Beesley et al v. International Paper Company et al
ORDER DENYING 370 Motion to Compel: in accordance with the Court's ruling on the record at the May 5, 2011 Discovery Dispute Hearing (see Doc. 373 ), Defendants' Motion to Compel is DENIED in its entirety. See the attached Order for details. Signed by Magistrate Judge Stephen C. Williams on 5/11/2011. (ehb)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
PAT BEESLEY, et al.,
INTERNATIONAL PAPER COMPANY,
Case No. 06−cv−0703−DRH−SCW
MEMORANDUM AND ORDER
WILLIAMS, Magistrate Judge:
Plaintiffs are participants in Defendant International Paper Company’s (“IP’s”) defined
contribution plans, commonly known as 401(k) plans.
Defendants are entities or individuals
involved in the operations of IP’s 401(k) plans (“the Plans”). Plaintiffs allege that Defendants
breached their fiduciary duties by “causing the Plans to pay excessive fees; maintaining imprudent
Plan investment options; and miscommunicating to participants about the Plans’ fees and
investments” (Doc. 372, p. 2). As a result of these alleged fiduciary breaches, Plaintiffs seek relief
under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 101 et seq.
District Judge David R. Herndon granted Plaintiffs’ Motion to Certify Class on September 30, 2008
(Doc. 240); and, pursuant to FEDERAL RULE
CIVIL PROCEDURE 23(f), Defendants timely filed
with the Seventh Circuit Court of Appeals a petition for leave to appeal this ruling. After granting
Defendants’ petition, on February 15, 2011, the Court of Appeals issued a Mandate, (see Doc. 352);
Spano v. Boeing Co., 633 F.3d 574 (7th Cir. 2011), vacating Judge Herndon’s class certification order
and remanding this action for further proceedings.
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Late in April 2011, the parties informed this Court that they had been unable to resolve a
discovery dispute relating to Defendants’ Third Request for Production of Documents (“RFP”).
The Court—in line with its standard Case Management procedures—set the discovery dispute for a
telephone conference and directed the parties to submit brief letters outlining the dispute and any
relevant case law (Doc. 366). The Court conducted a telephonic discovery dispute conference on
April 29, 2011, and the parties agreed that further briefing and argument was required. As such,
Defendants’ were directed to file a formal motion, Plaintiffs were given a brief time to respond, and
the matter was reset for a Discovery Dispute Hearing on May 5, 2011. After thoroughly reviewing
the papers submitted, and after hearing extensive arguments on the matter, the Court DENIED
Defendants’ Motion to Compel Plaintiffs’ Complete Responses to Defendants’ Third Request for
Production of Documents (Doc. 370), in its entirety. This Order therefore is intended only to
summarize the Court’s prior ruling which was made on the record (see Doc. 373).
In their Third RFP, Defendants seek, in part, the following information from Plaintiffs:
(1) Request No. 1: All documents or communications prepared for or by
you that relate to investments, investment management or financial
retirement planning for you, or you and your spouse or you and other
parties, including but not limited to documents received by you from any
financial planners, investment brokers, financial consultants or other
parties consulted by you.
(2) Request No. 2: Except to the extent previously produced, all documents
identifying and/or relating to any asset held by you individually or jointly,
whether as owner, custodian, guardian or otherwise at any time during
the period of January 1, 1997 to present…[, and]
(3) Request No. 3: All state, federal and local tax returns filed by you and/or
your spouse since your 1996 tax year.
(Doc. 372, p. 5). The Plaintiffs objected to these requests as overly broad, unduly burdensome,
lacking in relevance and contrary to an earlier ruling by Magistrate Judge Clifford J. Proud denying
discovery of this information (see Doc. 217); a ruling made prior to the Seventh Circuit’s Mandate
Plaintiffs also objected to Request No. 8, whereby Defendants sought “[a]ll
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documents that relate to any actions you took in reliance on, or as a result of, any communications
you received relating to the Plan,” on the grounds that this request was “unintelligible and
impermissibly vague and ambiguous” and called for a legal conclusion (Doc. 372, p. 10).
In their Motion to Compel, Defendants argue that the Seventh Circuit’s Mandate, which
noted that “much work remains to be done in the district court,” Spano, 633 F.3d at 590; Chief Judge
Herndon’s March 11, 2011 Order, noting that he interpreted this statement “to mean that the record
is devoid of sufficient facts to thoroughly consider the class questions under consideration” (Doc.
361, p. 2); and an oral Order by Magistrate Judge Wilkerson denying Plaintiffs’ Motion to Quash
Subpoena in a sister case (Spano v. Boeing, S.D. of Ill. Case No. 06-0743-DRH, Doc. 320), all compel
the “conclusion that the requested documents are directly relevant to the key issues of the adequacy
and typicality of the Plaintiffs’ claims” (Doc. 370, p. 2). In other words, Defendants argue that,
upon remand, the posture of this action has changed and further discovery is required to comply
both with the Seventh Circuit’s Mandate, and Judge Herndon’s March 11, 2011 Order, and to
properly resolve the issue of class certification. Specifically, Defendants seek discovery related to
Plaintiffs’ outside investments and assets because, according to Defendants, “what Plaintiffs knew,
considered or chose and what they did with their invested capital outside the Plans bears directly on
whether their allocations inside the Plans were imprudent as applied to them” (Doc. 370, p. 3).
Plaintiffs respond that no further discovery related to their outside investments and assets is
required because this information was previously found to be beyond the scope of discovery by
Judge Proud, and because the Seventh Circuit’s Mandate made no reference to Plaintiffs’
investments outside of the Plan. Plaintiffs further argue that discovery of all of their outside
investments and assets for a 15-year period is beyond the universe of what the Mandate
contemplated for resolving the remaining class certification issues. Instead, Plaintiffs contend that
all the Seventh Circuit Court of Appeals and Judge Herndon have ordered is enough discovery to lead
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to a more fact-based, specifically defined motion for class certification. Toward this end, Plaintiffs
argue that Defendants already have had the opportunity to depose Plaintiffs and question them
about their outside investments and assets, and additional depositions are scheduled in the
CIVIL PROCEDURE 26(b)(1) permits discovery “regarding any
nonprivileged matter that is relevant to any party’s claim or defense.” However, “discovery, like all
matters of procedure, has ultimate and necessary boundaries.” Oppenheimer Fund, Inc. v. Sanders, 437
U.S. 340, 351 (1978), quoting Hickman v. Taylor, 329 U.S. 495, 507 (1947). For example, under Rule
26(b)(2)(C), courts must limit the extent of discovery if it determines that “the discovery sought is
unreasonably cumulative or duplicative … the party seeking discovery has had ample opportunity to
obtain the information by discovery in the action; or the burden or expense of the proposed
discovery outweighs its likely benefit.…” Indeed, judges have “substantial discretion to … curtail
the expense and intrusiveness of discovery and trial.” Gehring v. Case. Corp., 43 F.3d 340, 342 (7th Cir.
1994). Or, put another way, “district courts enjoy broad discretion in controlling discovery.” Semien
v. Life Ins. Co. of North America, 436 F.3d 805, 813 (7th Cir. 2006).
Initially, the Court notes that all parties (and indeed all courts) involved appear to agree that
more work remains to be done in this case, including some level of additional discovery. The
parties’ dispute centers on the scope of this additional discovery. The key to resolving the instant
discovery dispute is a relevancy determination; that is, are Plaintiffs’ investments and assets, outside of
the Plan, in fact, relevant to determining whether the named representative’s claims are typical of the
claims of the entire class, and whether, in turn, the named representative can adequately represent
The Court finds that Plaintiffs’ outside investments and assets are not relevant to the
remaining class certification issues of typicality and adequacy. If the myriad individual investment
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decisions and outside assets of Plaintiffs are in fact relevant, then—based on the inherently diverse
and infinitely unique characteristics of these outside investments and assets—it is difficult to see
how a class could ever be certified. In other words, by deeming this vast amount of information
“relevant” the Court could, in effect, be making a determination that is dispositive of the viability of
a number of Plaintiffs’ proposed sub-classes. Further, the Spano Opinion offers no support for such
an expansive inquiry because the Spano Court focused its decision almost entirely on the investments
held by Plaintiffs, and the decisions that both they and the Defendants made, within the various Plan
options offered by IP. See Spano v. The Boeing Co., 633 F.3d 574 (7th Cir. 2010).
Other factors militate in favor of denying Defendants’ Motion to Compel. First, the Court
believes that the burden and breadth of Defendants’ proposed discovery far outweighs any potential
benefit. See Fed. R. Civ. P. 26(b)(2)(C)(3). Second, at this stage in this marathon litigation, the goal is
for the parties to discover only enough specific facts for the District Court to thoroughly consider
the class questions that remain unresolved—namely, the issues of typicality and adequacy. In this
regard, the Court agrees with Judges Herndon, Proud and Gilbert that the issue of the typicality of
the named Plaintiffs’ claims, and their adequacy to represent the class, is best assessed with an eye
toward the Defendants’ conduct (See Doc. 239, p. 5; Doc. 217, p. 4), citing Clay v. American Tobacco
Company, 188 F.R.D. 483, 491 (S.D. Ill. 1999); see also Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir.
1992); De La Fuente v. Stokely-Van Camp, Inc., 713 F.2d 225, 232-33 (7th Cir. 1983). Thus, allowing
discovery of Plaintiffs’ outside investments and assets would unnecessarily complicate, broaden and
shift the primary focus of the Court’s inquiry.
Finally, in regards to Defendants’ request number 8, the Court denied this request on the
grounds asserted by Plaintiffs in their objection; specifically, the Court found this request to be
vague, ambiguous and overly broad.
Once again, any potential benefit from this request is
outweighed by the unnecessary burden that such a vaguely defined request places on Plaintiffs.
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For all of the reasons outlined above, and for those articulated on the record at the May 5,
2011 Discovery Dispute Hearing, Defendants’ Motion to Compel Plaintiffs’ Complete Responses to
Defendants’ Third Request for Production of Documents (Doc. 370), is DENIED in its entirety.
Further, as the Court noted on the record, the Defendants’ proposed depositions shall go forward,
but each deposition shall be limited to no longer than three and a half hours.
IT IS SO ORDERED.
DATED: May 11, 2011.
/s/ Stephen C. Williams
STEPHEN C. WILLIAMS
United States Magistrate Judge
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