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Ely v. Board of Trustees of Pace Industry Union-Management Pension Fund

United States District Court, D. Idaho

January 8, 2020

DONNIE ELY, a Participant in the PACE Industry Union-Management Pension Fund, Plaintiff,
v.
BOARD OF TRUSTEES OF THE PACE INDUSTRY UNION-MANAGEMENT PENSION FUND, Defendant.

          MEMORANDUM DECISION AND ORDER

          Honorable Candy W. Dale, United States Magistrate Judge.

         INTRODUCTION

         Before the Court is Plaintiff Donnie Ely's motion to compel production of documents, filed on October 21, 2019. (Dkt. 68.) Ely seeks to compel responses to Request Nos. 13, 14, and 15, which documents the Board of Trustees has withheld based on a claim of attorney-client privilege. Ely argues assertion of the attorney-client privilege is not appropriate, and also that the privilege log is inadequate because the descriptions of the documents withheld and explanations for redactions[1] do not provide sufficient information to enable him to evaluate whether a privilege or protection from disclosure exists. Ely requests relief in the alternative, asking the Court to either: (1) order the Board of Trustees to produce documents responsive to the requests; (2) order the Board of Trustees to amend its privilege log; or (3) order the Board of Trustees to submit all materials to which a privilege is claimed to the Court for an in camera inspection.

         The Court has carefully considered the parties' arguments and cited authorities, and will grant the motion in part, as explained below.[2]

         BACKGROUND

         Ely seeks to compel responses to Document Request Nos. 13, 14, and 15, which ask for the following documents:

• Document Request No. 13: ALL COMMUNICATIONS OR DOCUMENTS between the TRUSTEES AND its attorneys CONCERNING the REHABILITATION PLAN OR the AMENDED REHABILITATION PLAN.
• Document Request No. 14: To the extent not already produced in response to other requests, all COMMUNICATIONS OR DOCUMENTS received by the TRUSTEES CONCERNING the REHABILITATION PLAN OR the AMENDED REHABILITATION PLAN.
• Document Request No. 15: All COMMUNICATIONS OR DOCUMENTS between the TRUSTEES AND the FUND actuary CONCERNING the REHABILITATION PLAN OR the AMENDED REHABILITATION PLAN.

         The Board of Trustees contends that communications involving Fund counsel regarding adoption of and amendment to the Rehabilitation Plan are protected from disclosure by the attorney-client privilege, because the Board of Trustees was performing a settlor function when it initially adopted and later amended the Rehabilitation Plan. Ely argues the communications are not protected from disclosure, because the advice was prepared for the benefit of the Plan's beneficiaries, not for the trustees exclusively, and therefore the fiduciary exception to the attorney-client privilege applies.

         ANALYSIS

         1. Reasonableness Standard

         The Pension Protection Act of 2006 (“PPA”) was enacted to address problems associated with underfunded pension plans and introduced “a number of mechanisms aimed at stabilizing pension plans and ensuring they remain solvent.” Trustees of Local 138 Pension Trust Fund v. F.W. Honerkamp Co., 692 F.3d 127, 130 (2nd Cir. 2012). Among the PPA's provisions are “measures designed to protect and restore multiemployer pension plans in danger of being unable to meet their pension distribution obligations in the near future.” Id. Funds designated as being in “critical status” require the plan sponsor to adopt a rehabilitation plan. 29 U.S.C. § 1085(e)(1), ERISA § 305(e)(1).

         In the case of a plan in critical status, see 29 U.S.C. § 1085(b)(2), ERISA § 305(b)(2),[3] the Plan Sponsor must adopt a rehabilitation plan which imposes revised benefit structures, revised contribution structures, or both which “may reasonably be expected” to enable the plan to emerge from critical status in accordance with the rehabilitation plan. 29 U.S.C. § 1085(e)(1)(B)(i), ERISA § 305(e)(1)(B)(i). If the Plan Sponsor determines that, “based on reasonable actuarial assumptions and upon exhaustion of all reasonable measures, the plan cannot reasonably be expected to emerge from critical status” by the end of the ten-year rehabilitation period, the Plan Sponsor must adopt “reasonable measures” that would allow the plan “to emerge from critical status at a later time or to forestall possible insolvency….” 29 U.S.C. § 1085(e)(3)(A)(ii), ERISA § 305(e)(3)(A)(ii). Stated differently, the Plan Sponsor is required to act reasonably, and choose from various options those that will either restore the plan's financial health within a specified period of time, or delay eventual insolvency.

         The PPA was designed to: (1) impose tougher funding rules upon employers to ensure the money workers earned for retirement would be there, as promised by their employer; (2) prevent plan terminations and bankruptcies; and (3) shore up the finances of the Pension Benefit Guarantee Corporation so as to avoid a taxpayer bailout of the agency. 152 Cong. Rec. S8747-01, 152 Cong. Rec. S8747-01, S8747, 2006 WL 2224796. The overriding purpose of the PPA was to ensure “promises made to workers for their retirement will be promises kept by assuring the money needed is in the fund and by appropriately limiting when benefits may be increased, freezing future accruals, and restricting the rapid out-flow of lump sums and shutdown benefits when the plan gets into serious trouble.” 152 Cong. Rec. S8747-01, 152 Cong. Rec. S8747-01, S8747, 2006 WL 2224796.

         However, the PPA's drafters recognized that some multiemployer plans will not avoid collapse but, at the very least, the statutory changes effected by the PPA “will postpone” the possible collapse of some of those plans. 152 Cong. Rec. S8747-01, 152 Cong. Rec. S8747-01, S8749, 2006 WL 2224796; see also 29 U.S.C. § 1085(e)(3)(A)(ii), ERISA § 305(e)(3)(A)(ii) (defining a rehabilitation plan as one that consists of “reasonable measures to emerge from critical status at a later time or to forestall possible insolvency (within the meaning of section 4245).”). The PPA was enacted for the benefit of workers, to “strengthen the financial health of pension plans by doing as much as we can to guarantee that funds will be there to pay for employees hard-earned retirement benefits.” 152 Cong. Rec. S8747-01, 152 Cong. Rec. S8747-01, S8754, 2006 WL ...


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