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Perry v. Bloomberg

United States District Court, D. Oregon, Medford Division

June 4, 2015

DAVID C. PERRY, a participant in the, KENNEDY FUEL CO. 401(K) PROFIT SHARING PLAN, Plaintiff,
BARRY BLOOMBERG, as Trustee of the Kennedy Fuel Co. 401(K) Profit Sharing Plan; GLORIA L. BLOOMBERG, as Trustee of the Kennedy Fuel Co. 401(K) Profit Sharing Plan; KENNEDY FUEL CO., an Oregon domestic business corporation, as Plan Administrator of the Kennedy Fuel Co. 401(K) Profit Sharing Plan; and KENNEDY FUEL CO. 401(K) PROFIT SHARING PLAN, Defendants.


MARK D. CLARKE, Magistrate Judge.

Plaintiff David Perry brings claims against the defendants Gloria Bloomberg, David Bloomberg, Kennedy Fuel Co., and Kennedy Fuel Co. 401(k) Profit Sharing Plan alleging they violated the Employee Retirement and Security Act of 1974 ("ERISA"), as amended, 29 USC §§ 1001-1191c. Plaintiff has filed a claim for distribution of benefits under ERISA §502(a)(1)(B) and (a)(2), 29 USC § 1132(a)(1)(B) and (a)(2), and a claim for relief under ERISA § 409, 29 U.S.C. § 1109. This case comes before the court on an ongoing discovery dispute between the parties. Defendants have filed a motion to quash (#16) and a motion to stay (#21). For the reasons below, Defendants' motions are denied. Defendants and subpoenaed nonparties are ordered to immediately produce all documents requested by Plaintiff in his May 1, 2015, subpoenas. (#16-1 to #16-5).


Plaintiff was an employee for Kennedy Fuel Co. for 32 years. Between 1985, when the Kennedy Fuel Co. 401(k) Plan ("the Plan") was established, and August 1, 2014, when the Plaintiff retired, Plaintiff participated in the Plan by contributing bi-weekly deductions from his salary. On December 9, 2014, Plaintiff requested that his account balance of $766, 240.49 be distributed into his IRA. (#23). Plaintiff alleges that Defendants improperly invested Plan contributions such that they were unable to comply with their fiduciary duties under ERISA and fulfill Plaintiff's distribution requests in compliance with the terms of the Plan. On March 12, 2015, Plaintiff filed a complaint against the Defendants under ERISA §409 and §502. Plaintiff requests damages as well as equitable relief.

On May 1, 2015, Plaintiff issued subpoenas requesting documents related to the investment of Plan funds and the management of the Plan to Crater Lake Developments, Northwest Retirement Plans, Inc., Crown West Developments, James K. Johnson DMD Pension Plan, and Gary Whittle. (#16-1 to #16-5). Defendants moved to quash the subpoenas under Federal Rule of Civil Procedure 45(d)(3). They allege that the subpoenas subject both Defendants and nonparties to undue burden.

Defendants have also moved to stay proceedings pending action by the Department of Labor. Defendants provided a copy of a May 5, 2015, Department of Labor report on the results of a two year investigation into the Plan, which found Defendants committed multiple ERISA violations. In support of their motion to stay, Defendants provided a declaration from Joelle Tavan, an attorney with defense counsel's firm who has experience with Department proceedings. She believes that the May 5th letter is indicative of the beginning of formal agency proceedings. (#33). At oral argument on May 28, 2015, Defendants stated that such proceedings would likely commence a year from the letter, during which time the Department of Labor will await voluntary compliance by Defendants. Defendants allege that a stay would prevent inconsistent adjudication and factual findings as well as prevent the depletion of Plan resources for other beneficiaries. In his response, Plaintiff points out that the May 5th letter states that no proceedings have begun. (#30).


I. Defendants' motion to stay (#21) is denied.

The power to stay is "incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants." Landis v. N Am. Co., 299 U.S. 248, 254 (1936). In Lockyer, the Ninth Circuit reiterated it would weigh:

the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.

Lockyer v. Mirant Corp., 398 F.3d. 1098, 1110 (9th Cir. 2005) (citing CMAX, Inc. v. Hall, 300 F.2d. 265, 268 (9th Cir. 1962)). Factors the court considers include whether "the other proceedings will be concluded within a reasonable time in relation to the urgency of the claims, " Levya v. Certified Grocers of California, Ltd. 593 F.2d. 857, 864 (9th Cir. 1979), and the nature of the relief sought, see Lockyer, 398 F.3d at 1112 (denying stay in part because the Attorney General is seeking injunctive relief on behalf of the people of California); CMAX, 300 F.2d at 268-69 (granting the stay and noting that the plaintiff is only seeking damages).

The doctrine of primary jurisdiction also allows courts to grant a stay pending agency proceedings. Under this doctrine, courts have the discretion to defer to the decision making power of an agency even when there are common-law remedies available to the plaintiff Nader v. Allegheny Airlines, Inc. 426 U.S. 290, 303-04 (1976). Such deference is often appropriate when the action addresses a highly technical finding of fact better suited for the expertise of the agency, id. at 304, or involves an issue of first impression, Syntek Semiconductor Co., Ltd. V Microchip Tech. Inc. 307 F.3d 775, 780 (9th Cir. 2002). In deciding whether to defer to an agency, courts evaluate whether there is a "(1) need to resolve an issue that (2) has been placed by Congress within the jurisdiction of an administrative body having regulatory authority (3) pursuant to a statute that subjects an industry or activity to a comprehensive regulatory authority that (4) requires expertise or uniformity in administration." Id. at 781

At this time, a Landis stay is not appropriate in this case. Unlike many cases where a motion to stay is granted, no other formal proceedings have commenced against Defendants. See Mediterranean Enters., Inc. v. Ssangyong Corp., 708 F.2d 1458, 1465 (9th Cir. 1983) (affirming stay because of pending arbitration of related claims); CMAX, 300 F.2d at 269-270 (granting stay because of enforcement proceedings in front of the Civil Aeronautics Board); Dixon v. Falcon Heights Condo. Ass'n, 1:12-cv-00439-CL, 2012 WL 3597555, at *4 (granting stay pending concurrent proceedings in the Circuit Court of Oregon); Alvarez v. T-Mobile USA, Inc. CIV. 210-2372 WBS GGH, 2010 WL 5092971, at *3 (E.D. Cal. Dec. 10, 2010) (granting stay pending a Supreme Court case regarding an arbitration). While defense counsel believes the May 5th letter is indicative of future formal action by the Department of Labor, counsel also stated at oral argument on May 28, 2015, that such proceedings would not start for at least a year while the Department awaits voluntary compliance by Defendants. Defendants argue that there may be criminal or other agency proceedings, but until such action has commenced a stay is inappropriate.

Had formal proceedings already begun, Defendants' motion probably still fails to meet the criteria for a Landis stay.[1] Plaintiff here has a right to take civil action against the Defendants both under the terms of the Plan, (#19-1), and under ERISA, 29 U.S.C. § 1132(a)(1)(b). In addition, the Department of Labor's letter makes clear that even a Department decision to move forward does not prevent other parties from pursuing legal action. (#22-1). Unlike in CMAX, where the plaintiff was only pursuing damages, 300 F.2d at 268-69, here, the Plaintiff is requesting that the court make decisions regarding the distribution of the Plan and take specific action with regard to the Defendants in their role as ...

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