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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) (CLW)

Motion Returnable: Oct. 3, 2011

Oral Argument Requested

REPLY MEMORANDUM IN FURTHER 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

Page

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ARGUMENT.........................................................................................................2

CONCLUSION ...................................................................................................10

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TABLE OF AUTHORITIES

Page(s)

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CASES

Calhoon v. TWA,

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

Goldenberg v. Indel, Inc.,

741 F. Supp. 2d 618 (D.N.J. 2010) ..................................................................8, 9

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

534 U.S. 204 (2002) ................................................................................2, 3, 4, 5

Haddock v. Nationwide Fin. Servs.,

419 F. Supp. 2d 156 (D. Conn. 2006) ..................................................................9

Harris Trust & Savings Bank v. Salomon Smith Barney,

530 U.S. 238 (2000) ........................................................................................4, 5

Hecker v. Deere & Co.,

No. 07-3605 (7th Cir. April 2, 2008) ...................................................................9

Hecker v. Deere & Company,

556 F.3d 575 (7th Cir. 2009) ...............................................................................8

In re Unisys Corp. Retiree Med. Benefits,

MDL Docket No. 969, 2007 WL 2071876 (E.D. Pa. July 16, 2007)....................3

Nechis v. Oxford Health Plans, Inc.,

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

Phones Plus, Inc. v. The Hartford Fin. Servs. Group, Inc.,

Civ. NO. 3:06CV01835, 2007 WL 3124733 (Oct. 23, 2007)...............................9

Sereboff v. Mid Atlantic Medical Services,

547 U.S. 356 (2006) ........................................................................................5, 6

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

317 F. App’x 169 (3rd Cir. 2009)........................................................................2

STATUTES

29 U.S.C. § 1101(b)(1) .......................................................................................7, 8

29 U.S.C. § 1132(a)(3)....................................................................................1, 2, 4

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Plaintiffs’ Brief in Opposition to Defendants’ Motions to Dismiss (“Pls’. 

Op.”) does nothing to salvage their claims against Defendants Transamerica 

Investment Management, LLC (“TIM”) and Transamerica Asset Management, Inc. 

(“TAM”). As an initial matter, Plaintiffs do not dispute that their claims against 

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

Management, Inc. (“TAM”) are entirely derivative of Plaintiffs’ prohibited 

transaction claims against Transamerica Life Insurance Company (“TLIC”). See 

TIM/TAM Mem.

1

 at 3-4. Accordingly, Plaintiffs’ prohibited transaction claims 

against TIM and TAM fail for the same reasons that they fail against TLIC, which 

has filed its own motion to dismiss. See Mem. in Supp. of Defendant 

Transamerica Life Insurance Company’s Mot. to Dismiss Class Action Compl. 

[Dkt. # 35-1]. 

Further, even if Plaintiffs’ claims against TLIC were to survive dismissal, 

their claims against TIM and TAM for non-fiduciary liability would still fail 

because, as Plaintiffs’ Opposition confirms, Plaintiffs cannot establish a right to 

“appropriate equitable relief,” the only relief permitted against non-fiduciaries 

under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3). The only equitable remedy 

Plaintiffs even identify is equitable restitution, which the Supreme Court has 

 

1 Mem. in Supp. of Defs’ Transamerica Investment Management, LLC and 

Transamerica Asset Management, Inc.’s Mot. to Dismiss Class Action Complaint 

[Dkt. #34-1].

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expressly held requires both the specific identification and traceability of 

recoverable assets in a defendant’s possession. Plaintiffs make no attempt to 

address the former requirement, and their efforts to argue traceability conflict with 

both established law and their own allegations. 

Accordingly, Plaintiffs’ claims against TIM and TAM should be dismissed 

in their entirety. 

ARGUMENT

Because Plaintiffs do not contest that their claims against TIM and TAM are 

wholly dependent on their prohibited transaction claims against TLIC, TIM and 

TAM will confine their Reply to the unavailability of a claim under ERISA § 

502(a)(3).

As addressed in TIM and TAM’s initial brief, ERISA § 502(a)(3) only 

permits suits for “appropriate equitable relief.” See TIM/TAM Mem. at 4-8. 

Plaintiffs, in contrast, seek monetary damages, which the Supreme Court has 

described as the “classic form of legal relief.” Great-West Life & Annuity Ins. Co. 

v. Knudson, 534 U.S. 204, 210 (2002) (citations omitted); see also Toy v. Plumbers 

& Pipefitters Local Union No. 74 Pension Plan, 317 F. App’x 169, 171 (3rd Cir. 

2009) (“[D]emands for monetary compensation that are not addressed to a 

particular fund cannot be brought pursuant to [ERISA § 502(a)(3)]. Such demands 

constitute legal, rather than equitable, remedies.”).

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Although there are some forms of equitable remedies that provide monetary 

relief under limited circumstances, Plaintiffs have not identified (and cannot 

identify) any such remedies that apply here. Plaintiffs are not, for example, 

entitled to equitable restitution because, as the Supreme Court made clear in GreatWest, that remedy is only available where plaintiffs seek to recover monies that are 

both (1) specifically identifiable; and (2) traceable to the plaintiffs’ plan. 534 U.S. 

at 213 (equitable restitution 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”).2 The monies Plaintiffs 

seek meet neither requirement. See TIM/TAM Mem. at 5-8.

In response, Plaintiffs conspicuously ignore one of Great-West’s two 

requirements, making no argument whatsoever that they are seeking “particular 

funds or property” in TIM’s or TAM’s possession.3 Instead, Plaintiffs confine 

their response solely to Great-West’s separate requirement that the monies sought 

 

2

See also; 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 particular funds or property in the defendant’s possession”)

3

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); Nechis v. 

Oxford Health Plans, Inc., 421 F.3d 96, 103 (2d Cir. 2005) (affirming dismissal 

and explaining that insurance premiums paid to an HMO were not subject to 

equitable restitution because they were placed into the insurer’s general accounts, 

not segregated). 

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be traceable to a plan’s assets. As to that requirement, Plaintiffs contend that it 

does not apply in cases involving prohibited transactions. 

But there is no logical or legal support for Plaintiffs’ position. While GreatWest itself did not involve alleged prohibited transactions, nothing in the Supreme

Court’s discussion suggests that the existence of a prohibited transaction would 

have at all mattered. The analysis in Great-West did not turn in any way on the 

nature of the alleged ERISA violation but instead focused on the ERISA § 

502(a)(3)’s express limitation to “appropriate equitable relief” and the traditional 

requirements for equitable restitution. 534 U.S. at 209-15. Plaintiffs provide no 

substantive reason that that limitation and those requirements would apply any 

differently in a case that involves prohibited transactions than in one that does not. 

Nor does Plaintiffs’ citation to Harris Trust & Savings Bank v. Salomon 

Smith Barney, 530 U.S. 238, 250 (2000), help their cause. Plaintiffs contend that 

the Harris Trust Court “held that under ERISA § 502(a)(3) plaintiffs may recover 

from non-fiduciaries for PTs, and never alluded to a tracing requirement.” Pls.’ 

Op. at 33. But, while Harris Trust (which predated Great-West) does not 

specifically use the term “tracing,” it expresses the same principles that underlie 

the analysis in Great-West. In holding that plaintiffs could maintain a claim 

against a non-fiduciary under § 502(a)(3), the Harris Trust Court explained that 

there are significant restrictions on a non-fiduciary’s potential liability. Noting the 

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statutory requirement that § 502(a)(3) relief be “appropriate equitable relief”, the 

Court invoked trust law principles which set: 

limits on restitution actions against defendants other than the principal 

‘wrongdoer.’ Only a transferee of ill-gotten trust assets may be held liable, 

and then only when the transferee (assuming he has purchased for value) 

knew or should have known of the existence of the trust and the 

circumstances that rendered the transfer in breach of the trust. 

530 U.S. at 251. As the Harris Trust Court made clear, those same restrictions 

apply to an ERISA § 502(a)(3) claim for non-fiduciary liability. Id. And it is 

those same traditional restrictions that drove the Court’s analysis in Great-West. 

Indeed, the Supreme Court in Great-West reconciled Harris Trust not by stating 

that Harris Trust involved prohibited transactions but by explaining that “the

nature of the relief we described in Harris Trust—a claim to specific property (or 

its proceeds) held by the defendant -- accords with the restitution we describe as 

equitable today.” 534 U.S. at 215. Harris Trust thus goes against Plaintiffs’ 

proposed distinction. 

Plaintiffs likewise find no support in Sereboff v. Mid Atlantic Medical 

Services, 547 U.S. 356 (2006)—the other Supreme Court decision on which they 

rely for their argument. Plaintiffs offer a partial quote from Sereboff to suggest 

that tracing only applies to certain causes of action. Pls.’ Op. at 32-33. Plaintiffs’ 

selective quotation, however, grossly distorts the Sereboff Court’s meaning. Read 

in full, the quoted sentence did not draw distinctions among different theories of 

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liability but instead made the point that the requirements for an equitable lien by 

restitution do not necessarily apply to other types of equitable liens. 547 U.S. at 

365 (“The Sereboffs appear to assume that Knudson endorsed application of all the 

restitutionary conditions--including restitutionary tracing rules--to every action for 

an equitable lien under § 502(a)(3).”). That unremarkable point does nothing to 

help Plaintiffs because Plaintiffs have failed to identify any type of equitable lien 

or other equitable remedy that would give them the monetary relief they seek and 

whose elements they have adequately pled.

4

Understandably unwilling to rest on their argument that tracing is 

unnecessary, Plaintiffs also assert in conclusory fashion that they have “adequately 

traced the fees to TIM/TAM’s possession.” Pls.’ Op. at 33. But the allegations 

they cite do not address traceability at all. Of the four cited paragraphs, the first 

two merely identify TIM and TAM as investment advisor or subadvisor of certain 

investment options; the third states that they are affiliates of TLIC; and the last 

 

4

 Plaintiffs plainly cannot establish the necessary elements for the equitable lien 

recognized in Sereboff, and they do not contend that they can. Sereboff involved a 

claim by a plan administrator seeking reimbursement of medical benefits provided 

to plan beneficiaries based on the beneficiaries’ recovery in a lawsuit against third 

parties. 547 U.S. at 360. The Supreme Court reasoned that because the plan 

document specifically provided a right to reimbursement from a particular fund 

(defined in the plan document as “[a]ll recoveries from a third party (whether by 

lawsuit, settlement or otherwise)”) and such fund was in the beneficiaries’ hands, 

the plan administrator had proven the necessary conditions for an equitable lien 

“by agreement.” Id. at 363-64. In contrast to those cases, Plaintiffs cite no 

language in a plan document or elsewhere giving client plans a right to the 

compensation received by TIM or TAM.

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alleges that they received fees “from Plaintiffs[’] investments into these investment 

options.” Compl. ¶¶ 338-41. None of the paragraphs asserts any facts to show that 

any fees TIM or TAM received are traceable to particular investors, much less 

particular plans. 

Plaintiffs’ other allegations refute that proposition. Plaintiffs themselves 

assert that the plans invested their assets in mutual funds and other “pooled 

investment vehicles,” where their respective Plans’ assets are commingled with the 

assets of other investors. See, e.g., Compl. ¶ 133 (“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.”); id. ¶¶ 119, 299-300; see also TIM/TAM Mem. at 5-7. And, 

in the case of mutual funds, the monies invested ceased to be the Plans’ assets at all 

but instead became the assets of the mutual funds themselves. See 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.”); see 

also TIM/TAM Mem. at 5-6. Thus, any fees that TIM and TAM may have received 

“from Plaintiffs[’] investments into these investment options” (Compl. ¶ 341), are 

inherently untraceable according to Plaintiffs’ own allegations. 

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Plaintiffs’ sole response to this argument is narrowly addressed to TIM and 

TAM’s point regarding the significance of ERISA § 401(b). Plaintiffs contend that 

this Court “rejected the same argument” in Goldenberg v. Indel, Inc., 741 F. Supp. 

2d 618 (D.N.J. 2010). But, if anything, the Court’s discussion—which does not 

even mention ERISA § 401(b)—supports TIM and TAM’s position. The plaintiffs 

in Goldenberg alleged that certain defendants engaged in prohibited transactions 

by causing the plan to invest in a money market fund that paid fees to those 

defendants’ affiliates. Id. at 632. The defendants argued in response that the 

fund’s payment of fees to the defendants’ affiliate “does not constitute the 

spending of Plan assets . . . .” Id. The Court agreed with defendants’ assertion. 

Id. at 632 (“Both premises are true . . . .”).

In doing so, this Court aligned with the Seventh Circuit (the only circuit 

court to address the issue) and the Department of Labor (the government agency 

primarily responsible for enforcing ERISA), both of which have concluded that socalled “revenue sharing payments” paid for mutual funds are not plan assets. See 

Hecker v. Deere & Company, 556 F.3d 575, 584 (7th Cir. 2009) (“The fees were 

drawn from the assets of the mutual funds in question, which, as the statute 

provides, are not assets of the Plans . . . Once the fees are collected from the 

mutual fund's assets and transferred to one of the Fidelity entities, they become 

Fidelity's assets—again, not the assets of the Plans.”); Brief Of The Secretary of 

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Labor, Elaine L. Chao, As Amicus Curiae In Support Of Plaintiffs-Appellants at 

22, Hecker v. Deere & Co., No. 07-3605 (7th Cir. April 2, 2008) (attached as Ex. 

1), (“The Secretary does not believe that [the ‘revenue sharing’ allegation], even if 

proven, would establish the fiduciary status of Fidelity Research, because the sums 

paid do not constitute plan assets.”).5

The court in Goldenberg rejected the defendants’ dismissal argument not 

because their point was wrong but because it was not relevant to the issue before 

the Court at that time: whether “buying shares of the Fund . . . was itself a 

prohibited transaction.” Id. at 632-33. The point is, however, relevant to the issue 

here. Because the fees that TIM and TAM received were not themselves plan 

assets, Plaintiffs cannot establish traceability by merely asserting that TIM and 

TAM received those fees—which is, of course, the most that Plaintiffs allege. 

Compl. ¶¶ 338-41.6 

 

5

 Plaintiffs attempt to distinguish Hecker on grounds that it did not involve 

prohibited transaction claims but, again, offer no explanation as to why that 

distinction matters. 

6

 In addition to relying on Goldenberg, Plaintiffs also cite to the district court 

decisions in Haddock v. Nationwide Fin. Servs., 419 F. Supp. 2d 156 (D. Conn. 

2006) and Phones Plus, Inc. v. The Hartford Fin. Servs. Group, Inc., Civ. NO. 

3:06CV01835, 2007 WL 3124733 (Oct. 23, 2007). Neither case advances 

Plaintiffs’ position. The Haddock court held that payments received by a 

defendant from a fund may constitute plan assets but only if the defendant receives 

such assets “(1) as a result of its status as a fiduciary or its exercise of fiduciary 

discretion or authority, and (2) at the expense of plan participants or beneficiaries.” 

Id. at 170. Not only is Haddock at odds with Goldenberg, it actually hurts 

Plaintiffs’ position in this case because Plaintiffs do not allege that TIM and TAM 

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In sum, Plaintiffs: (1) have not plausibly alleged the elements of traceability 

and specifically identifiable assets necessary for equitable restitution; and (2) have 

not identified any other equitable remedy that could provide the monetary relief 

they seek. Accordingly, Counts IV and VII against them should be dismissed. 

CONCLUSION

For the foregoing reasons, TIM and TAM respectfully request 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.

 

had or used any fiduciary status or authority to obtain their fees. The court in 

Phones Plus in turn, held that the plaintiffs had alleged “a detailed set of facts” to 

support their position that the “revenue sharing payments” at issue were plan 

assets. Id. at *5. While the Phones Plus court did not identify what those facts 

were, the decision cannot help Plaintiffs because Plaintiffs identify no alleged facts 

to support a similar legal conclusion here.

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Dated: September 19, 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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