In Estate of Barton v. ADT, No. 13-56379 (9th Cir. 2016), Bruce Barton appeals from the district court’s judgment concluding that the ADT Security Services Pension Plan Administrator did not abuse its discretion in denying Barton’s request for pension benefits. In analyzing the case, the Ninth Circuit Court of Appeals (the “Court”) concluded that, since the district court did not have the benefit of the Court’s analysis regarding the burden of proof in a case such as this, the Court reversed the case and remand it for proceedings consistent with this opinion.
The Court said the following as to the burden of proof. A claimant may bear the burden of proving entitlement to ERISA benefits. This rule makes sense in cases where the claimant has better–or at least equal–access to the evidence needed to prove entitlement. But in other contexts, the defending entity solely controls the information that determines entitlement, leaving the claimant with no meaningful way to meet his burden of proof. This is one of those cases.
The district court had placed the burden of proof on Barton to establish that his various ADT-related employers participated in defendants’ Plan, and that he worked the requisite hours per year. There are two problems with this approach. First, defendants are in a far better position to ascertain whether an entity was a participating employer. It should not greatly burden an ERISA-compliant entity to determine what companies were authorized as “participating employers,” so the entity, not the claimant, should bear the risk of insufficient records. Second, a shift in the burden of proof follows naturally from ERISA’s disclosure requirements. One such requirement, ERISA section 104(b)(4), mandates supplying participants with certain plan information, such as the summary plan description, annual report, or other instruments under which the plan is established or operated. These disclosure requirements, and corresponding penalties for failure to disclose found in ERISA section 502(c)(1), function to ensure that an individual is duly informed of basic information relating to his pension plan.
As such, the Court held that, where a claimant has made a prima facie case that he is entitled to a pension benefit but lacks access to the key information about corporate structure or hours worked needed to substantiate his claim and the defendant controls such information, the burden shifts to the defendant to produce this information.