White v. Guardian Life Insurance Company

Opinion

1 2 3 UNITED STATES DISTRICT COURT 4 SOUTHERN DISTRICT OF CALIFORNIA 5 6 WILLIAM WHITE, Case No.: 22-cv-1788-L-KSC 7 Plaintiff, ORDER DENYING PLAINTIFF’S 8 v. MOTION TO ESTABLISH DE NOVO AS THE APPLICABLE STANDARD 9 GUARDIAN LIFE INSURANCE OF REVIEW COMPANY, et al., 10 Defendants. [ECF No. 27] 11 12 In this action for review of Defendant Guardian Life Insurance Company’s denial of 13 Plaintiff’s claim for accidental death and dismemberment benefits, Plaintiff filed a motion 14 to establish de novo as the applicable standard of review under the Employee Retirement 15 Income Security Act (ERISA), 29 U.S.C. §§ 1001–1193c. (ECF No. 27.) Defendant 16 opposed, arguing that an abuse-of-discretion standard applies, (ECF No. 30), and Plaintiff 17 replied, (ECF No. 31). For the reasons stated below, Plaintiff’s motion is denied. 18 A denial of benefits challenged under ERISA “is to be reviewed under a de novo 19 standard unless the benefit plan gives the administrator or fiduciary discretionary authority 20 to determine eligibility for benefits or to construe the terms of the plan,” in which case an 21 abuse of discretion standard applies. Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 22 115 (1989). The policy at issue states in relevant part: “Guardian is the Claims Fiduciary 23 with discretionary authority to determine eligibility for benefits and to construe the terms 24 of the plan with respect to claims.” (ECF No. 28-1, at 23.) Thus the Court finds that the 25 plan confers discretion on the administrator which would normally trigger abuse-of- 26 discretion review. 27 But California law prohibits insurance policies from assigning discretion to the 28 insurer or administrator. Cal. Ins. Code § 10110.6. Specifically, “[i]f a policy . . . that 1 provides or funds life insurance or disability insurance coverage for any California resident 2 contains a provision that reserves discretionary authority to the insurer . . . that provision 3 is void and unenforceable.” Id. Thus, Plaintiff argues, the discretionary clause is void and 4 the appropriate standard of review is de novo. 5 Defendant responds that the policy designates Florida law as the law governing the 6 policy, (ECF No. 28, at 13), and that there is no statute banning discretionary clauses in 7 Florida. Accordingly, if the choice-of-law provision is enforceable then the discretionary 8 clause is valid under Florida law and abuse of discretion is the correct standard. The 9 outcome-determinative question then is which law controls. 10 Lawsuits concerning “ERISA-regulated plans [are] treated as federal questions.” 11 Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987). “In federal question cases . . . the 12 court should apply federal, not forum state, choice of law rules.” In re Lindsay, 59 F.3d 13 942, 948 (9th Cir. 1995). Under federal law, “[w]here a choice of law is made by an ERISA 14 contract, it should be followed, if not unreasonable or fundamentally unfair . . . so viewed 15 from the time when the contract was made.” Wang Laboratories, Inc. v. Kagan, 990 F.2d 16 1126, 1128–29 (9th Cir. 1993). Factors to be considered in determining whether a choice- 17 of-law clause is unreasonable or fundamentally unfair include where the employer is 18 headquartered and where most of the employees covered by the policy are located. See id. 19 at 1129. The party contesting the choice-of-law provision—here, Plaintiff—bears the 20 burden of showing that the provision is unreasonable or unfair. See id. 21 The Court finds that the application of Florida law to the policy at issue is neither 22 unreasonable nor fundamentally unfair. Indeed, Plaintiff’s employer, Staffing Resource 23 Group, Inc. (SRG) is a corporation headquartered in Florida, and a majority of its 24 employees are located in Florida. (ECF No. 30-1, Decl. of Melanie Wiltrout, at 2–3.) It is 25 also worth noting that at the time the policy was issued in 2009, (id. at 2), section 10110.6 26 of the California Insurance Code had not yet gone into effect, eliminating the possibility 27 that Defendant chose Florida law to avoid a statute banning discretionary clauses. 28 1 Plaintiff makes compelling policy arguments against the inclusion of discretionary 2 ||clauses in insurance contracts but does not meaningfully address how the general 3 || application of Florida law to the entire policy at issue would be unreasonable or unfair 4 || when viewed at the time the policy was entered into. See Wang, 990 F.2d at 1129 (stating 5 ||that the reasonableness of the choice of law must be viewed in the context of “when a 6 || particular individual could not know whether he would be a litigant’). Plaintiffs 7 ||arguments sounding in state choice-of-law principles are likewise unavailing in this 8 || federal-question case. In sum, the Court concludes that the policy’s choice of Florida law 9 ||applies. It follows that the discretionary clause is valid and that abuse of discretion is the 10 || applicable standard of review. Plaintiff's motion to establish de novo as the standard of 11 |/review is DENIED. 12 IT IS SO ORDERED. 13 14 || Dated: August 25, 2023 fee Soop 16 H . James Lorenz, 17 United States District Judge 18 19 20 21 22 23 24 25 26 27 28