DIX v. TOTAL PETROCHEMICALS USA, INC., PENSION PLAN
Filing
45
MEMORANDUM OPINION AND ORDER granting in part and denying in part 35 Motion to Compel. Signed by Magistrate Judge Joel Schneider on 11/10/11. (js)
[Doc. No. 35]
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
PHILIP A. DIX,
Plaintiff,
Civil No. 10-3196 (JBS/JS)
v.
TOTAL PETROCHEMICALS USA,
INC., PENSION PLAN,
Defendant.
MEMORANDUM OPINION AND ORDER
Presently before the Court are three (3) related discovery
motions.
This Memorandum Opinion and Order addresses “Plaintiff’s
Motion to Compel Discovery” directed to defendant. [Doc. No. 35].
The issue before the Court concerns the scope of discovery when a
defendant asserts a “clearly repudiated” defense under ERISA.
Defendant opposes plaintiff’s motion and the Court held oral
argument on November 7, 2011.
For the reasons to be discussed,
plaintiff’s motion is GRANTED in part and DENIED in part.
Background
By
way
of
background,
plaintiff
filed
his
class
action
complaint on June 23, 2010. Plaintiff started working for Rohm and
Haas in 1967 and from the outset participated in its pension plan.
The Rohm and Haas Plexiglas division plaintiff worked for was
subsequently acquired by Elf Atochem which changed its name to
Atofina
Chemicals.
Plaintiff
terminated
his
employment
with
Atofina on January 1, 2004. Plaintiff claims there was a shortfall
in his lump sum pension distribution. The essence of plaintiff’s
claim is that the portion of his pension attributable to his Rohm
and Haas service should have included a cost of living component
that the annuity option received.
Plaintiff maintains defendant
violated various provisions of ERISA by failing to provide a value
for the COLA in calculating his lump sum payment.
Defendant steadfastly maintains that plaintiff’s action is
barred by the statute of limitations.
Plaintiff filed a motion to
dismiss on September 17, 2010 arguing this point.
The Honorable
Jerome B. Simandle denied the motion without prejudice on June 20,
2011 as procedurally improper.
Judge Simandle found that since
defendant’s statute of limitations defense was based on a document
not “integral” to the complaint, he could not consider it and
defendant would have to raise the defense in a motion for summary
judgment.
what
Judge Simandle’s Memorandum Opinion did not weigh in on
discovery
was
defendant’s motion.
appropriate
for
plaintiff
to
respond
to
Memo Op. at 5 (“It is not clear to what extent
discovery will be necessary to respond to this motion [to dismiss]
if converted into a motion for summary judgment, and if discovery
will be necessary, how long it will require.”). Judge Simandle,
however, envisioned a streamlined procedure to address the merits
of defendant’s defense. Id. 5-6.
(“[G]iven the time the parties
have already spent litigating the issue, if the motion is re-filed
2
as a summary judgment motion, the Court will entertain requests to
streamline the summary judgment procedures or relax the briefing
requirements
in
order
to
fairly
resolve
this
potentially
dispositive issue in a way that minimizes the expense to the
parties.”).
Accordingly, this Court limited the initial discovery
phase in the case to the statute of limitations issue.
After the denial of its motion to dismiss, defendant answered
plaintiff’s complaint and filed its motion for summary judgment on
July 22, 2011 raising its limitations defense.
On July 27, 2011,
the Court held the Fed. R. Civ. P. 16 Scheduling Conference.
At
the conference defendant argued no discovery was necessary to
decide its motion for summary judgment.
Plaintiff disagreed.
Despite defendant’s argument, it was apparent to the Court that
there were some clearly relevant documents that defendant should
produce.
To be sure, however, defendant disagreed. Given the
parameters of discovery under Fed. R. Civ. P. 26, the Court
determined that it could not be reasonably questioned that some
categories
plaintiff
of
documents,
regarding
his
for
example
pension,
and
all
communications
all
pension
to
documents
plaintiff signed, were discoverable and should be produced.
As to
plaintiff’s other document requests, the Court asked the parties to
“meet and confer” to try and reach an agreement on what additional
discovery would occur. Given the Court’s indication that discovery
would not be completely barred as defendant requested, defendant
3
withdrew its motion for summary judgment without prejudice.
Defendant is anxious to re-file the motion as soon as possible but
wants to avoid a summary denial if plaintiff argues the motion was
filed before he had an opportunity to conduct relevant discovery.
Some additional background is necessary to put the present
discovery dispute in context.
As to the applicable law, the
trigger or accrual date for the applicable six-year statute of
limitations has been addressed in several Third Circuit cases.
In
Romero v. Allstate Corp., 404 F.3d 212 (3rd Cir. 2005), the Court
held that in an ERISA non-fiduciary duty claim, the claim accrues
when the “employee knew or should have known that the amendment has
brought about a clear repudiation of certain rights that the
employee believed he or she had under the plan.”
Id. at 223.
In
Miller v. Fortis Benefits Ins. Co., 475 F.3d 516 (3d Cir. 2007),
the court addressed the clear repudiation rule and approvingly
cited a Second Circuit case that cited Seventh, Eighth and Ninth
Circuit precedent that held that an “ERISA claim accrues upon a
clear
repudiation by the plan that is known, or should be known,
to the plaintiff--regardless of whether the plaintiff has filed a
formal application for benefits.”
Id. at 521-22.
(Citation and
quotation omitted).
The
additional
fact
background
discovery dispute is as follows.
relevant
to
the
parties’
When plaintiff retired he had a
choice whether to receive a monthly annuity or a lump sum payment.
4
Plaintiff chose to receive a lump sum distribution which was paid
in January 2004.
On December 7, 2009, plaintiff alleged in an
administrative claim that his lump sum payment did not include the
value of a COLA.
Defendant denied the claim on April 5, 2010 and
June 18, 2010, and this complaint was filed soon thereafter.
Defendant’s statute of limitations defense is based upon
Atofina papers plaintiff received with the title “Atofina Early
Retirement Incentive Program Statement of Estimated Benefits.” On
November 24, 2003, plaintiff signed Atofina’s “Retirement Benefits
Request” electing to receive a lump sum payment. The language
defendant relies upon is contained in the Statement of Estimated
Benefits and reads:
You will not be entitled to this cost-ofliving adjustment if you elect (with your
spouse’s written consent) to receive your
RandH accrued benefit in the form of a lump
sum. (Emphasis in original).
Defendant argues this was a clear repudiation of plaintiff’s right
to a COLA and, therefore, the statute of limitations accrued on
November 24, 2003.
Since plaintiff’s complaint was filed on June
23, 2010, defendant argues it is barred by the six-year statute of
limitations.
Plaintiff disagrees that the cited language was a clear
repudiation
of
his
present
claim.
Plaintiff
argues
that
on
November 14, 2003 he and his wife signed a form titled “Consent to
Payment of Retirement Benefit in the Form of a Single Payment” that
5
contained inconsistent or ambiguous language.
The form reads:
I, Philip A. Dix [handwritten](Participant),
hereby consent, pursuant to Article IV of the
ATOFINA Chemicals, Inc. Retirement Benefits
Plan (the “Plan”) to the Plan’s distribution
to me in a single payment of the actuarial
equivalent present value of the benefit that I
would otherwise be entitled to receive in the
form of monthly annuity payments. I understand
that by choosing my benefit in the form of a
single payment, the Plan will be fully
discharged of its obligations to me and to my
spouse, and I (we) will have no right or
entitlement to any future benefits from the
Plan. (Emphasis added).1
Plaintiff argues defendant did not make a clear repudiation because
the language in his consent form indicated that his lump sum
payment would include the actuarial value of the COLAs he would
have received had he elected to take an annuity.2
Plaintiff argues
the statute of limitations on plaintiff’s claim did not accrue
until defendant clearly repudiated his right to a COLA component in
his lump sum payment.
Plaintiff alleges this did not occur until
his administrative claim was denied in 2010.
Since the complaint
1
This document was not produced before or contemporaneously
with defendant’s two dispositive motions. Defendant did not
produce the document until after it was directed to do so by the
Court at the Rule 16 conference.
2
Plaintiff also argued in his opposition to defendant’s
motion to dismiss, inter alia, that he was not given notice that
his lump sum did not already include the value of the COLA, the
phrase accrued benefits could be read to include the value of
future COLAs, and defendant’s literature did not give an
illustration, explanation, or calculation of how the lump sum was
determined so plaintiff could see whether or not it included the
value of future COLAs. The Court assumes plaintiff has not
abandoned these arguments.
6
was filed soon thereafter, plaintiff argues defendant’s statute of
limitations defense is futile.
Discussion
Having summarized the background of the present motion, the
Court will now proceed to address the specifics of the parties’
discovery dispute.
The essence of the dispute is as follows:
defendant argues the only relevant inquiry is what plaintiff knew
or should have known about whether his lump sum pension payout
would include a value for a COLA.
Therefore, defendant argues,
discovery directed to what defendant intended, what other plan
participants thought or did, and the drafting history of the
relevant documents is irrelevant.
On the other hand, plaintiff
argues that in order to determine whether there was a clear
repudiation the “totality of the circumstances” must be examined.
As a result, plaintiff contends that his discovery should not be
limited to just the “four corners” of the defendant’s documents.
As the parties are aware, the Federal Rules of Civil Procedure
allow broad and liberal discovery.
Pacitti v. Macy’s, 193 F.3d
766, 777-78 (3d Cir. 1999); Tele-Radio Sys. Ltd. v. DeForest
Elecs., Inc., 92 F.R.D. 371, 375 (D.N.J. 1981).
In this context,
it is worth noting that relevance is a broader inquiry at the
discovery stage than at the trial stage. New Jersey Manufacturers,
Ins. Group v. Electrolux, Inc., No. 10-1952 (WJM) 2011 WL 5117781,
at *2 (D.N.J. October 26, 2011).
7
Nonetheless, discovery is not
limitless and may be circumscribed.
Bayer AG v. Betachem, Inc.,
173 F.3d 188, 191 (3d Cir. 1999).
Fishing expeditions during
which a party searches for evidence to support claims or defenses
not yet pleaded are not permitted.
Smith v. Lyons, Doughty &
Veldhuius, P.C., No. 07-5139 (JHR), 2008 WL 2885887, at *5 (D.N.J.
July 23, 2008).
Further, the Court may limit discovery where the
burden is likely to outweigh the benefit.
See Fed. R. Civ. P.
26(b(2)(C). Where a relevancy objection is made, the party seeking
discovery has the burden of showing the requested information is
relevant to the claims or defenses and may lead to admissible
evidence.
Electrolux, at *2.
Five specific document requests are at issue.
The Court will
address each one separately but not necessarily in the order in
which they were served.
The first document request to be addressed asks for the
drafting history of the key document defendant replies upon.
Specifically, the request asks for:
All
drafts,
comments
to
drafts
and
correspondence relating to the portion of the
form
letter
...
titled
“ATOFINA
Early
Retirement Incentive Program Statement of
Estimated Benefits” wherein the Rohm and Haas
Pension Plan or COLA are mentioned.
The parties have not cited, and the Court has not found, any case
law that specifically addresses what discovery is permitted on the
issue of
whether
an ERISA
benefit
is “clearly
repudiated.”
Nevertheless, the Court finds that plaintiff’s request asks for
8
relevant documents.
In In re New Valley Corp., 89 F.3d 143 (3d Cir. 1996), the
Third Circuit discussed the steps that should be taken to address
an ambiguity in the context of an ERISA dispute. In New Valley a
dispute
arose
regarding
whether
a
“top
terminated “at any time for any reason.”
this
language
was
clear
and
hat
plan”
be
The lower court held that
unambiguous
and
did
extrinsic evidence to show the parties’ intent.
decision was reversed.
could
not
permit
On appeal the
Like the present situation, the Third
Circuit was not called upon to decide the ultimate issue but just
whether the plaintiff “should have the opportunity to clarify the
meaning of their benefits contract through a proffer of extrinsic
evidence.”
Id. at 148.
The Court ruled that extrinsic evidence
should have been considered because:
A court cannot interpret words in a vacuum,
but rather must carefully consider the
parties’ context and the other provisions in
the plan. Moreover, extrinsic evidence should
have been considered to determine whether an
ambiguity existed, especially in the absence
of an integration clause in the plan.
Id. at 149.
The Third Circuit further stated that to decide if a contract
is
ambiguous,
the
trial
judge
should
consider
the
contract
language, the meanings suggested by counsel, and the extrinsic
evidence offered in support of each interpretation.
Id. at 150.
Extrinsic evidence may include the structure of the contract, the
9
bargaining history and the conduct of the parties that reflects
their understanding.
Id.
Here, the Court is not deciding if the
language at issue is a clear repudiation.
made by the District Judge.
That decision will be
However, the Third Circuit has held
that extrinsic evidence may be considered to show the parties
intent.
Thus, the drafting history plaintiff requests is relevant
and must be produced. See also Baldwin v. University of Pittsburgh
Medical Center, 636 F.3d 69, 78 (3rd Cir. 2011)(“[W]hen a contract
term is reasonably argued to be ambiguous, the better approach, and
the
one
that
is
consistent
with
the
weight
of
controlling
authority, is to allow the parties to proffer evidence in support
of alternative interpretations of the term so that the court may
properly address the purported ambiguity.
That is the approach
required by our precedent under ERISA.”).
In addition, although not identical to the issue presented
here, there is a line of cases in the insurance coverage context
that are sufficiently analogous to guide the Court in its ruling.
In Nestle Foods Corporation v. Aetna Casualty and Surety Company,
135 F.R.D. 101 (D.N.J. 1990), aff’d., No. 89-1701 (CSF), 1990 WL
191922 (D.N.J. Nov. 13, 1990), the Court addressed whether the
drafting history of an insurance policy was relevant and had to be
produced.
In Nestle the plaintiff sought insurance coverage for
environmental claims. The insurer, Liberty Mutual, argued that the
claims were excluded based upon the clear and unambiguous language
10
in its insurance policy. Nestle sought the drafting history of the
insurance policy and Liberty resisted arguing the discovery was
irrelevant.
Liberty’s objections were overruled.
In her Opinion, then Magistrate Judge Wolfson ruled that for
discovery purposes the drafting history of the policy was relevant.
The Court reasoned that the Third Circuit permitted the meaning of
a contract to be determined from the parties’ intent, and the
drafting history was relevant to show that intent.
105-106.
135 F.R.D. at
Similar to the argument plaintiff makes here, Nestle
argued, and the Court agreed, that the drafting history of Nestle’s
insurance policy could show that the interpretation suggested by
the insurers was not the same as what was intended by the original
drafters.
In affirming Judge Wolfson’s decision, the District
Judge wrote:
Because the existence of ambiguity in the policies, the
admissibility of extrinsic evidence, and the applicable
law are issues as yet unresolved, and because of the
liberal policy of providing discovery under the federal
rules, the magistrate correctly determined the drafting
history of Liberty Mutual’s insurance policies with
Nestle to be relevant and discoverable.
1990 WL 191922, at *5.
See also Leski, Inc. v. Federal Insurance
Co., 129 F.R.D. 99, 104 (D.N.J. 1989); Rhone-Poulenc Rorer, Inc. v.
Home Indemnity
Company,
No.
88-9752,
1991
WL
78200,
at
*1-2
(E.D.Pa. May 7, 1991).
In the cited insurance cases the courts had to decide if the
policy exclusions
were
clear
and
11
unambiguous.
To
make
this
determination the courts held extrinsic evidence was relevant for
discovery purposes.
Specifically, the cited cases held that the
drafting history was relevant.
Here the trial court will address
whether the defendant’s documents clearly repudiated an ERISA
benefit.
Because of the similarity between the determination of
whether an insurance policy is clear and unambiguous and whether a
particular benefit is clearly repudiated, the Court finds the cited
insurance cases persuasive.
In order to determine if defendant made a clear repudiation,
the language in defendant’s form documents must be examined.
The
drafting history of Atofina’s forms is relevant to determining
defendant’s intent behind its language and, therefore, must be
produced.
The Court rejects defendant’s argument that its intent
is irrelevant.3
The Court does not grasp defendant’s argument that
it could have clearly repudiated plaintiff’s right to a COLA
valuation in his lump sum payment if this is not what it intended.
Put another way, the Court cannot conceive that a party can clearly
repudiate something in the ERISA context that it did not intend to
repudiate.
See Baldwin, 636 F.3d at 75 (noting that the federal
common law of contract applied to the parties’ ERISA dispute and
the primary goal of contract interpretation is to determine the
3
Defendant argues, “each of Plaintiff’s requests, as well as
his explanations as to their relevance, focuses on the intent and
state of mind of the TOTAL plan and its predecessors, despite its
irrelevance to whether Plaintiff’s claim is barred by the statute
of limitations.” Brief at 4.
12
intent
of
the
parties).
For
this
reason,
the
Court
rejects
defendant’s argument that, “[i]ntent to create an ambiguity is
equally irrelevant to clear repudiation as whether or not the
language in the Benefit Election Statement is ambiguous is a legal
question.”
Brief at 6.
It may be when all is said and done it will be decided that
defendant’s form is an effective “clear repudiation.” That answer,
however, is yet to be determined. Until then plaintiff is entitled
to obtain relevant discovery. The Court agrees with plaintiff that,
“[e]vidence showing that the plan did (or did not) intend to
repudiate plaintiff’s claim is clearly relevant to whether the plan
did
(or
did
(emphasis
not)
in
repudiate
original).
plaintiff’s
Since
the
claim.”
drafting
Brief
history
of
at
4
the
“Statement of Estimated Benefits” is relevant, it must be produced.
The next document request to be addressed is plaintiff’s
request for:
All documents showing how the parties to
transfers of pension assets valued the
anticipated cost of the COLAs for each
transfer of assets – beginning with the
original transfer of assets from the Rohm and
Haas Pension Plan to the Atofina Plan, as well
as any transfers from the Arkema Plan to any
other company.
This request focuses on “the anticipated cost of the COLAs for each
transfer of assets.”
finds
that
information.
the
By focusing generally on COLAs, the Court
request
is
overbroad
and
requests
irrelevant
This case does not concern COLAs in general.
13
For
example, the COLA valuations as to the retirees who elected an
annuity are irrelevant to the statute of limitations issue.
The
only relevant inquiry is whether the value of COLAs should have
been included when plaintiff’s lump sum payment was calculated.
Therefore, plaintiff’s request for these documents is granted
except the request is limited to the valuation of lump sum payments
with and without a COLA component.
The next document request to address is plaintiff’s request
for:
All documents that mention or discuss any of
the following lawsuits: Hickey v. Chicago
Truck Drivers, Helpers & Warehouse Workers
Union, 980 F.2d 465 (7th Cir. 1992); Kohl v.
Association of Trial Lawyers of Am., Civil
Action No. AW-97-3264 (D. Md.) (decision
reported at 183 F.R.D. 475); Laurenzano v.
Blue Cross & Blue Shield of Mass., Inc.
Retirement Income Trust, Civil Action No. 9911751 (D. Mass.) (decisions reported at 134 F.
Supp.2d 189 and 191 F. Supp.2d 223); Williams
v. Rohm and Haas Pension Plan, Civil No. NA
02-123-C and Civil No. 04 CV 78 (S.D. Ind.)
(decision on appeal reported at 497 F.3d 710
(7th Cir. 2007)).
The Court finds that this document request does not have to be
responded to because it is overbroad and requests irrelevant
information. None of the cited cases address the same issue before
this Court.
Defendant’s discussions regarding other ERISA cases
has nothing to do with defendant’s statute of limitations defense.
Therefore, defendant does not have to respond to this request.
As
noted in Claude P. Bamberger Intern., Inc. v. Rohm and Haas Co.,
14
C.A. No. 96-1041 (WGB), 1998 WL 684263, at *2 (D.N.J. April 1,
1998)(citations and internal quotation marks omitted), “while the
standard of relevancy is a liberal one, it is not so liberal as to
allow a party to roam in shadow zones of relevancy and to explore
matter which does not appear germane merely on the theory that it
might become so.”
The next document request to address is plaintiff’s request
for:
Copies of any and all administrative claims
filed by former Rohm and Haas Pension Plan
participants challenging the failure to
include the value of COLAs in lump sums.
These documents are plainly relevant and should be produced.
Whether claims identical to those of plaintiff have been filed
undoubtedly
could
lead
to
relevant
evidence.
Nevertheless,
defendant represents that the documents responsive to this request
have already been produced.
Brief at 7.
The last document request at issue asks for:
All documents that mention or discuss the cost
of living adjustments (“COLAs”)promised in the
Rohm and Haas Pension Plan. This includes, but
is not limited to, all communications between
the Plan administrator and its agents and
inside and outside legal and actuarial
advisors regarding the administration of the
trust.
As phrased this request is overbroad and requests irrelevant
information.
This lawsuit does not address general COLA issues.
The only relevant issue is whether plaintiff’s lump sum payment
15
should have included a COLA component.
should
be
produced
but
only
as
to
Thus, these documents
documents
mentioning
or
discussing a COLA component of a retiree’s lump sum pension payout.
The Court is not addressing at this time whether the responsive
documents are privileged.
Conclusion and Order
For all the foregoing reasons, it is hereby ORDERED this 10th
day of November, 2011, that plaintiff’s Motion to Compel Discovery
is GRANTED in part and DENIED in part; and
IT IS FURTHER ORDERED that defendant shall produce documents
responsive to document request number two; and
IT IS FURTHER ORDERED that defendant shall produce documents
responsive to document requests numbers three and five as limited
in this Opinion; and
IT IS FURTHER ORDERED that to the extent not already done,
plaintiff shall produce documents responsive to document request
number five; and
IT IS FURTHER ORDERED that plaintiff’s request for documents
responsive to document request four is DENIED; and
16
IT IS FURTHER ORDERED that the documents responsive to this Order
shall be produced by December 23, 2011.4
s/Joel Schneider
JOEL SCHNEIDER
United States Magistrate Judge
4
To the extent this Order is not identical to the Court’s
informal oral ruling at the November 7, 2011 oral argument, the
Order obviously controls.
17
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