David v. Alphin et al

Filing 196

ORDER granting 178 Motion to Compel Production of Documents Pursuant to Plaintiff's Fourth Request for Production. Signed by Magistrate Judge Dennis Howell on 9/17/10. (gpb)

D a v i d v. Alphin et al

D o c . 196

IN THE UNITED STATES DISTRICT COURT F O R THE WESTERN DISTRICT OF NORTH CAROLINA C H A R L O T T E DIVISION 3 :0 7 cv 1 1 E L E N A M. DAVID; ARLEEN J. STACH; and V IC T O R M. HERNANDEZ, P l a i n t if f s V s. J . STEELE ALPHIN; AMY WOODS B R IN K L E Y ; EDWARD J. BROWN, III; CHARLES J. COOLEY; RICHARD M. D e M A R T I N I ; BARBARA J. DESOER; J A M E S H. HANCE; LIAM E. McGEE; E U G E N E M. McQUADE; ALVARO G. d e MOLINA; MICHAEL E. O'NEILL; O W E N G. SHELL, JR.; R. EUGENE T A Y L O R ; F. WILLIAM VANDIVER, JR.; B R A D F O R D H. WARNER; CHARLES W. C O K E R ; STEVEN JONES; KENNETH D. L E W IS ; BANK OF AMERICA C O R P O R A T IO N ; BANK OF AMERICA C O R P O R A T IO N CORPORATE B E N E F IT S COMMITTEE, D efen d a n ts. ________________________________________ ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

ORDER

T H IS MATTER is before the court on plaintiffs' Motion to Compel P ro d u ctio n of Documents Pursuant to Their Fourth Request for Production of D o cu m en ts to All Defendants (#178). Having considered plaintiffs' motion and r ev ie w e d the pleadings, including defendants' response and plaintiff's reply, the court
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en ters the following discussion and Order compelling such production. P lain tiffs allege that defendants are fiduciaries with respect to the Bank of A m erica 401(k) Plan (the "Plan"), and that they breached their duties under ERISA b y causing the Plan to invest in mutual funds with high investment management fees an d inferior returns, which were managed by affiliates of the Plan's sponsor, Bank of A m erica Corporation. Plaintiffs move to compel, pursuant to Fed. R. Civ. P. 37, the p r o d u c tio n of a Risk Analysis Report and related documents ("Risk Report D o cu m en ts") related to investment funds selected by the Plan's fiduciaries for the P lan .1 In their Request for Production 48 (contained in Plaintiffs' Fourth Request for P ro d u ctio n of Documents), plaintiffs specifically sought this type of report. D efen d an ts claim the documents are protected from discovery by the attorney-client p r iv ile g e and work product doctrine. Plaintiff is already in possession of the disputed d o cu m en ts, but such are subject to a recall by defendants. Discovery is currently lim ited to matters pertaining to Defendants' Motion for Summary Judgment on Statute o f Limitations Grounds.(#166) I n moving to compel, plaintiffs contend that the documents are not privileged

While plaintiffs have redacted even the names of these documents in its public filing, cogent discussion of the instant motion can not be accomplished without, at a minimum, naming the documents. Although the contents of such documents may contain proprietary business information, the captions do not as the court assumes that all major Plans generate similar documents. The court notes that plaintiffs, in the redacted brief, later do not redact the name of the documents. -2-

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an d that they relate to matters raised in defendants' Motion for Summary Judgment (# 1 6 6 ), which is now pending before the district court. Plaintiffs contend that the d o cu m en ts sought, which appear to have been generated in and around 1999, may well b e probative on the issue of whether plaintiffs' action is timely under the statutory ex cep tio n for fraud or concealment under ERISA.2 P lain tiffs contend that in response to an April 2000 announcement by the B e n e fits Committee, a participant in the Plan, David G. Mackenzie, questioned w h eth er the Plan's decision to purchase proprietary mutual funds, which purportedly p ro v id ed income to the Plan sponsor, was consistent with fiduciary obligations. P la in tif fs contend that in response to such inquiry, Mr. Mackenzie received two letters fro m the Plan's in-house benefits counsel, who purportedly made "questionable rep resen tatio n s" regarding the selection process and applicable law. Memorandum in Support, at p. 4. Plaintiffs contend that the documents are, therefore, relevant to d efen d an ts' statute of limitations defense as they are a source of evidence of co n cealm en t of fiduciary misconduct. The Risk Analysis Report and related documents are clearly relevant to whether in -h o u se benefits counsel concealed from Mr. Mackenzie, and other Plan participants,

ERISA provides an exception to the six- and three-year limitations periods: "in the case of fraud or concealment, [an] action may be commenced not later than six years after the date of discovery of such breach or violation." ERISA §413, 29 U.S.C. §1113. -3-

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alleg ed fiduciary breaches in connection with the selection of proprietary funds for the P la n . W ith that background, the court has first considered whether such documents are protected by the attorney-client privilege as defendants argue. The attorney-client p r iv ile g e applies only if: (1 ) (2) th e asserted holder of privilege is or has sought to become a client; th e person to whom communication was made: (a) is member of the bar or a subordinate of a member; and (b) in connection with this communication is acting as a lawyer; (3 ) th e communication relates to a fact of which the attorney was informed: (a) b y his client; (b ) w ith o u t presence of strangers; (c) fo r the purpose of securing primarily either: (i) o p in io n on law; (ii) le g a l services; or (iii) assistan ce in some legal proceeding; and not; (d ) fo r the purpose of committing a crime or tort; and (4 ) the privilege has been: (a) claimed; and (b ) not waived by the client. H aw k in s v. Stables, 148 F.3d 379 (4th Cir. 1998).3 Review of the response filed by d efen d an ts reveals that they have shown that the documents do contain information

In Hickman v. Taylor, 329 U.S. 495 (1947), the Supreme Court determined that material which is prepared "in anticipation of litigation" is protected from discovery. Id.,at 50810. As far as any assertion of a work-product privilege, it is clear from a review of the record that such documents, while certainly having their genesis in ongoing litigation against another bank's Plan, were not created in anticipation of litigation as there was no litigation pending or even on the horizon. Indeed, it appears that such documents were generated in the ordinary course of business, which, for a Plan, must certainly entail determining whether purchases of assets are in the best interest of the participants as well as whether such purchases are lawful. -4-

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c o n c e r n in g "settlor functions," which is privileged. The court will order such material red acted . Beyond such privileged material, the court cannot find that the documents are otherwise subject to the attorney-client privilege. Neither the privilege log nor the resp o n se satisfies defendants' burden of proving such documents are privileged, and n o evidence has been submitted identifying the lawyer who purportedly prepared the d o c u m e n ts . Finally, the court finds that even if a showing were made under Hawkins, the "f id u c ia ry exception" to the attorney-client privilege would require that such d o cu m en ts be produced. An ERISA plan fiduciary may not assert the attorney-client a n d work product privileges against plan participants on matters of plan ad m in istratio n , including investment of plan assets. After close review of all the m a terials presented, the court finds that the documents sought to be compelled are d o cu m en ts concerning plan administration and investment of plan assets. While the C o u rt of Appeals for the Fourth Circuit has yet to consider the fiduciary exception to th e attorney-client privilege, all district courts in this circuit that have addressed the issu e have recognized the fiduciary exception in the ERISA context. Coffman v. M etro p o litan Life Ins. Co., 204 F.R.D. 296, (S.D.W.Va. 2001); Tatum v. R.J. R eyn o ld s Tobacco Co., 247 F.R.D. 488 (M.D.N.C. 2008); Fortier v. Principal Life Ins. C o ., 2008 WL 2323918 (E.D.N.C. 2008).

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F in d in g that no privilege applies to the documents plaintiffs seek to compel, and th at the fiduciary exception would otherwise apply, the court will compel the p ro d u ctio n of such documents, redacted as to any settlor information.

ORDER IT IS, THEREFORE, ORDERED that plaintiffs' Motion to Compel P ro d u ctio n of Documents Pursuant to Their Fourth Request for Production of D o c u m en ts to All Defendants (#178) is GRANTED, and defendants are C O M P E L L E D to produce such documents, redacted as to any settlor information, w ith seven days.

Signed: September 17, 2010

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