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Schmolzا⑺盚 Usa, Inc., Et v. Brian Dauble

January 28, 2011

SCHMOLZҀ訐큀 USA, INC., ET AL., PLAINTIFFS,
v.
BRIAN DAUBLE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Pratter, J.

MEMORANDUM

INTRODUCTION

Three Plaintiffs -- Schmolz Bickenback USA, Inc. ("S"), the Ugitech, USA Inc. Money Purchase Plan ("the Plan") and Plan trustee Tony Elfstrom -- claim that the Defendants, former employees of S's successor corporation, were unjustly enriched as the result of an error that the Plaintiffs made in calculating pension plan distributions to the Defendants (collectively, "the Employees"). The Plaintiffs claim that they are entitled to restitution. The claim arises pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA").

In answering the Complaint, the Employees filed counterclaims against the Plan, seeking declaratory relief; against all of the Plaintiffs, seeking equitable relief; and against Mr. Elfstrom, alleging breach of fiduciary duty. Although there were eight Defendant Employees when the Complaint was first filed, five have settled with the Plaintiffs and are no longer parties. The three remaining Employees are Brian Dauble, Patrick Mullaney and Christopher Zimmer.

In two similar motions now before the Court, the Plaintiffs seek dismissal of all of the Employees' counterclaims.*fn1 For the reasons set forth below, these motions will be granted.

JURISDICTION

The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1331.

FACTUAL AND PROCEDURAL BACKGROUND

S is an Illinois corporation, and is the current sponsor of the Plan, which was established in 1985 and is an "employee pension benefit plan" within the meaning of Section 3(2)(A) of ERISA, 29 U.S.C. § 1003(2)(A). Mr. Elfstrom was appointed trustee of the Plan on December 13, 2007, and S became the sponsor of the Plan when the Plan's original sponsor, Ugitech USA ("Ugitech"), merged into S on May 1, 2008.

The Employees are citizens of Pennsylvania, former employees of Ugitech, and former participants in the Plan. In 2008, each of the Employees was terminated by S, and became eligible to request a distribution of Plan benefits, either in the form of a lump sum or in the form of an annuity. Each Employee elected to receive a lump sum distribution, and their distributions were duly "rolled over" into their IRA accounts.

In December of 2009, the Plaintiffs sued the Employees, alleging in a 17-count Complaint that each of the Employees had, due to an error on the part of the Plaintiffs, received more than the amount to which he or she was entitled; and further alleging that the Employees had refused to reimburse the Plaintiffs once the mistake had been discovered. As against each Employee, the Plaintiffs have asserted one claim of unjust enrichment and a second requesting restitution pursuant to Section 1132(a)(3) of ERISA.*fn2

At all relevant times, the distributions to Plan participants were calculated by S's Director of Human Resources, who was also the Plan Administrator. The Plaintiffs claim that in processing the distributions to the Employees, the Plan Administrator made an error that led each Employee to receive a significantly larger distribution than was appropriate.*fn3 Specifically, the Plaintiffs say that the Plan Administrator incorrectly used a "distribution determination date" of December 31, 2007 instead of December 31, 2008.*fn4 The choice of date is significant because the value of the Plan declined substantially during the 2008 calendar year, so an earlier distribution determination date -- i.e., one before the decline in value -- entailed a much larger distribution.

In February of 2010, Messrs. Dauble and Mullaney -- along with two other Employees who are no longer parties -- filed an answer asserting two counterclaims against the Plan and all of the Plaintiffs seeking declarative and injunctive relief (Counts I and II), and a third against Mr. Elfstrom, as the Plan's trustee, alleging breach of fiduciary duty (Count III). Mr. Zimmer soon thereafter also filed an answer presenting substantially identical counterclaims. The Plaintiffs have moved to dismiss all of the ...


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