830 F. Supp. 2d 772
N.D. Cal.2011Background
- ERISA plaintiff Michele P. Sconiers seeks disability benefits under Morgan Stanley Disability Plan; Morgan Stanley and Unum dispute eligibility and calculation of benefits.
- The plan administrator was Morgan Stanley; Unum served as claims fiduciary and paid benefits.
- Plaintiff’s disability onset date is June 22, 2007; she stopped work June 27, 2007 at age 33 with a $100,000 salary.
- Unum terminated benefits in March 2010 under a two-year mental illness limitation; plaintiff appealed, and Unum upheld in November 2010.
- Plaintiff alleges the 2007 policy, not the 2006 policy, governed her claim and that benefits should reflect bonuses and prior attorney income; discovery requested.
- Court grants in part and denies in part Morgan Stanley/Plan summary judgment, denies Unum summary judgment, and allows limited discovery.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of 2007 policy adoption | Sconiers argues the 2007 policy was not properly adopted. | Morgan Stanley/Plan contends executive committee validly amended per 141(c) authority. | Adoption of the 2007 policy by the executive committee is valid. |
| Adequacy of notice of the 2007 policy | Notice to participants was inadequate or inadequately provided. | Notice given during open enrollment complied with rules; content adequate. | Not decided on record; discovery to develop factual record allowed. |
| Interpretation and application of the 2007 policy to benefits | Unum misinterpreted/applied policy terms; calculation incorrect. | Unum had discretionary authority to determine eligibility and interpret terms; MS/Plan liable for miscalculation. | Summary judgment denied for Morgan Stanley/Plan on benefit calculation; discovery permitted; relief under 1132(a)(1)(B) not foreclosed. |
| Equitable relief under 1132(a)(3) | Equitable relief/remedies (reformation, estoppel, equitable surcharge) warranted due to misrepresentations. | Relief under 1132(a)(3) inappropriate where benefits sought under 1132(a)(1)(B). | Denied on the merits; discovery may limit theories, relief limited to theories not viable under other provisions. |
| Penalties for failure to produce documents under 1132(c)(1) | Morgan Stanley delayed producing policy and HWEE information; penalties appropriate. | Penalties discretionary; need more record. | Denial of summary judgment on penalties; discovery to inform relief. |
Key Cases Cited
- Varity Corp. v. Howe, 516 U.S. 489 (U.S. 1996) (safety-net relief requires proper consideration of various factors when reviewing fiduciary conduct)
- CIGNA Corp. v. Amara, 131 S. Ct. 1866 (U.S. 2011) (Supreme Court authorized equitable contract-reformation under 1132(a)(3) in dicta)
- Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (U.S. 2008) (conflict of interest should be weighed as a factor in abuse-of-discretion review)
- Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (skeptical review of conflicted administrator; supports considering outside-record evidence)
- Sgro v. Danone Waters of N. Am., Inc., 532 F.3d 940 (9th Cir. 2008) (epitomizes flexible application of information relevant to eligibility/records)
- Hangarter v. Provident Life and Accident Ins. Co., 373 F.3d 998 (9th Cir. 2004) (California law’s guidance on disability definitions in ERISA context)