James v. International Painters & Allied Trades Industry Pension Plan ( 2013 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 25, 2013 Decided December 20, 2013
No. 13-7002
IAN PHILLIP JAMES,
APPELLANT
v.
INTERNATIONAL PAINTERS AND ALLIED TRADES INDUSTRY
PENSION PLAN AND GARY J. MEYERS,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:07-cv-02107)
Kelly Burchell argued the cause and filed the briefs for
appellant.
Kent Cprek argued the cause for appellees. With him on the
brief was Judith Sznyter.
Before: BROWN, Circuit Judge, and EDWARDS and
SILBERMAN, Senior Circuit Judges.
Opinion for the Court filed PER CURIAM.
PER CURIAM: Appellant Ian Phillip James asserts that the
International Painters and Allied Trades Industry Pension Plan
2
(“International Plan”) has denied him benefits to which he is
entitled. The key factual issue is whether James accrued enough
credit under an earlier plan, the Local 963 Plan, which was later
merged into the International Plan. In light of certain
concessions, the only time period at issue is between 1959 and
1962. Relevant contemporaneous records regarding this period
are sparse. The International Plan determined that James had not
demonstrated sufficient accrued credit during the period, and it
denied James most of the benefits he sought. James sued in
district court, arguing, among other things, that the district court
should review the International Plan’s determination de novo.
According to James, the abysmal state of the International Plan’s
records, as well as its failure to timely produce certain records,
meant that the International Plan should forfeit its entitlement to
a deferential standard of review in district court. The district
court rejected this argument and affirmed the International
Plan’s decision as reasonable under an abuse of discretion
standard. James v. Int'l Painters & Allied Trades Indus. Pension
Plan, 844 F. Supp. 2d 131, 146-47 (D.D.C. 2012) (James II). On
appeal, the only issue is whether, because of the procedural
irregularities in the administrator’s handling of the claim, the
district court should have applied a de novo standard of review.
We think that the district court applied the correct standard of
review, and we affirm.
The International Plan is an ERISA-governed pension plan.1
The Supreme Court has held that courts should review ERISA
benefits determinations deferentially if the plan explicitly grants
discretion to plan administrators to determine benefits
eligibility. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
115-16 (1989). The district court found, and James concedes,
that the International Plan does grant the plan administrator
discretion. James v. Int'l Painters & Allied Trades Indus.
1
29 U.S.C. § 1001 et seq.
3
Pension Plan, 710 F. Supp. 2d 16, 24 (D.D.C. 2010) (James I).
Nevertheless, James argues that the district court should have
reviewed the International Plan’s determination under a de novo
standard because of a number of procedural irregularities in the
plan’s administration of his claim.
Although the Supreme Court has never suggested that the
standard of review applied to ERISA administrators’ benefits
determinations should change because of procedural
irregularities, a number of our sister circuits have carved out
varying exceptions to the general rule. Some circuits substitute
de novo review for deferential review only when the plan
administrator committed severe procedural violations. See, e.g.,
Atkins v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 694 F.3d
557, 567 (5th Cir. 2012); Trs. of Electricians’ Salary Deferral
Plan v. Wright, 688 F.3d 922, 927 (8th Cir. 2012); Anderson v.
Suburban Teamsters of N. Ill. Pension Fund Bd. of Trs., 588
F.3d 641, 646-47 (9th Cir. 2009). The Tenth Circuit is stricter,
stripping a plan administrator of deferential review unless the
irregularity is “inconsequential.” LaAsmar v. Phelps Dodge
Corp., 605 F.3d 789, 800 (10th Cir. 2010). The Seventh Circuit,
however, has held that procedural irregularities do not alter the
standard of review. See Weitzenkamp v. Unum Life Ins. Co. of
Am., 661 F.3d 323, 329 n.3 (7th Cir. 2011).
The apparent rationale for applying a more stringent
standard of review when there are procedural irregularities is
that certain irregularities may call into doubt the plan
administrator’s good faith or even competence. But whatever the
merits of the cases that have recognized a “procedural
irregularity exception” to deferential review, we do not think
that James has alleged ERISA violations that rise to that level.
First, James argues that the plan failed to maintain adequate
records, as it was required to do, see 29 C.F.R. § 2530.200b-
4
3(a), in order to accurately determine his eligibility for benefits.
To be sure, the lack of contemporaneous employment records is
unfortunate, and it would appear likely that either the Local 963
Plan or the International Plan was negligent in failing to
maintain those records. But the fact that records from over fifty
years ago were lost does not, by itself, call into question the
validity of the current plan administrator’s findings.2 ERISA
plan administrators must use the best available information to
make their determinations, and there is no reason that they
should lose the benefit of deferential review simply because, for
reasons beyond their control, the best available information is
limited.
Second, James argues that the current plan administrator
failed to timely produce documents that it was required to
produce under ERISA. See 29 C.F.R. § 2560.503-1(h)(2)(iii).
Here, James has a point. The district court found that the
International Plan had violated some of its ERISA disclosure
obligations. James II, 844 F. Supp. at 158. Moreover, the record
suggests that the International Plan, at least initially, was fairly
sloppy in evaluating James’ claim, making basic arithmetic
errors and failing to locate and produce documents that were, in
fact, in its possession. Id. at 136-37. But the International Plan
did ultimately produce all of the required documents, and its
ultimate decision took account of all available evidence,
including the existing records, James’ own testimony, and his
social security records. Id. at 146-48. The district court found
that the plan ultimately made a reasonable determination,
consistent with the procedural requirements of ERISA. Id. The
2
James argues that by keeping poor records, the Local Plan violated
its fiduciary duty, and the International Plan assumed liability for that
breach when the plans merged. But James is not making a breach of
fiduciary duty claim, and even if the plan has assumed the liabilities
of its predecessor, the conduct of the predecessor cannot logically call
into question the good faith or competence of the successor.
5
fact that the International Plan only made its reasonable, ERISA-
compliant determination after a few attempts does not change
the level of deference to which it is entitled. See Conkright v.
Frommert, 559 U.S. 506, 513 (2010) (rejecting a “‘one-strike-
and-you’re-out’ approach” to ERISA review). The admitted
violations of ERISA disclosure requirements in this case were
not so “flagrant” that we should consider recognizing a new
exception to the deferential review of plan administrators’
discretionary decisions.
We recognize that James seems only inches away from
having accrued sufficient credit to qualify for a greater pension,
but without adequate records, it is quite difficult to show. The
district court held that the plan administrator acted reasonably
in dealing with the sparse record – at least once all available
information was before it – and we see no basis in this case for
applying a more stringent standard of review.
So ordered.