United States District Court, D. Delaware
LYLE J. GUIDRY and RODNEY CHOATE, on behalf of the MRMC ESOP and a class of all other persons similarly situated, Plaintiff,
WILMINGTON TRUST, N.A., as successor to Wilmington Trust Retirement and Institutional Services Company, Defendant.
A. Felice, BAILEY & GLASSER, LLP, Wilmington, DE; Gregory
Y. Porter, Patrick Muench, and Ryan T. Jenny, BAILEY &
GLASSER, LLP, Washington, DC; Daniel Feinberg and Todd
Jackson, FEINBERG, JACKSON, WORTHMAN & WASOW LLP,
Berkeley, CA, attorneys for Plaintiff.
H. Manwaring, IV, MORRIS JAMES LLP, Wilmington, DE; Michael
J. Prame, Edward J. Meehan, Ross P. McSweeney, GROOM LAW
GROUP, Washington, D.C., attorneys for Defendant.
ANDREWS, U.S.DISTRICT JUDGE
Rodney Choate alleges Defendant Wilmington Trust breached its
fiduciary duties under the Employee Retirement Income
Security Act (ERISA) by causing an employee pension plan to
overpay for company stock. Currently before the Court is
Plaintiffs Motion for Class Certification. (D.I. 80). For the
reasons discussed below, the motion is GRANTED.
Martin Resource Management Corporation (MRMC) is a
privately-held company that transports petroleum products and
other bulk liquids. (D.I. 31 at 7). In January 2012, MRMC
created an Employee Stock Ownership Plan (ESOP)-a retirement
benefit for employees made up primarily of stock in the
employer company. (Id. at 8). MMRC appointed
Wilmington Trust as the trustee of the ESOP. (Id. at
9). Under ERISA, an ESOP trustee may not pay more than
"adequate consideration" for the employer's
stock. 29 U.S.C. § 1108(e)(1).
is challenging two ESOP transactions. In the first
transaction, on October 2, 2012, the Plan purchased 3, 066.5
shares of MRMC preferred stock and 738 shares of MRMC common
stock for $233 million. (D.I. 31 at 9). After a stock split
and conversion of preferred stock into common stock, this
transaction became 95, 112.5 shares of common stock.
(Id. at 10). In the second transaction, on December
23, 2013, the Plan bought an additional 89, 049.5 shares of
MMRC common stock for $142.5 million. (Id. at 11).
According to Plaintiff, the shares from both transactions are
only worth about $79 million now. (D.I. 81 at 1). Wilmington
Trust is responsible for both transactions in its capacity as
trustee of the ESOP. (D.I. 31 at 9, 11).
Guidry sued Wilmington Trust over the transactions in March
2017, and Rodney Choate sued the next month. The cases were
consolidated in May 2017. (D.I. 12). Guidry died on August
26, 2018, leaving Choate to pursue this action. (D.I. 124).
was employed as a boat captain for an MRMC subsidiary from
November 2006 until about April 2013. (D.I. 85, Ex. 5,
"Choate Decl," at 1). He became a participant in
the ESOP when it started in 2012. (Id.) Because he
left the company before his retirement account fully vested,
Choate forfeited about 80 percent of his potential benefits.
(D.I. 93 at 3).
action is "an exception to the usual rule that
litigation is conducted by and on behalf of the individual
named parties only." Comcast Corp. v. Behrend,
569 U.S. 27, 33 (2013). To qualify for this exception, a
party "must affirmatively demonstrate his
compliance" with Fed.R.Civ.P. 23 by a preponderance of
the evidence. Reyes v. Netdeposit, LLC, 802 F.3d
469, 485 (3d Cir. 2015). "Merits questions may be
considered to the extent-but only to the extent-that they are
relevant to determining whether the Rule 23 prerequisites for
class certification are satisfied." Amgen Inc. v.
Connecticut Ret. Plans & Tr. Funds, 568 U.S. 455,
466 (2013). The plaintiff must satisfy "the
prerequisites of Rule 23(a): numerosity, commonality,
typicality, and adequacy of the class representative."
Shelton v. Bledsoe, 775 F.3d 554, 559 (3d Cir.
2015). Additionally, the "proposed class must satisfy at
least one of the three requirements listed in Rule
23(b)." Wal-Mart Stores v. Dukes, 564 U.S. 338,
has sought certification under Rules 23(b)(1) and 23(b)(2).
"Most ERISA class action cases are certified under Rule
23(b)(1)." Kanawi v. Bechtel Corp., 254 F.R.D.
102, 111 (N.D. Cal. 2008). This rule "allows for
certification when the prosecution of separate suits by
individual class members would create a risk of inconsistent
or varying adjudications and establish incompatible standards
for Defendants, or when a judgment in one suit would be
dispositive of the interests of the other class members who
were not parties to the suit." Id. at 107. Rule
23(b)(2) authorizes a class action if the defendant "has
acted or refused to act on grounds that apply generally to
the class, so that final injunctive relief... is appropriate
respecting the class as a whole." Sullivan v. DB
Investments, Inc., 667 F.3d 273, 296 (3d Cir. 2011).
have recognized "that an essential prerequisite of a
class action, at least with respect to actions under Rule
23(b)(3), is that the class must be currently and readily
ascertainable based on objective criteria." Carrera
v. Bayer Corp., 727 F.3d 300, 305 (3d Cir. 2013). To
satisfy this implicit "ascertainability"
requirement, a plaintiff must show that "(1) the class
is defined with reference to objective criteria; and (2)
there is a reliable and administratively feasible mechanism
for determining whether putative class members fall within
the class definition." City Select Auto Sales Inc.
v. BMW Bank of N. Am. Inc., 867 F.3d 434, 439 (3d Cir.
2017) (cleaned up).
challenges certification on only three grounds: (1)
ascertainability; (2) numerosity; and (3) adequacy of ...