Here is a somewhat lengthy opinion in a case involving the Employee Retirement Income Security Act (ERISA) and a disability claim. The opinion is from the Western District of Texas, Austin Division, and is styled, Jason Thomas Young v. Reliance Standard Life Insurance Company and Matrix Absence Management, Inc.
Plaintiff, Young, was insured by way of an ERISA disability plan through his employer when he was injured in an automobile accident. He applied for and received disability benefits. At a later date is recovered a substantial settlement from the insurance company of the person with whom he had the accident. The disability plan administrator then attempted to offset the monies Young received from payments Young was receiving for disability pay.
Young filed suit and the plan administrator rescinded their earlier decision to offset payments. After agreeing to make regular payments for disability without taking into account any offsets, the plan administrator filed a Rule 12(b)(1) and Rule 12(b)(6) motions to dismiss Young’s claim based on the assertion that the matter was now moot and that Young has no standing to continue the lawsuit.
As to Standing –
Under Article III of the Constitution, federal courts may adjudicate only actual, ongoing “Cases” or “Controversies.” Article III denies federal courts the power to decide questions that cannot affect the rights of litigants in the case before them, and confines them to resolving real and substantial controversies admitting of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.
Although the case-or-controversy requirement of Article III, Section 2 of the Constitution underpins both our standing and our mootness jurisprudence, standing and mootness inquiries diverge in several important respects, one of which is timing. The standing inquiry focuses on whether the party invoking jurisdiction had the requisite stake in the outcome when the suit was filed. To satisfy Article III’s standing requirements, a plaintiff must show (1) he has suffered an “injury in fact” that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Whether a plaintiff has standing is determined at the time of filing.
While standing is determined at the time suit is filed, mootness is determined by actions that occur after a suit has been filed. The case-or-controversy requirement subsists through all stages of federal judicial proceedings, trial and appellate. It is not enough that a dispute was very much alive when suit was filed; the parties must continue to have a personal stake in the ultimate disposition of the lawsuit. A case becomes moot and there is no longer a case or controversy when the issues presented are no longer live or the parties lack a legally cognizable interest in the outcome. In other words, a case becomes moot only when it is impossible for a court to grant any effectual relief whatever to the prevailing party. However, as long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.
Accordingly, Defendants’ argument that Plaintiff lacks standing because Reliance terminated the Settlement Offset after he filed suit relies on the wrong jurisdictional doctrine: this argument concerns mootness, not standing. Clearly, Plaintiff had standing at the time he filed this suit because he alleged an injury in fact –that Reliance wrongly offset his disability benefits,in violation of the Plan. Accordingly, the Court should deny Defendants’ Motion to Dismiss Plaintiff’s suit based on lack of standing.
As to Mootness
A case becomes moot if it is impossible for a court to grant any effectual relief whatever to the prevailing party. Defendants argue that there is no longer a case or controversy because Reliance terminated the Settlement Offset to Plaintiff’s disability benefits after Plaintiff filed suit. A defendant, however, cannot automatically moot a case simply by ending its unlawful conduct once sued. Otherwise, a defendant could engage in unlawful conduct, stop when sued to have the case declared moot, then pick up where he left off, repeating this cycle until he achieves all his unlawful ends. Thus, a defendant claiming that its voluntary compliance moots a case bears the formidable burden of showing that it is absolutely clear the allegedly wrongful behavior could not reasonably be expected to recur.
Defendants have not sustained their heavy burden to show that “it is absolutely clear” that Reliance will not reinstate the Settlement Offset. Although Reliance notified Plaintiff in the July 2020 email that it agreed “at this time” to terminate the Settlement Offset, Reliance made no indication that its decision was final, unconditional, and irrevocable.
Additionally, Defendants have not stated in their pleadings that Reliance’s interpretation of the Settlement Offset was wrong or that it would not reinstate the Settlement Offset in the future. Instead, Defendants simply state that Plaintiff’s allegation that Reliance could reinstate the Settlement Offset in the future demonstrates there is no actual injury or the possibility of one that is beyond conjecture. Defendants, however, cannot sustain their burden to show that it is absolutely clear that the Settlement Offset could not reasonably be expected to recur by assuming the answer to that question.
Moreover, as noted above, Plaintiff’s claim that Defendants violated the Policy by imposing the Settlement Offset is not the only claim Plaintiff has asserted. In addition to seeking the benefits withheld, Plaintiff asks the Court to (1) clarify his right to future benefits under then Policy; (2) enter an injunction prohibiting Defendants from interpreting the “Other Income Benefits” language cited as including settlements of liability claims for bodily injuries and underinsured motorist claims for bodily injuries; and award him (3) prejudgment interest on the withheld benefits and (4) attorney’s fees. None of these issues is moot. As long as the parties have a concrete interest, however small, in the outcome of the litigation, the case is not moot.