in the united states district court for the district … docket 56...aug 05, 2016 · v. ) civil...

IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

)K. Wendell Lewis, et al., )

)Plaintiffs, )

v. ) Civil Action No. 1:15-cv-01328-RBW)

Pension Benefit Guaranty Corporation, ))

Defendant. ))

PLAINTIFFS’ OPPOSITION TO DEFENDANT’S MOTION FORRECONSIDERATION, OR IN THE ALTERNATIVE, FOR CERTIFICATION TO FILE

INTERLOCUTORY APPEAL, AND FOR A STAY OF PROCEEDINGS

Anthony F. Shelley (D.C. Bar No. 420043)Timothy P. O’Toole (D.C. Bar No. 469800)Michael N. Khalil (D.C. Bar No. 497566)Miller & Chevalier Chartered900 16th Street, NWWashington, DC 20006Telephone: 202-626-5800E-mail: [email protected]

[email protected]@milchev.com

August 5, 2016 Attorneys for Plaintiffs

Case 1:15-cv-01328-RBW Document 56 Filed 08/05/16 of 22

TABLE OF CONTENTS

Page

INTRODUCTION ...........................................................................................................................1

LEGAL STANDARDS ...................................................................................................................2

ARGUMENT...................................................................................................................................4

A. THE CORPORATION’S REQUEST FOR RECONSIDERATIONSHOULD BE DENIED BECAUSE IT RELIES ENTIRELY UPONLEGALLY FLAWED ARGUMENTS THAT HAVE ALREADY BEENCONSIDERED AND REJECTED BY THE COURT, OR ELSESHOULD HAVE BEEN RAISED PREVIOUSLY ............................................................4

B. THE CORPORATION’S REQUEST FOR CERTIFICATION SHOULDBE DENIED.........................................................................................................................6

1. The Memorandum Opinion and Order Do Not Involve aControlling Question of Law, and An Immediate Appeal WouldOnly Delay the Litigation’s Resolution ...................................................................6

2. The Corporation Has Not Shown A Substantial Ground forDisagreement With the Court’s Memorandum Opinion and Order.......................10

a. There Is Not a Substantial Ground for Disagreement as tothe Court’s Holding That the Relief Sought by Plaintiffs inClaim One Is “Appropriate Equitable Relief” Under§ 1303(f).....................................................................................................10

b. There Is Not a Substantial Ground For Disagreement Aboutthe Court’s Holding That Plaintiffs May RecoverIndividually for the Corporation’s Fiduciary BreachesUnder § 1303(f)..........................................................................................13

c. There Is Not a Substantial Ground for Disagreement as tothe Court’s Rejection of the Corporation’s Assertion Thatthe Fiduciary Breach Claim Must Be Dismissed asDuplicative.................................................................................................14

C. NO STAY IS WARRANTED ...........................................................................................15

CONCLUSION..............................................................................................................................17


ii

TABLE OF AUTHORITIESPage(s)

Cases

APCC Servs., Inc. v. ESH AT&T Corp.,297 F. Supp. 2d 101 (D.D.C. 2003) ...........................................................................................9

ASPCA v. Ringling Bros. & Barnum & Bailey Circus,246 F.R.D. 39 (D.D.C. 2007).............................................................................................2, 3, 4

Black v. PBGC,No. 09-13616, 2011 U.S. Dist. LEXIS 113522 (E.D. Mich. Oct. 3, 2011) .........................7, 13

Carr Park, Inc. v. Tasfaye,229 F. 3d 1192 (D.C. Cir. 2000) ..............................................................................................10

*CIGNA Corp. v. Amara,563 U.S. 421 (2011).................................................................................................................12

Clinton v. Jones,520 U.S. 681 (1997).............................................................................................................4, 16

Cuban v. SEC,795 F. Supp. 2d 43 (D.D.C. 2011) .............................................................................................3

First Am. Corp. v. Al-Nahyan,948 F. Supp. 1107 (D.D.C. 1996) ....................................................................................6, 9, 10

Fuller v. SunTrust Banks, Inc.,744 F.3d 685 (11th Cir. 2014) .................................................................................................15

Estate of Gaither ex rel. Gaither v. District of Columbia,771 F. Supp. 2d 5 (D.D.C. 2011) ...............................................................................................3

Graham v. Mukasey,608 F. Supp. 2d 56 (D.D.C. 2009) .......................................................................................4, 15

GTE New Media Servs. Inc. v. Ameritech Corp.,44 F. Supp. 2d 313 (D.D.C. 1999) .............................................................................................9

*Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc.,530 U.S. 238 (2000).................................................................................................................12

Husayn v. Gates,588 F. Supp. 2d 7 (D.D.C. 2008) ...............................................................................................3

*Judicial Watch, Inc. v. Nat’l Energy Policy Dev. Grp.,233 F. Supp. 2d 16 (D.D.C. 2002) ...........................................................................2, 3, 6, 7, 10


iii

Landis v. N. Am. Co.,299 U.S. 248 (1936).............................................................................................................4, 16

Lederman v. United States,539 F. Supp. 2d 1 (D.D.C. 2008) ...............................................................................................2

*Moore v. CapitalCare, Inc.,461 F.3d 1 (D.C. Cir. 2006) .....................................................................................................12

Moyle v. Liberty Mut. Ret. Benefit Plan,823 F.3d 948 (9th Cir. 2016) .....................................................................................................8

N.Y. State Psychiatric Ass’n v. UnitedHealth Grp.,798 F.3d 125 (2d Cir. 2015).......................................................................................................8

Nat’l Trust for Historic Pres. v. Dep’t of State,834 F. Supp. 453 (D.D.C. 1993) ................................................................................................3

Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. de C.V.,79 F. Supp. 3d 60 (D.D.C. 2015) ...........................................................................................1, 3

Paulsen v. CNF Inc.,559 F.3d 1061 (9th Cir. 2009) .................................................................................................14

Pueschel v. Nat’l Air Traffic Controllers’ Ass’n,606 F. Supp. 2d 82 (D.D.C. 2009) .............................................................................................2

*Said v. AMTRAK,No. 15-1289, 2016 U.S. Dist. LEXIS 75168 (D.D.C. June 9, 2016).....................................3, 5

Silva v. Metro. Life Ins. Co.,762 F.3d 711 (8th Cir. 2014) .....................................................................................................8

Singh v. George Wash. Univ.,383 F. Supp. 2d 99 (D.D.C. 2005) .........................................................................................1, 3

Soland v. George Wash. Univ.,916 F. Supp. 2d 33 (D.D.C. 2013) .............................................................................................8

In re Special Proceedings,840 F. Supp. 2d 370 (D.D.C. 2012) .........................................................................................15

Swint v. Chambers Cnty. Comm’n,514 U.S. 35 (1995).....................................................................................................................6

Tolson v. United States,732 F.2d 998 (D.C. Cir. 1984) ...................................................................................................6


iv

U.S. Dep’t of Treasury v. PBGC v. Black,301 F.R.D. 20 (D.D.C. 2014)...................................................................................................13

*United States v. Honeywell Int’l, Inc.,20 F. Supp. 3d 129 (D.D.C. 2013) .................................................................................4, 15, 16

United States v. Philip Morris USA Inc.,No. 99-2496, 2003 U.S. Dist. LEXIS 28004 (D.D.C. Sept. 2, 2003) ........................................8

*Varity Corp. v. Howe,516 U.S. 489 (1996).................................................................................................................14

In re Vitamins Antitrust Litig.,No. 99-197, 2000 U.S. Dist. LEXIS 1052 (D.D.C. Jan. 27, 2000)............................................6

In re Vitamins Antitrust Litigation,No. 99-197, 2000 U.S. Dist. LEXIS 11405 (D.D.C. Jan. 27, 2000)..........................................6

United States ex rel. Westrick v. Second Chance Body Armor, Inc.,893 F. Supp. 2d 258 (D.D.C. 2012) ...........................................................................................3

White v. Fraternal Order of Police,909 F.2d 512 (D.C. Cir. 1990) ...................................................................................................4

Statutes

28 U.S.C. § 1292........................................................................................................1, 2, 3, 6, 7, 10

Employee Retirement Income Security Act,29 U.S.C. § 1104......................................................................................................................1529 U.S.C. § 1132..............................................................................................................7, 8, 1429 U.S.C. § 1303........................................................................................1, 8, 9, 10, 11, 13, 1429 U.S.C. § 1342......................................................................................................................1529 U.S.C. § 1344..................................................................................................................5, 1129 U.S.C. § 1361......................................................................................................................11

Other Authorities

*General Order for Civil Cases Before the Honorable Reggie B. Walton ......................................5

*Authorities upon which we chiefly rely are marked with an asterisk.


INTRODUCTION

Plaintiffs are approximately 1,700 former airline pilots and have sued Defendant Pension

Benefit Guaranty Corporation (“the Corporation”) under 29 U.S.C. § 1303(f) of the Employee

Retirement Income Security Act of 1974 (“ERISA”). The first claim of the amended complaint

alleges that the Corporation has breached its fiduciary obligations to Plaintiffs by failing to

execute its duties as statutory trustee of Plaintiffs’ pension plan with the duty of loyalty required

of an ERISA fiduciary. On December 7, 2015, the Corporation moved to dismiss the fiduciary

breach claim. See DE 46 (the “Motion to Dismiss”). On July 6, 2016, the Court entered a

Memorandum Opinion (DE 53, “Mem. Op.”) and Order (DE 52, “Order”), denying the

Corporation’s Motion to Dismiss. In response, the Corporation has filed a motion seeking

reconsideration, or in the alternative, for certification to file an interlocutory appeal, and for a

stay of the proceedings. DE 54 (the “Current Motion”). The Current Motion is deficient in all

respects and should be denied.

Regarding the request for reconsideration, the Corporation relies on faulty arguments that

the Court has already considered and rejected in denying the Motion to Dismiss. This is plainly

improper. It is well settled that, in the context of reconsideration motions, “‘where litigants have

once battled for the court’s decision, they should neither be required, nor without good reason

permitted, to battle for it again.’” Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo

S.A. de C.V., 79 F. Supp. 3d 60, 66 (D.D.C. 2015) (quoting Singh v. George Wash. Univ., 383 F.

Supp. 2d 99, 101 (D.D.C. 2005)). Indeed, the Court’s own standing order plainly states that

motions based upon such faulty grounds will not be considered.

The Corporation’s request for certification of questions to the Court of Appeals is

similarly flawed. The proponent of a § 1292(b) certification request “‘must meet a high standard


2

to overcome the strong congressional policy against piecemeal reviews, and against obstructing

or impeding an ongoing judicial proceeding by interlocutory appeals.’” ASPCA v. Ringling Bros.

& Barnum & Bailey Circus, 246 F.R.D. 39, 43 (D.D.C. 2007) (quoting Judicial Watch, Inc. v.

Nat’l Energy Policy Dev. Grp., 233 F. Supp. 2d 16, 20 (D.D.C. 2002)). Additionally, a party can

obtain certification for an interlocutory order for immediate appellate review only if it

demonstrates that the order “involves a controlling question of law as to which there is

substantial ground for difference of opinion and that an immediate appeal from the order may

materially advance the ultimate termination of litigation.” 28 U.S.C. § 1292(b). The

Corporation’s request for certification makes none of the requisite showings, as it fails to present

any controlling issues, fails to show that there are any grounds for a difference of opinion

regarding the Memorandum Opinion and Order’s holdings, and fails to show how an appeal

would materially advance the litigation.

Finally, the imposition of a stay here would be particularly unjust, in light of the massive

delays the Corporation has already inflicted upon Plaintiffs, and Plaintiffs’ unique circumstances.

Respectfully, Plaintiffs submit that the Current Motion should be denied.

LEGAL STANDARDS

“[I]n order to promote finality, predictability and economy of judicial resources, ‘as a

rule [a] court should be loathe to [revisit its own prior decisions] in the absence of extraordinary

circumstances such as where the initial decision was clearly erroneous and would work a

manifest injustice.’” Pueschel v. Nat’l Air Traffic Controllers’ Ass’n, 606 F. Supp. 2d 82, 85

(D.D.C. 2009) (quoting Lederman v. United States, 539 F. Supp. 2d 1, 2 (D.D.C. 2008) (citation

omitted)). “[A] motion for reconsideration is discretionary and should not be granted unless the

movant presents either newly discovered evidence or errors of law or fact which need


3

correction.” Cuban v. SEC, 795 F. Supp. 2d 43, 48 (D.D.C. 2011) (Walton, J.) (citing Nat’l

Trust for Historic Pres. v. Dep’t of State, 834 F. Supp. 453, 455 (D.D.C. 1993)). Such discretion

“is ‘limited by the law of the case doctrine and subject to the caveat that where litigants have

once battled for the court’s decision, they should neither be required, nor without good reason

permitted, to battle for it again.’” Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo

S.A. de C.V., 79 F. Supp. 3d 60, 66 (D.D.C. 2015) (quoting Singh v. George Wash. Univ., 383 F.

Supp. 2d 99, 101 (D.D.C. 2005)). Accordingly, “motions for reconsideration are vehicles for

neither reasserting arguments previously raised and rejected by the court nor presenting

arguments that should have been raised previously with the court.” Said v. AMTRAK, No. 15-

1289, 2016 U.S. Dist. LEXIS 75168, at *2 (D.D.C. June 9, 2016) (Walton, J.) (citing Estate of

Gaither ex rel. Gaither v. District of Columbia, 771 F. Supp. 2d 5, 10 & n.4 (D.D.C. 2011)).

“The burden is on the moving party to show that reconsideration is appropriate and that harm or

injustice would result if reconsideration were denied.” United States ex rel. Westrick v. Second

Chance Body Armor, Inc., 893 F. Supp. 2d 258, 268 (D.D.C. 2012) (citing Husayn v. Gates, 588

F. Supp. 2d 7, 10 (D.D.C. 2008)).

A district court should certify an interlocutory order for immediate appellate review only

if it determines that it “involves a controlling question of law as to which there is substantial

ground for difference of opinion and that an immediate appeal from the order may materially

advance the ultimate termination of litigation.” 28 U.S.C. § 1292(b). “‘A party seeking

certification pursuant to § 1292(b) must meet a high standard to overcome the strong

congressional policy against piecemeal reviews, and against obstructing or impeding an ongoing

judicial proceeding by interlocutory appeals.’” ASPCA, 246 F.R.D. at 43 (quoting Judicial

Watch, Inc., 233 F. Supp. 2d at 20). “Interlocutory appeals are infrequently allowed. The


4

movant must show that exceptional circumstances justify a departure from the traditional

structure of litigation where appellate review is postponed until after the entry of final

judgment.” Graham v. Mukasey, 608 F. Supp. 2d 56, 57 (D.D.C. 2009) (citing American Soc'y

for the Prevention of Cruelty to Animals, 246 F.R.D. at 43). “A movant must do more than show

continued disagreement with the trial court’s decision. Even vehement disagreement with a

court’s ruling does not establish the substantial ground for difference of opinion sufficient to

satisfy the statutory requirements for interlocutory appeal. Id. (internal quotations and citations

omitted).

“[T]the decision whether to stay discovery is committed to the sound discretion of the

district court judge.” White v. Fraternal Order of Police, 909 F.2d 512, 517 (D.C. Cir. 1990)

(citations omitted). “In order to prevail in a motion to stay, ‘[t]he proponent of a stay bears the

burden of establishing its need.’” United States v. Honeywell Int’l, Inc., 20 F. Supp. 3d 129, 132

(D.D.C. 2013) (quoting Clinton v. Jones, 520 U.S. 681, 708 (1997)). “The movant ‘must make

out a clear case of hardship or inequity in being required to go forward, if there is even a fair

possibility that the stay for which he prays will work damage to some one [sic] else.’” Id.

(quoting Landis v. N. Am. Co., 299 U.S. 248, 255 (1936)).

ARGUMENT

A. THE CORPORATION’S REQUEST FOR RECONSIDERATION SHOULD BEDENIED BECAUSE IT RELIES ENTIRELY UPON LEGALLY FLAWEDARGUMENTS THAT HAVE ALREADY BEEN CONSIDERED AND REJECTEDBY THE COURT, OR ELSE SHOULD HAVE BEEN RAISED PREVIOUSLY

This Court’s General Order for Civil Cases states motions for reconsideration “are

strongly discouraged” and that “the Court will not entertain: (a) motions that simply reassert

arguments previously raised and rejected by the Court; and (b) arguments that should have been

previously raised, but are being raised for the first time in the motion for reconsideration.” See


5

General Order for Civil Cases Before the Honorable Reggie B. Walton ¶ 13. Nonetheless, the

Corporation solely relies on such improper arguments in seeking reconsideration. Specifically,

in seeking reconsideration, the Current Motion raises four arguments, each of which the

Corporation has previously raised and the Court rejected in the Memorandum Opinion and

Order.

1. The Corporation’s First Argument – that individuals cannot bring fiduciary breach

claims against the Corporation that duplicate their benefit claims – repeats arguments

the Corporation made in its Motion to Dismiss (DE 46) at pages 18-22, in its Reply in

support of its Motion to Dismiss (DE 48, the “Reply”) at pages 9-12, and its it

response to Plaintiffs’ notice of supplemental authority (DE 51).

2. The Corporation’s Second Argument – that participants cannot recover more from

the Corporation than the amount of their Title IV benefits – repeats arguments made

in the Corporation’s Motion to Dismiss (DE 46) at pages 15-17, and the

Corporation’s Reply (DE 48) at pages 8-9.

3. The Corporation’s Third Argument – that Title IV does not allow relief for fiduciary

breach on an individual, rather than plan-wide, basis – repeats arguments made in the

Corporation’s Motion to Dismiss (DE 46) at pages 11-14, and the Corporation’s

Reply (DE 48) at pp 5-7.

4. The Corporation’s Fourth Argument – that 29 U.S.C. § 1344(c) does not apply only

to assets that are determined to “be properly held” – repeats arguments made in the

Corporation’s Motion to Dismiss (DE 46) at pages 14-15, and the Corporation’s

Reply (DE 48) at pages 7-8.

Because “motions for reconsideration are vehicles for neither reasserting arguments

previously raised and rejected by the court nor presenting arguments that should have been raised

previously with the court,” Said v. AMTRAK, 2016 U.S. Dist. LEXIS 75168, at *2, and because

the Corporation’s request for reconsideration consists solely of such arguments, reconsideration

is unwarranted. Additionally, and as discussed below (infra at 10-15), these arguments are

meritless. Accordingly, the request for reconsideration in the Current Motion should be denied.


6

B. THE CORPORATION’S REQUEST FOR CERTIFICATION SHOULD BEDENIED

“[T]he law is clear that certification under § 1292(b) is reserved for truly exceptional

cases.” In re Vitamins Antitrust Litig., No. 99-197, 2000 U.S. Dist. LEXIS 1052, at*5-6 (D.D.C.

Jan. 27, 2000) (citing Tolson v. United States, 732 F.2d 998, 1002 (D.C. Cir. 1984)).

“Accordingly, a party seeking immediate review of an otherwise non-appealable interlocutory

order bears the ‘burden of showing that exceptional circumstances justify a departure from the

basic policy of postponing appellate review until after the entry of a final judgment.’” Id. at *6

(quoting First Am. Corp. v. Al-Nahyan, 948 F. Supp. 1107, 1116 (D.D.C. 1996)). Indeed, a

“District Court may certify an interlocutory order for immediate appeal [only] if it concludes that

it ‘involves a controlling question of law as to which there is substantial ground for difference of

opinion and that an immediate appeal from the order may materially advance the ultimate

termination of litigation.’” Judicial Watch, Inc. v. Nat’l Energy Policy Dev. Grp., 233 F. Supp.

2d 16, 19 (D.D.C. 2002) (quoting 28 U.S.C. § 1292(b)). Here, none of the requisite elements are

satisfied; the Memorandum Opinion and Order present no controlling issues of law, there are no

grounds (substantial or otherwise) for disagreeing with the Court’s Memorandum Opinion and

Order, and an immediate appeal would serve only to slow the litigation’s resolution. Because the

Memorandum Opinion and Order are neither “‘pivotal” nor “‘debatable,’” certification is

inappropriate. Id. (quoting Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 46, 47 (1995)).

1. The Memorandum Opinion and Order Do Not Involve a ControllingQuestion of Law, and An Immediate Appeal Would Only Delay theLitigation’s Resolution

“‘Under section 1292(b), a controlling question of law is one that would require reversal

if decided incorrectly or that could materially affect the course of litigation with resulting savings

of the court's or the parties’ resources.’” Id. at 19 (quoting In re Vitamins Antitrust Litigation,


7

No. 99-197, 2000 U.S. Dist. LEXIS 11405, at *22-23 (D.D.C. Jan. 27, 2000)).

None of the four issues presented by the Corporation qualifies as controlling.

The Corporation’s first purported controlling question is whether individuals can bring

fiduciary breach claims against the Corporation that “duplicate their benefit claims.” Current

Motion at 11. As an initial matter, this is a mischaracterization of the Court’s holding, and thus

it cannot serve as a basis for certification under § 1292(b). The Court never reached the question

posited by the Corporation because the Corporation’s “‘duplicative’ argument relies” entirely on

authority arising out of the civil enforcement realm of 29 U.S.C. § 1132, and plaintiffs “pursue

their entire case – not merely their fiduciary breach claims – outside of the civil enforcement

realm of § 1132.” Mem. Op. at 11. Consequently, “[b]ecause of the textual differences between

§ 1303(f) and § 1132(a),” the Court concluded that “the Corporation’s challenge to the plaintiffs’

fiduciary breach claims as duplicative of their other claims lacks merit.” Id. at 11-12. This is not

the same as holding that participants can bring duplicative benefit claims, and mischaracterizing

the Court’s holding is not a ground for certification. See, e.g., Black v. PBGC, No. 09-13616,

2011 U.S. Dist. LEXIS 113522, at *5 (E.D. Mich. Oct. 3, 2011) (denying the Corporation’s

§ 1292(b) motion in part because it relied upon a “mischaracterization” of the court’s order).

Additionally, the question is not “controlling” because it is not dispositive of Plaintiffs’

fiduciary breach claim, and therefore it would not “materially affect the course of litigation.”

Judicial Watch, Inc., 233 F. Supp. 2d at 19. The Corporation argues that “a successful appeal . . .

on these issues would obviate potentially extensive discovery and fact-finding, followed by

dispositive motions, and possibly a trial.” Current Motion at 12. This is incorrect. Under the

authority relied upon by the Corporation, a fiduciary breach claim under § 1132(a)(3) is only

prohibited if it is duplicative of a benefits claim that could be brought under § 1132(a)(1)(B) of


8

ERISA. Taking the Corporation’s analogy to its logical conclusion, assuming arguendo that the

Corporation could obtain a ruling finding that Plaintiffs have a claim for benefits that would

preclude a duplicative fiduciary breach claim under § 1303(f), the Court would still need to

resolve the question of whether the fiduciary breach claim is actually duplicative. Here,

Plaintiffs have alleged five different forms of fiduciary breach that are each distinct from the so-

called benefit denials. See Mem. Op. at 7-8 (summarizing factual allegations). And even in the

context § 1132(a)(3) fiduciary breach claims, the law is clear that such distinct claims are

mutually cognizable with claims for benefits under § 1132(a)(1)(B). See, e.g., Moyle v. Liberty

Mut. Ret. Benefit Plan, 823 F.3d 948, 960-62 (9th Cir. 2016); Silva v. Metro. Life Ins. Co., 762

F.3d 711, 726 (8th Cir. 2014); Soland v. George Wash. Univ., 916 F. Supp. 2d 33, 39 (D.D.C.

2013); see also N.Y. State Psychiatric Ass’n v. UnitedHealth Grp., 798 F.3d 125, 134 (2d Cir.

2015) (holding that, at the motion-to-dismiss stage, it is inappropriate to dismiss a § 502(a)(3)

claim as duplicative of a § 502(a)(1)(B) benefits claim where a plaintiff “has not yet succeeded

on his § 502(a)(1)(B) claim, and it is not clear at the motion--to-dismiss stage of the litigation

that monetary benefits under § 502(a)(1)(B) alone will provide him a sufficient remedy”).

Because the question put forth by the Corporation is not dispositive, it cannot be controlling.

See, e.g., United States v. Philip Morris USA Inc., No. 99-2496, 2003 U.S. Dist. LEXIS 28004,

at *26 (D.D.C. Sept. 2, 2003) (noting that it is not appropriate to certify a non-dispositive

question).

For the same reason, the remaining questions that the Corporation puts forward are not

“controlling.” Those questions all concern not whether Plaintiffs’ breach of fiduciary duty claim

states a claim upon which relief can be granted, but rather whether disgorgement is one of the

forms of “appropriate equitable relief” available in actions against the Corporation under


9

§ 1303(f). Assuming (for the sake of argument) that the Corporation were able to obtain a

contrary ruling from the Court of Appeals, the breach of fiduciary claim would still go forward,

and the only difference to the litigation would be in the forms of remedy that could be awarded if

the Corporation were adjudged to have breached its fiduciary duty to Plaintiffs. The exact same

fact-finding regarding Plaintiffs’ fiduciary breach allegations would be required. Thus, this

question too is not dispositive and would not affect the course of the litigation.

Similarly, immediate appeal would not “materially affect” the litigation. Because the

Corporation has not presented any issues that could be dispositive of Plaintiffs’ fiduciary breach

claims, even a successful appeal would only serve to delay this Court’s resolution of the claim.

Nor does this case involve the sort of “daunting discovery issues,” as in the cases cited by the

Corporation, where the courts had evidence that truly extraordinary amounts of discovery would

be necessary. Current Motion at 14 (quoting APCC Servs., Inc. v. ESH AT&T Corp., 297 F.

Supp. 2d 101, 109 (D.D.C. 2003)). Here, by contrast, the parties have yet even to discuss the

discovery that would be necessary in the context of the fiduciary breach claim; and, even without

having conducted such a discussion, it is clear that the Corporation’s suggestion that this case

could require “‘months of trial’” is plainly speculative, if not altogether baseless. Id. (quoting

GTE New Media Servs. Inc. v. Ameritech Corp., 44 F. Supp. 2d 313, 316 (D.D.C. 1999).

Because the Corporation has failed to show that the Memorandum Opinion and Order

involve a controlling question, or that an immediate appeal could materially advance the

termination of the litigation, the Motion does not present the “exceptional circumstances [to]

justify a departure from the basic policy of postponing appellate review until after the entry of a

final judgment.” First Am. Corp. v. Al-Nahyan, 948 F. Supp. 1107, 1116 (D.D.C. 1996) (internal

quotation marks and citation omitted).


10

2. The Corporation Has Not Shown a Substantial Ground for DisagreementWith the Court’s Memorandum Opinion and Order

“The threshold for establishing the ‘substantial ground for difference of opinion’ with

respect to a ‘controlling question of law’ required for certification pursuant to § 1292(b) is a high

one.” Judicial Watch, Inc. v. Nat’l Energy Policy Dev. Grp., 233 F. Supp. 2d 16, 19-20 (D.D.C.

2002). In a “traditional” case, where the party seeking certification simply “disagrees with a

court’s order denying a motion to dismiss and granting discovery,” certification under § 1292(b)

is inappropriate. Id. at 20. In these traditional cases, courts in the circuit “unequivocally” hold

that “[m]ere disagreement, even if vehement, with a court’s ruling on a motion to dismiss does

not establish a ‘substantial ground for difference of opinion’ sufficient to satisfy the statutory

requirements for an interlocutory appeal.” Id. (quoting First Am. Corp., 948 F. Supp. at 1116).

The Current Motion fails to demonstrate that there are reasonable, much less substantial, grounds

for disagreeing with the Court’s Memorandum Opinion and Order.

a. There Is Not a Substantial Ground for Disagreement as to the Court’sHolding That the Relief Sought by Plaintiffs in Claim One Is “AppropriateEquitable Relief” Under § 1303(f)

Rehashing arguments made in its Motion to Dismiss and in the part of the Current

Motion requesting reconsideration, the Corporation posits that, by finding that the Corporation

can be subject to the equitable remedy of disgorgement in cases of fiduciary breach, the

Memorandum Opinion and Order “‘could be seen as in tension with the plain wording of

[ERISA]’” in two respects. Current Motion at 12 (quoting Carr Park, Inc. v. Tasfaye, 229 F. 3d

1192, 1193-94 (D.C. Cir. 2000)). This argument is no more compelling here than before, and

certainly does not come close to meeting the “high” threshold required for certification. Judicial

Watch, 233 F. Supp. 2d at 19-20.


11

The Corporation first points to the language of 29 U.S.C. § 1361, which states that “[t]he

corporation shall pay benefits under a single-employer plan terminated under this title subject to

the limitations and requirements of subtitle B of this title.” The Corporation argues that the

Memorandum Opinion and Order are “in tension” with this provision because they potentially

could allow Plaintiffs to “recover more than their Title IV benefits” if the PBGC is found to have

breached its fiduciary duty. Current Motion at 13. This argument is meritless. The limitations

referred to in § 1361 refer only to the Corporation’s liability for “benefits” under subtitle B

(which covers the Corporation’s insurance guaranty benefits under §§ 1321 - 23). Because this

provision does nothing to abridge the scope of appropriate equitable relief (which is not a

“benefit”) available under § 1303(f) (which is in Subtitle A, not B of Title IV) to remedy a

breach of fiduciary duty by a statutory trustee, there is no tension between it and the Court’s

rulings. Indeed, the Corporation concedes that all of the cases it relies upon in its Current

Motion for this proposition involve guaranteed benefits, not the scope of appropriate equitable

relief available in fiduciary breach cases. See id. at 7-9.

Nor is there any merit to the Corporation’s assertion that the Court’s Memorandum

Opinion and Order contradict the language of 29 U.S.C. § 1344(c). Current Motion at 13. As

the Court correctly held, § 1344(c) neither implicitly nor explicitly limits the forms of equitable

relief available in actions against the Corporation. See Mem. Op. at 15. In fact, it is the

Corporation that seeks to rewrite the statute, by tampering with Congress’s carefully reticulated

scheme. This is not allowed, and should not be a basis for certification.

The Corporation next tries to argue that it is somehow in the interests of plan participants

generally to allow the Corporation to keep ill-gotten proceeds in cases where it breaches its

fiduciary duty. It argues that “[p]ayments that exceed the statutory limits – whether based on


12

allegations of fiduciary breach or not – would divert insurance funds from participants in other

plans, or plan assets available for other participants in the same plan.” Current Motion at 8. This

is patently false. Because the Corporation’s insurance funds and trust funds are kept in separate

accounts, and disgorgement, by definition, only seeks to recover investment proceeds from funds

improperly placed in the trust account, the Corporation’s insurance funds will not be affected by

the imposition of a disgorgement remedy. Next, the assertion that “plan assets available for

other participants in the same plan” might be “divert[ed]” is similarly false. Id. Disgorgement

does not seek to take assets properly allocated to some other party; rather it seeks to take any

investment proceeds that the Corporation has earned as a result of its alleged fiduciary breaches.

Those investment proceeds go to fund the Corporation’s operational expenses – and thus it is the

Corporation, and not plan participants, that are affected by disgorgement.

The Current Motion also fails to grapple with the controlling authorities cited by the

Court in its Memorandum Opinion. For example, there is no discussion in the Current Motion of

the fact that the DC Circuit has held that appropriate equitable relief includes “restitutionary”

remedies whose “‘purpose is to disgorge gains received from improper use of the plaintiff’s

property or entitlements.’” Mem. Op. at 14 (quoting Moore v. CapitalCare, Inc., 461 F.3d 1, 13

(D.C. Cir. 2006)); see also id. at 13 (noting the Supreme Court’s holdings in CIGNA Corp. v.

Amara, 563 U.S. 421 (2011) and Harris Tr. & Sav. Bank v. Salomon Smith Barney, Inc., 530

U.S. 238 (2000), support the conclusion that “both restitution and disgorgement” constitute

“appropriate equitable relief” under ERISA). While the Corporation makes the conclusory

assertion that the Court’s holding amounts to a “dramatic reversal of established legal principles

that would disrupt the administration of its insurance program,” it is telling that it cannot point to


13

a single case, from any court, anywhere, that stands for this proposition, and that it ignores

contrary controlling precedent. Id. at 9.

Finally, at least two other district courts have rejected the crabbed notion of appropriate

equitable relief under § 1303(f) that the Corporation tries to advance here. In the first of these,

U.S. Dep’t of Treasury v. PBGC v. Black, 301 F.R.D. 20, 27 (D.D.C. 2014), Judge Sullivan

considered a standing challenge by the U.S. Treasury to the enforcement of a Rule 45 subpoena

served in connection with a different case, pending before the Eastern District of Michigan, in

which the Corporation was the underlying defendant. The basis of the Treasury’s standing

challenge was the argument presented here by the Corporation – i.e., that plaintiffs in a § 1303(f)

action against the Corporation could obtain no more than their statutory benefits as equitable

relief. Judge Sullivan, noting that the court overseeing the underlying litigation (i.e, the

“Michigan Court”) had already considered and rejected an assertion by the Corporation that the

forms of equitable relief available against the Corporation were limited in that way, rejected the

Treasury’s argument, holding that “at the pleading stage of the litigation, this Court agrees with

[the Michigan Court] , who ‘declin[ed] to accept [the Corporation’s] position that Plaintiffs

cannot obtain any relief in this lawsuit if the [Michigan Court] concludes that the PBGC acted

improperly.’” Id. (quoting Black v. PBGC, No. 09-13616, Order at 3 (E.D. Mich. Feb. 17, 2010,

ECF #122)).

b. There Is Not a Substantial Ground For Disagreement About the Court’sHolding That Plaintiffs May Recover Individually for the Corporation’sFiduciary Breaches Under § 1303(f)

The Corporation has not cited a single case where a court has held that a claim for a

breach of fiduciary duty against the PBGC must be brought on behalf of an entire plan rather

than individually. As the Court noted in its Memorandum Opinion, “nothing in § 1303(f)

suggests that the appropriate equitable relief allowed by that provision must inure only to the


14

plan as a whole,” and “the cases upon which the Corporation relies [which all involve cases

proceeding under §§ 1109 and 1132(a)(2)], . . . do little to support its positon, because none of

them address the equitable remedies available under § 1303(f).” Mem. Op. at 16-17.

Entirely ignoring the Court’s analysis of the textual differences between these two

provisions (and the Supreme Court’s holding in Varity Corp. v. Howe, 516 U.S. 489, 515 (1996),

which expressly held that participants may obtain individualized relief under § 1132(a)(3) for a

breach of fiduciary duty), the Corporation suggests that the question is debatable. But the

Corporation continues to rely on the same discredited arguments, erroneously asserting that cases

like the Ninth Circuit’s decision in Paulsen v. CNF Inc. support its position. See Curent Motion

at 9, 13 (citing Paulsen v. CNF Inc., 559 F.3d 1061, 1073 (9th Cir. 2009). However, Paulsen

says nothing of the sort. Just as with all the other cases cited by the Corporation, the Paulsen

passage quoted in the Motion does not refer to a § 1303(f) fiduciary breach claim against the

Corporation, but rather involves claims against other defendants under §§ 1109 and 1132(a)(2)

(which again, cannot be brought against the Corporation). While it is true that Paulsen also

involved a fiduciary breach claim against the PBGC, the portion of the opinion cited by the

Corporation concerned a fiduciary breach claim against other defendants, and was irrelevant to

that court’s analysis of the fiduciary breach claim against the Corporation (which was denied on

other grounds). In short, the Current Motion does not present a reasonable basis to question the

Court’s holding, but instead seeks to rewrite the remedial provisions of § 1303(f) so as to

immunize the Corporation from Congressionally-approved remedies.

c. There Is Not a Substantial Ground for Disagreement as to the Court’sRejection of the Corporation’s Assertion That the Fiduciary Breach ClaimMust Be Dismissed as Duplicative

In the Memorandum Opinion, the Court went through an exhaustive analysis of the

Corporation’s “duplicative” argument. See Mem. Op. at 7-12. Relying on the same authorities


15

as before, and ignoring the Court’s analysis, the Corporation argues for the extraordinary relief

of interlocutory appeal. Current Motion at 14. Again, “[e]ven ‘vehement’ disagreement with a

court’s ruling does not establish the substantial ground for difference of opinion sufficient to

satisfy the statutory requirements for interlocutory appeal.” Graham v. Mukasey, 608 F. Supp.

2d 56, 57 (D.D.C. 2009). Nor is there any merit to the Corporation’s bizarre assertion that the

Court erred by supposedly failing to identify an alleged substantive violation under 29 U.S.C.

§ 1104(a). See Current Motion at 6. There is no dispute that the Corporation is a fiduciary when

serving as the Plan’s trustee, subject to ERISA’s duties of loyalty and prudence, 29 U.S.C.

§ 1342(d)(3), which duties courts have described as the “highest known to law.” Fuller v.

SunTrust Banks, Inc., 744 F.3d 685, 695 (11th Cir. 2014) (internal quotation marks and citation

omitted). In the Court’s Memorandum Opinion, the Court specifically identified the

Corporation’s violations of its fiduciary duties, as alleged by Plaintiffs:

Claim One of the Amended Complaint alleges that the Corporation breached itsfiduciary obligations under the ERISA by: (1) seeking to withhold or delay theproduction of information critical to the understanding of the [Corporation’s]benefit determination and asset allocation choices,” Am. Compl ¶ 66; (2) denyingthe plaintiffs an opportunity to lodge an informed appeal of the Corporation’sfinal determination, id. ¶ 67; (3) “allowing its agency litigation counsel advise its[A]ppeals [B]oard, and refusing to disclose the contacts between the two groups,”id. ¶ 68; (4) outsourcing “many of its trustee responsibilities to independentcontractors who lack[ed] the requisite competence or experience” to performthose duties adequately, then failing to monitor and remedy their inadequateperformance, see id. ¶¶ 69-70; and (5) “manipulat[ing] the asset allocation processin such a manner as to create hundreds of million of dollars of investment returnsto itself, at [the plaintiffs’] expense,” id. ¶ 71.

Mem. Op. at 7-8.

C. NO STAY IS WARRANTED

As an initial matter, a stay here is not warranted because the Corporation has not

demonstrated a likelihood of success. In re Special Proceedings, 840 F. Supp. 2d 370, 372

(D.D.C. 2012). Additionally, in order to prevail in a motion to stay, ‘[t]he proponent of a stay


16

bears the burden of establishing its need.’” United States v. Honeywell Int’l, Inc., 20 F. Supp. 3d

129, 132 (D.D.C. 2013) (quoting Clinton v. Jones, 520 U.S. 681, 708 (1997). “The movant

‘must make out a clear case of hardship or inequity in being required to go forward, if there is

even a fair possibility that the stay for which he prays will work damage to some one [sic] else.’”

Id. (quoting Landis v. N. Am. Co., 299 U.S. 248, 255 (1936)).

The imposition of a stay here would result in serious hardship upon Plaintiffs. They were

forced to wait approximately six years for the Corporation to complete its allocation decisions,

and then another two years for the Corporation to resolve their administrative appeal of those

decisions. As Plaintiffs have previously noted, the average Plaintiff is 70 years old, with the

youngest now aged 62, and the oldest being 95. According to the CDC, the average life

expectancy in this country is 78.8 years. Since the consolidated administrative appeal was filed

before the Corporation’s Appeals Board in 2011, more than 60 of those administrative appellants

have passed away. For this population, the danger of piecemeal litigation is particularly acute.

Moreover, and as discussed above (supra at 7-9), because the Corporation does not seek to

appeal any dispositive issues, there is no value to be had from a stay. Given these circumstances,

no stay is warranted.


17

CONCLUSION

For the foregoing reasons, the Court should deny the Corporation’s Current Motion in its

entirety, and issue an Order for Initial Scheduling Conference, setting a scheduling conference.

August 5, 2016 Respectfully submitted,

/s/ Anthony F. ShelleyAnthony F. Shelley (D.C. Bar No. 420043)Timothy P. O’Toole (D.C. Bar No. 469800)Michael N. Khalil (D.C. Bar No. 497566)Miller & Chevalier Chartered900 16th St. NWWashington, DC 20005Telephone: 202-626-5800E-mail: [email protected]

[email protected]@milchev.com

Attorneys for Plaintiffs


IN THE UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

)K. Wendell Lewis, et al., )

)Plaintiffs, )

v. ) Civil Action No. 1:15-cv-01328-RBW)

Pension Benefit Guaranty Corporation, ))

Defendant. ))

[PROPOSED] ORDER

UPON CONSIDERATION of the Defendant’s Motion for Reconsideration, or in the

Alternative, for Certification to File Interlocutory Appeal, and For a Stay of Proceedings;

Plaintiffs’ Opposition thereto; any reply; and the entire record herein, it is ORDERED that the

Motion is DENIED.

SO ORDERED this _____ of ________, 2016.

______________________________________Reggie B. WaltonUNITED STATES DISTRICT JUDGE

Case 1:15-cv-01328-RBW Document 56-1 Filed 08/05/16 Page 1 of 1

in the united states district court for the district … docket 56...aug 05, 2016 · v. ) civil...

Documents