Rochow v. Life Insurance Co. of North America
851 F. Supp. 2d 1090
E.D. Mich.2012Background
- Rochow was wrongfully denied disability benefits by LINA under a long-term disability plan.
- This court previously granted summary judgment against LINA (2005) and the Sixth Circuit affirmed (2007).
- Rochow sought an equitable accounting and disgorgement of profits in 2008; the court ordered such accounting in 2009.
- Parties filed positions on the proper method to calculate unjust enrichment in 2010; evidentiary hearing occurred in 2011.
- The court held a further argument in 2012 on the method, then adopted Plaintiff’s method and rejected Defendant’s offsets.
- The relief order requires Rochow to submit a final disgorgement amount within two weeks, with a responsive memorandum due seven days later.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Method for measuring unjust enrichment profits | Rochow supports Return on Equity baseline (ROE). | LINA argues for an Investment/Retained Income approach. | Court adopts ROE; rejects investment/retained income theory. |
| Offsets reducing disgorged profits | Court rejects offsets (taxes, net income, direct credits, discounting) and includes unrealized gains. | ||
| Burden of proof in equitable accounting | Burden on defendant to prove correctness; court finds defendant failed to do so; adopts plaintiff’s method. |
Key Cases Cited
- Amalgamated Clothing Workers v. Murdock, 861 F.2d 1406 (9th Cir.1988) (unjust enrichment/driven by breach of loyalty)
- SEC v. First City Fin. Corp., 890 F.2d 1215 (D.C. Cir.1989) (actual profits presumptively shifted to reasonable approximation)
- Nickel v. Bank of Am., 290 F.3d 1134 (9th Cir.2002) (profits from tainted fees—use of profits as restitution; traceability rule)
- Leigh v. Engle, 727 F.2d 113 (7th Cir.1984) (burden on fiduciary to ensure effective disgorgement)
- Donell v. Kowell, 533 F.3d 762 (9th Cir.2008) (tax offsets not permitted for deliberate wrongful acts in restitution)