Opposition Brief — Buce v. Allianz Life Insurance

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No. 01-516 / NOV 9 209 !

In The oy

Supreme Court of the United States ~~~

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PATRICIA W. BUCE,

Petitioner,

ALLIANZ LIFE INSURANCE COMPANY f/k/a

NORTH AMERICAN LIFE AND CASUALTY COMPANY,

Respondent.

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On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eleventh Circuit

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BRIEF IN OPPOSITION

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Douctas N. CAMPBELL

Counsel of Record

DoucLas CAMPBELL & Associates, P.C.

4776 East Conway Drive, N.W.

Atlanta, Georgia 30327

404-256-3633

Telecopier 404-256-0423

Counsel for the Respondent

COCKLE LAW BRIEF PRINTING CO, (800) 225-6964

OR CALL COLLECT (402) 342-2831

QUESTION PRESENTED

Whether, as a matter of the federal common law of

the construction of ERISA contracts, the Eleventh Circuit

properly gave effect to the parties’ agreement to look to

Georgia law to interpret the Plan’s insuring clause and

the definition of “injury” applicable to it?

CORPORATE STATEMENT PURSUANT TO RULE 29.6.

Allianz Life Insurance Company of North America is

a wholly owned subsidiary of Allianz of America, Inc, a

wholly owned subsidiary of Allianz AG, which is pub-

licly traded on the New York Stock Exchange.

ill

TABLE OF CONTENTS

Page

ne Seen peek dine ek rer ensaeeee i

Corporate Statement Pursuant to Rule 29.6......... ii

EE IP OOS IIOP EE POTEET ETE SET YT TT iii

i eS vou achcadnideueciddowsiceese ds iv

rr rr ee sy sedsdusvuerséavadeséduven 1

PN Teer eT yee PETTITTE Te Tre rT eT er ce 1

The District Court’s Decision and the Appeal.. 6

The Petition for Writ of Certiorari............. 8

Reasons for Not Granting the Writ................. 9

RG FON Gc0ceshesnesdesesesederecnerenee 9

The Eleventh Circuit Decision ................. 12

Il. The Eleventh Circuit correctly ruled that the

Plan’s choice of law provision was enforceable in

choosing Georgia law to interpret the insuring

A SE occ cdccccccesssccaueesses 16

ee ee eo eeeneeetbaesa 16

B. There Is No Directly Contrary Authority... 17

5 ees: GE - GD GUE wc cccéicvececess 17

2. There is No Conflict with Decisions of

SE RNIN pv s-cncc cess cenacessaveces 18

3. Displacement of ERISA Federal Law ... 22

ST RMD ccnncdosivecescdgaceasass 22

et eb waehed oudecbeeua 23

iv

TABLE OF AUTHORITIES

Page

CAsES

Baker v. Provident Life & Acc. Ins. Co., 171 F.3d 939

GR SN Se ha eictascaduccndccdsdshsucdscescee- 16

Brewer v. Lincoln Nat. Life Ins. Co., 921 F.2d 150 (8th

Cir. 1990), cert. denied, 501 U.S. 1238 (1991) ....20, 21

Brown v. Blue Cross and Blue Shield of Alabama, Inc.,

898 F.2d 1556 (11th Cir. 1990), cert. denied, 498

Ses ee ME eh bk isan heNeuns beceuaduncesesbeveds 7

Buce v. Allianz Life Ins. Co., 247 F.3d 1133 (11th Cir.

EE EE OE hn bbncce sak nedudtaeenseahanenas passim

Buce v. National Service Industries, Inc., et al., 74

F. Supp.2d 1272 (N.D.Ga. Atl. Div. 1999)

Seen ry ree Perm ener ne £6 2

Cagle v. Bruner, 112 F.3d 1510 (11th Cir. 1997), reh.

en banc denied, 124 F.3d 223 (1997)................ 17

Cates v. Metropolitan Life Ins. Co., 149 F.3d 1182 (6th

CO SUE Scuvhedin dies capscaunsdaoddeessitdahines 15

Concrete Pipe and Products of California, Inc. v. Con-

struction Laborers Pension Trust, 508 U.S. 602

(RDU i 0:6 khan ashe ane ean wenpondbouss caeesdenes ac 17, 18

Connolly v. Pension Benefit Guarantee Corp., et al.,

oe BR | re rere r ere rr re errr 17, 18

Cozzie v. Metropolitan Life Ins. Co., 140 F.3d 1104

CPR Se Be a aban bli oa hs GAs eekerenene das innes sao

Egelhoff v. Egelhoff, 532 U.S. 141, 121 S. Ct. 1322,

BOP En Fe ee Oe CES 5 kan ée pic anssscendcunans® 13

Vv

TABLE OF AUTHORITIES - Continued

Page

Fowler v. Metropolitan Life Ins. Co., 938 F. Supp. 476

(fa | Peer rer yrrrrr yr rrr Te er 16

Laney v. Continental Ins. Co., 757 F.2d 1190 (11th

ae PPTPPPTerrretrrr re ctr ee re er ee 12

Metropolitan Life Ins. Co. v. Potter, 992 F. Supp. 717

COINS. BOGE) occ ice casccasdenssavsncntsccdacashets 16

Miller v. Auto-Alliance Int'l, Inc., 953 F. Supp. 172,

174-175 (B.D. MACK. 1997) 000 scsaccccecscccennesscs 16

Morton v. Smith, 91 F.3d 867 (7th Cir. 1996) ..18, 19, 21

Mullaney v. Aetna U.S. Healthcare, 103 F. Supp.2d

GOR CORE, BOO a oss ida is cs ddan cinastaieniseacds 15

Nelson v. Sun Life Assurance Co., 962 F. Supp. 1010

(WED. MEG. BOS) onic ccc csccissdsrceasdessecenan 16

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) ..... 22

Prudential Ins. Co. v. Doe, 140 F.3d 785 (8th Cir.

1998), reh. denied, 1998 U.S. App. LEXIS 9881

UN én ankbcwkeves bacdsenseenaens 14, 18, 20, 21, 22

Schultz v. Metropolitan Life Ins. Co., 994 F. Supp.

1419 (M.D. Fla. 1996)... 2. scccscccecsccevesssccecen 15

Smith v. Life Ins. Co. of North America, 872 F. Supp.

GED CUED. TO, TOPE kia sce deeactscikncdecraciess 16

Sorrells v. Sun Life Assurance Co., 85 F. Supp.2d

EA21 GBD. AMG. BOD occ ivcccsccescssesesevcsncses 15

Walker v. Metropolitan Life Ins. Co., 24 F. Supp.2d

77S CLD. Maga. 1997) a0 a cccsscncaveccccascetecvess 16

vi

TABLE OF AUTHORITIES - Continued

Page

Wang Laboratories, Inc. v. Kagan, 990 F.2d 1126 (9th

CUe, BODE) oc ccccccccccccscnscccesasesecssncuses 10, 11

Wickman v. Northwestern Nat. Inc. Co., 908 F.2d

1077 (1st Cir. 1990), cert. denied, 498 U.S. 1013

DOU « 6b00s00s0sd006005sonsadbueeesaaeeas 11

STATUTES

BP OBL, O TAG) ccc vctsccdvcvidavdessserisses 10, 14

TREATISES

Georgia and Tennessee. O.C.G.A. § 40-6-391(a)(5) ..... 4

Tenn. Code Ann. § 55-10-401(a)(2) ............00e eee 4

STATEMENT OF THE CASE

On December 11, 1997, Plaintiff filed suit in the Supe-

rior Court of Fulton County, Georgia, to recover “Loss of

Life” benefits under an accidental death and dismember-

ment [“AD&D”] plan [the “Plan”] insured by Allianz Life

Insurance Company of North America [“Allianz”], and

on January 9, 1998, Defendants removed the case to the

United States District Court for the Northern District of

Georgia, Atlanta Division. After discovery and motions,

the case was tried to the court without a jury on Novem-

ber 8 and 9, 1999, and the district court entered an Order

on November 18, 1999, finding that Plaintiff was entitled

to recover $150,000 in benefits from Allianz. Buce v.

National Service Industries, Inc., et al, 74 F. Supp.2d 1272

(N.D.Ga. Atl. Div. 1999) (“Buce I”). Judgment was entered

on November 19, 1999, and on December 17, 1999, Allianz

filed its Notice of Appeal. On April 10, 2001, the Eleventh

Circuit reversed. Buce v. Allianz Life Ins. Co., 247 F.3d

1133, 1149 (11th Cir. 2001) (“Buce II”). Mrs. Buce has

petitioned this Court for a Writ of Certiorari.

Facts

The relevant facts are those that were before the plan

administrator or its representatives at the time of the

decision on appeal of the original claim denial. At the

time of his death, Plaintiff's husband, Walter Buce, age

57, was covered by a Personal Accident Insurance Plan

provided by his employer, National Service Industries,

Inc. [“NSI”]. The Plan was originally funded by a Fire-

man’s Fund Insurance Company AD&D policy [the “Pol-

icy”] in 1985 and that same year NSI distributed a

summary plan description [the “1985 SPD”] which the

Buces received and Mrs. Buce read. In 1993, Allianz

became the insurer and issued a new SPD [the “1993

SPD”] which NSI distributed by interoffice mail, a

method of distribution which had been demonstrated to

be reliable. Mrs. Buce denies seeing it but does not know

if her husband ever read or saw it. Each SPD included a

copy of the Certificate of Insurance which contained the

schedule of benefits and the intoxication exclusion. It is

undisputed that the coverage was in effect at the time of

Mr. Buce’s death and that the Plan is governed by ERISA.

The insuring clause for “Loss of Life” contained in

the Certificate provides:

“LOSS OF LIFE ACCIDENT INDEMNITY

When injury results in loss of life to the Insured

Person ..., the Company will pay the Loss of

Life Accident Indemnity stated in the Schedule

of Benefits.

“Injury” is defined in language commonly found in poli-

cies of this type:

“Injury,” wherever used in this certificate,

means bodily injury caused by an accident

... and resulting directly and independently of

all other causes in loss covered by the policy. ...

The SPD further provides:

The [Personal Accident] Plan is to be interpreted

in accordance with the laws of the State of Geor-

gia.

In January 1996, Plaintiff made claim to recover the

$150,000 “Loss of Life” benefit under the Plan. With her

original claim, Mrs. Buce submitted a claim form, an

enrollment card, a certified copy of the death certificate,

the Tennessee traffic accident report and a copy of a

newspaper article. Ed Carroll, adjuster for American Spe-

cial Risk Management, which evaluated the claims for

Allianz, conducted an investigation which resulted in

receipt of an investigation report that included the final

police report, an interview with the investigating officer,

and a toxicology report. The aggregate of all of the mate-

rials so collected formed the basis for the initial coverage

decision and revealed the following:

Mr. Buce had a well-known history of drinking. He

also had a history of open-heart surgery, was on Lithium

and Zoloft and had a heart condition. He had recently

been under a great deal of stress due to a late review and

the fact that his daughter had been missing for 31/2

months and had a very serious drug problem. During the

evening of December 12, 1995, the day before his death,

he visited his daughter in Acworth, Georgia, and drank

about 2'/2 beers during the evening. He left his daugh-

ter’s home at around 11:30 p.m. with a bag under his arm

and his movements are thereafter unaccounted for until

“some time between 12:20 a.m. and 1:00 a.m.” when he

telephoned his cousin, Sandy Mullin, from “on Ringgold

Road” about 45 minutes from his cousin’s home in

Ooltewah, Tennessee. Sandy told him not to miss the exit

to her home and Mr. Buce was in any event very familiar

with this area because he traveled it quite frequently. In

that conversation, Mr. Buce’s tone of voice was short and

he stated to Sandy that things were not going right. While

traveling north on I-75 inside the city limits of Cleveland,

Tennessee, two exits past the exit to Sandy’s home, Mr.

Buce’s car left the road at approximately 2:00 a.m., hit a

guard rail head on, rolled over, and burst into flames. The

weather at the time of the wreck was good; there were no

witnesses and no other vehicles were involved in the

crash; it occurred on a clear, straight, dry four-lane

divided, one way, interstate highway with no apparent

hazards or traffic controls (lights, signs, etc.); there was

no evidence of mechanical failure or apparent defects in

vehicle, which was going straight and left no skid marks

on the road; no other contributing factors were known.

The toxicology lab report of a blood sample of the

decedent taken at 3:35 a.m. on December 13, 1995, and

tested on December 22, 1995, showed a blood alcohol

content [“BAC”] of .22%, more than twice the level

required to be considered intoxicated for purposes of the

criminal “driving under the influence of alcohol” statutes

in Georgia and Tennessee. O.C.G.A. § 40-6-391(a)(5) (legal

limit of .10%); Tenn. Code Ann. § 55-10-401(a)(2) (legal

limit of .10%).

Allianz denied the claim on March 12, 1996. By letter

dated May 9, 1997, Mrs. Buce’s lawyer submitted addi-

tional materials, including affidavits, and requested

reconsideration. By letter dated July 11, 1997, Allianz’s

lawyers advised that the claim had been reconsidered

and that Allianz stood by its prior denial. Allianz rea-

soned that, based on Mr. Buce’s BAC of .22%, Mr. Buce

was intoxicated at the time of the wreck. It said that the

Policy provided “accidental means” coverage which

means that “in the act which preceded the injury there

must have occurred something sudden, unexpected and

unforeseen.” It went on to state that, as weather and road

conditions appeared to be normal and there was no evi-

dence of vehicle malfunction, it appeared Mr. Buce’s inju-

ries were caused by his voluntary ingestion of alcohol

and that this therefore did not present a situation involv-

ing a “’bodily injury caused by an accident’ as required

by the coverage provision of the Policy.”

Alternatively, Allianz relied upon the following

exclusion in the Certificate:

20. The Company shall not be liable for any

loss sustained in consequence of the person

whose injury is the basis of claim being

intoxicated. ...

Adopting a common law definition of intoxication mean-

ing that the person was materially impaired from guard-

ing himself against casualty, Allianz took the position

that a person with a .22% BAC is materially impaired

within the meaning of that definition and that it appeared

this impairment was the cause of the crash that resulted

in Mr. Buce’s death.

The July 11th letter advised Mrs. Buce of her right to

appeal and, on August 29, 1997, her lawyer submitted an

appeal accompanied by additional affidavits. Doctor A.

C. Richardson opined that Mr. Buce suffered a heart

attack that caused him to lose control and crash his car,

and that he might well have been dead before the car left

the road. A friend, Robert Mello, “opined” that Mr. Buce

either fell asleep at the wheel or had a heart attack prior

to his car running off I-75 North at about 2:11 a.m. on

December 13. None of the additional affidavits disputed

the .22% BAC set forth in the toxicology report. The claim

not having been paid, Mrs. Buce filed suit on December

11, 1997.

The District Court’s Decision and the Appeal

After a two-day bench trial, the district court held

that, if Georgia law controlled the interpretation of the

Plan, Mrs. Buce could not recover because Allianz’s

determination that Mr. Buce’s voluntary ingestion of alco-

hol resulting in a .22% BAC while driving removed the

crash that caused his injuries from the realm of “acci-

dent” under Georgia’s “accidental means” doctrine. Buce

I, 74 F. Supp.2d at 1276. The district court went on to

hold, however, that the Policy’s provisions choosing

Georgia law as governing the interpretation of the Policy

-— and specifically the definition of “injury” applicable to

the insuring clause for the “Loss of Life” — was essentially

preempted by ERISA, thus allowing him to hold that,

under federal common law, foreseeability plays no role in

determining whether a particular set of facts falls within

or without the Policy’s definition of “injury.” Id. at 1279.

Without postulating the proper test for making that deter-

mination, the court simply held that Allianz was arbitrary

and capricious in denying the claim “based upon an

interpretation of ‘accident’ that is not stated in the Policy

and that is contrary to the expectations of the ordinary

insured.” His rationale was just that “[death] as a result

of a car wreck is the quintessential accident under the

general understanding of that term.” Id. at 1279. In so

holding, he either attempted to distinguish, or else sim-

ply ignored, the numerous ERISA “intoxicated driver

cases” that reach a contrary conclusion under similar

facts (see n.3, infra). Id. at 1278-79.

On appeal, Allianz reiterated all of the chief positions

it had taken in the district court, including:

1. The district court erred as a matter of fed-

eral common law in refusing to apply the

Plan’s choice of law provision which would

result in judgment in its favor under a Geor-

gia law interpretation of the Policy terms (as

the district court specifically found);

2. Even if federal common law controls the

construction of the Policy’s insuring clause

and definition of “injury,” the vast weight of -

authority and application of the Wickman

analysis requires the conclusion that Mr.

Buce’s injuries were not “caused by an acci-

dent”;

3. There would also be no coverage under

Plaintiff’s alternate heart attack theory;

4. Because Allianz applied the correct legal

rules in making its determination denying

coverage, its denial was not “arbitrary and

capricious” under, e.g., Brown v. Blue Cross

and Blue Shield of Alabama, Inc., 898 F.2d

1556, 1566 n.12 (11th Cir. 1990), cert. denied,

498 U.S. 1040 (1991);

5. Even if coverage existed in the first instance,

denial was proper under the Policy’s intox-

ication exclusion;

6. The district court erred in holding that Mrs.

Buce had relied to her detriment on any

omission of the intoxication exclusion from

the 1985 SPD.

The Eleventh Circuit reviewing panel reversed, Judge

Pollak’s majority opinion (in which Judge Barkett con-

curred), agreeing with position number 1 and strongly

indicating in footnote 5, with reference to footnote 4, that

Allianz would probably win under position number 2 as

well. Buce II, 247 F.3d at 1145-47, 1149. Judge Barkett’s

thoughtful concurrence (in which Judge Pollak joined)

elaborated at length on her reasons for accepting position

number 1. Id. at 1149-54. Judge Carnes concurred with the

reversal, but preferred not to opine as to position number

1, choosing instead to ground his decision to reverse on

positions numbers 5 and 6. Id. at 1154-58.

Thus, the three panel judges postulated a total of four

separate and independent reasons - all federal law

grounds — why Allianz’s denial of Mrs. Buce’s claims was

proper, and the panel did not even reach Allianz’s other

two positions, each of which would also have justified

reversal independently.

The Petition for Writ of Certiorari

In her Petition, Mrs. Buce argues that the Eleventh

Circuit panel majority erred in giving effect to the Plan

provision that chooses Georgia law to govern the “inter-

pretation” of the Plan. She argues that to do so conflicts

with decisions of this Court, of other circuits, and with

the federal common law applicable to ERISA. She then

argues that to give effect to the parties’ agreement to

interpret Plan provisions under Georgia law will threaten

ERISA’s goals of uniformity and protecting plan pares:

pants and beneficiaries.

However, Mrs. Buce’s Petition is as remarkable for

what it does not say as for what it does say. Mainly, she

does not even suggest that application of federal common

law to avoid the choice of law provision will lead to a

different ultimate result in the case. She does not in any

way deal with the growing body of ERISA common law

oe

cases that find, in the absence of choice of law provisions,

that injuries sustained by insureds with high blood alcohol

contents in single vehicle collisions are not “caused by an

accident” as discussed by the panel majority in footnotes 4

and 5 of its opinion. See n.3, infra. Nor does she address

Judge Carnes’ independent ground for reversal based

upon the intoxication exclusion and Mrs. Buce’s lack of

detrimental reliance upon the alleged omission from the

1985 SPD of the Certificate’s intoxication exclusion, thus

authorizing Allianz to deny her claim. And she does not

contend that she could successfully overcome Allianz’s

other attacks upon the district court’s judgment even if she

could successfully negotiate the first four obstacles. The

fact is that, whether federal common law or Georgia law

applies to the interpretation of the Plan, Petitioner’s claim

for benefits must eventually be rejected.

Even were that not so, Petitioner has shown no com-

pelling reason why this Court should review the panel

majority's decision regarding the choice of law provision

at this time. Their opinions are well reasoned and correct,

and the “conflicting” cases upon which Petitioner relies

are at best distinguishable or poorly reasoned, and at

worst simply inapplicable. Given the paucity of circuit

court authority on this point, the issue is certainly not

ripe for this Court’s consideration.

*

REASONS FOR NOT GRANTING THE WRIT

I. INTRODUCTION

ERISA’s preemption clause does not preempt plan

provisions or policy provisions. Instead, it states that

10

ERISA “supercede(s) any and all State laws insofar as

they may now or hereafter relate to any employee benefit

plan. ...” 29 U.S.C. § 1144(a) (emphasis added). Thus,

when the clause is applied to the analysis of a contract

provision, it comes into play at the first point at which

the application of “law” is necessary. The Plan and the

Policy and Certificate that fund it are nothing but pieces

of paper that set forth the agreement of the parties — the

Plan Sponsor and the insurer. A contract provision may

be attacked for several reasons: e.g., it requires or forbids

the doing of something expressly forbidden or required

by ERISA; it provides a remedy forbidden by ERISA; or,

as here, the provision is ambiguous and in need of “inter-

pretation.” It is only to the latter situation that the Plan’s

choice of law clause is addressed.’ In construing, or

1 Choice of law provisions frequently cover matters in

addition to “interpretation” of contract terms, such as the

validity of the contract and its enforcement. Such provisions in

ERISA plan documents would obviously raise more

troublesome issues, but ones not present in this case. For

example, the choice of law clause in Wang Laboratories, Inc. v.

Kagan, 990 F.2d 1126, 1128 (9th Cir. 1993), was very broad,

providing that the ” rights and obligations of the parties were to

be ‘governed by the law of Massachusetts, and all questions

pertaining to the validity and construction of such rights and

obligations shall be determined in accordance with such law.’ ”

Wang did not involve the interpretation of a substantive

contract provision stating or chosing a particular limitation

period (the court noted that specific contractual periods in

insurance contracts are generally enforced, id. at 1128), but

rather whether the choice of law clause itself overrode the

general rule that, in ERISA cases, courts generally “borrow” the

contract statute of limitations of the forum state - there

California - or whether the clause required resort to the

Massachusetts statute of limitations under which the suit was

11

interpreting, contract provisions, courts apply “canons of

construction.” In Georgia, for example, many of the

canons are memorialized in statutes, whereas others

appear in the case law. The federal common law also

embraces canons of construction of contracts. E.g., Wick-

man v. Northwestern Nat. Ins. Co., 908 F.2d 1077, 1084 (1st

Cir. 1990), cert. denied, 498 U.S. 1013 (1990) (“Federal

common law on the issue of insurance benefits . . . must

embody common sense canons of contract interpreta-

tion.”) Construing a choice of law provision in an ERISA

plan, the Ninth Circuit in Wang, supra n.1, correctly held

that the proper rule of interpretation is that “[wJhere a

choice of law is made by an ERISA contract, it should be

followed if not unreasonable or fundamentally unfair.”

Id. at 1128-29. To reasonableness and fairness should

obviously be added the qualification that applying the

chosen law cannot result in contravening specific provi-

sions or policies of ERISA. If the panel majority was

correct in giving effect to the Plan’s choice law of provi-

sion, everyone, including the Petitioner and the district

court, agrees that Allianz properly denied Petitioner’s

claim. No provision of ERISA directly addresses the

meaning of “accident” or “bodily injury caused by an

accident,” so ERISA‘s preemption clause does not directly

preempt a state law construction of those terms or

directly void the choice of law provision insofar as it

chooses Georgia law under which to interpret those

timely. That is obviously a much closer question, but, again, one

not here presented. See generally Judge Barkett’s comments

regarding choice of law provisions in the ERISA statute of

limitations issue context. Buce II, 247 F.3d 1153, n.4.

12

terms. Thus, assuming state canons of construction

“relate to” ERISA plans and policies such that ERISA

does preempt them, the precise issue is whether, as a

matter of the federal common law of the construction of

contracts, a court should give effect to the parties’ agree-

ment to look to Georgia law to interpret the Plan’s insur-

ing clause and the definition of “injury” applicable to it?

The Eleventh Circuit Decision

The panel majority correctly answered that question

in the affirmative. In reaching that conclusion the panel

- first found that the definition of “injury” was “vague,”

and then found however that it was given clear meaning

by the Plan’s choice of Georgia law under which to inter-

pret it. Buce II, 247 F.3d at 1147. Under Georgia law, the

Policy is clearly an “accidental means” policy, Laney v.

Continental Ins. Co., 757 F.2d 1190 (11th Cir. 1985) (con-

struing Georgia law), which requires that the injury be

caused by an accident. Buce II, 247 F.3d at 1149-54. A

collision brought about by the insured’s voluntary inges-

tion of alcohol in an amount sufficient to induce a .22%

BAC would not be an accident under Georgia law, and

Allianz survived the Eleventh Circuit's heightened arbi-

trary and capricious standard of review in so finding and

denying the claim. Id.

In rejecting Mrs. Buce’s attack on the choice of law

provision based on ERISA’s preemption clause, the panel

majority held:

There is, of course, no question that ERISA’s

preemptive authority sweeps broadly to pre-

clude the application of provisions of state law

ee wy

13

(statutory or decisional) that would undercut

the uniform implementation of ERISA’s text or

its attendant case law. See Egelhoff v. Egelhoff, 532

U.S. 141, 121 S. Ct. 1322, 149 L. Ed. 2d 264

(2001). The rationale of ERISA’s preemption of

otherwise applicable state law mandates is the

rationale that underlies all federal preemption -

namely, that in enforcing federal law the direc-

tives of the supreme federal sovereign take pre-

cedence over directives of the not-supreme state

sovereign. But when private contracting parties

formulate a choice-of-law provision that, with a

view to defining liability, incorporates state

legal doctrines, those doctrines are not emana-

tions of state authority, they are simply a conve-

nient shorthand for what the private contracting

parties wish to agree to. The pertinent question

to be addressed with respect to such a choice-of-

law provision is, therefore, not a question of the

possible irreconcilability of directives issuing

from two different sovereignties — one federal

and one state. The pertinent question, in short, is

not one of “preemption” in the conventional sense of

that term. The pertinent question is whether the

principles of liability agreed upon by the parties are

inconsistent with the language of ERISA or the

policies that inform that statute and animate the

common law of the statute.

In the case at bar, we have been pointed to

no ERISA statutory language, and no cases for-

mulating the common law of ERISA, which sug-

gest that the agreement of the parties to utilize

Georgia doctrine would be subversive of ERISA

policy.

Id. at 1148 (footnote omitted) (emphasis added).

14

The panel found Petitioner's cases distinguishable, id. at

1148, n.6, and reversed. In her concurring opinion, Judge

Barkett undertook an analysis of 29 U.S.C. § 1144 (a) to

see if Georgia’s cases construing the Policy’s definition of

“injury” are preempted by ERISA as “State laws” that

“relate to” the Plan. She concluded that

[w]hen one looks at ERISA’s preemption clause

in light of Congress’ goals for the entire statute,

it seems clear that Congress was simply ensur-

ing that no state regulation would supersede the

protections provided by the statute’s provisions.

Therefore, consistent with these goals, the

phrase “State laws” in § 1144(a) refers to the

conflicting legislative acts of a state (and any

court interpretation of those legislative acts).

There is nothing in the goals and purposes of

ERISA that extends to non-conflicting agree-

ments to be bound by the decisional law of state

courts in interpreting ambiguous terms in their

contracts.

Id. at 1152

Noting that this Court has not “addressed ERISA pre-

emption in light of private agreements concerning state

law,” she distinguished this Court’s previous ERISA pre-

emption cases and those cases relied upon by Petitioner,

and rejected the Eighth Circuit’s decision in Prudential

Ins. Co. v. Doe, 140 F.3d 785, 790-91 (8th Cir. 1998), reh.

denied, 1998 U.S. App. LEXIS 9881 (1998), as being unsup-

ported by explanation or analysis.? Buce II, 247 F.3d at

1153-54.

2 In any event, the Eighth Circuit’s application of the

Illinois contra preferendum rule in Prudential would have been

(1) unnecessary in view of the court’s holding that the policy’s

15

If this issue is eventually to be decided by this Court,

it is certainly not ripe for consideration at this time and

needs to percolate some more. Nor is this an appropriate

case in which to decide the issue because, even in the

unlikely event Petitioner should prevail on it, the avail-

ability of so many alternate theories under which Alli-

anz’s claim denial will be upheld would result in a

decision on the issue that would have no effect on the

ultimate outcome of the case.*

thirty (30) day limitation was unambiguous, and (2)

inappropriate if the district court’s review of the claim denial

was under the arbitrary and capricious, as opposed to the de

novo standard, which the Eighth Circuit declined to decide, so

the entire discussion of the choice of law clause is a dictum.

3 For example, there is now a substantial body of cases

construing similar provisions under federal common law and

affirming claim denials in the drunk driving context. E.g., Cozzie

v. Metropolitan Life Ins. Co., 140 F.3d 1104, 1110 (7th Cir. 1998)

(affirming summary judgment in favor of administrator where

insured killed in single vehicle collision while driving with BAC

of .252%); Cates v. Metropolitan Life Ins. Co., 149 F.3d 1182 (6th

Cir. 1998) (unpublished opinion — affirming summary judgment

in favor of insurer where insured killed in single vehicle

collision while driving with BAC of .18%); Sorrells v. Sun Life

Assurance Co., 85 F. Supp.2d 1221 (S.D. Ala. 2000) (Same- BAC of

.22%); Strickland v. Aetna Life Ins. Co., Case No. 3:99cv7244

(N.D.Ohio W.Div. February 3, 2000) (denial of claim proper

where insured driver with .22% BAC level died of injuries

suffered in single vehicle crash); Mullaney v. Aetna U.S.

Healthcare, 103 F. Supp.2d 486 (D.R.I. 2000) (Same- BAC .37%);

Wineinger v. Metropolitan Life Ins. Co., 98-459-C-Y\G, 1999 U.S.

Dist. LEXIS 19873 (S.D. Ind. Oct. 15, 1999) (summary judgment

granted to insurer on accidental death claim where insured’s

BAC was .17% and there was no apparent cause for the crash

other than his intoxication, on the ground that the result was

foreseeable); Schultz v. Metropolitan Life Ins. Co., 994 F. Supp.

16

Il.

THE ELEVENTH CIRCUIT CORRECTLY RULED THAT

THE PLAN’S CHOICE OF LAW PROVISION WAS

ENFORCEABLE IN CHOOSING GEORGIA LAW TO

INTERPRET THE INSURING CLAUSE AND DEFINI-

TIONS.

A. Introduction

In her Brief of Appellee in the Eleventh Circuit, pp.

30-31, Petitioner devoted a little more than one page of

her forty-three (43) page brief to the proposition that

“Georgia law does not govern an ERISA case.” In her

Petition, she now argues for the first time that to give

effect to the parties’ choice of Georgia law for the

1419 (M.D. Fla. 1998) (summary judgment granted to insurer

where insured killed in single vehicle collision while driving

with BAC of .29%); Walker v. Metropolitan Life Ins. Co., 24

F. Supp.2d 775 (E.D. Mich. 1997) (AD&D benefits properly

denied where insured died in single-car collision with BAC of

.22%); Bailey v. Metropolitan Life Ins. Co., 1997 U.S. Dist. LEXIS

19480 (M.D.N.C. 1997) (claim properly denied where insured

driver of truck had BAC of .25%); Nelson v. Sun Life Assurance

Co., 962 F. Supp. 1010, 1013 (W.D. Mich. 1997) (benefits denied

where insured died in single-car collision with BAC of .18%);

Miller v. Auto-Alliance Int'l, Inc., 953 F. Supp. 172, 174-175 (E.D.

Mich. 1997) (fatal crash involving person driving while

intoxicated - BAC .29% - not “accidental”); Fowler v.

Metropolitan Life Ins. Co., 938 F. Supp. 476, 480 (W.D. Tenn. 1994)

(“it is clearly foreseeable that driving while intoxicated [BAC

.25%] may result in death or bodily harm”); Smith v. Life Ins. Co.

of North America, 872 F. Supp. 482 (W.D. Tenn. 1994) (no

coverage where alcohol [BAC .23%] at least a partial cause of

automobile collision). See also Baker v. Provident Life & Acc. Ins.

Co., 171 F.3d 939 (4th Cir. 1999) (BAC .286%). But see Metropolitan

Life Ins Co. v. Potter, 992 F. Supp. 717 (D.N.J. 1998) (summary

judgment denied despite BAC of .314%).

17

“interpretation” of the Plan runs afoul of previously

uncited* decisions of this Court, of the Eleventh and

other Circuits, and of ERISA’s goals. Her arguments fail

on all of those fronts.

B. There Is No Directly Contrary Authority

1. Decisions of this Court

Petitioner first argues that the panel majority’s deci-

sion “contravenes this Court’s holdings that ERISA plan

fiduciaries cannot ‘contract out’ of ERISA-based law,”

citing this Court’s decisions in Concrete Pipe and Products

of California, Inc. v. Construction Laborers Pension Trust, 508

U.S. 602 (1993), and Connolly v. Pension Benefit Guarantee

Corp., et al., 475 U.S. 211 (1986). But neither of those cases

involved the enforceability of a choice of law provision

governing the “interpretation” of plan provisions.

Instead, both involved attacks on plan provisions that

limited the liability of employers in a multi-employer

pension plan to the contributions they made to the plan

on behalf of their participating employees. The problem

was that 1980 amendments to ERISA known as MPPAA

added “withdrawal liability” provisions imposing addi-

tional liabilities on employers which withdrew from such

plans. There were no problems with the “interpretation”

of the plan provisions limiting liability, which were crys-

tal clear. Instead, the issue was whether those provisions

could be enforced in the face of MPPAA’s requirements to

* Except for Cagle v. Bruner, 112 F.3d 1510 (11th Cir. 1997),

reh. en banc denied, 124 F.3d 223 (1997), which is so obviously

inapposite that the panel majority did not even mention it.

18

the contrary. The answer was that they could not if

MPPAA is constitutional, and this Court held it is. The

Court’s rationale was simply that private parties cannot

contract out of doing that which Congress commands, a

proposition that surely requires no lengthy defense in

view of the Constitution’s Supremacy Clause. Concrete

Pipe, 508 U.S. at 642-643; Connolly, 475 U.S. at 223-224.

Those two cases are clearly distinguishable from the

instant situation, which only involves an agreement as to

how the Plan’s ambiguous provisions are to be inter-

preted.

2. There is No Conflict with Decisions of

Other Circuits.

Apparently attempting to create a conflict among the

circuit courts on the issue of the effectiveness of choice of

law provisions in ERISA plans, Petitioners next cite Mor-

ton v. Smith, 91 F.3d 867, 871 (7th Cir. 1996), and Prudential

Ins. Co. v. John Doe, 140 F.3d 785, 790-791 (8th Cir. 1998),

as cases where the Seventh and Eighth Circuits have

“rejected the argument that plan fiduciaries may assert

‘choice of law’ provisions to replace the federal common

law that governs ERISA with a state’s common law doc-

trines.” But any mention of the effectiveness of a choice

of law provision in an ERISA benefit plan is dictum in

both cases. -

At issue in Morton was the construction of the “self-

inflicted injury” exclusion in a health care ERISA welfare

benefit plan which had resulted in denial of benefits to

Morton for injuries he suffered when he jumped from the

roof of a bar while “drunk.” The trustees rejected his

19

appeal and he sued and lost. On appeal, he tried to

persuade the court to apply the Illinois contra preferendum

rule of contract interpretation® to the benefit plan based

on an Illinois choice of law provision contained in the

Plan trust instrument. The Seventh Circuit rejected that

argument on the basis that the choice of law provision in

the trust instrument expressly applied only to “this

Instrument” and was not applicable to the health care

benefit plan, which was contained in a different docu-

ment. Morton, 91 F.3d at 871. In dictum, the court went on

to opine that the choice of law provision could not in any

event be enforced, stating that “[t]he federal common law

of ERISA preempts most state law in regulating the inter-

pretation of benefit plans.” Id. at 871 (footnote omitted).

Moreover, that statement was a double dictum because of

the rule, to which the court correctly alluded in footnote

number 1 on page 871, that where, as there, the district

court reviewed the trustees’ interpretation of ambiguous

plan language for abuse of discretion, the contra preferen-

dum rule has no application because on that type of

review the inquiry is not, as it would be under de novo

review, whether the trustee’s interpretation of the plan

language was legally the only correct interpretation, but

simply whether it was one of the reasonable available

alternative interpretations. Thus, Morton does not directly

and unequivocally hold that a choice of law clause in an

ERISA benefit plan is ineffective and it does not directly

conflict with the panel majority’s decision below.

> The rule that ambiguous provisions in contracts are

construed most strongly against the drafter.

20

Prudential involved the interpretation of an ERISA

health benefit plan provision that limited benefits for the

hospital inpatient treatment of mental disorders to 30

days. Prudential denied the claim for benefits beyond the

30-day limit and Doe appealed on the basis that his

-daughter’s illness was not a “mental illness” within the

meaning of the limitation clause and therefore the limita-

tion should not apply. The district court affirmed Pruden-

tial’s denial, apparently under the abuse of discretion

standard. The Eighth Circuit declined to decide whether

the standard of review should have been abuse of discre-

tion or de-novo, finding that the result would be the same

under either standard. Prudential, 140 F.3d at 790. Appar-

ently, the Plan contained a clause that chose Illinois law

as applicable to the Plan, but the decision does not quote

the clause. Doe argued that the clause required applica-

tion of Illinois’ contra preferendum rule to the 30-day lim-

itation. The district court had declined to apply Illinois

law “to the issue of benefit denial.” The Eighth Circuit

agreed, citing Brewer v. Lincoln Nat. Life Ins. Co., 921°F.2d

150 (8th Cir. 1990), cert. denied, 501 U.S. 1238 (1991), an

ERISA case that did not involve a choice of law provision.

Brewer declined to apply the Illinois contra preferendum

rule because the Eighth Circuit had adopted a different

rule for the construction of substantive plan provisions

that are ambiguous (in the absence in a choice of law

clause): that, under federal common law, plan terms

should be interpreted as they would be understood by a

layman. Id. at 154. The Prudential court then stated that

“[t]he choice of law provision in the contract does not

alter the outcome here, for parties may not contract to

choose state law as the governing law of the ERISA-

21

governed benefit plan.” Prudential, 140 F.3d at 791. That

statement may be correct, but has no application to a

choice of law clause that simply chooses state law to

“interpret” ambiguous terms, as opposed to “governing”

the entire contract, which is a totally different concept.

The attempt of the Prudential court to use Brewer to boot-

strap itself into a rationale for rejecting a choice of law

provision is unavailing — the two cases are entirely differ-

ent.

Moreover, the Prudential court’s refusal to decide

whether the district court correctly applied the abuse of

discretion standard is significant and potentially outcome

determinative in and of itself, and renders the reference

to the choice of law issue a dictum. As the Seventh Circuit

discussed in Morton, see supra, if the insurer’s interpreta-

tion of ambiguous plan language is reviewed for abuse of

discretion, the contra preferendum/“layman’s understand-

ing” dispute is irrelevant and the only questions are: (1)

what are the available reasonable alternatives for inter-

preting the contested ambiguous plan language and (2)

did the insurer/review panel choose one of them? The

dispute would only be applicable in the de novo review

situation, and the Eighth Circuit declined to hold which

standard was involved. It is also dictum because of the

Court’s specific holding that “Prudential’s limitation of

coverage ... is unambiguous,” Prudential, 140 F.3d at 791,

with the result that under either state law or federal law

no “interpretation” would be required. Both members of

the panel majority specifically rejected Morton and Pru-

dential. Buce II, 247 F.3d at 1149, n.6 & 1154.

Thus, unlike this case, in which the Eleventh Circuit

- clearly and unambiguously gave effect to a choice of law

_

22

clause in an ERISA benefit plan that chose state law for

the “interpretation” of ambiguous plan language, Morton

and Prudential at best contain language, not supported by

extensive discussion or persuasive rationale, indicating

that they would reject such a clause. However, that lan-

guage is dictum in both cases and not sufficient to support

review by this Court at this time.

3. Displacement of ERISA Federal Law

In Section III of her Petition, Petitioner argues that

“state common law cannot displace ERISA federal law.”

However, the cases she cites deal largely with benefici-

aries seeking remedies or other enforcement measures

that directly conflict with specific parts of the ERISA

statutory scheme. E.g., Pilot Life Ins. Co. v. Dedeaux, 481

U.S. 41 (1987) (ERISA’s comprehensive scheme of

remedies preempts state law tort claims, punitive dam-

ages claims, etc., based upon benefit denials). None of the

cases cited deal at all with the effectiveness of a provision

choosing state law to “interpret” ambiguous plan terms.

4. ERISA’s Goals

Finally, Petitioner argues that “the Eleventh Circuit’s

decision threatens ERISA’s well-established goals” of pro-

tection of the interests of employees and uniformity of

Plan administration. The truth is, however, that choosing

the law of a single state under which to interpret the

terms of a particular plan issued by a multi-state

23

employer actually promotes uniformity.® District courts in

different circuits may adopt different federal common

law constructions of similar plan language, and it may -

take years for the conflict to work its way through the

circuit courts and on to this Court to produce a final,

single interpretation. But, where, as here, a state already

has an extensive body of law construing similar policy

language, allowing the parties to the plan to chose that

state’s law for plan interpretation is simply a “convenient

shorthand for what the private contracting parties wish

to agree to.” Buce II, 247 F.3d at 1148.

The panel majority specifically and correctly rejected

the notion that allowing the parties to specify the law of a

particular state under which to interpret ambiguous plan

provisions contravenes any specific ERISA provision or

frustrates its goals and policies. Id. at 1148, 1152.

o

CONCLUSION

The Eleventh Circuit’s reversal of the district court’s

judgment in this case is correct under several different

theories. Petitioner’s attack on the Plan’s choice of law

provision would, even if successful, not change that

result. There is no question but that the ERISA statute

“governs” ERISA welfare benefit plans, or that, to the

6 Certainly the district court’s application of federal

common law to the plan definitions in this case did not promote

uniformity. Compare Buce I with the numerous contrary

decisions cited in footnote 3, supra, which the district court

refused to follow.

24

extent a concept is not specifically contained in ERISA,

this Court has directed the development of a body of

federal common law to fill in the blanks. But the first

stage in dealing with a dispute regarding a plan provision

is to interpret it, and that is the first occasion for the

application of federal common law. Federal common law

recognizes standard canons of construction such as giv-

ing effect to the intent of the parties, giving words their

ordinary meanings, and requiring that the court in the

first instance (1) determine whether a provision is ambig-

uous and (2), if so, “interpret” it - that is, give it a

definite meaning (again, using canons of construction).

It is only after the court has determined the meaning

of the plan provision that the question arises whether the

provision contravenes ERISA’s specific provisions or frus-

trates ERISA’s policies and goals. At this point in the

process, it is no longer an exercise in “interpretation,”

requiring instead a comparison of the plan provision as

already “interpreted” with the ERISA statute. The Elev-

enth Circuit panel majority’s two carefully considered

opinions correctly analyzed this issue and reached the

correct conclusion. This Court has not addressed the

issue and no other circuit has directly held to the con-

trary, much less given the issue the thoughtful treatment

it deserves. If this Court is eventually to address the

issue, it should wait to see whether other circuits, after

giving the issue the analysis it requires, reach a result

contrary to that reached by the Eleventh Circuit.

25

This Court should not issue a Writ of Certiorari.

Respectfully submitted,

Douctas N. CAMPBELL

Counsel of Record

Doucias CampseLt & Associates, P.C.

4776 East Conway Drive, N.W.

Atlanta, Georgia 30327

404-256-3633; Telecopier 404-256-0423

dougcampbell@mindspring.com

App. 1

APPENDIX

O.C.G.A. § 40-6-391 (1999)

§ 40-6-391. Driving under the influence of alcohol,

drugs or other intoxicating substances; penalties; publica--

tion of notice of conviction for persons convicted for

second time; endangering a child

(a)- A person shall not drive or be in actual physical

control of any moving vehicle while:

(1) Under the influence of alcohol to the extent

that it is less safe for the person to drive;

* * *

(5) The person’s alcohol concentration is

0.10 grams or more at any time within three

hours after such driving or being in actual phys-

ical control from alcohol consumed before such

driving or being in actual physical control

ended; or

Tenn. Code Ann. § 55-10-401 (1999)

55-10-401. Driving under; the influence of intoxicant, drug

or drug producing stimulant prohibited — Alcohol con-

centration in blood or breath

(a) It is unlawful for any person to drive or to be in

physical control of any automobile or other motor driven

vehicle on any of the public roads and highways of the

state, or on any streets or alleys, or while on the premises

of any shopping center, trailer park or any apartment

house complex, or any other premises which is generally

frequented by the public at large, while:

App. 2

(1) Under the influence of any intoxicant, mari-

juana, narcotic drug, or drug producing stimulating

effects on the central nervous system; or

(2) The alcohol concentration in such person’s

blood or breath is ten-hundredths of one percent (.10%)

or more.

(b) For the purpose of this section, “drug producing

stimulating effects on the central nervous system”

includes the salts of barbituric acid, also known as mal-

onyl urea, or any compound, derivatives, or mixtures

thereof that may be used for producing hypnotic or som-

nifacient effects, and includes amphetamine, desox-

yephedrine or compounds or mixtures thereof, including

all derivatives of phenolethylamine or any of the salts

thereof, except preparations intended for use in the nose

and unfit for internal use. :