Clark v. Feder, Semo & Bard, P.C.
808 F. Supp. 2d 219
D.D.C.2011Background
- Plaintiff ERISA beneficiary Denise Clark sues Feder, Semo & Bard, the Retirement Plan, and former trustees Semo and Bard.
- Court previously granted summary judgment on some claims; reconsideration vacated part and required precise detailing of remaining claims.
- Clark asserts five theories: improper grouping, anti-cutback violation, SPD disclosures, actuarial/interest-rate missteps, and improper distributions to plan sponsors (Fed ers).
- Defendants moved for renewed summary judgment; issues focus on standing, justiciability, and whether relief is monetary or equitable.
- Court evaluates each theory under applicable ERISA provisions and Supreme Court guidance (notably Varity, CIGNA).
- Court ultimately grants in part and denies in part; allows some §1132(a)(1)(B) or §1132(a)(3) claims, but grants summary judgment on anti-cutback and certain distribution claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to pursue improper grouping claim | Clark may pursue against Plan despite termination; redressability not defeated. | No Article III or statutory standing since plan assets distributed; plan defunct. | Clark has Article III standing; may pursue under §1132(a)(1)(B) or §1132(a)(3), but not both. |
| Whether §1132(a)(3) provides a remedy when §1132(a)(1)(B) exists | If monetary relief unavailable due to asset distribution, §1132(a)(3) should apply. | Cannot pursue §1132(a)(3) where §1132(a)(1)(B) adequate; only one remedy allowed. | Plaintiff may proceed under either §1132(a)(1)(B) or §1132(a)(3), but not both. |
| Anti-cutback claim viability | Plan amendment/termination violated anti-cutback by reducing accrued benefits. | Termination alone did not reduce accrued benefit; underfunding caused reductions; no amendment violation. | Summary judgment for defendants; anti-cutback claim fails as terminated underfunded plan reduced benefits not via prohibited amendment. |
| SPD misrepresentation under §1132(a)(1)(B) and §1132(a)(3) | SPD failed to disclose PBGC insurance status and disqualifying circumstances; SPD controls in conflicts. | CIGNA limits misrepresentation claims regarding SPD; no direct ERISA remedy for SPD misstatements. | SPD misrepresentation cannot support §1132(a)(1)(B) claim; may support §1132(a)(3) as breach by plan administrator. |
| Actuarial/interest-rate assumptions and underfunding | Fiduciaries used unreasonable 8% rate; underfunding violated §1083(h) and fiduciary duties. | No evidence that rate was unreasonable or fiduciaries acted unreasonably; disputes require trial. | Genuine issues of material fact remain; denial of summary judgment; Clark may proceed on this theory. |
| Distributions to highly compensated individuals and tax-law claims | Earlier distributions to Feders violated 26 C.F.R. §1.401(a)(4)-5 and ERISA §1103(d)(1). | IRS tax provisions do not create ERISA rights; distributions cannot be ERISA claims. | Summary judgment for defendants; violations of tax provisions do not create ERISA liability; §1103(d)(1) claim dismissed. |
Key Cases Cited
- Paulsen v. CNF, Inc., 559 F.3d 1061 (9th Cir. 2009) (adequate remedy under §1132(a)(1)(B) bars §1132(a)(3) claims)
- Varity Corp. v. Howe, 516 U.S. 489 (Supreme Court 1996) (§1132(a)(3) as safety net for injuries not otherwise remedied)
- CIGNA Corp. v. Amara, 131 S. Ct. 1866 (Supreme Court 2011) (SPD misrepresentation may be addressed under §1132(a)(3); equitable relief possible)
- Esden v. Bank of Boston, 229 F.3d 154 (2d Cir. 2000) (accrued benefit value at termination must not be less than actuarial equivalent)
- Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (Supreme Court 1995) (settlor fiduciary distinction in plan amendments and terminations)
- Graden v. Conexant Sys., Inc., 496 F.3d 291 (3d Cir. 2007) (recovery limitations when plan funds are distributed)
- Sereboff v. Mid Atlantic Medical Services, 547 U.S. 356 (Supreme Court 2006) (equitable remedies for fiduciary breaches may include monetary relief)
- Hollowell v. Cincinnati Ventilating Co., 711 F. Supp. 2d 751 (E.D. Ky. 2010) (IR“C 401” tax rationale not automatically enforceable in ERISA action)