489 U.S. 101 (1989)
Late in 1980, petitioner Firestone Tire and Rubber Company sold its five Plastics Division plants to Occidental Petroleum Company as going concerns.1 Most of the approximately 500 salaried employees at the plants were rehired by Occidental without interruption and at the same rates of pay.2 At the time of the sale, Firestone maintained three unfunded pension and welfare benefit plans, including a termination pay plan, a retirement plan, and a stock purchase plan.3 Firestone served as the sole source of funding for the plans and had not established separate trust funds out of which to pay the benefits from the plans.4 By operation of law Firestone itself was the administrator and fiduciary of each plan.5
Respondents are six Firestone employees who were rehired by Occidental.6 They sought severance benefits from Firestone under the termination pay plan.7 Several respondents also requested information from Firestone regarding benefits under all three plans pursuant to ERISA disclosure provisions.8 Firestone denied the requests for severance benefits on the ground that the sale did not constitute a reduction in work force.9 It also denied the requests for information on the ground that respondents were no longer participants in the plans.10
Respondents filed a class action lawsuit in the United States District Court for the Eastern District of Pennsylvania on behalf of former salaried non-union employees who worked in the five plants.11 The action asserted claims to recover benefits due under the termination pay plan and for damages based on Firestone's failure to furnish the requested plan information.12 The District Court granted Firestone's motion for summary judgment on both claims.13
The United States Court of Appeals for the Third Circuit reversed the District Court's grant of summary judgment.14 The Court of Appeals remanded the case for further proceedings.15 The Supreme Court granted certiorari to address the appropriate standard of review and the definition of participant under ERISA.16
Whether the appropriate standard of judicial review of benefit determinations by fiduciaries or plan administrators under ERISA is de novo or the arbitrary and capricious standard?17
Under principles of trust law, a denial of benefits challenged under section 1132(a)(1)(B) is to be reviewed under a de novo standard.18 This rule applies unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan.19
No. The arbitrary and capricious standard does not apply.20 There is no evidence that under Firestone's termination pay plan the administrator has the power to construe uncertain terms or that eligibility determinations are to be given deference.21 The plan provided that if service is discontinued prior to pension eligibility, termination pay will be given if released because of a reduction in work force.22 But the plan did not grant discretionary authority to the administrator.23
The de novo standard applies regardless of whether the plan is funded or unfunded and regardless of whether the administrator is operating under a possible conflict of interest.24
The de novo standard of review applies to Firestone's denial of severance benefits under the termination pay plan.25
Whether former employees who claim but are not in fact entitled to benefits qualify as participants entitled to obtain information about benefit plans under ERISA?26
The term participant under ERISA means any employee or former employee who is or may become eligible to receive a benefit from an employee benefit plan.27 This term is naturally read to mean employees in currently covered employment or former employees who have a reasonable expectation of returning to covered employment or who have a colorable claim to vested benefits.
No. The Court of Appeals' interpretation that the right to information extends to people who claim to be but in fact are not participants strays far from the statutory language and renders the definition superfluous.28 Respondents must have a colorable claim that they will prevail in a suit for benefits or that eligibility requirements will be fulfilled in the future to qualify as participants entitled to plan information.29 A rational plan administrator would likely provide the information if there is any doubt as to whether the claimant is a participant given the possibility of penalties.30
Former employees who claim but are not in fact entitled to benefits do not qualify as participants under ERISA unless they have a colorable claim to vested benefits.31
Related opinions on this issue
Justice Scalia joined the judgment of the Court and Parts I and II of its opinion.32 He agreed with the disposition but not all of the reasoning regarding Part III.33
He argued that the definition of participant embraces those whose benefits have vested and those who by reason of current or former employment have some potential to receive the vesting of benefits in the future.34 It does not embrace those who have a good argument that benefits have vested even though they have not.35
Applying the definition in this fashion would mean that if the employer guesses right that a person with a colorable claim is in fact not entitled to benefits, he can deny that person the information without paying damages.36 Yet no sensible employer would take that risk.37