Free Motion for Summary Judgment - 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

MOTION FOR SUMMARY JUDGMENT ON STATUTE OF LIMITATIONS AND SUPPORTING MEMORANDUM Oral argument requested

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The Three Remaining Claims in this litigation arise out of an event--the merger of the Garrett Corporation Retirement Plan into the Signal Companies, Inc. Retirement Plan--that took effect on January 1, 1984, more than twenty years before plaintiffs (former participants in the Garrett Plan) filed this lawsuit. While the parties here differ as to the nature and effect of the changes to plaintiffs' retirement benefits that resulted from that merger, there can be no real dispute that plaintiffs knew or should have known of those changes shortly after they were implemented. Indeed, as described below, plaintiffs received numerous communications explaining the merger and its impact on their benefits, and those communications were more than sufficient to put them on notice of the claims they are now asserting. The upshot is that this lawsuit is untimely. The whole point of statutes of limitations, after all, is to allow individuals and corporations to structure their affairs, and prevent stale claims from upsetting settled expectations. See, e.g., United States v. Kubrick, 444 U.S. 111, 117 (1979) ("Statutes of limitations, which are found and approved in all systems of enlightened jurisprudence, represent a pervasive legislative judgment that it is unjust to fail to put the adversary on notice to defend within a specified period of time and that the right to be free of stale claims in time comes to prevail over the right to prosecute them.") (internal quotations omitted). This case is a perfect example: plaintiffs are challenging changes to their retirement plan that took effect more than twenty years ago, after substantial sums of money have been paid out under the challenged plan. The law does not reward such belated grievances. Plan participants who feel aggrieved by changes to a retirement plan simply cannot wait two decades after those changes to sue. Accordingly, pursuant to this Court's order at its November 2, 2007 status hearing (Decl. of Eleanor R. Barrett Ex. F, at 39-40), the Amended Fifth Revised Proposed Rule 16 Scheduling Order (Docket #322), and Federal Rule of Civil Procedure 56, defendants hereby move for summary judgment on the ground that each of the Three Remaining Claims in this litigation is time-barred. This motion is supported by defendants' separate statement of facts in support of their motion for summary judgment ("DSOF"), the
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declarations and exhibits attached thereto, the Declaration of Eleanor R. Barrett with attachments, and the following Memorandum of Points and Authorities. MEMORANDUM OF POINTS AND AUTHORITIES BACKGROUND As this Court recently noted, the question of the statute of limitations on plaintiffs' claims "has been spread across this entire litigation." (Barrett Decl. Ex. F, at 32.) Initially, defendants moved to clarify that the Court's ruling on summary judgment was not intended to foreclose defendants from pursuing affirmative defenses, including the statute of limitations, to plaintiffs' claims. (Defs.' Mot. for Reconsideration and Clarification (8/10/2005) (Docket #79), at 14-15.) The Court confirmed that

"Defendants understanding of the Court's decision" was "correct." (Order (11/18/2005) (Docket #138), at 14). The Court next addressed the statute of limitations in the context of plaintiffs' Motion for Class Certification. (Docket #84.) In that context, the Court recognized that the question of when the statute of limitations began to run on plaintiffs' claims was governed by the "federal discovery rule," but declined to resolve the issue, ruling instead that it "need not determine for purposes of deciding whether certification is warranted what the applicable statute of limitations is, when it accrued, and whether it applies." (Order (9/6/2006) (Docket #226), at 11-12); (Barrett Decl. Ex. F, at 30 (plaintiffs' counsel acknowledges that, in its order on class certification, the Court "did leave the door open" for defendants to "prove" their statute of limitations defense "later on" and that the Court "did not rule on the defense although plaintiffs urged [the Court] to" do so).) As the Court has recognized recently, it is time to meet this issue head on. At its November 2, 2007 status hearing, the Court urged the parties to present defendants' statute of limitations defense. The Court noted that a determination of this threshold "legal issue" could save the parties from "needless consumption of time." (Barrett Decl.

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Ex. F, at 32.) Defendants agree. Indeed, for the reasons set forth below, the statute of limitations disposes of the remaining claims in this case.1 ARGUMENT Summary judgment is appropriate where "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The facts in this case, in particular plan communications

describing the effect of the merger of the Garrett and Signal retirement plans on plaintiffs' retirement benefits, clearly establish that the statute of limitations as to each of plaintiffs' remaining claims accrued in 1984--more than two decades before they filed this lawsuit. Thus, plaintiffs' claims are time-barred under even the longest conceivable statute of limitations, and defendants are entitled to judgment as a matter of law. I. A One-Year Statute of Limitations Applies To Plaintiffs' Claims. ERISA's statute of limitations applies only to claims for breach of a fiduciary duty. See 29 U.S.C. § 1113. For non-fiduciary ERISA claims, like those at issue here, courts "look to the most analogous state statute of limitations." Wetzel v. Lou Ehlers

Under the terms of the parties' partial settlement (Joint Mot. for & Mem. in Supp. of Prelim. Approval of the Partial Settlement (Docket #312)); (Order (11/6/2007) (Docket #319)), the "Three Remaining Claims" in this case are the Social Security Offset Claim, the SBA Offset Claim, and the Minimum Benefits Claim (Class Action Partial Settlement Agreement (Ex. A to Joint Mot. for & Mem. in Supp. of Prelim. Approval of the Partial Settlement) (Docket #312) ("Partial Settlement Agreement"), at 18). As defined by the parties, the "Social Security Offset Claim" is plaintiffs' claim "that Defendants violated ERISA § 204(g) by applying the Social Security offset formula contained in Section 4.2(b) of the Signal Retirement Plan to service credited before January 1, 1984." (Id. at 16.) The "SBA Offset Claim" is plaintiffs' claim "that Defendants violated ERISA § 204(g) by increasing from 3.5% to 7.5% the interest rate used to project forward a portion of Secured Benefit Account balances from termination of employment to age 65 for purposes of calculating the SBA Offset following the merger of the Garrett Retirement Plan into the Signal Retirement Plan." (Id. at 15­16.) And the "Minimum Benefits Claim" is plaintiffs' claim "that Defendants violated the terms of the Signal Retirement Plan by applying the SBA offset to the minimum benefit formulas of § 4.2(c)(i) of the Signal Retirement Plan." (Id. at 10­11.)
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Cadillac Group Long Term Disability Ins. Program, 222 F.3d 643, 646 (9th Cir. 2000) (en banc).2 The Honeywell Retirement Earnings Plan (the defendant in this case, and the plan that was in effect when plaintiffs sued, see DSOF ¶ 16) provides that "[t]he internal laws of Delaware ... shall determine all questions arising with respect to the provisions of this Plan, except to the extent Federal statute supersedes Delaware law." (Decl. of Amy Promislo, Ex. P (Docket #16), at HW0000611.) Thus, the most analogous

Delaware statute of limitations applies to plaintiffs' claims. See Wang Labs., Inc. v. Kagan, 990 F.2d 1126, 1128-29 (9th Cir. 1993) ("Where a choice of law is made by an ERISA contract, it should be followed, if not unreasonable or fundamentally unfair."). Addressing this precise issue, the Third Circuit held that Delaware's one-year statute of limitations for "action[s] for recovery upon a claim of wages, salary, or overtime for work, labor, or personal services performed, ... or for any other benefits arising from such work, labor or personal services performed," Del. Code Ann. tit. 10, § 8111 (emphasis added), is the "best fit" for ERISA § 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B) claims. Syed v. Hercules Inc., 214 F.3d 155, 161 (3d Cir. 2000). All three of plaintiffs' claims purportedly arise under ERISA § 502(a)(1)(B). (See Partial Settlement Agreement 16 (Social Security Offset Claim); 15-16 (SBA Offset Claim); 1011 (Minimum Benefits Claim).) Thus, Delaware's one-year statute of limitations for benefits actions applies to each of plaintiffs' Three Remaining Claims. 3 To the extent that Meagher v. International Ass'n of Machinists & Aerospace Workers Pension Plan, 856 F.2d 1418 (9th Cir. 1988) could be read to imply that ERISA's statute of limitations applies not only to fiduciary-duty claims but to anticutback claims more broadly, it has been abrogated by more recent Ninth Circuit caselaw. See Flanagan v. Inland Empire Elec. Workers Pension Plan & Tr., 3 F.3d 1246, 1252 & n.7 (9th Cir. 1992) (noting that the Meagher court applied the ERISA statute of limitations "with no discussion or apparent consideration of an alternative" and concluding that § 1113 applies "only to a claim which alleges a breach of fiduciary duty") (emphasis added). 3 The statute of limitations would also be one year if the Court were to apply the law of Arizona, the forum state, to plaintiffs' claims. Plaintiffs' claims would be governed by Arizona's one-year statute of limitations for "breach of an oral or written employment contract," Ariz. Rev. Stat. § 12-541(3), under the principle that statutes specifically
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II.

Plaintiffs' Claims Accrued When They Should Have Known How the Merger of the Garrett and Signal Plans Would Affect Their Benefits. Although plaintiffs' claims are governed by statutes of limitations borrowed from

state law, the claims themselves arise under ERISA, a federal law. Therefore, "federal law determines the time at which the cause of action accrues," regardless of the source of the limitations period. Northern Cal. Retail Clerks Union & Food Employers Joint Pension Trust Fund v. Jumbo Markets, Inc., 906 F.2d 1371, 1372 (9th Cir. 1990). Under federal law, and in ERISA cases specifically, a cause of action accrues "when the plaintiff knows or has reason to know of the injury that is the basis of the action." Id. This rule applies equally to claims alleging violations of ERISA and to ERISA claims for benefits. Thus, in Pisciotta v. Teledyne Indus., Inc., 91 F.3d 1326, 1331-32 (9th Cir. 1996) (per curiam), the Ninth Circuit applied the "knew or had reason to know" standard to evaluate the timeliness of plaintiffs' class-action claims that the modification of an employee benefit plan violated ERISA. And in Wetzel, the en banc Ninth Circuit held that a cause of action for benefits under ERISA accrues "either at the time benefits are actually denied," i.e., when the plaintiff actually knows of his injury, "or when the insured has reason to know that the claim has been denied." 222 F.3d at 649 (emphasis added; citations omitted). As this Court has already recognized, this "know or should have known" standard, which is also "[k]nown as the federal discovery rule," applies to plaintiffs' claims in this case. (Order (9/6/2006) (Docket #226), at 11.) covering employment disputes, rather than general contract statutes of limitations, apply to claims for ERISA benefits. See Syed, 214 F.3d at 161. In this regard, plaintiffs' argument that their claims are governed by Arizona's six-year statute of limitations for "[a]n action for debt where indebtedness is evidenced by or founded upon a contract in writing executed within the state," Ariz. Rev. Stat. § 12-548; (see Pls.' Reply in Further Supp. of Mot. for Class Action Cert. (Docket #168), at 5), is clearly incorrect. A claim for ERISA benefits under either the statute or the terms of the plan is not most analogous to "[a]n action for debt," and the relevant contract (the plan) was not "executed within the state" of Arizona. Ariz. Rev. Stat. § 12-548. In any event, as explained in the text, at the end of the day it does not matter which statute of limitations applies, because plaintiffs' claims are time-barred even under the longest conceivable statute of limitations.
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In the context of ERISA claims, courts have adopted the concept of "clear repudiation" to more fully describe when plaintiffs knew or should have known of their claims. See, e.g., Chuck v. Hewlett Packard Co., 455 F.3d 1026, 1031 (9th Cir. 2006) ("[A] cause of action accrues when a pension plan communicates a clear and continuing repudiation of a claimant's rights under a plan, such that the claimant could not have reasonably believed but that his benefits had been finally denied.") (internal quotation marks and citations omitted); Romero v. Allstate Corp., 404 F.3d 212, 224 (3d Cir. 2005) (holding that "the federal discovery rule, which includes the `clear repudiation' concept," applies to ERISA § 204(g) claims); Carey v. International Bhd. of Elec. Workers Local 363 Pension, 201 F.3d 44, 49 (2d Cir. 1999) (holding that a non-fiduciary ERISA cause of action accrues "upon a clear repudiation by the plan that is known, or should be known, to the plaintiff"); Union Pac. R.R. Co. v. Beckham, 138 F.3d 325, 331 (8th Cir. 1998) (holding that ERISA cause of action accrues when there has been a clear repudiation of a beneficiary's rights and that repudiation is made known to the beneficiary). This "clear repudiation" rule does not replace the "knew or should have known" standard; instead, it is merely a "refinement of the federal discovery rule" as it applies to ERISA claims. Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 521 (3d Cir. 2007). Indeed, in applying the "clear repudiation" standard in the context of an anti-cutback claim (similar to plaintiffs' Social Security Offset and SBA Offset Claims in this case), the Third Circuit has explained that a "clear repudiation" occurs when "plaintiffs knew or should have known of the effect" that a plan amendment "would have on their benefits." Romero, 404 F.3d at 225. In other words, once ERISA plaintiffs have information that conveys the effect of a plan amendment on their benefits at their disposal, the statute of limitations on their statutory claims and claims for benefits begins to run. Although the general discovery rule applies across the board to all ERISA claims, what constitutes a "clear repudiation," or when plaintiffs "should have known" of the
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injuries that underlie their claims, depends on the nature of the particular claim. In some cases, such as where the resolution of the dispute requires the application of plan language to a particular set of facts, a "clear repudiation" will not occur until the plan administrator undertakes an individualized assessment of the plaintiff's claim. Thus, in Chuck, Wetzel, and Martin, which all involved individual employees' claims for additional benefits based on circumstances particular to the plaintiff, the Ninth Circuit focused on plan administrators' specific evaluations and rejections of the particular plaintiffs' claims. See, e.g., Chuck, 455 F.3d at 1038 (cause of action based on challenge to calculation of individual plaintiff's credited service accrued when plaintiff received letter from administrator stating that no further benefits were due); Wetzel, 222 F.3d at 650 (cause of action accrued when plan administrator finally denied plaintiff's claim for additional benefits based on a medical condition); Martin v. Constr. Laborer's Pension Trust for S. Cal., 947 F.2d 1381, 1385 (9th Cir. 1991) (claim seeking additional benefits based on credited service accrued after plaintiffs' application for determination of his pension credits was resolved). But in other cases, particularly where the terms of a plan amendment apply uniformly to all plan participants, "[a] plan amendment ... and knowledge thereof by an affected participant or beneficiary, can be sufficient as a repudiation for the cause of action then and there to accrue." Hirt v. Equitable Ret. Plan for Employees, 450 F. Supp. 2d 331, 333 (S.D.N.Y. 2006). In such cases, broadly distributed plan

communications suffice to trigger participants' knowledge of their injuries, and "there is no need to wait for a later application or claim for benefits by a participant or beneficiary." Id. So, for example, in Pisciotta, the Ninth Circuit held that plaintiffs' cause of action, which arose out of a generally applicable "freeze" of Medicare reimbursement benefits, arose on the date on which the "freeze" became effective because it was clear that plaintiffs knew about the impact that the freeze would have on their benefits (namely, that "their reimbursement amounts ... could not be increased") as soon as the "freeze" took effect. 91 F.3d at 1332. Similarly, in Union Pacific Railroad,
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the court determined that "fact sheets" distributed by the plan sponsor that explained the effect of a planned acquisition on the participants' benefits triggered the statute of limitations on plaintiffs' claims. 138 F.3d at 331­32. And, in Hirt, the court held that the receipt of a Summary Plan Description detailing the effects of a plan amendment effectively "`repudiated'" participants' and beneficiaries' rights under the previous version of the plan. 450 F. Supp. 2d at 333­34. In this case, each of the Three Remaining Claims arises out of changes to the plan documents that apply across the board to all plan participants. Plaintiffs do not

challenge the way that those amendments were applied under particular circumstances or to particular individuals. Instead, on a classwide basis, they challenge the validity of the amendments themselves (as in the Social Security Offset and SBA Offset Claims) and the way that the amended plan language was applied to all plan participants from the outset of the plan's amendment in 1984 (as in the Minimum Benefits Claim). Thus, here, as in Pisciotta, Union Pacific Railroad, and Hirt, general plan communications that explained the effect of the Garrett and Signal plan amendments sufficed to put plaintiffs on notice of their claims and to trigger the statute of limitations. See generally Miller, 475 F.3d at 521 ("We ... follow the Seventh, Eighth, and Ninth Circuits in holding that an ERISA claim accrues upon a clear repudiation by the plan that is known, or should be known, to the plaintiff--regardless of whether the plaintiff has filed a formal application for benefits.") (quoting Carey, 201 F.3d at 48; emphasis added); see also id. ("In other words, some event other than the denial of a claim may trigger the statute of limitations by clearly alerting the plaintiff that his entitlement to benefits has been repudiated.") (internal quotation omitted); id. ("[T]he clear repudiation rule does not require a formal denial to trigger the statute of limitations. To the contrary, the rule includes other forms of repudiation when a beneficiary knows or should know he has a cause of action.") (emphasis in original). This result comports with common sense and basic principles of finality and repose. See Chuck, 455 F.3d at 1034 (noting that such principles have "particular
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traction against allowing ERISA claims after potentially extreme delays, given their increased `negative effects on the availability of witnesses and evidence'") (quoting Martin, 947 F.2d at 1385). It simply cannot be that even though a plan sponsor clearly and unequivocally informs plaintiffs of the effect that a particular amendment will have on their benefits, some additional, individualized analysis is required to cause the statute of limitations to begin running. Otherwise, plaintiffs could effectively control the

accrual of their causes of action, and, as here, could wait more than two decades to investigate and bring their claims. Such a rule would effectively give rise to "perpetual liability" for the plan and eviscerate "the plan's abilities to anticipate its financial obligations adequately." Id. But that is not the law. Instead, where, as here, plan communications lay out the effects that changes to the plan will have on the participants' benefits, the statute of limitations begins to run, and the burden shifts to plaintiffs to develop and assert their claims before the statute expires. III. Plaintiffs' Three Remaining Claims are Time-Barred. Plaintiffs had sufficient notice of each of the Three Remaining Claims to bring this lawsuit years before they finally did so--well beyond even the longest conceivably applicable statute of limitations. It is axiomatic that plaintiffs need not have full

knowledge of every last factual and legal detail of their claims in order for the statute of limitations to begin running. See, e.g., Kubrick, 444 U.S. at 118­25. To the contrary, such details often do not emerge until litigation itself. What matters is only that

plaintiffs have enough information to put them on notice that inquiry into potential claims is warranted. See id. at 122­23. To excuse plaintiffs from such inquiry by postponing the accrual of their claims "would undermine the purpose of the limitations statute." Id. at 123. Here, plaintiffs knew about the changes to the Garrett retirement plan in 1984, but did not file this lawsuit until March 1, 2004, (Docket #1) (although they entered into a tolling agreement with defendants as of January 24, 2003 (DSOF ¶¶ 12­14)). Thus,

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regardless of which statute of limitations applies, each of the Three Remaining Claims is time-barred, and defendants are entitled to judgment as a matter of law. A. Defendants Clearly and Unequivocally Informed Plaintiffs that a Social Security Offset Would Apply to Their Post-Merger Benefits Outside of Any Conceivably Applicable Statute of Limitations. Plaintiffs' Social Security Offset Claim is based on the misperception that the post-merger Signal plan benefit formula applied a Social Security offset to years of service worked before the merger of the Garrett and Signal Plans that did not exist under the Garrett Plan benefit formula. Defendants continue to dispute this claim on the merits, because the net effect of the changes was to increase plaintiffs' benefits, and in any event the pre-merger Garrett Plan, like the post-merger Signal Plan, took Social Security into account in calculating a participant's Maximum Accrued Retirement Benefit. (See, e.g., Aff. of Jennifer Kroll Ex. A (Docket #26) (showing calculation of benefits under pre-amendment Garrett Plan, in which "Basic Benefit," based on Social Security Tax Base income, is calculated at 1%, less than the 1.5% rate used to calculate the "Supplemental Benefit," which applied to Final Average Compensation in excess of Social Security Tax Base income).) But even if this were not the case, defendants indisputably notified plaintiffs of the facts they now rely on to assert the Social Security Offset claim in 1984, two decades before they filed this lawsuit. Brochures distributed to plan participants in January 1984 clearly explained that one of the Signal Retirement Plan's benefit formulas included a deduction related to Social Security that applied to years of service credited before the merger of the plans; yet this is precisely what plaintiffs, through their Social Security Offset claim, now assert--twenty years later--constituted an impermissible cutback. In January 1984, the Garrett Corporation distributed a letter enclosing "two brochures describing the January 1, 1984 merger of the Garrett Retirement Plan and the Signal Companies, Inc. Retirement Plan." (DSOF ¶¶ 1­6); (Barrett Decl. Ex. A, at HW0008541). One of the brochures, entitled "The Signal Companies Retirement Plan: A New Plan For Your
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Future Coming January 1, 1984," stated: "[c]redited service under your prior retirement plan counts toward the new Retirement Plan." (Id. at HW0008548.) It also clearly showed that one of the two benefit formulas under the new Signal Retirement Plan included a deduction based on Social Security:

(Id.) These facts alone were enough to put plaintiffs on notice of the facts underlying their Social Security Offset claim. But, if there were any doubt, the second brochure, which was specifically geared towards participants in the Garrett Corporation Plan (such as plaintiffs) and was entitled "The Signal Companies, Inc. New Retirement Plan And How it Affects The Garrett Corporation Employee," explained the impact of the Social Security Offset on Garrett Corporation employees in even more explicit terms. First, it explained that "[a]ll past credited service accrued under the Garrett Plan will be carried forward into the Signal Plan." (Id. at HW0008543.) It then provided a side-by-side comparison of the "Old Garrett" benefit formula to the "New Signal" formula:

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(Id. at HW0008544.) This comparison clearly illustrates that the "Old Garrett" formula accounts for social security income by applying a lower rate to the participant's Social Security Wage Base, whereas, in line "g)" of the "New Signal Benefit Calculation," the "New Signal" formula subtracts (or "offsets") a percentage based on the participant's Social Security Benefit (calculated in line "f)" of the "New Signal Benefit Calculation) from the benefit based on his Final Average Compensation (calculated in line "d)").4 This is the sum total of the facts plaintiffs believe establish an impermissible cutback. Nothing more has been argued to comprise their Social Security Offset claim. See Allen v. Honeywell Ret. Earnings Plan, 382 F. Supp. 2d 1139, 1149 (D. Ariz. 2005) (granting summary judgment on plaintiffs' Social Security Offset claim because "a Social Security offset attributable to years of service worked prior to introduction of that offset" violated the anti-cutback rule). Thus, as of January 1984, more than twenty years before

plaintiffs filed their complaint, plaintiffs knew or should have known of the effect that the Social Security "offset" would have on their benefits, and, correspondingly, of the purported "injury" that underlies their Social Security Offset claim. The January 1984 brochures, like the "fact sheets" in Union Pacific Railroad, caused plaintiffs' Social Security Offset claim to accrue. See 138 F.3d at 331-32. Indeed, plaintiffs themselves have already acknowledged in this litigation that they received notice of the Social Security Offset in the 1984 brochures. In their Statement of Facts in Support of Summary Judgment, plaintiffs stated as follows: Participants were notified through a plan description dated January 1, 1984 about new benefit formulas and requirements under the newly merged retirement plan ("January 1984 Signal Retirement Plan Document"). ... The January 1984 Signal Retirement Plan Document informed Participants This comparison also illustrates that participants' monthly retirement benefits were higher under the "New Signal" plan than under the "Old Garrett" benefit calculation. The hypothetical participant in this example would receive $1073 in monthly retirement benefits under the New Signal plan, as compared with only $986 under the Old Garrett plan.
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that they were entitled, effective January 1, 1984, to two formulas for calculating normal retirement benefits, including a formula of 1.5% times final average compensation times years of credited service minus an offset for social security benefits .... (Separate Statement of Facts in Support of Pls.' Cross-Mot. for Partial Summ. J. ¶ 20 (Docket #24) (emphasis added)). And defendants' notification of the plan changes did not stop there. They

repeated the message of the January 1984 brochures--that, under the new Signal formula, plaintiffs' benefits were subject to an offset based on Social Security--in a series of other plan communications distributed to plaintiffs well beyond any conceivably applicable limitations period. For example, the Signal Companies, Inc. Summary Plan Description that was distributed to Garrett Corporation employees in May 1984 (DSOF ¶ 7); (Decl. of Dawn Dauphine in Supp. of Mot. to Dismiss Am. Compl., Ex. A (11/8/2004) (Docket #60)) both clearly defined "CREDITED SERVICE" to include service under the Garrett Corporation Retirement Plan (id. at HW 0000986) and showed that one of the benefit formulas under the new Signal Plan is calculated by subtracting "1.5% of estimated PRIMARY SOCIAL SECURITY multiplied by your years of CREDITED SERVICE" (id. at HW0000988). That document also provided a sample calculation of benefits under the Normal Retirement formula that illustrated that a participant's "monthly retirement benefit" was the difference between 1.5% of his "AVERAGE FINAL COMPENSATION Multiplied by Years of CREDITED SERVICE" and "1.5% of his "PRIMARY SOCIAL SECURITY BENEFIT Multiplied by years of CREDITED SERVICE." (Id. at HW 0000989.) And again, more than ten years later (but still beyond the longest conceivable limitations period), in the April 1996 AlliedSignal Retirement Program Summary Plan Description, under the heading "HOW SOCIAL SECURITY AFFECTS YOUR BENEFITS," defendants provided a six-paragraph explanation of the relationship between Social Security and plaintiffs' retirement benefits. (DSOF ¶¶ 8­11); (Barrett
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Decl. Ex. E, at HW0005888). As part of this explanation, defendants stated, in no uncertain terms, "the plan takes your estimated Social Security retirement benefits into account when determining your retirement benefits under the plan." (Id.) Like the January 1984 brochure and 1984 SPD, the 1996 SPD also laid out the basic retirement benefit formula, including the Social Security offset, and provided a sample calculation in which an offset based on a hypothetical participant's estimated Social Security benefit was subtracted from the final average compensation formula to arrive at a "monthly benefit." (See id. at HW0005889-5890.) In sum, plan communications beginning in the 1980s and continuing into the 1990s plainly conveyed to participants every fact upon which plaintiffs now rely to establish their Social Security Offset claims. Accordingly, these claims are time-barred as a matter of law. B. Plaintiffs Knew or Should Have Known How the Amended Plan's Secured Benefit Account Offset Would Affect Their Retirement Benefits in 1984. Plan communications from as far back as 1984 also informed plaintiffs of the effect that changes to the Secured Benefit Account offset made as part of the merger of the Garrett and Signal Plans would have on their retirement benefits. In fact, this Court has already held that the 1984 Signal Retirement Plan Summary Plan Description accurately "disclose[d] the `events' or `actions'" with respect to the Secured Benefit Account offset "that could trigger a loss of benefit." Allen, 382 F. Supp. 2d at 1169 (quoting Atwood v. Newmont Gold Co., 45 F.3d 1317, 1321-22 (9th Cir. 1995), overruled on other grounds by Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) (en banc)). In granting defendants' motion to dismiss plaintiffs' improper-disclosure claim, this Court ruled that the 1984 SPD "adequately alerted Plaintiffs to the offset," and provided "[a] participant who was concerned or curious about the mechanics of the Secured Benefit Account offset" with "an opportunity to obtain or review more detailed
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information." 382 F. Supp. 2d at 1170. The Court noted that the SPD "clearly explained that participants would have a lesser benefit under the Retirement Plan if they did not transfer their Secured Benefit Accounts to the Plan" and found that plaintiffs' argument that defendants were required to detail the interest rates used to calculate the offset had "no merit." Id. at 1169­70. Thus, under this Court's own analysis, the 1984 SPD provided plaintiffs with sufficient "notice" of the facts underlying their SBA Offset claims, and thereby triggered the statute of limitations. See In re J.P. Morgan Chase Cash Balance Litig., 460 F. Supp. 2d 479, 484 (S.D.N.Y. 2006) (noting that "receipt of an SPD from the Plan may be sufficient notice" of a claim for statute of limitations purposes); cf. Hirt, 450 F. Supp. 2d at 333­34 (SPD detailing amendments to retirement plan clearly repudiated plaintiffs' claims and caused the statute of limitations on plaintiffs' claims under the previous version of the plan). In fact, the 1984 plan communications did more than merely disclose the fact of an SBA offset. The January 1, 1984 Signal-Garrett brochure specifically described changes to the Secured Benefit Account that resulted from the merger, including that (1) employees became 100% vested in their account balances as of December 31, 1984; (2) "approximately 40% more" was added to each participants SBA account balance through credits from a share of excess assets previously held in the "Severance Plan Trust"; and (3) the SBA accounts were invested at a "guaranteed annual interest rate in excess of 12%." (Barrett Decl. Ex. A, at HW0008544.) The brochure also provides an example that compares the growth of hypothetical employees' SBA account balances under the Old Garrett and New Signal plans. (Id.) These facts clearly demonstrated that the SBA balance was larger under the new Signal plan; when combined with the clear disclosure (highlighted by the Court) that the benefit formulas were subject to SBA offsets, they at least raise an inference that the SBA offset would be larger after the amendment than it was before. Thus, plaintiffs' SBA Offset Claim, like its Social Security Offset Claim, accrued in 1984, and is therefore barred as a matter of law by the statute of limitations.
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C.

Plaintiffs' Minimum Benefits Claim is Time-Barred.

The 1984 plan communications also clearly disclosed the impact on participants' benefits that forms the basis of plaintiffs' Minimum Benefit claim. Plaintiffs contend that the 1984 Signal Retirement Plan unambiguously precluded any SBA offset to the minimum benefit formula. The January 1984 brochure, however, informed class

members that an SBA offset would apply to benefits calculated under both the standard and minimum benefit formulas. The Garrett-specific 1984 brochure identified the

retirement benefit under the "New Signal Benefit Calculation" as the greater of the standard or minimum benefit formula (Barrett Decl. Ex. A, at HW0008544) and explained that participants had two choices: they could "transfer the Garrett Secured Benefit Account Balance to the new Signal Retirement Plan and receive the maximum benefit accrued under the Retirement Plan," or "elect to withdraw part or all of the Secured Benefit Account Balance" (id. at HW0008545). In describing the second

option, the brochure specifically stated that "[t]he amount withdrawn will reduce the monthly benefit payable from the Retirement Plan by the actuarial equivalent of the cash withdrawal." (Id. (emphasis added).) Thus, the January 1984 brochure explained that the a participant's "monthly benefit" would be reduced if his or her SBA was not transferred to the retirement plan, regardless of whether the benefit was calculated under the standard or minimum benefit formula. (Id. (emphasis added).) The May 1984 Signal Retirement Plan Summary Plan Description similarly notified plan participants that, contrary to plaintiffs' current interpretation, the plan in fact would calculate benefits such that the minimum benefit formula was subject to an SBA offset. The May 1984 SPD explained that, to achieve the benefits calculated under either formula, a participant was required to "transfer the full balance" of his or her Garrett SBA to the Retirement Plan:

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(11/8/2004 Dauphine Decl. Ex. A, at HW 0000988.) The SPD then reiterated this point in a separate question that dealt directly with the effect of a Garrett SBA on participants' benefits. In response to the question "What happens if I have a GARRETT SECURED BENEFIT ACCOUNT?" the SPD specifically stated, "If you don't make this transfer, your NORMAL RETIREMENT benefit" (defined as "the larger of" the normal and minimum benefits formulas (id.)) "will be somewhat reduced" (id. at HW 0000989 (emphasis added)). The May 1984 SPD, therefore, informed class members in no

uncertain terms of the impact of the SBA offset on the minimum benefit formula. Thus, like the Social Security Offset and SBA Offset Claims, plaintiffs' Minimum Benefits Claim accrued in 1984, twenty years before plaintiffs filed suit. Under any possible statute of limitations, their suit on this claim, filed in 2004, is time-barred as a matter of law. CONCLUSION For the foregoing reasons, defendants respectfully request this Court to grant summary judgment in their favor on plaintiffs' Three Remaining Claims.

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Respectfully submitted this 10th day of December, 2007. OSBORN MALEDON 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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CERTIFICATE OF SERVICE I do certify that on December 10, 2007, I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a

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1852169_1

Notice of Electronic Filing to all CM/ECF registrants.

s/Kelly Dourlein