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NICHOLS v. BOARD OF TRUSTEES

October 30, 1989

DONNA L. NICHOLS, et al., Plaintiffs,
v.
BOARD OF TRUSTEES OF THE ASBESTOS WORKERS LOCAL 24 PENSION PLAN, et al., Defendants


Aubrey E. Robinson, Jr. Chief United States District Judge.


The opinion of the court was delivered by: ROBINSON, JR.

AUBREY E. ROBINSON, JR., CHIEF UNITED STATES DISTRICT JUDGE

 Now ripe for disposition in this matter is Plaintiffs' Motion for Expedited Discovery and Defendants' Counter-Motions for Protective Order. Because the Court remanded the case to the Internal Revenue Service (a co-Defendant) in accordance with the instructions of the Court of Appeals, the Court denies Plaintiffs' Motion as premature, and grants Defendants' Motions for Protective Order.

 I. BACKGROUND

 Plaintiff Nichols is a beneficiary of a retirement trust. In 1980, he sued both the Board of Trustees of the Pension Plan ("the Board") and the Internal Revenue Service ("the IRS"), when the Board applied for and the IRS approved an amendment to the plan which retroactively reduced accrued benefits. With respect to the Board, Plaintiff alleged that it had violated its fiduciary duty by denying Plaintiffs the opportunity to participate in the Board's decision to seek the amendment. Specifically, by his complaint, Plaintiff sought access to "materials submitted to the IRS in support of the application for approval of the plan amendment." Plaintiff's Complaint at 4.

 Against the IRS, Plaintiff alleged that the agency denied him any opportunity to "participate in and comment upon" the Board's application, in violation of the Administrative Procedure Act ("the APA"). In addition, Plaintiff sought an order requiring the IRS to "release all pertinent documents" which the Board had submitted to the IRS in support of the application. *fn1"

 The action originally came before Judge John Lewis Smith. On cross-motions for summary judgment, Judge Smith denied Plaintiffs' claims and refused to invalidate the retroactive amendment. See Nichols v. Board of Trustees, No. 80-0563, slip op. (D.D.C. July 19, 1982). The Court of Appeals reversed. See Nichols v. Board of Trustees, 266 U.S. App. D.C. 304, 835 F.2d 881 (D.C.Cir. 1987). In an opinion primarily addressed to the IRS, the Court of Appeals first held that the IRS had not properly considered the statutory factors enumerated in the Employee Retirement Income Security Act ("ERISA") in considering the Board's application for amendment to the plan. The Court also held that under the APA, *fn2" the IRS should have allowed some participation by Plaintiffs in its proceedings on the matter. See id. at 890-99.

 In the end, the Court of Appeals vacated the IRS approval of the amendment, and ordered the agency to "reconsider whether and upon what conditions it will permit public participation in such proceedings. We thus remand the case to the District Court with instructions to return it to IRS for further proceedings." Id. at 899.

 The Court of Appeals limited its discussion of Plaintiffs' claims against the Board to a single footnote. See id. at 894 n. 100. It stated there that, contrary to the holding of the District Court, section 404 of ERISA *fn3" imposed obligations upon fund trustees that paralleled those from the common law of trusts. Thus, the Board's refusal to allow Plaintiffs a role in the disputed decision was to be measured by "the arbitrariness standard applied at common law." Id. The Court of Appeals believed that Plaintiffs' claim against the Board "posed a substantial question of breach of fiduciary duty." It nonetheless concluded, somewhat vaguely, that "because our remand ensures that plan beneficiaries will gain a renewed opportunity to participate in the agency's deliberations upon the amendment, further consideration of the claim is not warranted." Id.

 On May 3, 1988, Judge Smith issued an Order remanding the matter to the IRS "for further proceedings in accordance with the findings expressed in the Court of Appeals opinion of December 11, 1987." Judge Smith added that the Court would retain jurisdiction "pending completion of the Internal Revenue Service determination." Since that time, the action has been reassigned to this Court, which issued an Order requiring the IRS to inform the Court of its final ruling in the matter. On September 11, 1989 the IRS replied that it had begun a new 90 day period to consider the Board's application. According to the IRS, this occurred because Plaintiffs requested an extension, and because both Plaintiffs and the Board made extensive documentary submissions in July and August of this year.

 II. THE PARTIES' CURRENT DISPUTE

 Immediately prior to the IRS' most recent report to the Court, Plaintiffs filed a motion for expedited discovery of all documents submitted by the Board and by the Asbestos Contractors Association, Inc., in support of its application. The Board and the IRS opposed the motion, and themselves moved for a protective order. The Board and the IRS have provided Plaintiffs with some documents, but withheld others. The materials at issue are the submissions of individual contributing employers and associations of such employers. Some of these materials were specifically requested by the IRS and relate to the issue of contributors' economic hardship -- one of the statutory factors for IRS consideration under the relevant ERISA provision. See ERISA § 302(c)(8), 29 U.S.C. § 1082(c)(8) (1982) (incorporating ERISA § 303(b), 29 U.S.C. § 1083(b) (1982)).

 The IRS opposes the discovery on the ground that IRS procedures do not require it. In support of its position, the IRS cites the Court of Appeals decision ordering it to fashion procedures for the participation of plan beneficiaries in the application process. As mentioned above, the Court of Appeals held that such beneficiaries were interested persons entitled to limited participatory rights. The Court noted that agencies have "broad discretion in fashioning rules to govern public participation" in agency proceedings. Nichols, 835 F.2d at 899. *fn4" In addition, the Court of Appeals denied that the IRS should necessarily fear the loss of its ability to prevent disclosure of confidential information:

 
The agency's authority to shape the manner in which interveners will participate in [ERISA] section 302(c)(8) proceedings provides ample protection against the potential release of confidential ...

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