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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UNITED STATES DISTRICT COURT
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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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Case No. C-08-05643-RMW

HILDA L. SOLIS, Secretary of the United
States Department of Labor,

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ORDER GRANTING MOTION TO
APPOINT INDEPENDENT
FIDUCIARY

Plaintiff,

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v.

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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,

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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.

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[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

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ORDER GRANTING MOTION TO APPOINT
INDEPENDENT FIDUCIARY,
CASE NO. C-08-05643 RMW, ALG

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March 5, 2010, this court entered a default judgment against defendants in the amount of

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$39,325.62 in missing Plan assets, plus $6,865.46 in pre-judgment interest as of January 15,

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2010, for a total of $46,191.08. The court additionally awarded pre-judgment interest through the

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date of entry of judgment, post-judgment interest through the date of collection, and $946.00 in

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costs of service to the Secretary.

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Following the entry of the default judgment, the Secretary obtained post-judgment

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discovery from defendant Michael D. Williams ("Williams"). The Secretary alleges that the

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department "further attempted to negotiate with . . . Williams to secure his cooperation and

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voluntary compliance with the judgment; specifically, to restore the funds owed to the Plan and to

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wind up and terminate the Plan without the Plan having to incur the cost of an [independent

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fiduciary.]" Pl.'s Br. 2, Dkt. No. 49. According to the Secretary, the negotiations were

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unsuccessful. The secretary now seeks to remove Williams as a fiduciary and trustee to the plan

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and moves to appoint Victor Yaneza of the Retirement Equity Administrators Corporation

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(currently the Plan's third party administrator), as the independent fiduciary.

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II. DISCUSSION
Pursuant to Rule 70(a), when a party fails to act in compliance with a judgment "within

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the time specified, the court may order the act to be done—at the disobedient party's expense—by

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another person appointed by the court. When done, the act has the same effect as if done by the

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party." Fed. R. Civ. P. 70. This court's March 5, 2010 default judgment provides for the

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appointment of an independent fiduciary upon motion by the Secretary. Williams does not

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oppose the Secretary's motion. Because Williams has failed to comply with the default judgment,

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the court grant's the Secretary's motion.
III. ORDER

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Having fully considered the Secretary’s Motion to Appoint Independent Fiduciary, and for
good cause shown,
IT IS HEREBY ORDERED, ADJUDGED, and DECREED that:

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ORDER GRANTING MOTION TO APPOINT
INDEPENDENT FIDUCIARY,
CASE NO. C-08-05643 RMW, ALG

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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;
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Defendant Michael Williams is removed as a fiduciary and trustee to the Plan;

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Victor Yaneza of Retirement Equity Administrators Corporation, San Francisco,

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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

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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;

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d. is authorized to delegate or assign fiduciary duties as appropriate and allowed under
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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

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assets of the Plan, with such amount added to the amount due the Plan from Defendant Williams

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under the Default Judgment entered March 5, 2010 as set forth as follows:

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i. As of December 7, 2012, the amount due the Plan under the March 5, 2010

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Default Judgment is $46,191.08, plus $193.64 in additional pre-judgment
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ORDER GRANTING MOTION TO APPOINT
INDEPENDENT FIDUCIARY,
CASE NO. C-08-05643 RMW, ALG

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interest through the date of entry of judgment, March 5, 2010, at the rate

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provided by IRC § 6621(a), plus $370.99 in post-judgment interest through

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December 7, 2012, pursuant to 28 U.S.C. § 1961, for a total of $46,755.71.

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ii. Adding $3,900.00 to the December 7, 2012 total of $46,755.71, the new
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total due the Plan under the March 5, 2010 Default Judgment is

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$50,655.71, with additional post-judgment interest to accrue thereon from

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December 7, 2012.

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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;

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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

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i. shall not be held personally responsible for any claims against the Plan or related

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entities which existed, arose, matured or vested prior to the appointment of the Independent

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Fiduciary, or for any claims filed subsequent to final distribution by a Plan participant that the

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Independent Fiduciary did not identify prior to closing of the account.

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It is SO ORDERED.

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Dated: February 8, 2013
Ronald M. Whyte
United States District Court Judge

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ORDER GRANTING MOTION TO APPOINT
INDEPENDENT FIDUCIARY,
CASE NO. C-08-05643 RMW, ALG

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