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

Filing 118

MEMORANDUM AND OPINION by Magistrate Judge James D. Moyer on 4/30/2014; For reasons stated, the court will deny the defendants motions. The court will enter a separate order.cc:counsel (DAK)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
JENNIFER A. DURAND, et al.

PLAINTIFFS

v.

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

THE HANOVER INSURANCE
GROUP, INC., et al.

DEFENDANTS

MEMORANDUM OPINION
This matter is before the court on the defendants’ motion to alter or amend a judgment
dismissing fewer than all parties, entered December 17, 2013, pursuant to Rule 59(e) of the
Federal Rules of Civil Procedure.1 The defendants also move, in the alternative, to stay certain
discovery pending appeal. The plaintiffs, Jennifer Durand, Walter Wharton, and Michael Tedesco,
are former employees and retirement-plan participants of The Hanover Insurance Group, Inc. and
The Allmerica Financial Cash Balance Pension Plan, governed by the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq. For reasons stated below, the
court will deny the defendants’ motions.
In this ERISA class action, the plaintiffs challenge the defendants’ methodology for
calculating lump-sum distributions between March 1, 1997 and August 17, 2006, which the
plaintiffs claim resulted in an underpayment of accrued benefits. The plaintiffs claim, in part, that
the defendants used an unlawful projection rate of interest in their “whipsaw” calculation and
breached their fiduciary duties. The court dismissed all claims asserted by the plaintiffs Wharton
and Tedesco, through a series of orders (DNs 71, 78, and 102), on grounds including the applicable
statutes of limitations. These rulings essentially narrowed the remaining claims and defenses to

1

Mem. Op. and Order (granting Pls.’ Rule 54(b) Mot.) (Docket No. 111); Judgment (DN 112); Defs.’ Mot. to Alter or
Amend (DN 114).

those arising under the plan amendment of March 1, 1997, the terms of which were again amended
January 1, 2004. Wharton and Tedesco’s “post-2003” claims, the court reasoned, were sufficiently
distinct from the remaining claims arising under the earlier plan amendment to warrant immediate
appellate review.2 Having concluded the Wharton and Tedesco claims lacked merit, the court
declined to certify these plaintiffs as class representatives and, instead, certified only the original
party-plaintiff Durand as an overall class representative and a subclass, represented by James A.
Fisher.3 The parties have advised the court that the Fisher subclass will require discovery and
motion practice on the statute of limitations defense, as well.
In their motion to alter or amend the judgment, the defendants seek reconsideration and
reversal of the entry of judgment permitting an immediate appeal for the dismissed parties,
Wharton and Tedesco. The defendants argue that the basis of the Rule 54(b) judgment no longer
exists because the plaintiffs seek immediate and extensive discovery on all issues, including the
whipsaw/fiduciary claims, which will expose the defendants to duplicative merits discovery,
rather than narrower statute-of-limitations discovery of the Fisher subclass while the
Wharton/Tedesco appeal is resolved. The defendants argue that if the appellate court were to
reinstate the Wharton/Tedesco whipsaw and fiduciary claims, the entire case will be delayed,
further undermining the basis of the Rule 54(b) order. The defendants argue the whipsaw claim,
that is, the proper projection rate of interest, is based in part on a 2002 report of the Department of
Labor, which includes discussion and examples, the court notes, of potential whipsaw violations.
The defendants contend overlap of discovery is inevitable because the Wharton/Tedesco claims
and the remaining whipsaw/fiduciary claims stem from the same topics and the same sources of
2
3

Mem. Op. and Order at 5 (DN 111).
Order Certifying Class (DN 110).

2

information: the administrator’s response to the 2002 DOL report, how the administrator
interpreted plan terms, and what the administrator told participants of plan terms. The defendants
argue they need to stay merits discovery to avoid duplication and that because a stay is necessary,
given the plaintiffs’ new position, the best course, argue the defendants, is to reverse the Rule
54(b) order and proceed on appeal in ordinary fashion after adjudication of all claims and parties.
The plaintiffs object to the defendants’ alternative motions because the defendants revisit
argument previously rejected by the court; because the anticipated discovery, running parallel to
an appeal, will involve extensive, as-yet unattained document production, likely to exceed an
appellate briefing schedule; and because any overlap in discovery pertaining to common legal
issues involves underlying facts sufficiently distinct among the plaintiff sub-classes. The plaintiffs
respond that they have no interest in duplicative discovery and agree that the core Durand claims
discovery should “take a back seat” pending the Wharton/Tedesco appeal. The plaintiffs
emphasize, however, that their document requests, including the 2002 DOL report, are dual-use
documents. The plaintiffs argue that merely because the documents are relevant to the merits of the
whipsaw/fiduciary claims, they should not be “walled off” from discovery needed on the Fisher
statute-of-limitations discovery. The plaintiffs intend to show the defendants knew and did not
inform participants of the whipsaw claims or the limitations on such claims and contend their
defense to the statute of limitations relies as much on the 2002 DOL report and related discovery as
does any underlying whipsaw/fiduciary claim.
The court remains persuaded that Rule 54(b) relief is appropriate, for reasons articulated in
its previous opinion, which contemplated discovery on the Fisher subclass statute of limitations
defense. The court concludes that during the document discovery phase, the overlap or duplication
3

with discovery of the merits of the whipsaw/fiduciary claims poses an insignificant and
manageable risk of expense or delay, and that the balance of the equities remains in favor of
prompt appellate review of the dismissals of the Wharton/Tedesco post-2003 claims. The court
disagrees with the defendants that an overlap of issues during the document phase of discovery
would unduly prejudice the defense in the event the Wharton/Tedesco dismissal is reversed on
appeal. If discovery reaches the deposition phase before resolution of the appeal, the defendants
may revisit their concerns and renew their motion to stay or seek protective orders as necessary.
The court will enter a separate order.
DATE:

April 30, 2014

cc: counsel of record