Solis v. Explore General, Inc. et al

Filing 39

JUDGMENT signed by Chief Judge Anthony W. Ishii on 01/20/2012. CASE CLOSED. (Flores, E)

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MARY K. ALEJANDRO
Acting Regional Solicitor
DANIELLE L. JABERG (S.B. #256653)
Counsel for ERISA
LAURA C. BREMER (S.B. #162900)
Trial Attorney
Office of the Solicitor
UNITED STATES DEPARTMENT OF LABOR
90 7th Street, Suite 3-700
San Francisco, California 94103
Telephone: [phone]
Facsimile: [phone]
Email: [e-mail]
Attorneys for Plaintiff
United States Department of Labor

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA
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HILDA L. SOLIS, Secretary of Labor,
United States Department of Labor,

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Plaintiff,

Case No. 1:10-cv-01157-AWI-SKO
vs.

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JUDGMENT
EXPLORE GENERAL, INC., a California
corporation; JAIME M. GONZALEZ, an
individual; PAUL K. GONG, an
individual; and, EXPLORE GENERAL,
INC. 401(K) PROFIT SHARING PLAN,
an employee benefit plan,
Defendants.

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Plaintiff Hilda L. Solis, Secretary of Labor, United States Department of Labor (the

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“Secretary”) filed a motion for summary judgment pursuant to Federal Rule of Civil Procedure

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56 against defendants Explore General, Inc. (“Explore General”), Jaime M. Gonzalez

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(“Gonzalez”), and Paul K. Gong (“Gong”). After reviewing the pleadings of record and all

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competent and admissible evidence submitted, the Court found that there are no genuine issues

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of material fact and that the movant is entitled to judgment as a matter of law. Accordingly, on

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December 22, 2012, the Court rendered a decision, Order Re: Motion for Summary Judgment or

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Partial Summary Judgment in the Alternative, granting the Secretary’s motion for summary
Judgment

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judgment. In accordance with that Order,

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IT IS HEREBY ORDERED AND ADJUDGED that:

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1.

Defendants Explore General and Gonzales are jointly and severally liable to

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restore $519,601.14 in losses to the Explore General, Inc. 401(k) Plan (the “Plan”) arising from

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and caused by their breaches of fiduciary duty under the Employee Retirement Income Security

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Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., and judgment is hereby entered against them

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in that amount.

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2.

All payments in satisfaction of the Judgment shall be made payable to the

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Explore General, Inc. 401(k) Plan and shall be remitted to the custodian Principal Life

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Insurance Group at 711 High Street, Des Moines, IA 50392. If, for any reason, the custodian

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does not deposit such payments, within 15 business days, Defendants Gonzalez and Explore

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General must establish a segregated trust account with title in the name of the Plan, and must

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deposit such payments to the Plan in the trust account. Within 15 business days after an

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Independent Fiduciary is appointed, as set forth below, Defendants Gonzalez and Explore

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General shall transfer all funds in the Plan’s trust account to the Independent Fiduciary. Any

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further payments in satisfaction of the Judgment shall be made in accordance with the

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Independent Fiduciary’s instructions.

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3.

Defendants Explore General, Gonzalez and Gong are permanently enjoined

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from serving as fiduciaries of, or service providers to, any ERISA-covered employee benefit

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plan.

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4.

Upon appointment of an Independent Fiduciary, as set forth below, Defendant

Explore General is removed as a fiduciary of the Plan.
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An independent fiduciary with discretionary authority over the administration

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and management of the Plan, with all the rights, duties, discretion, and responsibilities of a

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trustee, fiduciary, and Plan Administrator under ERISA shall be appointed (“Independent

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Fiduciary”). The Independent Fiduciary shall be designated upon later motion by the Secretary

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and order of this Court. Such motion shall be filed on or before March 19, 2012.

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6.
Judgment

The Independent Fiduciary shall have the following duties and responsibilities:
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a.

The Independent Fiduciary shall collect, marshal, allocate, distribute and

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otherwise pay out all of the assets of the Plan (in all Plan accounts, including forfeiture and

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suspense accounts) and take further action with respect to the Plan as appropriate, including

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terminating the Plan when all of its assets have been distributed to all eligible participants and

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beneficiaries;

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b.

The Independent Fiduciary shall, pursuant to the procedures outlined in

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the Employee Benefits Security Administration’s Field Assistance Bulletin 2004-02, exercise

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reasonable care and diligence to identify and locate each participant and beneficiary of the Plan

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who is eligible to receive a distribution under the terms of the Plan;

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c.

The Independent Fiduciary shall have full access to all data, information,

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and calculations in the possession of the Plan and under its control, including information and

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records maintained by the Defendants, their attorneys, their accountants, and other agents, as

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well as service providers of the Plan; and,

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d.

The Independent Fiduciary shall comply with all applicable rules and

laws.
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Following the designation of the Independent Fiduciary by this Court, the

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Independent Fiduciary shall be required to present to the Court and the Secretary an itemized

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application for the payment of fees and expenses on a quarterly basis (“Fee Application”) and

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upon termination of the Plan.

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a. The Fee Application shall include the hourly rates of pay, dates and hours of
work, a description of work performed, and an itemized statement of expenses.

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b. The Secretary requests that the Fee Application shall be deemed approved, unless

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the Secretary specifically objects to the Fee Application within fifteen business days. In the

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event the Secretary objects to the Fee Application, the Secretary requests that the Court decide

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whether the Independent Fiduciary’s application should be granted.

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c. Once approved, the Fee Application shall be paid from the assets of the Plan.

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8.

Costs are awarded to Plaintiff.

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9.

Interest shall accrue on the $519,601.14 awarded at the rate set forth 28 U.S.C.

Judgment

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§ 1961(a) from the date this Court enters this Judgment until such time as all losses with

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applicable interest are restored to the Plan.

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10.

Nothing in this Judgment affects the ability of the Secretary of Labor to assess a

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mandatory civil penalty against the Defendants in an amount equal to twenty percent of the

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applicable recovery amount pursuant to ERISA § 502(l), 29 U.S.C. § 1132(l).

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11.

This Court retains jurisdiction of this action for purposes of enforcing

compliance with the terms of this Judgment.

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IT IS SO ORDERED.

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Dated: January 20, 2012

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CHIEF UNITED STATES DISTRICT JUDGE
DEAC_Signature-END:

9h0d30bb

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Judgment

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