Source: http://ky.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180424_0000361.WKY.htm/qx
Timestamp: 2018-07-16 02:42:07
Document Index: 467406704

Matched Legal Cases: ['§ 502', '§ 404', '§ 404', '§ 404', '§ 404', '§ 102', '§ 502']

Before the Court is Plaintiffs' motion[1] (DN 267) for reconsideration of certain rulings in a Memorandum Opinion and Order (DN 263) that addressed three related motions filed by the parties (DN 235 SEALED; DN 239; DN 242 SEALED). Defendants have filed a memorandum in opposition (DN 270), and Plaintiffs have filed a reply in support of their motion (DN 271). For the reasons stated below, the Court denies Plaintiffs' motion for reconsideration (DN 267).
This is a class action against the Hanover Insurance Group, Inc. (“Hanover”) and the Allmerica Financial Cash Balance Pension Plan (the “Plan”). The Plan belongs to a subset of defined benefit plans known as cash-balance plans. Plaintiffs' whipsaw and whipsaw-related breach of fiduciary duty claims allege violations of various sections of the Employee Retirement Income Security Act (“ERISA”).
On December 17, 2013, the Court issued an order certifying the classes, claims, and defenses and appointing class counsel (DN 110). The Court found that Plaintiffs had established the prerequisites for class certification pursuant to Fed.R.Civ.P. 23(a) and that the requisites of Rule 23(b)(1)(A), (b)(1)(B), and (b)(2) had been met with regard to the lump-sum benefit whipsaw calculation and related fiduciary breach claims remaining in the case and that Plaintiffs' counsel should be appointed class counsel pursuant to Fed.R.Civ.P. 23(g) (Id. PageID # 1724-25). The order established an overall class (the “Lump Sum Class”) of vested Plan participants who received a lump sum distribution between March 1, 1997 and December 31, 2003 (Id. PageID # 1725). The order certified Durand as the overall class representative (Id.). Additionally, the order established a subclass (“Subclass A”) made up of class members who received their lump sum distribution between March 1, 1997 and March 12, 2002 (Id.). The order certified James A. Fisher, who received a lump sum distribution in 2000, as the subclass representative (Id.).
The Order at issue addressed Defendants' motion to enforce the scheduling order and for a protective order forbidding Plaintiffs additional privilege challenges as untimely (DN 235 SEALED); Plaintiffs motion to update and amend the Court's December 17, 2013 class certification order (DN 239); and Plaintiffs motion for in camera review of 218 additional documents that Defendants are withholding on privilege grounds (DN 242 SEALED). These related motions arose out of the 204(h) documents that Defendants produced, subject to a nonwaiver stipulation, on October 18 and December 5, 2017.
The Order denied Defendants' motion, and granted in part and denied in part Plaintiffs' two motions (DN 263 PageID # 5233). Plaintiffs' motion for reconsideration focuses on certain portions of the Order that addressed their two motions. The Court will briefly discuss Plaintiffs' two motions (DN 239, 242 SEALED) and the disputed portions of the Order (DN 263).
Plaintiffs' motion to update and amend the class certification order proposed some minor modifications to the Lump Sum Class definition and a mix of minor and substantial changes to the Subclass A[2] definition (DN 239). The Court granted Plaintiffs' motion to the extent that it sought minor modifications to the Lump Sum Class (DN 263 PageID # 5200-01). The Court granted in part and denied in part Plaintiffs' motion to with regard to their proposed changes to the Subclass A definition (DN 263 PageID # 5201-19).
More specifically, Plaintiffs conceded that the whipsaw benefits claims asserted by Subclass A's members are time-barred (DN 239 SEALED PageID # 4390-91 and 4394-95, DN 240 PageID # 4402, 4405-07). Plaintiffs proposed amending the class certification order to reflect that Subclass A's members are now limited to seeking appropriate equitable relief under § 502(a)(3) on whipsaw-related breach of fiduciary duty claims (DN 239 SEALED PageID # 4390-91 and 4394-95, DN 240 PageID # 4402, 4405-07). Facially, Plaintiffs' proposal seemed reasonable. But Defendants objected, arguing at least two claims that Plaintiffs intended to pursue were not actually pleaded in the amended complaint (DN 246 SEALED PageID # 4687-88). Notably, Plaintiffs failed to address this issue in their reply memorandum (DN 253 SEALED PageID # 5075-89).
In an effort to obtain a clear understanding of the dispute, the Court reviewed a number of documents in the record, including a letter from Plaintiffs' counsel dated February 5, 2016 (DN 263 PageID # 5202-03, citing DN 162 PageID # 2235-36; DN 239 PageID # 4390-91; DN 239-1 PageID # 4394-95; DN 240 PageID # 4402, 404, 4405-06 & n. 1, 4407; DN 253 SEALED PageID # 5075). The Court determined that Plaintiffs were proposing that Subclass A's members will pursue the following whipsaw-related breach of fiduciary duty claims:
1. Defendants breached their fiduciary duty under ERISA § 404 by failing to independently investigate the legality of the Plan's calculation method and override the Plan terms pursuant to ERISA § 404(a)(1)(D).
2. Defendants breached their fiduciary duty under ERISA § 404 by concealing from participants the plan's whipsaw calculation methodology (i.e., “projecting” to age 65 at the same rate as the ERISA-required discount rate, which was designed to be a meaningless “wash” calculation).
3. Defendants breached their fiduciary duty under ERISA § 404 by concealing from participants (1) that the Department of Labor had concluded that plaintiffs had a viable claim to additional whipsaw benefits . . . and (2) that participants could potentially forfeit that claim if they did not file suit within 5 years of receiving a lump-sum distribution, when the statute of limitations might foreclose the claim.
4. Defendants violated ERISA's § 102's SPD disclosure requirements by concealing from participants (1) that the Department of Labor had concluded that plaintiffs had a viable claim to additional whipsaw benefits . . . and (2) that participants could potentially forfeit that claim if they did not file suit within 5 years of receiving a lump-sum distribution, when the statute of limitations might foreclose the claim.
5. Defendants breached a fiduciary duty because they failed to apply to a court for instructions in 2002, while the participants' claims were unquestionably timely, about how to calculate benefits in light of the uncertainty created by the DOL IG's conclusions; and whether it needed to recalculate the lump sum benefits already paid to members of the Fisher class.
(DN 263 PageID # 5202-03). The Court found that claims 1 and 2 are actually pleaded in the amended complaint (Id. PageID # 5203-07). The Court also found that claims 3, 4, and 5 are not actually pleaded in the amended complaint (Id.). The Court reasoned that certification cannot be premised on these unpleaded claims (Id.). Therefore, the Court ordered that the class certification order shall be amended to reflect that Subclass A's class members are pursuing equitable relief under § 502(a)(3) on the whipsaw-related breach of fiduciary duty claims 1 and 2 identified above (Id.).
Plaintiffs also proposed an expansion of Subclass A to include Plan participants who received lump sum distributions between January 1, 2004 and August 17, 2006 (DN 239 PageID # 4391, DN 240 PageID # 4402, 4404, 4407-15). The Court considered the arguments of the parties and the record, including the amended complaint, and found that the whipsaw benefits claims and the whipsaw-related breach of fiduciary duty claims (claims 1 and 2 above) asserted by this group of Plan participants had already been denied on the merits (DN 263 PageID # 5208-13). Further, the Court concluded this dispositive ruling is the law of the case with regard to this group of Plan participants and that Plaintiffs failed to demonstrate a reason to reconsider that dispositive ruling (Id.). Therefore, the Court ordered that the class certification order shall not be amended to include this group of Plan participants (Id.).
Plaintiffs' also proposed amending the class certification order to expressly, instead of implicitly, indicate that Subclass A's members include participants who received lump sum distributions between March 1, 1997 and December 31, 1997 from two other plans (DN 239 PageID # 4391; DN 240 PageID # 4402-04, 4415-17). Specifically, this group of participants received lump sum distributions from the Allmerica Financial Cash Balance Pension Plan as adopted by the Hanover Insurance Company (“Hanover Plan”) and the Allmerica Financial Cash Balance Pension Plan as adopted by Citizens Insurance Company of America (“Citizens Plan”) (Id.). Defendants objected to the proposed amendment because participants in the Hanover and Citizens plans were not mentioned in Plaintiffs' motion for class certification (DN 246 SEALED PageID # 4674-75, 4687-08, citing DN 97 PageID # 1557, 1559 and DN 110 PageID # 1725).
Further, Defendants denied that the parties and the Court understood that participants in the Hanover and Citizens plans were implicitly included in the class certification order (Id.). The Court found that the record did not support Plaintiffs' claim that everyone understood the class certification order (DN 110) implicitly included participants in the Hanover and Citizens Plans (DN 263 PageID # 5214-19). Further, the Court concluded, despite being aware of Defendants' position for years, Plaintiffs failed to timely seek clarification or correction of the class certification order (Id.). Therefore, the Court denied Plaintiffs' untimely request to amend the class certification order to expressly include participants in the Hanover and Citizens Plans (Id.).
Plaintiffs' second motion sought in camera review of 199 additional documents that Defendants were withholding on claim of privilege (DN 242 PageID # 4484-99). Plaintiffs' relied on the claimed content of three recently produced 204(h) documents[3] and the similarity of their privilege log descriptions to those of the 199 additional documents to argue the content in these additional documents may pertain to matters of plan administration OR may satisfy the threshold requirement for in camera review under the crime-fraud exception (Id.). Plaintiffs also relied on the claimed content of the three recently produced 204(h) documents to support their assertion that the 199 additional documents may contain information that is relevant to Subclass A's whipsaw-related breach of fiduciary duty claims (Id.).
In the context of assessing relevance within the meaning of Rule 26(b)(1), the Court considered only the whipsaw-related breach of fiduciary duty claims that Plaintiffs actually pleaded in the amended complaint (claims 1 and 2 above) (DN 263 PageID # 5221-33). The Court concluded that an in camera review would be appropriate as to 141 of the documents as they seemed to be relevant to the whipsaw-related breach of fiduciary duty claims and pertain to matters of plan administration (Id.). The Court also concluded that Plaintiffs had made an unsubstantiated allegation of a criminal purpose which was not sufficient to warrant an in camera review under the crime-fraud exception to the attorney-client privilege (Id.).
Plaintiffs seek reconsideration of the following: (1) the Court's “sua sponte dismissal” of claims 3, 4, and 5 for want of an adequate statement in the amended complaint; (2) the Court's denial, based on its dismissal of the three claims, of Plaintiffs' requested modifications to Subclass A's definitions; (3) the Court's consideration of only claims 1 and 2 in the Rule 26(b)(1) relevance assessment of the 199 documents that Plaintiffs asked to be reviewed in camera; and (4) the Court's denial of Plaintiffs' request to amend the class certification order to expressly indicate that Subclass A's members include participants in the Hanover and Citizens plans (DN 267).
In their response, Defendants argue: (1) they flagged the issue of the claims not appearing in the amended complaint; (2) the requested modifications to the Class definitions were not appropriate; (3) consideration of only claims 1 and 2 was appropriate in assessing the Rule 26(b)(1) relevance of the 199 documents; and (4) the class certification order did not implicitly include participants in the Hanover and Citizens plans (DN 270).
In their reply, Plaintiffs assert: (1) claims 3, 4, and 5 are adequately pleaded in the amended complaint; (2) the Court should revisit their requested modifications to Subclass A's definition; and (3) the definitions in the amended complaint should be considered in determining whether participants in the Hanover and Citizens plans are included in the class certification order (DN 271).
A. Reconsideration of Interlocutory Orders
District courts possess the inherent power to reconsider their interlocutory orders and modify or rescind those orders prior to entry of a final judgment. Mallory v. Eyrich, 922 F.2d 1273, 1282 (6th Cir. 1991) (citing Marconi Wireless Tel. Co. v. United States, 320 U.S. 1, 47-48 (1943); Simmons Co. v. Grier Bros. Co., 258 U.S. 82, 88 (1922)). Moreover, in pertinent part, Rule 54 states that “any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.” Fed.R.Civ.P. 54(b). Together the common-law authority and Rule 54(b) give district courts the power to revisit their interlocutory orders. Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 F. App'x. 949, 959 (6th Cir. 2004).
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Order (DN 263) at issue adjudicated Defendants&#39; motion to enforce the scheduling order and for a protective order forbidding Plaintiffs additional privilege challenges as untimely (DN 235 SEALED); Plaintiffs motion to update and amend the Court&#39;s December 17, 2013 class certification order (DN 239); and Plaintiffs motion for in camera review of 218 additional documents that Defendants are withholding on ...