EDWARD J. LODGE, District Judge.
On June 9, 2010, United States Magistrate Judge Larry M. Boyle issued his Report and Recommendation in this matter. (Dkt. 53.) Pursuant to 28 U.S.C. § 636(b)(1), the parties had ten days in which to file written objections to the Report and Recommendation. Plaintiffs filed their objections on June 28, 2010. (Dkt. 54.) Defendant filed its response to the objections on July 8, 2010. The applicable federal rules, local rules and statutes do not provide for a reply to be filed.1
Pursuant to 28 U.S.C. § 636(b)(1)(C) this Court "may accept, reject, or modify, in whole or in part, the findings and recommendations made by the magistrate judge." Moreover, this Court "shall make a de novo determination of those portions of the report which objection is made." Id. In United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir.2003) the court interpreted the requirements of 28 U.S.C. 636(b)(1)(C):
The statute [28 U.S.C. § 636(b)(1)(C) ] makes it clear that the district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise. As the Peretz Court instructed, "to the extent de novo review is required to satisfy Article III concerns, it need not be exercised unless requested by the parties."
Peretz v. United States, 501 U.S. 923, 939 [111 S.Ct. 2661, 115 L.Ed.2d 808] (1991) (internal citation omitted). Neither the Constitution nor the statute requires a district judge to review, de novo, findings and recommendations that the parties themselves accept as correct. See United States v. Ciapponi, 77 F.3d 1247, 1251 (10th Cir.1996) ("Absent an objection or request for review by the defendant, the district court was not required to engage in any more formal review of the plea proceeding."); see also Peretz, 501 U.S. at 937-39 (clarifying that de novo review not required for Article III purposes unless requested by the parties) ....
See also Wang v. Masaitis, 416 F.3d 992, 1000 & n. 12 (9th Cir.2005). Based on the objections filed in this case, the Court has conducted a de novo review of the record pursuant to 28 U.S.C. § 636(b).
FACTUAL AND PROCEDURAL BACKGROUND The Court adopts and incorporates by reference the factual background as set forth in the Report and Recommendation on pages 1-4:
Building Materials Holding Corporation (BMHC) is a holding company which provides capital, management and administrative resources to its subsidiaries which provide building materials and residential construction services throughout the United States. Statement of Undisputed Material Facts Supporting Defendant's Motion for Partial Summary Judgment on Counts One and Two of Plaintiffs' Complaint (Docket No. 28) ( "DSOF" ), ¶¶ 1 & 3. Plaintiffs to this action include BMHC, as the sponsor and named fiduciary of one of its retirement plans 2 ("the Plan"), and the other named fiduciaries suing on behalf of the Plan. Defendant is ING Life Insurance & Annuity Company ("ILIAC").
ILIAC entered into a contract with the Plan trustees on behalf of the Plan to provide certain administrative services to the Plan in connection with ILIAC's holding the invested Plan funds in an annuity. DSOF, ¶ 1; Affidavit of Ian Dunn (hereafter, "Dunn Aff."), Exh. A (hereafter, "Contract") (Docket No. 31). The services included processing contributions to the Plan ( Contract, § 3.01), allocating contributions according to the express instructions of the Plan's trustees or participants ( id., § 3.02), and making payments to the Plan's participants or others as directed "in writing" by the Plan, ( id., § 8.06). See also Plaintiffs' Statement of Facts In Response to ILIAC's Motion For Partial Summary Judgment Filed on January 4, 2010 (Clerks Docket 27), (Docket No. 37-1) (hereafter, "PSOF"), ¶¶ 1-4.
Under the Contract, ILIAC purchased investments with the contributions it received, as directed by the Plan trustees or participants, from a list of options pre-selected and approved by the trustees, and maintained individual record-keeping accounts for each Plan participant. See Contract, § 3. If ILIAC received a contribution, but no allocation instructions, the Contract provided that ILIAC would return the contribution. Contract, § 3.02.
Once Plan contributions were transmitted to ILIAC, the funds were held in open-ended mutual funds in the investmentmarket. Dunn Aff., Exh. C; PSOF, ¶ 3. The Plan trustees and participants did not have direct access to the funds. PSOF, ¶¶ 1-4. ILIAC was the sole signatory on the Plan accounts, and had the exclusive authority to write checks on the accounts to make the payments or invest the funds as directed by the trustees or Plan participants. Id. The Contract provided, however, that the trustees directed all distributions, and could terminate the Contract at any time. See Contract, § 5.06
ILIAC made payments to itself for its administrative fees which were predetermined by formula set forth in the Contract on a quarterly basis. PSOF, ¶ 5.
The Contract specifically stated that ILIAC was "not the Plan administrator or the fiduciary and has no discretion or control over the Plan or its assets." Contract, § 2.01.
The Plan trustees, on behalf of the Plan, also signed several other documents in conjunction with the Contract:
• the "ING MAP Plus Contract Charges, Compensation, Disclosure, Fund Selection, and Plan Administrative Support" document which listed the administrative support services ILIAC agreed to provide under the Contract including certain record keeping services, ( Dunn Aff., Exh. C) (hereafter, "Administrative Support Document");
• a Contract Services Agreement whereby the Plan elected the accounts to create at ILIAC and how funds would be transferred by the Plan to those accounts, ( Dunn Aff., Exh. D);
• an Application for Group Annuity Contract, ( Dunn Aff., Exh. E); and
• a Third Party Administrator (TPA) Payment Request establishing Pinnacle Pension Services of Boise, Idaho as the Plan's third party administrator, and directing ILIAC to distribute a predetermined fee to Pinnacle out of the Plan assets; ( Dunn Aff., Exh. F). See also PSOF, ¶ 6.
In early January 2008, Plan representatives began discussions with ILIAC regarding the Plan's intent to terminate its Contract with ILIAC and to transfer the Plan's funds to Prudential. ILIAC representatives worked with the trustees and Prudential to accomplish the transfer. See Dunn Aff., Exhs. G, I-K; Supplemental Affidavit of Ian Dunn, Exh. H (Docket No. 40-1); PSOF, ¶ 9. On April 28, 2008, Stephanie Erickson, a named Plan trustee, directed ILIAC to "liquidate the assets in all of the plans ... and wire the proceeds to Prudential on May 1, 2008 using the wire instructions [enclosed]." Dunn Aff., Exh. M. "[T]he trustees, the participants and Prudential were dependent on ILIAC to make the transfer." PSOF, ¶ 7.
On May 1, 2008, ILIAC entered the wire transfer on 2:22 pm, it was approved at 2:22 pm, and "the funds were released from ILIAC's control at 3:59 pm EST." DSOF, ¶ 17; Dunn Aff., Exh. N. Prudential received the Plan funds at 4:26 pm EST. DSOF, ¶ 17; Compl. ¶ 26.
Plaintiffs claim that because Prudential did not receive the Plan funds of approximately $104 million by 4:00 pm EST, the Plan lost in excess of $375,790.16 in gains it would have otherwise realized from the market on May 1st. Dunn Aff., Exh. O. Plaintiffs allege claims for relief for breach of fiduciary duty under several provisions of ERISA and under Idaho state law, negligence, promissory estoppel and breach of contract. Defendant seeks partial summary judgment in its favor on Plaintiffs' ERISA claims only. Specifically, ILIAC moves for summary judgment on Plaintiffs' first two causes of action which allege breach of fiduciary dutyunder (1) sections 404 and 502(a)(2), and (2) sections 404 and 502(a)(3) of ERISA.
In the Report and Recommendation, Judge Boyle recommends that ILIAC's motion for summary judgment be granted. Judge Boyle determined that, as a matter of law, ILIAC was not a fiduciary for the purpose of the transfer of Plan assets to Prudential. Plaintiffs object to the Report and Recommendation and argue that Judge Boyle failed to give sufficient weight to controlling Ninth Circuit case law that would require the Court to find that ILIAC acted as a fiduciary. The Court will address this objection.
Motions for summary judgment are governed by Rule 56 of the Federal Rules of Civil Procedure. Rule 56 provides, in pertinent part, that judgment "shall be rendered forthwith 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 judgment as a matter of law." Fed.R.Civ.P. 56(c).
The Supreme Court has made it clear that under Rule 56 summary judgment is mandated if the non-moving party fails to make a showing sufficient to establish the existence of an element which is essential to the non-moving party's case and upon which the non-moving party will bear the burden of proof at trial. See, Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the non-moving party fails to make such a showing on any essential element, "there can be no 'genuine issue of material fact,' since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders...
