1132(a), 1132(f). FIRESTONE TIRE & RUBBER CO. v. BRUCH(1989). U.S. 716, 724 . ET AL. CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. Â. See, e. g., Conner v. Phoenix Steel Corp., 249 A. We express no view as to the appropriate standard of review for actions under other remedial provisions of ERISA. Nachman Corp. v. Pension Benefit Guaranty Corp. . See Brief for Petitioners 19-20. U.S. 101, 115] 93-533, p. 11 (1973) - will be thwarted by a natural reading of the term "participant." All rights reserved. [489 "This view attributes conventional meanings to the statutory language since all employees in covered employment and former employees with a colorable claim to vested benefits `may become eligible.' § 1132(c)(1)(B) (1982 ed., Supp. U.S. 101, 105] 2. §§ 1101-1114, "codif[y] and mak[e] applicable to [ERISA] fiduciaries certain principles developed in the evolution of the law of trusts." We do not think Congress' purpose in enacting the ERISA disclosure provisions -- ensuring that "the individual participant knows exactly where he stands with respect to the plan," H.R.Rep. Part of the Bridgestone Corp. Ante, at 117. 1002(7). CASE DETAILS. Co. v. Dedeaux, supra, at 56. Unlike the LMRA, ERISA explicitly authorizes suits against fiduciaries and plan administrators to remedy statutory violations, including breaches of fiduciary duty and lack of compliance with benefit plans. Moreover, ERISA provisions that define a fiduciary as one who "exercises any discretionary authority," give him control over the plan's operation and administration, and require that he provide a "full and fair review" of claim denials cannot be interpreted to empower him to exercise all his authority in a discretionary manner. 282, 287, 50 L.Ed. Id., at 105; see also id., at 108. , n. 26 (1983) ("`[A] body of Federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans'") (quoting 129 Cong. 186(c) authorizes unions and employers to set up pension plans jointly and provides that contributions to such plans be made "for the sole and exclusive benefit of the employees . Consistent with established principles of trust law, we hold that a denial of benefits challenged under § 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. The Court of Appeals held that where an employer is itself the fiduciary and administrator of an unfunded benefit plan, its decision to deny benefits should be subject to de novo judicial review. Cf. If the plan did not give the employer or administrator discretionary or final authority to construe uncertain terms, the court reviewed the employee's claim as it would have any other contract claim - We held in Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101 (1989), that an ERISA plan adminis- [Periodical] Retrieved from the Library of Congress, https://www.loc.gov/item/usrep489101/. (a) The arbitrary and capricious standard -- which was developed under the Labor Management Relations Act, 1947 (LMRA) and adopted by some federal courts for § 1132(a)(1)(B) actions in light of ERISA's failure to provide an appropriate standard of review for that section -- should not be imported into ERISA on a wholesale basis. 40. a reasonable expectation of returning to covered employment" or who have "a colorable claim" to vested benefits, Kuntz v. Reese, 785 F.2d 1410, 1411 (CA9) (per curiam), cert. at 153. 1024(b)(4), one of Saladino v. I.L.G.W.U. Thus, for purposes of actions under 1132(a)(1)(B), the de novo standard of review applies regardless of whether the plan at issue is funded or unfunded and regardless of whether the administrator or fiduciary is operating under a possible or actual conflict of interest. Adopting Firestone's. With respect to Count I, the Court of Appeals acknowledged that most federal courts have reviewed the denial of benefits by ERISA fiduciaries and administrators under the arbitrary and capricious standard. (1986). United States v. Price, 361 U. S. 304, 361 U. S. 313 (1960). BRUCH v. FIRESTONE TIRE AND RUBBER CO. Email | Print | Comments (0) No. 479 (b) Principles of the law of trusts -- which must guide the present determination under ERISA's language and legislative history and this Court's decisions interpreting the statute -- establish that a denial of benefits challenged under § 1132(a)(1)(B) must be reviewed under a de novo standard unless the benefit plan expressly gives the plan administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the plan's terms, in which cases a deferential standard of review is appropriate. See generally 29 U.S.C. ERISA's legislative history confirms that the Act's fiduciary responsibility provisions, 29 U.S.C. Because even under the arbitrary and capricious standard an employer's denial of benefits could 489 U. S. 115-118. Id. Of course, if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a "facto[r] in determining whether there is an abuse of discretion." Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101, 115. 29 U.S.C. See also Comment, The Arbitrary and Capricious Standard Under ERISA: Its Origins and Application, 23 Duquesne L.Rev. Search for: "Firestone Tire & Rubber Co. v. Bruch" Results 1 - 20 of 30. U.S. 101, 113] In Count VII, respondents alleged that they were entitled to damages under 1132 (c) because Firestone had breached its reporting obligations under 1025(a). U.S. 41, 52 ", "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.". Late in 1980, petitioner Firestone Tire and Rubber Company (Firestone) sold, as going concerns, the five plants composing its Plastics Division to Occidental Petroleum Company (Occidental). In order to establish that he or she "may become eligible" for benefits, a claimant must have a colorable claim that (1) he or she will prevail in a suit for benefits, or that (2) eligibility requirements, "This view attributes conventional meanings to the statutory language, since all employees in covered employment and former employees with a colorable claim to vested benefits 'may become eligible.' Nevertheless, Firestone maintains that congressional action after the passage of ERISA indicates that Congress intended ERISA claims to be reviewed under the arbitrary and capricious standard. 24-25; Reply Brief for Petitioners 7, n. 2; Brief for United States as Amicus Curiae 14-15, n. 11. The bill's demise may have been the result of events that had nothing to do with Congress' view on the propriety of de novo review. See Brief for Respondents ERISA's legislative history confirms that the Act's fiduciary responsibility provisions, 29 U.S.C. 481 § 1132(c)(1)(B) (1982 ed., Supp. IV), which provides that, "[a]ny administrator . Ante at 489 U. S. 117. O'CONNOR, J., delivered the opinion for a unanimous Court with respect to Parts I and II, and the opinion of the Court with respect to Part III, in which REHNQUIST, C.J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, O'CONNOR, and KENNEDY, JJ., joined. ed. Firestone was the sole source of funding for the plans and had not established separate trust funds out of which to pay the benefits from the plans. Respondent Bruch . ERISA's disclosure provisions. See also United States v. Mason, See generally Pilot Life Ins. Begin typing to search, use arrow keys to navigate, use enter to select. This case presents two questions concerning the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. a plan participant is, "any employee or former employee . venience of the reader. at 138-140. Rather, one is eligible whether or not he has yet been adjudicated to be - and, similarly, one can become eligible before he is adjudicated to be. Because the bill was never enacted, Firestone asserts that we should conclude that Congress was satisfied with the arbitrary and capricious standard. For the reasons set forth above, the decision of the Court of Appeals is affirmed in part and reversed in part, and the case is remanded for proceedings consistent with this opinion. No. In Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101, this Court addressed “the appropriate standard of judicial review of benefit determinations by fiduciaries or plan administrators under” §1132(a)(1)(B), the ERISA provision at issue here. Although it is a "comprehensive and reticulated statute," Nachman Corp. v. Pension Benefit Guaranty Corp., 446. The Court of Appeals reversed and remanded, holding that benefits denials should be subject to de novo judicial review rather than review under the arbitrary and capricious standard where the employer is itself the administrator and fiduciary of an unfunded plan, since deference is unwarranted in that situation given the lack of assurance of impartiality on the employer's part. by a participant or beneficiary [of a covered plan] . Consistent with established principles of trust law, we hold that a denial of benefits challenged under 1132(a)(1)(B) is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan. § 1024(b)(4), one of. Applying the definition in this fashion would mean, of course, that if the employer guesses right that a person with a colorable claim is in fact not entitled to benefits, he can deny that person the information required to be provided under 29 U.S.C. No. § 1002(8). It tried to solve this dilemma by suggesting that courts use discretion and not award damages if the employee's claim for benefits was not colorable or if the employer did not act in bad faith. be subject to judicial review, the assumption seems to be that a de novo standard would encourage more litigation by employees, participants, and beneficiaries who wish to assert their right to benefits. 87-1054. [489 It reasoned that in such situations deference is unwarranted given the lack of assurance of impartiality on Congress did not say that all "claimants" could receive information about benefit plans. See Brief for Respondents. Since the Court of Appeals did not attempt to determine whether respondents were "participants" with respect to the plans about which they sought information, it must do so on remand. Complaint §§ 23-44, App. U.S. 101, 107] Syllabus. FIRESTONE TIRE & RUBBER CO. v. BRUCH Syllabus FIRESTONE TIRE & RUBBER CO. O'CONNOR, J., delivered the opinion for a unanimous Court with respect to Parts I and II, and the opinion of the Court with respect to Part III, in which REHNQUIST, C. J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, and KENNEDY, JJ., joined. § 186(c), a provision of the Labor Management Relations Act, 1947 (LMRA). The relevant portion of the definition, however, refers to an employee "who is or may become eligible to receive a benefit." This view attributes conventional meanings to the statutory language, since the "may become eligible" phrase clearly encompasses all employees in covered employment and former employees with a colorable claim to vested benefits, but simply does not apply to a former employee who has neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits. 828 F.2d at 152. It noted, however, that the arbitrary and capricious standard had been softened in cases where fiduciaries and administrators had some bias or adverse interest. a reasonable expectation of returning to covered employment" or who have "a colorable claim" to vested benefits, Kuntz v. Reese, 785 F.2d 1410, 1411 (CA9) (per curiam), cert. In our view, the term "participant" is naturally read to mean either "employees in, or reasonably expected to be in, currently covered employment," Saladino v. I.L.G.W.U. Firestone Tire & Rubber Company v. Bruch. See, e.g., 29 U.S.C. as Amici Curiae 10-11. § 1001 (setting forth congressional findings and declarations of policy regarding ERISA). Several of the respondents also sought information from Firestone regarding their benefits under all three of the plans pursuant to certain ERISA disclosure provisions. . I agree with its disposition, but not all of its reasoning, regarding Part III.   828 F.2d 134, affirmed in part, reversed in part, and remanded. Supp., at 534. Docket no. To fill this gap, federal courts have adopted the arbitrary and capricious standard developed under 61 Stat. The District Court concluded that respondents were not entitled to damages under 1132(c) because they were not plan "participants" or "beneficiaries" at the time they requested information from Firestone. In relevant part, 29 U.S.C. Petitioner Firestone Tire & Rubber Co. (Firestone) maintained, and was the plan administrator and fiduciary of, a termination pay plan and two other unfunded employee benefit plans governed by the Employee Retirement Income Security Act of … JUSTICE O'CONNOR delivered the opinion of the Court. 473 640 F. Supp. In Count I of their complaint, respondents alleged that they were entitled to severance benefits because Firestone's sale of the Plastics Division to Occidental constituted a "reduction in workforce" within the meaning of the termination pay plan. See 29 U.S.C. . Faced with the possibility of $100 a day in penalties under § 1132(c)(1)(B), a rational plan administrator or fiduciary would likely opt to provide a claimant with the information requested if there is any doubt as to whether the claimant is a "participant," especially when the reasonable costs of producing the information can be recovered. Complaint 23-44, App. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 114 (1989). See also Franchise Tax Board v. Construction Laborers Vacation Trust, See generally 29 U.S.C. U.S. 101, 108] Trust principles make a deferential standard of review appropriate when a trustee exercises discretionary powers. After Firestone sold its Plastics Division to Occidental Petroleum Co. (Occidental), respondents, Plastics Division employees who were rehired by Occidental, sought severance benefits under the termination pay plan, but Firestone denied their requests on the ground that there had not been a "reduction in workforce" that would authorize benefits under the plan's terms. will be fulfilled in the future. See H.R. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) Firestone Tire & Rubber Co. v. Bruch. Bruch v. Firestone Tire & Rubber Co., 828 F.2d 134, 146 (3d Cir.1987). In determining the appropriate standard of review for actions under 1132(a)(1)(B), we are guided by principles of trust law. With respect to Count I, the Court of Appeals acknowledged that most federal courts have reviewed the denial of benefits by ERISA fiduciaries and administrators under the arbitrary and capricious standard. Petitioner Firestone Tire & Rubber Co. (Firestone) maintained, and was the plan administrator and fiduciary of, a termination pay plan and two other unfunded employee benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Despite these principles of trust law pointing to a de novo standard of review fOr claims like respondents', Firestone would have us read ERISA to require the application of the arbitrary and capricious standard to such claims. Though "instructive," failure to act on the proposed bill is not conclusive of Congress' views on the appropriate standard of review. The United States District Court dismissed the lawsuit. 453 (1973). A "participant" entitled to disclosure under § 1024(b)(4) and to damages for failure to disclose under § 1132(c)(1)(B) does not include a person who merely claims to be, but is not, entitled to a plan benefit. Id., at 138-140. No. before the Subcommittee on Labor-Management Relations of the House Committee on Education and Labor, 97th Cong., 2d Sess., 60 (1983). the part of the employer. Given this language and history, we have held that courts are to develop a "federal common law of rights and obligations under ERISA-regulated plans." (A) for the relief provided for in [ 1132(c)], [and] (B) to recover benefits due to him under the terms of his plan." National Retirement Fund, 754 F.2d 473, 476 (CA2 1985), or former employees who "have . Adcock v. the Firestone Tire & Rubber Co. v. Bruch ( 1989 ). form a basis... 724 -725 ( 1875 ) ( describing scope of 1132 ( a ) ( 1982 ), one is fiduciary! 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