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Heck-Johnson v. First Unum Life Insusrance Co.

May 4, 2006


The opinion of the court was delivered by: Sharpe U.S. District Judge


I. Introduction

In October 2001, Karen A. Heck-Johnson sued First Unum Life Insurance Company of America in New York Supreme Court alleging, inter alia, ERISA violations.*fn1 See Notice of Removal, Ex. A, Dkt. No. 1; see also 29 U.S.C. § 1001 et seq. (ERISA). A month later, First Unum's retained counsel, McNamee, Lochner, Titus & Williams, P.C. ("McNamee"), removed the action. See 29 U.S.C. § 1132. McNamee now moves to withdraw as First Unum's counsel. Heck-Johnson opposes the motion and seeks sanctions, and she has also filed an unauthorized cross-motion seeking declaratory and summary judgment. For the reasons that follow: McNamee's motion is granted; decision is reserved on Heck-Johnson's request for sanctions; and Heck-Johnson's cross-motion for declaratory and summary judgment is denied with leave to renew with permission of the court.

II. Background

After removal, First Unum answered and counterclaimed on November 29, 2001. See Dkt. No. 3. On December 26, Heck-Johnson answered the counterclaim, see Dkt. No. 6, and on March 20, 2002, First Unum withdrew it. See Stipulation & Order, Dkt. No. 13.

On September 4, 2002, Magistrate Judge Treece issued an order limiting discovery to, inter alia, the applicable standard of ERISA review. See Dkt. No. 22. In ERISA actions, the review standard is often critical. If a plan gives an administrator discretionary authority to determine its terms or eligibility, judicial review is typically limited to whether an administrator's subsequent adverse decision is arbitrary and capricious. Absent a plan's grant of discretionary authority, judicial review is usually de novo. By amended order, Judge Treece closed discovery on April 3, 2003. See Dkt. No. 25.

In March 2003, the case was reassigned to District Judge McAvoy, see Dkt. No. 24, and First Unum filed a motion for judgment on the administrative record in June. See Dkt. No. 32. After Heck-Johnson filed her opposition, see Dkt. No. 37, Judge McAvoy took the motion on submit in August. See Dkt. No. 45. On August 29, Judge McAvoy ordered the parties to submit proposed factual findings and legal conclusions, and the parties complied. See 08/29/03 Clerk's Entry; see also, Dkt. Nos. 46-48. On September 18, he adjourned a scheduled trial because the motion was under consideration. See Dkt. No. 50. Four months later and before Judge McAvoy decided the motion, the case was reassigned to District Judge Kahn, and reassigned to this court two months later. See Dkt. Nos. 52, 53.

On December 3, 2004, this court scheduled First Unum's motion to be heard on submit on January 20, 2005. See 12/03/05 Text Notice. However, on December 29, 2004, and without permission, Heck-Johnson filed a supplemental memorandum of law referencing the Second Circuit's decision in Locher v. Unum Life Ins.Co. of Am., 389 F.3d 288 (2d Cir. 2004). See Dkt. Nos. 54-56. In the interests of justice, the court accepted Heck-Johnson's non-compliant memorandum, and permitted First Unum to respond. See 01/05/05 Text Order; see also, Dkt. Nos. 59-61. The January 20 return date was adjourned pending submission of the supplemental briefs. See id.

On January 27, 2005, the court ordered supplemental briefing concerning the impact, if any, of First Unum's Multi-State settlement agreement. See 01/27/05 Text Order. After the parties responded, see Dkt. Nos. 62-64, the court scheduled the motions to be heard on submit on July 21, 2005, see 04/04/05 Text Notice, and then rescheduled them for oral argument on September 15. See 08/24/05 Text Notice. On September 8, the court granted the parties' joint adjournment request, and rescheduled the return for September 29. See Dkt. No. 66.

The day before the scheduled return, First Unum filed a letter seeking to withdraw its motion and submit a new motion. Dkt. No. 67. The original motion conceded de novo review because First Unum's plan did not afford discretionary authority to the administrator. According to McNamee's letter, First Unum's in-house counsel discovered at the last minute that the plan had been amended to grant discretionary authority, and, therefore, the arbitrary and capricious standard should govern the court's review. Id.

During the September 29 return, the court discussed First Unum's late request with the parties, and declined to reach the merits of the pending motion. See Dkt. No. 68. Heck-Johnson, who had less than two hours to digest First Unum's request, argued that a change in theory would prejudice her because First Unum had consistently conceded that a de novo standard applied. She further argued that if the court granted the request, further discovery would be necessary and sanctions would be appropriate. Id. At Heck-Johnson's request, the court granted her permission to respond to First Unum's letter, and granted First Unum permission to reply by November 14. See Minute Entry, Dkt. No. 68.

Heck-Johnson filed her response on October 25, and argued, inter alia, that First Unum's request to withdraw its motion and alter its theory constituted sanctionable conduct and should be denied. See Dkt. No. 70.

Three days before First Unum's reply was due, McNamee filed a letter requesting permission to withdraw with the consent of First Unum. See Dkt. No. 73. Apparently, McNamee and First Unum believed that their mutual consent was the sole withdrawal requirement. However, the court denied the request on November 14, with leave to renew in compliance with Local Rule 83.2(b). See Dkt. No. 74. First Unum's reply deadline was stayed pending refiling and disposition of the withdrawal motion. See 11/14/05 Text Notice. On November 21, First Unum's counsel refiled the withdrawal motion. See Dkt. No. 75. On December 15, Heck-Johnson filed an unnecessary and unauthorized cross-motion. See Dkt. No. 76. To the extent her cross-motion sought sanctions, it duplicated her October 25 reply. To the extent it sought declaratory and summary judgment, she exceeded the scope of the court's authorized reply.

Thereafter, the court issued an order scheduling these motions to be heard on submit on January 19, 2006. See 01/12/06 Text Notice.

On January 24, the court ordered McNamee to supplement its withdrawal motion in order to assert facts demonstrating good cause for the withdrawal request. See 01/24/06 Text Notice. The court also stayed Johnson's cross-motion for sanctions, summary judgment and declaratory judgment until further notice. Id. On January 25, Heck-Johnson objected to the court order permitting McNamee to supplement its withdrawal motion ex parte, and requested clarification. See Dkt. No. 78. On January 26, the court denied Heck-Johnson's request. See ...

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