Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ared-4_06-cv-00547/USCOURTS-ared-4_06-cv-00547-2/pdf.json

Parties Involved:
Cassandra Jones
Plaintiff
Unum Life Insurance Company of America
Defendant

Document Text:

IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF ARKANSAS

WESTERN DIVISION

CASSANDRA JONES PLAINTIFF

v. No. 4:06CV00547 JLH

UNUM LIFE INSURANCE COMPANY OF AMERICA DEFENDANT

OPINION AND ORDER

In November of 2004, Unum Life Insurance Company of America, along with its affiliates,

entered into a regulatory settlement agreement with the Superintendent of the State of Maine Bureau

of Insurance, the Commissioner of the Tennessee Department of Commerce and Insurance, the

Commissioner of the Massachusetts Division of Insurance, the insurance regulators of each of the

remaining States, the District of Columbia and American Somoa that adopted the agreement, and

the United States Department of Labor. Among other things, the agreement provided that certain

policyholders would be entitled to a reassessment of claims that had been previously denied. Jones

asserts that she is one of those policyholders and that Unum failed to notify her of her right to

reassessment, as it was required to do by the regulatory settlement agreement. Unum moved for

summary judgment, arguing that Jones is not a third party beneficiary under Maine law, which

governs the agreement, and because, Unum argues, it did send notice to Jones. On May 8, 2007, this

Court denied Unum’s motion for summary judgment. In denying Unum’s motion for summary

judgment, this Court held that Jones is a third party beneficiary of the regulatory settlement

agreement under Maine law, that she can sue to enforce her rights under that agreement, and that a

genuine issue of fact exists as to whether Unum sent her the notice required by the agreement.

Plaintiff has now filed a motion styled, “Plaintiff’s Motion to Alter or Amend.” The motion

states, in pertinent part, “Unum has offered a substantial amount of money to settle this matter,

Case 4:06-cv-00547-JLH Document 44 Filed 05/11/07 Page 1 of 5
1 See, e.g., Elizabeth R.P. Bowen, Routine Vacatur: The Supreme Court Strikes the

Balance in Favor of Finality, 3 FED. CIR. B.J. 259 (1993); Jill E. Fisch, Rewriting History: The

Propriety of Eradicating Prior Decisional Law Through Settlement and Vacatur, 76 CORNELL L.

REV. 589 (1991); Daniel Purcell, Comment, The Public Right to Precedent: A Theory and

Rejection of Vacatur, 85 CAL. L. REV. 867 (1997); Kathleen M. Scanlon, A Case for Judicial

Accountability: When Courts Add a Settlement Detour to the Traditional Appellate “Path”, 17

OHIO ST. J. ON DISP. RESOL. 379 (2002); Howard Slavitt, Selling the Integrity of the System of

Precedent: Selective Publication, Depublication, and Vacatur, 30 HARV. C.R.-C.L. L. REV. 109

(1995); Charles A. Sullivan, On Vacation, 43 HOUS. L. REV. 1143 (2006); William D. Zeller,

Avoiding Issue Preclusion by Settlement Conditioned upon the Vacatur of Entered Judgments, 96

YALE L.J. 860 (1987). The leading cases are discussed in these articles.

2

conditioned upon the Court vacating its Order denying Defendant’s Motion for Summary Judgment.”

Plaintiff concludes by requesting “an Order vacating the Court’s Order denying Defendant’s Motion

for Summary Judgment, and, upon vacation of this Order, for an Order dismissing this action with

prejudice, with the Court retaining jurisdiction for thirty (30) days to enforce settlement.” Unum has

written a letter to the Court joining plaintiff’s request.

The issue of whether a court should vacate a judgment when the parties have conditioned

settlement upon vacatur of the judgment is the subject of numerous opinions and several scholarly

articles.1

 As Daniel Purcell observes, “Typically, vacatur occurs when the party who loses at trial

offers the winning party a sum of money in exchange for an agreement to vacate the judgment. Once

a judgment is vacated, any collateral or preclusive effects the judgment might have had are generally

abolished.” Daniel Purcell, Comment, The Public Right to Precedent: A Theory and Rejection of

Vacatur, 85 CAL.L.REV. 867, 867 (1997). Here, no judgment has been entered. The Court entered

an order denying Unum’s motion for summary judgment and wrote an opinion explaining the

reasons for that order, but no judgment has been entered. Nothing has happened that would have

preclusive effect.

Regardless of the possible wide-ranging scope of the agreement at issue, this Court’s opinion

Case 4:06-cv-00547-JLH Document 44 Filed 05/11/07 Page 2 of 5
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denying summary judgment would not have preclusive effect on any similar action anywhere. When

parties settle without going to trial, there is no final, valid judgment on the merits, which is required

in virtually every jurisdiction, including both Arkansas and Maine, for a litigant successfully to assert

res judicata, or either of its components, claim preclusion and issue preclusion, the latter of which

is also known as collateral estoppel. See Dilday v. State, __ Ark. __, __ S.W.3d __, 2007 WL

474042 (Feb. 15, 2007) (“As to res judicata, four elements must be met: (1) the first suit must have

resulted in a final judgment on the merits . . . .”); Parker v. Johnson, __ Ark. __, __ S.W.3d __, 2006

WL 3446387 (Nov. 30, 2006) (“Arkansas law provides that the following elements must be present

in order to establish collateral estoppel: . . . (3) the issue must have been determined by a final and

valid judgment . . . .”); Carmical v. City of Beebe, 316 Ark. 208, 211, 871 S.W.2d 386, 388 (1994)

(“The claim preclusion aspect of the doctrine bars relitigation in a subsequent suit when: (1) the first

suit resulted in a judgment on the merits . . . .”); Norton v. Town of Long Island, 883 A.2d 889, 895

(Me. 2005) (“Claim preclusion . . . ‘bars relitigation if: . . . (2) a valid final judgment was entered

in the prior action . . . .’” (quoting Macomber v. MacQuinn-Tweedie, 834 A.2d 131, 139 (Me.

2003))); State v. Hughes, 863 A.2d 266, 268 (Me. 2004) (“Collateral estoppel, or issue preclusion,

is the prong of res judicata that ‘prevents the relitigation of factual issues already decided if the

identical issue was determined by a prior final judgment . . . .’” (quoting Cline v. Maine Coast

Nordic, 728 A.2d 686, 688 (Me. 1999))); 47 AM. JUR. 2d Judgments § 489 (2006) (“As a

precondition to the application of the doctrine of collateral estoppel or issue preclusion, courts

generally require that: . . . (2) the prior adjudication resulted in a final judgment on the merits . . . .”).

Here, no final valid judgment on the merits has been entered. Therefore, this Court’s opinion

denying summary judgment would have no preclusive effect. Had the parties settled without making

Case 4:06-cv-00547-JLH Document 44 Filed 05/11/07 Page 3 of 5
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the settlement contingent on vacating the order denying summary judgment, the effect would be the

same: Jones’s action would be dismissed with prejudice; there would be no final judgment on the

merits; and the opinion of this Court denying summary judgment would have no preclusive effect.

The only case this Court has found addressing the issue of settlement conditions on vacatur

of an order denying a motion for summary judgment is IBM Credit Corp. v. United Home for Aged

Hebrews, 848 F. Supp. 495 (S.D.N.Y. 1994). In IBM Credit, the court reasoned, “Vacatur of a

decision is appropriate where it benefits the parties but does not run counter to any public interest.”

Id. at 496. The court stated:

Unlike an appellate court or an administrative agency, district court decisions are not

treated as binding precedents in other cases. District court rulings have influence

only to the extent that jurists in other cases find them convincing, as would indeed

be the case with other forms of legal analysis.

Once a decision has been filed and in the public domain, its influence beyond any

effect on the parties is based solely upon future readers’ views of its merit, whether

vacated in connection with a settlement or not so vacated.

[The] order denying plaintiff’s and third party defendant IBM’s motion for summary

judgment has no collateral estoppel or other effect on specific parties now

identifiable other than those to the case. It has no valid or binding precedential effect

on other cases. Its sole effect beyond that on the immediate parties would be its

persuasive, not precedential or binding effect, unaffected by the grant or denial of the

motion to vacate.

Accordingly, the interests of the parties favor vacatur and no harm to any public

interest will be caused by granting the motion in this case, conditioned on the actual

implementation of the settlement as indicated above.

Id. at 497 (citations omitted).

Here, the Court wrote an extensive opinion concluding that, under Maine law, Jones was a

third party beneficiary to the regulatory settlement agreement between Unum and the Superintendent

of the State of Maine Bureau of Insurance and other insurance regulators. For the reasons stated

Case 4:06-cv-00547-JLH Document 44 Filed 05/11/07 Page 4 of 5
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above, that opinion has no preclusive effect. Kay-R Elec. v. Stone & Webster Constr., 23 F.3d 55,

59 (2d Cir. 1994) (“As the Restatement . . . points out, for purposes of issue preclusion, a final

judgment may include ‘any prior adjudication of an issue in another action that is determined to be

sufficiently firm to be accepted conclusive effect.’ The denial of a motion for summary judgment

is not such.” (citing RESTATEMENT (SECOND)JUDGMENTS § 13 (1982))). The only purpose of the

opinion was to explain the order denying summary judgment. The effect of the order was to leave

this case on track for trial. After the parties settle an action, there is no reason to leave an order in

effect when the only purpose of the order was to continue the action toward trial.

For all of these reasons, the Court has decided to grant plaintiff’s motion to alter or amend.

Document #43. Vacating the order denying summary judgment and dismissing the action will not

create any legal consequences different from the consequences of any other dismissal because of a

settlement before trial. No one is harmed and no one is helped by vacating that order.

The Court may very well take a different view of a motion to vacate a judgment for the

reasons stated in the scholarly literature cited above. See McMellon v. United States, No. 3:00-0582,

2007 WL 1029184 (S.D. W. Va. April 2, 2007); Evans v. Mullins, 130 F. Supp. 2d 774 (W.D. Va.

2001); Aetna Cas. and Sur. Co. v. Home Ins. Co., 882 F. Supp. 1355 (S.D.N.Y. 1995).

A separate order will be entered dismissing this case with prejudice, with the Court retaining

jurisdiction for 30 days to enforce the settlement agreement.

IT IS SO ORDERED this 11th day of May, 2007.

 

J. LEON HOLMES

UNITED STATES DISTRICT JUDGE

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