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In the Matter of the

July 19, 2012

IN THE MATTER OF THE APPLICATION OF LIQUOR SALESMEN'S UNION LOCAL 2D PENSION FUND, PETITIONER, FOR AN ORDER TO COMPEL A DEPOSITION AND DISCOVERY FROM, BANK OF AMERICA, N.A., RESPONDENT.


The opinion of the court was delivered by: Matsumoto, United States District Judge:

MEMORANDUM AND ORDER

On June 4, 2012, Petitioner Liquor Salesmen's Local 2D Pension Fund ("Petitioner" or the "Fund") filed its Verified Petition (ECF No. 1); proposed Order to Show Cause (ECF No. 2); Memorandum of Law in Support (ECF No. 3); and the Affirmation of J. Warren Mangan, Esq. in Support (ECF No. 4) as to why Petitioner's request to Bank of America, N.A.*fn1 ("BOA" or "Respondent") for discovery prior to commencement of an action related to a certain bank account should not be granted. The court has considered Petitioner's request pursuant to Federal Rules of Civil Procedure 27 and 34 and other applicable federal and state rules and regulations. For the reasons stated below, Petitioner's request is DENIED.

I. BACKGROUND

Petitioner is an "employee benefit plan," within the meaning of Sections 3(1)-(3) and 502(d)(1) of ERISA, 29 U.S.C. §§ 1002(1)-(3), and 1132(d)(1), and is a multiemployer employee plan within the meaning of Section 3(37) of ERISA, 29 U.S.C. § 1002(37). (ECF No. 1, Pet. ¶ 3.) Petitioner's principal office, where the Fund itself is administered, is located in Brooklyn, New York. (Id.) The Fund's purpose is to provide pension benefits to its eligible participants, on whose behalf their employers had made contributions to the Fund. (Id. ¶ 4.)

Respondent BOA is a banking and financial services corporation headquartered in Charlotte, North Carolina. (Id. ¶ 5.) BOA has a nationwide presence, including in the counties comprising the Eastern District of New York. (Id.) As discussed below, the Fund filed its Verified Petition (the "Petition") and proposed Order to Show Cause in furtherance of its attempt to obtain from BOA the identity of the current account holders (the "John Doe Account Holders") of a certain BOA bank account (the "John Doe Account") maintained in Boca Raton, Florida.

Specifically, one of the Fund's plan participants, Mr. Mortimer Abrams, a resident of Florida, has been entitled to receive a monthly, defined pension benefit from the Fund in the sum of $377 per month since September 1, 1989. (Id. ¶ 7.) On or about March 24, 2008, Mr. Abrams authorized the Fund to automatically deposit his monthly benefit check into the bank account he maintained at BOA's branch located in Boca Raton, Florida. (Id. ¶ 8.) On or about January 23, 2012, however, the Fund discovered through an internal reconciliation check that:

(1) Mr. Abrams had still been receiving paper checks at his Florida residence between April 2008 and December 2011; and (2) the Fund's own bank, JPMorgan Chase, had been continuously processing direct deposit checks for the benefit of Mr. Abrams into the John Doe Account during that same time period, even though Mr. Abrams was not the owner of the John Doe Account. (Id. ¶ 9.) The Fund's Trustees were advised of these "double benefit payments" and authorized the commencement of an investigation as well as the commencement of an ERISA action. (Id. ¶ 10.) The Fund further avers that it expects to be a party to any resulting future ERISA action, but that such ERISA action is unable to be brought presently. (Id.)

The Fund thereafter contacted Mr. Abrams' spouse (who has power of attorney over his accounts due to Mr. Abrams' recent onset of Alzheimer's disease), who confirmed that Mr. Abrams had received monthly benefit paper checks between April 2008 and 2011, which were deposited into Mr. Abrams' BOA bank account. (Id. ¶ 11.) Mrs. Abrams knew nothing of the separate direct deposits being sent to the John Doe Account, however. (Id.) The Fund asserts that it needs the John Doe Account Holders' identities and account information to "complete its investigation of its ERISA claims by properly identifying potential defendants," and to support its claim that "there has been a wrongful (possibly fraudulent) deposit and retention of its funds" into the John Doe Account. (ECF No. 4, Mangan Affirm. ¶ 3; ECF No. 12, Petitioner's Reply at 4.) BOA, however, has refused the Fund's request to disclose the John Doe Account Holders' identities, citing privacy restrictions imposed by federal banking laws, such as the Gramm-Leach Bliley Act ("GLBA"), 15 U.S.C. §§ 6801, et seq. (ECF No. 1, Pet. ¶ 12; ECF No. 11, Resp. Obj. at 2.) Thus, the Fund requests an Order compelling BOA to provide pre-complaint testimony regarding the John Doe Account Holders' identities and general account information.

The court held a show-cause hearing regarding the Fund's Petition on June 7, 2012, at which counsel for the Fund and BOA were present. (See ECF No. 6.) The primary issue discussed was whether BOA could insist that a notice/opt-out procedure*fn2 be followed before disclosing the John Doe Account Holders' identities to the Fund. Counsel for the Fund also acknowledged that the Fund had not followed Rule 27's directive to provide respondent BOA with twenty-one days' notice of its intent to seek pre-complaint discovery.

On June 14, 2012, at the court's direction, BOA submitted objections to the Petition on that issue. (ECF No. 11, Respondent's Objections.) The Fund replied to BOA's objections on June 18, 2012, indicating that it is particularly opposed to the notification aspect of BOA's proposed disclosure protocol. (ECF No. 12, Petitioner's Reply at 4.)

II. DISCUSSION

The court must consider whether the Fund is entitled to pre-complaint discovery under Federal Rule of Civil Procedure 27.*fn3 Although generally disallowed, the Fund may be entitled to pre-complaint discovery*fn4 under Rule 27 if, after filing a verified petition in the district court for the district where any expected adverse party resides and providing twenty-one days' notice to any expected adverse party, it can show: (1) that it expects to be a party to an action cognizable in a court of the United States, but the action is unable to be brought presently; (2) the subject matter of the expected action and the petitioner's interest in such an action; (3) facts which the petitioner seeks to establish through the proposed testimony and the reasons for desiring to perpetuate that testimony at this time; (4) the names or description of the expected adverse parties and (5) the names and addresses of the witnesses to be examined and the substance of the testimony petitioner expects to obtain from those witnesses. Fed. R. Civ. P. 27(a)(1) and (2). If the court finds that perpetuating the testimony may prevent a failure or delay of justice, the court may order appropriate orders to allow the discovery. Fed. R. Civ. P. 27(a)(3).

The court has discretion to grant discovery pursuant to Rule 27. Mosseller v. United States, 158 F.2d 380, 382 (2d. Cir. 1946). Rule 27 is not, however, a substitute for the broader, post-complaint discovery available under Rule 26 and should be used only in special circumstances to preserve testimony which otherwise might be lost. In re Yamaha Motor Corp., U.S.A., 251 F.R.D. 97, 99-100 (N.D.N.Y. 2008). Significantly, the Advisory Committee Notes to Rule 27 cite Arizona v. California, 292 U.S. 341 (1934), in which the Supreme Court explained that one of the factors required to allow a bill of equity for the perpetuation of testimony was "the danger that [the testimony] may be lost by delay." 292 U.S. at 347--48. It is thus generally understood that a successful Rule 27 petition must establish three elements: "First, they must furnish a focused explanation of what they anticipate any testimony would demonstrate. Such testimony cannot be used to discover evidence for the purpose of filing a complaint. Second, they must establish in good faith that they expect to bring an action cognizable in federal court, but are presently unable to bring it or cause it ...


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