Free Motion to Amend/Correct - District Court of Arizona - Arizona

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SUSAN MARTIN (AZ#014226) DANIEL L. BONNETT (AZ#014127) JENNIFER KROLL (AZ#019859) MARTIN & BONNETT, P.L.L.C. 3300 N. Central Avenue, Suite 1720 Phoenix, Arizona 85012-2517 Telephone: (602) 240-6900 [email protected] [email protected] [email protected] Attorneys for Plaintiffs DAVID B. ROSENBAUM (AZ#009819) DAWN L. DAUPHINE (AZ#010833) OSBORN MALEDON P.A. 2929 North Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 Telephone: (602) 640-9000 [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] Attorneys for Defendants IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA 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] AMY COVERT, Pro Hac Vice PROSKAUER ROSE, LLP One Newark Center, 18th Floor Newark, NJ 07102-5211 Telephone: (973) 274-3258 `[email protected]

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

JOINT MOTION TO AMEND THE ORDER CERTIFYING THE CLASS

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Plaintiffs and Defendants (collectively the Parties ) jointly move the Court pursuant to Federal Rule of Civil Procedure 23 to enter an Order vacating its September 6, 2006 class certification order (Dkt. No. 226) and certifying the Settlement Class, as described below, pursuant to Federal Rules of Civil Procedure 23(b)(1) and/or 23(b)(2). MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION On September 6, 2006, the Court granted Plaintiffs motion for class certification. (Dkt. No. 226.) Thereafter, the Parties engaged in extensive settlement negotiations,

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which included participating in several multi-day mediation sessions before two
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mediators, both of national reputation. The Parties also exchanged extensive mediation
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papers, data, and consulting expert analyses in order to facilitate settlement discussions.
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After months of intense, arms-length negotiations, the Parties reached a Partial Settlement
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Agreement that settles all but three of the Settlement Class claims, requires a plan
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amendment to provide eligible members of the Settlement Class with additional benefits,
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and limits the relief the Settlement Class can recover on the Three Remaining Claims that
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will continue to be litigated after the Partial Settlement becomes Final.1 (Dkt. No.312 .) In negotiating the Partial Settlement, the Parties concluded that the class certified

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by the Court s September 2006 Order, (Dkt. No. 226), did not include certain interested
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parties and should be amended to include those individuals. Accordingly, as described
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more fully below, the Parties jointly move the Court to vacate its September 2006 Order
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and certify the Settlement Class.
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In addition, following the Court s September 2006 class certification opinion, the
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Parties reevaluated Plaintiffs claims and the relief sought and determined that
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certification of the Settlement Class is appropriate under Rules 23(b)(1) and (b)(2), rather
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than 23(b)(3). Specifically, the Settlement Class claims ask the Court to interpret the
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Unless otherwise defined herein, all capitalized words and phrases shall have the meanings ascribed to them in the Partial Settlement Agreement. (Dkt. No. 312, Exhibit A.)
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Retirement Plan s benefit formula, determine the validity of certain Retirement Plan amendments, and reform the Retirement Plan. Allowing the prosecution of separate actions in these circumstances would create a significant risk of inconsistent or varying adjudications that would establish incompatible standards of conduct for Defendants and would affect other participants rights as a practical matter. Furthermore, the Parties have reconsidered their arguments and concluded that the Settlement Class will be entitled to monetary relief, if at all, through relief that flows incidentally from Plaintiffs requested declaratory and injunctive relief. Accordingly, the Parties jointly move the Court to certify the Settlement Class pursuant to Rules 23(b)(1) and (b)(2) and not Rule 23(b)(3).
II.

ARGUMENT
A.

The Court Should Amend The September 2006 Order And Certify The Settlement Class.

This Court is free to revisit and modify its Order granting class certification. See Fed.R.Civ.P. 23(c)(1)(C) (An order certifying a class may be altered or amended before
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final judgment. ); Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364,
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2372 (1982). ( [A]fter a certification order is entered, the judge remains free to modify it
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in the light of subsequent developments in the litigation. ) Therefore, it is within the
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Court s discretion to revisit its certification order and redefine the class. See Armstrong v.
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Davis, 275 F.3d 849 (9th Cir. 2001) ( Where appropriate, the district court may redefine
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the class. )
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The Court should redefine the class because the class certified in the Court s
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September 2006 Order excludes certain interested parties. (Dkt. No. 226.) While the
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class definition included certain individuals whose right to benefits were derivative of a
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participant s rights (e.g. beneficiaries), it did not include all such potential derivative
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claimants. For example, the certified class definition does not include alternate payees
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who have an interest in plan benefits pursuant to a Qualified Domestic Relations Order.
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Thus, the Parties respectfully request that the Court certify the following Settlement Class:
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the group of persons consisting of every Participant and SBA
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Participant and every derivative claimant of a Participant or SBA Participant. For this purpose, the derivative claimants of a Participant and SBA Participant include, without limitation, any spouse, domestic partner, civil union partner, child, representative, heir, administrator, beneficiary, alternate payee, executor, conservator, attorney, and/or assign of a Participant and SBA Participant. These derivative claimants are limited to the rights of and are subject to the defenses applicable against the Participant and SBA Participant from whom their claim derives. The Court Should Certify The Settlement Class Pursuant To Rules 23(b)(1) and (b)(2).

In its September 2006 class certification order, (Dkt. No. 226), the Court certified the class pursuant to Rules 23(a) and (b)(3). As discussed in detail below, the Parties jointly move the Court to certify the Settlement Class as a non-opt out class pursuant to Rules 23(a),2 (b)(1), and (b)(2).
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The Court Should Certify The Settlement Class Pursuant To Rule 23(b)(1).

Plaintiffs did not previously move to certify a class under Rule 23(b)(1). Accordingly, this Court has not yet addressed whether certification of a class pursuant to Rule 23(b)(1) is appropriate in this case. As discussed below, the Settlement Class is properly certified under Rule 23(b)(1). A mandatory, non-opt out class may be certified under Rule 23(b)(1) where: the prosecution of separate actions by or against individual members of the class would create a risk of (A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or (B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests Fed. R. Civ. P. 23(b)(1). Class certification under both clauses of Rule 23(b)(1) is
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The Court has already determined that the requirements of Rule 23(a) are met in this case and need not revisit the question again. (Dkt. No. 226.)
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common in labor relations cases because defendants often provide unitary treatment to all members of a putative class in this area and thus the rights of absent class members are often implicated by litigation brought by other class members. Thomas v. SmithKline Beecham Corp., 201 F.R.D. 386, 397 (E.D. Pa. 2001) (citation, internal quotations and reference to internal alternations omitted.) Indeed, courts regularly certify classes pursuant to Rule 23(b)(1) in ERISA cases where challenges to the legality of an amendment and/or issues concerning plan interpretation or reformation make individual litigation by class members untenable. See Humphrey v. United Way, No. H-05-0758, 2007 WL 2330933 at *10 (S.D. Tex. August 14, 2007) (certifying class of ERISA plan participants challenging the validity of a plan amendment pursuant to Rule 23(b)(1) because [i]ndividual suits might lead to conflicting orders on the interpretation of the 96 Plan ); In re Citigroup Pension Plan ERISA Litig., 241 F.R.D. 172, 180 (S.D.N.Y. 2006) (certifying under Rule 23(b)(1) a claim seeking reformation of an ERISA plan because . . . inconsistent dispositions of these claims by different courts could create an untenable situation. ) (internal quotation omitted); Richards v. FleetBoston Fin. Corp., 238 F.R.D. 345, 354 (D. Conn. 2006) (same); Thomas, 201 F.R.D. at 397 (certifying class under 23(b)(1) because plaintiffs seek broad declaratory and injunctive relief related to . . . the terms of the plan. If this relief were granted in some actions but denied in others, the conflicting declaratory and injunctive relief could make compliance impossible for defendants. ); Schutte v. Maleski, No. Civ. A. 93-0961, 1993 WL 218898 at *9 (E.D. Pa. June 18, 1993) (granting certification under 23(b)(1)(A) where plaintiffs sought invalidation of a plan amendment because differing outcomes [in individual suits] would make it near impossible for defendants to implement any one result because of the inherent conflict from disparate adjudications ). The Settlement Class should be certified under both prongs of Rule 23(b)(1). Certification under Rule 23(b)(1)(A) is clearly necessary. The primary issues presented in this case relate to the proper interpretation of the Retirement Plan, the validity of certain
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Retirement Plan amendments, and whether the Settlement Class is entitled to reformation of the Retirement Plan. As such, there is a significant risk that the prosecution of separate actions by individual members of the class would result in incompatible interpretations of the Retirement Plan or in conflicting injunctive and/or declaratory relief. For example, if two or more courts interpreted the Retirement Plan s Minimum Benefits provision differently, or found a violation of the anti-cutback rule and ordered different reformations of the Retirement Plan, Defendants would be bound to provide a certain level of benefits by one court, and simultaneously to provide a different level of benefits by another, the very result Rule 23(b)(1) is intended to avoid. Winnett v. Caterpiller, Inc., No. 3:06-cv00235, 2007 WL 2044098, *11 (M.D. Tenn. July 12, 2007) (slip copy) (certifying a class of participants in an ERISA plan pursuant to Rule 23(b)(1)).3 Thus, the Court should certify the Settlement Class pursuant to Rule 23(b)(1)(A) to protect against the very real danger that inconsistent adjudications in multiple individual actions would lead to incompatible standards of conduct. See Humphrey, 2007 WL 2330933 at *10; In re Citigroup Pension Plan ERISA Litig., 241 F.R.D. at 180; Richards, 238 F.R.D. at 354; Thomas, 201 F.R.D. at 397; Schutte, 1993 WL 218898 at *9. In addition, certification of the Settlement Class is independently appropriate under Rule 23(b)(1)(B) because any adjudication[] with respect to individual members of the class . . . would as a practical matter be dispositive of the interests of the other members not parties to the adjudication[]. Fed. R. Civ. P. 23(b)(1)(B). In this case, a court s interpretation of the Retirement Plan s Minimum Benefit formula, its decision regarding the validity of a plan amendment, or its adjudication of a plaintiff s request for
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See also Zinser v. Accufix Research Inst., Inc. 253 F.3d 1180, 1193 (9th Cir. 2001) ( The phrase incompatible standards of conduct refers to the situation where different results in separate actions would impair the opposing party s ability to pursue a uniform continuing course of conduct. ); La Mar v. H&B Novelty & Loan Co., 489 F.2d 461, 466 (9th Cir. 1973) ( Rule 23(b)(1)(A) authorizes class actions to eliminate the possibility of adjudications in which the defendant will be required to follow inconsistent courses of continuing conduct. This danger exists in those situations in which the defendant by reason of the legal relations involved can not as a practical matter pursue two different courses of conduct. (footnote omitted)).
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reformation of the Retirement Plan would necessarily affect the interests of all other similarly situated participants. Thus, this Court should also certify the Settlement Class under Rule 23(b)(1)(B). See In re J.P. Morgan Chase Cash Balance Litig., 242 F.R.D. 265, 276 (S.D.N.Y. 2007) (noting that reformation of the Plan may affect the interest of other plan members to the extent these participants are subject to the same Plan. ); Bunnion v. Consol. Rail Corp., No. Civ. A. 97-4877, 1998 WL 372644 at *13 (E.D. Pa. May 14, 1998) (certifying class under 23(b)(1) because [i]nconsistent judgments concerning how the Plans should have been interpreted or applied would result in prejudice. ); Schutte, 1993 WL 218898 at *9 (granting certification under 23(b)(1)(B) where plaintiffs sought invalidation of a plan amendment because the decision on [the] request for declaratory relief will affect the interests of all proposed class members, as the relief sought pertains directly to the Plan under which the proposed class is allegedly covered. ).
2.

In The Alternative, The Court Should Certify The Settlement Class Pursuant To Rule 23(b)(2).

In the alternative, the Settlement Class is also properly certified under Rule 23(b)(2).4 Defendants previously opposed, and the Court previously rejected certification of the class pursuant to Rule 23(b)(2) because the court concluded that Plaintiffs sought
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predominantly monetary relief, rather than injunctive relief. Molski v. Gleich, 318 F.3d
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937, 947 (9th Cir. 2003); (Dkt. No. 226). The Partial Settlement is structured as an
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amendment to the Retirement Plan in the form of declaratory and injunctive relief. The
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Partial Settlement was structured in this fashion because the Settlement Class seeks
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primarily injunctive and/or declaratory relief. Any monetary relief is incidental to the
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Settlement Class claims for injunctive or declaratory relief. See Molski, 318 F.3d at 949
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( Incidental damages are damages that flow directly from liability to the class as a whole
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Rule 23(b)(2) permits certification where the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole . . . Fed. R. Civ. P. 23(b)(2).
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on the claims forming the basis of the injunctive or declaratory relief. ). The Parties stipulate to certification of a class solely for settlement purposes (which includes litigation of the Three Remaining Claims) pursuant to Fed. R. Civ. P. 23(a)(1)-(4) and 23(b)(1) and 23(b)(2). Defendants will not seek to decertify the Settlement Class, but reserve their right to assert that some or all members of the Settlement Class are not entitled to any relief on any of the Three Remaining Claims (i.e., relief beyond that provided as Partial Settlement Benefits) for any reason, including, without limitation, on the basis of affirmative defenses such as the statute of limitations and laches. Thus, because any monetary recovery to the Settlement Class would be incidental to the requested declaratory and injunctive relief, the Parties respectfully request that the Court also certify the Settlement Class pursuant to Rule 23(b)(2). See, e.g., Humphrey, 2007 WL 2330933, *9 (certifying class under Rule 23(b)(2) where plaintiff seeks a declaration that the plan s method of computing the early retirement benefits is unlawful ); In re J.P. Morgan Chase Cash Balance Litig., 242 F.R.D. at 276 (certifying class under Rule 23(b)(2) where [i]f Plaintiffs prevail on the merits and [the plan at issue] is found to violate ERISA s age-based accrual rules, any injunctive or declaratory relief ordered would be applicable to the entire class ).5
III. CONCLUSION

For all of the above reasons, the Parties jointly move the Court pursuant to Federal Rule of Civil Procedure 23(c) to vacate its September 6, 2006 Order (Dkt. No. 226) and enter an order certifying the Settlement Class pursuant to Rules 23(b)(1) and (b)(2), with Named Plaintiffs as the named class representatives and with Class Counsel as counsel for named plaintiffs and the Settlement Class.

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Additionally, the Parties have agreed to settle many of the claims in this action by providing for prospective structural plan changes. (See Partial Settlement Agreement at Paragraphs 3.01 3.10.) Therefore, at a minimum, the Settlement Class should be certified pursuant to Rule 23(b)(2) for the purpose of the settled claims.
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Respectfully submitted this 31st day of October, 2007. s/Susan Martin Susan Martin Daniel L. Bonnett Jennifer Kroll MARTIN & BONNETT, P.L.L.C. 3300 North Central Avenue, Suite 1720 Phoenix, AZ 85012-2517
Telephone: (602) 240-6900

s/David Rosenbaum David B. Rosenbaum Dawn L. Dauphine OSBORN MALEDON, P.A. 2929 North Central Avenue, Suite 2100 Phoenix, AZ 85012-2794 Telephone: (602) 640-9000 Michael L. Banks (Pro Hac Vice) Will Delany (Pro Hac Vice) Azeez Hayne (Pro Hac Vice) MORGAN, LEWIS & BOCKIUS LLP 1701 Market Street Philadelphia, PA 19103 Telephone: (215) 963-5000 Howard Shapiro (Pro Hac Vice) PROSKAUER ROSE LLP 909 Poydras Street, Suite 1100 New Orleans, LA 70112-4017 Telephone: (504) 310-4088 Amy Covert (Pro Hac Vice) PROSKAUER ROSE LLP One Newark Center Newark, New Jersey 07102 Telephone: (973) 274-3258
Attorneys for Defendants

Class Counsel and Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE
I certify that on October 31, 2007, 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 the following CM/ECF registrants:

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 Will Delany, 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 (504) 310-4085 [email protected] Amy Covert, Pro Hac Vice PROSKAUER ROSE LLP One Newark Center Newark, NJ 07102-5211 973.274.3258 [email protected] Attorneys for Defendants
s/J. Kroll

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