Opinion
CIVIL ACTION No. 01-3523 SECTION "I" (1)
March 26, 2003
ORDER AND REASONS
Defendant, Kuno Laren ("Laren") has filed a motion for summary judgment. (Rec. Doc. No. 10). For the following reasons, the motion is DENIED.
Background
This class action lawsuit was filed by plaintiffs, all of whom are employees or ex-employeeS of Quality Industries, Inc. ("QI") and Quality Pump Systems, Inc. ("QPS"), pursuant to the Employee Retirement Income Securty Act ("ERISA"), 29 U.S.C. § 1001 et seq. Plaintiffs have sued defendants, QI, QPS, Quality Agriculture, Inc. ("QA"), Grant Enterprises, Ltd. ("Grant"), as the legal successor to the three aforementioned entities, and Laren, in his official capacity as an officer and directcr of both QI and Grant (collectivelY "defendants"). They allege that the defendants failed to pay health care costs incurred by their employees and owed to various health care providers pursuant to the terms of their employee benefits plan.Specifically, plaintiffs allege that during the period between March 1, 1997, and November 21, 2001, the defendants maintained a shared employee benefits plan for their employees which provided employees and their covered dependents with health and disability insurance benefits. Pursuant to the terms of the employee benefits plan, employees of the defendants elected to have their snare of the cost of health care coverage deducted directly from their paychecks. As a result, the defendants, operating as self-insurers, were responsible for paying the covered health care costs incurred by the employees and their dependents.
Rec. Doc. No. 1, ¶ 3.5.
Plaintiffs allege that during the time the employee benefits plan was in effect, the defendants did not fund the plan properly and that they arbitrarily and capriciously failed to pay claims under the plan. The plaintiffs allege that they were effectively excluded from participation in the employee benefits plan despite the fact that they paid insurance premiums to the defendants, through payroll deductions, for the right to participate in this plan.
Rec. Doc. No. 2, ¶ 3.8.
Rec. No. 1, p. 2.
Plaintiffs allege that Laren, as an officer and director of QI and Grant, breached his fiduciary duty to the plaintiffs by negligently or intentionally failing to fund the employee benefits plan and/or pay benefits under the plan and by failing to maintain insurance coverage for employees in violation of ERISA § 404, 29 U.S.C. § 1104. Defendant, Laren, has filed a motion for summary judgment contending that he was not a "fiduciary" for purposes of ERISA because he lacked "discretionary authority or control respecting management, disposition of assets, or administration of [the employee benefits] plan maintained by Quality Industries." Because he is not an ERISA fiduciary, Laren argues that summary judgment should be entered in his favor with respect to plaintiffs' claim that he breached his fiduciary duty.
ERISA provides that a fiduciary must discharge his duties:
(A) for the exclusive purpose of: (i) providing benefits to parttcipants and beneficiaries; and (ii) defraying reasonable expenses of administering the plan; (B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (C) by diversifying the investments of a plan so as to minimize the risk of large losses, unless under the circumstances it is clearly not prudent to do so; and (D) in accordance with the documents and instruments governing the plan insofar as such documents and instruments are consistent with the provisions of this subchapter and subchapter III of this chapter.
ERISA § 404, 29 U.S.C. § 1104 (1).
Summary Judgment
Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment should be granted only "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party moving for summary judgment bears the initial responsibility of "informing the district court of the basis for its motion, and identifying those portions of [the record] that it believes demonstrate the absence of a genuine issue of material fact."Taita Chemical Co., Ltd. v. Westlake Styrene Corp., 246 F.3d 377, 385 (5th Cir. 2001), quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986) (internal quotations omitted)
When the moving party has satisfied its threshold obligation under Fed.R.Civ.P. 56(c), the burden then shifts to the nonmoving party to establish the existence of a genuine issue of material fact. Taita, 246 F.3d at 385, citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 1355-56, 89 L.Ed.2d 538 (1986). The nonmoving party must, either by submitting opposing evidentiary documents or by referring to those evidentiary documents already in the record, present the court with specific facts showing that a genuine issue exists. Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915 (5th Cir. 1992); see also Fed.R.Civ.P. 56(e). The court must accept the evidence submitted by the nonmoving party and draw "all justifiable inferences" in favor of that party. Taita, 246 F.3d at 385. Thus, where the record taken as a whole could lead a reasonable trier of fact to find in favor of the nonmoving party, then a genuine issue for trial exists and summary judgment should not be granted. Id., citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 265 (1986) "Determining credibility, weighing evidence, and drawing reasonable inferences are left to the trier of fact." Taita, 246 F.3d at 385, citing Anderson, 477 U.S. at 255, 106 S.Ct. at 2513.
ERISA
In order to impose liability on Laren, individually, for his alleged breach of fiduciary duty to the plaintiffs, Laren must be deemed a "fiduciary" under ERISA § 3(21) (A) or § 402(a)(2), 29 U.S.C. § 1002 (21) (A), 1102(a)(2). Individuals are considered "fiduciaries" under ERISA if they are "named fiduciaries" in the employee benefits plan, pursuant to ERISA § 402(a)(2), 29 U.S.C. § 1102 (a)(2), or if their actions and control over the employee benefits plan at issue satisfy any of the three criteria listed under ERISA § 3 (21) (A)(i)-(iii), 29 U.S.C. § 1002 (21) (A)(i)-(iii). More specifically, an individual such as Laren is a fiduciary if he, inter alia, exercises any discretionary authority or control regarding the management of an employee benefits plan or the management or disposition of its assets, or if he has any discretionary authority or responsibility with respect to the administration of the plan. ERISA § 3 (21) (A), 29 U.S.C. § 1002 (21) (A).
A "named fiduciary" is defined as "a fiduciary who is named in the plan instrument, or who, pursuant to a procedure specified in the plan, is identified as a fiduciary (A) by a person who is an employer or employee organization with respect to the plan or (B) by such an employer and such an employee organization acting jointly." ERISA § 402(a)(2), 29 U.S.C. § 1102 (a)(2).
ERISA confers "fiduciary" status upon those individuals whose activities satisfy any one of the following three criteria:
A person . . . with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management of disposition of its assets, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has; any discretionary authority or discretionary responsibility in the administration of such plan. Such term includes any person designated under ERISA § 405(c)(1)(B).
ERISA § 3 (21) (A), 29 U.S.C. § 1002 (21) (A).
In his motion for summary judgment, Laren argues that his only position with Quality Industries was as a "director on the Board of Directors." Laren contends that QI did not name him as a fiduciary to its employee benefits plan. Plaintiffs concede that Laren is not a named fiduciary as to the employee welfare benefit plan at issue, but they contend that he is otherwise a fiduciary for ERISA purposes in light of his position and likely sphere of responsibilities. For example, there are documents filed in QI's bankruptcy action which name Laren as the "Secretary/Treasurer" of the organization. Further, in conjunction with those proceedings, Daniel Morvant, the president of QI, testified that Laren had greater authority than Morvant and that Laren could tell Morvant what to do. Morvant further testified that Laren had the right to override Morvant's decisions.
Rec. Doc. No. 7, Memorandum, p. 3.
Rec. Doc. No. 15, Memorandum, p. 3, n. 1.
Rec. Doc. No. 15, Exhibit E.
Rec. Doc. No. 15, Exhibit G, pp. 42-43.
Rec. Doc. No. 15, Exhibit G, p. 43.
As noted previously, an ERISA fiduciary is not only a person who actually "exercises any discretionary authority or discretionary control respecting management" of an employee benefit plan, but also any person who "has any discretionary authority or discretionary responsibility in the administration" of such plan. 29 U.S.C. § 1002 (21) (A). In light off the record evidence that Laren was both a director and the Secretary/Treasurer of QI and that he may have had greater authority than the president regarding the management of the company, there is a factual dispute with respect to whether Laren had "any discretionary authority or discretionary responsibility" in administering the employee benefit plan. Summary judgment, therefore, is inappropriate.
Accordingly,
IT IS ORDERED that the motion of defendant, Kuno Laren, for summary judgment and attorney's fees is hereby DENIED.