United States District Court, D. New Jersey
August 19, 2005.
THE SGS NORTH AMERICA, VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION, F/K/A THE GAB ROBBINS VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION AND JEMMA AYAZ, Plaintiff,
GAB ROBBINS NORTH AMERICA, INC. Defendants.
The opinion of the court was delivered by: DENNIS CAVANAUGH, District Judge
[EDITOR'S NOTE: This case is unpublished as indicated by the issuing court.] OPINION
This matter comes before the Court on Defendant's motion to
re-open the trial record to introduce new evidence. No oral
argument was heard pursuant to Rule 78 of the Federal Rules of
Civil Procedure. For the following reasons, Defendant's motion is
BACKGROUND AND PROCEDURAL HISTORY
Defendant GAB Robins North America, Inc. ("GAB Robins")
formerly called GAB Business Services, Inc., established the
Voluntary Employees' Beneficiary Association ("VEBA") effective
January 1, 1975, for the exclusive purpose of providing for
payment of group benefit plans for employees and certain retirees
of GAB Robins. GAB Robins established the VEBA to provide for payment of specific welfare benefit programs ("Plans") in the
event of sickness, accident, death, disability or other
interruption of the Participant's earning power. GAB Robins
created the VEBA pursuant to § 501(c)(9) of the Internal Revenue
Code and was exempt from federal income tax.
SGS North America ("SGS") owned GAB Robins during the time
period for which Plaintiff is seeking damages up until November
30, 1999. On November 30, 1999, SGS North America sold the stock
of its subsidiary GAB Robins to Brera GAB Robins, LLC ("Brera").
As part of the transaction, GAB Robins assigned all of its right,
title and interest in and to the VEBA. Under the Stock Purchase
Agreement, SGS retain[ed] the assets held in the VEBA Trust. The
VEBA was a single employer plan. Although SGS retained the VEBA
trust assets pursuant to the assignment, SGS did not retain any
of the employees or beneficiaries covered by GAB Robins' plans.
At the time of the assignment, SGS had no knowledge of GAB
Robins' failures to deposit the Aetna premium refunds for the
plan years from 1992 through 1998 into the VEBA.
In order to provide benefits to its employees, retirees and
beneficiaries, GAB Robins procured from Aetna Life Insurance
Company ("Aetna") a Group Life and Accident and Health Insurance
Policy ("the policy") effective January 1, 1991. The policy was
not assigned as a result of the sale by SGS of GAB Robins to
Brera. GAB Robins was, and still remains, the policyholder of the
At the end of the calender or plan year, Aetna provided an
annual accounting to GAB Robins that summarized the year's
premiums, plans' costs, administrative service charges and
experience credits. The VEBA Declaration requires that the VEBA
be audited once each year by an independent certified public
accounting firm, which was required to certify the results of its
audit. It is undisputed that from 1994 through 1999, Coopers &
Lybrand and later Price Waterhouse Coopers ("the VEBA auditors") were engaged to audit the financial
statements and supplemental schedules of the VEBA. Aetna's annual
accountings included a cover letter detailing the plan year's
financial results and explaining GAB's Robins' right to request a
refund of any amounts in excess of the Aetna-determined reserve
amount. GAB Robbins always requested that the maximum allowable
refund be paid to it.
When Aetna's annual accounting for the 1999 plan year was
issued in October 2000, a dispute arose between SGS and GAB
Robins over which entity was entitled to receive $251,161 in
Aetna premium refunds and reserves, referred to as the Premium
Stabilization Reserve ("PSR"). Counsel for SGS and GAB Robins
agreed that $54,632.14 would be transferred to the VEBA and that
the remaining $198,528.86 would be held in trust by GAB Robins in
order to allow the parties to try to resolve their dispute.
Attempts at resolution failed and a Complaint was filed on July
A bench trial was held April 12, 2005, through April 14, 2005,
on the issue of whether GAB Robins breached its fiduciary duties
under ERISA by failing to deposit the Aetna insurance premium
refunds for plan years 1992 through 1999 into the VEBA. GAB
Robins brings the instant motion to re-open the trial record to
introduce new evidence pertaining to: 1) whether the insurance
premium refunds GAB Robins received from Aetna consisted of
employee, employer, or a combination of employee and employer
contributions; and 2) the admission of the counter-designations
of Neil Rogers' deposition testimony on the issue of the
underfunding of the VEBA. DISCUSSION
A motion to reopen the trial record to admit additional proof
is in the sound discretion of the trial judge. Zenith Radio
Corp. v. Hazeltine Research, 401 U.S. 321, 331 (U.S., 1971).
Because there has not been a decision in this case, this motion
is not regarded as one governed by Rul 59 (motion for new trial)
or Rule 60 (motion for relief from judgment) under the F.R. Civ.
P. See Penn W. Assocs. v. Cohen, 371 F.3d 118, 125 (3d Cir.,
2004) (holding that Rule 60(b) applies only to final judgments
and orders); See Schick Dry Shaver, Inc. v. General Shaver
Corp., 26 F. Supp. 190, 191 (D. Conn., 1938) (holding a motion
to re-open could not be considered a R. 59 motion for a new trial
if a decision had not been rendered.) Although there is no
express statutory provision of substantive law specifically
allowing the reopening of a trial, the Court in Caracci v.
Brother International Sewing Machine Corp held that "such has
become a rule of law supplied by the jurisprudence. It appears to
be a cannibalization of those qualities found in Rules 59 and 60
[of the] Federal Rules of Civil Procedure, New Trials and Relief
from Judgment or Order respectively, geared by the philosophy of
Rule 1, that is, the `just, speedy, and inexpensive determination
of every action.'" Caracci v. Brother International Sewing
Machine Corp., 222 F. Supp. 769, 771 (D. La. 1963).
Whether a court will reopen a trial is largely within the
discretion of the trial judge. Shanteau v. United States,
1979 U.S. Ct. Cl. LEXIS 958, at *7 (Ct.Cl. 1979). In deciding whether
the Court will reopen the trial record, the trial judge may
consider the following factors: (1) the moving party must show
diligence or justification for failure to discover and present
the proposed evidence during the ordinary course of the trial; (2)
the moving party must be prepared to state specifically what the
additional evidence would be; (3) the proffered evidence and
testimony which would result from granting the motion must not be
merely cumulative; and (4) there must be a substantial showing
that the proposed evidence could materially affect the findings
and the outcome of the case. Id.
B. Testimony of Mary Ann McElhiney
In this case, Defendant argues that a substantial injustice
would occur if it is not permitted to introduce additional
testimony of Mary Ann McElhiney showing that the Group Universal
Life Insurance Policy was not part of Aetna's year end
reconciliations. Defendant asserts that it did not discover this
evidence until the conclusion of the trial. Defendant seeks to
introduce this additional evidence in the form of a declaration
of Mary Ann McElhiney, a representative of Aetna. Defendant
further argues that one of the most important issues in this case
is whether employee contributions made up a portion of the
insurance premium refunds. (Def.'s Br. at 8.) Defendant argues
that the additional testimony supports its contention that the
premium refunds paid to GAB Robins by Aetna were never assets of
the VEBA. Id.
Plaintiffs, on the other hand, argue that it is immaterial
whether the funds paid to GAB Robins were derived from company or
employee contributions since the insurance premium refunds
constitute VEBA plan assets and may not be paid to GAB Robins
regardless of the origin of the funds. (Pls.' Br. at 5.)
Plaintiffs further argue that Ms. McElhiney's deposition was
taken roughly eight days before the start of the bench trial and
Defendant failed to ask a single question about the Group Universal Life Insurance Policy or whether it was included in
Aetna's annual accounting results at the deposition. (Pls.' Br.
at 3.) Defendants argue they exercised due diligence in trying to
obtain the newly discovered evidence regarding which policies
were included or excluded in Aetna's year end reconciliation
through Ms. McElhiney's deposition. (Def.'s Reply Br. at 3.)
In applying the four factors previously articulated, the Court
is satisfied Defendant diligently attempted to obtain the
information sought through Ms. Mc McElhiney's deposition by
asking Ms. McElhiney "whether or not any insurance plans, other
than the HMO, were not part of Aetna's year end reconciliation."
(See Dep. Tr. of Mary Ann McElhiney at 39:16-20 attached as Ex.
1 of Grady Reply Decl.) The Court further finds the testimony of
Ms. Mc McElhiney Defendant is seeking to admit is specific and
not cumulative of evidence previously admitted. The Court further
finds that the method through which Defendant is seeking to
introduce Ms. McElhiney's testimony, i.e. through a declaration
is not sufficient. Accordingly, Defendant may depose Ms.
McElhiney limited to the narrow issue of which policies were
included or excluded in Aetna's year end reconciliation. Ms.
McElhiney's deposition is to take place at Aetna's offices
located in Middletown, Connecticut within thirty (30) days of the
date of this Opinion.
C. Deposition excerpts of Neil Rogers
Defendant seeks to admit the counter-designated portions of
Neil Rogers' ("Rogers") deposition testimony. Counsel for
Defendant, Michael O. Adelman, Esq., asserts that he was under
the mistaken impression that the counter-designated portions of
Rogers' testimony were admitted. Upon discovering that Rogers'
testimony was not admitted, Mr. Adelman immediately contacted the
Court and requested that the trial record be reopened to admit
Rogers' deposition testimony.
Plaintiffs argue that Rogers' testimony is cumulative of the
issue that the VEBA was underfunded and further argues that the
evidence is not relevant since Rogers' testimony relates to the
negotiations of the Stock Purchase Agreement by which Brera
purchased GAB Robins and the VEBA was assigned. Plaintiffs
further argue that since the Stock Purchase Agreement was not
admitted into evidence, negotiations surrounding the Stock
Purchase Agreement is not relevant. (Pls.' Br. Opp'n at 7.)
Defendant argues that the negotiations are relevant in that
Rogers' testimony demonstrates that VEBA's underfunding was a
consideration in arriving at the purchase price Brera paid for
The Court finds Defendant demonstrated its diligence in
immediately contacting the Court upon realizing that Rogers'
testimony was inadvertently not moved into evidence. Further,
Rogers' counter-designations were specifically identified in the
Final Pre-trial Order. Further, the Court finds Rogers' testimony
is not cumulative of testimony already admitted into evidence
since Rogers' testimony is related to a method of calculating the
underfunding different than the method testified to by Ms. Ayaz
and Mr. Ferugheli. Accordingly, the trial record is to be opened
to allow Defendant's counter-designations of Rogers' deposition
testimony to be admitted. Additionally, in allowing the admission
of Defendant's counter-designations of Rogers' deposition
testimony, the Court will also permit the admission of
Plaintiffs' designations of Rogers' deposition testimony if
Plaintiff so desires. CONCLUSION
Based on the foregoing, Defendant's motion to reopen the trial
record to allow testimony of Ms. McElhiney and the designations
and count-designations of Rogers' deposition testimony is
granted. An appropriate Order accompanies this Opinion.
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