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Saunders v. Davis

United States District Court, District of Columbia

September 15, 2016

NATHAN A. SAUNDERS, Plaintiff,
v.
ELIZABETH DAVIS, et al., Defendants. Re Document Nos. 15, 16, 19, 20

          MEMORANDUM OPINION GRANTING DEFENDANTS' MOTIONS TO DISMISS

          RUDOLPH CONTRERAS United States District Judge.

         I. INTRODUCTION

         Plaintiff Nathan A. Saunders, proceeding pro se, brings this suit alleging that numerous Defendants engaged in misconduct in the management of the Washington Teachers' Union's ("WTU") Option 2 Voluntary Employee Beneficiary Association Trust (the "Trust").[1] The Trust was created to provide supplemental unemployment benefits to teachers in the District of Columbia Public Schools ("DCPS") who met certain conditions. Mr. Saunders, who seeks a wide range of remedies, names fourteen Defendants, all associated in different ways with the Trust. Specifically, Mr. Saunders brings suit against: Elizabeth Davis, Jackie Hines, Michael White, Pauline Baker, John Hammond, Ray Mobley, Dorothy Egbufor, and the Trust itself (collectively, "Board Affiliate Defendants");[2] Darryl Anderson, Peter Leff, Lee Jackson, and the law firm O'Donnell, Schwartz, & Anderson, P.C. (collectively, "Attorney Defendants"); Calibre CPA Group, PLLC ("Calibre"); and Secretary Thomas Perez of the United States Department of Labor. See Compl. at 1-2, ECF No. 1.

         Four sets of Defendants separately move to dismiss the Complaint on a variety of grounds. The Court first considers whether it has jurisdiction. For the reasons explained below, the Court finds that sovereign immunity bars Mr. Saunders's claims against Secretary Perez. The Court will therefore dismiss those claims pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction. The Court also finds that Mr. Saunders fails to state a claim upon which relief can be granted under the Employee Retirement Income Security Act ("ERISA"), the Racketeer Influenced and Corrupt Organizations Act ("RICO"), and various federal criminal statutes. The Court will therefore dismiss those portions of the Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Because the Court dismisses all of Mr. Saunders's federal law claims, the Court declines to exercise supplemental jurisdiction over the remaining state law claims. Finally, the Court will deny Mr. Saunders's request that the Court appoint counsel to represent him in this case and his request for leave to amend his claims.

         II. FACTUAL & PROCEDURAL BACKGROUND

         A. Factual Background[3]

         This case arises from a dispute over the administration of the Trust, which was created for the benefit of certain teachers employed by DCPS. The allegations are rooted in the fallout from the WTU's disputed presidential election in 2013 and subsequent questions about the election's implications on the management of the Trust.

         Mr. Saunders is a member of the WTU. See Compl. at 4; Compl. Attach. 17 at 124.[4]Prior to the events giving rise to this case, Mr. Saunders was elected President of the WTU. See Compl. Attach. 2 at 75; Compl. Attach. 5 at 79-81. During Mr. Saunders's term in office and while acting on behalf of the WTU, he signed a document that created the Trust (the "Trust Agreement"). See Compl. Attach. 2 at 75; see also Compl. at 6 ("The WTU Option 2 VEBA creation was a multi-year project by Plaintiff"). Mr. Saunders was also a signatory to the Memorandum of Agreement between the WTU and the DCPS that provided for DCPS's financial contributions to the Trust, see Compl. Attach. 4 at 78, and to the Trust's "Plan Document, " see Compl. Attach. 1 at 47.

         The Trust was the result of collective bargaining between the WTU and DCPS. See Compl. Attach. 1 at 33; Compl. Attach. 2 at 48; Compl. Attach. 4 at 77; Compl. Attach. 8 at 86. The Trust was created to provide supplemental unemployment benefits for DCPS teachers who had been laid off-or "excessed" in the official terminology-if those teachers met certain criteria. See Compl. Attach. 1 at 34-35; Compl. Attach. 4 at 77; Compl. Attach. 8 at 89-90. Specifically, teachers were required to achieve a particular score on their most recent evaluation, attain permanent teacher status, and work in the DCPS system for a minimum number of years to be eligible for benefits. See Compl. Attach. 4 at 77; Compl. Attach. 8 at 89-90. The Trust, which makes payments to eligible teachers who apply for benefits, was intended to be funded by DCPS through annual payments of $1.7 million. See Compl. Attach. 4 at 77; see also Compl. at 6 ("The end result [of Plaintiff s efforts] was a Memorandum of Agreement funded by the employer."). DCPS and the WTU have subsequently disagreed over a number of issues related to the Trust, and the Trust was forced to suspend the payment of all benefits in 2015 because DCPS did not make its annual funding payments. See Compl. Attach. 10 at 119 ("Unfortunately, DCPS funded the [Trust] in the first year but has withheld funding for the last two years."); Compl. Attach. 11 at 122 ("DCPS has refused to make its last two contributions to [the Trust]."). Mr. Saunders asserts that "Defendants' transgressions are the sole reason for nonpayment... as opposed to employer recalcitrance as reported by Defendants." Compl. at 15.

         The Trust Agreement established a process to select trustees. See Compl. Attach. 2 at 55. The relevant provision, Section 3.01, states in full:

Designation of Trustees. Persons holding the following positions with the Union shall serve as the Trustees and shall be considered the "named fiduciaries, " "fiduciaries, " and the "plan administrator" as those terms are defined in ERISA:
1. President of the Union who shall serve as the Chairman of the Board and have a two year term;
2. One Vice President of Education who is also a member of the Executive Board of the Union who shall have a two year term;
3. One other member of the Executive Board of the Union, as appointed by the Chairman, who shall have an initial one year term and then two year terms thereafter;
4. Treasurer of the Union who shall have a two year term;
5. One Field Service Specialist of the Union, as appointed by the Chairman, who shall have an initial one year term and then two year terms thereafter.

Id.[5]

         According to the Complaint, WTU officials, including Mr. Saunders, stood for election in May 2013. See Compl. at 11. Mr. Saunders faced Defendant Elizabeth Davis in his bid to be re-elected as WTU President. See Id. After a close election and a subsequent, contested runoff, Mr. Saunders filed an "appeal to the 2013 WTU Runoff Election, " however, on "July 31, 2013 Plaintiff Saunders withdrew his election challenge and vacated the WTU Presidency." See Compl. Attach. 5 at 80; see also Compl. at 11. Ms. Davis entered office as President of the WTU on August 1, 2013. See Compl. at 11. On April 27, 2015, Mr. Saunders sent a letter to Secretary Perez and the Chancellor of DCPS raising concerns with purported "financial and other improprieties" associated with the Trust. See Compl. Attach. 19 at 131; see also Compl. at 10 ("Plaintiff complained to the Department of Labor, and D.C. Public schools among others.").

         B. Mr. Saunders's Allegations

         The core of Mr. Saunders's Complaint is that his defeat as WTU President did not alter his role in managing the Trust. In support of that position, Mr. Saunders argues that the "Original and Proper" Board of Trustees must be made up of the members who were on the board prior to the 2013 election. See Compl. at 12-13. Mr. Saunders states that he is the rightful "fiduciary based trustee-Chairperson of the WTU Option 2 VEBA Board of Trustees, " and that the current board is "not the properly constituted and seated WTU Option 2 VEBA Board of Trustees." Id. In other words, Mr. Saunders's position is that Ms. Davis may have won the WTU Presidency in the 2013 election, but the election did not permit her to take over Mr. Saunders's position as Chairman of the Board of Trustees. See Pl.'s Mem. Resp. Defs.' Mots. Dismiss ("Pl.'s Opp'n") at 11, ECF No. 23.

         Specifically, Mr. Saunders argues that "[t]he loss of a political union election can not be used as a basis for removal from the VEBA Board" and that "WTU elections are not controlling" on the question of who should run the Trust. Id. at 11-12. Mr. Saunders notes that he "worked 2 hard years" to create the Trust under the assumption that his continued involvement would not be dependent upon the upcoming WTU election. See Id. at 12 Mr. Saunders points to the Trust Agreement and argues that "[u]nion elected office is not a requirement for VEBA trusteeship participation, plan participation, or plan rights, " see Compl. at 11, and therefore, that "Defendants Davis, Hammond, White, Hines . . . had no authority to act and are not the properly constituted and seated WTU Option 2 VEBA Board of Trustees, " id. at 12.

         Mr. Saunders ultimately alleges that because the post-2013 Board of Trustees is "not the properly constituted and seated WTU Option 2 VEBA Board of Trustees, " each of the Defendants, "individually and collectively, " violated a number of statutes and caused harm to Mr. Saunders and others. See Id. at 12, 15. Because he asserts that the Board of Trustees took their positions illegally, he alleges that those individuals committed fraud when they took subsequent actions to manage the Trust, including relatively routine acts such as using the Trust's credit cards. Id. at 12-13. The legal foundations of Mr. Saunders's allegations include both civil and criminal violations of federal and state laws. See Id. at 4-6.

         Mr. Saunders asserts that the Defendants' alleged actions constitute a RICO violation. See Id. at 5-6; see also 18 U.S.C. § 1961. The Complaint's RICO allegations are based on a range of purported predicate criminal acts, including mail fraud, wire fraud, bank fraud, credit card fraud, identification fraud, and computer fraud. See Compl. at 5-6 (citing 18 U.S.C. §§ 1028, 1029, 1030, [6] 1341, 1343, 1344). Mr. Saunders also appears to assert these alleged criminal violations as separate causes of action. See Id. ("Plaintiff makes claims under[a list of criminal statutes]."). The Complaint also alleges a series of violations of ERISA. Id. at 4-5. Specifically, Mr. Saunders alleges that Defendants failed to provide required information, breached their fiduciary duties, and failed to provide benefits required by the terms of the plan. See Compl. at 4-5; see also 29 U.S.C. §§ 1021-25 (reporting requirements); 29 U.S.C. §§ 1104-09 (fiduciary duties); 29 U.S.C. § 1132(a)(1)(B) (private right of action to enforce plan terms).

         Mr. Saunders also brings a number of nonfederal claims. Mr. Saunders alleges violations of the District of Columbia Merit Personnel Act and the District of Columbia Retirement Act. See Compl. at 5 (citing D.C. Code §§ 1-618.02, 1-702(20), 1-747(a)(2)). He also cites provisions of the D.C. Code found in the chapter related to the Police Officers, Fire Fighters, and Teachers Retirement Benefit Replacement Plan. See Id. (citing D.C. Code §§ 1-901.02(7); 1-911.01(a)(2)). Mr. Saunders alleges that Defendants' actions constitute "tortious interference" because they allegedly "constructively and secretly disbanded the Original and Proper VEBA Board of Trustees while intercepting the $1.75 million trust fund check." Id. at 12. In his opposition to the motions to dismiss, Mr. Saunders also alleges that the Attorney Defendants' malpractice is responsible for $6.8 million in harm and "this VEBA's demise." Pl.'s Opp'n at 5-7; see also Id. at 17 ("The WTU and VEBA Attorney defendants . . . did not employ ordinary and common legal skill.").

         C. Motions before the Court

         Four sets of Defendants have moved separately to dismiss Mr. Saunders's Complaint. Board Affiliate Defendants move to dismiss the ERISA claims for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) and to dismiss the remainder of the Complaint for failure to state a claim pursuant to Rule 12(b)(6). See generally Mem. Supp. Mot. Dismiss Defs. Davis, et al. ("Board Affiliates' Mem.") at 2, ECF No. 15. Calibre moves to dismiss the Complaint for failure to state a claim pursuant to Rule 12(b)(6). See generally Mem. Supp. Def Calibre CPA Group, PLLC Mot. Dismiss ("Calibre Mem."), ECF No. 16-1. Secretary Perez moves to dismiss the Complaint under Rule 12(b)(1) because Mr. Saunders's claims against the Secretary are barred by sovereign immunity. See generally Mot. Dismiss Sec. Labor Action & Supp. Mem. P. & A. ("Perez Mot. Dismiss"), ECF No. 19. Attorney Defendants move to dismiss the Complaint pursuant to Rule 12(b)(6). See generally Mem. Supp. Defs. O'Donnell, Schwartz, & Anderson, P.C., et al. Mot. Dismiss ("Att'y Defs.' Mem."), ECF No. 20-1. After all Defendants moved to dismiss, the Court issued an Order reminding Mr. Saunders of his obligation to respond to the motions. See Order, ECF No. 21. Mr. Saunders filed an omnibus opposition to the motions, which also reiterated his request that "the federal court. . . appoint legal counsel to assist Pro Se Plaintiff in the resolution of this matter." Pl.'s Opp'n at 15; see also Compl. at 24. In support of that position, Mr. Saunders argued that "the federal court could appoint[] Plaintiff counsel and all parties will have a level playing field." Pl.'sOpp'n at 15. Each set of moving parties filed a reply in support of their motion. See Reply Mem. Supp. Mot. Dismiss Defs. Davis, et al. ("Board Affiliates' Reply"), ECF No. 24; Defs. O'Donnell, Schwartz, & Anderson, PC, et al. Reply Pl.'s Opp'n Defs.' Mot. Dismiss ("Att'y Defs.' Reply"), ECF No. 25; Reply Supp. Def Calibre CPA Group's Mot. Dismiss ("Calibre Reply), ECF No. 26; Reply Mem. Supp. Sec. Labor's Mot. Dismiss, ECF No. 27. Defendants' motions are now fully briefed and ripe for decision.

         III. DISCUSSION

         The Defendants, filing separately, move to dismiss the Complaint in its entirety on a number of different grounds. Each of the motions to dismiss, however, argues either that the Court lacks subject matter jurisdiction over claims against Defendants or that the Complaint fails to state a claim upon which relief can be granted. The Court first considers the question of subject matter jurisdiction, and finds that sovereign immunity bars Mr. Saunders's claims against Secretary Perez. Next, the Court finds that the Complaint's federal causes of action fail to state a claim upon which relief can be granted. Specifically, the ERISA claims are barred because the Trust is a government plan. Mr. Saunders also has failed to allege the necessary elements of a RICO claim, and his citations to various federal criminal statutes fail to state a claim. Because the Court will dismiss all federal law claims, the Court will decline to exercise supplemental jurisdiction over Mr. Saunders's state law claims. Thus, the Court will grant the motions to dismiss and dismiss the Complaint as to all remaining Defendants. Finally, Mr. Saunders's request for appointment of counsel and request for leave to amend are denied.

         A. Subject Matter Jurisdiction

         Pursuant to Federal Rule of Civil Procedure 12(b)(1), Secretary Perez moves to dismiss, arguing that the Court lacks subject matter jurisdiction because sovereign immunity bars Mr. Saunders's claims. See Perez Mot. Dismiss at 1. The Court finds that it does not have subject matter jurisdiction over claims against Secretary Perez because Mr. Saunders has failed to demonstrate a relevant waiver of sovereign immunity. Thus, the Court will dismiss Mr. Saunders's claims against Secretary Perez.

         Board Affiliate Defendants also move to dismiss and argue that this Court lacks subject matter jurisdiction over Mr. Saunders's ERISA claims. See Board Affiliates' Mot. Dismiss at 1. Specifically, Board Affiliate Defendants argue that because the Trust is a government plan, it is excluded from ERISA under 29 U.S.C. § 1003(b)(1), and therefore this Court lacks subject matter jurisdiction to address Mr. Saunders's ERISA claims. See Board Affiliates' Mem. at 2. Although the Court agrees that the Trust is a government plan that is exempt from ERISA, the Court does not believe that this issue is properly considered in the context of subject matter jurisdiction. Instead, the Court will construe Board Affiliate Defendants' argument as a motion to dismiss for failure to state a claim. See infra Part III.B.2.a.

         1. Applicable Legal Standard

         Apro se complaint is held to "less stringent standards than formal pleadings drafted by lawyers." Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam) (quoting Estelle v. Gamble, 429 U.S. 97, 106 (1976)). But even pro se litigants "must comply with the Federal Rules of Civil Procedure." Idrogo v. Foxx, 990 F.Supp.2d 5, 6 (D.D.C. 2013) (citing Jarrell v. Tisch, 656 F.Supp. 237, 239 (D.D.C. 1987)). Federal Rule of Civil Procedure 12(b)(1) provides for the dismissal of an action for lack of subject matter jurisdiction. See Fed. R. Civ. P. 12(b)(1). Federal courts are courts of limited jurisdiction, and the law presumes that "a cause lies outside this limited jurisdiction." Rasul v. Bush, 542 U.S. 466, 489 (2004) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)); see also Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004) ("As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction."). It is the plaintiffs burden to establish that the court has subject matter jurisdiction. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). To determine whether jurisdiction exists, a court may "consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Coal, for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003).

         2. Analysis

         Secretary Perez argues that sovereign immunity bars Mr. Saunders's claims against him. See Perez Mot. Dismiss at 3. The Court agrees, and finds that Mr. Saunders has failed to provide sufficient authority showing ...


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