Unpublished Disposition, 920 F.2d 937 (9th Cir. 1990)

MEMORANDUM^* 

Richard and Miriam Yusov appeal the district court's grant of summary judgment in favor of their brother-employer, Frank Yusuf, in his action to enforce an independent Committee's determination of the amount of retirement benefits the Yusovs were entitled to under three ERISA pension plans. The Yusovs contend that the district court should have reviewed the Committee's decision de novo rather than under an arbitrary and capricious standard, and that even assuming the district court applied the proper standard, the Committee's decision was arbitrary and capricious. We review a grant of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir. 1989), cert. denied, 110 S. Ct. 3217 (1990). We affirm.

* The denial of a claim for benefits under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a) (1) (B), is reviewed de novo "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, 109 S. Ct. 948, 956, 103 L. Ed. 2d 80, 95 (1989); see also International Bhd. of Elec. Workers, Local 47 v. Southern Cal. Edison Co., 880 F.2d 104, 108 (9th Cir. 1989). When a plan does confer such discretion, we apply a deferential standard of review and determine only if the decision to deny benefits is "arbitrary and capricious." Madden v. ITT Long Term Disability Plan for Salaried Employees, No. 89-55505, slip. op. at 11397 (9th Cir. Sept. 17, 1990) (per curiam).

We agree with the district court that the pension plans at issue here give the Committee sufficient discretionary authority to make the decision regarding the amount and kind of benefits to which the Yusovs were entitled. The 1984 Defined Benefit Plan granted discretion "to determine all questions relating to the eligibility of Employees ...; to compute ... the amount and the kind of benefits to which any Participant shall be entitled hereunder; ... to interpret the provisions of the Plan...." C.R. 27, Ex. C at 138-40. The dispute over the application of the 1984 or 1980 version of the Defined Benefit Plan is immaterial because the 1980 version also grants discretionary authority "to determine the rights of eligibility ... [and] the value of a Participant's Accrued Benefit." Id. at 144. Similarly, the Money Purchase Plan and the Profit Sharing Plan give the Committee "all powers and duties necessary" to "determine all questions relating to eligibility" and to "compute and certify to the Trustee the amount and kind of benefits payable...." C.R. 27, Ex. C at 146.

The Yusovs insist that the Committee lacked discretion to calculate benefits based upon an amount of compensation¹  other than that which the Yusovs actually received after they assumed financial control of the corporation. However, the provision on which the Yusovs rely requires compensation to be determined in accordance with information the employer supplies to the Committee. The Yusovs would require the Committee to determine compensation based upon amounts they paid and recorded themselves, despite the Committee's finding that the employer did not authorize the increased salaries. The Committee, which properly reviewed corporate documents in determining the amount of authorized compensation, acted within its conferred discretion in determining the amount of benefits. The district court therefore correctly applied the arbitrary and capricious standard of review.

The Yusovs further contend that less deferential arbitrary and capricious review is required because the Committee operated as "a venal and vengeful Employer's rubber stamp." Although a conflict of interest is a factor in determining whether a decision is arbitrary and capricious, Firestone, 489 U.S. at 115, 109 S. Ct. at 956, 103 L. Ed. 2d at 95, the Yusovs support their contention only with their own assertions that two of the Committee members worked in the same office building as the employer's attorney. However, each of the Committee members signed a statement that he was not related to any of the parties or their counsel and had no financial or other interest in the resolution of the matter. Less deferential review is required only where an actual conflict of interest exists between the beneficiaries and those construing the plan. See id. The Yusovs have not demonstrated any actual conflict of interest.² 

The arbitrary and capricious standard allows reversal only where a decision is "arbitrary, capricious, made in bad faith, not supported by substantial evidence, or erroneous on a question of law." Nevill v. Shell Oil Co., 835 F.2d 209, 212 (9th Cir. 1987). "Substantial evidence" is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." ASARCO, Inc. v. Occupational Safety & Health Admin., 746 F.2d 483, 490 (9th Cir. 1984). This court reviews only the evidence presented to the Committee. Jones v. Laborers Health & Welfare Trust Fund, 906 F.2d 480, 482 (9th Cir. 1990).

As to the amount of compensation, the Committee considered evidence that by 1981, Richard and Miriam signed all paychecks and controlled all of the corporation's finances, and that Frank Yusuf neither authorized, nor was aware of, the Yusovs' great increases in salary. The Committee rejected the Yusovs' contention that a partnership existed which justified the salary increases after considering evidence that Frank Yusuf never intended to enter a partnership, that California law prohibits members of the medical profession from profit-sharing with nonmembers, that the salaries never reflected the "50/50" partnership arrangement the Yusovs claimed, and that Richard Yusov's own corporate minutes recorded the authorization of a much lower salary.

As to the Committee's decision to calculate benefits using an "accrual fraction" of 3/19 rather than 4/20, the Committee considered evidence that Richard Yusov's own claim for benefits and records he kept for the corporation were based upon the 3/19 accrual fraction and that an expert witness testified that the plan provided for a 3/19 accrual fraction. In addition, the Committee's ultimate findings of fact conclude that Richard's entry date for plan purposes was February 28, 1981, which appears consistent with the plan's definition of entry date upon which the 3/19 accrual fraction is determined.

The Committee's determinations both as to the amount of compensation and as to the accrual fraction were supported by substantial evidence and were not arbitrary and capricious.³  Accordingly, the district court's grant of summary judgment is AFFIRMED.