Stanton v. NCR Pension Plan

478 F.Supp.3d 1325

Arthur STANTON, on behalf of himself and others similarly situated, Plaintiff,

v.The NCR PENSION PLAN, et al., Defendants.

Case No. 1:17-cv-02309

United States District Court, N.D. Georgia, Atlanta Division.

Signed August 4, 2020

Paul Joseph Sharman, The Sharman Law Firm, LLC, Alpharetta, GA, for Plaintiff.

Jeffrey D. Mokotoff, Tiffany D. Downs, Ford & Harrison LLP, Atlanta, GA, for Defendants.

ORDER

MICHAEL L. BROWN, UNITED STATES DISTRICT JUDGE

Plaintiff Arthur Stanton previously worked for NCR Corporation and claims to be a participant in its Pension Plan. He alleges (among other things) that Defendants NCR and members of the NCR pension committee violated their fiduciary duties to him and others similarly situated. Defendants move to dismiss those claims and to strike subclasses of similarly situated plaintiffs added in the amended complaint. (Dkt. 29.) The Court grants in part and denies in part Defendants’ motion.

I. Background¹

Plaintiff worked for NCR from 1961 to 1970, when he took a leave of absence for about a year. (Dkt. 28 ¶ 11.) He returned in 1971 and worked until 1980, when he left for other employment. (Id. ) While there, Plaintiff was part of a retirement benefits plan (the "Plan"). (Id. ¶ 58.) To receive benefits under the Plan, Plaintiff was required to have worked for NCR for ten continuous years. (Id. ¶¶ 19, 20.) Plaintiff retired from the workforce in 2015 and sought benefits under the Plan. (Id. ¶ 58.) NCR denied his claim after determining he had not worked for ten continuous years. (Id. ¶ 59.) Plaintiff disputes that saying his year-long absence was authorized and did not break his continued service. (Id. ¶¶ 11, 19, 47.)

After exhausting his remedies, Plaintiff filed an initial complaint against the Plan and its administrators and asserted four counts under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(a)(1)(B), (a)(3), (c)(1)(B). (Dkt. 1.) Count I was a claim for benefits under the Plan. (Id. ¶¶ 67–71.) Count II alleged Defendants (other than the Plan) breached certain fiduciary duties. (Id. ¶¶ 72–97.) Count III alleged Defendants (other than the Plan) failed to disclose information required by ERISA. (Id. ¶¶ 98–102.) Finally, Count IV claimed Defendants (other than the Plan) breached other fiduciary duties by taking financial actions that improperly benefitted individual Defendants and caused the Plan financial harm. (Id. ¶¶ 103–15.) Plaintiff asserted these claims on behalf of himself and others similarly situated.

Defendants moved to dismiss on several grounds, including lack of standing. (Dkt. 16.) The Court found Plaintiff had standing for Counts I and III, but lacked standing for Counts II and IV, the fiduciary duty claims. (Dkt. 26 at 16–20.) The Court permitted Plaintiff to amend the complaint if Plaintiff believed there was standing. (Id. at 20.) Plaintiff amended the complaint, again asserting four counts. (Dkt. 28.) Counts I and III are identical to his allegations in the original complaint. In Count II, Plaintiff clarified how Plan administrators breached their fiduciary duties. In Count IV, Plaintiff added allegations on the impact of the financial actions upon the Plan. Defendants now move to dismiss the fiduciary duty claims in Counts II and IV of the amended complaint as well as new class allegations. (Dkt. 29.)

II. Standard of Review

A court may dismiss a pleading for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "At the motion to dismiss stage, all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff." Bryant v. Avado Brands, Inc. , 187 F.3d 1271, 1273 n.1 (11th Cir. 1999).

A court may also dismiss a pleading for "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). If a defendant challenges the court's subject matter jurisdiction, then the plaintiff bears the burden of showing the court has subject matter jurisdiction, which entails showing the plaintiff has standing. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). There are three elements of standing: an injury-in-fact, "a causal connection between the injury and the conduct complained of," and a likelihood "the injury will be redressed by a favorable decision." Fla. Family Policy Council v. Freeman , 561 F.3d 1246, 1253 (11th Cir. 2009). An injury-in-fact is "an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." Lujan , 504 U.S. at 560, 112 S.Ct. 2130.

III. Discussion

A. Standing as to Count IV

1. Direct Harm to Participants in Count IV

In Count IV, Plaintiff claims Defendants (except the Plan) twice offered Plan participants lump sum distributions of benefits as part of its efforts to remove risk from the Plan. Plaintiff further claims that, when Defendants instituted these "derisking" actions, they "did not ensure that the Plan remained sufficiently funded to cover benefits payable to Plaintiff." (Dkt. 28 ¶ 106.) He also claims Defendants loaned and transferred money to a party-in-interest for its benefit. (Id. ¶ 111.) He claims Defendants’ actions violated their fiduciary duties to the Plan participants.

As the Court stated in its previous order, because participants in a defined benefits plan are entitled to a fixed amount of money, losses to a plan do not necessarily result in injury to the plan's participants. See LaRue v. DeWolff, Boberg & Assocs., Inc. , 552 U.S. 248, 255, 128 S.Ct. 1020, 169 L.Ed.2d 847 (2008) ; Hughes Aircraft Co. v. Jacobson , 525 U.S. 432, 439, 119 S.Ct. 755, 142 L.Ed.2d 881 (1999). Provided money is available, participants can recover their same benefits even if the plan takes a loss, thus preventing any injury. See Lee v. Verizon Commc'ns, Inc. , 837 F.3d 523, 545 (5th Cir. 2016).

Plaintiff essentially claims that Defendants’ "derisking" actions hurt the plan, making a full payment of his benefits unavailable. The Fifth Circuit addressed this argument in Lee v. Verizon Communications, Inc. In that case, Verizon, the plan provider, split its pension plan into two groups to remove risk from the plan. A plaintiff claimed the derisking actions caused financial harm to the plan, thus increasing the risk that he would not receive the benefits to which he was entitled. Id. at 531–32. The Lee court found the plaintiff had not alleged an injury. Id. at 545–46. Citing sister circuits, the court held that, when claiming an injury based on damage to a defined benefits plan, a plaintiff must allege an "imminent risk" of default to the plan. Id. at 546.

Plaintiff here claims there is a "significant risk" and a "substantial risk" that the Plan will be unable to provide full benefits. (Dkt. 28 ¶¶ 108, 110.) Reasoning from Lee , this Court finds Plaintiff's allegations insufficient. The Lee court analyzed a plan that was only sixty-six percent funded. Id. And yet that was not enough to establish sufficient risk of default so as to establish standing. Plaintiff here makes no allegations that the Plan is underfunded. He says there is a "risk" it will be unable to provide benefits and tries to elevate that risk to "significant" and "substantial." But, he does not allege the Plan is underfunded, let alone that he faces an imminent risk of not receiving benefits.

The Lee court also identified a safeguard from injury that participants in a defined benefits plan enjoy — the requirement that an employer cover any financial shortfall in its plan. Lee , 837 F.3d at 545 (quoting Hughes Aircraft Co. , 525 U.S. at 439, 119 S.Ct. 755 ) ("[T]he employer typically bears the entire investment risk and—short of the consequences of plan termination—must cover any underfunding as the result of a shortfall that may occur from the plan's investments."). And so, claiming that a plan is underfunded "merely increases the relative likelihood that [a defendant] will have to cover a shortfall." Id. It does not establish an injury to a plan participant.

NCR appears to have an obligation to cover any shortfall in the Plan. The 1963 Plan booklet included with the Amended Complaint states "[t]he Non-Contributory Annuity is paid for entirely by the Company.² " (Dkt. 28-1 at 3.) Plaintiff has not alleged otherwise. He also has not alleged that NCR would be financially unable to cover a shortfall in the Plan.

The Court acknowledges Lee is not binding. The Eleventh Circuit has not ruled on this issue — what constitutes an injury-in-fact when there is financial harm to a defined benefits plan — but other courts that have considered the issue have made the same findings as the Fifth Circuit. See David v. Alphin , 704 F.3d 327, 338 (4th Cir. 2013) ; Harley v. Minn. Min & Mfg. Co. , 284 F.3d 901, 906 (8th Cir. 2002) ; Perelman v. Perelman , 919 F. Supp. 2d 512, 517 (E.D. Pa. 2013), aff'd , 793 F.3d 368 (3d Cir. 2015). This Court, in fact, applied that reasoning in its previous order. (See Dkt. 26 at 17–18.) Plaintiff argues the Supreme Court overruled Lee in Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 194 L.Ed.2d 635 (2016). It is true the Fifth Circuit originally ruled in Lee before Spokeo. See 623 F. App'x 132 (5th Cir. 2015). But the Fifth Circuit reconsidered and then reaffirmed the opinion after Spokeo . See 837 F.3d 523 (5th Cir. 2016). This Court agrees with the Fifth Circuit's reconsideration of the case: rather than overrule it, Spokeo confirmed Lee ’s reasoning.³ Lee , 837 F.3d at 529 (" Spokeo maps surprisingly well onto the present case.").

The Court finds ...