Moyle et al v. Liberty Mutual Retirement Benefit Plan et al
Filing
300
ORDER Providing Tentative Ruling re Supplemental 296 MOTION for Summary Judgment filed by Defendant's. Counsel are advised that the Court's rulings are tentative and the Court will entertain additional arguments at the hearing on December 16, 2016 at 1:30 p.m. in Courtroom 2D. Signed by Judge Gonzalo P. Curiel on 12/15/16.(All non-registered users served via U.S. Mail Service)(dlg)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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GEOFFREY MOYLE, an individual;
PAULINE ARWOOD, an individual;
THOMAS ROLLASON, an
individual; and JEANNIE SANDERS,
an individual, on behalf of themselves,
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Plaintiff,
vs.
CASE NO.10cv2179-GPC(MDD)
NOTICE OF TENTATIVE RULING
ON DEFENDANT’S
SUPPLEMENTAL MOTION FOR
SUMMARY JUDGMENT
LIBERTY MUTUAL RETIREMENT
BENEFIT PLAN; LIBERTY
MUTUAL RETIREMENT PLAN
RETIREMENT BOARD; LIBERTY
MUTUAL INSURANCE GROUP,
INC., a Massachusetts company;
LIBERTY MUTUAL INSURANCE
COMPANY, a Massachusetts
company,
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Defendants.
Before the Court is Defendant’s supplemental motion for summary judgment.
(Dkt. No. 296.) The motion is fully briefed and a hearing is set on calendar for
December 16, 2016. After a review of the briefs, supporting documentation and the
applicable law, the Court issues the following tentative ruling and outstanding issues
in advance of Friday’s hearing.
Procedural Background
Prior to the filing of the instant case, on March 14, 2005, Plaintiff Geoffrey
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1 Moyle (“Moyle”) filed a complaint in this Court against Golden Eagle Insurance
2 Corporation (“Golden Eagle”) and Liberty Mutual Insurance Company (“Liberty
3 Mutual”).1 (Case No. 05cv507-DMS(WMC), Dkt. No. 1). On August 23, 2005, Moyle
4 filed a first amended complaint adding Defendant Liberty Mutual Retirement Benefit
5 Plan (“Plan”). (Id., Dkt. No. 12.) The first amended complaint sought causes of action
6 for determination of his future rights to benefits under the plan pursuant to 29 U.S.C.
7 § 1132(a)(1)(B), and breach of fiduciary duty pursuant to 29 U.S.C. § 1132(a)(3). (Id.)
8 On November 14, 2005, District Judge Dana Sabraw granted Defendants’ motion to
9 dismiss for failure to exhaust administrative remedies. (Id., Dkt. No. 32.) Plaintiff
10 appealed and on August 23, 2007, the Ninth Circuit affirmed the district court’s
11 dismissal requiring Plaintiff to exhaust. Moyle v. Golden Eagle Ins. Corp., 239 Fed.
12 App’x 362 (9th Cir. 2007).
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On January 26, 2008, Moyle filed a claim with Liberty Mutual. (Administrative
14 Record (“AR”) 783-86.) On July 18, 2008, Plaintiff Thomas Rollason (“Rollason”)
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Prior to the case filed in 2005, Plaintiff Moyle also filed two complaints in San
16 Diego Superior Court that were removed to this Court.
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On November 5, 2002, Plaintiff Moyle filed an action against GEIC, LMIC and
John Davis in San Diego Superior Court alleging eleven causes of action related to
18 employment and pension benefits due under the Plan. (Case No. 02cv2468-H(JAH).)
On December 16, 2002, the case was removed to this Court. (Id., Dkt. No. 1.) On
19 December 23, 2002, Defendants filed a motion for partial dismissal of Plaintiff’s
complaint arguing that the state law claims were preempted by ERISA as to the past
20 service credit under the Plan. (Id., Dkt. Nos. 7, 10.) Subsequently, Plaintiff filed a
notice of voluntary dismissal of action without prejudice. (Id., Dkt. No. 14.)
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On February 13, 2003, Plaintiff Moyle filed an action against Defendants GEIC,
22 LMIC and John Davis in San Diego Superior Court alleging ten causes of action
related to employment and past service credit under the Plan. (Case No. 03cv50923 IEG(JAH).) On March 13, 2003, Defendants removed the action to this Court. (Id.,
Dkt. No. 1.) On March 20, 2003, Golden Eagle and Liberty Mutual filed motions to
24 dismiss the complaint. (Id., Dkt. Nos. 5, 8.) On April 3, 2003, Plaintiff filed a motion
to remand. (Id., Dkt. No. 13.) On July 17, 2003, Judge Irma E. Gonzalez, United
25 States District Judge, issued an order denying Plaintiff’s motion to remand and granted
in part Golden Eagle and Liberty Mutual’s motions to dismiss. (Id., Dkt. No. 23.) The
26 Court concluded that the claims relating to the question of past service credit under the
Benefit Plan were preempted by ERISA. (Id.) Accordingly, the Court dismissed
27 Plaintiff’s state law claims without prejudice and granted leave to amend the complaint
to allege claims under ERISA. (Id.) On August 5, 2003, the Court granted Plaintiff’s
28 ex parte application to remand remaining causes of action to state court. (Id., Dkt. No.
25.)
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1 filed a claim.
(AR 639-43.)
On August 21, 2008, Plaintiff Pauline Arwood
2 (“Arwood”) filed a claim. (AR 1016-20.) Lastly, on December 4, 2008, Plaintiff
3 Jeannie Sanders (“Sanders”) filed her claim. (AR 1511-16.)
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On April 23, 2008, Moyle’s claim and subsequently Rollason, Arwood and
5 Sanders’ claims for benefits were initially denied by John R. St. Martin, Manager of
6 Pension and Savings, Benefits at Liberty Mutual. (AR 712-718 (“Moyle”); 590-96
7 (“Rollason”); 991-97 (“Arwood”); 1497-1503 (“Sanders”).)
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On June 20, 2008, Plaintiffs sought review of the initial decision and all four
9 claims were consolidated for purposes of the administrative appeal. (AR 426.) On
10 October 23, 2009, Plaintiffs’ appeals were denied by Helen Sayles, Senior Vice
11 President of Human Resources & Administration, on behalf of the Retirement Board.
12 (AR 4365-4414.)
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After having exhausted administrative remedies, on October 19, 2010, Plaintiffs
14 Moyle, Arwood, Rollason, and Sanders filed the instant class action complaint against
15 Defendants Liberty Mutual Retirement Benefit Plan (“Plan”); Liberty Mutual
16 Retirement Benefit Plan Retirement Board (“Board”); Liberty Mutual Insurance Group,
17 Inc. (“LMGI”); and Liberty Mutual Insurance Company (“Liberty Mutual”). (Dkt. No.
18 1.) On October 21, 2010, Plaintiffs filed a first amended complaint. (Dkt. No. 3.) On
19 April 25, 2011, District Judge Dana Sabraw denied Defendants’ motion to dismiss the
20 second and third claims; granted in part motion to dismiss improperly named
21 Defendants; denied Defendants’ motion to dismiss the first claim as to Plaintiff Moyle
22 and granted Defendants’ motion to strike demand for trial by jury. (Dkt. No. 18.) On
23 September 14, 2011, the Court granted Plaintiffs’ motion for leave to file a second
24 amended complaint. (Dkt. No. 41.) On September 20, 2011, Plaintiffs filed a second
25 amended complaint. (Dkt. No. 47.)
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After briefing by the parties on Plaintiffs’ motion for class certification, on April
27 10, 2012, District Judge Sabraw certified the class as to the first, second, and fourth
28 causes of action. (Dkt. No. 113 at 19.)
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1
On April 24, 2012, Defendants filed a petition for permission to appeal the
2 Court’s order granting class certification to the Ninth Circuit. (Dkt. No. 120.) In the
3 meantime, the Court denied Defendants’ motion for reconsideration and granted their
4 motion for stay pending appeal. (Dkt. No. 126.) On July 11, 2012, the Ninth Circuit
5 denied Defendants’ petition for permission to appeal. (Dkt. No. 128.)
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On October 12, 2012, the case was transferred to the undersigned judge. (Dkt.
7 No. 174.) On October 17, 2012, Plaintiffs filed a third amended complaint against
8 Defendants Liberty Mutual Retirement Benefit Plan (“Plan”); Liberty Mutual
9 Retirement Benefit Plan Retirement Board (“Board”), the Plan administrator; Liberty
10 Mutual Insurance Group, Inc. (“LMGI”), the Plan sponsor; and Liberty Mutual
11 Insurance Company (“Liberty Mutual”), the entity that purchased Old Golden Eagle,
12 and established Golden Eagle, a subsidiary of LMGI. (Dkt. No. 178.) The third
13 amended complaint alleges four causes of action: payment of benefits under the Plan
14 pursuant to 29 U.S.C. § 1132(a)(1)(B); equitable relief under 29 U.S.C. § 1132(a)(3);
15 violation of 29 C.F.R. § 2560.503-1(h)(2)(i); and violation of 29 C.F.R. § 2520.10216 3(l) and 29 C.F.R. § 2520.102-2(a).
On January 3, 2013, Defendants filed a motion
17 for summary judgment on all four causes of action while Plaintiffs filed a motion for
18 partial summary judgment on the second and fourth causes of action and on certain of
19 Defendants’ affirmative defenses. (Dkt. Nos. 212, 213.) On July 1, 2013, the Court
20 granted Defendants’ motion for summary judgment on all four causes of action in the
21 third amended complaint, and denied Plaintiffs’ motion for summary judgment. (Dkt.
22 No. 252.) Plaintiffs appealed the Court’s ruling on the first, second and fourth causes
23 of action while Defendants cross-appealed that the suit was time-barred and that class
24 certification was not proper. Moyle v. Liberty Mutual Retirement Benefit Plan, 823
25 F.3d 948, 952 (9th Cir. 2016). On May 20, 2016, the Ninth Circuit affirmed the district
26 court’s ruling on summary judgment on the first and fourth causes of action and
27 reversed the district court’s ruling on the second cause of action for equitable relief
28 under 29 U.S.C. § 1132(a)(3). Id. The Ninth Circuit also found that class certification
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1 was proper. Id. The court concluded there was a factual dispute whether “Liberty
2 Mutual breached its fiduciary duty by failing to inform Golden Eagle employees that
3 past service credit for the purpose of benefit accrual did not include the period prior to
4 October 1, 1997, when they were first employed by Golden Eagle.” Id. at 962. The
5 Ninth Circuit remanded “for determinations of fact and equitable relief in the form of
6 reformation and surcharge.” Id. at 965. The Ninth Circuit also declined to consider
7 “Liberty Mutual’s argument that the statute of repose in 29 U.S.C. § 1113 acts to bar
8 some of Appellants’ claims under 29 U.S.C. § 1132(a)(3). The district court may
9 consider such arguments on remand.” Id. at 959 n. 5.
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Factual Background
The Court recites the facts from its prior order on summary judgment and from
12 the Ninth Circuit’s opinion. Plaintiffs Moyle, Arwood, Rollason, and Sanders are four
13 former employees of Golden Eagle Insurance Company (“Old Golden Eagle” or
14 “OGE”). On January 31, 1997, the Superior Court of San Diego County placed OGE
15 into conservatorship proceedings under the supervision of the California Insurance
16 Commissioner. Liberty Mutual took an interest in acquiring OGE and was in a bidding
17 war with American International Group, Inc. (“AIG”) for the acquisition of OGE. In
18 order to increase its chances to win the bidding war, Liberty Mutual submitted an
19 enhanced bid which included improved employee benefits such as a retirement plan,
20 which was not offered by OGE. The increased employee benefits were used to retain
21 OGE employees and to increase the likelihood of court approval of its bid.
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On May 29, 1997, the Conservation Court held an evidentiary hearing to
23 evaluate Liberty Mutual's and AIG's competing bids. One of Liberty Mutual’s exhibit
24 expressly stated that the value that it added was to “increase employee benefits (credit
25 for prior year's of service and participation in the benefits plan).” Liberty Mutual also
26 told the Conservation Court that OGE employees would have the rights that Liberty
27 Mutual employees had with “X years of service.” This representation was later
28 repeatedly made to OGE employees.
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1
On May 30, 1997, the Conservation Court approved the sale and transfer of
2 certain OGE assets and liabilities to Liberty Mutual. The approval was memorialized
3 in a Rehabilitation Agreement drafted by Liberty Mutual on June 18, 1997. (AR 3013.)
4 Article 5.1(c) of the Rehabilitation Agreement states:
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As to the employees of [OGE] who become employees of New Eagle
or another Subsidiary of LMIC by reason of the transactions
contemplated by this Agreement . . . [s]uch employees shall be
provided benefits which are at least comparable to those offered by
[OGE] and shall be credited for all prior years of service with [OGE]
. . . for purposes of eligibility, vesting and early retirement subsidies
under the LMIC Retirement Benefit Plan . . . provided, that such period
of service with [OGE] will not be credited for purposes of benefits
accruals under the LMIC Thrift Incentive Plan and Retirement Benefit
Plan . . . .
The Rehabilitation Agreement was never provided to OGE employees and the
Conservator was not required to send notification of the agreement to OGE employees.
The Rehabilitation Agreement is the only document that expressly states that past
service credit with OGE would not be credited for purposes of benefits accrual. This
language does not appear elsewhere during the transition period or in any
communications with OGE employees.
As former employees of OGE, Plaintiffs had the opportunity to participate in a
401(k) Plan and profit-sharing plan. OGE did not offer a traditional defined benefit
pension plan to its employees. OGE did not contribute any assets to the Plan at issue
in this case and Plaintiffs did not make any contributions to the Plan.
During August 1997, Liberty Mutual hosted a series of benefits enrollment
meetings so that OGE employees could obtain information about the transition. The
presenters used a “Facilitator Guide” developed by Liberty Mutual as a script to convey
the terms and conditions of employee benefits. The Facilitator Guide did not mention
that past service credit with OGE would not be credited for benefits accrual. OGE
employees, including plaintiffs, testified that after attending the meetings, it was their
understanding that past service credit with OGE would apply to the retirement plan and
that is why everybody stayed with the company. When specifically asked about prior
years service at these meetings, they were told past years of service with OGE would
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1 count. During the enrollment period, the operative 1987 Plan and Summary Plan
2 Descriptions (“SPD”) were available to OGE employees; but the 1987 Plan and the
3 1996 SPD did not address past service credit.
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On October 1, 1997, pursuant to the Rehabilitation Agreement with the State-
5 appointed conservator, Liberty Mutual purchased certain assets of OGE and formed
6 and incorporated a new entity, Golden Eagle Insurance Corporation, (“Golden Eagle”),
7 as a subsidiary of Liberty Mutual.
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The Plan or the SPD was not amended to address past service credit until 2001
9 where the Plan and the 2002 SPD specifically addressed OGE employees and that past
10 service credit for OGE employees would be “credited for eligibility, vesting, early
11 retirement, and spouse’s benefits . . . .” In 2009, the word “solely” was added.
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From 2002 and 2006, Liberty Mutual Retirement Benefit Plan Retirement Board,
13 the Retirement Plan’s administrator, denied the claims of a dozen former OGE
14 employees who sought past service credit, including the named plaintiffs in this case.
15 Liberty Mutual explained that it had “informed former Golden Eagle employees about
16 when past service credit applied and therefore, former Golden Eagle employees should
17 have known when past service credit did not apply.” Moyle, 823 F.3d at 955.
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On October 19, 2010, Plaintiffs filed the class action complaint in this Court.
19 (Dkt. No. 1.) Defendants move for summary judgment arguing that the remaining
20 cause of action for breach of fiduciary duty under 29 U.S.C. § 1132(a)(3) is barred by
21 the statue of repose and statute of limitations under 29 U.S.C. § 1113. They also argue
22 that the equitable relief of reformation and surcharge under 29 U.S.C. § 1132(a)(3) are
23 not available as remedies to Plaintiffs.
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Discussion
25 A.
Statute of Repose and Statute of Limitations under 29 U.S.C. § 1113
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Defendants argue that the claim for breach of fiduciary duty is barred by the
27 statute of repose and the statute of limitations under 29 U.S.C. § 1113. Plaintiffs
28 respond that their claim is not governed by the statute of repose because their claim
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1 falls under the “fraud or concealment” exception that applies to both the statute of
2 limitations and statue of repose under 29 U.S.C. § 1113, and is therefore, timely.
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ERISA’s statute of repose and statute of limitations provide:
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No action may be commenced under this subchapter with respect to a
fiduciary’s breach of any responsibility, duty, or obligation under this
part, or with respect to a violation of this part, after the earlier of--
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(1) six years after (A) the date of the last action which constituted a
part of the breach or violation, or (B) in the case of an omission the
latest date on which the fiduciary could have cured the breach or
violation, or
(2) three years after the earliest date on which the plaintiff had actual
knowledge of the breach or violation;
except that in the case of fraud or concealment, such action may be
commenced not later than six years after the date of discovery of such
breach or violation.
12 29 U.S.C. § 1113. 29 U.S.C. § 1113(1) is considered the statute of repose while 29
13 U.S.C. § 1113(2) is considered the statute of limitations. See Landwehr v. DuPree, 72
14 F.3d 726, 733 (9th Cir. 1995) (distinguishing between three year statute of limitations
15 with six year statue of repose); Bruno v. Time Warner Pension Plan, 534 F. App’x 654,
16 655 (9th Cir. 2013) (noting repose period to be provided in § 1113(1).) While statutes
17 of limitations and statutes of repose both limit the “temporal extent or duration of
18 liability for tortious acts” and can bar a plaintiff’s case, the “time periods are measured
19 from different points, and the statutes seek to attain different purposes and objectives.”
20 CTS Corp. v. Waldburger, 134 S. Ct. 2175, 2182 (2014). Ordinarily, a statute of
21 limitations creates “a time limit for suing in a civil case, based on the date when the
22 claim accrued” while a statute of repose “puts an outer limit on the right to bring a civil
23 action. That limit is measured not from the date on which the claim accrues but instead
24 from the date of the last culpable act or omission of the defendant.” Id. “The statute
25 of repose limit is ‘not related to the accrual of any cause of action; the injury need not
26 have occurred, much less have been discovered.’” Id. (citation omitted). This reflects
27 a legislative decision that there should be a specific time where a defendant should be
28 free from liability. Id. at 2183. Therefore, a statute of repose is not subject to equitable
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1 tolling. Id.
2 B.
Fraud or Concealment Exception
3
Defendants contend that the breach of fiduciary claim is barred by the six year
4 statute of repose under § 1113(1) and three year statute of limitations under § 1113(2)
5 and further argue that the “fraud or concealment” exception of § 1113 does not apply
6 because the facts in the case do not support an allegation of “fraud or concealment.”
7 Plaintiffs respond first by arguing that the “fraud or concealment” tolling exception
8 applies to their claim, and alternatively, even if the “fraud or concealment” exception
9 does not apply, their claims are timely because the breach was not completed until
10 Liberty Mutual issued its final denial in 2009, the latest date Liberty Mutual could have
11 cured the violation or breach.2
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Ziegler presented a two step analysis in analyzing the statute of limitation under
13 § 1113. The two step analysis asks 1) “when did the alleged ‘breach or violation’
14 occur” and then “when did [the defendant] have ‘actual knowledge’ of the breach or
15 violation?” Ziegler v. Connecticut Gen. Life Ins. Co., 916 F.2d 548, 550 (1990). On
16 the first step, to determine when the alleged breach or violation occurred, “we must
17 first isolate and define the underlying violation upon which . . . [plaintiff's] claim is
18 founded.” Id. at 550-51. On this first step, the court need not consider when the
19 plaintiffs suffered actual harm except it may shed light on the second question of when
20 a plaintiff gains “actual knowledge” injured. Id. at 551-52. In Ziegler, the beach
21 occurred upon the contract’s creation, not at the time of termination or at the time of
22 injury. Id. at 551.
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Defendants argue that the “last action which constituted a part of the breach or
24 violation” was when Plaintiffs accepted employment with New Golden Eagle on
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Plaintiffs analyze, in some depth, whether the § 1113 is a statute of repose
26 and/or statute of limitations. (Dkt. No. 298 at 6-8.) Based on their statutory
construction analysis, Plaintiffs contend that § 1113 is not a statute of repose and that
27 the fraud or concealment exception applies to both § 1113(1) and § 1113(2). Despite
their analysis, Defendants do not dispute that the “fraud or concealment exception”
28 applies to the statute of limitations under § 1113(2) and tolls the limitations period until
after Plaintiffs’ discovery of the breach or violation.
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1 October 1, 1997 which was when they could have avoided the detriment of giving up
2 the opportunity to seek other employment. Plaintiffs do not address this argument.
3 Therefore, it appears that Plaintiffs concede that October 1, 1997 is the date of the
4 alleged breach.
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The “fraud or concealment” exception of 29 U.S.C. § 1113 tolls the statute of
6 limitations only “until the plaintiff in the exercise of reasonable diligence discovered
7 or should have discovered the alleged fraud or concealment.” DeFazio v. Hollister,
8 Inc., 854 F. Supp. 2d 770, 783 (E.D. Cal. 2012). “Plaintiffs bear the burden of proving
9 ‘fraud or concealment’ under 29 U.S.C. § 1113.” Id. at 782 (quoting Harris v. Koenig,
10 815 F. Supp. 2d 12, 20 (D.D.C. 2011)).
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Under 29 U.S.C. § 1113, the “fraud or concealment” exception applies when an
12 ERISA fiduciary either “made knowingly false misrepresentations with the intent to
13 defraud the plaintiffs” or took “affirmative steps . . . to conceal any alleged fiduciary
14 breaches.” Barker v. American Mobil Power Corp., 64 F.3d 1397, 1401 (9th Cir.
15 1995). In Barker, the fact that funds were transferred from the Plan to the parent
16 company, replaced with promissory notes executed by the parent company and never
17 repaid do not establish fraud or false misrepresentations with the intent to defraud the
18 plaintiffs. Id. at 1401. The court explained there was no specific evidence that the
19 defendants “made knowingly false misrepresentations with the intent to defraud” or
20 evidence that defendants took affirmative steps to conceal any alleged fiduciary
21 breaches. Id. Passive concealment is not sufficient to toll the statute of limitations
22 unless the defendant has a fiduciary duty to disclose material information. Thorman
23 v. Am. Seafoods Co., 421 F.3d 1090, 1096 (9th Cir. 2005).
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Under § 1113, “‘[f]raud’ involves false statements or misrepresentations, made
25 with knowledge of their falsity and with the intent to wrongfully deprive the plaintiff.”
26 Zelhofer v. Metro. Life Ins. Co., No. 16cv991 TLN AC, 2016 WL 4126724, at *4 (E.D.
27 Cal. Aug. 3, 2016) (citing Barker v. American Mobil Power Corp., 64 F.3d 1397, 1401
28 (9th Cir. 1995). “‘Concealment’ requires active steps to prevent plaintiff from
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1 discovering the violation.” Id.; see Kurz v. Philadelphia Elec. Co., 96 F.3d 1544, 1552
2 (3d Cir. 1996) (“The relevant question is . . . not whether the complaint ‘sounds in
3 concealment,’ but rather whether there is evidence that the defendant took affirmative
4 steps to hide its breach of fiduciary duty.”).
5
Defendants argue that Plaintiffs’ claim is based on the failure of Defendants to
6 provide complete information that they would not get benefit accrual credit for OGE
7 years of employment which constitutes passive concealment and does not rise to the
8 level of “fraud or concealment” as defined under § 1113.
Plaintiffs dispute
9 Defendant’s characterization of their claims; instead they claim that Defendants
10 misrepresented the significance of facts and concealed its “intent not to give [past
11 service credit] for accrual, burying specific exculpatory language in transactional
12 documents while omitting it in employee communications.” (Dkt. No. 233 at 423.)
13
After the approval of Liberty Mutual’s bid with the Conservation Court, the
14 Rehabilitation Agreement, dated June 18, 1997, is the only document explicitly stating
15 past service credit would count for purposes of eligibility, vesting, and early retirement
16 subsidies but past service credit with OGE would not be credited for the purpose of
17 benefit accrual. Moyle, 823 F.3d at 954. A copy of the Rehabilitation Agreement was
18 never provided to Golden Eagle employees and the statement, concerning PSC for
19 benefit accrual, was not communicated with Golden Eagle employees or appear
20 anywhere else during the transition. Id. It was in June 1997 that Liberty Mutual
21 expressly indicated its intention to not provide past service credit for benefit accrual
22 to OGE employee. However, that intention was never communicated to OGE
23 employees.
24
In August 1997, Liberty Mutual hosted a series of benefit enrollment meetings
25 so OGE employees could obtain information about the transition to Liberty Mutual.
26 (Dkt. No. 232-1, Ds’ Response to Ps’ SSUF No. 99.) The purpose of the meetings was
27 to welcome the employees and provide participants with all the important benefit
28
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Page numbers are based on the CM/ECF pagination.
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1 information related to the Plan in a strong, positive attitude. (Id., No. 100.) The
2 meetings were to provide all the “necessary data available” to employees to “make the
3 decisions they need as employees of Liberty.” (Id., No. 104.) Liberty prepared a
4 “Facilitator Guide” which the presenters used, as a script, to control the manner and
5 content of the information provided. (Id., Nos. 105, 106.) The Facilitator Guide
6 provided a consistent and accurate message about the terms and conditions of the
7 benefits available under the Plan. (Id., No. 107.) Retirement benefits were a small
8 portion of the benefit enrollment meetings and the Facilitator Guide did not define
9 “benefit accrual.” (Id., No. 113.) From these meetings, OGE employees had the
10 understanding that they would receive past service credit with OGE for all purposes.
11
George Kaerth was the Senior Vice President of Underwriting for Old Golden
12 Eagle from 1991-1997 and during the transition, he was Executive Vice President of
13 Underwriting and Marketing. (Dkt. No. 214-18, Butler Decl., Ex. 39, Kearth Depo. at
14 16:5-25; 17:14-22.) During the bidding process, Kaerth interacted with two members
15 of the due diligence team from Liberty Mutual, David Long, who is now Liberty’s
16 CEO, and Timothy Sweeney, and on several occasions, around February - June 1997,
17 Kaerth asked them whether years of service credit would be credited for purposes of
18 benefit accrual and they responded that the issue was under consideration and still
19 being negotiated. (Dkt. No. 214-27, Butler Decl. Ex. 48, Kaerth Decl. ¶ 3; Dkt. No.
20 214-18, Butler Decl., Ex. 39, Kaerth Depo. at 25:6-19.)
21
Later in July 1997, Kaerth was informed the Rehabilitation Agreement was
22 finalized but he never got a copy of it and was informed that employees would not be
23 receiving a copy. (Dkt. No. 214-27, Butler Decl. Ex. 48, Kaerth Decl. ¶ 4.) During the
24 transition period to Liberty Mutual, from July - September 1997, Kaerth asked Long
25 and Sweeney again whether years of service would be credited for purposes of benefit
26 accrual under the retirement plan and was again told it was under consideration and
27 still being negotiated. (Id. ¶ 5.) During the same time, he was asked on a dozen
28 occasions by former OGE employees whether their years of service with OGE would
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1 count under the retirement plan. (Id.) The OGE employees informed Kaerth that they,
2 as well as other OGE employees, understood past years of service would be credited.
3 (Id.) Kaerth told Long and Sweeney that former OGE employees told him that they
4 believed that years of service would be credited for all purposes and told Long and
5 Sweeney that they needed to promptly clarify with employees whether years of service
6 would be applied for all purposes including the calculation of accrued benefits. (Id.)
7 Long and Sweeney told Kaerth that the issue was being negotiated and still under
8 consideration. (Id.) Liberty Mutual also indicated they would address these questions
9 and clarify whether years of service with OGE would be credited for all purposes. (Id.)
10 But Kaerth was not aware of any meetings, actions taken or written communications
11 that clarified this issue. (Id. ¶ 6.) Kaerth does not recall attending the meetings in
12 August or September 1997 but he had discussions with employees who attended and
13 they believed all benefits would be calculated based on their date of hire with OGE.
14 (Id. ¶ 7.)
15
In October 1997, Kaerth was informed by Liberty Mutual that the transition
16 period had ended and was informed at this time that his years of service with OGE
17 would not be credited for purposes of benefit accrual under the plan. (Id. ¶ 8.) As a
18 result, he left employment in February 1998 because he did not receive credit for his
19 past years of service. (Id.) Between October 1997 and February 1998, about a dozen
20 former OGE employees asked him about whether their years of service would apply
21 under the plan, and after these discussions, Kaerth promptly informed Liberty Mutual
22 that former OGE employee had informed him that they believed their years of service
23 would be credited for all purposes. (Id. ¶ 9.) He informed Long and Sweeney that they
24 needed to immediately tell former OGE employees that years of service would not be
25 credited for the purpose of benefit accrual under the plan and they told him that they
26 would address the problem.
(Id.) However, he is unaware of Liberty Mutual
27 responding to these question or clarifying the issue. (Id.)
28
Helen Sayles, the Senior Vice President of Human Resources & Administration,
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[10cv2179-GPC(MDD)]
1 on behalf of the Retirement Board, was involved in preparing the SPDs before they
2 were finalized and testified that Liberty did not identify items that the employees were
3 not entitled to in the plan documents. (Dkt. No. 214-19, Ex. 40, Sayles Depo. at
4 197:19-24; 200:18-22.) Golden Eagle was not referenced in an SPD until 2001. (Dkt.
5 No. 214-14, Butler Decl., Ex. 35, Connolly Depo. at 223:19-224:1.) Defendants did
6 not update the SPD to include Golden Eagle until the transition of all the acquisitions
7 were complete in 2000, although they could have included Golden Eagle in 1998 after
8 it was purchased. (Dkt. No. 214-19, Ex. 40, Sayles Depo. at 198:4-199:1.)
9
The 2001 SPD referenced Golden Eagle for the first time and stated that “[p]ast
10 service credit with certain employers who either became part of the Liberty Mutual
11 Group and adopted the Retirement Plan, or from whom you are directly hired into the
12 Liberty Mutual Group, is credited for eligibility, vesting, early retirement and spouse's
13 benefits purposes as defined below . . . .” (Dkt. No. 213-10, Butler Decl., Ex. 7 at 22.)
14 Then in 2009, the SPD language concerning past service credit changed to add the
15 word “solely” and stated “[p]ast service credit with certain employers who either
16 became Participating Employers, or from whom you are directly hired by or into a
17 Participating Employer, is credited solely for eligibility, vesting, early retirement and
18 spouse’s benefits purposes as defined below . . . .” (Dkt. No. 213-18, Buter Decl., Ex.
19 15 at 28.)
20
Here, the Court concludes that Plaintiffs have presented facts that Liberty Mutual
21 engaged in acts to hinder the discovery of the breach of fiduciary duty or breached its
22 duty by making a knowing misrepresentation concerning past service credit and
23 intentionally took steps to conceal information about whether past service credit with
24 OGE would count towards benefits accrual.
25
In Evanson, the district court held that the alleged concealment of the Watson
26 Wyatt letters is evidence that Defendants “took affirmative steps to hide [their] breach
27 of fiduciary duty” and satisfied Rule 12(b)(6). Evanson v. Price, No. 06cv795-GEB28 KJM, 2006 WL 2829789, at *5 (E.D. Cal. Sept. 29, 2006). In the case, the defendants
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[10cv2179-GPC(MDD)]
1 adopted a new compensation plan for executives designed by a third party plan
2 administrator obtained. Id. at *1. Defendants then retained an independent trustee,
3 Watson Wyatt, to evaluate the fairness of this plan due to their conflict of interest. Id.
4 at *2. In letters, Watson Wyatt recommended that Defendants reconsider adopting the
5 new compensation plan concluding that the plan exceeded market compensation rates
6 by about thirty to fifty percent. Id. Defendants concealed the letters by placing them
7 in a file in an office that was inaccessible to others and by keeping secret the existence
8 and contents of the letters. Id. Plaintiff learned of the letters ten years letter when he
9 discovered them among one of the defendant’s files. Id. The court noted that the
10 alleged concealment of the letters is evidence that the defendants took affirmative steps
11 to hide their breach of fiduciary duty. Id. at *5.
12
Similarly, in this case, at least as of June 18, 1997, when the Rehabilitation
13 Agreement was finalized, it was clear that Liberty Mutual would not be providing past
14 service credit to employees of OGE for purposes of benefits accrual. The Conservator
15 was not mandated to provide copies of the Rehabilitation Agreement to OGE
16 employees and Liberty Mutual did not provide the Agreement to OGE employees.
17 Defendants were on notice that OGE employees were questioning whether past service
18 credit would apply to benefits accrual when Kaerth questioned Long and Sweeney
19 about the issue and informed them that OGE employees believed their years of service
20 would be credited for purposes of benefit accrual. Despite this knowledge and their
21 response that they would address and clarify the issue, Defendants failed to do so and
22 kept that information secret during the transition process and after. Moreover, Long
23 and Sweeney, falsely represented, after the Rehabilitation Agreement was approved,
24 that the issue of past service credit was still under consideration and being negotiated,
25 when in fact it was not. The Rehabilitation Agreement is the sole document evidencing
26 Defendants’ intent and decision not to provide past service credit during the transition
27 period. The facts presented by Plaintiff demonstrate an affirmative misrepresentation
28 and affirmative concealment by Liberty Mutual to hide its policy on past service credit
- 15 -
[10cv2179-GPC(MDD)]
1 despite numerous inquiries made by OGE employees. Thus, the Court concludes that
2 Plaintiffs have sufficiently provided evidence that the “fraud or concealment” tolling
3 exception applies to this case.
4
1.
5
The “fraud or concealment” exception to the statute of limitations begins to runs
Discovery of Breach or Violation
6 “no later than six years after the date of discovery of such breach or violation.” 29
7 U.S.C. § 1113(2). The analysis to determine the “date of discovery” is the same as
8 “actual knowledge.” See Ziegler v. Connecticut Gen. Life Ins. Co., 916 F.2d 548, 552
9 n.2 (9th Cir. 1990) (noting that tolling provision in cases of fraud or concealment
10 complements the requirement “to ascertain when an ERISA plaintiff gained actual
11 knowledge of a breach of violation”); Spragg v. Pacific Telesis Grp., 1999 WL 51489,
12 at *4 n. 1 (9th Cir. 1999) (unpublished) (even if plaintiff had alleged fraud or
13 concealment, statute of limitations would still have run after he obtained actual
14 knowledge of the alleged breaches of duty). Actual knowledge is a factual inquiry.
15 Ziegler, 916 F.2d at 552.
16
“We stress that an ERISA plaintiff’s cause of action cannot accrue and the
17 statute of limitations cannot begin to run until the plaintiff has actual knowledge of the
18 breach regardless of when the breach actually occurred.” Ziegler v. Connecticut Gen.
19 Life Ins., Co., 916 F.2d 548, 552 (9th Cir. 1990). In Ziegler, analyzing “actual
20 knowledge” based on the three year statute of limitations, the Ninth Circuit held that
21 the plaintiffs had “actual knowledge” of the alleged ERISA violation at least as of July
22 1984 when the defendant informed the plaintiffs, when they inquired of the defendant
23 of its desire to terminate its investment agreement, that the “market value” option, as
24 provided in the investment agreement, would result in its retention of a substantial
25 portion of his investment account, and not when the plaintiffs decided to terminate and
26 liquidate the account in March 1985. Id. at 549-550. According to the Ninth Circuit,
27 the statute of limitations began to run when the defendant specifically told the plaintiffs
28 the consequences of the “market value” option on the account which gave them “actual
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[10cv2179-GPC(MDD)]
1 knowledge” of the breach. Id. at 552.
2
“The Ninth Circuit has recognized that ‘actual knowledge of the breach or
3 violation’ is not satisfied by knowledge that the fiduciary acted but, rather, requires
4 knowledge of the breach of duty.” Spragg, 1999 WL 51489, at *3 (quoting Waller v.
5 Blue Cross of California, 32 F.3d 1337, 1341 (9th Cir. 1994)). “[O]nce an individual
6 has actual knowledge of the act that constitutes the breach and knows the harmful
7 effect of the act, a cause of action for breach of fiduciary duty accrues.” Id. (citing
8 Ziegler, 916 F.2d at 552).
9
In Spragg, the Ninth Circuit affirmed the district court’s dismissal of the
10 complaint on a Rule 12(b)(6) motion as time barred. Id. at 4. The plaintiff was
11 informed he would be hired as an independent contractor with AT&T in 1983. Id. at
12 2. In June 1988, the plaintiff alleged in the complaint that he was informed by his
13 former employer that his retirement assets had been transferred to AT&T and his
14 retirement could not be bridged because AT&T deemed him an employee and not an
15 independent contractor. Id. at 3. In 1996, AT&T told him directly for the first that it
16 was refusing his request to reclassify his 1983 status. Id. at 2. The court explained that
17
18
19
in June 1988, Spragg had actual knowledge of the allegedly wrongful
acts that underlie his instant claim against AT & T for breach of its
fiduciary duty. Likewise, in June 1988, Spragg had actual knowledge
of the effect the allegedly wrongful acts would have on his pension
benefits.
20 Id. at 3. In Spragg, the Ninth Circuit concluded that the plaintiff had actual knowledge
21 of the breach or violation when he learned of the underlying acts to support his claim
22 and the negative consequences of these acts.
23
In Waller, the defendant decided to terminate its retirement plan by using $62
24 million of the Plan’s assets to purchase annuities from select annuity providers to cover
25 plan liabilities and subsequently obtained a reversion of the residual assets of about $32
26 million. Waller, 32 F.3d at 1338. Plaintiffs alleged that the defendant breached its
27 fiduciary duty by imprudently choosing annuity providers to cover plan liabilities as
28 part of terminating plaintiffs’ plan. Id. Plaintiffs did not challenge the decision to
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[10cv2179-GPC(MDD)]
1 terminate the retirement. Plan but the “gravamen of plaintiffs’ action is that defendants
2 breached their fiduciary duties by unlawfully employing an infirm bidding process
3 geared solely toward selecting those annuity providers who would enable defendants
4 to obtain the maximum reversion possible.” Id. at 1339.
5
The Ninth Circuit explained that the complaint was filed more than four years
6 after the defendant purchased the annuities; however, the court rejected the defendant’s
7 argument that the statute of limitation began to run when Plaintiffs learned that it had
8 purchased the annuities and stated “[w]e decline to equate knowledge of the purchase
9 of annuities in this case with actual knowledge of the alleged breach of fiduciary duty.”
10 Id. at 1341. The court held that under the Rule 12(b)(6) standard, “actual knowledge”
11 was sufficiently alleged in the complaint when it asserted that the action was filed
12 within three years of actual knowledge, and plaintiffs “did not have actual knowledge
13 . . . until the publicized account of ELIC’s [one of the annuity providers] financial
14 difficulties and its ultimate insolvency and the subsequent investigation by counsel for
15 plaintiffs and the Class.” Id. In Waller, plaintiffs did not dispute the termination of the
16 plan and therefore knowledge of the annuity purchase did not put them on actual notice
17 that the choice of annuity providers were improper. It was not until after the plaintiffs
18 had knowledge of the effects of the selection of annuity providers that actual
19 knowledge was properly alleged. In Waller, the Ninth Circuit held that actual
20 knowledge requires knowledge of facts to support the claim and the consequences of
21 these acts.
22
Ninth Circuit cases defining “actual knowledge” require that Plaintiffs must have
23 actual knowledge of the underlying facts giving rise to the alleged violation, not
24 knowledge that the underlying facts violates ERISA, and knowledge of the
25 consequences or effects of the alleged breach of fiduciary duty. See also Meagher v.
26 Int’l Ass’n of Machinist and Aerospace Workers Pension Plan, 856 F.2d 1418, 1422-23
27 (9th Cir. 1988) (reversing the district court’s ruling of summary judgment in favor of
28 the defendants on the basis of the statute of limitations, holding that the date of accrual
- 18 -
[10cv2179-GPC(MDD)]
1 was when the plaintiff was harmed by the “wrongful application of the amendment”
2 which was when his accrued benefits decreased which was whenever he received
3 checks with reduced benefits and not when he learned the amendment, which resulted
4 in decreased benefits, passed); Blanton v. Anzalone, 760 F.2d 989, 992 (9th Cir. 1985)
5 (“The statute of limitations is triggered by the defendants’ knowledge of the transaction
6 that constituted the alleged violation, not by their knowledge of the law.” ).
7
Other circuits have acknowledged the Ninth Circuit’s standard of “actual
8 knowledge” to not require knowledge that the underlying facts give rise to a cause of
9 action under ERISA. See Wright v. Heyne, 349 F.3d 321, 322 (6th Cir. 2003);
10 Browning v. Tigers Eye Benefits Consulting, 313 Fed. Appx. 656, 660 (4th Cir. 2009)
11 (unpublished decision). In Wright, the plaintiffs alleged that the defendants breached
12 certain fiduciary duties in making investment decisions and engaged in conduct
13 prohibited under ERISA with regard to the receipt of commissions. Wright, 349 F.3d
14 at 322. The Sixth Circuit affirmed the district court granted defendants' summary
15 judgment based on the three year statute of limitations bar under § 1113. Id. at 321.
16
The court in Wright examined the different approaches circuits have taken to
17 define “actual knowledge” noting that the Seventh, Ninth, and Eleventh Circuits, on
18 the one hand, require knowledge of all the relevant facts and not facts to establish a
19 “cognizable legal claim”, while the Third and Fifth Circuits’ view that “‘actual
20 knowledge’ requires a showing that plaintiffs actually knew not only of the events that
21 occurred which constitute the breach or violation but also that those events supported
22 a claim for breach of fiduciary duty or violation under ERISA.” Id. at 327-28. The
23 court also noted a “hybrid view” adopted by the Second Circuit adopting both the Third
24 and Fifth Circuits’ view along with the Seventh, Ninth and Eleventh Circuits view. Id.
25 at 328. In conclusion, the Sixth Circuit, joining the Seventh, Ninth and Eleventh
26 Circuits held that “the relevant knowledge required to trigger the statute of limitations
27 under 29 U.S.C. § 1113(2) is knowledge of the facts or transaction that constituted the
28 alleged violation; it is not necessary that the plaintiff also have actual knowledge that
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[10cv2179-GPC(MDD)]
1 the facts establish a cognizable legal claim under ERISA in order to trigger the running
2 of the statute.” Id. at 330.
3
Recently, a district court rejected the plaintiff’s argument concerning “actual
4 knowledge” as it relied on Second, Third and Fifth Circuit cases which apply a
5 different standard than the Ninth Circuit. In re Northrop Grumman Corp. ERISA
6 Litigation, Case No. CV 06-06213 MMM(JCx), 2015 WL 10433713, at *19 (C.D. Cal.
7 Nov. 24, 2015). In applying the Ninth Circuit standard of “actual knowledge”, the
8 court explained that the plaintiffs must have “knowledge of the facts or transaction that
9 constituted the alleged violation; it is not necessary that the plaintiff also have actual
10 knowledge that the facts establish a cognizable legal claim under ERISA in order to
11 trigger the running of the statute” id. at 18 (citations omitted), and the court held that
12 the plaintiffs’ claim were time barred under the three year statute of limitations. Id. at
13 22.
14
Defendants argue that as to either of the statute’s provision, Plaintiffs actually
15 knew all the facts that constituted the breach of fiduciary duty no later than 2002 when
16 Plaintiffs testified that is when they learned past service credit would not apply to
17 benefits accrual, and thus, the claims are barred as a matter of law since the lawsuit was
18 not filed until 2010. In response, Plaintiffs assert that the statute of limitation began
19 when Moyle had actual knowledge of the facts establishing the cause of action which
20 was when Liberty Mutual denied his claim in 2009. They also argue that the statute of
21 limitations is also met if you consider other points in time to establish actual
22 knowledge such as when Liberty revised its SPD in 2009 to clarify and inserted the
23 word “solely”, when Liberty produced the Rehabilitation Agreement in the
24 administrative record in August 2008 - June 2009, and when Liberty attached the
25 Rehabilitation Agreement to the motion to dismiss in 2005. It was at these points
26 Plaintiffs were on notice as to the facts establishing the cause of action.
27
Similar to the plaintiffs in In re Northrop Grumman, in this case, Plaintiffs
28 improperly cite to the standard of “actual knowledge” applied in the Second and Third
- 20 -
[10cv2179-GPC(MDD)]
1 Circuits, a standard distinct from the Ninth Circuit, to support their argument that the
2 statue of limitations accrues at the time Plaintiffs learned the facts to support a cause
3 of action for breach of fiduciary duty. (Dkt. No. 233 at 43.) However, even if the
4 Court applied Plaintiffs’ argument that they did not have actual knowledge to support
5 their cause of action for breach of fiduciary until 2009, when their claims were denied
6 as well as early as September 12, 2005, when the Rehabilitation Agreement was
7 attached to Liberty Mutual’s motion to dismiss, Plaintiffs’ arguments are belied by the
8 record.
9
On March 14, 2005, Moyle filed a complaint seeking a determination of his
10 future rights to benefits under 29 U.S.C. § 1132(a)(1)(B) and breach of fiduciary duty
11 under 29 U.S.C. § 1132(a)(3). On that date, and most likely sometime prior to March
12 14, 2005 when Moyle consulted with counsel, he had actual knowledge of the facts to
13 establish a cognizable legal claim under ERISA. According to Plaintiffs’ interpretation
14 of actual knowledge requiring knowledge of facts to assert an ERISA claim, Moyle had
15 actual knowledge in 2005. Therefore, Plaintiffs’ argument that Moyle did not have
16 actual knowledge until the earliest date of September 12, 2005 when Defendants’
17 attached the Rehabilitation Agreement to their motion to dismiss, has no merit since
18 Moyle had actual knowledge when he filed his complaint on March 14, 2005 or some
19 earlier date. (Dkt. No. 05cv507, Dkt. No. 24 at 79.)
20
In applying the Ninth Circuit’s interpretation of “actual knowledge”, defined as
21 knowledge of the facts underlying the alleged violation, not actual knowledge to
22 establish a cognizable ERISA claim, and knowledge of the negative consequences of
23 these facts, Defendants argue that the named Plaintiffs had actual knowledge as early
24 as 2002 when they were informed that they would not be receiving past service credit
25 for purposes of pension benefits accrual.
26
Moyle testified that, in 2002, he called Liberty Mutual after he received his
27 personal data statement and was informed at that time, he was not entitled to
28 retirement. (Dkt. No. 212-24, Abel Decl., Ex. 10, Moyle Depo. at 51:6-15.) Once he
- 21 -
[10cv2179-GPC(MDD)]
1 learned about that, he spoke with his attorney. (Id. at 12-13.)
2
In 2002, Moyle learned he would not be receiving past service credit for his prior
3 years at OGE, even though he believed that Liberty Mutual represented that it would
4 be providing past service credit, and Moyle had actual knowledge that this information
5 would have detrimental effect on his pension benefits. In fact, Moyle contacted an
6 attorney at this time and even filed state court complaints that were removed to this
7 Court in November 2002 and February 2003 that address facts underlying the breach
8 of fiduciary duty but not the legal cause of action. Therefore, based on Ninth Circuit
9 authority, Moyle had actual knowledge of the alleged breach in 2002.4
10
Similarly, Arwood testified that when she called Liberty Mutual around
11 November 2001 to discuss her retirement the following year, she was told she would
12 not be getting credit for her prior years with OGE. (Dkt. No. 212-16, Abel Decl., Ex.
13 2, Arwood Depo. at 66:12-22; 78:2-24.) Rollason first learned that he would not be
14 getting past service credit from Arwood when he retired in 2001. (Dkt. No. 212-25,
15 Abel Decl., Ex. 11, Rollason Depo. at 73:23-74:25.) Shortly thereafter, maybe in 2002,
16 he spoke to Laura Bond of the human resource department and she confirmed what he
17 heard from Arwood. (Id. at 99:3-100:7.) Since the complaint in this case was filed on
18 October 19, 2010, Moyle, Rollason and Arwood’s claims for breach of fiduciary duty
19 are barred by the six year statute of limitations under the “fraud or concealment” tolling
20 provision in 29 U.S.C. § 1113(2).
21
Lastly, Sanders testified that around 2000 or 2001, she learned from other
22 employees at work, in the break room, that they would not get past service credit
23 because a former employee who was expecting her full retirement did not get it. (Dkt.
24 No. 212-27, Abel Decl., Ex. 13, Sanders Depo. at 67:8-68:25.) However, it was not
25 until the end of 2004 and beginning of 2005, when Sanders retired on November 19,
26
4
The Court notes that Moyle timely filed a complaint in 2005 for breach of
27 fiduciary duty; however, it was dismissed with prejudice on November 14, 2005 based
on the ruling in Varity Corp v. Howe, 516 U.S. 489 (1996) which held that a plaintiff
28 cannot bring suit under other subsections of § 1132 if he or she has an adequate remedy
under § 1132(a)(1)(B), . (05cv507-DMS-WMC, Dkt. No. 32 at 9.)
- 22 -
[10cv2179-GPC(MDD)]
1 2004, that she became aware that her specific benefit would not include past service
2 credit when she received her first pension check. (Id. at 75:20-21; 77:13-24.)
3
Defendants acknowledge that Sanders was not aware of her specific benefits
4 until the end of 2004 and the beginning of 2005 but argue that she learned that she
5 might not be getting past service credit in 2000 or 2001. However, Sanders testified
6 that what she heard in the break room about not receiving past service credit from other
7 employees was “conjecture.” (Dkt. No. 212-27, Abel Decl., Ex. 13, Sanders Depo. at
8 77:4-12.) Sanders testified that she did not learn she would not be receiving past
9 service credit for her years at OGE until she received her first pension paycheck shortly
10 after she retired on November 19, 2004. (Id. at 77:13-17.) Since the complaint was
11 filed on October 19, 2010, the claim as to Sanders is timely.
12
At the motion hearing, the Court would like the parties to address what effect
13 Sanders’ timely claim has on the case and on the Class. Moreover, the Court would
14 like the parties to address equitable tolling. While Plaintiffs raise state equitable tolling
15 for the first time in their supplemental opposition, their argument is presented only two
16 paragraphs without any legal authority to support their argument that state equitable
17 tolling applies to § 1113. Moreover, if equitable tolling applies, it would only apply
18 to Moyle and not the other named Plaintiffs and the Class; this issue should be
19 addressed by the parties.
20 C.
Last Opportunity to Cure
21
Alternatively, Plaintiffs argue that even if the fraud or concealment exception
22 does not apply, the case is timely based on Liberty Mutual’s last opportunity to cure
23 which is the date of final denial in 2009. Since Plaintiffs’ claims are premised on an
24 omission of material fact, a six year statute of limitations from the latest date on which
25 the fiduciary could have cured the breach or violation applies. Defendants argue that
26 the last opportunity to cure in an omissions case is on the last date the defendant could
27 have averted Plaintiffs’ detrimental reliance on the omitted information which was
28 when Plaintiffs accepted employment with New Golden Eagle on October 1, 1997.
- 23 -
[10cv2179-GPC(MDD)]
1
The last opportunity to cure provision provides,
2
No action may be commenced under this subchapter with respect to a fiduciary's
breach of any responsibility, duty, or obligation under this part, or with respect
to a violation of this part, after the earlier of--
3
4
(1) six years after (A) the date of the last action which constituted a part of the
breach or violation, or (B) in the case of an omission the latest date on which the
fiduciary could have cured the breach or violation, . . .
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
29 U.S.C. § 1113(1). Not many cases have addressed this issue and the cases that have
looked at this issue have held that the “last opportunity to cure” an omission is the “last
date on which Defendant could have averted Plaintiff's detrimental reliance on the
incomplete information.”
Fischer v. Carpenters Pension and Annuity Fund of
Philadelphia and Vicinity, No. 10-3048, 2012 WL 602170, at *5 (E.D. Pa. Feb. 24,
2012) (citing Librizzi v. Children’s Mem’l Med. Ctr., 134 F.3d 1302, 1307 (7th Cir.
1998)).
The Seventh Circuit warned about confusing the two meanings of the term
“cure” in the sense of “to fix” with “to find a remedy.” Olivo v. Elky, 646 F. Supp. 2d
95, 102 (D.C.C 2009) (quoting Librizzi, 134 F.3d at 1307). Defining “cure” in the
sense “to find a remedy” would extend a fiduciary’s liability indefinitely as it is always
possible to remedy a breach. Id. In Olivo, the plaintiffs claimed that defendants
breached their fiduciary duty by failing to notify them of their eligibility to enroll in the
Plan in 1994, 1999 and 2000. Id. The plaintiffs suffered the injury, the inability to
make income contributions and receive matching employer contributions, in the year
they should have been notified of their eligibility. Id. In Olivo, the court noted that the
last opportunity to cure was the time when plaintiff first suffered the injury complained
of. Id.
Here, Plaintiffs misconstrue Defendants’ last opportunity to cure to be the date
of remedying the breach.5 See Aull v. Cavalcade Pension Plan, 988 F. Supp. 1360,
27
5
In their opposition to Defendants’ motion for summary judgment, in arguing
28 that Plaintiffs met the statute of limitations from the latest date Defendants could cure
they state, “Here, Defendants could still cure the ERISA violations.” (Dkt. No. 233,
- 24 -
[10cv2179-GPC(MDD)]
1 1364 (D. Colo. 1997) (rejecting plaintiffs’ argument that defendant could still cure the
2 breach today and therefore the statue of limitations has not yet run). The last
3 opportunity to cure regarding notification that past service credit for time employed
4 with OGE would not count for accrued benefits would have been October 1, 1997
5 when Plaintiffs accepted employment with New Golden Eagle. October 1, 1997 was
6 the date Plaintiffs decided to forego looking for other employment opportunities and
7 stayed with New Golden Eagle and became a beneficiary under the Plan. Since the
8 complaint was not filed until 2010, Plaintiffs’ claim is not timely under § 1113(1)(B).
9
10
Conclusion
Counsel are advised that the Court’s rulings are tentative and the Court will
11 entertain additional arguments at the hearing on December 16, 2016 at 1:30 p.m. in
12 Courtroom 2D.
13
IT IS SO ORDERED.
14
15 DATED: December 15, 2016
16
HON. GONZALO P. CURIEL
United States District Judge
17
18
19
20
21
22
23
24
25
26
27
28
Ps’ Opp. at 46.)
- 25 -
[10cv2179-GPC(MDD)]
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