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Pegues v. Raytheon Co.

United States District Court, C.D. California

July 16, 2019



          Dale S. Fischer United States District Judge.

         This action was tried before the Court on March 12 and 13, 2019. Having heard and reviewed the evidence and having considered the parties' post-trial briefs, the Court makes the findings of fact and conclusions of law set forth below.[1]

         FINDINGS OF FACT[2]

         1. Plaintiff Sherri Pegues[3] seeks benefits under an employee welfare benefit plan (the Plan) governed by the Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (ERISA).

         A. The Plan

         2. The Plan is a group life insurance plan sponsored by Defendant Raytheon Company. Trial Exhibit (Tr. Ex.) 200, Bates Pru 0002.

         3. The Plan was fully funded by group life insurance contract no. G-52020-MA (the Group Contract) issued by The Prudential Insurance Company of America to Raytheon on January 1, 2016. Id. at Bates Pru 0002-0003; Trial Transcript (TT) at 403:18-23.

         4. Pursuant to the Group Contract, Prudential administered and paid from its own assets all life insurance claims under the Group Contract. Tr. Ex. 200, Bates Pru 0002, 0049; TT at 405:23-406:20; 408:24-409:5.

         5. Prudential was the claims administrator and payor of all life insurance benefits under the Plan. Id.; Tr. Ex. 201, Bates RAYTHEON 0590.

         6. Raytheon contracted with Prudential to fully fund and administer all claims for life insurance benefits under the Plan. TT at 428:5-13.

         7. The Group Contract's “BENEFICIARY RULES” section states, in part: “‘Beneficiary' means a person chosen, on a form approved by Prudential, to receive the insurance benefits. . . . You may change the Beneficiary at any time without the consent of the present Beneficiary. The Beneficiary change form must be filed through [Raytheon]. The change will take effect on the date the form is signed.” Tr. Ex. 200, Bates Pru 0049.

         8. Under the controlling terms of the Plan, a beneficiary must be designated “on a form” approved by Prudential, and a change of beneficiary must be “filed” through Raytheon on a “form [that] is signed.” Id.

         9. Raytheon is a global company with more than 100, 000 active and former employees who participate in numerous, varied types of employee benefit plans offered by Raytheon, including the Plan. TT at 336:1-3.

         10. Raytheon contracted with a benefits administration company, a unit of Xerox (now known as Conduent), which operates as “Raytheon Benefit Center” (RBC), to render certain benefits administration functions. TT at 335:16-21; 402:17-403:1; 428:21-429:5.

         11. Those functions include operating and maintaining the RBC website and call center that employees are instructed to contact if they have questions about benefits. TT at 189:23-190:5; 335:22-25; 385:8-20.

         12. It was Conduent's responsibility to communicate with Raytheon employees about their benefits under the Plan and to answer employees' questions about beneficiary designations and about using the RBC website. TT at 404:13-17.

         13. Conduent handles approximately 170, 000 calls and about 600, 000 transactions on the RBC website per year. TT at 336:1-13.

         14. Raytheon and Conduent are separate, unrelated entities. TT at 404:18-24.

         B. Marvin's Participation in the Plan

         15. Marvin Pegues, Sr. participated in the Plan beginning in 1978 by virtue of his employment with Raytheon. Tr. Ex. 57, Bates Pru 0093, 94.

         16. At that time, he was unmarried, and he designated his mother, Evelyn Johnson (a.k.a. Evelyn Pegues), as his life insurance beneficiary by filing a written, hard-copy form. Id. at Bates Pru 0094-0097.

         17. Marvin worked for Raytheon for the next 30 years, during which time his circumstances changed; he married Sherri in 1982 and had two children with her. Tr. Ex. 202.

         18. Marvin had the ability to change his life insurance beneficiary at any time for any reason. Tr. Ex. 200, Bates Pru 0049; TT at 438:16-23. He also had the ability to log on to the RBC website at any time to determine who was then designated as his beneficiary. Tr. Ex. 201, Bates RAYTHEON 0478.

         19. Raytheon provided a Benefits Handbook to its employees, including Marvin, which informed them in part:

Having up-to-date beneficiaries for your life insurance is important, especially if you've had a life event change-such as marriage, birth, or divorce. With Desktop Benefits, you can elect and make changes to your beneficiary(ies) any time by visiting https://raytheon.benefit If your initial beneficiary election was made manually-and you want to know who your current beneficiaries are before making your online designation- just call the Raytheon Benefit Center at 800-358-1231, Monday-Friday, 8:00 a.m.- 8:00 p.m. Eastern Time (ET). Once you've named your beneficiary online, you can view and change your designation online at any time.


         20. There were only two ways for a Raytheon employee to change his life insurance beneficiary under the Plan: by going to the RBC website and completing the online steps necessary to change the beneficiary, or by completing, signing and submitting to the RBC a hard copy change of beneficiary form. Id.; TT at 342:13-21.

         21. On July 21, 2011, [4] Marvin called the RBC and spoke with “Art, ” an employee of Conduent (then Xerox). Tr. Ex. 8; TT at 373:17-19.

         22. During the call, Art informed Marvin that Evelyn was the beneficiary under the Plan. Tr. Ex. 8, Bates RAYTHEON 0101.

         23. Marvin stated, “OK, I need that changed to my wife.” Marvin told Art that he did not know Evelyn was his beneficiary, they joked about it, and Art explained that it happens often. Id. at Bates RAYTHEON 0101-02.

         24. Marvin had significant difficulty navigating the RBC website during this call. See Tr. Ex. 8.

         25. Art offered to send Marvin a beneficiary change form for him to complete and return, but Marvin declined that offer and chose to attempt to make the change using the RBC website instead. Id. at Bates RAYTHEON 0101.

         26. At another point in the conversation while trying to change his life insurance beneficiary, Marvin asked Art if Art could send him the form electronically. Art replied: “No, they have to send it in the mail. We can't update it on the web. You either have to do it or we have to send you the form.” Id. at Bates RAYTHEON 0104-05.

         27. During the call, Art attempted to walk Marvin through the online steps necessary to change his life insurance beneficiary from Evelyn to Sherri. Id. at Bates RAYTHEON 0102-0110.

         28. When Marvin told Art that it appeared from the screen Marvin was viewing that the change had been made, Art informed Marvin that the beneficiary change was not reflected on the screen that Art was viewing, even though (as Art told Marvin) it should appear in “real time” on Art's screen if the change had been made. Id. at Bates RAYTHEON 0110.

         29. Art then instructed Marvin to print out what Marvin saw on his computer screen and to turn it in. Id.

         30. Marvin never turned in the print-out of the screen reflecting his attempt to change his life beneficiary as Art instructed him to do. TT at 358:4-6; 365:24-369:8.

         31. At no time, including during Marvin's call with Art, did Marvin complete a change of beneficiary under the Plan from Evelyn to Sherri. Tr. Ex. 8; Tr. Ex. 502; TT at 255:1-263:9.

         32. Marvin passed away on April 15, 2016. Tr. Ex. 205.

         33. At the time Marvin passed away, the life beneficiary designation on file on a form approved by Prudential named Evelyn as his ...

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