Schwarzer v. UFCW-Northern California Employer's Joint Pension Plan

Filing 24

ORDER RE 21 DISCOVERY DISPUTE. Signed by Magistrate Judge Laurel Beeler on 9/26/2013.(lblc2, COURT STAFF) (Filed on 9/26/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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San Francisco Division

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For the Northern District of California

United States District Court

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WILLIAM SCHWARZ,

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No. C 13-00977 LB

Plaintiff,
ORDER RE DISCOVERY DISPUTE

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v.
[Re: ECF No. 21]

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UFCW-NORTHERN CALIFORNIA
EMPLOYERS JOINT PENSION PLAN,

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Defendant.
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___________________________________/
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INTRODUCTION

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Plaintiff William Schwarz claims that he is entitled to disability benefits under Defendant’s

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pension plan. He became disabled in September 2011, claimed benefits in December 2011, and was

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denied benefits on the ground that Defendants had amended the plan to provide that its disability

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retirement benefit would no longer be available to participants who were not already in pay status as

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of December 1, 2011. See 5/31/13 Joint Case Management Conference Statement, ECF No. 13 at 2-

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3. Plaintiff wants discovery about whether plan participants (including Plaintiff) received notice of

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the benefits change, and Defendant resists discovery on the ground that when plan administrators

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have discretion regarding the award of benefits, a review of the plan administrator’s discretionary

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decision is limited to a review of the administrative record, and discovery would be pointless

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ORDER

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because notice was sent to over 52,000 plan participants. Joint Letter Brief, ECF No. 21 at 2-3.

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The court held a hearing on September 26, 2013 and orders the following discovery.

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STATEMENT

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Defendants say that they sent the following notices to plan participants: (1) April 2010 notice

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that the plan was in critical status, federal law required the plan to adopt a rehabilitation plan, and

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benefits might be reduced or eliminated; (2) April 2011 notice that the plan’s actuaries had certified

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that the plan was in critical status, a rehabilitation plan had been adopted, and adjustable benefits

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(including disability retirement benefits for those not in pay status) might be reduced or eliminated

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for participants whose commencement date was on or after January 1, 2012; and (3) October 2011
and November 2011 notices to participants and beneficiaries (including Plaintiff) (a) reminding them

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For the Northern District of California

United States District Court

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that they had been previously notified that the plan was in critical status and benefits might be

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reduced or limited as part of the rehabilitation plan that the plan’s trustees were required by law to

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adopt and (b) advising them of the change in disability benefits. 5/31/13 Joint CMC Statement, ECF

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No. 13 at 3. The notice had the following in bold print: “Effective January 1, 2012, the Plan’s

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Disability Retirement Benefit will no longer be available to Participants who are not already in pay

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status and receiving a Disability Retirement Benefit from the Fund as of December 1, 2011.” Id.

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The notice told participants that they would be eligible to receive a Disability Retirement Benefit if

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they had received a favorable decision from the Social Security Administration by November 30,

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2011, their date of entitlement to Social Security Disability Benefits was no later than December 1,

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2011 and their pension application was submitted by November 30, 2011 in addition to meeting the

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other disability requirements. Id. According to Defendant, the “Trustees exercised their discretion

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to continue Disability Retirement Benefits for certain participants and beneficiaries who were

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already receiving the benefits.” Id.

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According to the parties’ joint CMC statement, the fact issue is whether the notices sent in

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October 2011 and November 2011 were in fact sent. Id. at 4. The legal issue is whether the notices

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are legally sufficient to terminate the disability plan for participants (including Plaintiff) who were

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disabled as of October and November 2011. Id.

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ORDER

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ANALYSIS
I. PROCEDURAL BAR
Defendant argues that Plaintiff raised the issue too late because fact discovery closed on

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September 1, 2013. Joint Letter Brief, ECF No. 21 at 2. That does not bar the discovery. First, at

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the parties’ request, the court set expedited dates because of the nature of the case and the scope of

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the court’s review in ERISA abuse-of-discretion cases (and the corresponding lack of discovery

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generally). Second, the issue was raised along the way in case management statements, and the

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court directed and anticipated the raising of the issue in the joint letter brief.

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II. NOTICE AND WHETHER DISCOVERY IS FUTILE
Plaintiff asserts that there is no evidence in the administrative record that notice was sent in

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For the Northern District of California

United States District Court

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October and November 2011. Id. 29 U.S.C. § 1085(e)(8)(A)(I) and (C) require notice to plan

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participants at least 30 days before the effective date of the reduction.

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Defendant responds that the Trustee considered Plaintiff’s contention that he did not receive

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notice and denied Plaintiff’s appeal. Joint Letter Brief, ECF No. 21 at 2. Defendant says too that

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absent a conflict of interest or procedural irregularities that are the equivalent of a failure to exercise

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discretion at all or that prevent the full development of the administrative record, discovery is

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limited to the administrative record. Id. at 3-4 (citing Abatie v. Alta Health & Life Ins. Co., 458 F.3d

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955, 970, 873 (9th Cir. 2006); Goodes v. Pacific Gas & Elec. Co., No. C 12-1667 SI, 2013 WL

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1092916, at *1-2 (N.D. Cal. Mar. 15, 2013). Plaintiff does not allege a conflict, the alleged

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procedural irregularity was considered and rejected by the Trustee, and ordinarily the procedural

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irregularity exception is applied to allow plaintiffs to supplement the record with information in their

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possession. Id. at 4. Defendant also takes a different perspective about the effect of a failure to send

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notice as of October 2011. Id. at 5 n.2.

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At the hearing, the parties discussed a solution: providing a custodial declaration by a person

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with actual knowledge about the notice process. That process might include two declarations given

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that the mailing apparently was outsourced to a contractor. This process is designed to illuminate

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what the business records show about notice to Plaintiffs. Defendant’s counsel agreed that two

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weeks from today’s date was the reasonable time to accomplish this. The court’s view is that this
ORDER

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will be enough but will allow Mr. Ware to raise with defense counsel any issues with the

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declarations within 7 days after receipt of the declarations and any underlying business record. The

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parties then have 7 days after that to file any further joint letter brief with the court.

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CONCLUSION
This disposes of ECF No. 21.
Dated: September 26, 2013

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__________________________
LAUREL BEELER
United States Magistrate Judge

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For the Northern District of California

United States District Court

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ORDER

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