Ellis v. Fid. Mgmt. Tr. Co.
, No. 17-1693, __F.3d__, 2018 WL 991515 (1st Cir. Feb. 21, 2018) (Before Kayatta, Circuit Judge, Souter, Associate Justice, and Selya, Circuit Judge). In this certified class action alleging that Defendant breached its duties of loyalty and prudence under ERISA, the First Circuit affirmed the district court’s grant of summary judgment to Defendant. The court held that: (1) the participants failed to establish that there was a conflict of interest in the administrator’s pursuit of wrap insurance; (2) the administrator did not violate its duty of loyalty under ERISA by picking a conservative performance benchmark for its stable value fund; (3) the participants failed to establish that the administrator’s pursuit of wrap insurance breached its duty of prudence under ERISA; (4) the administrator’s choice of a performance benchmark for its portfolio could not be imprudent, in violation of ERISA, by virtue of being too conservative; and (5) there was no evidence that the administrator’s decisions regarding the portfolio were unreasonable under the circumstances at the time.
Swain v. Wilmington Trust, N.A., No. CV 17-71-RGA-MPT, 2018 WL 934598 (D. Del. Feb. 16, 2018) (Judge Richard G. Andrews). Plaintiffs’ complaint demonstrates a cognizable injury-in-fact with respect to the damages claims where an independent appraiser gave the ISCO stock held by the ESOP a fair market value that was $59,000,000 less (or 60% lower) than the purchase price paid just eleven days earlier. Plaintiffs “suffered a diminution in value” to their ESOP accounts and based on this the court denied the motion to dismiss these claims for lack of subject matter jurisdiction. But, the Magistrate Judge’s report correctly concluded that Plaintiffs lacked standing to pursue declaratory and injunctive relief, because Plaintiffs did not adequately allege “a real and immediate threat of future injury.” That the past injuries, which occurred once, “could happen again,” is nothing more than speculation. The court granted the motion to dismiss as to these claims. The court also dismissed Plaintiff’s claim based on 29 U.S.C. § 1106(a)(1)(E). The court denied the motion to dismiss Plaintiffs’ claims based on sections 1106(b)(2) and (b)(3) for failure to state a claim.
Trustees of Ohio Bricklayers Health & Welfare Fund, et al., v. VIP Restoration, Inc., et al., No. 1:17 CV 437, 2018 WL 931299 (N.D. Ohio Feb. 16, 2018) (Judge Patricia A. Gaughan). The court found that Semersky, as owner of the company, is a plan fiduciary, and he breached his fiduciary duties to the Funds by using unpaid contributions for the benefit of his other companies. Semersky is personally liable for the amount owed to Plaintiffs. His use of the plan assets for his own benefit and the benefit of his other businesses constitutes prohibited transactions under ERISA.
Usenko on behalf of SunEdison Semiconductor Ltd. v. SunEdison Semiconductor LLC, No. 4:17-CV-02227-AGF, 2018 WL 999982 (E.D. Mo. Feb. 21, 2018) (Judge Audrey G. Fleissig). The court granted Defendants’ motion to dismiss the amended complaint alleging breach of fiduciary duties for allowing Semi employees to continue to hold the stock of Semi’s former parent company. The Court found that Dudenhoeffer forecloses Plaintiff’s claims.
Santomenno v. Transamerica Life Ins. Co., No. 16-56418, __F.3d__, 2018 WL 1022460 (9th Cir. Feb. 23, 2018) (Before: Jacqueline H. Nguyen and Andrew D. Hurwitz, Circuit Judges, and Richard Seeborg, District Judge). “Joining other circuits, the panel held that a plan administrator is not an ERISA fiduciary when negotiating its compensation with a prospective customer. As to alleged breaches after the defendant became a plan service provider, the panel held that the defendant was not a fiduciary with respect to its receipt of revenue sharing payments from investment managers because the payments were fully disclosed before the provider agreements were signed and did not come from plan assets. Agreeing with other circuits, the panel held that defendant also was not a fiduciary with respect to its withdrawal of preset fees from plan funds. The panel concluded that when a service provider’s definitively calculable and nondiscretionary compensation is clearly set forth in a contract with the fiduciary-employer, collection of fees out of plan funds in strict adherence to that contractual term is not a breach of the provider’s fiduciary duty.”
- Alexander Acosta v. CMSH Electrical, et al., No. 217CV02253JAMCKD, 2018 WL 948613 (E.D. Cal. Feb. 20, 2018) (Magistrate Judge Carolyn K. Delaney). The court recommended that the Secretary’s motion for default judgment be granted. It found that the requested appointment of an independent fiduciary to manage, liquidate, and terminate the Plan is necessary to redress Defendant’s failure to comply with ERISA, and is appropriate equitable relief under ERISA.
Barnett, DDS v. Great Plains Trust Company et al., No. 17-2154-CM, 2018 WL 1035162 (D. Kan. Feb. 23, 2018). Where Plaintiffs allege that Defendant Kornitzer is a functional fiduciary because it provided investment advice for a fee, the court determined that they have pleaded enough facts to show that Kornitzer may have had enough involvement in the retirement plans that it is plausible it is liable for any breach of fiduciary duty under ERISA at the motion to dismiss stage. There is no authority to support Defendants assertion that a plan trustee is barred from seeking damages after a plan has been terminated. Plaintiffs’ Negligent Misrepresentation and Breach of Contract claims are dismissed as preempted by ERISA.
Schapker v. Waddell & Reed Financial, Inc., et al., No. 17-CV-2365-JAR-JPO, 2018 WL 1033277 (D. Kan. Feb. 22, 2018) (Judge Julie A. Robinson). The court determined that Plaintiff’s breach of fiduciary duty claim and prohibited transaction claim are not time-barred under § 1113(2) because Plaintiff did not have sufficient knowledge of all material facts at any time more than three years before she filed her original complaint. Here, Plaintiff alleged more than merely an excessive fees or underperformance claim that she states a plausible claim that Defendants’ process in selecting the Plan’s funds was flawed. The court also found Plaintiff’s indirect transfer prohibited transaction claim plausible. Motion to dismiss denied.
Downs v. JSP Companies, Inc., No. CV 17-0158 (DLF), __F.Supp.3d__, 2018 WL 1015341 (D.D.C. Feb. 22, 2018). The court denied Plaintiffs’ request for default judgment against Canales because they offer the bare assertion that the unpaid contributions are plan assets “for purposes of ERISA,” but they do not allege or demonstrate that the plan agreements actually define unpaid contributions as ERISA “plan assets,” much less “unambiguously” so. Therefore, the Court declined to hold Canales personally liable, whether as an ERISA “fiduciary” or “employer.”