Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


September 20, 2005.

PADDY F. BARRY, Plaintiff,

The opinion of the court was delivered by: JOHN BATES, District Judge


Presently before the court in this suit brought by plaintiff Paddy F. Barry ("Barry") pursuant to the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., are: (1) the motion of defendants Union Labor Life Insurance Company, Inc. ("ULLICO") and its directors Morton Bahr, James LaSala, Martin Maddaloni, William Bernard, Marvin Bode, Kenneth Brown, John T. Joyce, and Vincent Sombrotto ("Directors") (together the "ULLICO defendants") for summary judgment on Count VI of the Second Amended Complaint; (2) the motion of Robert A. Georgine ("Georgine") for summary judgment on Count VI;*fn1 (3) the motion of defendant Jacob West for summary judgment on all counts; and (4) plaintiff's motion for summary judgment against all defendants. BACKGROUND

A. Factual Background

  The following facts are uncontroverted, unless otherwise noted. Defendant ULLICO is a private stock company, whose Board of Directors has historically consisted primarily of officers of major unions. See Defendant Jacob West's Statement of Material Facts as to Which He Contends There is No Genuine Issue ("West Statement") ¶ 1. Mr. West served as a director of ULLICO from the mid-1980's until mid-2001. Id. ¶ 2. During that time, Mr. West purchased, with his own funds, stock in ULLICO. Id. ¶ 3. The International Association of Full-Timed Salaried Officers and Employees of Outside Local Unions and District Councils Pension Plan ("the LU&DC Plan" or "the Plan") is an employee pension benefit plan within the meaning of Section (3)(2) of ERISA. Id. ¶ 5. Plaintiff Paddy Barry is a participant in the LU&DC Plan. Id. Mr. West served as a trustee of the LU&DC Plan for roughly 12 years, ending in mid-2001. Id. ¶ 6.

  In 1992, while Mr. West was both a Director of ULLICO and a trustee for the LU&DC Plan, ULLICO offered the LU&DC Plan, and others, the opportunity to purchase ULLICO Preferred Certificates. Id. ¶ 7. In order to avoid the appearance of a conflict, Mr. West recused himself from the LU&DC Plan's discussions concerning the purchase of ULLICO's Preferred Certificates, and thus did not exercise discretion or control over the disposition of ULLICO stock held by the Plan. Id. ¶ 8; ULLICO Defendants' Statement of Material Facts As To Which There Are No Genuine Issues ("ULLICO Statement") ¶ 15.*fn2 The other two trustees of the LU&DC Plan, Leon Worley and James Cole, decided that the Plan would retain an "investment manager," Kennedy Associates, which would make all investment decisions regarding ULLICO stock for the Plan. West Statement ¶¶ 9-10.*fn3 Kennedy Associates invested $2,750,000 of the LU&DC Plan's money in ULLICO's Preferred Certificates. West Statement ¶ 10. In 1995 ULLICO's Preferred Certificates were converted to stock. Id. ¶ 13.

  In 1997, prior to realizing financial success on its investments, ULLICO adopted an eleven-year repurchase program, through which ULLICO each year would repurchase stock from its shareholders. Id. ¶ 15. Mr. West, as a Director of ULLICO, voted to approve the repurchase program each year from 1997 to 2001. Id. Under the repurchase program, ULLICO agreed to repurchase shares up to a maximum aggregate amount. Id. ¶ 17. If the total amount of tendered shares was more than the maximum agreed to by the directors, certain shareholders would be prorated with respect to the stock repurchases. Id. If a repurchase was oversubscribed, ULLICO would repurchase all shares of those that held less than 10,000 shares, but those with more than 10,000 would be subject to proration. Id. Mr. West resold some of his ULLICO stock through the repurchase program. Id. ¶ 18.

  In February of 1997, a ULLICO subsidiary invested $7.6 million in Nautilus LLC, which eventually became Global Crossing. Pl.'s Statement of Material Facts as to Which There is No Genuine Issue ("Pl.'s Statement") ¶ 9. ULLICO's after tax gains on its Global Crossing investment grew to more than $305 million through 2001. Id. ¶ 11. In May of 2000, the ULLICO Board approved a $240 million repurchase of ULLICO stock, contingent on the price of Global Crossing trading at $43 per share. Id. ¶ 52. When the price of Global Crossing fell, the repurchase was abandoned by the Board. Id. On November 3, 2000 the Board approved a $30 million repurchase plan at a share price of $146.04, operating under similar rules as previous repurchases, except that all shareholders owning more than 2% of ULLICO stock had to tender all of their shares if they sought to tender any. Id. ¶ 54. As a result, over $880 million in ULLICO stock was tendered for repurchase, resulting in significant proration of tender offers for shareholders holding more than 10,000 shares. Id. ¶ 55. The LU&DC plan sought to tender all of its shares of ULLICO stock, but due to the proration they were only able to sell 2,421 shares. Id. ¶ 84.

  In addition to the November 2000 repurchase program, certain other discretionary repurchases were made, including those as to defendants Georgine and Bernard. Id. ¶¶ 45, 61. These discretionary repurchases were a longstanding practice of ULLICO. See ULLICO Defendants' Statement of Genuine Issues Contesting Allegations of Fact Asserted By Plaintiff ("ULLICO Resp. to Pl.'s Statement") ¶ 45. Through the discretionary repurchases and formal repurchase program, ULLICO repurchased a total of $44.5 million in stock. Ultimately, a group of twenty officers and directors accounted for 31% of the total amount repurchased by ULLICO. Pl.'s Statement ¶ 70. All other shareholders were only able to sell 2.2% of their ULLICO stock. Id. ¶ 71. B. Procedural Background

  Plaintiff Barry filed this action on December 4, 2002 (twice amending his complaint on January 6, 2003 and August 25, 2004) seeking, inter alia, payment to the Plan of all Plan losses and defendants' gains from the sale of ULLICO stock. See Second Am. Compl. (Prayer for Relief). Defendants filed motions to dismiss plaintiff's Second Amended Complaint on a number of grounds. On March 11, 2004, the Court denied West's motion to dismiss, and granted in part the motion to dismiss of the ULLICO defendants, leaving only Count VI remaining against them. The Court held that plaintiff's claim in Count VI against the ULLICO defendants for knowingly participating in fiduciary breaches by West was viable. The Court also granted the motion to dismiss of Joseph J. Hunt, Michael A. Fitzpatrick, and Dennis R. Toney, trustees of the Plan. Over the course of the case, moreover, plaintiff has voluntarily dismissed his action against: Eugene Upshaw; John Wilhelm; Douglas J. McCarron; Frank Hurt; Earl Kruse; Terrence O'Sullivan; Lenore Miller; Moe Biller; Arthur Coia; John T. Joyce; Vincent Sombrotto; and John Barry. Defendant West and the remaining ULLICO defendants, as well as plaintiff, have now filed motions for summary judgment on all remaining claims.


  Summary judgment is appropriate when the pleadings and the evidence demonstrate that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine dispute of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The moving party may successfully support its motion by "informing the district court of the basis for its motion, and identifying those portions of `the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. (quoting Fed.R.Civ.P. 56(c)).

  To determine whether there is a genuine issue of material fact sufficient to preclude summary judgment, the court must regard the non-movant's statements as true and accept all evidence and make all inferences in the non-movant's favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A non-moving party, however, must establish more than the "mere existence of a scintilla of evidence" in support of its position. Id. at 252. A moving party may succeed on summary judgment by pointing to the absence of evidence proffered by the non-moving party. Celotex, 477 U.S. at 322. "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (internal citations omitted). Summary judgment is appropriate if the non-movant fails to offer "evidence on which the jury could reasonably find for the [non-movant]." Id. at 252; see also Holbrook v. Reno, 196 F.3d 255, 259-60 (D.C. Cir. 1999).


  Currently pending before the Court are motions for summary judgment from plaintiff, the ULLICO defendants, and West. The parties' memoranda address a variety of issues, but the thrust of the papers, and this action, is whether West breached his fiduciary obligations to the LU&DC Plan. Thus, it is most practical first to address West's motion for ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.