Disberry v. Emp. Relations Comm. of the Colgate-Palmolive Co.

• Decision Date: 19 December 2022
• Docket Number: 22 Civ. 5778 (CM)
• Parties: PAULA DISBERRY, Plaintiff, v. EMPLOYEE RELATIONS COMMITTEE OF THE COLGATE-PALMOLIVE COMPANY, ALIGHT SOLUTIONS LLC, AND BANK OF NEW YORK MELLON CORPORATION, Defendants.
• Court: U.S. District Court — Southern District of New York

PAULA DISBERRY, Plaintiff,
v.
EMPLOYEE RELATIONS COMMITTEE OF THE COLGATE-PALMOLIVE COMPANY, ALIGHT SOLUTIONS LLC, AND BANK OF NEW YORK MELLON CORPORATION, Defendants.

No. 22 Civ. 5778 (CM)

United States District Court, S.D. New York

December 19, 2022

DECISION AND ORDER DENYING THE MOTION TO DISMISS OF DEFENDANT ALIGHT SOLUTIONS LLC, AND GRANTING THE MOTION TO DISMISS BY DEFENDANT BNY MELLON AND DENYING THE MOTION TO DISMISS BY THE EMPLOYEE RELATIONS COMMITTEE OF THE COLGATE-PALMOLIVE COMPANY

McMahon, J.

Plaintiff Paula Disberry (“Plaintiff') was the victim of the heinous crime of identity theft. A “fraudster,” as the complaint identifies the malefactor, was able to convince the third-party service provider for Colgate-Palmolive's savings and investment plan, first to change her PIN, then to change her address and other identifying information, and finally to direct Bank of New York Mellon to empty her company-sponsored savings and investment account, sending the proceeds to the still-unknown thief. Despite filing criminal complaints in. the United States and South Africa, as well as complaining to the various defendants in this lawsuit, Ms. Disberry has been unable to get her hard-earned money back.

So Plaintiff brings this action against Employee Relations Committee of the Colgate-Palmolive Company, Alight Solutions, LLC, and Bank of New York Mellon (collectively, the

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“Defendants”) alleging that Defendants breached their fiduciary duties under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C, § 1001 et seq.

The three Defendants have moved separately for dismissal of Plaintiff s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The motions made by Defendants Alight and the Committee are denied; BNY Mellon's motion is granted.

BACKGROUND

I. The Parties

Plaintiff Paula Disberry worked for Colgate-Palmolive from December 1993 to March 2004 in England, Mexico, and the United States. (Dkt. No. 1 ¶ 8 (“Compl.”)). In 1998, Plaintiff became eligible to participate in the Colgate-Palmolive Company Employees Savings and Investment Plan (the “Plan”). (Id. ¶ 9). Plaintiff left Colgate-Palmolive in March 2004. (Id.) She has lived in South Africa since 2008. (Id. ¶ 10).

Defendant Employee Relations Committee of the Colgate-Palmolive Company (the “Committee) is the Plan Administrator of the Plan within the meaning of ERISA. (Id. ¶ 4). At all relevant times, the Committee was the named fiduciary of the Plan by reason of being the Plan Administrator. (Id.)

Defendant Alight Solutions, LLC (“Alight”) provided contract administration, record-keeping, and information management services to the Plan, for which it was compensated for its services by direct payment from the Plan. (Id. ¶ 5). Plaintiff alleges that Alight operated a telephone customer service center, referred to as the “Benefits Information Center” or the “Customer Care Center,” and a website at www.colgatebenefits.com, both of which provide Plan participants with the ability to manage their Plan accounts, including requesting distributions of benefits. (Id.) Plaintiff alleges that Alight exercised control over Plan assets by facilitating,

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directing and processing distributions from participants' accounts, including the unauthorized distributions in this case. (Id.)

Defendant Bank of New York Mellon (“BNY Mellon”) served as a Plan Trustee, provided investment management services to the Plan, served as custodian of Plan's assets, and made Plan payments from the Plan's trust fund, for which it was compensated for its services by investment management fees paid directly from the Plan. (Id. ¶ 6). Plaintiff alleges that, per the Master Trust Agreement, BNY Mellon agreed to implement and maintain a comprehensive information security program designed to protect the Plan's sensitive information, as well as to protect against threats or hazards and unauthorized access to or use of such information that could result in harm to Plan participants and that it agreed to discharge its duties with the care and skill required under ERISA and to otherwise exercise the standard of care of a professional custodian. (Id.)

II. Factual Background

Throughout her time at Colgate-Palmolive, Plaintiff made regular contributions to the Plan. As of March 17, 2020, her account balance under the Plan was just over $750,000. (Compl. ¶ 9) This sum represented a significant portion of Plaintiff s retirement savings. (Id. ¶¶ 9,11).

At that time, Plaintiff was 52 years of age. (Id. ¶ 11). Plaintiff alleges that it is, and always has been, her intention to leave her Plan account alone until she was ready to retire at approximately age 65. (Id.)

When Plaintiff moved to South Africa in 2008, she updated her contact information with the Plan - which consists of (1) a physical mailing address, (2) an email address, and (3) a cell phone number. She updated her contact information again in 2016. (Id. ¶ 10). Plaintiff s actual contact information has not changed since that 2016 update. (Id.)

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A. The Fraud

On January 29, 2020, an unknown individual (the “fraudster”) contacted the Plan's Benefits Information Center - the telephone customer service center operated by Alight ■ pretending to be Plaintiff. (Compl. ¶¶ 5,14). She asked Alight to update her Plan contact information. (Id. ¶ 14). Alight sent a temporary personal identification number (“PIN”) by what we now call “snail mail” to Plaintiffs South Africa address. (Id.) Plaintiff did not receive this letter; she alleges that the fraudster - and/or others working with her - intercepted her mail and stole the temporary PIN. (Id.)

On February 24,2020, the fraudster again contacted the Benefits Information Center, where she used the temporary PIN to create a new permanent PIN for Plaintiff s account. (Id. ¶ 15). She also caused Alight to change the phone number and email addresses associated with the account to a new number and email address, neither of which belonged to Plaintiff. (Id.)

Having taken these steps, on March 9, 2020, the fraudster accessed Plaintiff s Plan account online using the Colgate-Palmolive Benefits website, which is also operated by Alight. When she did so, she added information for direct deposit at a Bank of America branch with a Las Vegas address. (Id. ¶ 17).

A week later, on March 17, 2020, the fraudster again accessed Plaintiffs account online and attempted to distribute the entire contents of Plaintiff s account via direct deposit, to the Bank of America account in Las Vegas. (Id. ¶ 18). She also changed Plaintiffs mailing address from the address in South Africa to an address in Las Vegas. (Id.)

The same day, the fraudster called Alight's Benefits Information Center and said she had requested a total distribution from the Plan via direct deposit. (Id. ¶ 19). The representative informed her that the Plan did not make distributions by direct deposit. (Id.) The fraudster then told the benefits representative that she wanted the distribution made by check, to be sent to the

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Las Vegas mailing address. (Id.) During the course of that phone call, the benefits representative arranged for the transaction. (Id.) A confirmation of payment notice was sent by mail to the Las Vegas address. (Id. ¶ 21).

On March 20, 2020, BNY Mellon mailed a check for $601,144.42 ($751,430.53, the gross amount of the distribution, less mandatory tax withholdings)^[1] to the Las Vegas mailing address. (Id. ¶ 20). Whoever received the check cashed or deposited it at a bank in Las Vegas on March 27, 2020. (Id.)

B. Plaintiffs Attempts to Recover the Funds

Plaintiff discovered that her money was missing on September 14, 2020. (Compl. ¶ 13). Immediately upon discovering the fraud, Plaintiff alerted Alight to the theft of her Plan assets. (Id. ¶ 23). In response, Alight placed a freeze on Plaintiffs account - a bit late, as there were no longer any funds in the account - and conducted a fraud investigation. (Id. ¶¶ 22-23).

Based on its review, Alight concluded that Plaintiff appeared to have been the victim of identity theft. (Id.) Per the investigation report, during the first half of 2020, the fraudster had made seven additional phone calls to the Benefits Information Center and at least eleven additional attempts to log into the website in order to access Plaintiff s account information. On those occasions, the person trying to hack into Plaintiffs account was unable to provide the PIN, address, phone number or email address that were on file for the account and so was unable to access the account. (Id. ¶ 22).

Plaintiff also reported the fraud to multiple authorities. She has participated in investigations by the South African Police Service and the U.S. Secret Service office in Pretoria,

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South Africa. (Id. ¶ 25). She also placed a fraud alert on her credit file with Equifax, and she appointed the private firm of ENSafrica Forensics to conduct an investigation into the fraud. (Id.) Between September 2020 and October 2021, Plaintiff was also in contact with Colgate-Palmolive representatives^[2] to update them on her efforts with the criminal investigations. (Id. ¶ 33). Despite her efforts, she has not gotten her money back. (Id.)

On October 6, 2021, Plaintiff submitted a claim for benefits under the Plan to the Plan's Claims Administrator, to whom the Committee has delegated discretionary authority (1) to make decisions regarding the interpretation and application of plan provisions, (2) to make determinations as to rights and benefits of employees and participants under the Plan, and (3) to make claims determinations under the Plan.^[3] (Id. ¶ 34; Dkt. No. 39 at 3; Dkt. No. 40-3 at 80). In submitting her claim, Plaintiff asked the Claims Administrator to either confirm that the fraud had not impaired or reduced her benefits under the Plan, or to restore to her Plan account the amount of the fraudulently obtained distribution...