Litigation

Ninth Circuit on standing to seek plan benefits

By John Walch

"Standing" is the legal doctrine that requires a plaintiff to have a sufficient stake in a controversy before seeking judicial remedies.  Standing is often an issue in ERISA litigation, where benefit plans may seek to dismiss a participant's claims for lack of standing. 

A recent Ninth Circuit decision, in the case of Poore v. Simpson Paper Co., discussed the standing of participants in a retiree health plan.  The plan provided benefits to members of a union.  The collective bargaining agreement between the employer and the union provided that retirees over age 55 would receive retiree health benefits until they turned 65 or became eligible for Medicare.  The employer specifically reserved the right to alter, amend or cancel the retiree benefit at any time.

Eventually, the employer decided to terminate the retiree health benefit.  A group of retirees sued, claiming that their rights to benefits under the plan had "vested," or become permanent, and were no longer subject to the termination right of the employer.  (ERISA prohibits an employer from eliminating a vested benefit.) 

Initially, the Ninth Circuit held the plaintiffs' benefits had not vested, and as a result they did not have standing.  Without a vested benefit, the participants had no stake in a controversy that the court could resolve.  But after dismissing the case, the court withdrew its initial decision and reversed itself, holding that ERISA provides that plan participants may seek judicial enforcement of plan benefits and that a recent U.S. Supreme Court decision held "plan participant" for ERISA purposes "may include a former employee with a colorable claim for benefits" - without the requirement that the benefit be vested.

The Ninth Circuit did not reach the merits of the plaintiffs' claim -- whether they were entitled to retiree health benefits -- but merely that they had standing to pursue the claim.  This decision is a reminder of the statutory intricacies of ERISA, and the difficulties both participants and plans have in resolving a dispute.

Full post as published by Northwest Business Litigation Blog on June 08, 2009 (boomark / email).