The opinion of the court was delivered by: Yohn, J.
Plaintiff William Stanford, Jr., filed this class action individually and on behalf of all other similarly situated persons and on behalf of the Foamex L.P. Savings Plan (the "Plan") under section 502(a)(2) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(2). He asserts several claims against Foamex L.P. ("Foamex"), K. Douglas Ralph, Stephen Drap, Gregory J. Christian, and George L. Karpinski (collectively with Foamex, the "Foamex defendants") and against Fidelity Management Trust Co. ("Fidelity"). Now pending are cross-motions filed by plaintiff and defendants for summary judgment under Federal Rule of Procedure 56. For the reasons that follow, I will deny plaintiff's motion, I will grant in part and deny in part the Foamex defendants' motion, and I will deny Fidelity's motion.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY*fn1
Foamex is a wholly owned subsidiary of Foamex International, Inc. ("Foamex International"), which is engaged in the business of manufacturing and distributing foam products. Stanford v. Foamex L.P., 263 F.R.D. 156, 160 n.2 (E.D. Pa. 2009).*fn2 Foamex established the Plan to provide retirement income to eligible employees. Plaintiff Stanford is a former employee of Foamex and was a participant in the Plan. (Foamex Defs.' Statement of Uncontested Material Facts ("Foamex Facts") ¶ 1.)
The Plan was a 401(k) defined-contribution, or individual account, plan. The Plan allowed participating employees to make pre-tax contributions, through regular payroll deductions, to their individual accounts and to direct that their contributions be invested in one or more of the available investment options. (Decl. of Richard E. Spoonemore (Jan. 24, 2011) ("Spoonemore Decl.") Ex. A ("Plan") §§ 3.1, 4.4.) Under the terms of the Plan, Foamex matched the contributions of eligible employees, up to a specified level. (Plan § 3.2.1.) As the Summary Plan Description explained, a participating employee's account balance was "made up of [his or her] contributions, [Foamex's] matching contributions, . . . and investment earnings." (Fidelity's Statement of Undisputed Facts ("Fidelity Facts") Ex. 7, Summary Plan Description ("SPD") at 8.) A participant could "[e]xchange between investment options" and thereby "reallocate savings" in his or her account daily. (Id. at 8, 12.) The Plan made each participant "solely responsible" for investment decisions, and participating employees were informed that "[f]iduciaries of the Plan may be relieved of liability for any losses which are the direct and necessary result of investment instructions given by participants or beneficiaries." (Id. at 7--8.)
The Foamex L.P. Benefits Committee (the "Benefits Committee"), which was to consist of at least three members appointed by Foamex, the Plan sponsor, was the Plan administrator and the named fiduciary of the Plan. (Plan §§ 1.47, 12.3.) Defendants K. Douglas Ralph, Stephen Drap, Gregory J. Christian, and George L. Karpinski were members of Foamex's senior management and served on the Benefits Committee during the relevant period. (Foamex Facts ¶ 5.) Ralph was an executive vice president and the chief financial officer of Foamex. (Spoonemore Decl. Ex. F, Dep. of Kenneth Douglas Ralph ("Ralph Dep.") at 9:14--23.) Drap was the vice president of manufacturing for foam products. (Id. Ex. G, Dep. of Stephen Drap ("Drap Dep.") at 7:21--8:16.) Karpinski was a senior vice president and the treasurer of Foamex. (Spoonemore Decl. Ex. E, Dep. of George L. Karpinski ("Karpinski Dep.") at 9:11--16.) Christian, who was an executive vice president and Foamex's general counsel and secretary (Foamex Facts ¶ 6), was the chairman of the Benefits Committee (Fidelity Facts ¶ 4). On July 19, 2005, he was also named chief restructuring officer. (Foamex Facts ¶ 6; Fidelity Facts Ex. 1 (Minutes for the Foamex International Inc. Board of Directors Meeting (July 19, 2005)). Thomas A. McGinley, who is not named as a defendant, was Foamex's director of compensation and benefits (Spoonemore Decl. Ex. H, Dep. of Thomas McGinley ("McGinley Dep.") at 9:15--10:8), and served as the Benefits Committee's secretary, although he was not a member of the committee (Fidelity Facts ¶ 15; Pl.'s Undisputed Material Facts ("Pl.'s Facts") ¶ 19). The Benefits Committee had the "complete authority to control and manage the operation and administration of the Plan" (Plan § 12.1), including the authority to select the investment options available to Plan participants (Plan § 4.4).
Both Foamex, as the Plan sponsor, and the Benefits Committee, as the Plan administrator, had the authority to amend the Plan at any time. (Plan § 13.1.)
Fidelity served as the Plan's trustee, pursuant to a trust agreement (the "Trust Agreement") between Foamex and Fidelity. (Foamex Facts ¶ 3.) The Trust Agreement stated that the Benefits Committee, as the named fiduciary, would direct Fidelity as to the investment options in which Plan participants could invest (Spoonemore Decl. Ex. C ("Trust Agreement") § 4(b)),*fn3 and provided that Fidelity would "have no responsibility for the selection of investment options under the Trust and [would] not render investment advice to any person in connection with the selection of such options" (id. § 4(a)). The agreement further provided that Fidelity would not be liable for following a direction of the named fiduciary if the direction was in a writing signed by an authorized signatory and if Fidelity reasonably believed the signature to be genuine, "unless it is clear on the direction's face that the actions to be taken under the direction would be prohibited under ERISA or would be contrary to the terms of this Agreement." (Trust Agreement § 7(c)). McGinley was authorized to sign letters of direction to Fidelity on behalf of the Benefits Committee, both in its capacity as named fiduciary and in its capacity as Plan administrator (Fidelity Facts ¶ 18; Spoonemore Decl. Ex. L); he was also authorized to act on behalf of Foamex, as evidenced by the fact that he signed the Trust Agreement on behalf of Foamex (Fidelity Facts ¶ 19; Trust Agreement (signature page)).
Among the investment options available to Plan participants was the Foamex Stock Fund, a nondiversified stock fund that invested in the common stock of Foamex International. (Plan §§ 1.26, 1.32; Trust Agreement Sched. C.) The Foamex Stock Fund was a unitized fund and also included "cash or short-term liquid investments" in amounts designed "to satisfy daily participant exchange or withdrawal requests." (Trust Agreement § 4(e).) Accordingly, an investor's interest in the Foamex Stock Fund was measured in units of participation, rather than shares of common stock, and the value of each unit (the net asset value) was based on the price of the underlying Foamex International common stock as well as the value of the cash held by the fund. (Id.) This unitized structure enabled participants to invest in or transfer their investments out of the fund on a daily basis, rather than having to wait three days, the normal settlement period for purchases and sales of stock. It also allowed Fidelity to offset participant purchases and sales, thereby reducing the Plan's transaction costs. (Fidelity Facts Ex. 14, Decl. & Expert Report of Ellen A. Hennessy & John J. Miller ("Hennessy Report") ¶ 11.)
The Summary Plan Description explained that "[t]he investment performance of the fund is directly tied to the financial performance of Foamex International Inc. and its subsidiaries, along with general market conditions," and advised participants that "[b]ecause of the non-diversified nature of this fund, investing in this fund involves a greater element of risk than the other available funds." (SPD at 7.)
Under section 4(e) of the Trust Agreement, the Benefits Committee, as the named fiduciary, was charged with setting the target cash percentage and drift allowance in the Foamex Stock Fund after consulting with Fidelity.*fn4 And Fidelity was responsible for ensuring that the amount of cash in the Foamex Stock Fund fell within the agreed upon range. (Trust Agreement § 4(e).) Until July 2005, the Foamex Stock Fund maintained a target cash balance of 5%. (Foamex Facts ¶ 11; Spoonemore Decl. Ex. J, Dep. of Elisabeth Pathe ("Pathe Dep.") at 10:22--11:3.)
The Trust Agreement further provided that the Benefits Committee was responsible for "continually monitor[ing] the suitability under the fiduciary duty rules of section 404(a)(1) of ERISA . . . of acquiring and holding" the common stock of Foamex International, and that Fidelity would not be liable for any loss resulting from the directions of the Benefits Committee, as the named fiduciary, with respect to the acquisition or holding of Foamex International common stock, unless it was "clear on their face that the actions to be taken under those directions would be prohibited by [ERISA's] fiduciary duty rules or would be contrary to the terms of [the Trust] Agreement." (Trust Agreement § 4(e)(ii).)
C. Foamex's Financial Difficulties and Actions Taken with Respect to the Foamex Stock Fund
Foamex International and Foamex experienced financial problems, and on March 15, 2005, Foamex International filed a Form 8-K publicly announcing that Foamex had received waivers of compliance with financial covenants from certain of its lenders. (Fidelity Facts Ex. 21.) In its annual report (Form 10-K) filed on April 4, 2005, Foamex International informed investors that it "continue[d] to be highly leveraged and [had] substantial debt service obligations." (Supplemental Decl. of Richard E. Spoonemore in Supp. of Mot. for Class Certification (July 24, 2009) Ex. E at 9.) The company explained that "[f]or the last three fiscal years we have not generated enough cash flow from operations sufficient to pay our debt service obligations and capital expenditures." (Id. at 10--11.) On July 11, 2005, Foamex International issued a press release announcing that it had "significantly reduced its earnings expectations for the second quarter of 2005" and that it had retained an investment banking firm "to help evaluate strategic alternatives for strengthening the Company's balance sheet and enhancing long-term value." (Fidelity Facts Ex. 39 at 4.) The stock closed at $1.056 per share that day. (Spoonemore Decl. Ex. DD.) Around that time, a liquidity shortage in the Foamex Stock Fund resulted in a suspension of trading in and out of the fund. (Fidelity Facts ¶ 49.)
On July 13, 2005, the Benefits Committee determined that the Foamex Stock Fund was no longer an appropriate investment for Plan participants and decided to close the fund to new investments, but to allow those who had already invested in the fund to maintain their investments in the fund if they so chose. (Spoonemore Decl. Ex. M.) On July 14, 2005, Christian issued a memorandum to Plan participants informing them of this change:
The Benefits Committee regularly reviews the performance of the investments within the Foamex 401(k) Savings Plan to ensure the appropriateness of the options provided to participants. Due to the increasing volatility of the price of Foamex stock, the Benefits Committee has determined that the Foamex Stock Fund may no longer be an appropriate investment for a retirement plan such as the Savings Plan. Therefore, effective immediately, no additional employee contributions or Company Matching contributions will be directed into the Foamex Stock Fund. (Fidelity Facts Ex. 37.) The memorandum explained that "[t]his action applies only to new contributions. Money that is currently in the Foamex Stock Fund may remain in the Fund or can be moved into other investments within the Savings Plan." (Id.) On July 20, 2005, Fidelity mailed a letter to participants providing similar information. (Fidelity Facts Ex. 38.)
Fidelity and Foamex promptly amended the Trust Agreement to close the Foamex Stock Fund to new investments and exchanges into the fund. (Fifth Amendment to Trust Agreement.) And the Benefits Committee, acting on behalf of Foamex, amended the Plan. (Plan Amendment No. 4.)
On July 13, 2005, McGinley sent a letter to Fidelity directing the trustee to increase the cash component of the Foamex Stock Fund to 7%, subject to a minimum of 6.5% and a maximum of 7.5%. (Spoonemore Decl. Ex. O.) The letter, like the subsequent letters from McGinley to Fidelity (discussed below), bore the Foamex logo and the address of Foamex International, Inc., and identified McGinley as the director of compensation and benefits. (See Spoonemore Decl. Exs. O--R, T.)*fn5 The letter did not specify who was directing Fidelity to increase the cash target, but stated that Fidelity was being directed "[i]n accordance with the Trust Agreement between Foamex International Inc. and Fidelity Management Trust Company," (the agreement was actually between Foamex L.P. and Fidelity) and that the direction "shall apply until such time as Foamex International Inc. directs [Fidelity] in writing of any deviation to this letter." (Id.) McGinley testified that Christian, who was an executive vice president and Foamex's general counsel and secretary (Foamex Facts ¶ 6), made the decision to increase the cash target. (McGinley Dep. at 48:4--17.) And Christian similarly testified that "as an executive of the plan sponsor [Foamex]," he worked with McGinley and Fidelity in making the decision to increase the cash target. (Spoonemore Decl. Ex. D, Dep. of Gregory Christian ("Christian Dep.") at 35:12--36:5.) (The Foamex defendants explain that "Foamex entrusted Christian with ample authority to make [such] decisions" on behalf of Foamex. (Mem. of Foamex Defs. in Opp'n to Pl.'s Partial Summ. J. Mot. ("Foamex Opp'n Br.") at 1.) Plaintiff agrees that Christian took these actions on behalf of Foamex. Because both parties have agreed, I will accept this as true for purposes of these summary-judgment motions.) Although Christian was the chairman of the Benefits Committee, there is no evidence that the committee itself was involved in the decision to increase the target cash balance. (See Karpinski Dep. at 24:14--25:15 (testifying that neither he nor the Benefits Committee was involved in the decision); Ralph Dep. at 22:7--18 (same); Drap Dep. at 14:6--15:10 (same).)
In an August 15, 2005, press release, Foamex International announced that it was involved in negotiations with certain of its creditors. The company explained that "the restructuring of [its] balance sheet [might] be implemented by means of a case under chapter 11 of the Bankruptcy Code, possibly through a pre-arranged plan of reorganization." (Fidelity Facts Ex. 40 at 5.) The stock closed at $0.16 per share following this announcement. (Spoonemore Decl. Ex. DD.)
On September 19, 2005, Foamex International and certain of its subsidiaries, including Foamex, filed for bankruptcy. (Form 8-K (Sept. 21, 2005).*fn6 )According to Foamex International's press release, under the terms of the agreement in principle that it had reached with certain of its creditors, "there would be no recovery for holders of equity interests in the Company." (Id. (press release).) The company also announced that it had received notice that its stock would be delisted from Nasdaq on September 28, 2005. (Id.) The stock closed at $0.12 per share following Foamex's announcement. (Fidelity Facts Ex. 19-1, Decl. & Expert Report of M. Freddie Reiss (Oct. 29, 2010) ("Reiss Report") ¶ 26.) Following the delisting, the stock traded over the counter on the "Pink Sheets." (Id. ¶ 52.)
In a letter dated September 22, 2005, McGinley directed Fidelity to increase the target cash balance in the Foamex Stock Fund to 20%, ostensibly "to provide liquidity to satisfy daily participant requests." (Spoonemore Decl. Ex. P.) The letter did not specify who was directing Fidelity to increase the cash target, but stated that Fidelity was being directed "[i]n accordance with the Trust Agreement between Foamex International Inc. and Fidelity Management Trust Company," and that the direction "shall apply until such time as Foamex International Inc. directs [Fidelity] in writing of any deviation to this letter." (Id.) McGinley testified that Christian made the decision to increase the cash balance (McGinley Dep. at 74:11--75:5), and Christian testified that the decision was made on behalf of Foamex and that he did not recall discussing the matter with any of the other members of the Benefits Committee (Christian Dep. at 65:9--67:1). There is no evidence that the Benefits Committee was involved in the decision to increase the cash balance. (See Ralph Dep. at 26:2--12; Drap Dep. at 18:1--25.)
That same day, Foamex International released a term sheet describing the principal terms of its proposed plan of reorganization; under the terms of that plan, "[h]olders of equity interests in Foamex International Inc. [would] receive no distributions" and would not "retain any property on account of their equity interests, and such equity interests [would] be cancelled on the effective date of the [reorganization] Plan." (Fidelity Facts Ex. 49 (press release ¶ 9).)
On September 28, 2005, the closing price of Foamex International common stock was $0.045 per share, and Fidelity informed McGinley that because of the decline in the stock price, in order to keep the percentage of cash in the Foamex Stock Fund at only 20%, Fidelity would have to use cash in the fund to begin buying additional shares of Foamex International stock. (Supplemental Decl. of Richard E. Spoonemore in Supp. of Mot. for Class Certification (July 24, 2009) Ex. X.) In a letter dated September 29, 2005, McGinley directed Fidelity to "omit buys" for the Foamex Stock Fund: he instructed that "[s]hould the cash target move above its tolerance level . . . , no additional shares of Foamex Stock (FMXIQ) should be purchased." (Spoonemore Decl. Ex. Q.) The letter again did not specify who was directing Fidelity, but stated that Fidelity was being directed "[i]n accordance with the Trust Agreement between Foamex International Inc. and Fidelity Management Trust Company" and that the "direction shall apply until such time as Foamex International Inc. directs [Fidelity] in writing of any deviation to this letter." (Id.) McGinley testified that Christian made the decision to "omit buys." (McGinley Dep. at 85:23--86:2).
On December 23, 2005, Foamex International and its bankrupt subsidiaries filed a joint reorganization plan, which provided that all existing shares of Foamex International stock would be canceled without any compensation for shareholders. (Fidelity Facts Ex. 55.) The stock closed at $0.04 per share that day. (Reiss Report ¶ 31.)
Between September 8, 2005, and December 31, 2005, approximately one-fourth of the Fund investment units were transferred out of the Fund by Plan participants. (Foamex Facts ¶ 54.)
On January 4, 2006, representatives of Fidelity held a conference call with Christian and McGinley to discuss the Foamex Stock Fund. During that call, Christian informed Fidelity that he, on behalf of Foamex, had decided to close the fund and to reallocate the fund's assets to other funds. (Foamex Facts ¶¶ 47--48; Fidelity Facts ¶ 79.) (The Foamex defendants assert that Christian had the authority to make such a decision on behalf of Foamex (see Foamex Opp'n Br. at 1), and describe him as "the decision-maker for Foamex" (Foamex Facts ¶ 47).) In a subsequent e-mail, Fidelity informed Christian and McGinley that "[t]o begin the liquidation process," Fidelity would need a letter of direction authorizing the liquidation of the Foamex Stock Fund and that "[u]ntil the letter of direction is executed, Fidelity would also accept a letter of direction to raise the cash target in the [fund]." (Spoonemore Decl. Ex. NN.) Christian testified that during the conference call, Fidelity recommended that, as an interim step before closure, the cash balance in the fund be increased to 50%. (Christian Dep. at 96:17--97:10.)
In a letter dated January 6, 2006, McGinley directed Fidelity to maintain a target cash balance in the Foamex Stock Fund of 50%, subject to a minimum balance of 49% and a maximum balance of 51%, asserting that "[t]he purpose of this target cash balance is to provide liquidity to satisfy daily participant requests." (Spoonemore Decl. Ex. R.) Christian testified, however, that the purpose of increasing the cash target was to "phase in" the liquidation of the fund. (Christian Dep. at 104:2--7.) McGinley's letter once again did not specify who was directing Fidelity to increase the cash target, but stated that Fidelity was being directed "[i]n accordance with the Trust Agreement between Foamex International Inc. and Fidelity Management Trust Company," and that the direction "shall apply until such time as Foamex International Inc. directs [Fidelity] in writing of any deviation to this letter." (Id.) Christian testified that he made this decision to increase the cash balance and that no one else was involved in the decision. (Christian Dep. at 98:23--99:7.) McGinley similarly testified that, to his knowledge, members of the Benefits Committee were not informed of the decision to increase the cash balance. (McGinley Dep. at 126:18--127:7.) The stock closed at $0.02 per share that day. (Reiss Report ¶ 32.)
On January 20, 2006, McGinley countersigned a letter prepared by Fidelity that authorized Fidelity to begin liquidating the Foamex Stock Fund on January 23. In the letter, Fidelity "ask[ed] that an authorized signatory for the Named Fiduciary and Plan Administrator of the Plan [i.e., the Benefits Committee] review this letter and sign the final page indicating authorization and direction to take the steps outlined in this letter." The letter stated that "a decision has been made by Foamex L.P. to eliminate the Foamex Stock Fund as an investment option in the Plan" and that "Foamex L.P. agrees to execute an amendment to the Trust Agreement to reflect the elimination of the Foamex Stock Fund as an investment option in the Plan." McGinley signed the letter, stating that he was "an authorized signatory for the named fiduciary and Plan Administrator of Foamex L.P. 401(k) Savings Plan." (Spoonemore Decl. Ex. S.) The stock closed at $0.01 per share that day. (Reiss Report ¶ 33.)
In a notice dated January 27, 2006, Plan participants were advised by Fidelity that "[a]s a result of the filing of the proposed [reorganization plan] . . . , a decision has been made to liquidate the remaining shares of the Foamex Stock Fund." The notice explained that "[b]eginning on or about January 23, 2006, Foamex [International] shares held in the Foamex stock fund [would] begin to be liquidated" and that it was anticipated that they would "be sold in 10 to 20 business days." (Fidelity Facts Ex. 63.) Although Foamex did not amend the Trust Agreement, between January 23 and January 30, Fidelity liquidated all the Foamex International stock holdings in the fund. (Foamex Facts¶ 61; Pl.'s Facts ¶ 74.) The stock price ranged from one cent to two cents per share during that period. (Spoonemore Decl. Ex. DD.)
As a result of delays in the bankruptcy proceeding, however, the automatic cancellation of Foamex International stock was deferred. (Foamex Facts ¶ 62.) And during this time, a shortage in the supply of raw materials for the polyurethane foam industry, caused by the hurricanes in the Gulf of Mexico in August and September 2005, led to a spike in demand for Foamex products and allowed Foamex to raise prices. (Foamex apparently had made a strategic decision before its bankruptcy filing to pre-purchase large quantities of raw materials.) (Christian Dep. at 115:12--116:6.) In light of this improvement in Foamex's financial condition, Christian decided that the liquidation of the Foamex Stock Fund should be reversed (id. at 116:18--117:7), and on February 7, 2006, Foamex contacted Fidelity to discuss this possibility (Foamex Facts ¶ 63).*fn7 In a letter dated February 9, 2006, McGinley advised Fidelity that "[a]cting in its capacity as named fiduciary of the Plan, Foamex has determined that the removal of the Foamex Stock Fund should be delayed until further written direction" and directed Fidelity to repurchase shares of Foamex International stock and to maintain a target cash balance of 50%, subject to a minimum of 40% and a maximum of 60% "to provide liquidity to satisfy daily participant requests." (Spoonemore Decl. Ex. T at 1.) The letter stated that "Foamex has considered this direction in light of its fiduciary responsibilities under [ERISA]"; that "[a]fter Fidelity, as directed trustee, questioned the directions . . . , Foamex further considered the prudence of this direction"; and that "Foamex has discussed the directions . . . with its own legal counsel, who has advised that no provision of state or federal securities law or other applicable law prohibits Foamex from providing these directions to Fidelity." (Id. at 2.) The stock closed at $0.02 per share that day. (Spoonemore Decl. Ex. DD.)
Fidelity informed Plan participants of this repurchase in a notice dated February 24, 2006. Fidelity noted that it had recently been announced that remaining shares in the Foamex Stock Fund would be liquidated and transferred to a money-market fund on or about February 24, 2006, and explained that because of a delay in the company's bankruptcy proceedings, "the automatic liquidation of remaining shares in the Foamex Stock Fund has been deferred until further notice." Fidelity informed participants that the fund remained closed to additional contributions or exchanges into the fund but that participants could make exchanges out of the fund at any time. Fidelity further informed participants that Foamex had "directed Fidelity to maintain a target cash balance of 50% in the Fund, subject to a minimum balance of 40% and a maximum of 60%" and that "[t]he Benefits Committee may review this target cash balance in the future and adjust it as appropriate." (Supplemental Decl. of Richard E. Spoonemore in Supp. of Mot. for Class Certification (July 24, 2009) Ex. Q.)
The price of Foamex International stock began to increase in mid-April 2006. (Spoonemore Decl. Ex. DD.) On April 27, 2006, Foamex issued a press release asserting that it was "revising its business plan in light of recent favorable developments in Foamex's business performance." (Reiss Report ¶ 108 (quoting press release).) The stock closed at $2.37 per share following this announcement; a day later, the stock closed at $3.28 per share. (Spoonemore Decl. Ex. DD.) The Foamex Stock Fund did not fully realize the gains attendant to the stock price increases, however, because the fund maintained a 50% target cash balance; while the stock price increased from $0.02 per share on February 9, 2006 (when Foamex directed Fidelity to begin repurchasing stock for the Foamex Stock Fund) to $4.15 per share on December 22, 2006 (when the fund was ultimately closed and fully liquidated), the net asset value of the fund rose from $0.01 per unit to just $0.15 per unit over the same period. (See Spoonemore Decl. Ex. II, Expert Report of Dennis E. Logue (Aug. 9, 2010) ("Logue Report") Ex. 5.)
The Foamex Stock Fund was ultimately closed and was fully liquidated on December 22, 2006. Stanford, 263 F.R.D. at 162.
Plaintiff William Stanford, Jr., filed this class-action lawsuit on July 3, 2007, in the Western District of Washington, against the Foamex defendants and Fidelity under section 502(a)(2), 29 U.S.C. § 1132(a)(2), for losses sustained by the Plan as a result of the liquidation of the Foamex Stock Fund in January 2006 and certain adjustments to the fund's cash target. The case was transferred to this district on September 28, 2007.
After plaintiff filed an amended complaint, defendants filed motions to dismiss, which I denied except as to plaintiff's misrepresentation claim. See Stanford v. Foamex L.P., No. 07-4225, 2008 WL 3874823 (E.D. Pa. Aug. 20, 2008). Stanford amended his complaint twice more, and in his third amended complaint he asserts six counts. Plaintiff's claims are based on the following transactions: (1) the increase in the cash target for the Foamex Stock Fund to 20% on September 22, 2005; (2) the increase in the cash target to 50% on January 6, 2006; (3) the liquidation of the fund, as directed by the letter signed by McGinley on January 20, 2006; and (4) the reestablishment of the 50% cash target on February 9, 2006.*fn8 In count I, plaintiff claims that the Foamex defendants and Fidelity breached their fiduciary duty, as set forth in section 404(a)(1)(D) of ERISA, 29 U.S.C. § 1104(a)(1)(D), to act in accordance with the documents and instruments governing the Plan. Plaintiff asserts that the Foamex defendants breached their fiduciary duty by adjusting the cash target and by directing that the fund be liquidated in January 2006, even though they lacked the authority to do so. Plaintiff also claims that Fidelity breached its duty by following unauthorized and improper directions from Foamex. In addition to asserting that Foamex is directly liable under count I, plaintiff seeks, in count III, to hold Foamex liable for the breaches of fiduciary duty by the members of the Benefits Committee under the doctrine of respondeat superior. In counts II and V, plaintiff claims that Foamex failed to monitor the Benefits Committee and Fidelity, and thereby breached its duty of prudence under section 404(a)(1)(B) of ERISA, 29 U.S.C. § 1104(a)(1)(B). In count IV, plaintiff claims that Fidelity breached its duty, under section 403(a) of ERISA, 29 U.S.C. § 1103(a), to follow only the "proper directions" of the named fiduciary that are made in accordance with the terms of the Plan and are not contrary to ERISA, by following the unauthorized and improper directions of Foamex to liquidate the Foamex Stock Fund and adjust the cash target. And finally, in count VI, plaintiff seeks to hold each defendant liable for the breaches of fiduciary duty by the other defendants under section 405(a) of ERISA, 29 U.S.C. § 1105(a), which provides for cofiduciary liability.
On September 24, 2009, I granted plaintiff's motion for class certification as to the claims stated in plaintiff's third amended complaint. The class is defined as follows:
All individuals invested in the Foamex Stock Fund on September 22, 2005, except individuals who were members of the Foamex Benefits Committee at any time between September 22, 2005 and December 31, 2006, the members of their immediate families, and their heirs successors or assigns.
Stanford, 263 F.R.D. at 175.
After discovery, Fidelity filed a motion for summary judgment as to all claims against it. Plaintiff filed a cross-motion for partial summary judgment as to the liability of Fidelity under count IV and filed a motion for partial summary judgment as to the liability of Foamex and Christian under counts I and III. The Foamex defendants filed a cross-motion for summary judgment as to all claims against them.
A motion for summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). "Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no 'genuine issue for trial.'" Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting First Nat'l Bank of Ariz. v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
The moving party bears the initial burden of showing that there is no genuine issue of material fact and that it is entitled to relief. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met its initial burden, the nonmoving party must present "specific facts showing that there is a genuine issue for trial," Matsushita, 475 U.S. at 587 (internal quotation marks omitted), offering concrete evidence supporting each essential element of its claim, see Celotex, 477 U.S. at 322--23. The nonmoving party must show more than "[t]he mere existence of a scintilla of evidence" for elements on which it bears the burden of production, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986), and may not "rely merely upon bare assertions, conclusory allegations or suspicions," Fireman's Ins. Co. v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982). By the same token, "it is inappropriate to grant summary judgment in favor of a moving party who bears the burden of proof at trial unless a reasonable juror would be compelled to find its way on the facts needed to rule in its favor on the law." El v. SEPTA, 479 F.3d 232, 238 (3d Cir. 2007) (footnote omitted). In addition, the mere fact that parties have filed cross-motions for summary judgment "does not mean that the case will necessarily be resolved at the summary judgment stage," because "[e]ach party must still establish that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law." Atl. Used Auto Parts v. City of Philadelphia, 957 F. Supp. 622, 626 (E.D. Pa. 1997).
When evaluating a motion for summary judgment, the court "is not to weigh the evidence or make credibility determinations." Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1230 (3d Cir. 1993). "The evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Anderson, 477 U.S. at 255. "Summary judgment may not be granted . . . if there is a disagreement over what inferences can be reasonably drawn from the facts even if the facts are undisputed." Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737, 744 (3d Cir. 1996) (internal quotation marks omitted). "[A]n inference based upon a speculation or conjecture," however, "does not create a material factual dispute sufficient to defeat entry of summary judgment." Robertson v. Allied Signal, Inc., 914 F.2d 360, 382 n.12 (3d Cir. 1990).
Section 502(a)(2) of ERISA, 29 U.S.C. § 1132(a)(2), allows plan participants to bring suit against a plan fiduciary for relief under section 409, which imposes personal liability on "[a]ny person who is a fiduciary with respect to a plan who breaches any of the responsibilities, obligations, or duties imposed upon fiduciaries by [ERISA]," and requires such fiduciary "to make ...