Free Motion for Leave to File Excess Pages - District Court of Arizona - Arizona

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SUSAN MARTIN (AZ#014226) DANIEL L. BONNETT (AZ#014127) JENNIFER KROLL (AZ#019859) MARTIN & BONNETT, P.L.L.C. 3300 N. Central Avenue, Suite 1720 Phoenix, Arizona 85012-2517 Telephone: (602) 240-6900 [email protected] [email protected] [email protected] Attorneys for Plaintiffs IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA
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Barbara Allen, Richard Dippold, Melvin Jones, Donald McCarty, Richard Scates and Walter G. West, individually and on behalf of all others similarly situated, Plaintiffs,

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vs.
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Honeywell Retirement Earnings Plan, Honeywell Secured Benefit Plan, Plan Administrator of Honeywell Retirement Earnings Plan and Plan Administrator of Honeywell Secured Benefit Plan, Defendants.

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) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

No. CV04-0424 PHX ROS

Plaintiffs' Response to Defendants' Motion for Reconsideration and Clarification and Alternative Motion to Allow Interlocutory Appeal

Plaintiffs submit this response to Defendants' Motion for Reconsideration and Clarification and Alternative Motion to Allow Interlocutory Appeal as directed by the Court Order dated August 22, 2005.1 (Doc. 82.) Having thoroughly considered the scope of Michael v. Riverside Cement, 266 F.3d 1023 (9th Cir. 2001) and Shaw v. Int'l Ass'n of Machinists & Aerospace Workers Pension Plan, 750 F.2d 1458 (9th Cir. 1995), the Court

Pursuant to separate Order dated August 22, 2005, (doc. 83), on September 21, 2005 Plaintiffs will be filing a response to Defendants' supplemental brief addressing the impact of the newly issued Treasury regulations. (Doc. 95). This brief does not address Defendants' supplemental authority, (doc. 80), or Defendants' supplemental brief.

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issued a comprehensive ruling concluding that this case is governed by the cited authorities and that under Michael and Shaw, the challenged Plan amendments violate ERISA § 204(g). Defendants fail to meet the standards for reconsideration, for a 28 U.S.C. § 1292(b) appeal, or for a so-called "clarification." Their motion should be denied. I. DEFENDANTS FAIL TO MEET THE STANDARDS FOR RECONSIDERATION While this Court has discretion to reconsider and vacate its order granting summary judgment in an appropriate case, this is not one of them. None of the arguments advanced by Defendants satisfy the standards for reconsideration. The Court has made clear that motions for reconsideration "are disfavored." Collins v. D.R. Horton, Inc., 252 F.Supp 2d 936, 938-939 (D. Ariz. 2003) (citations omitted). "Motions for Reconsideration...are not the place for parties to make new arguments not raised in their original briefs. Nor is it the time to ask the Court to rethink what it has already thought. Accordingly, courts grant such motions only in rare circumstances." Id. "Under Rule 59(e), a motion for reconsideration should not be granted absent highly unusual circumstances unless the district court is presented with newly discovered evidence, committed clear error, or if there is an intervening change in the controlling law." 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999) (citations omitted). See also Plagens v. Nat'l Rv Holdings, Inc., 2004 U.S. Dist. LEXIS 17346, at *2 (D. Ariz. 2004); Motorola, Inc. v. J.B. Rodgers Mechanical

Contractors, Inc., 215 F.R.D. 581, 586 (D. Ariz. 2003).2 There is no newly discovered evidence or change in controlling law and there was no clear error committed by the Court. This latter ground, while not articulated as such by Defendants, appears to be the only possible basis for Defendants' motion which consists of Defendants fail to brief the standards for reconsideration altogether or to identify on which basis they believe reconsideration is warranted under this Court's rulings. While the formulation of standards warranting reconsideration in Plagens and Motorola is somewhat different than the formulation announced in Collins, none of the criteria under any ruling are satisfied by Defendants' motion.
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nothing but a re-hash of arguments previously made. Given the Court's extensive analysis of the issues, clear error with respect to the Court's conclusion that the holdings of Shaw and Michael are dispositive cannot be established. Defendants argue once again that the holdings of Michael and Heinz are limited to claims under ERISA § 204(g)(2) and that this case does not involve claims under that subsection of the anti-cutback rule; Defendants' argument misrepresents both the facts here and the holdings of those cases. The challenged amendments reduced Plaintiffs' early retirement benefits and retirement-type subsidies as well as normal retirement benefits. Plaintiffs have always asserted violations of both prongs of ERISA Section 204(g). Defendants' repeated misrepresentations to the contrary are improper. In response to Defendants' motion to dismiss and in support of Plaintiffs' motion for summary judgment, Plaintiffs argued that "[t]he impact of the challenged plan amendments was not confined to normal retirement benefits. Rather, the challenged amendments unlawfully reduced

Plaintiffs' early retirement benefits and/or retirement-type subsidies under 204(g)(2) as well."(Plfs' Opposition, p. 8 n.8.)3 Defendants responded to Plaintiffs' claims that both

See also e.g.: Amended Complaint (¶ 82) ("By the acts and omissions complained of herein, Defendants have reduced accrued benefits...including early retirement benefits and/or retirement-type subsidies..."); Plaintiffs' Opposition to Defendants' Motion to Dismiss and Plaintiffs' Cross Motion for Partial Summary Judgment ("Plaintiffs' Opposition")(p. 1112) ("The 3½% interest rate for valuing Secured Benefits specified in the Retirement Plan operated as another form of subsidized early retirement benefit.. . . The 3½% rate enabled employees who were terminated due to a reduction in force or who chose to leave employment prior to age 65, to withdraw the assets in the Severance Plan to live on (with or without retiring under the Retirement Plan). In the event terminated employees withdrew their Secured Benefits, they did so with the assurance that they would not be unduly penalized in the calculation of their monthly benefits under the Retirement Plan because the withdrawn benefits would continue to be valued using the relatively moderate long term rate of grown of 3½%"); Plaintiffs' Reply in Further Support of Plaintiffs' Cross Motion for Partial Summary Judgment ("Plaintiffs' Reply") (p.4) ("Claims are asserted under both prongs of ERISA's anti-cutback rules."); Plaintiffs' Reply (p.15) ("Defendants' effort to escape liability by attempting to carve an artificial distinction between the protections afforded early and normal retirement benefits are entirely without merit...").
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§ 204(g)(1) and § 204(g)(2) were violated. Defendants' claim that "Plaintiffs do not contend that an amendment imposed a condition upon, or otherwise impaired, their early retirement benefits, retirement-type subsidies or any other optional forms of benefits in violation of § 204(g)(2)" (Defs' Br., p.7) clearly misrepresents the record. Even if Defendants could establish that the Court committed clear error by holding that Michael and Heinz were not limited to claims arising under ERISA § 204(g)(2), the Court's conclusions that the challenged amendments violate ERISA's anti-cutback rules would still apply because the challenged amendments reduced the value of Plaintiffs' early retirement benefits, and retirement-type subsidies as well as Plaintiffs' normal retirement benefits. Aside from being based on a false factual predicate, Defendants' argument that Michael is distinguishable because it involves a claim under ERISA § 204(g)(2), (see, e.g., Defs' Br., p.1), was already considered, carefully analyzed and rejected. After reviewing the Michael opinion, the Court properly concluded: "This distinction is without a difference. First, the court in Michael does not state or intimate that the tests under § 1054(g)(1) and (g)(2) are different." (Order, p.21.) Not only did the Michael majority not limit its holding to ERISA § 204(g)(2), but, as the Court correctly noted, even the dissenting opinion of Judge Paez did not attempt to limit the Michael holding as Defendants would have this Court conclude. (Id.) The Court also correctly rejected the illogic of Defendants' position which would provide greater protection to the proverbial tail than the dog. After reviewing the statute and legislative history, the Court concluded: Defendants' suggestion that § 1054(g)(2) offers broader protection than § 1054(g)(1) is contrary to the terms of the statute and its legislative history. Congress enacted § 1054(g)(2) for the purposes of clarifying that early retirement benefits and retirement-type subsidies are entitled to the same protection from reduction by amendment as other benefits, not more. (Order, p. 21.) The Court continued: "Contrary to the Defendants' suggestion, § 1054(g)(2) does not single out early retirement benefits for special treatment; rather, it provides that they

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shall be protected to the same extent as other benefits." (Id., p.22.) Defendants' suggestion that the Michael court's failure to limit its holding to early retirement benefits was somehow an error of "loose citational form," (p.4), is also contradicted, as this Court correctly noted,

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by the Michael court's reliance on the Ninth Circuit's earlier decision in Shaw, which is an ERISA § 204(g)(1) case: Third, Michael relies on Shaw v. Int'l Ass'n of Machinists & Aerospace Workers Pension Plan, 750 F.2d 1458, 1460 (9th Cir. 1995), a case brought under § 1054(g)(1), to support is decision to look beyond the net effect of an amendment on annual pension payments and instead to the individual components of the benefit formula itself. The plan at issue in Shaw set forth the following formula for calculating a participant's monthly retirement benefit: 2.5% x years of credited service x final monthly salary. Id. at 1460. It also included a "living pension" feature that provided for adjustment of the benefit after retirement by substituting in the formula the currently monthly salary of the retiree's old ob in the place of the retiree's final monthly salary. Id. The defendants later amended the plan to phase out this feature. Id. Under the amended plan, retirees were entitled to a 100% adjustment from 29791980, a 75% adjustment from 1981-1982, and 25% adjustment from 19831984, and no adjustment thereafter. Id. After the amendment to the plan in Shaw, no retiree suffered a decrease in the actual dollar amount of his annuity. A retiree receiving a pension of $500.00 per month before the amendment actually received at least the same monthly amount going forward and likely more under the amended plan (if the current monthly salary of his old job had increased from 1979-1984). But the retiree's pension would not have increased at the same rate as before ­ he would only be entitled to an upward adjustment for a few years; thereafter, he would get no more increases in his periodic payment. The Ninth Circuit held that the elimination of the living pension feature reduced an accrued benefit in violation of the anti-cutback rule. Id. at 1464. Like the court in Michael, the court in Shaw found the individual piece of the benefit formula itself to be the accrued benefit, rather than the dollar amount of the participant's annual benefit payments up to the point of the amendment. Id. (Order, pp.22-23.)

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Defendants' tortured effort to distinguish Shaw is unconvincing. Contrary to Defendants' assertion that "the result in Shaw was a decrease in the dollar amount of the 204(g)(1) accrued benefit payable to the participant at every point in time after the living

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pension feature would have been triggered under the pre-amendment terms of the plan," there was no "decrease" in the benefits the plaintiffs in that case were receiving at their normal retirement date or at the date of the amendment. "[N]o retiree suffered a decrease in the actual dollar amount of his annuity." (Order, p.22.) Shaw preludes any claim that the anticutback rule protects only the base dollar amount payable at normal retirement age, without regard to the plan's promises regarding the components of the formula for determining the pension benefits. As Plaintiffs pointed out in the summary judgment motion, Shaw is

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followed in other circuits. See Hickey v. Chicago Truck Drivers Helpers and Warehouse Workers Union, 980 F.2d 465, 469 (7th Cir. 1992); Costantino v. TRW, Inc., 13 F.3d 969 (6th Cir. 1994). It is endorsed by the Internal Revenue Service as well.4 Defendants' other attempt to distinguish Shaw, that unlike the Plan here, the plan in Shaw "had no provision that protected participants' accrued benefit level from reduction," (Defs' Br., p.6, n.4), reveals the bankruptcy of Defendants' argument. Under Defendants'

While not controlling, the IRS endorses the Shaw holding "[T]he regulations provide that section 411(d)(6) protection applies to a participant's entire accrued benefit as of the applicable amendment date, without regard to whether the entire accrued benefit was accrued before a participant's severance from employment, or whether some portion of the accrued benefit was the result of an increase pursuant to a plan amendment adopted after the participant's severance from employment." 70 Fed. Reg. 47109, 47111 (2005) (footnote omitted).

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formulation, the only thing protected by the anti-cutback rule is the dollar value of the benefit payable at normal retirement age, and, contrary to Shaw and Michael, other promised components of the benefit formula that may reduce or increase that benefit (like the promised

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no-offset rule, the 3.5% interest projection rate and the fractional reduction in the offset) are not protected. Even if the plan in Shaw had a provision protecting "accrued benefits"from reduction, under Defendants' formulation, such a provision would not "preserve" the promised components of the formula in Shaw that guaranteed future increases in post-normal retirement benefits. There is no distinction between the right to receive periodic increases in retirement benefits as in Shaw and the right to receive benefits calculated on the basis of a promised offset formula, or a no-offset rule or a promised reduction in the offset. The

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offset rules here promised a specific formula for negative adjustments to Plaintiffs' benefits and also promised "no offset" of Social Security benefits for benefits attributable to service before 1984. The promises are no different than the COLA rules in Shaw promising a specific formula for positive adjustments in benefits. Under Michael and Shaw, both offsets and increases were accrued benefits attributable to service rendered prior to the amendments.5 As with the attempt to distinguish Shaw, the Plan provision Defendants cite for the proposition that benefits would not be reduced below the accrued benefit as of December 31, This case does not challenge reduction of future benefit accruals. Every dollar in the Secured Benefit account is attributable to service before the amendment and the offset promised with respect to those benefits could not be changed retroactively. Likewise, while Defendants were free to apply Social Security offsets to benefits accrued after 1984, the Plan did not allow offsets for earlier years.
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1983, (Signal Plan § 4.10(c)), also merely begs the question. Michael and Shaw enforce, under the anti-cutback rule, promises made in those plans that were not dependent upon whether the net dollar amount payable at early or normal retirement was decreased. If

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Michael and Shaw protect more than the net dollar value at a normal or early retirement, then the provision Defendants rely on merely promising not to reduce normal retirement benefits as of December 31, 1983, does not address the § 204(g) violation.6 Even if the Defendants could establish clear error in the Court's analysis that Michael is not limited to ERISA § 204(g)(2) and that Michael "does not preclude an adjustment to a benefit formula that does not eliminate or otherwise impair an early retirement benefit or optional form of benefit protected under § 204(g)(2)..." and even if Defendants could avoid the conclusion that the challenged amendments reduced Plaintiffs' early retirement benefits and retirement-type subsidies, the challenged amendments would still violate ERISA because Defendants never established that while reducing benefits, the dollar value of the pre-

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amendment benefits was not reduced. (Defs' Br., p. 6.)

Furthermore, Signal Plan, Section 4.10(c)(ii) , the provision on which Defendants rely, offers far less protection than Defendants claim it offers. On its face the provision is limited to the protection of "normal retirement benefits" and does not protect early retirement benefits or retirement-type subsidies. The Plan limits the definition of "Accrued Benefits" to the meaning in Section 4.10. Section 4.10 provides that "An Employee's `Accrued Benefit' as of his Separation from Service shall be equal to his Normal Retirement Benefit computed under Section 4.2 on the basis of his Credited Service completed prior to such Separation..." Nothing under Section 4.10(c)(ii) protects Plaintiffs' early retirement benefits and retirement-type subsidies. Given that the amendment on which Defendants rely does not guarantee that early retirement benefits or retirement-type subsidies will not be reduced, the existence of this provision is inadequate even assuming arguendo it is not irrelevant.
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On their face, the amendments reduce accrued benefits within the meaning of Shaw and Michael. As the Court held, the amendments had the effect of eliminating unconditional promises in the plan reducing the value of Plaintiffs' benefits attributable to service before

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the amendments. It was Defendants' burden to establish with credible evidence that despite the reductions inherent in the imposition of higher interest rates, causing a greater benefit offset by eliminating a fractional reduction in an offset and imposing a Social Security offset on pre-amendment benefits for pre-1984 service, the net effect of the challenged amendment increased benefits.7 This they failed to do. Defendants failed to show that they compensated
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Although the Court, citing to a footnote in Plaintiffs' brief, stated that Plaintiffs conceded for purposes of the motion for summary judgment that "they are better off on the whole" after the challenged amendments, contrary to Defendants' claims on this Motion, Plaintiffs have never conceded the issue that the net dollar value of Plaintiffs' benefits were higher immediately after the amendment than they were before the amendment. Plaintiffs argued that under Michael and Shaw whether benefits were increased overall was irrelevant and that "Defendants' effort to show the Plaintiffs' benefits were higher when they retired than they were on December 31, 1981 does not advance the relevant inquiry." (Plfs' Reply Br., p.6.) Plaintiffs also pointed out that whether benefits at termination of employment were higher than they were on December 31, 1983 was not the appropriate measuring point. (Plfs' Reply Br., p.4, noting that: this argument "is an apples to oranges comparison that is not the test for a violation of § 204(g).") Plaintiffs also pointed out that Defendants' claim that they increased benefits appeared to rest solely on the favorable interest rate secured for the Secured Benefits obtained following termination of the Garret Severance Plan and that no plan amendment ever promised to pay that interest rate. (Plfs' Reply Br., p.6 n.3.) (See, e.g., Complaint ¶67; Plfs' Opposition, p.3 n.5, 13; Plfs' SOF ¶¶ 18-21.) Having reviewed the footnote cited by the Court, Plaintiffs could have articulated the position on this point more clearly. Nonetheless, Plaintiffs believe, the Court, with Defendants' encouragement, (Defs' Reply on Motion to Dismiss, p.4, n.4), misunderstood Plaintiffs' argument. Footnote 16 on page 15 of Plaintiffs' cross motion for summary judgment states: Contrary to Defendants' claim (Defs' Br. pp.1, 6), Plaintiffs do not concede as a factual matter that benefits were necessarily increased by the changes in the basic benefit formula under the Signal Plan. Plaintiffs asserted during the administrative review that in fact some of the Plaintiffs' benefits declined after the amendments. (See, e.g., Dec., Ex. N, at HW 0000505.) This is a question
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participants for the losses occasioned by the amendments decreasing their accrued and vested benefits by simultaneously providing other benefit increases. There is no clear error in the Court's analysis of the applicability of Michael or Shaw. Defendants' request that the Court

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reconsider its ruling on § 204(g) should be denied. II. AN INTERLOCUTORY APPEAL IS NOT WARRANTED There are no grounds for an immediate appeal. The Ninth Circuit exercises its discretion to accept an interlocutory appeal only where there is: (1) a controlling question of law; (2) substantial grounds for difference of opinion and (3) the potential for an immediate appeal to materially advance the ultimate termination of the litigation. 28 U.S.C. § 1292(b). In Re Cement Antitrust Litigation, 673 F.2d 1020, 1026 (9th Cir. 1982). That is not the case here. "While Congress did not specifically define what it meant by `controlling,' the legislative history of 1292(b) indicates that this section was to be used only in exceptional

of fact which for purposes of the motion to dismiss, should be accepted as true. What Plaintiffs intended to be accepted as true were the assertions in the pleadings that benefits were reduced. While the syntax was perhaps confusing, the intent was not. The quoted footnote also cited to evidence submitted by Plaintiffs on the administrative review, that demonstrated that certain benefits immediately after the amendment were actually reduced. What Plaintiffs were attempting to establish in that footnote and elsewhere was that for purposes of deciding Defendants' motion to dismiss, Plaintiffs' claims that their benefits were reduced after the challenged Plan amendments had to accepted as true but also that for purposes of Michael, it did not matter. That is a far cry from the arguments raised by Defendants now, which quote only partially the Court's ruling, and omit its references to "on the whole" and assert that Plaintiffs have conceded that benefits were actually increased. The record establishes that Plaintiffs have made no such concession and consistently argued to the contrary.
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situations in which allowing an interlocutory appeal would avoid protracted and expensive litigation." Id. (citing United States Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966) (per curiam); Milbert v. Bison Laboratories, 260 F.2d 431, 433-35 (3d Cir. 1958)). In

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discussing the appropriateness of an interlocutory appeal, the Ninth Circuit has instructed that: Section 1292(b) was intended primarily as a means of expediting litigation by permitting appellate consideration during the early stages of litigation of legal questions which, if decided in favor of the appellant, would end the lawsuit. Examples of such questions are those relating to jurisdiction or a statute of limitations which the district court has decided in a manner which keeps the litigation alive but which, if answered differently on appeal, would terminate the case. United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959). "The resolution of the issue certified for interlocutory appeal must materially affect the outcome of the litigation, not only its duration." Nike, Inc. v. Interlake Cos., 947 F.Supp. 433, 435 (D. Or. 1996). While Plaintiffs certainly endorse the goal of expediting this litigation, Plaintiffs are concerned that an interlocutory appeal solely on the issue of Michael would not expedite the conclusion of this case. For one thing, claims remain to be tried that can provide

substantially the same relief. Plaintiffs have challenged the plan amendments both as violations of the anti-cutback rule and as violations of enforceable promises made under the terms of the Plan. Plaintiffs have not yet sought summary judgment on this latter basis

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because there are factual issues regarding when the challenged amendments were actually formally adopted.8 As this Court noted in its opinion: Like all retirement plans, the Garrett Retirement Plan contains similar mandatory language and unconditional "promises." The Plan provides the Secured Benefit Accounts of participants who retire early or separate from service before age 65 "shall be" increased by "Credited Interest," and it defines "Credited Interest" in turn as "interest computed annually at 3-1/2%." n10 (Garrett Retirement Plan §§ 1.3, 4.1(c).) Further, the Plan provides that all retirees who have completed more than 35 years of service "shall" receive a fractional reduction in the amount of their Secured Benefit Offset. (Id.) The Plan also provides that the Objective Retirement Income for a participant, whether an early retiree or not, "shall be" calculated pursuant to a series of formulas, none of which contain a social security offset. (Id. § 4.1(b).) (Order, pp. 20- 21.) In addition, Section 8.1(b) of the Garrett Retirement Plan promised that no amendment shall have any retroactive effect so as to deprive any participant of any benefit already vested. (SOF ¶ 12.) Regardless of whether these promises are protected under ERISA's anti-cutback rule, they are enforceable under ERISA § 502(a)(1)(b) and the federal common law. They provide an alternative basis for the Court's holding. ERISA provides a framework of minimum protections. The courts are in agreement that promises written into the Plan that exceed ERISA's minimum standards are enforceable. See, e.g., Bland v.

As Plaintiffs explained in their opposition to Defendants' motion to dismiss and cross motion for summary judgment, (p. 3 n.5), Plaintiffs' "complaint also asserts multiple ERISA and plan violations that are not, prior to discovery, ripe for summary judgment." These violations are also enforceable under ERISA § 502(a)(1)(B) and federal common law. Plaintiffs also pointed out in their opposition to Defendants' motion to dismiss that Defendants' motion to dismiss failed to address these claims, and this Court's order does not dismiss them.
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Fiatallis N. Am., Inc., 401 F.3d 779, 784 (7th Cir. 2005) (finding a promise of vested benefits in health plan may create enforceable contract obligation); Dobson v. Hartford Fin. Servs. Group, 389 F.3d 386, 391 (2d Cir. 2004) (noting that issues "are questions of contract to be

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decided under federal common law.") (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987); Feifer v. Prudential Ins. Co. of Am., 306 F.3d 1202, 1210 (2d Cir. 2002)). In the event summary judgment on the violation of the anti-cutback rule were to be reversed on appeal, in addition to the Plan violations, Plaintiffs would also be entitled to appeal the dismissal of Count V. In the event Plaintiffs were successful on that appeal and the summary plan descriptions are held to trump the offset provisions of the Plan, relief substantially equivalent to that granted by the § 204(g) rulings could also be obtained under Count V. See, e.g., Banuelos v. Constr. Laborers' Trust Funds for S. Cal., 382 F.3d 897, 904 (9th Cir. 2004) ("Courts will generally bind ERISA defendants to the more employeefavorable of two conflicting documents. . .."). Given that Defendants' success on an

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interlocutory appeal would not obviate the need for further appeals,9 an interlocutory appeal, while not unattractive to Plaintiffs if somehow all issues could be reviewed at this juncture, does not appear warranted as a controlling question of law nor would it advance the termination of the litigation. See Life Teen v. Yavapai County, 2003 U.S. Dist. LEXIS 24364 (D. Ariz. 2003) ("What defendants neglect to take into account is that plaintiff arguably still has several grounds for appeal that would then have to be decided, thereby Defendants are also opposing class certification and argue that they should be permitted to relitigate the statute of limitations and raise other affirmative defenses to the summary judgment rulings. Additional appeals on these or other issues might follow as well.
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creating a series of appeals rather than one."); Lorentz v. Westinghouse Electric Corp., 472 F.Supp. 954, 956 (W.D. Pa. 1979). An interlocutory appeal is also not warranted because there are no substantial grounds for a difference of opinion. There is no conflict within this Circuit. Even the Treasury Regulations regarding the so-called net dollar impact of simultaneous amendments acknowledge that the position taken by Defendants regarding Michael is contrary to the law of the Ninth Circuit. The same Treasury regulations appear to endorse the holding in Shaw. As will be discussed in Plaintiffs' brief responding to Defendants' supplemental brief, the IRS also took affirmative steps to make clear that the regulations are not retroactive. The regulations provide: "Plan amendments adopted before August 12, 2005 are to be evaluated in light of the applicable authorities without regard to these regulations." See 70 Fed. Reg. 47109, 47115. See United States v. Adam Bros. Farming, Inc., 369 F.Supp.2d 1180, 1184 (C.D. Cal. 2004) ("`given the virtual unanimity among the various Circuits and indeed within

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the Ninth Circuit whose rulings this Court is bound to follow' the Court concludes that there are no substantial grounds for differences of opinion on this issue.") (quoting City of Hope National Medical Center v, Blue Cross of California, 928 F.Supp. 1001, 1004 (C.D. Cal. 1996)); Allstate Ins. Co. v. Madan, 1995 U.S. Dist. LEXIS 4041 (C.D. Cal. 1995). Defendants cite zero authority to show why the Court's opinion fails to conform with Ninth Circuit authority. "The fact of the matter is that Michael and Shaw cannot be persuasively distinguished from the facts of this case..." (Order, p. 25.) An interlocutory appeal is not

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warranted.
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III. CLARIFICATION OF THE COURT'S ORDER IS NOT WARRANTED Without a single citation of authority, Defendants ask this Court to "clarify" that their

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failure to establish any defenses in opposition to Plaintiffs' summary judgment motion should not preclude them from doing so now. This Court has made a final determination on Plaintiffs' ERISA §§ 204(g) and (h) claims and Plaintiffs' minimum benefit claims. Surely the Court's fifty-page opinion was not an academic exercise. If Defendants had any facts to show why summary judgment in favor of Plaintiffs on these claims should not have been granted, they should have been established in opposition to Plaintiffs' motion for summary judgment. Defendants' failure to prove any defenses or establish the existence of any

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genuine issue of material fact bars them from doing so now. Fed. R. Civ. P. 56 makes clear: When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party. Local Rule 56(a) required Defendants to set forth the specific facts, in serial form (not in narrative form) that "establish a genuine issue of material facts precluding summary judgment in favor of the moving party." Defendants' only reference to any affirmative

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defense was confined to the following in Defendants' brief in opposition to Plaintiffs' motion for partial summary judgment, (doc. 31, p.38):

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Even if the Court concludes that Plaintiffs have stated a viable legal theory based on the plan documents, which seems dubious, additional factual disputes preclude the entry of judgment in their favor, such as whether the statute of limitations bars Plaintiffs' claims given that they challenge an amendment made over twenty years ago. For example, there may be disputes or disagreements about when Plaintiffs learned of the plan amendments at issue. In response, Plaintiffs made clear that Defendants' vague references to an unsupported claim regarding an unidentified statute of limitations were insufficient to create any genuine issue of material fact precluding summary judgment in favor of Plaintiffs. (Doc. 51, p. 22.) As the Court made clear in ruling on Plaintiffs' motion for summary judgment, (p. 20), The party opposing summary judgment "may not rest upon the mere allegations or denials of [the party's] pleadings, but . . .must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ. P. 56(e); see Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Brinson v. Linda Rose Joint Venture, 53 F.3d 1044, 1049 (9th Cir. 1995). There is no issue for trial unless there is sufficient evidence favoring the non-moving party; if the evidence is merely colorable or is not significantly probative, summary judgment may be granted. Anderson, 477 U.S. at 249-50. Defendants have argued that they had not yet been able to take discovery on the claims. However, if in order to assert affirmative defenses that would bar judgment in favor of Plaintiffs, discovery was needed, Defendants' remedy was to make a motion under Federal Rule of Civil Procedure 56(f).10

Defendants also make the disingenuous argument that they did not understand the claims Plaintiffs were raising. This is puzzling as Plaintiffs painstakingly listed the claims on which they sought summary judgment. (Doc. 23, pp.4-6.) The Court addressed Plaintiffs' motion in its entirety.
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Defendants failed to ask the Court to delay the summary judgment motion in order to develop claimed defenses. As a result, they are barred from attempting to relitigate the summary judgment issues a second time. In Kontrick v. Ryan, 540 U.S. 443, 458-60 (2004),

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the Court held that the failure to argue that a claim was time barred in opposition to a motion for summary judgment precluded the assertion of that defense even though there was no dispute that the claim was in fact time barred: Kontrick not only failed to assert the time constraints of Rules 4004(a) and (b) and 9006(b)(3) in a pleading or amended pleading responsive to Ryan's amended complaint. As earlier recounted... Kontrick moved to delete certain items from Ryan's summary judgment filings, but, even that far into the litigation, he did not ask the Bankruptcy Court to strike the family-account claim. Ordinarily, under the Bankruptcy Rules as under the Civil Rules, a defense is lost if it is not included in the answer or amended answer. See Fed. Rule Bkrtcy. Proc. 7012(b)("Rule 12(b)-(h) F.R.Civ.P. applies in adversary proceedings."); 5A C. Wright & A. Miller, Federal Practice and Procedure §§ 1347, p 184 (2d ed. 1990) ("A defense or objection that is not raised by motion or in the responsive pleading is waived unless it is protected by Rules 12(h)(2) or 12(h)(3) or by the successful invocation of the liberal amendment policy of Rule 15."). Rules 12(h)(2) and (3) prolong the life of certain defenses, but time prescriptions are not among those provisions. Even if a defense based on Bankruptcy Rule 4004 could be equated to "failure to state a claim upon which relief can be granted," the issue could be raised, at the latest, "at the trial on the merits." Fed. Rule Civ. Proc. 12(h)(2). No reasonable construction of complaint-processing rules, in sum, would allow a litigant situated as Kontrick is to defeat a claim, as filed too late, after the party has litigated and lost the case on the merits. As in Kontrick, Defendants have litigated and lost the summary judgment claims "on the merits." Whatever defenses could have been asserted against Plaintiffs individually or as class representatives are foreclosed. In Enlow v. Salem-Keizer Yellow Cab Co., 389 F.3d

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802, 818-19 (9th Cir. 2004), the Ninth Circuit held that defendants waived the affirmative BFOQ defense by failing to assert it in response to a summary judgment motion in an ADEA proceeding: "Since Yellow Cab did not specifically plead the BFOQ defense in its motion

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for summary judgment, Yellow Cab effectively waived this defense." See also Scott v. Collins, 286 F.3d 923, 927-928 (6th Cir. 2002); Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 235 (7th Cir. 1991). In Wholesale & Retail Food Distribution Local 63 v. Santa Fe Terminal Servs., 826 F.Supp. 326, 330 (C.D. Cal. 1993), the defendants failed to argue the statute of limitations in opposition to a motion for summary judgment. The court found that the issue was waived: Defendants now urge the Court to adopt the six-month statute of limitations contained in the National Labor and Relations Act, ("NLRA"), 29 U.S.C. §§ 160(b). Defendants failed to raise this argument earlier when the issue was briefed on a motion for summary judgment. Plaintiffs contend that defendants have waived the NLRA statute of limitations defense, relying on U.S. Postal Serv. v. American Postal Workers Union, 893 F.2d 1117 (9th Cir. 1990). However, the instant case is distinguishable from the U.S. Postal Serv. case because defendants pled the six-month NLRA statute of limitations as an affirmative defense in their Answer to plaintiffs' Complaint. In spite of pleading this statute in their Answer, defendants failed to raise the issue during the summary judgment proceeding or in the Pretrial Conference Order. Accordingly, defendants have waived it. Id. See also Bennett v. City of Holyoke, 362 F.3d 1, 6 (1st Cir. 2004). Defendants failed to prove or establish any genuine factual dispute that Plaintiffs' claims were barred by the statute of limitations or by any other affirmative defense. Without citation of authority, Defendants urge that because this case is a class action, somehow a

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different result should apply. However, nothing in Rule 56 suggests that Defendants are
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excused from the requirements of that rule in the case of a putative class action. The challenged Plan amendments do not purport to have different effective dates for different individuals. The named Plaintiffs retired between 1985 in the case of Mr. McCarty and 2002

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in the case of Mr. Dippold. (Complaint ¶ 4-10). It is hard to fathom how Defendants could claim that they have not lost every statute of limitations defense based on any basis that could have been asserted against any of the individual Plaintiffs. Rather, Plaintiffs submit that for any class member who retired between 1985 and 2002, any statute of limitations defense is barred, and for any class member, any affirmative defenses other than the statute of limitations, was waived with respect to the issues conclusively determined by the Court's summary judgment rulings.

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Defendants also waived the other affirmative defenses by failing to raise them as a basis to deny Plaintiffs' claims for benefits in the administrative claim appeal process. See Mitchell v. First Unum Life Ins. Co., 65 F.Supp.2d 686, 697 (S.D. Ohio 1998) ("the court

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will not consider arguments that the administrator failed to raise as a denial of the claim") (citations omitted); O'Bryhim v. Reliance Std. Life Ins. Co., 1996 U.S. Dist. Lexis 22109, at *9 (E.D. Va. 1996) ("In none of these [claim denial] letters was the defense raised of lack of starving on the part of the plaintiff. Accordingly, the court finds that the defense was waived."). Post hoc rationalizations for denial of administrative claims are not permitted. Reich v. Ladish Co., Inc., 306 F.3d 519, 524 n. 1 (7th Cir. 2002) ("Ladish was required to give Reich every reason for its denial of benefits at the time of the denial.") (citations

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omitted). See also 29 U.S.C. § 1133 (employee benefit plan must "provide adequate notice
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in writing to any participant or beneficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial..."). CONCLUSION For the foregoing reasons and those asserted on the summary judgment motion, Plaintiffs respectfully request that this Court deny Defendants' Motion for Reconsideration

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and Clarification and Alternative Motion to Allow Interlocutory Appeal. Respectfully submitted this 12th of September, 2005. MARTIN & BONNETT, P.L.L.C. By: s/Susan Martin Susan Martin Daniel L. Bonnett Jennifer L. Kroll 3300 North Central Avenue, Suite 1720 Phoenix, AZ 85012-2517 (602) 240-6900 Attorneys for Plaintiffs

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CERTIFICATE OF SERVICE I hereby certify that on September 12, 2005 I electronically transmitted the attached document to the Clerk's Office using the CM/ECF System for filing and transmittal of a Notice of Electronic Filing to the following CM/ECF registrants: David B. Rosenbaum Dawn L. Dauphine Osborn Maledon, P.A. and : Michael Banks William Delaney John G. Ferreira. Azeez Hayne. Amy Promliso Morgan Lewis & Bockius LLP Attorneys for the Defendants

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_s/Trudy Mahabir Legal Assistant for Martin & Bonnett, PLLC
G:\WORK\Allied\Court\Pleadings\response motion for reconsideration.wpd

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