Jensen v. Solvay Chemicals, Inc.

• Decision Date: 18 October 2007
• Docket Number: No. 06-CV-273 J.,06-CV-273 J.
• Citation: 520 F.Supp.2d 1349
• Parties: Wade E. JENSEN and Donald D. Goff, individually and on behalf of all others similarly situated, Plaintiffs, v. SOLVAY CHEMICALS, INC., Solvay America, Inc., and Solvay America Companies Pension Plan, Defendants.
• Court: U.S. District Court — District of Wyoming

520 F.Supp.2d 1349

Wade E. JENSEN and Donald D. Goff, individually and on behalf of all others similarly situated, Plaintiffs, v. SOLVAY CHEMICALS, INC., Solvay America, Inc., and Solvay America Companies Pension Plan, Defendants.

No. 06-CV-273 J.

United States District Court, D. Wyoming.

October 18, 2007.

Richard H. Honaker, Honaker Law Offices, Rock Springs, WY, Stephen R. Bruce, Law Offices of Stephen R. Bruce, Washington, DC, for Plaintiffs.

J. Richard Hammett, Scott M. Nelson, Baker & McKenzie, Houston, TX, Paul J. Hickey, Hickey & Evans, Cheyenne, WY, for Defendants.

ORDER GRANTING PLAINTIFFS' MOTION TO SET ASIDE JULY 11, 2007 ORDER DENYING MOTION FOR DISCOVERY

ALAN B. JOHNSON, District Judge.

This matter came before the Court on Plaintiffs' Motion to Set Aside July 11, 2007 Order Denying Motion for Discovery. The Court, having read the parties' briefs, listened to oral arguments, and being fully advised in the premises, FINDS and ORDERS as follows:

Factual and Procedural Background

On January 1, 2005, Solvay America Companies Pension Plan amended its defined benefit pension plan. Plaintiffs Wade El Jensen and Donald D. Goff allege in a Complaint filed November 15, 2006, that the structuring of the amendment freezes the retirement benefits of older, longer-service employees and offers lower rates of benefit accrual at older ages. Further, Plaintiffs allege that Defendants violated ERISA by failing to provide adequate notice of the changes. Before filing the present action, but after filing age discrimination complaints with the Wyoming Labor Standards Board, Plaintiffs' counsel sent a letter to Solvay America Companies' Plan administrator describing the claims and requesting relief. Solvay replied in a letter dated April 10, 2006, stating that Plaintiffs' letter was being treated as a claim for benefits. Solvay's "Administrative Committee" subsequently sent Plaintiffs a response letter, dated August 31, 2006, that denied each claim. On September 8, 2006, Plaintiffs sent a letter requesting information relating to the denial. The Solvay America Companies' Pension Plan Administrative Committee responded on October 13, 2006, enclosing documents related to the request. The Plaintiffs did not pursue further remedies with Solvay and this action was filed on November 15, 2006.

Plaintiffs specifically allege claims for (1) age discrimination stemming from a pension benefit freeze, (2) violation of ERISA's accrual requirements and (3) nonforfeitability rules, (4) reduced rates of benefit accrual based on age, (5) inadequate notice of reductions, and (6) inadequate summary of material modifications. Plaintiffs allege that these claims spring from the January 1, 2005 amendment to the defined benefit pension plan. Plaintiffs ask for relief from Solvay Chemicals, Inc., Solvay America, Inc., and Solvay America Companies Pension Plan (collectively "Solvay"). Plaintiffs filed a PLAINTIFFS' MOTION FOR DISCOVERY with accompanying brief on April 27, 2007. DEFENDANTS' BRIEF IN RESPONSE TO PLAINTIFFS' MOTION FOR DISCOVERY was filed on March 21, 2007. A subsequent PLAINTIFFS' REPLY BRIEF IN SUPPORT OF MOTION FOR DISCOVERY was filed on June 11, 2007. Magistrate Judge William C. Beaman issued an ORDER DENYING PLAINTIFFS' MOTION FOR DISCOVERY on July 11, 2007. Following this order, PLAINTIFFS' MOTION TO SET ASIDE JULY 11, 2007 ORDER DENYING MOTION FOR DISCOVERY with accompanying brief was filed July 27, 2007. DEFENDANTS' RESPONSE TO PLAINTIFFS' MOTION TO SET ASIDE JULY 11, 2007 ORDER was filed on August 10, 2007. Oral arguments in this matter were heard on September 14, 2007.

Standard of Review

A magistrate judge's nondispositive order can only be set aside by a district judge if it is "clearly erroneous or contrary to law." 28 U.S.C. § 636(b)(1)(A), Fed.R.Civ.P. 72(a); U.S.D.C.L.R. 74.1(a). Acting "similar to an appellate court[,]" the district court will review the magistrate's order pursuant to this "clearly erroneous or contrary to law" standard of review. Clark v. Poulton, 963 F.2d 1361, 1371 (10th Cir.1992). Under the "clearly erroneous" standard, the district court must affirm the magistrate's order unless it has a definite and firm conviction that an error has occurred. Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1464 (10th Cir.1988); see also Parts and Elec. Motors, Inc. v. Sterling Elec., 866 F.2d 228, 236 (7th Cir.1988) ("To be clearly erroneous, a decision must strike us as more than just maybe or probably wrong."). Moreover, "[b]ecause a magistrate judge is afforded broad discretion in the resolution of nondispositive discovery disputes, the court will overrule the magistrate judge's determination only if this discretion is clearly abused." Hinsdale v. City of Liberal, 981 F.Supp. 1378, 1379 (D.Kan.1997). Under the "contrary to law" standard, the district court conducts a plenary review of the magistrate judge's purely legal determinations, setting aside the magistrate judge's order only if it applied an incorrect legal standard. Wyoming v. United States Department of Agriculture, 239 F.Supp.2d 1219, 1236 (D.Wyo.2002) (citing Wright, Miller &amp Marcus, FEDERAL PRACTICE AND PROCEDURE § 3069, at 350 (1997 & Supp.2002)). "In sum, it is extremely difficult to justify alteration of the magistrate judge's nondispositive actions by the district judge." Id. at § 3069, at 350-51; see also Hayes v. Woodford, 301 F.3d 1054, 1067 n. 8 (9th Cir.2002).

Analysis

Plaintiffs ask the Court to set aside the July 11, 2007 Order of Magistrate Judge William C. Beaman. In that Order, Judge Beaman denied Plaintiffs' Motion for Discovery holding that, in ERISA cases, "judicial review is limited to the administrative record and any outside discovery is not allowed, except in unusual circumstances." (Ord. Den. Pls.' Mot. for Disc. 8) (citing Hall v. Unum Life Insurance Co. of America, 300 F.3d 1197 (10th Cir.2002)). In reaching that holding, Magistrate Beaman found that Plaintiffs Jensen and Goff's ERISA claims were claims for plan benefits. Further, on Plaintiffs' ADEA claims, Judge Beaman ruled that

[a]llowing discovery beyond the record for plaintiffs' ADEA claims would allow plaintiffs to circumvent ERISA's purpose to efficiently and expeditiously resolve disputes without burdensome discovery. Therefore, the Court will not support discovery in an ERISA case by allowing claims under another federal statute to create a situation where discovery takes places where it otherwise would not.

(Ord. Den. Pls.' Mot. for Disc. 11). In conclusion, Judge Beaman ordered that review of the case was limited to the record, and supplementation of the record would only be allowed upon a determination by the trial court of necessity to adequate review of the case. Id.

Plaintiffs argue that the order was contrary to law and clearly erroneous. Plaintiffs contend that Fed.R.Civ.P. 26(b)(1) is inconsistent with an order denying discovery on a blanket basis, nor can the Court abdicate control of the discovery process to one of the adversaries in the dispute. Further, Plaintiffs argue that these claims are for statutory violations for which exhaustion of internal procedures is not required and for which a trial must be conducted de novo. Plaintiffs also claim a right to discovery on the ADEA § 4(a) claims. Finally, they argue that Judge Beaman's Order shifts all future discovery decisions to the trial court and overlooks the problems created by limiting evidence selection to one party.

Defendants counter that discovery beyond the administrative record would circumvent ERISA's rules requiring development of the record through exhaustion of administrative remedies. Solvay further argues that under any applicable standard of review, discovery should be limited to the record. Defendants also counter that the Plaintiffs' ADEA claims mirror the ERISA claims and additional discovery is therefore improper.

This Court, in its Order Denying Plaintiffs' Motion to Dismiss, ruled that Jensen and Goffs claims are claims for enforcement of statutory rights and not subject to a requirement of exhaustion of administrative remedies. (Ord. Den. Pls.' Mot. to Dismiss 6). In ruling that "exhaustion in this instance is unnecessary and excused" this Court creates a logical requirement of further discovery for these parties. The requirement for a complete and thorough record of the underlying administrative proceedings was deemed unnecessary by the nature of the claims, and therefore the limitations on discovery imposed by Judge Beaman's order are illogical and unworkable. Judge Beaman's order was based upon an assumption of the type of claims that was contrary to the later findings of this Court. That order is therefore correct in the legal reasoning it followed but incorrect in the facts predicating the reasoning. This Court's conclusions and findings here require a more thorough and in-depth legal and factual analysis than utilized in the Order Denying Defendants' Motion to Dismiss.

The Tenth Circuit, in Millsap v. McDonnell Douglas Corp., succinctly and clearly analyzed the purposes of ERISA and its civil enforcement provisions. 368 F.3d 1246, 1249-1250 (10th Cir.2004). It stated:

ERISA regulates employee pension and welfare benefit plans. See 29 U.S.C. §§ 1002(1)-(2), 1003(a); Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 44, 107 S.Ct. 1549, 95 L.Ed.2d 39 (1987). Congress designed ERISA "to promote the interests of employees and their beneficiaries in employee benefit plans." Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990) (internal quotations and citation omitted). ERISA's "complex and detailed" statutory scheme "resolved innumerable disputes between powerful competing interests-not all in favor of potential plaintiffs." Mertens v. Hewitt Assoc., 508 U.S. 248, 262, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). Federal courts interpreting ERISA must take into account those competing interests, "such as Congress' desire...