Hugler v. DeWalt et al

Filing 23

ORDER denying Defendants' 12 Motion to Dismiss for Lack of Jurisdiction and Defendants' 15 Motion to Dismiss for Failure to State a Claim. Signed by Chief Judge Thomas O. Rice. (BF, Paralegal)

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1 2 3 4 5 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 6 7 8 R. ALEXANDER ACOSTA, Secretary of Labor, United States Department of Labor, 9 10 11 12 13 14 15 16 17 Plaintiff, NO: 2:17-CV-0082-TOR ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS v. JAMES DEWALT; ROBERT G. BAKIE; JACK L. FALLIS, JR.; JEFFREY A. BARTON; ASSOCIATED INDUSTRIES MANAGEMENT SERVICES, INC.; THE ASSOCIATED INDUSTRIES OF THE INLAND NORTHWEST; and THE ASSOCIATED EMPLOYERS HEALTH AND WELFARE TRUST, Defendants. BEFORE THE COURT are Defendants’ Motion to Dismiss for Lack of 18 Subject Matter Jurisdiction (ECF No. 12) and Defendants’ Motion to Dismiss for 19 Failure to State a Claim (ECF No. 15). These matters were submitted for 20 consideration with oral argument. The Court held a hearing on July 25, 2017. At ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 1 1 the hearing, Eirik J. Cheverud appeared on behalf of Plaintiff R. Alexander Acosta, 2 Secretary of Labor, Department of Labor, and Amanda S. Amert, Christopher J. 3 Rillo, and Thomas W. McLane appeared on behalf of Defendants James DeWalt, 4 Robert G. Bakie, Jack L. Fallis, Jr., Jeffrey A. Barton, Associated Industries 5 Management Services, Inc., Associated Industries of the Inland Northwest, and the 6 Associated Employers Health and Welfare Trust (collectively, “Defendants”). The 7 Court has reviewed the record and files herein, and is fully informed. For the 8 reasons discussed below, Defendants’ Motion to Dismiss for Lack of Subject 9 Matter Jurisdiction (ECF No. 12) and Motion to Dismiss for Failure to State a 10 11 12 Claim (ECF No. 15) are denied. BACKGROUND Plaintiff R. Alexander Acosta, United States Secretary of Labor, Department 13 of Labor (“Secretary”) brings this action under the Employment Retirement 14 Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. §§ 1001 et seq., 15 against Defendants for alleged breaches of their fiduciary duties committed in the 16 course of managing the Associated Employers Health and Welfare Trust (“Trust”) 17 and ERISA-covered employee benefit plans that participate in the Trust (“Plans”). 18 Defendants move to dismiss the Complaint under Federal Rule of Civil 19 Procedure 12(b)(1) for lack of subject matter jurisdiction. See ECF No. 12. 20 Defendants also seek dismissal under Rule 12(b)(6) for Plaintiff’s failure to plead ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 2 1 sufficient facts to support the ERISA claims. See Fed. R. Civ. P. 12(b)(6); ECF 2 No. 15. 3 4 FACTS The following facts are drawn from Plaintiff’s complaint, and are accepted 5 as true for purposes of the instant motions. Defendant Associated Industries of the 6 Inland Northwest (the “Association”), a Washington non-profit corporation, 7 established the Trust to receive monetary contributions from more than 300 8 participating employers (“Participating Employers”) and employees. ECF Nos. 1 9 at 6, ¶ 14; 15-1 at 7, Art. I ¶ 2. In turn, the Participating Employers and their 10 employees contributed to the Trust to fund various employee health and welfare 11 benefit ERISA plans (the “Plans”) by paying (1) insurance premiums to an 12 insurance company to provide insured medical benefits, and (2) the Plan’s 13 administrative expenses. ECF No. 1 at 2, ¶ 1; 11, ¶ 28. 14 The Association had the authority to and did appoint trustees (the 15 “Trustees”) to administer the Plans for the participating employees. Id. The 16 Association also had the authority to remove the Trustees. ECF No. 1, 4 at ¶ 5. 17 The Trustees received the Participating Employers’ contributions, which were held 18 by the Trust for the exclusive benefit of the participating employees and their 19 beneficiaries. Id. at 2, ¶ 1. The Trustees also had the authority to and did maintain 20 a reserve fund for future contingencies. Id. at 11, ¶ 28. ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 3 1 Defendant Associated Industries Management Services, Inc. (“AIMS”), a 2 for-profit corporation wholly owned by the Association, provided administrative 3 services for the Plans. Id. at 2, ¶ 2; 4 at ¶ 5. Defendant James DeWalt was the 4 President, CEO, and a director of AIMs, and the President and CEO of the 5 Association; Defendant Robert G. Bakie was the CFO of AIMS. Id. at 5-6, ¶¶ 10- 6 11. Both were Trustees, in addition to Defendants Jack L. Fallis, Jr. and Jeffrey A. 7 Barton. Id.; 6, ¶¶ 12-13; 12, ¶¶ 31-32. The Trust paid AIMS a fee for its 8 administrative services using contributions made by the Participating Employers. 9 ECF No. 1 at 14, ¶ 38. In 2009, AIMS’s fee equaled 2% of the total insurance 10 11 premiums paid through the Trust. Id. Generally, from December, 31 2009, through February 2014, the Trustees 12 purported to approve a series of increases in AIMS’s fees from the 2% fee to as 13 high as 7% of paid insurance premiums, and caused the Trust to pay those 14 increased fees. Id. at 15-22, ¶¶ 39-58. The Participating Employers and their 15 employees were never informed about the increases or that the Trustees took 16 money from the Trust’s reserve fund to pay the fee increases to AIMS. Id. at 17, 17 19-20, 23, ¶¶ 44-45, 51-52, 61-62. The Trust paid AIMS over $3 million more in 18 fees than the 2% fee rate would have allowed. Id. at 22, ¶ 59. 19 20 The Secretary asserts that the Trustees and the Association were ERISA fiduciaries who violated their duties of prudence and loyalty to the Plans by ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 4 1 engaging in prohibited transactions in violation of ERISA sections 406(a)(1)(C) 2 and (D), 29 U.S.C. § 1106(a)(1)(C), (D), because the Trustees retained and paid 3 AIMS, repeatedly increased those fees, and caused the Trust to pay such fees with 4 the Plans’ assets. Id. at 24-27, ¶¶ 63-68. The Secretary also alleges that the 5 Association failed to properly monitor the Trustees’ actions, and that the Trustees 6 and the Association are liable as co-fiduciaries for each other’s violations. Id. at 7 25-27, 29, ¶¶ 66, 67, 72-73. The Secretary further contends that the Trustees’ 8 conduct constituted prohibited self-dealing with the Plans’ assets and violated their 9 ERISA fiduciary duties of loyalty, prudence, and fidelity to the Plans’ participants 10 and beneficiaries. Id. at 3, ¶ 2. Similarly, the Secretary contends that AIMS is 11 liable under ERISA section 502(a)(5), 29 U.S.C. § 1132(a)(5), for disgorgement of 12 its unjust enrichment because it knowingly participated in these fiduciary breaches. 13 Id. at 4, ¶ 5. 14 DISCUSSION 15 In their motions to dismiss the Complaint pursuant to Fed. R. Civ. P. 16 12(b)(1) and 12(b)(6), Defendants factually challenge whether the Trust contains 17 ERISA-covered assets and dispute that Defendants are fiduciaries with respect to 18 the various Plans because—according to Defendants—they did not exercise control 19 or discretionary authority over the Plans’ assets. ECF No. 12 at 10-11; 15 at 8-14. 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 5 1 With respect to its Rule 12(b)(1) motion, Defendants argue that the Court 2 lacks subject matter jurisdiction because the Secretary’s Complaint does not 3 “present a federal question on [its] face.” ECF No. 12 at 5. Similarly, Defendants 4 argue in their Rule 12(b)(6) dismissal motion that (1) the Secretary failed to state 5 prohibited-transaction and knowing participation claims because the Trust’s assets 6 were not ERISA-covered plan assets; (2) the Secretary failed to allege facts to 7 support the failure-to-monitor claim against the Association; and (3) all claims 8 arising before May 27, 2010, are time-barred. ECF No. 15 at 14–19. 9 Defendants initially argued that the Court also lacks jurisdiction because the 10 Trust is not itself an ERISA plan. See ECF No. 12 at 6-10. The Secretary’s 11 responsive memorandum clarifies that this alternative position was pled based on 12 Defendants’ position taken in other litigation. See ECF No. 18 at 8. 13 A. Subject Matter Jurisdiction 14 Federal courts have subject-matter jurisdiction over “all civil actions arising 15 under the . . . laws . . . of the United States.” 28 U.S.C. § 1331. The Secretary 16 asserts that this Court has subject matter jurisdiction pursuant to ERISA 17 § 502(e)(1), 29 U.S.C. § 1132(e)(1). ECF No. 1 at ¶ 7. ERISA section 502(e)(1) 18 provides, in relevant part, that “the district courts of the United States shall have 19 exclusive jurisdiction of civil actions under this subchapter brought by the 20 Secretary . . . .” 29 U.S.C. § 1132(e)(1). Pursuant to ERISA section 502(a)(2) and ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 6 1 (5), 29 U.S.C. § 1132(a)(2) and (5), Congress cloaked the Secretary with the 2 authority to enjoin acts that violate ERISA provisions, obtain other appropriate 3 equitable relief, and enforce the fiduciary responsibility provisions of Title I of 4 ERISA. The Secretary may also bring an action under ERISA section 502(a)(5) 5 against a non-fiduciary that knowingly participates in an ERISA fiduciary 6 violation. 29 U.S.C. § 1132(a)(5). 7 Thus, the Secretary invoked federal-question jurisdiction under § 1331 and 8 the case arises under a federal law, ERISA section 502(e)(1). 29 U.S.C. 9 § 1132(e)(1). However, as a preliminary matter, whether the Trust contains 10 ERISA-covered plan assets and whether Defendants are subject to ERISA are 11 “question[s] on the merits of the claim, not an issue of subject matter jurisdiction.” 12 Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 997 (9th Cir. 2010) (quoting Trs. 13 of the Screen Actors Guild–Producers Pension & Health Plans v. NYCA, Inc., 572 14 F.3d 771, 775 (9th Cir. 2009)). Because the Secretary alleges causes of action 15 “arising under” ERISA, this Court unequivocally has subject matter jurisdiction. 16 See 28 U.S.C. § 1331; 29 U.S.C. § 1132(e)(1), ERISA § 502(e)(1); Daniels-Hall, 17 629 F.3d at 997. 18 19 Accordingly, Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction is denied. The Court will address whether the Secretary’s allegations 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 7 1 properly state a claim under ERISA. Daniels-Hall, 629 F.3d at 998 (citation 2 omitted). 3 B. Failure to state a claim 4 Fed. R. of Civ. P. 12(b)(6) provides that a defendant may move to dismiss 5 the complaint for “failure to state a claim upon which relief can be granted.” To 6 survive dismissal, a plaintiff must allege “sufficient factual matter, accepted as 7 true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 8 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 9 (2007)). This requires the plaintiff to provide “more than labels and conclusions, 10 11 and a formulaic recitation of the elements[.]” Twombly, 550 U.S. at 555. When deciding, the Court may consider the plaintiff’s allegations and any 12 “documents incorporated into the complaint by reference . . . .” Metzler Inv. 13 GMBH v. Corinthian Colleges, Inc., 540 F.3d 1049, 1061 (9th Cir. 2008) (citing 14 Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007)). A 15 plaintiff’s “allegations of material fact are taken as true and construed in the light 16 most favorable to the plaintiff[,]” but “conclusory allegations of law and 17 unwarranted inferences are insufficient to defeat a motion to dismiss for failure to 18 state a claim.” In re Stac Elecs. Sec. Litig., 89 F.3d 1399, 1403 (9th Cir. 1996) 19 (citation and brackets omitted). In addition, a federal court may dismiss a 20 complaint for failure to comply with the statute of limitations where “the running ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 8 1 of the statute is apparent on the face of the complaint.” Huynh v. Chase Manhattan 2 Bank, 465 F.3d 992, 997 (9th Cir. 2006) (quoting Jablon v. Dean Witter & Co., 3 614 F.2d 677, 682 (9th Cir. 1980); citing Supermail Cargo, Inc. v. United States, 4 68 F.3d 1204, 1206 (9th Cir. 1995)). “[A] complaint cannot be dismissed unless it 5 appears beyond doubt that the plaintiff can prove no set of facts that would 6 establish the timeliness of the claim.” Supermail Cargo, Inc., 68 F.3d at 1207 7 (citation omitted). 8 9 Defendants argue that the Secretary fails to sufficiently allege that Defendants administered or exercised discretion or control over any of the 10 Participating Employers’ Plans’ assets. ECF No. 12 at 11. Defendants contend 11 that the Plans never had an ownership interest in any of the money remitted to the 12 Trusts by the Participating Employers; therefore, as a notion of property rights law, 13 the Trust did not contain the Plans’ assets. Id. at 9-10. In turn, Defendants argue 14 that they had no fiduciary duties to the Plans. ECF No. 15 at 8-9. Defendants 15 reason that because the Plans had no ownership interest in the Trust funds, 16 Defendants could not have breached a fiduciary duty and, in tandem, cannot be 17 liable as non-fiduciaries that knowingly participated in such violations. Id. at 10- 18 13, 18. Defendants also contend that even if the Court finds that the Trust contains 19 Plan assets, the Secretary fails to plausibly allege how Associated breached its duty 20 to monitor the Trustees, which compels dismissal of that claim. Id. at 14. ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 9 1 The Secretary responds that when employers and/or employees contribute 2 assets to a multiple-employer trust—like the Trust, here—the assets are plan assets 3 in which the ERISA plans, and their participants and beneficiaries, have a 4 beneficial interest under the terms of the governing trust agreement, even though 5 the trustee possesses legal title. See ECF No. 15 at 7. The Secretary explains that 6 Defendants are properly considered both service providers and fiduciaries because 7 the Trust’s assets were Plan assets, and they possessed authority or control over 8 those assets. Id. 9 Here, the parties agree that the various Participating Employers each 10 established and maintained an employee welfare benefit plan covered by ERISA. 11 See ECF No. 1 ¶¶ 18–22. It is also undisputed that the Participating Employers 12 paid contributions to the Trust, and the Trust used some of those contributions to 13 pay insurance carriers to insure the medical benefits provided by the Plans’ 14 insurance coverage, to pay entities providing the Plans with administrative 15 services, and to maintain the remaining funds in the Trust’s reserve fund. See id. at 16 ¶¶ 28, 38. To decide whether the Secretary has alleged sufficient factual matter to 17 state a plausible claim to relief under ERISA, the Court must first determine 18 whether the Secretary sufficiently pled that the Trust contained Plan assets. See 19 Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570. 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 10 1 i. The Secretary sufficiently alleges causes of action under ERISA related to ERISA-covered Plan assets held by the Trust. 2 3 ERISA protects “the interests of participants in employee benefit plans and 4 their beneficiaries.” 29 U.S.C. § 1001(b). ERISA applies to “any employee 5 benefit plan if it is established or maintained . . . by any employer . . . or . . . by any 6 employee organization . . . or by both.” Id. § 1003(a)(1)-(3). “Employee benefit 7 plans” come in two types. Id. § 1002(3). The first category, the “employee 8 welfare benefit plan,” provides medical benefits and any benefits “other than 9 pensions on retirement or death.” Id. § 1002(1). The second category, the 10 “employee pension benefit plan,” “provides retirement income” or “results in a 11 deferral of income [until retirement].” Id. § 1002(2)(A)(i)-(ii). The first type of 12 benefit plan is at issue here. See ECF No. 1 at ¶ 19. The Participating Employer 13 Plans were a “multiple employer welfare arrangement.” See § 1002(40); ECF No. 14 1 at ¶ 21. 15 ERISA imposes strict fiduciary duties on persons who administer employee 16 welfare benefit plans. See § 1002(21)(A) (defining persons qualifying as plan 17 fiduciaries); see also id. § 1101 et seq. (establishing specific fiduciary duties and 18 liability for breaches of these duties). Specifically, ERISA defines a fiduciary as 19 anyone who: 20 (i) . . . exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 11 1 2 3 control respecting management or disposition of its assets, (ii) . . . renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) . . . has any discretionary authority or discretionary responsibility in the administration of such plan. 4 5 § 1002(21)(A). “[A] person’s actions, not the official designation of his role, 6 determine whether he enjoys fiduciary status.” Acosta v. Pac. Enterprises, 950 7 F.2d 611, 618 (9th Cir. 1991). Importantly, an ERISA plan cannot serve as its own 8 fiduciary with respect to its own assets. Id. 9 ERISA “plan assets” are defined “by such regulations as the Secretary may 10 prescribe . . . .” 29 U.S.C. § 1002(42). Importantly, the relevant regulation 11 provides that “[w]hen a plan acquires or holds an interest in any entity . . . which is 12 established or maintained for the purposes of offering or providing any benefit . . . 13 to the participants or beneficiaries of the investing plan, its assets will include its 14 investment and an undivided interest in the underlying assets of that entity.” 29 15 C.F.R. § 2510.3-101(h)(2) (emphasis added). Although the Ninth Circuit has yet 16 “to delineate the precise boundaries” of the “plan assets” phrase, “ERISA’s 17 legislative history makes clear that ‘the crucible of congressional concern was 18 misuse and mismanagement of plan assets by plan administrators and that ERISA 19 was designed to prevent these abuses in the future.’” Acosta, 950 F.2d at 620 20 (quoting Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140 n.8 (1985) ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 12 1 (citing 120 Cong. Rec. 29,932, 29,951, 29,954, 29,957, 29,961, 29,194, 29,196–97, 2 29,206 (1974)). The Department of Labor interprets the phrase as “any property, 3 tangible or intangible, in which the plan has a beneficial ownership interest.” U.S. 4 Dep’t of Labor, Off. Pension & Welfare Benefit Programs, Advisory Opinion, 93- 5 14A, 1993 WL 188473, at *4 (May 5, 1993). Defendants concede as much. ECF 6 No. 15 at 9. 7 Here, Defendants argue that the Secretary insufficiently pled ERISA claims 8 because funds used to purchase insurance policies for the Plans are not ERISA plan 9 assets. See id. at 9-10. However, Defendants’ reliance on Bos v. Bd. of Trs., 795 10 F.3d 1006, 1010 (9th Cir. 2015) is unavailing because there, the Ninth Circuit 11 merely held that “unpaid contributions to employee benefit funds are not plan 12 assets[.]” Bos, 795 F.3d at 1012. This is not a case where the Participating 13 Employers failed to remit contributions to the Trust. Defendants’ argument also 14 ignores the fact that the Trust funds also included funds used to pay administrative 15 costs and a reserve fund meant for the “exclusive purpose” of providing benefits to 16 the participating employees and their beneficiaries for future contingencies. See 17 ECF No. 15-1 at 13, Art. V ¶ 4. 18 Defendants’ other argument, that because the Trustees held legal title to the 19 Plans’ assets, the Trust held the entire ownership interest leaving no room for the 20 Plans to hold a beneficial interest, is equally unpersuasive. The Ninth Circuit has ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 13 1 counseled that “[t]o determine whether a particular item constitutes an ‘asset of the 2 plan,’ it is necessary to determine whether the item in question may be used to the 3 benefit (financial or otherwise) of the fiduciary at the expense of plan participants 4 or beneficiaries.” Acosta, 950 F.2d at 620. 5 Here, the Trust Agreement unambiguously provides that “the assets of the 6 Trust Fund . . . shall be held for the exclusive purposes of providing benefits to 7 participating employees and their beneficiaries and defraying expenses of 8 administering the plan.” ECF No. 15-1 at 13, Art. V § 4 (emphasis added). As 9 fiduciaries, “[t]he Trustees shall . . . administer the Trust Fund solely in the interest 10 of the participating employees and their beneficiaries and for the exclusive purpose 11 of (a) providing benefits to participating employees and their beneficiaries and (b) 12 defraying reasonable expenses of benefit plan administration.” Id. § 5 (emphasis 13 added). 14 Simply because the Trust held the Plans’ assets does not mean that the Plans 15 relinquished all interest in those assets. The Secretary’s Complaint explains that 16 the Trust Agreement explicitly reflects that the Plans maintained a beneficial 17 ownership interest in the Trust’s assets, exclusively intended to benefit the Plans’ 18 participants and beneficiaries, not the fiduciaries. See id.; see also Acosta, 950 19 F.2d at 620; ECF No. 1 at 2, ¶ 1. 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 14 1 Accordingly, the Court finds that the Secretary has sufficiently alleged that 2 the Trust’s funds contained the Plans’ assets, which is sufficient to support the 3 breach of fiduciary duty claims, if the Court accepts that allegation as true. Iqbal, 4 556 U.S. at 678 (citing Twombly, 550 U.S. at 570). The Complaint contains far 5 “more [than a] formulaic recitation of the elements” sufficient to survive dismissal. 6 See Twombly, 550 U.S. at 555. 7 8 ii. The Secretary sufficiently alleges causes of action under ERISA related to Defendants’ alleged breaches of their fiduciary duties. 9 Defendants next argue that the Secretary’s breach of fiduciary duty claims 10 must fail because the Secretary has failed to plead facts to support that Defendants 11 were fiduciaries over the Plans. The Secretary argues that its Complaint alleges 12 that the Trustees were ERISA fiduciaries under ERISA sections 3(21)(i) and (iii), 13 29 U.S.C. § 1002(21)(i), (iii), because they (1) exercised discretionary authority or 14 control respecting management of the Plans; (2) exercised authority or control 15 respecting management or disposition of the Plans’ assets; and/or (3) had 16 discretionary authority or discretionary responsibility for administration of the 17 Plans. ECF Nos. 1 ¶ 33; 18 at 9. Defendant argues that the Complaint does not 18 state a claim that is facially plausible, but Defendants’ sole bases for rebutting the 19 Secretary’s allegations are that the assets in the Trusts were not the Plans’ assets 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 15 1 and, therefore, they did not exercise discretionary managerial or administrative 2 control over the Plans or the Plans’ assets. ECF No. 19 at 4. 3 It is undisputed that the Trust Agreement governs the terms of the Trust. 4 ECF No. 15-1. The Trust Agreement defines “employee welfare benefit plan” as 5 any lawful employee benefit plan administered by the Trust’s Trustees. Id. at 7, 6 Art. II § 3. The Association is identified as the “Plan Sponsor” for those plans. Id. 7 at 8, Art. III, at § 3. Here, both the Trust and the Plans were to be administered by 8 the Board of Trustees, which was to be comprised of six trustees identified as in 9 the Trust Agreement “as ‘named fiduciaries’, ‘fiduciaries’, and the ‘plan 10 administrator’, as those terms are used in [ERISA].” Id. at §§ 1-2. Regardless of 11 whether the Trust acted as a “service provider” for the Plans, the Trust’s Trustees 12 are explicitly considered fiduciaries as defined in the Trust Agreement and in 13 harmony with the ERISA-defined fiduciary definition, 29 U.S.C. § 1002(21)(A). 14 See ECF No. 15-1 at 7, Art. I ¶ 2 (purpose is to provide an entity to which 15 contributions can be paid to the Trust and through which the Trustees can create 16 and administer the Plans); 12, Art. V ¶¶ 1, 5 (Trustees’ fiduciary duties, as imposed 17 by ERISA, require administration of the Trust to provide benefits and defray 18 benefit plan administration expenses). The Secretary’s Complaint sufficiently 19 alleges both contentions to support his claims. See also ECF No. 1 at 10, ¶ 23, 25. 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 16 1 Notwithstanding, Defendants also argue that the Secretary fails to allege 2 exactly how the Association breached its duty to monitor the Trustees. ECF No. 3 15 at 14. The Secretary alleged that the Association knew about the Trustees’ 4 ERISA violations, had authority to remove the Trustees it appointed, yet failed to 5 undertake action to remedy those known violations. See ECF Nos. 18 at 26; 1 6 ¶ 67. The Secretary further alleged that the Association “failed to properly monitor 7 the Trustees’ actions” in violation of its fiduciary duties (loyalty, prudence and 8 fidelity) under ERISA sections 404(a)(1)(A) and (B), 29 U.S.C. § 1104(a)(1)(A), 9 (B), (id. ¶ 67), and that the Trustees and the Association are liable as co-fiduciaries 10 for each other’s violations under ERISA section 405(a), 29 U.S.C. § 1105(a), (id. 11 ¶¶ 66, 67(c), 73). 12 As such, the Secretary’s breach of fiduciary duty and duty-to-monitor claims 13 are sufficiently pled to withstand the relatively low threshold to survive 14 Defendants’ motion to dismiss for failure to state a claim. See Iqbal, 556 U.S. at 15 678 (citing Twombly, 50 U.S. at 570). 16 iii. The Secretary sufficiently alleges that his claims are within the applicable statute of limitations period. 17 18 The Court may dismiss a claim under Fed. R. Civ. P. 12(b)(6) on the ground 19 that it is barred by a statute of limitations, but only when “the running of the statute 20 is apparent on the face of the complaint.” Von Saher v. Norton Simon Museum of ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 17 1 Art at Pasadena, 592 F.3d 954, 969 (9th Cir. 2010) (internal quotation marks 2 omitted). ERISA claims with respect to a fiduciary’s breach of any responsibility, 3 duty, or obligation must be brought within six years of a breach of an ERISA 4 violation. 29 U.S.C. § 1113(1)(A). 5 Here, the Secretary filed his Complaint in this action on February 24, 2017. 6 ECF No. 1. As part of Defendants’ Rule 12(b)(6) motion, Defendants argue that 7 the Secretary’s claims arising from events before May 27, 2010, should be 8 dismissed because those claims are untimely. See Fed. R. Civ. P. 12(b)(6); ECF 9 No. 15 at 18. Even though the parties executed tolling agreements that apply to 10 claims arising after May 27, 2010 (see ECF No. 1 at 7, ¶ 17), Defendants argue 11 that ERISA’s six-year statute of limitations bars claims arising before that date. 12 ECF No. 15 at 19. 13 The Secretary responds that Defendants’ argument conflicts with ERISA, in 14 that, the statute of limitation period runs “six years after . . . the date of the last 15 action which constituted a part of the breach or violation.” ECF No. 18 at 23 16 (citing 29 U.S.C. §1113(1) (emphasis added)). Although the initial act of the 17 Trustees’ vote to increase the fees it paid to AIMS occurred on December 31, 18 2009, it was not until June 28, 2010, when the Trustees “caused the Trust to pay” 19 the fee increase to AIMS. See ECF No. 1 ¶ 39. 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 18 1 In other words, it is apparent on the face of the Complaint that the “date of 2 the last action which constituted a part of the breach or violation” relates to the first 3 payment, which occurred on June 28, 2010. Id.; see also 29 U.S.C. §1113(1). 4 Accordingly, based on a review of the Complaint on its face, the applicable statute 5 of limitation does not bar the allegations. 6 ACCORDINGLY, IT IS HEREBY ORDERED: 7 8 9 10 11 12 13 1. Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction (ECF No. 12) is DENIED. 2. Defendants’ Motion to Dismiss for Failure to State a Claim (ECF No. 15) is DENIED. The District Court Executive is directed to enter this Order and provide copies to the parties. DATED July 31, 2017. 14 15 THOMAS O. RICE Chief United States District Judge 16 17 18 19 20 ORDER DENYING DEFENDANTS’ MOTIONS TO DISMISS ~ 19

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