Solis v. Hutcheson et al

Filing 16

PRELIMINARY INJUNCTION. Signed by Judge Edward J. Lodge. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (dks)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO

HILDA L. SOLIS, Secretary of the United
States Department of Labor,
Plaintiff,
Civil Action No. 1:12-cv-236-EJL
v.
PRELIMINARY INJUNCTION
MATTHEW D. HUTCHESON, HUTCHESON
WALKER ADVISORS LLC, GREEN VALLEY
HOLDINGS LLC, and the RETIREMENT
SECURITY PLAN AND TRUST, f/k/a
PENSION LIQUIDITY PLAN AND
TRUST.
Defendants.

On May 15, 2012, plaintiff, Hilda L. Solis, Secretary of the United States
Department of Labor (the "Secretary"), filed a complaint in this action (Dkt. 1) and, at the
same time, a motion for a temporary restraining order and preliminary injunction
removing defendants Matthew D. Hutcheson ("Hutcheson") and Hutcheson Walker
Advisors LLC ("HWA") as fiduciaries of the Retirement Security Plan and Trust, f/k/a
Pension Liquidity Plan and Trust ("RSPT") and the plans for which RSPT holds ERISAcovered assets (the "Plans") and appointing Jeanne B. Bryant of Receivership
Management, Inc. as independent fiduciary to RSPT and the Plans. (Dkt. 2.)

PRELIMINARY INJUNCTION - 1

On May 16, 2012, the Court granted the Secretary's motion for a temporary
restraining and took the motion for preliminary injunction under advisement. (Dkt. 6.) In
that same order defendants were directed to file responsive briefs on or before June 5,
2012. Id. No responsive briefs have been filed to date. The Court notes Hutcheson did
file a pro se declaration on June 11, 2012 (Dkt. 15) indicating he had not been served as
represented by Plaintiff but acknowledged he did receive a copy of the Court’s Order of
May 30, 2012 (Dkt. 9) on May 31, 2012 which provided notice to Hutcheson that he had
until June 5, 2012 to file a response to the motion for preliminary injunction.
Accordingly, in the interest of avoiding further delay, and because the Court
conclusively finds that the decisional process would not be significantly aided by oral
argument, this motion shall be decided on the record before this Court without oral
argument. Dist. Idaho Loc. Civ. R. 7.1(d)(2)(ii). Based on the following findings of facts
and conclusions of law, the Court finds as follows:
I.

Preliminary Injunction Standard:
Preliminary injunctions are designed to preserve the status quo pending the

ultimate outcome of litigation. They are governed by Federal Rule of Civil Procedure
65(b) which requires the moving party to show "specific facts in an affidavit or a verified
complaint clearly show that immediate and irreparable injury, loss, or damage will result
to the movant before the adverse party can be heard in opposition. . . .” Under Rule 65(b)
and Ninth Circuit case law, a plaintiff may obtain a preliminary injunction only where he
or she can “demonstrate immediate threatened injury.” See, e.g., Caribbean Marine
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Servs. Co. v. Baldridge, 844 F.2d 668, 674 (9th Cir. 1988) (emphasis in original).
Speculative injury does not constitute irreparable injury sufficient to warrant granting a
preliminary injunction. Goldie's Bookstore Inc. v. Superior Court, 739 F.2d 466, 472 (9th
Cir. 1984).
Fed. R. Civ. P. 65(b) discusses the procedure to be followed on an application for a
preliminary injunction. A preliminary injunction may issue even though a plaintiff’s right
to permanent injunctive relief is not certain. The grant or denial of a preliminary
injunction is a matter of the court’s discretion exercised in conjunction with the principles
of equity. See: Inland Steel v. United States, 306 U.S. 153 (1939); Deckert v.
Independence Shares Corp., 311 U.S. 282, 61 S. Ct. 229, 85 L.Ed. 189 (1940); and
Stanley v. Univ. of Southern California, 13 F.3d 1313 (9th Cir. 1994).
While courts are given considerable discretion in deciding whether injunctive
relief should be issued, injunctive relief is not obtained as a matter of right and it is
considered to be an extraordinary remedy that should not be granted unless the movant,
by a clear showing, carries the burden of persuasion. See: Sampson v. Murray, 415 U.S.
61 (1974); Brotherhood of Locomotive Engineers v. Missouri-Kansas-Texas R. Co., 363
U.S. 528 (1960); and Stanley v. Univ. of Southern California, 13 F.3d 1313 (9th Cir.
1994).
In each case, the district court “must balance the competing claims of injury and
must consider the effect on each party of the granting or withholding of the requested
relief.” Amoco Production Co. v. Gambell, 480 U.S. 531, 542 (1987). In Winter v.
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Natural Resource Defense Council, Inc., 555 U.S. 7 (2008), the United States Supreme
Court held that, in order to be entitled to a preliminary injunction, the moving party must
demonstrate (1) likelihood of success on the merits; (2) that he or she is likely to suffer
irreparable harm in the absence of preliminary relief; (3) that the balance of equities tips
in his or her favor; and (4) that an injunction is in the public interest. 555 U.S. at 20; see
also, Stormans, Inc. v. Selecky, 586 F.3d 1109, 1127 (9th Cir. 2009).
Prior to the Supreme Court’s ruling in Winter, the Ninth Circuit applied alternative
tests in determining whether a preliminary injunction should be granted: “[a] preliminary
injunction is appropriate when a plaintiff demonstrates either: (1) a likelihood of success
on the merits and the possibility of irreparable injury; or (2) that serious questions going
to the merits were raised and the balance of hardships tips sharply in [the plaintiff’s]
favor.” Lands Council v. McNair, 537 F.3d 981, 987 (9th Cir. 2008). The Ninth Circuit
reasoned that “[t]hese two options represent extremes on a single continuum: the less
certain the district court is of the likelihood of success on the merits, the more plaintiffs
must convince the district court that the public interest and balance of hardships tip in
their favor.” Id. In Winter, the Supreme Court expressly disapproved the “possibility of
harm standard,” stating that “the Ninth Circuit’s ‘possibility’ standard is too lenient . . .
[and the proper] standard requires plaintiffs seeking preliminary relief to demonstrate that
irreparable injury is likely in the absence of an injunction.” 555 U.S. at 22 (emphasis in
original). This left open the question, however, of whether the remaining aspects of the
Ninth Circuit’s sliding scale test for preliminary injunctions remained good law.
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The Ninth Circuit clarified the issue in Alliance for the Wild Rockies v. Cottrell,
632 F.3d 1127 (9th Cir. 2011). In that case, the Court of Appeals held that although
Winter had raised the bar on what must be shown on the irreparable harm prong to justify
a preliminary injunction, it did not alter the district court’s authority to balance the
elements of the preliminary injunction test, so long as a certain threshold showing is made
on each factor. 632 F.3d at 1134-35. The court in Wild Rockies stated that “the ‘serious
questions’ approach survives Winter when applied as part of the four-element Winter
test.” Id. at 1135. In other words, “‘serious questions going to the merits’ and a hardship
balance that tips sharply toward the plaintiff can support issuance of an injunction,
assuming the other two elements of the Winter test are also met.” Id.
II.

Findings of Fact:
Based on the record in this case, the Court finds as follows:
1.

This Court has jurisdiction and venue is proper. Hutcheson resides in

Idaho. ERISA § 502(e)(1) & (2), 29 U.S.C. §§ 1132(e)(1) & (2).
2.

On May 15, 2012, Plaintiff Hilda L. Solis, Secretary of the United States

Department of Labor, filed the Complaint in this case alleging claims for violations of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. § 1001, et
seq. (“ERISA”). (Dkt. 1.) The claims relate to Hutcheson’s alleged wrongful transfer of
$3.276 million dollars of ERISA-covered plan assets to accounts controlled by him in late
2010 and subsequent use of those funds for his personal benefit. (Dkt. 1.) At the time of
the transfer, the Complaint states, Hutcheson was a fiduciary of the ERISA-covered plans
PRELIMINARY INJUNCTION - 5

whose assets are held by an entity known as the Retirement Security Plan and Trust, f/k/a
Pension Liquidity Plan and Trust (“RSPT”). The transfer in question in the Complaint
was made from RSPT. As a result of the transfer, the Complaint alleges, there appears to
be insufficient funds in RSPT to provide all of the benefits due to the participants and
beneficiary of the plans for which RSPT holds ERISA-covered plan assets. Plaintiff now
seeks injunctive relief removing Defendants Hutcheson and HWA as fiduciaries of the
Plans and appointing an independent fiduciary over RSPT and the Plans.
3.

At all times relevant, RSPT has been an entity entrusted with discretionary

authority and control over assets of employee benefit plans (as that term is defined by
ERISA § 3(3), 29 U.S.C. § 1002(3) and over the administration of those plans.
Defendants Hutcheson and HWA exercised authority and control over the ERISAcovered assets entrusted to RSPT and over the management of the plans for which RSPT
held assets. Defendants Hutcheson and HWA also had discretionary authority and
responsibility in the administration of those plans. Thus, Defendants Hutcheson and
HWA were each a fiduciary of each of the plans to which those assets belong pursuant to
ERISA § 3(21), 29 U.S.C. § 1002(21).
4.

Hutcheson and his wife, Annette Hutcheson, are majority shareholders in

Green Valley Holdings, LLC ("GVH"), an Idaho limited liability company organized on
August 5, 2010. GVH is thus a party-in-interest with respect to the plans for which RSPT
holds and manages assets pursuant to ERISA § 3(14), 29 U.S.C. § 1002(14).

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5.

Plaintiff has filed a Declaration of J. Michael Ebbesen, Senior Investigator

for the Employee Benefits Security Administration of the United States Department of
Labor. (Dkt. 2, Ex. 2.) Mr. Ebbesen has conducted an investigation concerning the
alleged misuse of the $3,276,000 in funds from the RSPT trust by Hutcheson. This
investigation purports to show that Mr. Hutcheson directed for the transfer of funds in
order to purchase a bank note (the “PCB Note”)1, which was secured by a golf course at
Tamarack, for the benefit of Green Valley Holdings, LLC. (Dkt. 2, Ex. 2.) The PCB Note
was later pledged as collateral to another individual for a loan to pay Hutcheson’s legal
bills. Hutcheson defaulted on the loan and, as a result, may have lost title to the PCB
Note. Mr. Ebbesen contends that Hutcheson concealed pertinent details about the
transactions concerning the PCB Note. The Declaration goes on to detail the
commencement of the Government’s involvement and knowledge concerning the transfer
of funds by Hutcheson including the filing of Form 5500 and the findings of the
Independent Auditor’s Report finding of a “Prohibited Transaction.” (Dkt. 2, Ex. 2 at
¶¶ 28-32.) Mr. Ebbesen concludes with the statement that HWA has continued to make
distributions from RSPT knowing that $3,276,000 in assets are missing. (Dkt. 2, Ex. 2 at
¶ 33.) Attached to Mr. Ebbesen’s Declaration are several Exhibits that support the
conclusions made therein. (Dkt. 2-3, 5.)2
1

It appears “PCB” refers to Pacific Continental Bank, located in Eugene, Oregon. (Dkt. 2, Ex. 2 at ¶ 30.)

2

The Exhibits are appropriately filed under seal so the Court has not discussed the details of their content
in this Order. The Court has, however, reviewed the documents in relation to the claims made in Mr.
Ebbesen’s Declaration and the claims raised in the Complaint in reaching its decision on this Application
for Preliminary Injunction.
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6.

As a result of the alleged prohibited transaction, there are insufficient plan

assets in RSPT to provide all of the benefits due to all of the participants and beneficiaries
of ERISA-covered plans whose assets are held by RSPT.
7. Based on the foregoing and without any evidence being submitted by
Defendants to counter Mr. Ebbesen’s Declaration, the Court finds the Plaintiff has
demonstrated the type of immediate and irreparable injury necessitating entry of a
preliminary injunction. Plaintiff has clearly shown by way of Mr. Ebbesen’s Declaration
and the attachments thereto, specific facts evidencing a real threat of immediate and
irreparable injury, loss, or damage will result if the preliminary injunciton is not issued.
Though a great deal of funds have already been transferred from the particular funds at
issue, there is a danger that the remaining ERISA-covered assets could be further
diminished by these Defendants. Accordingly, the Court finds grounds have been shown
upon which to grant the preliminary injunction.
III.

Procedural Background:

On May 15, 2012, the Secretary filed a complaint in this action. (Dkt 1.) She
concurrently filed a motion for a temporary restraining order and preliminary injunction,
seeking removal of defendants Hutcheson and HWA as fiduciaries of RSPT and the
Plans. The Secretary also asked this Court to appoint Jeanne B. Bryant of Receivership
Management, Inc. as independent fiduciary to RSPT and the Plans. (Dkt. 2.)
On May 16, 2012, the Court granted the Secretary's motion for a temporary
restraining and took the motion for preliminary injunction under advisement. (Dkt. 6.) In
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that same order defendants were directed to file responsive briefs on or before June 5,
2012. Id.
On May 21, 2012, the Secretary filed an Expedited Motion to Extend the
Temporary Restraining Order and to Expedite Briefing on the Application for Preliminary
Injunction. (Dkt. 7.) In her application, the Secretary asked the Court to extend the
temporary restraining order in effect (Dkt. 6) beyond the fourteen (14) days provided in
Fed. R. Civ. P. 65, until briefing on the motion for preliminary injunction was complete
and the Court had the opportunity to rule on the motion for preliminary injunction. In the
same motion, the Secretary requested that the Court expedite the Defendants’ response to
the Secretary's request to extend the temporary restraining order. Id.
On May 23, 2012, the Court issued an Order expediting the briefing on the motion
to extend the temporary restraining order. (Dkt. 8.) Defendants were ordered to respond
to the Secretary's motion to extend the temporary restraining order no later than 5:00 p.m.
on May 29, 2012. Although Defendants have been properly served with copies of these
documents, they have failed to respond. See Hartman Declaration (Dkt. 14).
On May 30, 2012, the Court granted the Secretary's motion to expedite briefing on
the Application for Preliminary Injunction pursuant to Dist. Idaho Loc. Civ. R. 7.1(e)(2).
(Dkt. 9.) In that Order, Defendants again were instructed to file their response to the
Secretary's Application for Preliminary Injunction on or before June 5, 2012, as follows:
Defendants are to file their response brief to this Application on or before June 5,
2012. The Court revises the date Plaintiff's reply is due to June 11, 2012. After
reviewing the briefing on the Application, the Court will determine whether a
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hearing date is necessary and, if so, contact the parties to schedule a hearing on the
Application for Preliminary Injunction to be scheduled no later than June 13, 2012.
(Emphasis added.) Defendants have failed to file or serve any response to the Secretary's
Application for Preliminary Injunction. Pursuant to Dist. Idaho Loc. Civ. R. 7.1(e)(2), the
Court may deem the failure to file a response as consent by the non-moving party to the
granting of the motion.
IV.

Conclusions of Law.
The Secretary is entitled to preliminary injunctive relief because she has

established all of the grounds necessary for the imposition of such relief here, including:
(1) likelihood of success on the merits; (2) likelihood of irreparable harm in the absence
of preliminary relief; (3) that the balance of the equities tips in favor of injunctive relief;
and (4) that an injunction is in the public interest. Park Village Apartment Tenants Ass'n
v. Mortimer Howard Trust, 636 F.3d 1150, 1155 (9th Cir. 2011) (citing Cal. Pharmacists
Ass'n v. Maxwell-Jolly, 596 F.3d 1098, 1104 (9th Cir. 2010)).
A. Likelihood of Success on the Merits
ERISA is a comprehensive and remedial statute designed to promote and protect
the interests of participants and their beneficiaries in employee benefit plans. Shaw v.
Delta Air Lines, Inc., 463 U.S. 85, 90 (1983); Nachman Corp. v. Pension Benefit Guar.
Corp., 446 U.S 359, 361-62 (1980). Courts have repeatedly found that, under ERISA's
broad remedial provisions, injunctive relief, such as that sought in this action, is

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appropriate. See, e.g., Donovan v. Mazzola, 716 F.2d 1226, 1238-39 (9th Cir. 1983), cert.
denied, 464 U.S. 1040 (1984).
In passing ERISA, Congress declared a national public interest in protecting "the
continued well-being and security of millions of employees and their dependents . . .
directly affected by these plans." ERISA § 2(a), 29 U.S.C. § 1001(a); Johnson v.
Couturier, 573 F.3d 1067, 1082 (9th Cir. 2009); Herman v. South Carolina Nat'l Bank,
140 F.3d 1413, 1423 (11th Cir. 1998). In furtherance of this goal, "Congress intended to
make available the full range of legal and equitable remedies in cases of ERISA
violations." Whitfield v. Tomasso, 682 F. Supp. 1287, 1306 (E.D.N.Y. 1988) (citing H.R.
Rep. No. 93-127H, reprinted in 3 U.S. Code Cong. & Admin.News 4639, 4838, 4871
(1974)); accord South Carolina Nat'l Bank, 140 F.3d at 1423 ("It remains the intent of
Congress that the courts use their power to fashion legal and equitable remedies that not
only protect participants and beneficiaries but deter violations of the law as well").
The instant action, the Application for Preliminary Injunction falls squarely within
ERISA's statutory charge to the Secretary and are in furtherance of the Secretary's goal of
protecting the participants and beneficiaries of the employee benefit plans subject to this
action. In addition to providing for the removal of existing plan fiduciaries, such relief
also includes the appointment of an independent fiduciary to carry out the proper
administration and management of benefit plans. Mazzola, 716 F.2d at 1238-39; Solis v.
Vigilance, Inc., No. C-08-05083, 2009 WL 2031767, at *3 (N.D. Cal. July 9, 2009); Chao
v. Azon Employees Ret. Plan, No. 3:06-CV-1006, 2007 WL 4287784, at *4 (N.D.N.Y.
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Dec. 7, 2007); Chao v. Zoltrix, No. C-07-00610, 2007 WL 2990429, at *3 (N.D. Cal. Oct.
11, 2007).
One of the remedies expressly enumerated in ERISA is removal of a breaching
fiduciary. ERISA § 409(a), 29 U.S.C. § 1109(a); see Mertens v. Hewitt Assocs., 508 U.S.
248 (1993) (fiduciary subject to such other equitable or remedial relief as the court may
deem appropriate including removal of the fiduciary). A permanent injunction against
serving as a fiduciary is also an appropriate remedy under ERISA. Martin v. Feilen, 965
F.2d 660, 672 (8th Cir. 1992), cert. denied, 506 U.S. 1054 (1993) (permanent injunction
imposed on fiduciary who demonstrated a "fundamental misunderstanding" of ERISA).
In an action brought to enforce a remedial federal statute that provides a court with broad
jurisdiction to fashion relief, an injunction freezing assets, appointing an independent
fiduciary, and allowing the independent fiduciary to administer the plan is particularly
appropriate to ensure that participants suffer no additional losses due to misconduct.
Commodity Futures Trading Comm'n v. Muller, 570 F.2d 1296, 1300 (5th Cir. 1978).
It is likely that the Secretary will be successful on the merits because, although
there has been no formal discovery, the factual record in this matter without any dispute
by Defendants as to material facts supports of finding that the Plans are at risk of
sustaining devastating losses if the Defendants continue as fiduciaries of the Plans while
the allegations of improper conduct is investigated. The Court finds it is not in the best
interests of the Plans to allow Hutcheson to retain control over plan assets pending
resolution of criminal charges in the District of Idaho. The Secretary has established her
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likelihood of success on the merits of a claim regarding breaches of fiduciary duties by
Hutcheson and as a result of the reported prohibited transaction, there are insufficient
assets in RSPT to provide all the benefits due to participants and beneficiaries of ERISAcovered plans whose assets are held by RSPT. Therefore, whatever assets remain need to
be protected by an independent fiduciary.
B. Irreparable Harm Is Likely in the Absence of Immediate Relief
Injunctive relief is available "if plaintiffs demonstrate that irreparable injury is
likely in the absence of an injunction." Couturier, 572 F.3d at 1081 (internal citation
omitted). Here, it is clear that such injury is likely absent injunctive relief.
If the allegations against Defendants Hutcheson and HWA are found to be true, the
fiduciaries would be subject to removal under ERISA. Therefore, the risk of irreparable
harm to the ERISA plans has been demonstrated.
C. The Balance of the Equities Tips in Favor of Injunctive Relief
The balance of equities favors an award of injunctive relief for the Secretary in this
matter. Recognizing the public interest in protecting against future harm to ERISA plans,
courts have rejected arguments that "ERISA fiduciaries and their associates must be
allowed to loot a second pension plan before an injunction may be issued." Beck v.
Levering, 947 F.2d 639, 641 (2d Cir. 1991); Solis v. Couturier, 2009 WL 1748724 at *7.
"Accordingly, injunctive relief is available including an injunction to prohibit a party
from having further dealings with ERISA-covered plans." Tomasso, 682 F. Supp. at
1306; accord Beck, 947 F.2d at 641.
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Here, the harm that would likely occur without an injunction "would leave . . .
participants without the benefits whose security ERISA strives above all else to protect."
Couturier, 572 F.3d at 1081. The participants' interests in the loyal and prudent
management of their pension assets far outweighs any legitimate interest that Hutcheson
may assert to continued access to the funds. In light of not only the conduct in which
Hutcheson is alleged to have engaged, but the source of the funds that he is alleged to
have abused, participants' assets are at significant risk of further harm. Thus, the balance
of the equities favors preliminary relief.
D. An Injunction Is in the Public Interest
Serious allegations exist that tend to support the Secretary’s conclusion that
Defendants Hutcheson and HWA have violated ERISA § 404, and Hutcheson has further
violated the prohibited transaction and self-dealing rules in ERISA §§ 406(a) & (b). It is
thus in the public interest for Defendants Hutcheson and HWA to be prohibited from
exercising any further authority or control over any ERISA-covered assets at this time
and until the criminal proceedings are resolved. Any public concern that might extend to
somebody who has already admitted in the Form 5500 that the transaction violated
ERISA (and who has been indicted for alleged criminal behavior in connection with the
same transaction) "is far outweighed by the interests that ERISA protects." Couturier,
572 F.3d at 1081.

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ORDER
Based upon the foregoing and the record in this case, and for good cause shown,
the Court GRANTS the Secretary's Application for a Preliminary Injunction (Dkt. 2).
THEREFORE IT IS HEREBY ORDERED AND ADJUDGED THAT:
1. Hutcheson and HWA are removed as fiduciaries, service providers,
trustees, sponsors, administrators and from all other positions of authority or control over
RSPT and the Plans and are enjoined from acting as fiduciaries on behalf of RSPT and
the Plans, from exercising any authority or control with respect to RSPT and the Plans.
2. Jeanne B. Bryant of Receivership Management, Inc. is hereby appointed
as the independent fiduciary to RSPT (the "Independent Fiduciary"). The Independent
Fiduciary shall also serve as the successor trustee and plan administrator of RSPT and the
Plans and shall have fiduciary authority and control over RSPT's and the Plans' assets.
The Independent Fiduciary shall have the exclusive authority to exercise all powers
previously exercised or held by HWA and Hutcheson under the terms of the documents
governing RSPT and the Plans. Notwithstanding any provision herein to the contrary, the
fiduciary responsibility for determining the advisability of the Plans’ continued holding or
sale of any qualifying employer securities or for establishing the fair market value thereof
for any purpose shall remain with the individual sponsors of the Plans, as provided in
their respective letters of understanding with RSPT.
3. Hutcheson and HWA, and their fiduciaries, agents, employees, service
providers, depositories, banks, accountants, attorneys, and any other party acting in
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concert with them or at their direction, are enjoined to preserve, secure, and produce to
the Independent Fiduciary upon the Independent Fiduciary's request, all books, records,
and documents that relate to the administration and operation of RSPT, the Plans, and the
ERISA-covered assets therein, and to comply in good faith with the terms of this Order.
4. Hutcheson and HWA, and their fiduciaries, agents, employees, service
providers, depositories, banks, accountants, attorneys, and any other party acting in
concert with them or at their direction, are enjoined from expending, transferring,
hypothecating, secreting, or otherwise obligating or disposing of any assets of RSPT's or
the Plans' and from destroying, altering, or secreting any of RSPT's or the Plans' books,
records, or documents.
5. Hutcheson and HWA shall require their officers, employees, attorneys,
agents, advisers, and representatives, and all persons who serve in any capacity that
involves decision making authority for them, to act and discharge their duties in full
compliance with the terms of this Order and shall require that they not take any action in
the discharge of such duties that is inconsistent with the terms of this Judgment and
Order. Hutcheson and HWA shall also require their officers, employees, attorneys,
agents, advisers, representatives, and all persons who serve in any capacity that involves
decision making authority for them, as a condition of maintaining their relationships with
them, to cooperate fully with the Independent Fiduciary in the performance of the
Independent Fiduciary's duties and responsibilities. In furtherance thereof, Hutcheson
and HWA shall provide a copy of this Order to all of their officers, employees, attorneys,
PRELIMINARY INJUNCTION - 16

agents, advisers, representatives and all persons who serve in any capacity that involves
decision making authority for them, within ten (10) days after the entry of this Order.
6. The Independent Fiduciary shall have exclusive responsibility and
authority to control and manage all assets of RSPT's and the Plans' and all assets within
RSPT's and the Plans' custody or control, including, but not limited to:
a.

The authority to exercise all fiduciary responsibilities relating to
RSPT and the Plans, including, but not limited to, the responsibility
to act as the administrator of RSPT and the Plans;

b.

Any and all authority given to trustees under the terms of the
documents governing RSPT and the Plans;

c.

Authority to amend the documents governing RSPT and the Plans;

d.

The exclusive authority to appoint, replace and remove such
administrators, trustees, attorneys, agents, and service providers as
the Independent Fiduciary shall, in the Independent Fiduciary's sole
discretion, determine are necessary to aid the Independent Fiduciary
in the exercise of the Independent Fiduciary's powers, duties, and
responsibilities to RSPT and the Plans;

e.

Authority to wind down RPST and the Plans and make final
distributions to participants and beneficiaries; and,

f.

Except as provided herein, the authority to delegate to such
administrators, trustees, attorneys, agents, and service providers such

PRELIMINARY INJUNCTION - 17

fiduciary responsibilities as the Independent Fiduciary shall
determine appropriate. The Independent Fiduciary may not,
however, delegate the authority to appoint, replace and remove such
administrators, trustees, attorneys, agents, and service providers or
the responsibility to monitor the activities of RSPT's and the Plans'
administrators, trustees, attorneys, agents, and service providers.
7. The Independent Fiduciary shall have full access to all documents,
books, records, personnel, files, and information of whatever type or description in the
possession, custody, or control of RSPT and the Plans. In addition, the Independent
Fiduciary shall have full access to all documents, books, records, personnel, files and
information of whatever type or description relating to RSPT and the Plans in the
possession or control of Hutcheson or HWA, or their fiduciaries, agents, employees,
service providers, depositories, banks, accountants, attorneys, and any other party acting
in concert with or at their direction. HWA shall deliver such records as the Independent
Fiduciary may request within five (5) business days after demand therefore or within such
other time as the HWA and the Independent Fiduciary may agree.
8. The Independent Fiduciary shall obtain a bond that conforms to the
requirements of ERISA section 412, 29 U.S.C. § 1112.
9. The Independent Fiduciary shall not be discharged or terminated during
the duration of this Order except by leave of Court upon application by either the
Secretary or the Independent Fiduciary. Upon termination, discharge, or resignation of
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the Independent Fiduciary during the term of this Order, the Secretary shall recommend a
successor Independent Fiduciary for appointment by the Court. Recommendations for a
successor Independent Fiduciary shall be made by the Secretary within such periods as
the Court, by further order, may provide.
10. Subject to the terms of this Order and ERISA, the Independent
Fiduciary shall delegate administrative activities to individuals or entities with the
capability to perform those activities in compliance with her fiduciary obligations under
ERISA.
11. Concerning any activities which the Independent Fiduciary performs,
the Independent Fiduciary shall be free to consult with the Secretary, the Internal
Revenue Service, other federal, state, and local governmental agencies, and any other
person or entity that the Independent Fiduciary believes appropriate in the conduct of the
Independent Fiduciary's duties, including attorneys, accountants, actuaries, and other
service providers.
12. The Independent Fiduciary shall cooperate fully with the Secretary in
the exercise of the Secretary's enforcement responsibilities under ERISA, inter alia, by
promptly providing such documents, information and persons under the Independent
Fiduciary's control as the Secretary from time to time may request. Nothing herein shall
be construed to limit the rights the Secretary otherwise enjoys of access to documents,
information or persons or to waive or restrict the exercise by the Independent Fiduciary
and any individual of his or her constitutional rights.
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13. The payment of administrative expenses and all fees to the Independent
Fiduciary and the Independent Fiduciary's assistants, attorneys, accountants, actuaries and
other necessary service providers are to be considered priority administrative expenses of
RSPT's and the Plans' and its related entities, superior to any other class of expense or
obligation of RSPT's and the Plans' or its related entities and the Independent Fiduciary's
second priority is to be the payment of legitimate claims. Hutcheson and HWA shall be
responsible for repaying RSPT and the Plans for such funds expended. On a quarterly
basis, the Independent Fiduciary shall provide the Secretary, Hutcheson and HWA with a
report of all significant actions taken and all funds expended
14. The Independent Fiduciary shall be entitled to continue to collect all
fees from the RSPT Plans’ sponsors as such sponsors were paying to Hutcheson and
HWA prior to their removal as RSPT Plans fiduciaries, or such other amounts that Ms.
Bryant may determine as proper under the RSPT Plans’ documents. Any fees the
Independent Fiduciary collects from the sponsors shall offset any fees and expenses
chargeable to the RSPT Plans.
15. The terms of the documents governing RSPT and the Plans are hereby
amended to include the terms of this Order. This Judgment and Order shall, for the term
of this Judgment and Order, supersede any and all other provisions in any documents
governing RSPT and the Plans that are inconsistent with the terms of this Judgment and
Order including, but not limited to, any plan documents, trust agreements and/or
shareholder agreements.
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16. The freeze described in paragraph 15 above shall remain in effect until
the Independent Fiduciary determines that all of the actions described in paragraph 15
have been completed to the extent they are deemed necessary and they are reasonably
possible under the circumstances.
17. The reasonable expenses incurred in the administration of RSPT and
the Plans, including but not limited to the reasonable compensation of attorneys,
accountants, consultants or others retained in connection with the administration of RSPT
and the Plans and their termination, shall, in such manner as the Independent Fiduciary
deems appropriate, be charged to and paid by RSPT and the Plans and allocated among
participants. Hutcheson and HWA shall be responsible for repaying RSPT and the Plans
for such fees and expenses. Such fees and expenses shall be subject to prior review and
approval of the Court.
18. RSPT and the Plans are authorized and directed to pay the reasonable
compensation, fees and expenses of Ms. Bryant and such persons and firms retained by
the Independent Fiduciary in the performance of services to or for RSPT and the Plans
subject to the following procedures:
a.

Before causing RSPT and the Plans to pay compensation, fees or expenses
to the Independent Fiduciary or any person or firms retained by the
Independent Fiduciary, the Independent Fiduciary shall provide written
notice of such compensation, fees or expenses, by filing a fee notice with
this Court and by serving a copy to the Secretary;

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b.

The fee notice shall include a detailed invoice itemizing the compensation,
fees and expense to be paid by RSPT and the Plans;

c.

The Independent Fiduciary shall not be required to file, service or otherwise
deliver the Fee Notice to any person or person other than the Court, the
Secretary, Hutcheson and HWA.

d.

If within fifteen (15) days after filing of a fee notice, no objection to the fee
notice or payment by RSPT and the Plans of the compensation, fees, or
expenses described therein is filed with this Court, such compensation, fees,
and expenses shall be deemed reasonable expenses of the RSPT's and the
Plans' and shall be paid by the RSPT and the Plans without further action or
approval of this Court;

e.

If an objection to a fee notice or payment by RSPT and the Plans of the
compensation, fees, or expenses described therein is filed with this Court,
within fifteen (15) days after filing of such fee notice, the Court shall hold a
hearing on the matter and the compensation, fees, expenses described in the
fee notice shall be paid by RSPT and the Plans only to the extent approved
by the Court; and

f.

This paragraph 18 shall not apply to fees and expenses of the funds
custodian or the third party administrator generated in the course of its
performance under its pre-petition service agreements.
19. Nothing in this and Order shall be construed:

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a.

To limit the powers and responsibilities of any officer or employee of the
United States under ERISA or any other law, or

b.

To relieve RSPT or the Plans, or any of their administrators, fiduciaries,
officers, trustees, custodians, attorneys, agents, employees, advisers,
providers of goods or services, consultants, representatives in any capacity,
or persons who serve in any capacity that involves decision making
authority or custody or control of the moneys, funds or assets of RSPT's or
the Plans' of any duty, responsibility, or liability under ERISA or any other
law.
20. This Court shall retain jurisdiction over the parties and subject matter

of this action for the purpose of enforcing this Order and resolving the remaining claims.
21. Provisions of this Order requiring notice to the Independent Fiduciary,
the Secretary, Hutcheson, GVH, and HWA shall be satisfied by delivering it in writing as
follows:
To the Independent Fiduciary:
Jeanne B. Bryant
Receivership Management, Inc.
P. O. Box 2307
Brentwood, TN 37024
[phone]
Fax [phone]

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To the Secretary:
(If by mail)
United States Department of Labor
Office of the Solicitor
Plan Benefits Security Division
P.O. Box 1914
Washington, D.C. 20013
(If by delivery)
United States Department of Labor
Office of the Solicitor
Plan Benefits Security Division
200 Constitution Ave., N.W.
Room N-4611
Washington, D.C. 20210
To Hutcheson and GVH:
Matthew D. Hutcheson
39 Pinnacle Court
Donnelly, ID 83615
To HWA:
Monty W. Walker
c/o R. Bradford Huss
Trucker Huss, APC
One Embarcadero Center
San Francisco, CA 94111
The parties to this and Order may, as they deem necessary, change the designation
of persons to receive notice on their behalf by filing with the Court notification of such
change and serving a copy thereof on the other party or parties to this and Order.
22.

This and Order may be amended upon application by the Secretary

or the Independent Fiduciary to this Court.

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SO ORDERED.

DATED: June 13, 2012

Honorable Edward J. Lodge
U. S. District Judge

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