ERISA Makes an Interesting Appearance at the 7th Circuit

The Seventh Circuit's recent decision in Williams v. Interpublic Severance Pay Plan, No. 07-3146 (dec. April 29.2008) seems straightforward enough. It's an ERISA case. It's not very sexy.

But buried in there, underneath the actual legal analysis, are a couple of things worth mentioning.

1. Easterbrook Schools the Academics?
Judge Easterbrook focuses the first part of his holding on the use of trust law in analyzing ERISA cases. This seems appropriate, as the Supreme Court instructed as much in Firestone v. Bruch. But critics of the federal courts' consistent deference to plan administrators' decisions have been chastising the courts for years, saying they ignore trust law in favor of a rough amalgam of contract, administrative and labor law. And no one epitomizes the anti-deference movement like Yale professor John Langbein, who has written extensively on why he thinks the standard of review under ERISA is out of whack.

So it's no suprise when Judge Easterbrook supports deference to the plan's administrator, or when he uses contract law to do it. But when he supports his holding with "See generally John H. Langbein, The Contractarian Basis of the Law of Trusts, 105 Yale L. J. 625 (1995)," call me crazy but that's more than just a holding. That's a shot across the bow.

2. ERISA: the Cartoon
"Second, one must not anthropomorphize 'the administrator.'"

Oh, how many geeky benefits conversations this unfortunate statement could start. What Disney animal would best represent "the administrator?" Would "the administrator" have a high-pitched squeak or a low, dopey voice? How many episodes would it take before "the administrator" would have an anthropomorphically similar character of the opposite gender?

Seriously, though, Easterbrook's point is that administrator's are "commonly large organizations" and don't have any real "interest" in the day-to-day operation of the plan. I know, I know. ZZzzz.

But then, there it was. It might as well have been written in red.

There would be a real conflict of interest if a given administrator put in place a method of linking decisionmakers' income to the substance of their decisions. A quota system...or some other means of tying the wages or promotion of staff to its disposition of claims could call for non-deferential judicial review.

Really? Somebody must have seen "Sicko".

3. Please Deliver 9 Copies to: One First Street, Washington D.C.
Easterbrook ends his interest/deference analysis by noting that (what a coincidence!)the whole thing was presently before the Supremes in MetLife v. Glenn, which was argued (again!) six days before Williams was released. Make of that what you will.