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Denise M. Clark v. Feder

September 7, 2011


The opinion of the court was delivered by: John D. Bates United States District Judge


Plaintiff Denise Clark brings this action pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., against the law firm Feder, Semo & Bard ("Feder Semo"), the Feder Semo Retirement Plan and Trust ("Retirement Plan" or "Plan"), and two former trustees of the Retirement Plan, Joseph Semo and Howard Bard. On March 22, 2010, the Court granted summary judgment for defendants on all but plaintiff's improper grouping claim. Clark v. Feder Semo & Bard, P.C., 697 F. Supp. 2d 24 (D.D.C. 2010) ("Clark II"). On September 13, 2010 the Court issued its decision on reconsideration, which vacated the partial grant of summary judgment in favor of defendants and required the plaintiff to "precisely detail[] the nature of her remaining claims." Clark v. Feder Semo & Bard, P.C., 736 F. Supp. 2d 222, 225 (D.D.C. 2010) ("Clark III"). Now before the Court is defendants' renewed motion for summary judgment as to Clark's five claims ("Def.'s Mot.") [Docket Entry #90]. The parties, and the Court, are by now quite familiar with the facts animating this action. See Clark v. Feder Semo & Bard, P.C. 527 F. Supp. 2d 112, 114-15 (D.D.C. 2007) ("Clark I"); Clark II, 697 F. Supp. 2d at 26-29. Upon careful consideration of the parties' memoranda, the applicable law, and the entire record herein, and for the reasons set forth below, the Court will grant in part and deny in part defendants' motion.


In Plaintiff's Statement Detailing Nature of Claims ("Pl.'s Statement") [Docket Entry #87], Clark asserts five theories of recovery. First, she contends that Feder Semo improperly grouped her for purposes of her account credit, thereby understating her retirement benefits by 41%. See Pl.'s Statement at 1. Second, she submits that Feder Semo violated ERISA's anti-cutback rule, 29 U.S.C. § 1054(g), when it proportionately reduced the aggregate amount distributed to Plan participants to match the Plan's assets. Id. at 5-6. Third, she contends that defendants violated ERISA's disclosure requirements by failing to disclose the consequences of a plan termination and the Plan's lack of insurance. Id. at 7-8. Fourth, she argues that the Retirement Plan's fiduciaries failed to use a reasonable actuarial assumption for interest that caused the Plan to be underfunded. Id. at 13-14. And fifth, she contends that the Retirement Plan's fiduciaries failed to comply with the distribution restrictions in Treas. Reg. 1.401(a)(4)-5 with the effect of reducing the benefits received by most plan participants. Id. at 17. The Court will address each claim in turn.

I. Improper Grouping

Plaintiff contends that she was improperly classified in the Retirement Plan in "Group C" rather than "Group B," which resulted in the receipt of smaller percentage credits from the Plan. Pl.'s Statement at 2-3. Those classified in Group C received 20% allocations whereas those classified in "Group B" received only 10% allocations. Id. The Court ruled previously that plaintiff "had the better of the improper grouping claim," because defendants were aware of Clark's grouping in a less advantageous category and failed to provide a reasonable explanation for why she was initially classified in Group C and then her benefits were not adjusted prior to the disbursement of Plan assets upon its termination. See Clark II, 697 F. Supp. 2d at 30-33. On reconsideration, the Court explained further its decision that Clark could only proceed on her improper grouping claim under 29 U.S.C. § 1132(a)(1)(B), and ruled that defendants' arguments that plaintiff's improper grouping claim was non-justiciable lacked support. Clark III, 736 F. Supp. 2d at 227-28.

Now, plaintiff brings this claim under 29 U.S.C. § 1132(a)(1)(B) against the Plan and under § 1132 (a)(3) for breach of fiduciary duty against Semo and Bard, the "fiduciaries who decided not to correct her benefit before distributing the Plan's assets," to the extent that "monetary recovery for that violation is unavailable because the Plan's assets have been distributed." Pl.'s Statement at 3. Defendants argue, in a variation on their previous justiciability argument, that plaintiff (1) lacks constitutional standing to pursue an improper grouping claim against the defunct Plan, and (2) lacks statutory standing to raise a legal (rather than equitable) claim for improper grouping against individual defendants Semo and Bard under § 1132(a)(3). Both arguments are unpersuasive.

A. Article III Standing

Article III of the U.S. Constitution "limits the 'judicial power' of the United States to the resolution of 'cases' and 'controversies,'" Valley Forge Christian Coll. v. Am. United for Separation of Church and State, Inc., 454 U.S. 464, 471 (1982), and the doctrine of standing serves to identify those "'Cases' and 'Controversies' that are of the justiciable sort referred to in Article III," Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). "As an aspect of justiciability, the standing question is whether the plaintiff has 'alleged such a personal stake in the outcome of the controversy' as to warrant invocation of federal-court jurisdiction and to justify exercise of the court's remedial powers on his behalf." Warth v. Seldin, 422 U.S. 490, 498-99 (1975) (quoting Baker v. Carr, 369 U.S. 186, 204 (1962)); see also Sierra Club v. Morton, 405 U.S. 727, 731-32 (1972).

Standing doctrine encompasses "both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise." Warth, 422 U.S. at 498. To establish the "irreducible constitutional minimum of standing," a plaintiff must allege (1) an "injury in fact," defined as "an invasion of a legally protected interest which is (a) concrete and particularized," and (b) "actual or imminent, not conjectural or hypothetical"; (2) "a causal connection between the injury and the conduct complained of"; and (3) a likelihood "that the injury will be redressed by a favorable decision." Lujan, 504 U.S. at 560-61 (internal quotation marks and citations omitted). "Redressibility examines whether the relief sought, assuming that the court chooses to grant it, will likely alleviate the particularized injury alleged by the plaintiff." Florida Audubon Soc'y v. Bentsen, 94 F.3d 658, 663-64 (D.C. Cir. 1996) (en banc). Defendants contend that because the Plan's assets were distributed and the plan has terminated, plaintiff's injury is not redressible since "the Court cannot fashion any relief for Clark." Defs.' Mot. at 13. Plaintiffs maintain that the state of the Plan is a material fact in dispute. Pl.'s Opp'n at 7.

As the Court explained previously, defendants' theory "improperly conflates standing with a plaintiff's ability to recover damages from a defendant." See Clark II, 736 F. Supp. 2d at 227-28. The D.C. Circuit has explained that "[t]he appellants need not negate every conceivable impediment to effective relief no matter how speculative, nor are they required to prove that granting the requested relief is certain to alleviate their injury." Int'l Ladies Garment Workers v. Donovan, 722 F.2d 795, 811 (D.C. Cir. 1983) (citations omitted). If the Plan lacks sufficient assets, Clark may ultimately not recover the benefits she seeks. But precluding her from pursuing a claim for these benefits at this stage is not appropriate. See N. Carolina Fisheries Ass'n v. Gutierrez, 518 F. Supp. 2d 62, 84 (D.D.C. 2007) ("[E]ven if the relief that plaintiffs ultimately obtain constitutes a 'Pyrrhic' victory, the Court could award them relief that would remove the source of their injury."); Graden v. Conexant Sys., Inc., 496 F.3d 291, 301 (3d Cir. 2007) (explaining that practically, "it may be that . . . [an ERISA] plan, though liable, would be judgment proof" as to plaintiff's § 1132(a)(1)(B) claim for benefits because of plan fund allocation requirements).

The cases on which defendants rely involve redressibility issues inapposite to the facts here. In Paulsen v. CNF, Inc., 559 F.3d 1061, 1073 (9th Cir. 2009), the Ninth Circuit ruled that plaintiff beneficiaries lacked standing against a plan -- covered by the PBGC -- that had distressed terminated with inadequate assets. There, the plaintiffs' claims were not redressible by the plan because plaintiffs were only entitled to recover outstanding amounts from PBGC, which in turn was obligated only to pay the plaintiffs the statutory minimum. Paulsen, 59 F.3d at 1073. And in Hall v. LHACO, Inc., 140 F.3d 1190, 1196 (8th Cir. 1998), the Eighth Circuit ruled that a plaintiff's claim against a former plan administrator was not redressible because the former plan administrator lacked authority to pay out plan benefits. Unlike in Paulsen and Hall, plaintiff's claims here are not circumscribed by statute or limited by an administrator's authority to grant the relief sought. The Plan clearly has the authority to pay out Plan benefits. Furthermore, even if a beneficiary's ultimate recovery is uncertain, the beneficiary may sue a terminated pension plan.

See, e.g., Pfahler v. Nat'l Latex Products Co., 517 F.3d 816, 827 (6th Cir. 2007) ("[N]othing in the plain language of § 502(a)(2) suggests that a plaintiff's ability to recover under that provision is contingent upon a plan's being active at the time of suit."); Wilmington Shipping Co. v. New England Life Ins. Co, 496 F.3d 326, 337-38 (4th Cir. 2007) (ruling that a plan participant can sue for breach of fiduciary duty after plan termination); cf. Harris v. AMGEN, Inc., 573 F.3d 728, 735-36 (9th Cir. 2009) (ruling that there was "no lack of redressability merely because a plaintiff's recovery under ยง 502(a)(2) might go first to the ...

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