1302958_1

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

JACLYN SANTOMENNO, KAREN 

POLEY, and BARBARA POLEY, et 

al.,

Plaintiffs,

v.

TRANSAMERICA LIFE 

INSURANCE COMPANY, 

TRANSAMERICA INVESTMENT 

MANAGEMENT, LLC, and 

TRANSAMERICA ASSET 

MANAGEMENT, INC.,

 

Defendants.

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Civil Action No. 11-736 (ES) (PS)

Motion Returnable: Sept. 19, 2011

Oral Argument Requested

MEMORANDUM IN SUPPORT OF DEFENDANTS

TRANSAMERICA INVESTMENT MANAGEMENT, LLC 

AND TRANSAMERICA ASSET MANAGEMENT, INC.’S

MOTION TO DISMISS CLASS ACTION COMPLAINT

Thomas R. Curtin 

George C. Jones

GRAHAM CURTIN

A Professional Association

4 Headquarters Plaza, P.O. Box 1991

Morristown, New Jersey 07962-1991

(973) 292-1700

Robert N. Eccles (pro hac vice)

Gary S. Tell (pro hac vice)

O’MELVENY & MYERS LLP

1625 Eye Street, NW

Washington, D.C. 20006-4001

(202) 383-5300

Attorneys for Defendants

Transamerica Life Insurance Company,

Transamerica Investment Management, LLC

and Transamerica Asset Management, Inc.

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TABLE OF CONTENTS

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INTRODUCTION .................................................................................................1

BACKGROUND ...................................................................................................2

ARGUMENT.........................................................................................................3

I. STANDARD OF REVIEW .........................................................................3

II. PLAINTIFFS’ PROHIBITED TRANSACTION CLAIMS FAIL AS 

A MATTER OF LAW.................................................................................3

III. COUNTS IV & VII SHOULD BE DISMISSED AS TO TIM AND 

TAM FOR THE ADDITIONAL REASONS THAT THEY SEEK 

RELIEF THAT IS UNAVAILABLE UNDER ERISA § 502(A)(3).............4

CONCLUSION .....................................................................................................8

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TABLE OF AUTHORITIES

Page(s)

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Cases

Aetna Life Ins. Co. v. DFW Sleep Diagnostics Ctr., 

2004 WL 5489511, (E.D. La. 2004) ................................................................... 8

Bell Atlantic Corp. v. Twombly,

550 U.S. 544 (2007)........................................................................................... 8

Calhoon v. TWA, 

400 F.3d 593 (8th Cir. 2005) .............................................................................. 7

CIGNA v. Amara, 

131 S.Ct. 1866 (2011) .....................................................................................4, 5

Great-West Life & Annuity Ins. Co. v. Knudson, 

534 U.S. 204 (2002)....................................................................................2, 4, 5

Hecker v. Deere & Co., 

556 F.3d 575 (7th Cir. 2009)............................................................................... 6

In re Unisys Corp. Retiree Med. Benefits, 

MDL Docket No. 969, 2007 WL 2071876 (E.D. Pa. July 16, 2007)................... 7

Nechis v. Oxford Health Plans, Inc., 

421 F.3d 96 (2d Cir. 2005) ................................................................................. 8

Toy v. Plumbers & Pipefitters Local Union No. 74 Pension Plan,

317 F. App’x 169 (3d Cir. 2009) ........................................................................ 4

Statutes

15 U.S.C. § 80a-22................................................................................................. 6

ERISA § 3(21)(B), 29 U.S.C. § 1002(21) .............................................................. 6

ERISA § 401(b)(1), 29 U.S.C. § 1101(b)(1)............................................................ 6

ERISA § 406, 29 U.S.C. § 1106............................................................................. 3

ERISA § 502(a)(3)................................................................................................. 4

ERISA § 502(a)(3), 29 U.S.C. § 1132(a) ............................................................1, 4

Rules

Fed. R. Civ. P. 12(b) .............................................................................................. 1

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Regulations

17 C.F.R. § 270.2a-4(a)(4)...................................................................................... 6

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INTRODUCTION

Defendants Transamerica Investment Management, LLC (“TIM”) and 

Transamerica Asset Management, Inc. (“TAM”) do not belong in this case. 

Plaintiffs do not assert their Investment Advisers Act claims against TIM or TAM 

and do not allege that TIM or TAM themselves breached any fiduciary duties 

under ERISA.1 Instead, Plaintiffs seek to impose non-fiduciary liability against 

TIM and TAM under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). Plaintiffs’ 

claims against TIM and TAM are predicated entirely on the fiduciary status of 

Transamerica Life Insurance Company (“TLIC”), which TLIC addresses in a 

separate motion to dismiss under Fed. R. Civ. P. 12(b)(6). As such, to the extent 

the ERISA fiduciary claims are found to be invalid as to TLIC, Plaintiffs’ claims 

against TIM and TAM should be dismissed as well.

 But even if Plaintiffs had stated a valid claim against TLIC, their nonfiduciary duty claims against TIM and TAM would still fail for an additional 

reason. Plaintiffs have not alleged facts sufficient to show they are entitled to 

relief under § 502(a)(3). ERISA’s civil enforcement provision, § 502(a)(3), 

authorizes courts to remedy violations of statutory or plan provisions by nonfiduciaries by granting injunctions or “other appropriate equitable relief.” ERISA 

§ 502(a)(3), 29 U.S.C. § 1132(a)(3). That relief is available against non-fiduciaries 

 

1

Employee Retirement Income Security Act of 1974, as amended.

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only “where money or property identified as belonging in good conscience to the 

plaintiff could clearly be traced to particular funds or property in the [nonfiduciary’s] possession.” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 

204, 213 (2002) (emphasis added). Plaintiffs have not pleaded traceability nor 

could they. As described herein, traceability is an utter impossibility in light of the 

investment products at issue in this dispute.

Therefore, under Fed. R. Civ. P. 12(b)(6), the Court should grant 

Defendants’ motion to dismiss.

BACKGROUND

TIM and TAM incorporate by reference the Background section of TLIC’s 

Memorandum in Support of Motion to Dismiss (“TLIC Br.”) as if fully set forth 

herein, and additionally state as follows:

TIM and TAM, both affiliates of TLIC, act as advisers to certain of the 

underlying mutual funds and collective investment trusts held in the separate 

account investment options that TLIC offers to plan sponsors.2 (Compl. ¶¶ 63-64, 

296-298.) The Complaint alleges that TIM and TAM received investment 

 

2

TIM and TAM are not the only entities to play this role with respect to 

TLIC’s separate account investment options. As the Complaint reflects, many of 

the separate account investment options that TLIC offers invest solely in funds or 

trusts advised by companies that are unaffiliated with TLIC, such as Vanguard, 

Columbia, Oppenheimer, and State Street. (Id. ¶¶ 245, 320.) 

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management, investment advisory or similar fees from the Plaintiff Plans’ 

investments in these investment options, and that the receipt of such fees constitute 

prohibited transactions under ERISA § 406, 29 U.S.C. § 1106. (Id. ¶¶ 299-301.) 

Plaintiffs do not plead that TIM and TAM constitute fiduciaries under ERISA.

ARGUMENT

I. STANDARD OF REVIEW

TAM and TIM incorporate by reference Section I of TLIC’s Motion to 

Dismiss as if fully set forth herein.

II. PLAINTIFFS’ PROHIBITED TRANSACTION CLAIMS FAIL AS A 

MATTER OF LAW.

Counts IV and VII allege that TIM and TAM knowingly participated in 

fiduciary breaches by TLIC related to the payment of investment management, 

investment advisory or other fees to TLIC-affiliated entities. Those non-fiduciary 

claims are predicated entirely on alleged ERISA violations by TLIC. (See Count 

IV ¶ 8 (alleging TIM and TAM are liable “for the fees described herein that they 

received by knowingly participating in ERISA violations described herein of 

TLIC.”); Count VII ¶ 8 (same).) TLIC separately has moved to dismiss those 

claims on grounds that it was not a fiduciary for purposes of the conduct alleged in 

the Complaint. (See TLIC Br. Section II.) Because the ERISA claims asserted 

against TIM and TAM are derivative of the claims asserted against TLIC, to the 

extent TLIC succeeds in dismissing Counts IV and VII, those same claims also 

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must be dismissed as to TIM and TAM.

III. COUNTS IV & VII SHOULD BE DISMISSED AS TO TIM AND TAM 

FOR THE ADDITIONAL REASONS THAT THEY SEEK RELIEF 

THAT IS UNAVAILABLE UNDER ERISA § 502(a)(3).

The Complaint asserts claims against TIM and TAM (Counts IV & VII) 

under ERISA § 502(a)(3), which authorizes courts to remedy violations of 

statutory or plan provisions by granting injunctions or “other appropriate equitable 

relief.” But the relief Plaintiffs seek against those defendants is monetary. 

(Compl., Count IV, ¶ 8 & Count VII, ¶ 8.) 

The Supreme Court has recognized that, “almost invariably,” suits “seeking 

(whether by judgment, injunction, or declaration) to compel the defendant to pay a 

sum of money to the plaintiff are suits for ‘money damages,’ [which] are, of 

course, the classic form of legal relief.’” Great-West Life & Annuity Ins. Co. v. 

Knudson, 534 U.S. 204, 210 (2002) (citations omitted). Such money damages are 

not available under § 502(a)(3). See Toy v. Plumbers & Pipefitters Local Union 

No. 74 Pension Plan, 317 F. App’x 169, 171 (3d Cir. 2009) (“[D]emands for 

monetary compensation that are not addressed to a particular fund cannot be 

brought pursuant to this section. Such demands constitute legal, rather than 

equitable, remedies.”).3

 

3

 The Supreme Court recently indicated in CIGNA v. Amara, 131 S.Ct. 1866 

(2011), that the equitable remedy of “surcharge” may be available under ERISA § 

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While Plaintiffs may nonetheless attempt to shoehorn their requested relief

within the ambit of equitable restitution, Supreme Court precedent makes clear that 

Plaintiffs cannot successfully do so given their own allegations. In Great-West, the 

Supreme Court directly held that equitable restitution is available only “where 

money or property identified as belonging in good conscience to the plaintiff could 

clearly be traced to particular funds or property in the [non-fiduciary’s] possession.” 

534 U.S. at 213 (emphasis added). But the Complaint discloses that plaintiffs are 

not seeking recovery of specific funds in the Defendants’ possession that properly 

belong to the Plan. They are instead seeking broad recovery of the fees “that they 

received by knowingly participating in the ERISA violations described herein of 

TLIC.” (Compl., Count IV, ¶ 8; see also Count VII, ¶ 8.)

By their very nature, such fees cannot be traced to Plaintiffs’ respective plans. 

Plaintiffs allege, for example, that TIM and TAM received fees for management of 

the mutual funds within several of TLIC’s separate account options. (Compl. ¶¶ 

299-300.) As a matter of securities law, mutual fund shares must be sold and 

redeemed on the basis of their “net asset value”, which is calculated by deducting 

the mutual fund’s operating expenses and fees from the current market value of the 

 

502(a)(3) against a breaching fiduciary. In doing so, however, the Court pointed to 

the “critical difference” between fiduciary and non-fiduciary defendants. Id. at 

1880. Here, the Complaint does not allege that TIM or TAM are plan fiduciaries 

but instead seeks liability against them solely for participating as non-fiduciaries in 

TLIC’s alleged breaches. 

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funds’ portfolio of securities. 15 U.S.C. § 80a-22; 17 C.F.R. § 270.2a-4(a)(4). Thus, 

mutual fund fees and expenses—including a fund’s investment management fees—

must be paid out of the mutual fund’s corpus because the amount of those fees and 

expenses is inherent in the price charged to all mutual fund shareholders.4 Under 

ERISA, the assets of a mutual fund are not plan assets. ERISA § 401(b)(1), 29 

U.S.C. § 1101(b)(1) (providing that when an ERISA plan invests in a security issued 

by a mutual fund, or “investment company,” “the assets of such plan shall be 

deemed to include such security but shall not, solely by reason of such investment, 

be deemed to include any assets of such investment company.”); Hecker v. Deere &

Co., 556 F.3d 575, 584 (7th Cir. 2009) (holding the payments to plan service 

providers by mutual funds were not plan assets because the “fees were drawn from 

the assets of the mutual funds in question, which, as [ERISA] provides, are not 

assets of the Plans.”).5 Thus, the investment management fees that TIM and TAM 

received from the mutual funds included in TLIC separate accounts cannot, as a 

matter of law, be traced to any plan.

Nor can Plaintiffs trace any assets TIM and TAM received from the 

collective investment trusts included in TLIC separate accounts to Plaintiffs’ plans. 

 

4

 Mutual funds are permitted to charge some limited fees, such as redemption 

fees to prevent short-term trading to individual shareholder accounts.

5

 Consistent with the provision that mutual fund assets are not plan assets, 

ERISA § 3(21)(B), 29 U.S.C. § 1002(21)(B), provides that a mutual fund, its 

investment adviser and its principal underwriter are not fiduciaries of plans that 

invest in the mutual fund. 

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As the Complaint alleges, collective investment trusts are “pooled investment 

vehicles,” meaning that they contain the commingled assets of numerous different 

investors. (Compl. ¶ 119.) Thus, there is no way to tie a payment out of a 

collective investment trust to the investment by any particular investor.

Moreover, even if TIM and TAM received payments from the TLIC separate 

accounts themselves, rather than the underlying investments, those payments still 

could not be traced to any particular plan. As the Complaint itself makes clear: 

“Each of the separate accounts receives investments from many different 401(k) 

plans operated by TLIC and therefore TLIC is pooling assets together from the 

multiple different 401(k) plans operated by TLIC.” (Compl. ¶ 133.)

Finally, even if TIM or TAM at one time received fees that could be traced 

to one of Plaintiffs’ plans, Plaintiffs do not direct their demands for monetary relief 

to any specifically identifiable account or other res in TIM or TAM’s possession. 

See In re Unisys Corp. Retiree Med. Benefits, MDL Docket No. 969, 2007 WL 

2071876, at *14 (E.D. Pa. July 16, 2007) (“[S]ince they cannot identify the 

particular property that belongs to them, [plaintiffs] are seeking the same relief as 

every claimant who seeks monetary damages: money that they believe belongs to 

them.”) (emphasis in original) (quoting Great-West, 534 U.S. at 213); Calhoon v. 

TWA, 400 F.3d 593, 597 (8th Cir. 2005) (monetary relief is equitable only where 

the money sought is “specifically identifiable” and can “clearly be traced to 

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particular funds or property in the defendant’s possession”); Nechis v. Oxford 

Health Plans, Inc., 421 F.3d 96, 103 (2d Cir. 2005) (insurance premiums paid to an 

HMO were not subject to equitable restitution because they were placed into the 

insurer’s general accounts, not segregated); Aetna Life Ins. Co. v. DFW Sleep 

Diagnostics Ctr., 2004 WL 5489511, at *5 (E.D. La. 2004) (requested moneys had 

been “dissipated or commingled with other funds received from various other 

payors or sources” and thus were not “specifically identifiable”).

Accordingly, Plaintiffs have not (and cannot) plausibly alleged that the 

challenged fees paid to TIM and TAM are either specifically identifiable within 

TIM’s or TAM’s assets or traceable to Plaintiffs’ plans and thus have not pled the 

facts necessary to state a plausible claim under § 502(a)(3). Bell Atlantic Corp. v. 

Twombly, 550 U.S. 544, 555 (2007).

Accordingly, Counts IV and VII should be dismissed.

CONCLUSION

For the foregoing reasons, TIM and TAM respectfully requests that the 

Class Action Complaint be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) for 

failure to state a claim on which relief can be granted.

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Dated: July 29, 2011 Respectfully submitted,

s/ Thomas R. Curtin

Thomas R. Curtin

George C. Jones

GRAHAM CURTIN

A Professional Association

4 Headquarters Plaza

P.O. Box 1991

Morristown, New Jersey 07962-1991

Telephone: (973) 292-1700

Facsimile: (973) 292-1767

Robert N. Eccles (Pro Hac Vice)

Gary S. Tell (Pro Hac Vice)

O’MELVENY & MYERS LLP

1625 Eye Street, NW

Washington, D.C. 20006-4001

Telephone: (202) 383-5300

Facsimile: (202) 383-5414

Attorneys for Defendants

Transamerica Life Insurance Company, 

Transamerica Investment Management, 

LLC, and Transamerica Asset 

Management, Inc. 

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