Schikore v. Bank AM. Supplemental SI Retirement Plan

• Decision Date: 16 October 2001
• Docket Number: 99-17017,DEFENDANT-APPELLANT-CROSS-APPELLEE,PLAINTIFF-APPELLEE-CROSS-APPELLANT,Nos. 99-16952,s. 99-16952
• Citation: 269 F.3d 956
• Parties: (9th Cir. 2001) KARLA SCHIKORE,, v. BANKAMERICA SUPPLEMENTAL SI RETIREMENT PLAN,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 956

269 F.3d 956 (9th Cir. 2001)

KARLA SCHIKORE, PLAINTIFF-APPELLEE-CROSS-APPELLANT, v. BANKAMERICA SUPPLEMENTAL SI RETIREMENT PLAN, DEFENDANT-APPELLANT-CROSS-APPELLEE.

Nos. 99-16952, 99-17017

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted April 13, 2001

Filed October 16, 2001

[Copyrighted Material Omitted]

Margaret M. Farley, Esq., Farley Law Offices, San Rafael, California, for the defendant-appellant-cross-appellee.

Paul V. Simpson, Leigh Ann Alderman, Esq., Simpson, Garrity & Innes, San Francisco, California, for the plaintiff-appellee-cross-appellant.

Appeal from the United States District Court for the Northern District of California; Susan Illston, District Judge, Presiding. D.C. No. CV-98-03857(MEJ)

Before: Reinhardt, Tashima, and Berzon, Circuit Judges.

Opinion by Judge Reinhardt; Dissent by Judge Tashima

REINHARDT, Circuit Judge:

Plaintiff Karla Schikore, a 20-year employee of Bank of America, NT & SA, seeks lump-sum disbursement of retirement benefits she has accrued as a participant in the BankAmerica Supplemental Retirement Plan, an employee benefits plan covered under the ERISA statute. The defendant Plan denied Schikore's request on the ground that she failed properly to follow the Plan's payment election procedure. Specifically, the Plan contends that Schikore failed to submit the requisite benefit payment election form one year in advance of her request for lump-sum disbursement, as mandated by the Plan's rules, and that it has no record of having received the form. Schikore asserts that she mailed the form well in advance of the deadline, that she submitted evidence of such a mailing, and that the common law mailbox rule, under which receipt is presumed upon proof of mailing, should apply. Whether the federal and state common law mailbox rule applies to an ERISA plan's benefit decisions is a question of first impression in this Circuit. As Schikore was appealing a denial of benefits under her retirement plan, the district court had jurisdiction under 29 U.S.C. § 1132(a)(1)(B). The district court's order remanding to the Plan Administrator constitutes an appealable final order, over which we have jurisdiction pursuant to 28 U.S.C. § 1291 (stating that courts of appeals have jurisdiction solely over appeals from "final decisions of the district courts of the United States").¹

FACTUAL AND PROCEDURAL BACKGROUND

Schikore was employed by Bank of America, NT & SA ("Bank") from 1978 to March 31, 1998, when she voluntarily terminated her employment. The Bank is a subsidiary of BankAmerica Corporation ("Corporation"), which established the BankAmerica Supplemental Retirement Plan ("Plan") for its employees and employees of its subsidiaries and affiliates. The rules of the Plan are contained in the summary description document ("Plan Description"). During Schikore's employment with the Bank, she participated in several retirement plans offered by the Corporation; the one at issue here is an unfunded retirement benefits plan intended to provide supplementary benefits for certain management and highly compensated employees of various subsidiaries and affiliates of the Corporation. As an unfunded plan, the Plan is not required to segregate the funds to be used to pay benefits. The plan administrator for purposes of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1002(16)(A), is the BankAmerica Corporation Employee Benefits Administrative Committee ("Plan Administrator"), which consists of senior officers of participating Corporation subsidiaries and affiliates. The Plan Administrator has discretionary authority under the Plan to determine eligibility for benefits and to construe the terms of the Plan.

The Plan rules, contained in the Plan Description, provide that an employee with at least $10,000 in her account who wishes lump-sum disbursement of benefits following termination of employment must submit a benefit payment election form to the BankAmerica Retirement Plans Service Center ("Service Center") at least one year prior to the termination date. The daily administration of the Service Center is handled by a third-party administrator, Kwasha Lipton ("ThirdParty Administrator"), but overseen by the Plan Administrator. If employment is terminated before the one-year anniversary of the filing of the election form, the request for lumpsum disbursement is not honored and benefits are instead paid in five annual installments beginning in the calendar year after the employee reaches 65 years of age.

Schikore, who is 51 years old, stated that she completed the election form in December 1996 and mailed it to the Service Center, retaining a copy for her records. In March 1998, prior to terminating her employment with the Bank, Schikore applied for lump-sum disbursement of her benefits. Schikore was informed by the Plan that she did not have an election form on file at the Service Center. Immediately upon learning this, Schikore faxed a copy of the completed form to the Service Center. The Plan nevertheless denied Schikore's request for lump-sum disbursement on the basis that it did not have her election form on file one year prior to her March, 1998 request.

Schikore appealed the Plan's decision to the Plan Administrator, asserting that the common law mailbox rule creates a presumption of receipt which the Plan had failed to rebut. The Plan Administrator denied Schikore's appeal on the grounds that (1) because ERISA preempts common law rules, the mailbox rule is inapplicable to employee benefit plans, (2) even if the mailbox rule would otherwise apply, the Plan rules, as a matter of contract, expressly require actual receipt as opposed to mere mailing of the document, and (3) the Plan rules do not permit lump-sum disbursement because the Service Center did not have her election form on file one year prior to her March 1998 request.

Schikore filed suit under § 502(a)(1)(B) of ERISA, which permits a participant "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). The district court granted summary judgment in favor of Schikore, concluding that the Plan Administrator abused its discretion by refusing to apply the common law presumption of receipt. The court remanded for the Plan Administrator to determine whether Schikore had presented sufficient evidence of mailing to invoke a presumption of receipt and, if so, whether the Plan had sufficiently rebutted that presumption by contrary evidence of non-receipt. The Plan filed a timely notice of appeal. Schikore cross-appealed on the issue of remand to the Plan Administrator and on the district court's denial of attorney's fees. Both parties argue that a remand to the Plan Administrator is neither necessary nor desirable.

STANDARD OF REVIEW

In an ERISA case, we review the district court's determinations de novo. Friedrich v. Intel Corp., 181 F.3d 1105, 1109 (9th Cir. 1999). Where the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan, we ordinarily review the plan administrator's decisions for an abuse of discretion. Sandy v. Reliance Standard Life Ins. Co., 222 F.3d 1202, 1204 (9th Cir. 2000); Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989).

The abuse of discretion standard requires reversal of the findings of the Plan Administrator if they are found to be arbitrary and capricious. We have held that plan administrators abuse their discretion when they "render decisions without any explanation, or construe provisions of the plan in a way that conflicts with the plain language of the plan. " Eley v. Boeing Co., 945 F.2d 276, 279 (9th Cir. 1991) (internal quotations omitted). Similarly we have held that an abuse of discretion occurs when a plan administrator fails to develop facts necessary to make its determination, Taft, 9 F. 3d at 1473. As a more general matter, an error of law constitutes an abuse of discretion. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990) ("A district court would necessarily abuse its discretion if it based its ruling on an erroneous view of the law . . . ."); Levi Strauss & Co. v. Shilon , 121 F.3d 1309, 1313 (9th Cir. 1997) ("A district court abuses its discretion if it fails to apply the correct law . . . ."). The abuse of discretion rule is equally applicable in the case of errors of law made by plan administrators.

Additionally, "if a benefit plan gives discretion to an administrator or fiduciary who is operating under a conflict of interest, that conflict must be weighed as a `facto[r] in determining whether there is an abuse of discretion.' " Firestone Tire and Rubber Co., 489 U.S. at 115 (quoting Restatement (Second) of Trusts § 187, Comment d (1959)).² The district court, citing Winters v. Costco Wholesale Corp. , 49 F.3d 550, 553 (9th Cir. 1995), found that a less deferential standard of review was appropriate because a conflict of interest existed. Schikore urges us to apply that lesser standard here. See id. (applying less deferential standard of review where potential conflict of interest exists). We need not decide which standard of review is applicable because even under the more deferential traditional standard, we conclude that the plan administrator's decision must be vacated.

DISCUSSION

The Plan's determination was arbitrary and capricious and it abused its discretion in (1) finding that ERISA preempted the common law mailbox rule, (2) finding that the rule was one of construction and therefore inapplicable to the Plan's requirement of actual receipt, and (3) failing to adequately develop the factual record before denying Schikore's claim of eligibility for benefits.

I. The Application of the Common Law Mailbox Rule to Schikore's Eligibility Determination

The mailbox...