Shepherd, Finkelman, Miller & Shah, LLP
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Dedicated Client Advocacy

Plan Managers Must Investigate ERISA Participation

            The Employee Retirement Income Security Act ("ERISA") protects retirement assets to bring reliability and fiscal safety to millions of future retirees. ERISA sets minimum standards regarding participation, vesting, eligibility, and requires fiduciaries to ethically protect and manage retirees' assets. Plans covered under ERISA include, but are not limited to, 401(k)s, pensions, and employee stock ownership plans.

            In a lawsuit filed in August 2013, the plaintiff, Bruce Barton, sued American District Telegraph Services Pension Plan for denial of benefits, only to lose the case because the District Court ruled plaintiffs have the burden of proving their former employers participated in plans. Mr. Barton began working for a subsidiary of American District Telegraph ("ADT") in 1967 and terminated his employment in 1986. Over the course of his tenure, ADT enacted two different pensions plans- one that covered his employment from 1968 to 1975, and another that covered 1976 through to his termination. To receive a pension under the plans, an employee must have continuous service of ten years and reach age 65. Mr. Barton turned 65 in 2010 and made requested pension benefits from ADT. Unfortunately, ADT claimed there was no record of Mr. Barton's employment, and they asked for further documentation to show eligibility. Mr. Barton ultimately had his claim for benefits denied, and he sued in U.S. District Court.

            The District Court erred in placing the burden of proof on Mr. Barton. The court asked Mr. Barton to prove that the ADT subsidiary he worked for participated in the defendant's plan. The 9th Circuit noted several errors in the District Court's logic. First, "defendants are in a far better position to ascertain whether an entity was a participating employer. After all, they determine which employers participate in the plan." Secondly, "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." Moreover, the 9th Circuit foresaw future issues stemming from a plan administrator, given information lapses, throwing their hands in the air and claiming "it's not their problem if a claimant cannot prove eligibility." In summary, the 9th Circuit held "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."

The legal team at SFMS has significant experience litigating class action matters. If you have any questions regarding this subject or this posting, please contact Alec Berin ([email protected]) or Chiharu Sekino ([email protected]). We can also be reached toll-free at (866) 540-5505.

Shepherd, Finkelman, Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS is an active member of Integrated Advisory Group (, which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at


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