Court Opinion

ID: 2801225
Source: CourtListenerOpinion
Date Created: 2015-05-15 21:01:49.582075+00
Date Added: 2024-06-11T11:29:39.347871
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                            FILED
                            FOR THE NINTH CIRCUIT                             MAY 15 2015

                                                                          MOLLY C. DWYER, CLERK
                                                                            U.S. COURT OF APPEALS

JAMES P. DEFAZIO; et al.,                        No. 12-15973

              Plaintiffs - Appellants,           D.C. No. 2:04-cv-01358-WBS-
                                                 GGH
  And

KATHLEEN ELLIS,                                  MEMORANDUM*

              Plaintiff,

  v.

HOLLISTER EMPLOYEE SHARE
OWNERSHIP TRUST; et al.,

              Defendants - Appellees.

JAMES P. DEFAZIO; et al.,                        No. 12-16099

              Plaintiffs - Appellees,            D.C. No. 2:04-cv-01358-WBS-
                                                 GGH
  v.

HOLLISTER EMPLOYEE SHARE
OWNERSHIP TRUST; et al.,

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.

                                          1
              Defendants,

     And

 ALLAN F. HERBERT; et al.,

              Defendants - Appellants.

                   Appeal from the United States District Court
                        for the Eastern District of California
                 William B. Shubb, Senior District Judge, Presiding

                       Argued and Submitted March 11, 2015
                            San Francisco, California

Before: McKEOWN, MURGUIA, and FRIEDLAND, Circuit Judges.

       A group of former participants in the Hollister Employee Share Ownership

Trust (“Plan Participants” and the “Plan,” respectively) sued the Plan, Hollister,

Inc., Hollister’s parent company The Firm of John Dickinson Schneider, Inc.

(“JDS”), and various Plan fiduciaries for violation of their rights under the

Employee Retirement Income Security Act (“ERISA”). 29 U.S.C. § 1001 et seq.

The parties are familiar with the facts underlying this eleven-year dispute, and we

do not recount them here.

I.     The Appeal

       The Plan Participants appeal the district court’s judgment in favor of the

defendant companies and fiduciaries following multiple pre-trial motions and a

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fifteen-day bench trial. The district court entered careful and detailed orders

explaining its pre-trial rulings, as well as extensive findings of fact and conclusions

of law following trial.

      A.     The 1999 Transaction

      We affirm the district court’s determination on summary judgment that the

Plan Participants lacked standing to pursue relief on the 1999 Transaction, in

which JDS preferred shares were transferred to a trust rather than distributed to

Hollister employees. The fact that the plaintiffs are former—not current—plan

participants does not undermine their statutory standing under ERISA. See LaRue

v. DeWolff, Boberg & Assocs., Inc., 552 U.S. 248, 256 (2008); Harris v. Amgen,

Inc., 573 F.3d 728, 735 (9th Cir. 2009). However, the stacked assumptions and

speculation surrounding this claim do not support Article III’s standing

requirements of traceability and redressability. Bernhardt v. Cnty. of Los Angeles,

279 F.3d 862, 869 (9th Cir. 2002) (noting that injury must be “fairly traceable” to

alleged misconduct and that a claim is not redressable as “too speculative if it can

be redressed only through ‘the unfettered choices made by independent actors not

before the court’”) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61

(1992)).

      B.     Post-1992 Plan-JDS Share Repurchases

                                          3
      At trial, the district court determined that “because . . . the fiduciaries’

breaches of their duties did not cause a material harm to the Plan, plaintiffs are not

entitled to damages.” That conclusion remains unchallenged on appeal. The Plan

Participants affirmatively abandoned their claim to monetary relief, but continue to

pursue their claims for equitable relief. To the extent any additional money

damages claim might underlie the claim for equitable relief, the Plan Participants

waived that claim.

      Notably, both in their briefs and at oral argument, the Plan Participants could

not articulate proposed equitable relief that is not tied into or an end-run around

their claim for monetary relief. To the extent such a claim could be divined, the

Plan Participants, who have already cashed out of the Plan, lack Article III

standing as to redressability vis-a-vis their claims for prospective equitable relief.

See Mayfield v. United States, 599 F.3d 964, 970 (9th Cir. 2010) (“Past exposure to

harmful or illegal conduct does not necessarily confer standing to seek injunctive

relief if the plaintiff does not continue to suffer adverse effects. [Lujan, 504 U.S.

at 564.] Nor does speculation or ‘subjective apprehension’ about future harm

support standing.”) (quoting Friends of the Earth, Inc. v. Laidlaw Envtl. Servs.

(TOC), Inc., 528 U.S. 167, 184 (2000)). “Once a plaintiff has been wronged, he is

entitled to injunctive relief only if he can show that he faces a ‘real or immediate

                                           4
threat . . . that he will again be wronged in a similar way.’” Id. (omission in

original) (quoting City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983)).

      In light of this determination, we not specifically address every claim the

Plan Participants raise on appeal.1 With respect to most of the Plan Participants’

claims, any error was harmless in view of the unavailability of the requested

equitable relief and the waiver and abandonment of monetary claims.

      C.     Pre-1993 Plan-JDS Share Repurchases

      The district court dismissed the pre-1993 share repurchase claims on the

basis of the ERISA statute of limitations. 29 U.S.C. § 1113. We need not parse

the active/passive distinction for the “fraud or concealment” exception to the

statute of limitations for two reasons: (1) the Plan Participants abandoned their

claim for monetary damages, and (2) the district court determined that “[i]f the

court’s finding that plaintiffs’ claims based on defendants’ conduct from 1982 to

1992 is reversed for any reason, the remainder of the court’s analysis in this Order

      1
         The Plan Participants’ failure to show damages or entitlement to equitable
relief also bars recovery on their claim that the restrictions on the transferability of
JDS stock in the JDS Articles were invalid as preempted by ERISA. This
argument is unpersuasive for an independent reason. ERISA preempts “State
laws.” 29 U.S.C. § 1144(a). Contracts between private parties, such as the JDS
Articles, are not state laws. See Associated Gen. Contractors of Am. v. Metro.
Water Dist. of S. California, 159 F.3d 1178, 1183 n.2 (9th Cir. 1998) (“We see no
merit in AGC’s argument that simply because a contract is legal and enforceable it
has the effect of law of a state.”).

                                           5
of plaintiffs’ post-1992 claims would apply equally to their time-barred claims.”

The infirmities in the Plan Participants’ monetary and equitable claims for

post-1992 JDS share repurchases apply with equal force to the pre-1993 claims.

      D.     Amendments to the JDS Articles of Incorporation

      To the extent that the Plan Participants argue that passive concealment has

tolled ERISA’s statute of limitations with respect to the 1978, 1980, and 1984

amendments to the JDS Articles of Incorporation, we reject that argument. As the

district court noted, all the amendments to the Articles of Incorporation were filed

with the Illinois Secretary of State. Thus, even assuming that passive concealment

might toll ERISA’s statute of limitations, the record would not support a claim of

passive concealment here.

      E.     Excessive Sales of JDS Stock

      To the extent that the Plan Participants appeal the district court’s rejection of

their allegations that Plan trustees sold more shares of JDS stock than necessary in

1982, 1987, and 1993, their argument fails because—as the district court held after

trial—they have not proposed or sought any remedy with respect to this claim.

The Plan Participants do not contest this holding on appeal; thus, they have waived

any challenge to the district court’s ruling on this claim.

II.   Qualified Domestic Relations Orders

                                           6
       Separately, James DeFazio raises an issue relating to the handling of his

portion of his former wife’s Plan account. We conclude that these orders were

“qualified domestic relations orders” under ERISA and complied with the Act’s

requirements. See 29 U.S.C. § 1056(d)(3)(D). DeFazio’s related claims are

without merit.

III.   The Cross-Appeal

       In their cross-appeal, the defendant companies and fiduciaries ask us to

reverse the district court’s finding of breach of fiduciary duties, the statute of

limitations ruling permitting the post-1992 transactions to proceed to trial, the

district court’s holding that the Hollister Board had a duty to monitor the Plan

trustees, and other issues. We offer no judgment or view on those issues as it is

unnecessary to address them in light of our affirmance of the district court’s

judgment in favor of the defendant companies and fiduciaries.

       AFFIRMED.

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