Cyr v. Reliance Standard Life Insurance , 448 F. App'x 749 ( 2011 )

FILED
NOT FOR PUBLICATION AUG 26 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
LAURA A. CYR, No. 07-56869
Plaintiff - Appellee, D.C. No. CV-06-01585-DDP
v.
MEMORANDUM*
RELIANCE STANDARD LIFE
INSURANCE COMPANY, an Illinois
corporation,
Defendant - Appellant.
LAURA A. CYR, No. 08-55234
Plaintiff - Appellee, D.C. No. CV-06-01585-DDP
v.
RELIANCE STANDARD LIFE
INSURANCE COMPANY, an Illinois
corporation,
Defendant - Appellant,
and
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
CHANNEL TECHNOLOGIES, INC.
GROUP LONG TERM DISABILITY
INSURANCE PROGRAM, an employee
benefit plan; CHANNEL
TECHNOLOGIES, INC., in its capacity as
Administrator of the Channel
Technologies Inc Group Long Term
Disability Program,
Defendants.
Appeal from the United States District Court
for the Central District of California
Dean D. Pregerson, District Judge, Presiding
Argued and Submitted October 6, 2009
Ordered to be Heard En Banc December 2, 2010
Transferred to Three-Judge Panel June 22, 2011
Pasadena, California
Before: W. FLETCHER and CLIFTON, Circuit Judges, and POLLAK, Senior
District Judge.**
Reliance Standard Life Insurance Company appeals the district court’s grant
of summary judgment and attorneys’ fees to Laura Cyr in her action for retroactive
benefits under the Employee Retirement Income Security Act. An en banc panel
of this court held that Reliance was a proper defendant under 29 U.S.C.
§ 1132(a)(1)(B). Cyr v. Reliance Standard Life Ins. Co., 642 F.3d 1202 (9th Cir.
**
The Honorable Louis H. Pollak, Senior District Judge for the U.S.
District Court for Eastern Pennsylvania, Philadelphia, sitting by designation.
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2011) (en banc). The case was transferred back to this panel for disposition of the
remaining issues. We affirm.
We review de novo whether Cyr was entitled to retroactive disability
benefits under the terms of the benefit plan. See Blankenship v. Liberty Life
Assurance Co. of Boston, 486 F.3d 620, 624 (9th Cir. 2007). Under the plan,
benefits were payable based on “covered monthly earnings,” which were defined
as “salary received from [the employer] on the day just before the date of Total
Disability” (emphasis added). The plan also required that the insured be “actively
at work on the date of the change.”
The term “received” is not defined in the plan, but the term can reasonably
be construed to encompass a salary retroactively acquired on a particular date. See
Blankenship, 486 F.3d at 624-25 (ruling that the term “receives” is ambiguous and
applying the rule of contra proferentem to adopt an interpretation most favorable
to the insured). It is undisputed that Cyr was actively at work on October 1, 2000,
the date to which the salary increase was retroactively applied. Therefore, absent
other defenses, Reliance was obliged to provide retroactive benefits.
The district court did not abuse its discretion in declining to reach Reliance’s
remaining defenses: unclean hands and absence of a bona fide wage adjustment.
Although the underlying circumstances may arouse suspicion, Reliance failed to
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communicate these particular concerns to Cyr during the administrative process,
and Cyr was unable to respond to its concerns. There was no “meaningful
dialogue” between Reliance and Cyr as required under ERISA. See Booton v.
Lockheed Med. Benefit Plan, 110 F.3d 1461, 1463 (9th Cir. 1997). The
administrative record was therefore not developed on these grounds.
Allowing Reliance to present these defenses for the first time would have
required the district court to consider evidence outside the administrative record,
which the district court should not do unless “circumstances clearly establish that
additional evidence is necessary to conduct an adequate de novo review of the
benefit decision.” Opeta v. Nw. Airlines Pension Plan, 484 F.3d 1211, 1217 (9th
Cir. 2007) (citation omitted). Here, Reliance’s benefit decision was apparently not
based on Cyr’s alleged “unclean hands” or any conclusion that the wage
adjustment was not bona fide. Indeed, the only clear response from Reliance in the
record indicated simply that its own reinsurer did not wish to pay the benefits.
Any evidence related to Reliance’s two new defenses was therefore not necessary
to review the actual decision Reliance made during the administrative process, and
the district court did not abuse its discretion in excluding it. See id. at 1217-18.
Moreover, the court did not abuse its discretion in excluding evidence
related to settlement discussions under Federal Rule of Evidence 408. See Cassino
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v. Reichhold Chems., Inc., 817 F.2d 1338, 1342 (9th Cir. 1987). Nor was Reliance
prejudiced by being prohibited from introducing evidence related to defenses it
was not entitled to raise to the district court in the first instance.
Finally, the district court properly exercised its discretion in awarding
attorneys’ fees. The court carefully examined the time sheets and determined that
the awarded time was reasonable and related to litigating the ERISA claim,
including those hours logged for work involving the pre-litigation administrative
process. See Dishman v. UNUM Life Ins. Co. of Am., 269 F.3d 974, 987-88 (9th
Cir. 2001) (noting that courts may award pre-litigation fees under ERISA for
“efforts directed toward the filing of the litigation”). The court set the hourly rates
after determining the prevailing rate for ERISA attorneys and evaluating the ability
and reputation of the attorneys. See Welch v. Metro. Life Ins. Co., 480 F.3d 942,
945-46 (9th Cir. 2007). We review a district court’s award of fees deferentially,
see id. at 946, and we find no error.
AFFIRMED.
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