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Wagener v. SBC Pension Benefit Plan-Non-Bargained Program

March 26, 2007


The opinion of the court was delivered by: Royce C. Lamberth, United States District Judge


Pending before the Court is defendant's Motion for a Protective Order [45], and plaintiff's Opposition to defendant's Motion for a Protective Order and Cross-Motion to Compel Responses to Discovery and Enforce Subpoenas [54]. These motions involve closely related issues, and the Court will resolve these two motions together in one Memorandum Opinion and Order. For the reasons set forth below, the Court has determined that defendant's Motion for a Protective Order shall be GRANTED and plaintiff's Cross-Motion to Compel shall be DENIED.


Defendant SBC Pension Benefit Plan -- Non-Bargained Program ("the Plan"), pursuant to Rule 26 of the Federal Rules of Civil Procedures has filed a motion for Protective Order With Respect to the Scope of Discovery. The named plaintiffs represent a class of employees who received an enhanced pension benefit from the Plan in connection with an early retirement program ("EPR"). (Def.'s Mot. 1.) SBC Communications, Inc. ("SBC") is the Plan sponsor and is a named fiduciary of the Plan. The Benefit Plan Committee ("BPC") is another named fiduciary of the Plan, and has primary responsibility for the review of claims for benefits under the Plan. (Pl.'s Opp. 10.)

Plaintiffs worked for companies that are affiliated with the Plan sponsor, SBC Communications, Inc. ("SBC"). Plaintiffs Marian Wagener and Donald Champoux are both participants in the Plan and, in November 2000, they retired pursuant to an enhanced benefit program that was designed to encourage early retirement. The calculation of benefits under the terms of this program depends in part on the amount of a participant's compensation between January 1, 1995 and December 31, 1999. The plaintiffs' suit turns on how to calculate their compensation during this period. According to the defendant, plaintiffs' compensation between January 1, 1995 and December 31, 1999 includes only the amount of pay plaintiffs actually received during this period, thus excluding a paycheck that Wagener and Champoux received on January 5, 2000 for work they performed in 1999. By contrast, Wagener and Champoux argue that their level of compensation for benefit calculation purposes includes compensation earned between January 1, 1995 and December 31, 1999, even though one paycheck for this period was received at the beginning of the 2000 calendar year. They also allege that other similarly situated Plan participants have been paid benefits based on compensation earned, not received, in the base period, thus confirming their entitlement to benefits under a non-discrimination clause in the Plan.

The named plaintiffs and three other EPR beneficiaries sought additional benefits from the Plan based on their claim that 23 rather than 24 pay periods were included in the compensation for 1999 that was used to compute Average Annual Compensation for purposes of calculating the EPR benefit. (Def.'s Mot. 1-2). Their benefit claims were then denied by the BPC. (Id. 2). The BPC's decision to deny their claims was based on its interpretation of the amendments that required the use of actual base pay rather than the basic rate of pay, in computing the Average Annual Compensation (the "actual base pay amendments"). (Id.). This Court, finding the BPC's interpretation to be reasonable, dismissed the plaintiffs' Complaint. (Id.)

Plaintiffs appealed to the United States Court of Appeals for the District of Columbia Circuit. See Wagener v. SBC Pension Benefit Plan -- Non-Bargained Program, 401 F.3d 395 (D.C. Cir. 2005). The D.C. Circuit held that if the otherwise reasonable interpretation of "actual base pay" was contrary to the way in which another provision of the Plan had been applied (referred to by the court as the "equal treatment clause"), the BPC's decision to deny benefits would be unreasonable. Id. at 403-04. Therefore, the D.C. Circuit sent the case back to this Court to determine whether the interpretation of "actual base pay" rendered by the BPC "or other Plan fiduciaries with responsibility for construing and administering the Plan" was inconsistent with the equal treatment clause. Id. at 404. The D.C. Circuit also acknowledged that plaintiffs claimed the BPC operated under a conflict of interest, because plaintiffs alleged that the Plan was "underfunded" at the time the BPC made its decisions. Id. at 402. The D.C. Circuit remanded the case to this Court.


A. Standard of Review

A participant or beneficiary of an employee benefit plan may file suit under ERISA Section 502(a)(1)(B) "to recover benefits due to him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B). In Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 115, (1989), the Supreme Court held that federal courts must apply a de novo standard of review to a denial of benefits challenged under section 1132(a)(1)(b), "unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan". "In this later category of cases, the standard of review -- variously described by the Court as 'arbitrary and capricious' and 'abuse of discretion' review -- is plainly deferential." Wagener, 407 F.3d at 402 (citing Firestone, 489 U.S. at 111-115.). Courts within this jurisdiction have allowed discovery in order to determine whether a conflict of interest exists because "information regarding a potential conflict of interest will be relevant to the trial court's determination of the applicable standard of review." See, e.g., Pulliam v. Cont'l Cas. Co., 2003 WL 1085939, at *3 (D.D.C. Feb. 27, 2003); Hurley v. Life Ins. Co. of N. Am., 2006 WL 1883406 (D.D.C. July 9, 2006). At this time, however, the Court will not determine which standard is applies in the instant case.

B. Motion to Compel

The Court notes that the plaintiffs listed several specific requests in their Cross-Motion to Compel (Pl.'s Opp. 55-64), but withdrew their motion with respect to RFP No. 29, Subpoenas ¶ 27; RFP No. 41, Subpoenas ¶ 39; and Interrogatory No. 4 based on the representations obtained. (Pl.'s Reply 29 n. 38.)

1. Request for Production No. 1

This request asks for "all documents concerning the history, purpose, consideration, planning, analysis, drafting, adoption, or proposed adoption of the Actual Base Pay Amendments." (Pl.'s Reply Br. 30.) The plaintiffs describe this as the "legislative history" of the amendments. (Id.) However, the Plan argues that the history and purpose of the amendments are not part of the administrative record. (Def.'s Reply 36-39.) The Plan argues that BPC did not participate in the creation and adoption of the amendments, and that those duties were left to SBC. (Def. Reply 36.) The Plan also argues that SBC does not have authority to make final determinations of benefits claims. (Id.) The BPC is the sole fiduciary for responsible interpretation and final resolutions of claims under the Plan. (Id. 32-43.) Therefore, the Plan argues that only ...

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