Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_04-cv-01358/USCOURTS-caed-2_04-cv-01358-60/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1145 E.R.I.S.A.

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1 Plaintiff Kathleen Ellis--the only plaintiff who is

represented by separate counsel--joined the motion for

reconsideration on August 26, 2009. (Docket No. 566.)

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

JAMES P. DEFAZIO, et al.,

Plaintiffs,

 v.

 HOLLISTER, INC., et al.,

Defendants. /

NOS. CIV. 04-1358 WBS GGH

 05-0559 WBS GGH

 05-1726 WBS GGH

 CONSOLIDATED

MEMORANDUM AND ORDER RE: MOTION

FOR RECONSIDERATION

----oo0oo----

On June 29, 2009, the court issued an Order in the

above-titled action (“June 29 Order”) granting in part and

denying in part the parties’ various cross motions for summary

judgment. Thereafter, on August 24, 2009, plaintiffs filed a

motion for reconsideration requesting that the court review and

set aside several findings of the June 29 Order.1

 Although

“[m]otions for reconsideration are disfavored,” Tucker v. Garcia,

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2 The factual and procedural background of this case

remains substantially the same as in the court’s June 29 Order. 

(See June 29 Order (Docket No. 559) 2:8-13:11.)

2

No. 03-5594, 2009 WL 2448595, at *1 (E.D. Cal. Aug. 10, 2009)

(Ishii, C.J.), plaintiffs have identified two Ninth Circuit

decisions issued after June 29, 2009, that they argue changed the

law as applied in the June 29 Order. See Dixon v. Wallowa

County, 336 F.3d 1013, 1022 (9th Cir. 2003) (noting that an

intervening change in the law is a valid basis for

reconsideration). The court will address each decision in turn.2

A. Harris v. Amgen, Inc.

Plaintiffs contend that the Ninth Circuit’s decision in

Harris v. Amgen, Inc., 573 F.3d 728 (9th Cir. 2009), issued on

July 14, 2009, undermines this court’s holding that plaintiffs

failed to demonstrate that they had Article III standing to seek

make-whole monetary relief pursuant to 29 U.S.C. § 1132(a)(2) for

their claims related to the 1999 Transaction. In Harris, the

Ninth Circuit rejected the argument that a former participant in

a defined contribution plan could not show redressability solely

because any recovery would go to the plan as a whole and

administrators had discretion in allocating plan assets. 573

F.3d at 735. Noting the distinction between defined benefit

plans such as pensions and defined contribution plans, the Ninth

Circuit explained that “‘the redressability problem that arises

in defined benefit plans does not exist with respect to defined

contribution plans’ because in defined contribution plans a

successful suit leads to restoration of individual accounts.” 

Id. (quoting In re Mut. Funds Inv. Litig., 529 F.3d 207, 218 (4th

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Cir. 2008)). The Ninth Circuit therefore held that “there is no

lack of redressability merely because a plaintiff’s recovery

under Section 502(a)(2) [29 U.S.C. § 1132(a)(2)] might first go

to the defined contribution plan rather than directly to the

plaintiff.” Id. at 736.

The Harris decision does not affect this court’s grant

of summary judgment in favor of defendants regarding plaintiffs’

lack of standing to seek relief under § 1132(a)(2). In its June

29 Order, the court did not hold that plaintiffs lacked Article

III standing solely because any recovery involving the 1999

Transaction would accrue to the HolliShare plan as a whole or

because plaintiffs had already received their final distributions

from HolliShare. Rather, the court recognized that plaintiffs

could have standing but held that they had failed to set forth

facts showing at least a genuine issue of material fact regarding

whether the value or composition of HolliShare’s assets would

have been any different during the time that plaintiffs still had 

HolliShare accounts in the absence of the alleged fiduciary

breaches related to the 1999 Transaction. (June 29 Order 55:17-

59:11.) 

As presented at summary judgment, plaintiffs’ request

for make-whole monetary relief was chiefly premised on a set of

assumptions and conjecture about how third-parties, whose

behavior was not governed by ERISA, would have responded if

HolliShare trustees had not voted in favor of the 1999

Transaction. Since the benefits to plaintiffs from the recovery

in this case thus depends upon the conduct of actors who retain

independent discretion, the court held that plaintiffs had failed

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3 This court also held that plaintiffs lacked

constitutional standing to seek equitable relief pursuant to 29

U.S.C. § 1132(a)(3). (June 29 Order 59:12-60:24.) Since Harris

only addressed claims under § 1132(a)(2), plaintiffs have not

identified any possible change in the law affecting that portion

of the court’s Order.

4

to carry their burden at summary judgment of supporting their

contention that make-whole monetary relief would redress the

alleged fiduciary breaches.

Accordingly, because the Ninth Circuit’s holding in

Harris that former participants in defined contribution plans

generally have Article III standing to pursue claims under §

1132(a)(2) does not alter the court’s analysis of plaintiffs’

standing in this case, the court will deny plaintiffs’ request to

reconsider the June 29 Order in light of that decision.3

B. Johnson v. Couturier

Plaintiffs next contend that the court’s rejection of

their argument that ERISA preempts the stock restrictions

contained in the JDS Articles and the mid-80s buy back agreements

has been implicitly overruled by the Ninth Circuit’s opinion in

Johnson v. Couturier, 572 F.3d 1067 (9th Cir. 2009), issued on

July 27, 2009. In Johnson, the Ninth Circuit held that ERISA

preempted section 317 of the California Corporations Code as

applied to certain indemnity agreements between the defendant

ERISA fiduciaries and the corporation of which they were

directors. 572 F.3d at 1078. The Ninth Circuit explained that

section 317 was preempted because it authorized indemnity

agreements that effectively limited the liability of fiduciaries

when they violated the ERISA fiduciary standard of care. Id.

There was thus no question in Johnson that a particular state law

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conflicted with provisions of ERISA.

In contrast, in its June 29 Order, this court rejected

plaintiffs’ preemption argument because they failed to identify

any provision of law or state action having the effect of law

that conflicts with the terms of ERISA. (June 29 Order 48:27-

49:22.) Instead, plaintiffs argued that the JDS stock

restrictions and the mid-80s buy-back agreements qualified as

state law because those instruments are purportedly enforceable

under Illinois law, and ERISA therefore preempts the provisions

of those instruments in conflict with ERISA. In Associated

General Contractors of America v. Metropolitan Water District of

Southern California, 159 F.3d 1178, 1183 n.2 (9th Cir. 1998),

however, the Ninth Circuit expressly rejected that contention,

holding that there is “no merit in [the] argument that simply

because a contract is legal and enforceable it has the effect of

law of a state.” The Ninth Circuit’s holding in Johnson did not

purport to overrule its earlier holding in Associated General

Contractors, and therefore Johnson did not effect an intervening

change in the law as applied in the June 29 Order. Accordingly,

the court will deny plaintiffs’ request that the court reconsider

the June 29 Order on that basis.

All of plaintiffs’ remaining arguments in support of

their motion for reconsideration simply restate their original

positions opposing summary judgment or otherwise fail to raise

new issues or identify errors that would justify reconsideration

of the court’s Order. See Carroll v. Nakatani, 342 F.3d 934, 945

(9th Cir. 2003) (“‘[A] motion for reconsideration should not be

granted, absent highly unusual circumstances, unless the district

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court is presented with newly discovered evidence, committed

clear error, or if there is an intervening change in the

controlling law.’” (quoting Kona Enters., Inc. v. Estate of

Bishop, 229 F.3d 877, 890 (9th Cir. 2000))); Vaughn v. Giurbino,

No. 06-1019, 2009 WL 382979, at *1 (E.D. Cal. Feb. 13, 2009)

(O’Neill, J.) (“‘A party seeking reconsideration must show more

than a disagreement with the Court’s decision, and recapitulation

of the cases and arguments considered by the court before

rendering its original decision fails to carry the moving party’s

burden.’” (quoting United States v. Westlands Water Dist., 134 F.

Supp. 2d 1111, 1131 (E.D. Cal. 2001)).

IT IS THEREFORE ORDERED that plaintiffs’ motion for

reconsideration be, and the same hereby is, DENIED.

DATED: September 2, 2009

 

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