Pedersen v. Kinder Morgan, Inc.
| Docket Number | 4:21-CV-3590 |
| Decision Date | 02 November 2023 |
| Parties | CURTIS T. PEDERSEN, et al., Plaintiffs, v. KINDER MORGAN, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
Before the Court is Defendants' Motion for a Protective Order Preventing Plaintiffs from Deposing Bethany Bacci, Esq., ECF No. 140, and Motion for a Protective Order Preventing Plaintiffs from Deposing Norma Ortega and Eddie Ammons, ECF No. 141. Plaintiffs filed responses. ECF Nos. 146, 147. Defendants filed replies. ECF Nos. 153, 158. The Court denies both motions because Defendants have not established good cause for a protective order. Each of these three witnesses possess unique information and knowledge relevant to Plaintiffs' claims under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C §1132(a)(1)(B) and (a)(3) (“§ 502 (a)(1)(B) and (a)(3)).
This is an ERISA matter.[1] Plaintiffs bring six separate claims.
Earlier in the litigation, Defendants filed a motion for judgment on the pleadings seeking to limit Plaintiffs' ability to bring claims under § 502(a)(3). Relevant to discovery, Judge Ellison stated in the Memorandum and Order (“M&O”) addressing Defendants' motion:
The reason defendants are so keen to prevent plaintiffs from bringing claims under Section 502(a)(3) as opposed to 502(a)(1)(B) is because the remedial scheme for claims brought under 502(a)(1)(B) severely limits discovery.... In contrast, claims brought under 502(a)(3) are not typically reviewed solely for abuse of discretion and do not have the same limitations on discovery and, therefore, can result in much more costly and time-consuming litigation.
M&O, ECF No. 77 at 12. In deciding the motion, Judge Ellison permitted four of Plaintiffs' six claims to proceed under § 502(a)(3) and its less restrictive discovery procedures.
In Claim I under § 502(a)(1)(B), “Plaintiffs ask the Court to ‘interpret' the Kinder Morgan Plan's provisions so that the denominator in the fraction calculating participants' benefits is limited to the maximum number of years of participation that the plan's normal retirement benefit formula credits.” Id. at 15 (cleaned up). In Claim II under § 502(a)(3), Plaintiffs ask the Court to amend the Plan, and “point to the Kinder Morgan Plan language that removed the 30-year cap on the denominator, this time claiming that the change to the language violated ERISA's Anti-Cutback provisions.” Id. at 16. In Claim III under § 502(a)(3), “Plaintiffs claim that the Summary Plan Descriptions (“SPDs”) sent to plan participants were ambiguous,” and do not ask the Court to deal with the terms of the Plan at all. Id. In Claim IV under §502(a)(3), Plaintiffs ask the Court to amend the Plan, and claim that an earlier amendment of the Plan, which ended a former employer's policy of granting early retirement eligibility to employees who had turned 55 and completed ten years of service, but allowed employees who were already 53 and older to keep the previous early retirements, violated ERISA's anti-cutback protection for early retirement benefits. Id. at 16-17. In Claim V under § 502(a)(1)(B), Plaintiffs ask the Court to interpret the Plan, and argue that Kinder Morgan's interpretation of the grandfather clause as only applying to the .3% of final average earnings multiplied by years of service is incorrect. Id. at 17. In Claim VI under § 502(a)(3), Plaintiffs “insist that the mortality table and interest rate the Kinder Morgan Plan uses to calculate the ‘Vested Termination Reduction Factor' is outdated and out of compliance with ERISA,” and ask the Court to amend the Plan, “using a 4% interest rate instead of an 8% interest rate, and using the mortality table currently prescribed by ERISA §205(g)(3).” Id.
Here, the Parties dispute whether Plaintiffs may depose Bethany Bacci, Norma Ortega, and Eddie Ammons. Defendants argue that these witnesses only possess knowledge relevant to Plaintiffs' § 502(a)(1)(B), but Plaintiffs have not shown these witnesses' potential testimony relates to the administrative record or one of the exceptions to § 502(a)(1)(B)'s strict discovery procedures. Further, Defendants argue that even if permitted under ERISA, these depositions will be duplicative of other discovery already propounded in this case.
Under Rule 26(c), “[t]he court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense . . . forbidding the disclosure or discovery [and] forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters.” FED. R. CIV. P. 26(c)(A), (D). “[T]he burden is upon [the party seeking the protective order] to show the necessity of its issuance, which contemplates a particular and specific demonstration of fact as distinguished from stereotyped and conclusory statements.” In re Terra Int'l, 134 F.3d 302, 306 (5th Cir. 1998) (citation omitted). “A protective order is warranted in those instances in which the party seeking it demonstrates good cause and a specific need for protection.” Curtis v. Metro. Life Ins. Co., No. 3:15-CV-2328-B, 2016 WL 687164, at *2 (N.D. Tex. Feb. 19, 2016) (citing Landry v. Air Line Pilots Ass n, 901 F.2d 404, 435 (5th Cir. 1990)). The Court has broad discretion in determining whether to grant a motion for a protective order. Id. (citing Harris v. Amoco Prod. Co., 768 F.2d 669, 684 (5th Cir. 1985)).
“[D]iscovery regarding fiduciary duty claims under ERISA § 502(a)(3) should not be limited to the administrative record and should, instead, be governed by the general scope of discovery provided by Rule 26(b).” Manuel v. Turner Indus. Group, LLC, No. CV 14-599-SDD-RLB, 2021 WL 1187072, at *5 (M.D. La. Mar. 29, 2021) (collecting cases). Rule 26(b)(1) provides that “[p]arties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense.” FED. R. CIV. P. 26(B)(1). The Rule specifies that “[r]elevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.” Id. Under Rule 26(b)(2)(c), such discovery may be limited if: (1) the discovery sought is unreasonably cumulative or duplicative, or is obtainable from another, more convenient, less burdensome, or less expensive source; (2) the party seeking discovery has had ample opportunity to obtain the discovery sought; or (3) the burden or expense of the proposed discovery outweighs its likely benefit. FED. R. CIV. P. 26(B)(2)(C).
However, under § 502(a)(1)(B), the Fifth Circuit “prohibits the admission of evidence to resolve the merits of the coverage determination-i.e. whether coverage should have been afforded under the plan-unless the evidence is in the administrative record.” Crosby v. La. Health Serv. & Indem. Co., 647 F.3d 258, 263 (5th Cir. 2011). In addition to the administrative record, a claimant may question the: (1) completeness of the administrative record; (2) how plan administrators or fiduciaries have interpreted the plan in previous instances; (3) whether the plan administrator complied with ERISA's procedural regulations; and (4) the existence and extent of a conflict of interest created by a plan administrator's dual role in making benefits determinations and funding the plan. See id.
Notably, “[i]n this circuit, the burden is on the party resisting discovery to show how each discovery request is not relevant or is otherwise objectionable.” Revels v. Standard Ins. Co., 504 F.Supp.3d 556, 563 (N.D. Tex. 2020) (emphasis added) (citing McLeod, Alexander, Powel and Apffel, P.C. v. Quarles, 894 F.2d 1482, 1485 (5th Cir. 1990); Chavez v. Standard Ins. Co., No. 3:18-CV-2013-N, 2019 WL 1767000 (N.D. Tex. Apr. 22, 2019) ()).
Ms. Bethany Bacci is an attorney at Stoel Rives, LLP, who has “served as counsel to Kinder Morgan,” ECF No. 140 at 2, and counsel for the Plan, ECF No. 147 at 5.[2]
Defendants argue that Plaintiffs should be prevented from deposing Bacci for two reasons. First, Defendants argue that Plaintiffs' deposition of Bacci seeks “discovery beyond the administrative record,” and Plaintiffs have not established one of the four Crosby exceptions. Id. at 2. Second, Defendants argue that Plaintiffs' deposition of Bacci would be duplicative of discovery already conducted by Plaintiffs, namely the depositions of Mark Smith, the Claims Administrator for the Plan, and Chris Noonan, a Benefits Director who reports to Smith. Defendants also contend that even if the Court allows the deposition of Bacci, the Court should limit the deposition to “only topics that fall within the fiduciary exception to the attorney-client privilege-i.e., those that relate to advice concerning Plan administration that Ms. Bacci personally provided to Plan fiduciaries acting within the scope of their fiduciary duties.” Id. at 13.[3] Plaintiffs assert that Bacci possesses information relevant to their § 502(a)(1)(B) and (a)(3) claims, namely in her possession of her predecessor's notes and her knowledge of Fiduciary Committee meetings concerning Plan administration.[4]
Indeed Bacci has unique knowledge relevant to Plaintiffs' claims under § 502(a)(1)(B) and (a)(3). The Plan's Fiduciary Committee Minutes from February 13, 2020 show that Bacci “provided a thorough review of [Plaintiff Schmidgall's][5] appeal and materials circulated to the Committee, and responded to questions,” and then the Committee directed Stoel Rives to draft a “preliminary letter regarding the...
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