Carr v. Int'l Game Tech.

• Decision Date: 16 March 2011
• Docket Number: Nos. 3:09–CV–0584–ECR–RAM,3:09–CV–0585–ECR–RAM.,s. 3:09–CV–0584–ECR–RAM
• Citation: 79 Fed.R.Serv.3d 236,770 F.Supp.2d 1080,51 Employee Benefits Cas. 1140
• Parties: Christopher CARR, Roxanne Clayton, and Brian Bennett, Plaintiffs,v.INTERNATIONAL GAME TECHNOLOGY et al., Defendants.Randolph K. Jordan and Kimberly J. Jordan, Plaintiffs,v.International Game Technology, et al., Defendants.
• Court: U.S. District Court — District of Nevada

770 F.Supp.2d 1080

79 Fed.R.Serv.3d 236

51 Employee Benefits Cas. 1140

Christopher CARR, Roxanne Clayton, and Brian Bennett, Plaintiffs,

v.INTERNATIONAL GAME TECHNOLOGY et al., Defendants.Randolph K. Jordan and Kimberly J. Jordan, Plaintiffs,

v.International Game Technology, et al., Defendants.

Nos. 3:09–CV–0584–ECR–RAM

3:09–CV–0585–ECR–RAM.

United States District Court, D. Nevada.

March 16, 2011.

J. Stewart White, Geoffrey White, White Meany & Wetherall, LLP, Matthew L. Sharp, Matthew L. Sharp, Ltd., Reno, NV, Michael J. Klein, Stull, Stull & Brody, Thomas J. McKenna, Gainey & McKenna, New York, NY, Patrice L. Bishop, Stull, Stull & Brody, Los Angeles, CA, for Randolph K. Jordan and Kimberly J. Jordan.Boris Feldman, Bret F. Meich, Lance P. Maiss, Richard G. Campbell, Jr., Armstrong Teasdale, LLP, Reno, NV, David S. Steuer, Jacob Thayer Veltman, Nikki Stitt Sokol, Wilson Sonsini Goodrich Rosati, Palo Alto, CA, for Defendants.

Order

EDWARD C. REED, District Judge.

Plaintiffs are former employee participants in International Game Technology's (“IGT”) profit sharing plan (“Plan”) who have brought a class action suit under Federal Rule of Civil Procedure 23 to allege breach of fiduciary duty claims under Section 502(a) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132(a)(2). The parties have argued the merits of the motions to be considered by the Court at the hearing on March 10, 2011. The Court has read and considered the moving, opposition and reply documents, along with the parties' supplemental briefs. Now pending are a motion to dismiss (# 40) filed by Defendants IGT, Siciliano and the members of IGT's Board of Directors (the “Director Defendants”); a motion for summary judgment (# 44) filed by Defendants IGT, Siciliano and the Director Defendants; and an alternative motion to dismiss (# 46) filed by Defendant IGT Profit Sharing Committee. The motions are ripe, and we now rule on them.

I. Factual Background

A. The Plan

The Plan is a voluntary defined contribution plan whereby participants make contributions to the Plan and direct the Plan to purchase investments with those contributions from options pre-selected by Defendants, which are then allocated to participants' individual accounts. (Am. Compl. ¶¶ 57–58 (# 36).) As of June 26, 2008, Plan participants could direct their accounts to be invested in one or more of IGT Stock and twenty-six (26) mutual funds offered by the Plan as investment options. ( Id. ¶ 59.) Contributions are held by a Trustee and placed in the Plan's Trust Fund. (D's Memo. at 9 (# 41).) Fidelity Management Trust Company serves as the Trustee of the Plan. (Am. Compl. ¶ 62. (# 36).) IGT delegated responsibility for administration of the Plan to a committee (the “Committee”), whose members are subject to appointment or approval by IGT's Board of Directors (the “Board”). ( Id. ¶ 2.) The Committee is the named fiduciary for the Plan. ( Id. ¶ 38.)

The parties disagree as to whether the terms of the Plan mandate that IGT stock be offered as an investment option. ( Id. ¶ 64; D's Memo. at 10 (# 41).) Section 3.8(a) of the Plan provides that the “Committee may, in its discretion, terminate any Investment Fund,” while Section 3.8(b) of the Plan states that “[o]ne of the Investment Funds available shall be the IGT Stock Fund ....” (# 36–2 at 43–44.)

B. IGT Stock Price Decreases

As of the end of Plan year 2007, Plaintiffs assert that the Plan held approximately 2,370,954 shares of IGT stock, valued at a market price of over $104,156,009. (Am. Compl. ¶ 67.) By the end of Plan year 2008, the amount of shares of IGT stock held by the Plan increased to 2,878,778, while the market value of such shares decreased to $34,228,670, representing a decrease of 67%. ( Id.)

Plaintiffs define the “Class Period” as November 1, 2007—April 23, 2009. ( Id. ¶ 3.) Plaintiffs allege that during the Class Period, Defendants either were or should have been aware that IGT's stock was artificially inflated as a result of inaccurate public statements by IGT.

II. Procedural Background

On October 2, 2009, individual Plaintiffs Roxanne Clayton, Brian Bennett and Christopher Carr filed a “Class Action Complaint for Violations of the Employee Retirement Income Security Act” (# 1) against Defendants. Summons was issued as to Defendants on October 5, 2009 (# 3), and a Waiver of Service by each Defendant was filed on November 20, 2009 ( 10–20). On February 8, 2010, the Court issued an order (# 33) consolidating all related actions and appointing Plaintiffs Randolph K. Jordan, Kimberly J. Jordan, Christopher Carr, Roxanne Clayton and Brian Bennett as interim lead Plaintiffs. On March 10, 2010, Plaintiffs filed an amended complaint “Consolidated Class Action Complaint for Violations of the Employee Retirement Income Security Act” (# 36).

On April 9, 2010, individual Defendants and Defendant IGT filed a “Motion to Dismiss Consolidated Class Action Complaint and Request for Hearing” (# 40) (the “First MTD”) and accompanying memorandum (# 41), and on May 10, 2010, Plaintiffs filed their response (# 54) to such motion. Defendants filed their reply (# 65) on June 8, 2010.

Also on April 9, 2010, individual Defendants and Defendant IGT filed an “Alternative Motion by Defendants for Summary Judgment on Claims of Named Plaintiffs” (# 44) (the “MSJ”), and on April 30, 2010, Plaintiffs filed their response (# 49) to such motion. Defendants filed their reply (# 64) on May 14, 2010.

In addition, on April 9, 2010, Defendant IGT Profit Sharing Committee filed “Defendant IGT Profit Sharing Plan Committee's Alternative Motion to Dismiss” (# 46) (the “Alternative MTD”), and on May 10, 2010, Plaintiffs filed their response (# 55) to such motion.

III. Motion to Dismiss Standard

Courts engage in a two-step analysis in ruling on a motion to dismiss. Ashcroft v. Iqbal, ––– U.S. ––––, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). First, courts accept only non-conclusory allegations as true. Iqbal, 129 S.Ct. at 1949. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955). Federal Rule of Civil Procedure 8 “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. Federal Rule of Civil Procedure 8 “does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Id. at 1950. The Court must draw all reasonable inferences in favor of the plaintiff. See Mohamed v. Jeppesen Dataplan, Inc., 579 F.3d 943, 949 (9th Cir.2009).

After accepting as true all non-conclusory allegations and drawing all reasonable inferences in favor of the plaintiff, the Court must then determine whether the complaint “states a plausible claim for relief.” Iqbal, 129 S.Ct. at 1949. (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 1949 (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). This plausibility standard “is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. A complaint that “pleads facts that are ‘merely consistent with’ a defendant's liability ... ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’ ' ” Id. (citing Twombly, 550 U.S. at 557, 127 S.Ct. 1955).

IV. Summary Judgment Standard

Summary judgment allows courts to avoid unnecessary trials where no material factual dispute exists. N.W. Motorcycle Ass'n v. U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir.1994). The court must view the evidence and the inferences arising therefrom in the light most favorable to the nonmoving party, Bagdadi v. Nazar, 84 F.3d 1194, 1197 (9th Cir.1996), and should award summary judgment where no genuine issues of material fact remain in dispute and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). Judgment as a matter of law is appropriate where there is no legally sufficient evidentiary basis for a reasonable jury to find for the nonmoving party. Fed.R.Civ.P. 50(a). Where reasonable minds could differ on the material facts at issue, however, summary judgment should not be granted. See Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir.1995), cert. denied, 516 U.S. 1171, 116 S.Ct. 1261, 134 L.Ed.2d 209 (1996).

The moving party bears the burden of informing the court of the basis for its motion, together with evidence demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the party opposing the motion may not rest upon mere allegations or denials in the pleadings, but must set forth specific facts showing that there exists a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Although the parties may submit evidence in an inadmissible form—namely, depositions, admissions, interrogatory answers, and affidavits—only evidence which might be admissible at trial may be considered by a trial court in ruling on a motion for summary judgment. Fed.R.Civ.P. 56(c); Beyene v. Coleman Sec. Servs., Inc., 854 F.2d 1179, 1181 (9th Cir.1988).

In deciding whether to grant summary judgment, a court must take three necessary steps: (1) it must determine whether a fact is material; (2) it must determine whether there exists a genuine issue for the trier of fact, as determined by the documents submitted to the court; and (3) it must consider that evidence in light of the appropriate standard of proof. Celotex, 477 U.S. at 317, 106 S.Ct. 2548. Summary judgment is not proper if...