Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_01-cv-01425/USCOURTS-almd-2_01-cv-01425-1/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

---

The court’s ruling is memorialized in an opinion which is published at Cook v. 1

Campbell, 482 F. Supp.2d 1341 (M.D. Ala. 2007). Henceforth, the court cites the

reported decision as Cook I.

IN THE DISTRICT COURT OF THE UNITED STATES

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

BINITA L. COOK, et al., )

)

Plaintiffs, )

) Civil Action No. 2:01cv1425-ID

v. )

)

BOYD F. CAMPBELL, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

Before the court is Plaintiffs’ Motion to Reconsider. (Doc. No. 101.) Plaintiffs

ask the court to reconsider and reverse its ruling, entered March 30, 2007 (Doc. No. 59),

granting Defendant Boyd F. Campbell’s (“Campbell”) motion for judgment on the

pleadings on Plaintiffs’ claims for breach of fiduciary duty, brought pursuant to the

Employee Retirement Income Security Act of 1974 (“ERISA”), § 502(a)(2). See 29 1

U.S.C. § 1132(a)(2). As grounds for their Motion, Plaintiffs rely on the Supreme Court

of the United States’ recent holding in LaRue v. DeWolff, Boberg & Associates, Inc., ___

U.S. ___, 128 S. Ct. 1020 (2008). Campbell filed a Response in opposition to Plaintiffs’

Motion. (Doc. No. 105.) After careful consideration of the arguments of counsel, the

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 1 of 14
2

relevant law and the allegations in the complaint, as amended, the court finds that

Plaintiffs’ Motion is due to be denied.

II. JURISDICTION AND VENUE

The court exercises subject matter jurisdiction over this case pursuant to 28 U.S.C.

§ 1331 (federal question). The parties do not contest personal jurisdiction or venue, and

the court finds adequate allegations of each.

III. STANDARD OF REVIEW

An intervening change in controlling law justifies a court’s reconsideration of a

prior ruling. See Richards v. United States, 67 F. Supp.2d 1321, 1322 (M.D. Ala. 1999). 

The prior ruling at issue addressed Campbell’s motion for judgment on the pleadings,

made pursuant to Rule 12(c) of the Federal Rules of Civil Procedure. Judgment on the

pleadings is appropriate when “no issues of material fact exist, and the movant is entitled

to judgment as a matter of law.” Ortega v. Christian, 85 F.3d 1521, 1524 (11 Cir. 1996). th

When reviewing a judgment on the pleadings, the court must accept the facts in the

complaint as true and view them in the light most favorable to the nonmoving party. Id. 

A judgment on the pleadings is limited to consideration of “the substance of the pleadings

and any judicially noticed facts.” Bankers Ins. Co. v. Florida Residential Prop. & Cas.

Joint Underwriting Ass'n, 137 F.3d 1293, 1295 (11 Cir. 1998). “If upon reviewing the th

pleadings it is clear that the plaintiff would not be entitled to relief under any set of facts

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 2 of 14
3

that could be proved consistent with the allegations, the court should dismiss the

complaint.” Horsley v. Rivera, 292 F.3d 695, 700 (11 Cir. 2002). th

IV. FACTS

The facts are set out in Cook I, see supra footnote one. They need not be repeated

here. 

V. DISCUSSION

In Cook I, the court agreed with Campbell that Massachusetts Mutual Life

Insurance Co. v. Russell (“Russell”), 473 U.S. 134 (1985), precluded the relief sought by

Plaintiffs under ERISA § 502(a)(2) for breach of fiduciary duty. In Russell, the Court

held, “A fair contextual reading of the statute [§ 502(a)(2)] makes it abundantly clear that

its draftsmen were primarily concerned with the possible misuse of plan assets, and with

remedies that would protect the entire plan, rather than with the rights of an individual

beneficiary.” Id. at 142 (emphasis added). Applying Russell, this court concluded, 

Here, the relief sought, as set out in Plaintiffs’ “prayer for relief,” is for

individual relief. [Plaintiffs] do not bring their claims on behalf of the plan

or request that the losses resulting from Campbell’s alleged breaches be

returned to the plan. Hence, the court finds that Russell forecloses

Plaintiffs from suing for breaches of fiduciary duties under § 502(a)(2)

because Plaintiffs are seeking damages on their own behalf, not on behalf

of the Plan. 

Cook I, 482 F. Supp.2d at 1357.

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 3 of 14
4

After this court’s decision in Cook I, the Supreme Court of the United States

decided LaRue. The plaintiff in LaRue was a participant in a 401(k) plan sponsored by

his former employer. 128 S.Ct. at 1022. The 401(k) plan was a “defined contribution

plan” (also called an “individual account plan”). The plaintiff alleged that he instructed

his employer to make changes to the investments in his individual 401(k) account, but

that his employer did not implement these changes. The plaintiff further alleged that his

employer’s failure to follow his instruction caused his individual account to lose

$150,000 in “profits” and amounted to a breach of fiduciary duty. Id. at 1022-23. On

appeal to the Fourth Circuit, the plaintiff argued that he should be made whole through

ERISA § 502(a)(2), which authorizes claims for losses “to the plan.” Relying on Russell,

the Fourth Circuit held that, because the plaintiff’s losses could not be ascribed to the

collective 401(k) plan, the losses were not recoverable under § 502(a)(2). Id. at 1021. 

As submitted to the Supreme Court, the issue was whether, pursuant to

§ 502(a)(2), a participant in a defined contribution plan may sue to recover losses to the

plan caused by a breach of fiduciary duty, even when those losses affect only the

participant’s individual account and not other accounts. In LaRue, the Court narrowed

the scope of Russell’s longstanding holding that any recovery must benefit the “entire

plan,” reasoning that Russell applies only to a “defined benefit plan,” the type of plan at

issue in Russell. The LaRue Court explained that “[m]isconduct by the administrators of

a defined benefit plan will not affect an individual’s entitlement to a defined benefit

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 4 of 14
5

unless it creates or enhances the risk of default by the entire plan.” Id. at 1025. 

Distinguishing defined contribution plans, the Supreme Court explained:

For defined contribution plans . . . fiduciary misconduct need not threaten

the solvency of the entire plan to reduce benefits below the amount that

participants would otherwise receive. Whether a fiduciary breach

diminishes plan assets payable to all participants and beneficiaries, or only

to persons tied to particular individual accounts, it creates the kind of harms

that concerned the draftsmen of § 409. Consequently, our references to the

“entire plan” in Russell, which accurately reflect the operation of § 409 in

the defined benefit context, are beside the point in the defined contribution

context.

Id. The LaRue Court held, “that although § 502(a)(2) does not provide a remedy for

individual injuries distinct from plan injuries, that provision does authorize recovery for

fiduciary breaches that impair the value of plan assets in a participant’s individual

account.” Id. at 1026. 

Campbell argues that “LaRue is not on point,” and, therefore, “there is no reason

for the court to reconsider its prior ruling.” (Doc. No. 105 at 6.) According to Campbell,

Plaintiffs “are not alleging a fiduciary breach that affected only their individual

accounts.” (Id. at 4.) To the contrary, Campbell says that “the only facts alleged by

Plaintiffs in support of their ERISA fiduciary breach claims are that [he] failed to

adequately investigate the sale of George Hutchinson’s stock to the ESOP [employee

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 5 of 14
 The court notes that Counts Seven through Twelve of the First Amendment to 2

Complaint, for the most part, contain undefined allegations of breaches of fiduciary

duties. Count Nine, for example, alleges that Campbell “fail[ed] to perform his duties in

accordance with the documents and instruments governing Plaintiffs’ employee welfare

benefits plans,” namely, the ESOP and the career transition assistance plan (“CTAP”). 

(1 Am. Compl. at 3, Count 9 (¶ 2).) As pointed out by Campbell, only one count is st

defined. Count Ten alleges that Campbell “fail[ed] to conduct a good faith independent

investigation of the buyout transactions involving the stock of George E. Hutchinson to

determine whether the transactions were fair to the ESOP” and “permitt[ed] the ESOP to

purchase the Hutchinson shares for more than adequate consideration.” (Id. at 3, Count

Ten (¶¶ 2-3).)

6

stock ownership plan).” (Id.) Campbell contends that “[t]his alleged breach, if true, 2

impacts the Plan as a whole and all Plan participants.” (Id.)

The issue, as framed by the parties, is whether the holding in LaRue revives

Plaintiffs’ breach of fiduciary duty claims in the First Amendment to the Complaint so as

to warrant a reversal of the court’s prior ruling granting judgment on the pleadings in

favor of Campbell on Counts Seven through Twelve. For the reasons to follow, the court

finds that LaRue cannot save Plaintiffs’ breach of fiduciary duty claims. 

No argument has been advanced that the ESOP at issue, which bought and held

stock of Central Alabama for the employees’ benefit, is not a defined contribution plan. 

There is, however, a notable factual distinction between the 401(k) defined contribution

plan at issue in LaRue and the ESOP in this case, a distinction which Campbell highlights

in his brief. The 401(k) plan at issue in LaRue “permit[ted] participants to direct the

investment of their contributions in accordance with specified procedures and

requirements,” and the fiduciary breach alleged in LaRue occurred as a result of the

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 6 of 14
7

employer’s failure to comply with the plaintiff’s instruction to switch investments in the

plaintiff’s individual account. LaRue, 128 S.Ct. at 1022. The injury to the LaRue

plaintiff’s account was unique to that one account and did not affect the accounts of any

other participants. 

Here, to the contrary, as alleged in Plaintiffs’ amended complaint, the ESOP was

funded by Central Alabama with shares of company stock, which were deposited in each

participating employee’s individual account in a set amount proportionate to the

employee’s salary. (Compl. at 4); Cook I, 482 F. Supp.2d at 1347. There is no allegation

that Plaintiffs could make individual choices as to how the ESOP was funded or that

Plaintiffs’ losses occurred based on Campbell’s failure to adhere to Plaintiffs’ individual

directives as to how their accounts (i.e., their proportional share of company stock) were

to be maintained. The issue in this case is not, as it was in LaRue, whether § 502(a)(2)

“may be used by the beneficiary of a defined-contribution account that suffers a loss,

even though other participants are uninjured by the acts said to constitute a breach of

fiduciary duties.” Rogers v. Baxter Int’l, Inc., ___ F.3d ___, ___ 2008 WL 867741, *2

(7 Cir. 2008) (discussing LaRue) (emphasis added). th

Rather, here, Plaintiffs’ accusations are that Campbell breached his fiduciary

duties in a way that negatively impacted the value of the company stock, see, supra,

footnote 2, which, in turn, impacted not only Plaintiffs’ accounts, but the account of

every ESOP participant. The allegations, thus, establish that the fiduciary breaches of

which Plaintiffs complain were, as discussed in Russell, part of a systemic breach of

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 7 of 14
8

fiduciary obligations affecting the ESOP as a whole. This distinction is important

because, according to the theory of liability in the amended complaint – which is the

document in issue on a motion for judgment on the pleadings – Russell was not an

impediment to the ERISA § 502(a)(2) theory alleged by Plaintiffs. Similar claims were

allowed to proceed even during the Russell era. See e.g., Smith v. Sydnor, 184 F.3d 356,

362-63 (4 Cir. 1999) (§ 502(a)(2) claim viable where employer stock which funded th

401(k) plans was allegedly sold at undervalued price as a result of fiduciary breaches); In

re Syncor Erisa Litig., 351 F. Supp.2d 970, 990 (C.D. Cal. 2004) (complaint stated a

§ 502(a)(2) claim because the entire plan, not just the participant’s individual § 401(k)

account, was impacted because all accounts contained employer stock); see also Steven J.

Sacher, et al., Employee Benefits Law, Chp. 12 II.C.1, at 759-62 (2007 Suppl.)

(collecting pre-LaRue cases in which courts applied Russell and permitted fiduciary

breach claims relating to 401(k) plans). 

Plaintiffs misunderstand why the court granted Campbell’s motion for judgment

on the pleadings. Stripping the amended complaint down to its essence, the sole relief

sought by Plaintiffs on their claims for breach of fiduciary duty is “benefits due them

under their [CTAP] severance plan[.]” (1 Am. Compl. at 6 (emphasis added)); see st

generally Fed. R. Civ. P. 8(a) (requiring a complaint to contain “a demand for the relief

sought”). This remedy is expressly permitted under ERISA § 502(a)(1)(B). See 29

U.S.C. § 1132(a)(1)(B) (providing that a participant may bring a civil action “to recover

benefits due to him under the terms of his plan”). Plaintiffs, however, have not cited a

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 8 of 14
 Section 502(a)(2) allows a plan participant to seek “appropriate relief” under 3

ERISA § 409(a), which, in turn, provides that, on an action for breach of fiduciary duty, a

fiduciary may be held liable to “make good to [the] plan any losses to the plan resulting

from each such breach.” 29 U.S.C. § 1109(a).

9

decision from any court which has recognized this remedy as “appropriate relief” under

ERISA § 502(a)(2). Compare Smith, 184 F.3d at 363 (concluding that disgorgement of 3

profits and rescission are “appropriate relief” under § 502(a)(2)); In re JDS Uniphase

Corp. Erisa Litigation, No. C 03-04743 CW (WWS), 2005 WL 1662131, *12 (N.D. Cal.

July 14, 2005) (finding that plaintiffs’ sought appropriate relief under § 502(a)(2) where

complaint requested that defendants “restore the losses to the Plan caused by their

breaches of fiduciary duties” and “to make good to the Plans all losses to the Plans

resulting from the Defendants’ breaches of their fiduciary duties”); see Steven J. Sacher,

et al., Employee Benefits Law, Chp. 12 II.C.5, at 896-97 (2 ed. 2000). Problematically, nd

as plainly pleaded by Plaintiffs, they seek relief for plan benefits payable directly to

themselves. Cf. LaRue, 128 S.Ct. at 1023 (plaintiff requested “‘recovery to be paid into

his plan account’”). Plaintiffs’ remedy does not seek to hold Campbell “personally liable

to make good to [the] plan any losses to the plan resulting from each breach . . . and to

restore to such plan” the losses resulting from the breach. 29 U.S.C. § 1109(a). LaRue

did not alter the law in Russell (or the plain wording of § 1109(a)) that any recovery

under ERISA § 502(a)(2) against the breaching fiduciary must be paid to the plan, and

not to individual participants. See LaRue, 128 S.Ct. at 1029 (Thomas, J., concurring in

judgment) (“Of course, a participant suing to recover benefits on behalf of the plan is not

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 9 of 14
 While the Plans at issue in this case were not defunct at the time Plaintiffs 4

brought their litigation; they may be now given Central Alabama’s Chapter 11 bankruptcy

proceedings. When an ERISA plan has been terminated and, thus, cannot receive the

relief, some courts have found that the creation of a constructive trust in favor of former

plan participants is appropriate equitable relief under § 502(a)(3) for breaches of

fiduciary duties). See Steven J. Sacher, et al., Employee Benefits Law, Chp. 12 II.C.I,

at 893 n.85 (2 ed. 2000) (collecting cases). Plaintiffs originally pursued a § 502(a)(3) nd

claim, but sought strictly legal relief, which is not recoverable under § 502(a)(3). The

court’s findings in this regard are discussed in detail in Cook I. See Cook I, 482 F.

Supp.2d at 1357-63. 

10

entitled to monetary relief payable directly to him; rather, any recovery must be paid to

the plan.”). The remedy requested by Plaintiffs was foreclosed by Russell, and the court

finds that the remedy requested continues to be foreclosed under the holding in LaRue. 

4

The court is sympathetic to the plight of Plaintiffs, but at the same time the court

cannot ignore the governing pleading rules and the failure of Plaintiffs to seek and plead a

remedy permitted by § 502(a)(2). Cf. Cook I, 482 F. Supp.2d at 1359-61 (precluding

Plaintiffs’ § 502(a)(3) claim because the requested relief was legally insufficient). 

Plaintiffs may think that the court’s ruling today, again foreclosing their § 502(a)(2)

claims on the pleadings is too stringent, but the court does not believe that to be the case. 

During this litigation, the court has accorded substantial leeway to Plaintiffs’ pleadings,

perhaps more leeway than the Federal Rules of Civil Procedure permit, as Campbell

suggests. See, e.g., Cook I, 482 F. Supp.2d at 1361 (considering “whether there exists a

form of equitable relief (although not pleaded by Plaintiffs) through which Plaintiffs

potentially could secure the alleged benefits owed under § 502(a)(3)(B)”); see also id.

at 1355. Indeed, in an ERISA action where the plaintiffs pleaded only a claim for

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 10 of 14
 Notably, at no time have Plaintiffs sought to amend their ERISA complaint to 5

seek any additional or alternative form of relief – not after Campbell moved for judgment

on the pleadings, not after this court’s prior rulings, and not after LaRue. (See 1 Am.

st

Compl. at 6.) The court points out that the only reason Plaintiffs filed their First

Amendment to Complaint is because the court directed them to replead their preempted

state-law claims under ERISA. Even then Plaintiffs did so begrudgingly, defying the

court’s ruling by merely “adding” to, rather than replacing, their state-law claims and by

stating that, notwithstanding the court’s dismissal, they were not “waiv[ing] any of their

original causes of action under state law.” (1 Am. Compl. at 1.) st

11

recovery of benefits under the plan, the Eleventh Circuit admonished the district court for

awarding the plaintiffs a remedy not requested: “We also agree with [the employer’s]

argument that the district court should not have fashioned an equitable remedy in this

case when the [plaintiffs] neither sought equitable relief in their complaint nor raised the

issue at any point during the underlying litigation.” Ogden v. Blue Bell Creameries

U.S.A., Inc., 348 F.3d 1284, 1288 n.3 (11 Cir. 2003). The Eleventh Circuit’s th

admonition would appear to apply with equal force in this case.5

There is another reason why Plaintiffs’ § 502(a)(2) claims likely fail. As observed

by Chief Justice Roberts, “some Courts of Appeals have . . . prevented plaintiffs from

recasting what are in essence plan-derived benefit claims that should be brought under

§ 502(a)(1)(B) as claims for fiduciary breaches under § 502(a)(2).” LaRue, 128 S.Ct.

at 1027 (Roberts, Chief J., concurring in part and concurring in judgment) (citing Coyne

& Delany Co. v. Blue Cross & Blue Shield, 102 F.3d 712 (4 Cir. 1996)). The Fourth th

Circuit’s words ring true in this case. Plaintiffs’ § 502(a)(2) claims are just as described

by Coyne; they are disguised § 502(a)(1)(B) claims for benefits. Chief Justice Roberts

expressed his concern that “[a]llowing a § 502(a)(1)(B) action to be recast as one under

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 11 of 14
 The court recognizes that Plaintiffs dispute that “the CTAP document that was 6

provided to them contained a mandatory administrative remedies provision,” but

Plaintiffs have not challenged as inaccurate the CTAP plan which Campbell has

submitted to the court. (See Doc. No. 96 at 2 n.19, in which Plaintiffs note that they

“have not duplicated certain documents that were included in Defendant’s Evidentiary

Submission,” including “Defendant’s Exhibit 1, The Career Transition Assistance Plan

(“CTAP”) Document”); (see Rene Schraeder Decl. (Def. Ex. 16 to Doc. No. 84), stating

that “[a]n accurate and authentic copy of the CTAP plan document is attached as Exhibit

1”). Plaintiffs also have not disputed that those Plaintiffs who made the CTAP election,

did not invoke the claims procedures set out in the CTAP. Plaintiffs appear to take issue

with Campbell’s argument that claims exhaustion is mandatory, but Plaintiffs have not

submitted any evidence or argued that they interpreted the CTAP Claim and Appeal

Procedure as optional or that an “erroneous reading of the Plan . . . led [them] to fail in

[their] duty to present [their] claims for administrative review.” Spivey v. Southern Co.,

427 F. Supp.2d 1144, 1157 (N.D. Ga. 2006). Based on the court’s ruling herein, the

court need not, and declines to, decide the question of exhaustion. The court, by its

discussion, merely is pointing out that in this case the issue of exhaustion is not settled. 

12

§ 502(a)(2) might permit plaintiffs to circumvent safeguards for plan administrators that

have developed under § 502(a)(1)(B),” including “the requirement, recognized by almost

all the Courts of Appeals that a participant exhaust administrative remedies mandated by

ERISA, § 503, 29 U.S.C. § 1133, before filing suit under § 502(a)(1)(B).” Id. (internal

citation omitted); see Springer v. Wal-Mart Associates’ Group Health Plan, 908 F.2d 897,

900 (11 Cir. 1990) (“[I]t is no longer open to serious dispute that plaintiffs in ordinary th

breach-of-contract ERISA actions must normally exhaust available administrative

remedies.”). That concern manifests itself in this case, as Campbell has argued (albeit in

a reply brief), that Plaintiffs have not exhausted their administrative remedies under the

CTAP, and there is evidence which supports the argument. (See Doc. No. 99 at 6.) 6

Moreover, as also observed by Chief Justice Roberts, in Varity Corp. v. Howe,

516 U.S. 489 (1996), which involved a § 502(a)(3) claim, the Court “held that relief is

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 12 of 14
13

not ‘appropriate’ under § 502(a)(3) if another provision, such as § 502(a)(1)(B), offers an

adequate remedy.” LaRue, 128 S.Ct. at 1026; see also Ogden, 348 F.3d at 1287 (holding

that “an ERISA plaintiff who has an adequate remedy under Section 502(a)(1)(B) cannot

alternatively plead and proceed under Section 502(a)(3),” which similar to Section

502(a)(2) provides for “appropriate” relief). Chief Justice Roberts intimated, but did not

decide, that “[a]pplying the same rationale to an interpretation of ‘appropriate’ in

§ 502(a)(2) would accord with [the Court’s] usual preference for construing the “same

terms [to] have the same meaning in different sections of the same statute.’” 128

S.Ct. at 1026-27. Plaintiffs have discussed LaRue at length, but they have not presented

any meaningful argument as to why the court should not adhere to Chief Justice Roberts’

sound logic, and, as an alternative finding, the court does so. Should Plaintiffs complain

that they do not have an “adequate remedy” under § 502(a)(1)(B) given the court’s ruling

today in a separate opinion that res judicata is a bar to their § 502(a)(1)(B) claim, the

Eleventh Circuit’s holding in Ogden forecloses that argument. See 348 F.3d at 1284

(“We hold that an ERISA plaintiff has no cause of action under Section 502(a)(3) where

Congress provided for an adequate remedy elsewhere in the ERISA statutory framework,

even if res judicata now bars the adequate remedy provided”).

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 13 of 14
14

VI. ORDER

Based on the foregoing, it is CONSIDERED and ORDERED that Plaintiffs’

Motion to Reconsider (Doc. No. 101) be and the same is hereby DENIED.

Done this 12 day of May, 2008. th

 /s/ Ira DeMent 

SENIOR UNITED STATES DISTRICT JUDGE 

Case 2:01-cv-01425-ID-TFM Document 110 Filed 05/12/08 Page 14 of 14