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April 8, 2008
Law Professor Amicus Brief Filed in Glenn ERISA Case
Donald Bogan (Oklahoma) sent us a copy of an amicus brief he and a few others at the University of Oklahoma College of Law filed last week in the U.S. Supreme Court ERISA standard of review case, MetLife v. Glenn, which is set for oral agreement on April 23, 2008.
Don writes:
We made a more aggressive argument than did Ms. Glenn’s counsel in their merits brief. We argued that the Court should rethink Firestone and renounce the Firestone Court’s dicta that suggests the Restatement of Trusts should govern breach of contract claims under 502(a)(1)(B) arising from an insurance contract. Our amicus brief tracks and then expands on the arguments originally made by the Solicitor General in Firestone.
They conclude in their brief:
Accordingly, as a prelude to applying Firestone, this Court should disavow the uncritical
assumption in that case that donative trust law principles control straightforward claims for
benefits due under an ERISA plan. Instead, this Court should apply contract law to such claims, as recommended by the Solicitor General of the United States in Firestone.
Don and I are not quite on the same page on this one as illustrated by my previous post on Glenn. My beef with Firestone is not its trust law aspects necessarily, but that it does not give proper judicial review authority to the courts. I think 502(a)(1)(B) plan administrator decisions should always be reviewed de novo, regardless of the language on discretionary authority in the plan.
In any event, I will be doing an analysis of the Glenn oral argument transcript on the 23rd.
PS
April 8, 2008 in Pension and Benefits | Permalink
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Comments
It will be interesting to see how oral argument unfolds concerning what "abuse of discretion" means in Firestone. "Abuse of discretion" and "de novo" are both ambiguous terms, and there is correlation in their ambiguities. Most courts have treated "abuse of discretion" as an adminstrative law standard calling for the court to uphold a decision if its is based on "substantial evidence on the record considered as a whole," meaning "some evidence"; if that's what it means, then "de novo" would call for the court to apply "independent judgment" in weighing the evidence in the "record". I have never been sure that the Firestone court really intended for the courts to apply such a constrained procedure. After all, Firestone rejected the "arbitrary and capricious" formulation that most courts used before, and pointed to "abuse of discretion" as understood in the Restatement of Trusts. In the Restatement, "abuse of discretion" is a breach of trust, not a standard of reivew. Of course, breaches of trust are subject to correction under the principle that equity regards as done that which ought to be done. Under this principle, if a conflicted fiduciary fails to develop an adequate "record," the court should review the case based on the "record" that an impartial fiduciary would have developed. When the fiduciary does not have discretion, the "de novo" inquiry would suggest the court may consider any additional relevant admissible evidence that the participant might want to add to the record. If discretion is still to be respected, however, the "abuse of discretion" analysis would seem to call for an "extremely careful scrutiny" inquiry, after which the court may consider additional evidence only if the inquiry points to a conclusion that the fiduciary did an inadquate or biased job of its own investigation. If this turns out to be the Court's understanding of what "abuse of discretion" and "de novo" are supposed to mean, then of course "de novo" should be the normal rule and "abuse of discretion" the exception, because the "extremely careful scrutiny" requirement burdens the court and the litigants with an extra issue and restricts the admission of relevant evidence depending on the resolution. There is cause to believe that this sort of thinking may have legs, because the discussion in the context of footnotes 15 and 16 of the Rush HMO case suggests that this is where the court's interest may reside. If the questions from the bench focus on these on these distinctions, there is reason to think that the Court may be seeking way "clarify" and "develop" the Firestone doctrine in a way that will lead to de novo in all but execptional circumstances, without being constrained to confess error or overrule precedent.
Posted by: Les Baker | Apr 9, 2008 2:59:31 PM
