In re AME Church Emp. Ret. Fund Litig.

Decision Date17 March 2023
Docket NumberLead Case 1:22-md-03035-STA-jay
CourtU.S. District Court — Western District of Tennessee



This multidistrict litigation concerns losses to a non-ERISA retirement plan established by the African Methodist Episcopal Church for its clergy and employees. Plaintiffs are current or retired clergy of the church and allege a number of claims under Tennessee law and, in the alternative, a series of claims under the Employee Retirement Income Security Act of 1974 (ERISA), against the denomination, church officials, third-party service providers to the plan, and other alleged tortfeasors. Before the Court are a series of Motions to Dismiss challenging the sufficiency of Plaintiffs' Consolidated Amended Complaint - Class Action (ECF No. 74) (“the Amended Complaint”). The African Methodist Episcopal Church the AMEC Department of Retirement Services, the AMEC General Board, AMEC Council of Bishops, Bishop Samuel Green, and Bishop James Davis have filed a Motion to Dismiss (ECF No 99) twelve of the Amended Complaint's seventeen counts alleged against them. Defendant Newport Group, Inc. has filed its own Motion to Dismiss (ECF No. 100), and Symetra Life Insurance Company has also filed a Motion to Dismiss (ECF No. 111). The parties have fully briefed the issues, and the Court held a motion hearing with counsel for the parties on February 23, 2023. For the reasons set forth below, each Motion to Dismiss is GRANTED in part, DENIED in part.

I. Factual Background

For purposes of deciding Defendants' Motions to Dismiss, the Court accepts the following Well-pleaded facts of the Amended Complaint as true.

A. Plaintiffs and the African Methodist Episcopal Church

Plaintiffs and the members of the class are ministers, bishops, officers, elders, and other employees (and their respective beneficiaries) of AMEC or AMEC-related educational institutions or programs who have (i) lost money that was (or should have been) invested as part of the Church's retirement plan, (ii) had diminished investment returns because of mismanagement of the retirement plan, or (iii) found that they were never actually made participants in the plan as they were promised and should have been. (Am. Compl. ¶ 4.) The following clergy are the ten Plaintiffs named in the Amended Complaint: Reverend Pearce Ewing; Reverend Charles R. Jackson; Presiding Elder Cedric V. Alexander; Reverend Derrell Wade; Reverend Reuben J. Boyd; Presiding Elder Phillip Russ, IV; Reverend Marcius King; Reverend Matthew Ewing; Reverend A. Offord Carmichael, Jr.; and Reverend Diane Conley. (Id. ¶¶ 9-18.) Plaintiffs seek to represent a class defined as

All persons residing in the United States who are participants in the African Methodist Episcopal Church Ministerial Retirement Annuity Plan, all persons residing in the United States who are beneficiaries entitled to benefits as of January 1, 2021, under the African Methodist Episcopal Church Ministerial Retirement Annuity Plan, and all persons residing in the United States who are qualified employees of the AMEC who were not, but should have been, made participants or beneficiaries in the African Methodist Episcopal Church Ministerial Retirement Annuity Plan.[1]

(Id. ¶ 292.) According to the Amended Complaint, the class consists of more then 5,000 members, though the precise number is not currently known. (Id. ¶ 297.)

The African Methodist Episcopal Church (“AMEC” or “the Church”) was the first formally organized African American Christian denomination in the United States. (Id. ¶ 91.) The AMEC's first member church, Mother Bethel A.M.E. Church, was dedicated in Philadelphia, Pennsylvania in 1794. (Id. ¶ 92.) Today, the AMEC has more the 2,500,000 members and 7,000 congregations. (Id. ¶ 102.) The AMEC Council of Bishops (Council of Bishops) consists of all bishops of the Church and exercises general oversight authority over church affairs. (Id. ¶¶ 46, 47.) This includes enforcement of the AMEC's Doctrine and Discipline.[2] The AMEC General Board (General Board) is made up of members elected from the church. (Id. ¶ 41.) The General Board has authority to approve the amendments to the church retirement plan and appoint, monitor, and remove plan trustees. (Id. ¶ 42.)

AMEC is organized into 20 Episcopal Districts, which span 39 countries on 5 continents. (Id. ¶ 102.) The active bishops of the church, 21 in all, and nine general officers who manage departments within the church administer the work of the denomination. (Id.) The AMEC is a Pennsylvania corporation with its principal place of business in Nashville, Tennessee. (Id. ¶ 30.) One of the departments within the ecclesiastical structure is the AMEC Department of Retirement Services, the church department responsible for administering the retirement plan. (Id. ¶ 36.)[3] The AMEC Department of Retirement Services is headquartered in Memphis, Tennessee. (Id.)

From 2000 until June 2021, Rev. Dr. Jerome V. Harris served as the Executive Director of the AMEC Department of Retirement Services. (Id. ¶ 24.) In his capacity as Executive Director, Dr. Harris acted as Trustee of the retirement plan, making investment decisions about the funds held by the plan. (Id. ¶ 140.) Dr. Harris provided annual reports to the AMEC Commission on Retirement Services of the General Board. (Id. ¶ 141.) Bishop James Davis served as the Chair of the Department of Retirement Services from 2012 until July 2016. (Id. ¶ 58.) Bishop Davis was succeeded by Bishop Samuel L. Green, Sr. (Id. ¶ 53.) Bishop Green served as the Chair of the Department of Retirement Services from 2016 until July 2021. (Id.) During their respective tenures as Chair of the Department of Retirement Services, Bishop Davis and Bishop Green oversaw Dr. Harris's work as Executive Director of the Department. (Id. ¶ 142.) Plaintiffs have named the AMEC, the Council of Bishops, the General Board, the Department of Retirement Services, Dr. Harris, Bishop Davis, and Bishop Green as Defendants.

B. The Plan

AMEC's retirement plan for its eligible employees has gone through several iterations since its inception in the 1960s. (Id. ¶ 103.) In the mid-1990s, the original plan was renamed the “African Methodist Episcopal Church Retirement Plan.” (Id. ¶ 104.). Two methods of contribution funded this iteration of the plan: (1) AMEC employer entities (or AMEC itself) contributed a portion of each eligible employee's compensation to the plan on behalf of the employee; and (2) eligible employees could elect to contribute additional portions of their compensation to the plan for their future retirement benefit. (Id. ¶ 105).[4] After the initial creation of the Plan, AMEC organized a second, separate retirement fund only for ministers and church elders funded entirely by AMEC. (Id. ¶¶ 109, 110.) Then, on or about January 1, 2003, AMEC created a third plan, a 401(k) (defined contribution) plan for eligible employees who wished to contribute a portion of their earned compensation to the 401(k) plan. (Id. ¶ 111.)

At some point in or around 2005, AMEC consolidated the three separate plans into the Ministerial Annuity Plan of the African Methodist Episcopal Church (the “Plan”). (Id. ¶ 113.) The Plan consists of three “Levels.” (Id. ¶ 112.) Level I is a 401(k) defined contribution feature of the Plan. (Id. ¶ 114.) Level II holds retirement benefits funded by AMEC with periodic contributions equal to 12% of each plan participant's annual salary. (Id.) Level III provides annual contributions from the Church's General Treasury to all active Pastors and Presiding Elders. (Id.) A summary plan description (“SPD”) currently found on the Church's website for Church employees is upon information and belief the only SPD issued by AMEC. (Id. ¶ 115.) The SPD describes the defined contribution plan (Level I), requiring plan participants who choose to participate to contribute a percentage of their compensation to the Plan. Plaintiffs allege on information and belief that there is no summary plan description describing the Level II and Level III components of the Plan. (Id. ¶ 116.)

On or about December 19, 2001, acting on the recommendation of Dr. Harris, the AMEC General Board resolved to permit Dr. Harris to move its annuity funds to Safeco Insurance. (Id. ¶ 143.) On or about December 31, 2001, AMEC opened its investment account with Safeco Insurance and invested approximately $49.5 million. (Id. ¶ 144.) Safeco Insurance rebranded as Symetra Life Insurance Company (“Symetra”) in approximately 2005. (Id. ¶ 145.) AMEC also engaged American Express Tax & Business Services (“AmEx”) to operate as an independent, third-party administrator of the Plan. (Id. ¶ 146.) AmEx's role as third-party administrator required it to manage the Plan on a day-to-day basis, including tracking balances of plan participants and preparing and sending statements to plan participants. (Id. ¶ 147.) Following a series of corporate mergers and acquisitions,[5] Newport Group, Inc. (“Newport”) succeeded AmEx as the plan's third-party administrator. (Id. ¶ 150.) Plaintiffs have named Symetra and Newport as Defendants.

C. Dr. Harris' Companies Formed to Divert Plan Assets

In 2001, Dr. Harris set out on a long-running conspiracy to embezzle plan funds and defraud Plaintiffs. (Id. ¶ 153.) As part of a scheme to misappropriate plan assets, Dr. Harris set about creating a series of business organizations to further his fraudulent activities. In 2002 Dr. Harris organized AMEC Financial Services, LLC (“AMEC Financial Services”) to serve as a primary vehicle for his investment schemes and business...

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