In re Groep

• Decision Date: 31 March 2010
• Docket Number: Civil Action No. 1:09–CV–0400.
• Parties: In re ING GROEP, N.V. ERISA LITIGATION.This Document Relates To: All Actions.
• Court: U.S. District Court — Northern District of Georgia

749 F.Supp.2d 1338

In re ING GROEP, N.

v. ERISA LITIGATION.This Document Relates To: All Actions.

Civil Action No. 1:09–CV–0400.

United States District Court, N.D. Georgia, Atlanta Division.

March 31, 2010.

Albert Y. Chang, Francis A. Bottini, Jr., Johnson Bottini, LLP, San Diego, CA, David James Worley, James M. Evangelista, Evangelista & Associates, LLC, Atlanta, GA, Thomas J. McKenna, Gainey & McKenna, New York, NY, for Deadre D. Diggs, Kent Sewright individually and on behalf of all others similarly situated.Christopher P. Moore, Mitchell A. Lowenthal, Cleary Gottlieb Steen & Hamilton, New York, NY, Patrick Connors Dicarlo, Alston & Bird, Atlanta, GA, for ING Groep N.V., ING North America Insurance Corporation, ING Life Insurance and Annuity Company, Darryl Harris, Michel J. Tilmant, John C.R. Hele, ING U.S. Pension Committee, John Does 1-20, William Delahanty, Kimberly Shattuck, Byron Scott Burton, Catherine H. Smith, Tom McInerney, Jan H.M. Hommen, Henk Breukink, Peter A.F.W. Elverding, Claus Dieter Hoffmann, Piet Hoogendoorn, Piet C. Klaver, Wim Kok, Karel Vuursteen, Eric Boyer.

ORDER & OPINION

JULIE E. CARNES, Chief Judge.

This case is presently before the Court on defendants' Motion to Dismiss [34], defendants' Motion for Leave to File Corrected Memorandum of Law [35], and plaintiffs' Motion to Strike Exhibits J, K, L, M, N, O, P, and R to Defendants' Motion to Dismiss (“Motion to Strike”) [46]. The Court has reviewed the record and the arguments of the parties and, for the reasons set out below, concludes that defendants' Motion to Dismiss [35] should be GRANTED, defendants' Motion for Leave to File Corrected Memorandum of Law [35] should be GRANTED, and plaintiffs' Motion to Strike [46] should be DENIED.

BACKGROUND

This case arises under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. Plaintiffs Kent Sewright (“Sewright”) and Deadre Diggs (“Diggs”) assert that defendants breached fiduciary duties under ERISA by permitting plaintiffs to purchase shares of ING Groep, N.V. (“ING”) in the ING Americas Savings Plan for ILIAC Agents (“ILIAC Plan”) and the Employee Stock Option Plan (“Americas Plan”). Plaintiffs allege that they were participants in the Americas Plan from June 1, 2007 to the present. (ACC [21] at ¶¶ 17, 18, 64.) Plaintiffs acknowledge that they were never participants in the ILIAC Plan. ( Id.)

Defendant ING is “a global financial institution of Dutch origin offering banking, investments, life insurance, and retirement services.” ( Id. at ¶ 19.) Defendants ING North America Insurance Corporation and ILIAC are subsidiaries of ING and the sponsors of the Americas Plan and the ILIAC Plan, respectively. ( Id. at ¶¶ 49, 54.) Defendant ING U.S. Pension Committee is the administrator of both plans. ( Id. at ¶ 57.) Defendants Delahanty, Harris, Shattuck, and Wheat are members of the Committee (collectively “Committee defendants”).¹ Defendant McInerney is a member of ING's Executive Board, defendant Burton is the Senior Vice President at ING North America Insurance Corporation, and defendant Smith is the CEO of ING U.S. Retirement Services.² (ACC [21] at ¶¶ 26, 51, 55.)

Like most financial institutions, ING was negatively affected by the worldwide economic recession in 2008 and 2009. ( Id. at ¶¶ 142, 145). ING's stock fell from $40.40 on April 28, 2008 to a low of S3.03 on March 5, 2009. ( Id.) On June 8, 2009, the date plaintiffs filed the complaint, the price was back up to $10.89. ( Id.) Generally, the fluctuations in ING's stock tracked the market. ( See Mot. to Dismiss [34] at Ex. N.) Throughout the period of decline in the market, ING disclosed in its SEC filings the impact of changing market conditions. ( Id.)

In October 2008, the Dutch government provided a 10 billion infusion of capital to ING, which enabled ING to pay down its debt and increase shareholders' equity. (ACC [21] at ¶ 158.) Since that time, ING has continued to take measures to fortify its position in the market in light of the new market conditions. ( See Mot. to Dismiss [34] at Ex. R.)

The plans at issue in this case are “eligible individual account plans” (“EIAPs”) within the meaning of 29 U.S.C. § 1107(d)(3). They provide retirement income to eligible employees. Both are voluntary contribution plans in which participants manage and direct investment in their own accounts. (ACC [21] at ¶¶ 72, 86.) Both plans require ING stock be included as an investment option:

The Committee shall determine the investment options which will be made available under the plan from time to time, and may add or delete investment options, except for the Company Stock investment option which, consistent with the status of a portion of the Plan as an employee stock ownership plan, shall always be an investment option under the Plan, and the Committee shall have no discretion with respect to investments in or disposition of Company stock.

(Americas Plan (2008) at § 6.2(a), attached as Ex. A to Mot. to Dismiss [34] ). Pursuant to the above provision, none of the defendants had the discretion or authority to eliminate ING stock from the list of alternatives. ( Id.)

A class action securities complaint was filed against ING in the Southern District of New York in February 2009. See Freidus v. ING Groep N.V., et al., No. 09–cv–1049 (S.D.N.Y. Feb. 5, 2009). Several copycat cases followed, and all were consolidated with the Freidus action. Id. at Docket 32, Consolidation Order. Plaintiff Sewright filed a complaint in this Court on February 13, 2009, one week after Freidus was filed. Plaintiff Diggs filed a complaint asserting similar claims on March 5, 2009 in the Southern District of New York, even though the Americas Plan provides that the Northern District of Georgia has exclusive jurisdiction over cases arising under the plan. Diggs v. ING Groep N.V., No. 09–cv–2038, 2009 WL 688758 (S.D.N.Y. Mar. 5, 2009). After being threatened with a motion to transfer, Diggs withdrew her action and filed here. Diggs v. ING Groep N.V., 1:09–cv–1100, 2009 WL 3826743 (N.D.Ga. Apr. 24, 2009). Her case was consolidated with Sewright's, and plaintiffs filed an Amended Consolidated Complaint (“ACC”) on June 8, 2009.

In the ACC, plaintiffs allege that defendants were ERISA fiduciaries pursuant to 29 U.S.C. § 1102(a)(1), or de facto ERISA fiduciaries within the meaning of 29 U.S.C. § 1002(21)(A), and thus were bound by the duties of loyalty, exclusive purpose, and prudence. (ACC [21] at ¶¶ 222, 256, 267, 275.) Plaintiffs contend that defendants breached those duties by: (1) failing to prudently and loyally manage plans and assets, (2) failing to provide complete and accurate information to the plans' participants, (3) failing to monitor fiduciaries, and (4) failing to avoid conflicts of interest. ( Id. at ¶¶ 220–272.) Plaintiffs also assert a claim for co-fiduciary liability. ( Id. at ¶¶ 273–284.)

Defendants have filed a motion to dismiss the ACC pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).³ (Defs.' Mot. to Dismiss [34], [35].) Plaintiffs have filed a related motion to strike several exhibits to defendants' motion. (Pls.' Mot. to Strike [46].) Both of those motions are presently before the Court.

DISCUSSION

I. Motion to Strike

Plaintiffs move to strike exhibits J, K, L, M, N, O, P, and R to defendants' motion to dismiss. (Mot. to Strike [46].) Plaintiffs request in the alternative that the Court convert defendants' motion into a motion for summary judgment and permit plaintiffs to conduct discovery. ( Id. at 2.) Plaintiffs argue that the exhibits are not appropriate for consideration on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) because they go beyond the four corners of the complaint. ( Id.) Plaintiffs contend further that the exhibits are hearsay, and that the statements within the exhibits are double hearsay. ( Id.)

When deciding a motion to dismiss, the Court must limit its consideration to well-pleaded factual allegations, judicially noticed matters, and documents central to or referred to in the complaint. La Grasta v. First Union Sec. Inc., 358 F.3d 840, 845 (11th Cir.2004). Federal Rule of Evidence 201(b) allows a court to take judicial notice of facts that are “(1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b). The Court may take judicial notice at any point in the proceeding, including during a motion to dismiss. Fed. R. Evid. 201(f).

A. The Court Takes Judicial Notice of Generally Known Market Conditions During the Relevant Period: Exhibits J, K, M, N, O, and P

Plaintiffs concede that exhibits J, K, M, N, O, and P address generally known market conditions during the relevant time period. (Mot. to Strike [46] at 4.) Courts may take judicial notice of general economic conditions, stock prices, and market trends. La Grasta, 358 F.3d at 842 (finding judicial notice appropriate because stock prices are “not subject to reasonable dispute”). All of the referenced exhibits reflect general economic and market conditions. ( See Mot. to Dismiss [34] at Exs. J, K, M, N, O, and P.) They are thus appropriately subject to judicial notice.

Moreover, a court may consider a document that is “outside the four corners of the complaint” that is attached to a motion to dismiss if it is (1) “central to the plaintiff's claim” and (2) “undisputed.” Horsley v. Feldt, 304 F.3d 1125, 1134 (11th Cir.2002). See also Maxcess, Inc. v. Lucent Techs., Inc., 433 F.3d 1337, 1340 n. 3 (11th Cir.2005) (permitting consideration of documents outside the four corners of the complaint). Contrary to plaintiff's argument, these exhibits are central to the complaint because they show the condition of the market during the relevant time period. Accordingly, the court takes judicial notice of these exhibits.

B. The Court Takes Judicial Notice of ...