UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

DENNIS BLACK, ET AL.,

Plaintiffs,

v.

PENSION BENEFIT GUARANTY

CORPORATION, ET AL.,

Defendants.

/

Case No. 09-13616

SENIOR UNITED STATES DISTRICT

JUDGE

ARTHUR J. TARNOW

UNITED STATES MAGISTRATE JUDGE

MONA K. MAJZOUB

ORDER SUSTAINING PLAINTIFFS’ OBJECTIONS [172] TO MAGISTRATE JUDGE’S

SCHEDULING ORDER, GRANTING PLAINTIFF’S MOTION FOR ADOPTION OF

SCHEDULING ORDER [152], ADMINISTRATIVELY TERMINATING PBGC’S

MOTION FOR PROTECTIVE ORDER [178], ADMINISTRATIVELY TERMINATING

PLAINTIFFS’ MOTION TO COMPEL DISCOVERY [179], AND ENTERING

SCHEDULING ORDER

Now before the Court is the Magistrate Judge’s Order [169] denying Plaintiffs’ Motion

for Adoption of Scheduling Order. 

On April 11, 2011, Plaintiffs filed objections [172] to the order. Defendant PBGC filed a

response [173] to the objections on April 25, 2011 and Plaintiffs filed a reply [174] on May 2,

2011. 

I. Plaintiffs’ Objections

A. Standard of Review

The standard of review set forth in F.R.C.P. 72(a) governs this nondispositive matter. 

Pursuant to that rule, “The district judge in the case must consider timely objections and modify

or set aside any part of the [Magistrate Judge’s] order that is clearly erroneous or is contrary to

law.” 

B. Analysis

Upon review of the record, this Court makes the following findings: 

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By denying Plaintiff’s Motion for Adoption of Scheduling Order, the Magistrate Judge

erred.

On December 22, 2009, at a hearing held on Plaintiffs’ Motion for Preliminary Injunction

[7], this Court questioned counsel regarding what Plaintiffs would be required to show if it were

assumed that they were correct that they were entitled to a hearing prior to the termination of the

Salaried Plan. The Court ultimately ordered the parties to submit supplemental briefing

addressing the termination of the Plan. 

On September 24, 2010, the Court held a hearing on various motions in this matter,

including PBGC’s Motion to Dismiss Counts 1 through 3 of the Second Amended Complaint

[23] and PBGC’s Motion for Summary Judgment on Count 4 [45]. The Court again questioned

counsel as to what would be shown at a hearing to terminate the Plan that Plaintiffs asserted was

required. The Court denied PBGC’s dispositive motions without prejudice and specifically

permitted discovery to proceed as to Plaintiffs’ complaint. The Court did not address the full

scope of discovery that would be permitted. 

Plaintiffs then filed their Motion for Adoption of Scheduling Order [152] seeking to set a

schedule for conducting discovery on Counts 1 through 4. PBGC opposed the motion, arguing

that discovery should not be permitted. On March 28, 2011, the Magistrate Judge entered an

order [169] concluding that this “is an action for review on an administrative record” and

denying discovery as to Counts 1 through 3. The only discovery permitted related to Count 4

and whether any deficiencies existed in the administrative record. Defendants were permitted to

object to this discovery. 

In the instant objections, Plaintiffs assert that the Magistrate Judge erred in not allowing

discovery on Counts 1 through 3 of the complaint. Plaintiffs also maintain that the Magistrate

Judge improperly concluded that this is an action for review on an administrative record. 

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 Following the hearing, neither party filed a motion asking the Court to reconsider its

ruling.

3

The Court finds that the Magistrate Judge erred in concluding that discovery is not

permitted on Counts 1 through 3 of the complaint since the Court previously concluded on

September 24, 2010 that this case may proceed to discovery.1

 The Court did not limit that

discovery to only certain counts of the complaint.

The Court further concludes that the Magistrate Judge erred in finding that this is an

action for review on an administrative record, as the parties have disputed whether this action

only concerns the administrative record and this Court has never concluded that it will only

focus on the administrative record in considering Plaintiffs’ complaint. 

As Plaintiffs correctly point out, the Sixth Circuit has concluded that “[t]he scope of

discovery under the Federal Rules of Civil Procedure is traditionally quite broad.” See Lewis v.

ACB Bus. Servs., Inc., 135 F.3d 389, 402 (6th Cir. 1998). Fed. R. Civ. P. 26 states, “Parties may

obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or

defense.... Relevant information need not be admissible at the trial if the discovery appears

reasonably calculated to lead to the discovery of admissible evidence.” Since “‘discovery itself

is designed to help define and clarify the issue,’ the limits set forth in Rule 26 must be ‘construed

broadly to encompass any matter that bears on, or that reasonably could lead to other matters that

could bear on, any issue that is or may be in the case.’” Conti v. Am. Axle & Mfg., Inc., 326 Fed.

Appx. 900, 904 (6th Cir. 2009) (unpublished) (quoting Oppenheimer Fund, Inc. v. Sanders, 437

U.S. 340, 351 (1978)). 

In terms of addressing the scope of discovery for purposes of entering a scheduling

order– The Court’s initial focus, keeping the above case law in mind, is on Count 4 and whether

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 The Plan termination date, as per the agreement reached between PBGC and the plan

administrator, was July 31, 2009. 

3

 Of course, the PBGC may still prevail in this lawsuit even if the evidence demonstrates

that termination would not have been proper after a hearing under 28 U.S.C. §1342(c), as the

Court would consider at that time the relevant statutory and constitutional questions; these

questions could ultimately be decided in the PBGC’s favor. 

4

termination of the Salaried Plan would have been appropriate in July 20092

 if, as Plaintiffs

contend, Defendants were required under 29 U.S.C. §1342(c) to file before this court “for a

decree adjudicating that the plan must be terminated in order to protect the interests of the

participants or to avoid any unreasonable deterioration of the financial condition of the plan or

any unreasonable increase in the liability of the fund.” Plaintiffs maintain in their objections that

addressing this question may allow the Court to avoid constitutional and statutory questions

raised within the Second Amended Complaint in an exercise of judicial restraint The Court

agrees. Such a finding by the Court that termination was proper under 29 U.S.C. §1342(c)

would moot the remainder of the complaint pertaining to the PBGC, as it would be irrelevant

whether ERISA and the Due Process Clause require that a hearing be held under 29 U.S.C.

§1342(c) before termination of a plan (since with or without a hearing, termination would have

been proper). Certainly, this matter, which the Court will address, “bear[s] on” the case issues. 

Oppenheimer, 437 U.S. at 351; see also Conti, 326 Fed. Appx. at 904. Proceeding in this

manner is also an appropriate application of judicial restraint.3 See Firestone v. Galbreath, 976

F.2d 279, 285-286 (6th Cir. 1992) (court, quoting Supreme Court precedent, notes, “If there is

one doctrine more deeply rooted than any other in the process of constitutional adjudication, it is

that we ought not to pass on questions of constitutionality... unless such adjudication is

unavoidable. Deciding constitutional issues only after considering and rejecting every

nonconstitutional ground for the decision is a fundamental rule of judicial restraint”) (citations

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 The Court of course recognizes that unlike in UAL, the PBGC did not move here for a

court decree seeking termination; rather, the PBGC and the plan administrator reached an

agreement to terminate the plan. However, the same principles enunciated in UAL apply to the

review the Court is conducting here. Defendant has not offered the Court any Supreme Court or

Sixth Circuit case that has addressed the specific issue considered in UAL. The Court finds the

Seventh Circuit’s analysis of the issue persuasive. 

5

and internal quotation marks omitted). 

In addressing termination in Count 4 under 28 U.S.C. §1342 and assuming that a hearing

was required before termination, this Court, pursuant to In re UAL Corp., 468 F.3d 444 (7th Cir.

2006), will conduct a de novo review of the PBGC’s decision to terminate the Plan. Such a

review is not characterized as an APA review limited to the administrative record, with the

agency’s decision receiving deference. As the Court concluded in UAL:

Deference is appropriate when agencies wield delegated interpretive or

adjudicatory power– the former usually demonstrated by rulemaking and the

latter by administrative adjudication (which also may yield rules in common-law

fashion). The PBGC did not use either rulemaking or adjudication to decide that

United’s plan should be wrapped up at the end of 2004. Its decision was made

unilaterally and was not self-executing. The only authority that the PBGC has

under §1342 is to ask a court for relief. That implies an independent judicial role. 

When making its decision a court must respect any regulations issued after noticeand-comment rulemaking, but the PBGC has not promulgated any rules pertinent

to this subject. Nor has it issued the sort of interpretive guidelines that deserve

the court’s respectful consideration even though they lack the power to control. 

All the PBGC had done is commence litigation, and its position is no more

entitled to control than is the view of the Antitrust Division when the Department

files suit under the Sherman Act. As the plaintiff, a federal agency bears the same

burden of persuasion.

Nothing in 29 U.S.C. §1342(c), which describes the judicial function 

after the PBGC files an action seeking termination, suggests that the

court must defer to the agency’s view.

See UAL Corp., 468 F.3d at 449-450 (citations omitted).4

 

Once again, a finding by the Court in the PBGC’s favor on Count 4 after this review

would render moot the remainder of the complaint pertaining to the PBGC. In the event that the

Court finds that termination of the plan was not supported by the factors set forth in 28 U.S.C.

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§1342(c), the Court will consider the remaining issues raised in the complaint. 

II. Defendant’s Motion for a Protective Order [178] and Plaintiffs’ Motion to Compel

Discovery [179]

Also pending before the Court are Defendant’s Motion for a Protective Order [178] and

Plaintiffs’ Motion to Compel Discovery [179]. These motions were filed following the

Magistrate Judge’s order denying Plaintiffs’ Motion for Adoption of Scheduling Order. 

Plaintiffs’ objections have now been sustained and the Motion for Adoption of Scheduling Order

has been granted. Therefore, the issues raised in the motion may now be mooted based on the

Court’s ruling. 

The Court concludes that these motions should be deemed administratively terminated

and closed without prejudice. If necessary, the parties may file discovery motions at some later

date that account for the instant ruling. 

III. Conclusion

Accordingly, 

IT IS HEREBY ORDERED that Plaintiffs’ Objections [172] to the Magistrate Judge’s

Scheduling Order and Order Denying Plaintiffs’ Motion for Adoption of Scheduling Order are

SUSTAINED. As the Court previously ruled, this case will proceed to discovery. 

IT IS HEREBY ORDERED that Plaintiffs’ Motion for Adoption of Scheduling Order

[152] is GRANTED.

IT IS HEREBY ORDERED that Defendant’s Motion for a Protective Order [178] and

Plaintiffs’ Motion to Compel Discovery [179] are HEREBY ORDERED administratively

terminated by this Court. The Motions shall be closed without prejudice. The parties may file, if

necessary, discovery motions at a later date that account for the Court’s ruling in this order. 

IT IS FURTHER ORDERED that these proceedings as to Plaintiffs and the PBGC will

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continue as follows:

1. Plaintiffs and Defendant PBGC shall serve the initial disclosures which are

required by Fed. R. Civ. P. 26(a)(1) by September 16, 2011.

2. All discovery related to claims 1-4 shall be served in time to be completed by

April 30, 2012. 

3. All discovery motions related to claims 1-4 shall be filed by March 30, 2012. 

4. Plaintiffs and the PBGC shall exchange names of all witnesses, lay and expert,

by February 29, 2012. 

5. Each party shall be entitled to serve a maximum of 25 interrogatories upon

another party, with responses thereto required to be served in accordance with the

Federal Rules of Civil Procedure.

6. Plaintiffs and the PBGC shall each be allowed 10 depositions on claims 1-4

without leave of the Court. 

7. All dispositive motions related to claims 1-4 shall be filed no later than May

31, 2012. These motions, consistent with the above discussion in this order, must

address under Count 4 whether termination of the Salaried Plan would have been

appropriate in July 2009 if, as Plaintiffs contend, Defendants were required under

29 U.S.C. §1342(c) to file before this court “for a decree adjudicating that the

plan must be terminated in order to protect the interests of the participants or to

avoid any unreasonable deterioration of the financial condition of the plan or any

unreasonable increase in the liability of the fund.” 

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 #09-13616

Black et al v. Pension Benefit Guaranty Corporation

8

SO ORDERED.

Dated: September 1, 2011 s/Arthur J. Tarnow 

Arthur J. Tarnow

Senior United States District Judge

I certify that a copy of the foregoing document was sent to parties of record on September 1,

2011 by U.S./electronic mail.

s/Michael Williams 

Relief Case Manager for the 

Honorable Arthur J. Tarnow

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