United States District Court, N.D. California
FINDINGS OF FACT AND CONCLUSIONS OF LAW
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE.
in this diversity action contends that plaintiff's causes
of action in connection with a cutoff of her long-term
disability benefits are preempted by the Employee Retirement
Income Security Act. This order agrees based upon findings of
fact and conclusions of law after a one-day bench trial, as
set forth below.
Arlene Tom worked as an accounting partner/principal for
non-party Grant Thornton LLP from 2007 to 2009. In March
2016, she brought this action against defendant Hartford Life
and Accident Insurance Company in connection with
Hartford's decision to cut off her long-term disability
(LTD) benefits. The complaint asserted only state law causes
of action for breach of contract and breach of the covenant
of good faith and fair dealing. Hartford moved for summary
judgment on the ground that the Employee Retirement Income
Security Act preempted this action. Tom, however, contended
that she received LTD benefits under a separate plan that
covered only partners/principals, and that ERISA thus did not
apply. After supplemental discovery, briefing, and oral
argument, the undersigned denied summary judgment in favor of
a bench trial on the limited issue of ERISA preemption.
trial, the Court heard testimony from Lou Ann Hutchison, a
regional Director of Human Resources and then national
Director of Operations at Grant Thornton during the relevant
time period; John Choi, a National Account Executive at
Hartford; and Karen Suller, an Implementation Manager at
Hartford during the relevant time period. Each side then
submitted proposed findings of fact and conclusions of law.
Any proposal expressly agreed to by the opposing side at
least in part shall be deemed adopted to the extent agreed
upon, even if not expressly adopted herein. Citations to the
record herein are provided only as to particulars that may
assist the court of appeals. All declarative statements
herein are factual findings.
OF FINDINGS OF FACT
factual dispute in this case centers around two apparent
inconsistencies in the record. First, certain
documents generated by Hartford seemed to refer to a plan
numbered 501 whereas Grant Thornton's documents referred
to the Plan number as 509. Second, different
documents sported what appeared to be different versions of
Hartford's LTD policy number. This order concludes that
the use of 501 in Hartford's documents was due to a
clerical error; that Grant Thornton maintained a
comprehensive multi-benefit ERISA plan - numbered 509 - that
encompassed LTD benefits funded by Hartford's policy; and
that differences in how various documents identified
Hartford's LTD policy are immaterial, as discussed below.
Grant Thornton established and maintained the Grant Thornton
LLP Health and Welfare Benefits Plan (the “Plan”)
to provide various benefits - including LTD insurance - to
its employees and partners/principals. Grant Thornton funded
these benefits through piecemeal group insurance contracts
with different insurers.
During the relevant time period, Grant Thornton administered
the Plan, reviewed claims and appeals, and made decisions
regarding the design of the Plan. Grant Thornton worked off
of a “wrap document” titled, “Grant
Thornton LLP Health & Welfare Benefits Plan Amended and
Restated Effective January 1, 2002.” The cover page of
the wrap document contained a notation that read,
“DRAFT 9/15/2003” (Exh. 21). Despite bearing the
legend “DRAFT, ” this wrap document functioned as
a plan document within the meaning of ERISA.
wrap document stated, “This Plan is intended to
constitute a welfare plan under section 3(1) of ERISA,
” and noted that the Plan might include various
“health and welfare benefit programs, ” including
LTD benefits (id. at 6). The wrap document
incorporated by reference the Plan's participating
benefit programs, among other things (id. at 14).
June 2007, Grant Thornton - which had previously funded its
LTD benefits through a group policy from Life Insurance
Company of North America - decided to switch to a new insurer
for said benefits. Through its consulting firm, then named
Towers Perrin, Grant Thornton issued a request for proposal
(RFP) to different insurers, including Hartford, to initiate
the process of selecting “qualified vendors to
administer and insure the Life, AD&D [accidental death
and dismemberment], and LTD plans for Grant Thornton
Employees and Partners effective January 1, 2008” (Exh.
2 at 3).
RFP explained that Grant Thornton's LTD program was
“fully-insured and 100% employee-funded with . . . high
level plan provisions, ” including three classes of
beneficiaries for (1) full equity partners and principals,
(2) equity partners and principals, and (3) employees. The
RFP also contained a questionnaire that asked over one
hundred questions of potential insurers.
response to the RFP, Hartford prepared and submitted a
proposal of benefits that included LTD insurance for two
classes of beneficiaries - (1) employees and (2) all
partners/principals. The two classes had different
elimination periods and definitions of disability, such ...