Chao v. Williams et al

Filing 52

Order by Hon. Ronald M. Whyte granting 49 Motion to Appoint Independent Fiduciary(rmwlc1, COURT STAFF) (Filed on 2/8/2013)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION 11 12 Case No. C-08-05643-RMW HILDA L. SOLIS, Secretary of the United States Department of Labor, 13 ORDER GRANTING MOTION TO APPOINT INDEPENDENT FIDUCIARY Plaintiff, 14 15 v. 16 MICHAEL D. WILLIAMS, an individual; POWER & DATA TECHNOLOGY, INC., a California corporation; and POWER & DATA TECHNOLOGY, INC., 401(K) PROFIT SHARING PLAN, an employee pension benefit plan, 17 18 19 20 21 22 23 24 Defendants. On January 8, 2013, plaintiff Hilda L. Solis, Secretary of Labor, United States Department of Labor ("Secretary") moved under Federal Rule of Civil Procedure ("Rule") 70 for appointment of an independent fiduciary for the Power & Data Technology, Inc., 401(k) Profit Sharing Plan ("Plan"). For the reasons set forth below, this court GRANTS the Secretary's motion. 25 26 27 [Re Docket No. 49] I. BACKGROUND On December 18, 2008, the Secretary filed in this court a complaint for violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001-1191c. On 28 ORDER GRANTING MOTION TO APPOINT INDEPENDENT FIDUCIARY, CASE NO. C-08-05643 RMW, ALG -1- 1 March 5, 2010, this court entered a default judgment against defendants in the amount of 2 $39,325.62 in missing Plan assets, plus $6,865.46 in pre-judgment interest as of January 15, 3 2010, for a total of $46,191.08. The court additionally awarded pre-judgment interest through the 4 date of entry of judgment, post-judgment interest through the date of collection, and $946.00 in 5 costs of service to the Secretary. 6 Following the entry of the default judgment, the Secretary obtained post-judgment 7 discovery from defendant Michael D. Williams ("Williams"). The Secretary alleges that the 8 department "further attempted to negotiate with . . . Williams to secure his cooperation and 9 voluntary compliance with the judgment; specifically, to restore the funds owed to the Plan and to 10 wind up and terminate the Plan without the Plan having to incur the cost of an [independent 11 fiduciary.]" Pl.'s Br. 2, Dkt. No. 49. According to the Secretary, the negotiations were 12 unsuccessful. The secretary now seeks to remove Williams as a fiduciary and trustee to the plan 13 and moves to appoint Victor Yaneza of the Retirement Equity Administrators Corporation 14 (currently the Plan's third party administrator), as the independent fiduciary. 15 16 II. DISCUSSION Pursuant to Rule 70(a), when a party fails to act in compliance with a judgment "within 17 the time specified, the court may order the act to be done—at the disobedient party's expense—by 18 another person appointed by the court. When done, the act has the same effect as if done by the 19 party." Fed. R. Civ. P. 70. This court's March 5, 2010 default judgment provides for the 20 appointment of an independent fiduciary upon motion by the Secretary. Williams does not 21 oppose the Secretary's motion. Because Williams has failed to comply with the default judgment, 22 the court grant's the Secretary's motion. III. ORDER 23 24 25 26 Having fully considered the Secretary’s Motion to Appoint Independent Fiduciary, and for good cause shown, IT IS HEREBY ORDERED, ADJUDGED, and DECREED that: 27 28 ORDER GRANTING MOTION TO APPOINT INDEPENDENT FIDUCIARY, CASE NO. C-08-05643 RMW, ALG -2- 1 2 3 1. The Secretary’s Motion to Appoint an Independent Fiduciary (“IF”) for the Power & Data Technology, Inc., 401(k) Profit Sharing Plan is GRANTED in full; 2. Defendant Michael Williams is removed as a fiduciary and trustee to the Plan; 3. Victor Yaneza of Retirement Equity Administrators Corporation, San Francisco, 4 5 6 7 8 9 10 11 CA, currently the Plan’s Third Party Administrator, is appointed as the Independent Fiduciary to the Plan. The Independent Fiduciary: a. shall collect, marshal, pay out and administer all of the Plan’s assets and take further action with respect to the Plan as appropriate, including terminating the Plan when all of its assets have been distributed to all eligible participants and beneficiaries; b. shall, pursuant to the procedures outlined in the Employee Benefits Security 12 13 14 15 16 17 18 Administration’s Field Assistance Bulletin 2004-02, exercise reasonable care and diligence to identify and locate each Plan participant and beneficiary who is eligible to receive a distribution under the terms of the Plan; c. shall have all the rights, duties, discretion, and responsibilities of a trustee, fiduciary, and Plan Administrator under ERISA and is ordered to file a final Internal Revenue Service Form 5500 for the Plan; 19 d. is authorized to delegate or assign fiduciary duties as appropriate and allowed under 20 21 22 23 the law and may retain such assistance as it may require, including attorneys, accountants, actuaries, and other service providers; e. is authorized to receive $3,900.00 in reasonable fees and expenses, payable from the 24 assets of the Plan, with such amount added to the amount due the Plan from Defendant Williams 25 under the Default Judgment entered March 5, 2010 as set forth as follows: 26 i. As of December 7, 2012, the amount due the Plan under the March 5, 2010 27 Default Judgment is $46,191.08, plus $193.64 in additional pre-judgment 28 ORDER GRANTING MOTION TO APPOINT INDEPENDENT FIDUCIARY, CASE NO. C-08-05643 RMW, ALG -3- 1 interest through the date of entry of judgment, March 5, 2010, at the rate 2 provided by IRC § 6621(a), plus $370.99 in post-judgment interest through 3 December 7, 2012, pursuant to 28 U.S.C. § 1961, for a total of $46,755.71. 4 ii. Adding $3,900.00 to the December 7, 2012 total of $46,755.71, the new 5 total due the Plan under the March 5, 2010 Default Judgment is 6 7 $50,655.71, with additional post-judgment interest to accrue thereon from 8 December 7, 2012. 9 10 11 f. shall have full access to all data, information, and calculations in the Plan’s possession and under its control, including information and records maintained by the Plan’s custodial trustee or service provider; 12 13 14 g. is authorized to give instructions respecting the disposition of assets of the Plan; and h. shall comply with all applicable rules and laws; and 15 i. shall not be held personally responsible for any claims against the Plan or related 16 entities which existed, arose, matured or vested prior to the appointment of the Independent 17 Fiduciary, or for any claims filed subsequent to final distribution by a Plan participant that the 18 Independent Fiduciary did not identify prior to closing of the account. 19 20 It is SO ORDERED. 21 22 Dated: February 8, 2013 Ronald M. Whyte United States District Court Judge 23 24 25 26 27 28 ORDER GRANTING MOTION TO APPOINT INDEPENDENT FIDUCIARY, CASE NO. C-08-05643 RMW, ALG -4-

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