fund the benefits

(which are practically eliminated in some cases)

makes the plan unconscionable.

7. Further, in observing and evaluating a

video tape purportedly shown to employees that |

participated in both Allstate and MetLife long-

term disability policies, the portion of the tape

that deals with long-term disability is misleading

and/or confusing with reference to the reduction

of benefits after receiving Social Security

Disability Benefits. Although barely touched upon

in the film, one would conclude that the reduction

in long-term disability would only occur after

Social Security Retirement benefits after the age

sixty-two or sixty-five. Even though this film was

shown to employees who had MetLife policies

issued after 1989, they were not informed of the

changes. The MetLife long-term disability

17

contract is also unconscionable because of the

material changes which MetLife attempted to

make. The MetLife long-term disability contract

is misleading in that, after representing in notices

to the Sears’ employees, that there would be “no

change in the amount of long-term disability

insurance”, it was “gutted” by material changes

as set forth above.

The Eleventh Circuit itself has embraced the principle

which discourages summary judgment in cases where expert

testimony is relied upon to illuminate the issues of fact in

the case. See Childers v. Morgan County Board of Education,

817 F.2d 1556 (11th Cir. 1987); City of Tuscaloosa v.

Harcros Chemicals, Inc., 158 F.3d 548, 551 (11th Cir. 1998).

In fact, in the present case, there is not a conflict of expert

testimony that creates questions of fact, rather, the

Respondents have offered no evidence or testimony to rebut

or dispute any of Mr. Hand’s findings or conclusions.

In consideration of the spirit and application of the

Federal Rules of Procedure with regards to judgments as a

matter of law, the evidence in the record submitted by the

Petitioners is more than sufficient to defeat the Respondents’

motion for summary judgment. If Mr. Hand’s opinions are

taken to be true and viewing the evidence in a light most

favorable to the Petitioners, as the law requires the Court to

do, the entry of summary judgment was improvidently

granted by the district court and affirmed by the Eleventh

Circuit. Such a departure from the fundamentals of judicial

procedure merits a review and examination of the evidence

by this Court.

=

18

CONCLUSION

In consideration of the above and foregoing reasons, the

petition for a writ of certiorari should be granted.

Respectfully submitted,

WILLIAM W. SMITH

Counsel of Record

SMITH & ALSPAUGH, P.C.

Attorneys for Petitioners

1100 Financial Center

505 20th Street North

Birmingham, Alabama 35203

(205) 324-8910

APPENDIX

la &

APPENDIX A — PER CURIAM ORDER OF THE

UNITED STATES COURT OF APPEALS FOR THE

ELEVENTH CIRCUIT DATED

AND FILED APRIL 30, 2001

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 00-15505

D. C. Docket Nos. 96-02781-CV-C-W

96-02782-CV-C-W

WILLIE WHITE, individually and on behalf of

all persons similarly situated,

Plaintiff-Counter-defendant-Appellant,

CLARENCE MCCURDY,

Plaintiff-Appellant,

versus

METROPOLITAN LIFE INSURANCE

COMPANY, INC., a corporation,

Defendant-Counter-claimant-Appellee,

SEARS ROEBUCK COMPANY, INC., a corporation,

ALLSTATE INSURANCE COMPANY

INCORPORATION, a corporation,

— Defendants-Appellees,

LINDA TUCKER, an individual citizen of the State of

Alabama, DEBRA WILLIAMS, an individual

of the State of Alabama,

Defendants.

2a

Appendix A

Appeal from the United States District Court

for the Northern District of Alabama

(April 30, 2001)

Before DUBINA and KRAVITCH, Circuit Judges,

DUPLANTIER’, District Judge.

PER CURIAM:

AFFIRMED. See 11th Cir. R. 36-1.'

* Honorable Adrian G. Duplantier, U.S. District Judge for the

Eastern District of Louisiana, sitting by designation.

1. 11th Cir. R. 36-1 provides:

When the court determines that any of the following

circumstances exist:

(a) judgment of the district court is based on

findings of fact that are not clearly erroneous;

(b) the evidence in support of a jury verdict is

sufficient;

(c) the order of an administrative agency is

supported by substantial evidence on the

record as a whole;

(d) summary judgment, directed verdict, or

judgment on the pleadings is supported by the

record;

(e) judgment has been entered without a reversible

error of law; and an opinion would have no

precedential value, the judgment or order may

be affirmed or enforced without opinion.

3a

APPENDIX B — MEMORANDUM OPINION OF THE

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ALABAMA, WESTERN

DIVISION GRANTING SUMMARY JUDGMENT

DATED AND FILED MARCH 31, 2000

AND ENTERED APRIL 3, 2000

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

WESTERN DIVISION

CV-96-C-2782-W

CLARENCE McCurpy, individually, and on behalf

of all persons similarly situated,

Plaintiff,

VS.

METROPOLITAN LIFE INSURANCE COMPANY, INC.,

a corporation, et al.,

Defendants.

CV-96-C-2781-W

WILLIE WHITE, individually, and on behalf of

all persons similarly situated,

Plaintiff,

VS.

METROPOLITAN LIFE INSURANCE COMPANY, INC.,

a corporation, et al.,

Defendants.

4a

Appendix B

MEMORANDUM OPINION GRANTING

SUMMARY JUDGMENT

I. Jntroduction

In this putative class action under the Employee

Retirement Income Security Act, 29 U.S.C. § 1100 et seq.

(“ERISA”), the named plaintiffs Clarence McCurdy and

Willie White essentially claim that to their detriment, Defendant

Metropolitan Life Insurance Company (“MetLife”) and their

former employer, Defendant Sears, Roebuck & Company,

Inc. (“Sears”) made unilateral changes in the Long Term

Disability (“LTD”) Benefit Plan when Sears switched to

MetLife from Defendant Allstate Insurance Company

(Allstate), as its carrier. At the core of the Complaint is the

contention that the monthly disability benefits of the

Plaintiffs are now subject to reduction by the amount of

Social Security disability income received as a result of their

disability. Defendants have moved for summary judgment.

Based on the undisputed facts, the motion is due to be

granted.

II. The Undisputed Facts

1. Plaintiffs McCurdy and White were participants in a

long-term disability benefits plan administered by their Sears.

2. Until December 31, 1988, Allstate served as the claims

administrator and insurer of the Sears LTD Benefits Plan.

3. Under the LTD Plan administered by Allstate,

it is expressly provided, in the bold section entitled,

Pe

Sa

Appendix B

“PLAN AMENDMENT AND TERMINATION,” that

“Although Sears intends to continue the Plan, the Company

necessarily reserves the right to modify, amend, suspend, or

terminate it at any time.” See Court File Document 50,

Exhibit D.

4. The Allstate-administered Plan also contains the

following provision:

AMOUNT OF MONTHLY BENEFIT

WHILE TOTALLY DISABLED

“The monthly benefit payable from the Plan while

you are Totally Disabled will not be less than $35

unless Allstate has made payments in excess of

the amount actually payable under these LTD

Provisions. Then Allstate has the right to

recover the excess by applying all or part of

future monthly benefits until the excess has

been recovered.”

See Court File Document 50, Exhibit D.

5. As of January 1, 1999, MetLife became the insurer

and administrator of the Sears Plan.

6. The Sears Plan, as administered by MetLife, provides,

inter alia:

“REHABILITATIVE EMPLOYMENT

For dates of disability beginning on or after March

1, 1989,

6a

Appendix B

(A) The amount of Monthly Benefits

[shall be] the lesser of

— 50% of the first $12,500 of Monthly

LTD Covered Earnings, less 50% of any

Rehabilitation Earnings, if any, or

— 60% of your Monthly LTF Covered

Earnings, less (a) any Other Income

to which you are entitled and (b) 50%

of your Rehabilitation Earnings, if any.

If the sum of your monthly benefit and your Other

Income and/or Rehabilitation Earnings is greater

than your Monthly LTD Covered Earnings at the

time that you became disabled your Monthly

Benefit will be reduced so that the sum will not

exceed your Monthly Covered LTD Earnings.”

See Rider to MetLife Policy entitied “Notice of Changes to

Sears Group Long-Term Disability Insurance,” Document

50, Ex. “C.” (emphasis added).

7. The changes in the Sears Plan accompanying its

switch to MetLife were distributed in 1989 to all of the Plan’s

participants, including Plaintiffs.

8. Plaintiff White applied to the Sears Plan for LTD

benefits on September 29, 1992. His application was

approved on October 18, 1992 effective retroactively to

September 8, 1992. He began receiving the full formula

amount of those benefits immediately.

7a

Appendix B

9. White also applied for Social Security disability

benefits. On March 15, 1994, the Social Security

Administration determined that White was disabled; and it

awarded him $15,148 retroactively and $968 thereafter in

monthly benefits.

10. After White’s Social Security award, MetLife

reduced his Plan benefits and sought reimbursement from

the retroactive Social Security award.

11. Plaintiff McCurdy filed his application for LTD

benefits with MetLife on September 16, 1993. His application

was subsequently approved; and his LTD benefits

commenced in September of 1993.

12. In February of 1996, the Social Security

Administration determined that McCurdy became disabled

on April 20, 1993. It awarded him $37,050 in retroactive

benefits and $1,196 monthly thereafter.

13. After McCurdy’s Social Security award, MetLife

reduced his Plan benefits and sought reimbursement from

his retroactive Social Security award.

14. When Plaintiffs separately applied for Sears LTD

benefits, each of them signed a MetLife agreement to this

effect:

I understand that the plan provides that the amount

of Social Security benefits, as described in the

Group Plan, for which I or any of my dependents

may be eligible, are to be deducted from the

benefits payable under the plan.

8a

Appendix B

I agree to send a copy of any award or declination

letter received from the Social Security

Administration to the Metropolitan Life Insurance

Company and will reimburse such Company in

the amount due, upon commencement of benefits

awarded to me under the Social Security Act. Such

reimbursement shall cover the period from the

date of entitled benefits to and including the date

of benefits last paid to me.

See “Reimbursement Agreements,” Def. Metropolitan Life

Ins. Co.’s and Allstate Ins. Co.’s Supp. Mem. in Support of

Mot. for Summ. J. Ex. 1. (emphasis added).

II. Controlling Legal Principles

A. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate where there are no

genuine issues as to any material fact and the moving party

is entitled to judgment as a matter of law. Fep. R. Civ. P.

56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

The moving party bears the initial burden of showing

that there is an absence of a genuine issue of material fact.

For issues on which the non-movant bears the burden of proof

at trial, the moving party simply may show that there is an

absence of evidence to support the non-moving party’s case.

Alternatively, the moving party may support its motion for

summary judgment with affirmative evidence demonstrating

that the non-moving party will be unable to prove its case.

See Sherman v. Helms, 80 F.Supp.2d 1365, 1369 (M.D. Ga.

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Appendix B

2000) (citing Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1116

(11th Cir. 1993)).

If a moving party makes a prima facie showing that no

genuine issue of material fact exists, then the burden shifts

to the non-movant to overcome that showing by presenting

substantial evidence in support of its motion. See Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587

(1986). All evidence and reasonable factual inferences drawn

therefrom are viewed in the fight most favorable to the party

opposing the motion. See Glitz v. Compagnie Nationale Air

France, 129 F.3d 554, 556-57 (11th Cir. 1997).

B. OTHER PRINCIPLES

ERISA is a comprehensive and reticulated statute that

created a framework for the administration and maintenance

of private employee benefit plans. See Nachman Corp. v.

Pension Benefit Guaranty Corp., 446 U.S. 359, 361 (1980).

Although the statute delineates a myriad of detailed

procedural requirements for a plan’s implementation and

administration, one principle is unequivocally clear: ERISA

maintains no minimum substantive content for employee

welfare benefit plans, and therefore a district court has no

authority to draft the substantive content of such plans.

See Hunt v. Hawthorne Associates, Inc., 119 F.3d 888, 911

(11th Cir. 1997) (citing Hamilton v. Air Jamaica Ltd., 945

F.2d 74,78 (3rd Cir. 1991). Congress sought to discourage

judicial entanglement with the substantive features of

ERISA-regulated welfare benefit plans because presumably

parties retain a greater degree of freedom to contract between

themselves to determine the type and amount of benefits,

10a

Appendix B

and the conditions under which these benefits will be

provided under the plan. See Jordan v. Reliable Life Ins.

Co., 694 F. Supp. 822, 832 (N.D. Ala. 1998) (citing Vogel v.

Independence Fed. Sav. Bank, 728 F. Supp. 1210,1229

(D. Md. 1990)).

Federal courts at every level have consistently held that

it is outside the province of the judiciary to regulate the

substantive terms of a welfare benefit plan. See generally

Metropolitan Life Ins. Co. v. Travelers Ins. Co., 471 U.S.

724, 736 (1985); Curtiss-Wright Corp. v. Schoonejongen,

514 U.S. 73 (1995); First Capital Life Ins. Co. v. AAA

Communications, Inc., 906 F. Supp. 1546, 1555 (N.D. Ga.

1995). ea

III. Analysis

Assuming that Sears and MetLife made unilateral

changes in the Sears LTD Plan, ERISA does not empower

this Court to grant the relief which Plaintiffs seek. The Plan

itself confers on Sears the unilateral right not simply to

change its terms, but to terminate the Plan itself!

But more important is the consideration that the

operative provision did not change. Under the Sears LTD

Plan, whether administered by Allstate or by MetLife,

beneficiaries must reimburse for payments covered by a

subsequent retroactive Social Security award. In that key

respect, nothing has changed.

As a last ditch effort to avoid summary disposition,

Plaintiffs contend they were “unaware” that benefits paid

Wee tahini aaa odachsviis int 01S deg NOM GMI A aki MLGP aL IA senna ek ee tas

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Appendix B

by the insurance company would be reduced by the amount

of Social Security benefits subsequently paid to them.

See McCurdy Aff. at 2 and White Aff. at 2. The documents

signed by Plaintiffs belie this assertion. See infra, fn. 1. And

it is now well established under Alabama law that a party

has the affirmative duty to read and inspect any document

which might affect that person’s legal rights or liabilities.

See Ramp Operations Inc. v. Reliance Ins. Co., 805 F.2d

1552, 1556 (11th Cir. 1986).

Because Plaintiffs applied for and received social

security benefits, the outcome of this case has been

preordained by the signed reimbursement contracts. It

follows that MetLife may recoup the LTD benefits it paid

Plaintiffs while their social security applications were

pending.

V. Conclusion

For the foregoing reasons, Defendants’ Motion for

Summary Judgment will be granted by separate order.

DONE this 31st day of March, 2000.

s/ U.W. Clemon

UNITED STATES DISTRICT

JUDGE

U.W. CLEMON

12a

APPENDIX C — PER CURIAM ORDER OF THE

UNITED STATES COURT OF APPEALS FOR THE

ELEVENTH CIRCUIT DENYING PETITION FOR

REHEARING DATED AND FILED JUNE 6, 2001

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

No. 00-15505-DD =

WILLIE WHITE, individually and on behalf of

all persons similarly situated,

Plaintiff-

Counter-defendant-

Appellant,

CLARENCE MCCURDY,

Plaintiff-Appellant,

versus

METROPOLITAN LIFE INSURANCE

COMPANY, INC., a corporation,

Defendant-

Counter-claimant-

Appellee,

SEARS ROEBUCK COMPANY INC., a corporation,

ALLSTATE INSURANCE COMPANY

INCORPORATION, a corporation,

Defendants-Appellees,

13a

Appendix C

On Appeal from the United States District Court for the

Northern District of Alabama

BEFORE: DUBINA and KRAVITCH, Circuit Judges,

DUPLANTIER%, District Judge.

PER CURIAM:

The petition(s) for rehearing filed by Appellants Willie

White, et al. is DENIED.

ENTERED FOR THE COURT:

s/ Phyllis Kravitch

UNITED STATES CIRCUIT JUDGE

* Honorable Adrian G. Duplantier, U.S. District Judge for the

Eastern District of Louisiana, sitting by designation.