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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 IN THE UNITED STATES DISTRICT COURT
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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 PLAINTIFFS' OPPOSITION TO DEFENDANTS' MOTION TO AMEND ANSWER
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TABLE OF CONTENTS TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii MEMORANDUM OF POINTS AND AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . 1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 PROCEDURAL HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
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Defendants' Motion To Amend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 I. DEFENDANTS' MOTION TO AMEND SHOULD BE DENIED FOR UNDUE DELAY, PREJUDICE AND DILATORY MOTIVE . . . . . . . . . . . . . . . . . . . . . . 6 II. DEFENDANTS' MOTION TO AMEND IS FUTILE . . . . . . . . . . . . . . . . . . . . . . . 11 A. The Summary Judgment Ruling Forecloses the Proposed Amendments . . . . 11 B. Law of the Case Bars the Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 C. Defendants' Proposed Defenses Are Foreclosed By Dispositive Authority . . 13 D. The Court's Decision on the Standard of Review is Correct and the Result is the Same Under Any Standard of Review . . . . . . . . . . . . . . . . . . . . 14 E. Defendants' Failure to Raise the Proposed Defenses During the Claims Review Process Bars the Proposed Amendments . . . . . . . . . . . . . . . . . . 14 F. The Doctrine of Mistake Could Not Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 G. Prejudice Could Not Have Been A Defense To Defendants' Section 204(h) Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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TABLE OF AUTHORITIES Cases Abatie v. Alta Health & Life Ins. Co., 458 F.3d 955 (9th Cir. 2006) . . . . . . . . . . . . 14-15 Abels v. Titan Intern., Inc., 85 F.Supp.2d 924 (S.D. Iowa 2000) . . . . . . . . . . . . . . . . . . 17 Acri v. Int'l Ass'n of Machinists & Aerospace Workers, 781 F.2d 1393 (9th Cir. 1986) 10 passim Allen v. Honeywell Retirement Earnings Plan, 382 F.Supp.2d 1139 (D.Ariz. 2005)... AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946 (9th Cir. 2006) . . . . 9-11
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Bonin v. Calderon, 59 F.3d 815 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11 Brinson v. Linda Rose Joint Venture, 53 F.3d 1044 (9th Cir. 1995) . . . . . . . . . . . . . . . 12 Canseco v. Construction Laborers Pension Trust for Southern California, 93 F.3d 600 (9th Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Cinelli v. Security Pacific Corp., 61 F.3d 1437 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . 15 Copeland v. Geddes Federal Savings & Loan Ass'n Retirment Income Plan, 62 F.Supp.2d 673 (N.D.N.Y. 1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995) . . . . . . . . . . . . . . . . . . . . 16 Diaz v. United Agric. Employee Welfare Benefit Plan and Trust, 50 F.3d 1478 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Diersen v. Chicago Car Exchange, 110 F.3d 481 (7th Cir. 1997) . . . . . . . . . . . . . . . . . . 8 Enlow v. Salem-Keizer Yellow Cab Co., 389 F.3d 802 (9th Cir. 2004) . . . . . . . . . . . . 12 Farina v. Compuware Corp., 256 F.Supp.2d 1033 (D.Ariz. 2003) . . . . . . . . . . . . . . 11, 12 Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (9th Cir. 2001) . . . . . . . . 14
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Hirt v. Equitable Retirement Plan For Employees, Managers and Agents, 441 F.Supp.2d 516 ii
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(S.D.N.Y. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Image Technical Serv., Inc. v. Eastman Kodak Co., 903 F.2d 612 (9th Cir.1990) . . . . . . 7 In re Citigroup Pension Plan ERISA Litigation, __ F.Supp.2d ___, 2006 WL 3613691 (S.D.N.Y. 2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16-17 Jackson v. Bank of Hawaii, 902 F.2d 1385 (9th Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . 9 Johnson v. Mammoth Recreations, Inc., 975 F.2d 604 (9th Cir. 1992) . . . . . . . . . . . . . . . 9 Kontrick v. Ryan, 540 U.S. 443 (2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 12 Leslie Salt Co. v. U.S.,55 F.3d 1388 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980 (9th Cir. 1999) . . . . . 11 McDaniel v. City of Griffin, 636 S.E.2d 62 (Ga. App. 2006) . . . . . . . . . . . . . . . . . . . . . 8 McGrath v. Scott, 250 F.Supp.2d 1218 (D.Ariz. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Michael v. Riverside Cement, 266 F.3d 1023 (9th Cir. 2001) . . . . . . . . . . . . . . . . . . . . . 13 Nova Designs, Inc. v. Scuba Retailers Ass'n, 202 F.3d 1088 (9th Cir. 2000) . . . . . . . . . . 7 Peterson v. Petry, 2006 WL 2460760 (C.D. Ill.2006) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Production and Maintenance Employees' Local 504 v. Roadmaster Corp., 954 F.2d 1397 (7th Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Reich v. Ladish Co., Inc., 306 F.3d 519 (7th Cir. 2002) . . . . . . . . . . . . . . . . . . . . . . . . . 15 Schlacter-Jones v. General Telephone of California, 936 F.2d 435 (9th Cir. 1991) . . . . . 8 Shaw v. Int'l Ass'n of Machinists & Aerospace Workers Pension Plan, 750 F.2d 1458 (9th Cir. 1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Smith v. Marsh, 194 F.3d 1045 (9th Cir.1999) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Smith v. Sydnor, 2000 WL 33687953 (E.D. Va. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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Steir v. Girl Scouts of the USA,383 F.3d 7 (1st Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . 8 USX Corp. v. Barnhart, 395 F.3d 161 (3d Cir. 2004) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Watson Laboratories, Inc. v. Rhone-Poulenc Rorer, Inc., 178 F.Supp.2d 1099 (C.D. Cal.2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Wholesale & Retail Food Distribution Local 63 v. Santa Fe Terminal Servs., 826 F.Supp. 326 (C.D. Cal. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Wimm v. Jack Eckerd Corp., 3 F.3d 137 (5th Cir. 1993) . . . . . . . . . . . . . . . . . . . . . . 9, 11
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Statutes ERISA § 204(h), 29 U.S.C. § 1054(h) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2, 3, 16 ERISA § 204(g), 29 U.S.C. § 1054(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 3 ERISA § 402, 29 U.S.C. § 1102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Other Authorities 26 C.F.R. § 1.411(d)-3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 13 70 Fed. Reg. 47109 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 13
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Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, 10A Federal Practice and Procedure § 2716 (2006 supp.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Federal Rule of Civil Procedure 56 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Federal Rule of Civil Procedure 59 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Federal Rule of Civil Procedure 60 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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Plaintiffs hereby oppose Defendants' motion to amend the answer. MEMORANDUM OF POINTS AND AUTHORITIES INTRODUCTION Defendants' attempt to introduce new variations on defenses to claims that were fully litigated on Defendants' Motion to Dismiss and Plaintiffs' Cross-Motion for Partial Summary Judgment should be denied because of Defendants' undue delay, dilatory motive, substantial
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prejudice both to Plaintiffs and the judicial process and futility. The issues Defendants are now attempting to assert through the proposed addition of three new affirmative defenses and through changes to existing defenses are foreclosed by the Court's July 2005 summary judgment ruling1 and this Court's denial of Defendants' motion for reconsideration. (Doc. 73, 138.) To the extent Defendants purport to raise new theories of defense, they have no excuse for their failure to assert their arguments in opposition to the motion for summary judgment.
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Although Defendants unsuccessfully sought reconsideration of the Court's ruling that Plan amendments decreased accrued benefits in violation of ERISA §204(g), Defendants never sought reconsideration on the minimum benefits claims. Defendants are now attempting to do an end-run around the summary judgment ruling, the denial of their motion for reconsideration and the requirements of Rules 56, 59 and 60 of the Federal Rules of Civil Procedure by re-packaging their failed or unasserted arguments in the form of a proposed
Allen v. Honeywell Retirement Earnings Plan, 382 F.Supp.2d 1139 (D.Ariz. 2005). 1
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amended answer. While Defendants' proposed amended answer continues to aver that the Court's July 2005 ruling is final with respect to the issues Defendants won on their motion to dismiss2, the proposed amendments refuse to take "no" for an answer on the issues Plaintiffs won on summary judgment. Defendants' motion to amend should be denied. PROCEDURAL HISTORY The procedural history of this case demonstrates Defendants' undue delay and the
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futility of the present motion. Plaintiffs filed their complaint on March 1, 2004. On May 5, 2004, Defendants moved to dismiss the complaint. (Doc. 15.) On June 16, 2004, Plaintiffs cross-moved for summary judgment with respect to Plaintiffs' anti-cutback and minimum benefits claims. (Doc. 23.) On July 19, 2005, the Court granted in part, and denied in part, Defendants' motion to dismiss, and granted in part, and denied in part, Plaintiffs' motion for partial summary judgment. (Doc. 73.) The Court granted summary judgment on Plaintiffs' anti-cutback
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claims and minimum benefits claims finding that accrued benefits were decreased by Plan amendments in violation of §204(g) of ERISA. Allen, 382 F.Supp.2d at 1173. The Court also granted Plaintiffs' claims that Defendants violated the Plan and ERISA §§204(g) and (h) by applying a Secured Benefits Account ("SBA") offset to the minimum benefits formula under the Plan and by applying a 1993 amendment purporting to impose such
See, e.g., Proposed Amended Answer, (Doc. 256), ¶¶ 52,54-57, asserting "The allegations...relate to claims that were dismissed by the Court's Order dated July 19, 2005 and, therefore, no further response is required."
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an offset on the minimum benefits formula retroactively and without notice. Id. at 1162-64. The Court ruled that the de novo review applied to Plaintiffs' challenge of the Plan Administrator's decisions denying the administrative claims and appeal. Id. at 1161. The Court found that "[t]he unambiguous terms of the Signal Retirement Plan do not permit a Secured Benefit Account offset to the minimum benefit formulas contained in § 4.2(c) of the Plan." Id. at 1164. The Court held that "Defendants' unsupported assertions regarding the
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intent of the Plan cannot overcome the clear language of the plan," and that "[t]he text of the Plan controls here, not the unexpressed intent of the drafters." Id. at 1163 (citations omitted) (emphasis added). The Court also held that Defendants had failed to meet their burden to show genuine issues of material fact: In responding to Plaintiffs' request for partial summary judgment on this ground, Defendants must do more than simply show there is some metaphysical doubt as to the material facts-they must set forth specific facts showing that there is a genuine issue for trial. Id. (citations omitted). The Court also granted summary judgment in favor of Plaintiffs on their claims that the Plan was unlawfully amended in 1993 to impose an SBA offset in violation of ERISA §§ 204(g) and (h): Defendants do not dispute that the plan administrator did not give notice of the amendment providing for an offset to minimum benefits.... As discussed above, § 4.2(e)(i)(b) unambiguously did not provide for a Secured Benefit Account offset to the Plan's minimum benefit formulas. For participants who had a Secured Benefit Account offset of any amount, the amendment significantly reduced the rate of future benefit accruals. Thus, § 1054(h) required the plan administrator to give notice of the amendment to participants....
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Further, because the amendment was retroactive, it also violated the anticutback rule, 29 U.S.C. § 1054(g), for the same reasons stated in Section (F) above. Id. at 1167. The Court held that the amendment to the Plans' minimum benefits formula to impose an SBA offset "decreases the dollar amount of the participant's net annuity" and was "a paradigmatic example of a cutback-for those participants who would have had their benefits calculated under the Minimum Benefit Formulas...." Id. at 1167 n.1.
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Defendants moved for reconsideration and clarification with respect to the Court's ruling that Defendants violated ERISA's anti-cutback requirements, but not with respect to the Court's ruling that Defendants violated the Plan and ERISA §§ 204(g) and (h) by applying an SBA offset to the minimum benefits formula. (Doc. 79, 95.) In its ruling denying Defendants' motion for reconsideration, the Court reaffirmed its rulings that Plan amendments decreased Plaintiffs' accrued benefits in violation of ERISA § 204(g) and held that newly issued Treasury regulations did not apply to this case. (Doc. 138.) See 26 C.F.R. § 1.411(d)-
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3; 70 Fed. Reg. 47109 (2005). The Court also certified the anti-cutback claims for interlocutory appeal3 and clarified that Defendants were not foreclosed "from taking discovery on and asserting affirmative defenses related to individual putative class members' claims." (Doc. 138 p.1 n.1.) Defendants' Motion To Amend Against this background it is plain to see why Defendants' proposed amendments are
Defendants' petition for an interlocutory appeal was denied. (Doc.142.) 4
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prejudicial, dilatory and futile. The proposed amendments attempt to deprive Plaintiffs of the benefit of rulings in their favor and to resurrect losing arguments or ones Defendants could have, but did not make, in opposing summary judgment on the liability phase of this case. Defendants' proposed amendments would have this Court re-determine facts and legal issues of class-wide applicability as if Defendants were writing on a blank slate and the Court's summary judgment and reconsideration rulings somehow never existed.4 Despite the fact that
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this Court already ruled that Defendants offered no evidence of intent in opposing summary judgment and that the standard of review is de novo, Defendants propose, without any justification, to add an Eighth Affirmative Defense to assert that abuse of discretion review
While all of the changes in Defendants' motion can be denied on the grounds of delay, prejudice and futility, the Court need not reach these issues other than for the newly proposed Eighth, Ninth and Tenth Affirmative Defenses, because the original answer suffices to allege the matters asserted in the balance of the proposed changes. For example, the First Affirmative Defense relates to the statute of limitations. The original answer identifies certain specific statutes of limitation but contains the proviso that the identified statutes are listed as "including without limitation." (Doc. 78, p.22.) Given the sufficiency of the original answer to encompass assertion of the newly proposed specific statutes of limitation, there is no need for an amendment to Defendants' First Affirmative Defense. Likewise, Defendants' proposal to change the words of the Third Affirmative Defense is unnecessary. The original answer asserts: "Plaintiffs' claims against Defendants are barred because their accrued benefits were not decreased." (Id.) This assertion is broad enough to encompass the narrower assertion in the proposed amendment that Plaintiffs' and putative class members' benefits were not decreased "as of the dates of the challenged amendments." (Doc. 256.) While the Court has already ruled that Plaintiffs' benefits were decreased in violation of ERISA § 204(g), there is no necessity for an amendment and the Court need not address issues of delay, prejudice or futility because the original answer encompasses the proposed change. McGrath v. Scott, 250 F.Supp.2d 1218, 1235 (D.Ariz. 2003). The only other proposed changes, that propose to add the words "and putative class members" after the words "Plaintiffs," (Doc. 256, pp. 22-24) are likewise unnecessary and purely semantic because the Complaint has always been asserted as a class action.
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applies, that an SBA offset was properly applied to the minimum benefits formula and, for the first time, that the Court should find a "scrivener's error" and that the Plan should be "reformed" to conform to the "Settlor's intent." Without any showing of why the argument was not asserted earlier, Defendants propose to add a Ninth Affirmative Defense to assert that the Court's construction of the minimum benefits formula was "ultra vires and unenforceable" and that "the relevant plan provision should be reformed to strike the unauthorized plan
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terms."5 Contrary to Defendants' admission that they never gave any notice of the 1993 amendments imposing an SBA offset on the minimum benefits formula, Defendants' Tenth Affirmative Defense proposes to assert for the first time that the § 204(h) claim is barred because "claimants fail to establish that they suffered likely harm from Defendants' alleged failure to provide a § 204(h) notice." I. DEFENDANTS' MOTION TO AMEND SHOULD BE DENIED FOR UNDUE DELAY, PREJUDICE AND DILATORY MOTIVE Defendants' untimely motion to amend appears to be nothing more than a belated effort to delay resolution of the proceedings in this Court and to improperly bolster the record in an
Aside from the other grounds for denial of the motion to amend, the formulation of this defense is nonsensical. The only "unauthorized Plan terms" are the ones imposing an SBA offset on the minimum benefits formula, which the Court's ruling declares unlawful. It is Plaintiffs who moved for summary judgment to strike the "unauthorized Plan terms," namely the SBA offset to the minimum benefits formula, and that motion was granted in Plaintiffs' favor.
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effort to make arguments on appeal that were never raised in opposition to summary judgment.6 Since July 26, 2002, when Plaintiffs filed their detailed administrative claims, Defendants have been on clear notice of the precise nature of Plaintiffs' claims. (See Declaration of Amy Promislo, ("Promislo Decl.") Doc. 16, Exh. I, at HW 0000451-53. ) Defendants assert no reason for their inordinate delay in bringing this motion. Defendants'
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proposed amendments do not rely on new facts or theories previously unavailable to them or for which they should not be held accountable. Defendants did not move to amend their answer until four and a half years after notice of Plaintiffs' claims, over two and a half years after filing of the complaint, over two years after briefing on summary judgment was concluded, 16 months after the Court's ruling on these claims and 15 months after Defendants filed their post-summary judgment answer. It is far too late for Defendants to assert defenses to the matters determined on
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summary judgment. See Kontrick v. Ryan, 540 U.S. 443, 460 (2004) (affirming denial of leave to amend to assert statute of limitations defenses after summary judgment ruling: "No
Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, 10A Federal Practice and Procedure § 2716 (2006 supp.) (on appeal of summary judgment ruling, parties cannot "advance new theories or raise new issues in order to secure a reversal of the lower court's determination."). See Nova Designs, Inc. v. Scuba Retailers Ass'n, 202 F.3d 1088, 1090 -91 (9th Cir. 2000); Image Technical Serv., Inc. v. Eastman Kodak Co., 903 F.2d 612, 615 n. 1 (9th Cir.1990) ("Appellants . . . argue that Kodak's conduct is illegal under a rule of reason analysis. We do not consider this argument because appellants failed to raise it in response to Kodak's motion for summary judgment in the district court."); Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir.1999).
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reasonable construction of complaint-processing rules, in sum, would allow a litigant situated as Kontrick is to defeat a claim, as filed too late, after the party has litigated and lost the case on the merits."). Defendants' attempt to re- litigate issues already decided in Plaintiffs' favor on summary judgment also violates the Ninth Circuit's clear admonition that "[a] motion for leave to amend is not a vehicle to circumvent summary judgment." Schlacter-Jones v. General Telephone of California, 936 F.2d 435, 443 (9th Cir. 1991) (citations ommitted). While not
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controlling, one court's recent rejection of a similar motion is apt: No party, plaintiff or defendant, is permitted to stand his case before the court on some of its legs, and if it falls, set it up again on the rest in a subsequent proceeding, and thus evade the bar of the former judgment. Therefore, we cannot authorize a plaintiff to launch a new lawsuit through amendment after a final decision on summary judgment nor can we permit a defendant to utilize a new defense following a ruling on summary judgment in plaintiff's favor as to liability. McDaniel v. City of Griffin, 636 S.E.2d 62, 65 (Ga. App. 2006) (citations omitted). See USX Corp. v. Barnhart, 395 F.3d 161, 168 (3d Cir. 2004) ("Interests in judicial economy and
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finality of litigation become `particularly compelling' when `a party delays making a motion to amend until after summary judgment has been granted to the adverse party.'" ) (citations omitted); Diersen v. Chicago Car Exchange, 110 F.3d 481, 489 (7th Cir. 1997) ("[H]ad the judge permitted these amendments after the entry of summary judgment, we note that the litigation would have been prolonged and the public interest in prompt resolution of legal disputes impaired.") (citations omitted). See also Steir v. Girl Scouts of the USA,383 F.3d 7, 12 (1st Cir. 2004). To hold otherwise would render the summary judgment process a
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meaningless exercise rather than an effective mechanism for disposing of legal issues. 8
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Plaintiffs would be severely prejudiced if Defendants are permitted to amend their answer to assert defenses to claims already decided. In AmerisourceBergen Corp. v. Dialysist West, Inc., 465 F.3d 946, 953 (9th Cir. 2006), the Ninth Circuit reaffirmed the longstanding rule that leave to amend need not be granted where it prejudices the opposing party. There, in the absence of a summary judgment ruling and despite the facts that the Rule 16 deadline for amending pleadings had not expired and there were eight months remaining
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before the Rule 16 discovery cutoff, the Ninth Circuit agreed that the proposed amendment was tardy and prejudicial: "Allowing AmerisourceBergen to `advance different legal theories and require proof of different facts' at this stage in the litigation would have prejudiced Dialysist West and unfairly delayed Dialysist West's collection of a judgment worth approximately $2.2 million." Id. at 953-54 (citations omitted). See Jackson v. Bank of Hawaii, 902 F.2d 1385, 1388 (9th Cir. 1990) (upholding finding of undue prejudice where amendment would require relitigation of prior action on different theories).
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Following the Court's summary judgment ruling, the parties submitted proposed case management plans in November 2005 and April 2006, (Docs. 111, 148.) In neither plan did Defendants identify the proposed defenses as matters to be litigated.7 Defendants' claim that
Defendants' assertion that they moved before the date agreed upon by the parties in the Proposed Scheduling Order is irrelevant. A Rule 16 Scheduling Order simply imposes additional limitations above and beyond the limitations inherent in Rule 15(a). See Johnson v. Mammoth Recreations, Inc., 975 F.2d 604, 607-09 (9th Cir. 1992). "Federal Rule of Civil Procedure 16 has no effect on the operation of Federal Rule of Civil Procedure 15(a) principles in this case." AmerisourceBergen, 465 F.3d at 952. There is "no authority which supports the proposition that the district court was bound to permit all amendments sought before [a Rule 16] deadline..." Wimm v. Jack Eckerd Corp., 3 F.3d 137, 141 (5th Cir. 1993).
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Plaintiffs would not be prejudiced because they have not yet succeeded in their efforts to conduct depositions clearly misses the point. Plaintiffs have already won these claims and should not be required to take additional discovery on matters of alleged intent raised by the Eighth through Tenth Affirmative Defenses. Defendants' proposed amendments would require discovery in a whole new direction and force Plaintiffs to engage in additional needless litigation and constitute a waste of judicial resources. Defendants' proposed amended
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answer would also upset Plaintiffs' legitimate expectations (and work to thwart the Court's directive) that this case be concluded by October 2007. (Doc. 242.) "[L]ate amendments to assert new theories are not reviewed favorably when the facts and the theory have been known to the party seeking amendment since the inception of the cause of action." Acri v. Int'l Ass'n of Machinists & Aerospace Workers, 781 F.2d 1393, 1398 (9th Cir. 1986). Bonin v. Calderon, 59 F.3d 815, 845 (9th Cir. 1995) ("...we have held that a district court does not abuse its discretion in denying a motion to amend where the
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movant presents no new facts but only new theories and provides no satisfactory explanation for his failure to fully develop his contentions originally.") (citations omitted). Defendants offer zero justification for not having asserted their purported Affirmative Defenses until now. As the Ninth Circuit stated in AmerisourceBergen: In assessing timeliness, we do not merely ask whether a motion was filed within the period of time allotted by the district court in a Rule 16 scheduling order. Rather, in evaluating undue delay, we also inquire "whether the moving party knew or should have known the facts and theories raised by the amendment in the original pleading." We have held that an eight month delay between the time of obtaining a relevant fact and seeking a leave to amend is unreasonable. 10
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465 F.3d at 953 (citations omitted). Dilatory motive also justifies denial of leave to amend. See Lockheed Martin Corp. v. Network Solutions, Inc., 194 F.3d 980, 986 (9th Cir. 1999); Wimm., 3 F.3d at 141. Given that the proposed amendments seek to re-litigate matters previously determined, dilatory motivation can be inferred. See AmerisourceBergen, 465 F.3d at 953 ("We will not speculate whether AmerisourceBergen's sudden change in tactics was gamesmanship or the result of an
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oversight by counsel, but we do conclude that the district court did not abuse its discretion in denying AmerisourceBergen's motion for leave to amend."). II. DEFENDANTS' MOTION TO AMEND IS FUTILE A. The Summary Judgment Ruling Forecloses the Proposed Amendments Even if Defendants could somehow justify their delay and overcome the prejudice to Plaintiffs, the Ninth Circuit has held that "[f]utility of amendment can, by itself, justify the denial of a motion for leave to amend...." Bonin, 59 F.3d at 845 (citing Outdoor Systems, Inc.
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v. City of Mesa, 997 F.2d 604, 614 (9th Cir. 1993)). "The issue is not whether the plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." Farina v. Compuware Corp., 256 F.Supp.2d 1033, 1061 (D.Ariz. 2003) (quoting Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir.1997) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). There are multiple reasons why Defendants' proposed
amendments are futile. In the first place, the proposed affirmative defenses including the changes to the Third Affirmative Defense alleging that accrued benefits were not decreased
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as of the date of the challenged amendments8 have already been determined and Defendants are no longer "entitled to offer evidence to support the claims." Farina, 256 F.Supp.2d at 1061 (citations omitted). Defendants failed to meet their burden to oppose Plaintiffs' summary judgment motion. 382 F.Supp.2d at 1154-55, 1162-64, 1166-67. The summary judgment order bars relitigation of defenses. See Brinson v. Linda Rose Joint Venture,53 F.3d 1044, 1049 (9th Cir. 1995) ("the adverse party may not rest upon mere allegations of denials
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of pleadings, but response must set forth specific facts showing that there is a genuine issue for trial.") (citing Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1163 (5th Cir.1983)). See Kontrick, 540 U.S. at 458-60; Enlow v. Salem-Keizer Yellow Cab Co., 389 F.3d 802, 818-19 (9th Cir. 2004) ("Since Yellow Cab did not specifically plead the BFOQ defense in its motion for summary judgment, Yellow Cab effectively waived this defense."); Wholesale & Retail Food Distribution Local 63 v. Santa Fe Terminal Servs., 826 F.Supp. 326, 330 (C.D. Cal. 1993) ("In spite of pleading this statute in their Answer, defendants failed to raise the issue
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during the summary judgment proceeding or in the Pretrial Conference Order. Accordingly, defendants have waived it."); Watson Laboratories, Inc. v. Rhone-Poulenc Rorer, Inc., 178 F.Supp.2d 1099, 1114 (C.D. Cal.2001).
In a ruling issued on the same day as the summary judgment order, the Court struck as inadmissable, portions of a declaration offered by Defendants purporting to show "that no accrued benefits have been reduced." (Doc 72, p. 4.) The Court also struck, for lack of evidentiary support, allegations in Defendants' statement of facts attempting to assert that benefits were not decreased. (Id., pp. 5-6.)
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B. Law of the Case Bars the Amendments The Court's prior rulings constitute law of the case. The Court's summary judgment ruling should not be disturbed unless "there has been an intervening change of controlling authority, new evidence has surfaced, or the previous disposition was clearly erroneous and would work a manifest injustice." Leslie Salt Co. v. U.S.,55 F.3d 1388, 1393 (9th Cir. 1995) (citations omitted).9 Defendants made no attempt to show, nor could they, that any
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circumstances could justify overturning the Court's decision.
The Court should not
countenance Defendants' attempts to re-argue these issues perpetually. C. Defendants' Proposed Defenses Are Foreclosed By Dispositive Authority Leave to amend would also be futile because Defendants' defense that accrued benefits were not decreased is foreclosed by Michael v. Riverside Cement, 266 F.3d 1023 (9th Cir. 2001), and Shaw v. Int'l Ass'n of Machinists & Aerospace Workers Pension Plan, 750 F.2d 1458 (9th Cir. 1995). In addition, newly enacted Treasury Regulations, 26 C.F.R. § 1.411(d)-
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3 (2005), specifically direct that Michael and other controlling precedents apply with respect
See United States v. Union Corp.,194 F.R.D. 223, 239-41 (E.D.Pa. 2000) (denying leave to amend where defendant sought to relitigate issues already determined through amendments: "The law of the case doctrine is intended for this precise situation, to maintain consistency and avoid such endless reconsideration of legal matters during the course of a continuing lawsuit.") (citing Public Interest Research Group of N.J., Inc. v. Magnesium Elektron, Inc., 123 F.3d 111, 116-17 (3d Cir.1997)); Green v. Metrish, 2006 WL 2506191, at *2 (W.D.Mich.2006) (denying leave to amend where amendment " would in effect allow plaintiff to ignore and circumvent the established law of this case, and to improperly resurrect or revive [claims. . .] this Court has already analyzed and dismissed."). See also Allen v. City of Beverly Hills, 911 F.2d 367, 373 (9th Cir. 1990).
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to any amendments made prior to adoption of regulations. D. The Court's Decision on the Standard of Review is Correct and the Result is the Same Under Any Standard of Review With respect to the standard of review, aside from the attempt to re-litigate a matter foreclosed by summary judgment, Defendants' proposed amendment would also be futile because 1) the Court's ruling is in accord with Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1160-61 (9th Cir. 2001) and, 2) the Court's finding that the Plan unambiguously does not permit an SBA offset to the minimum benefits formula renders the
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standard of review irrelevant. The Plan does not permit an SBA offset to the minimum benefits formula even under a deferential standard of review. See Canseco v. Construction Laborers Pension Trust for Southern California, 93 F.3d 600, 606 (9th Cir. 1996) ("We have consistently explained that "trustees abuse their discretion if they ... construe provisions of [a] plan in a way that clearly conflicts with the plain language of the plan.") (citations omitted). E. Defendants' Failure to Raise the Proposed Defenses During the Claims Review Process Bars the Proposed Amendments Defendants' attempts to amend their answer are also futile because they attempt to assert in their Affirmative Defenses that the Administrator's decision should be accorded deference on the basis of defenses that were never articulated by the Plan Administrator in response to Plaintiffs' administrative claims. (See Promislo Decl., Exh. K, at HW 0000471; Exh. O at HW0000532.) Even if Defendants could re-litigate the standard of review at this late date, they could not prevail on a defense that was never advanced by the Plan
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Administrator when it denied Plaintiffs' claims and appeal. Abatie v. Alta Health & Life Ins. 14
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Co., 458 F.3d 955, 970 (9th Cir. 2006) ("in general, a district court may review only the administrative record when considering whether the plan administrator abused its discretion..."). See, e.g., Reich v. Ladish Co., Inc., 306 F.3d 519, 524 n. 1 (7th Cir. 2002) ("Ladish was required to give Reich every reason for its denial of benefits at the time of the denial."); 29 U.S.C. § 1133 (plan administrator must state "specific reasons" for denial of claim). Citing Diaz v. United Agric. Employee Welfare Benefit Plan and Trust, 50 F.3d 1478,
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1483-84 (9th Cir. 1995), Defendants have asserted that Plaintiffs should be limited to the administrative record in their Joint Proposed Case Management Plan. (Doc. 111 p. 9.) Given this assertion, they cannot be heard on defenses they failed to raise in the claims review process. F. The Doctrine of Mistake Could Not Apply Leave to amend to assert mistake or scrivener's error is also futile because the Ninth Circuit has rejected scrivener's error under ERISA as a defense to a plan document's "clear
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statement of benefits." Cinelli v. Security Pacific Corp., 61 F.3d 1437, 1444-45 (9th Cir. 1995). "[I]t would be inconsistent with the goal of ERISA to allow either the employee or employer to attack that statement on the basis of mistake. We decline to apply the doctrine of mistake in this instance to consider the intent of the parties." Id. Given this Court's ruling that the Plan document is clear and unambiguously does not contain an offset to the minimum benefits formula, Cinelli forecloses Defendants' proposed amendments.10
The Court also ruled that "Defendants' unsupported assertions regarding the intent of the Plan cannot overcome the clear language of the plan."Allen, 382 F.Supp.2d at 1163.
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G. Prejudice Could Not Have Been A Defense To Defendants' Section 204(h) Violations Likewise futile is Defendants' proposed amendment to assert for the first time that Plaintiffs' claims under ERISA § 204(h) are "barred" because of a belated claim that Plaintiffs somehow were not prejudiced by Defendants' admitted failure to provide any notice of the 1993 Plan amendments purporting to impose an SBA offset on the minimum benefits formula. The ERISA § 204(h) claim was determined in favor of Plaintiffs. Even in the absence of a
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summary judgment ruling on this issue, the proposed defense is completely without merit and contrary to the statute and cases holding that in the absence of any § 204(h) notice, the amendment never becomes effective. In Production and Maintenance Employees' Local 504 v. Roadmaster Corp., 954 F.2d 1397, 1404 (7th Cir. 1992), the court stated: Section 204(h)'s language is also clear and imperative: a plan "may not be amended" absent proper notice. Roadmaster's violations of §§ 204(g) and (h) rendered the June 27 amendment ineffective. Because the June 27 amendment was ineffective, it follows that the plan continued in force as if it had not been amended. Therefore, Roadmaster was obligated to continue accruing benefits as the plan provided until it properly amended the plan. See also In re Citigroup Pension Plan ERISA Litigation, __ F.Supp.2d ___, 2006 WL
Accordingly, any defense on the basis of intent, even if not foreclosed by Cinelli, would fail because Defendants failed to offer any proof of intent in opposition to summary judgment. In addition, Defendants claim of ultra vires was never raised in the administrative process, never raised on summary judgment, is in conflict with the written plan requirement of ERISA § 402 and would be preempted. See Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 83 (1995) (`[e]very employee benefit plan shall be established and maintained pursuant to a written instrument.' 29 U.S.C. § 1102(a)(1) (emphasis added). In the words of the key congressional report, `[a] written plan is to be required in order that every employee may, on examining the plan documents, determine exactly what his rights and obligations are under the plan.') (emphasis in original) (citations omitted). See also Peterson v. Petry, 2006 WL 2460760 (C.D. Ill.2006); Smith v. Sydnor, 2000 WL 33687953 (E.D. Va. 2000). 16
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3613691 (S.D.N.Y. 2006); Hirt v. Equitable Retirement Plan For Employees, Managers and Agents, 441 F.Supp.2d 516, 539 (S.D.N.Y. 2006); Abels v. Titan Intern., Inc., 85 F.Supp.2d 924, 937 (S.D. Iowa 2000); Copeland v. Geddes Federal Savings & Loan Ass'n Retirment Income Plan, 62 F.Supp.2d 673, 677-78 (N.D.N.Y. 1999). Plaintiffs sought summary judgment invalidating the amendment. (Doc. 23, p. 35.) The time for Defendants to argue about whether there were any grounds to oppose invalidation of the amendment was in
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response to the motion for summary judgment. Even if Defendants had properly opposed the motion, the belated § 204(h) defense would have failed. CONCLUSION For the foregoing reasons, Plaintiffs respectfully request that Defendants' motion to
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amend the answer be denied. Plaintiffs request such further relief as is equitable and just. Respectfully submitted this 18th day of December, 2006. MARTIN & BONNETT, P.L.L.C. By: s/Susan Martin Susan Martin Daniel L. Bonnett Jennifer L. Kroll 3300 North Central Avenue Suite 1720 Phoenix, AZ 85012-2517 Attorneys for Plaintiffs
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CERTIFICATE OF SERVICE I hereby certify that on December 18, 2006, 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 Dawn L. Dauphine Osborn Maledon, P.A. 2929 North Central Ave., Suite 2100 Phoenix, AZ 85012-2794 Michael Banks William Delaney John G. Ferreira Azeez Hayne Morgan Lewis & Bockius LLP 1701 Market Street Philadelphia, PA 19103 Amy Covert Proskauer Rose LLP One Newark Center, 18th Floor Newark , NJ 07102-5211 Howard Shapiro Proskauer Rose, LLP 909 Poydras St., Suite 1100 New Orleans, LA 70112 Attorneys for Defendants
s/Susan Martin
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