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The Plan at issue in this case does contain the necessary discretionary authority.

Therefore, the proper standard of review would be arbitrary and capricious, unless a

conflict of interest exists.

"A determination that the arbitrary and capricious standard applies does not end the court's inquiry with respect to the appropriate standard of review, however, because the concept of arbitrary and capricious must be 'contextually tailored.' Brown v. Blue Cross & Blue Shield, 898 F.2d 1556, 1564 (11th Cir. 1990). The Eleventh Circuit has identified a range of deference to be applied to an administrator's decision with a 'disinterested, impartial decisionmaker deserving the greatest deference' and fiduciaries with a serious conflict of interest being given slight, or even no deference, so that 'the decision, if wrong may be unreasonable.' Id.

Vann v. National Rural Electric Cooperative Assoc. Retirement and Security Program, 978 F.Supp. 1025, 1039, 1048 (M.D. Ala. 1997).

In this case, a conflict of interest exists making application of the heightened

arbitrary and capricious standard applicable. The Delta Plan is a non-contributory plan25

funded solely through contributions from the assets of Delta Airlines, Inc.26 The amount

of contributions required by Delta Airlines, Inc. varies based on an annual actuarial

valuation evidencing the actuarial position and actuarial costs of the Plan27. If the costs

or amount of claims to the Plan increase, the actuarial valuation would necessarily require

an increase in the amount of contributions from the assets of Delta Air Lines, Inc. This is

exactly how an insurance company manages its reserves and investment portfolio28.


Plan § 11.01.


Plan § 11.02.



28 Plaintiff is aware that the arbitrary and capricious standard of review has been applied to this Plan in one case. However, there has never been a judicial determination that a conflict of interest does not exist because the issue has never been raised. In Paramore v. Delta Air Lines, Inc., 129 F.3d 1446 (11th Cir. 1997), the Plaintiff stipulated that the interpretation of the plan terms was subject to an arbitrary and capricious standard of review. Id at 1449. The issue was whether the Court should have reviewed both the interpretation of the plan terms and the factual determinations under the arbitrary and capricious standard. Id. The question of whether or not a conflict of interest was present was never raised and, thus, never addressed.


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