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Isabella v. Express Products 401(k) Plan

March 4, 2009


The opinion of the court was delivered by: Thomas N. O'neill, Jr., J.


On June 6, 2008, plaintiffs Anthony Isabella and Timothy M. Eyer filed a complaint pursuant to the Employment Requirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (as amended) (ERISA) against defendants Express Products 401(k) Plan, Express Products, Inc. (EPI), Dan Geiger and State Street Bank and Trust Company On August 13, 2008, original plaintiffs, joined by plaintiffs David DeCamp and Karen Ezernack, filed an amended complaint alleging that defendants are liable for breaches of fiduciary duty under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2) (Count I) and for breaches of fiduciary duty under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3) (Count II). On November 12, 2008, I granted defendant State Street's uncontested motion for summary judgment and dismissed all claims against that party. Presently before me are the remaining defendants' motion to dismiss Count II of the complaint, plaintiffs' response and defendants' reply thereto.


On or about February 1, 2001, EPI started a 401(k) Plan for eligible employees. On December 1, 2002, it was restated by Automatic Data Processing (ADP). Plaintiffs, former employees of EPI, allege that Geiger, president and CEO of EPI, was administrator and fiduciary of the Plan.

Plaintiffs elected to participate in the Plan. They allege that, according to the Plan, if an employee elected to participate in the Plan and made elective deferrals EPI would contribute a Safe Harbor Matching Contribution (SFMC) equal to 100% of the first 4% of earnings that an eligible participant contributed to the Plan as an elective deferral. Plaintiffs contend that they met all of the conditions precedent under the Plan to be entitled to the SFMC. Plaintiffs allege that they were advised in August 2006 that EPI had not made matching contributions to the Plan for the years 2001 through August 2006. Plaintiffs claim that after several inquiries EPI began making SFMCs but failed to address the matching contributions that were not made previously.


Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss all or part of an action for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In ruling on a 12(b)(6) motion, I must accept as true all well-pleaded allegations of fact, and any reasonable inferences that may be drawn therefrom, in plaintiff's complaint and must determine whether "under any reasonable reading of the pleadings, the plaintiff[] may be entitled to relief." Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996) (citations omitted). Typically, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations," though plaintiffs' obligation to state the grounds of entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). A well-pleaded complaint may proceed even if it appears "that recovery is very remote and unlikely." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). When considering a Rule 12(b)(6) motion, I do not "inquire whether the plaintiff[] will ultimately prevail, only whether [he is] entitled to offer evidence to support [his] claims." Nami, 82 F.3d at 65, citing Scheuer, 416 U.S. at 236.


Plaintiffs have brought this action under ERISA § 502(a)(2) and § 502(a)(3) alleging that defendants breached their respective fiduciary duties by: (1) failing to select and appoint fiduciaries to administer the Plan and the SHMC provision; (2) failing to select and monitor fiduciaries; (3) failing to handle properly the administration of the Plan; (4) failing to pay the required SHMCs; (5) failing to act prudently; (6) failing to keep and maintain a proper claim procedure and process; (7) violating ERISA and other law with respect to contributions; (8) engaging in prohibited transactions under ERISA; and (9) otherwise failing to comply with ERISA.

Plaintiffs seek damages under ERISA § 502(a)(3) including: (1) a full and complete accounting with respect to the Plan and the SHMCs; (2) restitution in the form of full and complete benefits (SHMCs) with interest plus lost profits and economic loss; (3) injunctive relief in the form of an order requiring defendants to take corrective action as to its past acts and omissions and to avoid such claims, practices and procedures in the future; (4) removal of defendants as Plan administrators and fiduciaries and appointment of an independent fiduciary to handle the Plan and any inquiries with respect to it; (5) payments and reimbursements of all attorneys fees and costs incurred by this litigation; (6) and "any and all other relief, equitable or otherwise" deemed appropriate by the Court. Defendants have moved for dismissal of Count II because ERISA § 502(a)(3) does not permit non-equitable relief.

Section 502(a)(3) of ERISA provides Plan participants with a right to bring a civil action

(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan; or

(B) to obtain other appropriate equitable relief (i) to address such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan.

29 U.S.C. § 1132(a)(3). In Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002), the Supreme Court reiterated that "appropriate equitable relief" in Section 502(a)(3) of ERISA is to be narrowly interpreted as providing for "those categories of relief that were typically available in equity." Id. at 210 (2002), quoting ...

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