T hi s di s pos i t i on i s notappr opr i a t e f orpubl i c a t i on and i s notpr e c e de nt * e xc e pta s pr ovi de d by N i nth C i r c ui tR ul e 36- 3. NOT F OR P UB L I CAT I ON UN I TE D STATE S C OU RT OF APPE ALS FOR T HE NI NTH CI RC UI T TI M K RO N ZER, P la in tif

f - A p p e lla n t, v. GA RY HI NTZ, D ef

endant- A pp el l ee . N o. 11- 16494 D . C. N o . 3 : 1 0 - c v - 0 1 2 7 0 - BZ ME MOR AN DU M *

A pp ea l fr om the U ni t ed S t at es D i stri ctC ou rt f o rth e N o r th e rn D is tr ic t o f C a lif o rn ia B e rna r d Z i m m e rm a n, M a gi s tr a t e J udge , P r e s i di ng A r gue d a nd S ubm i tt e d D e c e m be r6, 2012 S a n F r a n c is c o , C a lif

o rn ia B efo re: S IL V E R M A N , G O U L D , an d C H R IS T E N , C i rcu i tJu d g es. P l ai nt i ff -A pp el l antT i m K ronzer appeal s tw o d i stri ctcourtsum m ary j udgm e ntor de r s tha tr e s ul t e d i n the di s m i s s a l of hi s l a w s ui tbr oughtunde rthe E m p lo y e e R e tir e m e n t I n c o m e S e c u r ity A c t ( “E R I S A ” ) . H e s e e k s a n a c c o u n tin g to de t e rm i ne w he the rthe E m pl oy e e S t oc k O w ne r s hi p P l a n ( “ E S O P ” ) tha the 

# FI LED DE C 24 2012 M OLLY C. DW Y ER, CLERK U . S. C O U R T OF APPE ALS2

part i ci pat ed i n w as harm ed by A pp el l ee G ary H i nt z’ s a l l eged breac hes of f i du ci ary d u ty u n d e r2 9 U . S. C. § § 1 0 0 1

– 1 1 4 4 , s t a tu t o ry d a ma g e s u n d e r2 9 U . S. C. § 1 1 3 2 ( c ) ( 1 ) , a n d a tto rn e y ’s f e e s p u r s u a n t to 2 9 U .S .C . § 1 1 3 2 ( g ) ( 1 ) . T he al l eged E R IS A vi ol at i on s s t em fr om the D ec em ber 200 7 sal e of N ew co K & K , I nc . ’ s c om pa ny s t oc k t o C . D . S . E ngi ne e r i ng, L L C f orabout$4. 5 m i l l i on or $1 27 . 19 per s hare . T he s a l e i nc l ude d s t oc k ow ne d by the E S O P , w hi c h he l d about 57. 37% of

the t ot a l s t oc k s ha r e s , a nd i nc l ude d a l l pr i va t e l y ow ne d s t oc k. A f t e rthe sa l e, K ronzer, a N ew co K & K , Inc. em pl oyee and E S O P part i ci pant , re qu es t ed i nf orm a t i on, i nc l udi ng c opi e s of f i na nc i a l s t a t e m e nt s , f

r om H i nt z , w ho w a s the tru s t e e o f

th e ESO P. H i nt z ga ve s om e i nf

orm a t i on t o K r onz e r , i nc l udi ng s om e s um m a ry da t aon ba nk ba l a nc e s , butH i nt z di d notturn ove rof f i c i a l ba nk s t a t e m e nt s be c aus e he apparent l y bel i eved, base d o n adv i ce gi ven t o h i m by a thi rd-party profe ss i on al pl a n a dm i ni s tr a t or , tha the di d notne e d t o do s o. K r onz e rw a s di s s a t i s f i e d w i th the i nform at i on gi ven and fi l ed sui ti n the N orthern D i stri ctof C al i forni a. T he c om pl a i ntw a s a m bi guous , apoi nttha tK r onz e rha s a dm i tt e d. T he c om pl a i ntdi d nota l l e ge tha tH i nt z f a i l e d t o pr ovi de a ny r e que s t e d i nf orm a t i on, nor di d i tas k for st atut ory r em edi es un der 29 U . S . C . § 1 13 2(c) (1). A ta case m anagem entconfere nce, the m agi stra t e j ud ge w arned K ronzer abo utthe po t ent i al3

c o n s e q u e n c e s o f

th e c o m p la in t’s a m b ig u ity a n d g a v e h im a n e x p lic it d e a d lin e to f ile a n a m e n d e d c o m p la in t. K r o n z e rn e v e rf ile d a n a m e n d e d c o m p la in t. D es pi t e the cl ai m ’ s absence fr om the com pl ai nt , K ronzer l at ersoug htpart i al sum m ary j ud gm entas se rt i ng thatdi sc re t i on ary penal t i es shou l d b e aw ar ded u nd er 29 U . S . C . § 1132( c ) ( 1) be c aus e H i nt z s t i l l ha d notpr ovi de d the a c tua l ba nk st at em ent s. T he m ot i on al so re qu es t ed an acc ou nt i ng t o d et erm i ne w hether a $1 00 , 00 0 b on us pu rport edl y pai d t o H i nt z a s partof the st ock sal e w as detri m ent al t o th e E S OP a nd a tt orne y ’ s f e e s a nd c os t s pur s ua ntt o 29 U . S . C . § 1132( g) ( 1) . T he m agi stra t e j ud ge i ss ued a t ent at i ve order denyi ng the m ot i on bu tagre ei ng that K r onz e rw a s e nt i t l e d t o r e c e i ve the r e que s t e d doc um e nt s . H i nt z pr oduc e d the do cum ent s bef

ore the order w as fi nal i ze d. A ft erre ce i vi ng the do cum ent s, K ronzer tr ie d to w ith d r a w th e m o tio n , s ta tin g th a t h e w a s “s a tis f ie d ,” b u t th e m a g is tr a te j u d g e d en i ed th e w i th d raw al as u n t i m el y. T he m agi stra t e j ud ge then d eni ed K ronzer’ s m ot i on for part i al sum m ary j ud gm entand att orney’ s f ee s bec ause there w as no evi dence thatH i nt z had r e c e iv e d a$ 1 0 0 ,0 0 0 b o n u s , K r o n z e rh a d n o t r a is e d c la im s u n d e r§ 1 1 3 2 ( c ) ( 1 ) in hi s c om pl a i nt , a n d K r o n z e rd id n o t p r e v a il o n h is m o tio n . H i nt z l a t e rm ove d f or su m m ary j u d g m en t , w h i ch th e m ag i strat e j u d g e g ran t ed o n si m i l ar g ro u n d s. K ronzer then fi l ed thi s app ea l and requestfor j ud i ci al no t i ce .4

K ronzer f

i rs tcont ends thatthe m agi stra t e j ud ge erre d i n d enyi ng hi m an a c c ount i ng on the gr ounds tha tthe r e w a s no e vi de nc e tha tH i nt z br e a c he d a fi du ci ary duty ow ed t o the E S O P by ac ce pt i ng fi nanci al benefi t s f rom the st ock s a le . B u t u n d e rd e n o v o r e v ie w a n d d r a w in g a ll in f e r e n c e s in f

a v o ro f K r o n z e r , se e S z a j e rv . Ci t y o f L. A. , 632 F . 3d 607, 610 ( 9th C i r . 2011) , w e hol d tha tthe m a g is tr a te ju d g e d id n o t e rrin g r a n tin g s u m m a ry ju d g m e n t to H in tz o n th is c la im . C om m on st ock transac t i on s betw ee n N ew co K & K , Inc. and i t s f ou nd i ng m em bers thatre sul t ed i n the E S O P ho l di ng l es s than 1 00 % of the com pany st ock o cc urre d b efo re th e fo rm at i o n o f th e E S O P an d are n o trel ev an tt o th e E R IS A cl ai m s. W i thoutthi s e vi de nc e , nothi ng s ugge s t s tha tH i nt z br e a c he d af i duc i a ry duty by recei v i n g p aym en tfo r th e sal e o f h i s p ri v at el y o w n ed st o cksh ares. T h e reco rd al so doe s notpr ovi de e vi de nc e tha tH i nt z i n f a c tr e c e i ve d the $100, 000 bonus . T o the c o n tr a ry , th e e v id e n c e o n th is is s u e in th e r e c o r d , in c lu d in g ad e c la r a tio n b y H in tz and a B enef

i ci al M ai nt enance A gree m entbetw ee n H i nt z and the st ock p urchas er , su p p o rt s a fi n d i n g th atH i n t z n ev er received th atm o n ey. K r o n z e rn e x t c o n te n d s th a t th e m a g is tr a te ju d g e e rr e d in d e n y in g h im st atu t o ry d am ag es u n d er 2 9 U . S . C . § 1 1 3 2 (c)(1 ) fo r H i n t z’ s fai l u re t o d i scl o se doc um e nt s a s r e qui r e d by 29 U . S . C . § 1024( b) ( 4) . B utw e do notne e d t o de c i de w he the rabr e a c h a c tua l l y oc c urr e d be c aus e thi s c l a i m w a s notpl e a de d i n the5

c o m p la in t. Se e I

n s . C o . o f N . A m. , 783 F . 2d 1326, 1327–28 ( 9th C i r . 1986) ( hol di ng tha tadi s tr i c tc ourtdi d note rrw he n i tr e f us e d t o a w a r d r e l i e f

on a po t ent i al l y s ucce ss ful cl ai m because thatcl ai m w as no tadj ud i ca t ed). W e r ej ec t K ronzer’ s a ss ert i on thathi s c om pl ai ntw as suff i ci entt o rai se thi s c l ai m un der no t i ce pl ea di ng st andards because the com pl ai nt ’ s l ac k o f s peci fi ci ty di d n otst at e a p lau s ib le c la im o f

r e lie f u n d e r2 9 U .S .C . § 1 1 3 2 ( c ) ( 1 ) o rg iv e th e o p p o s in g p a r ty n o tic e th a t d is c lo s u r e v io la tio n s w e r e b e in g a lle g e d . See C oto Set t lem ent v. E isen b erg , 593 F . 3d 1031, 1034 ( 9th C i r . 2010) ( r e c i t i ng the f e de r a l pl e a di ng r e qui r e m e nt s i n c i vi l c a s e s ( c i t i ng A s h c r o ft v . I q b a l, 556 U . S . 662, 677–79 ( 2009) ) ) . K r onz e rm i ghtha ve c orr e c t e d thi s e rr orby a m e ndi ng hi s c om pl a i nt d u r in g th e w in d o w p r o v id e d b y th e m a g is tr a te ju d g e , b u t h e n e v e rd id s o . M or e ove r , the m a gi s tr a t e j udge a c t e d w i thi n hi s di s c r e t i on w he n he ack n o w l ed g ed th at , “ ev en i f . . . p ro p erl y p l e[a]d[ed , ] ” h e w o u l d d ecl i n e t o i m p o se penal t i es un der thi s provi si on because H i nt z di d n otac ti n b ad fa i th and K ronzer w as n o tp rej u d i ced b y th e d el ay i n recei v i n g th e d o cu m en t s. See 2 9 U . S. C. § 1 1 3 2 ( c ) ( 1 ) ( c o n ta in in g d is c r e tio n a ry la n g u a g e ) . T h e r e c o r d s h o w s th a t H in tz prom pt l y r es po nd ed t o K ronzer’ s r equest s f or i nform at i on and rel i ed on the advi ce of the a s s i s t a ntpl a n a dm i ni s tr a t or . B e c aus e thi s f i ndi ng i s s uppor t e d by f a c t s i n the6

r e c o r d , th e d is tr ic t c o u rt d id n o t ab u s e its d is c r e tio n . Se e U ni te d State s v . Hi nk

s on , 58 5 F . 3d 12 47 , 12 61 (9th C i r. 20 09 ) ( en banc). K r onz e rf

i na l l y c ont e nds tha t , e ve n i f the c l a i m s w e r e pr ope r l y di s m i s s e d, the m agi stra t e j ud ge erre d i n d enyi ng hi m att orney’ s f ee s and cost s und er 29 U . S . C . § 1 13 2(g)(1). K ronzer r equest ed att orney’ s f ee s i n b oth h i s i ni t i al c o m p la in t a n d in h is m o tio n f o rp a r tia l s u m m a ry ju d g m e n t. I n the or de rde ny i ng pa r t i a l s um m a ry j udgm e nt , the m a gi s tr a t e j udge de ni e d K r onz e rf e e s be c aus e he di d not“ pr e va i l ” on the m ot i on. A l though the m a gi s tr a t e j udge m i s s t a t e d the stan d ar d in an E R IS A ca se fo r d ec id in g w h eth era p ar ty is en ti tl ed to atto rn ey ’s f e e s , s e e H

ardt v . R e l i anc e Standard L i f e I ns . C o. , __ U . S . __, 130 S . C t . 2149, 2157–58 ( 2010) ( hol di ng tha tac l a i m a nti n a n E R I S A a c t i on ne e d onl y a c hi e ve

“ som e degree of succ es s on the m er i t s” before ob t ai ni ng att orney’ s f ee s und er § 1132( g) ( 1) a nd r e

j e c t i ng the “ pr e va i l i ng pa r ty ” s t a nda r d i n thi s c ont e xt ) , the m agi stra t e j ud ge di d n otcom m i tre vers i bl e e rr or bo th b ec ause the l aw sui tw as ongoi ng w he n the or de rw a s i s s ue d a nd be c aus e K r onz e rdi d not , a s am a tt e rof la w , a c h ie v e s o m e d e g r e e o f s u c c e s s o n th e m e r its . A tt orne y ’ s f

e e s unde r29 U . S . C . § 1132( g) ( 1) r e qui r e a n a s s e s s m e ntof w he the rapa rty ha s a c hi e ve d s om e de gr e e of s uc c e s s of

the m e r i t s , w hi c h m a y be d if f ic u lt to d e te rm in e u n til th e la w s u it is o v e ra n d th e m e r its ar e d e c id e d . See7

H ardt , 130 S . C t . a t2152 ( c i t i ng R uc ke l s haus v . Si e r r a C lub , 463 U . S . 680, 694 (198 3)). W hen K ronzer w as deni ed att orney’ s f ee s on h i s part i al sum m ary j udgm e ntm ot i on, the l a w s ui tw a s s t i l l ongoi ng. W e a lso re ject K ro n ze r’s c o n te n tio n th a t h e d id n o t lo s e th e p a r tia l s u m m a ry ju d g m e n t m o tio n o rth e la w s u it as a w ho l e bec ause he ac hi eved w hathe soug htt o o bt ai n— the fi nanci al d o c u m e n ts . W e c a n a f

f irm f o ra n y r e a s o n s u p p o r te d b y th e r e c o r d , se e U ni ted S ta te s v . O r teg a -A s c a n io , 376 F . 3d 879, 885 ( 9th C i r . 2004) ( c i t i ng U SA P e tr ole um C o. v . A t l . R i c hf

i e ld C o. , 1 3 F .3 d 1 2 7 6 , 1 2 7 9 ( 9 th C ir . 1 9 9 4 ) ) . P r e v a ilin g p a r ty s t a tu s i s n o tn e c e s s a ry f o rf e e s i n a n ERI SA c a s e , i tw i l l b e e n o u g h i f th e r e i s s o me d e g r e e o f s u c c e s s o n th e m e r its . H ardt , 1 3 0 S . C t. a t 2 1 5 6

– 5 8 . W e h o ld th a t a p ar ty ca n n o t ach iev e “so m e s u cc es s o n th e m er it s” fo r p u rp o se s o f a n atto rn ey ’s f e e a w a r d by obt a i ni ng “ r e l i e f ” tha tw a s nots oughton ac l a i m pl e a de d i n the com pl ai nt . K ronzer di d n otm ent i on the fi nanci al do cum ent s or the l at er -a ss ert ed di sc l osure vi ol at i on s i n h i s c om pl ai nt , and h e di d n otam end the com pl ai ntbefore th e m ag istrate ju d g e’s d ea d li n e. A cc o rd in g ly, h e is in elig ib le to o b tain atto rn ey ’s f e e s u n d e r2 9 U .S .C . § 1 1 3 2 ( g ) ( 1 ) . T h e p e n d in g m o tio n f

o rju d ic ia l n o tic e is gr a nt e d. A F F I R M E D .