Date: 07-11-2018

Case Style:

Case Number: 17-1532

Judge: Hamilton

Court: United States Court of Appeals for the Eighth Circuit on appeal from the Northern District of Illinois

Plaintiff's Attorney: Scott Rogoff for Emma Cehovic-Dixneuf

Defendant's Attorney: Teresa Minnich and Robert Trizna for Lisa Wong

Description: The federal Employee Retirement Income Security Act of 1974
(ERISA) requires administrators
of employee benefit plans to comply with the documents
that control the plans. 29 U.S.C. § 1104(a)(1)(D). In the
case of life insurance policies, that means death benefits are
paid to the beneficiary designated in the policy, notwithstanding
equitable arguments or claims that others might assert.
2 No. 17‐1532
In this case, the deceased employee was Georges Cehovic,
whose employer offered its employees an insurance benefit
plan through ReliaStar Life Insurance Company. Georges had
two policies under the plan with ReliaStar: a basic life insurance
policy with a death benefit of $263,000, and a supplemental
life insurance policy with a death benefit of $788,000.
On both policies, Georges listed his sister, plaintiff Emma
Cehovic‐Dixneuf, as the sole and primary beneficiary. After
Georges died, his ex‐wife, defendant Lisa Wong, claimed that
she and the child she had with Georges were entitled to the
death benefits from the supplemental policy. Any equitable
arguments Wong might make can gain no traction, however,
if the supplemental life insurance policy is covered by ERISA.
The district court granted summary judgment for plaintiff
Cehovic‐Dixneuf, finding that the supplemental life insurance
policy is indeed covered by ERISA. We affirm. Defendant
Wong failed to offer evidence to the district court showing
any genuine issue of any fact material to the case. She did not
present her evidentiary objections to Cehovic‐Dixneuf’s evidence
in the district court when she could and should have.
As noted, ERISA ordinarily requires plan administrators
to manage plans according to the governing documents, including
beneficiary designations. Kennedy v. Plan Administrator
for DuPont Savings & Investment Plan, 555 U.S. 285, 288
(2009) (beneficiary designation for pension plan upon participant’s
death); Egelhoff v. Egelhoff, 532 U.S. 141 (2001) (life insurance
benefits under ERISA plan awarded to designated
beneficiary, who was decedent’s ex‐wife, despite contrary
state law); Melton v. Melton, 324 F.3d 941 (7th Cir. 2003) (same).
It is virtually impossible to avoid a written designation of a
beneficiary for a life insurance policy governed by ERISA. To
No. 17‐1532 3
avoid the effect of beneficiary designation, therefore, Wong
has argued in the district court and on appeal that the supplemental
policy is not governed by ERISA.
This question on the merits is governed by our decision in
Postma v. Paul Revere Life Insurance Co., 223 F.3d 533 (7th Cir.
2000). We explained there the scope of ERISA’s coverage of insurance
for the benefit of employees and the scope of the
United States Department of Labor’s so‐called safe‐harbor
regulation, which offers a way to exclude insurance for employees
from ERISA coverage. We explained in Postma that
five elements must be shown for ERISA to cover an employee
welfare plan like an insurance plan:
(1) a plan, fund, or program, (2) established or
maintained, (3) by an employer or by an employee
organization, or by both, (4) for the purpose
of providing medical, surgical, hospital
care, sickness, accident, disability, death, unemployment
or vacation benefits, apprenticeship
or other training programs, day care centers,
scholarship funds, prepaid legal services or severance
benefits, (5) to participants or their beneficiaries.
Id. at 537, quoting Ed Miniat, Inc. v. Globe Life Ins. Group, Inc.,
805 F.2d 732, 738 (7th Cir. 1986). All of those criteria are satisfied
here. The life insurance policy was part of a program established
by Georges’s employer for the purpose of providing
death benefits to participants or their beneficiaries.
Wong asserts, however, that the supplemental life insurance
policy should fall outside ERISA because Georges paid
all of the premiums on the policy himself (and, she says, with
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marital assets), without any direct subsidy from the employer.
That is not enough to avoid ERISA coverage, however. The
safe‐harbor regulation excludes from coverage some group
insurance programs, but with four requirements that must all
be satisfied:
For purposes of title I of the Act and this chapter,
the terms “employee welfare benefit plan”
and “welfare plan” shall not include a group or
group‐type insurance program offered by an insurer
to employees or members of an employee
organization, under which
(1) No contributions are made by an employer
or employee organization;
(2) Participation [in] the program is completely
voluntary for employees or members;
(3) The sole functions of the employer or employee
organization with respect to the program
are, without endorsing the program, to permit
the insurer to publicize the program to employees
or members, to collect premiums through
payroll deductions or dues checkoffs and to remit
them to the insurer; and
(4) The employer or employee organization receives
no consideration in the form of cash or
otherwise in connection with the program,
other than reasonable compensation, excluding
any profit, for administrative services actually
rendered in connection with payroll deductions
or dues checkoffs.
No. 17‐1532 5
29 C.F.R. § 2510.3‐1(j). Wong cannot satisfy the third required
element here. When an employer has “performed all administrative
functions associated with the maintenance of the Policy,”
the policy does not meet that requirement. Postma, 223
F.3d at 538.
In this record, the key information comes from the summary
plan description. It makes clear that the employer maintained
substantial administrative functions beyond the very
limited ones allowed by the safe harbor provision. The employer
was listed as the policyholder for all components of the
plan, of which the supplemental life insurance policy was but
one menu item. The plan description also made clear that the
supplemental life insurance policy would remain part of the
employer’s group policy, but could be converted to an individual
life insurance policy in certain situations. See Waks v.
Empire Blue Cross/Blue Shield, 263 F.3d 872, 875 (9th Cir. 2001)
(converted policy not subject to ERISA); Demars v. Cigna Corp.,
173 F.3d 443, 450 (1st Cir. 1999) (same). But see White v. Provident
Life & Accident Ins. Co., 114 F.3d 26, 28 (4th Cir. 1997)
(questioning whether converted policy was subject to ERISA);
Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1346–47
(11th Cir. 1994) (same). Nothing in the record shows that
Georges executed such a conversion.
To avoid application of ERISA, Wong argues that we
should sever the supplemental life insurance policy, for which
Georges (the employee) paid all premiums, for consideration
separate from the basic life insurance policy and the other
benefits in the employer’s group insurance plan. We rejected
such an argument in Postma, explaining that for “purposes of
determining whether a benefit plan is subject to ERISA, its
various aspects ought not be unbundled.” 233 F.3d at 538. This
6 No. 17‐1532
rule finds support in every other circuit that has considered
this issue. See Menkes v. Prudential Ins. Co. of America, 762 F.3d
285, 292 (3d Cir. 2014); Gross v. Sun Life Assurance Co. of Canada,
734 F.3d 1, 8 (1st Cir. 2013); Sgro v. Danone Waters of North
America, Inc., 532 F.3d 940, 943 (9th Cir. 2008); Gaylor v. John
Hancock Mut. Life Ins. Co., 112 F.3d 460, 463 (10th Cir. 1997);
Glass, 33 F.3d at 1345. We see no reason to disturb our precedent
in Postma or to break from the consensus among the circuits.
Wong also argues on appeal that we should reverse summary
judgment for a more basic, case‐specific reason. She argues
that Cehovic‐Dixneuf simply failed to come forward
with proper, admissible evidence to establish that the supplemental
life insurance policy was covered by ERISA. This argument
requires us to examine how the parties litigated the
case in the district court and how district courts manage summary
judgment practice, particularly with respect to the
presentation of evidence for purposes of summary judgment.
Cehovic‐Dixneuf moved for summary judgment on the
ground that ERISA mandated that she receive the funds under
the policy. In support of her motion, Cehovic‐Dixneuf
provided the summary plan description, as well as the unsworn
admissions by insurer ReliaStar in its own pleadings.
In her appellate briefing, Wong argues that Cehovic‐Dixneuf
failed to submit admissible evidence to support her motion.
She asserts that ReliaStar’s assertions in its pleadings are hearsay
if offered against Wong to prove their truth. Also,
Cehovic‐Dixneuf did not present an affidavit from ReliaStar
attesting to truth of those assertions. Even the summary plan
description, which was the centerpiece of Cehovic‐Dixneuf’s
No. 17‐1532 7
motion, was not submitted with an affidavit properly authenticating
it.
In response to the motion for summary judgment, Wong
did not submit evidence of her own. Nor did she challenge in
any way the admissibility of Cehovic‐Dixneuf’s evidence. Instead,
Wong disputed Cehovic‐Dixneuf’s assertions of facts
by trying to re‐characterize the import of the ReliaStar materials
and by arguing that the life insurance company’s admissions
could not bind Wong. Based on the arguments presented
on the motion for summary judgment, the district
court correctly granted summary judgment for Cehovic‐
Dixneuf, as we explained above.
To be clear, if Wong had raised her hearsay and authenticity
objections in response to the original motion, her arguments
might well have had merit. At the same time, we expect
it would not have been difficult for Cehovic‐Dixneuf to fix
those problems with a supplemental affidavit or two. On appeal,
Wong has not argued that Cehovic‐Dixneuf’s factual assertions
are wrong, but only that they were not supported
properly.
Looking generally at how summary judgment practice
works, as the moving party, Cehovic‐Dixneuf could support
her assertions of undisputed facts using a variety of materials,
including depositions, affidavits, and other documents in the
record. Fed. R. Civ. P. 56(c)(1)(A). Still, the materials presented
should be admissible in evidence or point to evidence that
would be admissible at trial (as affidavits may be used to provide
testimony that would be admissible through oral testimony
at trial). See Fed. R. Civ. P. 56(c)(4) (affidavits or declarations
“must be made on personal knowledge, set out facts
8 No. 17‐1532
that would be admissible in evidence, and show that the affiant
or declarant is competent to testify on the matters stated”);
see, e.g., Cairel v. Alderden, 821 F.3d 823, 830 (7th Cir. 2016);
Stinnett v. Iron Works Gym/Executive Health Spa, Inc., 301 F.3d
610, 613 (7th Cir. 2002); Ford v. Wilson, 90 F.3d 245, 247 (7th Cir.
1996). In the briefing on a motion for summary judgment,
either side may object that the other’s evidence “cannot be
presented in a form that would be admissible in evidence.”
Fed. R. Civ. P. 56(c)(2).
Those are the key elements of the legal framework for
summary judgment evidence. But we also have to keep in
mind the adversarial process, which district courts can and do
rely on to identify disputed issues in summary judgment
practice as in other aspects of litigation. It is not unusual for
parties to submit documentary evidence to support or oppose
summary judgment, as happened here, without fully authenticating
the documents with affidavits thorough enough to
overcome any and all evidentiary objections that could be
raised. Baines v. Walgreen Co., 863 F.3d 656, 662 (7th Cir. 2017)
(“Evidence offered at summary judgment must be admissible
to the same extent as at trial, at least if the opposing party objects,
except that testimony can be presented in the form of affidavits
or transcripts of sworn testimony rather than in person.”)
(emphasis added); Fenje v. Feld, 301 F. Supp. 2d 781, 811 (N.D.
Ill. 2003); Elghanmi v. Franklin College of Indiana, Inc., No. IP 99‐
879‐C, 2000 WL 1707934 at *1 (S.D. Ind. Oct. 2, 2000).
When that happens—when one side fails to cross all evidentiary
t’s and dot all procedural i’s—it is also not unusual
for opposing lawyers to choose to overlook available evidentiary
or other procedural objections. Lawyers should know
their cases. Courts are entitled to rely on lawyers to decide
No. 17‐1532 9
which potential objections are worth raising and which are
not. This is especially so when many such defects in summary
judgment evidence could be cured quickly with a supplemental
affidavit or two. Neither the rules of evidence nor the
rules of civil procedure require lawyers or judges to raise all
available evidentiary objections.
If Wong had raised in the district court the evidentiary arguments
she makes on appeal, perhaps she might have had
some success, at least temporarily, or perhaps Cehovic‐
Dixneuf might have responded with a supplemental affidavit
or two to cure the problems. Wong did not do that. She never
denied the truth or admissibility of the documents showing
the supplemental life insurance policy was a component of
the group health plan offered to Georges and his fellow employees.
She simply disputed, without evidence of her own,
Cehovic‐Dixneuf’s legal arguments about the significance of
the plan documents and other facts.
After the district court granted summary judgment for
Cehovic‐Dixneuf, Wong filed a motion for reconsideration
raising for the first time the evidentiary objections she pursues
on appeal. The district judge properly treated the motion
as one to alter or amend the judgment under Rule 59(e) and
denied the motion. See Lardas v. Grcic, 847 F.3d 561, 566 (7th
Cir. 2017). Until Wong filed that motion, the district judge had
no notice that she believed Cehovic‐Dixneuf’s summary judgment
materials posed any evidentiary problems. All the district
judge knew based on Wong’s response to Cehovic‐
Dixneuf’s statement of facts was that Wong disagreed with the
legal import of those facts.
Rule 59(e) did not give Wong a right to avoid forfeiture of
her evidentiary arguments by failing to raise them before the
10 No. 17‐1532
court’s original ruling on the merits of the motion. District
courts need not grant Rule 59(e) motions “to advance arguments
or theories that could and should have been made before
the district court rendered a judgment.” Miller v. Safeco
Ins. Co. of America, 683 F.3d 805, 813 (7th Cir. 2012), quoting LB
Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th
Cir. 1995). That rule makes especially good sense in this context,
where the potential evidentiary defects on summary
judgment often can be cured easily. Because Wong failed to
make her evidentiary arguments before the district court
made its decision to grant summary judgment, she forfeited
those arguments.
We see no abuse of discretion by the district judge in denying
the Rule 59(e) motion. In denying a motion to reconsider
a summary judgment opinion, in a passage quoted by other
courts literally hundreds of times, the late Judge Shadur
wrote thirty years ago that “this Court’s opinions are not intended
as mere first drafts, subject to revision and reconsideration
at a litigant’s pleasure.” Quaker Alloy Casting Co. v. Gulfco
Industries, Inc., 123 F.R.D. 282, 288 (N.D. Ill. 1988) (denying
motion to reconsider certain conclusions in summary judgment
decision); see also, e.g., Caisse Nationale de Credit Agricole
v. CBI Industries, Inc., 90 F.3d 1264, 1270 (7th Cir. 1996) (“A
party seeking to defeat a motion for summary judgment is required
to ‘wheel out all its artillery to defeat it.’”), quoting
Employers Ins. of Wausau v. Bodi‐Wachs Aviation Ins. Agency,
Inc., 846 F. Supp. 677, 685 (N.D. Ill. 1994); Fast Tek Group, LLC
v. Plastech Engineered Products, Inc., No. 1:05‐cv‐1868, 2006 WL
3409171, *5 (S.D. Ind. Nov. 27, 2006) (denying motion to reconsider
grant of summary judgment relying on new arguments
and new evidence); Pickett v. Prince, 5 F. Supp. 2d 595,
596–97 (N.D. Ill. 1998) (collecting cases and denying motion
No. 17‐1532 11
to reconsider grant of summary judgment based on argument
not raised in original briefing). Having decided the motion
before it correctly, on the briefs and record before it, the district
court was not required to vacate that decision to allow
Wong to start all over again on the basis of arguments she
could and should have made earlier.

Outcome: The judgment of the district court is AFFIRMED.

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