Opinion ID: 169422
Heading Depth: 2
Heading Rank: 2

Heading: The Spokane Plaintiffs

Text: 46 The Spokane plaintiffs initially sought benefits by inquiring directly with the Company, outside the formal claims administration process set out in the Plan's SPD. They received a written response from the Company on August 22, 2003, which stated as follows: 47 These issues [including the request for Plan benefits] were discussed again at the June 16, 2003 meeting. The following is the company's final position on these issues. 48    49 3. The Work Force Stabilization Summary Plan Description states the following groups of employees are not eligible to participate: any member of a recognized or certified collective bargaining unit unless coverage under the plan is included under the collective bargaining agreement. As the collective bargaining agreement does not include coverage under Work Force Stabilization, [sic] the represented employees are not eligible for benefits under Work Force Stabilization. 50 Id. at 233-34. 51 The Spokane plaintiffs asked the Company to reconsider, but received no response. Accordingly, on July 14, 2004 (seven months after the final denial of the Woods Cross plaintiffs' claims), the Spokane plaintiffs formally applied for benefits from the Plan by a letter addressed to the Plan Administrator. The Plan Administrator denied the claims in a letter dated September 14, 2004, giving this explanation: 52 To summarize my findings, the Plan excludes employees who are members of a recognized or certified collective bargaining unit unless the Plan is included in the collective bargaining agreement. The collective bargaining agreement applicable to your bargaining unit, PACE Local 8-562 does not include the Plan; therefore, the employees of that bargaining unit are not participants under the plan or eligible for benefits. 53 Id. at 239. The explanation also explicitly stated, for the first time, that the WFSP was not arranged by the Company for its employees as a whole. Id. at 244. 54 The Spokane plaintiffs appealed the denial of benefits in a letter dated November 3, 2004. The Plan Administrator, however, denied the appeal summarily on the ground that it was submitted late. Id. at 275-76. The Spokane plaintiffs were then added to the lawsuit and the class by way of an amended complaint on August 5, 2005. C. The Proceedings Below 55 In district court, the parties disputed the appropriate standard of review. The Plan argued that, because the WFSP gives the Plan Administrator and the Plan Committee discretionary authority to determine eligibility, the burden should be on Plaintiffs to show that the denial of benefits was arbitrary and capricious. See Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989); Chambers v. Family Health Plan Corp., 100 F.3d 818, 825 (10th Cir. 1996). Plaintiffs countered that the Plan Committee members had a serious conflict of interest and that there were significant irregularities in the claims process. Consequently, Plaintiffs argued the burden was on the Plan to show its denial of the benefits was reasonable and supported by substantial evidence. See Fought v. UNUM Life Ins. Co., 379 F.3d 997, 1006 (10th Cir.2004). The district court concluded that the Plan Committee members had only a standard conflict of interest and that there were no procedural irregularities. Accordingly, it reviewed the decision denying benefits under the arbitrary and capricious standard, adjusted only slightly for the standard conflict [of interest]. Flinders v. Workforce Stabilization Plan, No. 2:04-CV-541, 2006 WL 641524, at  (D.Utah Mar.10, 2006). 56 On its merits review, the district court affirmed the denial of benefits. Regardless of the standard of review, it considered and agreed with the Plan's argument that the WFSP was not arranged by the Company for its employees generally and therefore was not included in the CBA. Id. at . It reached this conclusion because the WFSP excluded certain classes of employees (aside from union workers) and was only triggered upon the happening of a merger. Id. at . Furthermore, the district court granted the Plan's motion to strike the alleged statement of Jim Nokes, a Company administrator, as unreliable double hearsay. Id. at . It also granted the Plan's motion to strike a Yahoo! finance report showing that the Plan Committee members owned stock in the Company. Id. 57 On appeal, Plaintiffs argue that the district court erred in (1) utilizing the arbitrary and capricious standard of review without any adjustment for a serious conflict of interest or a serious procedural irregularity and (2) holding that the Plan's decision denying benefits on the ground that Plaintiffs were not participants was not arbitrary and capricious. In addition, Plaintiffs contend that the district court abused its discretion in excluding the alleged statement of Jim Nokes and the Yahoo! finance report. We consider these arguments below.