Chаrles Johnson brought this suit against his former employer and former plan administrator, Allsteel, Inc., and several related entities (collectively “Allsteel”) under §§ 404(a) and 502(a) of the Employee Retirement Income Security Act (“ERISA”) challenging what he claims is an illegal plan amendment. The district court dismissed the case sua sponte for *887 lack of standing because it was not convinced that Johnson had sufficiently alleged injury-in-fact. Taking all of his factual allegations as true, we are satisfied that Johnson has alleged sufficient facts to establish Article III standing and, therefore, revеrse the judgment of the district court and remand the case for further proceedings.
I. BACKGROUND
Johnson was employed by Allsteel, a manufacturer and distributor of office furniture. While there, he became a participant in Allsteel’s pension plan (“the Plan”). The specific sections of the Plan amended by Allsteel (discussed below) are part of pension agreements that his union, the International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers & Helpers, Local 1239 (“the Union”), bargained for on his and his fellow union members’ behalf.
As originally drafted, seсtion 11.1 of the Plan provided that the Plan could be amended only “by agreement of the parties.” Without obtaining the agreement of any other party to the Plan, Allsteel changed the language of section 11.1 to state that the Plan could be amended only “by the Company,” thereby granting itself the right to unilaterally amend the Plan. Allsteel then used this purported right to grant itself discretion to resolve all questions arising under the Plan and relating to the Plan’s administration:
The Company [(Allsteel)] will be responsible for the general administration of the Plan and as Plan Administrator will bе responsible for the carrying out of its provisions. From time to time, the Company may adopt such rules and regulations as may be necessary for proper and efficient administration of the Plan. However, the Company’s administration of the Plan and the rules and regulations adopted by it shall be consistent with the terms of the Plan and any applicable pension agreement arrived at through collective bargaining. The Company shall have discretionary authority to interpret and construe this Plan and to determine all questions arising under this Plan, including quеstions regarding eligibility, vesting and entitlement to benefits under the Plan.
Amended Section 1.3 (emphasis added).
Johnson alleges that he was injured by this second amendment, which grants Allsteel an additional quantum of discretion not bargained for by the parties. To remedy this alleged injury, Johnson seeks (i) a declaration that the allegedly рroscriptive amendment violates the terms of the Plan, (ii) reformation of the Plan to eliminate the amended language, (iii) clarification of his rights to future benefits under the Plan, and (iv) other equitable relief.
II. ANALYSIS
We review the district court’s dismissal for lack of standing de novo.
Norfolk S. Ry. Co. v. Guthrie,
To satisfy Article Ill’s standing requirements, a plaintiff must allege that he has sustained “personal injury[in-fact] fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.”
Allen v. Wright,
We agree with Johnson that he was injured by Allsteel’s increase in discretion. We have stated before that the right to have a plan administered with a limited amount of discretion is an important right for plan participants:
An employee’s decision with regard to the purchase of medical insurance and the provision of resources for retirement will often depend critically on his understanding of his rights under his employer’s ERISA plan. The very еxistence of “rights” under such plans depends on the degree of discretion lodged in the administrator. The broader that discretion, the less solid an entitlement the employee has and the more important it may be to him, therefore, to supplement his ERISA plan with other forms of insurаnce.
Herzberger v. Standard Ins. Co.,
For example, an amendment that changes a plan’s terms so that oral surgery, which previously was always covered, is covered at the administrator’s discretion obviously makes it less certain that the insured will be covered in the event that he must undergo such a procedure. The chance that the administrator will, at some point, exercise its discretion adversely against the insured immediately decreases the insured’s rights under the plan. This is true whether or not the administrator ever exercises its discretion adversely against the insured; the increased risk is itself an injury. See id. The insured would have to purchase additional insurance in order to regain the protection the plan оriginally provided.
To see why Allsteel’s alteration of the Plan’s language makes less certain Johnson’s rights, we must understand the plan administrator’s decision-making process. A plan administrator is responsible for the general administration of the plan, a contract between the employee and the employer for benefits.
See
Contents of Summary Plan Description, 29 C.F.R. § 2520.102-3 (2001);
Herzberger,
When presented with a benefits claim, the administrator is aware of the risk that his decision may be subject to judicial review. The administrator has an incentive to avoid intense scrutiny by the courts (such processes can be costly and time-consuming) and is, therefore, more likely to choose an interpretation that will be favored by the reviewing court, an independent and unbiased forum more likely to explain fully its reasons and thereby scrutinize effectively the soundness of its own decision.
1
See 29 U.S.C. § 1001(b) (2001) (“[ERISA’s policy is] to protect ... the interests of participants in employee benefit plans ... by providing for appropriate remedies, sanctions, and ready access to the Federal courts.”);
Bogue v. Ampex Corp.,
The scope of judicial review varies in accordance with the extent of discretion afforded the administrator.
Firestone Tire and Rubber Co. v. Bruch,
Our review in
Morton v. Smith,
In affirming the district court’s grant of summary judgment for the trustees, we reminded Morton that our standard of review limited our ability to оverride the trustees’ decision.
Id.
at 872.
*890
We noted that the trustees had several interpretations to choose from, Morton’s interpretation being only one, and that because we were engaging in deferential review we had to respect their choice to adoрt a different interpretation. We further acknowledged that if we had been reviewing Morton’s claim de novo we might have adopted his interpretation and overturned the trustees’ decision.
Id.
As this illustration indicates, administrators empowered, like the trustees in
Morton,
with discretionary authority to construe the plan enjoy “a broad, unchanneled discretion to deny claims.”
Herzberger,
Allsteel’s alteration of the Plan’s language changed the standard of review by which a court would review its decisions, thereby granting Allsteel the same un-channeled discretion to deny claims. Before Allsteel altered the Plаn’s language to grant itself discretion to interpret and construe the Plan, its decision would have been subject to de novo review. Section 1.3 of the Plan, as originally drafted, was insufficient to trigger deferential review.
See Krueger Int’l, Inc. v. Blank,
Just as an amendment that changes from universal to discretionary coverage for oral surgery immediately harms the insured by making his entitlement less certain, so too does the amendment here, which expands the range of permissible choices open to the administrator. By adding language that granted itself discretionary authority to determine eligibility under and to construe the Plan, Allsteel increased the likelihood that Johnson will, at some point, be denied benefits under the Plan. This correspondingly decreased the certainty of his Plan entitlements, causing him immediate injury. Thus we-conclude that Johnson has sufficiently alleged injury-in-fact.
Our standing inquiry, however, does not end here. Although the parties asked us to decide only whether Johnson sufficiently alleged injury-in-fact, we must satisfy оurselves that the remaining elements of Article Ill’s standing test (causation and redressability) are met.
Rhodes v. Johnson,
We decline to reach Allsteel’s remaining non-jurisdietional arguments supporting dismissal because they werе not presented to the district court in the first instance.
Zbaraz v. Quern,
III. CONCLUSION
For these reasons, we REVERSE the judgment of the district court and RemaND the case for further proceedings.
Notes
. For a discussion of the administrator's incentive to avoid intense judicial scrutiny, see George Lee Flint, Jr., ERISA: the Arbitrary and Capricious Rule under Siege, 39 Cath. U.L. Rev. 133, 181-82 (1989).
. We make no comment, however, on the merits of Johnson's claim.