by looking to the terms of the plan and other manifestations of the parties' intent.   CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT No. See H.R. In Count I of their complaint, respondents alleged that they were entitled to severance benefits because Firestone's sale of the Plastics Division to Occidental constituted a "reduction in work force" within the meaning of the termination pay plan. De novo review is the appropriate standard for reviewing Firestone's denial of benefits to respondents. ", "concede[d] that it is expensive and inefficient to provide people with information about benefits -- and to permit them to obtain damages if information is withheld -- if they are clearly not entitled to the benefits about which they are informed.". See, e.g., Brief for American Council of Life Insurance et al. 1002(21) (A)(i). Supreme Court of United States. 481 ERISA's legislative history confirms that the Act's fiduciary responsibility provisions, 29 U.S.C. 1002(16)(A)(ii), and fiduciary, 1002(21)(A), of each of these "unfunded" plans. Federal courts adopted the arbitrary and capricious standard both as a standard of review and, more importantly, as a means of asserting jurisdiction over suits under 186(c) by beneficiaries of LMRA plans who were denied benefits by trustees. In light of Congress' general intent to incorporate much of LMRA fiduciary law into ERISA, see NLRB v. Amax Coal Co., 453 U. S. 322, 453 U. S. 32 (1981), and because ERISA, like the LMRA, imposes a duty of loyalty on fiduciaries and plan administrators, Firestone argues that the LMRA arbitrary and capricious standard should apply to ERISA actions. Whether "the exercise of a power is permissive or mandatory depends upon the terms of the trust." See also G. Bogert & G. Bogert, Law of Trusts and Trustees § 560, pp.193-208 (2d. Under ERISA a plan participant is "any employee or former employee . Id., at 153. Instead, in a Supreme Court decision from 1989, Firestone Tire & Rubber Co. v. Bruch, 489 U.S.110, 115, the Court reasoned that the employer and ERISA administrator could agree on a more deferential standard of review. An Insurance Company's Conflict of Interest. Respondents, six Firestone employees who were rehired by Occidental, sought severance benefits from Firestone under the termination pay plan. The Court of Appeals also held that the right to disclosure of plan information extends both to people who are entitled to plan benefits and to those who claim to be, but are not, so entitled. a plan participant is, "any employee or former employee . Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U. S. 559, 472 U. S. 570 (1985). The administrator may make a reasonable charge to cover the cost of furnishing such complete copies. sensible enough to consult the law would be senseless enough to take that risk, giving the term its defined meaning would produce precisely the same incentive for disclosure as the Court's opinion. The court in Adcock v. The Firestone Tire & Rubber Co., 616 F. Supp. U.S. 304, 313 as Amici Curiae 10-11. H. R. Rep. No. 829, as amended, 29 U.S.C. 361 ", The Court of Appeals noted that § 1132(a)(1) allows suits for benefits "by a participant or beneficiary." will be fulfilled in the future.   "The extent of the duties and powers of a trustee is determined by the rules of law that are applicable to the situation, and not the rules that the trustee or his attorney believes to be applicable, and by the terms of the trust as the court may interpret them, and not as they may be interpreted by the trustee himself or by his attorney. Nichols v. Eaton, U.S. 391, 399 Id., at 105; see also id., at 108. See, e.g., 29 U.S.C. Co. v. Russell, See, e. g., Brief for American Council of Life Insurance et al. Without this jurisdictional analogy, LMRA principles offer no support for the adoption of the arbitrary and capricious standard insofar as 1132(a)(1)(B) is concerned. A former employee who has neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits, however, simply does not fit within the [phrase] `may become eligible.'" Indeed, respondents admitted at oral argument that "the words point against [them]." . ET AL. We now affirm in part, reverse in part, and remand the case for further proceedings. BECKER, Circuit Judge. At a time when most federal courts had adopted the arbitrary and capricious standard of review, a bill was introduced in Congress to amend 1132 by providing de novo review of decisions denying benefits. A former employee who has neither a reasonable expectation of returning to covered employment nor a colorable claim to vested benefits, however, simply does not fit within the [phrase] 'may become eligible.'". The Court of Appeals did not attempt to determine whether respondents were "participants" under § 1002(7). United States v. Price, U.S. 101, 109] . Co. v. Russell, 473 U. S. 134, 473 U. S. 146 (1985). Although it is a "comprehensive and reticulated statute," Nachman Corp. v. Pension Benefit Guaranty Corp., 446.   29942 (1974) (remarks of Sen. Javits)). O'CONNOR, J., delivered the opinion for a unanimous Court with respect to Parts I and II, and the opinion of the Court with respect to Part III, in which REHNQUIST, C. J., and BRENNAN, WHITE, MARSHALL, BLACKMUN, STEVENS, and KENNEDY, JJ., joined. Several of the respondents also sought information from Firestone regarding their benefits under all three of the plans pursuant to certain ERISA disclosure provisions. Thus, for purposes of actions under 1132(a)(1)(B), the de novo standard of review applies regardless of whether the plan at issue is funded or unfunded and regardless of whether the administrator or fiduciary is operating under a possible or actual conflict of interest. Firestone and its amici also assert that a de novo standard would contravene the spirit of ERISA because it would impose much higher administrative and litigation costs, and therefore discourage employers from creating benefit plans. At the time of the sale of its Plastics Division, Firestone was not aware that the termination pay plan was governed by ERISA, and therefore had not set up a claims procedure, § 1133, nor complied with ERISA's reporting and disclosure obligations, §§ 1021-1031, with respect to that plan. of benefits violated [§ 186(c)])." See generally Pilot Life Ins. See also United States v. Mason, IV). Finding that it would be illogical to say that a person could only bring a claim for benefits if he or she was entitled to benefits, the Court of. If the plan did not give the employer or administrator discretionary or final authority to construe uncertain terms, the court reviewed the employee's claim as it would have any other contract claim - Second, we determine which persons are "participants" entitled to obtain information about benefit plans covered by ERISA. The Court of Appeals reversed and remanded, holding that benefits denials should be subject to de novo judicial review rather than review under the arbitrary and capricious standard where the employer is itself the administrator and fiduciary of an unfunded plan, since deference is unwarranted in that situation given the lack of assurance of impartiality on the employer's part. Co. v. Dedeaux, In relevant part, that plan provides as follows: Respondents then filed a class action on behalf of "former, salaried, non-union employees who worked in the five plants that comprised the Plastics Division of Firestone." 640 F. Supp. 157, 29 U.S.C. Without more, we cannot ascribe to Congress any acquiescence in the arbitrary and capricious standard. 186(c), a provision of the Labor Management Relations Act, 1947 (LMRA). See also G. Bogert & G. Bogert, Law of Trusts and Trustees 560, pp. Respondents' action asserting that they were entitled to benefits because the sale of Firestone's Plastics Division constituted a "reduction in work force" within the meaning of the termination pay plan was based on the authority of 1132(a) (1)(B). Federal courts adopted the arbitrary and capricious standard both as a standard of review and, more importantly, as a means of asserting jurisdiction over suits under § 186(c) by beneficiaries of LMRA plans who were denied benefits by trustees. 86-1448. Second, we determine which persons are "participants" entitled to obtain information about benefit plans covered by ERISA. See Brief for Petitioners 13-14. From these provisions, Firestone concludes that an ERISA plan administrator, fiduciary, or trustee is empowered to exercise all his authority in a discretionary manner subject only to review for arbitrariness and capriciousness. by a participant or beneficiary [of a covered plan] . , n. 26 (1983) ("`[A] body of Federal substantive law will be developed by the courts to deal with issues involving rights and obligations under private welfare and pension plans'") (quoting 129 Cong. No. Copyright © 2020, Thomson Reuters. Hence, over a century ago we remarked that, "[w]hen trustees are in existence, and capable of acting, a court of equity will not interfere to control them in the exercise of a discretion vested in them by the instrument under which they act. 519 (ED Pa.1986). National Retirement Fund, supra, at 476. Firestone was the sole source of funding for the plans, and had not established separate trust funds out of which to pay the benefits from the plans. Pp. In 1965 Firestone acquired the Seiberling Rubber Company . It follows that the phrase "may become eligible" has nothing to do with the probabilities of winning a suit. at 138-140. That result should be unsurprising on these facts. United States v. Price, 361 U. S. 304, 361 U. S. 313 (1960). 986, 994, n. 40 (1986).   Restatement (Second) of Trusts § 187, Comment d (1959), Respondents unsuccessfully sought plan information from Firestone pursuant to 29 U.S.C. (1980), ERISA does not set out the appropriate standard of review for actions under 1132(a)(1)(B) challenging benefit eligibility determinations. 24-25; Reply Brief for Petitioners 7, n. 2; Brief for United States as Amicus Curiae 14-15, n. 11. That provision reads as follows: "The administrator shall, upon written request of any participant or beneficiary, furnish a copy of the latest updated summary plan description, plan description, and the latest annual report, any terminal report, the bargaining agreement, trust agreement, contract, or other instruments under which the plan is established or operated. It tried to solve this dilemma by suggesting that courts use discretion and not award damages if the employee's claim for benefits was not colorable or if the employer did not act in bad faith. . Ante, at 117. 98-104. ERISA defines a fiduciary as one who, "exercises any discretionary authority or discretionary control respecting management of [a] plan or exercises any authority or control respecting management or disposition of its assets.". as Amici Curiae 10-11. U.S. 322, 332 U.S. 101, 105] by Rex E. Lee, Carter G. Phillips, Mark D. Hopson, Stephen A. Bokat, Robin S. Conrad, Jan S. Amundson, and Quentin Riegel; for the ERISA Industry Committee by John M. Vine, Harris Weinstein, and Elliott Schulder; and for the Travelers Insurance Co. by Carol H. Jewett. Respondents then brought suit for severance benefits under § 1132(a)(1)(B) and for damages under §§ 1132(a)(1)(A) and (c)(1)(B) based on Firestone's breach of its statutory disclosure obligation. With respect to Count I, the District Court held that Firestone had satisfied its fiduciary duty under ERISA because its decision not to pay severance benefits to respondents under the termination, pay plan was not arbitrary or capricious. BRUCH v. FIRESTONE TIRE AND RUBBER CO. OPINION OF THE COURT. §§ 1002(7) ("participant"), 1002(8) ("beneficiary"), 1002(21)(A) ("fiduciary"), 1103(a) ("trustee"), 1104 ("fiduciary duties"). From these provisions, Firestone concludes that an ERISA plan administrator, fiduciary, or trustee is empowered to exercise all his authority in a discretionary manner subject only to review for arbitrariness and capriciousness. Pp. United States Supreme Court. At the time of the sale, Firestone maintained three pension and welfare benefit plans for its employees: a termination pay plan, a retirement plan, and a stock purchase plan. Though "instructive," failure to act on the proposed bill is not conclusive of Congress' views on the appropriate standard of review. Petitioner Firestone Tire & Rubber Co. (Firestone) maintained, and was the plan administrator and fi-duciary of, a termination pay plan and two … Part of the Bridgestone Corp. The words of a plan may speak clearly, but they may also leave gaps. Complaint §§ 23-44, App. [489 104-106. 1033, 1037-1039 (1985). The United States District Court dismissed the lawsuit. [ . ERISA abounds with the language and terminology of trust law. Id., at 105; see also id., at 108. Firestone and its amici also assert that a de novo standard would contravene the spirit of ERISA because it would impose much higher administrative and litigation costs and therefore discourage employers from creating benefit plans. Because even under the arbitrary and capricious standard an employer's denial of benefits could § 1132(c)(1)(B) (1982 ed., Supp. Plan Sponsor Interpretation Must Be Given Deference in Lawsuits Challenging Plan Terms. Nachman Corp. v. Pension Benefit Guaranty Corp. U.S. 986 Recently the Eighth Circuit Court of Appeals affirmed the trial court's summary judgment order in a similar case Lakey v. Remington Arms, 874 F.2d 541 (8th Cir.1989). Firestone concluded that respondents were not entitled to the information because they were no longer "participants" in the plans. Those reasons have nothing to do with the concern for impartiality that guided the Court of Appeals, and the de novo standard applies regardless of whether the plan at issue is funded or unfunded and whether the administrator or fiduciary is operating under a conflict of interest. 828 F.2d 134, affirmed in part, reversed in part, and remanded. In Firestone Tire & Rubber Co. v. Bruch, 489 U. S. 101, this Court addressed “the appropriate standard of judicial review of benefit determinations by fiduciaries or plan administrators under” §1132(a)(1)(B), the ERISA provision at issue here. 91 Respondents' action asserting that they were entitled to benefits because the sale of Firestone's Plastics Division constituted a "reduction in workforce" within the meaning of the termination pay plan was based on the authority of § 1132(a)(1)(B). 1969); Atlantic Steel Co. v. Kitchens, 228 Ga. 708, 187 S. E. 2d 824 (1972); Sigman v. Rudolph Wurlitzer Co., 57 Ohio App. With its en banc decision in Ariana v.Humana Health Plan of Texas, 1 the Fifth Circuit reconsidered the standard of review in an ERISA denial of benefits case.. Respondents unsuccessfully sought plan information from Firestone pursuant to 29 U.S.C. See Brief for Respondents   We do not think Congress' purpose in enacting the ERISA disclosure provisions -- ensuring that "the individual participant knows exactly where he stands with respect to the plan," H.R.Rep. Rather, one is eligible whether or not he has yet been adjudicated to be -- and similarly one can become eligible before he is adjudicated to be. Moreover, ERISA provisions that define a fiduciary as one who "exercises any discretionary authority," give him control over the plan's operation and administration, and require that he provide a "full and fair review" of claim denials cannot be interpreted to empower him to exercise all his authority in a discretionary manner. To fill this gap, federal courts have adopted the arbitrary and capricious standard developed under 61 Stat. We recommend using ", "The amount of termination pay you will receive will depend on your period of credited company service.". 473 Rather, one is a fiduciary to the extent he exercises any discretionary authority or control. ", "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder.". be subject to judicial review, the assumption seems to be that a de novo standard would encourage more litigation by employees, participants, and beneficiaries who wish to assert their right to benefits. We do not think Congress' purpose in enacting the ERISA disclosure provisions - ensuring that "the individual participant knows exactly where he stands with respect to the plan," H. R. Rep. No. ERISA was enacted "to promote the interests of employees and their beneficiaries in employee benefit plans," Shaw v. Delta Airlines, Inc., Eligibility exists not merely during the brief period between formal judgment of entitlement and payment of benefits. As this case aptly demonstrates, the validity of a claim to benefits under an ERISA plan is likely to turn on the interpretation of terms in the plan at issue. Tr. before the Subcommittee on Labor-Management Relations of the House Committee on Education and Labor, 97th Cong., 2d Sess., 60 (1983). Rather, one is eligible whether or not he has yet been adjudicated to be - and, similarly, one can become eligible before he is adjudicated to be. 828 F.2d at 152. at 534. Complaint § 9, App. In relevant part, 29 U.S.C. See Van Boxel v. Journal Co. Employees' Pension Trust, 836 F.2d 1048, 1052 (CA7 1987) ("[W]hen a plan provision as interpreted had the effect of denying an application for benefits unreasonably, or as it came to be said, arbitrarily and capriciously, courts would hold that the plan as structured' was not for the sole and exclusive benefit of the employees, so that the denial.   104-106. 519 (ED Pa. 1986). Cf. No.   Applying the definition in this fashion would mean, of course, that, if the employer guesses right that a person with a colorable claim is in fact not entitled to benefits, he can deny that person the information required to be provided under 29 U.S.C. FIRESTONE TIRE & RUBBER CO. v. BRUCH(1989) No. See also United States v. Mason, 412 U. S. 391, 412 U. S. 399 (1973). In Count VII, respondents alleged that they were entitled to damages under § 1132(c) because Firestone had breached its reporting obligations under § 1025(a). , Paula R. Markowitz, and Supreme Court of Appeals for the CIRCUIT... 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