Affonso v. Metropolitan Life Insurance Company et al

Filing 78

ORDER granting 36 38 Motion for Abuse of Discretion Review ; granting 50 Motion to Dismiss; granting in part and denying in part 52 Motion to Augment Administrative Record (hlk, COURT STAFF) (Filed on 7/6/2011)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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GARY E. AFFONSO,

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Plaintiff,

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ORDER

METROPOLITAN LIFE INSURANCE
COMPANY, et al.,

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For the Northern District of California

United States District Court

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v.

No. C 10-05054 PJH

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Defendants.
_______________________________/

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On June 29, 2011, the court held a hearing on defendants Metropolitan Life

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Insurance Company’s (“MetLife”) and Morgan Stanley Benefits Plan’s (“Plan”) motion for

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abuse of discretion review, plaintiff Gary E. Affonso’s motion to augment the administrative

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record, and defendant Morgan Stanley’s motion to dismiss. All parties appeared through

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counsel. Having read the parties’ papers and carefully considered their arguments and the

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relevant legal authority, and good cause appearing, the court hereby GRANTS MetLife and

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the Plan’s motion for abuse of discretion review; GRANTS IN PART AND DENIES IN

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PART plaintiff’s motion to augment the administrative record; and GRANTS Morgan

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Stanley’s motion to dismiss for the reasons stated at the hearing and summarized as

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follows.

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1.

MetLife and the Plan seek a determination that the applicable standard of

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review is for abuse of discretion. As a general matter, when a Plan administrator's denial of

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benefits is challenged under ERISA, the default rule holds that court review of the

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administrator's denial is de novo, unless the benefit Plan gives the administrator or fiduciary

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discretionary authority to determine eligibility for benefits or to construe the terms of the

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Plan. See Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 963 (9th Cir. 2006) (en

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banc). Analysis of this issue depends on the wording of the Plan itself. The Ninth Circuit in

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Abatie held that "for a Plan to alter the standard of review from the default of de novo to the

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more lenient abuse of discretion, the Plan must unambiguously provide discretion to the

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administrator." See id. at 964. The parties do not dispute that the language contained in

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the Summary Plan Description (“SPD”) is sufficient to confer discretion to the Plan

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Administrator, but plaintiff disputes whether the SPD constitutes the formal Plan document.

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The employer, Morgan Stanley, has offered the declaration of Leigh Braun, a Vice

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President of Human Resources in the Benefits Department of Morgan Stanley, who states

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that the formal plan document for the Morgan Stanley Life Insurance Plan is one and the
same with the SPD. Braun Decl. ¶ 5 and Ex. 1. Plaintiff’s objections to the Braun

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For the Northern District of California

United States District Court

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Declaration are overruled. Based on the Braun declaration, the court determines that the

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SPD constitutes the formal plan document for the supplemental life insurance Plan at issue

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in this case. Under Abatie, 458 F.3d at 963, the language of the SPD constitutes a clear

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grant of discretionary authority to the Plan administrator and Plan fiduciaries. See Braun

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Decl., Ex. 1 at Morgan Stanley 000165, 000175. The motion for abuse of discretion review

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is therefore GRANTED.

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2.

Plaintiff moves to augment the administrative record with several groups of

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documents. Judicial review of an ERISA plan administrator's decision on the merits is

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limited to the administrative record. Montour v. Hartford Life & Acc. Ins. Co., 588 F.3d 623,

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632 (9th Cir. 2009). In the ERISA context, the “administrative record” consists of “the

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papers the insurer had when it denied the claim.” Id. at 632 n. 4 (citing Kearney v.

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Standard Ins. Co., 175 F.3d 1084, 1086 (9th Cir.1999) (en banc)). Even on de novo

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review, the court generally considers only the evidence that was before the plan

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administrator but has discretion to allow evidence that was not before the plan

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administrator “only when circumstances clearly establish that additional evidence is

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necessary to conduct an adequate de novo review.” Mongeluzo v. Baxter Travenol

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Disability Benefit Plan, 46 F.3d 938, 944 (9th Cir.1995) (quoting Quesinberry v. Life

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Insurance Company, 987 F.2d 1017, 1025 (4th Cir.1993) (en banc)) (internal quotation

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marks omitted).

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Plaintiff has demonstrated that the administrative record lacks certain documents

booklet and certain other documents together make up the official Plan documents.”

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Doc. no. 39, Ex. 1 at 000045 (emphasis added). Further, the SPD refers to the insurance

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contract. Braun Decl., Ex. 1 at Morgan Stanley 000175 (“benefits provided by each of the

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Plans are limited to the coverage of the insurance contract”). Plaintiff’s motion to augment

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the administrative record is therefore GRANTED IN PART. Defendants are ordered to

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provide a declaration that describes the “certain other” Plan documents identified in the

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For the Northern District of California

that the claim administrator had when it denied plaintiff’s claim. The SPD states, ”This

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United States District Court

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SPD, not limited to the life insurance plan, and provide a copy of all Plan documents,

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including any corrected versions of the SPD. Defendants are further ordered to produce

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the insurance contract for the life insurance plan, including the supplemental life insurance

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plan. Further, defendants must provide legible, complete copies of the Plan documents,

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particularly of pages with shaded charts or tables. Defendants must augment the

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administrative record by July 29, 2011.

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Plaintiff’s motion to augment the administrative record is DENIED with respect to the

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requests for Morgan Stanley corporate documents, Benefits Center training instructions

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and website, and recordings of phone calls to the Benefits Center on the ground that these

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documents could not be construed to define or vary the terms of the Plan. The court will

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not entertain motions to compel discovery by plaintiff.

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3.

Morgan Stanley moves to dismiss plaintiff’s third claim for relief alleging

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breach of contract on the ground that this claim is preempted by ERISA. Section 502(a) of

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ERISA provides, among other things, that "[a] civil action may be brought . . . by a

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participant or beneficiary . . . to recover benefits due to him under the terms of his plan . . ."

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29 U.S.C. § 1132(a). “The purpose of ERISA is to provide a uniform regulatory regime

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over employee benefit plans.” Aetna Health, Inc. v. Davila, 542 U.S. 200, 208 (2004). To

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this end, ERISA includes expansive preemption provisions which are intended to ensure

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that employee benefit plan regulation would be exclusively a federal concern. Id.; see also

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Security Life Ins. Co. of America v. Meyling, 146 F.3d 1184, 1188 (9th Cir. 1998) (“ERISA

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contains one of the broadest preemption clauses ever enacted by Congress.”). ERISA

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preempts all state laws insofar as they relate to an employee benefit plan. 29 U.S.C.

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§ 1144(a); Cleghorn v. Blue Shield, 408 F.3d 1222, 1225 (9th Cir. 2005). This provision

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has been interpreted broadly to apply to “any state-law cause of action that duplicates,

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supplements, or supplants the ERISA civil enforcement remedy” because any such cause

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of action would “conflict[ ] with the clear congressional intent to make the ERISA remedy

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For the Northern District of California

United States District Court

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exclusive . . .” Davila, 542 U.S. at 209 (footnote added).
The breach of contract claim alleges, in part, “In the event that the Court determines

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that the maximum amount of insurance available under the plan is limited to $550,000, as

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claimed by the Plan, then Plaintiff alleges that the promise by the Benefits Center

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representative that insurance was available in the amount of $1 million constitutes, in part,

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a promise by Morgan Stanley and, to pay that portion of the benefit which is not covered by

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the ERISA plan, i.e., $500,000 as a form of compensation which is not subject to ERISA.”

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FAC ¶ 40. The court determines that plaintiff’s breach of contract claim against Morgan

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Stanley relates to the employee benefit plan for supplemental life insurance and is

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therefore preempted by ERISA. Morgan Stanley’s motion to dismiss the breach of contract

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claim is therefore GRANTED without leave to amend.

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The parties are instructed that future filings must comply with Civil Local Rule
3-4(c)(2) which requires footnotes to conform to the font requirements for printed text.
IT IS SO ORDERED.

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Dated: July 6, 2011
______________________________
PHYLLIS J. HAMILTON
United States District Judge

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