Free Brief (Non Appeal) - District Court of Arizona - Arizona

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Susan Martin, Atty, No. 014226 Daniel L. Bonnett, Atty. No. 014127 Jennifer Kroll, Atty, No. 019859 Martin & Bonnett, P.L.L.C. 3300 North Central Avenue, Suite 1720 Phoenix, AZ 85012-2517 Telephone: (602) 240-6900 [email protected] [email protected] [email protected] Attorneys for Plaintiffs Michael L. Banks, Pro Hac Vice MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 Telephone: (215) 963-5000 [email protected] Howard Shapiro, Pro Hac Vice PROSKAUER ROSE LLP 909 Poydras Street, Suite 1100 New Orleans, LA 70112-4017 Telephone: (504) 310-4088 [email protected]

David B. Rosenbaum, Atty. No. 009819 Dawn L. Dauphine, Atty. No. 010833 OSBORN MALEDON, P.A. 2929 North Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 Telephone: (602) 640-9000 [email protected] [email protected]

Amy Covert, Pro Hac Vice PROSKAUER ROSE LLP One Newark Center, 18th Floor Newark, NJ 07102 Telephone: (973) 274-3258 [email protected] Christopher Landau, P.C., Pro Hac Vice Craig S. Primis, P.C., Pro Hac Vice Michael F. Williams, Pro Hac Vice Eleanor R. Barrett, Pro Hac Vice KIRKLAND & ELLIS LLP 655 Fifteenth Street, N.W. Washington, DC 20005-5793 Telephone: (202) 879-5000 [email protected] [email protected] [email protected] [email protected]

Attorneys for Defendants

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Barbara Allen, et al., Plaintiffs, vs. Honeywell Retirement Earnings Plan, et al., Defendants. No. CV04-0424 PHX ROS JOINT BRIEF RE: PLAINTIFFS MOTION TO COMPEL DOCUMENTS ON DEFENDANTS PRIVILEGE LOGS

Case 2:04-cv-00424-ROS

Document 451

Filed 05/16/2008

Page 1 of 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

PLAINTIFF S POSITION. For the same reasons stated on the motions sub judice, (Doc. 234, 332), Defendants should be compelled to disclose the additional documents Plaintiffs seek from the 803 claims of privilege provided in privilege logs Defendants served on May 6 and May 13, 2008. For the convenience of the Court, Plaintiffs have annotated Defendants privilege logs with a legend setting forth the basis why each document Plaintiffs seek should be disclosed, (Exh. A & B), as follows: Code F: Documents Subject To The Fiduciary Exception To The Attorney Client Privilege. (Doc. 332, pp. 2-6, 10-12.): These documents appear to relate to Plan administration. They include, inter alia, evaluation and responses to Plaintiffs and other participants administrative claims, appeals or correspondence regarding benefits under the Plan,1 compliance with ERISA, implementation of Plan amendments and communications with Plan participants and are therefore subject to the fiduciary exception. Matters addressing implementation of plan amendments clearly involve Plan administration as does advice concerning compliance with ERISA, fiduciary responsibilities, or other statutory requirements, including communications with participants regarding Plan features and changes. Code L: Litigation Not Reasonably Anticipated. (Doc. 332 pp. 5-6, 9-10.) There was no divergence of interests and litigation could not have been reasonably anticipated until after denial of Plaintiffs administrative appeal. The fact that Plaintiffs hired a representative who submitted all claims to the Plan in an effort to avoid litigation did not make litigation inevitable. See, e.g., Geissal v. Moore Medical Corp., 192 FRD 620, 625 (E.D. Mo. 2000). Cf. 29 C.F.R. § 2560.503-1(b)(4) (ERISA claims rules require plans to allow authorized representative to represent claimant) . Code P: Documents That Post-Date The 2/4/84 Signal Plan Amendments. (Doc. 332 pp. 6-7, 10-12.) Plaintiffs have challenged Defendants claim that the Signal Plan amendments at issue were adopted on 2/4/84 and have served Defendants with Plaintiffs administrative claims were submitted on 7/26/02 and were denied on 1/24/03. Plaintiffs appeal was submitted on 7/1/03 and denied on 10/29/03.
Case 2:04-cv-00424-ROS Document 451 Filed 05/16/2008 Page 2 of 8
1

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

discovery requests related to that issue. Prior to the belated "discovery" of a document dated 2/4/84, Defendants produced and relied on a document dated 10/85 as the first Signal Plan document which amended the Garrett Plan benefit formulas. Numerous documents on Defendants logs refer to Signal Plan amendments, post-date 2/4/84 and appear to be essential to Plaintiffs claim regarding the alleged adoption date of the Signal Plan amendments, an issue that clearly implicates Plan administration and ERISA compliance requirements, issues subject to the fiduciary exception. In the pending privilege motions, Plaintiffs challenged the refusal to produce a 2/10/84 document which purports to be a memo regarding the "draft" Signal Retirement Plan but is dated after the 2/4/84 date Defendants claim the Signal Plan amendments were adopted. Defendants latest listing contains over 50 such documents which discuss or reference drafts of the amendment to the Signal Retirement Plan after 2/4/84 and as late as 11/84. In addition there are more than 50 undated documents that likewise appear to pertain to the adoption date issue. If, as Defendants contend, the Plan had been properly amended on 2/4/84, then these documents must deal with Plan administration and should be disclosed. Code R: Documents that appear to reflect no legal advice, no lawyer involvement or appear to be capable of redaction to remove any legal advice. Assuming arguendo that such documents do not also implicate Plan administration issues, this category includes, inter alia, all drafts of Plan amendments and notes regarding the same unless some advice was given in connection therewith. See In Re

Gabapentin Patent Litigation 214 F.R.D. 178, 187 (D.N.J. 2003) ( Since it impossible to tell when or why the undated documents were created, we are precluded from finding that they were created in anticipation of litigation and therefore order them produced...attorney's notes and personal musings do not constitute communications, are not privileged, and must be produced. ). Code E: Documents Authored By Or Distributed To Lower Level Employees With No Showing By Defendants That The Documents Met The Upjohn Criteria For Privilege. (Doc. 332 pp. 14-15.) For a corporation to establish that the attorney2

Case 2:04-cv-00424-ROS

Document 451

Filed 05/16/2008

Page 3 of 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

client privilege applies, the corporation must show that the communications at issue are between corporate employees and counsel, made at the direction of corporate superiors in order to secure legal advice. United States v. Chen, 99 F.3d 1495, 1502 (9th Cir.

1996) (citing Upjohn Co. v. United States, 449 U.S. 383, 390-94 (1981)). Defendants have failed to meet their burden with respect to the lower level employees set forth on Exh. C (showing documents that lower level employees were sent or authored). Code O and U: Documents that were distributed to the Plan s outside

actuaries, consultants and administrators ( O ) and documents that have an unknown distribution ( U ) such as documents distributed to Garrett Corp. or Hewitt or CET. (Doc. 332 pp. 12-14.) Disclosure to the Plan s actuaries,

consultants and third party administrators such as Prudential, the company that administered the Guaranteed Income Contract for the Secured Benefit Account are not privileged. These documents were not privileged in the first instance because no showing was made that the outside non-lawyers were essential to the representation or were working under the direct supervision of the attorneys. Hoptowit v. Ray, 682 F.2d 1237, 1262 (9th Cir. 1982); United States v. Ackert, 169 F.3d 136, 139-40 (2d Cir. 1999) (finding insufficient basis for concluding attorney client privilege applied to communications with accountant). Even if they were privileged, their disclosure to the actuaries, consultants and other outside third parties waived any privilege. DEFENDANT S POSITION. Plaintiffs request for the disclosure of hundreds of privileged documents presents the same arguments that plaintiffs previously raised with the Court. For the reasons set forth in defendants earlier briefing on these issues and as set forth below, the Court should deny the motion to compel. First, plaintiffs continue to argue that the fiduciary duty exception requires defendants to disclose hundreds of communications with counsel, from as far back as March 23, 1983 until as recently as October 29, 2003. But plaintiffs still do not address the well-settled precedent holding that legal advice concerning non-fiduciary matters, such as plan amendment and design, do not fall within the exception. See Becher v. Long
3

Case 2:04-cv-00424-ROS

Document 451

Filed 05/16/2008

Page 4 of 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Island Lighting Co., 129 F.3d 268, 271 (2d Cir. 1997). Nor do they have any answer to the cases holding that the exception does not apply to legal advice sought contemplation of adversarial proceedings against [the] beneficiaries. in

Wachtel v. Health

Net., Inc., 482 F.3d 225, 233 (3d Cir. 2007). In short, plaintiffs would have this Court look past the decision in United States v. Mett, 178 F.3d 1058, 1065 (9th Cir. 1999), and the numerous other cases recognizing that, [w]hen an ERISA trustee seeks legal advice for his own protection, the legal fiction of trustee as representative of the beneficiaries is dispelled, notwithstanding the fact that the legal advice may relate to the trustee s administration of the trust. Id.; see also Tatum v. R.J. Reynolds Tobacco Co., 247

F.R.D. 488, 493 (M.D.N.C. 2008) ( In these situations, the fiduciary s interests diverge from that of the beneficiaries so as to render the fiduciary exception inapplicable and protect the plan administrator s interest in the attorney-client privilege. ). In tacit recognition that the fiduciary duty exception does not apply to legal advice secured in anticipation of litigation, plaintiffs argue that defendants did not reasonably anticipate litigation until after the administrative appeal was denied. This argument ignores the undisputed record evidence that, well before any administrative claim was even filed, defendants knew that retirees had formed a committee, hired an attorney, and begun soliciting donations to challenge the SBA and Social Security offsets to the Garrett Plan. (See Doc. No. 238 at 6.) The argument also ignores the admonitions in the claim letter submitted by plaintiffs on July 26, 2002 purportedly on behalf of several

hundred former employees that there would be litigation if the administrative claims were not resolved to the claimants satisfaction. (See Doc. No. 16, Ex. I, at 2, 13.) Far from presenting the mere prospect of post-decisional litigation, plaintiffs counsel was explicit in warning defendants that a class-action lawsuit was forthcoming. Second, plaintiffs argue that defendants must produce a subset of draft documents and legal advice about the drafts because they relate to a plan amendment whose adoption date (not effective date) is supposedly in dispute. Plaintiffs cite no authority in support of this novel position, and it has never been the rule that a lawyer s advice is beyond the
4

Case 2:04-cv-00424-ROS

Document 451

Filed 05/16/2008

Page 5 of 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

privilege simply because one party claims it may be relevant. Moreover, with respect to this very issue, plaintiffs have already acknowledged, for purposes of their claims on summary judgment, that it does not matter whether the plan that retroactively reduced benefits was issued in February 1984 or October 1985. (Doc. No. 23 at 7 n.1; see also

Doc. No. 73 at 7 n.6 (plaintiffs maintain that the Signal Retirement Plan was not effectively amended to include Garrett Corporation employees until 1985 but admit that the distinction is not material to resolution of the Motions. ).) Plaintiffs desire to breathe new life into this issue is no valid basis for depriving defendants of the privilege. Third, plaintiffs put forward various other arguments against the privilege that are equally unavailing. For instance, they object that defendants are asserting the privilege with respect to communications involving actuaries and other non-lawyer consultants, even though these consultants are communication with the lawyer reasonably necessary to facilitate the client s

[and] the client reasonably believes that [they] will

hold the communication in confidence, and therefore within the privilege. Restatement (Third) of the Law Governing Lawyers § 70, cmt. f & illustration 5. They also try to fault defendants for failing to provide more specific descriptions of employees or documents relating to events that took place many years ago. But plaintiffs identify no entries on the log that they can challenge based upon anything more than supposition. In the end, plaintiffs are seeking the disclosure of hundreds of documents validly withheld as privileged asserting broad challenges to entire groups of privileged

documents without providing the context or analysis necessary to overcome a claim of privilege. Given the large number of the challenges that plaintiff has asserted, it may be more efficient and more orderly for the Court simply to rule on the pending motion to compel and then afford the parties the opportunity to re-evaluate their positions on the documents at issue here in light of the Court s rulings. If the Court upholds the

defendants assertions of privilege in the pending motion, then that would effectively moot most if not all of plaintiffs current challenge. In all events, the Court should deny plaintiffs request for a production of privilege documents en masse.
5

Case 2:04-cv-00424-ROS

Document 451

Filed 05/16/2008

Page 6 of 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

Respectfully submitted this 16th day of May, 2008. MARTIN AND BONNETT OSBORN MALEDON, P.A.

By: s/ Susan Martin By: s/David B. Rosenbaum Susan Martin David B. Rosenbaum Daniel L. Bonnett Dawn L. Dauphine Jennifer Kroll Osborn Maledon, P.A. 3300 N. Central Ave., Suite 1720 2929 North Central Avenue, Suite 2100 Phoenix, Arizona 85012 Phoenix, AZ 85012-2794 Attorneys for Plaintiffs Michael L. Banks MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 Howard Shapiro PROSKAUER ROSE LLP 909 Poydras Street, Suite 1100 New Orleans, LA 70112-4017 Amy Covert PROSKAUER ROSE LLP One Newark Center, 18th Floor Newark, NJ 07102-5211 Christopher Landau, P.C. Craig S. Primis, P.C. Michael F. Williams Eleanor R. Barrett KIRKLAND & ELLIS LLP 655 Fifteenth Street, N.W. Washington, DC 20005-5793 Attorneys for Defendants

6

Case 2:04-cv-00424-ROS

Document 451

Filed 05/16/2008

Page 7 of 8

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Case 2:04-cv-00424-ROS

CERTIFICATE OF SERVICE I do certify that on May 16, 2008, I electronically transmitted the attached document to the Clerk s Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing: David B. Rosenbaum Dawn L. Dauphine Osborn Maledon, P.A. 2929 North Central Ave., Suite 2100 Phoenix, AZ 85012-2794 Michael Banks Azeez Hayne Morgan Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 Howard Shapiro Proskauer Rose LLP 909 Poydras Street, Suite 1100 New Orleans, LA 70112 Amy Covert Proskauer Rose LLP One Newark Center, 18th Floor Newark , NJ 07102-5211 Christopher Landau Eleanor R. Barrett Kirkland & Ellis LLP 655 Fifteenth Street, N.W. Washington, D.C. 20005

Attorneys for the Defendants

s/ T.Mahabir

Document 451

Filed 05/16/2008

Page 8 of 8