Kip Sides v. Cisco Systems, Inc. et al

Filing 155

ORDER by Judge Haywood S. Gilliam, Jr. DENYING 146 PLAINTIFFS REQUEST FOR ADDITIONAL DISCOVERY. (This order also terminates docket no. 148 ). Cross Motions due by 8/10/2018; Responses due by 9/7/2018. Bench Trial / Motion Hearing set for 9/27/2018 02:00 PM in Oakland, Courtroom 2, 4th Floor before Judge Haywood S. Gilliam Jr. (ndrS, COURT STAFF) (Filed on 6/18/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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KIP SIDES,
Plaintiff,

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v.

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United States District Court
Northern District of California

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Case No. 15-cv-03893-HSG

CISCO SYSTEMS, INC., et al.,

ORDER DENYING PLAINTIFF’S
REQUEST FOR ADDITIONAL
DISCOVERY
Re: Dkt. No. 146

Defendants.

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I.

BACKGROUND
Plaintiff Kip Sides is a participant in the Cisco Systems, Inc. Retiree Medical Access Plan

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(the “Plan”). Dkt. No. 57 (“Third Amended Complaint” or “TAC”) ¶ 1. Defendant Cisco

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Systems, Inc. is the plan administrator and Defendant UnitedHealthcare Insurance Co. (“UHIC”)

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is the claim administrator. Id. ¶¶ 4–5. The Plan is governed by the Employee Retirement Income

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Security Act of 1974 (“ERISA”). See 29 U.S.C. §§ 1001 et seq.; TAC ¶ 2. Plaintiff brings this

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action for belatedly paid medical benefits and misprocessed claims. Plaintiff states that,

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specifically, he brings this action to prevent Defendants from erecting barriers to coverage and to

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the efficient, transparent resolution of his claims. TAC ¶ 11. Plaintiff seeks monetary damages,

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injunctive relief, and information about his benefits and claims. See id. “Prayer for Relief” ¶¶ 1–

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The parties appeared before the Court for a case management conference on October 10,

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2017. During that conference, the Court ordered supplemental briefing from the parties regarding

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the scope of allowable discovery. See Dkt. No. 144. Having reviewed the parties’ briefing, the

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Court, in its discretion, DENIES Plaintiff’s request for discovery beyond the administrative

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record.
II.

SCOPE OF DISCOVERY
The Ninth Circuit requires an “abuse of discretion review whenever an ERISA plan grants

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discretion to the plan administrator.” Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 967 (9th

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Cir. 2006). The ERISA plan at issue in this case confers discretionary authority on its claims

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administrator. Dkt. No. 69, Ex. 1 at 3.3B(6).
However, even abuse of discretion review must be “informed by the nature, extent, and

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effect on the decision-making process of any conflict of interest that may appear in the record.”

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Abatie, 458 F.3d at 967. The Court has “discretion to allow evidence that was not before the plan

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administrator. The district court should exercise its discretion, however, only when circumstances

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United States District Court
Northern District of California

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clearly establish that additional evidence is necessary.” Mongeluzo v. Baxter Travenol Long Term

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Disability Ben. Plan, 46 F.3d 938, 943–44 (9th Cir. 1995) (quoting Quesinberry v. Life Ins. Co. of

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N. Am., 987 F.2d 1017, 1025 (4th Cir. 1993)) (emphasis omitted).

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With respect to Plaintiff’s Section 502(a)(3) claim, TAC ¶¶ 55–57, Plaintiff cites to Colaco

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v. ASIC Advantage Simplified Pension Plan, 301 F.R.D. 431 (N.D. Cal. 2014), for the proposition

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that “discovery beyond the administrative record may be appropriate for claims . . . that do not

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arise from the written ERISA plan terms, as there may be no administrative record for such

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claims.” Dkt. No. 146 (citation omitted). Plaintiff also cites Abatie, noting that “the court may

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consider evidence beyond that contained in the administrative record that was before the plan

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administrator, to determine whether a conflict of interest exists that would affect the appropriate

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level of judicial scrutiny.” Abatie, 458 F.3d at 970.

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Here, no additional discovery beyond the administrative record is necessary to establish the

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existence of a conflict of interest, or to address Plaintiff’s Section 502(a)(3) claim. To the extent

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Plaintiff alleges a conflict of interest, that conflict is structural and inherent in UHIC’s dual role as

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the entity that both decides and pays claims, and does not warrant discovery. See Metro. Life Ins.

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Co. v. Glenn, 554 U.S. 105, 108 (2008); Dkt. No. 147 at 1 n.1; Dkt. No. 146 at 2 (citing

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Defendant’s answer and “public on-line information” to show conflict of interest).

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Plaintiff, at the Court’s request, filed supplementary briefing to explain in detail the
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injunctive relief he seeks under Section 502(a)(3). Dkt. No. 149. In it, Plaintiff provides a non-

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exhaustive list of relief sought in order to bring Defendant to “full ERISA compliance,” including

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ordering Defendants to: (1) have medical claims audited for the next five years; (2) include a

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services level agreement in their contracts; (3) provide a complete list of documents under which

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the plan is administered and operated; (4) remove conflicts of interest by preventing medical

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directors from pursuing sales and/or business objectives; and (5) carry out their supervisory

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fiduciary responsibilities to monitor benefits accounting. Dkt. No. 149 at 1–2. Plaintiff has

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additionally sought in his TAC equitable relief including ordering Defendants to: (6) correctly

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process Plaintiff’s future claims, TAC ¶¶ 57, 73; and (7) timely notify Plaintiff of future benefit

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United States District Court
Northern District of California

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determinations, TAC ¶¶ 64–69.
To the extent these claims are viable, they do not warrant discovery beyond the

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administrative record. The 502(a)(3) cause of action “to stop the systemic misprocessing of

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[Plaintiff’s] claims” is appropriately based in the administrative record relevant to those claims,

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and does not require the expansive discovery requested in Plaintiff’s briefing. See TAC ¶ 57. The

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Court therefore DENIES Plaintiff’s request for discovery beyond the administrative record.

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The Court SETS the following case deadlines pursuant to Federal Rule of Civil Procedure
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Event
Rule 52 Cross-Motions
Rule 52 Responses
Bench Trial/Hearing on Rule 52 Motions

Date
August 10, 2018
September 7, 2018
September 27, 2018, 2:00 p.m.

The Court DIRECTS each party to address the standard of review it contends applies in its
Rule 52 Motion. This order also terminates Docket Number 148.
IT IS SO ORDERED.
Dated: 6/18/2018
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HAYWOOD S. GILLIAM, JR.
United States District Judge

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