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Felker v. USW Local 10-901

United States District Court, E.D. Pennsylvania

April 23, 2015

PAUL L. FELKER, et al., Plaintiffs,
v.
USW LOCAL 10-901, USW LOCAL 10-901 (SU) AND USW LOCAL 10-901 (NE) MARCUS HOOK REFINERY WORKERS INVOLUNTARY TERMINATION PLAN, Defendant.

OPINION

JOEL H. SLOMSKY, District Judge.

I. INTRODUCTION

Plaintiffs are former employees of Sunoco, Inc. ("Sunoco") and bring this case under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq., seeking benefits they claim are due to them under a severance plan established through negotiations with Sunoco. (Doc. No. 1 ¶¶ 1-3.) On May 1, 2014, following a pretrial conference, the Court ordered the parties to submit briefs on two issues that are endemic to this kind of ERISA case: (1) the applicable standard of review under ERISA and (2) whether discovery outside the administrative record should be permitted. (Doc. No. 10.) The parties have submitted their briefs and the Court held a hearing on these issues on June 20, 2014. (See Doc Nos. 12, 13, 14, 17, 19.)

The applicable standard of review and whether to permit discovery outside the administrative record are now ripe for decision. For reasons that follow, the Court will apply the arbitrary and capricious standard of review and permit Plaintiffs to conduct limited discovery only into whether the Plan Administrator had a conflict of interest.

II. BACKGROUND

During the relevant time period, Plaintiffs were employees of Sunoco, members of United Steel Workers Local 10-901 (the "Union"), and assigned to Sunoco's Marcus Hook Mobile Work Force (the "MWF"). (Doc. No. 1 ¶ 2.) The MWF consisted of maintenance workers employed at Sunoco's Marcus Hook Refinery who also worked at Sunoco's Philadelphia Refinery. (Doc. No. 13 at 3.) Defendant (the "Plan") is an employee welfare benefit and severance plan subject to the requirements of ERISA, 29 U.S.C. §§ 1001 et seq. (Doc. No. 1 ¶ 3.)

The Plan was established pursuant to an agreement between Sunoco and Plaintiffs' Union, and became effective on or about February 21, 2012. (Doc. No. 12 at 2.) According to a section of the Plan entitled "Background and Purpose of the Plan, " the Plan "is intended to alleviate financial hardships which may be experienced by employees of [Sunoco] whose employment is terminated in connection with [Sunoco's] idling of the main processing units at its Marcus Hook Refinery." (Doc. No. 1-1 at 3.) Benefits awarded under the Plan are paid out of Sunoco's assets. (Id. at 11.)

The Plan states that it will be administered as follows:

Plan Administration
The Plan Administrator or his delegate has full responsibility for interpreting and administering the terms and provisions of the Plan. All interpretations, determinations and decisions of the Plan Administrator (or its delegate) in respect to any [matter] shall be final, conclusive and binding upon the Company, any employer, participants and all other persons claiming an interest in the Plan. The Plan Administrator is:

(Doc. No. 1-1 at 11.)

Sunoco designated its Chief Executive Officer ("CEO") to make decisions regarding the Plan. This designation was made in a resolution of the Board of Directors of Sunoco, dated November 4, 1993, which provides as follows:

[T]he Chief Executive Officer of this Corporation is hereby delegated full power and authority, in the name of and on behalf of this Corporation, to modify, amend, and terminate employee welfare benefit plans of this Corporation and to adopt new employee welfare benefit plans for this Corporation, and to sign such plans, insurance contracts, trust agreements, and other documents as he may deem necessary or desirable to make such modifications, amendments, terminations, and adoptions of such employee welfare benefit plans effective, provided that such modifications, amendments, terminations, and adoptions are, in his judgment, in the best interests of the Corporation.

(Doc. No. 19-1, Ex. A.)

On March 1, 2012, pursuant to the authority delegated to him in the November 4, 1993 Board Resolution, the CEO of Sunoco executed an Officer's Certificate appointing Vincent J. Brigandi as "Plan Administrator" of the Plan. (Doc. No. 19-1, Ex. B.) The Officer's Certificate provides that "the Plan Administrator may take all actions necessary to effectuate the intent of this Officer's Certificate." (Id.)

In September 2012, Sunoco sold its Philadelphia Refinery to Philadelphia Energy Solutions ("PES"). (Doc. No. 12 at 3.) On September 7, 2012, Plaintiffs were terminated by Sunoco. (Doc. No. 1 ¶ 12.) That same day, Plaintiffs were hired by PES to work at the Philadelphia Refinery under a Refining Contribution Agreement between Sunoco and PES. (Doc. No. 13 at 3.)

Despite not losing any work time as a result of the changeover, on October 22, 2012 Plaintiffs filed their claim for severance benefits under the Plan. (Doc. No. 1 ¶ 16.) They contend that they were involuntarily terminated by Sunoco because Sunoco idled the main processing units at its Marcus Hook Refinery (Id. ¶ 12), even though they were immediately transferred to the Philadelphia Refinery as part of the Refining Contribution Agreement between Sunoco and PES. Because of their termination from the Marcus Hook Refinery, Plaintiffs allege that they are due severance benefits under the terms of the Plan. (Id.)

Vincent Brigandi, as Plan Administrator, denied the claim. (Doc. No. 13-3, Exs. D, F.) In a letter dated January 22, 2013, Brigandi explained his decision:

Although the members of the MWF did terminate employment with Sunoco on September 7, 2012, such termination only occurred because of Sunoco's contribution of the assets of the Philadelphia Refinery to a joint venture with Philadelphia Energy Solutions (PES) for which PES is responsible for the operations of the Philadelphia Refinery. Members of the MWF were not terminated from employment in connection with the idling of the Marcus Hook Refinery and therefore, they are not entitled to severance benefits under the Plan.

(Doc. No. 13-3, Ex. D.)

On December 5, 2013, after exhausting their administrative remedies, Plaintiffs filed a Complaint in this Court seeking judicial review of Brigandi's decision denying their request for benefits. (Doc. No. 1.) On March 17, 2014, Defendant filed an Answer to the Complaint. (Doc. No. 6.) On May 1, 2014, the Court held a pretrial conference with counsel for parties. (Doc. No. 9.) After the conference, the Court ordered the parties to file briefs on the standard of review under ERISA and whether the Court should permit discovery outside the administrative record. (Doc. No. 10.) On June 20, 2014, after the parties had filed their briefs, the Court held a hearing on these issues. On August 6, 2014, pursuant to the Court's instruction during the June 20, 2014 hearing, Defendant filed a Memorandum of Law in Support of the Delegation of Discretionary Authority to Plan Administrator Vincent Brigandi. (Doc. No. 19.)

III. STANDARD OF REVIEW

A. Judicial Review in ERISA Cases

The Supreme Court has held that "a denial of benefits challenged under [ERISA] is to be reviewed [by a court] under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989). If the plan gives the administrator or fiduciary discretionary authority to make eligibility determinations, a court will review the decision under an abuse-of-discretion (or arbitrary and capricious) standard.[1] Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008); Viera v. Life Ins. Co. of N. Am., 642 F.3d 407, 413 (3d Cir. 2011). "Whether a plan administrator's exercise of power is mandatory or discretionary depends upon the terms of the plan." Luby v. Teamsters Health, Welfare, & Pension Trust Funds, 944 F.2d 1176, 1180 (3d Cir. 1991). There are no "magic words" determining the scope of judicial review of decisions to deny benefits, and discretionary powers may be granted expressly or implicitly. Id . However, when a plan is ambiguous, it is construed in favor of the party claiming benefits. Heasley v. Belden & Blake Corp., 2 F.3d 1249, 1258 (3d Cir. 1993). "The plan administrator bears the burden of proving that the arbitrary and capricious standard of review applies." Kinstler v. First Reliance Std. Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999).[2]

B. The Plan Administrator's Decision Will Be Reviewed Using the Arbitrary and Capricious Standard

In this case, Plaintiffs agree that the language of the Plan grants "the Plan Administrator or his delegate" discretionary authority with respect to benefits decisions. (Doc. No. 12 at 9.) Plaintiffs also agree that Sunoco is the Plan Administrator. (Doc. No. 14 at 4.) They disagree, however, with one aspect of the Plan in regard to Sunoco's delegation to Brigandi. Plaintiffs argue that the Plan does not set forth "express procedures" to support the delegation to Brigandi, which they assert ERISA requires in order for Sunoco to delegate its authority to administer the Plan. (Id. at 4-5.) Because the Plan lacks "express procedures" for delegation, Plaintiffs contend that the decision to deny benefits made by Sunoco's delegate, Brigandi, should be subject to the Court's de novo review.[3] (Id. at 6.)

Plaintiffs' argument rests on a provision of ERISA, found at 29 U.S.C. § 1105(c)(1)(B), that permits a plan fiduciary to delegate its responsibilities. It states as follows:

[T]he instrument under which a plan is maintained may expressly provide for procedures... (B) for named fiduciaries to designate persons other than named fiduciaries to carry out fiduciary responsibilities (other than trustee responsibilities) under the plan.

Plaintiffs argue that under this provision of ERISA a plan must expressly set forth procedures for a fiduciary to delegate its fiduciary responsibilities, which would include administering the Plan. (Doc. No. 14 at 2-6.) Here, the Plan provides that the "Plan Administrator or his delegate has full responsibility for interpreting and administering the terms and provisions of the Plan." (Doc. No. 1, Ex. A at 10.) Plaintiffs claim that this language falls short of providing the express procedures required by ERISA for Sunoco to delegate its fiduciary responsibility of administering the Plan.[4] (Doc. No. 14 at 6.) Without language providing express procedures for delegation, Plaintiffs contend that Sunoco cannot delegate its fiduciary responsibility to administer the Plan to anyone and still claim the benefit of arbitrary and capricious review.[5] (Id.) Accordingly, Plaintiffs argue that the de novo standard of review is applicable to this case.[6]

Defendant argues that Brigandi's appointment as Plan Administrator with discretionary authority to administer the Plan was proper pursuant to ERISA and the terms of the Plan. (Doc. No. 19 at 1.) Defendant contends that ERISA does not require benefits plans to provide "express procedures" for delegation of administrative authority, pointing to the permissive word "may" in ERISA. (Id. at 3) ("[Benefit plans] may expressly provide for procedures...." (quoting 29 U.S.C. § 1105(c)(1)(B) (emphasis added)).

In support of its position, Defendant has produced the Plan, a Board Resolution, and an Officer's Certificate that together show how Sunoco delegated to Brigandi discretionary authority to administer the Plan. (See Doc. No. 13-1, Ex. A; Doc. No. 19-1, Exs. A, B.) Defendant describes the delegation as follows:

The Plan names Sunoco as the Plan Administrator, and unambiguously grants it the power to delegate its authority to interpret the Plan in two separate provisions. Specifically, the Plan states:
The Plan Administrator or his delegate has full responsibility for interpreting and administering the terms and provisions of the Plan. All interpretations, determinations and decisions of the Plan Administrator (or its delegate) in respect to any matter shall be final, conclusive and binding upon the Company, any employer, participants, and all other persons claiming an interest in the Plan. (Doc. No. 13-1, Ex. A at 10 (emphasis added).)
Pursuant to this delegation provision, the Sunoco Board of Directors delegated its authority under the Plan to the Company's CEO, Brian McDonald, by resolution in 1993.[7] (Doc. No. 19-1, Ex. A.) Then, on March 1, 2012, the CEO executed an Officer's Certificate delegating the discretionary authority to Vince Brigandi.[8] ( Id., Ex. B.) The 2012 Delegation specifically assigns Mr. Brigandi the role of "Plan Administrator." (Id.) Pursuant to this delegation, Mr. Brigandi made claim determinations for the Plan, including those at issue in this matter. (See Doc. No. 13-3, Exs. D, F (claim determination letters signed by Brigandi).)

(Doc. No. 19 at 2-3.)

The Court is persuaded that Defendant has produced enough evidence to show that Sunoco delegated its authority to administer the Plan to Brigandi. The Plan identifies Sunoco as the Plan Administrator and states that the "Plan Administrator or his delegate has full responsibility for interpreting and administering the terms and provisions of the Plan." (Doc. No. 1, Ex. A at 10.) Plaintiffs have cited no authority that supports their position that the language in the Plan is insufficient to allow Sunoco to delegate its discretionary authority to administer the Plan.

In any event, ERISA does not require language of express delegation as Plaintiffs assert. As a general rule of statutory construction, the word "may" is permissive, whereas "shall" is mandatory. LeMay v. U.S. Postal Serv., 450 F.3d 797, 799 (8th Cir. 2006) (citing Anderson v. Yungkau, 329 U.S. 482, 485 (1947)). If Congress intended that express procedures for delegation be mandatory, it would not have used the word "may" in the pertinent provision of ERISA, 29 U.S.C. § 1105(c)(1)(B). In addition, Plaintiffs' Union was involved in the negotiations that established the Plan, and could have bargained for a more detailed delegation procedure to be included in the Plan. (Doc. No. 1 ¶ 3.) As such, Sunoco's delegation of discretionary authority to administer the Plan to Brigandi was proper, and his decision to deny severance benefits will be subject to the arbitrary and capricious standard of review.[9]

IV. SCOPE OF DISCOVERY

A. Discovery Beyond the Administrative Record in ERISA Cases

In Metropolitan Life Ins. Co. v. Glenn, the U.S. Supreme Court stated that 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 factor in determining whether there is an abuse of discretion.'" 554 U.S. 105, 111 (2008) (quoting Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). The Court instructed that "the significance of the conflict of interest factor will depend upon the circumstances of the particular case." 554 U.S. 105, 106 (2008). The Court elaborated as follows:

[A conflict] should prove more important (perhaps of great importance) where circumstances suggest a higher likelihood that it affected the benefits decision, including, but not limited to, cases where an insurance company administrator has a history of biased claims administration. It should prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and to promote accuracy, for example, by walling off claims administrators from those interested in firm finances, or by imposing management checks that penalize inaccurate decisionmaking irrespective of whom the inaccuracy benefits.

Id. at 117.

In Howley v. Mellon Financial Corp., the Third Circuit interpreted Glenn to mean that a court may consider evidence of a plan administrator's alleged conflict of interest that is not found in the administrative record. See 625 F.3d 788, 793-94 (3d Cir. 2010). The Howley court reasoned as follows:

It is true that courts generally must base their review of an administrator's decision on the materials that were before the administrator when it made the challenged decision. Materials that the parties failed to put before the administrator are not usually relevant to the inquiry of whether the administrator abused its discretion. Thus, under most circumstances, "the record for arbitrary-and-capricious review of ERISA benefits denial is the record made before the plan administrator, and cannot be supplemented during litigation." Kosiba v. Merck & Co., 384 F.3d 58, 67 n.5 (3d Cir. 2004). However, this rule is not without exceptions. A court may certainly "consider evidence of potential biases and conflicts of interest that is not found in the administrator's record." Id .; see also Burke v. Pitney Bowes Inc. Long-Term Disability Plan, 544 F.3d 1016, 1028 (9th Cir. 2008) ("[T]he district court may consider evidence outside the administrative record to decide the nature, extent, and effect on the decision-making process of any conflict of interest." (internal quotation marks omitted)). The necessity for this exception is obvious. A plan participant may be unaware of information relating to an administrator's conflict until well after the administrative process has ended, and a conflicted administrator, especially one whose decision-making has been affected by that conflict, is not at all likely to volunteer that information. To allow an administrator the benefit of a conflict merely because it managed to successfully keep that conflict hidden during the administrative process would be absurd.
Although we adopted this exception prior to the Supreme Court's decision in Glenn, it remains equally appropriate after Glenn. Glenn directs a court to consider a conflict of interest as a factor in its analysis, and to afford that factor greater importance, perhaps determinative importance, where the evidence suggests a greater likelihood that it affected the decision to deny benefits. 128 S.Ct. at 2351. For this legal standard to be meaningful, courts plainly must be willing to consider evidence relative to "the nature, extent, and effect on the decision-making process of any conflict of interest" revealed during the litigation process. Burke, 544 F.3d at 1028.

Howley, 625 F.3d at 793-94.

In accordance with Glenn and Howley, courts in the Third Circuit have permitted limited discovery into an ERISA plan administrator's potential conflict of interest. See, e.g., Preitz v. Am. Airlines, Inc., Civ. No. 11-44, 2015 WL 221065, at *2 (E.D. Pa. Jan. 14, 2015); Charles v. UPS Nat'l Long Term Disability Plan, Civ. No. 12-6223, 2013 WL 6080163, at *2 (E.D. Pa. Nov. 19, 2013); Lucas v. Liberty Life Assur. Co. of Boston, Civ. No. 11-4417, 2011 WL 6196720, at *2-3 (E.D. Pa. Dec. 12, 2011); Rhodes v. Principal Fin. Grp., Inc., Civ. No. 10-290, 2010 WL 4867618, at *2 (M.D. Pa. Nov. 23, 2010); Sivilingam v. Unum Provident Corp., 735 F.Supp.2d 189, 196 (E.D. Pa. 2010); Dandridge v. Raytheon Co., Civ. No. 08-4793, 2010 WL 376598, at *4 (D.N.J. Jan. 26, 2010).

Even where a conflict is presumed, discovery may be necessary to determine how the conflict affected the plan administrator's decision. In Charles v. UPS Nat'l Long Term Disability Plan, the court addressed this issue and permitted discovery beyond the administrative record:

[Defendant] argues that because the conflict is presumed no other discovery related to this issue is necessary. This is not true. Even under the more deferential arbitrary and capricious standard, this court will still be required to determine how, if at all, this conflict may have affected the benefits determination in deciding whether the decision was an abuse of discretion. This information would not necessarily be apparent from the administrative record, as plaintiff points out.

Civ. No. 12-6223, 2013 WL 6080163, at *2 (E.D. Pa. Nov. 19, 2013).

Any discovery, however, "must be circumscribed so as to preserve ERISA's goal of providing an inexpensive and expeditious means of resolving benefit disputes." Sivalingam v. Unum Provident Corp., 735 F.Supp.2d 189, 196 (E.D. Pa. 2010). A plaintiff should only be allowed to conduct discovery into a plan administrator's conflict of interest.[10] Id. at 195-96. Discovery into the merits of the plan administrator's decision should not be permitted. Id.

B. Plaintiffs Will Be Permitted to Conduct Limited Discovery Only into the Plan Administrator's Potential Conflict of Interest

In this case, Plaintiffs seek discovery into the Plan Administrator's potential conflict of interest. (Doc. No. 12 at 23.) Defendant agrees that, on the surface, there is a conflict of interest because Sunoco both administers the Plan and pays the benefits. (Doc. No. 13 at 14). Given this conflict, Defendant contends that discovery beyond the administrative record is not required. (Id. at 13-14.) This position, however, is not persuasive.

First, the weight of authority supports allowing discovery into a plan administrator's potential conflict of interest, even when it is agreed that a conflict is evident. The reason for allowing such discovery is because evidence on the conflict must be given meaningful consideration by a district court in deciding whether the actions of the plan administrator were an abuse of discretion. As noted above in Glenn, the U.S. Supreme Court held that a plan administrator's conflict of interest "must be weighed as a factor in determining whether there is an abuse of discretion." 554 U.S. at 111. In Howley, the Third Circuit stated that "[f]or this legal standard to be meaningful, courts plainly must be willing to consider evidence relative to the nature, extent, and effect on the decision-making process of any conflict of interest' revealed during the litigation process." 625 F.3d at 794 (quoting Burke, 544 F.3d at 1028). Accordingly, "[a] court may certainly consider evidence of potential biases and conflicts of interest that is not found in the administrator's record.'" Id . (quoting Kosiba v. Merck & Co., 384 F.3d 58, 67 n.5 (3d Cir. 2004)). In line with Howley, the court in Charles v. UPS Nat'l Long Term Disability Plan allowed discovery into a conflict of interest, even though it was presumed, because the "court will still be required to determine how, if at all, this conflict may have affected the benefits determination in deciding whether the decision was an abuse of discretion. This information would not necessarily be apparent from the administrative record." 2013 WL 6080163, at *2.[11]

The Court is persuaded that the need for discovery into the "nature, extent, and effect" of the Plan Administrator's conflict is not eliminated merely because Defendant has agreed that a conflict exists. In order for the record to be fully developed on the conflicts issue, the Court must permit discovery beyond the administrative record. "Otherwise, [the Court] would be handicapped in analyzing all the factors [the Court] must consider in deciding whether an abuse of discretion has occurred." Sivilingam, 735 F.Supp.2d at 196.

Second, Defendant relies on cases that do not persuade the Court that discovery is unnecessary where a conflict of interest is presumed. See Atkins v. UPMC Healthcare Benefits Trust, Civ. No. 13-520, 2013 WL 6587170, at *3 (W.D. Pa. Dec. 16, 2013); Muccino v. Long Term Disability Income Plan for Choices Eligible Employees of Johnson & Johnson, Civ. No. 11-3641, 2012 U.S. Dist. LEXIS 80327, at *29 (D.N.J. June 12, 2012); Shvartsman v. Long Term Disability Income Plan for Choices Eligible Employees of Johnson & Johnson, Civ. No. 11-3643, 2012 U.S. Dist. LEXIS 80328, at *27-28 (D.N.J. June 11, 2012).

In Atkins, plaintiff alleged that both the plan administrator and medical professionals involved in the decision to deny her claim for benefits had a structural conflict of interest, and sought discovery into the conflicts. 2013 WL 6587170, at *1. She also sought discovery into several alleged procedural conflicts. Id. at 2. Defendants stipulated that the plan administrator had a structural conflict because it both evaluated and paid the claims for benefits. Id . However, Defendants disputed that the medical professionals had a structural conflict. Id . The court allowed discovery into the medical professionals' alleged structural conflict and into alleged procedural conflicts, but did not permit discovery into the plan administrator's structural conflict. Id. at *3. The court stated that "no discovery is necessary" into the plan administrator's structural conflict because defendants have "stipulated that it exists." Id . No other reason is given for not allowing discovery into the structural conflict.

The two other decisions relied on by Defendant, Muccino and Shvartsman, are almost identical opinions that were issued by the same magistrate judge on the same day and concern the same Johnson & Johnson disability benefits plan. Muccino, 2012 U.S. Dist. LEXIS 80327, at *15; Shvartsman, 2012 U.S. Dist. LEXIS 80328, at *15. In each case, plaintiffs sought discovery into alleged structural and procedural conflicts of interest. Muccino, at *4; Shvartsman, at *4. The court first held that the plan administrator did not have a structural conflict of interest, and therefore discovery beyond the administrative record would not be permitted. Muccino, at *28; Shvartsman, at *26. The court then held that even if the plan administrator did have a structural conflict, the court could evaluate it based on documents in the administrative record. Muccino, at *29; Shvartsman, at *28.

In Muccino and Shvartsman, the court also denied discovery into plaintiffs' alleged procedural conflicts. In each case, plaintiffs alleged that the letter denying their benefits claim was "ghostwritten by an anonymous person, " that defendant withheld the identities of reviewers and fiduciaries, and that a nurse's review of their claim was "cloaked in secrecy." Muccino, at *32-34; Shvartsman, at *30-31. Nevertheless, the court in each case concluded that "nothing in the administrative record, or in Plaintiff's brief, raises a reasonable suspicion of [Defendant's] misconduct.'" Muccino, at *31; Shvartsman, at *30 (citation omitted). The court in Muccino and Shvartsman therefore held that plaintiffs had not presented "a good faith basis for alleging bias, conflict of interest, or irregularity in the Defendant's decision-making process." Muccino, at *31; Shvartsman, at *30.

This Court does not agree with the holding in Atkins that discovery into a structural conflict is not necessary when it is presumed, nor does it agree with the statements in Muccino and Shvartsman that a structural conflict can be evaluated solely from documents in the administrative record. In Glenn, the U.S. Supreme Court stated that "the significance of the conflict of interest factor will depend upon the circumstances of the particular case." 554 U.S. 105, 106 (2008). The Court then explained that such a conflict will "prove more important (perhaps of great importance)" where, for instance, the "administrator has a history of biased claims administration." Id. at 117. A conflict will "prove less important (perhaps to the vanishing point) where the administrator has taken active steps to reduce potential bias and promote accuracy." Id . A mere stipulation that a conflict exists does not permit this Court to thoroughly evaluate the conflict in accordance with Glenn. The type of information Glenn instructs courts to consider would not "necessarily be apparent from the administrative record." Charles, 2013 WL 6080163, at *2. As stated in Siviligam, "[d]iscovery is the only way the record can be fully developed on the conflicts use. Otherwise, [the Court] would be handicapped in analyzing all the factors [the Court] must consider in deciding whether an abuse of discretion has occurred." 735 F.Supp.2d at 196. Accordingly, this Court will permit discovery into the Plan Administrator's structural conflict of interest, even though Defendant has stipulated that the conflict exists.

In addition, the Court does not agree that the plaintiffs in Muccino and Shvartsman failed to establish a "good faith" allegation of a procedural conflict. As noted above, the court in those cases held that plaintiffs had failed to establish a "good faith basis" for alleging procedural irregularities because there was "nothing in the administrative record, or in [p]laintiff's briefs, which raises a reasonable suspicion of [Defendant's] misconduct.'" Muccino, at *31; Shvartsman, at *30 (citation omitted). Plaintiffs did allege that the letter denying their benefits claim was "ghostwritten by an anonymous person, " that defendant withheld the identities of reviewers and fiduciaries, and that a nurse's review of their claim was "cloaked in secrecy." Muccino, at *32-34; Shvartsman, at *30-31. These allegations are sufficient to establish a "good faith" showing of a procedural conflict.

This Court is persuaded that evidence of procedural conflicts-like evidence of structural conflicts-would "not necessarily be apparent from the administrative record." Charles, 2013 WL 6080163, at *2. As stated by the Third Circuit in Howley, a conflict will often only be revealed through discovery:

The necessity [of permitting discovery] is obvious. A plan participant may be unaware of information relating to an administrator's conflict until well after the administrative process has ended, and a conflicted administrator, especially one whose decision-making has been affected by that conflict, is not at all likely to volunteer that information. To allow an administrator the benefit of a conflict merely because it managed to successfully keep that conflict hidden during the administrative process would be absurd.

625 F.3d 788, 794 (3d Cir. 2010). This reasoning in Howley convinces the Court that plaintiffs should only be required to make a "minimal showing of bias or irregularity that could have impacted the administration of the claim" to be permitted to conduct discovery into procedural conflicts. Dandridge v. Raytheon Co., Civ. A. No. 08-4793, 2010 WL 376598, at *6 (D.N.J. Jan. 26, 2010).

In this case Plaintiffs have alleged that Brigandi, the Plan Administrator, may not have made the decision to deny the claim for benefits. (Doc. No. 12 at 20.) In support of this allegation, Plaintiffs contend that letters written by Sunoco's outside labor counsel and Sunoco's Assistant General Counsel are very similar to the letters signed by Brigandi that denied Plaintiffs' claim for benefits. (Id.) Plaintiffs assert that there is a procedural conflict if these attorneys, instead of Brigandi, made the decision to deny the benefit claim. (Id.) This Court is persuaded that Plaintiffs have made a "minimal showing of bias or irregularity" sufficient to establish a "good faith" allegation of a procedural conflict. Accordingly, the Court will permit Plaintiffs to conduct discovery into the Plan Administrator's alleged structural and procedural conflicts of interest.

V. CONCLUSION

For the reasons stated above, the arbitrary and capricious standard of review will be used in this case, and Plaintiffs will be permitted to conduct limited discovery only into the Plan Administrator's conflict of interest. An appropriate Order follows.


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