Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_10-cv-03020/USCOURTS-caed-2_10-cv-03020-3/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

TERESA SHAPPELL, No. 2:10-cv-03020-MCE-EFB

Plaintiff,

v. MEMORANDUM AND ORDER

SUN LIFE ASSURANCE COMPANY;

LINCOLN NATIONAL LIFE

INSURANCE; EMPLOYERS INSURANCE

COMPANY OF NEVADA; and DOES 1

to 100,

Defendants.

----oo0oo----

Through this action, Plaintiff Teresa Shappell (“Plaintiff”)

seeks damages for the denial of total long term disability

benefits she claims she was entitled to under disability

insurance plans issued by Defendants Sun Life Assurance Company

(“Sun Life”) and Lincoln National Life Insurance (“Lincoln”). 

Those disability plans were obtained by Plaintiff’s former

employer, Employers Insurance Company of Nevada (“Employers”). 

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Plaintiff has now moved for a Protective Order preventing Sun

Life and Lincoln from subpoenaing records associated with

Plaintiff’s concurrent arbitration proceedings against Employers

on grounds that such discovery is not permitted in actions

arising under the Employee Retirement Income Security Act of

1971, 29 U.S.C. § 1001 et seq. (“ERISA”). The parties have

agreed both that the instant matter comes within the purview of

ERISA and that the decision denying Plaintiff’s benefits should

be reviewed under an abuse of discretion standard. As set forth

below, Plaintiff’s Motion for Protective Order will be GRANTED.1

BACKGROUND

As indicated above, Plaintiff seeks long term disability

(“LSD”) benefits that were denied by Defendants. Plaintiff has

alleged she was totally disabled and unable to work at the time

that Defendants Sun Life and Lincoln denied her disability claim. 

Plaintiff simultaneously pursues, however, a wrongful

termination/discrimination claim against Employers that is being

arbitrated in Nevada (“Nevada Arbitration”). Defendants contend

that Plaintiff alleges, in the Nevada Arbitration, that she was

able to work, without accommodation, and was wrongfully

terminated from her employment. 

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 Because oral argument was of material assistance, the 1

Court ordered this matter submitted on the briefs. E.D. Cal.

Local Rule 230(g).

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Defendants served Employers with a subpoena seeking

production of the following documents associated with the Nevada

Arbitration: written discovery and responses; deposition

transcripts; employment records pertaining to Plaintiff; and

orders or decisions issued by the arbitrator. 

Plaintiff objected to the subpoena. Defendants refused to

withdraw the subpoena. Plaintiff filed this motion seeking to

limit the production of records pertaining to Plaintiff’s last

day of work, documents which Plaintiff has agreed to produce 

Plaintiff also seeks an award of expenses incurred in bringing

this motion. 

Plaintiff argues that discovery in ERISA actions is limited

instances where exceptional circumstances apply, as set forth in

Steiner v. Hartford Life & Accident Ins., 2004 WL 2271599 (9th

Cir. 2004) (delineating the factors set forth in Quesinberry v.

Life Ins. Of N. Am., 987 F.2d 1017, 1027 (4th Cir. 1993).)2

Plaintiff argues that no exceptional circumstances are present

here. Additionally, in her reply, Plaintiff further contends

that the evidence in this case must be limited to the

administrative record because this matter is subject to an abuse

of discretion standard of review. 

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 Those factors include claims that require consideration of 2

complex medical questions or issues regarding the credibility of

medical experts, where there is little or no evidentiary record,

where interpretation of the plan is needed, where issues arise

concerning the insurer’s impartiality, and circumstances where

there is additional evidence that a claimant could not have

presented in the administrative process. Id.

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Despite these contentions, as indicated above, Plaintiff has

agreed to the discovery of evidence pertaining to her last day of

work because that issue may be critical in determining whether a

preexisting condition on Plaintiff’s part bars her LTD claim.

Defendant argues that the exceptional circumstances factors

set forth in Quesinberry, supra, 987 F.2d 1017, are not

exhaustive. Defendants contend that exceptional circumstances

also exist when a plaintiff is seeking long term disability

benefits for an alleged permanent disability while concurrently,

in a separate wrongful termination action, alleging that she was

capable of performing her occupation without limitation. 

Since filing the instant motion, each party has submitted a

Motion for Judgment under Federal Rule of Civil Procedure 52. 

Plaintiff and both Defendants unanimously concur that this matter

should be reviewed under an abuse of discretion standard. See 

ECF No. 49 at 15; ECF No. 56-1 at 9; ECF No. 57-1 at 14. 

ANALYSIS

A. Because this action is reviewed under an abuse of

discretion standard, the discovery sought is not likely

to lead to the discovery of admissible evidence.

“Where a plan vests the administrator with discretionary

authority to determine eligibility for benefits [ ] a district

court may review the administrator’s determination only for an

abuse of discretion.” Taft v. Equitable Life Assur. Soc., 9 F.3d

1469(9th Cir. 1993) (citing Firestone Tire & Rubber Co. v. Bruch,

489 U.S. 101, 115; and Eley v. Boeing Co., 945 F.2d 376, 278 (9th

Cir. 1991)). 

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“The standard of review informs the amount of evidence that a

district court may consider.” Abatie v. Alta Health & Life Ins.

Co, 458 F.3d 955 (9th Cir. 2006) (citing Kearney v. Standard Ins.

Co., 175 F.3d 1084 (9th Cir. 1999).). The Ninth Circuit, in

Taft, Abatie, and their progeny, has considered the scope to

which evidence outside the administrative record is admissible in

ERISA actions that are reviewed under the abuse of discretion

standard. 

We have considered the scope of district court review

of administrative discretion under ERISA only once

since Firestone. In Jones v. Laborers Health & Welfare

Trust Fund, 906 F.2d 480 (9th Cir.1990), we held that

the abuse of discretion standard permits the district

court to “review only the evidence presented to the

[plan] trustees.” Id. at 482. Accord Farrow v.

Montgomery Ward Long Term Disability Plan, 176 Cal.

App. 3d 648, 222 Cal. Rptr. 325, 331 (1986). Because

this conclusion is consistent with the nature of abuse

of discretion review, furthers the goals of ERISA, and

is in line with the decisions of nearly every other

circuit to consider the issue, we decline to disturb it

here.

Permitting a district court to examine evidence outside

the administrative record would open the door to the

anomalous conclusion that a plan administrator abused

its discretion by failing to consider evidence not

before it.

Taft, supra, 9 F.3d at 1471-72.

The scope of admitting evidence not contained in the

administrative record in ERISA actions falling within the abuse

of discretion standard of review is much more limited than the

exceptions available in a de novo review. Abatie, supra,

458 F.3d 955 (abrogating Taft to the extent that evidence outside

the administrative record is admissible if procedural

irregularities have prevented a full development of the

administrative record); Tremain v. Bell Industries,Inc., 196 F.3d

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970 (9th Cir. 1999) (permitting evidence outside of the

administrative record pertaining to a conflict of interest that

would enable the action to be reviewed de novo); See also Burke

v. Pitney Bowes, Inc. Long Term Disability Plan, 544 F.3d 1016

(9th Cir. 2008).

Because the parties agree to that abuse of discretion is the

appropriate standard of review, the discovery currently sought

from the Nevada Arbitration is not likely to lead to the

discovery of admissible evidence. That discovery is neither

related to deficiencies in the record stemming from the

administrator’s failure to follow ERISA procedures nor to any

potential conflict of interest that would enable a de novo

review. 

 

 B. Defendant’s contention that the discovery is proper

because Plaintiff is making simultaneous conflicting

claims is unsupported by any applicable law.

Defendants incorrectly contend that Plaintiff’s conflicting

allegations in simultaneous legal actions creates an exceptional

circumstance that warrants the discovery request. The

exceptional circumstances argument, however, does not apply to 

ERISA matters being reviewed under an abuse of discretion

standard. See Quesinberry, supra, 987 F.2d at 1026-27. 

Defendants fail to provide any legal authority to support

extension of an exceptional circumstances inquiry to the scope of

ERISA discovery in an abuse of discretion context. 

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Furthermore, Defendants fail to illustrate any potential facts or

legal theories to support their bald assertion that Plaintiff’s

allegations in the Nevada Arbitration “may have impacted how the

Defendants assessed her disability status for purposes of her

benefits claim.” 

Conflicting simultaneous claims of work capacity and

disability are not uncommon and are appropriately dealt with

under the doctrine of judicial estoppel. See Cleveland v. Policy

Management Systems Corp., 526 U.S. 795 (1997) (holding that

claims for Social Security Disability Insurance (“SSDI”) and for

ADA damages do not inherently conflict, and that the employee is

entitled to explain the discrepancy between her statement to SSDI

that she was totally disabled and her ADA claim that she could

perform essential functions of her job). Such conflicting

admissions are more appropriately admissible against Plaintiff in

the Nevada Arbitration. Absent additional facts or legal

authority in this case, the abuse of discretion standard limits

the evidence to the administrative record.

C. Defendant’s contention that Plaintiff has attached new

evidence to her complaint is not compelling.

Defendants’ contention that it would be unjust to allow

Plaintiff to attach new evidence to her complaint while

prohibiting their pursuit of discovery is unsupported by any

authority and the Court declines to investigate the complaint to

confirm or deny such accusations. 

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To the extent that Plaintiff attempts to introduce evidence

outside of the administrative record as part of her Motion for

Judgment under Federal Rule of Civil Procedure 52, Defendants are

free to object to such evidence on any grounds that are proper.

D. Plaintiff’s request for award of expenses is denied

because the Defendant’s actions were substantially

justified.

The area of ERISA litigation is a highly technical and

specialized field. Plaintiff’s motion only provides a two-line

description that abuse of discretion is the appropriate standard

and spends the rest of the motion erroneously rebutting any

contention that exceptional circumstances are present. As stated

above, such exceptions are only applicable in de novo review. 

Plaintiff herself does not address this distinction until her

reply. As such, Defendants’ arguments do not rise to the level

of sanctionable conduct. 

3

CONCLUSION

Because the standard of review informs the amount of

evidence that a district court may consider in ERISA actions, the

Court finds that the discovery sought is outside the permissible

scope for the abuse of discretion standard of review applicable

to the present matter. 

 By determining that an award of expenses is not 3

appropriate in this case, the Court in no way infers that such

records either are or are not discoverable under a de novo

review.

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Plaintiffs’ Motion For Protective Order (Docket No. 41) is

accordingly GRANTED. Plaintiff’s request for sanctions is

DENIED. 

The Court further notes that Defendant Sun Life has moved on

an ex parte basis that the filing deadlines established in this

matter for dispositive motions be extended so that materials from

the Nevada Arbitration can be obtained and reviewed. Because the

Court has already reviewed that such materials are not

discoverable given the abuse of discretion standard applicable

here, that Ex Parte Application (ECF No. 52) is also DENIED. 

IT IS SO ORDERED.

Dated: June 21, 2012

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

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