NANCY TORRESEN, District Judge.
Plaintiffs Denise Merrimon and Bobby S. Mowery are beneficiaries of group life insurance policies administered by the Defendant, Unum Life Insurance Company of America (
The Plaintiffs also move to certify a class of similarly-situated plaintiffs including a subclass of beneficiaries whose policies are protected by the Late Payment Statute. Certification of the general class is GRANTED. Because the Court has granted Unum's motion for summary judgment on Plaintiffs' Maine state law claims, and because the subclass was based on those claims, certification of the subclass is unnecessary and is therefore DENIED.
The parties do not dispute any of the following facts, which were set forth by each side in their respective statements of material fact. In 2001, Peabody Investments Corp. established group life insurance coverage through Unum for the benefit of its employees (
The parties agree that the GISBs are in all respects the relevant documents in this case. They are the contracts agreed to by the employers and Unum, and they contain the relevant portions of these employers' ERISA plans. They were written by Unum to fulfill ERISA's requirements for summary plan descriptions. These GISBs contain two critical provisions governing when and how the beneficiaries will be paid upon the approval of a claim. The pertinent wording of the two policies is identical.
In a section of the GISBs entitled "WHEN WILL YOUR BENEFICIARY RECEIVE PAYMENT?" the GISBs stated: "Your beneficiary(ies) will receive payment when Unum approves your death claim." Peabody Policy Summary of Benefits, p. 31 (Doc. # 33); St. Joseph's Policy Summary of Benefits, p. 30 (Doc. # 34).
In a section of the GISBs entitled "HOW WILL UNUM MAKE PAYMENTS?" the GISBs provided:
Id. at p. 17 (Doc. # 33); id. at p. 11 (Doc. # 34). A glossary to both GISBs defined the term "Retained Asset Account" (hereinafter
Plaintiff Bobby S. Mowery's son died on or about September 23, 2007. On December 28, 2007, Mr. Mowery submitted a claim for death benefits, which was approved by Unum on January 4, 2007. That same day, Unum's contractor Open Solutions, Inc. (
Between January 12, 2008 and January 18, 2008, Mr. Mowery wrote out five drafts in the total amount of $62,304.51. He paid off his mortgage, two student loans, and the balance of the bill for his son's funeral, and then he transferred the balance of the account into his investment account. On February 5, 2008, because the account balance had fallen below the required minimum balance of $250, State Street Bank closed Mr. Mowery's account and sent him a treasurer's check in the remaining amount of $19.13. In total, Unum paid Mr. Mowery $62,323.64, representing the full principal benefit plus $23.64 in accrued interest.
Plaintiff Denise Merrimon's husband died on or about July 13, 2007. Ms. Merrimon first contacted Unum about the death benefit due to her on August 3, 2007.
On September 10, 2007, OSI mailed Ms. Merrimon a Welcome Kit which contained the same information and features as Mr. Mowery's kit. On November 13, 2007, Ms. Merrimon wrote out a single draft to herself in the amount of $51,036.34 and deposited that check into her personal checking account. On December 5, 2007, because the balance in Ms. Merrimon's RAA had fallen below $250, the Bank closed her account and sent her a treasurer's check in the remaining amount of $53.19. In total, Unum paid Ms. Merrimon $51,089.53, representing the full principal benefit plus $89.53 in interest.
No funds are actually placed into the RAAs when they are initially opened. Instead, Unum retains and continues to invest the amounts due under the approved claims until a draft is presented to the Bank for payment. When a draft is presented for payment, funds sufficient to cover the draft are transferred from Unum's general accounts to the Bank.
Unum acknowledges that the RAAs it creates under these contracts bear interest at a rate selected by Unum or its agents, and that Unum and its agents retain the right to change the applicable interest rate. A committee at Unum meets periodically to recommend the interest rate that will apply to its RAAs. The rate is set by analyzing the interest rates used by banks for money market accounts and certificates of deposit as well as interest rates applied to RAAs created by other insurance companies. Since October 28, 2004, Unum has set the interest rate for its RAAs at 1%. Among the factors that Unum considered in setting and keeping this rate since 2004 were the rate at which beneficiaries would draw down their accounts to place the funds into higher-yield accounts (thus depriving Unum of the benefit of continuing to invest the funds backing the accounts), and whether higher interest rates on RAAs offered by other insurers would cause Unum to lose business. According to Unum's research, as of June, 2008 other insurers offered an average rate of about 2% on their RAAs, with some as high as 4%.
RAAs provide Unum an opportunity for earnings on the "interest spread," which is the difference between the income Unum earns from investing the funds backing the RAAs and the amount of interest it pays to beneficiaries on these accounts. The creation of RAAs is also intended to give beneficiaries time to recover from their loss before making a decision about what to do with their benefits.
On October 29, 2010, the Plaintiffs filed a three-count suit against Unum alleging: (1) that Unum breached the applicable plans as well as its fiduciary duties to them under ERISA by retaining and investing the funds backing their RAAs; (2) that Unum breached its contracts with them by failing to pay post-mortem interest as required by Maine state law, which law is incorporated into the relevant policies;
On June 14, 2011, the Plaintiffs filed a motion for partial summary judgment on liability (Doc. # 25) and a motion to certify a class (Doc. # 29). Unum filed a cross-motion for summary judgment (Doc. # 26). By agreement of the parties, several documents in the record were sealed from public view, and, on July 14, 2011, a consent confidentiality order was entered by the Court (Doc. # 45). Following responses and replies from both sides on all motions, Unum filed a request for oral argument (Doc. # 55), which the Court granted. Oral argument was held on January 19, 2012. Thereafter, the parties submitted their positions to the Court regarding the possibility of a stay and/or an interlocutory appeal of this case to the First Circuit. On January 30, 2012, the Court held a telephonic conference with the parties on this issue.
Summary judgment is authorized "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R.Civ.P. 56(c).
On summary judgment, the Court reviews the record together with all reasonable inferences therefrom in the light most favorable to the non-moving party. See Johnson v. Educ. Testing Serv., 754 F.2d 20, 25 (1st Cir.1985), cert. denied, 472 U.S. 1029, 105 S.Ct. 3504, 87 L.Ed.2d 635 (1985). Only those facts in dispute that might affect the outcome of the suit under the governing law will bar the entry of summary judgment. Factual disputes which are irrelevant or unnecessary will not be considered. See Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To determine whether a dispute as to a material fact is genuine, the Court must decide whether the "evidence is such that a reasonable [fact-finder] could return a verdict for the non-moving party." Id.
As to issues on which the movant would be obliged to carry the burden of proof at trial, the movant must initially proffer record materials that support his position. See In re Varrasso, 37 F.3d 760, 763 (1st Cir.1994) (citations omitted). This means that summary judgment is inappropriate if inferences are necessary for the judgment and those inferences are not mandated by the record. Id. (citing Blanchard v. Peerless Ins. Co., 958 F.2d 483, 488 (1st Cir. 1992) (warning that summary judgment is precluded "unless no reasonable trier of fact could draw any other inference from the `totality of the circumstances' revealed by the undisputed evidence."))
As to issues on which the non-movant has the burden of proof, the movant need do no more than aver "an absence of evidence to support the nonmoving party's case." Blanchard, 958 F.2d at 488 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The burden of production then shifts to the non-movant, who, to avoid summary judgment, must establish the existence of at least one question of fact that is both "genuine" and "material." Id. (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505).
Federal Rule of Civil Procedure 23 sets forth the substantive criteria for certifying
The Plaintiffs claim that Unum has a fiduciary duty to use the life insurance benefits due to the Plaintiffs solely to benefit them and not to use those assets for its own interest. The crown jewel in the Plaintiffs' argument is a First Circuit case which held, on similar though not identical facts, that an RAA "was no more than an IOU which did not transfer the funds to which the beneficiaries were entitled out of the plan assets and hence UNUM remained a fiduciary with respect to those funds." Mogel v. Unum Life Ins. Co., 547 F.3d 23, 27 (1st Cir.2008). Unum counters that the present case is distinguishable from Mogel, which dealt with policies that promised lump sum payments as opposed to policies which promised RAAs. Unum points to a Second Circuit case, Faber v. Metropolitan Life Ins. Co., 648 F.3d 98 (2d Cir.2011), and a recent advisory opinion from the Department of Labor (
The group life insurance policies at issue are "employee welfare benefit plans" governed by ERISA. See 29 U.S.C. § 1002(1) (2009). ERISA provides:
29 U.S.C. § 1002(21)(A).
Particular fiduciary duties under ERISA are stated in Section 404(a) and 406(b). Section 404(a) provides: "a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and — (A) for the exclusive purpose of: (i) providing benefits to participants and their beneficiaries ..." 29 U.S.C. § 1104(a)(1). Section 406(b) provides: "[a] fiduciary with respect to a plan shall not — (1) deal with the assets of the plan in his own interest or for his own account ..." 29 U.S.C. § 1106(b)(1).
The threshold question to determine liability under ERISA is whether Unum was acting as a fiduciary when it opened and maintained RAAs for the beneficiaries. Under ERISA's fiduciary definition, Unum could have acted as a fiduciary if it exercised:
Unum argues that because the plan has no ownership interest in the payment due after a death benefit is approved, the moneys owed to the beneficiaries are not plan assets, and therefore Unum has no fiduciary obligation with regard to them. Relying on Mogel, the Plaintiffs claim that benefits payable to ERISA plan beneficiaries are plan assets and remain so until they are actually paid through the banking system. See Mogel, 547 F.3d at 26 ("the sums due Plaintiffs remain plan assets subject to UNUM's fiduciary obligations until actual payment.") The Plaintiffs also argue, however, that Unum's fiduciary obligations would continue as long as it managed and administered the RAAs regardless of whether the funds backing the RAAs were plan assets. See id. at 27 (citing 29 U.S.C. § 1002(21)(A)(i) and (iii)). Unum counters that its last discretionary fiduciary act is determining whether the Plaintiffs' claims are payable, and that its relationship with the Plaintiffs thereafter is strictly a contractual debtor-creditor relationship.
Under ERISA, there is no general definition of "plan assets," but only an indication of what are not "plan assets." Under the guaranteed benefit policy exemption insurers who provide policies for "guaranteed benefits" — e.g. life insurance policies stating a specific pre-defined payout upon the death of a plan participant such as the ones at issue in this case — are allowed the freedom to invest the proceeds of the premiums on such policies as they see fit without the restrictions otherwise imposed upon fiduciaries under ERISA. Under this exclusion, the policies themselves are considered the "plan assets," however the assets backing the benefits guaranteed under the policies are not "plan assets." See 29 U.S.C. § 1101(b)(2).
Mogel is clear that the guaranteed benefit exemption is no longer applicable once Unum approves the death claim and the beneficiaries' rights to payment vest. Mogel, 547 F.3d at 27 ("once an insured's death occurs, we are no longer concerned with the management of plan assets in an insurance company's general account (which is all the guaranteed benefit exemption covers)"). The critical question is whether the proceeds due to beneficiaries become plan assets once the insured dies and the benefit is approved.
Mogel concludes, without much discussion, that "the sums due plaintiffs remain plan assets subject to UNUM's fiduciary obligations until actual payment." Id. at 26. Unum points out, persuasively, that the Seventh Circuit decision in Commonwealth Edison Co. v. Vega, 174 F.3d 870, 872-73 (7th Cir.1999), which the First Circuit cited in support of its conclusion, dealt not with an ERISA defined-benefits plan, but rather with a ERISA retirement plan, which began with a pool of funds that were themselves plan assets. In Vega, checks cut to beneficiaries were drawn from funds that were always plan assets and that remained so until the checks were presented to the plan for payment. See id. In this case, the funds due would have to somehow become plan assets following approval of the claim.
Faber, following the DOL Opinion, concludes that the amounts due the beneficiaries do not become plan assets because the plans "do not have an ownership interest — beneficial or otherwise — in them." 648 F.3d at 106 (citing DOL Opinion at pp. 9-10 (Doc. # 26-2)). Indeed, it is difficult to understand how these amounts, which must be drawn from Unum's general account where they have been sitting under the guaranteed benefit exemption up to
The First Circuit in Mogel may have been interpreting ERISA's "disposition of [the plan's] assets" language broadly to mean disposition of the policies themselves. Once the policies, which all agree are plan assets, become due and payable to beneficiaries, the insurer must dispose of those policies by paying the claims due. Perhaps the First Circuit was saying that until whatever payment promised under the plan is in the hands of the beneficiaries, the insurer has not met its fiduciary obligation to dispose of the plan assets, i.e. the policies.
It is also possible that the First Circuit was adopting a functional test to determine whether the funds due beneficiaries were "plan assets." The "functional" approach to determining plan assets was articulated by the Ninth Circuit in Acosta v. Pac. Enters., 950 F.2d 611, 620 (9th Cir. 1992). Under this approach, "to determine whether a particular item constitutes an `asset of the plan' it is necessary to determine whether the item in question may be used to the benefit (financial or otherwise) of the fiduciary at the expense of plan participants or beneficiaries." Id. Mogel pointed out that Unum was the party enjoying the use of the funds. Mogel, 547 F.3d at 26 ("Until a beneficiary draws a check on the Security Account, the funds represented by that check are retained by UNUM and UNUM had the use of the funds for its own benefit. To say that the funds are `deemed to belong' to the beneficiaries obscures the reality that UNUM had possession of them and enjoyed their use.") While the functional test may in many situations be a useful analysis, it results in somewhat circular logic in this case. It only appears that Unum used the amounts owed to Plaintiffs at their "expense" if one views them as plan assets to begin with. Furthermore, if the funds owed to the Plaintiffs are considered plan assets, the result will be an end to the RAA method of payment because insurers will be required to immediately cease investment of and segregate the funds due to beneficiaries. For reasons articulated in Section V(A)(3) infra, the Court finds this to be a drastic result which is not required by ERISA.
Mogel's core holding — that Unum's "disposition to the beneficiaries of benefits under the plan falls comfortably within the scope of ERISA's definition of fiduciary duties with respect to plan administration" — did not require the First Circuit to find that the sums due to those plaintiffs were plan assets.
Mogel made clear that "once an insured's death occurs," the concern was with the "insurance company's duties with respect to the payment that is now due the beneficiary." Mogel, 547 F.3d at 27. "[T]he disposition to the beneficiaries of the benefits due under the plan falls comfortably within the definition of fiduciary duties with respect to plan administration." Id.
Unum asks us to distinguish Mogel because the plaintiffs in Mogel had policies that called for payment to the beneficiaries by a lump sum payment. Unum argues that these policies in the instant case require payment by RAAs and that Unum discharged its duties by providing RAAs. Unum cites Faber, which held that that once an insurance company "creates and credits a beneficiary's [RAA] and provides a checkbook, the beneficiary `has effectively received a distribution of all the benefits that the Plan promised' and `ERISA no longer governs the relationship'" between the insurer and the beneficiary. Faber, 648 F.3d at 102 (quoting DOL Opinion at p. 11 (Doc. # 26-2)).
The Court disagrees that simply providing RAAs to the Plaintiffs ends the inquiry into satisfaction of Unum's fiduciary duties:
Varity Corp. v. Howe, 516 U.S. 489, 504, 116 S.Ct. 1065, 134 L.Ed.2d 130 (1996) (quoting Bogert & Bogert, Law of Trusts and Trustees § 551, at 41-52). The Court is obliged to look at whether Unum retained any discretion in its provision of RAAs to the Plaintiffs and, if so, whether it exercised that discretion solely in their interests.
The plans provide that payment will be by RAAs, which are defined as interest-bearing accounts established through an intermediary bank in the name of the beneficiary. When Unum chose to award itself the business of administering the Plaintiffs' RAAs and chose to retain the assets backing these accounts, Unum was exercising its discretionary authority and responsibility in the administration of the Peabody and St. Joseph's Plans.
In doing so, Unum chose to maximize its own profits by setting the RAAs' interest rate just high enough to forestall mass withdrawal of the funds backing these accounts. The Court is unaware of whether there are banks or other institutions which would have bid on Unum's book of RAA
The Court wishes to emphasize that the RAA method of payment itself is not necessarily inconsistent with ERISA. The Court agrees with the DOL that Mogel does not imply any general restrictions on the method of payment chosen by plan settlors. See DOL Opinion at p. 13 (Doc. #26-2) ("Mogel does not stand for the broader proposition that the insurance company can never `retain' plan assets and use them for its own benefit, regardless of whether the plan specifically provided for a lump sum case distribution or simply for the creation of a[RAA].") The plan settlor generally has wide discretion to design an employee welfare benefit plan, see Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 444, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999), and the Plaintiffs have not pointed to any prohibition under ERISA against paying guaranteed-benefit claims through the establishment of RAAs. Indeed, RAAs are in some ways superior to lump sum payments in that they provide flexibility and at least some interest for people who are without a bank or who need time to consider their investment options. It is inconsistent with ERISA's goals to prohibit this type of arrangement.
Unum's difficulty in this case was not in using RAAs as a method of payment, but rather in offering insurance policies that left discretion to Unum to determine the interest rates and other features accruing to these accounts. If Unum had set forth the pertinent features of the proposed RAAs in the plan itself,
Unum argues that the Plaintiffs are not entitled to summary judgment on liability because the parties dispute the extent to which the Plaintiffs knew that Unum was retaining and investing their funds. Unum appears to argue that so long as beneficiaries allowed their funds to remain in the RAAs, knowing that Unum was retaining and investing the funds backing those accounts, they consented or ratified any breach of fiduciary duty that Unum committed.
Maine's Trust Code 18-B M.R.S.A. § 1009, cited by Unum in support of this assertion, does not equate mere knowledge of a trustee's actions with consent or ratification of a breach of the trustee's fiduciary duties. In fact, the Uniform Comment to this section states, "[a] consent, release, or affirmance under this section may occur either before or after the approved conduct. This section requires an affirmative act by the beneficiary. A failure to object is not sufficient...." 18-B M.R.S.A. § 1009, Uniform Comment. Unum has presented no evidence that the Plaintiffs undertook any affirmative act indicating consent to its conduct.
Moreover, the Comment states that, "[t]o constitute a valid consent, the beneficiary must know of the beneficiary's rights and of the material facts relating to the breach." Id. Unum does not contend that it informed the Plaintiffs that it:
For these reasons, Unum has failed to generate any material issues of fact with regard to consent or ratification by the Plaintiffs.
The Plaintiffs bring their ERISA claims under 29 U.S.C. § 1132(a)(3), which states in pertinent part that a claim may be brought:
Unum contends that the relief that Plaintiffs seek amounts to a money judgment against Unum. It asserts that this is not equitable relief and therefore cannot be obtained by the Plaintiffs. The Plaintiffs style the relief they seek as a declaration that Unum was unjustly enriched by the "profits" it obtained from its investment of the funds backing their RAAs. They further seek to impose a constructive trust upon Unum's funds to the extent of these profits and to disgorge the funds held in the constructive trust.
The fact that the Plaintiffs may obtain monetary relief out of this litigation does not mean that their claims against Unum are not equitable. The Supreme Court recently considered the scope of relief available under Section 1132(a)(3), and
It also appears under general trust principles that the remedies of a beneficiary against a trustee are almost exclusively equitable. See Restatement (Second) of Trusts (1959) §§ 197 and 198 ("the remedies of the beneficiary against the trustee are exclusively equitable" ... except for cases in which the trustee is under an obligation to immediately and unconditionally transfer money or chattel to the beneficiary); cf. Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 210, 122 S.Ct. 708, 151 L.Ed.2d 635 (2002) (making distinctions between the equitable versus legal nature of restitution where the defendant was not a fiduciary but a beneficiary, and the claim was "for a contractual obligation to pay money relief that was not typically available in equity.") Accordingly, the Plaintiffs' claims do not appear to be barred by unavailability of the relief they seek.
However, this does not mean that the Plaintiffs are entitled to disgorgement of Unum's entire investment spread. Unum breached its fiduciary duties by awarding the RAA business to itself without offering the best overall RAAs to the Plaintiffs. No vendor would service interestbearing demand accounts without either charging fees or obtaining an appreciable volume of assets from which to make an investment spread. Unum has "profited" from the Plaintiffs to the extent it used its proprietary position to retain these accounts on terms less favorable than other vendors might have offered for the same book of business.
Under their breach of contract and statutory late payment claims, the Plaintiffs assert that, by setting up RAAs instead of issuing checks, Unum failed to make the complete, timely payment that was due to them under their contracts. The Court disagrees.
The plain language of these GISBs makes it clear to an ordinary person in the Plaintiffs' shoes that payment will be made upon approval of their claims by means of setting up an RAA.
The Plaintiffs' statutory claim under Maine's late payment statute, 24-A M.R.S.A. § 2436, is contingent upon Unum's failure to timely make payment according to the terms of its contracts. This statute states in pertinent part:
24-A M.R.S.A. § 2436(1).
The Court agrees with Unum that Dodge v. United Servs. Auto. Ass'n, 417 A.2d 969 (Me.1980) provides whatever guidance is needed on the question of whether Unum's presentation of blank drafts, statements, and explanatory Welcome Kits to the Plaintiffs satisfies this statute's requirement of payment within 30 days. Id. at 973 ("Section 2436 neither purports to prescribe nor to prohibit any particular method of payment; it merely sets forth the applicable time limits beyond which payments shall be considered overdue."). As Unum points out, if it had presented checks to the Plaintiffs, they would have still had to deposit these checks to their accounts. It is by no means a violation of the late payment statute when an insurer presents a check to an insured which the insured thereafter fails to deposit. By providing blank drafts, account balances, and a plain language explanation of the RAAs to the Plaintiffs, Unum provided the Plaintiffs with unconditional access to their benefits, the same — considering the purpose of the Late Payment Statute — as if it had issued a check. Accordingly, Unum is entitled to summary judgment on the Plaintiffs' claims for breach of contract and under 24-A M.R.S.A. § 2436.
The Plaintiffs seek to certify two classes as follows:
And:
Plaintiffs' Motion to Certify Class and Subclass at p. 1 (Doc. # 29).
The Court denies the Plaintiffs' motion for certification of the Maine PMI Subclass because it has granted summary judgment to Unum on the claims supporting this proposed class. The inquiry that follows concerns only certification of the general ERISA class.
Under Fed.R.Civ.P. 23, the Court engages in both a general and a specific set of inquiries relating to class certification. The general prerequisites for class certification are contained under Rule 23(a) as follows:
Fed.R.Civ.P. 23. The Court must then review the additional requirements contained under Rule 23(b) to determine if the plaintiffs fit within any of the particular types of classes articulated therein.
The Plaintiffs contend that the ERISA class meets the requirements of 23(b)(1) and 23(b)(3). These state respectively:
A class action may be maintained if Rule 23(a) is satisfied and if:
Unum proceeds from the premise that this case is about "delayed payment" of funds due to the Plaintiffs and argues that each beneficiary's knowledge and motivation in choosing to leave their funds in RAAs is central to a determination of liability. Unum asserts that the unique knowledge and motivation of each Plaintiff precludes a finding of commonality, typicality, or adequacy of representation under Rule 23(b)(1), as well as a finding of predominance and superiority under Rule 23(b)(3). Unum refers particularly to the fact that in February of 2009, it began sending out letters that were explicit about the fact that Unum would retain and invest the funds backing the RAAs.
Unum's argument is based on a view of the issues not adopted by the Court. As discussed in the summary judgment portion of this Order, Unum's breach of fiduciary duty arose out of its discretionary choices to retain the assets behind the RAAs in its own general account and to set the features for these RAAs, including the applicable interest rates, in its own interest rather than solely in the interest of the beneficiaries.
These choices affected all of the beneficiaries in a similar manner — i.e. in the loss of additional interest to their accounts for the period of time in which they left their funds in the RAAs. The Plaintiffs' individual damages will be different depending upon when their benefits vested and how long they kept their money in the RAAs. However, the Plaintiffs' varying motivations for leaving money in these accounts are not relevant to Unum's liability or to the calculation of damages.
Unum also claims that the proposed class is divided by ERISA's three-year statute of limitations on claims for breach of fiduciary duty in which the plaintiff had actual knowledge of the breach or violation. See 29 U.S.C. § 1113.
The Plaintiffs filed their complaint on October 29, 2010, well within the three-year statute of limitations for those who received letters from Unum after it began making more complete disclosures in February of 2009. Thus, there appears to be no cause at this time to consider whether to certify a separate subclass consisting of those whose claims arose prior to October 29, 2007. If discovery discloses that, in spite of the inadequacy of the pre-February-2009 communications, some class members nevertheless understood that Unum was retaining and investing the assets behind their RAAs, the parties can request certification at that time of a subclass to represent the specific interests of this group, including any defense against Unum's statute-of-limitations defense.
Unum also claims that some of the Plaintiffs may have either consented to or ratified Unum's actions in this case, a defense that requires individualized determinations that break up the commonality of the issues among the Plaintiffs and prohibit a finding of predominance. The Court found in its order on summary judgment that Unum has created no material issues of fact with regard to this defense. This determination was based on the facts relating to the named Plaintiffs. If discovery reveals that certain individuals within the class may have taken affirmative action constituting informed consent, the Court will entertain a request to certify a subclass in this regard. See Smilow v. Sw. Bell Mobile Sys., Inc., 323 F.3d 32, 39 (1st Cir.2003) (if "evidence later shows that an affirmative defense is likely to bar claims against at least some class members, then a court has available adequate procedural mechanisms" to address such contingencies, including exclusion of these members from the class or the creation of a subclass).
Unum also argues that certification under Rule 23(b)(1) is inappropriate. While the Court agrees,
In reviewing the summary judgment record and the arguments presented thereon by the parties, it is apparent that questions of law and fact common to class members predominate over any questions affecting individuals. Likewise, the class members' claims appear to be individually quite small,
The Court is of the opinion that, although this order is not otherwise appealable at this time, it involves controlling questions of law as to which there is substantial ground for difference of opinion, including the Court's determinations that the funds backing the RAAs are not plan assets and its determination that Unum breached its fiduciary duties to the Plaintiffs by failing to solely consider their interests when investing the funds behind the RAAs for its own benefit. The Court finds that pursuant to 28 U.S.C. § 1292, an immediate appeal from this order may materially advance the ultimate termination of the litigation, especially in light of the fact that similar issues are or may be addressed by the First Circuit in the appeal of Otte v. Life Ins. Co. of N.A., 275 F.R.D. 50 (D.Mass.2011).
The Plaintiffs have failed to demonstrate that Unum committed any breach of contract or that it is liable to the Plaintiffs under Maine's late payment statute, 24-A
The Court DIRECTS the Clerk of the Court to seal this opinion when docketed. The parties shall notify the Court by noon on Tuesday, February 7, 2012, with due regard to the public's interest in access to court proceedings, whether this opinion contains any confidential information that should remain sealed and, if so, indicate explicitly what language is proposed to be redacted, and why. If the Court does not hear from the parties by noon on Tuesday, February 7, 2012, this opinion will be unsealed.
SO ORDERED.
Unum claims that it is entitled to deferential review of its contract terms because it has provided itself with discretionary authority to interpret the terms and provisions of its summaries of benefits. See Maher v. Mass. Gen. Hosp. Long Term Disability Plan, 665 F.3d 289, 291-92 (1st Cir.2011). The Court need not determine whether this standard of review is applicable because even applying non-deferential rules of interpretation the plan is unambiguous.
With respect to the request for injunctive relief, the named Plaintiffs have already withdrawn their funds from Unum's RAA's and they have no further relationship with Unum. There is thus no ongoing violation with respect to these Plaintiffs which would provide a basis for injunctive relief. While there are class members who may still have funds with Unum, the Plaintiffs have not brought forward any particular facts related to their circumstances, nor have they articulated what, if any sort of injunction they think would be necessary in the wake of a finding by the Court that Unum has breached its fiduciary duty to set interest rates solely in the interest of the Plaintiffs. Thus, because the Plaintiffs have not demonstrated that broad declaratory and injunctive relief are likely to result in this case, the Plaintiffs have not identified a basis on which to grant certification under Rule 23(b)(1)(A).
Certification is appropriate under Rule 23(b)(1)(B) in situations where the plaintiffs seek recovery to a plan of illegal profits from an ERISA fiduciary under 29 U.S.C. § 1132(a)(2). Unum points out that this is appropriate only because, once a fiduciary has been ordered to restore to the plan its improperly made profits, the claims of all other beneficiaries of the plan would, as a practical matter, be resolved. Unum's Response to Plaintiffs' Motion to Certify Class at p. 19 (Doc. # 49.) The Court agrees that, since the Plaintiffs do not seek to restore funds to a common plan but instead seek individual recoveries, the justification for Rule 23(b)(1)(B) certification disappears.
