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In re Wilmington Trust Corp. Erisa Litigation

United States District Court, Third Circuit

September 4, 2013

IN RE WILMINGTON TRUST CORP. ERISA LITIGATION

MEMORANDUM ORDER

At Wilmington this 4th day of September, 2013, having considered plaintiffs Julie Gray and James Bradford's motion to proceed without class certification and the papers submitted therewith;

IT IS ORDERED that said motion (D.I. 56) is granted, for the reasons that follow:

1. Background.

On December 20, 2010, plaintiffs Karen Outten and James Bradford ("plaintiffs Outten and Bradford, " respectively), individually and on behalf of all others similarly situated, filed suit under the Employee Retirement Income Security Act ("ERISA"), ERISA § 502(a), 29 U.S.C. § 1132(a), against Wilmington Trust Corporation, et al.[1] (D.I. 1 at ¶ 1) On January 31, 2011, plaintiff Julie Gray ("plaintiff Gray"), on behalf of herself and persons similarly situated, instituted a similar ERISA litigation against Wilmington Trust Corporation, et al.[2] (D.I. 1 at ¶¶ 8-20 in 11-00101)

After reviewing competing motions for consolidation and appointment of lead counsel (D. I. 23; D.I. 26), on March 15, 2012, the court ordered the cases consolidated and appointed Interim Lead and Co-Lead counsel. (D.I. 35; D.I. 36) On May 25, 2012, plaintiffs Gray, Outten, and Bradford[3] filed an amended consolidated complaint ("complaint") against all defendants[4] (collectively "defendants"). (D.I. 38) On May 3, 2012, the court granted in part and denied in part defendants' Rule 12(b) motion to dismiss, in part concluding that plaintiff Outten lacked constitutional standing. (D.I. 51; D.I. 52) On June 6, 2012, plaintiffs Gray and Bradford ("plaintiffs") filed a first amended complaint (D.I. 55) and defendants answered on July 1, 2013. (D.I. 59) The court has jurisdiction over this action pursuant to ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1).

2. Standard.

Section 502(a)(2) of ERISA authorizes a plan participant to bring a civil action "for appropriate relief under [Section 409]." Section 409 provides that a fiduciary who breaches the duties imposed upon fiduciaries under ERISA "shall be liable to make good to such plan any losses to the plan resulting from each such breach . . . ." Section 502(a)(2) claims are "brought in a representative capacity on behalf of the plan" and provide recovery only for the plan. Coan v. Kaufman, 457 F.3d 250, 259-261 (2d Cir. 2006) (citing Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140 (1985)); LaRue v. DeWolff, Boberg & Assocs., 552 U.S. 248, 261 (2008) (Thomas, J., concurring).

3. The Second Circuit[5] has reasoned "that the representative nature of the section 502(a)(2) right of action implies that plan participants must employ procedures to protect effectively the interests they purport to represent." Coan, 457 F.3d at 259 (citing Massachusetts Mut. Life, 473 U.S. at 142 n.9). As Congress has remained silent on the issue of making such actions permissive or mandatory class actions, "the procedures necessary to protect absent parties, and to prevent redundant suits, [must] be worked out by parties and judges according to the circumstances on a case by case basis." Id. at 260. To discharge his or her duty to proceed on behalf of the plan, "the requirement is only that the plaintiff take adequate steps under the circumstances properly to act in a 'representative capacity on behalf of the plan.'" Id. at 261 (citing Massachusetts Mut. Life, 473 U.S. at 142 n. 9).

4. Discussion.

Defendants argue that similarly to the situation in Coan, plaintiffs have not taken any safeguards to insure that this action will benefit other plan participants. Plaintiffs respond that, as any recovery inures to the plan, plaintiffs have every incentive to maximize the plan's recovery and will only receive their share of any such recovery. The court previously ordered the cases consolidated and "that all future actions arising under ERISA in connection with the above claims shall be similarly consolidated." (D.I. 35 at 8) Further, the court appointed lead counsel to best serve the interests of the plan participants. (D.I. 35 at 15)

5. The court recognizes the need for the plaintiffs at bar to fairly represent all potential plaintiffs, as well as for this action to be structured in a manner that will bind all plan participants to court holdings and prevent multiple further lawsuits.[6] To this end, the court concludes that plaintiffs have been acting in a representative capacity, seeking to recover losses incurred by the plan as a whole due to alleged fiduciary breaches. In both the amended complaint and first amended complaint, plaintiffs filed on their own behalf, on behalf of the plan, and on behalf those similarly situated participants and beneficiaries of the plan.

6. For these reasons, the court concludes that plaintiffs may continue to pursue their claims as individuals acting in a representative capacity and requires this action to be governed by Federal Rule of Civil Procedure 23.1 in all respects, except that plaintiffs are not required to comply with the pleading requirements set forth by Federal Rule of Civil Procedure 23.1(b). See e.g., Fish v. Greatbanc Trust Co., 667 F.Supp.2d 949 (N.D. III. 2009).

7. Conclusion.

Based on the foregoing, the court grants plaintiffs' motion to proceed without class certification (D.I. 56).


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