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Michael Dann v. Lincoln National Corp.

February 10, 2011

MICHAEL DANN, PLAINTIFF,
v.
LINCOLN NATIONAL CORP., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Anita B. Brody, J.

MEMORANDUM

Plaintiff Michael Dann ("Dann") is a participant in a 401(k) employee retirement savings plan sponsored by Lincoln National Corporation ("LNC") that held LNC common stock as an investment. Dann brings this purported class action on behalf of the LNC Employees' Savings and Retirement Plan, the Lincoln National Life Insurance Company Agents' Savings and Profit-Sharing Plan, and the Delaware Management Holdings, Inc. Employees' Savings and 401(k) Plan (collectively the "Plans") against Defendants LNC, The Lincoln National Life Insurance Co., William H. Cunningham, Dennis R. Glass, Michael F. Mee, Patrick S. Pittard, LNC Benefits Committee, William David, Does 1-30, Delaware Management Holdings, Inc., Kelly Davis, Audrey Im, Sharon Marnien, Carolyn McIntyre, Kim Miner, Timothy Sexton, and Rebecca Silva (collectively "Defendants" or "Lincoln").

Dann brings suit under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. (2006), alleging that: (1) it was imprudent for the Plans to invest in LNC common stock and that Defendants breached their fiduciary duty by failing to provide plan participants with complete and accurate information; and (2) Defendants LNC and Dennis Glass (LNC's Chief Executive Officer, President, and a Board Member) failed to adequately monitor the other fiduciaries and failed to provide them with accurate information.*fn1 In its Answer to Dann's Complaint, Lincoln plead ten defenses. Dann now moves to strike the following eight of Lincoln's ten defenses. For the reasons that follow, I will grant in part and deny in part Dann's Motion to Strike.

I.BACKGROUND

Dann moves to strike the following defenses: FIRST DEFENSE To the extent applicable, the claims of Plaintiff and each member of the putative class are barred in whole or in part by the applicable statutes of limitations, including ERISA Section 413, 29 U.S.C. § 1113, and/or the doctrines of laches, waiver and/or estoppel. . .

THIRD DEFENSE Plaintiff and each member of the putative class have proximately caused, contributed to, or failed to mitigate any and all losses claimed by them and, as such, Defendants did not cause "any losses to the Plan" under ERISA Section 409(a), 29 U.S.C. § 1109(a). FOURTH DEFENSE To the extent the defense provided by ERISA Section 404(c), 29 U.S.C. § 1104(c), does not apply, Plaintiff and each member of the putative class acted as fiduciaries when they directed the investment of funds allocated to their account(s) and are therefore liable for any claimed losses.

FIFTH DEFENSE Any losses alleged by Plaintiff and each member of the putative class were not caused by any fault, act or omission by Defendants, but were caused by circumstances, entities or persons, including Plaintiff and each member of the putative class, for which Defendants are not responsible and cannot be held liable.

SIXTH DEFENSE ERISA Section 514(d), 29 U.S.C. § 1144(d), prohibits ERISA from being used to alter, modify, or impair federal securities law or other federal laws. . . .

EIGHTH DEFENSE Fiduciaries are not required or permitted to violate securities laws, or any other law, to satisfy their fiduciary obligations.

NINTH DEFENSE Plaintiff and each member of the putative class have each failed to exhaust the administrative remedies available to them under the terms of the Plans, and their claims should therefore be remanded to the plan administrator for a determination in the first instance.

TENTH DEFENSE The plan administrator has discretion to interpret the Plans and make factual determinations under the Plans.

II.LEGAL STANDARD

Federal Rule of Civil Procedure 12(f) provides that "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Fed. R. Civ. P. 12(f). "[S]triking a pleading is a 'drastic remedy' to be used sparingly because of the difficulty of deciding a case without a factual record." BJ Energy, LLC v. PJM Interconnection, LLC, Nos. 08-3649, 09-2864, 2010 WL 1491900, at *1 (E.D. Pa. Apr. 13, 2010) (quoting N. Penn. Transfer, Inc. v. Victaulic Co. of Am., 859 F. Supp. 154, 158-59 (E.D. Pa. 1994)). Thus, although Rule 12(f) grants the court the power to grant a motion to strike, such motions "are not favored and usually will be denied unless the allegations have no possible relation to the controversy and may cause prejudice to one of the parties, or if the allegations confuse the issues." Wilson v. King, No. 06-2608, 2010 WL 678102, at *2 (E.D. Pa. Feb. 24, 2010) (quoting N. Penn. Transfer, 859 F. Supp. at 158 (internal quotations omitted)).

When a party moves to strike a defense on insufficiency grounds, the motion should not be granted "'unless the insufficiency of the defense is clearly apparent.'" Nupro Indus. Corp. v. Lexington Ins. Co., No. 08-4809, 2010 WL 2553698, at *2 (E.D. Pa. June 21, 2010) (quoting Synthes v. Globus Med., Inc., No. 04-1235, 2007 WL 1001587, at *1 (E.D. Pa. Mar. 29, 2007)). Further, a "'motion to strike will not be granted where the sufficiency of a defense depends on disputed issues of fact. Even when the facts are not in dispute, Rule 12(f) is not ...


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