McCullough v. Aegon Usa, Inc., 06-CV-0068-LRR.
| Decision Date | 30 October 2007 |
| Docket Number | No. 06-CV-0068-LRR.,06-CV-0068-LRR. |
| Citation | 521 F.Supp.2d 879 |
| Parties | Randal E. McCULLOUGH, Plaintiff, v. AEGON USA, INC., Aegon Usa, Inc. Board of Directors, Patrick S. Baird, James A. Beardsworth, Kirk W. Buese, Tom A. Schlossberg, Arthur C. Schneider, Mary Taiber, James R. Trefz, Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company, Transamerica Financial Life Insurance Company, Transamerica Investment Management LLC, Diversified Investment Advisors, Inc. and does 1-20, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
Gregory Y. Porter, James Brian McTigue, Jennifer Hope Strouf, McTigue & Porter LLP, Washington, DC, Kay Marie Johansen, Cedar Rapids, IA, for Plaintiff.
David A. Hacker, Simmons Perrine Albright Ellwood, Cedar Rapids, IA, Gary S. Tell, Robert N. Eccles, O'Melveny & Myers, Washington, DC, for Defendants.
The matter before the court is the Motion for Partial Summary Judgment ("Motion") (docket no. 66), filed by Defendants AEGON USA, Inc. ("AEGON USA"), AEGON USA, Inc. Board of Directors, Patrick S. Baird, James A. Beardsworth, Kirk W. Buese, Tom A. Schlossberg, Arthur C. Schneider, Mary Taiber, James R. Trefz, Transamerica Life Insurance Company, Transamerica Occidental Life Insurance Company, Transamerica Financial Life Insurance Company, Transamerica Investment Management LLC, and Diversified Investment Advisors, Inc. (collectively "Defendants"). Plaintiff Randal E. McCullough ("Plaintiff") resists the Motion. Neither party requested oral argument, and the court finds it is unnecessary in light of the record. Therefore, the matter is fully submitted and ready for decision.
On October 5, 2005, Plaintiff filed a Complaint in the United States District Court for the Central District of California. On March 17, 2006, Plaintiff filed a First Amended Complaint ("Amended Complaint"). The two-count Amended Complaint alleges that Defendants violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. Specifically, Count I ("Prohibited Transactions Count") alleges that:
Defendants, by their actions and omissions in authorizing or causing the [AEGON USA Pension Plan ("Pension Plan") and the AEGON USA 401(k) Profit Sharing Plan ("Profit Sharing Plan") (collectively "Plans")] to invest in [investment funds of AEGON USA subsidiaries and affiliates, purchase products and services of AEGON USA subsidiaries and affiliates] and pay investment management [fees] and other fees in connection therewith, caused the Plans to engage in transactions that Defendants knew or should have known constituted sales or exchanges of property between the Plans and parties in interest, the furnishing of services by parties in interest to the Plans, and transactions with fiduciaries[, in violation of section 406(a)(1)(A), (C) and (b), 29 U.S.C. § 1106(a)(1)(A), (C) and (b)1]. Amended Complaint at ¶ 95. Count II ("Breach of Duties Count") alleges that:
Defendants, by their actions and omissions in authorizing or causing the Plans to invest in investment funds [of AEGON USA subsidiaries and affiliates, purchase products and services of AEGON USA subsidiaries and affiliates] and pay investment management [fees] and other fees in connection therewith, [...] caused the Plans to pay investment management fees that were higher than the [fees of unaffiliated investment funds; ... Defendants] breached their duties of prudence and loyalty to the Plans[, in violation of section 404(a)(1)(A) and (B), 29 U.S.C. § 1104(a)(1)(A) and (B)2].
As a direct and proximate result of Defendants' actions and omissions, Plaintiff contends that the Plans and the participants and beneficiaries of the Plans paid millions:,of dollars in investment management fees and other fees that are prohibited by ERISA, and, under section 502(a)(2), 29 U.S.C. § 1132(a)(2),3 and section 409(a), 29 U.S.C. § 1109(a),4 Defendants are required to refund all of the fees that the Plans paid to AEGON USA subsidiaries and affiliates.5 Apart from a refund or restoration of all fees paid, Plaintiff seeks declaratory relief; "equitable restitution and other appropriate equitable monetary relief"; other appropriate equitable or remedial relief, which includes "the permanent removal of Defendants from any positions of trust with respect to the Plans and the appointment of independent fiduciaries to administer the Plans"; injunctive relief, which includes barring Defendants, collectively and individually, from committing further violations of their fiduciary responsibilities, obligations and duties; attorneys' fees and costs pursuant to section 502(g), 29 U.S.C. § 1132(g), and/or the Common Fund doctrine; and other relief that the court deems equitable and just. Amended Complaint at ¶ 1-5 of Prayer for Relief. As a participant of the Plans, Plaintiff brings the instant action on behalf of the Plans and the participants and beneficiaries of the Plans.
On May 2, 2006, the United States District Court for the Central District of California granted Defendants' Motion to Change Venue and transferred the case to this court.
On October 31, 2006, Defendants filed the Motion. On December 6, 2006, the court permitted Defendants to file a Supplement to their Appendix to the Motion. On December 29, 2006, Plaintiff filed a Resistance. On January 31, 2007, Defendants filed a Reply and a Second Supplement to their Appendix to the Motion. On February 6, 2007, Plaintiff sought to file a Surreply. On February 7, 2007, the court denied Plaintiffs request to file a Surreply.
On September 28, 2007, the court granted Defendants' Motion and indicated that the instant memorandum opinion would be filed.
On October 10, 2007, Plaintiff filed an unresisted motion to add parties and amend the Amended Complaint. On October 12, 2007, the court granted such motion. On October 16, 2007, Plaintiff filed the Second Amended Complaint.6
Pursuant to. 28 U.S.C. § 1331, the court has federal question subject matter jurisdiction over this dispute, that is, the Prohibited Transactions Count and the Breach of Duties Count, because Plaintiff's claims arise under ERISA. See 28 U.S.C. § 1331 ().
Summary judgment is appropriate if the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). "An issue of fact is genuine when `a reasonable jury could return a verdict for the nonmoving party' on the question." Woods v. DaimlerChrysler Corp., 409 F.3d 984, 990 (8th Cir.2005) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). A fact is material when it is a fact that "`might affect the outcome of the suit under the governing law....'" Johnson v. Crooks, 326 F.3d 995, 1005 (8th Cir.2003) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). The court must view the record in the light most favorable to the nonmoving party and afford it all reasonable inferences. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); McCoy v City of Monticello, 411 F.3d 920, 922 (8th Cir.2005); Woods, 409 F.3d at 990.
Procedurally, the moving party bears "the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue." Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir.1992) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Once the moving party has successfully carried its burden under Rule 56(c), the nonmoving party has an affirmative burden to go beyond the pleadings and by depositions, affidavits or otherwise, designate "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e); see, e.g., Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Janis v. Biesheuvel, 428 F.3d 795, 799 (8th Cir. 2005). The nonmoving party must offer proof "such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct. 2505.
As explained above, the Amended Complaint consists of two counts against Defendants: the Prohibited Transactions Count and the Breach of Duties Count. If successful, the Prohibited Transactions Count and the Breach of Duties Count would impose personal liability on Defendants pursuant to 29 U.S.C. § 1109(a) and 29 U.S.C. § 1132(a)(2). Plaintiff seeks relief under 29 U.S.C. § 1109(a) and bases standing upon 29 U.S.C. § 1132(a)(2).
In support of the Motion, Defendants submitted the following statement of undisputed material facts:
1. [Plaintiff] is a former employee of Life Investors Insurance Company of America ("Life Investors"), a subsidiary of [AEGON USA]....
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McCullough v. Aegon Usa, Inc.
...Plan. The district court agreed that Harley controlled, and granted AEGON's motion for summary judgment. See McCullough v. Aegon USA, Inc., 521 F.Supp.2d 879, 894 (N.D.Iowa 2007). The parties subsequently filed a joint stipulation of dismissal, see Fed.R.Civ.P. 41(a)(1)(A)(ii), dismissing w......