Ninth Circuit Adopts Pro-Worker Pension Framework

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Jacklyn Wille

April 21 — The Ninth Circuit made it easier for workers to claim pension benefits by changing the legal standard governing disputes that turn on documents within an employer's control.

In a 2-1 ruling, the U.S. Court of Appeals for the Ninth Circuit held that the burden of proving whether a worker is entitled to pension benefits will shift to the plan sponsor when the dispute turns on documents within the plan's control, such as employment records and corporate structure information.

“To hold otherwise would essentially reward Lucy for pulling the football away from Charlie Brown, something that we do not believe Congress intended when it enacted ERISA,” the court explained.

This decision will be most helpful to employees whose pension benefits involve coordination among more than one entity, such as union workers who work for multiple companies and employees at businesses involved in mergers and acquisitions.

In a dissenting opinion, Judge Sandra S. Ikuta accused the majority of going “off the rails” and adopting an “ad hoc” rule designed to help a single claimant in a single case.

‘Breath of Fresh Air.'

Erin M. Riley and Gretchen Obrist, attorneys in Keller Rohrback LLP's Seattle office who represent plaintiffs in Employee Retirement Income Security Act cases, praised the Ninth Circuit's decision as a “breath of fresh air.”

“Very often in ERISA cases, key documents necessary to prove” an ERISA participant's “claims are in the possession of defendants—and for some reason (e.g., the documents are lost, or defendants refuse to produce them), the participant cannot obtain such documents,” Riley and Obrist told Bloomberg BNA in a joint e-mail on April 21. “It is a breath of fresh air for the Ninth Circuit to rule that ERISA plan sponsors will no longer be rewarded by a dismissal of such an action.”

Riley and Obrist said the court's decision “is consistent with the goals of ERISA and common sense.” They added that “federal courts have consistently said that ERISA has authorized them to create a body of federal common law around the statute, and this kind of burden-shifting is consistent with that statutory authorization.”

R. Bradford Huss, a defense-side ERISA lawyer with San Francisco-based Trucker Huss APC, raised concerns about the decision's potential effect on future ERISA cases.

“The dissent in this case clearly has the better view and the burden shifting imposed by the majority opinion may work to undercut long established ERISA precedent applying the abuse of discretion standard in benefit claim cases as well as the limits on discovery and on the use of extrinsic evidence by the courts,” Huss told Bloomberg BNA in an e-mail April 21.

Riley, Obrist and Huss weren't involved in the instant dispute.

Missing Information

The dispute arose when ADT Security Services denied pension benefits to Bruce H. Barton, a now-deceased employee who claimed he worked for multiple ADT-related entities between 1967 and 1986.

A federal judge in California upheld ADT's decision, finding that Barton failed to prove he had attained the 10 years of continuous service required by the ADT pension plan (142 PBD, 7/24/13).

The U.S. Court of Appeals for the Ninth Circuit reversed this decision in an April 21 opinion by Judge John B. Owens.

According to Owens, the district judge was wrong to place the burden of proof on Barton. That's because the ADT defendants—and not Barton—had the information necessary to determine whether the companies Barton worked for were participating employers in ADT's pension plan, Owens said.

In shifting the burden onto employers and plans, Owens said that the prior rule requiring claimants to prove their entitlement to benefits makes sense in cases in which the claimant can access the relevant information, such as disability cases that turn on the claimant's physical condition.

The same isn't true in other contexts, Owens said, such as when the “defending entity solely controls the information that determines entitlement, leaving the claimant with no meaningful way to meet his burden of proof.”

Summarizing the court's newly created framework, Owens said that “where a claimant has made a prima facie case that he is entitled to a pension benefit but lacks access to the key information about corporate structure or hours worked needed to substantiate his claim and the defendant controls such information, the burden shifts to the defendant to produce this information.”

Judge Alex Kozinski joined the opinion.

Morris S. Getzels Law Office represented Barton's estate. Ogletree Deakins Nash Smoak & Stewart PC represented ADT.

Ikuta Dissents

In her dissenting opinion, Ikuta criticized multiple aspects of the majority opinion.

She faulted the majority for disregarding U.S. Supreme Court precedent, for failing to properly defer to the ADT plan's reasonable decision and for inventing a burden-shifting standard that directly conflicts with the abuse-of-discretion standard governing ERISA cases.

Further, by tipping the scales in favor of claimants “whenever the historical information is scanty or unavailable,” the majority “enhances the risk that uninsured claimants will draw funds away from the legitimate beneficiaries,” Ikuta said.

To contact the reporter on this story: Jacklyn Wille in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

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