Cohen v. CME Group Inc. Severance Plan

Background

Samuel Cohen brought claims under the Employee Retirement Income Security Act (ERISA) against CME Group Inc. and related parties. He alleged that he was entitled to severance benefits under a plan that CME Group administered for Cohen’s former employer, ENSO Financial Management. The underlying dispute turns largely on whether ENSO terminated Cohen or whether he resigned. The opinion addresses discovery, not the ultimate entitlement to benefits.

Cohen moved to compel additional discovery in two categories: (1) five depositions outside the administrative record, meaning the materials available to the plan administrator when it decided the benefits claim; and (2) documents created after October 2019 that defendants withheld based on attorney-client privilege or the work-product doctrine.

Standard of Review and Discovery Outside the Record

The court explained that ERISA benefits decisions ordinarily are reviewed under the abuse-of-discretion standard when the plan gives the administrator discretion to decide eligibility or interpret the plan. The plan gave its administrator “full and exclusive discretionary authority” to interpret the plan and determine eligibility and benefit amounts. The court therefore assumed, for purposes of this discovery motion, that the abuse-of-discretion standard would apply to the ultimate issues. It did not finally decide the merits or conclusively resolve the standard of review.

ERISA review is ordinarily limited to the administrative record. Additional evidence may be allowed for good cause, and discovery beyond that record is generally limited to matters such as a potential conflict of interest rather than the substantive merits of the benefits claim. The court found that defendants appeared to both evaluate and pay benefits, creating a structural conflict of interest. Cohen also presented preliminary evidence that the conflict may have affected the investigation, including interview notes in which Emmanuela Bowman asked questions that appeared directed toward supporting a finding that Cohen voluntarily resigned.

The court therefore allowed limited additional discovery concerning the alleged conflict. Cohen was permitted to depose:

- A representative designated by CME under Rule 30(b)(6), with knowledge of the claim and appeal process; and - One of the three witnesses whom Bowman interviewed.

The court denied Cohen’s request to depose a witness with knowledge of defendants’ policies concerning terminations and resignations because that request concerned the merits of the benefits determination. The court denied without prejudice Cohen’s requests to depose the other two interviewees, allowing him to renew those requests if the permitted depositions produced additional facts suggesting a conflict of interest and a need for further depositions.

Documents Withheld as Privileged or Protected

Defendants had produced documents created before October 2019 that they had initially withheld under the attorney-client privilege. They acknowledged that the fiduciary exception can prevent use of that privilege in ERISA cases when communications concern administration of the benefits plan.

The administrative record contained substantial material created after October 2019, including materials related to an appeal that defendants accepted and decided. The court did not decide whether defendants were required to accept that appeal, but concluded that defendants appeared to have accepted and adjudicated it. Documents relied on in that determination therefore appeared to be part of the administrative record. The court ordered defendants to produce documents withheld only under attorney-client privilege when those documents are subject to the fiduciary exception.

The court separately addressed the work-product doctrine, which can protect documents prepared in anticipation of litigation. The Second Circuit had not decided whether the ERISA fiduciary exception applies to work-product protection, and the court reserved judgment on that question. The court found that defendants’ privilege log listed both attorney-client privilege and work-product protection for every withheld document without distinguishing between them or providing enough information to determine whether the documents were prepared for litigation or instead concerned ordinary benefits administration.

Because defendants had the burden of establishing work-product protection, the court stated that it could have compelled production based on the inadequate showing. Instead, it gave defendants one opportunity to develop the record. By June 10, 2022, defendants had to serve Cohen with a revised privilege log identifying only documents they believed could properly be withheld under the work-product doctrine. If Cohen disputed protection for a document, the parties were required to confer in good faith, after which either party could seek court relief through the court’s discovery-dispute procedures.

Disposition

The court granted in part and denied in part Cohen’s motion for additional discovery. Cohen could conduct the two specified depositions. Defendants had to promptly produce documents withheld only under attorney-client privilege that were subject to the fiduciary exception. Defendants also had to revise their privilege log if they continued to rely on the work-product doctrine. The court directed the parties to reschedule a settlement conference and directed the clerk to terminate the motion docketed as ECF No. 34. Judge Jesse M. Furman did not decide Cohen’s underlying claim for severance benefits.