[00:00:00] Speaker 04: Case number 22-7T02, King-Kyster, a balance versus American Association of Retired Persons, Inc. [00:00:08] Speaker 04: Ms. [00:00:09] Speaker 04: Clark for the balance, Ms. [00:00:10] Speaker 04: Davis for the evidence. [00:00:12] Speaker 03: Morning, counsel. [00:00:13] Speaker 03: Good morning. [00:00:14] Speaker 03: Ms. [00:00:14] Speaker 03: Clark, please proceed. [00:00:15] Speaker 02: Thank you. [00:00:15] Speaker 02: After receiving his, filing his complaint against AARP benefit committee and understanding it was going to be dismissed, King-Kyster filed a complaint against AARP [00:00:30] Speaker 02: before a final judgment was entered. [00:00:33] Speaker 02: This case has been brought because the district court concluded that the claim was barred by both claimant and the issue of collusion. [00:00:45] Speaker 02: For the following reasons, the plaintiff says that's incorrect. [00:00:49] Speaker 02: First of all, with regard to the original case that was brought, it was brought under original section 502A1B. [00:00:54] Speaker 02: A1B only allows [00:00:57] Speaker 02: participant to enforce the terms of the plan. [00:01:01] Speaker 02: And in that case, that would have been the contract between AARP and Aetna. [00:01:06] Speaker 02: So it would have been a claim against Aetna. [00:01:08] Speaker 02: And AARP's benefit committee was a fiduciary named in that plan, who we, at the time we filed the complaint, believe could have been an administrator. [00:01:19] Speaker 02: So ERISA and the Supreme Court has held that 502A1B claims are limited to enforcing the terms of the plan against [00:01:28] Speaker 02: fiduciaries. [00:01:29] Speaker 02: That's the claim that was dismissed in Keister one. [00:01:32] Speaker 02: That's what I'll call it. [00:01:34] Speaker 02: The claim that's been brought now is about misrepresentation, inducement of Mr. Keister by AARP to sign a contract that waived claims based on misrepresentation of his rights. [00:01:50] Speaker 02: Now, in Verity versus Hound, the Supreme Court [00:01:55] Speaker 02: Elm and at Verde versus house 516 US 489. [00:01:59] Speaker 02: The Supreme Court recognized that there could be individual recovery under 502A3. [00:02:05] Speaker 02: A3 could be brought against not just fiduciaries, but non fiduciary. [00:02:12] Speaker 02: This case was brought against the plan sponsor. [00:02:16] Speaker 02: So it's not a claim against AARP in a fiduciary role, but in a sponsor role. [00:02:23] Speaker 01: Let's suppose I agree with everything that you said. [00:02:27] Speaker 01: Don't you still have an issue that claim preclusion doctrine is written because they don't want people to split claim? [00:02:39] Speaker 01: So if you could have brought the claims in the second lawsuit, in the first lawsuit, then doesn't claim preclusion still apply? [00:02:54] Speaker 02: I mean, I answered two ways. [00:02:56] Speaker 02: First, I think from a legal standpoint, this court has raised, I think, for plaintiff counsel and a real concern about whether or not it's appropriate to do this. [00:03:10] Speaker 02: And I'll cite the case Clark versus Spader, Seymour and Bard, 527F sub-second, 112, and page 116 of that case, [00:03:23] Speaker 02: I'm sorry. [00:03:25] Speaker 02: I think it was this court. [00:03:26] Speaker 02: It was the district court. [00:03:27] Speaker 02: I apologize. [00:03:29] Speaker 02: That case was that complaint had both a 502 a one B claim and a 502 a three claim. [00:03:38] Speaker 02: And the risk that you run with regard to bringing both is that the court might conclude that you're looking for the same remedies and therefore [00:03:50] Speaker 02: that you're looking under A3 for the same remedies you could get under A1B. [00:03:56] Speaker 02: In the case, in Easter one, there was no ability to conduct discovery. [00:04:03] Speaker 02: In the case that I've cited, the Clark versus Bader St. [00:04:05] Speaker 02: Louis part, there was discovery in order for you to reach that issue. [00:04:09] Speaker 01: Given the fact, I think, but I don't, I guess I'm trying to understand what you're getting at. [00:04:17] Speaker 01: Plaintiffs bring alternative theories of liability all the time. [00:04:22] Speaker 01: A breach of contract claim, a tort claim, fraudulent inducement claim. [00:04:27] Speaker 01: and it may be that you can't have double, triple, quadruple recovery because the injuries are going to be in the remedies, the damages are going to overlap, but that doesn't mean that you get to bring your tort claim and then see how that works out and then bring your breach of contract claim and see how that works out and then bring your fraudulent inducement claim, et cetera, et cetera. [00:04:52] Speaker 02: Yeah, I disagree to the extent that we're talking about ERISA claims because [00:04:58] Speaker 02: because of the uniqueness of who it is that can provide the benefit. [00:05:04] Speaker 02: So if this were originally a breach of fiduciary duty claim against AARP's benefit committee, and we did include AARP as an entity, then I think yes, I think claim splitting would be something that's appropriately brought against the plaintiff here. [00:05:29] Speaker 02: But that's not what happened here. [00:05:31] Speaker 02: He was seeking benefits under the terms of the plan. [00:05:34] Speaker 02: And the only way he could bring those claims was to bring it against the insurance company and the administrator. [00:05:42] Speaker 02: And AARP is neither in that case. [00:05:46] Speaker 02: And so I think if he did not have, which he didn't at the time he filed Easter one, if he did not have a reasonable basis, [00:05:55] Speaker 02: to understand that there was a breach of judiciary in this case, a misrepresentation of that inducing him into signing his rights away. [00:06:06] Speaker 02: I think it would have been inappropriate as a plaintiff to bring that claim without any evidence, without a good faith belief that that was a claim that you could bring. [00:06:15] Speaker 02: It's only after the fact understanding the position of. [00:06:20] Speaker 02: And the administrator. [00:06:25] Speaker 02: that he then understood what the real context of that contract was. [00:06:35] Speaker 01: But he could have amended his complaint. [00:06:38] Speaker 01: He had those claims, right? [00:06:40] Speaker 02: He made an effort to do that and was basically told that that was something that was not going to be allowed in that case. [00:06:46] Speaker 02: That was part of the oral argument at summary judgment. [00:06:51] Speaker 01: then your remedy for that is to appeal that denial of the motion to which we did. [00:06:57] Speaker 02: And we were told that that the judge was within her discretion to deny that. [00:07:03] Speaker 01: So aren't we essentially in effect and in a position of of second guessing that earlier ruling of an of a prior panel. [00:07:16] Speaker 02: I don't think we're second guessing something that wasn't presented to them in total, because what was not presented to that panel were the facts of misrepresentation. [00:07:26] Speaker 02: What was not presented to that panel were the facts of the omission. [00:07:31] Speaker 02: What was before the panel was the contract and whether or not there would be evidence that could be taken with regards to the enforcement of that contract. [00:07:40] Speaker 02: And I think that was a very distinct issue. [00:07:46] Speaker 02: before the panel. [00:07:50] Speaker 02: There have been issues and facts presented about the misrepresentation that was made to Mr. Kuster when he signed his rights away. [00:08:00] Speaker 02: I think that would be a very different thing. [00:08:03] Speaker 02: Those facts were not taken into account. [00:08:07] Speaker 02: They were not allowed to be developed below. [00:08:09] Speaker 02: They were just considered to be something that would not change [00:08:15] Speaker 02: the nature of the contract wasn't considered. [00:08:18] Speaker 02: It wasn't viewed from the standpoint of what induced the person to sign the contract, the omission of misrepresentation. [00:08:25] Speaker 02: It was instead looked at from the standpoint of, do we take that into account in order to interpret the contract? [00:08:32] Speaker 02: And I think that's very different. [00:08:35] Speaker 02: It did also to preserve. [00:08:39] Speaker 03: We'll give you a rebuttal time. [00:08:41] Speaker 03: Thank you, Ms. [00:08:42] Speaker 03: Clark. [00:08:43] Speaker 03: Ms. [00:08:43] Speaker 03: Davis will hear from you. [00:08:56] Speaker 04: Good morning, may it please the court. [00:08:58] Speaker 04: I will address Judge Wilkins' question about splitting claims and the ability of Mr. Keister to amend his complaint. [00:09:08] Speaker 04: As Ms. [00:09:10] Speaker 04: Clark argued and pointed out, at oral argument, the issue of whether or not there were misrepresentations were raised before the district court. [00:09:23] Speaker 04: Mr. Keister had the opportunity at that point [00:09:26] Speaker 04: to raise any facts that would have been a basis to allow discovery on this issue. [00:09:34] Speaker 04: But even at that stage, we would have objected because it would have been too late and also not in the proper form under the rule for seeking discovery in response to a motion for summary judgment. [00:09:49] Speaker 04: The proper course, which Ms. [00:09:51] Speaker 04: Clark should have followed in responding to our argument that the case [00:09:57] Speaker 04: should be dismissed because of the existence of severance agreement would have been to file a Rule 56B declaration and set forth the discovery which she would require. [00:10:12] Speaker 04: In addition, with respect to amending the complaint, the complaint could have been amended any time within 21 days after we filed our motion. [00:10:21] Speaker 04: And she also could have thought leave at that point [00:10:26] Speaker 04: on the basis that she needed discovery and chose not to. [00:10:31] Speaker 01: What was the first response? [00:10:34] Speaker 01: Did you file an answer or was your first response a motion to dismiss or was it a motion for summary judgment in the first case? [00:10:44] Speaker 04: In the first case, it was a motion for summary judgment. [00:10:47] Speaker 01: And so if one free amendment could have been made without any leave of court within 21 days of filing it at [00:10:57] Speaker 04: I actually misspoke because we did file an answer in that case, but she could have sought leave from the court to amend once she became aware of the existence of this other claim where she could have brought in AARP. [00:11:14] Speaker 04: Rather than doing so, Mr. Keister waited to file Keister 2, which is the reason why we're here today, after receiving the order, tentative order [00:11:26] Speaker 04: from the court on September 30th, and then filed this action on October 1. [00:11:35] Speaker 03: I thought there was a motion for leave to amend. [00:11:37] Speaker 03: No. [00:11:38] Speaker 03: In the first action, was there not? [00:11:39] Speaker 04: There was not a motion for leave to amend. [00:11:41] Speaker 04: There was an oral request. [00:11:43] Speaker 03: OK, right. [00:11:44] Speaker 04: An argument was made, yes. [00:11:45] Speaker 03: Not a formal motion. [00:11:46] Speaker 04: Not a formal motion. [00:11:48] Speaker 04: And the district court did respond by saying that the fact that we're proffered were not sufficient to establish [00:11:55] Speaker 04: any type of fraud that would have supported a claim for misrepresentation. [00:12:00] Speaker 04: So Mr. Keister has not been denied the opportunity to raise that legal theory in response to his inability to collect long-term disability benefits. [00:12:14] Speaker 04: Separate and apart from that, the court also made it ruling that the severance agreement that he signed was enforceable and therefore [00:12:24] Speaker 04: He was well aware or should have known about any claim that existed prior to him signing the agreement. [00:12:32] Speaker 04: And he waived those claims by entering into the severance agreement. [00:12:37] Speaker 04: So regardless of the fact that Mr. Keister may believe that he could bring a separate action in order to get a second bite at the Apple as to his denial of his long-term disability claims, he waived that right by signing the severance agreement. [00:12:54] Speaker 04: We have the decision in Keyster 1, which finds that the severance agreement isn't possible and applying race judicata, therefore he's foreclosed from pursuing Keyster 2. [00:13:07] Speaker 04: And so the district court's decision should be affirmed on that ground. [00:13:12] Speaker 03: Can I ask you a question just about claim for occlusion doctrine and the way it works? [00:13:16] Speaker 03: Um, I know you, it sounds like, and I've looked at the council lists. [00:13:19] Speaker 03: I know you were involved in Keister one. [00:13:20] Speaker 03: And so in some ways it seems like a continuation of that case, even vis-a-vis the parties. [00:13:28] Speaker 03: But is it the case that anytime there's a judgment involving a subsidiary, that that judgment necessarily encompasses the parent also for purposes of claim for occlusion and they're treated as the same party. [00:13:41] Speaker 04: Not in every case, but in this situation, we have a common nucleus of fact. [00:13:48] Speaker 04: This all relates to Mr. Keester's application for long-term disability benefits and his eventual signing away of his rights to bring claims against AARP and any of the other LECs. [00:14:01] Speaker 04: And so in this case, claim preclusion should apply. [00:14:04] Speaker 03: So I take the point that you need common nucleus of operative facts for claim preclusion. [00:14:09] Speaker 03: I guess I'm just looking at the same party's element of claim preclusion, which is a separate one. [00:14:13] Speaker 03: It has to be the same party. [00:14:14] Speaker 03: I was wondering, is it the case that two parties are necessarily considered the same party for purposes of that part of claim preclusion doctrine whenever one party is the parent or subsidiary of the other one? [00:14:27] Speaker 04: If there are facts that establish a connection between the affiliated entities, yes. [00:14:34] Speaker 04: it would apply. [00:14:35] Speaker 04: So in this case, we have in the original Keeser one, there was Aetna, which was the plan administrator, and we had AARP benefits committee, which was the plan. [00:14:50] Speaker 04: And now in this case, we have AARP, which is the plan sponsor. [00:14:56] Speaker 04: And so there is a, there is a relationship between all three parties. [00:15:00] Speaker 03: And a relation, you mean a relationship [00:15:03] Speaker 03: There's always a relationship between a parent and a subsidiary, at least in a formal legal sense, because one's the parent of the other. [00:15:09] Speaker 03: You're not saying that that in and of itself is enough to render them the same parties. [00:15:12] Speaker 03: There has to be more of a relationship than that. [00:15:14] Speaker 03: Yes, that's my position. [00:15:17] Speaker 03: And the more of the relationship that's present here, and this suffices, is that the parent and the subsidiary are both involved in the administration of plan benefits? [00:15:25] Speaker 04: That's correct. [00:15:27] Speaker 03: That's the way you're looking at it. [00:15:28] Speaker 00: Is that disputed in the district court? [00:15:31] Speaker 04: I don't believe it was. [00:15:32] Speaker 00: Yeah, I thought that was a given that the subsidiary and the parent were privy with one another. [00:15:40] Speaker 00: It was not litigated. [00:15:42] Speaker 04: In Easter one, there was... Let me ask you another question. [00:15:47] Speaker 00: I was not aware that you filed an answer and I looked at the docket sheet. [00:15:52] Speaker 04: I may be mistaken. [00:15:53] Speaker 00: I thought we had... There's no answer in the docket sheet. [00:15:56] Speaker 04: I may be mistaken then, my recollection. [00:15:59] Speaker 00: Okay. [00:16:04] Speaker 03: Thank you, Council. [00:16:06] Speaker 03: Unless you have anything further, I think we have no further questions. [00:16:09] Speaker 04: Nothing further, just request that you affirm the decision. [00:16:12] Speaker 03: Thank you. [00:16:13] Speaker 03: Thank you. [00:16:13] Speaker 03: Thank you. [00:16:15] Speaker 03: Ms. [00:16:15] Speaker 03: Clark will give you the two minutes you asked for for rebuttal. [00:16:21] Speaker 02: To address the issue that was just raised about the parent of the subsidiary. [00:16:25] Speaker 02: I think in the original context, you cannot look at it the same way. [00:16:29] Speaker 02: The fiduciary is completely independent of the plan sponsor. [00:16:33] Speaker 02: And their functions are completely different. [00:16:38] Speaker 02: Acts to amend the plan, for example, cannot be considered fiduciary acts. [00:16:43] Speaker 02: And those are typically the acts by a plan sponsor. [00:16:46] Speaker 02: In this case, we're talking about a misrepresentation that's being made by a plan sponsor. [00:16:54] Speaker 02: That is action. [00:16:56] Speaker 02: And so I don't think that they are [00:17:00] Speaker 02: But because there are distinct acts between the administrator and the distinct act by AARP, in this case, their HR department, that the piece for one could have never addressed the HR department because their acts were not part of that original case. [00:17:20] Speaker 02: And they couldn't have been under a 502A1B claim because, again, a 502A1B claim is limited to enforcing the terms of the plan, and the plan [00:17:31] Speaker 02: would have been the contract between the insurance contract between AARP and Aetna. [00:17:37] Speaker 01: Just so that I make sure I understand your argument. [00:17:41] Speaker 01: You aren't contending that because of some sort of jointer or any other kind of rules, you couldn't have brought the claims in Keister 2, in Keister 1, right? [00:17:55] Speaker 01: There's nothing [00:17:56] Speaker 01: There's nothing, no law or rule procedure that would preclude you from bringing those claims together against all of the relevant parties, right? [00:18:07] Speaker 02: If I had amended the plan to add AARP as a defendant, I could have brought the claim. [00:18:14] Speaker 02: With the existing defendants, I could not have brought the claim. [00:18:18] Speaker 01: So the issue was not that you were prevented from doing so by any sort of a rule or principle or doctrine [00:18:26] Speaker 01: or law, it was that you weren't aware of the basis or Easter to when you brought Easter one, the factual base that is correct. [00:18:38] Speaker 01: Um, I think Judge Randolph has a question of your friend on the other side. [00:18:42] Speaker 01: This, um, did you challenge, um, whether there was privity between a R P and the, um, in the fiduciary, as you put it, [00:18:56] Speaker 01: Um, did you challenge the privity argument, um, below when that was raised, uh, was a basis for a claim or issue? [00:19:07] Speaker 01: I challenge the previous idea that they weren't the same party. [00:19:10] Speaker 01: Did you argue that they weren't the same party below? [00:19:13] Speaker 01: I believe that we did. [00:19:14] Speaker 02: I mean, because they are not the same party. [00:19:18] Speaker 02: I mean, I believe our arguments have been very consistent that because the claim is being brought against the plan sponsor, [00:19:25] Speaker 02: That's a completely different entity than the fiduciary or and or administrative. [00:19:34] Speaker 03: Thank you. [00:19:35] Speaker 03: Thank you. [00:19:36] Speaker 03: Thank you, counsel. [00:19:37] Speaker 03: Thank you to both counsel. [00:19:38] Speaker 03: We'll take this case under submission.