Browe et al v. CTC Corporation et al

Filing 290

ENTRY ORDER re: Rulings of the Court. Signed by Judge Christina Reiss on 6/7/2022. (sjl)

Case 2:15-cv-00267-cr Document 290 Filed 06/07/22 Page 1 of 5

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
DONNA BROWE, TYLER BURGESS,
BONNIE JAMIESON, PHILIP JORDAN,
LUCILLE LAUNDERVILLE, and
THE ESTATE OF BEVERLY BURGESS,
Plaintiffs,
V.

CTC CORPORATION and
BRUCE LAUMEISTER,
Defendants.

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2122 JUN - 7 Ntf ff: 07

Case No. 2:15-cv-267

ENTRY ORDER
RE: RULINGS OF THE COURT:
PLAINTIFFS' REQUEST FOR INJUNCTIVE AND DECLARATORY RELIEF
1. The parties agree and the court so orders that Defendants and Ms. Launderville
shall not act as Plan Administrators, which task shall be undertaken by the
court unless it orders otherwise. Plaintiffs' requests for relief in Count II of
their Second Amended Complaint are therefore DENIED AS MOOT.

BASE AMOUNT AND CALCULATION OF RESTORATION AWARD
2. Based upon the mandate dated October 20, 2021 from the Court of Appeals for
the Second Circuit (the "mandate"), the court adopts its Findings of Fact which
were not challenged on appeal and are the law of the case. The court thus
rejects Plaintiffs' request to adopt a new Base Amount for the calculation of
the amount to be restored to the Plan. In its mandate, the Second Circuit
approved the court's use of the Base Amount for purposes of remand:
Although it was undisputed that CTC continued contributing to the
Plan account after 1997, the district court determined that it could
not estimate the amount of such contributions with sufficient
confidence to include them in its calculation of damages and
therefore declined to do so. Plaintiffs do not challenge this
determination on appeal and instead seek damages based only on the
1997 balance of the Plan account.

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(Doc. 245-1 at 21).
The Second Circuit directed the court to "recalculate [the Restoration Award]
in order to capture losses through the date of judgment." Id. at 46. The court
must follow this mandate and will do so. See Havlish v. 650 Fifth Ave. Co., 934
F.3d 174, 181-82 (2d Cir. 2019) ("A district court must follow the mandate
issued by an appellate court. Where an issue was ripe for review at the time of
an initial appeal but was nonetheless foregone, the mandate rule generally
prohibits the district court from reopening the issue on remand unless the
mandate can reasonably be understood as permitting it to do so. Where a
mandate limits the issues open for consideration on remand, a district court
ordinarily cannot consider additional issues.") (citations, footnote, brackets,
and internal quotation marks omitte~).
Because Plaintiffs offered no evidence of the Restoration Award as of the date
of the Final Judgment using the Base Amount minus known distributions, there
is presently insufficient evidence on this point. Plaintiffs may recall their
expert witness or submit other evidence for the purposes of supplying this
evidence.
PLAN PERCENTAGES
3. The parties have stipulated that the Plan Participation percentages set forth in
Exhibit 42 shall be used to determine the Restoration Award as of the date of
the Final Judgment. The court hereby adopts those percentages as its Findings
of Fact subject to correction through the claim form process described herein.
CALCULATION METHODOLOGY
4. The court has ruled that the Restoration Award shall be calculated consistent
with the methodology set forth in Richard Heaps's Table 4 with no adjustments
for additional contributions (by employer or employee) based upon Plaintiffs'
concession that there is no evidence of additional contributions.
Defendants shall be permitted to provide evidence of additional distributions
consistent with this Entry Order and may challenge Mr. Heaps' s rate of growth
projections through briefing and through expert witness testimony at the
court's next evidentiary hearing.
CTC'S STATUS AS A DEFENDANT IN FINAL JUDGMENT
5. The parties agree that CTC Corporation shall be a Defendant responsible for
the claims asserted against it and the court's Final Judgment shall reflect that
status.
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PLAINTIFFS ARE VESTED
6. Consistent with the Second Circuit's mandate, the court rules that, pursuant to
ERISA's minimum vesting schedules, 29 U.S.C. §§ 1053(a)(2)(B),
1053(b)(l)(C), Plaintiffs are vested. As the mandate states:
Given that the Plan was offered beginning in 1990 at the
latest, the district court's own findings of fact confirm that all
Plaintiffs' accrued benefits had fully vested irrespective of
which vesting schedule applied, as each of them (or, in the
case of Jamieson and Burgess, their mother) completed well
over six years of full-time service with CTC after 1990.
(Doc. 245-1 at 64-65.)
WAIVER OF STRICT COMPLIANCE WITH PLAN ELIGIBILITY
7. The court finds Defendants have waived their right to insist upon strict
compliance with the Plan's eligibility requirements other than the requirements
set forth in ERISA's minimum vesting provisions because there is no evidence
Defendants have ever insisted on strict compliance, Defendants destroyed
virtually all records in their possession, custody, and control that might
demonstrate such compliance, and because Defendants themselves failed to
comply with the Plan's and ERISA's requirements. Accordingly, Plaintiffs and
Plan Participants need not establish matching contributions to the Plan. Under
such circumstances, the court finds that Defendants have waived and are
estopped from insisting on strict compliance with Plan requirements, as
observed in the mandate. See (Doc. 245-1 at 60) ("[T]he record demonstrates
CTC itself ... continued to deposit deferred compensation earmarked for each
participant in the Plan account and took no steps to verify compliance with the
3% contribution requirement, suggesting that, even if the requirement were
intended as a condition, CTC was content to waive it.") (footnote omitted).
CLAIM FORM FOR PLAN PARTICIPANTS
8. Plan participants who are not Plaintiffs are entitled to notice and an opportunity
to be heard. In consultation with Plaintiffs' counsel, Defendants' counsel shall
draft a claim form for all Plan Participants that may seek relevant information
including requesting Plan Participants to attest to their years of service at CTC
Corporation, their status during that time period as full-time employees, any
Plan distributions received to date, any evidence of CTC employment or Plan
participation in their possession, custody, or control, and any information
relevant to Defendants' affirmative defenses.
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At Defendants' expense, Defendants shall cause personal service of this claim
form upon any Plan Participant who has not received mailed notice of this
proceeding as set forth in the Affidavit Regarding Service (Doc. 279) filed by
Plaintiffs' counsel. Plan Participants who have previously received certified
notice as set forth in the Affidavit Regarding Service need not be personally
served with the claim form but may, instead, be again served by certified mail.
Service shall take place or shall be attempted no later than July 1, 2022 and
shall require a return of the claim form to Defendants' counsel no later than
July 20, 2022. Defendants' counsel shall promptly share each claim form
received with Plaintiffs' counsel.
The court has DENIED Defendants' motion for joinder finding it was untimely
filed and would unduly delay the proceedings.

DEFENDANTS' AFFIRMATIVE DEFENSES
9. No later than August 4, 2022, Defendants shall notify Plaintiffs and the court
as to the nature of their affirmative defenses, if any, they intend to raise with
regard to each Plan Participant. Defendants, upon request, may elect to crossexamine Plan Participants by notifying the court in writing of their intention to
do so by August 8, 2022. It shall be Defendants' responsibility to subpoena or
otherwise present each witness for cross-examination and rebuttal examination
by Plaintiffs' counsel at the court's next hearing.

DISMISSAL OF BROWE AND LAUNDERVILLE BREACH OF FIDUCIARY
DUTY CLAIMS
10. Over Plaintiffs' objection, the court hereby DISMISSES the breach of
fiduciary duty claims of Plaintiffs Browe and Launderville consistent with the
mandate:
We agree with Defendants that Launderville and Browe had
knowledge of the fiduciary breaches underlying the claims.
That conclusion flows directly from the district court's
finding that both of them were actually aware ofLaumeister's
misappropriation of Plan assets. Moreover, Plaintiffs
themselves alleged that "Laumeister admitted to Launderville
that he had been using Plan assets to pay for CTC's business
expenses." Thus, Browe's and Launderville's fiduciary
claims are, as a formal matter, time-barred, and they would
not have been able to bring those claims if they were the only
Plaintiffs .... It may therefore be appropriate for the district
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court, on remand, to dismiss Browe and Launderville as
plaintiffs with respect to the breach of fiduciary duty claim.
(Doc. 245-1 at 28-28 n.8) (citations omitted).

INDEMNITY AND CONTRIBUTION
11. The parties agree that no further evidence shall be presented with regard to the
issues of indemnity and contribution. As the proponents of these claims,
Defendants must establish their entitlement to this form of relief and shall
submit a memorandum in support of these claims no later than August 16,
2022. Plaintiffs shall have fourteen (14) days thereafter the filing of
Defendants' memorandum to file their opposition.

ATTORNEY'S FEES AND COSTS
12. After the court issues a Judgment in this matter, it will set a briefing schedule
to resolve the issue of attorney's fees and costs.
SO ORDERED.
Dated at Burlington, in the District of Vermont, this

71k-day of June, 2022.

~~udge
United States District Court

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