Wakamatsu v. Oliver et al

Filing 70

ORDER by Judge Charles R. Breyer granting 31 Motion for Summary Judgment. (crblc2, COURT STAFF) (Filed on 4/9/2012)

1
2
3
4
5
6
7
8

IN THE UNITED STATES DISTRICT COURT

9

FOR THE NORTHERN DISTRICT OF CALIFORNIA

United States District Court
For the Northern District of California

10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

No. C 11-00482 CRB

SANDRA WAKAMATSU,

ORDER RE MOTIONS FOR
SUMMARY JUDGMENT

Plaintiff,
v.
ROBERT W. OLIVER, D.D.S. & DAVID
M. PERRY, D.D.S., INC. et al.,
Defendants.

/

Before the Court are Defendants Dr. David M. Perry, D.D.S.’s (“Dr. Perry’s”) and Dr.
Perry and Robert W. Oliver, D.D.S. and David M. Perry, D.D.S., Inc.’s (“the Company’s”)
Motion for Summary Judgment (dkt. 31) and Plaintiff Sandra Wakamatsu’s (“Plaintiff’s”)
Motion for Judgment (dkt. 47). Dr. Perry administrated the Robert W. Oliver, D.D.S. and
David M. Perry, D.D.S., Inc. 401(k) Profit Sharing Plan (“Plan” or “the Plan”) on behalf of
the Company. In December 2008, Plaintiff requested her benefits be distributed to her based
on an account valuation date of December 31, 2007. However, because the Plan’s value
dropped dramatically over the course of 2008, Dr. Perry instead offered to pay Plaintiff based
on a valuation date of December 31, 2008. Plaintiff seeks to recover the difference between
what she eventually received and her expected payout based on the December 31, 2007,
valuation. Because Dr. Perry acted within his discretion, in the best interest of the Plan

1

participants, and in accordance with the usual practice, the Court DENIES Plaintiff’s Motion

2

for Judgment and GRANTS Defendants’ Motion for Summary Judgment.

3

I.

BACKGROUND

4

Defendant Dr. Perry is a shareholder of the Company, which is the sponsor and

5

administrator of the Plan. Perry Decl. (dkt. 32) ¶ 1. Dr. Perry executes duties as Plan

6

Administrator on behalf of the Company. Id. ¶ 1. Dr. Perry contracted with Associates in

7

Excellence (“AIE”) to provide administrative record keeping for the Plan. Id. ¶ 8.

8
9
United States District Court
For the Northern District of California

10
11
12
13
14
15

The Plan grants the Plan Administrator broad discretion to interpret the Plan and
determine the participants’ benefits under the Plan:
The Plan Administrator will administer the Plan for the exclusive benefit of the
Plan Participants and Beneficiaries, and in accordance with the terms of the Plan.
To the extent the terms of the Plan are unclear, the Plan Administrator may
interpret the Plan, provided such interpretation is consistent with the rules of
ERISA and Code §401 and is performed in a uniform and nondiscriminatory
manner. This right to interpret the Plan is an express grant of discretionary
authority to resolve ambiguities in the Plan document and to make discretionary
decisions regarding the interpretation of the Plan’s terms, including who is eligible
to participate under the Plan and the benefit rights of a Participant or Beneficiary.
The Plan Administrator will not be held liable for any interpretation of the Plan
terms or decision regarding the application of a Plan provision provided such
interpretation or decision is not arbitrary or capricious.

16

The Pension League Defined Contribution Prototype Plan and Trust, Basic Plan Document
17

#01 (dkt. 32 Ex. B) (“Prototype Plan”) at 68.1 The Plan also grants discretion to “review and

18

decide on claims for benefits under the Plan.” Id. at 69.
19

The value of an individual participant’s account “consists of the fair market value of
20

the Participant’s share of the Trust assets.” Id. at 78. Participants’ retirement benefits were
21

kept in a pooled investment account (“Pooled Account”), separate from Dr. Perry’s own
22

investments. Perry Decl. ¶¶ 8, 10. Valuation of the assets must be conducted at least
23

annually, but the Plan Administrator may request interim valuations. Prototype Plan at 78.
24

Plan assets are distributed based on the valuation date that “immediately precedes the date
25

the Participant receives his/her distribution from the plan.” Id. at 49. Distribution of an
26
27
1

28

The Prototype Plan is incorporated as part of the Plan. See Robert W. Oliver, D.D.S. & David
M. Perry, D.D.S., Inc. Volume Submitter 401(k) Plan (dkt. 32 Ex. A) (“Agreement”) at 1.
2

1

account exceeding $5,000 is first available “as soon as administratively feasible” following

2

the employee’s termination. Agreement at 18.

3

Plaintiff Sandra Wakamatsu worked for Dr. Perry’s dental office, retiring on October

4

31, 2006. Wakamatsu Decl. (dkt. 36) ¶ 2. In a letter to Plaintiff dated December 10, 2008,

5

Beth Bowles of AIE estimated Plaintiff’s payable benefits at $195,317.82. Wakamatsu Decl.

6

Ex. 1. AIE arrived at the estimate based on the valuation date of December 31, 2007 (“the

7

2007 Valuation”). See Wakamatsu Decl. Ex. 5. Plaintiff completed the required retirement

8

plan forms on December 17, 2008. Wakamatsu Decl. ¶¶ 14-15. AIE informed Dr. Perry that

9

the paperwork had been received, and told Dr. Perry that he “may now proceed with the

United States District Court
For the Northern District of California

10

distribution” based on the 2007 Valuation. Wakamatsu Decl. Ex. 4. The letter indicated that

11

Plaintiff’s account would be subject to gains or losses attributable to 2008 if she did not

12

receive her distribution by December 31, 2008. Id.

13

After determining that processing Plaintiff’s claim under the 2007 Valuation would be

14

a breach of fiduciary duty owed to the remaining Plan participants, Dr. Perry processed

15

Plaintiff’s request for benefits under a valuation date of December 31, 2008 (“the 2008

16

Valuation”). Perry Decl. ¶ 8 & Ex. F. Based on the 2008 Valuation, Plaintiff’s account

17

totaled $135,449.40. Perry Decl. Ex. F. Plaintiff declined to take payment in 2009.

18

Wakamatsu Decl. ¶ 21.

19

The Plan was subject to another valuation on December 31, 2009 (“the 2009

20

Valuation”), which valued Plaintiff’s benefits at $159,581.93. Id. ¶ 29. On June 17, 2010,

21

Plaintiff filed an administrative claim for benefits based on the 2007 Valuation. Wakamatsu

22

Decl. ¶ 36. The defendants denied Plaintiff’s claim on July 23, 2010. Perry Decl. ¶ 12 & Ex.

23

H. Plaintiff appealed on September 15, 2010, which was denied on November 15, 2010. Id.

24

¶¶ 13-14 & Exs. I, H. In the meantime, Plaintiff took distribution of $159,581.93 based on

25

the 2009 Valuation, while reserving the right to seek the $35,735.89 difference between the

26

distribution and the value based on the 2007 Valuation. Perry Decl. Ex. I.

27
28

Plaintiff filed the instant action to recover $35,735.89 on February 1, 2011. Compl.
(dkt. 1). The parties have filed cross-motions for summary judgment.
3

1

II.

LEGAL STANDARD

2

Summary judgment is properly entered “if the pleadings, the discovery and disclosure

3

materials on file, and any affidavits show that there is no genuine issue as to any material fact

4

and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); see

5

Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The movant bears the “burden of

6

showing the absence of a genuine issue as to any material fact, and for these purposes the

7

material it lodged must be viewed in the light most favorable to the opposing party.”

8

Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970). The movant is not required to

9

produce evidence negating the non-movant’s claims. Lujan v. Nat’l Wildlife Fed’n, 497 U.S.

United States District Court
For the Northern District of California

10

871, 885 (1990) (“[T]he purpose of Rule 56 is to enable a party who believes there is no

11

genuine dispute as to a specific fact essential to the other side’s case to demand at least one

12

sworn averment of that fact before the lengthy process of litigation continues”). If the

13

movant carries its burden, the burden shifts to the nonmoving party to establish facts beyond

14

the pleadings showing that a triable issue of disputed material fact remains so that summary

15

judgment is not appropriate. Celotex, 477 U.S. at 324; Adickes, 398 U.S. at 157.

16

To successfully rebut a properly supported summary judgment motion, the non-

17

moving party “must point to some facts in the record that demonstrate a genuine issue of

18

material fact and, with all reasonable inferences made in the [nonmoving party’s] favor,

19

could convince a reasonable jury to find for [that party].” Reese v. Jefferson School Dist.

20

No. 14J, 208 F.3d 736, 738 (9th Cir. 2000). The non-moving party must “go beyond the

21

pleadings and by her own affidavits, or by ‘the depositions, answers to interrogatories, and

22

admissions on file,’ designate ‘specific facts showing that there is a genuine issue for trial.’”

23

Celotex, 477 U.S. at 324 (quoting Fed. R. Civ. P. 56(e)). The opposing party may not rest on

24

conclusory allegations or mere assertions. Rather, it must present significant probative

25

evidence of specific facts raising a material issue that “can be resolved only by a finder of

26

fact because [the issue] may reasonably be resolved in favor of either party.” Anderson, 477

27

U.S. at 249-50, 256.

28
4

1
2

III.

DISCUSSION
Plaintiff alleges that Dr. Perry abused his discretion as Plan Administrator by applying

3

the 2008 Valuation to her claim. Pl. Opp’n (dkt. 34) at 2-3. The parties agree that the Plan

4

gave Dr. Perry, as Plan Administrator, discretion to “resolve ambiguities in the Plan

5

document and to make discretionary decisions regarding the interpretation of the Plan’s

6

terms.” Prototype Plan at 68; see Pl. Opp’n at 7. However, Plaintiff alleges that conflicts of

7

interest influenced Dr. Perry’s exercise of his discretion.
A.

9

Plaintiff raises four potential conflicts of interest that allegedly tainted Dr. Perry’s

10
United States District Court
For the Northern District of California

8

decision: (1) that Dr. Perry’s wife and two daughters had money in the pooled investment

11

account; (2) that Dr. Perry’s wife, Judy Perry, involved herself in the administration of

12

benefits; (3) that Dr. Perry operated under a bias favoring current employees over retired

13

employees; and (4) that Dr. Perry’s potential personal liability improperly influenced his

14

decision. Pl. Opp’n at 9-13.

15

Dr. Perry’s Alleged Conflicts of Interest

In the absence of a conflict of interest, “the plan administrator’s decision can be

16

upheld if it is ‘grounded on any reasonable basis.’” Montour v. Hartford Life & Accident

17

Ins. Co., 582 F.3d 933, 940 (9th Cir. Cal. 2009) (quoting Sznewajs v. Bancorp Amended &

18

Restated Supplemental Benefits Plan, 572 F.3d 727, 734-35 (9th Cir. 2009)). However, if

19

the same entity both pays the benefits and evaluates the claims, there is a “structural conflict

20

of interest” and a more complex analysis is required. Id. A court can give more or less

21

weight to a conflict depending on what the other evidence shows. Saffon v. Wells Fargo &

22

Co. Long Term Disability Plan, 522 F.3d 863, 868 (9th Cir. 2008). A court can “view the

23

conflict with a low level of skepticism if there’s no evidence of malice, of self-dealing, or of

24

a parsimonious claims-granting history.” Id. However, the court “may weigh the conflict

25

more heavily if there’s evidence that the administrator has given inconsistent reasons for

26

denial, has failed adequately to investigate a claim or ask the plaintiff for necessary evidence,

27

or has repeatedly denied benefits to deserving participants by interpreting plan terms

28

incorrectly.” Id.
5

1.

1
2

The Financial Interests of Dr. Perry’s Family Members

Plaintiff’s first claim is that Dr. Perry’s wife and two children had money in the

3

pooled investment account, affecting his decisions. Pl. Opp’n at 9. A conflict of interest

4

exists when “an administrator has an incentive to pay as little in benefits as possible to plan

5

participants because the less money the insurer pays out, the more money it retains in its own

6

coffers.” Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 966 (9th Cir. 2006), abrogated

7

on other grounds, Metro. Life Ins. Co. v. Glenn, 554 U.S. 105 (2008). Here, while Dr.

8

Perry’s own funds are separately held, his wife and daughters held an interest in the pooled

9

account totaling $85,750.75 under the 2008 Valuation. Perry Supp. Decl. (dkt. 45) ¶¶ 9-10.

United States District Court
For the Northern District of California

10

Thus, Dr. Perry did have a conflict of interest to avoid paying Plaintiff, because paying

11

Plaintiff would reduce the Pooled Account value and thus reduce the value of his wife and

12

daughters’ interests.2 Although a conflict exists, the Court must determine what weight to

13

place on the conflict. See Glenn, 544 U.S. at 108, 115-17. Here, Dr. Perry’s family

14

members held an approximately 10% interest in the pooled account. Def. Reply (dkt. 44) at

15

7 n.5. Because Plaintiff is claiming that she was underpaid by $35,753.89, the 10% interest

16

attributable to Dr. Perry’s family members in that underpayment comes out to approximately

17

$3,575. When viewed in relation to Dr. Perry’s separate account worth over $3 million, the

18

$3,575 does not warrant much weight when reviewing Dr. Perry’s decision. Furthermore,

19

Dr. Perry’s interest in preserving the Pooled Account because his family members held a

20

portion of it is subsumed by his fiduciary duty to all of the Plan’s participants to avoid

21

overpaying participants. Therefore, his family members’ investments in the Pooled Account

22

were unlikely to affect on his decision-making process, and the Court will not give them

23

much weight.
2.

24

Dr. Perry’s Wife “Meddling” in the Plan

25

Plaintiff’s second claim is that Dr. Perry’s wife Judy “meddled” in the administration

26

of the plan. Pl. Opp’n at 10. Dr. Perry’s declaration states that Mrs. Perry acted as his agent

27
28

2

The pooled account was valued at $883,462 as of December 31, 2008. Def. Reply at 7 n.5.
6

1

when assisting in administration of the Plan, but that Dr. Perry retained authority for making

2

any final decisions. Perry Supp. Decl. ¶ 7. Plaintiff has not presented any facts to contradict

3

Dr. Perry’s declaration. Thus, there is no evidence to support this claim.
3.

4

Current and Retired Employees

Plaintiff’s third argument that a conflict of interest existed is that Dr. Perry favored

5
6

current employees over retired employees when administrating the plan. Pl. Opp’n at 11-12.

7

Plaintiff does not offer any authority suggesting that this is recognized as a conflict of

8

interest. If Plaintiff’s argument it accepted, then nearly every plan governed by ERISA

9

would give rise to a conflict of interest when the plan covered both current and retired

United States District Court
For the Northern District of California

10

employees and the plan administrator makes a determination of benefits that is unfavorable

11

to a retired employee. Given the lack of law to support this position or any evidence

12

suggesting that such a conflict existed in fact, it is not compelling.
4.

13

Liability to Other Participants

Plaintiff’s final argument for finding a conflict of interest is that Dr. Perry acted to

14
15

avoid liability for breaching his fiduciary duty to other participants, again without citing any

16

supporting authority. Pl. Opp’n at 12. ERISA requires that fiduciaries discharge “duties

17

with respect to a plan solely in the interest of the participants and beneficiaries,” imposing a

18

fiduciary duty to all plan participants. 29 U.S.C. § 1104(a)(1). If, as Plaintiff suggests, a

19

fiduciary acts under a conflict of interest by acting in the interest of all plan participants and

20

beneficiaries, then denying any claim made by any participant would create a conflict of

21

interest. This would mean that a conflict of interest exists in every plan administrated

22

pursuant to ERISA’s statutory mandate, a conclusion that would be illogical.
Although Dr. Perry acted under a conflict of interest because his wife and two

23
24

daughters held an interest in the Pooled Account, when viewed in context, the conflict

25

deserves minimal weight. Ultimately, the Court reviews Dr. Perry’s decisions for abuse of

26

discretion with additional skepticism proportional to the minor conflict.

27

//

28

//
7

1

B.

Dr. Perry’s Decision on the Merits

2

Dr. Perry denied paying Plaintiff’s claim for benefits under the 2007 Valuation

3

because he determined that it did not represent the account’s true value, and paying benefits

4

based on that valuation would have prejudiced the other participants. Def. Mot. at 5-6.

5

Dr. Perry’s denial of payment under the 2007 Valuation is reviewed for abuse of

6

discretion. A challenge to an ERISA plan’s denial of benefits under 29 U.S.C. §

7

1132(a)(1)(B) is reviewed for abuse of discretion if the plan gives the administrator

8

discretionary authority to construe the terms of the plan. Abatie, 458 F.3d at 963; see

9

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). “An ERISA administrator

United States District Court
For the Northern District of California

10

abuses its discretion only if it (1) renders a decision without explanation, (2) construes

11

provisions of the plan in a way that conflicts with the plain language of the plan, or (3) relies

12

on clearly erroneous findings of fact.” Boyd v. Bell, 410 F.3d 1173, 1178 (9th Cir. 2005)

13

(citing Bendixen v. Standard Ins. Co., 185 F.3d 939, 944 (9th Cir. 1999)). The

14

administrator’s decision will be upheld if “it is based upon a reasonable interpretation of the

15

plan’s terms and was made in good faith.” Id. (quoting Estate of Shockley v. Alyeska

16

Pipeline Serv. Co., 130 F.3d 403, 405 (9th Cir. 1997)).

17
18

1.

Dr. Perry Reasonably Decided Not to Apply the 2007 Valuation

The first issue for the Court is whether Dr. Perry acted within his discretion when he

19

decided that the 2007 Valuation did not accurately represent the value of the Pooled Account

20

at the end of 2008. See Def. Mot. at 5-6.

21

When a past account valuation does not accurately reflect the present account value

22

due to unusual economic circumstances, it is reasonable to conduct a special valuation before

23

distributing proceeds to avoid prejudicing other plan participants. Jasper v. M.H & B.L.

24

Jasper D.D.S., P.C. Profit Sharing Plan, 340 F. Supp. 2d 1017, 1027-28 (E.D. Mo. 2004). In

25

Jasper, the plaintiff retired and sought distribution of his proceeds from a retirement plan

26

governed by ERISA. Id. at 1020-21. The plan documents adopted an annual valuation date

27

of March 31, but granted the administrator the power to designate a special valuation date

28

when necessary to avoid prejudice to any participant. Id. at 1021-22. The plaintiff
8

terminated his employment on June 12, 2001, and submitted his benefit distribution forms on

2

August 2, 2001. Id. at 1021. The plan required payment on the “first day of the calendar

3

month that coincides with or next follows the date 60 days after the date the Participant . . .

4

consent[s] to the distribution.” Id. Based on a valuation date of March 31, 2001, the plan

5

held assets of $2,405,041, and the plaintiff was entitled to $2,228,501, over 92% of the total

6

value. Id. at 1020. However, due to the events of September 11, 2001, the total value of the

7

plan on September 21, 2001, was estimated at approximately $2,100,000. Id. at 1022. The

8

plan disbursed benefits to the plaintiff using a valuation date of October 1, 2001. Id. at 1023.

9

The Eastern District of Missouri upheld the administrator’s use of a special valuation date,

10
United States District Court
For the Northern District of California

1

because doing so avoided prejudice to all the other participants in the plan. Id. at 1027. By

11

applying the special valuation date, the plan administrator ensured that all the participants

12

“would suffer their pro rata share” of the effects of September 11. Id. at 1027-28. Finding

13

that the administrator acted consistently with the goal of considering the assets of all the

14

participants, given the crisis affecting the account’s value, the court concluded that the

15

administrator did not abuse its discretion by choosing a special valuation date. Id. at 1028.

16

Here, like in Jasper, Dr. Perry acted reasonably when he determined that, due to

17

unforeseen market conditions, paying benefits to Plaintiff based on the 2007 Valuation would

18

prejudice the other participants in the plan. The Plan provides for annual valuation, but

19

allows the Administrator to perform interim valuations. Prototype Plan at 78. Given the

20

drastic decrease in the value of the Pooled Account in 2008, the 2007 Valuation no longer

21

reflected the actual value of the Pooled Account at the end of the year. Dr. Perry reasonably

22

concluded that making a distribution based on the 2007 Valuation would have allowed

23

Plaintiff to escape her share of the losses occurring in 2008 and force the other participants to

24

bear those losses. It is important to recognize that applying a different valuation date did not

25

deprive Plaintiff of her benefits, and instead merely ensured that Plaintiff bore her share of

26

the losses that the Plan suffered over the course of the year. Dr. Perry acted reasonably and

27

fulfilled his duties to all Plan participants by refusing to apply the 2007 Valuation to

28

Plaintiff’s claim for benefits. Courts have consistently upheld similar decisions to properly
9

1

allocate losses when plans governed by ERISA experienced drastic losses in anomalous

2

market conditions. See, e.g., Wininger v. Wilcox Fuel, Inc., No. 02-1671, 2004 WL 97626,

3

at *3 (D. Conn. Jan. 12, 2004) (upholding an interim valuation to avoid the inequitable result

4

of giving the plaintiff “a lump-sum payout that did not reflect the true value of his formulaic

5

share, and leaving the remaining participants in the Plan to shoulder all the losses from the

6

stock market downturn”); Cator v. Herrgott & Wilson, Inc., 609 F. Supp. 12, 15 (N.D. Cal.

7

1984) (upholding an amendment allowing an interim valuation because “fluctuating market

8

conditions, changing financial conditions, and economic circumstances could result in a

9

‘windfall’ to [the plaintiff] at the expense of the other twelve Plan participants if an interim

United States District Court
For the Northern District of California

10
11

valuation date was not enacted”).
Plaintiff attempts to analogize this case to Brug v. Pension Plan, 669 F.2d 570 (9th

12

Cir. 1982), where the Ninth Circuit held that rescission of an amendment could not be

13

retroactively applied to divest the plaintiff of her benefits. 699 F.2d at 575. In Brug, the

14

plan’s trustees had adopted an amendment making clerical workers eligible for retirement

15

benefits. Id. at 572. The amendment made the plaintiff eligible for benefits, but the

16

administration committee deferred consideration of her application until after rescinding the

17

amendment that made her eligible. Id. at 573. The district court upheld the administration

18

committee’s decision, but the Ninth Circuit reversed. Id. at 574. The plaintiff clearly met the

19

requirements for the disability pension retirement benefits created by the amendment at the

20

time she applied, and the administration committee’s decision retroactively divested her of

21

the benefits. Id. While the administration committee had discretion to rescind the

22

amendment going forward, it abused its discretion by applying that rescission retroactively to

23

the plaintiff’s vested benefits. Id. at 575.

24

Unlike in Brug, Dr. Perry did not retroactively divest Plaintiff of her benefits. Rather

25

than divest Plaintiff of her benefits, the application of an alternate valuation fairly distributed

26

the losses that the Pooled Account suffered among all the participants, including Plaintiff.

27

Plaintiff received the benefits she was entitled to, not the inflated amount she hoped to

28

receive based on an out-dated valuation. Furthermore, here the Plan provided for interim
10

1

valuations during the entirety of Plaintiff’s employment, unlike in Brug where the material

2

change occurred after the plaintiff’s retirement. Thus, Brug is not applicable to this case.3

3

Plaintiff has not demonstrated a triable issue of fact on the question of whether Dr.

4

Perry abused his discretion by applying a valuation date other than December 31, 2007.
2.

5

Dr. Perry Reasonably Applied the 2008 Valuation to Plaintiff’s
Request for Benefits

6

The next inquiry is whether Dr. Perry acted reasonably by using the upcoming 2008
7

Valuation rather than request an interim valuation to apply to Plaintiff’s claim for benefits.
8

Dr. Perry decided against conducting an interim valuation, “given the time and expense
9

involved in conducting a Plan valuation and the proximity in time to the December 31, 2008
United States District Court
For the Northern District of California

10

valuation.” Perry Decl. (dkt. 32) ¶ 8. ERISA requires that an administrator discharge his
11

duties in the interest of the participants and beneficiaries, for the purpose of providing
12

benefits and “defraying reasonable expenses of administering the plan.” 29 U.S.C. §
13

1104(a)(1)(A)(ii); see McCabe v. Capital Mercury Apparel, 752 F. Supp. 2d. 396, 411
14

(S.D.N.Y. 2010) (“Incurring . . . expenses for a new valuation, only months before the
15

regularly scheduled valuation was set to take place, would run counter to defendants’
16

statutory duty to defray administrative expenses.”). Given that Plaintiff’s request for
17

disbursement came a mere two weeks before the scheduled end-of-the-year valuation, Dr.
18

Perry did not act unreasonably by waiting to apply that valuation to Plaintiff’s claim.
19

Conducting an interim valuation would have required additional expenditure, and the
20

already-scheduled 2008 Valuation provided an accurate valuation of Plaintiff’s account for
21

disbursement.4 See Prototype Plan at 69 (expenses in administrating the Plan are paid from

22

Plan assets).
23

Dr. Perry’s decision did not contradict the Plan’s language. An administrator abuses
24

his discretion if he acts contrary to the documents and instruments governing the plan. See
25
26
3

27

The court in Cator distinguished Brug on similar grounds. See Cator, 609 F. Supp. at 16.

4

28

Because the 2008 Valuation would occur within two weeks of Plaintiff’s request, it represented
her account value more accurately than the 2007 Valuation did.
11

29 U.S.C. § 1104(a)(1)(D). The Plan provides that “a Participant’s Account Balance is

2

determined as of the Valuation Date (as specified in Part 12 of the Agreement) which

3

immediately precedes the date the Participant receives his/her distribution from the Plan.”

4

Prototype Plan at 49 (emphasis added). In arguing that Dr. Perry did not have discretion to

5

wait for the 2008 Valuation, Plaintiff persistently clings to Part 9 of the Agreement, which

6

provides that “[d]istribution is first available as soon as administratively feasible following:

7

the Participant’s employment termination date.” Agreement at 18. However, the “as soon as

8

administratively feasible” language that Plaintiff relies on only governs the timing of initial

9

availability of a distribution, not the timing of a distribution following a request. Because the

10
United States District Court
For the Northern District of California

1

Plan is silent as to the timing of distribution after a request is made, Dr. Perry had discretion

11

as the Plan Administrator to determine when to make the distribution.5 Dr. Perry did not

12

abuse that discretion by waiting until the 2008 Valuation accurately reflected the value of

13

Plaintiff’s account.

14

Finally, Dr. Perry’s decision to use the year-end valuation for Plaintiff’s benefits

15

conformed with the usual practice when administering the Plan. Plan participants Sally and

16

Lillian both requested distribution of benefits on November 29, 2007. See Perry Supp. Decl.

17

¶ 3; PER 00924, 00942. They each received an initial payment on April 9, 2008, and a

18

supplemental payment on December 22, 2008. See PER 00932, 00952, 00982, 00983. Both

19

Sally and Lillian made requests towards the end of 2007, and their initial estimates were

20

based on the valuation conducted on December 31, 2006. However, because their payments

21

were made in 2008, Dr. Perry used the 2007 Valuation to compute their total distribution,

22

with the payments in December 2008 representing the additional benefits that Sally and

23
24
25
26
27
28

5

Plaintiff’s argument that the letter from AIE dated December 22, 2008, required Dr. Perry to
make payment immediately is unpersuasive. See Pl. Opp’n at 8. The letter clearly states that Dr. Perry
“may” proceed with distribution, consistent with AIE’s limited role as a record keeper. See Perry Decl.
Ex. E. Furthermore, the letter itself contemplates the possibility that Plaintiff would not receive her
distribution until 2009 in warning that her account balance could be subject to gains and losses
attributable to 2008. See id. Finally, the letter is consistent with Dr. Perry’s interpretation that the
valuation date is prior to distribution, not prior to request as Plaintiff urges, because it warns Dr. Perry
that Plaintiff’s account would be subject to gains and losses if she did not receive distribution before
the end of the year. See id.
12

1

Lillian were due under the increased valuation. See Perry Supp. Decl. ¶ 3; Wakamatsu 2d

2

Decl. (dkt. 68) Ex. 1. Thus, both Sally and Lillian were paid benefits under the 2007

3

Valuation, the valuation preceding their receipt of benefits.
Here, Dr. Perry applied the same process to Plaintiff’s claims, but the value of the

4

Pooled Account decreased dramatically during 2008. Had the value increased, Plaintiff

6

would have been first paid an initial estimate and then paid the residual that was not

7

accounted for in the outdated valuation – just like Sally and Lillian were – and it is unlikely

8

that Plaintiff would have complained. See Perry Supp. Decl. ¶ 5; Wininger, 2004 WL 97626,

9

at *3 (“Had the interim valuation been done to determine and equitably increase Wininger’s

10
United States District Court
For the Northern District of California

5

retirement payout due to an anomalous situation caused by a bull market, it is highly unlikely

11

that there would have been any objection by Wininger or any of the Plan participants.”).

12

Given the drastic decrease in the value of the Pooled Account, Dr. Perry could not make a

13

partial payment to Plaintiff, and instead acted reasonably by waiting for the upcoming

14

valuation to be completed before disbursing Plaintiff’s benefits.

15

Dr. Perry reasonably decided to use the upcoming 2008 Valuation to distribute

16

Plaintiff’s benefits because the 2008 Valuation more accurately represented the true value of

17

her account. Therefore, Plaintiff fails to raise a triable issue of fact on the issue of whether

18

Dr. Perry abused his discretion as Plan Administrator.

19

IV.

20
21
22

CONCLUSION
For the foregoing reasons, the Court DENIES Plaintiff’s Motion for Judgement and

GRANTS Defendants’ Motion for Summary Judgment.
IT IS SO ORDERED.

23
24
25

CHARLES R. BREYER
UNITED STATES DISTRICT JUDGE

Dated: April 9, 2012

26
27
28
13