Jones v. Singing River Health Servs. Found.
| Decision Date | 27 July 2017 |
| Docket Number | No. 16-60550,16-60550 |
| Parties | Thomas JONES, on behalf of themselves and others similarly situated ; Joseph Charles Lohfink, on behalf of themselves and others similarly situated ; Sue Beavers, on behalf of themselves and others similarly situated ; Rodolfoa Rel, on behalf of themselves and others similarly situated ; Hazel Reed Thomas, on behalf of themselves and others similarly situated, Plaintiffs–Appellees v. SINGING RIVER HEALTH SERVICES FOUNDATION; Singing River Health System Foundation ; Singing River Hospital System Foundation, Incorporated; Singing River Hospital System Employee Benefit Fund, Incorporated; Singing River Hospital System; Michael J. Heidelberg ; Michael D. Tolleson ; Tommy Leonard ; Lawrence H. Cosper; Morris G. Strickland; Ira Polk; Stephen Nunenmacher; Hugo Quintana; Gary C. Anderson; Stephanie Barnes Taylor; Michael Crews ; Singing River Health System; Allen Cronier; Martin Bydalek ; William Descher ; Joseph Vice ; Eric Washington; Marva Fairley-Tanner; Grayson Carter, Jr, Defendants–Appellees v. Cynthia N. Almond; Francisco C. Aguilar; Kitty Patricia Aguilar; Tanya R. Ardoin; Ray J. Barbour, et al., Appellant Regina Cobb, on behalf of themselves and others similarly situated, et al., Plaintiffs v. Singing River Health System; Board of Trustees for The Singing River Health System; Michael J. Heidelberg, in their individual and official capacities; Michael D. Tolleson, in their individual and official capacities; Allen L. Cronier, in their individual and official capacities; Tommy L. Leonard, in their individual and official capacities; Lawrence H. Cosper, in their individual and official capacities; Morris G. Strickland, in their individual and official capacities; Ira S. Polk, in their individual and official capacities; Stephen Nunenmacher, in their individual and official capacities; Hugo Quintana, in their individual and official capacities; Marva Fairley-Tanner, in their individual and official capacities; William C. Descher, in their individual and official capacities; Joseph P. Vice, in their individual and official capacities; Martin D. Bydalek, in their individual and official capacities; Eric D. Washington, in their individual and official capacities; G. Chris Anderson, in their individual and official capacities; Kevin Holland, in their individual and official capacities, Defendants–Appellees v. Cynthia N. Almond; Francisco C. Aguilar; Kitty Patricia Aguilar; Tanya R. Ardoin; Ray J. Barbour, et al., Appellants |
| Court | U.S. Court of Appeals — Fifth Circuit |
James Robert Reeves, Jr., Esq., Matthew Gerard Mestayer, Reeves & Mestayer, P.L.L.C., Biloxi, MS, George W. Finkbohner, III, Attorney, Steven L. Nicholas, Esq., Lucy Elizabeth Tufts, David George Wirtes, Jr., Esq., Cunningham Bounds, L.L.C., Mobile, AL, for Plaintiffs–Appellees.
Brett Keith Williams, Esq., Alexander Kelly Sessoms, III, Esq., Dogan & Wilkinson, P.L.L.C., John L. Hunter, John Anderson Banahan, Bryan, Nelson, Schroeder, Castigliola & Banahan, Pascagoula, MS, Carly D. Duvall, Jason R. Scheiderer, Dentons US, L.L.P., Kansas City, MO, Stephen Giles Peresich, Attorney, Page, Mannino, Peresich & McDermott, P.L.L.C., Biloxi, MS, Roy D. Campbell, III, Esq., Bradley Arant Boult Cummings, L.L.P., Pieter Teeuwissen, Esq., Pieter Teeuwissen, Esq., P.L.L.C., Jackson, MS, Donald Claire Dornan, Jr., Esq., Dornan Law Office, P.L.L.C., Gulfport, MS, for Defendants–Appellees.
William Harvey Barton, II, Trial Attorney, Barton Law Firm, P.L.L.C., Pascagoula, MS, Earl Lamar Denham, Denham Law Firm, P.L.L.C., Ocean Springs, MS, for Appellants.
Before HIGGINBOTHAM, JONES, and HAYNES, Circuit Judges.
The Singing River Health System (SRHS), a community hospital owned by Jackson County, Mississippi, created a defined benefits pension fund into which employees have recently been paying three percent of their paychecks and to which SRHS was obliged to contribute whatever additional amounts were actuarially required to fund the Plan's promised benefits. From 2009-14, however, the hospital fell into serious financial difficulties and made only one plan contribution. The Plan was "frozen" in late November 2014. This appeal considers objections to the settlement of class actions that arose in the wake of the financial crisis. The most troubling issues center on the extraordinarily long-term, unsecured, and unpredictable proposed payout of the settlement amount and the release of the County, a non-party, from liability. We vacate and remand for further consideration of issues concerning the settlement's consequences for Plan beneficiaries.
As described by its CEO, SRHS SRHS is the largest employer in Jackson County. County Supervisors appoint seven of the nine members of the SRHS Board; the Chief of Staff and Chief-elect of SRHS occupy the other two seats. See Miss. Code. Ann. § 41-13-29. SRHS created the Employees' Retirement Plan and Trust (the "Plan") in 1983 as a successor to the Public Employees' Retirement System of Mississippi.
Since 2008, the most recent version of the Plan has required employees to contribute three percent of their salaries to the Plan. Further, SRHS "shall have the sole responsibility for making the [actuarially determined] contributions necessary to provide benefits under the Plan, as administered by the Board of Trustees of [SRHS]." Finally, although the Plan states that it was established in confidence that it would continue indefinitely, SRHS "reserve[s] the right to terminate the Plan ..., in whole or in part, at any time."
SRHS's finances became increasingly imperiled during the 2008 recession and with the reduction of federal assistance. Consequently, and without informing the employees, SRHS failed to make all but one of its contributions needed to maintain the Plan's fiscal integrity from 2009 to 2014. In late November 2014, the hospital Board, together with executives and counsel, decided to liquidate the Plan. On December 1, 2014, SRHS announced it was freezing the Plan and, "[i]n the coming months, the Plan will be officially liquidated." At that point, there were over three thousand Plan participants, both current and past employees, of whom approximately 600 were retirees receiving monthly payments.
Counsel for retirees, many of whom have become Objectors to the proposed settlement, immediately sought injunctive relief in the Jackson County Chancery Court, which ordered SRHS not to terminate the Plan. Since that date, however, the Plan has remained "frozen" in that no contributions have been made by employees or SRHS. Plan assets are being steadily depleted, however, because benefit payments to retirees have continued without interruption. In August 2015, the Chancery court held SRHS indebted as a matter of law to the Plan for the missed contributions plus lost earnings, a sum exceeding $55 million.
Numerous lawsuits were soon filed in state and federal court after the announced termination of the Plan. Pertinent here are three Rule 23 class actions commenced and later consolidated in the federal district court, styled as the Jones , Cobb , and Lowe cases.1 The operative complaint in the lead case, Jones, names as defendants the Singing River Health Services Foundation, Singing River Health System Foundation, Singing River Hospital System Foundation, Inc., Singing River Hospital System Employee Benefit Fund, Inc., and Singing River Hospital System (collectively, "SRHS Defendants"), along with various individual SRHS executives and members of SRHS's Board of Trustees. KPMG, LLP, and Transamerica Retirement Solutions Corporation, advisers and administrators of the Plan, also were joined as defendants. See Jones v. Singing River Health Sys ., No. 1:14-CV-447, 2016 WL 6106521 (S.D. Miss. June 2, 2016).2
The Jones complaint alleged multiple causes of action for, inter alia , state and federal constitutional violations, federal law breaches of ERISA, and state law claims for breach of contract, fraud, and breach of fiduciary duty. See id.
Expedited discovery led to the production of "thousands of pages of SRHS financial documents" that enabled the plaintiffs' retained CPA expert to calculate the missed contributions and associated lost Plan earnings. The district court appointed former Chief United States Bankruptcy Judge for the Northern District of Mississippi, David M. Houston, as a mediator, and several mediation sessions, open to various counsel including those of the Objectors, occurred over the next several months.
When the Jones Plaintiffs moved for preliminary approval of a settlement, the court granted the motion, conditionally certified the class, and approved procedures for notifying class members, who include all current and former employee Plan participants, their spouses, alternate payees, death beneficiaries, or "any other person to whom a plan benefit may be owed."
On April 1, 2016, the Plaintiffs moved for approval of the final settlement (the "Settlement Agreement"). The Settlement Agreement contains the following terms specifically touted in the district court opinion:
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