Opinion ID: 197450
Heading Depth: 2
Heading Rank: 1

Heading: Circumstances of the Present Appeal

Text: 40 As already noted, the district court had, and this court has, authority for judicial review of the out-of-court decisions that preceded commencement of this civil action in the district court. 29 U.S.C. §§ 1132(a)(1)(B) and 1132(c); 28 U.S.C. §§ 636(c)(3) and 1291. Also, Recupero does not dispute that the judicial review is to be de novo  and that she has the burden, in the circumstances of this case, of showing that the denial of her claim violated the arbitrary and capricious standard. (Appellant's Br. at 9, citing Firestone Tire and Rubber, Inc. v. Bruch, 489 U.S. 101, 113, 109 S.Ct. 948, 955-56, 103 L.Ed.2d 80 (1989); Pagan v. NYNEX, 52 F.3d 438, 442 (2d Cir.1995) (judicial review of decision by pension plan administrator to deny long-term disability benefits, where pension provisions gave the plan administrator broad discretion to determine eligibility issues and no material fact was genuinely in dispute; we are not free to substitute our judgment for that of the NYNEX Committee as if we were considering the issue of eligibility anew, and as if free to upset a reasonable interpretation; court reviews only the decision of the NYNEX Committee and, even if plan provisions were drafted by NYNEX, which is an entity different from the NYNEX Committee, and were ambiguous, the rule contra proferentum is inapplicable); Diaz v. Seafarers Union, 13 F.3d 454, 456-57 (1st Cir.1994) (trustees' decision denying retired seaman's claim for higher monthly pension benefit under Seafarers International Union's Pension Plan did not improperly apply the trustee rules about break in service that were promulgated pursuant to powers that the Plan instrument granted to the trustees); Stuart v. Metropolitan Life Ins. Co., 664 F.Supp. 619, 622-23 (D.Me.1987) (declining to overturn recoupment from worker, of sum equal to lump-sum Social Security payments, by insurer under Group Insurance Policy taken out by Plan)). 41 Though the contentions of the parties about the scope of the jurisdiction of the district court and this court differ, all parties to this appeal urge us to take an exceedingly expansive view of the scope of the courts' jurisdiction in reviewing ERISA benefit determinations. Each party to this appeal, at least in the alternative, urges us to hold that the district court had jurisdiction not only to apply the arbitrary and capricious standard of review to at least some aspects of the out-of-court decisions, but also to make findings on material and genuinely disputed factual issues that allegedly should have been decided and were not. In essence, we are asked to decide on the merits, or direct the district court to decide on the merits, every material factual issue as to which the out-of-court decisions under judicial review are challenged. We are asked to exercise plenary jurisdiction of the most expansive form. 42 We acknowledge that statements made about de novo review in some passages from authoritative sources, standing alone, may seem to support the parties' expansive jurisdictional contentions. We conclude, however, that a close examination of the entire array of relevant authority discloses that contentions of the parties in this respect flow from a misreading of Firestone, and a resulting misunderstanding of that case and its sequels. Such a misreading was anticipated by Justice (then Chief Judge) Breyer's opinion for the First Circuit in Diaz, 13 F.3d at 458. In that case an argument was made that a Plan amendment, granting broad discretion to trustees, showed that the previous provisions of the Plan did not grant discretion that broad. The Diaz opinion responds that the amendment merely made express a power ... plainly implied all along, perhaps because the trustees wanted to play it safe in light of Firestone and the possibility that lower courts would later misread it. Id. 43 The parties' expansive views about jurisdiction derive, at least to some extent, from their reading of what Firestone said about de novo review. In that case, the Court declared: 44 ... Consistent with established principles of trust law, we hold that a denial of benefits challenged under § 1132(a)(1)(B) 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. 45 489 U.S. at 115, 109 S.Ct. at 956-57 (emphasis added). 46 In several significant respects, the case before us in this appeal differs from Firestone. Nevertheless, in this case, one of the questions we must address may be stated in a generalized way in exactly the same phrase as that used by Justice O'Connor in describing the first of two questions before the Court in that case: First, we address the appropriate standard of judicial review of benefit determinations by fiduciaries or plan administrators under ERISA. 489 U.S. at 105, 109 S.Ct. at 951. 47 The plans involved in Firestone were Firestone's three pension and welfare benefit plans for its employees: a termination pay plan, a retirement plan, and a stock purchase plan. Id. All three of the plans were ... governed (albeit in different ways) by ERISA. Id. In our case, also, the NET plan is governed by ERISA, but in some respects by the same ERISA provisions that applied to the Firestone plans and in other respects by different ERISA provisions. One difference is that the Firestone plans were welfare and pension plans, and the NET plan is not. Other differences emerge as we apply the reasoning of the Court in Firestone to the present case. Firestone determines that: 48 [f]or purposes of actions under § 1132(a)(1)(B), the de novo standard of review applies regardless of whether the plan at issue is funded or unfunded and regardless of whether the administrator or fiduciary is operating under a possible or actual conflict of interest. 49 489 U.S. at 115, 109 S.Ct. at 957. The role of the district court in applying the de novo standard is affected, however, by the terms of the particular plan at issue. For example, if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest that conflict must be weighed as a 'facto[r] in determining whether there is an abuse of discretion.' Restatement (Second) of Trusts § 187, Comment d (1959). Id. 50 In this case, no party challenges the proposition that NET plan documents did give some discretion, subject to judicial review, to the EBC and EBRC. Nor does any party question that the Committees were acting on behalf of an entity that was, within the meaning of the statutory phrase, an administrator or fiduciary. Also, we do not understand the briefs of the parties as challenging the proposition that the Committees had some responsibility, and associated authority, with respect to constru[ing] the terms of the plan, as that phrase is used in Firestone, 489 U.S. at 115, 109 S.Ct. at 956-57. In any event, if this proposition is challenged, we conclude that the challenge is without merit. 51 As previously discussed, when the benefit plan gives the administrator or fiduciary discretion to determine benefit eligibility or construe plan terms, Firestone and its progeny mandate a deferential arbitrary and capricious standard of judicial review. Id. Thus, a deferential arbitrary and capricious standard of review applies, even though the review is also to be de novo review to assure compliance of the out-of-court decisionmakers with standards of conduct analogous to those applied to trustees under judicially developed law (which Firestone adopts to fill the gap left because ERISA does not set the appropriate standard of review for actions under § 1132(a)(1)(B) challenging benefit eligibility determinations.). 489 U.S. at 109, 109 S.Ct. at 953. 52 Because of the combination of similarities and differences between the circumstances in Firestone and the circumstances before us in this case with respect to the array of different plan provisions and with respect to which among ERISA's various provisions apply, however, we must be especially observant of the extent to which the Firestone de novo standard of judicial review requires de novo determinations by the reviewing court and the extent to which, instead, it requires deference to an out-of-court decision that is not arbitrary and capricious. 53 An example of the kind of problems we must consider is the determination of the meaning of provisions of the NET plan regarding eligibility for benefits of various types--in this case, Sickness Disability Benefits and Accident Disability Benefits. Determining the meaning of such plan provisions ordinarily depends solely on deciding an issue of law with respect to manifested meaning of relevant provisions of the plan. A reviewing court, at least in the absence of plan provisions explicitly declaring otherwise, has authority to decide that a committee interpretation that varies from an unambiguously manifested meaning is arbitrary and capricious, and must be disregarded. If, instead, the reviewing court determines that the plan provisions are ambiguous or otherwise unclear, in some respect material to the outcome of the case, this determination of lack of clarity does not necessarily lead to treating the issue of meaning as one for decision by findings of fact in the district court (either by a jury or by the district judge). Instead, interpretive issues of this kind may be decided by the court as matters of law are decided, or they may be partly decided in court and partly on remand to the out-of-court decisionmakers, or applicable law may require some other allocation of decisionmaking functions. We say more on this subject in Parts II.B and II.C of this opinion, below. 54 Summarizing, we conclude that in view of the Supreme Court's pronouncement in Firestone, it is no longer in dispute that federal courts review some ERISA claims de novo. Even when de novo review is appropriate, however, it is often subject to some limitations. Thus, the phrase de novo review, as used in the context of judicial review of out-of-court decisions of ERISA-regulated plan administrators or fiduciaries does not mean that a district court has plenary jurisdiction to decide on the merits, anew, a benefits claim. 55 We use the term plenary to describe jurisdiction of the court to disregard completely an out-of-court decision the court is reviewing and itself (with or without participation by a jury) decide anew all questions of fact bearing on the merits of the benefits claim. 56