Sacerdote et al v. Retirement Plan Committee et al

Filing 137

OPINION & ORDER re: 117 MOTION to Dismiss Amended Complaint filed by Chris Tang, Ann Kraus, Thomas Feuerstein, Margaret Meagher, Retirement Plan Committee, Nancy Sanchez, Catherine Casey, Tim Hesler, New York University Scho ol of Medicine, Sabrina Ellis, Michael Burke, Maurice Maertens, Joseph Monteleone, Martin Dorph, Kathleen Jacobs, Cynthia Nascimento, Linda Woodruff, Richard Bing, Andrew Gordon, Patricia Halley, Tina Surh, Ray Oquendo, Marina Kartanos. For the foregoing reasons, the motion to dismiss is GRANTED in full. The Clerk of Court is directed to close the open motion at ECF No. 117 and to terminate case 17-cv-8834. SO ORDERED. (Signed by Judge Katherine B. Forrest on 2/23/2018) (mml)

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------------------ X
DR. ALAN SACERDOTE, DR. HERBERT
:
SAMUELS, MARK CRISPIN MILLER,
:
MARIE E. MONACO, DR. SHULAMITH
:
LALA STRAUSSNER, AND JAMES B.
:
BROWN, individually and as representatives of :
a class of participants and beneficiaries on
:
behalf of the NYU School of Medicine
:
Retirement Plan for Members of the Faculty,
:
Professional Research Staff and Administration :
and the New York University Retirement Plan :
for Members of the Faculty, Professional
:
Research Staff and Administration,
:
:
Plaintiffs,
:
:
-v:
:
NEW YORK UNIVERSITY SCHOOL OF
:
MEDICINE, CAMMACK LARHETTE
:
ADVISORS, LLC, RETIREMENT PLAN
:
COMMITTEE, RICHARD BINGM MICHAEL :
BURKE, CATHERINE CASEY, MARTIN
:
DORPH, SABRINA ELLIS, THOMAS
:
FEUERSTEIN, ANDREW GORDON,
:
PARTICIA HALLEY, TIM HESLER,
:
KATHLEEN JACOBS, MARINA KARTANOS, :
ANN KRAUS, MARGARET MEAGHER,
:
CYNTHIA NASCIMIENTO, NANCY
:
SANCHEZ, TINA SURH, LINDA WOODRUFF, :
MAURICE MAERTENS, JOSEPH
:
MONTELEONE, RAY OQUENDO, CHRIS
:
TANG,
:
:
Defendants.
:
------------------------------------------------------------------ X

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: February 23, 2018

17-cv-8834 (KBF)
OPINION & ORDER

KATHERINE B. FORREST, District Judge:
On August 9, 2016, plaintiffs filed an action under the Employee Retirement
Income Security Act of 1974 (“ERISA”) against New York University (“Sacerdote I”).

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(16-cv-6284, ECF No. 1.) On August 25, 2017, the Court dismissed Claims I, II, IV,
VI, and VII in their entirety, and Counts III and V in part. (16-cv-6284, ECF No.
79.) The Court subsequently denied plaintiffs’ motion to file a second amended
complaint adding defendants and reinstating certain claims, (16-cv-6284, ECF No.
100), as well at their motion for reconsideration, (16-cv-6284, ECF No. 101.)
Sacerdote I is set to begin trial on the remaining claims on April 16, 2018.
On November 13, 2017, plaintiffs filed a new action against NYU School of
Medicine, the Retirement Plan Committee, and Cammack LaRhette Advisors, LLC
(“Cammack”), as well as individual defendants Michael Burke, Richard Bing,
Catherine Casey, Martin Dorph, Sabrina Ellis, Thomas Feuerstein, Andrew
Gordon, Particia Halley, Tim Hesler, Kathleen Jacobs, Marina Kartanos, Ann
Kraus, Margaret Meagher, Cynthia Nascimiento, Nancy Sanchez, Tina Surh, Linda
Woodruff, Maurice Maertens, Joseph Monteleone, Ray Oquendo, and Chris Tang
(collectively, “defendants”). (ECF No. 1.1) The Complaint and Amended Complaint
in Sacerdote II utilize discovery gathered in Sacerdote I to bolster plaintiffs’ claims.
All but one of the Sacerdote II defendants are part of NYU, either as a division or as
an employee. Pending now before the Court is defendants’ motion to dismiss,
claiming in large part that plaintiffs cannot file the same case twice in an attempt
to avoid the Court’s previous rulings. The Court agrees.
While procedurally positioned as a new case, the Amended Complaint in
Sacerdote II is a blatant attempt to replead an existing action. The Court construes

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All ECF citations in this opinion are to docket number 17-cv-8834 unless otherwise noted.

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it as a motion for reconsideration based on new evidence and a motion for joinder.
The motion to dismiss is GRANTED.
I.

LEGAL PRINCIPLES
“As part of its general power to administer its docket, a district court may

stay or dismiss a suit that is duplicative of another federal court suit.” Curtis v.
Citibank, N.A., 226 F.3d 133, 138 (2d Cir. 2000) (citing Colorado River Water
Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). In deciding whether
to do so, a district court must “consider the equities of the situation when exercising
its discretion.” Curtis, 226 F.3d at 138. Dismissal may be appropriate because
“plaintiffs have no right to maintain two actions on the same subject in the same
court, against the same defendant at the same time.” Id. at 139. “[T]he court must
assess whether the second suit raises issues that should have been brought in the
first.” Id. at 140.
Parties may not institute a new action to avoid a court’s previous denial of a
motion to amend a complaint in a separate, ongoing case. Id. at 138; see also James
v. AT&T Corp., 334 F. Supp. 2d 410, 412 (S.D.N.Y. 2004) (“Filing a second identical
action is not the proper procedure for . . . adding additional parties.”); see also
Morency v. Vill. of Lynbrook, 1 F. Supp. 3d 58, 62 (E.D.N.Y. 2014) (noting that
“duplicative complaints may be not be filed by a plaintiff for the purpose of
circumventing the rules pertaining to the amendment of complaints” (internal
quotation omitted)).

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When allegations duplicate claims that are being raised in another case by
the same plaintiffs, the suits themselves may be duplicative, especially if the
second-filed suit “involves essentially the same factual background and legal
questions as those presented” in the previously filed suit. See Lopez v. Ferguson,
361 Fed. App’x 225, 226 (2d Cir. 2010). In addition, complaints against an employer
and employees may be duplicative and are often dismissed. See, e.g., id. at 226;
Barclay v. Lowe, 131 Fed. App’x 778, 779 (2d Cir. 2005). The same goes for parallel
complaints in actions against a parent and subsidiary organization, see James, 334
F. Supp. 2d at 411, and complaints against parties that are in privity with one
another, see DiGennaro v. Whitehair, 467 Fed. App’x 42, 44 (2d Cir. 2012).
II.

DISCUSSION
It is clear that Sacerdote II is duplicative of Sacerdote I. Plaintiffs agree that

the “defendants in [Sacerdote II] currently are all agents or employees of the sole
defendant in [Sacerdote I] or the New York University School of Medicine.” (16-cv6284, ECF No. 125.) The individual defendants in Sacerdote II are employees of
NYU, the defendant in Sacerdote I, (ECF No. 105, Am. Compl. ¶ 35), and NYU
School of Medicine is, according to the Amended Complaint, “a division of New York
University,” (id. ¶ 29). The fact that the defendants are technically different is not
dispositive. The defendants in both suits have the same counsel and “a sufficiently
close relationship . . . such that NYU “‘control[s] or substantially participate[s] in
the control of the presentation on behalf of a party’ to the prior action.” Cent.
Hudson Gas & Elec. Corp. v. Empresa Naviera Santa S.A., 56 F.3d 359, 367-68 (2d
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Cir. 1995) (quoting National Fuel Gas Distribution Corp. v. TGX Corp., 950 F.2d
829, 839 (2d Cir. 1991)). For the purposes of this action, NYU is in privity with the
Sacerdote II defendants and will adequately represent their interests. See
DiGennaro, 467 Fed. App’x at 44 (affirming a dismissal of a duplicative case when
the defendant in the second case “was not a named defendant in the original
action,” but was “in privity with the defendants named in the original complaint”
and the second case’s defendant’s “interests are adequately represented by those in
the first suit who are ‘vested with the authority of representation.’” (quoting Barclay
v. Lowe, 131 Fed. App’x 778, 779 (2d Cir. 2005))); see also Alpert’s Newspaper
Delivery Inc. v. N.Y. Times Co., 876 F.2d 266, 270 (2d Cir. 1989) (“The issue is one
of substance rather than the names in the caption of the case; the inquiry is not
limited to a traditional privity analysis.”).2
Plaintiffs argue that the defendants in each case are not in privity, but its
reliance on Northern Assurance is misplaced. There, a magistrate judge had denied
a plaintiff’s untimely request to amend a complaint to add a defendant; the plaintiff
then filed a new lawsuit against that defendant with substantially similar claims,
and the district court dismissed it as res judicata. Northern Assurance Co. v.

In fact, the Amended Complaint in Sacerdote I describes NYU as “the Plans’ Administrator under
29 U.S.C. §1002(16)(A)(i) with exclusive responsibility and complete discretionary authority to
control the operation, management and administration of the Plans, with all powers necessary to
enable NYU to properly carry out such responsibilities, including the selection and compensation of
the providers of administrative services to the Plans and the selection, monitoring, and removal of
the investment options made available to participants for the investment of their contributions and
provision of their retirement income.” (16-cv-6284, ECF No. 39, Am. Compl. ¶ 26.) With the
exception of the word “exclusive,” plaintiff makes the same allegations as to NYU School of Medicine,
(Am. Compl. ¶ 30), and substantially similar allegations as to the Committee, (id. ¶ 36).
2

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Square D Co., 201 F.3d 84, 86 (2d. Cir. 2000). The Second Circuit reversed that
dismissal. Id. However, the second lawsuit in Northern Assurance was against a
defendant that was entirely unrelated to the defendant in the first suit. The suit
had arisen out of a home fire; one defendant was the electric company and the other
was the manufacturer of the home’s circuit breaker. They were different entities
with different states of incorporation and different principal places of business. The
circumstances are not analogous to Sacerdote I and Sacerdote II, in which the
defendants are closely related.
Plaintiffs argue further that NYU and the Sacerdote II defendants have
divergent interests because NYU cannot be held liable for the “entities or persons”
that caused the Plan’s losses. But the argument that NYU “may argue at trial that
it has no responsibility or liability for the imprudent acts of the Committee or its
members,” (Mem. Opp. at 11), does not mean that it does not in fact have
responsibility or liability; in fact, plaintiffs are likely to strongly counter that
argument at trial. Speculation that, at trial, NYU would blame the Committee but
the Committee would blame NYU does not warrant two duplicative actions. Ruling
otherwise would suggest that the suits in which entities, their subdivisions, and
employees are co-defendants—of which there are many—should be split.
While two new claims are against defendant Cammack only, that is not
enough to make the entire case a new and separate action. Those claims should

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have been brought by joining Cammack earlier in the Sacerdote I litigation.3 In
addition, the Court has granted class certification to plaintiffs in Sacerdote I; as
plaintiffs noted, there is a “unity of parties-in-interest” between the two cases. (16cv-6284, ECF No. 125.) Accordingly, the plaintiffs in Sacerdote I who may recover
encompass the same set of employees that could recover in this case.
Moreover, resolution of the claims in Sacerdote II relies on the same set of
facts as resolution of Sacerdote I. The Amended Complaint in each action attacks
the Plans in the same way, using the same descriptions of each. The allegations in
both cases rely on the management of the Plans—accordingly, the set of facts
underlying each case is the same. Any new claims in Sacerdote II are, to a large
extent, repackaged versions of claims dismissed by the Court in Sacerdote I. While
several claims are new in theory, they merely rephrase previously brought claims
and, more importantly, are based on the same set of facts at issue in Sacerdote I.
For example, both cases would require inquiries into whether the various
defendants were in fact fiduciaries to the Plans, and if so, whether any breach of
their fiduciary duties occurred. Depositions would be of the same individuals, and

Plaintiffs argue that the amended complaint in Sacerdote II contains four claims not included in
Sacerdote I, including: “allegations that Defendants breached their fiduciary duties and engaged in
prohibited transactions by (1) allowing TIAA to mandate the inclusion of the CREF Stock Account
and Money Market Account in the Plans and to require that it provide recordkeeping for its
proprietary products; (2) failing to monitor and control the Plans’ administrative fees paid through
revenue sharing, resulting in the Plans paying annual administrative fees that were six to eight
times higher than the market rate for the same services; (3) retaining imprudent investment options,
including the CREF Stock and TIAA Real Estate Account, which both had long histories of dramatic
underperformance and excessive fees; and (4) providing higher-cost share classes of dozens of the
Plans’ mutual funds, instead of identical lower-cost share classes of those same funds.” (ECF No.
133, Mem. in Opp. to Def.’s Mot. to Dismiss Am. Compl. (“Mem. Opp.”) at 8.) However, these claims
do not arise from facts separate from those in Sacerdote I; plaintiffs could have attempted to bring
these claims in that case but failed to do so.
3

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to a large extent, document production would also overlap. In fact, plaintiffs
themselves requested and received permission from the Court to use the
confidential discovery materials—consisting of over 160,000 pages—from Sacerdote
I in Sacerdote II, in an effort to “avoid inefficient and duplicative discovery.” (16-cv6284, ECF No. 142.) Specifically, they noted that Sacerdote I’s narrowed
possibilities of theories of recovery (i.e., breach of the duty of prudence only) are the
result of this Court’s dismissal of many of plaintiffs’ original allegations—plaintiffs
cannot avoid that ruling by simply filing another case with the same claims. In
fact, plaintiffs admitted in depositions that Sacerdote II is a way “to get the
question of the fees charged for investing back on the table.” (Ex. 2, Brown Dep.
Tr., at 28:2-4.) Furthermore, plaintiffs’ brief in opposition to the motion to dismiss
acknowledges the “duplicative litigation” and notes that Sacerdote II was filed
“[g]iven the Court’s denial of the motion for leave to amend, dismissal of the failureto-monitor claim, and the prospect that NYU could disclaim liability based on
having delegated its duties to the committee.” (Mem. Opp. at 7.)
Sacerdote II is more properly characterized as a type of Rule 15 motion to
amend, a motion for reconsideration, and/or a motion for joinder in Sacerdote I. But
in fact, plaintiffs have already tried several of those avenues and such attempts
have been denied by the Court. (See 16-cv-6284, ECF Nos. 100, 101.) Plaintiffs are
not entitled to another bite at the apple simply because they have repackaged
various claims and named more specific defendants within the NYU umbrella.

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III.

CONCLUSION
For the foregoing reasons, the motion to dismiss is GRANTED in full. The

Clerk of Court is directed to close the open motion at ECF No. 117 and to terminate
case 17-cv-8834.
SO ORDERED.
Dated:

New York, New York
February 23, 2018
____________________________________
KATHERINE B. FORREST
United States District Judge

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