Holmes v. Pension Plan of Bethlehem Steel Corp.

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit

5-23-2000

Holmes v. Pension Plan/ Bethlehem Steel
Precedential or Non-Precedential:

Docket 99-1619

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Filed May 23, 2000

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 99-1619 and 99-1620

ARNOLD HOLMES; LAWRENCE HOLLYFIELD, Fiduciary
to the Estate of Collins Hollyfield

v.

PENSION PLAN OF BETHLEHEM STEEL CORPORATION
AND SUBSIDIARY COMPANIES; EMPLOYEE BENEFITS
ADMINISTRATION COMMITTEE OF BETHLEHEM STEEL
CORPORATION; MICHAEL P. DOPERA;
JOHN/JANE DOES 1-10

Arnold Holmes and Lawrence Hollyfield, Fiduciary
to the Estates of original named plaintiff Collins
Hollyfield, individually and on behalf of all
members of the proposed class and subclasses,

Appellants at No. 99-1619

ARNOLD HOLMES; LAWRENCE HOLLYFIELD, Fiduciary of
the Estate of Collins Hollyfield

v.

PENSION PLAN OF BETHLEHEM STEEL CORPORATION
AND SUBSIDIARY COMPANIES; EMPLOYEE BENEFITS
ADMINISTRATION COMMITTEE OF BETHLEHEM STEEL
CORPORATION; MICHAEL P. DOPERA;
JOHN/JANE DOES 1-10

the Pension Plan of Bethlehem Steel Corporation and
Subsidiary Companies, the Employee Benefits
Administration Committee of Bethlehem Steel Corporation
and Michael P. Dopera,

Appellants at 99-1620
APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. No. 98-cv-01241)
District Judge: Honorable Franklin S. Van Antwerpen

ARGUED April 11, 2000

BEFORE: NYGAARD, ALITO, and GIBSON,*
Circuit Judges.

(Filed May 23, 2000)

Alan M. Sandals, Esq. (argued)
Howard I. Langer, Esq.
Sandals, Langer & Taylor
1650 Market Street
One Liberty Place, 50th Floor
Philadelphia, PA 19103

Attorneys for Appellants

G. Stewart Webb, Jr., Esq. (argued)
Venable, Baetjer & Howard
2 Hopkins Plaza
1800 Mercantile Bank & Trust
Building
Baltimore, MD 21201

Attorney for Appellees

OPINION OF THE COURT

NYGAARD, Circuit Judge.

Appellants, Arnold Holmes and Lawrence Hollyfield,filed
a civil action against Appellees pursuant to SS 404 and
502(a) of the Employment Retirement Income Security Act.
_________________________________________________________________

* The Honorable John R. Gibson, United States Circuit Judge for the
Eighth Circuit Court of Appeals, sitting by designation.

2
29 U.S.C. SS 1104 & 1132(a). The District Court had
jurisdiction over the action pursuant to 29 U.S.C.
S 1132(e)(1). We have jurisdiction to review the District
Court's final order pursuant to 28 U.S.C. S 1291.

Appellants, plaintiffs below, successfully prosecuted their
claim to interest on pension benefits they received after a
decade and a half of delay. Nevertheless, Appellants
challenge two equitable limitations the District Court placed
on the interest it awarded. They also challenge the District
Court's refusal to certify two classes of plaintiffs they
proposed for class action purposes. Finally, they challenge
the District Court's ruling that a legal memorandum they
sought to discover was protected by the doctrine of work-
product immunity. We will affirm in part, and reverse in
part.

Appellees, defendants below, cross appeal, ostensibly
raising an issue as to whether the District Court erred by
concluding that Appellants were entitled to any interest at
all, regardless of the limitations it imposed. Rather than
directly challenging the District Court's decision, however,
they limit their argument to a critique of our decision,
which the District Court correctly found controlling, in
Fotta v. Trustees of the United Mine Workers of Am. Health
& Retirement Fund, 165 F.3d 209 (3d Cir. 1998) (holding
that ERISA permits actions to recover interest on wrongly
withheld benefits even where the benefits were paid before
litigation). We hold that the argument is not properly
presented in this appeal, and decline to entertain it.

I. Background Facts & Procedure

Appellants, as well as the members of the plaintiff classes
they seek to certify, are participants in, or beneficiaries of,
the Pension Plan of Bethlehem Steel Corporation and its
Subsidiary Companies (hereafter referred to as "the Plan").
Prior to a 1977 amendment, the Plan required that benefits
due under the Plan be offset (i.e., reduced) by the amount
of any pension benefits the relevant participant received
from any source other than the Plan itself. In July 1977,
the Plan was amended so that the offset requirement
applied only to non-plan pension benefits "attributable to

3
employment with an Employing Company." See Bethlehem
1977 Salaried Pension Plan S 3.8 (J.A. at 128-29). In other
words, after the 1977 amendment, non-Plan pension
benefits received from sources falling outside the definition
of an Employing Company are not deducted from benefits
received from the Plan itself.

The Plan defines an "Employing Company" to mean
Bethlehem Steel, any Bethlehem Subsidiary that has
adopted the Plan, and "any corporation which, prior to July
31, 1966, was merged into or consolidated with any such
subsidiary company or with" Bethlehem Steel. See
Bethlehem Steel 1977 Salaried Pension Plan at 2 (J.A. at
120). Additionally, the Plan provides that benefits received
from sources falling within the definition of an Employing
Company are offset only to the extent they were earned
during a period in which the participant was being
"credited with continuous service for the purpose of
calculating the amount of any regular pension under[the]
Plan." Id. at 19-20 (J.A. at 128-29).

Appellants Holmes and Hollyfield both worked for
Bethlehem Steel subsidiaries prior to their respective
retirements, and both participated in the Plan. After retiring
in 1977, Hollyfield applied for pension benefits from both
the Plan, and from the United Mine Workers of America
Retirement Fund. Unlike the Plan, the UMWA Fund is not
employer specific. Rather, it is a multi-employer plan
providing benefits to all workers represented by the UMWA.
Like the Plan, however, it is funded entirely by employer
contributions, including contributions from Bethlehem
Steel and its subsidiaries.

Following his retirement, the Plan awarded Hollyfield
$214.13 in monthly pension benefits, effective December 1,
1977. Nearly a year later, in November 1978, his
application for UMWA benefits was granted in the amount
of $250 per month, retroactive to September 1, 1977.
Thereafter, the Plan notified Hollyfield that his Plan benefits
would be reduced by the full amount of his UMWA benefits.
Thus, because his UMWA benefits were greater than this
Plan benefits, Hollyfield's Plan benefits were eliminated
altogether. Additionally, because his UMWA benefits award
was retroactive, the Plan also required Hollyfield to repay

4
all Plan benefits he had previously received. Hollyfield
complied, paying the Plan $2,449.56 in previously received
benefits. The Plan did not request, and Hollyfield did not
pay, interest on the repaid benefits.

Appellant Holmes retired in 1980 and, like Hollyfield,
applied for pension benefits from both the Plan and from
the UMWA Fund. The Plan awarded him a monthly benefit
of $1,224.36, effective February 1, 1981. In October 1981,
the UMWA Fund awarded Holmes a monthly benefit of
$290.00, retroactive to November 1980. As it did with
Hollyfield, the Plan determined that all of Holmes' UMWA
benefits should be offset against his Plan benefits. And,
again, it required Holmes to repay all offset amounts
already received. Thereafter, Holmes repaid the Plan
$2,825.00, reflecting principal only and no interest.

In 1994, Hollyfield's son contacted Plan administrators
regarding his father's Plan benefits. In a subsequent
investigation, the Plan determined that none of Hollyfield's
UMWA benefits were earned during a period in which he
was being credited with continuous service for purposes of
calculating his Plan benefits. In other words, the Plan
concluded that none of Hollyfield's UMWA pension should
have been offset against his Plan benefits during the 17-
year period since he had retired. Consequently, the Plan
paid Hollyfield a lump sum of $47,553 in past-due benefits.
That sum represented past-due principal only, and did not
include any interest payments for the period of delay.

A similar series of events in 1997 led to Holmes'
collection of $24,514 in past-due Plan benefits. In contrast
to Hollyfield's case, however, the Plan determined that
Holmes earned 65% of his UMWA benefits at the same time
he was being credited with continuous service for purposes
of calculating his benefits under the Plan. Therefore, his
lump-sum payment amounted to only 35% of the Plan
benefits that had been offset in the sixteen years since his
retirement, not the 100% that Hollyfield had recovered.

Shortly after Holmes received his past-due benefits, his
attorney placed a call to the Plan's offices. In a conversation
with an assistant to the Plan's administrator, the attorney
claimed that Holmes was entitled to interest on his past-

5
due benefits as well as the principal. In response, a Plan
attorney prepared a memorandum analyzing the legal
issues surrounding Holmes' interest claim. The
memorandum was circulated to other Plan attorneys, as
well as to its administrator. Thereafter, the administrator
informed Holmes' attorney that nothing in the Plan
provided for interest payments on delayed benefits, and
that the administrator had determined such a payment
would not be appropriate. See Letter from Dopera to
Thornton of 07/22/1997 (J.A. at 185). Holmes then
appealed the denial of his interest claim to the Plan's
Employee Benefits Administration Committee. The
Committee affirmed. See Letter from Dopera to Thornton of
10/10/1997 (J.A. at 191).

In March 1998, Holmes and Hollyfield filed a civil
complaint against the Plan and its administrators. In Count
One of the complaint, both Holmes and Hollyfield sought
interest on their delayed benefits, as well as disgorgement
of any additional profits the Plan may have earned on those
benefits during the period of delay. Holmes also challenged
the continuing 65% offset of his UMWA benefits against his
Plan benefits, arguing that the UMWA benefits were not
received from an "Employing Company." See App. at 20.
Count Two alleged violations of the fiduciary duty to
disclose accurate information. See id. at 21.

The complaint also sought certification of two proposed
classes of Plan participants and beneficiaries: (1) those
whose benefits had been, were or would one day be
erroneously offset; and (2) those who had received or one
day would receive past-due benefits but neither interest nor
disgorgement of unjust gains. On August 12, 1998, the
District Court denied the motion for class certification
without prejudice, granting Appellants leave to refile their
motion after additional discovery.

During the course of discovery, Appellants sought to
compel production of the legal memorandum prepared in
response to Plaintiff Holmes' initial claim to interest on his
delayed benefits. The defendants argued that the
memorandum was protected by both the attorney-client
privilege and the doctrine of work-product immunity. A
Magistrate Judge rejected the attorney-client privilege

6
claim, but concluded that the memorandum was protected
from discovery under the work-product immunity doctrine.
The District Court affirmed, concluding that the Magistrate
Judge's reasoning was neither clearly erroneous nor
contrary to law.

After answering Appellants' complaint, the defendants
moved for summary judgment on both of its counts. With
respect to Count One, the defendants argued that neither
ERISA nor the Plan required payment of interest"when
retroactively awarding benefits to a participant." See Def.'s
Motion for S.J. at 4 (J.A. at 49). The District Court agreed,
and granted summary judgment in favor of the defendants
on Count One's interest claims.

The court also ruled that Plaintiff Holmes had failed to
exhaust his administrative remedies with respect to his
continuing-offset claim. Consequently, the court dismissed
the claim without prejudice. Holmes subsequently
reasserted the claim in a separate law suit. See Holmes v.
Pension Plan of Bethlehem Steel and Subsidiary Cos. , No.
99-CV-2369 (E.D. Pa., filed May 7, 1999) (J.A. at 591). The
District Court also granted summary judgment for the
Defendants on Count Two's breach-of-fiduciary-duty
claims, ruling that they were barred by the statute of
limitations. Thereafter, the court entered final judgment
and closed the case.

On February 4, 1999, the District Court granted
Appellants' motion for reconsideration of their interest
claims based on our intervening decision in Fotta v.
Trustees of the United Mine Workers of Am. Health &
Retirement Fund, 165 F.3d 209 (3d Cir. 1998) (holding that
ERISA permits actions to recover interest on wrongly
withheld benefits even where the benefits were paid before
litigation). At the same time, the court also ruled that the
doctrine of laches would limit the period for which interest
could be recovered, and that Pennsylvania's general six-
year statute of limitations provided the appropriate
limitations period. See Mem. & Order of 02/04/1999 at 5-
7 (J.A. at 528-30).

In a subsequent Memorandum and Order, the District
Court ruled that Appellants were entitled to interest on

7
their delayed benefits. But, based on a balancing of the
equities, the court also ruled that such interest should be
calculated at the post-judgment interest rate specified in 28
U.S.C. S 1961. See Mem. & Order of 03/25/1999 at 3-9
(J.A. at 528-30). Thus, the court ordered the Plan to pay
Appellants Holmes and Hollyfield $1391.50 and $459.68
respectively as interest on their delayed benefits. On March
25, 1999, the court closed the case for a second time.

A few days earlier, Appellants had renewed their motion
for class certification, once more proposing two classes of
prospective plaintiffs. Consequently, on April 7, Appellants
moved the District Court to reconsider its order closing the
case, and to consider their renewed motion for class
certification. The District Court granted the motion to
reconsider, but ultimately denied certification of both
proposed classes. That denial was based on the court's
conclusion that the proposed class definitions were overly
broad, and that neither class satisfied the prerequisites for
certification. See Mem. & Order of 06/30/99 at 7-29 (J.A.
at 607-29). The court then closed the case for a third time,
and Appellants filed this appeal.

On appeal, Appellants argue that the District Court erred
by: (1) awarding interest at the statutory rate rather than
requiring the Plan to disgorge the actual profits it earned on
their delayed benefits; (2) concluding that the doctrine of
laches applied to limit the period for which they could
recover interest; (3) denying certification of their proposed
plaintiff classes; and (4) concluding that the legal
memorandum they sought to discover was entitled to work-
product immunity.

II. Discussion

A. Appellant's Interest Rate Claims

Though ultimately awarded interest on their delayed
pension benefits, Appellants argue that the District Court
erred by calculating the award based on the post-judgment
interest rate established at 28 U.S.C. S 1961. Relying on
our decision in Fotta, Appellants argue that they are
entitled to recover interest at the actual rate of return that

8
the Pension Plan earned during the period it wrongfully
delayed payment of their benefits. Our review of the District
Court's interpretation and application of Fotta is plenary.
See Holmes v. Millcreek Township Sch. Dist., 205 F.3d 583,
589 (3d Cir. 2000) (citing Louis W. Epstein Family
Partnership v. Kmart Corp., 13 F.3d 762, 765-66 (3d Cir.
1994)). We conclude, however, that it is Appellants, not the
District Court, who have misinterpreted Fotta .

In Fotta, we held that a beneficiary may bring an action
under ERISA against a pension plan "to recover interest on
benefits the plan paid after some delay, but without the
beneficiary having sued under ERISA" to recover the
benefits themselves. See id. at 210. In earlier decisions, we
had already recognized that prejudgment interest was
available where the beneficiary had brought suit under
ERISA to recover unpaid benefits. See Fotta , 165 F.3d at
212 (citing Schake v. Colt Indus. Operating Corp. Severance
Plan for Salaried Employees, 960 F.2d 1187, 1192 n.4 (3d
Cir. 1992); Anthuis v. Colt Indus. Operating Corp., 971 F.2d
999, 1010 (3d Cir. 1992)).

Those earlier decisions were based on recognition of the
fact that

"[t]o allow the Fund to retain the interest it earned on
funds wrongfully withheld would be to approve of
unjust enrichment. Further the relief granted would
fall short of making [the claimant] whole because he
has been denied the use of the money which was his."

Id. (quoting Short v. Central States, Southeast and
Southwest Areas Pension Fund, 729 F.2d 567, 576 (8th Cir.
1984)). Those principles applied, we held in Fotta, whether
the beneficiary ultimately recovered the wrongfully withheld
benefits through judicial action, or through non-judicial
means. See id.

Although Fotta makes clear that interest on delayed
ERISA benefits is an equitable remedy left to the discretion
of the trial court, id. at 213-15, we also held that "interest
is presumptively appropriate." Id. at 214. We did not,
however, offer extensive guidance for deciding what rate of
interest is appropriate in a given case. Recognizing the need
to fill this gap, as well as its discretion in doing so, the

9
District Court in this case turned to Fotta's two primary
justifications for interest awards: (1) ensuring full
compensation to the plaintiff; and (2) preventing unjust
enrichment. See Mem. of 03/25/1999 at 5, (J.A. at 571)
(citing Fotta, 165 F.3d at 213). In considering these two
justifications, the District Court concluded that Fotta did
not qualify one as more important than the other, and that
each could result in a different interest rate. See id.

Focusing solely on compensating the plaintiff, the court
concluded that it would be inappropriate to award interest
at a rate higher than the essentially zero-risk yield on
Treasury Bills provided for in 28 U.S.C. S 1961. See id. at
6. In the court's view, it would be "highly speculative" to
simply assume that Appellants would have invested their
benefits in higher-risk, higher-yield securities, and that to
so assume would be to reward them for risks they did not
take. See id. On the other hand, if the only objective were
to prevent unjust enrichment, disgorgement of the
defendant's actual profits would be the appropriate
measure of interest to be awarded. See id. Ultimately, the
District Court concluded that the best way to resolve this
apparent conflict was to resort to equitable principles. See
id. at 7.

Balancing the equities, the District Court concluded that
requiring the Plan to disgorge its profits "would be
essentially punitive in nature," and that punitive measures
were inappropriate where the delayed payment of benefits
was inadvertent rather than intentional. See id. The court
further concluded that "the fact that the Appellants have
been paid amounts on all of the years, rather [than] the
amount they are legally entitled to is further evidence of
good faith." Id. at 7-8.2 Therefore, the court ruled,
restitution was the most equitable measure of interest due,
and restitution would be achieved by awarding interest at
the Treasury Bill yield rate as calculated according to the
analogous provisions in 28 U.S.C. S 1961. Performing the
_________________________________________________________________

2. The court had previously concluded that had Appellants been forced
to sue for recovery of their past-due benefits, the statute of limitations
would have barred them from recovering benefits due more than six
years prior to the filing of their suit.

10
necessary calculations, the District Court then awarded
Appellants interest at the rate of 5.01%. See id. at 575-78.

Appellants argue that they are entitled to recover the
much higher rate of interest that the Plan actually earned
while their benefits were withheld, approximately 12%, and
allege several flaws in the District Court's analysis. First,
they argue that the District Court erred by concluding that
requiring the Plan to disgorge all profits earned by delaying
payment of their benefits would be "punitive in nature." See
Appellants' App. at 26. "As a matter of logic," they argue,
"when a defendant is stripped of a benefit it had no right to
retain, it is not being `punished.' " Id. Although we can find
flaws in Appellants' own analysis, we ultimately conclude
that whether disgorgement is deemed punitive or otherwise,
the District Court did not abuse its discretion by declining
to adopt it as a remedy in this case.

As an initial matter, we note that any return the Plan
realized in excess of the risk-free yield on Treasury Bills
during the relevant period would be the result of the Plan's
investment expertise and labor, as well as additional risk
that the Plan, not Appellants, bore. Had the Plan's
investments yielded a lower rate of return than Treasury
Bills, or even a loss, it would have been the Plan rather
than Appellants that would have been required to bear the
resulting loss.

Indeed, as Appellants concede, in such circumstances
they would have sought, and likely would have recovered,
interest based on the Treasury Bill yield or some other
"minimal standard rate." Appellant's Br. at 29 n.2.
Consequently, requiring the Plan to disgorge profits earned
as a result of risks irreversibly borne and labor otherwise
uncompensated could be viewed as punitive. Alternatively,
awarding interest at a rate higher than the statutory rate
might be viewed as punitive merely because it would be
higher than necessary to compensate Appellants. See Ford
v. Uniroyal Pension Plan, 154 F.3d 613, 619 (6th Cir. 1998)
(concluding that awarding interest at a rate that would
overcompensate the plaintiff would be punitive and would
contravene "ERISA's remedial goal of simply placing the
plaintiff in the position he or she would have occupied but
for the defendant's wrongdoing.").

11
In any event, what matters is not how the District Court
characterized disgorgement, but whether its balancing of
the equities amounted to an abuse of discretion. Wefind no
such abuse in the District Court's conclusion that the Plan
had acted in good faith, and that Appellants would be fully
compensated by interest paid at the statutory post-
judgment rate.

Appellants next argue that deeming disgorgement of
profits as punitive defies the law as well as logic. The
District Court's approach, they argue, contravenes Fotta's
"paramount goal" of deterring ERISA violations by denying
wrongdoers the profits of their misconduct. See Appellant's
Br. at 26. Again, however, the argument misconstrues our
decision in Fotta. Deterrence was not the paramount goal in
Fotta, but only one of the decision's two primary goals--
providing restitution and preventing unjust enrichment "at
beneficiaries' expense." Fotta, 165 F.3d at 214 (emphasis
added). Interest earned in excess of what Appellants
themselves would have earned is not earned at their
expense.

Appellants next argue that the District Court
"impermissibly imposed a requirement of " culpability on
the Defendants' part not found in Fotta. See Appellants' Br.
at 27. But the mere fact that Fotta did not impose a
requirement of culpability does not mean that the District
Court, in its discretionary application of equitable
principles, could not do so.

In their final argument on this issue, Appellants contend
that although this court "has not yet ruled on the
appropriate measure of prejudgment interest under ERISA,"
it "has made clear that selection of an appropriate rate of
prejudgment interest must be made in light of the goals of
the statute involved." Id. at 31. They then argue, implicitly
rather than expressly, that only disgorgement can
effectuate ERISA's goals.

As an initial matter, the cases cited by Appellants in
support of this argument did not hold that a statutorily-
established rate of interest was per se inadequate, as
Appellants imply. Rather they merely upheld the relevant
decision maker's discretion to award interest at a higher

12
rate according to equitable principles. See Peterson v.
Crown Financial Corp., 661 F.2d 287, 292-93 (3d Cir. 1981)
(holding that where a "claim sounds in restitution, it calls
for the exercise of the court's broader equitable powers,"
leaving the trial judge with the discretion to award interest
above the statutory rate); North Cambria Fuel Co., Inc. v.
NLRB, 645 F.2d 177, 181 (3d Cir. 1981), cert. denied, 454
U.S. 1123 (1981) (holding that the NLRB's "broad discretion
in fashioning remedies . . . extends to the imposition of an
interest rate.").

Additionally, ERISA's goals do not mandate total
disgorgement. As we recently noted, "ERISA does no more
than protect the benefits which are due to an employee
under a plan." Bennett v. Conrail Matched Savings Plan,
168 F.3d 671, 677 (3d Cir. 1999). As the United States
Court of Appeals for the Sixth Circuit has recognized, the
purpose of granting equitable relief under ERISA is simply
to place "the plaintiff in the position he or she would have
occupied but for the defendant's wrongdoing." Ford, 154
F.3d at 619.

Awarding Appellants in this case interest at a higher rate
then they would have earned had they invested their
benefits on their own behalf would go beyond making them
whole. Therefore, ERISA's goals can be achieved by
awarding interest below the rate actually earned by the
Plan. Thus, Appellants' own argument on this point weighs
in favor of affirming the District Court's decision to award
interest at the statutory rate. Accordingly, we will affirm.

B. Laches

Though the District Court awarded Appellants interest on
their delayed pension benefits, it also ruled that the
doctrine of laches limited the period for which interest
could be recovered. According to the court, "under
Pennsylvania law, in the absence of fraud or concealment,
laches generally follows the statute of limitations." Mem. &
Order of 02/04/1999 at 5 (J.A. at 528) (citing United
National Ins. Co. v. J.H. France Refractories Co. , 668 A.2d
120 (Pa. 1995)). Concluding that there was no fraud or
concealment in this case, the District Court determined

13
that Pennsylvania's general six-year statute of limitations
was the most appropriate limitations period, and restricted
the period for which Appellants could recover interest
accordingly. See id. at 7. On appeal, Appellants do not
challenge the District Court's findings regarding the
absence of fraud or concealment. Rather, they argue that
the District Court misinterpreted United National Ins. Co.,
and erred in its application of the laches doctrine. We
agree.

As an equitable doctrine, the decision to apply laches is
left to the sound discretion of the District Court. See Gruca
v. U.S. Steel Corp., 495 F.2d 1252, 1258 (3d Cir. 1974).
Consequently, appellate review of a lower court's
application of the doctrine is limited to a review for abuse
of discretion. See id. Nevertheless, in the exercise of its
discretion, the District Court must correctly apply the
governing law. In this case, the District Court did not make
the necessary findings and we must remand.

In United National Ins. Co., the Pennsylvania Supreme
Court did, as the District Court correctly noted, iterate that
" `[i]n the absence of fraud or concealment, it is that general
rule that laches follows the statute of limitations.' " 668
A.2d at 124 (quoting Silver v. Korr, 139 A.2d 552, 555 (Pa.
1958)), and (citing Philadelphia v. Louis Lab., Inc., 189 A.2d
891, 893 (1963)). But the court's opinion did not discuss,
much less define, the doctrine of laches itself.

Under Pennsylvania law, the doctrine of laches has two
elements: (1) inexcusable delay; and (2) prejudice. See, e.g.,
Jacobs v. Halloran, 710 A.2d 1098, 1102 (Pa. 1998)
("Laches arises when a defendant's position or rights are so
prejudiced by length of time and inexcusable delay, plus
attendant facts and circumstances, that it would be an
injustice to permit presently the assertion of a claim
against him.") (emphasis in the original); DiLucia v.
Clemens, 541 A.2d 765 (Pa. Super 1988) ("In order to
prevail on his assertion of the equitable defense of laches,
[the defendant] must establish both undue delay from [the
plaintiff 's] failure to exercise due diligence and prejudice
resulting from the delay."). See also Burke v. Gateway, 441
F.2d 946, 949 (3d Cir. 1971) (noting that before a district
court can apply the doctrine of laches, it mustfind

14
"inexcusable delay in light of the equities of the case and
prejudice to the defendant."). The District Court applied the
doctrine of laches, but did not determine that its two
required elements were satisfied. Accordingly, we will
reverse the District Court on the issue of laches, and
remand for a proper application of the doctrine.

C. Class Certification

After the District Court denied Appellants' initial motion
for class certification without prejudice, the parties
undertook discovery on the issue of whether class
certification would be proper. Thereafter, Appellants
renewed their motion, seeking certification of the following
two classes of plaintiffs:

Class One [Offset Claims]:

All persons who retired on or after July 31, 1977 and
their beneficiaries who are or were entitled to pension
benefits under the Pension Plan of Bethlehem Steel
Corporation and Subsidiary Companies but whose
benefits were denied or reduced due to their receipt of
benefits from another pension plan or fund that were
attributable to employment with a former employer
that was not an "Employing Company" within the
meaning of the Plan.

Class Two [Interest Claims]:

All persons, including beneficiaries, who are or were
entitled to pension benefits under the Pension Plan of
Bethlehem Steel Corporation and Subsidiary
Companies whose benefits were delayed, reduced or
denied by the Plan for more than 90 days and who
have received or will receive a retroactive payment by
the Plan of such withheld pension benefits.

Mem. & Order of 06/30/99 at 4 (J.A. at 604) (citing Pls.'
Renewed Motion at 1).

In a 29-page Memorandum and Order, the District Court
denied certification of both proposed classes,finding them
deficient in several respects. On appeal, Appellants argue
that the District Court's certification analysis contains

15
numerous errors. They also claim that the "principle basis
for denying class certification was the fact that after the
renewed class motion was filed, but before the class ruling,
the court elected to grant final relief to the two named
Appellants and their claims were no longer actively
pending." Appellants' Br. at 39-40 (citing Mem. & Order of
06/30/1999 at 8-10 (J.A. at 608-10)). That claim grossly
mischaracterizes the District Court's decision.

1. Requirements for Class Actions

Under the Federal Rules of Civil Procedure, a civil suit
may proceed as a class action only if it satisfies four
prerequisites. Accordingly,

[o]ne or more members of a class may sue or be sued
as representative parties on behalf of all only if:

(1) the class is so numerous that joinder of all
members is impracticable;

(2) there are questions of law or fact common to t he
class;

(3) the claims or defenses of the representative p arties
are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and ade quately
protect the interests of the class.

Fed. R. Civ. P. 23(a).

In addition to the requirements expressly enumerated in
Rule 23, class actions are also subject to more generally
applicable rules such as those governing standing and
mootness. For instance, a plaintiff who lacks the
personalized, redressable injury required for standing to
assert claims on his own behalf would also lack standing to
assert similar claims on behalf of a class. See Davis v.
Thornburgh, 903 F.2d 212, 222 (3d Cir. 1990). Additionally,
even a plaintiff with standing is generally disqualified from
representing a class if his individual claim becomes moot
before the proposed class is certified. See Rosetti v. Shalala,
12 F.3d 1216, 1225 (3d Cir. 1993); Lusardi v. Xerox Corp.,
975 F.2d 964, 974 (3d Cir. 1992) (citations omitted). Not

16
surprisingly, however, there are exceptions to this general
rule. One such exception is at issue in this case.

So long as a class representative has a live claim at the
time he moves for class certification, neither a pending
motion nor a certified class action need be dismissed if his
individual claim subsequently becomes moot. See id. at
1228. If, on the other hand, the putative class
representative's individual claim becomes moot before he
moves for class certification, then any subsequent motion
must be denied and the entire action dismissed. See
Lusardi, 975 F.2d at 978.

2. Standard of Review

We review a decision to certify, or to deny certification of,
a class action for abuse of discretion. See In re Prudential
Ins. Co. Am. Sales Litig., 148 F.3d 283, 299 (3d Cir. 1998)
(citing In re General Motors Corp. Pick-Up Truck Fuel Tank
Products Liab. Litig., 55 F.3d 768, 782 (3d Cir. 1995));
Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 923 (3d
Cir. 1992). We may find an abuse of discretion"where the
`district court's decision rests upon a clearly erroneous
finding of fact, an errant conclusion of law or an improper
application of law to fact.' " Id. (quoting In re General Motors
Corp., 55 F.3d. at 783) (additional quotation marks and
citations omitted).

3. Class One (Offset Claims)

The District Court identified multiple, alternative grounds
for denying certification of the Class One "offset" claims.
First, it concluded that the proposed class had been defined
too broadly to permit certification. Stated differently, the
District Court concluded that Appellants sought to assert
claims on behalf of the proposed class that they had not,
and could not, assert on their own behalf. Consequently,
they were not qualified to represent the proposed class.
Second, the court concluded that even if the proposed class
were properly defined, it failed to satisfy three of Rule
23(a)'s four prerequisites for certification. Appellants raise
separate challenges to each of these conclusions.

17
The District Court based its conclusion that proposed
Class One was overbroad on several factors. First, the court
noted that after it had dismissed Plaintiff Holmes'
"continuing-offset claim" without prejudice, he had

reasserted that claim in a separate lawsuit. Consequently,
there was no live continuing-offset claim pending before the
court for which a class could be certified. See Mem. &
Order of 06/30/99 at 8 (J.A. 608). The court then noted
that both Appellants had settled their "mistaken-offset
claims" through administrative means before filing their
complaint seeking interest on those claims. Consequently,
they lacked live claims at the time they filed their motion
for class certification, requiring that it be denied. See id. at
8-10.

On appeal, Appellants argue that under the law of this
Circuit, the fact that their mistaken-offset claims had
become moot did not disqualify them from representing the
proposed class, and thus did not mandate denial of
certification. Again, they miscomprehend the relevant law.
The status of their own claims would be irrelevant only if
those claims were live at the time they moved for class
certification. Their claims, however, were moot before they
even filed their complaint. Consequently, they are
disqualified from representing the proposed class and the
District Court did not err by denying certification. See
Lusardi v. Xerox Corp., 975 F.2d 964, 978 (3d Cir. 1992).

In addition to concluding that Appellants lacked the live
claims required for class certification, the District Court
also concluded that certification of proposed Class One
should be denied on several alternative grounds. For
instance, the court concluded that the proposed class was
"so highly diverse and so difficult to identify that [it] is not
adequately defined or ascertainable." Mem. & Order of
06/30/1999 at 12 (J.A. 612) (listing six areas that would
require detailed inquiry). In addition, the court concluded
that even if the proposed class had been properly defined,
it did not satisfy Rule 23(a)'s commonality, typicality, and
adequacy-of-representation requirements. See id. at 17-19,
23, 25; see also Fed. R. Civ. P. 23(a)(2)-(4).

On appeal, Appellants raise separate challenges to each
of these alternative bases for denying certification. Here we

18
need not decide whether the District Court erred, because
the fact that Appellants lacked live claims at the time they
moved for certification bars certification of proposed Class
One in any event. Consequently, there is no need to
consider the validity of Appellants' additional challenges,
and denial of certification of Class One will be affirmed.

4. Class Two (Interest Claims)

As it did with respect to proposed Class One, the District
Court identified several alternative grounds for denying
certification of proposed Class Two. First, the District Court
concluded that Class Two was defined too broadly"because
it includes every plan participant, past or future, who has
received or will be receiving a delayed payment of benefits."
Mem. & Order of 06/30/1999 at 13 (J.A. 613) (citation
omitted). The court had "particular misgivings with respect
to the `future' members of the class because of the
infeasibility of auditing the Plan in order to determine
whether each participant may or may not have some
present or future claim regarding delayed benefits." Id.
(citation omitted). The court further concluded that the
proposed class was "ill-defined" because it included
individuals who had received or may one day receive
delayed benefits for any reason. In contrast, Appellants'
claims focused on "incorrect offsets since the Plan's
amendment in 1977." Id. at 13-14.

Appellants argue that the District Court incorrectly
concluded that proposed Class Two was overbroad. See
Appellants' Br. at 43-45. They do not, however, expressly
claim that the conclusion was "clearly erroneous" as
required for reversal on appeal. Nor, in fact, are the District
Court's conclusions clearly erroneous.

Appellants first argue that "[a]lthough the court believed
that determining interest for the members of Class Two
would require individualized determinations, this is not
correct." Id. at 44 (internal citation omitted). Yet Appellants
fail to explain why such a belief is incorrect. Based on their
subsequent arguments, Appellants appear to believe that
the interest entitlement of every class member can be
calculated using a single, objective formula, and that the

19
parties, not the court, would be responsible for performing
the requisite calculations. See id. Such a belief ignores
Fotta's clear holding that interest on delayed ERISA benefits
is an equitable remedy dependent upon the individual facts
of each claim. Thus, there is no single, objective formula for
calculating each class member's interest entitlement.
Moreover, it is the province of the court, not the parties, to
balance the equities in each claim. Therefore, the District
Court's conclusion that individualized determinations
would be required is not clearly erroneous.

Appellants next argue that even if individualized
determinations are required, that fact alone is not a "legally
valid ground to deny class certification." Id. at 44. But the
cases on which Appellants rely do not support their
argument. For instance, in Bogosian v. Gulf Oil Corp., we
held that:

it has been commonly recognized that the necessity for
calculation of damages on an individual basis should
not preclude class determination when the common
issues which determine liability predominate. E.g.,
Philadelphia Electric Co. v. Anaconda American Brass,
Co., 43 F.R.D. 452, 457 (E.D. Pa. 196 8); Dolgow v.
Anderson, 43 F.R.D. 472, 490-91 (E.D.N.Y. 1968 ). If
for any reason the district court were to conclude that
there would be problems involved in proving damages
which would outweigh the advantages of class
certification, it should give appropriate consideration to
certification of a class limited to the determination of
liability. See Rule 23(c)(4)(A).

561 F.2d 434, 456 (3d Cir. 1977) (emphasis added). As
already noted, the issue of liability itself requires an
individualized inquiry into the equities of each claim. Thus,
the District Court did not err by concluding that proposed
Class Two was overly broad and we will affirm denial of
certification.

D. Work-Product Immunity

Before seeking relief in the District Court, Appellant
Holmes pursued his interest claim through administrative
channels. His original claim to interest prompted a Plan

20
attorney to prepare a legal memorandum analyzing the
merits of the claim. Once judicial action had been initiated,
Appellants moved to compel production of that
memorandum during discovery. A Magistrate Judge denied
the motion, concluding that the memorandum was
protected from discovery by the doctrine of work-product
immunity. See Mem. of 01/08/1999 at 5-6 (J.A. at 514-15).
Appellants then appealed to the District Court, which
affirmed. In the final issue raised in their appeal,
Appellants argue that the Magistrate Judge erred by
denying their production request, and that the District
Court erred by affirming the Magistrate Judge's order.

We review discovery orders for abuse of discretion. See
Massachusetts School of Law at Andover, Inc. v. American
Bar Ass'n, 107 F.3d 1026, 1032 (3d Cir. 1997) (citing
Wisniewski v. Johns-Manville Corp., 812 F.2d 81, 90 (3d
Cir. 1987); Marroquin-Manriquez v. INS, 699 F.2d 129, 134
(3d Cir. 1983)). We agree that the Magistrate Judge erred,
and that the District Court thus erred by affirming denial
of Appellants' motion to compel discovery.

The doctrine of work-product immunity " `shelters the
mental processes of the attorney, providing a privileged
area within which he can analyze and prepare his client's
case.' " In re Grand Jury (Impounded), 138 F.3d 978, 981
(3d Cir. 1998) (quoting United States v. Nobles , 422 U.S.
225, 238 (1975)). A party claiming work-product immunity
bears the burden of showing that the materials in question
"were prepared in `the course of preparation for possible
litigation.' " Haines v. Liggett Group, Inc., 975 F.2d 81, 94
(quoting Hickman v. Taylor, 329 U.S. 495, 505 (1947);
Conoco, Inc. v. United States Dept. of Justice, 687 F.2d 724,
730 (3d Cir. 1982). Work product prepared in the ordinary
course of business is not immune from discovery. If the
party asserting the privilege bears its burden of proof, the
party seeking production may obtain discovery "only upon
a showing that the party. . . has substantial need of the
materials in the preparation of the party's case and that the
party is unable without undue hardship to obtain the
substantial equivalent of the materials by other means."
Fed. R. Civ. 26(b)(3).

21
In concluding that the memorandum at issue in this case
was protected by work-product immunity, the Magistrate
Judge noted that the Plan's attorney had prepared it
shortly after Plaintiff Holmes' attorney placed a telephone
call to a subordinate of the Plan's administrator. In that
telephone conversation, Holmes' attorney claimed that
Holmes was entitled to interest on his delayed benefits and
further asserted that failure to pay interest violated ERISA.
See Mem. of 01/08/1999 at 2 (J.A. 511). Thereafter, the
Plan's attorney prepared a memorandum analyzing the
merits of Holmes' interest claim.

Based on this factual background, the Magistrate Judge
concluded that "it is apparent the [memorandum] was
prepared in anticipation of possible future litigation. In
addition, it is reasonable to conclude that the document
would not have been prepared but for the prospect of
litigation." Id. at 6. The District Court determined that the
Magistrate Judge's reasoning was "not clearly erroneous or
contrary to law," and entered an order affirming denial of
Appellants' request for production. See Dist. Ct. Order of
02/03/1999 at 1-2 n.1 (J.A. 522-23).

The Magistrate Judge's conclusions may be reasonable,
but they are based on nothing more than assumptions.
There is nothing in the record indicating that the
Defendants have carried their burden of showing that the
memorandum was, in fact, prepared in anticipation of
possible litigation. Indeed, the Defendants appear to have
claimed nothing more than that "the memorandum was
written in connection with the claim by Plaintiff Holmes . . .
and . . . is, therefore, privileged and immune from discovery
under . . . the work product doctrine." Def.s' Answers to
Pl.s' Second Set of Interrogs. at 14 (J.A. 517). The mere fact
that the memorandum was prepared "in connection with"
Plaintiff Holmes' administrative claim to interest on his
delayed benefits hardly establishes that it was prepared in
anticipation of litigation. The Magistrate Judge abused his
discretion in assuming otherwise. Therefore, we will reverse
the order denying Appellants' request for production.

E. The Cross Appeal

Raising a single issue in their cross appeal, the Cross-
Appellants (defendants below) suggest that our decision in
Fotta is:

22
 unclear to the extent it does not address situations in
which a participant brings a claim for interest, but the
plan at issue expressly disallows such payment, or the
plan administrator, who has discretionary authority,
has construed the plan to mean that such payment is
not allowed.

Cross-Appellants' Br. at 37. They therefore invite us to
modify Fotta "to hold that under appropriate
circumstances, plan provisions will be given effect and
deference paid to plan administrators' decisions to deny
interest on delayed benefits and overpayments." Id. at 37-
38.

We decline the invitation for three reasons. First, the
Cross-Appellees did not raise this issue below, and have
thus waived it on appeal. See Pritzker v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 7 F.3d 1110, 1115 (3d Cir.
1993). Second, the Bethlehem Steel Plan at issue does not
contain a provision preventing the payment of interest on
delayed benefits. Consequently, the Cross-Appellees'
arguments on this point are entirely hypothetical, lacking
the concrete, particularized facts necessary to support a
sound judicial decision. Third, only an en banc court can
overturn Fotta's holding that interest on delayed payment of
plan benefits is an implied term of the plan contract. See
Fotta, 165 F.3d at 213-14; see also United States Court of
Appeals for the Third Circuit, Internal Operating Procedure
9.1 (Policy of Avoiding Intra-circuit Conflict of Precedent).
Therefore, we decline to entertain the arguments presented
in the cross appeal.

III. Conclusion

The District Court correctly concluded that interest
awards on delayed employment benefits are an equitable
remedy left to its discretion. The court did not abuse that
discretion by awarding Appellants interest at the post-
judgment statutory rate, and we affirm the award. Nor did
the District Court abuse its discretion in refusing to certify
the two classes of plaintiffs proposed in Appellants'
complaint and subsequent motion for certification.
Accordingly, we also affirm the District Court's denial of
class certification.

23
The District Court did err in two respects, however. First,
the court erred by applying the doctrine of laches without
first determining that its two required elements were
satisfied. Consequently, we reverse on this issue and
remand the case for further findings of fact. Additionally,
the court erred by concluding that the legal memorandum
Appellants sought to discover was entitled to work-product
immunity. The memorandum may well be entitled to
immunity, but, on this record, the Defendants have not
carried their burden of showing that it is. Therefore, we
reverse the District Court's ruling on work-product
immunity and remand for further findings.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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