ERISA Rehearing Vote Riles Ninth Circuit

(CN) - A divided Ninth Circuit on Tuesday denied a petition for rehearing en banc in a lawsuit against ADT Security and Tyco International over washed-up retirement benefits.

Plaintiff Bruce Barton worked for American District Telegraph (ADT) from November 1967 to September 1986, and he claimed the company withheld his pension payments after he retired.

Defendants ADT Security Services Pension Plan, Tyco International Management Company and Tyco International Management Company LLC Administrative Committee disputed Barton's claim.

Specifically, the committee said, "it was unclear" whether Barton had a continuous term of employment, or earned required service, to meet a 10-year minimum for benefit eligibility.

The committee added that tax information supplied by Barton, including Federal Insurance Contributions Act records and W-2s, did not cover each year of his claimed employment, and that his additional documents lacked identifying information.

Barton sued the trio in August 2012 in Central California, under the Employee Retirement Income Security Act (ERISA) of 1974.

In July 2013, the district court ruled Barton did not have a strong enough legal claim to pension benefits and lacked standing to assert a violation of ERISA's disclosure requirements.

On appeal, the Ninth Circuit reversed and remanded the decision in April.

Likening the lawsuit to a "Peanuts" comic strip in which Lucy steals a football from Charlie Brown, U.S. Circuit Judge John Owens said the lawsuit was ultimately "about burdens."

"To qualify for his pension, must a former employee who quit working for the company more than 25 years ago decipher the corporate structure of his former employer from documents that were not disclosed to him? Should he have saved all of his pay stubs in the off chance that his employer would demand proof that he met the hours requirement for obtaining a pension? Or should the corporate defendant bear this load?" Owens wrote. "ERISA, our precedent, and common sense dictate that the corporate defendant should not lay that arduous task at the feet of former employees. To hold otherwise would essentially reward Lucy for pulling the football away from Charlie Brown, something that we do not believe Congress intended when it enacted ERISA."

U.S. Circuit Judge Sandra Ikuta disagreed.

"In short, the majority's ad hoc rule designed to help Barton in this case is a disaster," Ikuta wrote in her 11-page dissent. "The majority's requirement that the district court allocate a burden of proof when it is supposed to be reviewing a plan administrator's decision for abuse of discretion makes no sense and is contrary to our case law. And the rule itself, which verges on the incomprehensible, will defy district courts' efforts to apply it."

In a brief ruling, levied Tuesday, the appeals court denied petitions for a panel rehearing and rehearing en banc after failing to receive a majority vote from the circuit's 29 judges.

Circuit Judge N. R. Smith, joined by Judges Diarmuid O'Scannlain, Richard Tallman, Ronald Gould, Jay Bybee, Consuelo Callahan, Carlos Bea and Ikuta, dissented from the opinion.

The octet said the opinion ignored Supreme Court and Ninth Circuit precedent placing a burden of proof of eligibility for pension benefits on an ERISA plan administrator.

"In this case, the majority ignores United States Supreme Court precedent and our own Employee Retirement Income Security Act (ERISA) precedent and thus fails to maintain the uniformity of the courts' decisions," Smith wrote.

Dissenters pointedly added that the court "turned its back" on precedent doctrine principles.

"Why have the Supreme Court and our circuit mandate standards of review if judges can ignore them at any time they are so inclined?" the 6-page dissent added. "Our circuit has inexplicably turned its back on the principle of stare decisis in this case. From this time forward, can each panel decide the law on its own, provided enough active judges are willing to live with it?"

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