The opinion of the court was delivered by: A. Richard Caputo, United States District Judge
Currently before the Court is Plaintiffs' Motion to Bar Discovery Concerning Changes in Assessed Withdrawal Liability that was made orally at the discovery conference held in chambers on September 15, 2008. For the reasons stated below Plaintiffs' motion will be granted.
The Court has jurisdiction in this matter pursuant to 28 U.S.C. §§ 1331 and 1337.
Plaintiffs Romney and Thomas, trustees and fiduciaries of the UNITE National Retirement Fund ("the Fund"), filed their Complaint (Doc. 1) in the current case on April 25, 2007 in attempt to collect unpaid withdrawal liability from Rosal Sportswear ("Rosal"), Rose Boni, Cataldo Boni, Tonia Boni, Lorena Boni, and Pat Boni. According to the Complaint, Rosal permanently ceased its manufacturing operations in September of 2002, effecting a "complete withdrawal" from the Fund, by which it became liable to the Fund for withdrawal liability under section 4201(a) of the Employee Retirement Income Security Act of 1974 ("ERISA"). The Fund determined Rosal's withdrawal liability to be two hundred twenty-six thousand and eighty-six dollars ($226,086.00) and provided Rosal with written notice of the amount along with a demand for payment on or about March 6, 2003. Rosal did not pay the demanded amount and failed to exercise its options under ERISA to request a review of the Fund's calculation within ninety (90) days of receiving the notice of liability or initiate arbitration within one hundred twenty (120) days. The Fund provided Rosal with the appropriate written notice of its default in payment, and subsequently commenced an action in the United States District Court for the Southern District of New York, seeking to recover the withdrawal liability. After appropriate service of process, Rosal did not appear, answer or defend against this action, and the court entered a Judgment in Default against Rosal for the liability and accrued interest for a total of two hundred fifty thousand, nine hundred seventy-two dollars and thirty-two cents ($250,972.32).
On May 10, 2004, the judgment from the Southern District of New York was entered on the docket of the United States District Court for the Eastern District of Pennsylvania, and the Fund, in an attempt to satisfy the judgment, initiated supplemental proceedings to locate assets of Rosal, related entities, and related individuals. Through these proceedings, the Fund learned that Rosal no longer has any assets or property of record. The Fund alleges that Defendant Rose Boni, the former chief executive officer and sole stockholder of Rosal Sportswear, caused all the assets of Rosal to be transferred to herself and the other members of her family who are now Defendants in the current action.
Plaintiffs filed their Complaint initiating the current action on April 25, 2007, therein asserting nine Counts against Defendants. On June 11, 2007, the Defendants filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12. (Doc. 7.) On September 14, 2007, the Court entered an Order granting Defendants motion to dismiss Counts IV through IX of the Complaint and denying Defendants motion to dismiss Counts I through III. (Doc. 15.) Defendants filed their Answer to the Complaint along with affirmative defenses on October 5, 2007 (Doc. 19) and, following a case management conference, the Court entered an Order on January 24, 2008 assigning the case to the "standard" case management track (Doc. 22). On August 23, 2008, the Court received a letter from Plaintiffs' counsel requesting an in-person conference to discuss a discovery issue arising out of Defendants' efforts to obtain information about changes in assessed withdrawal liability. (Doc. 25.)
The Court held this conference and heard arguments from both Plaintiffs and Defendants on September 15, 2008. At the conference, Plaintiffs made an oral motion to bar discovery concerning changes in assessed withdrawal liability, arguing that Defendants are seeking to conduct discovery concerning the Fund's calculation of the amount of Plaintiffs' withdrawal liability and the Fund's efforts to collect withdrawal liability from other employers. Plaintiffs argue that the information and documents sought by the Defendants do not and cannot reasonably bear on any issue or matter that may be involved in any of Defendants' defenses. For this reason, Plaintiffs urge the Court to find that the Defendants cannot sustain the burden of making a clear showing that the information and documents sought are relevant to any claims in this matter.
In response, the Defendants explain that prior to the alleged cessation of operations in September 2002, Rosal received several letters from the Fund indicating the amount of its expected withdrawal liability. Letters dated in December 1996 and March 2001 indicated that Rosal's anticipated withdrawal liability was zero ($0.00) and a letter dated August 19, 2002 advised that Rosal's anticipated withdrawal liability was seventeen thousand two hundred thirty-five dollars ($17,235.00). The next letter that Rosal received, dated March 6, 2003, assessed their withdrawal liability to be two hundred twenty-six thousand and eighty-six dollars ($226,086.00). The Defendants state that they are seeking discovery to determine the bases and reasons for the drastic increase in withdrawal liability occurring between August 2002 and March 2003.
Defendants submitted a brief in opposition to Plaintiffs' motion on September 29, 2008 (Doc. 30) and Plaintiffs submitted a reply brief on October 14, 2008 (Doc. 31). Plaintiffs' motion has been fully briefed and is currently ripe for disposition.
In their brief opposing Plaintiffs' motion (Doc. 30), Defendants argue that the information they seek to explore is within the broad scope of permissible discovery created by Federal Rule of Civil Procedure 26(b)(1), which states, in part, that:
Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense--including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter.
Fed. R. Civ. P. 26(b)(1). Defendants further argue that the information they seek is specifically relevant to Counts I ...