Jones et al v. Allen, et al

Filing 164

ORDER granting in part and denying in part 153 Motion for leave to amend. Plaintiffs shall file an amended complaint in conformance with the Court's order within fourteen days. Signed by Magistrate Judge Terence P Kemp on 3/21/14. (Kemp, Terence)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Craig S. Jones, et al.,

:

Plaintiffs,

:

v.

:

Case No. 2:11-cv-380

Kerry A. Allen, Plan
Administrator, et al.,

:

JUDGE MICHAEL H. WATSON
Magistrate Judge Kemp

:
Defendants.
OPINION AND ORDER
Plaintiffs brought this ERISA action against former employers,
and certain other parties connected with the severance plans at
issue in this case.

Before the Court is Plaintiffs’ Motion for

Leave to Amend Complaint filed under seal (Doc. No. 153).

For the

reasons set forth below, the motion will be granted in part and
denied in part.
I.

BACKGROUND

Plaintiffs are former employees of one of the mortgage and
investment
Capital.

banking

entities

collectively

referred

to

as

Red

On May 3, 2011, Plaintiffs filed a complaint against the

four entities that are collectively referred to as Red Capital, the
company that acquired Red Capital on December 31, 2008 (the PNC
Financial Services Group, Inc. (“PNC”)), certain severance benefits
plans, and the plan administrator for those plans alleging that
Defendants retaliated against them for exercising certain rights
pursuant to ERISA and wrongfully denied their ERISA benefits.
(Doc. No. 2.)

Count II of the Complaint, the retaliation claim,

alleged that it was pleaded in the alternative to the claims for
severance benefits.

Plaintiffs alleged that they notified PNC and

Red Capital of their intention to claim benefits under the 2005
National City Plan and the 2006 Severance Guaranty effective March
16, 2010, and that on the following day, offers of continuing

employment were extended to all employees who had not notified
their employer of their intent to seek severance benefits under the
plans. Plaintiffs alleged that they were discharged in retaliation
for exercising their rights as participants in the plans.
The remaining counts in the original complaint allege that
Defendants wrongfully denied Plaintiffs benefits under the plans at
issue.

Plaintiffs claimed benefits in connection with two changes

in ownership of Red Capital.

The first was the purchase of Red

Capital’s sole owner, National City, by PNC on December 31, 2008.
As to the second, Plaintiffs alleged that an investor group led by
ORIX USA Corp. acquired Red Capital on May 8, 2010.
¶30).

(Doc. #2 at

Plaintiffs did not include ORIX USA Corp. (“ORIX”) as a

defendant in the original complaint.
On July 15, 2011, Defendants filed a motion to dismiss the
Complaint, which was denied without prejudice.
#55).

(Doc. #32; Doc.

On October 11, 2012, Defendants answered the Complaint.

(Doc. #65). On January 24, 2013, Amy Howell, an attorney for ORIX,
was deposed and testified that an individual named Jim Thompson
made the ultimate decision to fire Plaintiff Russi.
Exh. 3 at 142).

(Doc. 153,

On February 21, 2013, Plaintiffs filed a motion to

Amend/Correct the Complaint.

(Doc. #92).

On May 14, 2013,

Plaintiffs’ counsel emailed Defendants’ counsel to obtain the
consent of Defendant “Red” to amend the pleadings to add Jim
Thompson and the entity on whose behalf he was acting when he
terminated Plaintiff Russi’s employment.

(Doc. 153, Exh. 4).

According to Plaintiffs, on June 3, 2013, Defendants produced an
email, which Defendants have sought to claw back as privileged
based on inadvertent production, that states that “the buyer”
learned of Plaintiffs’ March 17, 2010 letters regarding their
rights under the severance plans and demanded immediate termination
of the employees who sent in the letters.
#153, Exh. 1 at 68).

(Doc. #153 at 5; Doc.

On August 16, 2013, the Court denied
2

Plaintiffs’ motion to Amend/Correct the Complaint.

(Doc. #125).

On September 5, 2013, ORIX’s CEO, Jim Thompson, was deposed.
During his deposition he testified that when he made the decision
to terminate Plaintiff Russi in March of 2010, he was making the
decision on behalf of ORIX.

(Doc. #153, Exh. 5 at 27).

Plaintiffs have moved for leave to make the following changes
to the Complaint: (1) to add ORIX USA Corporation (“ORIX”) as an
additional defendant for purposes of Plaintiffs’ retaliation claim,
(2) to add certain additional factual allegations relating to the
allegedly retaliatory nature of Defendants’ actions, and (3) to
assert a claim for breach of fiduciary duty against existing
Defendants.
II.

STANDARD

Generally, motions to amend pleadings are governed by Rule
15(a) of the Federal Rules of Civil Procedure, which provides that
after the time for amending as a matter of course has passed, “a
party may amend its pleading only with the opposing party's written
consent or the court's leave. The court should freely give leave
when justice so requires.”

Fed. R. Civ. P. 15(a).

The higher

standard set forth in Rule 16(b) for modifying a scheduling order
only applies when a court has issued a scheduling order setting a
deadline for motions to amend the pleadings.
16(b).

Fed. R. Civ. P.

Here, although Defendants point out that the parties’ Rule

26(f) Report proposed September 15, 2011 as the recommended date
for filing a motion to amend, there was no scheduling order setting
that deadline for motions to amend.

Accordingly, the liberal

standard set forth in Rule 15(a) applies here.
Under this standard, motions for leave to amend may be denied
“where the court finds ‘undue delay, bad faith or dilatory motive
on the part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, futility of the
3

amendment, etc.’”

Marquette Gen. Hosp. v. Excalibur Med. Imaging,

LLC, 528 F. App'x 446, 448 (6th Cir. 2013) (quoting Foman v. Davis,
371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962)).

In

considering what constitutes “undue delay” and “undue prejudice,”
the Court of Appeals has considered factors including the length of
the delay, whether dispositive motions have been granted, whether
the

new

allegations

would

require

the

opponent

to

expend

significant additional resources to conduct discovery and prepare
for trial, and whether the new allegations would significantly
delay resolution of the dispute.

See e.g., Parry v. Mohawk Motors

of Michigan, Inc., 236 F.3d 299, 306 (6th Cir. 2000) (adding a new
legal theory after the grant of summary judgment and denial of
motion for reconsideration and 9 months after the filing of the
first amended complaint and more than a year after the filing of
the original complaint would prejudice the defendants); Phelps v.
McClellan, 30 F.3d 658, 662-63 (6th Cir. 1994) (“In determining
what

constitutes

prejudice,

the

court

considers

whether

the

assertion of the new claim or defense would: require the opponent
to expend significant additional resources to conduct discovery and
prepare for trial; significantly delay the resolution of the
dispute; or prevent the plaintiff from bringing a timely action in
another jurisdiction”).

“The longer the delay, the less prejudice

the opposing party will be required to show.”

Debuc v. Green Oak

Tp., 312 F.3d 736, 752 (6th Cir. 2002) (citation omitted).

On the

other hand, “[i]n the absence of reasons such as those listed
above, leave should generally be granted.” Johnson v. Metro. Gov't
of Nashville & Davidson Cnty., Tenn., 502 F. App'x 523, 541 (6th
Cir. 2012) (citing Foman, 371 U.S. 178).
III. ANALYSIS
First, Plaintiffs request leave to add ORIX USA Corporation
(“ORIX”) as a defendant with respect to Plaintiffs’ claim for
retaliation.

Plaintiffs argue that the interests of justice
4

require that they be allowed to amend their complaint, because they
“have learned ORIX (like PNC and Red) has violated ERISA by
terminating their employment for exercising their rights under the
various plans.”

(Doc. #153 at 8).

Plaintiffs

or

knew

should

have

The parties dispute when

known

enough

to

make

that

allegation.
Plaintiffs argue that “[i]t was not until Mr. Thompson’s
deposition in September 2013 that Plaintiffs finally learned it was
ORIX who ultimately made the decision to terminate them.”

(Doc.

#153 at 9). However, as Defendants point out, the testimony of Mr.
Thompson that Plaintiffs cite is not exactly as Plaintiffs have
represented.

Mr. Thompson testified that he made a decision to

terminate Plaintiff Russi on behalf of ORIX in March.
Exh. 2 at 25:20-27:7).

(Doc. #158,

Mr. Thompson further testified that he did

not decide to terminate the other four Plaintiffs and that the only
other Plaintiff (apart from Mr. Russi) whose termination he had a
role in was Plaintiff Jones, and his role was to set conditions for
further employment.
147:23).

(Doc. #158, Exh. 2 at 35:1-38:11; 146:16-

Accordingly, it appears that Plaintiffs have overstated

the new facts.

To the extent that Plaintiffs became aware of new

evidence in 2013 regarding ORIX’s alleged involvement in the facts
underlying the retaliation claim, that evidence did not pertain to
whether ORIX terminated all Plaintiffs, but whether ORIX terminated
Plaintiff Russi, and possibly Plaintiff Jones.
As far as the remaining Plaintiffs, Plaintiffs state that
prior to the beginning of discovery they “knew the Buyer Group had
directed their terminations, the capacity in which the members of
the Buyer Group had acted was unknown.”

(Doc. #153 at 4).

Rather

than ruling on whether that knowledge was sufficient to add ORIX as
a Defendant when Plaintiffs initially filed their complaint, the
Court will assume for purposes of this discussion that Plaintiffs
did not have cause for their delay in seeking to add ORIX and will
5

consider whether the delay or other factors should preclude the
amendment.
“Ordinarily, delay alone, does not justify denial of leave to
amend.”

Morse v. McWhorter, 290 F.3d 795, 800 (6th Cir. 2002)

(citations omitted); see also Szoke v. United Parcel Serv. of Am.,
Inc., 398 F. App'x 145, 153 (6th Cir. 2010) (“[d]elay by itself is
not sufficient reason to deny a motion to amend.”) (citations and
internal

quotations

omitted);

Commercial

Money

Ctr.,

Inc.

v.

Illinois Union Ins. Co., 508 F.3d 327, 347 (6th Cir. 2007) (“Delay
alone will ordinarily not justify the denial of leave to amend”)
(citation omitted).

“Notice and substantial prejudice to the

opposing party are critical factors in determining whether an
amendment should be granted.” Wade v. Knoxville Utilities Bd., 259
F.3d 452, 458-59 (6th Cir. 2001) (quoting Head v. Jellico Hous.
Auth., 870 F.2d 1117, 1123 (6th Cir. 1989)).

“When amendment is

sought at a late stage in the litigation, there is an increased
burden to show justification for failing to move earlier.” Wade,
259 F.3d at 459 (quoting Duggins v. Steak ‘N Shake, Inc., 195 F.3d
828, 834 (6th Cir. 1999)).
Here, Plaintiffs filed the complaint about two and a half
years before filing the present motion to amend the complaint.
While

this

is

a

significant

delay,

sufficient to deny the motion to amend.

delay

by

itself

is

not

Unlike many cases where

two and a half years have passed, this case – and particularly the
retaliation claim in this case – is not at a late stage in the
litigation.

That claim is not on the eve of trial, and, indeed, no

trial date has been scheduled.

While there have been a number of

dispositive motions filed, only two of those motions were directed
to the retaliation claim at issue.

Neither of those motions has

discussed whether particular Defendants are proper parties to that
claim and the Court’s rulings as to those two motions would not
likely have been different had ORIX been named as a defendant on
6

that claim.
Regarding whether additional resources would be expended to
conduct discovery and prepare for trial, Defendants argue:
If
Plaintiffs’
proposed
amendment
is
permitted,
Defendants would be faced with reconstructing further
dispositive motions and having to conduct a second round
of wasteful discovery.
RED has already expended
substantial resources fashioning its prior document
searches to Plaintiffs’ existing claims and selecting and
producing thousands of documents relevant to those
claims.
Defendants continue make additional arguments regarding the burden
of additional discovery, but those are specific to the proposed new
claim of breach of fiduciary duty rather than the prosed new
Defendant.

Defendants have not provided any explanation for why

adding ORIX to the existing retaliation claim would result in
burdensome additional discovery, especially in light of the fact
that Defendants have pointed to paragraphs in the complaint that
allege ORIX’s involvement in the termination of Plaintiffs.
#158 at 7; Doc. #159 at 10).

(Doc.

Furthermore, ORIX’s CEO and an

attorney for ORIX have already been deposed.

There has been no

showing that Defendants will have to expend substantial additional
resources to conduct discovery or prepare for trial if Plaintiffs
are permitted to add ORIX as a Defendant to the retaliation claim.
Nor has there been any showing that adding ORIX to the retaliation
claim will significantly delay the resolution of the dispute.

Nor

has there been any showing that Defendants would have conducted the
defense in a substantially different manner had the amendment been
tendered previously.
Defendants also argue that Plaintiffs acted opportunistically
by waiting for the Court to rule before amending the complaint, but
that argument is also directed toward the proposed new claim rather
than the proposed new Defendant.

(Doc. #158 at 3).

Plaintiffs

have not hidden their desire to add an additional entity to the
7

retaliation claim.

Rather, on May 14, 2013, Plaintiffs’ counsel

emailed Defendants’ counsel to obtain the consent of Defendant
“Red” to amend the pleadings to add Jim Thompson and the entity on
whose behalf he was acting when he terminated Plaintiff Russi’s
employment.

(Doc. 153, Exh. 4).

Defendants have also argued that the proposed addition of ORIX
would be “futile from a factual standpoint.” (Doc. #158 at 14; see
also Doc. #159 at 14).

In support of that argument, Defendants

first reiterate that Mr. Thompson’s deposition did not provide the
evidence that Plaintiffs say it did.

However, as discussed above,

Plaintiffs did not need new evidence in order to add ORIX as a new
defendant, because, as Defendants have pointed out, Plaintiffs’
original complaint alleged facts that supported inclusion of ORIX
as a defendant. Defendants also point to Mr. Thompson’s deposition
and additional evidence to contradict Plaintiffs’ allegations that
they were fired in retaliation for exercising their rights under
the plans and ERISA.

Whether or not allegations in the original

complaint are correct, however, is not the issue.

To the extent

that

claim

Defendants

believe

Plaintiffs’

retaliation

survive summary judgment, they can make such a motion.

cannot

Here, the

question is not whether Defendants had a retaliatory motive, but
whether ORIX may be added as a defendant.

Even the evidence that

Defendants discuss emphasizes the role of ORIX in the decisions
relating to the employment and/or termination of Plaintiffs.
Accordingly, there is no evidence of bad faith or dilatory motive
on the part of Plaintiffs, there has been no repeated failure to
cure deficiencies by amendments previously allowed, there is no
showing of undue prejudice to Defendants by virtue of allowance of
the amendment, there is no showing of futility of the amendment,
and the delay, though long, has not been prejudicial.

Therefore,

these factors, weighed together, favor permitting Plaintiffs to
amend their complaint to add ORIX as a defendant.
8

Second,

Plaintiffs

seek

to

add

“some

additional

factual

allegations that highlight the retaliatory nature of Defendants’
actions based on documents produced in discovery.”
2.)

(Doc. #153 at

In connection with those allegations, Plaintiffs seek to add

a February 17, 2010 email from William Roberts to Amy Howell and a
March 19, 2010 email from David Williams as exhibits to the
complaint.

(Doc. #153 at 2.)

“Confidential”

when

they

Defendants marked those emails

produced

them.

If

Plaintiffs

are

permitted to amend the complaint to include those documents, they
ask the Court to allow them to file the amended complaint without
requiring it to be filed under seal.

(Doc. #153 at 3.)

Plaintiffs

also note, in a footnote, that Defendants sought to claw back the
second of the two emails as privileged after it was used in a
deposition.

(Doc. #153 at 5 n.7).

While Defendants do discuss

both of the emails and point to other evidence that Defendants
believe contradict Plaintiffs’ representations about the import of
those documents, (Doc. #158 at 16, 18; doc. #159 at 15-17), they
mention nothing about privilege or confidentiality, nor do they
oppose the inclusion of those exhibits or references to them in the
proposed amended complaint.
In light of the absence of any objection by Defendants and in
accordance with the discussion above regarding the addition of the
ORIX as a defendant, the Court finds no prejudice would result from
the addition of the factual allegations based upon the February 17,
2010 email that Plaintiffs have attached as Exhibit 44 to the
proposed First Amended Complaint and the March 19, 2010 email that
Plaintiffs have attached as Exhibit 45 to the proposed First
Amended

Complaint,

complaint.

nor

to

making

those

exhibits

part

of

the

Defendants have not addressed the issue of privilege,

and there is no formal motion asserting a privilege with respect to
Exhibit 45 to the proposed First Amended Complaint. The Court must
now consider whether to require that the First Amended Complaint be
9

filed under seal.
Under the terms of the Agreed Protective Order:
If any party objects to the designation of any document
or information as Confidential, counsel for the objecting
party shall notify all counsel of record and any affected
non-party of the objection. If a dispute regarding the
objection cannot be resolved by agreement, counsel for
the party objecting to the Confidential designation shall
provide written notice of such fact to counsel for the
party
seeking
the
Confidential
designation
and
specifically identify in such notice the documents or
information at issue. Counsel for the party seeking the
confidential designation shall have 14 calendar days
after issuance of such written notice to move this Court
for an order confirming confidential treatment under this
Order of the documents or information in question. . . .
If counsel for the party seeking the confidential
designation does not move this Court for such an order
within 14 calendar days of issuance of the written
notice, then the documents or information identified in
the notice shall no longer be covered by this Order.
(Doc. #40 at ¶6).

It is not clear whether the parties have sought

to resolve the dispute by agreement as contemplated by the Agreed
Protective Order, but in light of the fact that Defendants did not
voice any opposition to Plaintiffs’ assertion that the documents
should not have been marked confidential, it appears that the
parties are in agreement that the documents need not be filed under
seal.

Accordingly, the Court concludes that proposed exhibits 44

and 45 to the First Amended Complaint are not covered by the Agreed
Protective Order.
The proposed amended complaint that Plaintiffs attached to
their motion for leave to amend included two new paragraphs that do
not fit within any of the areas as to which Plaintiffs have moved
to amend. Those allegations, which appear in the retaliation claim
(Count II), are the following:

“Defendants have been unjustly

enriched by virtue of the profits they have earned as a consequence
of the consummation of the Red-Orix transaction,” and “Disgorgement
of profits realized by Defendants as a consequence of their scheme
10

of retaliation and intimidation is an appropriate equitable remedy
under 29 U.S.C. 1132(a)(3).”

(Doc. #153, Exh. 1 at ¶¶ 261, 264).

Plaintiffs only sought leave to amend to add ORIX as an additional
defendant in relation to Plaintiffs’ retaliation claim, to add a
claim for breach of fiduciary duty, and to add additional factual
allegations based on the two documents that Plaintiffs attached as
Exhibits 44 and 45 to their proposed amended complaint.
at 1-3).

(Doc. 153

While Plaintiffs’ motion and memorandum mention seeking

to disgorge profits, that occurs in the context of the proposed new
breach of fiduciary duty claim.

The closest Plaintiffs come to

mentioning their additional claims for relief in the retaliation
count is in a footnote where Plaintiffs state that “[w]hile
Plaintiffs have always maintained that Defendants were unjustly
enriched [citation omitted] and disgorgement was already included
as

appropriate

equitable

relief

under

29

U.S.C.

1132(a)(3),

Plaintiffs specifically state disgorgement as an available remedy
in their First Amended Complaint.”
Plaintiffs

appear

to

maintain,

(Doc. 153 at 2 n.1).
they

do

not

need

to

If, as
allege

specifically that disgorgement is an available remedy on the
retaliation claim because they have already asked for appropriate
equitable relief, then Plaintiffs will not be harmed by the
exclusion of those paragraphs (¶¶ 261, 264) of the proposed amended
complaint.
essential

If, on the other hand, those proposed paragraphs are
to

claiming

those

damages,

Plaintiffs

should

move

directly to amend the complaint to add those paragraphs and explain
why such an amendment would be proper.

The Court will not allow

such language to be added through the procedure followed by
Plaintiffs.
Third, Plaintiffs request leave to add a new count for breach
of fiduciary duty.

Unlike adding the proposed defendant to the

retaliation count, the Court finds that adding this new claim would
cause undue prejudice to Defendants.
11

The language of Plaintiffs’

proposed new claim alleges in relevant part:
402. As fiduciaries, [the Plan administrator and
certain committees and designees for the plans at issue]
must “discharge [their] duties with respect to a plan
solely in the interest of the participants and their
beneficiaries.” 29 U.S.C. 1104(a)(1).
. . .
404. These individuals acting as fiduciaries for
the various plans breached their fiduciary duties in
numerous ways, including but not limited to (1) failing
to inform Plaintiffs regarding their eligibility under
the various plans; (2) failing to provide pertinent
information despite requests from Plaintiffs; (3) failing
to provide timely notice in accordance with the 2006
Guaranty, the 2005 National City Plan, and the Red Plan;
and (4) their actions in wrongfully denying Plaintiffs’
benefits claims.
405.
The decisions made by these individual
employees acting as fiduciaries benefitted their
employers, PNC and/or Red Capital.
406.
As a result of such breaches, PNC and Red
improperly profited and were unjustly enriched by the
actions and decisions of the fiduciaries by at least
$30,000,000 for severance claims they have to date
avoided paying to the Red Capital employees.
407. As a result of such breaches, PNC improperly
profited and was unjustly enriched by the actions and
decisions of the fiduciaries by at least $100,000,000 for
severance claims it has to date avoided paying to former
National City employees.
408. As a result of such breaches, PNC and Red have
improperly profited and were unjustly enriched by the
earnings they have realized on the amounts due to plan
participants for severance benefits that have been
wrongfully withheld.
(Doc. #153, Exh. 1).
In determining prejudice, a significant factor is whether
permitting the proposed claim would require Defendants to expend
additional resources to conduct discovery.

Here, Defendants argue

that “Neither Plaintiffs nor Defendants have taken any discovery
12

related to the breaches of fiduciary duty Plaintiffs now seek to
allege. [citation omitted] Rather, the focus has been on whether
the denial of Plaintiffs’ benefits claims should be overturned, and
whether Plaintiffs were retaliated against.”

(Doc. #159 at 17).

While the PNC Defendants “do not concede that Plaintiffs, under
Wilkins v. Baptist Healthcare Sys., Inc., 150 F.3d 609, 618 (6th
Cir. 1998), and its progeny, would be entitled to additional
discovery on their new claim,” neither do they explain why such
discovery would not be permitted.

The other Defendants argue that

“Plaintiffs’ new claim would require RED . . . expend significantly
more resources searching many of its same records a second time for
newly relevant materials.”

(Doc. #158 at 6).

Plaintiffs first respond by pointing to the facts already
alleged in the original complaint.

Plaintiffs argue that their

proposed breach of fiduciary claim “is based upon many of the same
underlying facts as their other claims, such as Defendants’ failure
to gather all pertinent information regarding Plaintiffs’ benefits
claims.”

(Doc. #161 at 20 (footnote and citation omitted)).

However, alleging those facts in relation to Plaintiffs’ claims for
ERISA benefits does not necessarily entitle them to discovery of
those facts.

With the exception of the retaliation claim, all of

the claims brought in the original complaint would typically be
decided based on the administrative record alone.

See Wilkins v.

Baptist Healthcare Sys. Inc., 150 F.3d 609, 617–20 (6th Cir. 1998)
cited in McCartha v. Nat'l City Corp., 419 F.3d 437, 441 (6th Cir.
2005)

(Courts

reviewing

an

ERISA

administrative

typically limited to the administrative record).

decision

are

To the extent

that the Court were to consider evidence outside the administrative
record for those claims, such evidence would be limited in scope.
See Moore v. Lafayette Life Ins. Co., 458 F.3d 416, 430 (6th Cir.
2006) (limited discovery beyond the administrative record may be
considered “only if that evidence is offered in support of a
13

procedural challenge to the administrator's decision, such as an
alleged lack of due process afforded by the administrator or
alleged bias on its part”).

Here, the Court has permitted some

limited conflict of interest discovery, but that ruling is fairly
narrow and would not encompass all of the facts alleged relating to
the ERISA claims which, according to Plaintiffs, also form the
factual basis for their breach of fiduciary duty claim.

And

neither party has asserted that the discovery relating to the
retaliation claim would overlap significantly with the potential
breach of fiduciary duty claim.
Plaintiffs also assert that they “have already requested
discovery related to this assertion – Plaintiffs’ investigation of
the conflicts under which the Committee operated and the lack of
due

process

afforded

Plaintiffs

is

the

scope

Plaintiffs’ breach of fiduciary duty claim.

and

extent

of

(See, e.g., Pls.’

Third Set of Interrogs. & Reqs. for Produc. of Docs. to All Defs.,
[Doc. # 161, Exh. 1]; Notices to Take Deps. Of Kerry Allen, James
Popp, & Brian Ferguson, [Doc. # 161, Exh. 2].”

(Doc. #161 at 20).

However, the interrogatories and document requests that Plaintiffs
cited did not address all the questions raised by the proposed
amendment, such as whether Plan Administrators “(1) fail[ed] to
inform Plaintiffs regarding their eligibility under the various
plans;

(2)

fail[ed]

to

provide

pertinent

information

despite

requests from Plaintiffs; (3) fail[ed] to provide timely notice in
accordance with the 2006 Guaranty, the 2005 National City Plan, and
the Red Plan; and (4) . . . wrongfully den[ied] Plaintiffs’
benefits claims.”

(Doc. #153, Exh. 1 at ¶404).

Furthermore, the

deposition notices that Plaintiffs cited indicate that the subject
of the depositions would be discovery permitted by the Court’s
order dated March 21, 2013, which would not encompass all of the
subjects relevant to the potential breach of fiduciary duty claim.
In addition, there are several motions pending that seek a ruling
14

as to the scope of the discovery.

In contrast with the limited

discovery beyond the administrative record that may be permitted
for claims reviewing a Plan Administrator’s denial of a claim, the
parties have not cited, and the Court is unaware of, any authority
limiting discovery in ERISA breach of fiduciary duty claims to the
administrative record. Accordingly, if Plaintiffs are permitted to
add the breach of fiduciary duty claim, the scope of discovery that
they could seek would be much broader than the discovery permitted
under the original complaint.
In addition to the potential for additional discovery, the
parties have filed motions for summary judgment (docs. ##32, 38,
53), a motion for judgment on the administrative record (doc. #60),
and a motion for judgment on the pleadings (doc. #86), which
collectively challenge all of the counts in the original complaint.
Furthermore, as alluded to above, if Plaintiffs had filed the
breach of fiduciary duty claim in their original complaint, it
likely would have affected some of the motions regarding discovery
beyond the administrative record and might have made such motions
unnecessary.

Defendants also speculate that Plaintiffs were using

a wait-and-see approach; however, Plaintiffs’ explanation for the
timing of their motion to amend the complaint to add the breach of
fiduciary

duty

claim

discussed

below)

is

(the
at

recent

least

as

Court

of

plausible

Appeals
as

decision

Defendants’.

Accordingly, the Court is not persuaded that Plaintiffs were acting
in bad faith in bringing the motion to amend at this time.
Regardless,
combination

with

in

light

the

of

the

significant

prejudice

to

delay

moving

in

Defendants
to

in

amend,

Plaintiffs have an “increased burden to show justification for
failing to move earlier.”

Pittman ex rel. Sykes v. Franklin, 282

F. App'x 418, 425 (6th Cir. 2008) (citations omitted).

Here,

Plaintiffs argue that the recent Court of Appeals decision, Rochow
v. Life Ins. Co. of N. Am., 737 F.3d 415 (6th Cir. Dec. 6, 2013),
15

would now “allow Plaintiffs, under ERISA, to assert a claim for
breach of fiduciary duty and disgorge Defendants’ profits in
addition to their claims for benefits.”

(Doc. # 153 at 6).

Defendants counter that Plaintiffs could have brought a breach of
fiduciary claim when they filed their complaint, because breach of
fiduciary duty claims have been available since 1996.
at 8).

(Doc. #159

Plaintiffs reply that Rochow’s ruling regarding the

remedies available for breach of fiduciary duty claims broke new
ground, extending the law of this Circuit, and that Plaintiffs “are
clearly entitled to take advantage of intervening, ground-breaking
governing law . . . .”

(Doc. #161 at 15-16).

Defendants have also

filed a notice of supplemental authority noting that the Sixth
Circuit judges have voted to rehear Rochow en banc, the effect of
which is to vacate the Rochow decision.

(Doc. #163).

By the time Plaintiffs filed their complaint in this action on
May 3, 2011, it was already well established in this Circuit that
plaintiffs could bring claims for breaches of fiduciary duty in
ERISA cases, and could even do so alongside a claim for benefits in
certain circumstances.

Rochow, 737 F.3d at 424-25 (citing Hill v.

Blue Cross and Blue Shield of Michigan, 409 F.3d 710 (6th Cir.
2005); Gore v. El Paso Energy Corp. Long Term Disability Plan, 477
F.3d 833 (6th Cir. 2007)).

Rochow, which has now been vacated,

states that it is a “logical extension of the Hill exception to
Varity and Wilkins because §502(a)(1)(B) cannot provide all the
relief Rochow seeks.”

Rochow, 737 F.3d at 425.

While Plaintiffs

may have felt more confident in seeking disgorgement following
Rochow

than

they

did

when

they

filed

their

complaint,

they

certainly could have asserted a breach of fiduciary duty claim
seeking equitable relief generally.

Further, although Plaintiffs

may have chosen not to bring such a claim because they did not
believe they could recover money damages, the Court must still
consider the prejudice to Defendants in permitting the amendment at
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this juncture.

In light of the likelihood that Defendants will be

required to expend additional resources to conduct discovery, the
numerous dispositive motions that have been filed, and the two and
a half years that passed between the filing of the original
complaint and the filing of the present motion for leave to amend,
permitting the proposed breach of fiduciary duty claim will result
in

substantial

prejudice

to

Defendants.

Accordingly,

while

Plaintiffs have advanced a colorable argument for failing to make
this claim earlier, it does not rise to the level necessary to
defeat the prejudice to Defendants from adding this new claim.
IV.

Conclusion and Order

For the reasons set forth above, the Court grants in part and
denies in part Plaintiffs’ motion for leave to amend the complaint.
Plaintiffs are permitted to amend the complaint to add ORIX as a
defendant

in

relation

to

Plaintiffs’

retaliation

claim,

and

Plaintiffs are permitted to amend the complaint to add proposed
Exhibits 44 and 45 to the proposed amended complaint and the
factual allegations based on those documents.

Plaintiffs are not

permitted to amend the complaint to add proposed Count XIV (the
breach of fiduciary duty claim), to change the wherefore clause, or
to add a related substantive allegation.

(Doc. #153, Exh. 1 at ¶¶

399-409, as well as the proposed changes to the wherefore clause
and ¶11).

Plaintiffs are not permitted to amend the complaint to

add proposed paragraphs 261 and 264, which add new requests for
relief to the retaliation claim in Count II.

(Doc. #153, Exh. 1 at

¶¶ 261, 264). The remaining changes made in the amended complaint,
which appear to be non-substantive (extra spaces deleted, typos
corrected, etc.) have not been objected to by Defendants and will
be permitted.

Plaintiffs shall submit their amended complaint, in

conformance with the Court’s ruling as to its permissible content,
within fourteen days.
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V.

Procedure for Reconsideration

Any party may, within fourteen days after this Order is filed,
file and serve on the opposing party a motion for reconsideration
by a District Judge.

28 U.S.C. §636(b)(1)(A), Rule 72(a), Fed. R.

Civ. P.; Eastern Division Order No. 91-3, pt. I., F., 5.

The

motion must specifically designate the order or part in question
and the basis for any objection.

Responses to objections are due

fourteen

are

days

after

objections

filed

and

replies

by

the

objecting party are due seven days thereafter. The District Judge,
upon consideration of the motion, shall set aside any part of this
Order found to be clearly erroneous or contrary to law.
This order is in full force and effect, notwithstanding the
filing of any objections, unless stayed by the Magistrate Judge or
District Judge.

S.D. Ohio L.R. 72.4.
/s/ Terence P. Kemp
United States Magistrate Judge

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