Free Statement - 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 William J. 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] [email protected] Attorneys for Defendants

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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, No. CV04-0424 PHX ROS

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vs.
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Honeywell Retirement Earnings Plan, Honeywell Secured Benefit Plan, Plan Administrator of Honeywell Retirement Earnings Plan, and Plan Administrator of Honeywell Secured Benefit Plan, Defendants.

CERTIFICATION REGARDING COMPLIANCE WITH LR CIV. 7.2(J) AND RULE 16 AND JOINT STATEMENT REGARDING DISCOVERY DISPUTE CONCERNING DEFENDANTS' ASSERTION OF ATTORNEY CLIENT AND WORK PRODUCT PRIVILEGE

Case 2:04-cv-00424-ROS

Document 169

Filed 06/15/2006

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CERTIFICATION Pursuant to Local Rule 7.2(j) and Fed. R. Civ. Pro. 16, the undersigned counsel confirm that they personally consulted and made sincere efforts to resolve all discovery issues. Date: June 15, 2006 MARTIN & BONNETT, PLLC BY: /s Susan Martin MORGAN, LEWIS & BOCKIUS LLP BY /s William J. Delany

Susan Martin Daniel L. Bonnett Jennifer Kroll 3300 N. Central Ave., Suite 1720 Phoenix, AZ 85012-2517

Michael L. Banks (Pro Hac Vice) William J. Delany (Pro Hac Vice) Amy Promislo Covert(Pro Hac Vice) Azeez Hayne (Pro Hac Vice) 1701 Market Street Philadelphia, PA 19103 Attorneys for Defendants

Attorneys for Plaintiffs

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Plaintiffs' Statement Plaintiffs seek production of: (1)documents generated prior to denial of Plaintiffs' administrative appeal, and (2)documents Defendants claim contain advice to Honeywell as Plan sponsor, but not as Plan Administrator. Plaintiffs propose an in camera inspection to determine whether any documents concern plan administration, including advice regarding Plaintiffs' claims or application of Plan amendments. Unless the communication is unrelated to Plan administration or implicates personal liability of the fiduciaries, they are discoverable. These privilege disputes are legal issues that will not vary and need not await Defendants' anticipated production of a supplemental privilege log. ERISA regulations require full disclosure of all documents "submitted, considered, or generated in the course of making the benefit determination..." See 29 C.F.R. § 2560.503-1 (m)(8). Withholding this information defeats ERISA's intended purpose that fiduciaries act in the best interest of the beneficiaries. "When an attorney advises an ERISA trustee regarding the management of the fund, the ultimate clients of the attorney are as much the beneficiaries of the plan as the trustees." In re Grand Jury Proceedings, 162 F. 3d. 554, 556-57 (9th Cir. 1998). See United States v. Mett, 178 F. 3d 1058, 1063, 1066 (9th Cir. 1999) (noting that exception may arise from trustee's duty of disclosure and advocating "communication-by-communication analysis"); Lewis v. Unum Corp. Severance Plan, 203 F.R.D. 615, 620 (D. Kan. 2001); WashingtonBaltimore Newspaper Guild Local 35 v. Washington Star Co., 543 F. Supp. 906 (D.D.C. 1982). Plaintiffs attempted to amicably resolve the claims and avoid litigation by submitting all claims to the Plan. (Promislo Decl. Exh. I, at p.2.) It is unlikely documents are directed at fiduciaries' personal liability. None involve litigation counsel. Some are from the Plan's actuaries. Prior to denial of the administrative appeal there was no divergence of interest between the Plan and claimants. The attorneys had to act on

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behalf of claimants. See Geissal v. Moore Med. Corp., 192 F.R.D. 620, 625 (D. Mo. 2000)
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( prospect of post-decisional litigation against plan is "an insufficient basis for gainsaying
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the fiduciary exception to the attorney-client privilege").

Case 2:04-cv-00424-ROS

Document 169

Filed 06/15/2006

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Defendant's Statement: Plaintiffs request an in camera review to determine whether certain documents on Defendants' privilege log are properly discoverable. Plaintiffs' challenge is misplaced, and a hearing or in camera review would be premature. Defendants will produce by June 30 a Supplemental Log relating to a supplemental production of documents. Disputes over both logs should be decided together to avoid duplicative litigation. Furthermore, the complex legal issues surrounding the "fiduciary exception" should be decided based on a full briefing and evidentiary record (including an opportunity to submit affidavits). Such a record will demonstrate that the challenged documents are not discoverable without any need for in camera review. The "fiduciary exception" is a tightly constrained doctrine that prevents fiduciaries from asserting the attorney-client privilege against plan beneficiaries regarding advice on matters of plan administration. U.S. v. Mett, 178 F.3d 1058, 1062-63 (9th Cir. 1999). It does not vitiate the work product rule, nor does it apply to advice that is given as a result of looming adversarial proceedings. Id. at 1064; Fischel v. Equitable Life Assurance, 191 F.R.D. 606, 609-10 (N.D. Cal. 2000) (documents regarding plan participants' claims created in anticipation of litigation were not discoverable). The party asserting the fiduciary exception bears the burden of proving that it applies and "hard cases should be resolved in favor of the privilege, not in favor of disclosure." Mett, 178 F.3d at 1064. Here, the challenged documents are not within this narrow exception. Communications between outside counsel and entities not acting as fiduciaries (e.g. Honeywell, the plan sponsor) are outside the exception by definition. Furthermore, the documents were prepared in anticipation of litigation. Participants were mobilizing, and the Company learned of potential litigation in advance of Plaintiffs' administrative claim. Plaintiffs' initial claim letter, submitted on behalf of "several hundred" participants, explicitly raised the specter of litigation. (Doc. # 13, at HW446-447.) (asserting that Plaintiffs were not required to administratively exhaust their "legal claims for violations of ERISA . . . before filing suit.") Thus, the challenged documents are not within the fiduciary exception. See Mett, 178 F.3d at 1064-65; Fischel, 191 F.R.D. at 609-10.
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Respectfully submitted this 15th day of June, 2006. MARTIN & BONNETT, PLLC BY: /s Susan Martin MORGAN, LEWIS & BOCKIUS LLP BY /s William J. Delany

Susan Martin Daniel L. Bonnett Jennifer Kroll 3300 N. Central Ave., Suite 1720 Phoenix, AZ 85012-2517

Michael L. Banks (Pro Hac Vice) William J. Delany (Pro Hac Vice) Amy Promislo Covert(Pro Hac Vice) Azeez Hayne (Pro Hac Vice) 1701 Market Street Philadelphia, PA 19103 Attorneys for Defendants

Attorneys for Plaintiffs

CERTIFICATE OF SERVICE
I do certify that on June 15, 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: Susan Martin Martin & Bonnett P.L.L.C. 3300 N. Central Avenue, Suite 1720 Phoenix, Arizona 85012-2517 Attorney for Plaintiff s/ Ann E. Blacketer

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