United States District Court, D. Columbia.
JAMAL J. KIFAFI, individually and on behalf of all others similarly situated, Plaintiff,
HILTON HOTELS RETIREMENT PLAN, et al., Defendants
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For JAMAL J. KIFAFI, individually, and on behalf of all others similarly situated, Plaintiff: Stephen Robert Bruce, LEAD ATTORNEY, Allison C. Pienta, STEPHEN R. BRUCE LAW OFFICES, Washington, DC.
For HILTON HOTEL RETIREMENT PLAN, HILTON HOTELS CORPORATION, Defendants: Andrew M. Lacy, SIMPSON THACHER & BARTLETT, LLP, Washington, DC; Jonathan K. Youngwood, PRO HAC VICE, SIMPSON THACHER & BARTLETT LLP, New York, NY; Thomas C. Rice, PRO HAC VICE, COOLEY LLP, San Francisco, CA.
For JAMES M. ANDERSON, members of the Hilton Hotels Retirement Plan Committee, MATTHEW J. HART, members of the Hilton Hotels Retirement Plan Committee, BARRON HILTON, DIETER HUCKESTEIN, members of the Hilton Hotels Retirement Plan Committee mem, SAM D. YOUNG, JR., members of the Hilton Hotels Retirement Plan Committee, Defendants: Andrew M. Lacy, LEAD ATTORNEY, SIMPSON THACHER & BARTLETT, LLP, Washington, DC; Jonathan K. Youngwood, SIMPSON THACHER & BARTLETT LLP, New York, NY; Thomas C. Rice, PRO HAC VICE, COOLEY LLP, San Francisco, CA.
For EDNA OGBONNA, FANNY CANAR, MARC TOUSSAINT, Movants: Stephen Robert Bruce, LEAD ATTORNEY, STEPHEN R. BRUCE LAW OFFICES, Washington, DC.
COLLEEN KOLLAR-KOTELLY, UNITED STATES DISTRICT JUDGE.
This action was brought by Plaintiff Jamal J. Kifafi, on behalf of himself and similarly situated individuals, to recover for violations of the Employee Retirement Income Security Act (" ERISA" ) of 1974, as amended, 29 U.S.C. § § 1001 et seq., in the Hilton Hotels Retirement Plan (the " Plan" ). Defendants are the Plan, the individual members of the Committee of the Plan, the Hilton Hotels Corporation, and individual Hilton officers or directors (collectively, " Defendants" or " Hilton" ). On May 15, 2009, this Court granted-in-part Plaintiff's motion for summary judgment, finding that Defendants had violated ERISA's anti-backloading provision, 29 U.S.C. § 1054(b)(1), and had violated the Plan's vesting provisions with respect to the rights of four certified subclasses. See Kifafi v. Hilton Hotels Retirement Plan, 616 F.Supp.2d 7 (D.D.C. 2009). On August 31, 2011, the Court issued a final remedial Order requiring Defendants to amend the Plan to remedy the backloading and vesting violations and commence awarding back payments and increased benefits to class members. See generally Order (Aug. 31, 2011), ECF No. . The Court stayed its August 31, 2011, Order pending the United States Court of Appeals for the District of Columbia Circuit's resolution of the parties' appeal of the Court's liability and remedial orders. Mem. Op. & Order (Jan. 19, 2012), ECF No. , at 10-11. The Court granted the stay contingent upon Defendants posting a supersedeas bond in the amount of $75.8 million to secure the judgment. Id. at 11. Presently before the Court is Defendants' Motion to Release the Supersedeas Bond. Also before the Court are Plaintiff's Motion for Post-Judgment Discovery and Motion to Modify the Judgment in Aid of Enforcement, which Plaintiff effectively filed in opposition to Defendants' Motion. Upon consideration of the pleadings, the relevant legal authorities, and the record as a whole, the Court finds that Defendants
have satisfied the terms of the Court's judgment. Accordingly, Defendants' Motion to Release the Supersedeas Bond is GRANTED and Plaintiff's Motion for Post-Judgment Discovery and Motion to Modify the Judgment in Aid of Enforcement are DENIED.
A. Procedural History
The history of the case is thoroughly laid out in the Court's prior opinions, most significantly its opinion on summary judgment, see Kifafi v. Hilton Hotels Retirement Plan, 616 F.Supp.2d 7 (D.D.C. 2009), and its opinions regarding equitable remedies, see Kifafi v. Hilton Hotels Retirement Plan, 736 F.Supp.2d 64 (D.D.C. 2010) (initial remedial order); Kifafi v. Hilton Hotels Retirement Plan, 826 F.Supp.2d 25 (D.D.C. 2011) (final remedial order); Kifafi v. Hilton Hotels Retirement Plan, 825 F.Supp.2d 298 (D.D.C. 2011) (order on amendments to remedial plan). The Court assumes familiarity with these opinions. Nevertheless, the Court shall review the facts of this case insofar as they are relevant to the issues discussed herein.
On August 31, 2011, the Court issued its final remedial Order requiring Defendants to (1) amend the Plan's benefit accrual formula to remedy the backloading violation; (2) administer a claim procedure for crediting participants' years of union service for vesting purposes; (3) award back payments for increased benefits that should have been paid in the past; and (4) commence increased benefits for all class members by no later than January 1, 2012. Order (Aug. 31, 2011), at 7, 9. The Court retained " continuing and exclusive jurisdiction over the parties and over the administration and enforcement of this Order for a period of two (2) years." Id. at 10-11.
Defendants and Plaintiff appealed the Court's liability and remedial orders to the United States Court of Appeals for the District of Columbia Circuit and Defendants sought a stay pending appeal, which the Court granted " until thirty days after the exhaustion of Defendants' appeal to the United States Court of Appeals for the District of Columbia Circuit." Mem. Op. & Order (Jan. 19, 2012), at 11. As Defendants asserted that they were only appealing the Court's rulings as to the backloading class, the Court granted the stay of the August 31, 2011, Order " to the extent it requires Defendants to amend the Plan or pay out benefits as part of the backloading remedy." Id. The Court still required Hilton to begin the process of paying out original benefits to newly vested participants. Id. at 10-11. The Court's granting of the stay was contingent upon Defendants posting a bond in the amount of $75.8 million, " Hilton's undisputed estimate of the increased liability the Plan faces under the Court's judgment in 2012, in order to secure Plaintiff's interest in the judgment." Id. at 9.
On December 14, 2012, the Court of Appeals affirmed the Court's liability and remedial orders. See Kifafi v. Hilton Hotels Retirement Plan, 701 F.3d 718, 403 U.S.App.D.C. 156 (D.C. Cir. 2012). The Court of Appeals mandate was issued on January 23, 2013. See Ct. of Appeals Mandate, ECF No. . Accordingly, the stay of the Court's final remedial order, which had been stayed until thirty days after the resolution of the parties' appeal, was lifted and the Court's two-year continuing and exclusive jurisdiction over the parties and over the administration and enforcement of its final remedial order began to run on February 22, 2013. The Court's jurisdiction over the parties and the administration and enforcement of the August 31, 2011, final remedial Order terminates on February 23, 2015.
Following the Court of Appeals' mandate, Defendants filed a Motion for Clarification, which the Court granted in part, clarifying that Defendants were not required to enact and implement the Plan amendment until after the Court's resolution of Plaintiff's motion for attorney's fees. Order (Oct. 11, 2013), ECF No. , at 4-5. The Court ordered Defendants to " amend the Plan within seven days of the Court's final order on the Plaintiff's motion for attorney's fees." Id. at 5-6. In turn, the Plan amendment required that the amendment " be implemented as soon as administratively feasible, but no later than 90 days from date of Court's final order resolving the Plaintiff's motion for attorney's fees, with respect to any payment required, or required to be increased." See id. at 7 (internal brackets omitted).
On November 18, 2013, the Court entered its final order on Plaintiff's Motion for Attorney's Fees. Order (Nov. 18, 2013), ECF No. . Accordingly, Hilton was required to amend the Plan by no later than November 25, 2013, and implement the amendment by no later than February 16, 2014.
B. Hilton's Efforts to Satisfy the Court's Judgment
As evidence of the efforts they have made to satisfy the Court's August 31, 2011, judgment, Defendants present sworn declarations from Javier Hernandez, Principal and consulting actuary with Aon Hewitt, the firm Hilton hired to provide recordkeeping and other consulting services in support of Hilton's administration of the Plan;  from Michael W. Duffy, Senior Vice President--Corporate Accounting of Hilton Worldwide, Inc.;  and from Ted Nelson, Vice President Benefits Americas of Hilton Worldwide, Inc. These sworn declarations detail the efforts Defendants have made to comply with the Court's judgment.
Plaintiff has challenged Defendants' reliance on these declarations, arguing that they are " conclusory" and not sufficiently detailed to establish Defendants' compliance or substantial compliance. Pl.'s Opp'n at 6. Plaintiff contends that Defendants cannot simply rely on summary declarations or exhibits, but must provide the actual records supporting those exhibits. Id. at 7. In support of his argument, Plaintiff relies on this Court's ruling in SEC v. Kenton Capital, Ltd., 983 F.Supp. 13 (D.D.C. 1997), where this Court rejected defendant's " bald and conclusory statements in his affidavit" supporting his contention that he was unable to satisfy an order of disgorgement because he had repaid several loans. 983 F.Supp. at 15. The Court finds Plaintiff's reliance on Kenton Capital unavailing because that case involved the defendant himself simply averring that he could not satisfy a court order because he had repaid several loans. Id. Moreover, it was clear to the Court that the defendant had more than sufficient assets to make the required payment. Id. at 16. Here, by contrast, Defendants have provided sworn declarations from Hilton officials intimately involved with the benefits process and from an official from the accounting firm responsible for administrating the Plan, all attesting in great detail how Defendants have complied with the Court's judgment. Defendants also provided directly to Plaintiff's counsel a
summary categorization spreadsheet, " detailing participant-by-participant, which class members had been paid increased benefits or sent notices of increased benefits, including how much was paid to each participant." Defs.' Opp'n at 5-6 (citing Declaration of Jonathan K. Youngwood, ECF No. [386-1], Ex. C; Declaration of Allison C. Pienta (" Pienta Decl." ), ECF No. [385-5], Ex. 4, at 3). Defendants' declarations do not make " bald and conclusory" assertions that the judgment has been satisfied, but break the class members down into different categories and detail the efforts they have made to satisfy the judgment as to each category and sub-category of class members. Most importantly, through the briefing of these two motions, Plaintiff has had the opportunity to challenge Defendants' representations in their declarations. The Court engages with each of those challenges in this Memorandum Opinion. Although the Court shall order Defendants to provide limited additional information regarding their efforts to locate class members as discussed below, Plaintiff's challenges do not put into question the Court's reliance on Defendants' declarations. Accordingly, the Court finds that Defendants' declarations provide sufficiently detailed and reliable evidence for the Court to rely on these declarations in evaluating whether Defendants have complied with the Court's August 31, 2011, judgment.
The declarations supporting Defendants' Motion to Release the Supersedeas Bond Obligation present the following information regarding Defendants' compliance with the Court's August 31, 2011, judgment. Defendants state that three days after the Court's attorney's fees order, Hilton executed the Plan amendment pursuant to the Court's August 31, 2011, and October 13, 2013, orders. See Duffy Decl. ¶ 7. In addition, Defendants sent notices of increased benefits to approximately 20,000 class members. Hernandez Decl. ¶ 6. Of these class members, Hilton has paid lump sum payments or increased annuities to more than 11,000 class members totaling $33.3 million. Hernandez Suppl. Decl. ¶ 4. Hilton has provided notice of increased benefits to another approximately 5,600 class members who are not currently in pay status or have chosen not to begin their benefits yet. Hernandez Decl. ¶ 8. As to these approximately 16,600 class members, Defendants contend that they have fully satisfied the Court's judgment because these class members have received the full benefit they are due from the Court's judgment at this point. Defs.' Reply at 8.
As for the remaining class members, Hilton contends that they are class members whom " neither Defendants nor Plaintiff have, after significant efforts, been able to locate or from whom Defendants require information from the class member before Defendants can process the payment." Id. at 7. Specifically, Defendants aver that 1,847 Plan participants or their survivors have not responded to the notice of benefit increases or have had their notices returned as a " bad address" by the United States Postal Service. Hernandez Decl. ¶ 7. Defendants have not identified any address for another 149 participants who are eligible for a benefit increase. Id. Approximately 1,400 class members have not received any payment because they have not responded to benefit communications seeking information necessary to pay their benefits. Id. Finally, Hilton is presently taking steps to confirm that 135 claimants of deceased participants' benefits are in fact the appropriate payee. Id.
Defendants note that Hilton enlisted a search firm, Pension Benefit Information Participant Research Services (" PBI" ), which was approved by the Court, to search for and update the addresses of
Plan participants so that they could be notified of their benefit increases and paid. Id. ¶ 4. Hilton has also used information provided by Plaintiff about Plan participants' addresses in its efforts to locate all Plan participants. Id. ¶ ¶ 4, 7.
Finally, Defendants aver that they have paid Plaintiff's counsel $21,738,000 in attorney's fees and expenses pursuant to the Court's final attorney's fees order and sent Plaintiff's counsel the $50,000 incentive award due Mr. Kifafi. Duffy Decl. ¶ 9.
II. LEGAL STANDARD
A. Supersedeas Bond
Under Federal Rule of Civil Procedure 62(d), an appellant may obtain a stay of a judgment pending appeal by posting a supersedeas bond. Fed.R.Civ.P. 62(d). " The purpose of a supersedeas bond is to preserve the status quo while protecting the non-appealing party's rights pending appeal." Halliburton Energy Services, Inc. v. NL Industries, 703 F.Supp.2d 666, 669 (S.D. Tex. 2010) (quoting Poplar Grove Planting & Refining Co. v. Bache Halsey Stuart, Inc., 600 F.2d 1189, 1190-91 (5th Cir. 1979)). Typically, " [c]ourts release supersedeas bonds when the bond has served its purpose and no outstanding judgment remains." Goss Int'l Corp. v. Tokyo Kikai Seisakusho, Ltd., No. 00-CV-35-LRR, 2006 WL 4757279, at *3 (N.D. Iowa Aug. 9, 2006) (citations omitted). " A supersedeas bond posted for a stay of execution of judgment should be released once all appeals are exhausted, the stay has been lifted and full payment has been made." Id. (citation omitted). In certain circumstances, however, courts will release the supersedeas bond even though the judgment award has not yet been fully paid. See, e.g., Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Defense System, Inc., No. 98-CV-1165-B, 2012 WL 2152068, at *3 (S.D. Cal. June 12, 2012) (entering an order of satisfaction stating that Defendant " paid the bulk of the judgment but that it may also be liable for attorney's fees and pre-judgment interest" ); Halliburton ...