Free Response in Opposition to Motion - District Court of Arizona - Arizona

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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] Michael L. Banks, Pro Hac Vice Azeez Hayne, Pro Hac Vice MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 Telephone: (215) 963-5000 [email protected] [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] 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 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]

Attorneys for Defendants IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Barbara Allen, Richard Dippold, Melvin Jones, Donald McCarty, Richard Scates and Walter G. West, individually and on behalf of all others similarly situated, Plaintiffs, vs. Honeywell Retirement Earnings Plan, Honeywell Secured Benefit Plan, Plan Administrator of Honeywell Retirement Earnings Plan, and Plan Administrator of Honeywell Secured Benefit Plan, Defendants. No. CV04-0424 PHX ROS

DEFENDANTS' OPPOSITION TO PLAINTIFFS' MOTION TO SUPPLEMENT

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Defendants hereby oppose plaintiffs' motion to supplement their Opposition to Defendants' Motion for Reconsideration, and to supplement their Motion to Reconsider Order Regarding the Discovery Dispute. This is plaintiffs' third attempt to place before the Court legally irrelevant material concerning the Treasury Department's consideration and interpretation of its own 1977 Regulation. This Court properly rejected plaintiffs' prior efforts, because "attempts to probe the motivations or mental processes of agency decision-makers are rejected by the courts absent `a strong showing of bad faith or improper behavior' by the agency decision-makers." 12/18/07 Order at 2 (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971)); see also id. at 2-3 (citing Advance Comm'n Corp. v. FCC, 376 F.3d 1153, 1157-58 (D.C. Cir. 2004); Animal Defense Council v. Hodel, 840 F.2d 1432, 1437 (9th Cir. 1988)). The issue presented here is no different. Regardless of how Plaintiffs obtain evidence of the Treasury Department's internal deliberative processes (by subpoenaing Honeywell, or by subpoenaing the Treasury Department), the result is the same: plaintiffs have failed to show that judicial inquiry into the Treasury Department's motivations and deliberative processes is warranted. See Order, at 2-3 (citing, inter alia, United States v. Morgan, 313 U.S. 409, 422 (1941) (disapproving of questioning of the Secretary of Agriculture regarding "the process by which he reached the conclusions of his order, including the manner and extent of his study of the record and his consultation with subordinates"); Checkosky v. SEC, 23 F.3d 452, 489 (D.C. Cir. 1994)). Indeed, far from establishing "a strong showing of bad faith or improper behavior by the agency decision-makers," 12/18/07 Order 2 (internal quotation omitted), the materials submitted by plaintiffs only confirm, and do not rebut, the "'strong presumption of agency regularity.'" Id. at 3 (quoting Louisiana Ass'n of Indep. Producers v. FERC, 958 F.2d 1101, 1111 (D.C. Cir. 1992)). If anything, those materials highlight the agency's thoughtful consideration of the issues and consistent support for Honeywell's reading of the 1977 Regulation and the status of the
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controlling law at the time of the plan amendments. For example, plaintiffs' Exhibit B shows that no fewer than 15 government officials--not including Assistant Secretary Solomon, Congressman Rangel, Congressman McCrery, Senator Baucus, or Senator Grassley--were involved in the process leading to the Treasury Letter, and not even plaintiffs accuse all of those elected and appointed officials of bad faith or improper behavior. Further, it is clear from the e-mails that plaintiffs submitted that the Treasury Department personnel involved all reached the conclusion set forth in the Treasury Letter--that 1977 Regulation has the same import as the 2005 Regulation with respect to the operation of ERISA's anti-cutback rule: · "[W]hen we're asked what our view is of the status of the law prior to the reg, we have to admit that the reg is a codification of what we think the law is." (Mot. Ex. B at 905-Treas00029 (7/24/07 email from T. Reeder (Deputy Benefits Tax Counsel).) · "I think [the final sentence of the Treasury Letter] does clarify what we would have said the law to be prior to the reg." (Id. at 905-Treas00034 (7/24/07 email from A. Tawshunsky (IRS Office of the Assistant Chief Counsel, Tax Exempt & Government Entities Division).) · "I think the 2005 final 411(d)(6) regulations reflected our pre-existing position on simultaneous amendments (increasing and decreasing plan benefits) absent the Michael's decision so I would not expect us to challenge simultaneous amendments whose net effect is not to decrease plan benefits." (Id. (7/24/07 email from M. Hoffman (IRS Special Counsel to the Assistant Chief Counsel for Employee Benefits).) In short, far from raising any suggestion of bad faith or improper behavior, the documents Plaintiffs obtained from the Treasury Department confirm the exact opposite. Finally, it is important to keep in mind that even though the materials plaintiffs attached to their motion favor defendants, not plaintiffs, the applicable legal standard renders all of this extraneous evidence legally irrelevant. Under settled precedent, the Treasury Letter, as an interpretation of the Treasury Department's own regulations, "is controlling under Auer unless plainly erroneous or inconsistent with the regulation." Bassiri v. Xerox Corp., 463 F.3d 927, 930 (9th Cir. 2006) (citing Auer v.
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Robbins, 519 U.S. 452 (1997)). The Treasury Letter is neither plainly erroneous nor inconsistent with the 1977 regulations, and plaintiffs are, understandably, afraid of what that means for their anti-cutback claims. But that reality does not justify

plaintiffs' repeated requests for the Court to consider extraneous evidence that has no place in the Auer/Bassiri inquiry. For that reason, plaintiffs' motion to supplement should be denied. Respectfully submitted this 7th day of January, 2008. OSBORN MALEDON, P.A.

By: /s/David B. Rosenbaum David B. Rosenbaum Dawn L. Dauphine Osborn Maledon, P.A. 2929 North Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 Michael L. 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 70112-4017 Amy Covert PROSKAUER ROSE LLP One Newark Center, 18th Floor Newark, NJ 07102-5211 Christopher Landau, P.C. Craig S. Primis, P.C. Eleanor R. Barrett KIRKLAND & ELLIS LLP 655 Fifteenth Street, N.W. Washington, DC 20005-5793 Attorneys for Defendants

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OSBORN MALEDON
A PR O FESSI O NA L A SSO CIA TI O N A T T O R N E Y S A T LA W

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______________________

CERTIFICATE OF SERVICE I hereby certify that on January 7, 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 to all CM/ECF registrants.

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The Phoenix Plaza 21st Floor 2929 North Central Avenue Phoenix, Arizona 85012-2793 P.O. Box 36379 Phoenix, Arizona 85067-6379 Telephone Facsimile 602.640.9000 602.640.9050

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/s/Kelly Dourlein

1880539_1

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