ERISA burden shifting

Estate of Barton v. ADT Sec. Servs. Pension Plan, No. 13-56379 (9th Cir. Apr. 21, 2016).

Bruce Barton asked the ADT Security Services Pension Plan for pension benefits. His eligibility for benefits depended on whether he met a couple of conditions. In the first place, he had to have worked for companies whose employees were eligible to get pension benefits through the plan. Second, he must have earned vested benefits by working at least 1000 hours per year for those companies.

The pension plan denied Barton benefits because it believed he hadn’t shown that he met those two conditions. The district court agreed, ruling that Barton hadn’t carried his burden of proof. 

The majority of this Ninth Circuit panel holds that the district court put the burden on the wrong party. A pension plan is in a much better position than a retiree to figure out whether the retiree’s employers participated in the pension plan. It is the pension plan that admits employers to participation in the first place. It’s also unreasonable, the Ninth Circuit adds, to require employees to prove that they worked a certain number of hours per year. The employer should keep those records, and if it doesn’t—well, that’s the employer’s fault, not the employee’s. The burden of proof should have been on the plan and the plan sponsor, not on Barton’s estate. The case is remanded for the district court to apply the correct burden of proof. 

Judge Ikuta dissents, arguing that this burden shifting conflicts with the deference that’s usually given to a pension plan’s benefit determinations. Perhaps I’m misunderstanding her argument, but I’m inclined to disagree. It’s true that federal courts generally defer to benefit determinations, but pension plans cannot violate ERISA itself. If the pension plan here denied Barton benefits because he purportedly hadn’t met his burden of proof, then the plan simply violated ERISA—or rather, the “federal common law of rights and obligations” built up around ERISA. That law, as the Ninth Circuit now holds, puts the burden of proof on the plan, and not on Barton.