Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_05-cv-00556/USCOURTS-cand-5_05-cv-00556-3/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

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28 1 This disposition is not designated for publication and may not be cited. 

Case No. C 05-00556 JF

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION

(JFEX1)

 **E-filed 3/27/06**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

ROSE WOOD,

 Plaintiff,

 v.

XEROX CORPORATION LONG-TERM

DISABILITY INCOME PLAN, et al.,

 Defendants.

Case Number C 05-00556 JF

ORDER1 GRANTING PLAINTIFF’S

MOTION FOR SUMMARY

ADJUDICATION

[Re: Docket No. 15]

I. BACKGROUND

In 1985, Defendant Xerox Corp. (“Xerox”) employed Plaintiff Rose Wood (“Wood”) as a

researcher. Motion for Summary Adjudication of Standard of Review (“Motion”), Ex. 3. As an

employee, Wood became a beneficiary of Xerox’s Long-Term Disability Income Plan (“LTD

Plan”). Id., Ex. 2. The LTD Plan consists of a multi-level program of disability benefits. Id.

The first phase is divided into two sub-phases: (a) up to five months of short-term disability

coverage administered by Xerox administers; and (b) six to twenty-nine months of long-term

disability administered by Defendant Prudential Insurance Company of America (“Prudential”). 

Case 5:05-cv-00556-JF Document 18 Filed 03/27/06 Page 1 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Case No. C 05-00556 JF

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION

(JFEX1)

Id., Ex. 2 at 71. The second phase of disability coverage, which begins after twenty-nine months

of disability, is administered by Prudential. Id.

On August 9, 1999, Wood became disabled due to symptoms of pain and numbness in

her right hand, cervical pain, and headaches. Id., Ex. 5. Pursuant to the first phase of the LTD

Plan, Wood received five months of short-term disability benefits and in January, 2000, she

began receiving long-term disability benefits. Compl. ¶ 12-13. Prudential terminated these

benefits in March, 2001, because it found that Wood could perform “any job with restrictions.” 

Compl. ¶ 17. 

After Prudential denied her three appeals, Wood filed a complaint in this Court on

February 7, 2005, pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”),

29 U.S.C. § 1001 et seq., claiming that the LTD Plan benefits to which she was entitled were

improperly terminated. On February 16, 2006, Wood filed a motion for summary adjudication of

the standard of review for her claim for LTD benefits. Wood asserts that the appropriate

standard of review of her claim for benefits under the LTD Plan is de novo because the LTD Plan

does not grant discretion to Prudential. On March 3, 2006, Defendants filed opposition claiming

that the appropriate standard of review is abuse-of-discretion because the plain language in the

LTD Plan confers discretionary authority upon Prudential. On March 10, 2006, Wood filed a

reply. Having considered the briefs, relevant evidence, and the oral arguments at the hearing on

March 24, 2006, the Court will grant the motion. 

II. DISCUSSION

A denial of benefits challenged under 29 U.S.C. § 1132(a)(1)(B) is 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 & Rubber

Co. v. Bruch, 489 U.S. 101, 115 (1989). “That means the default is that the administrator has no

discretion, and the administrator has to show that the plan gives it discretionary authority in order

to get any judicial deference to its decision.” Kearney v. Standard Ins. Co., 175 F. 3d 1084, 1089

(9th Cir. 1999) (en banc). The presumption of de novo review can be overcome only when a

plan’s reservation of discretion is unambiguous. McDaniel v. Chevron Corp., 203 F.3d 1099,

Case 5:05-cv-00556-JF Document 18 Filed 03/27/06 Page 2 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

Case No. C 05-00556 JF

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION

(JFEX1)

1107 (9th Cir. 2000); see Thomas v. Oregon Fruit Prods. Co., 228 F.3d 991, 994 (9th Cir. 2000)

(noting plan administrator “carries the burden of showing that the Policy is unambiguous” in

granting discretionary authority to the plan administrator). Where the benefit plan does give the

administrator such discretion, a deferential standard of review is appropriate. See Firestone Tire

& Rubber Co., 489 U.S. at 111. The deferential standard of review is referred to interchangeably

as “abuse of discretion” or “arbitrary and capricious,” both of which have the same meaning in

this context. Hensley v. Northwest Permanente P.C. Ret. Plan & Trust, 258 F.3d 986, 994 n.4

(9th Cir. 2001). 

To determine the appropriate standard of review, the Court must determine whether the

PTD Plan grants Prudential discretionary authority to determine eligibility for benefits or to

construe the terms of the PTD Plan. See Firestone Tire & Rubber Co., 489 U.S. at 115. The

PTD Plan contains the following language: 

“Total Disability” exists when Prudential determines that all of the 

these conditions are met:

(1) Due to Sickness or accidental injury, you are not able to

perform, for wage or profit, the material and substantial duties of

any gainful occupation for which you are reasonably fitted by your

education, training or experience, or other work which the

Employer has made available to you.

(2) You are not working at any job for wage or profit. This does

not apply to a job with another employer which began prior to your

Total Disability

(3) You are under the regular care of a Doctor. 

For the purposes of Total Disability, a gainful occupation means an

occupation that is or can be expected to provide you with an

income at least equal to 60% of your indexed Pre-Disability

Earnings.

Motion, Ex. 1 at 11 (emphasis added). Prudential argues that the phrase “when Prudential

determines that all of these conditions are met” constitutes a grant of discretionary authority

sufficient to trigger the abuse-of-discretion standard. Prudential relies on Bogue v. Ampex Corp.,

976 F.2d 1319 (9th Cir. 1992) and Eley v. Boeing Co., 945 F.2d 276 (9th Cir. 1991), to argue that

the power to “determine” or “make a determination” regarding eligibility for benefits constitutes

a grant of discretionary authority. However, both of these cases pre-date Kearney, in which the

Case 5:05-cv-00556-JF Document 18 Filed 03/27/06 Page 3 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Case No. C 05-00556 JF

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION

(JFEX1)

Ninth Circuit clarified that the grant of discretion must be unambiguous in order to trigger the

abuse-of-discretion standard. See McDaniel, 203 F.3d at 1107 

Since Kearney, the Ninth Circuit has held that an “allocation of decision-making

authority . . . is not, without more, a grant of discretionary authority in making those decisions.” 

Ingram v. Martin Marietta Long Term Disability Income Plan, 244 F.3d 1109, 1112-13 (9th Cir.

2001). In Sandy v. Reliance Standard Life Ins. Co., 222 F.3d 1202, 1203, 1206 (9th Cir. 2000),

the court held that the plan’s language requiring the insured to “submit satisfactory proof of total

disability” to the plan administrator was not sufficient to grant discretion to the plan

administrator. See also Thomas, 228 F.3d at 994 (finding that the policy language requiring

submission of “satisfactory proof of Total Disability to us” did not unambiguously grant the

administrator discretion). In Ingram, the Ninth Circuit found the following policy language did

not unambiguously grant discretion to the plan administrator: 

The carrier solely is responsible for providing the benefits under

the Plan. . . . The carrier will make all decisions on claims and has

reserved the right to examine medically an individual for whom

claim is made at any time during the period of disability.

Accordingly, the management and control of the operation and

administration of claims procedures under the Plan, including the

review and payment or denial of claims and the provision of full

and fair review of claim denial pursuant to Section 503 of the Act,

shall be vested in the carrier. 

244 F.3d at 1112. Thus, the court concluded: 

We think it appropriate to insist, as we did in Kearney, that the text

of a plan be unambiguous. If an insurance company seeking to sell

and administer an ERISA plan wants to have discretion in making

claims decisions, it should say so. It is not difficult to write, “The

plan administrator has discretionary authority to grant or deny

benefits under this plan.” When the language of a plan is

unambiguous, a company purchasing the plan, and employees

evaluating what their employer has purchased on their behalf, can

clearly understand the scope of the authority the administrator has

reserved for itself. As we wrote in Sandy, it is “easy enough” to

confer discretion unambiguously “if plan sponsors, administrators,

or fiduciaries want benefits decisions to be reviewed for abuse of

discretion.” Where they fail to do so, “in this circuit at least, they

should expect de novo review.” 

Id. at 1113-14 (citations omitted). 

In the instant case, the LTD Plan language does not constitute an unambiguous conferral

Case 5:05-cv-00556-JF Document 18 Filed 03/27/06 Page 4 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

Case No. C 05-00556 JF

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION

(JFEX1)

of discretionary authority to Prudential. The LTD Plan language does not expressly state that

“Prudential has discretionary authority to grant or deny benefits under this Plan.” As in Ingram,

it would not here be difficult for Prudential to use unambiguous language in order to retain

discretionary authority if it had wished to do so, and the absence of such explicit language

consequently results in de novo review. See Ingram, 244 F.3d at 1113-14. “[U]nless plan

documents unambiguously say in sum or substance that the Plan Administrator or fiduciary has

authority, power, or discretion to determine eligibility or to construe the terms of the Plan, the

standard of review will be de novo.” Sandy, 222 F.3d at 1207. “Neither the parties nor the

courts should have to divine whether discretion is conferred. It either is, in so many words, or it

isn’t.” Id. 

III. ORDER

Good cause therefore appearing, IT IS HEREBY ORDERED that the motion for

summary adjudication is GRANTED.

IT IS SO ORDERED. 

DATED: March 24, 2006

 

JEREMY FOGEL

United States District Court

Case 5:05-cv-00556-JF Document 18 Filed 03/27/06 Page 5 of 6
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

Case No. C 05-00556 JF

ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY ADJUDICATION

(JFEX1)

This Order has been served upon the following persons:

Charles B. Perkins

Flynn Rose & Perkins

59 University Ave., Suite H

Los Gatos, CA 95030

Email: cbperk@earthlink.net

Rebecca Labat Crosby 

Wilson Elser Moskowitz Edelman & Dicker LLP

525 Market St., 17th Floor

San Francisco, CA 94105

Email: crosbyr@wemed.com

Case 5:05-cv-00556-JF Document 18 Filed 03/27/06 Page 6 of 6