Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02846/USCOURTS-cand-3_07-cv-02846-3/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

ALEXANDER P. SOMMER, an individual,

by and through his Guardian ad

Litem, CHRISTIAN SOMMER,

Plaintiff,

 v.

UNUM, UNUM PROVIDENT CORPORATION;

UNUM PROVIDENT LIFE INSURANCE

COMPANY OF AMERICA; FIRST UNUM LIFE

INSURANCE COMPANY OF AMERICA; PAUL

REVERE LIFE INSURANCE COMPANY,

Defendants.

 

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Case No. 07-2846 SC

ORDER GRANTING

DEFENDANTS' MOTION TO

DISMISS

I. INTRODUCTION

This matter comes before the Court on a Motion to Dismiss

("Motion") filed by the defendants Unum et al., ("Defendants" or

"Unum"). See Docket No. 20. The plaintiff Alexander P. Sommer

("Plaintiff" or "Sommer") filed an Opposition. See Docket No. 23. 

For the following reasons, the Court GRANTS Defendants' Motion to

Dismiss. 

II. BACKGROUND

The facts of this case have been exhaustively detailed in the

three prior cases that comprise the history of the present action. 

The parties familiarity with the facts is assumed and the Court

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1 Although the claims have varied slightly, and Sommer raises

new claims in the present case, all claims are derived from the

same nucleus of operative facts; namely Unum's denial of Sommer's

disability benefits.

2 Ninth Circuit Rule 36-3 states that unpublished opinions

may not be cited and are not precedent except as follows:

(i) They may be cited to . . . by any

other court in this circuit when relevant

under the doctrine of law of the cases or

rules of claim preclusion [res judicata]

or issue preclusion. (ii) They may be

cited to . . . for factual purposes, such

as to show . . . sanctionable conduct . .

2

discusses only those relevant to the present Motion. It is

nonetheless worth emphasizing that this represents the sixth time

that a federal court has considered Sommer's claims against Unum.1

In 1996 Sommer sued Defendants for their denial of disability

benefits and the Honorable Judge Jenkins granted summary judgment

against Sommer. See Sommer v. Unum Life Ins. Co., Docket No. 93

CV 96-2407 (N.D. Cal. June 17, 1997) (Sommer I). Sommer appealed

the decision and the Ninth Circuit, in an unpublished opinion,

affirmed the district court's decision. See Sommer v. Unum Life

Ins. Co., 173 F.3d 861, 1999 WL 173570, at *1 (9th Cir. 1999).

In November 1997, Sommer filed another action in district

court against Defendants and the Honorable Judge Armstrong granted

summary judgment against Sommer. See Sommer v. Unum Life Ins.

Co., Docket No. 43 CV 97-4159 (N.D. Cal. March 27, 1998) (Sommer

II). Sommer appealed this decision and the Ninth Circuit, in an

unpublished companion opinion to Sommer I, affirmed the district

court's decision. See Sommer v. Unum Life Ins. Co., 173 F.3d 861,

1999 WL 173592 at *1 (9th Cir. 1999) (stating "Sommer's claims are

barred by the doctrine of res judicata").2

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., entitlement to attorneys' fees, or the

existence of a related case. . . . 

3

In April 2000 Sommer filed yet a third complaint in federal

district court and the Honorable Judge Armstrong dismissed on res

judicata grounds. See Sommer v. Unum Life Ins., Docket No. 26 CV

00-1368 (N.D. Cal. January 8, 2001) (Sommer III). Sommer appealed

and in another unpublished opinion the Ninth Circuit affirmed,

stating, "[t]hese cases are concluded." Sommer v. Unum Life Ins.

Co., 35 Fed. Appx. 489, 493 (9th Cir. 2002). 

III. DISCUSSION

A. Legal Standard

A motion to dismiss tests the legal sufficiency of the claims

asserted in the complaint and "all factual allegations are to be

taken as true and construed in the light most favorable to the

non-moving party." Levine v. Diamanthuset, Inc., 950 F.2d 1478,

1482 (9th Cir. 1991). Dismissal "is proper only where it appears

beyond doubt that the plaintiff can prove no set of facts in

support of his claim which would entitle him to relief." Id.

(internal citations and quotations omitted).

Defendants have moved to dismiss based on res judicata. "In

order to bar a later suit under the doctrine of res judicata, an

adjudication must (1) involve the same claim as the later suit,

(2) have reached the final judgment on the merits, and (3) involve

the same parties or their privies." Nordhorn v. Ladish Co., Inc.,

9 F.3d 1402, 1404 (9th Cir. 1993). "[T]he doctrine of res

judicata (or claim preclusion) bars all grounds for recovery which

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could have been asserted, whether they were or not, in a prior

suit between the same parties . . . on the same cause of action." 

Costantini v. Trans World Airlines, 681 F.2d 1199, 1201 (9th Cir.

1982) (internal quotations and citations omitted) (alterations in

original). 

B. Analysis

1. Res Judicata

The parties in the present suit are the same parties from

Sommer I. Sommer does not allege otherwise. Nor is there any

dispute that the prior adjudications reached final judgments on

the merits. Thus, the primary issue before the Court is whether

the previous Sommer cases involved the same claims as the present

action.

In determining whether two suits contain the same claims,

courts examine the following criteria: 

(1) whether rights or interests

established in the prior judgment would

be destroyed or impaired by the

prosecution of the second action; (2)

whether the two suits involve

infringement of the same right; (3)

whether substantially the same evidence

is presented in the two actions; and (4)

whether the two suits arise out of the

same transactional nucleus of facts.

Nordhorn, 9 F.3d at 1405. "The last of these criteria is the most

important." Costantini, 681 F.2d at 1202.

In the First Amended Complaint in Sommer I, Sommer alleged

two causes of action under ERISA: (1) breach of contract under 29

U.S.C. § 1132(a)(1)(B), to recover benefits owed to him under the

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terms of the benefit plans, and (2) equitable relief under 29

U.S.C. § 1132(a)(3), seeking to compel Defendants to pay him

future benefits owed under terms of Defendants' respective

policies. See Mot., Burnite Decl., Ex. 3, First Am. Comp. ¶¶ 19,

23; Ex. 4, Order from Sommer I at 3. This action arose out of

Defendants' denial of disability benefits. See Sommer I, CV 96-

2407, at 2-3 (stating "Plaintiff . . . alleges that defendants

wrongfully breached, and continue to breach, their obligations to

pay plaintiff disability insurance benefits due under his

employers' group policies"). 

In the present action, Sommer asserts four causes of action:

(1) civil RICO violations; (2) unfair business practices under the

California Unfair Business Practices Act; (3) indemnity; and (4)

punitive damages.

a. RICO Violations

The elements of a civil RICO claim are: "(1) conduct (2) of

an enterprise (3) through a pattern (4) of racketeering activity

(known as 'predicate acts') (5) causing injury to the plaintiff's

'business or property.'" Grimmett v. Brown, 75 F.3d 506, 510 (9th

Cir. 1996) (citing 18 U.S.C. §§ 1964(c), 1962). 

Sommer's RICO claim arises out of the same operative facts as

his ERISA claims from Sommer I. In the Complaint, under the RICO

cause of action, Plaintiff states: "when defendants made these

representations concerning their willingness to insure Plaintiff

and to pay him money, should he become disabled, they knew such

representations to be false . . . ." First Am. Compl. ¶ 46. 

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Although dressed in different clothes, the underlying claim is

aimed squarely at Defendants' refusal to provide Sommer with

disability benefits. Thus, the two suits "arise out of the same

transactional nucleus of facts." Nordhorn, 9 F.3d at 1405.

Furthermore, relitigation of these issues would clearly

impact the "rights or interests established in the prior

judgment." Nordhorn, 9 F.3d at 1405. Plaintiff's disability

claims were found to be barred in Sommer I. Nonetheless,

Plaintiff now alleges, under the RICO cause of action, that

Defendants intended to "deceive Plaintiff and thereby deprive and

defraud him completely of the benefits promised under the

disability policy." First Am. Compl. ¶ 46. A finding in favor of

Sommer would not only impact but eviscerate the finding in Sommer

I that Sommer's claims for disability benefits were barred.

Sommer also argues that the rights asserted in this action

are different than those previously asserted.

Plaintiff here is not seeking to

vindicate merely his own contract rights

as an employee, rather, plaintiff is

seeking to vindicate the rights of

himself and others, in fact all citizens,

to live in a civil society where

businesses that must . . . be licensed by

the state can not, simultaneously, be run

as criminal enterprises. . . . One set

of rights, the ERISA rights[,] is

personal and contractual. The other,

under RICO, although arising from an

injury to person or property, vindicates

the right of society at large to be free

of racketeering activity . . . .

Opp'n at 13-14.

Plaintiff's distinction is not compelling. Although it is

true that ERISA and RICO are designed to protect different rights,

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the fact that Plaintiff's present claim is titled a RICO violation

does not change the right that Plaintiff seeks to vindicate:

Defendants' denial of his disability benefits. That Plaintiff is

also seeking to "vindicate[] the right of society at large" does

not alter this analysis.

In addition, in order to state a RICO claim a plaintiff must

allege, in part, conduct "causing injury to the plaintiff's

'business or property.'" Grimmett, 75 F.3d at 510 (citing 18

U.S.C. §§ 1964(c), 1962). Because Plaintiff's claims for injury

against Defendants were previously adjudicated in favor of

Defendants, Plaintiff cannot now re-allege this injury.

Finally, "substantially the same evidence [would be]

presented in the two actions." Nordhorn, 9 F.3d at 1405. 

Plaintiff's underlying claim in the present action is that

Defendants' wrongfully denied him disability benefits. This was

also the underlying claim in Sommer I. The additional evidence of

the findings made by the California Department of Insurance

regarding Unum was not presented at the Sommer actions. 

Nonetheless, this evidence is, at best, tangential to Sommer's

present claim. 

As Sommer himself concedes, his prior action was "dismissed

with prejudice before trial." First Am. Compl. ¶ 26. For these

reasons, the Court finds that Sommer's RICO claim is barred by res

judicata.

b. Unfair Business Practices

"California's unfair competition statute prohibits any unfair

competition, which means 'any unlawful, unfair or fraudulent

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business act or practice.'" In re Pomona Valley Med. Group, 476

F.3d 665, 674 (9th Cir. 2007) (citing Cal. Bus. & Prof. Code §§

17200, et seq.). "This tripartite test is disjunctive and the

plaintiff need only allege one of the three theories to properly

plead a claim under section 17200." Med. Instrument Dev. Lab. v.

Alcon Lab., CV 05-1138, 2005 WL 1926673, at * 5(N.D. Cal. Aug. 10,

2005). In the present action, Sommer has alleged unfair business

practice. 

Section 17200 also states that "a private person has standing

to sue only if he or she has suffered injury in fact and has lost

money or property as a result of such unfair competition." Pomona

Valley Med. Group, 476 F.3d at 675 n. 12 (internal quotation marks

and citations omitted). Sommer alleges that Defendants "acted

without any good faith intention of actually paying plaintiff

should he become disabled." First Am. Compl. ¶ 54. The injury

that Sommer alleges for his § 17200 claim is an injury that

directly resulted from Defendants' failure to pay his disability

benefits. As has already been noted, however, the prior Sommer

actions established that Defendants were not liable to Sommer for

refusing to make these benefit payments. Therefore, Sommer cannot

allege any injury resulting from Defendants' unfair business

practices and this claim is also barred by res judicata.

c. Indemnity and Punitive Damages

Sommer's remaining two claims for indemnity and punitive

damages are even more closely aligned with the claims raised in

the prior Sommer actions. Sommer's indemnity claim states, in

part, that "plaintiff is entitled to indemnification by defendants

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. . . for all losses suffered and/or proximately caused by the

failure of these defendants . . . to previously indemnify

plaintiff . . . ." First Am. Compl. ¶ 62. Sommer's punitive

damages claim states, in part, that "defendants . . . acted

oppressively toward plaintiff whom they knew to be disabled with a

serious brain injury. Accordingly, the acts . . . warrant[] as

[sic] assessment of punitive damages . . . ." Id. ¶ 65. At the

root of both claims is Defendants' denial of disability benefits. 

Because a final judgment was previously entered in favor of

Defendants on this issue, these final two claims are also barred

by res judicata.

2. Exceptions to Res Judicata

Sommer argues that res judicata should not apply for two

reasons: the underlying judgment was obtained by fraud and there

is a strong public policy reason for allowing the case to go

forward.

a. Fraud Exception to Res Judicata

The Ninth Circuit has recognized a fraud exception to the bar

of res judicata. See Costantini, 681 F.2d at 1203 n. 12 (stating

that "in situations where defendant's misconduct prevented

plaintiff from knowing, at the time of the first suit, either that

he had a certain claim or else the extent of his injury," the

fraud exception to res judicata may apply).

Sommer alleges that Defendants "hid from the court, and from

plaintiff, the fact of it's [sic] schemes, thereby depriving the

court of the opportunity to consider the case fairly and denying

the plaintiff of [sic] the opportunity to present his case to the

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court at all." Opp'n at 9. These schemes, according to Sommer,

were finally brought to light by the California Department of

Insurance, and included numerous violations of the California

Insurance Code. See Compl. ¶ 31.

The Court does not doubt the findings made by the California

Department of Insurance regarding the actions by Unum. To the

contrary, the Court finds Unum's behavior troubling, to say the

least. Sommer fails to establish, however, how these findings

demonstrate that "defendant's misconduct prevented plaintiff from

knowing, at the time of the first suit, either that he had a

certain claim or else the extent of his injury." Costantini, 681

F.2d at 1203 n. 12. In other words, Sommer has not explained what

fraudulent acts Unum perpetrated with respect to Sommer's specific

case filed in 1996 (Sommer I). Sommer's allegations that

"defendants concealed from plaintiff and this court the fact of

their illegal scheme to intentionally deprive plaintiff, and other

policy holders, of their rightful benefits," Mot. at 9, does

little but echo the findings of the California Department of

Insurance. Sommer asserts that the previous Sommer decisions were

"based on partial and doctored information . . . ." The fraud

exception, however, requires more than such conclusory

allegations. Simply put, Sommer "has not shown the existence of

any 'fraudulent concealment,' even if such a showing would permit

him to avoid the bar of res judicata." Costantini, 681 F.2d at

1203.

b. Public Policy Exception to Res Judicata

Sommer, citing California state law, also asserts that where

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a strong public policy consideration is at issue, the bar of res

judicata may be lifted. In People v. Barragan, 32 Cal. 4th 236,

256 (Cal. App. 2004), the California Court of Appeal "recognized

that public policy considerations may warrant an exception to the

claim preclusion aspect of res judicata . . . ." 

Sommer argues that "[t]he people and businesses of this state

both need and deserve a reliable, properly functioning, insurance

industry." Opp'n at 11. While the Court is in full agreement

with this statement, the unfortunate reality for Sommer is that

his claim, even if permitted to go forward, would not ensure a

properly "functioning[] insurance industry." As Sommer himself

points out, the California Department of Insurance has already

taken Unum to task for its treatment of the people of California. 

Sommer's claims reach back to the mid-90s and it is far from clear

how public policy today would be benefitted by exempting the

present claims from res judicata. Accordingly, the public policy

exception to res judicata is not applicable to the present case.

3. Attorneys' Fees, Costs and Sanctions

Defendants seek attorneys' fees and costs in the amount of

$10,128.50. Burnite Decl. ¶ 2. This request is denied. The

Court is convinced that Plaintiff's counsel filed the present suit

in good faith. The Court notes that Plaintiff's counsel was not

involved with Sommer I, Sommer II, or Sommer III. In addition,

the Court understands that Plaintiff's counsel had a reasonable

belief that the findings by the California Department of Insurance

may have opened the door for Plaintiff to recover for what

Plaintiff and his counsel believe was the wrongful denial of

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disability benefits. Thus, the request for attorneys' fees and

costs is DENIED and, for the same reasons, the Court DECLINES to

impose sanctions.

4. Vexatious Litigant

Finally, Defendants seek to have Plaintiff labeled a

vexatious litigant. "District courts have the inherent power to

file restrictive pre-filing orders against vexatious litigants

with abusive and lengthy histories of litigation." Weissman v.

Quail Lodge, Inc., 179 F.3d 1194, 1197 (9th Cir. 1999). Although

vexatious litigant orders are typically imposed on pro se

litigants, see id., Defendants have requested that Sommer, who has

always been represented by counsel, be so labeled. 

Mindful of the history of the prior Sommer actions, the Court

declines this course of action. The Court is confident that

Plaintiff and Plaintiff's counsel understand that further

litigation of claims related to the denial of disability benefits

to Sommer by Defendants is barred. The Court further reminds

Plaintiff and Plaintiff's counsel that renewal of claims under

these facts will inevitably result in consideration by the Court

of attorneys' fees, costs, Rule 11 sanctions and Plaintiff's

status as a vexatious litigant.

///

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IV. CONCLUSION

 For the foregoing reasons, Defendants' Motion to Dismiss is

GRANTED and Defendants' Request for Attorneys' Fees and Costs is

DENIED.

IT IS SO ORDERED.

Dated: November 13, 2007 

UNITED STATES DISTRICT JUDGE

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