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Ramos v. Banner Health

United States District Court, D. Colorado

August 8, 2018

LORRAINE M. RAMOS, et al., Plaintiffs,
BANNER HEALTH, et al., Defendants.


          William J. Martínez, United States District Judge

         Plaintiffs Lorraine M. Ramos and others assert claims under Section 502 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132, against Defendants Banner Health and several of its officers (collectively, “Banner”) as well as against Jeffrey Slocum & Associates, Inc. (“Slocum”). This case is currently before the Court on Plaintiffs' Motion to Compel Supplementation of the Banner Defendants' Discovery Responses (the “Motion”) (ECF No. 258) and Special Master John P. Leopold's Report No. 7 concerning the Motion (ECF No. 267).[1] Plaintiffs seek production of five categories of documents related to materials prepared, developed, and used at meetings of the Banner Health Retirement Plans Advisory Committee (“RPAC”) and the Banner Investment Committee (“IC”), quarterly asset balances through the present, Plan participant counts through the present, and a spreadsheet related to a 2016 audit. The discovery dispute was referred to Special Master Leopold for a recommendation, which he provided on January 16, 2018 by way of Report No. 7. (ECF No. 267.)

         For the reasons discussed below, the Court concurs in part with the Special Master and orders Banner to produce the 2016 RPAC minutes and materials. The Court rejects the Special Master's recommendation on the quarterly asset balances and Plan participant counts, and orders Banner to produce documents with such information through November 30, 2017. In addition, because the Special Master recommendation did not directly address the audit spreadsheet, the Court reviewed the underlying Motion and now orders production of the subject document.

         I. BACKGROUND

         The parties are familiar with the factual and procedural background of this case, so an exhaustive review is unnecessary. The facts relevant to the instant dispute as set forth below are drawn primarily from Plaintiffs' Amended Complaint (ECF No. 118) and the parties' briefing on the Motion and on the Special Master's recommendation (ECF Nos. 258, 264, 265, 269-1, 272).

         Plaintiffs are participants in Banner's 401(k) employee retirement plan (the “Plan”). The Plan assets are held in trust, with a trustee appointed by Banner. Banner Health is the named fiduciary of the Plan, as well as Plan administrator within the meaning of ERISA. See 29 U.S.C. §§ 1002(16)(A) & 1102(a).

         Banner selected Fidelity Management Trust Company (“Fidelity”) to provide recordkeeping and administrative services to the Plan. Banner also hired Defendant Slocum as a third-party investment consultant to act as a fiduciary for investment and administration of Plan assets. Slocum was responsible for reviewing investment policy statements that governed the Plan and investment options in the Plan.

         The parties agree that RPAC was a fiduciary to the Plan responsible for day-today Plan operations, selecting investment options, and evaluating fees. (ECF No. 258 at 4; ECF No. 264 at 3.) The IC was an authorized subcommittee of the Banner Health Board of Directors that was responsible for monitoring performance of the CEO. (ECF No. 258 at 4; ECF No. 264 at 3; ECF No. 269-1 at 4.) Plaintiffs claim that the IC was a fiduciary to the Plan. (ECF No. 269-1 at 4.) Banner Defendants disagree. (ECF No. 264.)

         Plaintiffs commenced this class action litigation on November 20, 2015, alleging five separate causes of action. (ECF No. 1.) Relevant to this discovery dispute, Plaintiffs allege that Defendants breached their fiduciary duties to Plaintiffs by allowing Fidelity to collect excessive recordkeeping and administrative fees from the Plan, and by failing to assure that compensation paid to Fidelity and Banner Health was reasonable for the administrative services provided. (ECF No. 118 ¶¶ 62-80, 120-30). On March 28, 2018, the Court granted class certification of Plaintiffs' claims against Banner, defining the class as “[a]ll participants and beneficiaries of the Banner Health Employees 401(k) Plan from November 20, 2009 through the date of judgment, excluding the Defendants.” (ECF No. 296.)

         In late 2017, Plaintiffs moved to compel production of certain documents. (ECF No. 258.) The Court referred the discovery dispute to Magistrate Judge Michael J. Watanabe, who in turn referred it to Special Master Leopold with instructions to review the Motion and provide the Court with a written report and recommended ruling. (ECF Nos. 55, 261.) Special Master Leopold submitted Report No. 7 on the Motion on January 16, 2018. (ECF No. 267.) Plaintiffs timely filed an objection (ECF No. 268) and, though not explicitly contemplated by the Federal Rules of Civil Procedure, Defendants filed a response (ECF No. 272). Upon Judge Watanabe's retirement, the undersigned withdrew the referral to Judge Watanabe. (ECF No. 326.) As a consequence, the Court will treat Report No. 7 as a report and recommendation made directly to the undersigned.


         The Court reviews objections to factual and legal findings of a special master de novo and rulings on procedural matters for abuse of discretion. Fed.R.Civ.P. 53(f)(3)-(5). Even where a party does not object to a recommendation, a court may elect to review a special master recommendation de novo. Id., Advisory Comm. Note 2003. Upon review, the Court may “adopt or affirm, modify, wholly or partly reject or reverse, or resubmit to the master with instructions.” Id. 53(f)(1).

         Courts differ on whether discovery recommendations are procedural or nonprocedural in nature. See Callwave Commc'n LLC v. AT&T Mobility LLC, 2016 WL 3450736, at *1, n.3 (D. Del. June 16, 2016).[2] Neither this District nor the United States Court of Appeals for the Tenth Circuit has directly addressed this issue. Some courts in other Districts consider discovery recommendations a procedural matter and review special master recommendations for abuse of discretion. See Nippon Steel & Sumitomo Metal Corp. v. Posco, 2014 WL 1266219, at *1 (D.N.J. Mar. 26, 2014) (reviewing a special master recommendation on discovery matters under an “abuse of discretion” standard); In re Hardieplank Fiber Cement Siding Litig., 2014 WL 5654318, at *1 (D. Minn. Jan. 28, 2014) (“A decision regarding the scope of discovery is a procedural matter, reviewed for abuse of discretion.”). Other courts, faced with objections to special master recommendations on discovery issues, have reviewed de novo. See In re Cathode Ray Tube (CRT) Antitrust Litig., 301 F.R.D. 449 (N.D. Cal. 2014) (reviewing de novo a special master's recommendation on a motion for a protective order); Wellin v. Wellin, 2015 WL 5781383, at *1 (D.S.C. Sept. 30, 2015) (appearing to apply a de novo standard to a special master's report and recommendation to non-dispositive discovery motions).

         III. ANALYSIS

         The Court concludes that it need not resolve the question of whether objections to a special master recommendation on the scope of discovery should be decided de novo or under an abuse of discretion standard of review. Both Plaintiffs and Banner contend that the Court should review Report No. 7 de novo, which the Court may in any event do in its discretion. See Fed. R. Civ. P. 53, Advisory Comm. Note. 2003.[3]

         Reviewing under a de novo standard, the Court overrules in part and sustains in part Plaintiffs' objections to the issues actually decided by the Special Master. For issues on which the Special Master did not issue a specific recommendation, the Court decides Plaintiffs' Motion in the first instance.

         A. Discovery Standards

         The Federal Rules provide that “parties may obtain discovery regarding any nonprivileged mater that is relevant to any party's claim or defense and proportional to the needs of the case.” Fed.R.Civ.P. 26(b)(1). This broad standard allows parties to discover information necessary to support their case. Meeker v. Life Care Ctrs. of America, Inc., 2015 WL 5244947, at *2 (D. Colo. Sept. 9, 2015). Generally, the party “objecting to discovery must establish that the requested information does not fall under the scope of discovery as defined in Fed.R.Civ.P. 26(b)(1).” Clay v. Lambert, 2017 WL 4755152, at *2 (D. Colo. Oct. 20, 2017). However, “when the relevance of a discovery request is not apparent on the face of the request itself, the proponent of discovery bears the burden of making an initial, rebuttable showing of relevance.” Meeker, 2015 WL 5244947, at *2.

         While the scope of discovery is broad, it is not unlimited and is bounded by the principle of proportionality. Meeker, 2015 WL 5244947, at *2; see Fed. R. Civ. P. 26(b)(2)(c). In determining whether a discovery request is proportional or should be limited, a court considers “the importance of the issues at stake in the action, the amount in controversy, the parties' relative access to relevant information, the parties' resources, the importance of the discovery in resolving the issues, and whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed R. Civ. P. 26(b)(1), (2)(C); see Meeker, 2015 WL 5244947, at *2. “This is particularly true in large or complex litigation, in which a court may limit the scope of discovery to protect a party from unduly burdensome discovery requests.” Beltran v. InterExchange, Inc., 2018 WL 2045890, at *3 (D. Colo. May 2, 2018).

         Parties are under a continuing obligation to supplement discovery if they learn “that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process.” Fed.R.Civ.P. 26(e)(1); see Switch Commc'ns Group v. Ballard, 2012 WL 2342929, at *7 (D. Nev. June 19, 2012). While courts allow discovery of documents post-dating the filing of a complaint, such documents must be relevant to the claims in the complaint and not a fishing expedition into other potential claims. United States ex rel. Spay v. CVS Caremark Corp., 2013 WL 4525226, at *3-4 (E.D. Pa. Aug. 27, 2013). When evaluating the temporal scope of discovery, “the court's task is to balance the relevance of the information against the burden on the defendant.” Caban v. Sedgwick Cnty. Sheriff's Dept., 2000 WL 1480481, at *2 (D. Kan. May 18, 2000). The balance will reflect the needs of and burdens on the parties and the judicial system. For example, in a Medicare fraud case, the court recognized that “some end date must be established; otherwise, discovery would never end. It is not manageable to permit the continued discovery of patient records, experts' reviews of them, and deposition testimony about them through trial.” United States ex rel. Conroy v. Select Med. Corp., ...

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