                   FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

MARK STEPHAN,                            
                 Plaintiff-Appellant,           No. 10-16840
                 v.
                                                  D.C. No.
                                             3:08-cv-01935-MHP
UNUM LIFE   INSURANCE COMPANY OF
AMERICA,                                          OPINION
                 Defendant-Appellee.
                                         
       Appeal from the United States District Court
           for the Northern District of California
      Marilyn H. Patel, Senior District Judge, Presiding

                  Argued and Submitted
        December 8, 2011—San Francisco, California

                   Filed September 12, 2012

 Before: Diarmuid F. O’Scannlain, Robert E. Cowen,* and
            Marsha S. Berzon, Circuit Judges.

                  Opinion by Judge Berzon;
                 Dissent by Judge O’Scannlain




  *The Honorable Robert E. Cowen, Senior Circuit Judge for the Third
Circuit, sitting by designation.

                              11077
               STEPHAN v. UNUM LIFE INSURANCE            11081
                         COUNSEL

Mark D. DeBofsky, Daley, DeBofsky & Bryant, Chicago, Illi-
nois; Terrence J. Coleman and Brian H. Kim, Pillsbury &
Levinson, LLP, San Francisco, California, for the appellant.

Anna M. Martin and Kevin G. Gill, Rimac Martin, P.C., San
Francisco, California, for the respondent.


                         OPINION

BERZON, Circuit Judge:

   In August 2007, just three months after he had begun a new
job at Thomas Weisel Partners (“TWP”), Plaintiff-Appellant
Mark Stephan (“Stephan”) had a bicycling accident that
resulted in a spinal cord injury, rendering him quadriplegic
and thus permanently disabled. Stephan was insured under
TWP’s long-term disability insurance plan, underwritten and
administered by Defendant-Appellee Unum Life Insurance
Company (“Unum”). Stephan disputes Unum’s calculation of
his pre-disability earnings, upon which his disability benefits
were based. In calculating his earnings, Unum included only
Stephan’s monthly salary but not his annual bonus. Stephan’s
earnings, and therefore his disability benefits, would be con-
siderably higher if the bonus were included.

   The central issue in this appeal is whether the bonus should
have been counted. The district court reviewed Unum’s deci-
sion and upheld Unum’s benefit determination. The court also
denied Stephan’s motion to compel discovery of a series of
internal memoranda created by Unum’s in-house counsel
regarding Stephan’s claim. Stephan appeals from each of the
district court’s rulings.

  We agree with the district court that the applicable standard
of review is abuse of discretion. The district court also cor-
11082           STEPHAN v. UNUM LIFE INSURANCE
rectly held that because Unum was responsible both for evalu-
ating benefits claims and paying them, it operated under a
conflict of interest, which “ ‘must be weighed as a factor in
determining whether there is an abuse of discretion’ ” (quot-
ing Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 113 (2008)).
However, in determining what weight ought to be given the
conflict, the district court erred in three ways: First, it failed
to apply the traditional rules of summary judgment to its anal-
ysis of whether and to what extent a conflict of interest
impacted Unum’s benefits determination. Second, it incor-
rectly held that certain internal memoranda between Unum’s
claims analyst and its in-house counsel were not discoverable.
Finally, it did not take into account substantial evidence that
Unum’s conflict of interest “infiltrated the entire decision-
making process” and therefore ought to be accorded “signifi-
cant weight.” Montour v. Hartford Life & Accident Ins. Co.,
588 F.3d 623, 634 (9th Cir. 2009).

   We remand to the district court to reconsider the impact of
Unum’s conflict of interest; correspondingly, what weight to
accord the conflict in determining whether Unum abused its
discretion; and ultimately whether Unum did indeed abuse its
discretion in failing to include Stephan’s bonus in his pre-
disability earnings.

 I.   FACTUAL AND PROCEDURAL BACKGROUND

                         A.   The Plan

   The long-term disability insurance policy (“the Plan”)
issued by Unum to TWP, Stephan’s employer, “provide[d]
financial protection” for TWP employees should they become
disabled, by ensuring that disabled employees would continue
to receive sixty percent of their monthly earnings up to a max-
imum of $20,000. The Plan authorized Unum to interpret its
provisions and to determine claimants’ eligibility for benefits.
               STEPHAN v. UNUM LIFE INSURANCE             11083
                    B.   Stephan’s Claim

  On April 18, 2007, TWP offered Stephan a position as
Managing Director in its Institutional Sales department. Ste-
phan’s offer letter stated, in relevant part:

    Your salary rate will be $200,000 annually. Your
    salary will be paid semi-monthly, less payroll deduc-
    tions and all required withholdings. You will be eli-
    gible to participate in Thomas Weisel Partners’
    discretionary bonus program. Although bonuses are
    generally discretionary, you will be guaranteed [a]
    $300,000 bonus for your first 12 months of employ-
    ment, provided you perform at the level both you
    and we anticipate and that you have not voluntarily
    terminated your employment or been terminated for
    cause prior to the relevant payment dates.

When he accepted his new position, Stephan became insured
under TWP’s policy, underwritten by Unum.

   Four months later, Stephan suffered a severe spinal cord
injury in a bicycling accident, as a result of which he became
quadriplegic. Shortly thereafter, he applied for disability ben-
efits under the Plan. On December 3, 2007, Unum sent Ste-
phan a letter stating that his disability claim had been
approved and specifying that Stephan would receive disability
benefits of $10,000 per month. Unum based this amount on
Stephan’s annual salary of $200,000 per year. Later that
month, TWP paid Stephan the $300,000 bonus promised in
his offer letter.

   Stephan appealed Unum’s benefits determination, arguing
that his benefits should have been based not on his annual sal-
ary of $200,000 per year but on an annual income of
$500,000 — his base salary plus the annual bonus guaranteed
to him in his offer letter. In support of his appeal, Stephan
pointed to the disability claim form submitted by TWP
11084          STEPHAN v. UNUM LIFE INSURANCE
Human Resources, which stated that Stephan’s annual earn-
ings were $500,000; the insurance premiums TWP paid
Unum based on that rate of compensation; and Stephan’s
offer letter guaranteeing him a bonus of $300,000. Stephan
also attached several additional documents to his appeal: He
provided Unum a memo from TWP explaining that “in each
month prior to the date of [Stephan’s] disability, TWP
recorded compensation expense, associated with the cash
component of [his] guaranteed bonus payment”; another
memo from TWP explaining how the company calculated its
insurance premiums; and a letter from accountant and former
Unum Director of Financial Assessment, Carol Poulin, ana-
lyzing Stephan’s claim and finding that “Mr. Stephan’s
monthly income,” on which his disability benefits should be
based, “consists of both his pro-rated salary and pro-rated
guaranteed bonus.”

   Unum rejected Stephan’s appeal, maintaining “that the
original basic monthly earnings calculation was correct.” The
letter from Unum rejecting Stephan’s appeal observed:

    As Mr. Stephan began working in April and stopped
    working in August he did not work a full 12 months
    and it is apparent that TWP went outside their own
    employment agreement when [Stephan] received a
    bonus in December 2007. This is consistent with the
    information provided in a December 14, 2007 con-
    ference call with TWP representatives when they
    indicated that they intended to morally honor his
    contract.

Further, Unum stated that it did

    not appear [Stephan’s] bonus was a true accrual as
    indicated by TWP. If it were truly an accrual, the
    bonus would have been paid monthly, which would
    have been reflected in [Stephan’s] payroll records.
               STEPHAN v. UNUM LIFE INSURANCE             11085
Unum noted that contrary to Stephan’s claim that TWP paid
insurance premiums on a salary of $500,000, Unum’s “pre-
mium billing department confirmed that premiums for [Ste-
phan’s disability] coverage were based on earnings of
$100,000; not his salary at the time of disability and not
including any bonus.” Finally, Unum rejected the analysis of
accountant Carol Poulin. Poulin, Unum stated, did “not take
into account the fact that [Stephan’s] bonus [was] contingent
on a level of performance over the 12 months of employment,
which [Stephan] did not complete.” “Accordingly,” Unum
continued, “we have determined that his analysis and conclu-
sions are flawed.”

                  C.   Procedural History

   This case was initially filed in the Superior Court of Cali-
fornia and then removed by Unum to federal court. The dis-
trict court resolved it in three stages.

   First, the court ruled on the parties’ cross-motions for sum-
mary adjudication regarding the standard of review to be
applied to the case. Because the Plan contained a provision
delegating discretionary authority over its interpretation to
Unum, the court held that the proper standard of review was
abuse of discretion. The court rejected Stephan’s contention
that the discretionary provision was void either because of a
settlement agreement between Unum and the State of Califor-
nia or because it was in violation of California public policy.

   In addition, the district court’s initial decision held that,
absent attorney-client privilege, certain memoranda between
Unum’s in-house counsel and the claims analyst responsible
for Stephan’s claim were discoverable, because they might
help demonstrate whether and to what extent Unum was oper-
ating under a conflict of interest. The court withheld any
determination, however, on whether the attorney-client privi-
lege protects these documents pending briefing on the appli-
11086             STEPHAN v. UNUM LIFE INSURANCE
cability to the documents of the fiduciary exception to
attorney-client privilege.

   Second, after the parties briefed the issue, the district court
ruled on the discoverability of these memoranda. Although
the court assumed without deciding that the fiduciary excep-
tion to attorney-client privilege generally applies to wholly-
insured ERISA plans such as TWP’s, it held that the excep-
tion did not apply in this case, because “the interests of plain-
tiff and defendant had sufficiently diverged at the time the
disputed memoranda were created.” Therefore, it held, Unum
need not produce the documents.

   Finally, on cross-motions for summary judgment on the
merits, the district court ruled that “Unum’s conflict of inter-
est did not weigh heavily upon its decision-making process in
this case,” and more generally, that Unum had not abused its
discretion in excluding Stephan’s bonus from its calculation
of the monthly earnings upon which it based its disability pay-
ments. The court therefore granted Unum’s motion for sum-
mary judgment, and denied Stephan’s. This appeal followed.

                II.    STANDARD OF REVIEW

   ERISA benefit determinations are reviewed de novo, unless
the benefit plan provides otherwise. Glenn, 554 U.S. at 111.
“Where the plan . . . grant[s] the administrator or fiduciary
discretionary authority to determine eligibility for benefits,
trust principles make a deferential standard of review appro-
priate.” Id. (internal quotation marks, citations, and alteration
omitted).

   The benefit plan in this case delegates discretionary author-
ity to Unum.1 Stephan contends, however, that, for two rea-
  1
    The plan states “Thomas Weisel Partners LLC is the Plan Administra-
tor and named fiduciary of the Plan, with authority to delegate its duties.”
It further provides:
                  STEPHAN v. UNUM LIFE INSURANCE                   11087
sons, the Plan’s discretionary authority provisions must be
disregarded and Unum’s benefits determination reviewed de
novo. First, Stephan maintains that the California Settlement
Agreement, an agreement between Unum and the California
Department of Insurance, prohibits the discretionary authority
provision. Second, he argues the discretionary provision is
contrary to California state law and therefore void. Both argu-
ments fail.

                          A.    Background

  Cal. Ins. Code § 10291.5(b) provides that the California
Insurance Commissioner “shall not approve any disability
policy for insurance or delivery in” California that does not
meet certain requirements. In particular, § 10291.5(b)(1) pro-
hibits the Commissioner from approving a policy

     [i]f the commissioner finds that it contains any pro-
     vision, or has any label, description of its contents,
     title, heading, backing, or other indication of its pro-
     visions which is unintelligible, uncertain, ambigu-
     ous, or abstruse, or likely to mislead a person to
     whom the policy is offered, delivered or issued.

    In exercising its discretionary powers under the Plan, the Plan
    Administrator, and any designee (which shall include Unum as a
    claims fiduciary) will have the broadest discretion permissible
    under ERISA and any other applicable laws, and its decisions
    will constitute final review of your claim by the Plan. Benefits
    under this Plan will be paid only if the Plan Administrator or its
    designee (including Unum) decides in its discretion that the
    applicant is entitled to them.
(emphasis added). In addition, the certificate of coverage states “[w]hen
making a benefit determination under the policy, Unum has discretionary
authority to determine your eligibility for benefits and to interpret the
terms and provisions of the policy.”
11088          STEPHAN v. UNUM LIFE INSURANCE
The Insurance Code provides not only that the Commissioner
may deny approval to policies that do not meet this standard,
but also that

    [t]he commissioner may withdraw approval of filing
    of any policy or other document or matter required
    to be approved by the commissioner, or filed with
    him or her, by this chapter when the commissioner
    would be authorized to disapprove or refuse filing of
    the same if originally submitted at the time of the
    action of withdrawal.

Id. § 10291.5(f). Finally, the Code states that any insurance
policy issued

    on a form approved by the commissioner, and in
    accordance with the conditions, if any, contained in
    the approval, at a time when that approval is out-
    standing shall, as between the insurer and the
    insured, or any person claiming under the policy, be
    conclusively presumed to comply with, and conform
    to, this section.

Id. § 10291.5(k).

   On February 27, 2004, the Commissioner issued a notice
that it intended to withdraw approval of several insurance
forms, including the form upon which TWP’s long-term dis-
ability policy was written, because they contained discretion-
ary authority provisions. Such provisions, the Commissioner
explained, “render [a policy] ‘fraudulent or unsound insur-
ance’ within the meaning of [California] Insurance Code
§ 10291.5” because they make insurance payments “contin-
gent on the unfettered discretion of the insurer, thereby . . .
rendering the contract potentially illusory.” The notice stated
that the withdrawal of approval would be effective within 91
days unless, within 30 days, an adversely affected insurer
requested a hearing.
                  STEPHAN v. UNUM LIFE INSURANCE                     11089
   Unum requested such a hearing. After the hearing, the
administrative hearing officer issued a proposed decision
upholding the Commissioner’s notice of withdrawal. The
decision stated that the discretionary provisions included in
the policies at issue “create[ ] a legal ambiguity and [are]
likely to mislead the insured,” in violation of Cal. Ins. Code
§ 10291.5. “In eliminating discretionary clauses in disability
insurance policies,” the decision reasoned, “the Commissioner
is fulfilling the statute’s direction that he is to assure that all
insurance policies can be readily understood and interpreted.”
The Commissioner adopted the opinion, stating that it would
take effect on April 22, 2005 “unless the affected insurers
agree in writing before that date to amend all insurance prod-
uct forms to delete all discretionary clauses or other language
having the same legal effect.”2

   Unum filed a writ of mandate with the San Francisco Supe-
rior Court challenging the Commissioner’s notice and his
order adopting the hearing decision. On October 1, 2005,
Unum and the California Department of Insurance reached a
settlement agreement, the California Settlement Agreement
(“CSA”). Pursuant to the CSA, Unum withdrew its writ of
mandate and agreed to make various changes to its insurance
forms.

             B.    California Settlement Agreement

                                    1.

   [1] The CSA requires Unum to

      discontinue use of a[ny] provision that has the effect
      of conferring unlimited discretion on [Unum] or
      other plan administrator to interpret policy language,
  2
    Unum, as well as another affected insurer, eventually reached agree-
ments with the State of California, and therefore the opinion and its under-
lying orders were subsequently vacated.
11090          STEPHAN v. UNUM LIFE INSURANCE
    or requires an “abuse of discretion” standard of
    review if a lawsuit ensues . . . in any California Con-
    tract sold after the date set forth in Section V.

The Agreement defines “California Contract” as “a policy of
disability income insurance . . . which is subject to the juris-
diction of and approved by the Department [of Insurance].”
Section V of the CSA provides that

    [a]ny language having the effect of a “discretionary
    authority provision” . . . shall not be applied to any
    California Contract sold after the CSA Effective
    Date [November 1, 2005]. A “discretionary authority
    provision” shall not be included in any new policies
    issued as California Contracts or included in Sum-
    mary Plan Descriptions (SPDs) in ERISA-related
    Plans generated or issued by the Company, after the
    CSA Effective Date so long as its omission from the
    policy form or SPD is consistent with what is per-
    mitted by applicable California statutory and case
    law. Discretionary authority provisions in existing
    California Contracts that were issued prior to the
    date of the Order of the Commissioner are not
    affected by the CSA.

   Whereas the CSA provisions relating to discretionary
authority apply to “policies sold after the CSA Effective
Date,” the CSA requires that other changes, such as, for
example, exclusions for pre-existing conditions, “be made in
all new policies” as well as all “in-force policies upon renewal
after the CSA Effective Date.” Thus, by its terms, the CSA
distinguishes between changes, like the prohibition on discre-
tionary authority provisions, that apply only to “new poli-
cies,” and those that apply to both “new policies” and
“policies upon renewal.” Both parties interpret the CSA as
providing that policies already extant on the CSA effective
date and renewals of such policies are not subject to the
Agreement’s prohibition on discretionary authority provi-
                   STEPHAN v. UNUM LIFE INSURANCE                    11091
sions, whereas new policies sold after the CSA Effective Date
are subject to the prohibition.3

   Stephan argues that the policy under which he was insured
was a new policy, issued after the CSA Effective Date, and
that therefore its discretionary authority provision is void. We
disagree.

                                     2.

   [2] Unum first issued the relevant disability insurance pol-
icy to TWP in 1999, years before the effective date of the
CSA. TWP renewed the policy annually. Between 1999 and
2007, the Plan was amended six times. The 2007 amendment
stated that it “form[ed] a part of Group Policy No. 537429
001,” the policy originally issued to TWP in 1999. It also
stated that “[t]he entire policy is replaced by the policy
attached to this amendment.” The attached policy was the
same as the previous version, issued in 2006, with the excep-
tion of a few changes to provisions that insurance companies
are explicitly permitted to amend upon renewal without seek-
ing permission of the Commissioner.4 While the effective date
of the amendment was listed as January 1, 2007, the policy as
a whole retained its original effective date, June 11, 1999.

   [3] Stephan contends that because the 2007 amendment
stated that it “replaced” the previous policy, the 2007 contract
cannot be understood as a renewal but must be viewed as an
entirely new policy. Unum responds that the language does
not indicate an intent to create a new policy, but rather was
  3
     Although the CSA is not entirely clear on this point, we accept the par-
ties’ interpretation for purposes of this appeal.
   4
     While the district court characterized the 2007 contract as containing
“a few amendments,” Unum states that there was only a single change to
the policy between 2006 and 2007. The record is unclear as to whether
there was a single change or a few changes, but the difference is unimpor-
tant. The changes were minimal and permitted under the California Insur-
ance Code.
11092          STEPHAN v. UNUM LIFE INSURANCE
included simply to avoid confusion: Rather than requiring
policyholders to read both the policy and any amendments,
Unum inserted the amendments into the text of the policy,
such that all policy information was contained in a single doc-
ument. Reviewing the 2007 contract as a whole, we agree
with Unum’s characterization and hold that the policy under
which Stephan was insured constituted a renewal within the
meaning of the CSA.

  First, as noted, any changes between the 2006 and 2007
policies were minimal and permitted under California law.

   Second, the language of the amendment itself indicates that
the policy to which it is attached is a renewal. The amendment
states that “[t]he policy’s terms and provisions will apply
other than as stated in this amendment.” Were the 2007 policy
entirely new and not a renewal, this language would make lit-
tle sense, as the reference to “the policy” would have no
meaning. Furthermore, the repeated use of the word “amend-
ment” in the 2007 contract indicates that it did not constitute
a new policy, but rather a continuation of the old policy with
minimal, permitted changes.

   The amendment also states that “[t]his amendment forms a
part of Group Policy No. 537429 001 issued to the Policy
holder: Thomas Weisel Partners LLC,” the policy issued to
TWP in 1999, and that “[t]he effective date of these changes
is January 1, 2007” (emphasis added). This language further
confirms that the 2007 policy was not a renewal by indicating
that while the changes were effective as of January 1, 2007,
the remainder of the policy as a whole retained its original
effective date. Indeed, the effective date of the policy contin-
ued to be listed as June 11, 1999.

   The CSA refers to “existing California contracts” as those
“issued prior to the Order of the Commissioner” (emphasis
added). The retention of the 1999 effective date on the
                STEPHAN v. UNUM LIFE INSURANCE              11093
amended policy is the strongest indicator that the policy was
issued in 1999, prior to the CSA.

   Overall, then, the language and structure of the 2007 con-
tract, taken together, indicate that the original 1999 policy
remained in effect. In support of his position to the contrary,
Stephan relies on cases holding that “[t]he renewal of a policy
is a new contract of insurance” (citing Borders v. Great Falls
Yosemite Ins. Co., 72 Cal. App. 3d 86, 94 (1977)). But the
cases Stephan cites are context-specific and inapplicable to
the question at issue here. As we noted above, the CSA
explicitly differentiates between new policies and renewals. If
all renewals constituted new policies under the CSA, the
CSA’s differentiation between the two would be meaningless.
Stephan’s reliance on cases where no such distinction was
made is therefore misplaced.

   [4] Because the language and structure of the 2007 policy
clearly indicates that it is a renewal of the existing policy, ini-
tially effective June 11, 1999, its discretionary authority pro-
visions are unaffected by the CSA.

                C.    California Public Policy

   Stephan’s alternative position is that in 2007, the inclusion
of discretionary provisions in insurance polices violated Cali-
fornia law and that any such provisions in the Plan are there-
fore void. This argument is also unavailing.

   [5] Under California law, “insurance policies are governed
by the statutory and decisional law in force at the time the
policy is issued. Such provisions are read into each policy
thereunder, and become a part of the contract with full bind-
ing effect upon each party.” Interins. Exch. of the Auto. Club
of S. Cal. v. Ohio Cas. Ins. Co., 58 Cal. 2d 142, 148 (1962)
(internal quotation marks omitted). This principle governs not
only new policies but also renewals: Each renewal incorpo-
rates any changes in the law that occurred prior to the
11094          STEPHAN v. UNUM LIFE INSURANCE
renewal. See Modglin v. State Farm Mut. Auto. Ins. Co., 273
Cal. App. 2d 693, 700 (1969); Steven Plitt, Daniel Maldonado
& Joshua D. Rogers, Couch on Insurance § 29:43 (3d ed.
2010). So, even though the 2007 policy under which Stephan
was insured was a renewal, it was nevertheless subject to any
relevant California law in place at the time it was issued. The
law in effect at the time of renewal of a policy governs the
policy even if that law is subsequently changed or repealed.
See Interins. Exch. of the Auto. Club, 58 Cal. 2d at 148-49.

   [6] In 2007, there was no California statute explicitly pro-
hibiting discretionary provisions. Stephan relies on Cal. Ins.
Code § 10291.5(b) which provided then (and provides now)
that

    [t]he commissioner shall not approve any disability
    policy for insurance or delivery in this state . . . [i]f
    the commissioner finds that it contains any provi-
    sion, or has any label, description of its contents,
    title, heading, backing, or other indication of its pro-
    visions which is unintelligible, uncertain, ambigu-
    ous, or abstruse, or likely to mislead a person to
    whom the policy is offered, delivered or issued.

This reliance is misplaced.

   As we explained above, the Commissioner’s notice that he
would withdraw approval from policies containing discretion-
ary clauses, the administrative hearing officer’s proposed
decision approving such notice, and the Commissioner’s order
adopting that decision (together, “the Commissioner’s deci-
sion” or “the decision”) held that discretionary clauses create
“uncertainty” about how a policy will be enforced and there-
fore what entitlements it ultimately guarantees. For that rea-
son, the Commissioner decided such clauses render insurance
policies “misleading and ambiguous” in violation of Cal. Ins.
Code § 10291.5(b)(1).
                  STEPHAN v. UNUM LIFE INSURANCE                     11095
   This decision did not, as Stephan contends, render void all
discretionary provisions contained in policies issued or
renewed after it was made. Section 10291.5(b) does not
directly void any policy or policy provision, even those that
fail to conform with its strictures. Rather, § 10291.5(b) pro-
vides the Commissioner grounds for refusing to approve or
withdrawing approval from any non-conforming policy. See
id. § 10291.5(b); id. § 10291.5(f). Specifically, the statute
provides that any policies that are approved by the Commis-
sioner and are “in accordance with the conditions, if any, con-
tained in the approval . . . shall . . . be conclusively presumed
to comply with, and conform to” § 10291.5. Id. § 10291.5(k)
(emphasis added). Thus, “[r]egardless of whether the Insur-
ance Commissioner should have approved the policy, an oth-
erwise valid policy is a binding contract and governs the
obligations of the parties until the Commissioner revokes his
approval.” Peterson v. Am. Life & Health Ins. Co., 48 F.3d
404, 410 (9th Cir. 1995).

   The policy form upon which the Plan was written was
approved by the Department of Insurance in 1991.5 After
Unum and the California Department of Insurance reached a
settlement agreement, the policy form was re-approved, sub-
ject to the terms of the CSA. As discussed above, because it
was a renewal, the Plan could contain a discretionary author-
  5
    Stephan argues that the policy was never approved by the Department
of Insurance. For this proposition, Stephan relies on a letter from the
Department stating that it had no record of approving the form issued to
TWP, although it did have a record “of approving a similar form number.”
Unum submitted to the district court an affidavit from Bonita Williams,
the Unum employee responsible for overseeing the filing and approval of
insurance forms with state departments of insurance. Williams stated that
the relevant form had indeed been approved, and that the Department
could not locate the approval because the policy number had been inadver-
tently changed. The district court found that the policy form was
approved. This factual finding is not clearly erroneous; we therefore
affirm it. See Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955, 962 (9th
Cir. 2006) (en banc).
11096           STEPHAN v. UNUM LIFE INSURANCE
ity provision and remain in compliance with the CSA.
Because the Plan was approved by the Commissioner, under
§ 10291.5(k), it must be “conclusively presumed to comply
with” California law.

   [7] In sum, the Plan’s discretionary authority provision did
not violate the terms of the CSA, nor is the provision void
under California law. We therefore review Unum’s decision
for abuse of discretion. See Glenn, 554 U.S. at 111.

             III.   CONFLICT OF INTEREST

   As we have explained, because the Plan grants discretion-
ary authority to Unum, we review Unum’s benefits decision
for an abuse of that discretion. See Glenn, 554 U.S. at 111;
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115
(1989); Salomaa v. Honda Long Term Disability Plan, 642
F.3d 666, 673 (9th Cir. 2011). Under this deferential standard,
a plan administrator’s decision “will not be disturbed if rea-
sonable.” Conkright v. Frommert, 130 S. Ct. 1640, 1651
(2010) (internal quotation marks omitted); Salomaa, 642 F.3d
at 675 (internal quotation marks omitted). This reasonableness
standard requires deference to the administrator’s benefits
decision unless it is “(1) illogical, (2) implausible, or (3) with-
out support in inferences that may be drawn from the facts in
the record.” Salomaa, 642 F.3d at 676 (internal quotation
marks omitted).

   This abuse of discretion standard, however, is not the end
of the story. Instead, the degree of skepticism with which we
regard a plan administrator’s decision when determining
whether the administrator abused its discretion varies based
upon the extent to which the decision appears to have been
affected by a conflict of interest. Id.

   [8] Under ERISA, Unum has a duty to process claims
“solely in the interests of the [plan’s] participants and benefi-
ciaries.” Glenn, 554 U.S. at 106 (alteration in original) (inter-
                STEPHAN v. UNUM LIFE INSURANCE             11097
nal quotation marks omitted). But because Unum “both
decides who gets benefits and pays for them, . . . it [also] has
a direct financial incentive to deny claims.” Saffon v. Wells
Fargo & Co. Long Term Disability Plan, 522 F.3d 863, 868
(9th Cir. 2008); see also Glenn, 554 U.S. at 105, 114-15; Aba-
tie v. Alta Health & Life Ins. Co., 458 F.3d 955, 966 (9th Cir.
2006) (en banc). Unum’s dual role as plan administrator,
authorized to determine the amount of benefits owed, and
insurer, responsible for paying such benefits, creates a struc-
tural conflict of interest. See Glenn, 554 U.S. at 105, 114-15.

   While not altering the standard of review itself, the exis-
tence of a conflict of interest is a factor to be considered in
determining whether a plan administrator has abused its dis-
cretion. Id. at 108. The weight of this factor depends upon the
likelihood that the conflict impacted the administrator’s deci-
sionmaking. Where, for example, an insurer has “taken active
steps to reduce potential bias and to promote accuracy,” the
conflict may be given minimal weight in reviewing the insur-
er’s benefits decisions. Id. at 117. In contrast, where “circum-
stances suggest a higher likelihood that [the conflict] affected
the benefits decision,” the conflict “should prove more impor-
tant (perhaps of great importance).” Id.

   The district court held that “Unum’s conflict of interest did
not weigh heavily upon its decision-making process in this
case and therefore does not tip the scale towards a finding of
an abuse of discretion.” In reaching this conclusion, the dis-
trict court erred by failing to apply traditional principles of
summary judgment; denying Stephan’s motion to compel dis-
covery of certain internal memoranda between Unum’s claim
analyst and its in-house counsel; and ignoring evidence that
Unum has a history of biased decisionmaking that indicates
that its conflict of interest in this case ought to be given more
weight.

                               A.

  Traditional summary judgment principles have limited
application in ERISA cases governed by the abuse of discre-
11098           STEPHAN v. UNUM LIFE INSURANCE
tion standard. Nolan v. Heald College, 551 F.3d 1148, 1154
(9th Cir. 2009). “Where,” as here, “the abuse of discretion
standard applies in an ERISA benefits denial case, a motion
for summary judgment is,” in most respects, “merely the con-
duit to bring the legal question before the district court and
the usual tests of summary judgment, such as whether a genu-
ine dispute of material fact exists, do not apply.” Id. (internal
quotation marks omitted).

   [9] Consideration of a conflict of interest is, however, an
exception to this feature of ERISA cases as “the traditional
rules of summary judgment” do apply. Id. As to issues regard-
ing the nature and impact of a conflict of interest, summary
judgment may only be granted if after “viewing the evidence
in the light most favorable to the non-moving party, there are
[no] genuine issues of material fact.” Id. (internal quotation
marks omitted).

   [10] Here, there is no indication that the district court
viewed the evidence of bias in the light most favorable to Ste-
phan. Rather, as in Nolan, “without evidentiary hearing or
bench trial, the district court considered and rejected [Ste-
phan’s] bias argument by weighing the documentary evidence
of bias, and ignoring the protections that summary judgment
usually affords the non-moving party.” Id. This was error.

   [11] On remand, the district court may, but need not, hold
a bench trial to determine the impact of Unum’s conflict of
interest. See id. Such a trial would ensure the “full bias inqui-
ry” necessary to determine what weight to give a conflict of
interest. Id. The district court may, however, rule once again
on summary judgment if a renewed motion is made. But it
must do so in accordance with the traditional summary judg-
ment principles.

   In particular, it should, where relevant, permit the admis-
sion of evidence outside the administrative record. Although,
for the most part, judicial review of benefits determinations is
               STEPHAN v. UNUM LIFE INSURANCE             11099
“limited to the administrative record” — that is, the record
upon which the plan administrator relied in making its bene-
fits decision — the evaluation of a conflict of interest is not
so limited. Id. Evidence outside the administrative record is
“properly considered” in determining the extent to which a
conflict of interest affected an administrator’s decision. Id.

   Here, as explained further below, the district court should
consider any relevant evidence about Unum’s history of
biased decisionmaking; any evidence that its decisionmaking
was biased in this case, including the internal memoranda
between Stephan’s claim analyst and its in-house counsel; as
well as any evidence that Unum took steps to reduce the
potential impact of a conflict of interest, either in general or
in this case. And, if considered on summary judgment, the
district court should view the evidence in the light most favor-
able to the non-moving party. Id.

                              B.

   In an effort to demonstrate to the district court that Unum
operated under a conflict of interest, Stephan sought to dis-
cover a series of internal memoranda created between Decem-
ber 2007 and February 2008 by Unum’s in-house counsel, at
the request of Unum’s claims analyst. Stephan argues that
although ordinarily such memoranda would fall under the
attorney-client privilege, Unum is a fiduciary of TWP’s
ERISA plan, and therefore the fiduciary exception to the priv-
ilege permits his discovery of the memoranda.

   The district court assumed without deciding that the fidu-
ciary exception applied to wholly-insured ERISA plans like
TWP’s. But it held that the exception did not apply in this
case because “the interests of plaintiff and defendant had suf-
ficiently diverged at the time the disputed memoranda were
created.” We agree that the fiduciary exception applies to
wholly-insured ERISA plans but disagree with the district
court’s holding that it is inapplicable here.
11100             STEPHAN v. UNUM LIFE INSURANCE
                                    1.

   [12] “As applied in the ERISA context, the fiduciary
exception provides that an employer acting in the capacity of
ERISA fiduciary is disabled from asserting the attorney-client
privilege against plan beneficiaries on matters of plan admin-
istration.” United States v. Mett, 178 F.3d 1058, 1063 (9th
Cir. 1999) (internal quotation marks omitted). Although the
Ninth Circuit has held that the fiduciary exception applies
generally in the ERISA context, see id. at 1062-63, whether
it applies to insurance companies in particular is a question of
first impression in this Circuit.6

   The justifications for excepting ERISA fiduciaries from
attorney-client privilege apply equally to insurance compa-
nies. In particular, courts have cited two rationales for apply-
ing an exception to the attorney-client privilege to ERISA
fiduciaries: “[S]ome courts have held that the exception
derives from an ERISA trustee’s duty to disclose to plan ben-
eficiaries all information regarding plan administration.” Mett,
178 F.3d at 1063. On this view, the attorney-client privilege
is subordinated to the fiduciary’s disclosure obligation. See id.
(citing In re Long Island Lighting Co., 129 F.3d 268, 271-72
(2d Cir. 1997)).

   “Other courts have” reasoned that because the ERISA fidu-
   6
     Although there is no Ninth Circuit precedent on this question, several
other courts have considered it. The Third Circuit, the only Court of
Appeals to address the issue, held that the fiduciary exception was inappli-
cable to insurance companies. See Wachtel v. Health Net, Inc., 482 F.3d
225 (3d Cir. 2007). Every district court that has considered the question
since, however, has rejected Wachtel’s approach and held that the fidu-
ciary exemption does apply to insurance companies. See, e.g., Klein v. Nw.
Mutual Life Ins. Co., 806 F. Supp. 2d 1120 (S.D. Cal. 2011); Buzzanga v.
Cigna, No. 4:09-CV-1353, 2010 WL 1292162 (E.D. Mo. Apr. 5, 2010);
Smith v. Jefferson Pilot Fin. Ins. Co., 245 F.R.D. 45 (D. Mass. 2007). For
the reasons we explain below, we agree with the rationale of these courts
and reject the Third Circuit’s conclusion.
                STEPHAN v. UNUM LIFE INSURANCE             11101
ciary is “a representative for the beneficiaries of the trust
which he is administering,” it is not the fiduciary, but rather
the plan beneficiary that is the “real client.” Mett, 178 F.3d at
1063 (internal quotation marks omitted). On this view, the
fiduciary exception is not really an exception at all. Attorney-
client privilege is maintained; there is only a different under-
standing of the identity of the client. Id.

   [13] Neither of these theories provides any basis for distin-
guishing ERISA trustees, to whom the Ninth Circuit has
already extended the fiduciary exception, from insurance
companies also serving in the role of ERISA fiduciary. The
duty of an ERISA fiduciary to disclose all information regard-
ing plan administration applies equally to insurance compa-
nies as to trustees.

   ERISA has broad disclosure requirements: It requires that
“every employee benefit plan . . . afford a reasonable opportu-
nity to any participant whose claim for benefits has been
denied for a full and fair review by the appropriate named
fiduciary of the decision denying the claim.” 29 U.S.C.
§ 1133. Because “[t]he opportunity to review . . . pertinent
documents is critical to a full and fair review,” Ellis v. Metro-
politan Life Insurance Co., 126 F.3d 228, 237 (4th Cir. 1997),
the regulations implementing this provision require that upon
request, a claimant be provided all “information relevant to
the claimant’s claim for benefits,” 29 C.F.R. § 2560.503-
1(h)(2)(ii). Neither the statute nor the regulations provide any
reason why the disclosure of information is any less important
where an insurer, rather than a trustee or other ERISA fidu-
ciary, is the decisionmaker.

   Similarly, the obligation that an ERISA fiduciary act in the
interest of the plan beneficiary does not differ depending on
whether that fiduciary is a trustee or an insurer. There is there-
fore no principled basis for excluding insurers from the fidu-
ciary exception.
11102          STEPHAN v. UNUM LIFE INSURANCE
                              2.

   The district court held that even if the fiduciary exception
applies to wholly-insured ERISA plans, the particular docu-
ments requested by Stephan do not fall within this exception
because they “were created after [Stephan’s] counsel con-
tacted Unum and an adversarial relationship had begun.”
After reviewing these documents in camera, we disagree.

   “The fiduciary exception has its limits — by agreeing to
serve as a fiduciary, an ERISA trustee is not completely debil-
itated from enjoying a confidential attorney-client relation-
ship.” Mett, 178 F.3d at 1063. Mett addressed these limits,
considering whether the fiduciary exception applied to two
memoranda written by a law firm that “wore many hats, serv-
ing at various times as counsel to [two ERISA trustees] per-
sonally and in their capacities as ERISA plan trustees, to [a
corporation] as a corporation and in its role as plan adminis-
trator, and to the ERISA plans themselves.” Id. at 1062. The
memoranda were written to the trustees and “relate[d] to the
potential civil and criminal consequences” the trustees might
face due to illegal actions they had taken in administering an
ERISA plan. Id.

   In analyzing whether the documents fell within the fidu-
ciary exception, Mett explained:

    [T]he case authorities mark out two ends of a spec-
    trum. On the one hand, where an ERISA trustee
    seeks an attorney’s advice on a matter of plan
    administration and where the advice clearly does not
    implicate the trustee in any personal capacity, the
    trustee cannot invoke the attorney-client privilege
    against the plan beneficiaries. On the other hand,
    where a plan fiduciary retains counsel in order to
    defend herself against the plan beneficiaries (or the
    government acting in their stead), the attorney-client
    privilege remains intact.
               STEPHAN v. UNUM LIFE INSURANCE             11103
Id. at 1064. The memoranda at issue in Mett, we held, fell
within the latter category. They were not rendering advice “on
a matter of plan administration,” but “were plainly defensive
on the trustees’ part and aimed at advising the trustees how
far they were in peril.” Id. (internal citations and quotation
marks omitted).

   Here, the documents sought fall on the other end of the
Mett spectrum. The documents at issue are notes of conversa-
tions between Unum claims analysts and Unum’s in-house
counsel about how the insurance policy under which Stephan
was covered ought to be interpreted and whether Stephan’s
bonus ought to be considered monthly earnings within the
meaning of the Plan. Unlike the memoranda in Mett, the dis-
puted documents offer advice solely on how the Plan ought to
be interpreted. They do not address any potential civil or
criminal liability Unum might face, nor is there any indication
that they were prepared with such liability in mind.

   Unum argues that, nevertheless, the fiduciary exception
ought not apply to the documents because of the context in
which they were created. The memoranda, Unum contends,
“were all created after Unum had received correspondence
from Stephan’s counsel,” and therefore after there was “an
indication that the parties may become adverse.” There is no
binding precedent in this circuit delineating precisely when
the interests of a Plan fiduciary and its beneficiary become
sufficiently adverse that the fiduciary exception no longer
applies. Courts that have considered the issue, however, “have
repeatedly rejected the argument that the prospect of post-
decisional litigation is enough to overcome the fiduciary
exception.” Allen v. Honeywell Ret. Earnings Plan, 698 F.
Supp. 2d 1197, 1201 (D. Ariz. 2010) (internal quotation
marks omitted); see, e.g., Geissal v. Moore Med. Corp., 192
F.R.D. 620, 625 (E.D. Mo. 2000); Klein, 806 F. Supp. 2d at
1132-33 (collecting cases). Most courts have held that it is not
until after the final determination — that is, after the final
administrative appeal — that the interests of the Plan fidu-
11104          STEPHAN v. UNUM LIFE INSURANCE
ciary and the beneficiary diverge for purposes of application
of the fiduciary exception. See Klein, 806 F. Supp. 2d at 1132.
We agree with the weight of authority. The context of the
documents at issue here — communications in advance of
Unum’s decision on Stephan’s appeal — indicates that their
goal was the determination of Stephan’s pre-disability earn-
ings, a matter of plan administration, and was not preparation
for litigation.

   [14] The content of the documents confirms this conclu-
sion. Whereas the Mett memoranda were prepared to advise
ERISA trustees “regarding their own personal civil and crimi-
nal exposure in light of undocumented withdrawals that had
already occurred,” Mett, 178 F.3d at 1064, the documents
here were prepared to advise Unum claims analysts about
how best to interpret the Plan, and were communicated to the
analysts before any final determination on Stephan’s claim
had been made. The content of the documents was thus about
plan administration, a topic to which, under Mett, the fidu-
ciary exception applies.

   [15] In sum, advice on the amount of benefits Stephan was
owed under the Plan, given before Unum had made any final
determination on his claim, constitutes advice on plan admin-
istration. Such advice was given before the interests of Ste-
phan and Unum became adverse. The fiduciary exception to
the attorney-client privilege therefore applies to the docu-
ments at issue here. Absent some other basis for withholding
them, the district court, on remand, should permit discovery
of the documents.

                              C.

   [16] The Supreme Court instructed in Glenn that a “con-
flict of interest . . . should prove more important (perhaps of
great importance) . . . where an insurance company adminis-
trator has a history of biased claims administration.” Glenn,
554 U.S. at 117. In so stating, Glenn cited a law review article
                STEPHAN v. UNUM LIFE INSURANCE             11105
“detailing such a history for one large insurer.” Id. (citing
John H. Langbein, Trust Law as Regulatory Law: The Unum/
Provident Scandal and Judicial Review of Benefit Denials
Under ERISA, 101 Nw. U. L. Rev. 1315, 1317-21 (2007)).
That insurer was Unum. Id.

   [17] Numerous courts, including ours, have commented on
Unum’s history “ ‘of erroneous and arbitrary benefits denials,
bad faith contract misinterpretations, and other unscrupulous
tactics,’ ” McCauley v. First Unum Life Ins. Co., 551 F.3d
126, 137 (2d Cir. 2008) (quoting Radford Trust v. First Unum
Life Ins. Co., 321 F. Supp. 2d 226, 247 (D. Mass. 2004), rev’d
on other grounds, 491 F.3d 21, 25 (1st Cir. 2007)). Indeed, in
Saffon, we attributed the trend of state prohibitions on discre-
tionary provisions in insurance contracts to “the cupidity of
one particular insurer, Unum-Provident Corp., which boosted
its profits by repeatedly denying benefits claims it knew to be
valid. Unum-Provident’s internal memos revealed that the
company’s senior officers relied on ERISA’s deferential stan-
dard of review to avoid detection and liability.” 522 F.3d at
867; see also Radford Trust, 321 F. Supp. 2d at 247 n.20 (col-
lecting cases). Moreover, the CSA notes that Unum was sub-
ject to “a multistate targeted examination” of its “claims
handling practices,” which resulted in a settlement agreement
similar to the CSA. And the CSA was the product of investi-
gations by the State of California into Unum’s claims han-
dling practices.

   The district court held that Stephan had not “demonstrated
‘a history of biased claims administration.’ ” Given the public
record and the record in this case, that conclusion is incorrect.

   Furthermore, Unum did not present any evidence indicating
that it made any effort to mitigate its conflict of interest.
Unum “was not required to present evidence demonstrating
its efforts to achieve claims administration neutrality.” Mon-
tour, 588 F.3d at 634. But “the Supreme Court’s decision in
[Glenn] placed it on notice as to the potential significance of
11106           STEPHAN v. UNUM LIFE INSURANCE
such evidence in defense of a suit by a claimant challenging
an adverse benefits determination.” Id. Glenn explained that
a conflict of interest would

    prove less important (perhaps to the vanishing point)
    where the administrator has taken active steps to
    reduce potential bias and to promote accuracy, for
    example, by walling off claims administrators from
    those interested in firm finances, or by imposing
    management checks that penalize inaccurate deci-
    sionmaking irrespective of whom the inaccuracy
    benefits.

554 U.S. at 117. So far, Unum has presented no such evi-
dence.

   [18] In reconsidering the weight to accord to Unum’s con-
flict of interest, the district court should take into account the
public record of Unum’s history of biased decisionmaking as
well as any evidence of such history Stephan produces. In
addition, it should allow Unum the opportunity to demon-
strate that, before making the decision on Stephan’s claim, it
implemented procedures to mitigate possible bias.

                               D.

   As we have explained, on remand, the district court should
reconsider what weight to give Unum’s conflict of interest in
its analysis of whether Unum abused its discretion. In particu-
lar, the court must determine whether the “conflict may have
tainted the entire administrative decisionmaking process” and
therefore the “stated bases for [Unum’s] decision” ought to be
reviewed “with enhanced skepticism.” Montour, 588 F.3d at
631. Although we express no opinion on the ultimate outcome
of this inquiry, we note that there are several aspects of
Unum’s decision that might well indicate that “bias infiltrated
the entire decisionmaking process.” Id. at 634.
               STEPHAN v. UNUM LIFE INSURANCE             11107
                               1.

   First, Unum’s interpretation of the language of the Plan
rests on terms that do not appear in the relevant text. The Plan
entitled Stephan to sixty percent of his monthly earnings up
to a maximum of $20,000. It specified that

    “Monthly Earnings” means your average gross
    monthly income as figured:

         a. from the income box on your W-2 form
         which reflects wages, tips and other com-
         pensation received from your Employer for
         the two (2) calendar-years just prior to your
         date of disability; or

         b. for the period of your employment with
         your Employer if you have been employed
         less than two (2) full calendar years prior to
         your date of disability.

    Average gross monthly income is your total income
    before taxes. It is prior to any deductions made for
    pre-tax contributions to a qualified deferred compen-
    sation plan, Section 125 plan, or flexible spending
    account. It does not include income received from
    car, housing or moving allowances, Employer contri-
    butions to a qualified deferred compensation plan, or
    income received from sources other than your
    Employer.

As Stephan worked for less than a year before becoming dis-
abled, his Plan benefit was to be calculated based on his “av-
erage gross monthly income . . . for the period of [his]
employment” at TWP.

 As noted above, in the letter offering Stephan employment,
TWP provided:
11108             STEPHAN v. UNUM LIFE INSURANCE
      Your salary rate will be $200,000 annually. . . . You
      will be eligible to participate in Thomas Weisel Part-
      ners’ discretionary bonus program. Although
      bonuses are generally discretionary, you will be
      guaranteed [a] $300,000 bonus for your first 12
      months of employment, provided you perform at the
      level both you and we anticipate and that you have
      not voluntarily terminated your employment or been
      terminated for cause prior to the relevant payment
      dates.

The Plan is silent as to whether and how such a bonus ought
to be included in Stephan’s gross monthly earnings if he is
disabled before the bonus is received.7

   Unum insists that the “monthly earnings” upon which dis-
ability benefits are based must be limited to “earnings
received up to the date of disability.” But the language limit-
ing earnings to income already “received” appears in section
(a) of the definition, applicable after two years of employ-
ment, not in section (b), which applies to employees disabled
after fewer than two years of work. As Stephan had worked
for less than a year before becoming disabled, it is section (b)
that applies to him. Section (b) contains no reference to when
income is received. Unum’s reliance on the term “received”
to interpret section (b) is therefore misplaced.

   Furthermore, Unum’s interpretation would make arbitrary
distinctions based on an insured’s length of employment, dis-
  7
   Citing Arnold v. Unum Life Insurance Co. of America, 726 F. Supp. 2d
1063 (N.D. Cal. 2009), Stephan notes that other insurance plans issued by
Unum explicitly excluded bonuses from the definition of monthly earn-
ings, and argues therefore that Unum’s failure to do so here indicates that
they are included. However, Unum also issued plans that explicitly
included bonuses in the definition of monthly earnings. See Hemenway v.
Unum Life Ins. Co. of Am., 89 F. App’x 630, 631 (9th Cir. 2004). We
therefore cannot draw any inference from the Plan’s silence on how
bonuses ought to be treated.
               STEPHAN v. UNUM LIFE INSURANCE             11109
tinctions not supported by the text of the Plan. For example,
if Stephan had become disabled the day he received his
bonus, it would be included in the earnings upon which
Unum’s disability payments were based. But if he had
become disabled one day before his first bonus was received,
it would not be so included, even if he had worked for twelve
months at an adequate level and his bonus was, therefore,
guaranteed.

   In addition, the Plan’s definitions of “monthly earnings”
and “gross monthly income” are the same — “total income
before taxes” — regardless of how long an insured has been
employed. Such earnings are not defined differently based on
length of employment, but merely “figured” differently
(emphasis added). On Unum’s interpretation, however, for
those employees who have received their bonuses, “total
income” would include salary and bonuses. For those whose
bonuses are guaranteed but have yet to be paid, such income
would include salary only. This result is at odds with the poli-
cy’s language, which defines monthly earnings without regard
to length of employment.

   Finally, interpreting “gross monthly income” to include
only income actually received would mean that employees
who became disabled before receiving their first paycheck
would receive no disability payments at all. Similarly, the dis-
ability payments for an employee whose paycheck was incor-
rect — for example someone who had been accidentally
underpaid due to a payroll error or intentionally underpaid
due to discrimination — would be calculated based on this
erroneous figure.

   The district court “expresse[d] no opinion on these matters,
and limit[ed] its holding to the facts of this action.” But the
Plan applies to all TWP employees, not merely Stephan, and
Unum is required by law to ensure that “the plan provisions”
are “applied consistently with respect to similarly situated
claimants.” 29 C.F.R. § 2560.503-1(b)(5). Unum’s interpreta-
11110          STEPHAN v. UNUM LIFE INSURANCE
tion of the Plan as limiting monthly earnings to income actu-
ally received either disregards this obligation or reaches an
unsupportable result.

                               2.

   Similarly, Unum relies on a questionable interpretation of
Stephan’s offer letter. As noted above, Stephan’s offer letter
provided that his compensation included a “guaranteed
$300,000 bonus for [his] first twelve months of employment”
(emphasis added). Stephan’s bonus was thus a nondiscretion-
ary part of his income, so long as he met the conditions of the
offer letter. The letter required only that Stephan “perform at
the level both [he and TWP] anticipate[d] and that [Stephan]
not voluntarily terminate[ ] [his] employment or be[ ] termi-
nated for cause prior to the relevant payment dates.”

   Unum decided that because Stephan “did not work a full 12
months . . . it is apparent that TWP went outside their own
employment agreement when [Stephan] received a bonus in
December 2007.” Such a conclusion is far from clear from the
language of the offer letter.

   Stephan was certainly not “terminated for cause.” Nor is it
sensible to understand his inability to work due to disability
as a voluntary termination of employment. And although the
bonus was contingent on Stephan maintaining a particular
level of performance in his first twelve months, the letter does
not specify that level. Nor is there any indication that Stephan
fell below any requisite performance standard. Finally, the let-
ter does not indicate that periods of disability cannot count
toward the requisite period of employment.

   Moreover, the central question at issue in this case is not
whether Stephan was entitled to receive his bonus in its
entirety, but whether he earned it on a pro rata basis each
month as part of his income. Unum’s interpretation of the
offer letter does not answer that question. In relying on Ste-
               STEPHAN v. UNUM LIFE INSURANCE             11111
phan’s offer letter, Unum thus relied on a contractual interpre-
tation that is, at best, only weakly supported by the
contractual language.

                               3.

   In support of its decision, Unum repeatedly cited a tele-
phone call during which TWP General Counsel Mark Fisher
stated that TWP intended to “morally honor” Stephan’s con-
tract by paying him his annual bonus even though he had not
yet worked twelve months. Unum argues that this statement
indicates that TWP did not consider the bonus a portion of
Stephan’s income it was contractually obligated to pay;
instead, Unum contends, TWP gave Stephan $300,000, none
of which he was actually owed, out of sympathy for his situa-
tion.

  Unum took this quotation out of context and then pro-
ceeded to give it undue weight in its determination of Ste-
phan’s pre-disability earnings. The text of the notes from
which the quotation was drawn states more completely:

    Received a call from [TWP] . . . . They are going to
    continue payment and honor their contract with the
    claimant and continue his salary along with the
    bonus payment and they want a statement in writing
    that this wil[l] [n]ot affect the LTD bens [long-term
    disability benefits] and we will not consider this an
    offset to his earnings. He says as their company is
    set up and the way most wall street corps are the
    main income ee’s [employees] receive is from bonus
    and the base salary is a set amount. They want a
    statement that continued payment of his contract
    they are going to morally honor will be treated as
    s[al]ary cont[inuation] and not affect his benefits.

(emphasis added). In contrast to Unum’s implication, this
conversation demonstrates that TWP understood Stephan’s
11112           STEPHAN v. UNUM LIFE INSURANCE
bonus not as a discretionary addition to his income, but rather
as an integral — in fact, the “main” — part of his payment
for each month’s work, despite the fact that it was not to be
received until later. TWP’s counsel therefore most probably
meant not that it was giving Stephan his bonus to be charita-
ble, but rather that it considered the bonus an essential part of
Stephan’s salary.

   Other evidence in the record confirms that TWP understood
Stephan’s bonus as part of his monthly earnings, and therefore
as earnings upon which disability payments ought to be calcu-
lated. For example, the claim form TWP submitted for Ste-
phan listed as his “Salary/Wage prior to date last worked,” a
semi-monthly salary of $8,333.33 as well as a bonus of
“$300,000 (for 2007).” And in the same conversation upon
which Unum relies to support its earnings determination,
TWP “also stated that they have an issue with the monthly
earnings and the amount of ben[efit]s [Unum] will be pay-
ing.”

   Given the strong support in the record for the conclusion
that TWP believed Unum’s bonus to be part of his monthly
earnings, Unum’s reliance on TWP’s statement that it would
“morally honor” Stephan’s contract as implying that TWP did
not understand the bonus as part of Stephan’s monthly income
is “without support in inferences that may be drawn from the
facts in the record,” Salomaa, 642 F.3d at 676, and may indi-
cate bias.

                               4.

   In addition to mischaracterizing TWP’s understanding of
Stephan’s bonus, Unum ultimately disregarded TWP’s con-
clusion that the bonus ought to be included in the calculation
of Stephan’s pre-disability earnings. Unum also rejected the
views of Carol Poulin, a Certified Public Accountant, who in
his former positions as Manager and then Director of Finan-
cial Assessment at Unum,
                 STEPHAN v. UNUM LIFE INSURANCE                 11113
      was closely involved in developing the LTD [long-
      term disability] contract language for Basic Monthly
      Earnings definitions for the new LTD contract devel-
      oped by UNUM in the 1990s — the same contract
      that Mr. Stephan [was] . . . covered under.

Relying on several documents related to Stephan’s claim,8
Poulin concluded that “Mr. Stephan’s monthly income con-
sists of both his pro-rated salary and pro-rated guaranteed
bonus.”

   Unum rejected Poulin’s conclusion because it did “not take
into account the fact that the bonus is contingent on a level of
performance over the first 12 months of employment, which
[Stephan] did not complete.” However, Poulin’s report states
that he reviewed Stephan’s offer letter. Furthermore, as we
have explained, Unum misreads the offer letter as specifying
that the bonus was not part of Stephan’s earnings.

   Unum’s failure to give any weight to Poulin’s analysis and
its distortion of TWP’s views indicate that it failed to take
into account relevant evidence, supporting the conclusion that
its decisionmaking was affected by a conflict of interest.

                                  5.

  Unum repeatedly cited the premiums paid for Stephan as
evidence that Stephan’s bonus ought not be included as gross
monthly earnings. The record makes clear, however, that
Unum either did not in fact rely on the premiums or did so in
a way that was illogical. In either case, Unum’s citation of
premium payments supports an inference of bias.
  8
    Poulin reviewed Stephan’s earnings statements, his 2007 W-2 form,
memoranda from TWP to Stephan’s attorney, Stephan’s disability applica-
tion, Stephan’s employment offer letter, Unum plan documents, TWP’s
premium statement from Unum, and letters from Unum regarding Ste-
phan’s claim.
11114          STEPHAN v. UNUM LIFE INSURANCE
   Because of what seems to have been a recordkeeping error,
Unum believed for most of the benefits determination process
that TWP had paid premiums for Stephan corresponding to an
annual income of only $100,000. While still under the impres-
sion that TWP paid premiums based on a salary of $100,000,
Unum found that Stephan was owed disability payments
based on an annual salary of $200,000. Thus, Unum could not
have initially relied on the premiums paid by TWP to deter-
mine Stephan’s pre-disability earnings.

   Nevertheless, once Unum confirmed that TWP paid premi-
ums for Stephan based on a salary of $200,000, it began to
justify its decision with reference to these premiums. This
“shifting and inconsistent” reliance on premiums raises the
possibility that Unum’s decision was affected by its conflict
of interest. See Salomaa, 642 F.3d at 678.

   Furthermore, there is conflicting evidence in the record
about how TWP paid its premiums and, therefore, to what
extent the premiums accurately reflected the earnings of TWP
employees. Unum’s own review of TWP’s premium pay-
ments was inconclusive, finding that there was not “sufficient
information to be able to clearly determine if the earnings fig-
ures [on which premiums were paid] . . . are salary only or
some combination of salary and bonus.” Indeed, with respect
to TWP’s premiums, the only thing clear from the record is
that they were not a reliable source of evidence of employees’
actual earnings. The record notes, for example, “a significant
adjustment [in premiums] in April of 2006, which does not
appear to correspond to a significant increase in policy lives
covered but may reflect an attempt to correct a historical
underpayment of premiums” — that is, an adjustment of pre-
miums entirely unrelated to the earnings of TWP employees.

  Thus, Unum’s reliance on TWP’s premium payments was
both inconsistent and illogical. That reliance therefore could
be indicative of the impact of Unum’s conflict of interest. See
Salomaa, 642 F.3d at 678.
                  STEPHAN v. UNUM LIFE INSURANCE                     11115
                                    6.

   Attached to the letter Stephan sent to Unum appealing its
decision, Stephan provided a letter from TWP stating that
each month, the company recorded a compensation expense
equal to 1/12th of the cash amount of Stephan’s annual bonus.
In its letter rejecting Stephan’s appeal, Unum stated that if
Stephan’s bonus payment truly accrued monthly, it would
have been paid monthly. This assertion is incorrect. Compa-
nies that use an accrual method of accounting record expenses
when they are incurred, rather than when they are paid. See,
e.g., Carl S. Warren, James M. Reeve & Jonathan Duchac,
Accounting 104 (24th ed. 2011). Thus, a compensation
expense can be accrued without it having actually been paid.9

   That Unum relied on an unsupported assertion contrary to
basic accounting principles is yet another factor relevant to
assessing the degree to which Unum’s structural conflict of
interest may have affected its benefits decision.

                        IV.    CONCLUSION

   [19] We affirm the district court’s ruling that the proper
standard of review is abuse of discretion. We reverse, how-
ever, the district court’s grant of summary judgment to Unum.
We remand the case to the district court for reconsideration of
the weight Unum’s conflict of interest ought to be accorded
in determining whether Unum abused its discretion. On
  9
    Moreover, it is standard accounting practice to estimate the amount of
yearly bonuses that will be paid and record monthly a pro-rated amount
attributed to each month. See Steven M. Bragg, The Ultimate Accountants’
Reference 207 (3d ed. 2010). This is so even when the payment or amount
of the bonus is uncertain and dependent — such as, for example, a bonus
tied to sales benchmarks — so long as the bonus can be estimated with
reasonable confidence. See id. It is therefore difficult to draw any conclu-
sions from TWP’s monthly recording of a pro-rated share of Stephan’s
bonus. But this difficulty is not for the reason stated by Unum — that an
expense is only truly accrued if it is paid out.
11116           STEPHAN v. UNUM LIFE INSURANCE
remand, the district court may, but need not, determine that
additional discovery; an evidentiary hearing; and/or a bench
trial is required. We leave it to the district court in the first
instance to determine the procedures best suited to evaluating
fully Unum’s conflict of interest. Having reconsidered the
nature and impact of Unum’s conflict of interest — including
any evidence that the conflict led Unum to render an interpre-
tation of the policy that is unsupported by the record — the
district court should re-weigh the relevant evidence and deter-
mine whether Unum abused its discretion in failing to include
Stephan’s bonus in its pre-disability earnings calculation.

  AFFIRMED   IN   PART,      REVERSED          AND
REMANDED IN PART. Each party shall bear its own costs
on appeal.



O’SCANNLAIN, Circuit Judge, dissenting:

   I agree with the majority that we evaluate Unum Life Insur-
ance Company’s interpretation of plan terms under an abuse
of discretion standard. I cannot agree, however, that remand
is appropriate. The district court did not, as the majority con-
tends, improperly weigh evidence at the summary judgment
stage. And Unum’s interpretation of the plan—which is silent
on whether a bonus should be counted as monthly income—
is reasonable and supported by the record. I would therefore
affirm the grant of summary judgment in favor of Unum.

                                I

   The majority holds that the district court “failed to apply
the traditional rules of summary judgment to its analysis of
whether and to what extent a conflict of interest impacted
Unum’s benefits determination.” Op. at 11082. I disagree.
The district court properly considered the evidence before it.
Stephan presented no specific evidence of bias; the exhibits
                  STEPHAN v. UNUM LIFE INSURANCE                     11117
he filed included correspondence with Unum, an expert
report, and Unum’s notes from Stephan’s claim folder, all of
which showed consistent handling of Stephan’s claim.1 The
district court considered all of Stephan’s evidence, as well as
hundreds of pages of evidence submitted by Unum, before
concluding that “Unum’s conflict of interest did not weigh
heavily upon its decision-making process in this case.”

   Lacking support for its assertion that the district court
improperly weighed the evidence before it, the majority
directs the district court on remand to “permit the admission
of evidence outside the administrative record” to evaluate
bias. Op. at 11098. This is not our law. A district court is not
required to consider evidence outside the record. Rather,
when evaluating the “nature, extent, and effect on the
decision-making process of any conflict of interest,” the dis-
trict court “may, in its discretion, consider evidence outside
the administrative record.” Abatie v. Alta Health Ins. Co., 458
F.3d 955, 970 (9th Cir. 2006) (en banc) (emphasis added);
Nolan v. Heald College, 551 F.3d 1148, 1150 (9th Cir. 2009)
(explaining that Abatie “permit[s]” plaintiffs to submit evi-
dence outside the administrative record). We therefore cannot,
as the majority suggests, require the district court to conduct
an independent assessment of bias beyond the evidence pres-
ented by the parties. See op. at 11098-99.

  Remand thus serves only to provide Stephan a second
opportunity to litigate his case. That is not appropriate here.
  1
    While I agree with the majority that the district court erred in denying
Stephan’s motion to compel certain discovery, having reviewed these doc-
uments in camera, they would not help Stephan’s case. Such an error, in
light of the other evidence, does not require remand. See Kaiser Found.
Health Plan, Inc. v. Abbot Labs., Inc., 552 F.3d 1033, 1042 (9th Cir. 2009)
(explaining that erroneous evidentiary rulings require reversal only where
they are prejudicial).
11118          STEPHAN v. UNUM LIFE INSURANCE
                              II

                              A

   Nevertheless, the majority decides to remand. Having so
decided, the majority’s opinion should be at an end. But it is
not. While purporting to “express no opinion” on whether
Unum’s interpretation of the plan should be found unreason-
able, Op. at 11106, the majority expansively opines on the
correct outcome of the district court’s inquiry, see op. at
11106-15. In doing so, the majority mischaracterizes the
record and traverses well outside the bounds of our deferential
review. What is more, the majority’s extensive dicta, see op.
at 11106-15—which, in any event, does not bind the district
court—relies on inconclusive evidence and concludes that,
because it would have interpreted that evidence differently,
Unum’s interpretation is unreasonable. See op. at 11111-14.
This is not abuse of discretion review.

   To take one example: the majority unfairly criticizes
Unum’s reliance on TWP’s statement that it would “morally
honor” its employment contract and posits that TWP “most
probably meant” that TWP viewed the bonus as a necessary
component of Stephan’s salary. Op. at 11112. Based on the
record, which consists only of Unum’s own notes of the con-
versation, the meaning of TWP’s statement is—as the major-
ity itself acknowledges—inconclusive. Likewise, the
majority’s reliance on Stephan’s offer letter is misplaced.
Though the letter indicated that his bonus was “guaranteed,”
it also said that this bonus would be paid to Stephan “pro-
vided you perform at the level” TWP anticipated for a twelve-
month period. Yet the majority is confident that Unum “mis-
reads” TWP’s offer letter. Op. at 11113. This dictum should
have been left on the cutting room floor.

                              B

  The evidence demonstrates that Unum’s conclusion that
Stephan’s bonus was not included in the calculation of
                STEPHAN v. UNUM LIFE INSURANCE             11119
monthly benefits under the plan is a reasonable one. Unum
consistently explained that it was not including the annual
bonus because that bonus was contingent on Stephan complet-
ing a year of satisfactory performance, which he did not do;
because the bonus was not paid on a monthly basis; because
TWP had not paid premiums on the higher amount; and
because it did not find TWP’s expert persuasive. Its interpre-
tation of the plan should not be disturbed. See Conkright v.
Frommert, 130 S. Ct. 1640, 1647, 1651 (2010); Salomaa v.
Honda Long Term Disability Plan, 642 F.3d 666, 676 (9th
Cir. 2011).

   We may not substitute our views on how the plan should
be interpreted for those of the plan administrator. The district
court, after considering the evidence Stephan presented, cor-
rectly concluded that Unum’s conflict of interest carried little
weight in light of other considerations and that Unum had rea-
sonably interpreted the plan. It should not have to revisit that
determination.

                               III

   It is admittedly difficult to weigh the extent to which a con-
flict influenced a benefits determination. See Salomaa, 642
F.3d at 675. But “district courts are well equipped to consider
the particulars of a conflict of interest.” Abatie, 458 F.3d at
969. The district court did so correctly in this case, and I
would affirm its grant of summary judgment in favor of
Unum.

  I respectfully dissent.
