Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_03-cv-03302/USCOURTS-cand-4_03-cv-03302-4/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 28:2201 Declaratory Judgement

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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

NOT FOR CITATION

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

No. C 03-3302 PJH

In re ADMINISTRATIVE ORDER DENYING MOTION FOR CLASS

COMMITTEE ERISA LITIGATION CERTIFICATION AND DISMISSING

CONSOLIDATED AMENDED

COMPLAINT

_______________________________/

Plaintiff Dale Ingle’s motion for class certification came on for hearing before this court

on November 16, 2005. Plaintiff appeared by his counsel Thomas Bilek, and defendants

appeared by their counsel James P. Baker and David L. Bacon. Having read the parties’

papers and carefully considered their arguments and the relevant legal authority, and good

cause appearing, the court hereby DENIES the motion as follows and for the reasons stated

at the hearing. 

INTRODUCTION

 This is a proposed class action brought under §§ 409 and 502 of the Employment

Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1109(a) and § 1132(a)(2), on behalf of

all participants in the Emery Worldwide Savings Plan and the CNF Transportation, Inc. Thrift

and Stock Plan (collectively, the “Plans”) as of August 15, 2001. The Plans are 401(k) plans

that were established and sponsored by defendants CNF, Inc. (“CNF”), Emery Worldwide

Airlines, Inc. (“EWA”), and Emery Air Fright Corporation d/b/a Emery Worldwide (“EWW”),

also known as Menlo Worldwide Forwarding, Inc., as a benefit for their employees. 

The complaint alleges that CNF, EWA, EWW, the Plans, and the other defendants (the

Administrative Committee of the CNF, Inc. EWW Savings Plan and the CNF, Inc. Thrift and

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Savings Plan (“Administrative Committee”), T. Rowe Price Group, Inc., T. Rowe Price Trust

Company, and T. Rowe Price Retirement Plan Services, Inc. breached their fiduciary duties to

the Plan participants when they unilaterally “froze” or shut down access to their 401(k)

accounts. 

BACKGROUND

This case arises out of the demise of EWA in 2001. Briefly, EWA operated a fleet of

freighter aircraft used exclusively by EWW. At the time of the events alleged in the complaint,

both EWA and EWW were wholly-owned subsidiaries of CNF. On August 13, 2001, the

Federal Aviation Administration (“FAA”) ordered an immediate suspension of EWA’s

operations for 60 days, citing EWA’s violations of air safety regulations. Two months later, on

December 5, 2001, CNF announced that EWA would permanently cease operating its fleet of

aircraft. All EWA flight crew members were subsequently furloughed. 

The complaint alleges that following the August 13, 2001, suspension of operations,

the Plan participants (the proposed class members) were notified that their access to the

Plans was “frozen” as of August 12, 2001 – that is, they could not alter the investment mix to

sell their CNF stock, could not withdraw funds from the retirement Plans, could not borrow

money from the funds in their accounts, and could not access their account balances or

statements over the telephone or the Internet. 

Access to the Plans was restored on October 15, 2001. The complaint alleges that

during the two-month period that the participants were denied access to their accounts, the

value of those accounts dropped significantly, in part because of a decline in the value of CNF

stock (which some of the participants held in their 401(k) accounts), and in part because of a

decline in the markets generally after September 11, 2001.

The original complaint in this action was filed as Administrative Committee v. Rachford,

case No. C-03-3302, on July 15, 2003. The plaintiff – the Administrative Committee – sought

a declaratory judgment that it had not breached its fiduciary duties in connection with the

Plans. Named as defendants were Thomas Rachford ("Rachford"), Dale Ingle ("Ingle"), and

Haile Yohannes ("Yohannes"), individually and as representatives of a class of furloughed or

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laid-off EWA employee participants in the Plans. The proposed defendant class was defined

in the complaint as consisting of 

all participants in one or both of the 401(k) Plans who were laid off by EWA in

2001, who continued to receive employee benefits from EWA for 60 days

following their layoffs, for whom EWW Plan and or TASP distributions were not

authorized during the 60 day period after their layoffs while they received

employee benefits from EWA, and who were not permitted to take new loans

out against one or both 401(k) Plans after their layoffs.

Cplt ¶¶ 1, 12, 13, 53.

Approximately three weeks later, on August 8, 2003, Ingle and Christopher Coffey

(“Coffey” – another former EWA pilot) filed Coffey v. CNF as a proposed class action in the

Eastern District of Texas. The proposed plaintiff class was defined as consisting of “all

persons who were participants in or beneficiaries of [the Plans] at any time between August

12, 2001, and October 16, 2001.” Plaintiffs alleged two causes of action under 29 U.S.C. 

§ 1104, one for breach of fiduciary duties, and one for breach of co-fiduciary duties. The

defendants in the Coffey case were CNF, EWA, EWW, the two Plans, the Administrative

Committee of the Plans, and the three T. Rowe Price entities. 

On January 9, 2004, the Administrative Committee filed an amended complaint

(“FAC”) in case No. C-03-3302. In the FAC, the Administrative Committee referenced the

Coffey case as support for its claim that an actual dispute existed between the parties, which

warranted its request for declaratory relief. The FAC contained the same proposed class

definition as the original complaint. FAC ¶¶ 14, 15, 56. 

After the Texas action was transferred to this district as case No. C-04-4613, the two

cases were consolidated. On November 29, 2004, the Administrative Committee filed a

motion for certification of a defendant class in case C-03-3302, seeking to have Ingle,

Rachford, and Yohannes named as defendant class representatives. The proposed

defendant class was defined as 

all participants, and their beneficiaries, in one or both of [the 401(k) Plans] who

were furloughed or laid off by [EWA] in 2001 due to actions taken by the Federal

Aviation Administration, who continued to receive paid health care benefits from

EWA for 60 days following their furloughs or layoffs (“the Class Period”), for

whom the 401(k) Plan distributions were not authorized during the Class Period

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 It isn’t clear how or when Rachford became a named plaintiff in this case, which was

originally filed by Ingle and Coffey. It appears that at the time the case was transferred to this

district, Ingle and Coffey were the named plaintiffs.

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while they received paid health care benefits from EWA, and who were not

permitted to take new loans against one or both of the 401(k) Plans after their

furloughs or layoffs.

On the same date, Ingle and Rachford filed a motion to certify a plaintiff class in Coffey

v. CNF, C-04-4613.1 The proposed class in the Coffey case was defined as 

all persons who were participants in or beneficiaries of the Retirement Plans at

any time between August 12, 2001, and October 16, 2001 (“the Class Period”).

The order consolidating the two cases under No. C-03-3302 was filed on December

20, 2004. On January 7, 2005, the court ordered the parties to realign themselves and file a

consolidated amended complaint, and suggested that only one motion for class certification

be filed. The realigned parties filed a consolidated amended class action complaint (“CAC”)

on January 27, 2005. The CAC names Ingle and Rachford as plaintiffs (but not Yohannes or

Coffey). Defendants are CNF, EWW, EWA, the two Plans, and the Administrative Committee

(collectively, “the CNF defendants”), plus the three T. Rowe Price defendants.

On February 10, 2005, the CNF defendants filed an answer and counterclaim seeking

a declaratory judgment that the defendants had not breached their fiduciary duties (identical to

the original allegations in Administrative Committee v. Rachford). 

On August 15, 2005, Ingle filed the present motion to certify a plaintiff class, with

himself as the sole class representative, and defining the proposed class as 

all persons who were furloughed on August 12, 2001, and who were also

participants in or beneficiaries of the Retirement Plans at any time between

August 12, 2001, and October 16, 2001 (“the Class Period”) [but excluding any

defendant or person related to defendants].

On the same date, the CNF defendants filed a motion to certify a counterclaimant defendant

class (substantially identical to the Administrative Committee’s previous motion to certify a

defendant class) with Rachford, Ingle, and Yohannes as proposed defendant class

representatives, and the proposed class defined as 

all participants in one or both of the 401(k) Plans who were furloughed by [EWA]

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in 2001 or 2002 due to actions taken by the Federal Aviation Administration

(“FAA”) that ultimately resulted in the shutdown of EWA, who continued to

receive paid health benefits under the Health Plan for 60 days following the start

of their furloughs (“the Class Period”), for whom the 401(k) Plan account

distributions were not authorized during the Class Period while they received

such employee benefits, and who were not permitted to take new loans against

their accounts after the start of their furloughs.

Each side was then directed to file a statement explaining why the court should be

required to adjudicate two motions for class certification. They did so, and the court advised

the parties that it would consider the plaintiff’s motion first, and that it would take up the CNF

parties’ motion later, “to the extent necessary.” 

DISCUSSION

Plaintiff Ingle seeks certification of a class defined as 

all persons who were furloughed on August 12, 2001, and who were also

participants in or beneficiaries of the Retirement Plans at any time between

August 12, 2001, and October 16, 2001 (“the class period”). 

He argues that all the requirements of Federal Rule of Civil Procedure 23(a) are satisfied, and

that the action is appropriate for certification under either Rule 23(b)(1) or Rule 23(b)(2). 

Before determining whether a proposed class satisfies the requirements of Rule 23,

the court must be satisfied that the named plaintiffs have standing to assert their claims, since

the court cannot certify a proposed class if the proposed representatives lack standing to sue. 

O’Shea v. Littleton, 414 U.S. 488, 494 (1974); Lierboe v. State Farm Mut. Auto Ins. Co., 350

F.3d 1018, 1022 (9th Cir. 2003); Boyle v. Madigan, 492 F.2d 1180, 1182 (9th Cir. 1974). 

Indeed, "standing is the threshold issue in any suit. If the individual plaintiff lacks standing, the

court need never reach the class action issue." 3 Newberg on Class Actions § 3:19, at 400

(4th ed. 2002). 

ERISA allows “a participant, beneficiary, or fiduciary” to bring a civil action for breach

of fiduciary duty. 29 U.S.C. § 1132(a)(2). Thus, Ingle – the proposed class representative –

has standing to bring this action only if he is a plan participant, beneficiary or fiduciary. See

Harris v. Provident Life and Accident Ins. Co., 26 F.3d 930, 933 (9th Cir.1994) (federal court

has no jurisdiction to hear civil action under ERISA that is brought by person who is not a

“participant, beneficiary, or fiduciary”) (quoting Franchise Tax Bd. v. Construction Laborers

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 Rachford, who does not seek to serve as class representative, took a complete

distribution of his account in November 2002, also before the complaint in Coffey was filed. 

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Vacation Trust, 463 U.S. 1, 27 (1983)); see also Curtis v. Nevada Bonding Corp., 53 F.3d

1023, 1027 (9th Cir. 1995) (claimant's standing to enforce ERISA under 29 U.S.C. § 1132 is

prerequisite to subject matter jurisdiction under ERISA). 

“The term 'participant' means any employee or former employee of an employer . . . 

who is or may become eligible to receive a benefit of any type from an employee benefit

plan." 29 U.S.C. § 1002(7). In Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101 (1989),

the Supreme Court refined the definition of "participant," holding that,

the term "participant" is naturally read to mean either "employees in, or

reasonably expected to be in, currently covered employment," or former

employees who "have . . . a reasonable expectation of returning to covered

employment" or who have "a colorable claim" to vested benefits. In order to

establish that he or she "may become eligible" for benefits, a claimant must

have a colorable claim that (1) he or she will prevail in a suit for benefits, or that

(2) eligibility requirements will be fulfilled in the future. . . . A former employee

who has neither a reasonable expectation of returning to covered employment

nor a colorable claim to vested benefits, however, simply does not fit within the

[phrase] ‘may become eligible.’

Id. at 117-18 (citations and quotations omitted). 

Defendants contend that because Ingle was not a Plan participant at the time of filing of

the present action, he does not have standing to assert claims on his own behalf or on behalf

of the other proposed class members.2 Defendants assert that Ingle is not a participant

because he does not have a “‘colorable claim’ to vested benefits,” as required under

Firestone. They argue that rather than seeking “benefits,” he is seeking damages for loss of

the additional benefits he claims he would have received from his Plan investments but for the

defendants’ alleged misrepresentations. 

Ingle maintains, however, that he has a “colorable claim” to vested benefits, arguing

that the members of the proposed class had in their retirement accounts “vested benefits” that

were improperly withheld from them by defendants. He contends that by calling these

benefits “damages” instead of “vested benefits,” defendants are simply engaged in a game

of semantics. He urges the court to ignore the distinction between “damages” and “vested

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benefits” at this stage of the litigation. 

It is settled in the Ninth Circuit that a person's standing as a plan participant "must be

decided as of the time of the filing of the lawsuit." Harris, 26 F.3d at 933; see also Schultz v.

PLM Int'l, Inc., 127 F.3d 1139, 1142 (9th Cir. 1997) (participant status is determined at the

time suit is filed); Crotty v. Cook, 121 F.3d 541, 547 (9th Cir. 1997) (same). The court finds

that at the time of the filing of this suit in August 2003, Ingle was not “eligible to receive a

benefit” under the Plan, and was therefore not a Plan “participant. At the time Ingle filed suit,

he was a former employee of EWA. He thus qualifies as a "plan participant only if he has 'a

reasonable expectation of returning to covered employment or [has] a colorable claim to

vested benefits.' " Harris, 26 F.3d at 933 (quoting Firestone, 489 U.S. at 117).

Because EWA – which ceased operations in December 2001 – no longer existed at

the time the complaint was filed, Ingle did not have a reasonable expectation of returning to

covered employment. And because he had taken a full distribution of the money in his 401(k)

account in January 2002, he did not have a colorable claim to vested benefits: his benefits

under the Plans had already been distributed to him in full. Because he had neither a

reasonable expectation of returning to covered employment nor a colorable claim to vested

benefits, Ingle was not a participant in an ERISA plan at the time he filed suit. He therefore

lacked standing to bring a claim under § 1132.

Ingle argues that he falls within a well-recognized exception to the general rule that a

former plan participant lacks standing to sue under ERISA. He relies on Amalgamated

Clothing & Textile Workers Union, AFL-CIO v. Murdock, 861 F.2d 1406, 1418 (9th Cir. 1988),

where the court held that a former plan participant could sue for breach of fiduciary duty

because to preclude him from suing would be to allow the fiduciary to benefit from its scheme

to personally profit from the breach of duty of loyalty; and on Perigo v. Hoffer, 354 F.Supp. 2d

1145, 1147 (E.D. Cal. 2005), where the court found that a former plan participant had

standing to seek disgorgement of ill-gotten gains that had accrued to defendant as a result of

breaches of fiduciary duty. Ingle argues that in this case, he seeks, in essence, the imposition

of a constructive trust to strip the defendants of any ill-gotten profits of CNF stock earned from

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 See Ruocco v. Bateman, Eichler, Hill, Richards, Inc., 903 F.2d 1232, 1236 (9th Cir.

1990) (incase challenging employer’s failure to distribute to planparticipants a surplus dividend

it received from plan’s disability carrier, court ruled that former employee had “colorable claim”

of entitlement to share of surplus because he was former plan participant who had contributed

financially to the plan); see also McBride v. PLM Int’l, Inc., 179 F.3d 737, 742-44 (9th Cir. 1999)

(notwithstanding usual rule that former employee who has received full distribution of vested

benefits does not have standing to sue as plan “participant,” such an employee does have

standing to sue for violation of ERISA’s whistleblower provision (29 U.S.C. § 1140), because

otherwise, employer could unfairly escape liability for violations of ERISA).

4

 Plaintiff’s counsel cited headnote 3 from Acosta, in which West Publishing Company

summarized a portion of the decision as follows: “Despite general rule that actual controversy

must exist at all stages of federal court proceedings, Court of Appeals may nonetheless review

claims that implicate practices that are capable of repetition, yet evading review.” Id. at 612.

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their individual accounts based on allegations of ERISA fiduciary duties. 

In scattered instances, courts have found that individuals who were not plan participants

at the time of filing an ERISA action nonetheless had standing. Most of the cases involve a

scenario similar to that in the Amalgamated Clothing and Perigo decisions cited by Ingle –

where a court determines that it would be inequitable to allow the fiduciary to personally profit

from unlawful gains obtained via the breach of fiduciary duty.3 However, despite Ingle’s

attempt to make the facts of this case fit into that pattern, the court does not agree that

plaintiffs have alleged facts showing “ill-gotten profits” made by defendants as a result of the

decision to “freeze” access to the accounts. 

Nor does this case fall into the category of “capable of repetition, yet evading review,”

as argued by plaintiff’s counsel at the hearing. Plaintiff’s counsel asserted that the question is

controlled by Acosta v. Pacific Enter., 950 F.2d 611 (9th Cir. 1992), and referred the court to a

headnote that appears at the beginning of that decision.4 However, the Acosta decision

actually supports defendants’ position, not Ingle’s. In Acosta, a participant in one of various

employee benefit plans administered on behalf of a single parent company brought an ERISA

action against the trustee of the plans and the parent company, challenging the company’s

refusal to provide him with a list of names, addresses, and shareholdings beneficially owned

by each participant in each of the various plans. (He wished to use the information to solicit

votes for a particular candidate in the parent company’s corporate directors election.) The

district court denied the plaintiff’s request for injunctive relief as moot because the election of

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 However, the Ninth Circuit found that defendants had no fiduciary duty to disclose the

specific information sought by the plaintiff, as such disclosure was not sufficiently related to the

provision of benefits or to defrayment of expenses. Id. at 618-19. 

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directors had already occurred. In addition, the court granted summary judgment for the

defendants, finding that the plaintiff did not have standing to challenge decisions affecting

plans in which he did not participate. Id. at 615-16.

The Ninth Circuit found the case not moot, because the plaintiff had indicated that he

intended to support candidates in future elections and to seek the support of other

participants, and would again seek a list of all participants in any plan maintained by the

parent company or its subsidiaries. The court noted that even though the election for which the

plaintiff sought the information was over, the controversy was “sufficiently capable of

repetition” to preserve the court’s jurisdiction. Id. at 616 (citation and quotation omitted).5 In

addition, however, with regard to the information regarding plans in which the plaintiff was not

a participant, the court held that “[i]f an individual does not participate in a specific plan, the

fiduciaries of that plan generally have no fiduciary duty to him,” and concluded that plaintiff

therefore lacked standing under ERISA to bring an action for breach of fiduciary duty in the

administration of plan in which he did not participate. Id. at 617. 

The finding that the plaintiff’s claim was “capable of repetition, yet evading review” was

made in response to the district court’s ruling that the plaintiff’s claim was moot. The

case-or-controversy requirement demands that, through all stages of federal judicial

proceedings, the parties continue to have a personal stake in the outcome of the lawsuit.

Caswell v. Calderon, 363 F.3d 832, 836 (9th Cir. 2004). This means that, throughout the

litigation, the plaintiff must have suffered, or be threatened with, an actual injury traceable to

the defendant and likely to be redressed by a favorable judicial decision. Id.; see also City of

Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000) (case is moot when issues presented are no

longer “live” or parties lack legally cognizable interest in outcome). Here, by contrast, the

question is whether Ingle had standing under ERISA § 502(a) in August 2003 to bring a claim

for breach of fiduciary duty. Acosta supports the proposition that a person who is not a

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participant in an ERISA plan lacks standing to bring an action for breach of fiduciary duty in

the administration of the plan. 

Ingle requests that if the court finds that he lacks standing, another plan participant be

permitted to seek to represent the proposed class. Under recent Ninth Circuit authority,

however, the court finds that that the CAC must be dismissed. In Lierboe, the Ninth Circuit

considered an appeal of a class certification order. The plaintiff, a resident of Montana who

had been injured in a car accident, incurred medical bills that exceeded the limit of the policy

for the vehicle in which she was riding. She sought additional coverage under a policy that

insured a vehicle owned by her closely-held business. The second policy provided no

coverage for any injury sustained by the insured while riding in a vehicle owned by the insured

but not covered under the second policy. Plaintiff filed suit, claiming that the insurer’s refusal

to “stack” more than one policy violated public policy. The suit was filed as a proposed class

action. The district court certified the class, but also certified to the Supreme Court of

Montana the question whether plaintiff had a “stacking” claim under her policies. Lierboe, 350

F.3d at 1020-21.

After the appeal of the class certification appeal had been argued, the Montana

Supreme Court ruled that the plaintiff had no “stacking” claim. The Ninth Circuit then held that

because the plaintiff could not state a “stacking” claim, it was premature to assess the

prerequisites of Rule 23(a) or the standards for compliance under Rule 23(b) because she

could not represent others who might have such a claim. The issues of predominance,

superiority, typicality, and so forth “need not be considered if [plaintiff] is not in the subject

class.” Id. at 1022. 

The court considered whether “it might be possible that the suit can proceed as a class

action with another representative, subject to the district court’s assessment whether a

substitute representative is adequate for Rule 23 class purposes.” Id. at 1023. The court

concluded that because it was “not a mootness case, in which substitution or intervention

might have been possible,” the only resolution possible was to remand for dismissal. Thus,

The Ninth Circuit vacated the class certification, and remanded the case with instructions to

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 Despite Ingle’s assertions that he seeks recovery on behalf of the Plans, what he

appears to be seeking is recoveryfor himself and the other individualmembers of the class. The

CAC alleges that“[p]laintiffs bring this action onbehalf of themselves and everyother participant

in and beneficiaryof the Plans.” CAC ¶ 5. Since § 502(a)(2) gives an individual plaintiff standing

to seek monetary relief on behalf ofhis/her ERISA plan, but not on his/her own behalf, one could

therefore also argue on that basis that Ingle lacks standing to bring a claim under § 502(a)(2).

However, defendants have not made this argument. 

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dismiss: 

We are persuaded by the Seventh Circuit’s approach in an analogous case,

Foster v. Center Township of LaPorte County, 798 F.2d 237, 244-45 (7th Cir.

1986), which held that where the sole named plaintiff “never had standing” to

challenge a township’s poor-relief eligibility guidelines, and where “she never

was a member of the class she was named to represent,” the case must be

remanded with instructions to dismiss.

Id. 

CONCLUSION

In accordance with the foregoing, the court finds that the class certification motion must

be denied for lack of standing of the class representatives,6 and that the consolidated

amended complaint must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6),

for lack of standing under ERISA. See Cetacean Community v. Bush, 386 F.3d 1169, 1175

(9th Cir. 2004). 

IT IS SO ORDERED.

Dated: December 15, 2005

______________________________

PHYLLIS J. HAMILTON

United States District Judge

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