Beesley et al v. International Paper Company et al

Filing 386

ORDER denying 375 APPEAL OF MAGISTRATE JUDGE DECISION to District Court filed by Ethel A. Scully, Jerome N. Carter, Bob Hunkeler, Robert Florio, International Paper 401(k) Committee, The International Paper Fiduciary Review Committee, International Paper Company, Patricia Neuhoff, David Whitehouse, Alicen Francis, Mark Lehman. Magistrate Judge Williams' order 374 is affirmed. Signed by Chief Judge David R. Herndon on 6/28/2011. (msdi, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
PAT BEESLEY, et al.,
Plaintiffs,
v.
INTERNATIONAL PAPER COMPANY, et al.,
Defendants.

No. 06-703-DRH

ORDER
HERNDON, Chief Judge:
Before the Court is defendants’ objections to and request for
reconsideration of Magistrate Judge Williams’ entry and order on defendants’ motion
to compel (Doc. 375), which the Court construed as an appeal of Magistrate Judge
Williams’ order on defendants’ motion to compel (Doc. 374). For the reasons that
follow, the Court denies the motion (Doc. 375) and affirms Judge Williams’ order
(Doc. 374).
I. Background
After the Seventh Circuit’s mandate (Doc. 352) came down vacating this
Court’s order (Doc. 24) certifying the members of the class, plaintiffs filed an amended
motion for class certification (Doc. 357) along with a memorandum in support thereof
(Doc. 358). In plaintiffs’ memorandum (Doc. 358), plaintiffs set forth seven different
subclasses revolving around the following categories labeled as such by plaintiffs: 1)

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excessive administrative fees; 2) imprudent company stock fund; 3) imprudent large
cap stock fund; 4) securities lending; 5) excessive investment management fees; 6)
delayed contributions; and 7) fraudulent performance reporting. The Court held a
status conference where it heard arguments by the parties and ultimately entered an
order (Doc. 361) allowing defendants’ request for additional discovery, noting that
“[c]learly the circumstances have changed.”
During the course of discovery, a dispute arose between the parties
regarding the scope of the additional discovery. This appeal concerns four requests

for production in defendants’ third request for production of documents, specifically
requests one, two, three, and eight. Those requests seek the production of the
following documents:
“1. All documents or communications prepared for or by you
that relate to investments, investment management or financial
or 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 advisors,
investment brokers, financial consultants or other parties
consulted by you.
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 from January 1, 1997 to present
including but not limited to Individual Retirement Accounts,
annuity contracts, life insurance policies, brokerage accounts,
money market accounts, interest bearing accounts of any kind,
mutual funds, stocks or bonds, real estate, real estate investment
trusts, options, futures, derivative contracts, limited or general
partnerships, business ventures, and trusts whether held inside
or outside the Plans and whether publicly or non-publicly traded.
Such documents and communications include, but are not
limited to: (a) account statements and summaries; (b)
prospectuses; (c) tax information; (d) promotional, marketing or
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informational materials; (e) research conducted by, or provided
to, you or your spouse relating to such investments; (f)
documents relating in any way to the fees charged or paid with
respect to such investments; and (g) any evidence of ownership
or custody of such assets.
3. All state, federal and local tax returns filed by you and/or your
spouse since your 1996 tax year.
....
8. All documents that relate to any actions you took in reliance
on, or as a result of, any communications you received relating to
the Plan.”
Plaintiffs refused to provide responses to the above requests, and
in turn, defendants filed a motion to compel complete responses (Doc. 370).
Plaintiffs filed a response in opposition, (Doc. 372) and the following day
Judge Williams held a discovery dispute conference whereby he denied
defendants’ motion to compel (Doc. 370) and noted that a summary order
would follow (Doc. 373). A few days later, Judge Williams entered an order
(Doc. 374) summarizing the Court’s prior ruling denying defendants’ motion
to compel (Doc. 373). Thereafter, defendants’ filed this appeal (Doc. 375), and
plaintiffs’ filed a response thereto (Doc. 378). For the reasons that follow,
Judge Williams’ order (Doc. 374) is affirmed and defendants’ appeal (Doc. 375)
is denied.
II. Analysis
The Court may modify or reverse a decision of a magistrate judge
on a nondispositive issue upon a showing that the magistrate judge’s decision
is “clearly erroneous or contrary to law.” F ED . R. C IV . P. 71.1(a); SDIL-LR

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73.1(a). A finding is clearly erroneous when “the reviewing court on the entire
evidence is left with the definite and firm conviction that a mistake has been
committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573 (1985)
(quoting United States v. U.S. Gypsum Co., 333 U.S. 364 395 (1948)); see also
Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 943 (7th Cir. 1997) (“The
clear error standard means that the district court can overturn the magistrate
judge’s ruling only if the district court is left with the definite and firm
conviction that a mistake has been made.”). “When there are two permissible
views of the evidence, the factfinder’s choice between them cannot be clearly
erroneous.” Anderson, 470 U.S. at 574 (citing United States v. Yellow Cab
Co., 338 U.S. 338, 342 (1949)).
The defendants’ appeal can be broken down into two claims: 1)
defendants request for documents that refer or relate to plaintiffs’ investments
outside of the International Paper Salaried and Hourly Savings Plans (the
plans), i.e., requests one through three and 2) defendants’ request for all
documents that relate to any actions you took in reliance on, or as a result, of
any communications you received relating to the plan, i.e., request number
eight. The Court will address each argument in turn.
A. Requests One through Three: Plaintiffs’ Outside Investments
With regard to requests for production one through three,
defendants first contend that Judge Williams’ decision erroneously ignored
controlling Seventh Circuit precedent.

Specifically, defendants argue that

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Judge Williams’ decision relies on reasoning that the Seventh Circuit rejected
in Spano v. Boeing Co., 633 F.3d 574 (7th Cir. 2011), the 7th Circuit’s opinion
vacating this Court’s order certifying the classes in both this case and Spano
and remanding for further proceedings. Furthermore, defendants contend that
Judge Williams’ decision is inconsistent with this Court’s March 10, 2011,
order, allowing discovery and setting forth new discovery deadlines. The Court
disagrees.

Judge Williams narrowed the issue in this case down to a
relevancy determination. Specifically, “are [p]laintiffs’ investments and assets,
outside of the Plan, . . . 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
class?” (Emphasis in original). Judge Williams found that plaintiffs’ outside
investments and assets were not relevant to the remaining class certification
issues of typicality and adequacy. Moreover, Judge Williams noted that Spano
offered no support for such an expansive inquiry. Rather, he found that
Spano focused almost entirely on the investments held by plaintiffs and the
decisions that both plaintiffs and defendants made within the various plan
options offered by defendants.
Furthermore, Judge Williams found that other factors mitigated
in favor of denying defendants’ motion to compel, including the fact that the
burden and breadth of defendants’ proposed discovery far outweighed any
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potential benefit and because the issues of typicality and adequacy were better
assessed with an eye towards defendants’ conduct as opposed to plaintiffs.
Judge Williams’ decision was not clearly erroneous or contrary to law.
Defendants seem to imply that in order to determine plaintiffs’
alleged injury from the plans in this case, that the Court needs to also look at
plaintiffs’ outside investments. The Seventh Circuit in Spano said no such
thing and this Court’s March 10, 2011, order stating that “[c]learly the
circumstances have changed” does not indicate that either. While the Seventh
Circuit stated that “much work remains to be done,” that does not include the
discovery of irrelevant matters. As Judge Williams found, the Seventh Circuit
focused on the investments within the plan, not outside the plan. There is no
support in Spano for discovering plaintiffs’ outside investments. Thus, Judge
Williams’ decision was not clearly erroneous or contrary to law.
Defendants next cite to Summers v. State St. Bank & Trust Co.,
453 F.3d 404, 409 (7th Cir. 2006), to support their position that plaintiffs’
outside investments are relevant to plaintiffs’ claims.

In Summers, the

Seventh Circuit considered whether the plaintiffs, a class of airline employees
who owned more than half the airline’s common stock through an employee
stock ownership plan (ESOP), had a remedy against the ESOP trustee for
imprudent management or, more specifically, for failing to sell the airline’s
stock as its market priced plummeted, eventually leading to the airline’s
bankruptcy. Significantly, the trustee was a “directed” trustee, who was
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directed to invest the ESOP’s assets exclusively in the stock of the airline.
Without getting into the issues decided in that case, it suffices to say that
defendants reliance is misplaced. Summers is clearly factually distinguishable
from the case at hand, and defendants’ reliance on Summers misses the mark.
B. Request Eight: Plaintiffs’ Reliance on the Plan
As stated above, request number eight sought “[a]ll documents
that relate to any actions you took in reliance on, or as a result of, any
communications you received relating to the Plan.” Plaintiffs objected and
Judge Williams denied this request, finding it to be vague, ambiguous, and
overly broad, and also finding that any potential benefit would be outweighed
by the unnecessary burden that such a vaguely defined request places on
plaintiffs.

Again, Judge Williams’ decision was not clearly erroneous or

contrary to law.
On appeal, defendants argue that this request was in written in plain
English that was capable of being understood by non-lawyers, and that it simply
required plaintiffs to review their personal records and identify whether they have
documentation to support their argument that they relied on communications relating
to the plans when making other investment decisions. Defendants cite no controlling
case law on this point. Plaintiffs counter that the request is so unintelligible, vague,
and ambiguous as to allow any meaningful response, and that the request is
duplicative and requires a legal conclusion.

Here, the Court is not left with a definite and firm conviction that a
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mistake has been made. Arguably this request is vague, ambiguous, and overly
broad, and the Court will not disrupt that decision absent clear error. No such error
occurred in this case.
III. Conclusion
For the reasons stated above, the Court affirms Judge Williams’
memorandum and order (Doc. 374) and denies defendants’ appeal (Doc. 375).
IT IS SO ORDERED.
Signed this 28th day of June, 2011.
Digitally signed by David R.
Herndon
Date: 2011.06.28 13:47:48
-05'00'

Chief Judge
United States District Court

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