Davidson v. Henkel Corporation et al

Filing 110

ORDER OVERRULING PLAINTIFFS OBJECTIONS [#96] TO THE MAGISTRATE JUDGES ORDER DENYING PLAINTIFFS SECOND MOTION TO COMPEL DISCOVERY AND PLAINTIFFS MOTION TO COMPEL COMPLIANCE WITH SUBPOENAS. Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JOHN B. DAVIDSON, individually and
on behalf of others similarly situated,

Plaintiff,
v.

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Case No. 12-cv-14103-GAD-DRG
Hon. Gershwin A. Drain

HENKEL CORPORATION, HENKEL
Hon. David R. Grand
OF AMERICA, INC., and HENKEL
CORPORATION DEFERRED
COMPENSATION AND
SUPPLEMENTAL RETIREMENT
PLAN and its COMMITTEE AS
ADMINISTRATOR OF THE HENKEL
CORPORATION DEFERRED
COMPENSATION AND
SUPPLEMENTAL RETIREMENT
PLAN,
Defendants.
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ORDER OVERRULING PLAINTIFF’S OBJECTIONS [#96] TO THE MAGISTRATE
JUDGE’S ORDER DENYING PLAINTIFF’S SECOND MOTION TO COMPEL
DISCOVERY AND PLAINTIFF’S MOTION TO COMPEL COMPLIANCE WITH
SUBPOENAS
I. INTRODUCTION
On September 14, 2012, Plaintiff, John B. Davidson, filed the instant class action1
Complaint pursuant to the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et
seq. (“ERISA”), against Defendants, Henkel Corporation, Henkel of America, Inc. and
Henkel Corporation Deferred Compensation and Supplemental Retirement Plan (collectively
“Defendants”), seeking to recover plan benefits from Defendants. Presently before the court

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The issue of class action treatment is not presently before the Court.

is Plaintiff’s Objection to the Magistrate Judge’s Order Denying Plaintiff’s Second Motion to
Compel Discovery and Plaintiff’s Motion to compel Compliance with Subpoenas [#96].
II. FACTUAL BACKGROUND
Plaintiff sent his first set of interrogatories to Defendant in October of 2013. Plaintiff
sought information on any compromise Defendants made with the Internal Revenue Service
(“IRS”). Plaintiffs wanted to secure information regarding how any compromise with the IRS
would affect him and other class members.

Defendants responded by arguing such

communications were privileged communications between counsel and a third party whose
assistance was required in order to ensure they were meeting their obligations under Federal
Insurance Contributions Act (“FICA”).
III. LAW AND ANALYSIS
A. Standard of Review
Rule 72(a) of the Federal Rules of Civil Procedure provides for review of magistrate
judge orders on nondispositive matters. The district court judge can modify or set aside a
magistrate judge’s order if it is clearly erroneous or contrary to the law. See Fed. R. Civ. P.
72(a). A decision is “clearly erroneous” when, “although there is evidence to support it, the
reviewing court on the entire evidence is left with a definite and firm conviction that a mistake
has been committed.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948). If there are
two plausible views of a matter, then a decision cannot be “clearly erroneous.” Anderson v. City
of Bessemer, 470 U.S. 564, 573 (1985). The district court must answer the question of whether
the magistrate judge’s conclusion was reasonable. Heights Cmty. Congress v. Hilltop Realty,
Inc. 774 F.2d 135, 140 (6th Cir. 1985)

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B. Plaintiff’s Objections
First, Plaintiff objects to the magistrate judge’s findings that defendants’ communications
between their counsel and tax issues consultant are privileged.

Plaintiff argues that the

magistrate incorrectly placed the burden on him to prove the communications were privileged.
Defendants’ correctly argued that they sought legal advice from counsel in order ensure they
complied with FICA, which is a separate duty from managing the Plaintiff’s benefit fund.
Defendants were seeking advice on how to meet a legal obligation. The magistrate judge held
that plaintiff had to overcome this assertion. See Hr’g Tr. at 47, ln 16-20. Thus, there was no
improper shifting of the burden. The third party in this case is a firm that offers accounting and
payroll services to large corporations like the Henkel Corporation. Seeking the firm’s assistance
was necessary in order for Defendants’ counsel to offer legal advice. See Jenkins v. Bartlett, 487
F.3d 482, 491 (7th Cir. 2007); see also Arkwright Mut. Ins. Co. of Pittsburgh, 19 F.3d 1432 (6th
Cir. 1994) (holding the privilege encompasses statements made to the attorney’s agent for the
goal of obtaining legal advice). This objection is unavailing.
Second, Plaintiff argues the court failed to apply the fiduciary exception to attorney-client
privilege to communications between counsel and its law firm’s lawyers in the benefits
management group. The magistrate judge held that Defendants were acting on their own behalf
in order to ensure FICA compliance. Plaintiff argues waiver because Defendants listed the
benefits attorneys as witnesses. Defendants hired their counsel for advice on their tax liability,
thus privilege applies to these communications as well. The Reed factors in both parties’
briefings on the Motions are met for these communications. See Reed v. Baxter, 134 F.3d 351,
355-56 (6th Cir. 1998). The attorneys listed as witnesses can still testify to the facts surrounding
the communication, but cannot testify about the substance of the communication due to
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privilege. Upjohn Co. v. United States, 449 U.S. 383, 395 (1981). Plaintiffs also argue the
magistrate judge did not apply the fiduciary exception for the roles defendants and their counsel
played for Plaintiffs. ERISA did not impose such a role on the defendants and neither does
FICA.

Any attempts by Defendants to meet their own FICA obligations were done by

Defendants for Defendants. The fiduciary exception to privilege does not apply. This objection
is unavailing.
Lastly, plaintiffs suggest in camera review would effectively resolve the privileges issues
raised. At the hearing on these motions Plaintiff had an opportunity to rebut Defendants’ claims
of privilege and failed to do so. In camera review will not change the facts already established
below about these communications. The Court declines to conduct an in camera review.
IV. Conclusion
For the reasons mentioned above, Plaintiff’s Objections [#96] are OVERRULED and
Magistrate Judge David R. Grand’s Order [#91] is AFFIRMED.
SO ORDERED.

Dated: September 11, 2014

/s/Gershwin A Drain
GERSHWIN A. DRAIN
UNITED STATES DISTRICT JUDGE

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