Metaxas v. Gateway Bank F.S.B. ( 2021 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 POPPI METAXAS, Case No. 20-cv-01184-EMC 8 Plaintiff, ORDER RE STANDARD OF REVIEW 9 v. 10 GATEWAY BANK F.S.B., et al., 11 Defendants. 12 13 14 I. INTRODUCTION 15 Plaintiff Poppi Metaxas brought this case claiming entitlement to disability and termination 16 of employment benefits under the terms of the Supplemental Executive Retirement Plan (“the 17 Plan”) obtained through her former employer, Defendant Gateway Bank, F.S.B. (“Gateway”). 18 Docket No. 1. The Plan is governed by the Employee Retirement Income Security Act of 1974 19 (ERISA), 28 U.S.C. § 1001, et seq. Plaintiff seeks relief under ERISA §§ 502(a)(1)(B), (a)(3). 20 Docket No. 1. 21 Currently pending is Plaintiff’s motion to supplement the administrative record. Docket 22 No. 38. To decide Plaintiff’s motion, the Court must make a threshold determination regarding 23 the standard of review that applies to the merits of Plaintiff’s action requesting review of 24 Defendants’ decision to deny benefits to Plaintiff under the Plan. 25 For the following reasons, the Court determines that Defendants’ decision to deny benefits 26 to Plaintiff under the Plan is reviewed for abuse of discretion. 27 1 II. RELEVANT BACKGROUND 2 A. Factual Background 3 The Plan states that its purpose “is to provide supplemental retirement benefits for certain 4 key employees of Gateway Bank, F.S.B.” Docket No. 41-2 (“Administrative Record” or “AR”) at 5 23. The administration of the Plan is governed by the provisions in Article VII. Id. at 28-29. 6 Accordingly, the “Plan shall be administered by an Administrative Committee which shall consist 7 of not less than three persons appointed by the Board [of Gateway]” and the “Committee shall 8 have the authority to make, amend, interpret, and enforce all appropriate rules and regulation for 9 the administration of this Plan and decide or resolve any and all questions including interpretations 10 of this Plan, as my arise in connection with the Plan.” Id. at 28 (Plan § 7.1). “A majority vote of 11 the Committee members constituting a quorum shall control any decision.” Id. Furthermore, the 12 “decision or action of the Committee in respect of any question arising out of or in connection 13 with the administration, interpretation and application of the Plan and the rules and regulations 14 promulgated hereinunder shall be final and conclusive and binding upon all persons having an 15 interest in the Plan.” Id. at 29 (Plan § 7.3). 16 The Plan sets out a claim procedure for “any person claiming a benefit, requesting an 17 interpretation or ruling under the Plan, or requesting information under the Plan shall present the 18 request in writing to the Committee which shall respond in writing as soon as practicable.” Id. 19 (Plan § 8.1). The decision on a claim, including review of the denial of a claim, rests with the 20 Administrative Committee. Id. (Plan §§ 8.1-8.4). The Committee’s “decision” regarding a claim 21 for benefits “shall be in writing” and the Committee’s “decisions on review shall be final and bind 22 all parties concerned.” Id. (Plan § 8.4). 23 B. Procedural Background 24 Plaintiff filed this action on February 17, 2020. Docket No. 1. On October 5, 2021, 25 Plaintiff filed a motion to supplement the administrative record. Docket No. 38. In order to 26 address Plaintiff’s motion to supplement the administrative record, the Court determined that it is 27 necessary to decide a threshold merits question: what standard of review applies to Plaintiff’s 1 supplemental briefing addressing the question. Id. The parties briefed the issue. Docket Nos. 56, 2 57. 3 III. ANALYSIS 4 A district court reviews a challenge to an ERISA plan’s denial of benefits de novo “unless 5 the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility 6 for benefits or to construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 7 101, 115 (1989). The Ninth Circuit has held that the default standard of review in ERISA cases is 8 de novo and that the decision is reviewed for abuse of discretion only if discretion is 9 “‘unambiguously retained’” by the plan administrator. Kearney v. Standard Ins. Co., 175 F.3d 10 1084, 1090 (9th Cir. 1999) (en banc) (quoting Bogue v. Ampex Corp., 976 F.2d 1319, 1325 (9th 11 Cir. 1992)). “Neither the parties nor the courts should have to divine whether discretion is 12 conferred.” Sandy v. Reliance Standard Life Ins. Co., 222 F.3d 1202, 1207 (9th Cir. 2000). 13 “[U]nless plan documents unambiguously say in sum or substance that the Plan Administrator or 14 fiduciary has authority, power, or discretion to determine eligibility or to construe the terms of the 15 Plan, the standard of review will be de novo.” Id. 16 The Plan at issue here confers discretionary authority to the Committee to construe the 17 terms of the plan and determine eligibility for benefits, and, thus, the Court reviews Plaintiff’s 18 appeal from denial of benefits for abuse of discretion. See Firestone, 489 U.S. at 115; Sandy, 222 19 F.3d at 1207. The Plan unambiguously confers discretionary authority to the Administrative 20 Committee by stating that the “Committee shall have the authority to make, amend, interpret, and 21 enforce all appropriate rules and regulation for the administration of this Plan and decide or 22 resolve any and all questions including interpretations of this Plan, as my arise in connection with 23 the Plan.” AR at 28 (Plan § 7.1) (emphases added). Any “decision or action of the Committee in 24 respect of any question arising out of or in connection with the administration, interpretation and 25 application of the Plan. . . shall be final and conclusive and binding.” Id. (Plan § 7.3). The Plan 26 expressly confirms that this wide grant of discretionary authority to the Administrative Committee 27 encompasses decisions regarding eligibility and entitlement claims for benefits. “Any person 1 the Committee’s decision, including the Committee’s “decisions on review” of any claim for 2 benefits under the Plan “shall be final and bind all parties concerned.” Id. (Plan §§ 8.1-8.4) 3 (emphasis added). 4 The Ninth Circuit has held that similar language granting the authority to interpret plan 5 terms, resolve questions arising under the plan, and decide claims for benefits sufficient to confer 6 discretion on the administrator. See, e.g., Bergt v. Ret. Plan for Pilots Employed by Mark Air, 7 Inc., 293 F.3d 1139, 1142 (9th Cir. 2002) (finding grant of the “‘power’ and ‘duty’ to ‘interpret 8 the plan and to resolve ambiguities, inconsistencies and omissions’ and to ‘decide on questions 9 concerning the plan and the eligibility of any Employee’” sufficient to confer discretion); Grosz- 10 Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1159 (9th Cir. 2001) (finding discretion 11 where the plan gave the administrator “‘the full, final, conclusive and binding power to construe 12 and interpret the policy under the plan . . . [and] to make claims determinations’”); McDaniel v. 13 Chevron Corp., 203 F.3d 1099, 1107 (9th Cir. 2000) (holding that a plan conferred sufficient 14 discretion because the administrator “has the ‘sole discretion to interpret’” plan terms and such 15 “interpretations ‘shall be conclusive and binding’”); Bendixen v. Standard Ins. Co., 185 F.3d 939, 16 943 & n.1 (9th Cir. 1999), abrogated in part on other grounds by Abatie v. Alta Health & Life Ins. 17 Co., 458 F.3d 955, 966-69 (9th Cir. 2006) (finding language stating “‘we have full and exclusive 18 authority to . . . interpret the Group Policy and resolve all questions arising in the administration, 19 interpretation, and application of the Group Policy’” along with a provision that “‘any decision we 20 make in the exercise of our authority is conclusive and binding’” clearly conferred discretion); 21 Jones v. Laborers Health & Welfare Trust Fund, 906 F.2d 480, 481 (9th Cir. 1990) (discretion 22 conferred by language granting the administrator the “‘power . . . to construe the provisions’” of 23 the plan and making such construction “‘binding’”). 24 The Plan here empowers the Administrative Committee to “interpret, and enforce” the 25 Plan, and to “decide or resolve any and all questions including interpretations of this Plan, as may 26 arise in connection with the Plan” through “final and conclusive and binding” decisions. Plan §§ 27 7.1-7.3. Like the plans in Grosz-Salomon, McDaniel, Bendixen, and Jones, although the Plan here 1 encompasses the Committee’s authority to make determinations regarding eligibility for benefits. 2 Here, the Plan grants the Committee far-reaching authority to decide “any question arising out of 3 or in connection with the administration, interpretation and application of the Plan,” id. § 7.3, and 4 expressly states that the Committee issues “final and bind[ing]” decisions in response to “[a]ny 5 person claiming a benefit, requesting an interpretation or ruling under the Plan.” Id. §§ 8.1, 8.4. 6 Accordingly, the Court finds that the Plan confers discretionary authority to construe the terms of 7 the Plan and to determine claims regarding eligibility for benefits to the Administrative 8 Committee, and, thus, the Administrative Committee’s benefits determination must be reviewed 9 for an abuse of discretion. 10 Plaintiff’s arguments to the contrary are not persuasive. First, Plaintiff cites Ingram v. 11 Martin Martietta Long Term Disability Income Plan, 244 F.3d 1109, 1112-13 (9th Cir. 2001) to 12 argue that the Plan at issue here does not unambiguously confer discretion because it does not 13 expressly state that the Committee has discretion to make “benefit determinations” or to 14 “determine eligibility for benefits.” Docket No. 156 at 5. No such “magic words” are required, 15 Sandy, 222 F.3d at 1207, where it is clear that the Plan grants the Committee “final and conclusive 16 and binding” authority to “resolve any and all questions” related to “the interpretation and 17 application” of the Plan, including to make “final and bind[ing]” decisions in response to “[a]ny 18 person claiming a benefit, requesting an interpretation or ruling under the Plan.” See Plan §§ 7.3, 19 8.1-8.4. 20 Second, Plaintiff’s observation that the Committee lacks authority over certain 21 determinations, such as whether an employee has had a “change in employment status,” Docket 22 No. 56 at 5, does not negate the relevant fact that the Plan grants the Committee discretionary 23 authority to make final, binding and conclusive decisions and to interpret, apply and enforce the 24 Plan, including in response to “[a]ny person claiming a benefit. . . under the Plan.” Plan § 8.1. 25 Thus, Plaintiff’s argument does not alter the relevant analysis and conclusion that the Committee 26 has discretion “to determine eligibility for benefits” under the Plan and “to construe the terms of 27 the plan.” Firestone Tire & Rubber Co, 489 U.S. at 115. 1 that the Committee was not properly appointed and, thus, did not have proper authorization to 2 exercise discretion over Plaintiff’s benefits claim. Docket No. 56 at 6. Plaintiff did not make such 3 an allegation in her complaint, nor does she point to anything in the record suggesting that she 4 raised this argument during the administrative process of pursuing her benefits claim. To the 5 contrary, the record demonstrates that Plaintiff participated in the claims process before the 6 Committee, including appearing before the Committee at an appeal hearing and did so objecting to 7 the composition of the Committee. Docket No. 41-6. Similarly, in her supplemental brief, 8 Plaintiff claims for the first time that the Committee’s decision on her request for review of the 9 denial of her benefits claim was untimely, and thus improper. This claim is not raised in her 10 complaint or in her opening brief. Even if the Court were to consider this argument 11 notwithstanding an arguable waiver thereon, Plaintiff has not shown that an untimely decision by 12 the Committee would change the applicable standard of review. Viad Corp. Supp’l Pension Plan v. 13 Nasi, 586 F. App’x 451, 452 (9th Cir. 2014) (“[A]n administrator’s procedural violations ordinarily 14 ‘do not alter the standard of review unless those violations are so flagrant as to alter the substantive 15 relationship between the employer and employee, thereby causing the beneficiary substantive harm.’”) 16 (quoting Gatti v. Reliance Std. Life Ins. Co., 415 F.3d 978, 985 (9th Cir. 2005)). 17 Fourth, to the extent that Plaintiff argues that the Plan’s status as a “top hat plan” alters the 18 applicable standard of review, the Ninth Circuit has rejected this argument. See Sznewajs v. U.S. 19 Bancorp. Am. & Restated Supp’l Benefits Plan, 572 F.3d 727, 734 (9th Cir. 2009), abrogated in 20 part on other grounds by Salomaa v. Honda Long Term Disability Plan, 637 F.3d 958, 965 (9th 21 Cir. 2011) (“We conclude that importing ‘de novo’ language into the standard of review simply 22 because the plan involved is a top hat plan would create unnecessary confusion. We will therefore 23 continue to adhere to the framework established by the Supreme Court in Firestone and MetLife 24 for all covered plans, top hat or otherwise.”). 25 Finally, Plaintiff contends that there was a “financial conflict of interest” that could have 26 influenced the Administrative Committee’s decision as to Plaintiff’s benefits claim. Docket No. 27 56 at 4-5. But the existence of a conflict of interest does not alter the standard of review. Metro. 1 917, 929 (9th Cir. 2012). Instead, the alleged conflict of interest is a factor for the Court to 2 consider when reviewing the decision for an abuse of discretion. Glenn, 554 U.S. at 115; Stephan, 3 697 F.3d at 929 (“While not altering the standard of review itself, the existence of a conflict of 4 interest is a factor to be considered in determining whether a plan administrator has abused its 5 discretion.”). 6 IV. CONCLUSION 7 For the foregoing reasons, the standard of review that applies to the merits of Plaintiff’s 8 action requesting review of Defendants’ decision to deny benefits to Plaintiff under the Plan is 9 abuse of discretion. Accordingly, the proceedings before this Court and generally limited to the 10 administrative record, save and except evidence pertaining to any conflict of interest which may 11 affect the level of deference accorded under abuse of discretion review. 12 13 IT IS SO ORDERED. 14 15 Dated: December 6, 2021 16 17 ______________________________________ EDWARD M. CHEN 18 United States District Judge 19 20 21 22 23 24 25 26 27