Jones et al v. KPMG, LLP et al

Filing 53

MEMORANDUM OPINION AND ORDER granting 41 Motion to Dismiss for Lack of Jurisdiction. The claims filed against KPMG LLP by Martha Ezell Lowe, individually and on behalf of a class of similarly situated employees, are hereby dismissed without prejudice for lack of jurisdiction. Signed by District Judge Louis Guirola, Jr. on 12/18/2019 (wld)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
THOMAS JONES, JOSEPH CHARLES
LOHFINK, SUE BEAVERS,
RODOLFOA REL, and HAZEL REED
THOMAS, on behalf of themselves and
others similarly situated

PLAINTIFFS

and
MARTHA EZELL LOWE, individually
and on behalf of a class of similarly
situated employees
v.

CONSOLIDATED PLAINTIFF
CAUSE NO. 1:17CV319-LG-RHW

KPMG LLP and TRANSAMERICA
RETIREMENT SOLUTIONS
CORPORATION

DEFENDANTS

MEMORANDUM OPINION AND ORDER
GRANTING KPMG LLP’S MOTION TO DISMISS
BEFORE THE COURT is the [41] Motion to Dismiss filed by the defendant
KPMG LLP. The parties have fully briefed the Motion. After reviewing the
submissions of the parties, the record in this matter, and the applicable law, the
Court finds that the Motion to Dismiss should be granted.
BACKGROUND
The claims presented here were originally filed in two separate putative class
action lawsuits seeking relief as a result of the underfunding of the Singing River
Health System Employees’ Retirement Plan and Trust (“the Plan”) — Jones, et al. v.
Singing River Health System, et al., 1:14cv447-LG-RHW, and Lowe v. Singing River
Health System, et al., 1:15cv44-LG-RHW. In the interest of judicial economy, the

Court entered an [1] Order severing the claims presented by the Jones plaintiffs
against Transamerica Retirement Solutions Corporation and Lowe’s claims against
KPMG and Transamerica from claims against Singing River Health System and the
Plan’s trustees.1 The Court consolidated the Jones and Lowe plaintiffs’ claims
against KPMG and Transamerica under a new cause number, 1:17cv319-LG-RHW.
Lowe alleges that KPMG, the company that audited the annual financial
statements of Singing River Health System (SRHS) and the Plan, either knew or
should have known that SRHS had defaulted on its contributions to the Plan since
2009. She asserts that KPMG “allowed or did not correct statements that
attributed the Trust’s underfunding to returns on investments and changed
actuarial assumptions.” (Compl. 14, ECF No. 5.) She attempts to assert a breach of
fiduciary duty and/or aiding and abetting breach of fiduciary duty claim against
KPMG. KPMG filed the present Motion to Dismiss for Lack of Subject Matter
Jurisdiction, alleging, inter alia, that Lowe lacks standing to pursue this lawsuit
against KPMG because a special fiduciary now has exclusive authority to file claims
on behalf of the Plan.
DISCUSSION
The Fifth Circuit has explained:
To have Article III standing, a plaintiff must show an injury in fact
that is fairly traceable to the challenged action of the defendant and
likely to be redressed by the plaintiff’s requested relief. Courts have
divided this rule into three components: injury in fact, causation, and
The Jones plaintiffs had previously filed a [7] Notice voluntarily dismissing their
claims against KPMG, but they expressed a desire to remain members of the
putative class in the Lowe case.
1

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redressability. The party seeking to invoke federal jurisdiction, in this
case the Plaintiffs, bears the burden of establishing all three elements.
Stringer v. Whitley, 942 F.3d 715, 720 (5th Cir. 2019). As with standing, mootness
implicates the Article III case-or-controversy requirement and is thus a
jurisdictional matter. United States v. Heredia-Holguin, 823 F.3d 337, 340 (5th Cir.
2016) (en banc). “A case becomes moot when ‘[t]he requisite personal interest that
must exist at the commencement of the litigation’ ceases to exist because ‘interim
relief or events have completely and irrevocably eradicated the effects of the alleged
violation.’” Stringer v. Whitley, 942 F.3d 715, 724 (5th Cir. 2019) (quoting Renne v.
Geary, 501 U.S. 312, 320 (1991)).
The parties appear to agree that the question of standing or mootness in this
case is governed by trust law. Since Lowe is a beneficiary to the trust at issue and
KPMG is a third party, Lowe may only maintain a lawsuit against KPMG if (a) she
“is in possession, or entitled to immediate distribution, of the trust property
involved; or (b) the trustee is unable, unavailable, unsuitable, or improperly failing
to protect the beneficiary’s interest.” See Restatement (Third) of Trusts § 107
(2012); see also Miss. Code Ann. § 91-8-811 (“A trustee shall take reasonable steps
to enforce claims of the trust [but a] trustee may abandon or assign any claim that
it believes is unreasonable to enforce to one or more of the beneficiaries of the trust
holding the claim.”)
Lowe argues that she has standing to pursue this lawsuit because she alleged
in her Complaint that the Plan’s trustees breached their fiduciary duties. However,
as KPMG correctly notes, Lowe’s claims against those former trustees have been
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settled, and a special fiduciary was appointed to oversee the Plan. The special
fiduciary has apparently not abandoned her duty to file lawsuits on behalf of the
Plan as she has filed a lawsuit against KPMG in state court. The appointment of a
special fiduciary has mooted Lowe’s claims against KPMG, because only the special
fiduciary has authority to maintain lawsuits on behalf of the Plan and Lowe is not
entitled to immediate distribution of the trust property. As a result, KPMG’s
Motion to Dismiss for Lack of Jurisdiction must be granted.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the [41] Motion
to Dismiss filed by the defendant KPMG LLP is GRANTED. The claims filed
against KPMG LLP by Martha Ezell Lowe, individually and on behalf of a class of
similarly situated employees, are hereby DISMISSED WITHOUT PREJUDICE
FOR LACK OF JURISDICTION.
SO ORDERED AND ADJUDGED this the 18th day of December, 2019.
s/

Louis Guirola, Jr.

LOUIS GUIROLA, JR.
UNITED STATES DISTRICT JUDGE

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