Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-03506/USCOURTS-cand-3_04-cv-03506-4/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JOSEPH MINIACE, 

Plaintiff,

 v.

PACIFIC MARITIME ASSOCIATION, 

Defendant.

______________________________________/

PACIFIC MARITIME ASSOCIATION, 

Counterclaimant and

Cross-Claimant,

vs.

JOSEPH N. MINIACE; JEANNETTE COBURN;

MICHAEL E. CORRIGAN;

BENMARK, INC.; CORRIGAN & COMPANY;

and BENMARK WEST,

Counterdefendant and 

Cross-Defendants.

 /

No. C 04-03506 SI

ORDER DENYING MOTION TO

INTERVENE; DENYING PMA’S

MOTION FOR PRELIMINARY

INJUNCTION; AND GRANTING IN

PART THE CORRIGAN DEFENDANTS’

MOTION TO DISMISS

On July 8, 2005, the Court heard oralargument on ILWU-PMA’s motionto intervene,PMA’s motion

for a preliminary injunction, and a motion to dismiss brought by Michael Corrigan, Corrigan & Company and

Benmark West. Having carefully considered the arguments of counsel and the papers submitted, the Court

hereby: DENIES the motion to intervene;DENIES the motion for a preliminary injunction; and GRANTS IN

PART and DENIES IN PART the motion to dismiss.

 

BACKGROUND

Pacific Maritime Association is a non-profit mutualbenefit corporation, whose members are maritime

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 ILWU is the International Longshore and Warehouse Union.

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shipping carriers thatservice ports on the West Coast. PMA negotiates and administers collective bargaining

agreements for longshoremen and other port workers, as well as oversees employment benefit plans for the

workers. Plaintiff Joseph Miniace was President of PMA from 1996 until March 2004. Thomas McMahon

was PMA’s Chief Financial Officer from 1982 until his death on May 3, 2002.

The dispute before this Court surrounds a death benefit payment under a Secured Executive Benefit

Plan (SEBP)to McMahon’s widow, Jeannette Coburn, ofmore than $9,000,000. PMA received $986,383,

the amount of premiums paid on McMahon’s behalf. PMA claims that Miniace and McMahon altered the

SEBP in 2002 to pay the bulk of the death benefits to McMahon’s heirs. PMA also claims that the Board of

Directors did not know of the 2002 alteration to the SEBP.

PMA terminated Miniace’s employment on March 17, 2004. As a result, Miniace filed a complaint

against PMA in California Superior Court on July 21, 2004, alleging breach of contract, violation of the labor

code, promissory estoppel, and intentional infliction of emotional distress. PMA removed the case to this

Court, and filed counterclaims and cross-claims against Miniace, Jeannette Coburn, Michael Corrigan,

Benmark, Inc., Corrigan & Company, and Benmark West.

Now before the Court is the motion by the Trustees of the ILWU-PMA1 Pension and Welfare Plan

to intervene; PMA’s motion for a preliminary injunction against Jeanette Coburn; and a motion to dismiss

brought by Michael Corrigan, Corrigan & Company and Benmark West. 

DISCUSSION

I. Motion to intervene

In their capacity as Trustees of the ILWU-PMA Pension and Welfare Plans, James Spinosa, Robert

McEllrath, Joseph Wenzl, and Ray Ortiz bring a motion to intervene in this action. They claim that intervention

is appropriate under Federal Rule of Civil Procedure 24(a) and (b). Intervenors claim thatMiniace, a trustee

ofthe ILWU-PMA pension plan (“the Plan”), breached hisfiduciary duty to the Plan because he had a financial

incentive in his contract with PMA to reduce contributions to the Plan. The proposed complaint in intervention

names Miniace and PMA as defendants.

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2 The foregoing facts have been taken fromintervenors’ complaint, which the Court accepts as true for

purposes of this motion. 

3

At issue is the Twenty-Sixth Amendment to the Plan. The Plan had a requirement that annual employer

contributions must be at least the amount of administrative costs and payments made from the Plan. However,

Miniace proposed a modificationin 1997 that allowed employer contributions to be sufficient if they consisted

ofonly 85% ofthe Plan expenditures. This proposal was accepted by the President ofILWU and became the

26th Amendment. In order for the Amendment to go into effect, the Plan Trustees were required to seek

approval from the Pension Benefits Guaranty Corporation (“PBGC”). Miniace submitted the Amendment to

the PBGC without informing other Plan Trustees, and the Amendment was approved.2 According to

intervenors, the Amendment has resulted in contribution reductions of at least $100 millionin PlanYears 1999

and 2000.

Intervenors allege that Miniace breached his fiduciary duty to the Plan because he had an incentive

scheme under his PMA contract that rewarded any decrease in contributions to the Plan. Intervenors also

assert that PMA breached its fiduciary duties because it “appointed Miniace as a Trustee while conditioning

his compensation on successful implementation of the 26th Amendment.” Mot. at 4. Intervenors draw on

language in Miniace’s Complaint that he “performed all conditions, covenants and policiesrequired on his part

to be performed in accordance with the terms and conditions of his contract with PMA.” Miniace Compl. at

¶ 16. Intervenors contend that one ofthese accomplishments was his ability to amend the Plan. See Miniace

Compl. at ¶ 12. 

Intervenors contend that interventionis appropriate because theylearned fromMiniace’s complaint that

his compensation at PMA was conditioned in part on the implementationofthe 26th Amendment. Once they

learned of this, intervenors claim that they requested information regarding 

any financial incentives provided by PMA related to the 26th Amendment, but PMA refused their request.

Additionally, intervenors claim that they cannot now obtain this information because of the protective order

among the parties in this case. Intervenors assert that their “principalobjective . . . in intervening in this action

is to gain access to informationregarding the financialincentives offered by PMA to Miniace, which, according

to the Complaint, were conditioned on the manner in whichMiniace carried out his fiduciary duties as Trustee

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of the ILWU-PMA Pension Plan.” Reply at 2.

The intervenors provide only a brief discussion ofwhether theymeet the standard forinterventionunder

Rule 24(a) or (b). PMA and Maritech Corporation filed an opposition to the motion to intervene, whichwas

joined by Miniace. In their reply, intervenors relegate Rule 24(a) to a single footnote and only discuss whether

interventionis appropriate under Rule 24(b)“forthe limited purpose ofmodifying the parties’ stipulated blanket

protective order.” Reply at 2.

A. Rule 24(a)

A motion to intervene under Rule 24(a) is subject to the following four-part test:

(1) the motion must be timely; (2)the applicant must claim a “significantly

protectable” interest relating to the property or transaction which is the

subject of the action; (3) the applicant must be so situated that the

disposition of the action may as a practical matter impair or impede its

ability to protect that interest; and (4) the applicant’s interest must be

inadequately represented by the parties to 

the action.

Forest ConservationCouncil v. U.S. Forest Service, 66 F.3d 1489, 1493 (9th Cir. 1995) (quoting Sierra Club

v. U.S. Environmental Protection Agency, 995 F.2d 1478, 1481 (9th Cir. 1993)). 

The Court findsthat intervention under Rule 24(a) is not appropriate because the intervenors have not

demonstrated a “signficantly protectable” interest relating to the property subject to this litigation. This

requirement is met only if the resolution of the pending claims actually will affect the intervenor. Arakaki v.

Cayetano, 324 F.3d 1078, 1084 (9th Cir. 2003). Intervenors’ claims relate to Miniace’s and PMA’s

involvement in the Plan, specifically the enactment ofthe 26th Amendment. These claims are not impacted by

the current claims before this Court.

Miniace in his complaintseeks compensation under his employment contract with PMA. Miniace has

asserted causes of action for breach of contract, Labor Code violations, promissory estoppel and intentional

infliction of emotional distress. See Medina Decl., Ex. 1. These claims do not relate to the ILWU-PMA

Pension Plan or the 26th Amendment, and intervenors can file their complaint as an independent action thatwill

not be impacted by the resolution of the action currently before this Court.

The Miniace Complaint does make a brief reference to the 26th Amendment. See Medina Decl. Ex.

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1 at ¶ 12. However, this is background information that demonstrates the quality of his performance as

President. The counter-claims and cross-claims asserted by PMA and Maritech Corporation do not even

mention the 26th Amendment of the ILWU-PMA Pension Plan. See Medina Decl., Ex. 2. These claims

involve the Secured Executive Benefits Plan (“SEBP”), alleged misappropriation of directors’ fees, and

unauthorized executive benefits. In order to resolve the current disputes, it will not be necessary to litigate the

meaning, negotiation or implementationofthe 26th Amendment. Nor will it be necessary to litigate the fiduciary

duties owed to the ILWU-PMA Pension Plan by Miniace and PMA. Therefore,the Courtfindsitinappropriate

for the intervenors to “inject new, unrelated issues into the pending litigation.” Arakaki, 324 F.3d at 1086. 

Based onthe Court’s finding that the intervenors have failed to demonstrate a “signficantly protectable”

interest relating to the property subject to this litigation, the Court DENIES the motion to intervene pursuant

to Rule 24(a).

B. Rule 24(b)

Interventionmay be allowed atthe Court’s discretionwhen the intervenors’ claim and the current action

have a common question of law or fact and allowing intervention “will not unduly delay or prejudice the

adjudication of the rights of the original parties.” Fed. R. Civ. P. 24(b). In determining whether a “common

question” exists, courts should construe the requirement liberally. Stallworth v. Monsanto Co., 558 F.2d 257,

265 (5th Cir. 1977). However, intervention under Rule 24(b) is “not intended to allow the creation ofwhole

new lawsuits by the intervenors.” Deus v. Allstate Insurance Co., 15 F.3d 506, 525 (5th Cir. 1994).

As discussed above, the Court findsthat the intervenors’ claims do not have a common question oflaw

or fact with the current action. The intervenors assert claims against Miniace and PMA for breach of fiduciary

duty with respect to the ILWU-PMA Pension Plan based on the implementation of the 26th Amendment.

Neither Miniace, PMA, nor Maritechmakes any claims related to the ILWU-PMA Pension Plan or the 26th

Amendment. Therefore, there are no common questions of law. 

The intervenors assert that a common question of fact exists because Miniace refers to the 26th

Amendment in his Complaint. However, Miniace’s claims do not depend on whether he was offered

compensation from PMA for implementing the 26th Amendment in 1997. Specifically, Miniace claims that he

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is entitled to: 1) a bonus for remaining employed from March 6, 2001 to March 6, 2004; 2) a bonus for

reaching productivity goals in 2003; 3) a severance award for being terminated without cause; 4) waiting time

penaltiesfor PMA’sfailureto paywages immediately upon termination; and 5) damages forintentionalinfliction

of emotionaldistress. These claims raised by Miniace do not raise common questions of fact with intervenors’

complaint, which deals with the enactment of the 26th Amendment in 1997.

Perhaps recognizing the weakness oftheir argument, intervenorsfocus their discussion in the reply brief

on intervention under Rule 24(b) for the limited purpose of modifying the protective order in this case.

Intervenors claim that the protective order will prevent them fromobtaining documents related to any financial

incentives to implement the 26th Amendment. However, intervenors do not identify any documents that the

parties in the action are withholding because of the protective order.

Intervenor Spinosa asserts that he attempted to obtain relevant information regarding the 26th

Amendment from PMA after the Miniace Complaint was filed, but has been unsuccessful. See Spinosa Decl.

at ¶ 2. However, PMA received information requests from ILWU regarding the 26th Amendment in 2001 and

2002. Epperson Decl. at ¶ 6. The ILWU disputed the production of information by PMA and brought the

issue to the National Labor Relations Board (“NLRB”), which found in favor of PMA. See Epperson Decl.,

Ex. 4. Since the NLRB’s decision, PMA has not received any written requests for information regarding

compensation for Miniace related to the 26th Amendment. Epperson Decl. at ¶ 9. 

Intervenors claim that they are entitled to intervene to challenge the protective order under San Jose

Mercury News v. United States District Ct.--Northern District of California (San Jose), 187 F.3d 1096 (9th

Cir. 1999) and Beckman Industries v. InternationalInsurance Co., 966 F.2d 470 (9th Cir. 1992). However,

the circumstances surrounding the current motion differ greatly from San Jose Mercury News and Beckman.

In San Jose Mercury News, a newspaper filed a motion to intervene in order to obtain a report regarding

sexual harassment claims asserted against the police department. The newspaper sought the information in

order to inform the public about the operations of the police department. Here, intervenors seek the

information for their potential use in litigation. 

In Beckman Industries, the court allowed intervention for an insured who requested documents from

a previous litigation involving the same defendant insurer. The insurer asserted that it could not produce the

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documents because discovery from the previous case was subject to a blanket protective order. 966 F.2d at

472-474. However, the intervenor had already filed a separate action in state court. Here, intervenors have

not filed a separate action against PMA and Miniace, nor have they identified any documents that PMA has

refused to produce based on the protective order in this case.

 The Court finds that intervention is not appropriate under Rule 24(b) to allow intervenors to challenge

the protective order. Intervenors have not filed suit against PMA and Miniace, they have not made a single

written request to obtain the documents, and they have not identified any documents relevant to their claims that

are subject to the protective order. Therefore, the Court DENIES the motion to intervene under Rule 24(b).

II. Motion for preliminary injunction

PMA brings a motion for a preliminary injunction. Specifically, PMA requests an order restraining

Coburn and her agents from spending, committing or otherwise disposing of the death benefit proceeds she

received under the SEBP without prior written notification to PMA, and written notification to and approval

by the Court. PMA also seeks to require Coburn to provide PMA with copies of monthly account statements

forthe funds during the pendency of this action. PMA argues that the preliminary injunctionis proper because

PMA is likely to succeed on the merits, because the Board did not approve the alteration to McMahon’s SEBP

carried out by Miniace and McMahon. Additionally, PMA claims that it will be irreparably harmed if Coburn

spends the SEBP proceeds and PMA is unable to recover damages as a result.

The Court has the authority to grant a preliminary injunction in the exercise of its equitable powers.

Fed. R. Civ. P. 65. As the Court is acting in equity, the decision to enter a preliminary injunction is largely left

to its discretion. See Big Country Foods, Inc. v. Board ofEduc. ofAnchorage SchoolDist., 868 F.2d 1085,

1087 (9th Cir. 1989). 

At the extremes, the party seeking injunctive relief must show either (1) a combination of probable

success on the merits and the possibility of irreparable harm, or (2) that serious questions are raised and the

balance of hardships tips sharply in the moving party's favor. Miss World (UK) Ltd. v. Mrs. America

Pageants, Inc., 856 F.2d 1445, 1448 (9th Cir. 1988); Rodeo Collection, Ltd. v. West Seventh, 812 F.2d

1215, 1217 (9th Cir. 1987). "These are not two distinct tests, but rather the opposite ends of a single

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'continuum in which the required showing of harm varies inversely with the required showing of

meritoriousness.'" Miss World, 856 F.2d at 1448 (quoting Rodeo Collection, 812 F.2d at 1217). However,

in any situation, the Court must find that there is some threat of an immediate irreparable injury, even if that

injury is not of great magnitude. Big Country, 868 F.2d at 1088 (citing cases); Oakland Tribune, Inc. v.

Chronicle Publishing Co., Inc., 762 F.2d 1374, 1376 (9th Cir. 1985) (citing cases). 

PMA seeks to alter the status quo by preventing Coburn from accessing funds currently in her

possession without Court approval. When a party requests relief that alters the status quo, the request is

subject to higher scrutiny and it carries a heavy burden of persuasion. Tom Doherty Assocs., Inc. v. Saban

Entertainment, Inc., 60 F.3d 27, 32-33 (2nd Cir. 1995). Regardless of whether it applies this higher burden

or not, the Court finds that granting PMA’s request is not appropriate at this time.

The Court finds that PMA has not demonstrated a threat of irreparable injury if the preliminary

injunction is denied. The Court has reviewed the financialrecords submitted under seal. The Court has found

no evidence to support PMA’s assertion that the assets will be dissipated by the time this matter can be

resolved on the merits. Coburn’s spending habits since 2002 have been reasonable, and PMA acknowledges

that Coburn has other significant assets available to her. Furthermore, PMA waited nearly eight months from

filing cross-claims to bring this motion, which undermines its argument that “irreparable injury” is imminent.

Therefore, the Court finds that PMA has demonstrated at most a remote possibility of irreparable harm.

Because of PMA’s failure to demonstrate a significant possibility of irreparable harm, the Court must

only briefly discuss its likelihood of success on the merits. Based on the evidence submitted, the Court

recognizes that the parties raise complicated issues surrounded by highly disputed facts. The Court finds that

Coburn has some likelihood ofsuccess on the merits. Coburn presents testimony thatMiniace believed he had

the authority to modify the SEBP. Coburn also presents evidence that the SEBP gave management the power

to execute agreements and documents, and take other actions to give effect to the Plan. See Wexler Decl.,

Ex. 70. There is also evidence that Board members believed that PMA should not benefit from the death of

its employees. See Wexler Decl., Ex. G at 122. Miniace’s decision to “flip” the plan also coincided with an

IRS notice that had implications for the SEBP.

Additionally, Coburn presents evidence that the Board ofDirectors allowed the President of PMA to

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3 For purposes of this motion, the Court will refer to the cross-claimants PMA and Maritech

Corporation as “PMA.”

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establish executive compensation for all executives beside himself. See Wexler Decl., Ex. G at 81. This is

supported by evidence that current executives at PMA have also amended their SEBPs without Board

approval. See Opp’n at 15. 

The Court provides this discussion of evidence presented in support of Coburn’s arguments not

because it finds that Coburn will or should succeed on the merits. Instead, the above discussion merely

demonstrates that Coburn has some likelihood of success on the merits, which is sufficient to defeat PMA’s

motion for preliminary injunction given the dearth of irreparable injury demonstrated by the moving party.

Therefore, the Court DENIES PMA’s motion for a preliminary injunction. 

III. Motion to dismiss

PMA and Maritech Corporation,3 a wholly owned subsidiary of PMA that provides payroll services

to PMA and other customers, filed cross-claims against MichaelCorrigan, Corrigan& Company and Benmark

West. These claims were the Twelfth through Nineteenth Causes of Action in PMA’s First Amended

Counterclaims and Cross-claims. Cross-defendants Corrigan, Corrigan & Company and Benmark West

(“Corrigan defendants”) have brought a motion to dismiss, arguingthatdismissalofvarious claims filed by PMA

is proper. The Court will discuss each in turn below.

A. Legal standard

A motion to dismiss for failure to state a claim will be denied unless it appears that the plaintiff can

prove no set of facts which would entitle it to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99,

102 (1957); Fidelity Fin. Corp. v. Federal Home Loan Bank, 792 F.2d 1432, 1435 (9th Cir. 1986). All

materialallegations in the complaint willbe takenas true and construed in the lightmost favorable to the plaintiff.

NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

B. ERISA preemption

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The Corrigan defendants argue that ERISA preempts PMA’s Twelfth through Fifteenth Causes of

Action because PMA’s claims relate to the Secured Executive Benefit Plan (“SEBP”). In these Causes of

Action, PMA asserts claims for: 1) breach of contract; 2) breach of fiduciary duty; 3) negligence; and 4)

vicarious liability for breach of fiduciary duty by others. PMA seeks damages in excess of $10 million, based

on the allegedly wrongful payment of benefits to Coburn under the SEBP and commissions paid by PMA to

the Corrigan defendants.

ERISA’s preemption provision states that ERISA shall “supercede any and all State laws, insofar as

they may now or hereafter relate to any employee benefit plan described in Section 1003(a) ofthis title and not

exempt under Section 1003(b) ofthis title.” 29 U.S.C. § 1144(a). Therefore, state laws are preempted when

there is an employee benefit plan as defined by ERISA and the state law “relates to” the ERISA plan. Harper

v. AmericanChambers Life Insurance Co., 898 F.2d 1432, 1433 (9th Cir. 1990). The parties agree that the

SEBP is an employee benefit plan as defined by ERISA. However, the parties dispute whether PMA’s claims

against the Corrigan defendants “relate to” the SEBP ERISA plan.

The Corrigan defendants argue that the claims “relate to” an ERISA plan, “because they seek to

recover fromCorrigan $9.6 million in SEBP benefits PMA claims were wrongfully paid to Coburn.” Mot. at

9. PMA asserts that preemption is not appropriate because its claims arise out of PMA’s business relationship

with an insurance broker, which is a relationship not otherwise regulated by ERISA. Because of this, PMA

argues that its state law claims against the Corrigan defendants will not affect a relationship between ERISA

participants and do not constitute “alternative enforcement mechanisms” in relation to an ERISA plan.

“It is with great trepidation thatwe tread into the field ofERISA preemption.”Dishmanv. UNUM Life

Insurance Co. ofAmerica, 269 F.3d 974, 980 (9th Cir. 2001). This trepidation is based on the “amorphous

contours ofthe preemption doctrine.” Id. After careful consideration of this difficult issue, the Court finds that

PMA’s claims against the Corrigan defendants are not preempted for the reasons provided below.

The parties agree that the Corrigan defendants are not ERISA fiduciaries. See Rutledge v. Seyfarth,

Shaw, Fairweather & Geraldson, 201 F.3d 1212, 1220 (9th Cir. 2000) (noting that professionals providing

advice regarding an ERISA plan are not fiduciaries unless they “exercise authority over the plan in a manner

other than by usual professional function”). “ERISA does not necessarily preempt relationships between an

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4 The court in Rutledge also considered whether: 1) state laws mandate employee benefit structures

or their administration; 2) state laws preclude uniform administrative practice; and 3) state laws provide

alternative mechanisms for employees to obtain ERISA plan benefits. 201 F.3d at 1217-1218. 

5 The court in Dishman stated: “First, we note that the Supreme Court’s recent cases have eschewed

such multi-factor tests in favor of a more holistic analysis guided by congressional intent. Second, though

perhaps usefultools in other contexts, these tests are ofmarginalutility, where, as here, the question boils down

to whether state tort law ‘relates to’ an ERISA plan.” 269 F.3d at 981 n. 15.

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ERISA entity and a third party.” Geweke Ford v. St. Joseph’s Omni Preferred Care, Inc., 130 F.3d 1355,

1360 (9th Cir. 1997). The parties also agree that PMA will not be able to bring a cause of action under

ERISA against the Corrigan defendants if these claims are preempted by ERISA. “The lack of an ERISA

remedy against [a third party], though not determinative, counseled the court against preemption.” Id.

Therefore, PMA’s claims are brought against parties that are not ERISA fiduciaries and, if preempted, will

leave PMA with no remedy against the parties. These factors turn in favor of finding that preemption should

not occur.

The difficulty of this issue is demonstrated by the Ninth Circuit’sinability to agree on a test for ERISA

preemption. Recognizing that it has “formulated several different, though compatible, tests” for ERISA

preemption, it has held that a “core factor leading to the conclusion that a state law claim is preempted is that

the claim bears on an ERISA-regulated relationship.” Rutledge, 201 F.3d at 1217-1219 (9th Cir. 2000).4

The Corrigan defendants argue that the Court should apply a “more holistic analysis guided by congressional

intent,” as suggested in a footnote in Dishman v. UNUM Life Ins. Co. of America, 269 F.3d 974, 981 n. 15

(9th Cir. 2001).5 It is unclear what the differences between the two tests are; however, the Court finds that

the distinction between the tests is not important for purposes of the Court’s analysis in this case.

The Corrigan defendants argue that PMA’s state claims constitute an “alternative enforcement

mechanism” because PMA seeks to “duplicate, supplement, or supplant” its civil enforcement remedy under

ERISA to recover benefits it believes it is entitled to under the SEBP. ERISA § 502(a)(1)(B) does provide

a beneficiary with a cause of action to “recover benefits due to him under the terms of his plan . . . .” The

Corrigan defendants rely heavily on language fromAetna Health Inc. v. Davila, 124 S.Ct. 2488 (2004), which

states that “any state-law cause of action that duplicates, supplements, or supplants the ERISA civil

enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is

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6 The Corrigan defendants do not argue that the state law claims would impact the ERISA regulatory

regime.

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therefore preempted.” Id. at 2495. 

However, Davila provided a much different set of facts than the current case. In Davila, plaintiff was

a participant in an ERISA-regulated employee benefit plan who was denied coverage by the health care

company administering the plan. He filed suit alleging injuries caused by the health care provider’s refusal to

provide certain treatment and services. Id. at 2493. The Supreme Court, in finding the state law claims

preempted, recognized that the purpose of ERISA “is to provide a uniform regulatory regime over employee

benefit plans.” Id. at 2495. The Court also stated that an individual’s cause of action is preempted “if an

individual, atsome point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there

is no other independent legal duty that is implicated by a defendant’s actions . . . .” Id. at 2496. 

 The Court finds that Davila does not require preemption of PMA’s state law claims here, because

PMA has notfiled those claims against the SEBP plan administrator. Additionally, the state law claims brought

by PMA would not impact the “uniform regulatory regime over employee benefit plans,” as the Corrigan

defendants are not ERISA fiduciaries.6 Finally, PMA entered into an agreement with the Corrigan defendants

to provide various services and products, which included obtaining the SEBP and consulting for the SEBP.

This agreement created a legal duty outside of duties regulated by ERISA, and it is this separate legal duty

which PMA seeks to enforce here.

Under the Corrigan defendants’ argument, insurance brokers and consultants could never face liability

for wrongdoing related to an ERISA plan, because any claims would be preempted by ERISA but could not

be brought under ERISA because insurance brokers are not ERISAfiduciaries. This contravenes Ninth Circuit

precedent, which has found that the “core factorleading to the conclusion that a state law claim is preempted

is that the claim bears on an ERISA-regulated relationship.” Rutledge, 201 F.3d at 1217-1219. 

This does not create a “huge loophole,” as warned by the Corrigan defendants. Reply at 6. For

example, the Corrigandefendants assert that PMA’s argument would have allowed the plaintiffin PilotLife Ins.

Co. v. Dedeaux, 481 U.S. 41 (1987) to file state law claims. However, in PilotLife Insurance the plaintiffsued

the ERISA plan administrator for the wrongful processing of his benefit claim. Id. at 43. Thus an ERISACase 3:04-cv-03506-SI Document 137 Filed 09/13/05 Page 12 of 34
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It is telling that, in support ofits preemption argument, the Corrigan defendants cite only Ninth Circuit

cases involving beneficiaries who filed state law claims against ERISA participants.

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regulated relationship was involved, unlike the current case.7 

The Corrigan defendants also argue that preemption is appropriate because PMA’s state law claims

will require the Court to interpret the provisions of the SEBP. Although the SEBP provisions will most likely

be relevant to adjudicating the state law claims, the claims will depend on legal duties that exist outside of the

ERISA plan. This counsels against preemption. See Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1460

(4th Cir. 1997); see also Donald I. Galen, M.D., Inc. v. McAllister, 833 F.Supp. 761, 764 (N.D.Cal. 1992).

Accordingly, the Court DENIES the motion to dismiss with respect to preemption.

C. Statute of limitations

The Corrigandefendants assert that the Twelfth, Fourteenth, Fifteenth, Sixteenthand EighteenthCauses

ofAction should be dismissed because they fall outside ofthe two year statute oflimitations. The Sixteenth and

Eighteenth Causes of Action allege discussions between Corrigan, Miniace and McMahon regarding lifetime

long-termcare insurance for certain PMA executivesin January-March 2002. See FAC at ¶¶ 101, 106, 111.

The Twelfth, Fourteenth and Fifteenth Causes of Action allrelate to actions taken by the Corrigan defendants

in April-June 2002. See FAC at ¶ 101.

PMA does not contest the Corrigandefendants’ assertionthatthe events occurred in March 2002, and

therefore would fall outside ofthe two year statute oflimitations forits Cross-claims, whichwere filed in 2005.

However, PMA asserts that the statute of limitations for the claims did not begin to run until 2004 under the

“discovery rule.” Under this rule, “a cause of action does not accrue, nor does the statute of limitations start

to run, until plaintiff discovers or in the exercise of reasonable diligence should discover the negligent cause of

his or her injury.” Russell v. Stanford University Hospital, 15 Cal.4th 783, 786 n. 1 (1997).

PMA argues that the claims are timely under the “discovery rule” because the Board of Directors and

its Compensation Committee did not learn about the Amendment to the SEBP or the lifetime, long-term

insurance procured by Corrigan, Miniace and McMahon until 2004. See FAC at ¶¶ 23-35. According to

PMA’s claims, “the Board ofDirectors was empowered to ‘fix [the] compensation [of all officers, agents and

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employees ofthe corporation].” Id. at ¶ 11. However, the claims make no mention of whether the Board of

Directors delegated this authority to other officers or agents in the corporation. Additionally, PMA appears

to contradict itself in its opposition when it states that “corporate officers other than Miniace and McMahon

had no authority to set the compensation and benefits paid to Miniace and McMahon.” Opp’n at 16. 

PMA does not state in its Cross-claims whether officers or agents of the company were involved in

the SEBP or long-terminsurance. PMA, in its claims, makes vague reference to Miniace, McMahon and “one

other PMA executive” receiving lifetime, long-terminsurance. FAC at ¶ 101. If this other PMA executive, or

anyother corporate agents,were authorized to be involved in the procurement ofthe insurance and were aware

ofwhat transpired, it would prevent PMA fromclaiming that the knowledge ofthis matter could not be imputed

to the corporation because it fell outside the “subjectmatter ofthe agency.” If notice has been provided to the

agent within the scope of his or her agency, then notice to the corporation has occurred. Primm v. Joyce, 87

Cal.App.2d 288, 291-92 (1948). According to California Civil Code § 2332, “both principaland agent

are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of

ordinary care and diligence, to communicate to the other.” It is clear that knowledge of the insurance policy

and SEBP Amendment byMcMahon and Miniace does not constitute implied notice to PMA, because they

are alleged to be part ofthe wrongfulbehavior. See DisplayResearchLabs. v. TelegenCorp., 133 F.Supp.2d

1170, 1172 (N.D.Cal. 2001). Additionally, if McMahon and Miniace misled other corporate officers into

believing that the Board of Directors had approved the benefits, then the discovery rule may apply.

However, it is unclear to the Court: 1) what authority other PMA agents had from the Board of

Directors to be involved in the compensation and benefitsto the top officials in the company and 2) what those

agents knew in 2002. If agents were authorized to be involved in executive compensation for Miniace,

McMahon and the third executive under the lifetime, long-term benefit plan, then these facts would “relat[e]

to the subject matter of the agency” obtained by the agent “while acting as such within the scope of his

authority.” 2 B. Witkin, Summary of California Law: Agency § 101. 

Because PMA has left this matter unclear based on its pleadings, the Court GRANTS the Corrigan

defendants’ motion to dismiss the Twelfth, Fourteenth, Fifteenth, Sixteenth and Eighteenth Causes of Action,

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8 As discussed below, the Seventeenth Cause of Action is dismissed with leave to amend. Therefore,

the Court will not address whether the statute of limitations applies.

9 PMA requests that the Court, ifit is inclined to grant the motion to dismiss on these claims, treat them

as claims for professional negligence or breach of the covenant of good faith and fair dealing. The Court will

not choose the proper claim for PMA, but allows PMA leave to amend, taking into consideration the statute

of limitations issues discussed previously.

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but with leave to amend subject to the discussion above.8

D. Breach of fiduciary duty

In the Thirteenth and Seventeenth Causes of Action, PMA asserts that the Corrigan defendants

breached their fiduciary duty as PMA’s insurance brokers. The Corrigan defendants move to dismiss these

claims, arguing that PMA cannot state a cause of action for breach of fiduciary duty against an insurance

broker. California courts have recognized that “it is unclear whether a fiduciary relationship exists between an

insurance broker and an insured.” Hydro-Mill Company, Inc. v. Hayward, Tilton and Rolapp Insurance

Associates, Inc., 115 Cal.App.4th 1145, 1156 (2004).

The parties agree that the relationship between a broker and the insured does not rise to the level of

the attorney/client relationship. PMA provides a number of cases to support its assertion that the Corrigan

defendants had “special” or “heightened” duties; however, none of the cases cited by PMA provides for a

breach of fiduciary duty claim by an insured against its broker. See Jones v. Grewe, 189 Cal.App.3d 950,

954-55 (1987) (plaintiff asserted cause of action for negligence); Kurtz, Richards, Wilson & Co., 12

Cal.App.4th 1249, 1257 (1993) (fraud, negligent misrepresentation and negligence); Free v. Republic

Insurance Co., 8 Cal.App.4th 1726, 1729 (1992) (negligence). 

This Court will not expand the doctrine of fiduciary duty to include insurance brokers, giventhat it has

not been recognized by California courts. Therefore, the Court GRANTS the motion to dismiss with respect

to the Thirteenth and Seventeenth Causes of Action with leave to amend.9

E. Conspiracy and aiding and abetting

In the Nineteenth Cause of Action, PMA asserts a claim of vicarious liability against the Corrigan

defendants for breach of fiduciary duty by others. PMA claims that “each of the Corrigan companies joined

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in, and engaged in acts in furtherance of, a conspiracy with Counterdefendant Miniace and McMahon to

improperly offer lifetime long-term care insurance to certain PMA executives.” FAC at ¶ 114. PMA also

alleges that “Corrigan and each of the Corrigan Companies aided and abetted the breaches of fiduciary duty

by Miniace and McMahon with respect to the long-termcare insurance as described above and furthered their

improper objectives.” Id. at ¶ 115.

The Corrigan defendants argue that the allegations relating to conspiracy and aiding and abetting are

either redundant or should be alleged in separate causes of action. However, they present no evidence that

the two allegations are redundant. Additionally, the cause of action is for vicarious liability, not for conspiracy

or aiding and abetting. The Corrigan defendants provide no basis for their assertion that they should be able

to defend against the various elements of the allegation separately. Therefore, the Court DENIES the motion

to dismiss with respect to the Nineteenth Cause of Action.

F. Summary

As discussed above, the Court GRANTS IN PART and DENIES IN PART the motion to dismiss.

Specifically, the Court findsthat: 1) PMA’s state law claims are not preempted by ERISA; 2) PMA’s Twelfth,

Fourteenth, Fifteenth, Sixteenth and Eighteenth Causes ofAction are dismissed with leave to amend, in order

to allow PMA to more clearly plead their claims in light of the statute of limitations; 3) PMA’s Thirteenth and

Seventeenth Causes of Action are dismissed with leave to amend, provided the amended claims do not assert

a claim of fiduciary duty; and 4) PMA’s Nineteenth Cause of Action is not dismissed.

CONCLUSION

For the reasons discussed above, the Court hereby DENIES the motion forintervention[Docket #60];

DENIES PMA’s motion for preliminary injunction [Docket #83]; and GRANTS IN PART and DENIES IN

PART the Corrigan defendants’ motion to dismiss [Docket #64]. If PMA chooses to file

an amended cross-complaint, it must do so on or before September 30, 2005.

IT IS SO ORDERED.

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Dated: September 13, 2005

 

SUSAN ILLSTON

United States District Judge

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JOSEPH MINIACE, 

Plaintiff,

 v.

PACIFIC MARITIME ASSOCIATION, 

Defendant.

______________________________________/

PACIFIC MARITIME ASSOCIATION, 

Counterclaimant and

Cross-Claimant,

vs.

JOSEPH N. MINIACE; JEANNETTE COBURN;

MICHAEL E. CORRIGAN;

BENMARK, INC.; CORRIGAN & COMPANY;

and BENMARK WEST,

Counterdefendant and 

Cross-Defendants.

 /

No. C 04-03506 SI

ORDER DENYING MOTION TO

INTERVENE; DENYING PMA’S

MOTION FOR PRELIMINARY

INJUNCTION; AND GRANTING IN

PART THE CORRIGAN DEFENDANTS’

MOTION TO DISMISS

On July 8, 2005, the Court heard oralargument on ILWU-PMA’s motionto intervene,PMA’s motion

for a preliminary injunction, and a motion to dismiss brought by Michael Corrigan, Corrigan & Company and

Benmark West. Having carefully considered the arguments of counsel and the papers submitted, the Court

hereby: DENIES the motion to intervene;DENIES the motion for a preliminary injunction; and GRANTS IN

PART and DENIES IN PART the motion to dismiss.

 

BACKGROUND

Pacific Maritime Association is a non-profit mutualbenefit corporation, whose members are maritime

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 ILWU is the International Longshore and Warehouse Union.

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shipping carriers thatservice ports on the West Coast. PMA negotiates and administers collective bargaining

agreements for longshoremen and other port workers, as well as oversees employment benefit plans for the

workers. Plaintiff Joseph Miniace was President of PMA from 1996 until March 2004. Thomas McMahon

was PMA’s Chief Financial Officer from 1982 until his death on May 3, 2002.

The dispute before this Court surrounds a death benefit payment under a Secured Executive Benefit

Plan (SEBP)to McMahon’s widow, Jeannette Coburn, ofmore than $9,000,000. PMA received $986,383,

the amount of premiums paid on McMahon’s behalf. PMA claims that Miniace and McMahon altered the

SEBP in 2002 to pay the bulk of the death benefits to McMahon’s heirs. PMA also claims that the Board of

Directors did not know of the 2002 alteration to the SEBP.

PMA terminated Miniace’s employment on March 17, 2004. As a result, Miniace filed a complaint

against PMA in California Superior Court on July 21, 2004, alleging breach of contract, violation of the labor

code, promissory estoppel, and intentional infliction of emotional distress. PMA removed the case to this

Court, and filed counterclaims and cross-claims against Miniace, Jeannette Coburn, Michael Corrigan,

Benmark, Inc., Corrigan & Company, and Benmark West.

Now before the Court is the motion by the Trustees of the ILWU-PMA1 Pension and Welfare Plan

to intervene; PMA’s motion for a preliminary injunction against Jeanette Coburn; and a motion to dismiss

brought by Michael Corrigan, Corrigan & Company and Benmark West. 

DISCUSSION

I. Motion to intervene

In their capacity as Trustees of the ILWU-PMA Pension and Welfare Plans, James Spinosa, Robert

McEllrath, Joseph Wenzl, and Ray Ortiz bring a motion to intervene in this action. They claim that intervention

is appropriate under Federal Rule of Civil Procedure 24(a) and (b). Intervenors claim thatMiniace, a trustee

ofthe ILWU-PMA pension plan (“the Plan”), breached hisfiduciary duty to the Plan because he had a financial

incentive in his contract with PMA to reduce contributions to the Plan. The proposed complaint in intervention

names Miniace and PMA as defendants.

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2 The foregoing facts have been taken fromintervenors’ complaint, which the Court accepts as true for

purposes of this motion. 

3

At issue is the Twenty-Sixth Amendment to the Plan. The Plan had a requirement that annual employer

contributions must be at least the amount of administrative costs and payments made from the Plan. However,

Miniace proposed a modificationin 1997 that allowed employer contributions to be sufficient if they consisted

ofonly 85% ofthe Plan expenditures. This proposal was accepted by the President ofILWU and became the

26th Amendment. In order for the Amendment to go into effect, the Plan Trustees were required to seek

approval from the Pension Benefits Guaranty Corporation (“PBGC”). Miniace submitted the Amendment to

the PBGC without informing other Plan Trustees, and the Amendment was approved.2 According to

intervenors, the Amendment has resulted in contribution reductions of at least $100 millionin PlanYears 1999

and 2000.

Intervenors allege that Miniace breached his fiduciary duty to the Plan because he had an incentive

scheme under his PMA contract that rewarded any decrease in contributions to the Plan. Intervenors also

assert that PMA breached its fiduciary duties because it “appointed Miniace as a Trustee while conditioning

his compensation on successful implementation of the 26th Amendment.” Mot. at 4. Intervenors draw on

language in Miniace’s Complaint that he “performed all conditions, covenants and policiesrequired on his part

to be performed in accordance with the terms and conditions of his contract with PMA.” Miniace Compl. at

¶ 16. Intervenors contend that one ofthese accomplishments was his ability to amend the Plan. See Miniace

Compl. at ¶ 12. 

Intervenors contend that interventionis appropriate because theylearned fromMiniace’s complaint that

his compensation at PMA was conditioned in part on the implementationofthe 26th Amendment. Once they

learned of this, intervenors claim that they requested information regarding 

any financial incentives provided by PMA related to the 26th Amendment, but PMA refused their request.

Additionally, intervenors claim that they cannot now obtain this information because of the protective order

among the parties in this case. Intervenors assert that their “principalobjective . . . in intervening in this action

is to gain access to informationregarding the financialincentives offered by PMA to Miniace, which, according

to the Complaint, were conditioned on the manner in whichMiniace carried out his fiduciary duties as Trustee

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of the ILWU-PMA Pension Plan.” Reply at 2.

The intervenors provide only a brief discussion ofwhether theymeet the standard forinterventionunder

Rule 24(a) or (b). PMA and Maritech Corporation filed an opposition to the motion to intervene, whichwas

joined by Miniace. In their reply, intervenors relegate Rule 24(a) to a single footnote and only discuss whether

interventionis appropriate under Rule 24(b)“forthe limited purpose ofmodifying the parties’ stipulated blanket

protective order.” Reply at 2.

A. Rule 24(a)

A motion to intervene under Rule 24(a) is subject to the following four-part test:

(1) the motion must be timely; (2)the applicant must claim a “significantly

protectable” interest relating to the property or transaction which is the

subject of the action; (3) the applicant must be so situated that the

disposition of the action may as a practical matter impair or impede its

ability to protect that interest; and (4) the applicant’s interest must be

inadequately represented by the parties to 

the action.

Forest ConservationCouncil v. U.S. Forest Service, 66 F.3d 1489, 1493 (9th Cir. 1995) (quoting Sierra Club

v. U.S. Environmental Protection Agency, 995 F.2d 1478, 1481 (9th Cir. 1993)). 

The Court findsthat intervention under Rule 24(a) is not appropriate because the intervenors have not

demonstrated a “signficantly protectable” interest relating to the property subject to this litigation. This

requirement is met only if the resolution of the pending claims actually will affect the intervenor. Arakaki v.

Cayetano, 324 F.3d 1078, 1084 (9th Cir. 2003). Intervenors’ claims relate to Miniace’s and PMA’s

involvement in the Plan, specifically the enactment ofthe 26th Amendment. These claims are not impacted by

the current claims before this Court.

Miniace in his complaintseeks compensation under his employment contract with PMA. Miniace has

asserted causes of action for breach of contract, Labor Code violations, promissory estoppel and intentional

infliction of emotional distress. See Medina Decl., Ex. 1. These claims do not relate to the ILWU-PMA

Pension Plan or the 26th Amendment, and intervenors can file their complaint as an independent action thatwill

not be impacted by the resolution of the action currently before this Court.

The Miniace Complaint does make a brief reference to the 26th Amendment. See Medina Decl. Ex.

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1 at ¶ 12. However, this is background information that demonstrates the quality of his performance as

President. The counter-claims and cross-claims asserted by PMA and Maritech Corporation do not even

mention the 26th Amendment of the ILWU-PMA Pension Plan. See Medina Decl., Ex. 2. These claims

involve the Secured Executive Benefits Plan (“SEBP”), alleged misappropriation of directors’ fees, and

unauthorized executive benefits. In order to resolve the current disputes, it will not be necessary to litigate the

meaning, negotiation or implementationofthe 26th Amendment. Nor will it be necessary to litigate the fiduciary

duties owed to the ILWU-PMA Pension Plan by Miniace and PMA. Therefore,the Courtfindsitinappropriate

for the intervenors to “inject new, unrelated issues into the pending litigation.” Arakaki, 324 F.3d at 1086. 

Based onthe Court’s finding that the intervenors have failed to demonstrate a “signficantly protectable”

interest relating to the property subject to this litigation, the Court DENIES the motion to intervene pursuant

to Rule 24(a).

B. Rule 24(b)

Interventionmay be allowed atthe Court’s discretionwhen the intervenors’ claim and the current action

have a common question of law or fact and allowing intervention “will not unduly delay or prejudice the

adjudication of the rights of the original parties.” Fed. R. Civ. P. 24(b). In determining whether a “common

question” exists, courts should construe the requirement liberally. Stallworth v. Monsanto Co., 558 F.2d 257,

265 (5th Cir. 1977). However, intervention under Rule 24(b) is “not intended to allow the creation ofwhole

new lawsuits by the intervenors.” Deus v. Allstate Insurance Co., 15 F.3d 506, 525 (5th Cir. 1994).

As discussed above, the Court findsthat the intervenors’ claims do not have a common question oflaw

or fact with the current action. The intervenors assert claims against Miniace and PMA for breach of fiduciary

duty with respect to the ILWU-PMA Pension Plan based on the implementation of the 26th Amendment.

Neither Miniace, PMA, nor Maritechmakes any claims related to the ILWU-PMA Pension Plan or the 26th

Amendment. Therefore, there are no common questions of law. 

The intervenors assert that a common question of fact exists because Miniace refers to the 26th

Amendment in his Complaint. However, Miniace’s claims do not depend on whether he was offered

compensation from PMA for implementing the 26th Amendment in 1997. Specifically, Miniace claims that he

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is entitled to: 1) a bonus for remaining employed from March 6, 2001 to March 6, 2004; 2) a bonus for

reaching productivity goals in 2003; 3) a severance award for being terminated without cause; 4) waiting time

penaltiesfor PMA’sfailureto paywages immediately upon termination; and 5) damages forintentionalinfliction

of emotionaldistress. These claims raised by Miniace do not raise common questions of fact with intervenors’

complaint, which deals with the enactment of the 26th Amendment in 1997.

Perhaps recognizing the weakness oftheir argument, intervenorsfocus their discussion in the reply brief

on intervention under Rule 24(b) for the limited purpose of modifying the protective order in this case.

Intervenors claim that the protective order will prevent them fromobtaining documents related to any financial

incentives to implement the 26th Amendment. However, intervenors do not identify any documents that the

parties in the action are withholding because of the protective order.

Intervenor Spinosa asserts that he attempted to obtain relevant information regarding the 26th

Amendment from PMA after the Miniace Complaint was filed, but has been unsuccessful. See Spinosa Decl.

at ¶ 2. However, PMA received information requests from ILWU regarding the 26th Amendment in 2001 and

2002. Epperson Decl. at ¶ 6. The ILWU disputed the production of information by PMA and brought the

issue to the National Labor Relations Board (“NLRB”), which found in favor of PMA. See Epperson Decl.,

Ex. 4. Since the NLRB’s decision, PMA has not received any written requests for information regarding

compensation for Miniace related to the 26th Amendment. Epperson Decl. at ¶ 9. 

Intervenors claim that they are entitled to intervene to challenge the protective order under San Jose

Mercury News v. United States District Ct.--Northern District of California (San Jose), 187 F.3d 1096 (9th

Cir. 1999) and Beckman Industries v. InternationalInsurance Co., 966 F.2d 470 (9th Cir. 1992). However,

the circumstances surrounding the current motion differ greatly from San Jose Mercury News and Beckman.

In San Jose Mercury News, a newspaper filed a motion to intervene in order to obtain a report regarding

sexual harassment claims asserted against the police department. The newspaper sought the information in

order to inform the public about the operations of the police department. Here, intervenors seek the

information for their potential use in litigation. 

In Beckman Industries, the court allowed intervention for an insured who requested documents from

a previous litigation involving the same defendant insurer. The insurer asserted that it could not produce the

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documents because discovery from the previous case was subject to a blanket protective order. 966 F.2d at

472-474. However, the intervenor had already filed a separate action in state court. Here, intervenors have

not filed a separate action against PMA and Miniace, nor have they identified any documents that PMA has

refused to produce based on the protective order in this case.

 The Court finds that intervention is not appropriate under Rule 24(b) to allow intervenors to challenge

the protective order. Intervenors have not filed suit against PMA and Miniace, they have not made a single

written request to obtain the documents, and they have not identified any documents relevant to their claims that

are subject to the protective order. Therefore, the Court DENIES the motion to intervene under Rule 24(b).

II. Motion for preliminary injunction

PMA brings a motion for a preliminary injunction. Specifically, PMA requests an order restraining

Coburn and her agents from spending, committing or otherwise disposing of the death benefit proceeds she

received under the SEBP without prior written notification to PMA, and written notification to and approval

by the Court. PMA also seeks to require Coburn to provide PMA with copies of monthly account statements

forthe funds during the pendency of this action. PMA argues that the preliminary injunctionis proper because

PMA is likely to succeed on the merits, because the Board did not approve the alteration to McMahon’s SEBP

carried out by Miniace and McMahon. Additionally, PMA claims that it will be irreparably harmed if Coburn

spends the SEBP proceeds and PMA is unable to recover damages as a result.

The Court has the authority to grant a preliminary injunction in the exercise of its equitable powers.

Fed. R. Civ. P. 65. As the Court is acting in equity, the decision to enter a preliminary injunction is largely left

to its discretion. See Big Country Foods, Inc. v. Board ofEduc. ofAnchorage SchoolDist., 868 F.2d 1085,

1087 (9th Cir. 1989). 

At the extremes, the party seeking injunctive relief must show either (1) a combination of probable

success on the merits and the possibility of irreparable harm, or (2) that serious questions are raised and the

balance of hardships tips sharply in the moving party's favor. Miss World (UK) Ltd. v. Mrs. America

Pageants, Inc., 856 F.2d 1445, 1448 (9th Cir. 1988); Rodeo Collection, Ltd. v. West Seventh, 812 F.2d

1215, 1217 (9th Cir. 1987). "These are not two distinct tests, but rather the opposite ends of a single

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'continuum in which the required showing of harm varies inversely with the required showing of

meritoriousness.'" Miss World, 856 F.2d at 1448 (quoting Rodeo Collection, 812 F.2d at 1217). However,

in any situation, the Court must find that there is some threat of an immediate irreparable injury, even if that

injury is not of great magnitude. Big Country, 868 F.2d at 1088 (citing cases); Oakland Tribune, Inc. v.

Chronicle Publishing Co., Inc., 762 F.2d 1374, 1376 (9th Cir. 1985) (citing cases). 

PMA seeks to alter the status quo by preventing Coburn from accessing funds currently in her

possession without Court approval. When a party requests relief that alters the status quo, the request is

subject to higher scrutiny and it carries a heavy burden of persuasion. Tom Doherty Assocs., Inc. v. Saban

Entertainment, Inc., 60 F.3d 27, 32-33 (2nd Cir. 1995). Regardless of whether it applies this higher burden

or not, the Court finds that granting PMA’s request is not appropriate at this time.

The Court finds that PMA has not demonstrated a threat of irreparable injury if the preliminary

injunction is denied. The Court has reviewed the financialrecords submitted under seal. The Court has found

no evidence to support PMA’s assertion that the assets will be dissipated by the time this matter can be

resolved on the merits. Coburn’s spending habits since 2002 have been reasonable, and PMA acknowledges

that Coburn has other significant assets available to her. Furthermore, PMA waited nearly eight months from

filing cross-claims to bring this motion, which undermines its argument that “irreparable injury” is imminent.

Therefore, the Court finds that PMA has demonstrated at most a remote possibility of irreparable harm.

Because of PMA’s failure to demonstrate a significant possibility of irreparable harm, the Court must

only briefly discuss its likelihood of success on the merits. Based on the evidence submitted, the Court

recognizes that the parties raise complicated issues surrounded by highly disputed facts. The Court finds that

Coburn has some likelihood ofsuccess on the merits. Coburn presents testimony thatMiniace believed he had

the authority to modify the SEBP. Coburn also presents evidence that the SEBP gave management the power

to execute agreements and documents, and take other actions to give effect to the Plan. See Wexler Decl.,

Ex. 70. There is also evidence that Board members believed that PMA should not benefit from the death of

its employees. See Wexler Decl., Ex. G at 122. Miniace’s decision to “flip” the plan also coincided with an

IRS notice that had implications for the SEBP.

Additionally, Coburn presents evidence that the Board ofDirectors allowed the President of PMA to

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3 For purposes of this motion, the Court will refer to the cross-claimants PMA and Maritech

Corporation as “PMA.”

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establish executive compensation for all executives beside himself. See Wexler Decl., Ex. G at 81. This is

supported by evidence that current executives at PMA have also amended their SEBPs without Board

approval. See Opp’n at 15. 

The Court provides this discussion of evidence presented in support of Coburn’s arguments not

because it finds that Coburn will or should succeed on the merits. Instead, the above discussion merely

demonstrates that Coburn has some likelihood of success on the merits, which is sufficient to defeat PMA’s

motion for preliminary injunction given the dearth of irreparable injury demonstrated by the moving party.

Therefore, the Court DENIES PMA’s motion for a preliminary injunction. 

III. Motion to dismiss

PMA and Maritech Corporation,3 a wholly owned subsidiary of PMA that provides payroll services

to PMA and other customers, filed cross-claims against MichaelCorrigan, Corrigan& Company and Benmark

West. These claims were the Twelfth through Nineteenth Causes of Action in PMA’s First Amended

Counterclaims and Cross-claims. Cross-defendants Corrigan, Corrigan & Company and Benmark West

(“Corrigan defendants”) have brought a motion to dismiss, arguingthatdismissalofvarious claims filed by PMA

is proper. The Court will discuss each in turn below.

A. Legal standard

A motion to dismiss for failure to state a claim will be denied unless it appears that the plaintiff can

prove no set of facts which would entitle it to relief. See Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99,

102 (1957); Fidelity Fin. Corp. v. Federal Home Loan Bank, 792 F.2d 1432, 1435 (9th Cir. 1986). All

materialallegations in the complaint willbe takenas true and construed in the lightmost favorable to the plaintiff.

NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

B. ERISA preemption

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The Corrigan defendants argue that ERISA preempts PMA’s Twelfth through Fifteenth Causes of

Action because PMA’s claims relate to the Secured Executive Benefit Plan (“SEBP”). In these Causes of

Action, PMA asserts claims for: 1) breach of contract; 2) breach of fiduciary duty; 3) negligence; and 4)

vicarious liability for breach of fiduciary duty by others. PMA seeks damages in excess of $10 million, based

on the allegedly wrongful payment of benefits to Coburn under the SEBP and commissions paid by PMA to

the Corrigan defendants.

ERISA’s preemption provision states that ERISA shall “supercede any and all State laws, insofar as

they may now or hereafter relate to any employee benefit plan described in Section 1003(a) ofthis title and not

exempt under Section 1003(b) ofthis title.” 29 U.S.C. § 1144(a). Therefore, state laws are preempted when

there is an employee benefit plan as defined by ERISA and the state law “relates to” the ERISA plan. Harper

v. AmericanChambers Life Insurance Co., 898 F.2d 1432, 1433 (9th Cir. 1990). The parties agree that the

SEBP is an employee benefit plan as defined by ERISA. However, the parties dispute whether PMA’s claims

against the Corrigan defendants “relate to” the SEBP ERISA plan.

The Corrigan defendants argue that the claims “relate to” an ERISA plan, “because they seek to

recover fromCorrigan $9.6 million in SEBP benefits PMA claims were wrongfully paid to Coburn.” Mot. at

9. PMA asserts that preemption is not appropriate because its claims arise out of PMA’s business relationship

with an insurance broker, which is a relationship not otherwise regulated by ERISA. Because of this, PMA

argues that its state law claims against the Corrigan defendants will not affect a relationship between ERISA

participants and do not constitute “alternative enforcement mechanisms” in relation to an ERISA plan.

“It is with great trepidation thatwe tread into the field ofERISA preemption.”Dishmanv. UNUM Life

Insurance Co. ofAmerica, 269 F.3d 974, 980 (9th Cir. 2001). This trepidation is based on the “amorphous

contours ofthe preemption doctrine.” Id. After careful consideration of this difficult issue, the Court finds that

PMA’s claims against the Corrigan defendants are not preempted for the reasons provided below.

The parties agree that the Corrigan defendants are not ERISA fiduciaries. See Rutledge v. Seyfarth,

Shaw, Fairweather & Geraldson, 201 F.3d 1212, 1220 (9th Cir. 2000) (noting that professionals providing

advice regarding an ERISA plan are not fiduciaries unless they “exercise authority over the plan in a manner

other than by usual professional function”). “ERISA does not necessarily preempt relationships between an

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4 The court in Rutledge also considered whether: 1) state laws mandate employee benefit structures

or their administration; 2) state laws preclude uniform administrative practice; and 3) state laws provide

alternative mechanisms for employees to obtain ERISA plan benefits. 201 F.3d at 1217-1218. 

5 The court in Dishman stated: “First, we note that the Supreme Court’s recent cases have eschewed

such multi-factor tests in favor of a more holistic analysis guided by congressional intent. Second, though

perhaps usefultools in other contexts, these tests are ofmarginalutility, where, as here, the question boils down

to whether state tort law ‘relates to’ an ERISA plan.” 269 F.3d at 981 n. 15.

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ERISA entity and a third party.” Geweke Ford v. St. Joseph’s Omni Preferred Care, Inc., 130 F.3d 1355,

1360 (9th Cir. 1997). The parties also agree that PMA will not be able to bring a cause of action under

ERISA against the Corrigan defendants if these claims are preempted by ERISA. “The lack of an ERISA

remedy against [a third party], though not determinative, counseled the court against preemption.” Id.

Therefore, PMA’s claims are brought against parties that are not ERISA fiduciaries and, if preempted, will

leave PMA with no remedy against the parties. These factors turn in favor of finding that preemption should

not occur.

The difficulty of this issue is demonstrated by the Ninth Circuit’sinability to agree on a test for ERISA

preemption. Recognizing that it has “formulated several different, though compatible, tests” for ERISA

preemption, it has held that a “core factor leading to the conclusion that a state law claim is preempted is that

the claim bears on an ERISA-regulated relationship.” Rutledge, 201 F.3d at 1217-1219 (9th Cir. 2000).4

The Corrigan defendants argue that the Court should apply a “more holistic analysis guided by congressional

intent,” as suggested in a footnote in Dishman v. UNUM Life Ins. Co. of America, 269 F.3d 974, 981 n. 15

(9th Cir. 2001).5 It is unclear what the differences between the two tests are; however, the Court finds that

the distinction between the tests is not important for purposes of the Court’s analysis in this case.

The Corrigan defendants argue that PMA’s state claims constitute an “alternative enforcement

mechanism” because PMA seeks to “duplicate, supplement, or supplant” its civil enforcement remedy under

ERISA to recover benefits it believes it is entitled to under the SEBP. ERISA § 502(a)(1)(B) does provide

a beneficiary with a cause of action to “recover benefits due to him under the terms of his plan . . . .” The

Corrigan defendants rely heavily on language fromAetna Health Inc. v. Davila, 124 S.Ct. 2488 (2004), which

states that “any state-law cause of action that duplicates, supplements, or supplants the ERISA civil

enforcement remedy conflicts with the clear congressional intent to make the ERISA remedy exclusive and is

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6 The Corrigan defendants do not argue that the state law claims would impact the ERISA regulatory

regime.

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therefore preempted.” Id. at 2495. 

However, Davila provided a much different set of facts than the current case. In Davila, plaintiff was

a participant in an ERISA-regulated employee benefit plan who was denied coverage by the health care

company administering the plan. He filed suit alleging injuries caused by the health care provider’s refusal to

provide certain treatment and services. Id. at 2493. The Supreme Court, in finding the state law claims

preempted, recognized that the purpose of ERISA “is to provide a uniform regulatory regime over employee

benefit plans.” Id. at 2495. The Court also stated that an individual’s cause of action is preempted “if an

individual, atsome point in time, could have brought his claim under ERISA § 502(a)(1)(B), and where there

is no other independent legal duty that is implicated by a defendant’s actions . . . .” Id. at 2496. 

 The Court finds that Davila does not require preemption of PMA’s state law claims here, because

PMA has notfiled those claims against the SEBP plan administrator. Additionally, the state law claims brought

by PMA would not impact the “uniform regulatory regime over employee benefit plans,” as the Corrigan

defendants are not ERISA fiduciaries.6 Finally, PMA entered into an agreement with the Corrigan defendants

to provide various services and products, which included obtaining the SEBP and consulting for the SEBP.

This agreement created a legal duty outside of duties regulated by ERISA, and it is this separate legal duty

which PMA seeks to enforce here.

Under the Corrigan defendants’ argument, insurance brokers and consultants could never face liability

for wrongdoing related to an ERISA plan, because any claims would be preempted by ERISA but could not

be brought under ERISA because insurance brokers are not ERISAfiduciaries. This contravenes Ninth Circuit

precedent, which has found that the “core factorleading to the conclusion that a state law claim is preempted

is that the claim bears on an ERISA-regulated relationship.” Rutledge, 201 F.3d at 1217-1219. 

This does not create a “huge loophole,” as warned by the Corrigan defendants. Reply at 6. For

example, the Corrigandefendants assert that PMA’s argument would have allowed the plaintiffin PilotLife Ins.

Co. v. Dedeaux, 481 U.S. 41 (1987) to file state law claims. However, in PilotLife Insurance the plaintiffsued

the ERISA plan administrator for the wrongful processing of his benefit claim. Id. at 43. Thus an ERISACase 3:04-cv-03506-SI Document 137 Filed 09/13/05 Page 29 of 34
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It is telling that, in support ofits preemption argument, the Corrigan defendants cite only Ninth Circuit

cases involving beneficiaries who filed state law claims against ERISA participants.

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regulated relationship was involved, unlike the current case.7 

The Corrigan defendants also argue that preemption is appropriate because PMA’s state law claims

will require the Court to interpret the provisions of the SEBP. Although the SEBP provisions will most likely

be relevant to adjudicating the state law claims, the claims will depend on legal duties that exist outside of the

ERISA plan. This counsels against preemption. See Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1460

(4th Cir. 1997); see also Donald I. Galen, M.D., Inc. v. McAllister, 833 F.Supp. 761, 764 (N.D.Cal. 1992).

Accordingly, the Court DENIES the motion to dismiss with respect to preemption.

C. Statute of limitations

The Corrigandefendants assert that the Twelfth, Fourteenth, Fifteenth, Sixteenthand EighteenthCauses

ofAction should be dismissed because they fall outside ofthe two year statute oflimitations. The Sixteenth and

Eighteenth Causes of Action allege discussions between Corrigan, Miniace and McMahon regarding lifetime

long-termcare insurance for certain PMA executivesin January-March 2002. See FAC at ¶¶ 101, 106, 111.

The Twelfth, Fourteenth and Fifteenth Causes of Action allrelate to actions taken by the Corrigan defendants

in April-June 2002. See FAC at ¶ 101.

PMA does not contest the Corrigandefendants’ assertionthatthe events occurred in March 2002, and

therefore would fall outside ofthe two year statute oflimitations forits Cross-claims, whichwere filed in 2005.

However, PMA asserts that the statute of limitations for the claims did not begin to run until 2004 under the

“discovery rule.” Under this rule, “a cause of action does not accrue, nor does the statute of limitations start

to run, until plaintiff discovers or in the exercise of reasonable diligence should discover the negligent cause of

his or her injury.” Russell v. Stanford University Hospital, 15 Cal.4th 783, 786 n. 1 (1997).

PMA argues that the claims are timely under the “discovery rule” because the Board of Directors and

its Compensation Committee did not learn about the Amendment to the SEBP or the lifetime, long-term

insurance procured by Corrigan, Miniace and McMahon until 2004. See FAC at ¶¶ 23-35. According to

PMA’s claims, “the Board ofDirectors was empowered to ‘fix [the] compensation [of all officers, agents and

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employees ofthe corporation].” Id. at ¶ 11. However, the claims make no mention of whether the Board of

Directors delegated this authority to other officers or agents in the corporation. Additionally, PMA appears

to contradict itself in its opposition when it states that “corporate officers other than Miniace and McMahon

had no authority to set the compensation and benefits paid to Miniace and McMahon.” Opp’n at 16. 

PMA does not state in its Cross-claims whether officers or agents of the company were involved in

the SEBP or long-terminsurance. PMA, in its claims, makes vague reference to Miniace, McMahon and “one

other PMA executive” receiving lifetime, long-terminsurance. FAC at ¶ 101. If this other PMA executive, or

anyother corporate agents,were authorized to be involved in the procurement ofthe insurance and were aware

ofwhat transpired, it would prevent PMA fromclaiming that the knowledge ofthis matter could not be imputed

to the corporation because it fell outside the “subjectmatter ofthe agency.” If notice has been provided to the

agent within the scope of his or her agency, then notice to the corporation has occurred. Primm v. Joyce, 87

Cal.App.2d 288, 291-92 (1948). According to California Civil Code § 2332, “both principaland agent

are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of

ordinary care and diligence, to communicate to the other.” It is clear that knowledge of the insurance policy

and SEBP Amendment byMcMahon and Miniace does not constitute implied notice to PMA, because they

are alleged to be part ofthe wrongfulbehavior. See DisplayResearchLabs. v. TelegenCorp., 133 F.Supp.2d

1170, 1172 (N.D.Cal. 2001). Additionally, if McMahon and Miniace misled other corporate officers into

believing that the Board of Directors had approved the benefits, then the discovery rule may apply.

However, it is unclear to the Court: 1) what authority other PMA agents had from the Board of

Directors to be involved in the compensation and benefitsto the top officials in the company and 2) what those

agents knew in 2002. If agents were authorized to be involved in executive compensation for Miniace,

McMahon and the third executive under the lifetime, long-term benefit plan, then these facts would “relat[e]

to the subject matter of the agency” obtained by the agent “while acting as such within the scope of his

authority.” 2 B. Witkin, Summary of California Law: Agency § 101. 

Because PMA has left this matter unclear based on its pleadings, the Court GRANTS the Corrigan

defendants’ motion to dismiss the Twelfth, Fourteenth, Fifteenth, Sixteenth and Eighteenth Causes of Action,

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8 As discussed below, the Seventeenth Cause of Action is dismissed with leave to amend. Therefore,

the Court will not address whether the statute of limitations applies.

9 PMA requests that the Court, ifit is inclined to grant the motion to dismiss on these claims, treat them

as claims for professional negligence or breach of the covenant of good faith and fair dealing. The Court will

not choose the proper claim for PMA, but allows PMA leave to amend, taking into consideration the statute

of limitations issues discussed previously.

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but with leave to amend subject to the discussion above.8

D. Breach of fiduciary duty

In the Thirteenth and Seventeenth Causes of Action, PMA asserts that the Corrigan defendants

breached their fiduciary duty as PMA’s insurance brokers. The Corrigan defendants move to dismiss these

claims, arguing that PMA cannot state a cause of action for breach of fiduciary duty against an insurance

broker. California courts have recognized that “it is unclear whether a fiduciary relationship exists between an

insurance broker and an insured.” Hydro-Mill Company, Inc. v. Hayward, Tilton and Rolapp Insurance

Associates, Inc., 115 Cal.App.4th 1145, 1156 (2004).

The parties agree that the relationship between a broker and the insured does not rise to the level of

the attorney/client relationship. PMA provides a number of cases to support its assertion that the Corrigan

defendants had “special” or “heightened” duties; however, none of the cases cited by PMA provides for a

breach of fiduciary duty claim by an insured against its broker. See Jones v. Grewe, 189 Cal.App.3d 950,

954-55 (1987) (plaintiff asserted cause of action for negligence); Kurtz, Richards, Wilson & Co., 12

Cal.App.4th 1249, 1257 (1993) (fraud, negligent misrepresentation and negligence); Free v. Republic

Insurance Co., 8 Cal.App.4th 1726, 1729 (1992) (negligence). 

This Court will not expand the doctrine of fiduciary duty to include insurance brokers, giventhat it has

not been recognized by California courts. Therefore, the Court GRANTS the motion to dismiss with respect

to the Thirteenth and Seventeenth Causes of Action with leave to amend.9

E. Conspiracy and aiding and abetting

In the Nineteenth Cause of Action, PMA asserts a claim of vicarious liability against the Corrigan

defendants for breach of fiduciary duty by others. PMA claims that “each of the Corrigan companies joined

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in, and engaged in acts in furtherance of, a conspiracy with Counterdefendant Miniace and McMahon to

improperly offer lifetime long-term care insurance to certain PMA executives.” FAC at ¶ 114. PMA also

alleges that “Corrigan and each of the Corrigan Companies aided and abetted the breaches of fiduciary duty

by Miniace and McMahon with respect to the long-termcare insurance as described above and furthered their

improper objectives.” Id. at ¶ 115.

The Corrigan defendants argue that the allegations relating to conspiracy and aiding and abetting are

either redundant or should be alleged in separate causes of action. However, they present no evidence that

the two allegations are redundant. Additionally, the cause of action is for vicarious liability, not for conspiracy

or aiding and abetting. The Corrigan defendants provide no basis for their assertion that they should be able

to defend against the various elements of the allegation separately. Therefore, the Court DENIES the motion

to dismiss with respect to the Nineteenth Cause of Action.

F. Summary

As discussed above, the Court GRANTS IN PART and DENIES IN PART the motion to dismiss.

Specifically, the Court findsthat: 1) PMA’s state law claims are not preempted by ERISA; 2) PMA’s Twelfth,

Fourteenth, Fifteenth, Sixteenth and Eighteenth Causes ofAction are dismissed with leave to amend, in order

to allow PMA to more clearly plead their claims in light of the statute of limitations; 3) PMA’s Thirteenth and

Seventeenth Causes of Action are dismissed with leave to amend, provided the amended claims do not assert

a claim of fiduciary duty; and 4) PMA’s Nineteenth Cause of Action is not dismissed.

CONCLUSION

For the reasons discussed above, the Court hereby DENIES the motion forintervention[Docket #60];

DENIES PMA’s motion for preliminary injunction [Docket #83]; and GRANTS IN PART and DENIES IN

PART the Corrigan defendants’ motion to dismiss [Docket #64]. If PMA chooses to file

an amended cross-complaint, it must do so on or before September 30, 2005.

IT IS SO ORDERED.

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Dated: September 13, 2005

 

SUSAN ILLSTON

United States District Judge

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