Durand v. The Hanover Insurance Group, Inc. et al

Filing 111

ORDER by Magistrate Judge James D. Moyer on 12/17/2013 granting 104 Motion for Entry of Judgment under Rule 54(b); the court will enter a separate final judgment. cc:counsel (TLB)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE

JENNIFER A. DURAND, et al.
v.

PLAINTIFFS
CIVIL ACTION NO. 3:07-CV-130-JDM

THE HANOVER INSURANCE
GROUP, INC., et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER

This matter is before the court on the plaintiffs’ motion for relief under Rule 54(b) of the
Federal Rules of Civil Procedure. The plaintiffs request that the court enter a final judgment on its
orders dismissing the “post-2003” claims of two of the three plaintiffs, Walter Wharton and
Michael Tedesco.1 The defendants vigorously oppose the motion. For reasons stated below, the
court will grant the plaintiffs’ request for relief.
A. Background
The plaintiffs, Jennifer Durand, Walter Wharton, and Michael Tedesco, are former
employees of the defendant, Hanover Insurance Group, and participants in Hanover’s pension
plan, The Allmerica Financial Cash Balance Pension Plan, which is also named as a defendant.
The plaintiffs allege the defendants have underpaid their pension benefits and file suit to recover
benefits due, pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§ 1132(a)(1)(B).
The plaintiffs seek certification of an overall class and two subclasses of plan participants
who received early lump-sum distributions of their retirement benefits between March 1, 1997 and

1 Plaintiffs’ Reply, Introduction (Docket No. 109).

August 17, 2006.2 The plaintiffs seek certification under Rule 23(b)(1) and (2). The overall
“lump-sum class” is represented by Durand. The lump-sum class is further comprised of two
subclasses, which are delineated according to the plan amendments of March 1997 and January
2004. Wharton represents “subclass A,” participants who received lump-sum distributions
between January 1, 2004 and August 17, 2006. James A. Fisher represents “subclass B,”
participants who received lump-sum distributions between March 1, 1997 and March 12, 2002.
The plaintiffs aver the Wharton subclass is comprised of about 1,700 members, and the remaining
overall class and subclass, represented by Durand and Fisher, number 2,975 members.3
In a Memorandum Opinion, entered March 31, 2011 (DN 71), and a Memorandum and
Order, entered January 6, 2012 (DN 78), the court dismissed Wharton and Tedesco’s claims,
which were added to the action by an amended complaint in December 2009, on grounds of the
applicable statute of limitations. These added claims challenge, in essence, the 2004 plan
amendment which changed the future interest crediting rate to the 30-year Treasury rate, (as set
forth in Section 417(e) of the Internal Revenue Code), from the 1997 plan’s provision for a
variable, 401(k)-style rate, referred to as “investment experience crediting.”4
In due course, the parties tendered an agreed order of class certification, and the defendants
moved for partial summary judgment on Wharton’s remaining claims. In a Memorandum Opinion
and Order entered October 2, 2013 (DN 102), the court granted the defendants’ motion and
dismissed the claims of Wharton, individually, and as a putative class representative, on grounds

2 At employment separation, Tedesco elected a single annuity payment and continues to be a plan participant.
3 Declaration, Plaintiffs’ Reply (DN 109-1).
4 The amended complaint also added an “interest crediting floor claim,” to challenge the 1997 plan amendment which
changed the future interest crediting rate to the 401(k)-style rate from the previous plan’s provision for a fixed rate of
6%. (Mem. Op. and Order, Jan. 6, 2012, at 5-6 (DN 78)). The plaintiffs do not seek immediate appeal of this ruling and
represent they have no intention of appealing this ruling in the future. (Plaintiffs’ Reply at 13 (DN 109)).

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which included the statute of limitations.5 The court concluded that the 2004 plan governs the
parties’ dispute because the amended terms satisfy an ERISA regulatory safe harbor and because
Wharton’s claim for a split calculation of future interest credits under both the 2004 plan and the
1997 plan is in essence a cutback claim, which the court previously dismissed as time-barred.6
The remaining claims for adjudication, at present, are the whipsaw and fiduciary claims,
which are set forth in the original complaint, filed in March 2007, of the plaintiff Durand,
individually, and as a class representative. In short, Durand claims the defendants miscalculated
her pension benefit, by using a uniform projection rate in a whipsaw calculation for future interest
credits, rather than using an individualized projection rate, based on the 1997 plan provision for
“investment experience crediting.” Durand’s claims do not challenge the 2004 plan terms.
B. Standard for Immediate Appeal
Rule 54(b) of the Federal Rules of Civil Procedure provides that in an action involving
multiple claims or parties, a district court may direct entry of a final judgment on any claim before
full adjudication of all claims if it determines there is no just reason for delay. The determination
lies within the sound discretion of the district court, although general practice disfavors piecemeal
appellate review. Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 8 (1980).
The district court must first conclude that it is dealing with a final judgment and then
examine several factors in determining whether there is no just reason for delay – an inquiry which
requires consideration of judicial administrative interests as well as the equities involved. Lowery

5 Because the ruling raised concerns about the parties’ tendered agreed order of class certification, the court delayed
entering the order. Specifically, the court dismissed Wharton’s individual claims and stated its intention to order
certification of the class, as agreed by the parties, excluding however the Wharton subclass. The parties have briefed
this issue and the court will address it in a separate order.
6 The “split calculation claim” is the claim the plaintiffs refer to as the “post-2003 projection rate claim.” (Plaintiffs’
Motion for Entry of Jdmt. at 2 (DN 104)).

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v. Federal Exp. Corp., 426 F.3d 817, 821 (6th Cir. 2004) (quoting Curtiss-Wright, 446 U.S. at 8.
The Court of Appeals for the Sixth Circuit lists these factors: 1) the relationship between the
adjudicated and unadjudicated claims; 2) the possibility that the need for review might or might
not be mooted by future developments in the district court; 3) the possibility that the reviewing
court might be obliged to consider the same issue a second time; 4) the presence or absence of a
claim or counterclaim which could result in set-off against the judgment sought to be made final;
and 5) miscellaneous factors such as delay, economic and solvency considerations, shortening the
time of trial, frivolity of competing claims, expense, and the like. Id., (quoting General
Acquisition, Inc. v. GenCorp, Inc., 23 F.3d 1022, 1030 (6th Cir. 1994) (internal quotations
omitted)). This analysis boils down to “whether the needs of the parties’ outweigh the efficiency of
having one appeal at the conclusion of the case in its entirely, and it must spell out its reasons for
concluding that prompt review is preferable.” Id.
C. Analysis
The plaintiffs state that because the court’s dismissal of Wharton and Tedesco’s claims
ends the case at the district court level for these plaintiffs and the 1,700 current and former
Allmerica participants they seek to represent, these claims should be certified for immediate
appeal. The plaintiffs further contend the outcome of the surviving claims of plaintiff and class
representative Durand (and class representative Fisher) has no bearing on the merits of the
dismissed claims and that certifying the dismissal orders for immediate appeal will avert
potentially duplicative discovery and trial proceedings.
The defendants oppose immediate certification because, they argue, the proposed appeal
would involve whipsaw, fiduciary-duty and statute-of-limitation issues that remain in this case,
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including the interpretation and analysis of the 1997 plan, and that the claims are so entangled or
overlapping, that the risk of a dual adjudication, with proceedings at the trial and appellate levels,
is great. The court respectfully disagrees.
The court concludes the plaintiffs are entitled to prompt appellate review. The dismissed
claims challenge the legality of the 2004 plan’s introduction of a new future interest crediting rate,
the merits of which are not only distinct from Durand’s whipsaw claim under the 1997 plan, but
also have no bearing on the court’s ruling that the new claims asserted by new parties in a 2009
amended complaint were filed too late under the applicable statute of limitations. The meritorious
time-bar defense is particularly relevant, moreover, to the court’s ruling that Wharton’s so-called
whipsaw claim, one for a split calculation of future interest credits under to the 1997 and 2004
plans, is a disguised cutback claim which the court, again, dismissed under the statute of
limitations. Because the claims of Wharton and Tedesco hinge on the application of the statute of
limitations, the court concludes these claims are sufficiently distinct from the remaining claims of
Durand to warrant immediate appellate review.
The defendants argue that the risk of mootness is high in the event Durand’s claim
eventually fails on the merits. If the defendants prevail on the merit of a uniform projection rate,
this eventuality may moot Wharton’s claim for a split calculation of future interest credits because
the 1997 plan’s projection rate and the 2004 plan’s fixed rate would be the same, or at least result
in no damages.7 The court concludes, however, that this risk does not outweigh the equities
favoring judicial economy and the plaintiffs’ need for immediate relief.
The plaintiffs anticipate that proceedings in the district court on the remaining claims of the

7 See Plaintiffs’ Reply at 2, 14 (DN 109).

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Fisher subclass will require discovery and motion practice on affirmative defenses, including the
statute of limitations and failure to state a claim, and will proceed apace during appellate review of
the viability of the Wharton/Tedesco claims. The plaintiffs further contend the age of this case
weighs in favor of certification in part because these plaintiffs and nearly 1,700 other class
members might receive a far earlier resolution of their claims. On balance, the court concludes an
immediate appeal is the more efficient, fairer way to proceed, despite the potential risks
emphasized by the defendants.
Therefore, the court concludes that the equities and judicial economy favors an immediate
appeal of the final orders dismissing the plaintiffs Wharton and Tedesco’s post-2003 claims and
that such relief will not unduly prejudice the defendants.
IT IS HEREBY ORDERED that the plaintiffs’ motion for entry of a final order on the
claims brought by plaintiffs Wharton and Tedesco is GRANTED. (DN 104).
The court will enter a separate, final judgment.
DATE:

December 17, 2013

cc: Counsel of Record

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