Opposition Brief — Sommer v. UNUM Life Insurance Co. of America

a FILED

Y) SEP 12 2002

No. 02-203 i

In The

Supreme Court of the United States

¢

ALEXANDER P. SOMMER

and his counsel, JOHN G. WARNER,

Petitioners,

vs.

UNUM LIFE INSURANCE COMPANY OF AMERICA,

Respondent.

¢

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

4

OPPOSITION BRIEF OF RESPONDENT

UNUM LIFE INSURANCE COMPANY OF AMERICA

TO PETITION FOR WRIT OF CERTIORARI

¢

RIMAC & MARTIN, P.C.

WILLIAM REILLY

JOSEPH M. RIMAC

Counsel of Record

1700 California Street, Suite 470

San Francisco, CA 94109

(415) 561-8440

Attorneys for Respondent

UNUM Life Insurance

Company of America

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

OR CALL COLLECT (402) 342-2831

RULE 29.6 DISCLOSURE STATEMENT

The undersigned, counsel of record for UNUM LIFE

INSURANCE COMPANY OF AMERICA, certifies that the

following listed party has a direct, pecuniary interest in

the outcome of this case.

UNUMProvident Corporation

UNUM Life Insurance Company of America

ii

TABLE OF CONTENTS

Page

I. CITATIONS TO OPINIONS BELOW ..........++ 1

Il. STATEMENT OF THE CASE AND PRO-

CEREDINGS..........ccccscoscccssssssssesssscrnnneneasensences 1

III. REASONS FOR DENYING THE WRIT ......... 8

1. SOMMER III WAS BARRED BY THE

DOCTRINE OF RES JUDICATA ........--+- 11

29. SOMMER I WAS A FINAL DECISION

ON THE MERITG...........:::seeeeesererererenenees 17

3. SUMMARY JUDGMENT IS AN APPRO-

PRIATE ACTION WHERE A PLAINTIFF

HAS FAILED TO EXHAUST ERISA AD-

MINISTRATIVE REMEDIES ..........-++0++00++ 18

TV. CONCLUSION ..........-sssscsesrrrececerreesnrersesenersen® 22

TABLE OF AUTHORITIES

Page

CASES

Costantini v. Trans World Airlines, 681 F.2d 1199

(Othe Cir, 1982) ...........-scsssccssorsssenenssseneneesenernnsnenesensesennenes 13

Denton v. First National Bank of Waco, Texas, 765

F.2d 1295 (Sth Cir. 1985)........seccseserersssssseretecsseesesnens 8, 12

Diaz v. United Agricultural Employee Welfare

Benefit Plan and Trust, 50 F.3d 1478 (9th Cir.

DOE) ccccvessorcssinoesardscossesvnqevosoncavnnnsestonesovsosocnsenons 20, 21, 22

Foman v. Davis, 371 U.S. 178 (1962) .....ceseeccceesesreeeensreeees 11

Griffith v. Wainwright, 772 F.2d 822 (11th Cir.

I cas sblvvsbeniauncnnrorsvenvnnceenvdavenpenniiepnceantorenennenent® 11

Harris v. Jacobs, 621 F.2d 341 (Oth Cir. 1980)..........:eeee 13

Hoffman v. Babbitt Bros. Trading Co., 203 F.2d 636

(9th Cir, 1953) ......c.cssccsscoosssesesssensesenonvensnnensonesenarsossoneens 11

International Union of Operating Engineers-

Employers Construction Industry Pension, Wel-

fare and Training Trust Funds v. Karr, 994 F.2d

1426 (Oth Cir. 1993)........cssssssseersrsrenrssserenenenensesenrensorses 16

Lester v. NBC, 217 F.2d 399 (9th Cir. 1954), cert.

denied, 348 U.S. 954, 75 S. Ct. 444, 99 L. Ed. 746

I 56 iclccsahsnshcsrssecnednseonasabhivoiekenstivnsneseevenoanrunsneesenceses 16

Pengilly v. The Guardian Life Insurance Co. of

America, 81 F.Supp.2d 2010 (N.D.Cal. 2000).........++--++ 21

Rand v. Rowland, 154 F.3d 952 (9th Cir. 1998) .........-++++ 11

Sarraf v. Standard Ins. Co., 102 F.3d 991 (9th Cir.

DUIS. sncnnscasenvate\nusnaneivinsinenrasonsanegnenecroanananensnnnnensenne® 22

Scoggin v. Schrunk, 522 F.2d 436 (9th Cir. 1975),

cert. denied, 423 U.S. 1066, 96 S.Ct. 807, 46

L. Ed. 2d 657 (1976) ......cssescesesserserssenesssesennenenensssnenens +16

iV

TABLE OF AUTHORITIES — Continued

Page

Sommer v. UNUM, 1999 U.S. LEXIS 5382 (9th Cir.

TODD) giosncsnsssusaiescsssussonsenvensscovennnnvenensnonnenonsensuseneetets 6, 16, 19

Sommer v. UNUM, 1999 U.S. LEXIS 5388 (9th Cir.

SEI ..sscysrunenseiocesnpsneneiesnainonenenepunnnbenneconemmnssoenennn=* passim

Sommer v. UNUM Life Ins. Co. of Am., 35 Fed.Appx.

489, 2002 WL 972177 (Oth Cir. 2002) .......seceeecreeees passim

Stein v. Wood, 127 F.3d 1187 (Oth Cir. 1997) ........sseeceeereees 5

White v. Jacobs Eng’g Group, 896 F.2d 344 (9th Cir.

SII, sosnseensscivcrecucroensecerinennmiienoneiectesian ete amy atenn tenner 19

FEDERAL STATUTES

Employee Retirement Income Security Act of 1974

(“ERISA”), 29 U.S.C. Sections 1001, et seq.......--++ passim

RULES

Federal Rule of Civil Procedure 11........:cesscecsesrreeessreesesees 9

Federal Rules of Civil Procedure 12(b)(6) ......sssesesseeseeesees 11

Federal Rule of Civil Procedure 59(a) .........sseee+++9 eat Re 12

Federal Rule of Civil Procedure | en 7, 10, 12, 17, 18

OTHER

Wright, Miller & Kane, Federal Practice and

Procedure: Civil 2d § 2713 (2d ed. 1983) .......--eeeeeeereeeer® 11

Wright, Miller & Kane, Federal Practice and

Procedure: Jurisdiction § 4444 (1981) ......sccccseeerreceeseeees 11

1

I. CITATIONS TO OPINIONS BELOW

The opinion of the Ninth Circuit Court of Appeals is

reproduced in Petitioner’s Appendix (“P's App.”) at 1-8

(Sommer v. UNUM Life Ins. Co. of Am., 35 Fed.Appx. 489,

2002 WL 972177 (9th Cir. 2002).

The opinion of the District Court denying Petitioner's

motion to correct a clerical mistake is reproduced in

Petitioner’s Appendix at 9-24.

The opinion of the District Court entering judgment in

favor of UNUM Life Insurance Company of America

(“UNUM”) is reproduced in Respondent’s Appendix (“R’s

App.”) at 1-10.

Il. STATEMENT OF THE CASE AND PROCEED-

INGS

Alexander P. Sommer, a securities firm account

executive, was an insured under a UNUM group long-term

disability plan, established by his former employer Piper

Jaffray, Inc. Mr. Sommer was apparently employed by

Piper Jaffray from December 1992 through August 1994.

After Piper Jaffray terminated Mr. Sommer’s employment

in August, 1994, he then went to work for Wedbush Mor-

gan Securities. Mr. Sommer was insured under another

UNUM group long-term disability plan, established by his

next employer, Wedbush Morgan Securities. Mr. Sommer

was apparently employed by Wedbush Morgan Securities

from August 1994 through January 1996. Despite the fact

that Mr. Sommer was employed from 1992 through 1996,

he submitted disability claims in 1995 in which he as-

serted that he was and had been disabled since 1988. (P’s

App. 10). UNUM denied Mr. Sommer’s claim because,

among other reasons, he was working full-time during the

2

period that he claimed that he could not perform all of the

material duties of his regular occupation. Mr. Sommer did

not appeal the denial of his claim under the Wedbush plan

within sixty days, as required by the plan and ERISA. (P’s

App. 11). The denial of Mr. Sommer’s disability claim lead

to the ever-reoccurring stream of litigation described

below.

Mr. Sommer has litigated this identical disability

claim under the same UNUM disability policies’ in

THREE separate District Court filings and FOUR Ninth

Circuit Appeals. In Sommer I, the Honorable D. Lowell

Jensen granted UNUM’s motion for summary judgment

regarding Mr. Sommer’s disability claims against UNUM

under the Wedbush Morgan Securities group long-term

disability policy, at issue here. Specifically, as to Mr.

Sommer’s claim under the Wedbush group policy, Judge

Jensen held that his claim was barred for failure to ex-

haust administrative remedies and granted summary

judgment in favor of UNUM. (P's App. 3 & 11).

Mr. Sommer filed a motion for reconsideration of the

summary judgment entered against him in Sommer I,

pursuant to F.R.C.P. Rule 59(a), which was denied by

Judge Jensen on August 4, 1997. (P’s App. 12). Mr. Som-

mer did not allege in his motion for reconsideration that

there were any clerical errors in the summary judgment.

Additionally, Mr. Sommer did not assert in his motion for

1 Here, Mr. Sommer only contests the denial of his disability

benefits under the Wedbush policy, that was affirmed by the District

Courts and the Ninth Circuit on at least six separate occasions. Mr.

Sommer is not contesting the denial of his disability claim under the

Piper Jaffray policy.

3

reconsideration that the judgment entered should actually

have been a dismissal without prejudice. Instead, Mr.

Sommer argued that he should have been excused from

exhausting his administrative remedies because exhaus-

tion would have been futile. The District Court rejected

Mr. Sommer’s argument because plaintiff had every

opportunity to raise the futility argument in response to

UNUM’s summary judgment motion, but failed to do so.

Thus, the trial Court would not consider this argument on

a motion for reconsideration. Since Mr. Sommer was

apparently unsatisfied with Judge Jensen’s decision, he

appealed Sommer I to the Ninth Circuit on August 14,

1997. (P’s App. 12).

In addition to filing his appeal of Sommer I, on or

about August 29, 1997, Mr. Sommer proceeded to refile

identical claims for disability benefits with UNUM under

the same policies and based upon the same disabilities,

which had been previously adjudicated by Judge Jensen

and which were now pending before the Ninth Circuit. Mr.

Sommer refiled these claims with UNUM based upon the

same purported disabilities as had been finally adjudi-

cated by Judge Jensen in Sommer I. (P’s App. 18).

UNUM responded to Mr. Sommer’s refiled August 29,

1997 claims through its attorneys, because of the pending

appeal of Sommer I. UNUM’s attorneys informed Mr.

Sommer’s attorney that the matter was in litigation, and,

therefore, requested that all future communications from

Mr. Sommer be directed to UNUM’s attorneys, informed

Mr. Sommer that any disability claims that he could

possibly have had under the UNUM policies had been

finally adjudicated by Judge Jensen, and that the policies

terminated by their terms when Mr. Sommer completed

his employment with Piper Jaffray in August 1994 and

ee Ke

4

with Wedbush in January 1996. Thus, any claim arising

after January 1996 (the termination of the last UNUM

policy available to Mr. Sommer) could not possibly be

covered by any UNUM policy. (P’s App. 19).

On November 13, 1997, Mr. Sommer filed a second

action in District Court against UNUM (“Sommer IT’) case

number C-97-4159. (Ps App. 12). In Sommer II, Mr.

Sommer contended that he was entitled to benefits under

the same UNUM disability policies as a result of the same

purported 1988 illness that was the subject of the earlier

claim and lawsuit. Sommer II alleged claims against

UNUM for past disability benefits, future benefits, and

breach of fiduciary duty under the same UNUM disability

policies based upon the purported August 29, 1997 claim

submission to UNUM that was responded to by UNUM’s

attorneys. (P’s App. 12).

On February 17, 1998, UNUM filed and served a

Motion to Dismiss Sommer II on the grounds that the

claims asserted therein had been previously submitted

and completely adjudicated in Sommer I. In response, Mr.

Sommer filed a Motion for Partial Summary Judgment of

Sommer II, asking the District Court to hold as a matter of

law that he was entitled to disability benefits and that

UNUM breached its fiduciary duties under ERISA. Mr.

Sommer argued that UNUM failed to re-review his re-

submitted claim in 1997, and that such failure constituted

both grounds for awarding benefits and a breach of fiduci-

ary duty. In UNUM’s opposition to Mr. Sommer’s motion

for partial summary judgment and in UNUM’s motion to

dismiss, it asserted that Mr. Sommer’s claims were barred

by the principles of res judicata.

Bi

5

The hearing of UNUM’s Motion to Dismiss and Mr.

Sommer’s Motion for Partial Summary Judgment of

Sommer II occurred on March 23, 1998. At the hearing,

Mr. Sommer’s counsel conceded that every issue raised in

Sommer II was raised in Sommer I, and was pending

before the Ninth Circuit in the appeal of that action.

Judge Armstrong of the District Court issued an

Order granting UNUM’s Motion to Dismiss and denying

Mr. Sommer’s Motion for Partial Summary Judgment in

Sommer II, on March 27, 1998, based upon Stein v. Wood,

127 F.3d 1187 (9th Cir. 1997). Judge Armstrong ruled that

she did not have jurisdiction to adjudicate the issues

raised in Sommer II because all of these claims were

already pending before the Ninth Circuit in the appeal of

Sommer I. Moreover, Judge Armstrong held that, if the

court had jurisdiction, Mr. Sommer’s claims were barred

by res judicata. The court further sanctioned Mr. Sommer

$1,000 under F.R.C.P. Rule 11. (P's App. 12). Mr. Sommer

proceeded to appeal Sommer II to the Ninth Circuit. (9th

Cir. Case No. 97-16340). (P’s App. 12).

On March 24, 1999, after briefing of Sommer I and II

and oral argument, the Ninth Circuit affirmed the ruling

in Sommer I and held that “Sommer cannot survive

UNUM’s motion for summary judgment, even under a de

novo standard.” Further, the Ninth Circuit held that “the

district court did not abuse its discretion in declining to

consider Sommer’s argument that exhaustion of adminis-

trative remedies would be futile. Sommer’s argument was

presented for the first time in a motion for reconsideration

following the grant of summary judgment for UNUM and

was based on evidence that Sommer had before him at the

time of briefing the summary judgment motion.” See

Sommer v. UNUM, 1999 U.S. LEXIS 5388 (9th Cir. 1999).

6

Additionally, as to Sommer II, the Ninth Circuit affirmed

the “district court’s dismissal of his [Sommer IT] complaint,

summary judgment in favor of UNUM ... [and affirmed

the] denial of Sommer’s motion for partial summary

judgment.” The Ninth Circuit further ruled that Mr.

Sommer’s claims in Sommer II were “barred by the doc-

trine of res judicata.” See Sommer v. UNUM, 1999 U.S.

LEXIS 5382 (9th Cir. 1999).

Then, just as he had done in August, 1997 before filing

Sommer II, in January, 2000, Mr. Sommer proceeded to

attempt to refile with UNUM for a third time, the same

disability claims based upon the same purported disability,

on the same UNUM policies (which had terminated years

before). Again, UNUM’s counsel informed Mr. Sommer’s

counsel that his claim had been finally adjudicated by the

Ninth Circuit and that his attempt to submit another

claim to UNUM, after the matter had been resolved on the

merits by the Ninth Circuit, was improper. Mr. Sommer’s

counsel then filed a third action, Sommer v. UNUM, Case

#00-1368 SBA (“Sommer IIT’), which is the subject of this

Petition for Writ of Certiorari. (P’s App. 13).

By refiling his disability claim with UNUM for a

third time and refiling his lawsuit against UNUM for a

third time, Mr. Sommer was again merely improperly

attempting to circumvent Judge Jensen's, Judge Arm-

strong’s and the Ninth Circuit’s prior rulings, which all

had become final. In opposing UNUM’s motion to dismiss

in Sommer III, Mr. Sommer attempted to argue, as he has

here, that the summary judgment granted in favor of

UNUM in Sommer I was actually a dismissal without

prejudice because the basis of the summary judgment was

that he failed to exhaust his administrative remedies

under ERISA. Judge Armstrong entered judgment against

ee

7

Mr. Sommer finding that Judge Jensen’s decision of June

17, 1997 granting summary judgment in Sommer I was a

final judgment on the merits of the same claim that

plaintiff raised in Sommer III. (P’s App. 3). Judge Arm-

strong dismissed Sommer III again based upon the doc-

trine of res judicata.

Further, Judge Armstrong found that the Sommer III

complaint was frivolous. Sommer’s counsel “should have

known, after Sommer I and Sommer II, that the claim for

benefits under the Wedbush policy was barred by the

doctrine of res judicata.” (P’s App. 5). Judge Armstrong

sanctioned Mr. Sommer’s counsel $2,500 to serve as a

deterrent to further frivolous litigation and awarded

UNUM its attorneys’ fees. (P’s App. 3).

After Judge Armstrong rejected the argument in

Sommer III that the summary judgment granted in favor

of UNUM in Sommer I was actually a dismissal without

prejudice, true to form, Mr. Sommer filed with Judge

Jensen what purported to be a F.R.C.P. Rule 60(a) motion

to correct a clerical error in the judgment of Sommer I. (P's

App. 9). Judge Jensen denied Mr. Sommer’s motion finding

that the Court granted summary judgment in favor of

UNUM in Sommer I with respect to the Wedbush policy on

the grounds that plaintiff had failed to exhaust his

administrative remedies. Further, in finding that the

summary judgment issued in Sommer I was not a clerical

error and that the Order was exactly as the Court in-

tended, the Court stated as follows:

The Court finds that a plain reading of the Order

indicates the Court’s intention to grant summary

judgment, with its attendant consequences to

plaintiff. First, the Court unequivocally used

the words “summary judgment,” and entered a

RON | en Sa Le EE St Ae

8

separate judgment on the same day against

plaintiff and in favor of UNUM. See Judgment of

June 17, 1997. Second, the Order made no men-

tion of plaintiff’s return to this Court after ex-

haustion. Third, the Order cited Denton v. First

National Bank of Waco, Texas, 765 F.2d 1295 (5th

Cir. 1985), [cases that supported the issuance of

summary judgment for failure to exhaust admin-

istrative remedies].

(P’s App. 22).

Thereafter, Mr. Sommer filed two notices of appeal,

one appealing Judge Jensen’s Order denying his motion to

correct a clerical mistake and the other appealing Judge

Armstrong’s dismissal of Sommer III based upon the

doctrine of res judicata. Mr. Sommer’s counsel also ap-

pealed the $2,500 Rule 11 sanction award and the award

of attorneys’ fees against him issued by Judge Armstrong

in Sommer III.

The Ninth Circuit affirmed the Order denying Mr.

Sommer’s motion to correct a clerical mistake and Judge

Armstrong’s dismissal of Sommer III based upon the

doctrine of res judicata. Those rulings are the subject of

this Petition for Writ of Certiorari. Additionally, the Ninth

Circuit affirmed the $2,500 Rule 11 sanction award and

the award of attorneys’ fees against Mr. Sommer’s counsel

issued by Judge Armstrong in Sommer III. See Sommer v.

UNUM, 35 Fed.Appx. 489, 2002 WL 972177 (9th Cir.

2002).

III. REASONS FOR DENYING THE WRIT

Beginning in the mid-1990s, Alexander Sommer

sought disability benefits under policies he obtained

9

through his employer, Wedbush. Following denial of

benefits by UNUM, he sued in federal court. The Ninth

Circuit’s consideration of Sommer’s last Ninth Circuit

appeal was the fifth given to his case in the federal courts.

Sommer v. UNUM Life Ins. Co. of Am., 35 Fed.Appx. 489,

2002 WL 972177 (9th Cir. 2002). This Petition for Writ of

Certiorari amounts to Sommer’s sixth foray into the

federal courts on the same disability claim.

District Court Judge Jensen issued a final judgment

in Sommer I. The Ninth Circuit affirmed the summary

judgment. Sommer v. UNUM Life Ins. Co. of Am., 1999

WL 173570, 1999 U.S. LEXIS 5388 (9th Cir. 1999). Som-

mer filed his claim with UNUM again. His claim was for

the same disability under the same policy, so UNUM

rejected it again. Following this second rejection, Sommer

filed his second suit in federal district court. In Sommer il,

District Judge Armstrong dismissed the case based on lack

of jurisdiction because Sommer I was pending before the

Ninth Circuit and also imposed $1,000 in Rule 11 sanc-

tions. She noted that even if the court did have jurisdic-

tion, Sommer II would be barred by res judicata as a result

of Sommer I. The Ninth Circuit agreed, affirming on res

judicata grounds. Sommer v. UNUM Life Ins. Co. of Am.,

1999 WL 173592, 1999 U.S. LEXIS 5382 (9th Cir. 1999).

After yet another rejection of the same disability claim by

UNUM, Sommer brought a third suit, again in Judge

Armstrong’s court. The district court dismissed Sommer

III on res judicata grounds. The district court also imposed

$2,500 in Rule 11 sanctions and assessed attorneys’ fees

and costs against Sommer’s attorney pursuant to 29

U.S.C. § 1132(g)(1).

Sommer appealed the Sommer III decisions, as well as

Judge Jensen’s refusal to amend his final judgment in

SE

10

Sommer I per Sommer’s Rule 60(a) motion. The Ninth

Circuit affirmed the Sommer III district court’s decision in

all respects and affirmed the Sommer I court’s denial of

Sommer’s Rule 60(a) motion for correction of a clerical

mistake. Sommer v. UNUM Life Ins. Co. of Am., 35

Fed.Appx. 489, 2002 WL 972177 (9th Cir. 2002).

This Petition for Writ of Certiorari purportedly seeks

the review of the Ninth Circuit’s ruling affirming Sommer

III. However, the “Question Presented” by Sommer herein

— “Did the Court of Appeals for the Ninth Circuit commit

judicial error by concluding that in an ERISA case a

beneficiary under a long-term disability plan is barred by

the doctrine of res judicata from filing a second lawsuit to

enforce his or her entitlement to benefits, after subse-

quently exhausting his or her administrative remedies?” —

was not at issue in Sommer III. Accordingly, this Court

must reject Sommer’s Petition because Sommer does not

have standing to raise the issue presented.

If Sommer wished to dispute District Court Judge

Jensen’s issuance of a final judgment, instead of a dis-

missal without prejudice, in Sommer I, he needed to raise

that issue in the appeal of Sommer I. Sommer v. UNUM

Life Ins. Co. of Am., 1999 WL 173570, 1999 U.S. LEXIS

5388 (9th Cir. 1999). He did not. He is now foreclosed from

doing so by the doctrine of res judicata. Sommer cannot

avoid the doctrine of res judicata by simply refiling his

action over and over again.

The only issues that Mr. Sommer can challenge in this

Petition for Writ of Certiorari are the Ninth Circuit's

affirmance of Judge Armstrong’s ruling in Sommer III that

the action was barred by the doctrine of res judicata and

Judge Jensen’s denial of Mr. Sommer’s purported Rule

11

60(a) motion. Sommer has not raised that issue and

Respondent respectfully urges this Honorable Court to

deny the Petition for Writ of Certiorari.

1. SOMMER III WAS BARRED BY THE DOC-

TRINE OF RES JUDICATA

The Ninth Circuit has long recognized that summary

judgment affects substantive rights. See Hoffman uv.

Babbitt Bros. Trading Co., 203 F.2d 636, 637 n.1 (9th Cir.

1953). While a complaint that is sought to be dismissed

under Rule 12(b)(6) can often be amended, see, e.g.,

Foman v. Davis, 371 U.S. 178, 182, (1962); Wright, Miller

& Kane, Federal Practice and Procedure: Civil 2d § 2713

(2d ed. 1983), a grant of summary judgment is a final

adjudication on the merits. See Rand v. Rowland, 154 F.3d

952, 957 (9th Cir. 1998) citing Griffith v. Wainwright, 772

F2d 822, 825 (11th Cir. 1985); Wright, Miller & Cooper,

Federal Practice and Procedure: Jurisdiction § 4444

(1981). The Griffith Court explained that the disposition of

a case on summary judgment grounds represents a final

adjudication on the merits and forecloses subsequent

litigation of the matter. See Griffith, 772 F.2d at 825.

Here, although Mr. Sommer characterizes Judge

Jensen’s ruling in Sommer I as a dismissal, the facts

establish that summary judgment was entered in favor of

UNUM. (See Sommer v. UNUM, 1999 U.S. LEXIS 5388,

*2 (9th Cir. 1999) “Alexander P. Sommer (“Sommer”)

appeals from the district court's summary judgment in favor

of UNUM Life Insurance Company (“UNUM”) and the Paul

Revere Life Insurance Company (“Paul Revere”). We have

jurisdiction under 28 U.S.C. § 1291 and we afhirm.”). More-

over, this fact was confirmed again by Judge Jensen, when

el

12

he denied Mr. Sommer’s purported F.R.C.P. Rule 60(a)

motion to correct a clerical error in the judgment of Som-

mer I. (P’s App. 9). Judge Jensen denied Mr. Sommer’s

motion finding that the Court granted summary judgment

in favor of UNUM in Sommer I with respect to the Wed-

bush policy on the grounds that plaintiff had failed to

exhaust his administrative remedies. Further, in finding

that the summary judgment issued in Sommer I was not a

clerical error and that the Order was exactly as the Court

intended, the Court stated as follows:

The Court finds that a plain reading of the Order

indicates the Court’s intention to grant summary

judgment, with its attendant consequences to

plaintiff. First, the Court unequivocally used the

words “summary judgment,” and entered a sepa-

rate judgment on the same day against plaintiff

and in favor of UNUM. See Judgment of June 17,

1997. Second, the Order made no mention of

plaintiff’s return to this Court after exhaustion.

Third, the Order cited Denton v. First National

Bank of Waco, Texas, 765 F.2d 1295 (5th Cir.

1985), [cases that supported the issuance of

summary judgment for failure to exhaust admin-

istrative remedies].

(P’s App. 22).

Accordingly, Judge Jensen’s disposition of Sommer I

on summary judgment grounds represented a final

adjudication on the merits.

For the same reasons that the Ninth Circuit decided

that Sommer II was barred by the doctrine of res judicata,

Sommer III was also barred. In making its finding that

Sommer II was barred by the doctrine of res judicata the

Ninth Circuit stated as follows:

13

Sommer’s claims are barred by the doctrine of

res judicata. Res judicata bars the relitigation of

claims raised (or that could have been raised)

and adjudicated in a prior lawsuit involving the

same parties. Costantini v. Trans World Airlines,

681 F.2d 1199, 1201 (9th Cir. 1982). Whether a

suit involves the same “claim” as an earlier suit

is determined by looking at four factors:

“(1) whether rights or interests established in the

prior judgment would be destroyed or impaired

by prosecution of the second action; (2) whether

substantially the same evidence is presented in

the two actions; (3) whether the two suits involve

infringement of the same right; and (4) whether

the two suits arise out of the same transactional

nucleus of facts.”

Id. at 1201-02 (quoting Harris v. Jacobs, 621 F.2d

341, 343 (9th Cir. 1980)). The fourth factor is the

_ most important. 681 F.2d at 1202.

This case and Sommer’s prior lawsuit, Som-

mer v. UNUM Life Ins. Co., 1999 U.S. LEXIS

5388, No. 97-16564, also pending before this

Court, arise out of the same transactional nu-

cleus of facts: Sommer’s brain surgeries in 1988

and 1989; Sommer’s application for disability

benefits from the Paul Revere Insurance Com-

pany (“Paul Revere”); Paul Revere’s denial of

benefits; Sommer’s application for disability

| benefits from UNUM; and UNUM’s denial of

benefits. Both of Sommer’s lawsuits involve the

same parties - Sommer, UNUM, and Paul Re-

vere — and the same claim — wrongful denial of

disability benefits under ERISA. Sommer’s com-

plaint in each case alleges the same disability,

the same cause of disability, and the same al-

leged right to disability benefits under the same

ES ————

14

disability policies. The other three factors also

establish that Sommer’s second suit involves the

same “claim” as his prior suit: prosecution of

Sommer’s second action would impair the rights

established in the prior judgment that UNUM

and Paul Revere did not violate ERISA in deny-

ing Sommer benefits, substantially the same evi-

dence is presented in the two actions, and the

two suits involve infringement of the same right

— to recover benefits payable from a benefits plan

covered by ERISA.

Sommer argues that he has stated a cause of

action different from that raised in his first suit

because his current cause of action is based upon

“new” medical evidence, reports not considered

by UNUM and Paul Revere in denying benefits.

Although Sommer labels the evidence “new,” this

evidence was submitted by Sommer in the prior

case in a motion to “augment the administrative

record” before the plan administrator. The dis-

trict court denied that motion and the district

court’s ruling is an issue in the appeal of Som-

mer’s first suit. Allowing Sommer to proceed with

his second suit would circumvent the district

court’s ruling in that case.

Sommer also argues that his current action

is not subject to the doctrine of res judicata be-

cause it is a claim for benefits under ERISA. No

ERISA case from this Court or any other has

carved out such an exception to the rules of pro-

cedure and we decline to adopt such a rule. We

affirm the district court’s dismissal of Sommer’s

complaint on the ground of res judicata.

Here, again, Sommer III and Sommer I & II arise out

of the same transactional nucleus of facts: Sommer’s

surgeries in 1988 and 1989; Sommer’s application for

15

disability benefits from UNUM; and UNUM’s denial of

benefits. All three of Sommer’s lawsuits involve the same

parties - Sommer and UNUM - and the same claim —

purported wrongful denial of disability benefits under

ERISA. Sommer’s complaint in each of the cases alleges

the same disability, the same cause of disability, and the

same alleged right to disability benefits under the same

disability policies. The other three factors also establish

that Sommer III involves the same “claim” as his prior

suits: prosecution of Sommer III would impair the rights

established in the prior judgments which were upheld by

the Ninth Circuit that UNUM did not violate ERISA in

denying Sommer benefits, substantially the same evidence

is presented in the three actions, and the three suits

involve infringement of the same right — to recover bene-

fits payable from a benefits plan covered by ERISA.

In Sommer III, Mr. Sommer made another erroneous

claim that he had stated a cause of action different from

those raised in Sommer I & II because he had now pur-

portedly exhausted his administrative remedies and had a

new cause of action based on an alleged denial of disability

benefits by UNUM on or about March, 2000. This same

allegation was made and rejected in Sommer II. Mr.

Sommer cannot create a new cause of action by resubmit-

ting a claim under a policy which he acknowledges has

long since terminated. This alleged claim is a fiction

created by Mr. Sommer and is simply the refiling for a

third time of his previously finally adjudicated disability

claims with UNUM. All of Mr. Sommer’s claims arise from

the same disability policies and all claims which could

have arisen from those disability policies were previously

fully, fairly and finally adjudicated. What Mr. Sommer

continues to fail to acknowledge is that the judgment

16

entered and affirmed in Sommer I is a final adjudication

on the merits of all of his claims. Once the summary

judgment was entered he no longer had any administra-

tive remedies to exhaust. Again, allowing Mr. Sommer to

pursue the same claims that were previously resolved both

at trial and on appeal in Sommer III would circumvent the

District Courts’ and the Ninth Circuit’s rulings in Sommer

I and II.

Under federal law, a party cannot avoid the bar of res

judicata merely by alleging conduct not previously alleged

in their prior suit, nor can a party avoid the bar of res

judicata by pleading a new legal theory. Lester v. NBC, 217

F.2d 399, 400 (9th Cir. 1954), cert. denied, 348 U.S. 954, 75

S. Ct. 444, 99 L. Ed. 746 (1955); Scoggin v. Schrunk, 522

F.2d 436, 437 (9th Cir. 1975), cert. denied, 423 U.S. 1066,

96 S. Ct. 807, 46 L. Ed. 2d 657 (1976). A review of the

pleadings of Sommer I, Sommer II, Sommer III, the

District Court’s Orders, Sommer v. UNUM, 1999 U.S.

LEXIS 5382 (9th Cir. 1999), Sommer v. UNUM, 1999 U.S.

LEXIS 5388 (9th Cir. 1999) and Sommer v. UNUM Life

Ins. Co. of Am., 35 Fed.Appx. 489, 2002 WL 972177 (9th

Cir. 2002) conclusively establish that Sommer III is merely

a regurgitation of the prior actions and an attempt to

undermine Judge Jensen’s, Judge Armstrong’s and the

Ninth Circuit’s rulings and, as such, Mr. Sommer’s present

claim is barred by the doctrine of res judicata.

The doctrine of res judicata “is motivated primarily by

the interest in avoiding repetitive litigation, conserving

judicial resources, and preventing the moral force of court

judgments from being undermined.” International Union

of Operating Engineers-Employers Construction Industry

Pension, Welfare and Training Trust Funds v. Karr, 994

F.2d 1426, 1430 (9th Cir. 1993) (citation omitted). Sommer

ee eee

17

III violates principles of res judicata, is frivolous and such

conduct should not be tolerated by this Court. Judicial

resources have been and continue to be wasted by Mr.

Sommer’s and his attorney's spurious tactics. Under Mr.

Sommer’s repetitive litigation theory, every matter once

finally adjudicated would be subject to endless re-litigation

until the matter was resolved to Mr. Sommer’s satisfac-

tion. No legal system could function applying Mr. Som-

mer’s rules, and the Federal Court system definitely does

not follow Mr. Sommer’s rules. Accordingly, the Ninth

Circuit’s affirmance of Judge Armstrong’s dismissal of

Sommer III based upon the doctrine of res judicata is

correct. As such, Respondent respectfully urges this

Honorable Court to deny the Petition for Writ of Certio-

rari.

_ 2. SOMMER I WAS A FINAL DECISION ON

THE MERITS

While Sommer III was pending before Judge Arm-

strong, Mr. Sommer filed a motion with Judge Jensen

pursuant to Rule 60(a) to correct a purported clerical error

in Sommer I. In it, Mr. Sommer argued that Judge Jen-

sen’s designation of his final order in Sommer I as a

“summary judgment” rather than a “dismissal judgment”

was a clerical error. In his denial of Mr. Sommer’s Rule

60(a) motion, Judge Jensen made clear that there was, in

fact, no clerical error: he intended his June 17, 1997 order

in Sommer I to be a summary judgment, and not a dis-

missal without prejudice.

The Ninth Circuit affirmed the denial of the Rule

60(a) motion. Sommer v. UNUM Life Ins. Co. of Am., 35

Fed.Appx. 489, 2002 WL 972177. Further, the Ninth

18

Circuit confirmed that the Rule 60(a) motion failed be-

cause the Rule “only applies during the pendency of an

appeal. By the time Sommer filed his Rule 60(a) motion,

the Sommer I appeal had been over for nearly two years.”

(P’s App. 8). This further illustrates that if Mr. Sommer

wished to contend that the Order of summary judgment in

Sommer I should have been a dismissal without prejudice,

he needed to raise that argument in Sommer I. Sommer v.

UNUM, 1999 U.S. LEXIS 5388 (9th Cir. 1999). He did not.

Therefore, as explained above, he is forever precluded

from raising that argument because of the doctrine of res

judicata.

3. SUMMARY JUDGMENT IS AN APPRO-

PRIATE ACTION WHERE A PLAINTIFF

HAS FAILED TO EXHAUST ERISA AD-

MINISTRATIVE REMEDIES

Mr. Sommer failed to appeal the denial of his disabil-

ity claim within the sixty day time period provided under

ERISA and expressly stated in the UNUM denial letter

and policy. Accordingly, after the sixty day time period for

administrative appeal expired without Mr. Sommer

requesting an appeal, it was impossible for Mr. Sommer to

ever exhaust his administrative remedies because he had

failed to request a timely appeal of the denial of his

disability claim. In Sommer III, Judge Armstrong con-

firmed this point as follows:

Plaintiff argues that his claim in the instant case

is not barred by res judicata because he has fi-

nally exhausted his administrative remedies un-

der the UNUM policy by appealing the initial

denial of his claim for benefits. He argues that

Judge Jensen’s finding that plaintiff failed to

19

exhaust his administrative remedies is not a fi-

nal judgment on the merits. It is undisputed,

however, that plaintiff failed to appeal the initial

denial of benefits with UNUM'’s Quality Review

Board within 60 days, as required by the terms

of the plan. Therefore, plaintiff had failed, and

was unable, to exhaust his administrative reme-

dies under the disability policy. This Court is not

free to rewrite the terms of the Wedbush policy to

permit plaintiff's appeal of the initial denial of

his claim nearly four years after it was denied.

Judge Jensen’s decision granting summary

judgment was a final judgment on the merits of

the same claim that plaintiff raises here today.

(R’s App. 6-7).

Further, the sixty day time bar in which a claimant

must file their request for appeal under an ERISA plan

was affirmed by the Ninth Circuit in White v. Jacobs Eng’g

Group, 896 F.2d 344, 349 (9th Cir. 1989). Mr. Sommer’s

contentions that Sommer I should have resulted in a

dismissal without prejudice and that he has subsequently

exhausted his administrative remedies are both com-

pletely spurious and irrelevant. When Mr. Sommer chose

not to request an appeal with UNUM Life Insurance

Company of America of the initial decision to deny his

disability claim, he chose not to exhaust his administra-

tive remedies and he cannot change those facts.

The Ninth Circuit affirmed Judge Jensen’s ruling in

Sommer I and held that “Sommer cannot survive UNUM’s

motion for summary judgment, even under a de novo

standard.” Further, the Ninth Circuit held that “the

district court did not abuse its discretion in declining to

consider Sommer’s argument that exhaustion of adminis-

trative remedies would be futile. Sommer’s argument was

20

presented for the first time in a motion for reconsideration

following the grant of summary judgment for UNUM and

was based on evidence that Sommer had before him at the

time of briefing the summary judgment motion.” See

Sommer v. UNUM, 1999 U.S. LEXIS 5388 (9th Cir. 1999).

Now, Mr. Sommer contends that Judge Jensen erred in

granting UNUM’s motion for summary judgment in

Sommer I and in not ordering a dismissal without preju-

dice. Mr. Sommer does not mention that he did not con-

tend or request that the Court Order a dismissal without

prejudice during the trial Court proceedings and/or appel-

late proceedings in Sommer I and II.

Judge Jensen’s grant of summary judgment in Som-

mer I was based upon binding authority that stated under

ERISA, summary judgment should be entered, not a

dismissal without prejudice, when a claimant fails to

exhaust their administrative remedies, as such an action

is barred. The purpose of the requirement to exhaust

administrative remedies is to alleviate the need for federal

courts to make initial claims determinations as well as to

allow for the establishment of a record for review by the

courts. Indeed, the Ninth Circuit has required that a

beneficiary exhaust this plan review process before bring-

ing suit, recognizing the exhaustion of administrative

remedies requirement as a “matter of sound policy.” The

Ninth Circuit also recognizes that the failure to exhaust

administrative remedies prior to filing suit serves as a bar

to the action and results in a binding appealable judg-

ment, not a dismissal without prejudice. See, e.g., Diaz v.

United Agricultural Employee Welfare Benefit Plan and

Trust, 50 F.3d 1478, 1483 (9th Cir. 1995). Under ERISA, a

claimant must exhaust a plan’s internal review proce-

dures, described above, prior to bringing suit in federal

21

court. Pengilly v. The Guardian Life Insurance Co. of

America, 81 FSupp.2d 2010, 1023 (N.D.Cal. 2000); Diaz v.

Unite? Agriculture Employee Welfare Benefit Plan and

Trust, 50 F.3d 1478, 1483 (9th Cir. 1995).

In Diaz and Pengilly, all actions governed by ERISA,

summary judgment was entered against plaintiffs because

their actions were barred due to their failure to exhaust

their administrative remedies under ERISA. Further, the

Ninth Circuit affirmed the entries of summary judgment

in Diaz and Pengilly.

Mr. Sommer improperly contended in Sommer III, for

the first time, contrary to clear Ninth Circuit precedent,

that his failure to exhaust administrative remedies under

ERISA should have resulted in a dismissal without preju-

dice and that, therefore, the entry of summary judgment

in Sommer I was improper. Clearly, as discussed above,

Mr. Sommer’s contention is not one that could be advanced

in Sommer III because of the doctrine of res judicata. Be

that as it may, Mr. Sommer’s contention in that regard is

incorrect.

None of the cases cited by Mr. Sommer are governed

by ERISA and, as a result, are completely inapplicable to

the case at bar. The Ninth Circuit has ruled that a claim-

ant’s failure to exhaust his administrative remedies under

ERISA results in his action being barred and subject to a

summary judgment being entered against the claimant.

See, e.g., Diaz v. United Agricultural Employee Welfare

Benefit Plan and Trust, 50 F.3d 1478, 1483 (9th Cir. 1995).

Judge Jensen’s granting of summary judgment for UNUM

in Sommer I was based upon sound binding legal authority

and was correct.

22

Further, in Sommer III, the Ninth Circuit correctly

confirmed that “summary judgment is an appropriate

action where a plaintiff has failed to exhaust ERISA

administrative remedies.” (P’s App. 4). Citing Diaz v.

United Agric. Employee Welfare Benefit Plan & Trust, 50

F.3d 1478, 1480 (9th Cir. 1995); Sarraf v. Standard Ins.

Co., 102 F.3d 991, 992 (9th Cir. 1996).

IV. CONCLUSION

For all of the foregoing reasons, Respondent respect-

fully requests that this Honorable Court deny the Petition.

Respectfully submitted,

RIMAC & MARTIN, P.C.

WILLIAM REILLY

JOSEPH M. RIMAC

Counsel of Record

1700 California Street, Suite 470

San Francisco, CA 94109

(415) 561-8440

Attorneys for Respondent

UNUM Life Insurance Company

of America

App. 1

APPENDIX

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ALEXANDER P. SOMMER, No. C 00-01368 SBA

Plaintiff, ORDER

Vv. (Filed Jan. 8, 2001)

UNUM LIFE INSURANCE,

Defendant.

/

INTRODUCTION

This matter comes before the Court on defendant's

motion to dismiss, or in the alternative for summary

judgment, and motion for Rule 11 sanctions. Having read

and considered all the papers filed in connection with

these motions, having considered the arguments advanced

by the parties and being fully informed, the Court

GRANTS defendant’s motion for summary judgment [# 6-

1] and GRANTS defendant’s motion for Rule 11 sanctions

[# 9-1].

BACKGROUND

I. Undisputed, Material Facts

Plaintiff Alexander P. Sommer was employed as an

account executive for Henry F. Swift & Co. (“Swift”), a

securities firm, from November 1988 through December

1992. In January 1993, Swift merged with Piper Jaffray,

Inc. (“Piper”). Plaintiff continued to work as an account

executive for Piper until he was fired in August 1994 for

App. 2

lack of production. Approximately one month later, plain-

tiff obtained employment as an account executive with

Wedbush Morgan Securities (“Wedbush”), where he

worked until January 1996. Plaintiff voluntarily left

Wedbush after being diagnosed by his neuropsychologist

with an organic brain disorder attributable to previous

surgeries. While plaintiff worked for Piper and Wedbush,

he was covered by a long-term disability policy issued by

defendant UNUM Life Insurance Company of America.

Plaintiff underwent three separate brain surgeries in

1988 and 1989. He alleges that as a result of the surgeries,

he was totally disabled by organic brain deficits during the

times he worked for Swift, Piper, and Wedbush. In Sep-

tember 1994, Plaintiff filed a claim for disability benefits

with UNUM payable under the terms of the Piper policy.

UNUM rejected plaintiffs claim on July 10, 1995 on the

ground that plaintiff was not disabled under the terms of

the policy. Defendant reviewed its determination on

appeal, and determined that plaintiff was in fact disabled

as early as January 1, 1993. Nonetheless, it still deter-

mined that plaintiff was ineligible for benefits because of a

policy exclusion for pre-existing conditions.

On January 26, 1996, plaintiff filed another disability

claim with UNUM under the Wedbush policy. That claim

was also denied on April 24, 1996, on the ground that

plaintiff was not disabled under the policy. Plaintiff failed

to appeal this determination.

II. Procedural History

Plaintiff filed a First Amended Complaint on Septem- |

ber 6, 1996, alleging causes of action under the Employee

Retirement Income Security Act of 1974 (“ERISA”), 29

sii

App. 3

U.S.C. §§ 1001, et seq., against UNUM, the Paul Revere

Life Insurance Company, and the administrators of his

disability insurance plans (hereinafter, “Sommer I”), Case

No. C 96-2407 DLJ. Defendant UNUM moved for sum-

mary judgment on three issues: (1) standard of review; (2)

scope of review; and (3) liability.

On June 17, 1997, Judge Lowell Jensen of the North-

ern District of California granted defendant’s motion. The

court concluded that UNUM did not abuse its discretion in

denying benefits under the Piper policy. As to the Wed-

bush policy, the court found that plaintiff had failed to

exhaust his administrative remedies since he did not

appeal the denial of benefits to defendant’s Quality Review

Section, as required by the terms of the policy. Plaintiff

appealed the district court’s grant of summary judgment

on August 14, 1997.

On or about August 28 and 29, 1997, plaintiff filed

new claims for disability benefits with UNUM under the

Piper and Wedbush Policies, respectively. On November

13, 1997, plaintiff commenced a new action (“Sommer II”)

before this Court, Case No. C 97-4159 SBA. In the Sommer

II complaint, plaintiff adopted the substance of his first

amended complaint from the previous action. (Pl. Exhs. D,

F) Again, UNUM moved for summary judgment. On

' The parties agree that plaintiff's claims of August 28 and 29,

1997 were denied, though neither party presents evidence of the

reasons for the denial.

2 ‘The main differences are that the new complaint contains dates

to reflect a different request for benefits and denials by UNUM;

allegations that UNUM denied benefits without conducting any review

and a prayer for punitive damages.

App. 4

March 31, 1998, this Court granted defendant’s motion on

the grounds that the same issues raised in Sommer II

were also raised in Sommer I, and Sommer I was on

appeal before the Ninth Circuit. The pending appeal

divested this Court of jurisdiction to hear the matter.

Moreover, the Court concluded that even if it had jurisdic-

tion over the matter, the issues raised in the complaint

were fully adjudicated in the prior action, and plaintiffs

claims were therefore barred by the doctrine of res judi-

cata. (Pl. Exh. J) The Court also granted a co-defendant’s

motion for Rule 11 sanctions in the amount of $1,000

against plaintiff. Plaintiff appealed this Court’s order

granting summary judgment.

On March 24, 1999, the Ninth Circuit affirmed judg-

ments in Sommer I and Sommer II. As to Sommer I, the

Ninth Circuit first held that plaintiffs claims could not

survive defendant’s motion for summary judgment even if

the claim denial were subject to a de novo standard of

review. It agreed that plaintiffs claim was barred by the

pre-existing condition provision of UNUM’s policy, and it

held that the district court did not abuse its discretion in

declining to consider plaintiffs argument that exhaustion

of administrative remedies would be futile. With respect to

Sommer II, the Ninth Circuit held that this Court properly

dismissed plaintiffs complaint on the ground of res judi-

cata.

On April 20, 2000, plaintiff filed a third complaint

against UNUM (“Sommer III”). In Sommer III, plaintiff

* See Pl. Exh. I.

* See Pl. Exh. H.

App. 5

again seeks damages for an unlawful denial of benefits

under ERISA. He alleges that he has been totally disabled

as a result of brain surgeries in 1988, and that this disabil-

ity existed during the time period he was employed by

Wedbush. He also alleges that on or about February 1996,

he filed a claim for disability benefits payable under the

terms of the Wedbush policy, and that on or about March

2000, UNUM rejected his claim.

DISCUSSION

I. Res Judicata

Defendant argues plaintiffs claim for disability

benefits under the Wedbush policy is barred by the doc-

trine of res judicata. A claim is precluded under the

doctrine of res judicata if it involves the same “claim” as a

prior suit, on which a final judgment on the merits was

reached, and it involves the same parties or their privies.

Nordhom v. Ladish Co., 9 F.3d 1402, 1404 (9th Cir. 1993);

see also Federated Department Stores, Inc. v. Moitie, 452

U.S. 394, 398 (1981) (“[a] final judgment on the merits of

an action precludes the parties or their privies from

relitigating issues that were or could have been raised in

that action”).

The Court finds there to be no genuine dispute that

each of the elements of res judicata is met in this case.

First, plaintiffs claim for disability benefits in this case is

the same claim as that asserted by plaintiff against

defendant in Sommer I and in Sommer II. Namely, it is a

claim for disability benefits under the UNUM group

disability insurance policy issued to plaintiffs former

employer, Wedbush Morgan Securities, for the period of

September 1994 through January 1996, for an allegedly

App. 6

disabling condition involving plaintiffs brain that began in

November 1988. Second, Judge Jensen granted summary

judgment to UNUM on this same claim for disability

benefits on the ground that plaintiff had failed to exhaust

his administrative remedies. Summary judgment is a final

judgment on the merits. Rand v. Rowland, 154 F.3d 952,

957 (9th Cir. 1998). This Court also granted summary

judgment to defendant on this claim, in part, on the basis

that Judge Jensen’s adjudication of this claim rendered it

res judicata. The Ninth Circuit affirmed the decisions of

Judge Jensen and this Court. And, third, plaintiff and

defendant were parties to all three cases.

Plaintiff argues that his claim in the instant case is

not barred by res judicata because he has finally ex-

hausted his remedies under the UNUM policy by appeal-

ing the initial denial of his claim for benefits. He argues

that Judge Jensen’s finding that plaintiff failed to exhaust

his administrative remedies is not a final judgment on the

merits. It is undisputed, however, that plaintiff failed to

appeal the initial denial of benefits with UNUM’s Quality

Review board within 60 days, as required by the terms of

the plan. Therefore, plaintiff had failed, and was unable,

to exhaust his administrative remedies under the disabil-

ity policy. This Court is not free to rewrite the terms of the

Wedbush policy to permit plaintiffs appeal of the initial

denial of his claim nearly four years after it was denied.

Judge Jensen’s decision granting summary judgment was

App. 7

a final judgment on the merits of the same claim that

plaintiff raises here today.”

II. Sanctions

Defendant also moves for Rule 11 sanctions.” Rule 11

imposes a duty on attorneys to certify that all pleadings

are legally tenable and well-grounded in fact. Primus

Automotive Fin. Services, Inc. v. Batarese, 115 F.3d 644,

648 (9th Cir. 1997).’ Plaintiffs counsel filed a frivolous

complaint. He should have known, after Sommer I and

Sommer II, that the claim for benefits under the Wedbush

policy was barred by the doctrine of res judicata.

Under Rule 11, the sanction imposed may consist of

“an order directing payment to the movant of some or all

* Heath v. Cleary, 708 F.2d 1376, 1380 n.4 (9th Cir. 1983), cited by

plaintiff, is inapposite. There, the Ninth Circuit observed in a footnote

that, although it found no California cases on point, “it appears that

California courts would conclude that a denial of a writ of mandamus

for failure to exhaust administrative remedies is not a decision on the

merits.” This statement is dictum concerning a matter of state law.

Plaintiffs case is governed by federal law, which holds that summary

judgment is a final decision on the merits.

* Defendant also requests sanctions under 28 U.S.C. § 1927. To

justify the imposition of sanctions under § 1927, defendant must

demonstrate subjective bad faith. New Alaska Dev. Corp. v. Guetschow,

869 F.2d 1298, 1306 (9th Cir. 1989). Defendant has not shown that the

instant complaint was filed with subjective bad faith on the part of

counsel. See id. (“[bJad faith is present when an attorney knowingly or

recklessly raises a frivolous argument or argues a meritorious claim for

the purpose of harassing an opponent”). Defendant’s request for § 1927

sanctions is therefore denied.

’ There is no dispute that defendant complied with the “safe

harbor” provisions of Rule 11. Fed. R. Civ. P. 11(c)(1)(A).

App. 8

of the reasonable attorneys’ fees and other expenses

incurred as a direct result of the violation.” Fed. R. Civ. P.

11(c)(2). However, the sanction imposed must be “limited

to what is sufficient to deter repetition of such conduct or

comparable conduct by others similarly situated.” Fed. R.

Civ. P. 11(c)(2).

Defendant requests an award of $21,000 in attorneys’

fees as a sanction, but does not provide an itemization of

these fees to enable the court to determine whether the

request is reasonable. At the hearing on these motions,

piaintiffs counsel argued that an appropriate sanction, if

the Court is inclined to impose one, is $2,500.

It is clear that the $1,000 sanction this Court imposed

on plaintiffs counsel in Sommer II was insufficient to

deter another frivolous action against the same defendant.

The Court finds that a $2,500 sanction is sufficient deter-

rence. This amount is 150% more than the sanction

imposed in Sommer II. In addition, the Court is persuaded

by plaintiffs counsel statements in court that this amount

would be an appropriate sanction. The Court finds that

this sanction should serve as a deterrent to further frivo-

lous litigation by plaintiffs counsel while not being unfair

or overly punitive to plaintiff under the circumstances

presented herein.*

* The Court denies defendant’s request for an order requiring prior

court approval before plaintiff files any further claims and lawsuits

(whether regarding the Wedbush policy or otherwise). There is no basis

on this record for such a sweeping order.

App. 9

CONCLUSION

For the foregoing reasons, iefendant’s motion for

summary judgment [# 6-1] is G ANTED and defendant’s

motion for Rule 11 sanctions [* 9-1] is GRANTED. Plain-

tiffs counsel shall pay defeiidant’s counsel twenty-five

hundred dollars ($2,500) as a sanction for filing a frivolous

complaint. Plaintiff shall make this payment on or before

March 2, 2001.

Defendant’s request for sanctions under 28 U.S.C.

§ 1927 and for a “vexatious litigant” order are both DE-

NIED.

IT IS SO ORDERED.

Dated: 1-3-01

/s/ Saundra Brown Armstrong

SAUNDRA BROWN ARMSTRONG

United States District Judge

App. 10

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

ALEXANDER P. SOMMER, No. C 00-01368 SBA

Plaintiff, JUDGMENT

v. (Filed Jan. 8, 2001)

UNUM LIFE INSURANCE,

Defendant.

/

In accordance with the Court’s Order granting Defen-

dant’s Motion for Summary Judgment, IT IS HEREBY

ORDERED that final judgment is entered in favor of

Defendant.

IT IS SO ORDERED.

Dated: 1-8-01

/s/ S B Armstrong

SAUNDRA BROWN ARMSTRONG

United States District Judge