Situated v. Owens Corning Inv. Review Comm.
| Citation | 622 F.3d 564 |
| Decision Date | 27 September 2010 |
| Docket Number | No. 09-3692.,09-3692. |
| Parties | Britton C. BROWN; Sandra K. Brown; Carol A. Lindhuber; Shirley J. Reed; John L. Delgado, for themselves and all others similarly situated, Plaintiffs-Appellants, v. OWENS CORNING INVESTMENT REVIEW COMMITTEE; Owens Corning Benefits Review Committee, Defendants, Owens Corning Savings and Security Plan; Owens Corning Savings Plan; Richard C. Tober; Domenico Cecere; Fidelity Management Trust Company; David Johns; Edward Mirra; Steven Stobel; Michael Thaman, Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
OPINION TEXT STARTS HERE
ARGUED: Gregory Yann Porter, Bailey & Glasser, LLP, Washington, D.C., for Appellants. Erin E. Kelly, Sidley Austin LLP, Chicago, Illinois, Howard Shapiro, Proskauer Rose LLP, New Orleans, Louisiana, for Appellees. ON BRIEF: Gregory Yann Porter, Bailey & Glasser, LLP, Washington, D.C., Bryan T. Veis, McTigue & Veis LLP, Washington, D.C., for Appellants. Erin E. Kelly, Walter C. Carlson, John M. George, Jr., Sidley Austin LLP, Chicago, Illinois, Howard Shapiro, Robert W. Rachal, Charles F. Seemann III, Proskauer Rose LLP, New Orleans, Louisiana, Edward A. Brill, Proskauer Rose LLP, New York, New York, Jennifer J. Dawson, Marshall & Melhorn LLC, Toledo, Ohio, William M. Connelly, Steven R. Smith, Janine T. Avila, Connelly, Jackson & Collier LLP, Toledo, Ohio, for Appellees.
Before: COLE, GILMAN, and WHITE, Circuit Judges.
GILMAN, J., delivered the opinion of the court, in which COLE, J., joined. WHITE, J. (pp. 576-79), delivered a separate opinion concurring in all sections except for Section II.C. and in the result of the majority opinion.
A number of former Owens Corning (OC) employees (the Plaintiffs) brought a class-action lawsuit against the fiduciaries of their retirement plans pursuant to the Employee Retirement Income Security Act (ERISA), alleging that the fiduciaries failed to protect plan participants by not divesting the plans of OC stock before the shares became virtually worthless when the company filed for bankruptcy. The fiduciaries filed motions to dismiss, based in part on the defense that the claims against them were barred by ERISA's three-year statute of limitations. Their motions were later converted by the district court into motions for summary judgment.
Although the district court originally denied the motions for summary judgment, it reversed itself after the fiduciaries filed a motion to reconsider. The court held that the Plaintiffs' claims against the fiduciaries were time-barred because the Plaintiffs had actual knowledge of all the relevant facts more than three years before filing their lawsuit. For the reasons set forth below, we AFFIRM the judgment of the district court.
OC sponsored two defined-contribution retirement plans for its employees: the OC Savings Plan for salaried employees and the OC Savings & Security Plan for hourly employees (the Plans). Participants in the Plans could invest in several different investment funds, including the OC Stock Fund, which primarily invested in OC common stock.
Plan participants were provided with quarterly account statements, which reflected a participant's contribution history as well as the current value of the participant's investments. These statements included a “Message from the Plan Administrator” about various Plan updates. Summary Plan Descriptions (SPDs) for both the salaried plan and the hourly plan stated that the “Plan Administrator ... is the Owens Corning Benefits Review Committee.” They also informed participants that the OC Investment Review Committee “is a Named Fiduciary” of the Plan.
The SPDs stated that “[t]he Plan is administered on Owens Corning's behalf by Fidelity Investments” and listed a contact telephone number for Fidelity. Fidelity was also listed in the SPDs as the Plan Trustee. The SPDs included several other references to Fidelity, the Investment Review Committee, and the Benefits Review Committee, stating that The parties dispute how many of the Plaintiffs actually received SPDs, but Richard Tober, the head of Compensation and Benefits at OC, stated that the SPDs were periodically mailed to all hourly employees and that salaried employees were notified that the SPDs were available on the company's internet website. In addition, Carol Lindhuber, a salaried employee and one of the named Plaintiffs, acknowledged that she was told where the electronic version of the Plan documents could be found.
OC was obligated under the Plans to partially match employee contributions. In the 1990s, the Plans mandated that all employer matching contributions and one-half of the employer profit-sharing contributions be invested in the OC Stock Fund. Beginning in 2000, however, employees were permitted to invest new OC contributions in any investment fund and could transfer portions of previous OC contributions to any other investment fund. OC's Compensation Committee decided in late September 2000 to close the OC Stock Fund to new investments and to permit participants to immediately transfer all prior OC contributions into other investment funds. Participants were notified of this change through a “Message from the Plan Administrator” on their account statements and by a letter sent from OC Chairman and CEO Glen Hiner on September 29, 2000 to all Plan participants. The letter listed a contact telephone number for the OC Compensation and Benefits Call Center as well as for Fidelity if participants had any questions about the change.
At the same time that these changes to the Plans were being made, OC was preparing to file for bankruptcy. Prior to 1972, OC had manufactured an industrial insulating product containing asbestos. OC began to face increased liability in the 1990s as a result of countless claims by those injured from asbestos exposure. Moreover, two Supreme Court cases in 1997 and 1999 severely limited the ability of asbestos manufacturers to settle claims against them through either a class action or a mass-settlement fund. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (asbestos class action); Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999) (asbestos mass-settlement fund). As a result of the asbestos litigation and damage costs, OC filed for bankruptcy on October 5, 2000. CEO Hiner sent a letter on the same date to all OC employees, informing them of the bankruptcy filing and how it would affect their employment, compensation, and benefits.
OC stock began to significantly decline in value after the two Supreme Court cases were publicized. On the day that Ortiz was decided-June 23, 1999-the stock closed at $35.44 per share. By the end of 1999, the per-share price had dropped to $19.31, and in mid-2000 it closed at $9.25. The day before OC filed for bankruptcy, the stock closed at $1.81 per share, and the day after, at $0.50. As a result of this steep decline in value, the OC Stock Fund lost tens of millions of dollars. Plaintiff Lindhuber eventually filed a proof of claim against OC in the bankruptcy proceedings in April 2002, seeking to recoup the losses that she had suffered in her retirement account.
On September 1, 2006, Britton Brown and Sandra Brown filed a purported class-action lawsuit on behalf of participants in the Plans against the following defendants: the Plans themselves; the OC Investment Review Committee, which was a named fiduciary of the Plans; individual members of the OC Investment Review Committee; the OC Benefits Review Committee, which was the administrator for the Plans; individual members of the OC Benefits Review Committee; Tober; and several John Does who performed administrative functions for the Plans. (These parties will hereinafter be referred to as the OC Defendants.) OC itself was not named as a defendant.
The Plaintiffs alleged that by July 1, 1999, “when the impact of Ortiz would have sunk in, the Plans' fiduciaries knew or should have known that OC's asbestos liability threatened OC's future and that investing in OC stock was highly risky.” Specifically, the Plaintiffs contended that the OC Defendants breached their fiduciary duties to both the Plans and the Plan participants by continuing to offer the OC Stock Fund as an investment option and by limiting the ability of participants to transfer previously invested funds out of the OC Stock Fund until the company was on the verge of bankruptcy. The Plaintiffs also alleged that the OC Defendants should have filed a proof of claim against OC during its bankruptcy proceedings. They brought suit under ERISA § 404, 29 U.S.C. § 1104, which requires plan fiduciaries to exercise a prudent standard of care when administering a plan, as well as ERISA § 405, 29 U.S.C. § 1105, which imposes liability on a fiduciary for breaches by a cofiduciary.
In December 2006, the Plaintiffs filed their first amended complaint, which added Lindhuber as a named plaintiff, Fidelity Management Trust Company as a corporate defendant, and specific members of the Investment Review Committee as individual defendants. Fidelity was also sued as the trustee of the Plans. The Plaintiffs alleged that it violated ERISA § 404 by failing to protect Plan assets when Fidelity did not file a timely proof of claim against OC in the bankruptcy proceedings for the alleged breaches of fiduciary duties by the OC Defendants. On the other hand, the first amended complaint dropped the Investment Review Committee and the Benefits Review Committee as defendants.
In March 2007, the OC Defendants and Fidelity filed their respective motions to dismiss. In addition...
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