David v. Alphin, 3:07cv11.
| Decision Date | 22 September 2011 |
| Docket Number | No. 3:07cv11.,3:07cv11. |
| Court | U.S. District Court — Western District of North Carolina |
| Parties | Elena M. DAVID; Arleen J. Stach; and Victor M. Hernandez, Plaintiffs v. J. Steele ALPHIN; Amy Woods Brinkley; Edward J. Brown, III; Charles J. Cooley; Richard M. Demartini; Barbara J. Desoer; James H. Hance; Liam E. McGee; Eugene M. McQuade; Alvaro G. De Molina; Michael E. O'Neill; Owen G. Shell, Jr.; R. Eugene Taylor; F. William Vandiver, Jr.; Bradford H. Warner; Charles W. Coker; Steven Jones; Kenneth D. Lewis; Bank of America Corporation; Bank of America Corporation Corporate Benefits Committee, Defendants. |
OPINION TEXT STARTS HERE
Bryan T. Veis, J. Brian McTigue, James Arthur Moore, McTigue & Veis LLP, Washington, DC, Gregory Y. Porter, Bailey & Glasser LLP, Washington, DC, Robert M. Elliot, Elliot Pishko Morgan, P.A., Winston–Salem, NC, William G. Bertain, Law Office of William G. Bertain, Eureka, CA, for Plaintiffs.
Arthur W.S. Duff, Edith Carmen Ramirez, Gary S. Tell, Robert N. Eccles, Shannon Michael Barrett, Christopher Dylan Catalano, O Melveny & Myers LLP, Washington, DC, Irving M. Brenner, McGuirewoods LLP, Charlotte, NC, for Defendants.
THIS MATTER is before the court on defendants' Motion for Summary Judgment on Statute of Limitations Grounds (# 222), which has been fully briefed. A non-evidentiary hearing was conducted on July 20, 2011, at which counsel for all parties appeared and presented oral arguments. Having carefully considered the defendants' motion, considered the briefs of respective counsel, and heard arguments, the court enters the following findings, conclusions, and Order granting summary judgment and dismissing this action.
I. Procedural History
In the four years this action has been pending, the court has allowed plaintiffs three opportunities to amend their Complaint to address issues raised by defendants. Presently before the court is plaintiffs' Third Amended Complaint (# 219).
While the court will not recite the entire procedural history of the case, the court will highlight the history relating to the present Motion for Summary Judgment. After plaintiffs filed their Second Amended Complaint (# 83), defendants filed their first Motion for Summary Judgment on Statute of Limitations Grounds (# 166). Soon after briefing of such issue was complete, plaintiffs moved under Rule 15, Federal Rules of Civil Procedure, for leave to file their Third Amended Complaint (# 207), arguing that such amendment would allege “facts and legal theories sufficient to overcome Defendants' statute of limitation argument.” Brief in Support of Plaintiffs' Motion for Leave to Amend Complaint (# 208), at p. 11. The court allowed the motion to file the Third Amended Complaint and denied the first Motion for Summary Judgment on Statute of Limitations Grounds as moot. See Order (# 218) (Conrad, C.J.)
After the Third Amended Complaint was filed, defendants answered ( see Answer # 221 & Answer # 248) and filed their second Motion for Summary Judgment on Statute of Limitations Grounds (# 222) on December 29, 2010. In response to this motion, plaintiffs filed their “Motion for Relief Under Fed.R.Civ.P. 56(f)” (# 241) on January 18, 2011,1 arguing therein that responsive facts were not then available to plaintiffs and that discovery was necessary on the statute of limitations issue. Over an objection from defendants which highlighted plaintiffs' earlier discovery opportunities, on March 8, 2011, this court reopened and allowed plaintiffs an opportunity to take depositions and conduct other discovery to justify their opposition to the second Motion for Summary Judgment. See Order (# 249) (Howell, J.). In accordance with the schedule set forth by the court, the parties completed the additional discovery and fully briefed the issues now pending before the court.
II. Factual BackgroundA. Introduction
Plaintiffs are participants in the Bank of America 401(k) Plan (the “401(k) Plan”). While they have sued in their individual and representative capacities on behalf of plan participants, no motion to certify a class has been filed.2 The defendants are Bank of America Corporation, a bank holding company (the “Bank”), the Bank of America Corporation Corporate Benefits Committee (“CBC”), and the individual members of the CBC (“Individual Defendants”).
B. Nature and Composition of the 401(k) Plan
For the limited purposes of the pending motion, it appears undisputed that the 401(k) Plan provides plan participants the option to invest in both bank-affiliated and non-affiliated mutual funds. Plaintiffs claim that the defendants breached their fiduciary duties to the 401(k) Plan under ERISA by selecting bank-affiliated mutual funds as investment options. As made clear by plaintiffs in seeking leave to file their Third Amended Complaint (hereinafter “TAC”):
Plaintiffs' claims are not based upon the properties of specific funds. Instead, Plaintiffs are making a general claim that BofA breached its fiduciary duties by improperly favoring its own proprietary funds for the Plan.
Brief in Support of Plaintiffs' Motion for Leave to Amend Complaint (# 208), at p. 12.
It appears undisputed that the 401(k) Plan is a “defined contribution plan” within the meaning of ERISA, TAC., at ¶ 22, that the CBC is plan administrator of the 401(k) Plan, id., at ¶ 25, and that the 401(k) Plan was created effective July 1, 2000, through the merger of the BankAmerica 401(k) Plan and the NationsBank 401(k) Plan. Id., at ¶ 23. The 401Plan is a profit-sharing savings plan under which participating bank employees contribute a portion of their pre-tax earnings to the Plan. Those employee contributions are then matched in part by the bank or its affiliates. “The Bank of America 401(k) Plan, as amended effective July 1, 2000,” Exhibit 1 to the Declaration of Stephen D. Terry (hereinafter “Terry Decl.”) Plan participants, such as plaintiffs, direct the investment of their respective accounts among a menu of investment options identified in the formal Plan document. Terry Decl., Ex. 4, 2006 Plan Document at BOA–DAVID 00070–71. The CBC has authority to alter the number of investments options and to add or terminate specific funds in the 401(k) Plan. Terry Decl., Ex. 4, 2006 Plan Document at BOA–DAVID 00059.
In the late 1990s, the 401(k) Plan's investment lineup was modified to add several “Nations Funds,” which were funds managed by NationsBank Corporation, which was Bank of America's predecessor and Plan sponsor prior to their merger. Declaration of David Andreasen (hereinafter “Andreasen Decl.”), Ex. 1.
In 1999, a project team was formed by the CBC to evaluate various issues relating to the 401(k) Plan, including the Plan's selection and use of proprietary investment options, processes for paying Plan expenses, and Plan investment performance and fees. Terry Decl., Ex. 10–11. Findings were presented to the CBC at its December 6, 1999 meeting, including findings that the Plan's procedures for selecting and monitoring investment options complied with fiduciary standards, that the performance and expenses of the mutual funds in the 401(k) Plan's lineup were reasonable, and that the administrative expenses paid by the Plan complied with all regulatory requirements. Id., Ex. 11. After considering the project team's report, the CBC agreed that the investment management and performance results of the Plan mutual funds were competitive. Id., Ex. 10.3
It is equally undisputed that as of July 1, 2000,4 the Plan's investment lineup consisted of the Bank of America Company Stock Fund, the Stable Capital Fund, and ten (10) Nations Funds.5 Since 2000, the 401(k) Plan has added only one bank-affiliated mutual fund, the Columbia Quality Plus Bond Fund, Andreasen Decl., Ex. 1 (), which was added in December 2004 as a replacement for the Nations Bond Fund. Id. As of December 31, 2009, 19 of the 26 funds in the 401(k) Plan were non-bank-affiliated funds. Id.
C. Participation in the Plan By Plaintiffs
Plaintiff Elena M. David participated in the Plan since at least the mid–1990s. Barrett Decl., Ex. 10, Deposition of Elena M. David (hereinafter “David Dep.”) at 34. Her quarterly account statements show that, as of December 31, 2000, her Plan account was allocated among the Nations Large Cap Stock Index Fund, the Stable Capital Fund, and Bank of America Common Stock. Barrett Decl., Ex. 4 at DAVID–00383. David invested solely in those three options until taking a distribution of her account in 2005. Barrett Decl., Ex. 3 quarterly Plan account statements; Ex. 10, David Dep. at pp. 24, 43–44. She testified that she recalled that the fees associated with the mutual funds in the Plan had increased following the Bank of America merger with Nations Bank in 2000, and that her decision to file this lawsuit related to those fees. Barrett Decl., Ex. 10 at pp. 31, 62–63.
Plaintiff Arleen Stach became a Plan participant after her previous employer merged into Bank of America and her former employer's plan was merged into the Plan. Barrett Decl., Ex. 11, Deposition of Arleen J. Stach (hereinafter “Stach Dep.”) at pp. 26, 33, 58, & 59. Her quarterly Plan account statements show that, as of December 31, 2000, her Plan account was allocated among the Nations Large Cap Stock Index Fund, the Stable Capital Fund, and Bank of America stock. Barrett Decl., Ex. 6 at STACH00292. According to subsequent account statements, Stach kept her account in these same investment options through at least September, 2009. Barrett Decl., Ex. 7, quarterly Plan account statements.
Plaintiff Victor Hernandez enrolled in the Plan in 2000. Barrett Decl. Ex. 12, Deposition of Victor Hernandez (hereinafter “Hernandez Dep.”), at p. 58. As of March 31, 2003, Hernandez had his Plan account invested solely in Bank of America stock. Declaration of Susan Kelly (hereina...
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