ERISA Litigation: Remedies and Benefit Claims After Amara and Frommert. Overview: Topics & Issues. CIGNA Corp. v. Amara, 131 S. Ct.

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1 ERISA Litigation: Remedies and Benefit Claims After Amara and Frommert Employment Rights & Responsibilities March 2012 Midwinter Meeting Howard Shapiro Proskauer Rose, LLP 650 Poydras Street Suite 1800 New Orleans, LA (504) Overview: Topics & Issues Supreme Court Cases: - CIGNA Corp. v. Amara - Wal-Mart Stores, Inc. v. Dukes - AT&T Mobility LLC v. Concepcion Other Notable 2011 ERISA Developments: - Circuit Court Class Certification Rulings - 401(k) Plan Fee Litigation Rulings - 401(k) Plan Employer Stock Drop Cases - Cash Balance Plans - Retiree Health Rulings Benefit Claim issues: - Discovery - Standard of Review - Expanding proper defendants in 502(a)(1)(B) claim for benefits 2 CIGNA Corp. v. Amara, 131 S. Ct (2011) Background facts. The Supreme Court s Ruling: - Summary Plan Description (SPD) is not a plan document - ERISA 502(a)(1)(B) v. 502(a)(3) - Equitable relief under 502(a)(3) Implications for ERISA communication claims Implications for monetary relief Claims: age discrimination, backloading, non-forfeiture, faulty SPD, deficient 204(h) notice, and breach of fiduciary duty Allegations: participant communications failed to give proper notice of greater of formula, and caused participants to believe they would receive the frozen pension benefit PLUS the cash balance benefit (A + B) 3 1

2 Amara Procedural History: District Court Class of approximately 27,000 participants Bench trial Liability as to: 204(h) notice and SPDs - Failed to adequately disclose the wear-away phenomenon; participants believed A + B rather than greater of A or B - Court found CIGNA intentionally misled participants Plaintiffs need not demonstrate individual harm flowing from deficient SPD; rather sufficient to show likely harm CIGNA did not refute likely harm presumption 4 Amara Procedural History: District Court (cont d) No 204(h) remedy: Annulling amendment under 204(h) would have put participants back in a frozen plan. Remedy awarded: Each participant receives the benefit that the SPD suggested the frozen traditional defined benefit plus his cash balance benefits (A + B) Court awarded relief for the SPD violation under ERISA 502(a)(1)(B) Court doubted that the relief awarded was permissible under ERISA 502(a)(3), citing Mertens and Great-West 5 Amara Procedural History: Second Circuit Summary Opinion Issued Adopted District Court s Opinion Both Parties Sought Certiorari 6 2

3 Amara Supreme Court Opinion SPD is NOT binding contract - SPD is meant to be a summary of the plan, not the plan itself - Plan and SPD serve different roles, governed by different rules, and drafted by separate entities Accordingly, no relief under ERISA 502(a)(1)(B): - Participant can bring an action to enforce not change the terms of the plan - Reformation of plan more like an equitable remedy under ERISA 502(a)(3) 7 Amara Supreme Court Opinion (cont d) ERISA 502(a)(3) - appropriate equitable relief Had generally been interpreted as precluding monetary relief under Mertens v. Hewitt Assoc., 508 U.S. 248 (1993) Amara says Mertens precluded monetary relief against non-fiduciaries; looking to trust law, concluded appropriate equitable relief may include monetary relief against fiduciaries Amara suggests various remedies may be appropriate under ERISA 502(a)(3): Estoppel; Surcharge; Reformation 8 Amara Supreme Court Opinion (cont d) Elements of a valid claim/form of relief depend on nature of the claim. For example: Equitable estoppel requires detrimental reliance Reformation: To reflect mutual understanding of parties where fraudulent suppression, omission, or insertions materially affected the substance of the contact, even if the complaining party was negligent in not realizing the mistake Surcharge (monetary relief for fiduciary breach): Showing of actual harm by preponderance of the evidence - Possible harm from loss of statutory right: Had SPD been sufficient, likely employees would have heard of negative change from workplace discussions 9 3

4 Amara Supreme Court Opinion: Scalia/Thomas Concurrence ERISA 204(h) most natural statutory basis for remedying failure to disclose impact of plan amendment ERISA 502(a)(3) discussion: purely dicta Remedy may be far different than what district court imposed 10 Amara s Pro-Plaintiff Implications Cabins Mertens limitations on monetary relief to non-fiduciaries - Major change: lower courts had consistently applied Mertens to claims against fiduciaries - Not dicta. Even if dicta, it is Supreme Court dicta - What is Amara s impact, if any, on ERISA 510 claims? What is surcharge trust law remedy? - Punishment of errant trustees. - Benefits otherwise had but for breach (e.g., failure to provide application for benefits) seem to fit comfortably within trust law remedies - Is relief beyond this extracontractual or not typically equitable? (e.g., misinformed had benefits did not have) Amara s Implications for ERISA Communication Claims & Class Actions Reformation is some form of reliance or causation and harm required to justify reformatory remedy? - Not needed? - Individualized or group? - Distinction between intentional/fraudulent or merely negligent misrepresentation? - See following Wal-Mart discussion on common answers Actual harm from loss of a right protected by ERISA - What is harm, causation, and remedy in relation to this? - See majority s discussion of loss of being informed of negative changes through workplace discussion

5 Amara s Pro-Defendant Implications Does Amara negate implied in law remedies under ERISA 502(a)(1)(B)? - Are statutory violation claims limited to ERISA 502(a)(3)? - Must equitable requirements also be complied with? - Is ERISA s two-step (reform under ERISA 502(a)(3)/enforce under 502(a)(1)(B)) dead or alive? - Impact on fiduciary insurance and/or taxes if remedies are construed to be non-plan relief? Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct (2011) Female Wal-Mart employees sued under Title VII: company-wide pattern/practice of discrimination (pay/promotions) - corporate culture permits gender bias - local managers exercised discretion to favor men, causing unlawful disparate impact - refusal to cabin managers authority = disparate treatment Proposed Class: Approx. 1.5 million female employees (since Dec. 1998) Seeking: Backpay, injunctive & declaratory relief Wal-Mart: Procedural History Plaintiffs evidence of company-wide policy: - statistical evidence (which showed mixed results at local level) - anecdotal evidence from 120 employees - sociologist s testimony: Wal-Mart s culture and personnel practices made it vulnerable to gender discrimination District court certified claims under Rule 23(b)(2): 1,500,000+ class members (female Wal-Mart employees nationwide since 1998) 9 th Circuit affirmed: narrow 6-to-5 split en banc decision

6 Wal-Mart: Pertinent Holdings Common Question is not Enough - Must have common answer that supports each class member s claim - Court relied on Nagereda s Class Certification in the Age of Aggregate Proof and his dissimilarity analysis - Nagareda: are there dissimilarities that defeat joint resolution of the claims? Managers hiring/promotion actions varied: no glue or basis to assume common and unlawful answer to this question Wal-Mart: Pertinent Holdings (cont d) Citing Ticor Title Ins. Co. v. Brown, 114 S.Ct (1994), can class seeking monetary relief be certified under Rule 23(b)(2)? - Did not reach this issue because claims for individualized relief cannot proceed under Rule 23(b)(2) - Rule 23(b)(2) limited to remedy that is indivisible, applies to all (or none) (citing Nagareda) - Rule 23(b)(2) classes are mandatory, non opt-out classes because they do not have individualized relief issues No Trial by Formula - Cannot try sample backpay claims to extrapolate damages - Rule 23 cannot abridge defendants rights, i.e., individual proceedings on remedies & affirmative defenses Wal-Mart: Implications for ERISA Classes Rule 23(b)(3) s superiority and predominance requirements makes class certification harder - Where applicable, individualized defenses and issues can overwhelm common ones Rule 23(b)(2) may be unworkable for many ERISA cases. But, are cases with indivisible monetary relief amenable to mechanical calculations still available? - E.g., statutory violation case that includes monetary relief be certified? Is class certification necessary/desirable for an ERISA 502(a)(2) claim on behalf of a plan?

7 Wal-Mart: Implications for ERISA Classes (cont d) Are Rule 23(b)(1) classes available for ERISA cases with individualized issues or defenses? - Defined contribution investment claims and 404(c) or other defenses? - Communication-based cases where may not be a common answer to how communication impacted proposed class members? (see Nagareda article) Or: - Does the nature of ERISA fiduciary claims make them more amenable to Rule 23(b)(1) certification? Or: - Does this even matter if must clear a common answer threshold? Does Wal-Mart s common answer requirement provide a substantial hurdle to ERISA communication-based claims? Other ERISA claims? AT&T Mobility LLC v. Concepcion, 131 S. Ct (2011) Plaintiffs entered agreement for sale and servicing of cell phones - Agreement provided for arbitration, but excluded class arbitration - AT&T to pay costs of non-frivolous claims, and $7,500 minimum plus 2x attorney s fees, if arbitration award greater than settlement offer Plaintiffs claimed wrongfully charged $30 sales tax for free phone, filed class action suit Concepcion: Legal issues Section 2 of the Federal Arbitration Act ( FAA ): - arbitration provisions are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. The district court and 9 th Circuit held AT&T s arbitration provision was unenforceable under California s Discover Bank rule (generally barring enforcement of class action waivers in contracts of adhesion)

8 Concepcion: Legal issues (cont d) Supreme Court held FAA preempted California s Discovery Bank rule - State laws cannot obstruct FAA - FAA designed to provide informal and streamlined proceedings to resolve disputes - Class arbitration fundamentally different - State cannot use other concerns (e.g., small dollar claims would not be vindicated), to impose procedures incompatible with FAA Concepcion is newest link in long chain of pro-arbitration rulings Concepcion: Implications for ERISA If arbitration applies to ERISA claim at issue, suggests agreements can exclude class claims - Concepcion held enforcing class arbitration incompatible with FAA s objectives, and ERISA 514(d) suggests ERISA must defer to other federal laws Benefits claims: - DOL regulation imposes limits on arbitration - May risk abuse of discretion review if arbitrator is one making benefits decision Concepcion: Implications for ERISA (cont d) Fiduciary claims: - Employment agreements may contain arbitration clauses; what about retirees? - If claim brought on behalf of the plan (ERISA 502(a)(2)), does an employee-participant s agreement to arbitrate control? - Comer v. Micor, Inc., 436 F.3d 1098 (9 th Cir. 2006) participants not bound by plan s agreement to arbitrate - Other issues?

9 Hot ERISA Class Certification Rulings Bacon v. Stiefel, 2011 WL (S.D. Fla. July 21, 2011) Spano v. The Boeing Co., 633 F.3d 574 (7th Cir. 2011) Bacon v. Stiefel, 2011 WL (S.D. Fla. July 21, 2011) Claim: fraudulent scheme to conceal value of corporation from merger and recapture stock from ESOP participants prior to merger Individualized reliance issues defeated certification - Why participants sold stock back to company was an individualized inquiry that defeats class certification Spano v. The Boeing Co., 633 F.3d 574 (7th Cir. 2011) 7th Circuit consolidated Beesley v. International Paper Co. & Spano v. The Boeing Co. Substantive claim 502(a)(2): breach of fiduciary duty for excessive fees in various funds Proposed class failed Rule 23 s requirement - Failed typicality and adequacy: Not limit class to participants investing in challenged funds - Too broad to be a mandatory class under Rule 23(b)(1): May be differing interests of class members regarding funds offered

10 Groussman v. Motorola, Inc., 2011 WL (N.D. Ill., Nov. 15, 2011; J. Der-Yeghiayan) 401(k) plan stock action; class certification denied. Citing Dukes, no showing class members suffered the same injury or that key common issues of fact or law exist. Dukes does not permit certification where allegation is that all Plaintiffs invested in employer stock. Class does not contain individuals who invested uniformly in stock at set time and were damaged in a similar manner. Individualized investment strategies cause each class member damages in a different manner. Class also fails as Plaintiffs relied upon different representations in making their investment decisions. 28 ERISA Fees Cases Approximately 30 excessive fees cases filed since September 2006 Major appellate decisions: - Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. 2009) (affirming Motion to Dismiss) - Braden v. Wal-Mart, 588 F.3d 585 (8th Cir. 2009) (allowing claims to proceed) 2011 Appellate Decisions: - Renfro v. Unisys, --- F.3d ---, 2011 WL (3d Cir. Aug. 19, 2011) (affirming Motion to Dismiss) - Loomis v. Excelon, 658 F.3d 667 (7th Cir. 2011) (affirming Motion to Dismiss) Old Fee Cases Hecker v. Deere & Co., 556 F.3d 575 (7 th Cir. 2009), 569 F.3d 708 (7 th Cir. 2009) (rehearing denied); affirming Defendant s Motion to Dismiss Directed Trustee was not a fiduciary for the purposes challenged by Plaintiffs. Once Fidelity collected fees, no longer plan assets. Deere not liable even though plan assets used to pay fees. ERISA does not require disclosure of fee split among entities when participants only charged publicly disclosed amount. 404(c) defense can be established at pleadings stage when participants have range of investment options. No misrepresentations by Deere because participants knew the total fee costs. Deere provided wide range of investment options for participants with wide range of fees (20 Fidelity Trust funds, and an open brokerage window with access to 2,500 other funds). Comments favorably on the application of the 404(c) defense

11 Old Fee Cases Braden v. Wal-Mart, 588 F.3d 585 (8th Cir. 2009). Reverses motion to dismiss and holds Plaintiffs asserted actionable claim that the fiduciaries should have used clout to acquire cheaper institutional mutual fund shares as opposed to retail mutual fund shares. District court erroneously required Plaintiff to describe directly the way the fiduciaries breached their duties. Plaintiff discharged this duty by alleging 7 out of 10 plans charge fees from which participants derive no benefit. Cites comparison to Hecker where there were over 2,500 investment options vs. 10 here. ERISA Plaintiffs generally lack information to make out their claims in detail unless and until discovery occurs. Unlike Hecker, allows claims to go forward as to fees paid to Directed Trustee. 31 Renfro v. Unisys, 2011 WL (3d Cir. Aug. 19, 2011) Affirming dismissal of claims against fiduciaries and directed trustee No breach of fiduciary duty to offer retail mutual funds Range of investment options was reasonable: wide variety of risk profiles, investment strategies, and associated fees Fidelity not liable for the funds selected for the plan because it controlled only investments it administered; Unisys had the right to select other investments for the plan As to Unisys, court notes that the plan offered a wide mix/range of available (73) investment options with varied risk profiles and fees Declines to opine on the ERISA 404(c) defense Loomis v. Exelon, 658 F.3d 667 (7th Cir. 2011) Follows Hecker, and affirms dismissal of retail fees claim. Court rejects claim that plan, not participants, should have paid fees. This is a plan design, Settlor Function issue, because if plan incurred these costs, it would increase sponsor costs. Attacks Plaintiffs preference for institutional funds vs. retail funds and notes that participants may prefer retail funds because of liquidity and daily transfer feature. Court also notes that fees for institutional grade shares were often higher than fees of the retail funds at issue Citing ERISA 404(c), court holds that Exelon offered a mix of high-expense, high-risk, high-return funds and low-expense, lowrisk, lower-return funds

12 George v. Kraft Foods Global, Inc., 641 F.3d 786 (7 th Cir. 2011) District court grants summary judgment on 3 issues. 7 th Circuit reverses on two issues; strong dissent by J. Cudahy. At issue is unitized fund accounting as to the Company Stock Fund (CSF); fees paid to Hewitt as recordkeeper; and fees paid to State Street as the Trustee. Issue One Investment Drag (loss from cash component of fund) & Transactional Drag (trading fees paid by the plan, all plan participants for trading, thus favoring day-traders). No evidence in record fiduciaries considered whether to go to real-time trading to eliminate Investment and Transactional Drag, even though Defendants were aware that former parent company, Altria, changed platform to real-time trading. Plaintiffs estimate this as an $87MM loss to the plan. 34 George v. Kraft Foods Global, Inc., 641 F.3d 786 (7 th Cir. 2011) Issue Two recordkeeping fees paid to Hewitt averaged $43-$65 per participant per year. Plaintiffs expert witness testified the appropriate recordkeeping services should cost between $20-$27 per participant per year. Court reverses holding that this expert witness testimony creates a disputed issue of fact. Issue Three Affirms summary judgment for State Street as to fees derived from float on deposits pending clearance of a check written on plan assets. Court holds that Plaintiffs failed to put evidence into record showing fiduciaries failed to review this float fee arrangement to determine whether it was prudent. 35 George v. Kraft Foods Global, Inc., 641 F.3d 786, (7 th Cir. 2011) (Dissent, Cudahy) Unitized funds allow for hedging because of the cash component, now ominously described as investment drag and transactional drag. Finds no provision of ERISA on which to base a claim for breach of fiduciary duty for failing to select between unitized trading and real-time trading. Unitized trading is a universally accepted investment practice. Recordkeeping fees is a closer question. But, fiduciaries should not have to bear the burden of litigation merely because Plaintiffs find an expert witness who states that these fees are too high. Hewitt served in this role for 15 years; fiduciaries need not substitute with any lower bidder; the decision is committed to the sound discretion of the fiduciaries

13 Employer Stock Cases: Typical Claims Prudence Claim - The fiduciaries knew or should have known that company stock was an imprudent investment, and the failure to eliminate the stock fund was a breach of fiduciary duty Misrepresentation Claim - The failure to disclose material information related to the company s overvaluation is a breach of fiduciary duty 37 Major Current Issues Citigroup and whether and how hard-wiring in plan terms impacts claims and fiduciary duties. Moench and high hurdles to overcome presumption of prudence, e.g., recent Ninth Circuit case as illustration. Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995). 38 Hard wiring plan terms Hard-wiring = putting in plan terms that require offer of employer stock fund. -Do you include any explicit duty to monitor and stop or sell investment? Does hard wiring negate any duty to override e.g., Citigroup? Or does hard wiring impact whether and when have any duty to override or sell e.g, Quan v. CSC? 39 13

14 Older Appellate Court Decisions 1 st Circuit: Bunch v. W.R. Grace & Co. 3 rd Circuit: Edgar v. Avaya, Inc. 4 th Circuit: DiFelice v. U.S. Airways 5 th Circuit: Langbecker v. EDS, Kirschbaum v. Reliant Energy 7 th Circuit: Pugh v. Tribune Co., Nelson v. Hodowal (IPALCO) 9 th Circuit: In re Syncor ERISA Litigation, Quan 40 Quan v. Computer Sci. Corp., 623 F.3d 870 (9 th Cir. 2010) Pivotal announcement as to stock options, company no longer for sale, repurchased $2BB of its common stock. Stock drops 12% in value, from $55.88 to $48.56/share; one year later stock price is $6/share higher at $61.79/share. A precipitous decline? 41 Quan v. Computer Sci. Corp., 623 F.3d 870 (9 th Cir. 2010) Adopts Moench presumption at summary judgment stage. Held that Moench had not been adopted by 9 th Cir. in past because it was not sufficiently deferential to fiduciaries. Moench provides shield to fiduciaries -They are not required to predict future -Investments have long term horizon 42 14

15 Quan v. Computer Sci. Corp., 623 F.3d 870 (9 th Cir. 2010) To overcome Moench presumption, show precipitous decline, brink of bankruptcy, serious mismanagement. No evidence it was unreasonable for fiduciaries to believe company would overcome its problems. No causal link between alleged failure of fiduciaries to investigate and harm to plan. Alleged misrepresentations not material. 43 In re Citigroup ERISA Litigation, 2011 WL (2d Cir. Oct. 19, 2011); Gearren v. The McGraw-Hill Cos. Inc., 2011 WL (2d Cir. Oct. 19, 2011). Companion cases where 2d Circuit affirms Motions to Dismiss. Relying upon hard-wiring of plans, court holds that there is a presumption of prudence that should be reviewed for an abuse of discretion at the Motion to Dismiss phase. Heavy emphasis on the Congressional preferences for ESOP and a transference of that preference into the EIAP arena. Appropriate to apply the Moench presumption at pleading stage. 2d Circuit notes no court of appeal has rejected the presumption of prudence. - 3d Circuit Moench; Fifth Circuit Kirschbaum; Sixth Circuit Kuper v. Iovenko; 9 th Circuit Quan. Presumption provides the best accommodation between protecting retirement assets and encouraging investment in employer stock. 44 In re Citigroup ERISA Litigation, 2011 WL (2d Cir. Oct. 19, 2011); Gearren v. The McGraw-Hill Cos. Inc., 2011 WL (2d Cir. Oct. 19, 2011). Rejects defense that hard-wiring means the fiduciary has no discretion to override plan terms. Applying Moench presumption: override plan terms only in a dire situation that could not be foreseen by the settlor. Stock fluctuations that trend down-hill are insufficient. Bad subprime loan business decisions a dire situation. Communications claim: no duty to provide plan participants material non-public information as to investment options. Duty to inform exists only where necessary to correct previous misstatement or to avoid misleading participants. Plaintiffs cite no cases requiring fiduciaries to reveal material non-public information. Vigorous dissent in this case that reads straight out of the Plaintiffs briefs

16 Howell v. Motorola, Inc., 633 F.3d 552 (7 th Cir. 2011) Stock drop case focusing on communications issues. Alleged fiduciary breach re: non-disclosure of loan to failing subsidiary causing a decline in the price of stock from $40/share to $14.26/share; company fundamentally sound during class period. A sub-set of Plaintiffs signed releases barring their claims. Defendants rely on ERISA 404(c). As to selection of the employer stock fund, court holds 404(c) is NOT a defense to the selection of investment options, but is a defense as to participant conduct and communications. Critical of Plaintiffs evidence as fatally thin. Evaluate Plaintiffs case against backdrop of one fund offered amongst many; Plaintiffs could have divested but did not. 46 Howell v. Motorola, Inc., 633 F.3d 552 (7 th Cir. 2011) Prospectus disclosed risk of employer stock fund. Issue here was a non-public matter. Question of whether failure to disclose violates 404(c) s requirement to reveal material information. No breach of duty to disclose material information and concomitantly no failure to adhere to 404(c) safe harbor. Plaintiffs cannot identify one intentional misleading statement by the corporate actors and no support for theory that Defendants are required to provide all financial information in real-time to Plaintiffs. Fact that this was a bad business decision insufficient to make omission of such information an ERISA valuation. Contrary rule would mandate insider trading. 47 Pfeil v. State Street Bank, 2012 WL (6 th Cir. Mich., 2/22/12). Case arises in the context of the GM bankruptcy, and State Street has independent discretion as to the employer stock fund. USDC Motion to Dismiss based on holding that there was a lack of causation: participants had multiple investment options and could have traded out of GM stock. On issue of presumption of prudence, USDC holds that Plaintiffs met their pleading burden, but panel still addresses this issue. Sixth Circuit reverses across the board. Presumption of prudence - Kuper v. Iovenko, 66 F.3d 1447 (6th Cir.1995) panel holds that presumption of reasonableness adopted in Kuper is not an additional pleading requirement and thus does not apply at the motion to dismiss stage

17 Pfeil v. State Street Bank, 2012 WL (6 th Cir. Mich., 2/22/12). As to causation, panel holds that because State Street was a fiduciary, it was obligated to exercise prudence when designating and monitoring the menu of investment options offered by plan. A fiduciary cannot avoid liability for offering imprudent investments merely by including them alongside a larger menu of prudent investment options. Court also holds 404(c) is not applicable at this stage of the case because it is an affirmative defense that is not appropriate for consideration on a motion to dismiss when plaintiffs did not raise it in the complaint. And, even if the plans satisfied 404(c) requirements, a safe harbor defense does not apply because it does not relieve fiduciaries of the responsibility to screen investments. 49 Benefit Claim Litigation Firestone Tire & Rubber Company v. Bruch, 489 U.S. 101 (S.Ct. 1989). - Deferential review if plan language grants deferential power to fiduciary. - Absent power granting language, de novo review. - Standing/Participant & Conflict issues. Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). - When the same entity is responsible for determining eligibility for benefits and paying benefit claims, a conflict-of-interest arises. - The conflict is one factor to consider in deciding whether the defendant abused its discretion. - No bright line test for courts or plans to follow; instead, case-by-case basis analysis. Conkright v. Frommert, 130 S. Ct (2010). - People including plan administrators make mistakes. - Absent bad faith or multiple errors, Firestone entitles plan administrator to deferential review. 50 Crosby v. Louisiana Health Serv. & Indem. Co., 647 F.3d 258 (5 th Cir. 2011) Discovery Vacated summary judgment for insurer, citing improper limitations on discovery Magistrate refused any discovery outside administrative record; district court granted summary judgment Fifth Circuit affirmed existing rule limiting admission of evidence on coverage questions, but held discovery should not be so limited: [A] claimant may question the completeness of the administrative record; whether the plan administrator complied with ERISA s procedural regulations; and the existence and extent of a conflict of interest created by a plan administrator's dual role 51 17

18 Salomaa v. Honda LTD Plan, 642 F.3d 666 (9 th Cir. 2011) Standard of Review. LTD case involving depression, CFS, and other non-measurable maladies; district court summary judgment for Defendant. 9 th Circuit reverses. Attempts to re-define discretionary standard as one of reasonableness which does not mean the court will agree all the time, but could find the decision reasonable. Where conflict of interest is present, judge the reasonableness of the plan with skepticism. Court then slams Defendant for acting in a fashion that was illogical, implausible, and without support in the record. Every doctor who examined Plaintiff concluded he was disabled; plan s reasons for denial kept shifting; plan demanded objective tests for conditions where no such tests were possible; plan failed to consider the Social Security Administration award; and no meaningful dialogue between the plan and the participant occurred. 52 ERISA Litigation: Remedies and Benefit Claims After Amara and Frommert Employment Rights & Responsibilities March 2012 Midwinter Meeting Howard Shapiro Proskauer Rose, LLP 650 Poydras Street Suite 1800 New Orleans, LA (504) howshapiro@proskauer.com 53 18