Lawyers in Principal Revenue Sharing Case Spar over Confidentiality Issue

January 17, 2008 ( - The latest legal battle in the lawsuit over the Principal Financial Group's 401(k) revenue sharing arrangements centers around whether a federal judge in Iowa will impose sweeping restrictions on how information provided in pre-trial discovery can be used.

Lawyers for the Principal have asked U.S. District Judge John A. Jarvey of the U.S. District Court for the Southern District of Iowa, who is presiding over the case, to approve a proposed order. The proposal suggests, among other things, that information generated in the suit by plaintiff Joseph Ruppert, cannot be shared with anyone other than those involved in Ruppert’s suit against Principal – specifically attorneys in other cases.

Ruppert is vice president of Fairmount Park Inc., which runs the Fairmount Park Racetrack in  Collinsville, Illinois near St. Louis.   He alleged in the suit that Principal’s revenue sharing practices violated the Employee Retirement Income Security Act (ERISA).

Mark Blocker, an attorney for Principal, contended in his request to Jarvey that the information the financial services company has provided includes valuable proprietary plan data and operating agreements with various service providers.

“This information includes personal identifiers, employment information, details of individual retirement accounts, earnings, account balances, trading records, details of plan distributions, and personal financial information such as savings history, investment returns, and details of telephone conversations between plan participants and The Principal,” Blocker wrote. “(Discovery) disclosures to Plaintiff also include The Principal’s confidential commercial information such as prototype plan documents, draft advertising materials, and agreements between The Principal and plan fiduciaries, mutual funds, plan participants, and other service providers.”

Blocker maintained: “It (information released in discovery) is not publicly available and is zealously protected by The Principal. Some of this information is access-logged, password protected, and provided on a need-to-know basis even to employees of The Principal. The Principal has a legitimate business interest in safeguarding this information and the Protective Order would help preserve its confidentiality.”

In his response filed with the court, plaintiff attorney   Klint L. Bruno acknowledged getting plan details but only for Ruppert’s plan and said a court protective order would not be necessary because of ERISA requirements for trustees.

“Principal and Plaintiff are both already mutually bound to respect those participants’ privacy by virtue of their status as fiduciaries of the Plan,” Bruno said.

Bruno also claimed that 25,000 to 30,000 of the documents produced so far are Principal’s marketing and advertising materials: “ Advertising materials and template documents shared with thousands of pension plans cannot reasonably be characterized as ‘confidential.'” Also, Principal already shares generic plan documents with clients and potential clients, Bruno said.

The suit was initially filed in federal court in Illinois but was later transferred to Iowa. (See Principal Revenue Sharing Suit Gets Moved to Iowa ).