Solis v. Maximus Multimedia International, LLC et al
Filing
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ORDER & OPINION Entered by Judge Joe Billy McDade on 2/1/13 granting 6 Motion for Default Judgment: IT IS THEREFORE ORDERED: 1) Plaintiff's Motion for Default Judgment 6 is GRANTED. Default Judgment is ENTERED against Defendants Maximus and the Plan. (See Written Order).. (TK, ilcd)
E-FILED
Friday, 01 February, 2013 04:53:27 PM
Clerk, U.S. District Court, ILCD
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF ILLINOIS
PEORIA DIVISION
ACTING SECRETARY OF LABOR
SETH D. HARRIS,1
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Plaintiff,
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v.
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MAXIMUS MULTIMEDIA
INTERNATIONAL, LLC, and MAXIMUS )
MULTIMEDIA INTERNATIONAL, LLC )
401(k) SAVINGS PLAN,
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)
)
Defendants.
Case No.
12-cv-1208
ORDER & OPINION
This matter is before the Court on Plaintiff’s Motion for Default Judgment
and his Supplemental Brief in Support of that Motion. (Docs. 6 & 8). For the
reasons stated below, default judgment is granted in Plaintiff’s favor and equitable
relief is granted.
Plaintiff filed his Complaint pursuant to 29 U.S.C. § 1132(a)(2) & (5) on June
27, 2012, claiming that Defendant Maximus violated the terms of the federal
Employee Retirement Income Security Act, specifically 29 U.S.C. § 1104(a)(1)(A) &
(B). Plaintiff alleged that Defendant Maximus, the Plan sponsor, administrator, and
fiduciary, ceased operations in February 2010. After ceasing operations, Defendant
failed to authorize Great West Life Insurance and Annuity Company, the Plan’s
custodial agent, to distribute the Plan’s assets to the participants, and no individual
Acting Secretary of Labor is substituted as Plaintiff for former Secretary of
Labor Hilda L. Solis.
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or other entity has taken fiduciary responsibility for the Plan. Due to Defendant
Maximus’ failure to administer the Plan, its participants and beneficiaries have
been unable to obtain distributions from it and their inquiries have gone
unanswered. (Doc. 1 at 2-3).
Pursuant to Federal Rule of Civil Procedure 55(a), the Court entered
Defendants’ default on October 12, 2012, after they had failed to plead or otherwise
defend. (10/12/2012 Entry of Default; 10/11/2012 Text Order). In his Motion for
Default Judgment, Plaintiff sought the following equitable relief: the removal of
Defendant Maximus from its position as a fiduciary of the Plan, the appointment of
the law firm of Spencer, Fane, Britt & Browne, LLP to serve as independent
fiduciary to administer the Plan in order to effectuate its termination and the
distribution of Plan assets to the participants, and to allow no more than $59,423.00
in fees and expenses related to the administration and termination of the Plan. This
fee amount, as well as the costs of the bonding required by 29 U.S.C. § 1112, would
be paid by the Plan. (Doc. 6).
On January 11, 2013, the Court agreed that removal of Defendant Maximus
from its responsibility for administration of the Plan is the best course of action,
given its failure to provide for the Plan’s proper administration and termination
upon the cessation of Maximus’ business, and that a new fiduciary must be
appointed in order to allow the Plan to be terminated in an orderly and just
manner, with distribution of the assets to the appropriate participants and
beneficiaries. (Doc. 7 at 3-4). However, the Court was not satisfied with Plaintiff’s
failure to explain why Spencer, Fane, Britt & Browne, LLP was his choice for
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independent fiduciary, and why a fee of up to $59,423.00, as well as the as-yet
unknown costs of the bonding, was reasonable, and therefore required Plaintiff to
file a brief addressing these issues, in order to allow the Court to more fully
evaluate whether to grant the relief sought. (Doc. 7 at 4).
Plaintiff has now filed this supplemental brief, which adequately explains
Plaintiff’s requested equitable relief and allows the Court to grant it in good
conscience. (Doc. 8). Plaintiff explains that, after determining that an independent
fiduciary should be appointed to terminate the Plan, he solicited requests for
proposals from three law firms. (Doc. 8 at 1-2). Of those three, Spencer, Fane, Britt
& Browne, LLP was the best choice because its fees were capped at $4,000 less than
the bid of one of the other firms, while the third firm’s bid failed to limit the fees
that might be charged. (Doc. 8 at 2). Spencer Fane’s bid represents only 6.7% of the
Plan’s $893,510.38 in assets. (Doc. 8 at 2). In addition, the Spencer Fane attorney
who will handle the termination of the Plan has over 20 years of legal experience
focusing solely on employee benefit plans and has served as an independent
fiduciary pursuant to court appointments in several other cases. (Doc. 8 at 2). The
Court thus approves Plaintiff’s choice of Spencer, Fane, Britt & Browne, LLP, and
the proposed fee. In addition, because Plaintiff estimates that the costs of the
bonding required by 29 U.S.C. § 1112 would be only $350 to $500, the Court
approves payment of the cost of such bonding from the Plan’s assets.
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IT IS THEREFORE ORDERED:
1.
Plaintiff’s Motion for Default Judgment (Doc. 6) is GRANTED. Default
judgment is ENTERED against Defendants Maximus and the Plan.
2.
Defendant Maximus is REMOVED from its position as a fiduciary with
respect to the Plan.
3.
Spencer, Fane, Britt & Browne, LLP is APPOINTED as the Plan’s
independent fiduciary to terminate the Plan consistent with the Plan’s governing
documents, the Internal Revenue Code, and the Employee Retirement Income
Security Act, and issue distributions to the Plan participants.
4.
The independent fiduciary SHALL RECEIVE no more than $59,423.00 for
fees and expenses related to the administration and termination of the Plan.
5.
Upon final termination of the Plan’s assets, the independent fiduciary
SHALL PROVIDE proof of such termination and distribution of the Plan’s assets to
James Purcell, Regional Director of the Employee Benefits Security Administration,
2300 Main Street, Suite 1100, Kansas City, Missouri, 64108-2415.
6.
The independent fiduciary SHALL OBTAIN bonding in an amount that
meets the requirements of 29 U.S.C. § 1112. The costs incurred by the independent
fiduciary in obtaining such bonding SHALL BE PAID by the Plan.
CASE TERMINATED.
Entered this 1st day of February, 2013.
s/ Joe B. McDade
JOE BILLY McDADE
United States Senior District Judge
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