Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-02569/USCOURTS-caed-2_08-cv-02569-10/pdf.json

Parties Involved:
David Barboza
Plaintiff
Kenneth Blanton
Defendant
California Administration Insurance Services, Inc.
Defendant
California Association of Professional Firefighters
Defendant
Dennis Campanale
Defendant
Gene Dangel
Defendant
James Floyd
Defendant
Charles Gluck
Defendant
Brian Pinomaki
Defendant
William Soqui
Defendant

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

DAVID BARBOZA,

NO. CIV. S-08-02569 FCD/GGH

Plaintiff,

v. MEMORANDUM AND ORDER

CALIFORNIA ASSOCIATION OF

PROFESSIONAL FIREFIGHTERS, a

California corporation;

CALIFORNIA ASSOCIATION 

OF PROFESSIONAL FIREFIGHTERS

LONGTERM DISABILITY PLAN;

CALIFORNIA ADMINISTRATION

INSURANCE SERVICES, 

INC., a California

corporation; and KENNETH

BLANTON, DENNIS CAMPANALE,

GENE DANGEL, JAMES 

FLOYD, CHARLES GLUCK, BRIAN

PINOMAKI, and WILLIAM SOQUI, 

individually and as Plan

Directors, 

Defendants.

----oo0oo----

This matter is before the court on (1) defendants California

Association of Professional Firefighters (“CAPF”), California

Administration Insurance Services, Inc. (“CAISI”), Kenneth

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Blanton, Dennis Campanale, Gene Dangel, Brian Pinomaki, Charles

Gluck, William Soqui, and James Floyd’s (collectively,

“defendants”) motion to alter or amend the judgment, pursuant to

Federal Rules of Civil Procedure 59(e) and 60; (2) plaintiff

David Barboza’s (“plaintiff”) motion for attorneys’ fees; (3)

defendants’ motion for attorneys’ fees; (4) defendants’ bill of

costs; and (5) plaintiff’s bill of costs. Based upon the

submissions of the parties and for the reasons set forth below,

(1) defendants’ motion to alter or amend the judgment is DENIED;

(2) plaintiff’s motion for attorney fees is DENIED; (3)

defendants’ motion for attorney fees is DENIED; (4) defendants’

bill of costs is DENIED; and (5) plaintiff’s bill of costs is

DENIED.

BACKGROUND1

Defendant CAPF is a non-profit mutual benefit corporation

that sponsors the California Association of Professional

Firefighters Long-Term Disability Plan (the “Plan”). (Order at

2-3.) Defendant CAISI administers the Plan and is responsible

for making determinations regarding participants’ disability and

benefits. (Id.) Individual Defendants Kenneth Blanton, Dennis

Campanale, Gene Dangel, and Brian Pinomaki are Directors and

Executive Board members of CAPF and are “fiduciaries” within the

meaning of 29 U.S.C. §§ 1002(14) and (21). (Id.) The Plan is an

ERISA welfare benefit plan that receives its funding exclusively

from Plan participants, as opposed to employers, and pays all

1 The facts of this case are set forth in full in the

court’s Memorandum and Order, filed January 25, 2011. (Mem. &

Order (“Order”) [Docket # 96], filed Jan. 25, 2011, at 1-6.)

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benefits solely from Plan assets. (Id. at 3.) Plaintiff was a

participant in the Plan. (Id. at 5.) 

Plaintiff brought suit against defendants, the Plan, the

Plan Administrator (CAISI), and the individual board members of

CAPF and CAISI, alleging numerous breaches of fiduciary duties

under Part 4 of Title I of ERISA. (Id.) Plaintiff alleged that

defendants breached their fiduciary duties by: (1) failing to

distribute a Summary Annual Report (“SAR”) to Plan participants;

(2) unlawfully refusing to file Form 990 with the IRS; (3)

unlawfully failing to hold Plan assets in trust; (4) engaging in

unlawful self-dealing and prohibited transactions by coming to an

agreement that allows CAISI to use fees and expenses; (5)

engaging in prohibited transactions by renewing the

administrative services agreement between CAPF and CAISI,

including authorizing an administrative services fee increase,

agreeing to an unreasonably lengthy term, and including an

indemnity clause; and (6) failing to obtain actuarial review as

required by Plan bylaws.2 (Id. at 5–6.)

In July 2010, plaintiff and defendants filed cross-motions

for summary judgment.3 (See Pl.’s Mot. for Summ. J., filed Jul.

20, 2010 [Docket #41]; Defs.’ Mot. For Summ. J., filed Jul. 30,

2 Plaintiff’s complaint alleged several other breaches of

fiduciary duties, including causing Plan investments to incur

substantial losses by imprudently delegating investment authority

and paying unlawful kick-backs to CAPF directors. In his

opposition to defendants’ motion for summary judgment, plaintiff

conceded that he no longer pursued those claims.

3 The parties also filed cross-motions for sanctions

pursuant to Federal Rule of Civil Proceduer 11, both of which the

court denied. (See Defs.’ Mot. for Sanctions, filed Sep. 10,

2010 [Docket #61.]; Pl.’s Opp’n to Mot. for Sanctions, filed

Sept. 21, 2010 [Docket #84].)

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2010 [Docket #47].) The court granted plaintiff summary judgment

on his claim for failure to distribute a SAR and failure to

obtain actuarial review. (Order at 31.) In reaching the merits

of the claim, the court relied, inter alia, on various opinions

published by the Department of Labor (“DOL opinions”) in

concluding that the CAPF Plan was not unfunded, and thus, not

exempt from issuing a SAR pursuant to 29 C.F.R.

2520.104b-10(g)(1). (Id. at 11–13.) As a result, the court

ordered defendants “to distribute SARs from 2002 to date to all

participants in accordance with 29 C.F.R. 2520.104b-10 and to

obtain actuarial studies for each year that the Plan has not

undergone actuarial review.” (Id. at 32.) The court granted

defendants summary judgment on the remainder of plaintiff’s

claims. (See id.)

After the court issued its order, both parties filed motions

for attorney fees and filed bills of costs. (See Pl.s’ Mot. for

Atty’s Fees, filed Feb. 22, 2011 [Docket #103]; Defs.’ Mot. For

Atty’s Fees, filed Feb. 22, 2011 [Docket #102]; Pl.’s Bill of

Costs, filed Feb. 8, 2011 [Docket #98]; Defs.’ Bill of Costs,

filed Feb. 8, 2011 [Docket #99].)

ANALYSIS

A. Motion to Alter or Amend/Relief from Judgment

Defendants contend that the court should grant its motion to

amend or alter the judgment on three separate grounds. First,

defendants argue that the court’s use of the DOL opinions to

conclude that the Plan is not unfunded and thus, not exempted

from the SAR requirement, unjustifiably “surprised” defendants. 

Second, defendants assert that the DOL opinions apply only to

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employer plans, not employee organizations plans such as CAPF,

and thus, it was error for the court to rely upon them as

persuasive authority. Finally, defendants contend that requiring

them to issue reports for previous years undermines the purpose

of ERISA. 

Federal Rule of Civil Procedure 59(e) permits a party to

file a motion to amend or alter a trial court’s order. Under the

standard imposed by the Ninth Circuit, “the rule offers an

‘extraordinary remedy, to be used sparingly in the interest of

finality and conservation of judicial resources.’” Kona Enter.,

Inc. v. Estate of Bishop, 229 F.3d 877 (9th Cir. 2000) (quoting 6

James Wm. Moore et al., Moore’s Federal Practice § 54.78[1] (3d

ed. 2000)). Indeed, a district court should refrain from

granting a motion for reconsideration absent highly unusual

circumstances falling into one of three specific categories: (1)

the moving party presents newly discovered evidence; (2) the

district court committed clear error; or (3) there is an

intervening change in the controlling law. 389 Orange Street

Partners v. Arnold, 179 F.3d 656, 665 (9th Cir. 1999) (emphasis

added). Alternatively, Federal Rule of Civil Procedure 60(b)

permits a party to file for relief from judgment on the basis of

“mistake, inadvertence, surprise, or excusable neglect.” 

“A district court may reconsider its grant of summary

judgment under either Federal Rule of Civil Procedure 59(e) . . .

or Rule 60(b).” School Dist. No. 1J Multnomah County, Oregon v.

ACands, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993), cert. denied,

512 U.S. 1236, 114 S.Ct. 2742, 129 L. Ed. 2d 861 (1994). Under

both Rule 59(e) and Rule 60(b), the district court has

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considerable discretion in granting or denying a motion for

reconsideration. Id.

1. Reliance on DOL Opinion Letters

Defendants contend that relief from the judgment is

warranted pursuant to Federal Rule of Civil Procedure 60(b)

because the order “granting summary judgment . . . relies upon

authorities that had not been discussed by Plaintiff or

Defendants.” (Defs.’ Mot. to Alter or Amend Judgment [“MTAA”],

filed Feb. 22, 2011 [Docket #107], at 5:17–19.) However,

defendants’ contention is factually inaccurate. 

In his opposition to defendant’s motion for summary

judgment, plaintiff specifically cited to DOL Opinion 92-24, DOL

Technical Release 92-01 and the instructions to IRS form 5500 —

all of which the court relied on in concluding that the Plan was

not an unfunded benefit plan exempt from filing SARs. (See Pl.’s

Opp’n to Mot. for Summ. J. at 3:5–4:8, 8:22–26.) Plaintiff

expressly relied on these authorities in support of his argument

that “participant contributions funded the plan,” an issue the

court was required to resolve in determining whether the Plan was

exempt from distributing a SAR. (Id.) 

Accordingly, defendants’ assertion that they were

“unjustifiably surprised” by the courts reference to these

authorities is without merit.

2. Interpretation of DOL Authorities

Defendants also assert that the DOL opinions are

unpersuasive because they pertain only to employers, not employee

organizations like CAPF. (Id. at 6:2–26.) Therefore, defendants

argue that it was “clear error” for the court to rely on these

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authorities in determining that CAPF was not exempt from

distributing a SAR. 

Contrary to defendants’ contention, none of the authorities

the court relies on pertain only to “employer” plans and not to

“employee organization” plans. Indeed, DOL opinion 92-24A

explicitly states:

As explained in the instructions to the Form 5500

series, a plan seeking to rely on this first prong of

the [SAR] exemption cannot pay benefits from

participant contributions . . . from a trust . . . that

holds plan assets. In other words the application of

this prong of the exemption to a given plan turns, as a

threshold matter, on whether any of the amounts used to

pay benefits constitute plan assets.

(Id.) (emphasis added). Neither DOL opinion 92-24A nor the other

authorities relied upon distinguish between employer funds and

employee organization funds for purposes of determining whether a

plan is exempt from distributing a SAR. Nor do defendants offer

any meaningful argument, let alone legal authority, that would

justify such a distinction. Defendants’ mere disagreement with

the court’s interpretation is not grounds to reconsider the

order. See Blacklund v. Barnhart, 778 F.2d 1386, 1388 (9th Cir.

1985); Reliance Ins. Co. v. Doctors Co., 299 F. Supp. 2d 1131,

1154 (D. Haw. 2003) (recognizing that “[r]eiteration of arguments

originally made in support of, or in opposition to, a motion . .

. do not provide a valid basis for reconsideration”). 

Therefore, the court cannot conclude that it committed clear

error in its application and interpretation of these authorities.

3. Injunctive Relief

Finally, defendants contend that the court clearly erred in

requiring them to prepare and distribute SARs and actuarial

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studies for previous years. Specifically, they argue that

requiring defendants to prepare the reports would “undermine

(instead of advance) the [ERISA] goals of encouraging benefit

plans by simplifying administration and assuring that a plan

retains sufficient funds to meet its obligation.” (MTAA at

10:18–21.)

“Congress’s purpose in enacting the ERISA disclosure

provisions [was to] ensure that the ‘individual participant knows

exactly where he stands with respect to the plan.’” Firestone

Tire & Rubber Co. v. Bruch, 489 U.S. 101, 118 (1989) (quoting

H.R. Rep. No. 93-533, 93rd. Cong., 1st Sess. 11 (1973)). 

Injunctive relief is the appropriate remedy for enforcing these

requirements. Shaver v. Operating Eng’r Local 428 Pension Trust

Fund, 332 F.3d 1198, 1203 (9th Cir. 2003); Horvan v. Keystone

Health Plan East, Inc., 333 F.3d 450, 456 (3d Cir. 2003); Gillis

v. Hoechst Celanese Corp., 4 F.3d 1147, 1148 (3rd Cir. 1993).

Defendants have failed to establish that the court committed

clear error in ordering injunctive relief in this case. 

Plaintiff established, by undisputed evidence, that defendants

unlawfully failed to distribute SARs and breached their fiduciary

duties by failing to comply with the Plan’s annual actuarial

review requirement. (See Order at 13-14, 28.) Even though

plaintiff failed to demonstrate damages as a result of defendants

wrongful conduct, loss causation is not required for the court to

issue the injunctive relief given in this action for breach of

fiduciary duty. See Shaver, 332 F.3d t 1203. This is

particularly true where the failure to distribute financial

disclosure documents or prepare reports relating to the proper

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funding of the Plan are the breaches at issue. Based upon the

circumstances in this case, plaintiff is entitled to disclosures

that would let him know “exactly where he stands” as well as

where he stood with the Plan at all relevant times. See

Firestone Tire & Rubber Co., 489 U.S. at 118. Defendants’

argument as to injunctive relief is unpersuasive. 

Accordingly, defendants’ motion to alter or amend the

judgment is DENIED.

B. Motions for Attorney Fees

Both plaintiff and defendants filed motions for attorney

fees under 29 U.S.C. 1132(g)(1). Both parties respectively argue

that they had sufficient success on the merits to justify an

award of attorney fees.

Defendants specifically contend that they had some degree of

success on the merits because “[t]hey prevailed on sixteen of the

most serious claims asserted against them, and saw summary

judgment granted against them on only the three most

insignificant claims.” (Defs.’ Mot. for Atty’s Fees at 6:7–9.) 

Defendants further contend that an award of attorney fees in its

favors is proper because: (1) plaintiff acted in bad faith, and

thus, an award of fees would deter plaintiff, and other ERISA

beneficiaries, from filing unmeritorious ERISA claims; (2)

“[d]efendants seek to benefit all of the participants in the CAPF

Plan by recovering sums for that plan;” and (3) the merits of

defendants position is stronger because they prevailed on more

claims than did plaintiff. (Id. at 7:5–6.)

Plaintiff argues that his victory on the SAR and actuarial

review issues was central and substantial because one of

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plaintiff’s main goals in bringing suit was “to require

[d]efendants to make full and accurate financial disclosures to

Plan participants.” (Pl.’s Mot. For Atty’s Fees at 6:1–3.) 

Moreover, plaintiff contends that an award of attorney fees is

appropriate because: (1) defendants are highly culpable based on

their breach of fiduciary duty; (2) plaintiff lacks ability to

pay; (2) attorney fees would deter the Plan administrators from

breaching their fiduciary duties; (3) an award of attorney fees

would benefit the Plan because plaintiff’s suit “clarif[ied]

significant legal issues involving the Plan’s compliance with

ERISA; and (4) plaintiff’s position has more merit because the

decision clarified the terms of the Plan. (Id. at 7:7–9:16.) 

Claims for attorney fees in ERISA actions are determined by

ERISA’s statutory fee shifting scheme. “In any action under

[ERISA] . . . by a participant, beneficiary, or fiduciary, the

court in its discretion may allow a reasonable attorney’s fee and

costs of action to either party.” 29 U.S.C. § 1132(g)(1). 

The Supreme Court recently clarified the specific standard

for awarding attorney fees under Section 1132(g)(1). Hardt v.

Reliance Standard Life Insurance, 130 S. Ct 2149 (2010). In

Hardt, the Court held that the plain language of the statute

dictates that prevailing party status is not a prerequisite to

receiving attorney fees; instead, “a court, in its discretion,

may award fees . . . as long as the fee claimant has had some

degree of success on the merits.” Id. at 2152, 2156. The Court

further explained that “[a] claimant does not satisfy the

requirement by achieving ‘[t]rivial success on the merits’ or a

‘purely procedural victor[y], but does satisfy it if the court

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can fairly call the outcome of the litigation some success on the

merits without conducting a ‘lengthy inquir[y] into the question

whether a particular party’s success was ‘substantial’ or

occurred on a ‘central issue.’” Hardt, 130 S.Ct. at 2158

(quoting Ruckelshaus v. Sierra Club, 463 U.S. 680, 688 n.9

(1983)). Fee shifting schemes of this nature vest district

courts with broad discretion to determine whether attorney fees

are appropriate. Id. at 2158. 

If the court determines that the fee claimant has achieved

some degree of success on the merits, it must then apply the five

factors set forth by the Ninth Circuit to determine whether

granting fees is appropriate. Hummell v. S.E. Rykoff & Co., 634

F.2d 446 (9th Cir. 1980); see Hardt, 130 S. Ct. at 2158 n.8

(“[O]nce a claimant has satisfied th[e] [some success]

requirement, and thus becomes eligible for a fees award under §

1132(g)(1), a court may consider the five factors adopted by the

court of appeals.”) These factors are:

(1) the degree of the opposing parties’ culpability or

bad faith; (2) the ability of the opposing parties to

satisfy an award of fees; (3) whether an award of fees

against the opposing parties would deter others from

acting under similar circumstances; (4) whether the

parties requesting fees sought to benefit all

participants and beneficiaries of an ERISA plan or to

resolve a significant legal question regarding ERISA;

and (5) the relative merits of the parties’ positions.

1. Some Degree of Success on the Merits

In this case, both plaintiff and defendants achieved some

degree of success on the merits.4 Defendants had some degree of

4 In his moving papers, plaintiff admits that “the

positions of both parties have some merit.” (Pl.’s Mot. For

Atty’s Fees at 9:4.)

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success on the merits by virtue of their victory on the majority

of plaintiff’s claims, including plaintiff’s central claims for

damages and appointment of an independent trustee. Similarly,

plaintiff’s victories on its contract claim, SAR claim and

actuarial review claim were not merely trivial or procedural;

rather, plaintiff succeeded in obtaining injunctive relief with

respect to financial disclosure documentation and records

spanning a number of years.5 Therefore the court finds that both

plaintiff and defendants have made the requisite showing under

Section 1132(g)(1) of “some degree of success on the merits.” 

Hardt, 130 S.Ct. at 2152.

2. Hummel Factors

However, despite achieving some degree of success on the

merits, after consideration of the five Hummel factors, the court

concludes, in its “broad discretion,” that the award of attorney

fees is not appropriate in this case. As noted in its denial of

both parties’ Rule 11 motions, neither party has convinced the

court that the other acted either in bad faith or in a culpable

manner.6 Further, with respect to the merits of the parties’

positions, the court cannot conclude that defendants acted in bad

faith in failing to comply with certain financial disclosure

obligations or reporting requirements. Rather, the disposition

of the cross-motions for summary judgment required complex,

5 Indeed, had plaintiff’s victory been “trivial” or

“merely procedural,” it is highly unlikely defendants would have

filed a motion to alter or amend the judgment.

6 The court notes that it is unlikely that plaintiff

would be able to satisfy an award of fees. The court has no

evidence before it regarding defendants’ ability to do so.

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statutory interpretation without the aid of clear, precedential

authority on either side. As such, an award of fees against

defendants would not serve a deterrent effect. Moreover, as set

forth above, both plaintiff and defendants achieved some degree

of success that was tempered by the court’s ruling that denied

summary judgment on several of their respective claims and

defenses. 

Under these circumstances, the court does not find that an

award of attorneys’ fees to either plaintiff or defendants is

appropriate. Accordingly, both plaintiff and defendants’ motions

for fees are DENIED.

C. Plaintiff’s and Defendants’ Bill of Costs

Both plaintiff and defendants filed a bill of costs; both

parties also filed objections to the opposing parties’ bill of

costs. Pursuant to Federal Rule of Civil Procedure 54(d)(1), the

party that prevails on the merits should be awarded costs. 

However, the court has held that where the court grants “a portion

of each side’s request for summary judgment . . . the [c]ourt will

not award costs to either side.” U.S. v. Curtis-Nevada Mines,

Inc., 415 F. Supp 1373, 1379 (E.D. Cal. 1976) rev’d on other

grounds 611 F.2d 1277 (9th Cir. 1980). Because both parties

prevailed on a portion of their motions for summary judgment, the

court declines to award costs to either plaintiff or defendants.

IT IS SO ORDERED.

DATED: April 6, 2011

 FRANK C. DAMRELL, JR.

UNITED STATES DISTRICT JUDGE

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