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Johnson v. Smith

January 18, 2007

ALBERT JOHNSON, JR. AND LOUIS HOUSEMAN, PLAINTIFFS,
v.
GEOFFREY SMITH, DEBORAH GUETTERMAN, DANA ALBRIGHT, DAVID JACKSON, CHRISTOPHER SMITH, AND WATERFRONT SERVICES COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Gilbert, District Judge

ORDER

Before the Court are various motions which are discussed below.

I. Background

Plaintiffs, past and present vested participants in the Waterfront Services Company Employee Stock Ownership Plan, (ESOP), have sued Waterfront Services Company, (WSC), and five members of WSC's Board of Directors: 1) Geoffrey Smith, (President of WSC and Chairman of the Board), 2) Deborah Guetterman, (Human Resources Administrator), 2) Dana Albright, 4) David Jackson, and 5) Christopher Smith. Defendants Geoffrey Smith, Guetterman, and Albright are also members of the ESOP administrative committee.

Plaintiffs have filed a two-count complaint under the Employee Retirement Income Security Act of 1974, (ERISA), 29 U.S.C. §1001, et seq. In Count I, plaintiffs allege that defendants breached their fiduciary duties by failing to act solely in the interests of the ESOP participants and beneficiaries, and by failing to act with the care, skill, prudence, and diligence that prudent persons in a like capacity would use in the conduct of a similar enterprise. Plaintiffs also claim that Geoffrey Smith violated his fiduciary duties under ERISA by engaging in "per se prohibited transactions involving the direct or indirect sale or exchange of property and/or the transfer to, or use by or the benefit of, a party in interest of any assets" of the ESOP, and by dealing the ESOP's assets for his own interests. In Count II, under ERISA's equitable relief provision, plaintiffs seek to remove fiduciaries Smith, (Geoffrey and Christopher), Guetterman, Albright, and Jackson, as well as to appoint an independent fiduciary to manage the ESOP while this suit is pending. The parties' various motions are discussed below.

II. Plaintiffs' Discovery Motions

Federal Rule of Civil Procedure 26(b)(1) allows discovery: regarding any matter, not privileged, that is relevant to the claim or defense of any party[.] . . . For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence.

Fed.R.Civ.Proc. 26(b)(1).

A. Plaintiffs' Second Motion to Compel and for Sanctions (Docs. 79, 80)

Plaintiffs have filed a second motion to compel seeking information and documents regarding the following:

1) defendant Geoffrey Smith's: a) salary; b) bonus compensation; c) deferred compensation; d) ESOP benefits; e) other cash or non-cash benefits paid, all for the years 1996, 1997, and 1998;

2) employee compensation and benefits, including W-2 forms, that were paid to the remaining individual defendants during the years 1996, 1997, and 1998;

3) the value of each of the individual defendants' ESOP accounts for each year ending May 31, 1998 to the present;

4) the amount of the individual defendants' stock and cash contributions for each plan year ending ...


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