Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-03341/USCOURTS-cand-3_06-cv-03341-3/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SARAH KOWALSKI,

Plaintiff,

 v.

FARELLA, BRAUN & MARTEL, LLP, et. al.,

Defendants.

 /

No. C-06-3341 MMC

ORDER GRANTING PLAINTIFF’S

MOTION FOR SUMMARY

ADJUDICATION ON THE STANDARD

OF REVIEW; VACATING HEARING

(Docket No. 36)

Before the Court is plaintiff’s Motion for Summary Adjudication on the Standard of

Review, filed June 22, 2007. Defendants have filed opposition to the motion; plaintiff has

filed a reply. Having considered the papers filed in support of and in opposition to the

motion, the Court finds the matter appropriate for decision without oral argument, see Civil

L.R. 7-1(b), hereby VACATES the July 27, 2007 hearing, and rules as follows.

BACKGROUND

On February 15, 2006, plaintiff appealed defendants’ termination of her ERISA

long-term disability benefits. (See Stamey Decl. Ex. 2 (Administrative Record (“AR”)) at

1404.) To date, defendants have not issued a decision on plaintiff’s appeal. (See White

Decl. ¶ 2.)

Case 3:06-cv-03341-MMC Document 43 Filed 07/23/07 Page 1 of 4
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LEGAL STANDARD

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment as

to “all or any part” of a claim “shall be rendered forthwith if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is entitled to

judgment as a matter of law.” See Fed. R. Civ. P. 56(b), (c). Material facts are those that

may affect the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248 (1986). A dispute as to a material fact is “genuine” if the evidence is such that “a

reasonable jury could return a verdict for the nonmoving party.” See id. The Court may not

weigh the evidence. See id. at 255. Rather, the nonmoving party’s evidence must be

believed and “all justifiable inferences must be drawn in [the nonmovant’s] favor.” See

United Steelworkers of Am. v. Phelps Dodge Corp., 865 F.2d 1539, 1542 (9th Cir. 1989)

(en banc) (citing Liberty Lobby, 477 U.S. at 255).

The moving party bears the initial responsibility of informing the district court of the

basis for its motion and identifying those portions of the pleadings, depositions,

interrogatory answers, admissions and affidavits, if any, that it contends demonstrate the

absence of a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317,

323 (1986). Where the nonmoving party will bear the burden of proof at trial, the moving

party’s burden is discharged when it shows the court there is an absence of evidence to

support the nonmoving party’s case. See id. at 325. 

A party opposing a properly supported motion for summary judgment “may not rest

upon the mere allegations or denials of [that] party’s pleading, but . . . must set forth

specific facts showing that there is a genuine issue for trial.” See Fed. R. Civ. P. 56(e); see

also Liberty Lobby, 477 U.S. at 250. The opposing party need not show the issue will be

resolved conclusively in its favor. See Liberty Lobby, 477 U.S. at 248-49. All that is

necessary is submission of sufficient evidence to create a material factual dispute, thereby

requiring a jury or judge to resolve the parties’ differing versions at trial. See id.

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DISCUSSION

Plaintiff moves for summary adjudication of the standard of review, arguing that

defendants’ failure to decide her appeal requires the Court to conduct a de novo review of

defendants’ termination of her disability benefits.

“[A] denial of benefits . . . is to be reviewed under a de novo standard unless the

benefit plan gives the administrator or fiduciary discretionary authority to determine

eligibility for benefits or to construe the terms of the plan.” Firestone Tire and Rubber Co.

v. Bruch, 489 U.S. 101, 115 (1989). “[I]f the plan does confer discretionary authority . . .

then the standard of review shifts to abuse of discretion.” Abatie v. Alta Health Life Ins.

Co., 458 F.3d 955, 963 (9th Cir. 2006) (en banc). “[F]or a plan to alter the standard of

review from the default of de novo to the more lenient abuse of discretion standard, the

plan must unambiguously provide discretion to the administrator.” See id.

Here, however, the Court need not review the language of the plan, because

regardless of whether the plan contains a grant of discretionary authority, the plan

administrator, by failing to rule on plaintiff’s appeal, failed to exercise any such authority. A

plan administrator “is entitled to deference only when the administrator exercises discretion

that the plan grants.” See id. at 971. Courts “review de novo a claim for benefits when an

administrator fails to exercise discretion.” See id. at 972. In short, “‘[w]here a trustee fails

to act or to exercise his or her discretion, de novo review is appropriate because the trustee

has forfeited the privilege to apply his or her discretion.’” See id. (quoting Gritzer v. CBS,

Inc., 275 F.3d 292, 296 (3d Cir. 2002)).

The Court finds unpersuasive defendants’ reliance on Gatti v. Reliance Standard

Life Ins. Co., 415 F.3d 978 (9th Cir. 2005) and Moskowite v. Everen Capital Corp. Group

Disability Income Plan (“Moskowite”), 2005 U.S. Dist. LEXIS 20942 (N.D. Cal. Aug. 10,

2005), for the proposition that “‘procedural violations of ERISA do not alter the standard of

review.’” (See Opp. at 15:20-27 (quoting Gatti, 415 F.3d at 985).) In both Gatti and

Moskowite, the plan administrator issued a decision, albeit untimely, resolving the plaintiff’s

appeal. See Gatti, 415 F.3d at 981; Moskowite, 2005 U.S. Dist. LEXIS 20942 at *19. By

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contrast, defendants here have never ruled on plaintiff’s appeal. Defendants cite no

authority holding abuse of discretion to be the appropriate standard where the plan

administrator fails entirely to issue a decision, and, as noted, Abatie holds to the contrary. 

See Abatie v. Alta Health Life Ins. Co., 458 F.3d at 972. 

Accordingly, the Court will grant plaintiff’s motion for summary adjudication, and will

review de novo defendants’ termination of plaintiff’s disability benefits. 

CONCLUSION

For the reasons set forth above, plaintiff’s Motion for Summary Adjudication on the

Standard of Review is hereby GRANTED, and the Court will review de novo defendants’

termination of plaintiff’s disability benefits. 

This order terminates Docket No. 36.

IT IS SO ORDERED.

Dated: July 23, 2007 

MAXINE M. CHESNEY

United States District Judge

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