STEPHANIE WOZNICKI, on behalf of herself and all others similarly situated, Plaintiff, v. RAYDON CORPORATION, DONALD K. ARIEL, DAVID P. DONOVAN, THE ESOP COMMITTEE OF THE RAYDON CORPORATION EMPLOYEE STOCK OWNERSHIP PLAN, LUBBOCK NATIONAL BANK, DAVID P. DONOVAN 2012 TRUST, ARIEL FAMILY TRUST DATED DECEMBER 18, 2012, PAMELA W. ARIEL, VERNA L. DONOVAN 2012 TRUST, DAVID P. DONOVAN, JR., IRREVOCABLE TRUST DATED JULY 25, 2008, LORI L. WEISS IRREVOCABLE TRUST DATED JULY 25, 2008, NIKI J. DUNCAN IRREVOCABLE TRUST DATED JULY 25, 2008, Defendants Case No. 6:18-cv-2090-Orl-78GJK United States District Court, M.D. Florida Filed May 19, 2020 Counsel Colin M. Downes, Pro Hac Vice, Robert Joseph Barton, Pro Hac Vice, Block & Leviton LLP, Washington, DC, Daniel M. Feinberg, Pro Hac Vice, Feinberg Jackson Worthman & Wasow LLP, Berkeley, CA, Loren Bolno Donnell, Sam Jones Smith, Burr & Smith, LLP, St. Petersburg, FL, for Plaintiff. Alicia M. Chiu, Jackson Lewis, PC, Orlando, FL, Ashley B. Abel, Pro Hac Vice, Cashida N. Okeke, Pro Hac Vice, Jackson Lewis P.C., Greenville, SC, Kenneth C. Weafer, Pro Hac Vice, Jackson Lewis, P.C., Albany, NY, Eliot T. Burriss, Pro Hac Vice, Holland & Knight LLP, Dallas, TX, Joseph M. Wasserkrug, Kamal Sleiman, Michael Garrett Austin, McDermott, Will & Emery, LLP, Miami, FL, Theodore M. Becker, Pro Hac Vice, Richard J. Pearl, Pro Hac Vice, McDermott Will & Emery LLP, Chicago, IL, Ashley B. Abel, Jackson Lewis, PC, Greenville, SC, for Defendants. Kelly, Gregory J., United States Magistrate Judge Order *1 This cause came on for consideration, without oral argument, on the following motion: MOTION: PLAINTIFF’S MOTION TO COMPEL PRODUCTION OF DOCUMENTS AGAINST DEFENDANT LUBBOCK NATIONAL BANK (Doc. No. 168) FILED: April 6, 2020 THEREON it is ORDERED that the motion is GRANTED IN PART AND DENIED IN PART. I. BACKGROUND Raydon Corporation “was founded in 1988 and specializes in developing simulation and training technologies for military training by the U.S. Armed Services.” Doc. No. 98 at 9. Plaintiff Stephanie Woznicki alleges that in 2015, Defendant Raydon was a closely held company that was not traded on any public market or exchange. Doc. No. 67, ¶ 21. It “had a history of expansion and contractions.” Id. at ¶ 23. In April 2015, the owners attempted to sell Raydon to Cubic Corporation, but after conducting its due diligence, Cubic decided not to complete the transaction. Id. at ¶¶ 33-34. In 2015, Raydon’s contract with the Program Executive Office for Simulation, Training and Instrumentation (U.S. Army) was terminated due to the company’s “fail[ure] to meet technical performance requirements,” making it highly unlikely that Raydon would receive any more U.S. Army contracts. Id. at ¶¶ 26, 28, 31. Three weeks later, the “Selling Shareholders”[1] sold the stock of Raydon to the Raydon Corporation Employee Stock Ownership Plan (the “ESOP”) for $60.5 million (the “2015 Transaction”). Id. at ¶ 2. Defendant Lubbock National Bank (“Lubbock”) was the trustee of the ESOP and facilitated the 2015 Transaction. Id. at ¶¶ 19, 47. The 2015 Transaction included million-dollar payments to Defendants Donald K. Ariel and David P. Donovan (the “Director Defendants”) in return for their promises to not compete with Raydon. Id. at ¶ 63. This was in addition to subordinated notes obligating Raydon to pay the Director Defendants millions of dollars in principal and interest over at least fifteen years after the sale. Id. at ¶¶ 63-64. Woznicki alleges that there is “no rational economic basis” for the non-compete agreements because Raydon is indebted to the Director Defendants for at least fifteen years and competing with the company might cause it to default on the subordinated note payments. Id. at ¶ 65. As part of the 2015 Transaction, Raydon agreed to indemnify the Director Defendants against claims regarding their services as fiduciaries of the ESOP. Id. at ¶ 75. Raydon also agreed to indemnify Lubbock against claims related to the ESOP or its performance of its duties as trustee of the ESOP. Id. at ¶ 76. On December 31, 2015, the fair market value of Raydon’s stock held by the ESOP was $5.11 million. Id. at ¶ 53. On December 31, 2017, the stock was worth $4.55 million. Id. *2 Following the 2015 Transaction, Lubbock entered into a settlement agreement in the case of Acosta v. Cactus Feeders, Case No. 2:16-cv-00049 (N.D. Tex.). Id. at ¶¶ 67-68. In Acosta, the United States Department of Labor alleged that Lubbock caused the Cactus Feeders, Inc. Employee Stock Ownership Plan to pay tens of millions of dollars more than it should have for company stock in a 2012 ESOP transaction. Id. at ¶ 67. As part of the settlement, Lubbock “agreed to adopt policies and procedures applicable to its services as Trustee of any ESOP in connection with transactions in which the ESOP is purchasing or selling employer securities that are not publicly traded.” Id. at ¶ 68. Woznicki alleges that the ESOP’s fiduciaries would have known about the Acosta lawsuit and settlement, and this should have prompted Raydon, the ESOP Committee and Director Defendants to conduct an investigation to determine whether Lubbock followed appropriate procedures in the 2015 Transaction and whether the price paid by the ESOP for the Raydon stock represented fair market value. Id. at ¶ 71. Woznicki is a participant in the ESOP. Id. at ¶ 6. She believes Lubbock failed to adequately investigate Raydon and that it should not have relied on information provided to it by persons with a financial interest in the 2015 Transaction. Id. at ¶¶ 35-45. She complains that when they engaged in the 2015 Transaction, the officers and directors of Raydon, their relatives, and their relatives’ trusts (the “Raydon Defendants”), along with Lubbock, violated the Employee Retirement Income Security Act of 1974 (“ERISA”). Doc. No. 67. The Amended Complaint includes claims for (1) engaging in a prohibited transaction forbidden by ERISA §§ 406(a), 29 U.S.C. §§ 1106(a), against the Selling Shareholders and Lubbock; (2) engaging in a prohibited transaction forbidden by ERISA §§ 406(b), 29 U.S.C. §§ 1106(b), against the Selling Shareholders; (3) breach of fiduciary duty under ERISA §§ 404(a)(1)(A) and (B), 29 U.S.C. §§ 1104(a)(1)(A) and (B) against Lubbock; (4) breach of fiduciary duty under ERISA §§ 404(a)(1)(A), (B) and (D), 29 U.S.C. §§ 1104(a)(1)(A), (B) and (D) by Raydon, the ESOP Committee, and Director Defendants; and (5) violation of ERISA § 410 and ERISA § 502(a)(3) against Lubbock and the Director Defendants. Id. at ¶¶ 92-145. Woznicki seeks a declaratory judgment, injunctive relief, disgorgement of profits made using the ESOP’s assets, an accounting, constructive trusts, equitable liens on funds wrongfully withheld by Defendants, and attorney’s fees and costs. Id. at 36-37. On March 16, 2020, the Court certified the following class: All participants in the Raydon Corporation Employee Stock Ownership Plan from September 30, 2015, or any time thereafter, who vested under the terms of the Plan and those participants’ beneficiaries. Excluded from the named class are Defendants and their immediate family (including any person defined as a relative under 29 U.S.C. § 1002(15)); any fiduciary of the Plan; the officers and directors of Raydon Corporation or of any entity in which any Defendant has a controlling interest; and legal representatives, successors, and assigns of any such excluded persons. Doc. No. 163 at 4-5. Woznicki was certified as the class representative and her attorneys were appointed Class Counsel. Id. at 5. II. THE MOTION TO COMPEL On April 6, 2020, Woznicki filed a motion to compel (the “Motion”), asking the Court to compel Lubbock to produce documents responsive to its Requests for Production of Documents dated over a year earlier, March 10, 2019. Doc. No. 168. Woznicki asks the Court to compel documents responsive to requests 3, 5-10, 12, 14-16, 18-20, 22-29, and 33-34. Id. at 1. On April 20, 2020, Lubbock filed its response to the Motion (the “Response”). Doc. No. 170. In the Response, Lubbock asserts that it does not intend to withhold documents responsive to requests 3, 6, 8, 9, 12, 14, 18, 22, 25, 29, 33, and 34. Id. at 3. Thus, the requests at issue are 5, 7, 10, 15, 16, 19, 20, 23, 24, 26, 27, and 28. *3 Federal Rule of Civil Procedure 26(b)(1) provides the following: Parties may obtain discovery regarding any nonprivileged matter that is relevant to any party’s claim or defense and proportional to the needs of the case, considering 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. Lubbock asserted numerous objections in response to the requests, Doc. No. 170 at 6-14, but the majority of them are general objections that the Court summarily overrules. Polycarpe v. Seterus, Inc., No. 6:16-CV-1606-ORL-37TBS, 2017 WL 2257571, at *1-2 (M.D. Fla. May 23, 2017) (general objections do not meet the specificity requirement of Rule 34 for objections to requests to produce); Benfatto v. Wachovia Bank, N.A., No. 08-60646-CIV, 2008 WL 4938418, at *2 (S.D. Fla. Nov. 19, 2008) (“generalized objections, which purported to object to each and every category of documents, are not recognized by this Court.”). Lubbock’s specific objections are addressed below. A. Time Period Objections Regarding requests 5, 7, 15, 16, 19, 20, 24, 26, 27, and 28, Lubbock objects to producing documents that were created after the 2015 Transaction.[2] Doc. No. 170 at 3-7. Lubbock argues that these documents are irrelevant and not proportional because whether Lubbock is liable depends on the circumstances then prevailing, not “the results of the transaction.” Id. at 4-5. Simply because the circumstances then prevailing are when Lubbock’s behavior will be measured, does not necessarily lead to the conclusion that documents created after the 2015 Transaction are not relevant or proportional. For example, in Donovan v. Cunningham, 716 F.2d 1455, 1472 (5th Cir. 1983), which Lubbock relies on to support its argument, Doc. No. 170 at 4, the Fifth Circuit pointed to evidence consisting of a letter written after the ESOP transaction, which was used to demonstrate what was known pre-transaction. Although the evidence did not help the party using it to prevail, it was certainly considered relevant. See id. Lubbock’s objection to producing documents responsive to requests 5, 7, 15, 16, 19, 20, 24, 26, 27, and 28, that were created after the 2015 Transaction is overruled. B. Documents Constituting or Discussing Insurance Policies Reflecting Terms of Insurance or Indemnification Woznicki’s request 10 asks for the following: All DOCUMENTS constituting or discussing any insurance policies, in effect during the RELEVANT TIME PERIOD, that reflect the terms under which any PERSON may be insured or indemnified against liability RELATING TO the PLAN, including but not limited to the policies themselves, any reservation of rights letters, or other DOCUMENTS that consist of, refer to, or contain COMMUNICATIONS with any insurer regarding the claims set forth in this action. *4 Doc. No. 168 at 6. Lubbock states that it produced “the insurance policy that is available to pay [Woznicki’s] claims ... [and] the engagement agreements reflecting potentially available indemnity arrangements.” Doc. No. 170 at 12. In support of its argument that it need not produce any other documents because there are no express claims regarding insurance matters, Lubbock cites Summit Towers Condominium Association, Inc. v. QBE Insurance Corp., No. 11-60601-CIV, 2012 WL 1440894, at *4 (S.D. Fla. Apr. 4, 2012), Doc. No. 170 at 12, but in that case the court was asked to determine whether reinsurance information was discoverable. Here, request 10 includes documents discussing or constituting insurance policies that reflect terms under which any person may be indemnified against liability relating to the ESOP, and the indemnification agreements entered into as part of the 2015 Transaction form the basis of Woznicki’s claim against Lubbock and the Director Defendants for violating ERISA §§ 410 and 502(a)(3). Doc. No. 67 at ¶¶ 141-45. Therefore, Lubbock’s objections to request 10 are overruled. C. Document Retention Policies Woznicki’s request 23 asks for “[a]ny document retention policy or policy regarding retention of electronically stored information in effect during the RELEVANT TIME PERIOD.” Doc. No. 168 at 13. Both Woznicki and Lubbock agree that a request for document retention policies is relevant and proportional when there is a gap in document production, although they may disagree on how big that gap must be. Id. at 13-14; Doc. No. 170 at 13. Woznicki notes that Lubbock had only produced forty-six documents when the Motion was filed. Doc. No. 168 at 13. Rather than addressing Woznicki’s representation in any way, Lubbock makes the conclusory assertion that “[r]etention policies are not relevant at this juncture.” Doc. No. 170 at 13. Woznicki demonstrates that request 23 is relevant and proportional, and Lubbock’s objection is overruled. D. Privileged Information and the Fiduciary Exception Woznicki asserts that Lubbock “refuse[s] to produce otherwise privileged documents it acknowledges are subject to the fiduciary exception unless Plaintiff enters into an agreement restricting her ability to use or share those documents.”[3] Doc. No. 168 at 23. Lubbock states that it is not refusing to produce privileged documents that are subject to the fiduciary exception, but that Woznicki believes she can unilaterally waive the privilege. Doc. No. 170 at 15-16. Lubbock wants Woznicki to “acknowledge, via a Confidentiality Agreement, that the fiduciary exception applies to these documents to the extent they are produced to [her], as a participant in the ESOP.” Id. at 16. Lubbock states, “It is insufficient for Woznicki to merely acknowledge that the privileged documents will be kept confidential per the parties’ existing Confidentiality Agreement.” Id. Lubbock contends that this is insufficient because “[a] document merely designated ‘Confidential’ under the existing agreement could ultimately be filed publicly if this Court found that the designating parties’ interests in protecting the business information in the document outweighed the public’s right to see it.” Id. Woznicki and Lubbock appear to agree that there are documents subject to the fiduciary exception that need to be produced. Instead of filing a motion for protective order, however, Lubbock put its request for relief from the Court in the Response in violation of Local Rule 3.01. Lubbock failed to meet its burden in demonstrating that the documents are privileged or should be protected. Lubbock will be provided an opportunity to move for a protective order. The motion should comply with Local Rule 3.01 and the undersigned’s Standing Order Regarding Privileged and Protected Information, Case No. 6:18-mc-20-Orl-GJK, which can be found on the Court’s website. E. Federal Rule of Civil Procedure 34(b)(2)(C) *5 Woznicki argues that Lubbock did not comply with Rule 34(b)(2)(C), Doc. No. 168 at 22, which states, “An objection must state whether any responsive materials are being withheld on the basis of that objection. An objection to part of a request must specify the part and permit inspection of the rest.” Woznicki asks the Court to compel Lubbock to “revise its responses to clarify where it is withholding otherwise responsive documents based on any objections this Court does not overrule ....” Doc. No. 168 at 22. As Lubbock’s objections, other than those as to privilege, are overruled, this request is moot. III. CONCLUSION Accordingly, it is ORDERED that the Motion, Doc. No. 168, is GRANTED IN PART AND DENIED IN PART as follows: 1. On or before May 26, 2020, Lubbock shall: a. Produce all non-privileged documents responsive to Woznicki’s Requests for Production of Documents dated March 10, 2019, and numbered 3, 5-10, 12, 14-16, 18-20, 22-29, and 33-34; b. Produce a log of all documents withheld from production on the basis of privilege;[4] c. File a motion for protective order regarding documents subject to the fiduciary exception; and 2. In all other respects, the Motion is DENIED. DONE and ORDERED at Orlando, Florida, on May 19, 2020. Footnotes [1] The Selling Shareholders are Defendants Donald K. Ariel; David P. Donovan; David P. Donovan 2012 Trust; Ariel Family Trust Dated December 18, 2012; Pamela W. Ariel; Verna L. Donovan 2012 Trust; David P. Donovan, Jr., Irrevocable Trust Dated July 25, 2008; Lori L. Weiss Irrevocable Trust Dated July 25, 2008; and Niki J. Duncan Irrevocable Trust Dated July 25, 2008. (Doc. No. 67 at ¶ 17. [2] Lubbock also objects to producing documents responsive to requests 7, 15, 16, 19, 20, 24, 26, 27, and 28, because it contends that Woznicki should seek these documents from other parties and it would be time consuming and costly to search for and produce these documents. Doc. No. 170 at 7. Lubbock may not dictate how Woznicki should conduct her discovery, and its conclusory assertions are unavailing. [3] Lubbock explains that “[t]he fiduciary exception to the attorney-client privilege allows for the limited production of otherwise privileged communications between an ERISA fiduciary and its attorney, if those communications were made in the capacity as an ERISA fiduciary.” Doc. No. 170 at 15 (emphasis in original). [4] Lubbock need not log documents generated for the defense of this case after Woznicki’s claims were asserted.