Solis v. Plan Benefit Services, Inc., Civil Action No. 07-11474-DPW.
| Decision Date | 20 March 2009 |
| Docket Number | Civil Action No. 07-11474-DPW. |
| Citation | 620 F.Supp.2d 131 |
| Parties | Hilda SOLIS,<SMALL><SUP>1</SUP></SMALL> Secretary of the United States Department of Labor, Plaintiff, v. PLAN BENEFIT SERVICES, INC., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Kelly M. Lawson, Office of The Regional Solicitor, Michael D. Felsen, U.S. Department of Labor, Boston, MA, for Plaintiff.
Jeffrey S. Patterson, William T. Hogan, III, Nelson, Mullins, Riley & Scarborough, LLP, Christopher S. Brolly, Corwin & Corwin LLP, Boston, MA, Tess J. Ferrera, Thompson Hine, Washington, DC, for Defendant.
The Secretary of the United States Department of Labor ("Secretary" or "DOL") brings this action against Plan Benefit Services, Inc. ("PBS") for alleged violations of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. PBS is the Master Plan Sponsor ("Plan Sponsor") and Recordkeeper of the Contractors and Employees Retirement Plan ("Master Plan"), through which employers have established plans that provide retirement benefits to employees working under certain public contracts. The Secretary alleges that PBS violated its fiduciary duties as Master Plan Sponsor by failing to ensure the collection of employer contributions by the Trustee and that the Plan provision relieving the Trustee from the obligation to collect employer contributions is void as against public policy. The parties have submitted cross-motions for summary judgment.
The Contractors and Employees Retirement Plan is a plan that allows employers who adopt it to provide pension benefits. The Master Plan currently services approximately 1,100 retirement plans ("Participating Plans"). Each employer executes an agreement ("Adoption Agreement") that establishes either a 401(k) profit-sharing plan or a money purchase plan. Through these retirement plans, employers provide pension benefits to employees who work under public contracts subject to the Davis-Bacon Act, the Service Contract Act, or any other federal, state or municipal prevailing wage law.
Employers are governed not only by the Master Plan, but also by the Contractors and Employees Retirement Plan Master Trust Agreement ("Trust Agreement"). Under the Trust Agreement, employer contributions are deposited into the Contractors and Employees Retirement Plan Master Trust ("Master Trust"). The Master Trust has a Trustee, which has the authority "[t]o invest, manage, hold and control the assets of the [Master Trust] in a manner consistent with the terms of the Plan and the Master Trust Agreement." From at least January 2005 until December 31, 2006, the Trustee was Reliance Trust Company ("Reliance"). RSGroup Trust Company ("RSGroup") has been the Trustee since January 1, 2007.
Until December 31, 2004, the Plan Sponsor was Associated Prevailing Wage Contractors, Inc. Since January 2005, PBS has been the Plan Sponsor for the Master Plan. As Plan Sponsor, PBS has the authority to appoint and remove the Trustee. PBS is responsible for the language in the Master Plan and the Adoption Agreements, and has the authority to amend the Master Plan, the Trust Agreement, and the form of the Adoption Agreement. PBS is also responsible for approving "reasonable compensation" for the Trustee, paid out of the Master Trust.
PBS has also been the Recordkeeper for the Participating Plans since January 2005. As Recordkeeper, PBS is responsible for computing, certifying and directing the Trustee as to the amount and form of benefits for which a participant may be eligible under the Master Plan. PBS also has the authority to direct the Trustee to make disbursements from the Master Trust, and can interpret provisions of the Master Plan.
The employers, under the Master Plan, are the "Plan Administrators." The employers' responsibilities are identified in Article 9.01 of the Master Plan: "By adopting this Plan, the Employer agrees to have such contributions as may be made hereunder contributed to the [Master Trust], ... and to be bound by the terms of the trust agreement which governs such Trust." Article VIII of the Master Plan states that the "[e]mployer shall make any contributions required under Article III of the Plan and shall maintain records, including payroll records, necessary to support such Employer Contributions."
The provision at issue in this case involves specification of Trustee responsibilities. The Master Plan and Trust Agreement explicitly state that the Trustee is not responsible for monitoring and collecting employer contributions.
The Trust Agreement states in Article 1.07(a) that:
The Trustee shall be accountable for all contributions received by it, but shall have no duty to require any contributions to be made to it, or to determine that the amounts received comply with the Plan, or to determine that the fund is adequate to provide the benefits payable pursuant to the Plan.
The Master Plan states in Article 9.02 that the "Trustee does not have any duty to see that the contributions received comply with the eligibility, contribution rate or other provisions in the Plan."
During the time periods relevant to this suit—January 1, 2005 until the present— the Master Plan and the Trust Agreement did not authorize either Reliance or RSGroup to take direction from a named fiduciary who was not a trustee. The Master Plan and Trust Agreement also did not authorize a named fiduciary to delegate authority to manage, acquire or dispose of the Participating Plans' assets to investment managers.
The Secretary filed her initial Complaint in August 2007, identifying as defendants both PBS and Linskey Construction, Inc. ("Linskey"). Linskey, an employer who participated in the Master Plan, was a Plan Administrator. The Secretary alleged that Linskey had failed to make contributions that were owed to the Master Plan. I entered an Order on January 31, 2008, granting a partial consent judgment between Linskey and the Department of Labor whereby Linskey agreed to pay restitution of the funds owed to the Master Plan.
The Secretary thereafter submitted an Amended Complaint with PBS as the sole Defendant. The Secretary and PBS have filed cross-motions for summary judgment as to that complaint.
Summary judgment should be granted when "there is no genuine issue as to any material fact" and "the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The court must construe the facts "in the light most favorable to the party opposing the motion." Coffin v. Bowater Inc., 501 F.3d 80, 85 (1st Cir.2007). When there are cross-motions for summary judgment, the basic standard of Rule 56 does not change; it "rather simply require[s] the courts to determine whether either of the parties deserves judgment as a matter of law on facts that are not disputed." Adria Int'l Group, Inc. v. Ferré Dev., Inc., 241 F.3d 103, 107 (1st Cir.2001).
ERISA is a comprehensive federal statute "designed to promote the interests of employees and their beneficiaries in employee benefit plans." Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). The thrust of the Secretary's allegations against the Defendant is that a provision of the Master Plan relieves the Trustee of statutory obligations, in violation of ERISA requirements and PBS's own fiduciary duties.
The allegations involve three key provisions of ERISA: Sections 403, 404, and 410. Section 403 states that trustees, with two exceptions, shall have exclusive authority and discretion over the management of plan assets. 29 U.S.C. § 1103(a). Section 404 outlines the fiduciary duties that are involved in the management of employee retirement plans. 29 U.S.C. § 1104(a)(1). Section 410 states that any provision that relieves a fiduciary of its responsibilities is void as against public policy. 29 U.S.C. § 1110. The Secretary makes two specific legal claims: (A) PBS has violated its fiduciary duties under Section 404 of ERISA because it has relieved the Trustee of responsibilities for collection of employee contributions; and (B) the Master Plan provision relieving the Trustee of responsibility for collection of employee contributions is void as against public policy pursuant to Section 410.
I will address the Section 404 fiduciary duties claim separately from the Section 410 public policy claim. I will then proceed to discuss the Defendant's argument that the Plaintiff's suit is time-barred by ERISA's limitations period. I conclude with a Coda regarding the use of litigation to obtain judicial rule-making.
Section 404 lays out the obligations of ERISA fiduciaries. The Secretary's Section 404 claim relies on three related arguments: (1) that under Section 403, the Trustee is responsible for plan assets, assets that include the right to collect employer contributions to the Master Trust; (2) that PBS is a fiduciary for purposes of ensuring that the Trustee is fulfilling its ERISA obligations; and (3) that PBS violated its fiduciary duties under Section 404 by relieving the Trustee of an obligation under Section 403, i.e., its responsibility for the collection of employer contributions. The legal framework of the argument thus depends first on whether the Master Plan contravenes Section 403.
Section 403 of ERISA, which addresses the establishment of a trust for the assets of a benefits plan, identifies certain requirements for the treatment of those assets:
Except as provided in subsection (b) of this section, all assets of an employee benefit plan shall be held in trust by one or more trustees. Such trustee or trustees shall be either named in the trust instrument or in the plan instrument ... or appointed by a person who is a named fiduciary, and upon acceptance of being named...
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