Day v. AT & T Disability Income Plan
698 F.3d 1091
9th Cir.2012Background
- Day, an ERISA plan beneficiary, rolled over his pension into an IRA after separating from AT&T; LTD benefits were reduced by the amount of the rollover under the Plan’s offset provision and SPD; Sedgwick interpreted Day’s rollover as receiving pension benefits for offset purposes; the district court upheld Sedgwick’s interpretation under abuse of discretion review; Day appealed asserting misinterpretation, lack of disclosure, and ADEA violations; the court affirmed the district court’s decision.
- The Plan offsets LTD by pension benefits Day may receive, including amounts actually paid or received, and allows offset even if pension is rolled into an IRA.
- Sedgwick concluded Day had “received” pension benefits by rolling into an IRA because Day controls the IRA and could withdraw, despite the funds being held separately.
- Day argued Blankenship v. Liberty Life would treat rollover funds as not received, but the court distinguished it, holding the administrator had discretion to interpret plan terms.
- AT&T did not owe a fiduciary duty to warn Day of every tax consequence or to provide individualized notices beyond the SPD; no ADEA violation found or required disclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for Sedgwick’s interpretation | Day contends de novo review due to potential misconduct | Sedgwick’s discretion governs plan interpretation with no reversible bias | Abuse-of-discretion review applies (with conflict considerations) |
| Whether Day’s rollover was “received” for offset purposes | Day did not receive pension benefits since funds were rolled into an IRA | Control over IRA means Day 'received' benefits | Sedgwick’s interpretation reasonable; Day received pension benefits for offset |
| Duty to disclose offset consequences | AT&T failed to inform Day of offset impact | SPD disclosed offset policy; no individualized duty to warn | No fiduciary breach; no obligation to provide individualized notice |
| ADEA compliance with the offset | Offset would violate ADEA and Kalvinskas | Offset does not force retirement; safe harbor not implicated | Offset does not violate the ADEA or Kalvinskas |
Key Cases Cited
- Blankenship v. Liberty Life Assurance Co. of Boston, 486 F.3d 620 (9th Cir. 2007) (ambiguity in 'receive' when plan grants discretion to interpret terms)
- Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (abuse-of-discretion review with conflict of interest considerations)
- Conkright v. Frommert, 130 S. Ct. 1640 (U.S. 2010) (deferential standard for plan interpretations under ERISA)
- Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (U.S. 1989) (established deferential review framework for plan administrators)
- Kalvinskas v. California Institute of Technology, 96 F.3d 1305 (9th Cir. 1996) (ADEA safe harbor and double-dipping considerations)
- Leeson v. Transamerica Disability Income Plan, 671 F.3d 969 (9th Cir. 2012) (ERISA jurisdictional questions; plan participant definitions)