D.C. Circuit Review – Reviewed: Earning Their Pay

by Aaron Nielson — Friday, Dec. 2, 2016@Aaron_L_Nielson

We find the PRC’s interpretation that “service standards” should be measured in conjunction with separately defined performance goals reasonable and entitled to deference. The PAEA requires the Postal Service to establish a set of service standards, not service guarantees. See 39 U.S.C. § 3691(a). These standards must be designed to ‘reasonably assure Postal Service customers delivery reliability, speed and frequency.’ Id. § 3691(b)(1)(C). Such ‘reasonabl[e] assur[ance]’ simply creates an ‘expectation’ of on-time delivery without developing an enforceable right to sue over each-and-every piece of mail that arrives outside that delivery window. Therefore, when examining whether the Postal Service has complied with its service obligations, the PRC regularly analyzes the Postal Service’s rate of on-time delivery performance in reference to separately published service performance goals.

American Postal Workers Union v. PRC

A claim under § 1132(a)(1)(B) is reviewed de novo except where the plan vests the administrator with “discretionary authority to determine eligibility for benefits or to construe the terms of the plan.” Firestone, 489 U.S. at 115 (emphasis added). When the terms of a plan confer such discretion, an administrator’s denial of benefits is reviewed under an abuse of discretion or arbitrary and capricious standard, a standard which, in this particular context, we have referred to as “reasonableness.” Moore v. CapitalCare, Inc., 461 F.3d 1, 11 (D.C. Cir. 2006). On the record before us, we conclude that the District Court properly applied a deferential standard of review because the long-term disability benefit plan here vests Sedgwick with discretion to construe disputed terms of the plan and determine eligibility for benefits.

Foster v. Sedgwick Claims Management Services Inc.

Let’s be honest: at least as far as courts go, the D.C. Circuit is pretty glamorous. It decides important cases. Students desperately want to clerk there. Like the Supreme Court, the D.C. Circuit stops hearing cases over the summer. At least among lawyers, D.C. Circuit judges can be mini-celebrities. And so on.

But all of that comes at a cost; sometimes the Court has to figure out the inner workings of the Postal Service. Of course, on occassion such cases are launching pads for important constitutional analysis. But most of the time, they aren’t. They are just hard, technical disputes that require focusing on the details of intricate legal schemes. These are the cases for which the D.C. Circuit earns it pay.

The D.C. Circuit earned its pay this week.

In American Postal Workers Union v. PRC, Judge Wilkins (joined by Judges Edwards and Williams) dived into the world of “First-Class Mail service standards.” The actual dispute here is quite complicated to explain. If your practice involves the Postal Service, this opinion is for you. For everyone else, it is probably okay to let this one pass by. Don’t believe me? Here is a sample:

Given the dual remedies available through the ACD and complaint process, the Newspaper Association of America expressed concern several years ago that a finding of compliance or noncompliance in an ACD could moot a pending complaint on the same issue. U.S. Postal Regulatory Comm’n, Order No. 195, Order Establishing Rules for Complaints and Rate or Service Inquiries 21 (Mar. 24, 2009) [hereinafter Rules for Complaints]. The PRC responded by noting that Congress contemplated this exact issue and addressed it in the statute. Id. at 22. Specifically, section 3653(e) creates a rebuttable presumption of compliance by the Postal Service if the PRC issues a timely written determination of compliance in an ACD. 39 U.S.C. § 3653(e); see Rules for Complaints, supra, at 22-23. If Congress had wished for an ACD to render a complaint moot, it would have created a non-rebuttable presumption in section 3653(e). Rules for Complaints, supra, at 23. The dual enforcement scheme of ACD reports and complaints is necessary because ACD proceedings are completed in short, fixed timeframes and are not subject to the same opportunities for contesting evidence in adversarial proceedings. Thus, “Commission findings in an annual compliance determination are relevant to a pending complaint proceeding, but are not necessarily dispositive of those issues.”

There are 19 more pages of similar analysis. For what it is worth, after reading the opinion a few times, I think that Judge Wilkins does a great job explaining the scheme. But I’m not going to try to explain why!*

Foster v. Sedgwick Claims Management Services Inc. is also complicated. I’ll let Judge Edwards (joined by Judges Rogers and Tatel) explain the issues:

This appeal raises two issues regarding the reach and application of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., with respect to private benefit plans. The first issue concerns the definition of “payroll practices” that are exempt from ERISA. The second addresses whether terms of the ERISA plan at issue in this case grant discretion to the plan administrator sufficient to warrant deferential review of the administrator’s benefit determinations.

How does the panel resolve those issues? Through 24 pages of complex analysis. Here is the summary:

We affirm the District Court at each turn. First, we affirm the District Court’s finding that the short-term disability plan is an ERISA-exempt “payroll practice” under Department of Labor regulations. Second, we hold that the District Court appropriately applied a deferential standard of review to the administrator’s denial of benefits under the long-term disability plan because the terms of the plan unambiguously grant the administrator, and the administrator alone, the power to construe critical terms of the plan and to decide an employee’s eligibility for benefits. Finally, we hold that the District Court did not abuse its discretion in denying Appellant’s motion for reconsideration.

So there you go.

Upon reflection, this is not the most interesting blog post I’ve written. But you know what? I’m giving my “admin law” final on Tuesday and my office is full of nervous students with questions. I have to earn my pay too!

 

* If you want more Postal Service law, let me quote the opinion again: “Further, if service standards could be violated on an envelope-by-envelope basis, it would be a foregone conclusion in every ACD that the Postal Service is in noncompliance with the statute. This result would eliminate any meaningful distinction between compliance and noncompliance. Rather than being subject to remedial directives only in years of noncompliance, the Postal Service would be forced to undertake remedial measures yearly. See 39 U.S.C. § 3653(c) (‘If, for a year, a timely written determination of noncompliance is made under subsection (b), the Postal Regulatory Commission shall take appropriate action . . . .’). This contravenes the statutory structure, which clearly contemplates that the Postal Service can be found in compliance with its service standards. See, e.g., id. § 3653(b) (‘If, with respect to a year, no instance of noncompliance is found under this subsection to have occurred in such year, the written determination shall be to that effect.’). A contrary result would frustrate congressional intent.”

 

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About Aaron Nielson

Professor Nielson is an associate professor at Brigham Young University Law School. Before joining the academy, Professor Nielson was a partner in the Washington, D.C. office of Kirkland & Ellis LLP (where he remains of counsel). He also has served as a law clerk to Justice Samuel A. Alito, Jr. of the U.S. Supreme Court, Judge Janice Rogers Brown of the U.S. Court of Appeals for the D.C. Circuit, and Judge Jerry E. Smith of the U.S. Court of Appeals for the Fifth Circuit. All views expressed are the author's alone. Follow him on Twitter @Aaron_L_Nielson.

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