Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 1 of 44 THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK CHRISTOPHER HUDSON, Plaintiff, Civ. Action No. 18-CV-4483-GHW-RWS v. NATIONAL FOOTBALL LEAGUE MANAGEMENT COUNCIL, et al., Defendants. MEMORANDUM OF LAW IN OPPOSITION TO DEFENDANTS’ MOTIONS TO DISMISS PLAINTIFF’S AMENDED COMPLAINT Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 2 of 44 TABLE OF CONTENTS Page TABLE OF AUTHORITIES ......................................................................................................... iii INTRODUCTION ...........................................................................................................................1 FACTUAL ALLEGATIONS ..........................................................................................................8 The Benefits Provided by the Plan.......................................................................................9 The Fiduciaries of the Plan ..................................................................................................9 The Summary Plan Description & Disclosures About the Plan Terms .............................11 Chris Hudson’s Experience Applying for Benefits ...........................................................12 ARGUMENT .................................................................................................................................13 I. PLAINTIFF HAS CONSTITUTIONAL STANDING TO BRING COUNT I ...........................................................................................................................13 II. COUNT I PROPERLY ALLEGES A TIMELY CLAIM FOR BREACH OF FIDUCIARY DUTY BY THE BOARD DEFENDANTS ................................................17 III. A. Count I States a Claim ...........................................................................................17 B. Count I Is Timely ..................................................................................................22 1. Count I Adequately Pleads Concealment, thus the Statute Runs From the Date of Discovery of the Breach ................................................22 2. Alternatively, Count I Adequately Pleads the Board Defendants’ Breaches were Part of a Single Scheme where Breaches Occurred Within the Limitations Period....................................................................24 COUNT II PROPERLY ALLEGES A BREACH OF THE DUTY TO MONITOR BY THE MANAGEMENT COUNCIL AND THE PLAYERS ASSOCIATION............26 A. The Management Council & Players Association Are Fiduciaries of the Plan .............................................................................................................27 B. The Duty to Monitor Required the Management Council and Players Association to Act ....................................................................................30 i Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 3 of 44 C. Count II Adequately Alleges Breaches of the Duty to Monitor By The Management Council and Players Association ....................................................33 CONCLUSION ..............................................................................................................................36 ii Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 4 of 44 TABLE OF AUTHORITIES Cases Page Barker v. Am. Mobil Power Co., 6 F.3d 1397 (9th Cir. 1995) .....................................................................................................35 Becker v. Eastman Kodak Co., 120 F.3d 5 (2d Cir. 1997).........................................................................................................21 Bixler v. Cent. Penn. Teamsters Health & Welfare Fund, 12 F.3d 1292 (3d Cir. 1993).....................................................................................................18 Buccino v. Cont’l Assurance Co., 578 F. Supp. 1518 (S.D.N.Y. 1983).........................................................................................25 Cal. Pub. Emps' Ret. Sys. v. ANZ Secs., Inc., 137 S. Ct. 2042 (2017) .........................................................................................................5, 22 Caputo v. Pfizer, Inc., 267 F.3d 181 (2d Cir. 2001)...........................................................................................5, 22, 23 Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 433 F.3d 181 (2d Cir. 2005)...............................................................................................14, 15 Chesemore v. Alliance Holdings, Inc., 886 F. Supp. 2d 1007 (W.D. Wis. 2012) .................................................................................34 Coyne & Delany Co. v. Selman, 98 F.3d 1457 (4th Cir. 1996) ...................................................................................................28 DeFazio v. Hollister, Inc., 636 F. Supp. 2d 1045 (E.D. Cal. 2009)....................................................................................25 DeRogatis v. Bd. of Trustees of the Cent. Pension Fund of the Int'l Union of Operating Engineers, 2015 WL 1923544 (S.D.N.Y. Apr. 2, 2015), aff'd sub nom. In re DeRogatis, 904 F.3d 174 (2d Cir. 2018) ................................................ 17 iii Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 5 of 44 Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76 (2d Cir. 2001).................................................................................................18, 20 Eastman Kodak Co. v. Henry Bath LLC, 936 F.3d 86 (2d Cir. 2019).......................................................................................................20 Electro–Mech. Corp. v. Ogan, 9 F.3d 445 (6th Cir. 1993) .......................................................................................................21 Flanigan v. Gen. Elec. Co., 242 F.3d 78 (2d Cir. 2001).......................................................................................................17 Gates v. United Health Group Inc., 2012 WL 2953050 (S.D.N.Y. July 16, 2012) ..........................................................................13 Horvath v. Keystone Health Plan E., Inc., 333 F.3d 450 (3d Cir. 2003).....................................................................................................14 In re Am. Int’l Group, Inc. ERISA Litig. II, 2011 WL 1226459 (S.D.N.Y. Mar. 31, 2011) .........................................................................33 In re Fannie Mae 2008 ERISA Litig., 2012 WL 5198463 (S.D.N.Y. Oct. 22, 2012) ..........................................................................33 In re M&T Bank Corp. ERISA Litig., 2018 WL 4334807 (W.D.N.Y. Sept. 11, 2018) .................................................................33, 34 In re Morgan Stanley ERISA Litig., 696 F. Supp. 2d 345 (S.D.N.Y. 2009)......................................................................................34 In re Polaroid ERISA Litig., 362 F. Supp. 2d 461 (S.D.N.Y. 2005)......................................................................................28 In re Xerox Corp. ERISA Litig., 483 F. Supp. 2d 206 (D. Conn. 2007) ......................................................................................33 Johnson v. Couturier, 572 F.3d 1067 (9th Cir. 2009) .................................................................................................28 Kendall v. Emps. Ret. Plan of Avon Prods, 561 F.3d 112 (2d Cir. 2009)...............................................................................................13, 16 iv Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 6 of 44 Larson v. Northrop Corp., 21 F.3d 1164 (D.C. Cir. 1994) .................................................................................................14 LaScala v. Scrufari, 330 F. Supp. 2d 236 (W.D.N.Y. 2004) ..............................................................................24, 25 LaScala v. Scrufari, 479 F.3d 213 (2d Cir. 2007).....................................................................................................24 Leigh v. Engle, 727 F.2d 113 (7th Cir. 1984) .............................................................................................29, 34 Lerner v. Fleet Bank, N.A., 459 F. 3d 273 (2d Cir. 2006)....................................................................................................18 Liss v. Smith, 991 F. Supp. 278 (S.D.N.Y. 1998) ....................................................................................30, 34 Lutz v. Kaleida Health, 2019 WL 3556935 (W.D.N.Y. Aug. 5, 2019) ...................................................................27, 28 Martin v. Feilen, 965 F.2d 660 (8th Cir. 1992) .............................................................................................29, 34 Merck & Co. v. Reynolds, 559 U.S. 633 (2010) .............................................................................................................5, 23 Morrissey v. Curran, 567 F.2d 546 (2d Cir. 1977).....................................................................................................25 Mullins v. Pfizer, Inc., 147 F. Supp. 2d 95 (D. Conn. 2001) ........................................................................................21 Negron v. Cigna Health & Life Ins., 300 F. Supp. 3d 341 (D. Conn. 2018) ......................................................................................18 New York Dist. Council of Carpenters Pension Fund v. Forde, 939 F. Supp. 2d 268 (S.D.N.Y. 2013)......................................................................................25 v Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 7 of 44 Nicolas v. Trustees of Princeton Univ., 2017 WL 4455897 (D.N.J. Sept. 25, 2017) .............................................................................32 NLRB v. Amax Coal Co., 453 U.S. 322 (1981) .............................................................................................................7, 29 Osberg v. Foot Locker, Inc., 138 F. Supp. 3d 517, 553 (S.D.N.Y. 2015), aff'd, 862 F.3d 198 (2d Cir. 2017) .....................................................................................18, 19 Patterson v. Stanley, 2019 WL 4934834 (S.D.N.Y. Oct. 7, 2019) ............................................................................19 Reinke v. Boden, 45 F.3d 166 (7th Cir. 1995) .....................................................................................................35 Solomon v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 2016 WL 852732 (D. Md. Mar. 4, 2016).............................................................................9, 12 Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) .............................................................................................................16 State of N.Y. v. Hendrickson Bros., Inc., 840 F.2d 1065 (2d Cir. 1988)...................................................................................................23 Switzer v. Wal–Mart Stores, Inc., 52 F.3d 1294 (5th Cir. 1995) ...................................................................................................21 Tibble v. Edison Int’l, 135 S. Ct. 1823 (2015) .............................................................................................................25 Trustees of Upstate New York Engineers Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561 (2d Cir. 2016).....................................................................................................16 Veera v. Ambac Plan Admin. Comm., 769 F. Supp. 2d 223 (S.D.N.Y. 2011)......................................................................................33 Vellali v. Yale Univ., 308 F. Supp. 3d 673 (D. Conn. 2018) ............................................................................7, 28, 33 vi Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 8 of 44 White v. Chevron, 2016 WL 4502808 (N.D. Cal. Aug. 29, 2016) ........................................................................32 Whitfield v. Tomasso, 682 F. Supp. 1287 (S.D.N.Y. 1988).........................................................................................30 Statutes 29 C.F.R. § 2509.75-8 ...........................................................................................................29, 34 29 U.S.C. § 1001 ...........................................................................................................................1 29 U.S.C. § 1002(2)(A) .................................................................................................................8 29 U.S.C. § 1002(16)(A) ...............................................................................................................9 29 U.S.C. § 1002(21)(A) .............................................................................................................10 29 U.S.C. § 1102 ...........................................................................................................................9 29 U.S.C. § 1104(a)(A) .................................................................................................................1 29 U.S.C. § 1104(a)(B) .................................................................................................................1 29 U.S.C. § 1104(a)(1)(A) ......................................................................................................1, 17 29 U.S.C. § 1104(a)(1)(B) .......................................................................................................1, 17 29 U.S.C. § 1113 ...............................................................................................................4, 21, 22 29 U.S.C. § 1113(1)(B) .................................................................................................................4 vii Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 9 of 44 Plaintiff respectfully submits this memorandum in opposition to the motions to dismiss the Amended Class Action Complaint (ECF Doc. No. 104) 1 by the Retirement Board Defendants (ECF Nos. 116-117), the National Football League Management Council (ECF Nos. 111, 112, 115), and the National Football League Players Association (ECF Nos. 113-114). INTRODUCTION Plaintiff Christopher Hudson, a former, now-disabled NFL football player, brings this action under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq., on behalf of a Class of participants in and beneficiaries of the Bert Bell/Pete Rozelle NFL Player Retirement Plan (the ”Plan”) against the fiduciaries of the Plan to remedy their failure to make critical disclosures about the Plan about the ability of participants to obtain reclassification of their category of benefits under the Plan. AC ¶¶ 2-4. The Amended Complaint alleges two causes of action: Count I alleges a breach of fiduciary duty of ERISA § 4040(a)(1)(A) & (B), 29 U.S.C. § 1104(a)(A) & (B) against the Board Defendants 2 for breaching their duty to disclose and inform; Count II alleges a breach of fiduciary duty of ERISA §§ 404(a)(1)(A), (B) and (D), 29 U.S.C. §§ 1104(a)(1)(A), (B) and (D) by the National Football League Management Council (the “Management Council”) and the National Football League Players Association (the “Players Association”) for failure to monitor the Board Defendants. In its September 30, 2019 Order (ECF Doc. No. 96)(the “Order”), the Court concluded that the ERISA § 404 claim “was not based on separate misrepresentations or knowing omissions, but on the exact same allegations which formed the basis for his § 102 claim” and that there were “no 1 Citations to the Amended Class Amended Complaint in this memorandum of law shall be to “AC ¶.” 2 The “Board Defendants” include The Retirement board of the Bert Bell/Pete Rozelle NFL Player Retirement Plan, Katherine Blackburn, Richard Cass, Ted Phillips Samuel McCullum, Robert Smith, and Jeffrey Van Note. 1 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 10 of 44 allegations in the complaint that the Retirement Board made any misleading representations or that the Board had any reason to know that its failure to disclose its interpretation of ‘changed circumstances’ might cause Plaintiff harm.” Order at 5. The Amended Complaint makes specific factual allegations that address the Court’s concerns, including, identifying Mr. Hudson’s specific requests for information, the fact that the Board utilized secret definitions and “deliberately keeps the language vague,” and gave instructions not to provide participants with information other than what was contained in the Summary Plan Description (the “SPD”). AC ¶¶ 40-47. Thus, the Amended Complaint addresses and corrects what the Court previously concluded was deficient in the original complaint. The Board Defendants’ motion is based on a narrow reading of the Order, a mischaracterization of the Amended Complaint, and a circumscribed scope of their fiduciary duties under ERISA. Those fiduciary duties require: (a) a duty not to misinform, (b) an affirmative duty to inform when the fiduciary knows or should know that silence might be harmful, and (c) a duty to convey complete and accurate information material to the circumstances of the participants and beneficiaries. Id. at ¶ 64 (page 25). The Amended Complaint alleges omissions and failures to act, which the Board Defendants ignore. It also details a pattern of withholding key information, including definitions and interpretations of key terms such as “changed circumstances.” AC ¶¶ 4142, 44, 46-47. The issue, as framed by the Amended Complaint, is that the information was not provided until or after a participants’ last and final appeal. AC ¶¶ 66-67 (page 26). Rather than address the allegations in the Amended Complaint, the Board Defendants argue that the Amended Complaint has not alleged what Mr. Hudson asked about the standard for reclassification before 2 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 11 of 44 he filed his initial claim.3 See Memorandum of Law in Support of Motion to Dismiss Plaintiffs” Amended Complaint filed by Board Defendants (ECF No. 117))(the “Board Defendants Br.) at 4, 8-9. This is a manufactured artifice designed to distract from the alleged wrongdoing occurring throughout the process. The Amended Complaint, properly interpreted on the standards applicable to a motion to dismiss, alleges systemic issues whereby the Board and its delegates deliberately refused to respond to inquiries or provide clarifications. The Amended Complaint alleges that when Mr. Hudson made direct inquiries to the Board they were ignored or deflected, and that the Board Defendants breached their fiduciary duties to Plan participants by creating a system that deliberately kept definitions of key plan terms vague and secret from participants. The Amended Complaint details a system that was designed to provide retired players with as little information as possible. The Amended Complaint discusses a New York Times article published after Plaintiff’s initial complaint which recounts the experiences of a former employee of the Plan administrator, Paul Scott, who was “point person telling players what paperwork they needed to apply for disability benefits.” AC ¶ 40. It also discusses other articles and studies documenting the Board Defendants’ pervasive pattern of obfuscation and inadequate disclosures. Id. at ¶¶ 51, 52. Based on an interview with a confidential witness, the Amended Complaint alleges that the Board deliberately keeps things vague, rubber-stamped decisions by others, and was unable to define “changed circumstances” for Plaintiff. Id. at ¶ 42. The Amended Complaint alleges that this confidential witness received numerous calls from players who did not understand the SPD and was told to direct questions to the language in the SPD or defendant NFL Players 3 The Board Defendants quote this Court’s decision relating to Plaintiff’s claim brought under ERISA § 102(a) concerning the sufficiency of the SPD not ERISA § 404. See Board Defendants Br. at 2. The two claims have different elements and are decided under two separate standards. The SPD could satisfy Section 102 but the Board Defendants’ conduct under the circumstances could still constitute a breach of fiduciary duty. 3 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 12 of 44 Association. Id. at ¶ 43. Plaintiff’s experiences are consistent with the system described by Mr. Scott as well as the experiences of other retired players. E.g., Id. at ¶¶ 46-47. By instructing persons employed by the Plan Administrator to withhold information regarding the standard of “changed circumstances,” the Amended Complaint sufficiently alleges that the Board Defendants breached their fiduciary duty. The Board Defendants disparage the sources of the factual allegations in the Amended Complaint, including, for example, the high rate at which retired players file suits, although it is the Board Defendants who relied on interpretations of “changed circumstances” from other court decisions on the motions to dismiss. Id. at ¶ 54. Questioning the veracity of the allegations is not proper on a motion to dismiss. Read as a whole, which is required at the pleading stage, the Amended Complaint describes a system for retired players that was following a strategy of “delay, deny, and hope they die.” E.g., Id. at ¶ 51. The Amended Complaint alleges that the Board Defendants utilized a system of undefined and vague terms and secret definitions that harmed the very people they were supposed to be protecting, a classic breach of fiduciary duty. Id. at ¶ 44. By doing so, a reasonable and fair inference is that the Board Defendants knew that they should have made proper disclosures and failing to do so would harm the participants applying for benefits who later applied for reclassification. Finally, the Board Defendants’ statute of limitations argument is premised on the same faulty characterization of the complaint’s allegations. As the Amended Complaint is based on defendants’ omissions, the six years is measured from “the latest date on which the fiduciary could have cured the breach or violation,” not on the date of the last action which constituted the breach. 29 U.S.C. § 1113(1)(B). Additionally, the “6-year statute of repose” at issue here is subject to an exception for fraud or concealment, in which case “the 6-year period runs from the plaintiff’s 4 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 13 of 44 discovery of the violation.” Cal. Pub. Emps' Ret. Sys. v. ANZ Secs., Inc., 137 S. Ct. 2042, 2050 (2017); 29 U.S.C. § 1113. As the Second Circuit has explained, “the ‘fraud or concealment’ provision” actually prescribes “a separate statute of limitations of six years from the date of discovery.” Caputo v. Pfizer, Inc., 267 F.3d 181, 189 (2d Cir. 2001). Finally, the Supreme Court has explained that when a defendant engages in “deceptive conduct [that] may prevent a plaintiff from even knowing that he or she has been defrauded,” and the plaintiff “remains in ignorance of [the fraud] without any fault or want of diligence or care on his part, the bar of the statute [of limitations] does not begin to run until the fraud is discovered.” Merck & Co. v. Reynolds, 559 U.S. 633, 644–45 (2010). Thus, the statute of limitations contained in ERISA § 413(1) did not start to run until Plaintiff discovered the deceptive acts by defendants. Plaintiff alleges that that the Board Defendants hid the standard for reclassification until the final decision denying Hudson’s appeal for re-classification. E.g., AC ¶ 38. With respect to the Players Association and Management Council, in its Order dismissing the original Complaint, the Court concluded that the complaint failed to sufficiently identify “issue[s] with the actual procedures the Council and Association used to monitor the [B]oard” and found the Complaint did not sufficiently allege that “either the Council or the Association was aware of any red flags that should have alerted them to potential breaches of fiduciary duties by members of the Retirement Board.” Order at 7. The Amended Complaint addresses the Court’s concern and specifically added allegations explaining why the procedures were different and what red flags should have alerted the Management Council and the Players Association that they needed to take action. AC ¶¶ 48-52, 76-77. Thus, the Amended Complaint addresses and corrects what the Court previously concluded was deficient in the original complaint. 5 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 14 of 44 The Amended Complaint does not allege claims against these defendants arising out of their appointment of their designees to the Board but for their failures that occurred after such appointments. Defendants minimize the import of their ability to remove trustees who fail to act. The Amended Complaint alleged significant events that occurred that would have prompted a prudent appointing fiduciary to act. AC ¶ 47. These events included publications in prominent media outlets (including, the New York Times) stating that retired NFL players believed the modus operandi of the Board Defendants to consist of “delay, deny, and hope they die.” AC ¶ 51. These events also included the release of findings of the prominent Petrie-Flom Center for health law Policy, Biotechnology, and Bioethics at Harvard Law School. AC ¶ 52. In November 2016, scholars with the Petrie-Flom Center noted that interviews with current and former players revealed widespread lack of clarity and understanding regarding their benefits. Id. The scholars specifically admonished the policy of “bare provision of information and documents to the players” as insufficient. Id. The Amended Complaint does not equate the responsibility of the Players Association and Management Council to liability for specific decisions made by the trustees but for a system that defendants were on notice erected barriers to players’ understanding of and access to their benefits. The Amended Complaint also alleges, based on the accounts of a former employee and a confidential informant, that the Board Defendants were directing the inquiries of retired players to the NFL Players Association on the very issues asserted in this action. AC ¶¶ 43, 47. The Players Association incorrectly asserts that the Amended Complaint only provides one example of a player contacting them. See Memorandum of Law in Support of NFL Players Association’s Motion to Dismiss (ECF No. 114) (“Players Association Br.”) at 5. But the 6 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 15 of 44 Amended Complaint alleges, based on the account of a former employee of the Plan administrator, that players were routinely referred to the Players Association. AC ¶ 43. The monitoring defendants also misconstrue the role of appointing fiduciaries. The Management Council, for example, contends that its duty to monitor was limited to attendance and voting. See Memorandum In Support of NFL Management Council’s Motion to Dismiss (ECF Doc. No. 112) (“Management Council Br.”) at 10. Their role is not simply to make sure the Board members attended meetings, but to ensure that they acted consistent with their fiduciary duties. “ERISA law imposes a duty to monitor appointees on fiduciaries with appointment power.” Vellali v. Yale Univ., 308 F. Supp. 3d 673, 691 (D. Conn. 2018). The duty to monitor includes investigating whether the fiduciary is acting in accordance with the Plan and ERISA. See id. The Amended Complaint alleges that there either was no system in place to monitor the trustees or that it was ineffective since no action was taken in the face of available information. AC ¶ 76. The monitoring defendants discount the Amended Complaint’s allegations based on news articles and other publications discussing the shoddy treatment of the retired players who sought benefits. E.g., AC ¶¶ 51-52. Examining why there is a high rate of lawsuits from former players is not the same as injecting themselves into a particular case. Defendants do not properly construe the allegations and inferences in the light most favorable to Plaintiff and instead request resolution of the red flags alleged in the Amended Complaint at the pleading stage. These are both questions for the trier of fact and not appropriate to resolve on a motion to dismiss. Moreover, like the Board Defendants, these defendants fundamentally ignore the basis of the Amended Complaint -- a failure to act. Finally, both the Management Council and the Players Association suggest that the Supreme Court’s decision in NLRB v. Amax Coal Co., 453 U.S. 322 (1981) somehow bars them 7 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 16 of 44 from supervising the Board members. See Management Council Br. at 11; Players Association Br. at 7. First, this argument is based on the incorrect interpretation of the decision and an incorrection assertion that the Amended Complaint alleges that these monitoring fiduciaries were required to interject themselves in the day-to-day decisions of the Board. Second, as Plaintiff explained in opposition to the original motion to dismiss and in his objections to Magistrate’s Report and Recommendation, cases involving multi-employer plans have found the appointing entities to be ERISA fiduciaries. See Plaintiff’s Objections (ECF No. 91) at 21 n.7 (citing cases cited in opposition to motions to dismiss). Third, if these entities were barred from monitoring the appointed fiduciaries, then that alone would be a violation as someone should have been responsible for monitoring the Board. As the claims in the Amended Complaint more than meet the requirements of Rule 8, are timely filed, and Plaintiff has standing to assert such claims, Defendants’ motions should be denied. FACTUAL ALLEGATIONS The Plan is an employee pension benefit plan within the meaning of ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A) that has been established to offer both retirement benefits and disability benefits to its participants. AC ¶ 21. 4 Many former NFL players who are participants in this Plan suffer from League-related head trauma from their years of punishing play in the. Despite the vulnerable condition of the players who are participants, Defendants have crafted confusing 4 The written instrument of the Plan within the meaning of ERISA § 402(a) was amended and restated in 2009 (often referred to as the “Plan Document”).¶¶ 21. This Plan applies to disability benefits for claims filed prior to January 1, 2015. Id. There is no dispute that Plaintiff is a participant in this Plan and this Plan is the one that governs his disability benefits. 8 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 17 of 44 interpretations of key plan terms and systematically concealed these secret interpretations from Plan participants. Id. at ¶¶ 2-3, 40-47. The Benefits Provided by the Plan The Plan provides different benefit levels with largely divergent compensation rates depending on whether the player’s injuries can be shown to be related to playing football. AC ¶¶ 24-25. Article 5.1 of the Plan provides for four categories of benefits that offer substantially different monthly benefit rates depending on which of the benefit criteria are met. Id. at ¶ 25. 5 Of most concern is the difference between the Inactive and Football Degenerative levels of disability under the Plan. “Inactive” Total & Permanent Disability (T and P) benefits will have (as of 2016) monthly payments of $4,166.50 a month versus $10,250.00 a month for disability related to football under the Football Degenerative level. Id. at ¶ 25. The Plan allows for players to seek benefits for a one benefit level and then later apply for a different benefit level through its Reclassification terms. In seeking benefits, an initial determination is made by an Initial Claims Committee. AC ¶ 27. Adverse decisions are then appealable to the Retirement Board which makes the final administrative determination. Id. The Fiduciaries of the Plan The Retirement Board is designated in Article 1.3 of the ¶ as the designated Plan Administrator of the Plan within the meaning of ERISA § 3(16)(A), 29 U.S.C. § 1002(16)(A), and 5 Solomon v. Bert Bell/Pete Rozelle NFL Player Ret. Plan, 2016 WL 852732, at *7 (D. Md. Mar. 4, 2016). The Plan provides disability benefits to, among others not here relevant, retired players like Solomon who became TPD as a result of their football career and are thus unable to work T and P benefits. The level of benefits paid varies depending upon when the player's disability manifested. For example, "Football Degenerative" benefits are paid for disabilities stemming from a player's football career that manifest within 15 years of retirement; See Plan Section 5.1(c), AR 023. Lesser "Inactive" benefits are paid for disabilities not stemming from a player's football career, or if stemming from a player's football career, that did not manifest within 15 years of retirement. See Plan Section 5.1(d). 9 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 18 of 44 a named fiduciary of the ESOP within the meaning of ERISA § 402, 29 U.S.C. § 1102. AC. ¶ 13. Under Article 8.2 of the Plan Document, the Retirement Board was responsible for the following: defining the terms of the Plan and Trust; construing the Plan and Trust; reconciling any inconsistencies in the definition or interpretation of the Plan and Trust; deciding claims for benefits; paying all reasonable and necessary expenses of the Plan; adopting procedures, rules, and forms; delegating authority as necessary in administration of the Plan; selecting Trustees and setting forth terms of the Trust; commencing or defending suits or legal proceedings involving the Plan and the Trust; and settling, compromising, or submitting to arbitration for claims, debts, or damages due or owing to or from the Plan or Trust. Id. at ¶ 13. As a result of these positions, responsibilities and activities, the Retirement Board and its individual members are and have been fiduciaries of the Plan under ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A). Id. at ¶ 13-19. The Board and its members are referred to as the Board Defendants. Id. at ¶ 20. The Board Defendants do not dispute their status as fiduciaries or their roles and responsibilities as described in the Amended Complaint. The Players Association is the labor organization representing the professional American football players in the National Football League. AC ¶ 12. The Management Council is a nonprofit association of clubs of the National Football League that is based in New York City. Id. at ¶ 11. The Players Association had the authority to and did appoint three of the six members of the Retirement Board and, also had the authority to remove and replace any of those three members. Id. at ¶¶ 12 13. Likewise, the Management Council had the authority to and did appoint the other three members of the Retirement Board, and the authority to remove and appoint a replacement for any member of the Retirement Board that the Management Council has appointed. Id. at ¶¶ 11, 13. As a result of their authority to remove and replace their respective appointees on the 10 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 19 of 44 Retirement Board, the Complaint alleges that the Management Council and the Players Association were fiduciaries of the Plan within the meaning of ERISA. AC ¶¶ 11-12. The Summary Plan Description & Disclosures About the Plan Terms As the plan administrator, the Retirement Board is required, among other things, to define the terms of the Plan and Trust, construe the Plan and Trust and reconcile any inconsistencies in the definition or interpretation of the Plan and Trust. disclose information about the Plan to the player-participants. AC ¶ 13. Article 5.5(b) of the Plan addresses reclassification: “A Player who becomes totally and permanently disabled and who satisfies the conditions of eligibility for benefits under Section 5.1(a), 5.1(b), 5.1(c), or 5.1(d) will be deemed to continue to be eligible only for the category of benefits for which he first qualifies, unless the Player shows by evidence found by the Retirement Board or the Disability Initial Claims Committee to be clear and convincing that, because of changed circumstances, the Player satisfies the conditions of eligibility for a benefit under a different category of total and permanent disability benefits. Id. at ¶ 28. Article 5.5(b) of the Plan does not provide any definition or explanation as to what is meant by “clear and convincing evidence” or “changed circumstances.” See, e.g., AC ¶¶ 28, 29. The players are also not informed that the Board has adopted a hidden definition for “changed circumstances” that is only made known to the players at the very end of the administrative process, in their final decision. AC ¶¶ 38-39. The counterintuitive definition adopted by the Retirement Board is: Section 5.55(b) governs requests for reclassification such as yours, and it permits reclassification of T&P benefits only where a Player provides “clear and convincing” evidence of “changed circumstances” warranting “a different category of total and permanent disability benefits.” In this and all other instances, the Retirement Board interpret Section 5.5(b)’s “changed circumstances” requirement to mean a change in Player’s physical condition—such as a new or different impairment—that warrants a different category of benefits. 11 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 20 of 44 Id. at ¶ 38. Further, 5.2(b) of the Plan establishes on method of creating a presumption of eligibility for Football Degenerative T and P benefits is through the award of Social Security Disability benefits within 15 years of a player’s last year of League play. AC ¶ 26 (citing Solomon, 2016 WL 852732, at *10-11). Chris Hudson’s Experience Applying for Benefits After 8 years playing in the League, Mr. Hudson sustained numerous head injuries. AC ¶ 30. Just two years after his 2003 retirement from the NFL, in 2005, Hudson began complaining of headaches, dizziness, ringing ears and blurry vision. Id. By 2008, these symptoms worsened to the point that Mr. Hudson experienced increased anxiety, poor decision making, inability to sit still for long periods of time, sleep problems, decreased ability to concentrate, social withdrawal, memory problems and increased occurrence of headaches and light sensitivity. Id. Mr. Hudson applied for benefits under the Plan and, ultimately, in May 20, 2011, the Retirement Board reversed its prior denial of Hudson’s T & P benefits for Inactive T & P benefits. Id. at ¶ 33. However, in so doing, it made a determination that the disabling injuries suffered by Mr. Hudson were “not related to League football activities.” Id. at ¶ 33. Mr. Hudson then sought Social Security Disability benefits and was awarded these benefits with a disability date of December 31, 2009. AC ¶ 34. After receiving the decision from Social Security, Mr. Hudson sought Reclassification under the Plan asserting that his Social Security Disability award and other new medical documentation established changed circumstances by clear and convincing evidence. Id. at ¶ 35. He was subsequently denied by the Initial Claims Committee which never explained its definition of “changed circumstances” or how it weighed the evidence submitted by Hudson for its consideration. Id. at ¶ 36. In its denial, the Initial Claims Committee also notified Hudson of his right to appeal as well as his ability to “submit written 12 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 21 of 44 comments, documents and any other information that you believe shows you qualify for these benefits.” Id. On March 21, 2015, Hudson appealed this decision and included numerous pieces of new supporting medical evidence. Id. at ¶ 37. On May 21, 2015, the Board issued a Final Decision, received by Hudson on May 27, 2015. Id. at ¶ 38. For the first time in this final decision, the Board notified Hudson of its interpretation of “changed circumstances” under the Plan. Id. at ¶¶ 38-39. ARGUMENT I. PLAINTIFF HAS CONSTITUTIONAL STANDING TO BRING COUNT I The Board Defendants misstate the rule of this Circuit for Article III standing on ERISA breach of fiduciary duty claims, arguing Plaintiff fails to allege an injury in fact traceable to the Board Defendants’ conduct. Board Defendants Br. at 3-6. But “[i]n order to have standing to seek injunctive relief based on defendants' statutorily-created disclosure or fiduciary responsibilities, plaintiff need only allege that she was ‘generally harmed by the deprivation of a specific right;’ she need not show that she was ‘specifically injured, pecuniarily or otherwise.’” Gates v. United Health Group Inc., 2012 WL 2953050, at *9 (S.D.N.Y. July 16, 2012) (citing Kendall v. Emps. Ret. Plan of Avon Prods., 561 F.3d 112, 120-21 (2d Cir. 2009) and finding on motion to dismiss that complaint had adequately alleged breach of fiduciary duty and other disclosure obligations). Adopting the view of the Third Circuit, the Second Circuit has recognized that a participant does not need to show individual harm to “have Article III standing to obtain injunctive relief related to ERISA's disclosure and fiduciary duty requirements:” [T]he disclosure requirements and fiduciary duties contained in ERISA create in [a participant] certain rights, including the rights to receive particular information and to have [defendant] act in a fiduciary capacity. Thus, [plaintiff] need not demonstrate actual harm in order to have standing to seek injunctive relief requiring that [defendant] satisfy its statutorily-created disclosure or fiduciary responsibilities. 13 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 22 of 44 Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L.L.C., 433 F.3d 181, 199 (2d Cir. 2005) (quoting Horvath v. Keystone Health Plan E., Inc., 333 F.3d 450, 456-57 (3d Cir. 2003)). The Third Circuit in turn relied on the Second Circuit decision that “ERISA's goal of deterring fiduciary misdeeds” supports a “broad view of participant standing under ERISA,” and that a violation of § 404 satisfies the injury requirement of Article III. Horvath, 333 F.3d at 456 (quoting Fin. Inst. Ret. Fund, 964 F.2d at 149 and citing Larson v. Northrop Corp., 21 F.3d 1164, 1171 (D.C. Cir. 1994) (holding plaintiff need not demonstrate actual harm in order to file suit for alleged breach of fiduciary duty under ERISA § 404)). The Amended Complaint more than sufficiently alleges that Plaintiff was generally harmed by the deprivation of a specific right. The Amended Complaint alleges that the Board Defendants’ actively obfuscated the reclassification process and key plan provisions. This included adopting “secret definitions” for terms, including “changed circumstances,” that were “fuzzy on purpose”— and not disclosing them to Plan participants. AC ¶ 44. The Amended Complaint alleges that this practice was part of a comprehensive effort that included stonewalling player inquiries about the claims process and operation of the Plan. AC ¶¶ 46, 47. Hudson was therefore unaware of the standard for “changed circumstances” used by the Plan when he applied for benefits, and only learned of the standard when his appeal for reclassification was rejected. AC ¶ 12. As a result, Hudson took his one and only shot at submitting evidence that his T&P related injuries were related to NFL football activities without understanding it would be his one and only shot. Hudson was placed at a disadvantage in the claims process, the victim of a “trap for the unwary.” AC ¶ 3. And so he was caught by surprise when, on his application for reclassification, the numerous pieces of new medical evidence regarding his disability that he submitted with his application were irrelevant because they did not establish a “change in Player’s physical condition—such as a new 14 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 23 of 44 and different impairment.” AC ¶¶ 37-39. Thus, the Board Defendants’ assertion that the Amended Complaint does not allege any failure to disclose Plan interpretations or link it to harm suffered by Hudson, simply contradicts the allegations of the Amended Complaint. See Board Defendants Br. at 3. The Amended Complaint adequately pleads a general harm that the Board Defendants caused by depriving Hudson of his specific right to competent, loyal fiduciaries who would have adequately informed him of the standard for “changed circumstances” (instead of actively endeavoring to conceal that standard from players). AC ¶¶ 3,71. Had Hudson been appropriately informed, a fair inference is that Hudson could have approached the claims process differently. See id. But neither Article III standing nor Rule 8 requires Plaintiff to specifically plead a counterfactual hypothetical that he would have waited to submit his initial claim, submitted such and such alternative evidence, and in due course received FD benefits and the Board Defendants cite no case standing for such a proposition. Even if the result of Hudson’s claim or application for reclassification would have been the same on an ordinary understanding of “changed circumstances,” Hudson was entitled to a fair process administered by loyal fiduciaries, not a shell game. DaCosta v. Prudential Ins. Co. of Am., 2010 WL 4722393, at *2-3 (E.D.N.Y. Nov. 12, 2010) (rejecting argument that plaintiffs lacked standing because they could not show interest in ultimately prevailing on benefit claim and holding no showing of individualized harm needed to bring action alleging failure to provide sufficient information concerning benefit appeals process). The pleading requirement that Defendants articulate would effectively demand Hudson allege specific, pecuniary injury on his breach of fiduciary duty claim, the very requirement disclaimed by this Circuit’s precedents. See Cent. States Se. & Sw. Areas Health and Welfare Fund v. MerckMedco Managed Care, L.L.C., 433 F.3d 181, 199 (2d Cir. 2005). It would also be inconsistent 15 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 24 of 44 with Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), which emphasizes that while a plaintiff “cannot satisfy the demands of Article III by alleging a bare procedural violation,” the key question for with respect to intangible harms is “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.” Spokeo, 135 S. Ct. at 550 (emphasis added). That is the mere risk of harm attached to a procedural breach can be sufficient to provide a basis for standing to bring a claim alleging deprivation of a statutory right. Id. The Board Defendants’ demands for such allegations also misread the holdings of Trustees of Upstate New York Engineers Pension Fund v. Ivy Asset Mgmt., 843 F.3d 561 (2d Cir. 2016) and Kendall v. Emps. Ret. Plan of Avon Prods., 561 F.3d 112 (2d Cir. 2009). See Board Defendants Br. at 5-6. The plaintiff in Kendall primarily sought restitution and disgorgement. Kendall, 561 F.3d at 119. Those remedies require a different showing than the injunctive relief sought by this case: “[r]equests for restitution or disgorgement under ERISA are different from requests for injunctive relief. Obtaining restitution or disgorgement under ERISA requires that a plaintiff satisfy the strictures of constitutional standing by demonstrating individual loss, to wit, that they have suffered an injury-in-fact.” Id. (quoting Cent. States, 433 F.3d at 200). Upstate was likewise an action for restitution and disgorgement. 843 F.3d at 567. Here, the Amended Complaint seeks primarily injunctive and declaratory relief (aside from attorneys’ fees and prejudgment interest), including the disclosure of the standards for reclassification, the voiding of denials of reclassification based on the Board’s undisclosed interpretations, and the removal of the Board Defendants. AC Prayer for Relief ¶¶ A-D, G. Thus, Plaintiff does not need to show an individual loss to have actual harm for Article III standing in an action seeking injunctive and declaratory relief for Defendants’ failure to satisfy their fiduciary disclosure obligations. 16 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 25 of 44 II. COUNT I PROPERLY ALLEGES A TIMELY CLAIM FOR BREACH OF FIDUCIARY DUTY BY THE BOARD DEFENDANTS A. Count I States a Claim The Board Defendants argue that the Amended Complaint fails to make out the elements of a breach of fiduciary duty claim for nondisclosure. Board Defendants Br. at 6-10. In doing so, they inappropriately contradict the allegations of the Amended Complaint and draw inferences against the Plaintiff. Count I alleges that the Board Defendants breached their fiduciary duties under ERISA § 404(a)(1)(A) and (B). AC ¶¶ 62-71. ERISA § 404(a)(1) provides that “a fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and – (A) for the exclusive purpose of (i) providing benefits to participants and their beneficiaries; and (ii) defraying reasonable expenses of administering the plan” and also “(B) with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.” 29 U.S.C. § 1104(a)(1)(A) & (B). The Amended Complaint alleges that the breach in this action consists of the Board Defendants’ failure to disclose their secret interpretations of key plan terms relating to reclassification. E.g., AC ¶ 3. Under Second Circuit law, fiduciaries may be “liable for nondisclosure of information about a current plan when the omitted information was necessary to an employee's intelligent decision about [their benefits].” DeRogatis v. Bd. of Trustees of the Cent. Pension Fund of the Int'l Union of Operating Engineers, 2015 WL 1923544, at *8 (S.D.N.Y. Apr. 2, 2015), aff'd sub nom. In re DeRogatis, 904 F.3d 174 (2d Cir. 2018) (quoting Flanigan v. Gen. Elec. Co., 242 F.3d 78, 84 (2d Cir. 2001)). As a result, “[w]hen a plan administrator … fails to provide information when it knows that its failure to do so might cause harm, the plan administrator 17 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 26 of 44 has breached its fiduciary duty to individual plan participants and beneficiaries.” Id. at *10 (quoting Devlin v. Empire Blue Cross & Blue Shield, 274 F.3d 76, 88 (2d Cir. 2001)). The Board Defendants argue two things are missing from the Amended Complaint: an allegation Hudson asked the Board about the reclassification provisions before applying from benefits, and allegations he was harmed by not receiving information about them. See Board Defendants Br. at 4, 9. But this, misstates the Board’s obligations, improperly denies the allegations of the Amended Complaint, and impermissibly draws unfavorable inferences from the allegations. As Board Defendants acknowledge, “a duty to disclose arises where, among other things, a party ‘possesses superior knowledge, not readily available to the other.’” Board Defendants Br. at 7 (quoting Lerner v. Fleet Bank, N.A., 459 F. 3d 273, 292 (2d Cir. 2006)). The Board Defendants had such knowledge because they adopted secret interpretations of the reclassification provisions deliberately adopted for their vagueness and ability to confuse. AC ¶ 42. And because of the “disparity of training and knowledge” between the fiduciary and participant, “the fiduciary's obligations will not be excused merely because [a participant] failed to comprehend or ask about a technical aspect of the plan.” Osberg v. Foot Locker, 138 F. Supp. 3d 517, 552 (S.D.N.Y. 2015) (Bixler v. Cent. Penn. Teamsters Health & Welfare Fund, 12 F.3d 1292, 1300 (3d Cir. 1993)). Another court in this Circuit held that a complaint adequately alleged a violation of ERISA § 404(a)(1)(B) for failing to disclose information about the plan because “a fiduciary has a duty to disclose ‘material facts, known to the fiduciary but unknown to the beneficiary, which the beneficiary must know for its own protection.’” Negron v. Cigna Health & Life Ins., 300 F. Supp. 3d 341, 361 (D. Conn. 2018) (citing Glaziers & Glassworkers Union Local No. 252 Annuity Fund v. Newbridge Sec., Inc., 93 F.3d 1171, 1182 (3d Cir. 1996) and denying motion to dismiss). The Board Defendants refused to disclose these interpretations as a 18 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 27 of 44 matter of policy, even when directly asked by participants for explanations of the terms. AC ¶¶ 41, 43, 45-47. The Board Defendants protest that they are not “omniscient,” and could not have known these knowing omissions would harm Hudson or other participants. Board Defendants Br. at 8. Yet, this argument ignores that allegations that of the deliberate and calculated character of the omissions. AC ¶¶ 42-45. The inference reasonably drawn from this practice is that the Board intended to create an impenetrable thicket designed to obfuscate Plan terms. This inference is supported by the allegations based on widespread views of players, who understand the Defendants’ operating strategy in administering their benefit plans to be “delay, deny, and hope they die” and who, according to interviews conducted by scholars at the Petrie-Flom Center for health law Policy, Biotechnology, and Bioethics at Harvard Law School generally lack clarity and understanding regarding their benefits. AC ¶¶ 51-52. The Board Defendants cite Patterson v. Stanley, 2019 WL 4934834 (S.D.N.Y. Oct. 7, 2019) and Osberg, 138 F. Supp. 3d at 553, aff'd, 862 F.3d 198 (2d Cir. 2017) respectively to accuse Plaintiff of demanding “clairvoyance on the part of plan fiduciaries” or simply arguing with the benefit of hindsight. Board Defendants Br. at 8. Neither case is on point. Patterson involved backward looking allegations of underperforming investment funds. 2019 WL 4934834 at *10. Osberg cuts the other way. In that case, Foot Locker executed a plan conversion that effectively eliminated additional benefit growth for a period of years, in an effort to save money, which resulted in “wear-away.” Osberg, 138 F. Supp. 3d at 523. The Court observed that the “wear-away effect was not the result of an unexpected change in economic conditions, for instance, a falling interest rate environment, but was the precise goal sought.” Id. at 553. The Amended Complaint makes similar allegations here: Disadvantaging 19 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 28 of 44 participants in the claims process is the precise goal sought by the Board Defendants nondisclosures. AC ¶¶ 40, 42--45. The Board Defendants engaged in sustained efforts to avoid disclosing to participants their interpretation of the Plan terms governing reclassification. AC ¶¶ 40-47. According to a confidential witness with significant responsibility for administering the Plan from at least 2004 to at least 2016 (“CW1”), the Board kept “secret definitions” for Plan terms. These included “clear and convincing,” “total and permanent disability,” and “changed circumstances.” Id. at ¶¶ 42, 44. The secret definitions adopted by the Board Defendants were “fuzzy on purpose” and not disclosed to Plan participants. AC ¶ 44. 6 The Amended Complaint alleges that Board employees received numerous phone calls from players who did not understand the SPD, but the Board instructed those Plan employees not to provide players with information about reclassification beyond the language of the SPD. AC ¶ 43. These allegations are further corroborated by allegations detailing the experience of player participants, including Plaintiff, who made phone calls specifically inquiring regarding reclassification and the meaning of related terms found themselves all stonewalled by Board employees. AC ¶¶ 41, 46-47. It is also corroborated by a New York Times article that reported Board employees were given instructions limiting their ability to respond to player inquiries. AC ¶ 40. The Amended Complaint alleges a sustained pattern of fiduciary breach. The Second Circuit has recognized a fiduciary duty by the plan administrator to provide information in response to a participant’s inquiry about benefits. Devlin, 274 F.3d at 88 (citing In re Unisys, 57 6 The Board Defendants’ denial that they keep secret definitions of Plan terms, Board Defendants Br. at 9, is irrelevant on a Motion to Dismiss. “Motions to dismiss complaints for failure to state a claim, it is a court's obligation to view the evidence and interpret the allegations in the light most favorable to the plaintiffs, drawing reasonable inferences in their favor.” Eastman Kodak Co. v. Henry Bath LLC, 936 F.3d 86, 93 (2d Cir. 2019). 20 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 29 of 44 F.3d at 1264); Becker v. Eastman Kodak Co., 120 F.3d 5, 10 (2d Cir. 1997) (recognizing that ERISA fiduciaries have a “fiduciary duty to provide [participants] with complete and accurate information about her retirement options.”). Another court in this Circuit found that a fiduciary cannot have its representatives fail to respond to inquiries about benefits and benefit changes: A fiduciary cannot leave its front-line benefits counselors in the dark, or instruct them to give noncommittal and nonfactual responses to inquiries regarding potential benefit changes, if the information that is withheld is material to beneficiaries. Such a stance is inconsistent with the mandate that a fiduciary discharge its duties with the care, skill, prudence and diligence required by the statute. Mullins v. Pfizer, Inc., 147 F. Supp. 2d 95, 109 (D. Conn. 2001) (finding failure of representative of plan administrator to provide material information to participant was breach of fiduciary duty); see also Switzer v. Wal–Mart Stores, Inc., 52 F.3d 1294, 1299 (5th Cir. 1995) (explaining that upon receiving an inquiry from a beneficiary, a plan administrator “has a fiduciary obligation to respond promptly and adequately in a way that is not misleading”); Electro–Mech. Corp. v. Ogan, 9 F.3d 445, 451 (6th Cir. 1993) (“ERISA imposes a duty upon fiduciaries to respond promptly and adequately to employee-initiated inquiries regarding the plan or any of its terms.”). This is in keeping with the well-established law of trusts: “The trustee is free to stand aloof, while others act, if all is equitable and fair. He cannot rid himself of the duty to warn and to denounce, if there is improvidence or oppression, either apparent on the surface, or lurking beneath the surface, but visible to his practiced eye.” Eddy v. Colonial Life Ins. Of Am., 919 F.2d 747, 752 (D.C. Cir. 1990) (quoting Globe Woolen Co. v. Utica Gas & Elec. Co., 224 N.Y. 483, 489, 121 N.E. 378, 380 (1918) (Cardozo, J.)). The Board Defendants’ unsupported contention that it is appropriate for their agents to refuse to answer participant questions save by referring players to the SPD is inconsistent with their obligation to provide participants with complete and accurate information in response to participant questions. See Board Defendants Br. at 9. Thus, the 21 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 30 of 44 Amended Complaint’s allegations are more than sufficient to state a claim that Defendants violated ERISA § 404(a)(1)(A) & (B). B. Count I Is Timely The Board Defendants argue that Count I is untimely under ERISA § 413, 29 U.S.C. § 1113. But “[d]ismissal based on an affirmative defense at the complaint stage is warranted only if ‘it is clear from the face of the complaint, and matters of which the court may take judicial notice, that the plaintiff’s claims are barred as a matter of law.’” Reed v. Queens Vill. Comm. for Mental Health for J-CAP, Inc., 2019 WL 4452386, at *8 (E.D.N.Y. Sept. 17, 2019) (citing cases and denying motion to dismiss on that basis). 1. Count I Adequately Pleads Concealment, thus the Statute Runs From the Date of Discovery of the Breach The Board Defendants rely on a simplistic argument that ERISA § 413 contains a six year “statute of repose” and that because Mr. Hudson filed his original claim for benefits more than six years ago, therefore his claim is untimely. Board Defendants Br. at 11-14. But Defendants’ argument rests on flawed premises. The “6-year statute of repose” is subject to an exception for fraud or concealment, in which case “the 6-year period runs from the plaintiff’s discovery of the violation.” Cal. Pub. Emps' Ret. Sys., 137 S. Ct. at 2050; 29 U.S.C. § 1113; see Caputo v. Pfizer, Inc., 267 F.3d 181, 189 (2d Cir. 2001) (“[T]he ‘fraud or concealment’ provision” actually prescribes “a separate statute of limitations of six years from the date of discovery.”). Despite citing these two decisions, Defendants’ arguments ignore their holdings. Unlike some other Circuits, the Second Circuit has concluded that the “fraud or concealment” provision should not be fused into a single concept “fraudulent concealment” but instead refers to two distinct concepts: fraud or fraudulent concealment. Caputo, 267 F.3d at 189, 190. Fraud includes not only “false representations of fact, whether by words or conduct,” but 22 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 31 of 44 also “concealment of that which should have been disclosed.” Id. (emphasis added). Concealment means a “withholding of something which one knows and which one, in duty, is bound to reveal.” Id. As a result, this “six-year statute of limitations should be applied to cases in which a fiduciary: (1) breached its duty by making a knowing misrepresentation or omission of a material fact to induce an employee to act to his detriment or (2) engaged in acts to hinder the discovery of a breach of fiduciary duty.” Id. (emphasis added). As concealment incorporates the fraudulent concealment doctrine, the Second Circuit has long held that certain wrongs are themselves of such a nature as to be self-concealing. State of N.Y. v. Hendrickson Bros., Inc., 840 F.2d 1065, 1083 (2d Cir. 1988) (finding that a bid-rigging scheme was inherently self-concealing that fraudulent concealment doctrine applied to statute of limitations); see Caputo, 267 F.3d at 190 n.3 (citing Hendrickson Bros.). The Supreme Court has explained that when a defendant engages in “deceptive conduct [that] may prevent a plaintiff from even knowing that he or she has been defrauded,” and the plaintiff “remains in ignorance of [the fraud] without any fault or want of diligence or care on his part, the bar of the statute [of limitations] does not begin to run until the fraud is discovered.” Merck & Co. v. Reynolds, 559 U.S. at 644–45. Thus, the statute of limitations contained in ERISA § 413(1) did not start to run until Plaintiff discovered the deceptive acts by Defendants. In addition to alleging that the Board Defendants failed to properly disclose the standards regarding reclassification, the Amended Complaint alleges that the Board Defendants hid the standard for reclassification from plaintiff Hudson until the Board’s “final decision denying Hudson’s appeal for reclassification.” AC ¶ 39; see also id. at ¶ 29. The Amended Complaint explains that Plaintiff only discovered that the Board Defendants were not using the plain and ordinary definitions for those terms until May 2015 (less than 6 years from filing the Complaint). 23 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 32 of 44 Id. And, the Amended Complaint also alleges specific, affirmative actions taken by the Board in order to conceal the interpretations it had adopted from participants, including directing representatives specifically not to disclose them to participants when asked, (id. at ¶¶ 41, 43-44), as well as limiting the ability of the Board’s agents to respond to participant questions generally, (id. at ¶¶ 40, 46-47). These directives had the effect of concealing the Board’s secret interpretations of the Plan, interpretations which were themselves deliberately crafted to be “vague” and “fuzzy on purpose.” Id. at ¶¶ 42, 44. Thus, the Amended Complaint adequately alleges both a self-concealing scheme of deception and concealment and affirmative concealing acts in the form of knowing omissions, see Order Adopting Mag. Rep. & Rec. at 5 n. 2 (ECF No. 96) that were discovered less than six years before the Complaint was filed. 2. Alternatively, Count I Adequately Pleads the Board Defendants’ Breaches were Part of a Single Scheme where Breaches Occurred within the Limitations Period As the Amended Complaint has sufficiently alleged both a self-concealing scheme and affirmative concealing acts, it is not necessary to address Defendants arguments as to “the latest date on which the[se] fiduciaries could have cured the[ir] breach or violations” of ERISA § 404(a). See Board Defendants Br. at 12. Nonetheless, Defendants rely exclusively on out-of-Circuit authority to argue that the latest date on which the Board Defendants could have cured their breach or violation was when Hudson was awarded benefits, more than 6 years before the Complaint was filed. Id. By contrast, the Second Circuit has held that “no part of plaintiffs claim is time-barred [where defendant’s] conduct in breach of his fiduciary duties ‘was in furtherance of a single scheme,’” and because “numerous of [defendant’s] breaches occurred within the limitations period,” the action was therefore “timely under ERISA § 413(1)(A).” LaScala v. Scrufari, 479 F.3d 213, 220 n.1 (2d Cir. 2007) (affirming the decision and adopting the rationale of LaScala I, 330 F. Supp. 2d 236, 256 (W.D.N.Y. 2004)). The LaScala court found the “action was timely 24 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 33 of 44 since it was commenced ‘within six years of ‘the last action [] which constituted a part of the breach or violation.’” LaScala, 330 F. Supp. 2d at 256 (quoting DePerno, 816 F. Supp. at 144). Here, the Complaint pleads Defendants’ breaches as an ongoing scheme through at least November 2016. AC ¶ 57. At the earliest, the last action constituting a part of the breach or violation as to Plaintiff occurred in May 2015 (i.e., the denial of reclassification). Id. at ¶ 39. As the Complaint was filed less than 6 years later, Count I is timely. And, courts of this Circuit determining the last date a breach could be cured look beyond the date of the plaintiff’s detrimental reliance where the defendant had an ongoing duty to disclose. In New York Dist. Council of Carpenters Pension Fund v. Forde, 939 F. Supp. 2d 268 (S.D.N.Y. 2013), the court concluded that a breach of fiduciary duty for “failure to disclose material information” was not barred under ERISA § 413(1)(B) because the fiduciary “had a continuing obligation to disclose this material information as long as he was a trustee of the Funds, and ‘the latest date on which the fiduciary could have cured the breach or violation’ was at the time he stepped down as fiduciary.” Id. at 281. Courts in this District (and elsewhere) have rejected similar arguments where the defendants have a continuing obligation to take corrective action. E.g., Buccino v. Cont’l Assurance Co., 578 F. Supp. 1518, 1520 (S.D.N.Y. 1983) (finding defendants had a continuing obligation to take corrective action). “One form of remedying the breaches of a co-fiduciary would be to file a suit against the breaching co-fiduciary to … redress any violations of ERISA.” DeFazio v. Hollister, Inc., 636 F. Supp. 2d 1045, 1058-59 (E.D. Cal. 2009), aff'd in part, 612 Fed. App’x 439 (9th Cir. 2015). Such decisions are consistent with the Second Circuit’s well-established precedent in Morrissey v. Curran, 567 F.2d 546, 549 & n.9 (2d Cir. 1977) (explaining “fiduciaries [must] take remedial action upon discovery of breaches by co-fiduciaries”) and the Supreme Court’s more recent decision in Tibble v. Edison Int’l, 135 S. Ct. 1823, 1829 25 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 34 of 44 (2015) (“[S]o long as the alleged breach of the continuing duty occurred within six years of suit, the claim is timely.”). As these fiduciaries had a continuing obligation to remedy the prior breaches (even their own), and could have cured the breach at least through May 2015, the Amended Complaint is timely. III. COUNT II PROPERLY ALLEGES A BREACH OF THE DUTY TO MONITOR BY THE MANAGEMENT COUNCIL AND THE PLAYERS ASSOCIATION Count II of the Amended Complaint alleges that the Management Council and the Players Association breached their duty to monitor the Board Defendants. AC ¶¶ 72-79. Count II alleges that both of these defendants each had the power to appoint and remove three members of the Retirement Board and explains that this power obligates them to undertake an appropriate investigation “at reasonable intervals to ensure” that their respective appointed fiduciary “is acting in compliance with the terms of the Plan and in accordance with ERISA.” Id. at ¶¶ 74-75. Both the Management Council and Players Association complain that Plaintiff has not provided sufficient detail of their lapses. A review of the Amended Complaint demonstrates that their arguments are based on a misrepresentation of the allegations of the Amended Complaint and as well as their mandate under ERISA. Defendants focus on particular allegations that they take issue with, but this is precisely this type of argument that demonstrates why their motions to dismiss must be denied. Defendants are asking this Court to disregard the allegations of the Amended Complaint and draw inferences in their favor at the pleading stage, when a review of the complaint describes a system that ran amok while these defendants stood idly by while their appointees failed their wards. To substantiate their motions, as discussed herein, the monitoring defendants attempt to minimize specific allegations in the Amended Complaint, including those based on news articles and other publications discussing the shoddy treatment of the retired players who sought benefits. 26 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 35 of 44 E.g., AC ¶¶ 51-52. They conflate examining why there is a high rate of lawsuits from former players with injecting themselves into the details of a particular case. But what makes this case different from many of the cases on which defendants rely is the public nature of the faulty system faced by the retired Plan participants. Defendants are asking this Court to condone turning a blind eye to what should have been right before them. But more importantly as it relates to this motion is that whether or not the appointing defendants should have acted in response to the red flags set forth in the complaint is a question for the trier of fact and not appropriate to resolve on a motion to dismiss. See Management Council Br. at 14 which debates the impact of the high rate of lawsuits by former players; see also Players Association Br. at 3 (discussing amended complaint). Defendants also try to portray this class action as the tale of the misfortunes of a few disgruntled players instead of a complaint that describes a process that was rigged against the very people it was designed to help. See Management Council Br. at 18. The allegations in the Amended Complaint are hardly “generic” as suggested by the Management Council (Id.). 7 Plaintiff has alleged a series of events over many years which would have put the monitoring defendants on notice that something was wrong with the actions of their appointees. A. The Management Council and Players Association Are Fiduciaries of the Plan Defendants attempt to confuse the issue of the role of the Management Council and Players Association by arguing that they were not fiduciaries or de facto fiduciaries. Management Council Br. at 7-8; Players Association Br. at 6-7. Yet, “[a]n appointing fiduciary’s duty to monitor his appointees is well-established.” Lutz v. Kaleida Health, 2019 WL 3556935, at *4 (W.D.N.Y. Aug. 7 As set forth in the Amended Complaint (¶ 45), “[i]t was clear to CW1 that neither the NFLPA nor the Management Council wanted the Plan Administrator to be answering the questions of the Plan participants and that neither was interested in helping the retired players with their benefits and the NFLPA had to keep in mind how the awards would affect the current players.” Such an allegation is hardly generic boilerplate language and paints a picture of a broken system. 27 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 36 of 44 5, 2019) (quoting In re Polaroid ERISA Litig., 362 F. Supp. 2d 461, 477 (S.D.N.Y. 2005) (collecting cases)). While the duties of the appointing fiduciaries are different than those of the Board Defendants, even one who has appointment power has some fiduciary duties with respect to the Plan. The Management Council, for example, asserts that it is not a named fiduciary. Management Council Br. at 7-8. But the Amended Complaint alleges that Article 8.1 of the Plan Document specifically names the both the Management Council and the Players Association as the entities that each had the authority to appoint and remove three members of the six-person Retirement Board. AC ¶ 10. With that responsibility comes the duty to monitor (which is different than the role of those they appoint). “An appointing fiduciary’s duty to monitor his appointees is well-established.” Lutz v. Kaleida Health, 1:18-CV-01112 EAW, 2019 WL 3556935, at *4 (W.D.N.Y. Aug. 5, 2019) (citing In re Polaroid, 362 F. Supp. 2d at 477 (collecting cases) and denying motion to dismiss). Even when a person only has oversight of its appointees, the appointing fiduciary still has a “fiduciary duty” to monitor its appointees. Id.; Vellali, 308 F. Supp. 3d at 691 (citing numerous cases to hold that “ERISA law imposes a duty to monitor appointees on fiduciaries with appointment power.”). Every Circuit addressing the issue has recognized that persons with the power to appoint and/or remove other fiduciaries (either from the Plan Document or actual exercise of such power) are themselves fiduciaries who have an ongoing duty to monitor those fiduciaries. Johnson v. Couturier, 572 F.3d 1067, 1076 (9th Cir. 2009) (“[W]here members of an employers’ board of directors have responsibility for the appointment and removal of ERISA trustees, those directors are themselves subject to ERISA fiduciary duties, albeit only with respect to trustee selection and retention.”) (emphasis added); Coyne & Delany Co. v. Selman, 98 F.3d 1457, 1465-66 (4th Cir. 1996) (The power to appoint, retain and remove plan fiduciaries “carries 28 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 37 of 44 with it a duty ‘to monitor appropriately’ those subject to removal.”); Martin v. Feilen, 965 F.2d 660, 669-70 (8th Cir. 1992)(“Depending upon the circumstances, the director's duty to monitor the actions of appointed trustees may impose a duty to prevent wrongful conduct.”); Leigh v. Engle, 727 F.2d 113, 134-35 (7th Cir. 1984) (Court of Appeals held that the fact that fiduciaries had “only limited responsibilities does not mean that they had no responsibilities whatsoever” and found that the district court had conducted too limited examination in determining whether a defendant was a fiduciary.). As does the DOL: 29 C.F.R. § 2509.75-8 at FR-17: FR–17 Q: What are the ongoing responsibilities of a fiduciary who has appointed trustees or other fiduciaries with respect to these appointments? A: At reasonable intervals the performance of trustees and other fiduciaries should be reviewed by the appointing fiduciary in such manner as may be reasonably expected to ensure that their performance has been in compliance with the terms of the plan and statutory standards, and satisfies the needs of the plan. No single procedure will be appropriate in all cases; the procedure adopted may vary in accordance with the nature of the plan and other facts and circumstances relevant to the choice of the procedure. Both the Management Council and the Players Association suggest that the Supreme Court’s decision in NLRB, supra, somehow bars them from supervising the independent Board members. See Players Association Br. at 7; Management Council Br. at 11,14. First, this argument is based on the incorrect interpretation of the decision and an incorrect assertion that the Amended Complaint alleges that these monitoring fiduciaries were required to interject themselves in the day-to-day decisions of the Board. Second, “[w]ithin the duty to appoint and remove trustees of a multi-employer plan, courts have also found a duty to monitor the conduct of those trustees.” Hudson v. Nat’l Football League Mgmt. Council, 2019 WL 5722220, at *11 (S.D.N.Y. Sept. 5, 2019), report and recommendation adopted as modified, 2019 WL 4784680 (S.D.N.Y. Sept. 30, 2019). Several cases within this Circuit involving multi-employer plans have found the appointing 29 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 38 of 44 entities to be ERISA fiduciaries. E.g., Whitfield v. Tomasso, 682 F. Supp. 1287, 1305 (S.D.N.Y. 1988) (finding a Union breached its fiduciary duty in failing to monitor and remove its appointees.). In one of those cases, in which the union and management each had the power to appoint 3 appointees, the court found it was “It is well established that ‘the limited power to appoint and remove trustees renders’ the ERISA fiduciary ‘liable for the breaches those trustees committed ...’” Int’l Bhd. of Elec. Workers, Loc. 90 v. Nat’l Elec. Contractors Ass'n, 2008 WL 918481, at *7 (D. Conn. Mar. 31, 2008); see also Chao v. Constable, 2006 WL 3759749, at *5 (W.D. Pa. Dec. 19, 2006) (finding “as a matter of law that the power to appoint the two employee/union trustees makes the Union a fiduciary under ERISA” and “the Union's power to appoint carries with it the power to reasonably monitor the individuals who have been appointed.”). Neither these cases nor the DOL regulations distinguish the duties of appointing fiduciaries in multi-employer plans from other plans with respect to their duty to monitor because there is none. These defendants’ duties is not an activity arising out of its collective bargaining activity, but its appointment and removal power. Finally, defendants fail to explain that if they are somehow barred from monitoring the appointed fiduciaries, then who should be responsible for monitoring the Board (as someone under ERISA needs to have responsibility for monitoring the Board). B. The Duty to Monitor Required the Management Council and Players Association to Act The Management Council and Players Association argue that, at most, they were required to make sure they attend meetings and voted. E.g., Players Association Br. at 2. 8 They also 8 In this regard, the Players Association quotes the Report and Recommendation including its citation to a single case in support of this proposition. Players Association Br. at 2. The sole authority cited, decided on summary judgment, found that an appointing fiduciary was liable for his appointees’ breaches where he had knowledge of and then failed to take steps to remove the non-performing fiduciary. Liss v. Smith, 991 F. Supp. 278, 311 (S.D.N.Y. 1998). Here plaintiff does allege what the Management Council and Players Association knew or should have known and that they failed to remove their respective appointees (or take other steps). AC ¶¶ 76-77. 30 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 39 of 44 contend that the Amended Complaint alleges that they needed to micro-manage the Retirement Board. Players Association Br. at 1; Management Council Br. at 1. But such argument mischaracterizes the Amended Complaint. The title of Count II makes clear that the alleged breaches are “For Failure to Monitor” and then specifically alleges that these Defendants should have removed their appointees unless the Board Defendants took actions to remedy their breaches. AC ¶¶ 74, 75, 78. To substantiate their argument that they were not required to do more under the facts here, defendants attempt to minimize the import of particular factual allegations that were newly added to the Amended Complaint. For example, as discussed above, the Amended Complaint alleges that players were directed to the Players Association for information regarding the very matters that are at issue in this case. The Players Association, for example, complains that Plaintiff refers only to one specific player call when in fact the Amended Complaint alleges that the Plan Administrator was specifically instructed to steer Plan Participants to the Players Association for questions relating to the Plan definitions and procedures. Players Association Br. at 35. The inclusion of the experience of one player bolsters the allegations of the confidential witness on how inquiries were handled not, undermine it. The Amended Complaint alleges that the monitoring defendants either did not have a system in place or had inadequate procedures to monitor the Board Defendants. AC ¶ 76. Defendants now argue that these allegations do not sufficiently describe the lack of procedures. Players Association Br. at 4; Management Council Br. at 2-3. But the Amended Complaint identifies what these appointing fiduciaries either knew or should have known if proper systems and procedures were in place. AC ¶ 76. Defendants’ authorities do not support that their argument these allegations are insufficient. 31 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 40 of 44 See, e.g., Players Association Br. at 4. In Nicolas v. Trustees of Princeton Univ., 2017 WL 4455897 (D.N.J. Sept. 25, 2017), the court found that the plaintiff did not allege the specific “shortcomings” of the monitoring process and merely provided legal conclusions. Id. at *5. Here, the Amended Complaint specifically alleges facts that would have alerted the Players Association of the shortcomings of their appointees. AC ¶ 76. In White v. Chevron, 2016 WL 4502808 (N.D. Cal. Aug. 29, 2016), the court held that that the plaintiffs had failed to show how the monitoring process was insufficient because the claims were wholly dependent on the appointee breaches of fiduciary duty. Id. at *19. At issue in White is what was reasonable in evaluating a plan’s administrative fees and determining whether they are competitive. Id. at *2. This analysis involves different considerations than what is at issue here. Nothing in the White decision that suggests that the operative complaint alleged that those defendants had any red flags that would alert them to the problems at the fund. See id. By contrast, the Amended Complaint identifies the information available to these Defendants namely, i.e., news articles, multiple lawsuits, well publicized information regarding the injuries. AC ¶ 76. Here again, it is imperative that the Court consider the well-plead allegations, as a whole, in a context-specific evaluation as required by the applicable precedent. It is easy to focus on the insufficiency of one particular allegation but taken as a whole, the Amended Complaint makes clear that the process failed, and any reasonable monitoring process would have detected the global problem at the board level. The monitoring defendants also quarrel with the fact that one of the articles cited in the Amended Complaint was published after the original complaint was filed. See Management Council Br. at 15. But Defendants ignore that the article describes processes pre-dating the original complaint. See AC ¶ 40. The article confirms the allegations of the original complaint. Id. Defendants dispute recommendations by the Petrie-Flom Center for Health Law Policy, 32 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 41 of 44 Biotechnology, and Bioethics at Harvard Law School, complaining that the report followed the administration decisions specific to Mr. Hudson. Management Council Br. at 16. They also complain that the report is too long and did not make specific findings about the Board. Id. But, as they acknowledge, the report found that the information directed to the players “could be more digestible and user-friendly.” Id. Certainly, the reasonable inference of this allegation taken with the Amended Complaint as a whole is that the information being provided to players needed to better. Indeed, this is exactly what ERISA requires. See, e.g., ERISA § 102 and the DOL Regulations implementing ERISA § 102, 29 C.F.R. § 2520.102-2(a). Nevertheless, this argument is another example of defendants raising questions of fact at the pleading stage. C. Count II Adequately Alleges Breaches of the Duty to Monitor By The Management Council and Players Association “Because the appropriate ERISA mandated monitoring procedures vary according to the nature of the plan at issue and other facts and circumstances, an analysis of the precise contours of the defendants' duty to monitor at this stage is premature.” In re M&T Bank Corp. ERISA Litig., 2018 WL 4334807, at *11 (W.D.N.Y. Sept. 11, 2018); Vellali, 308 F. Supp. 3d at 692 (same); In re Xerox Corp. ERISA Litig., 483 F. Supp. 2d 206, 215 (D. Conn. 2007) (same). Courts in this Circuit have found that “[a]llegations of inadequate performance by appointee fiduciaries support a claim of breach of the duty to monitor.” In re Fannie Mae 2008 ERISA Litig., 2012 WL 5198463, at *7 (S.D.N.Y. Oct. 22, 2012) (emphasis added); In re Am. Int’l Group, Inc. ERISA Litig. II, 2011 WL 1226459, at *10 (S.D.N.Y. Mar. 31, 2011) (same); Veera v. Ambac Plan Admin. Comm., 769 F. Supp. 2d 223, 231 (S.D.N.Y. 2011) (finding allegations that “potential breaches [by the appointed fiduciaries] were otherwise going unaddressed” suffices “to state a claim against fiduciaries for violation of the duty to monitor.”); In re Morgan Stanley ERISA Litig., 696 F. Supp. 2d 345, 366 (S.D.N.Y. 2009) (finding allegations that “the Monitoring 33 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 42 of 44 Defendants did nothing” was sufficient to state a claim because it “suggest[s] that no system was in place to review and evaluate the performance of their appointees or that potential breaches were otherwise going unaddressed”); see In re M&T Bank Corp. ERISA Litig., 2018 WL 4334807, at *11 (denying motion to dismiss monitoring claim). In a case involving a multi-employer plan, the union was found liable for failing to monitor and remove its appointee for the breaches of his fiduciary duties to the plans because the union “had no system to monitor its trustees; [and] the record shows that it did not monitor its trustees in any way. Int’l Bhd. of Elec. Workers, 2008 WL 918481, at *8. Count II alleges six specific items of information about which Council and the Association knew or had they conducted a proper review on reasonable and regular intervals should have known. AC ¶ 77. These allegations are specific to this Plan and the issues raised by the Amended Complaint, and the Amended Complaint also alleges what the Management Council and the Players Association should have done if they were properly monitoring the Board Defendants. AC ¶ 78. An appointing fiduciary’s duty to monitor the actions of appointed trustees may impose a duty to prevent wrongful conduct. Martin, 965 F.2d at 669–70 (citing Leigh, 727 F.2d at 133– 135; 29 C.F.R. § 2509.75–8.). As another court in this District explained in the context of analyzing the liability of an appointing fiduciary in union plan: “The question is thus whether the limited power to appoint and remove trustees renders [the appointing fiduciary] liable for the breaches those trustees committed. The answer is yes.” Liss, 991 F. Supp. at 311. 9 Thus, Count II properly alleges a breach of the duty to monitor which is all that is required at the pleading stage. Monitoring fiduciaries also have liability under ERISA § 405(a)(2) and (3) if allow their appointees to commit a breach or if they know of and fail to remedy a breach. See id.; see also Chesemore v. Alliance Holdings, Inc., 886 F. Supp. 2d 1007, 1057 (W.D. Wis. 2012) (finding entity with monitoring responsibility liable after trial as a co-fiduciary for its appointee’s breach under both ERISA § 405(a)(2) and (3)), aff'd, 829 F.3d 803 (7th Cir. 2016). 9 34 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 43 of 44 Finally, to the extent that defendants argue that there can be no breach of the duty to monitor if the claim against the Board Defendants is dismissed, (Players Association Br. at 8), such argument is not accurate. There can still be an underlying breach by the Board Defendants even if the claim may not proceed because of a procedural reason (such as the expiry of the statute of limitations). A determination that claims are time-barred does not mean that there was no underlying breach of fiduciary duty. See Reinke v. Boden, 45 F.3d 166, 169 & n.11 (7th Cir. 1995) (explaining that dismissal based on statute of limitations merely determines the “suits of that vintage to be stale” but is not a decision on the merits of the suit). For example, in Barker v. Am. Mobil Power Co., 6 F.3d 1397 (9th Cir. 1995), the Ninth Circuit concluded that breach of fiduciary duty claims against trustees for mismanaging plan assets were barred by the statute of limitations. Barker, 64 F.3d at 1402. Nonetheless, the Ninth Circuit concluded that their co-fiduciary, who served on the Administrative Committee that appointed the Trustees, was still liable for failing to “investigate[] his suspicions and notify[] the participants of his concerns about the Plan's mismanagement.” Id. at 1404. Applying that same analysis here, Count II against the Players Association and Management Council will survive even if Count I is time barred by virtue of the ongoing character of their breach of the duty to monitor. 35 Case 1:18-cv-04483-GHW-RWL Document 120 Filed 01/23/20 Page 44 of 44 CONCLUSION For the foregoing reasons, Defendants’ motions to dismiss should be denied in their entirety. Dated: January 23, 2020 Respectfully submitted, _/s/ Robert I. Harwood________________ Robert I. Harwood Daniella Quitt Glancy Prongay & Murray LLP 712 Fifth Avenue, 31st Floor New York, NY 10019 Tel: (212) 935-7400 Email: rharwood@glancylaw.com Email: dquitt@glancylaw.com R. Joseph Barton (admitted pro hac vice) Colin M. Downes Block & Leviton LLP 1735 20th Street NW Washington, DC 20009 Tel: (202) 734-7046 Email: jbarton@blockesq.com Email: colin@blockesq.com Robert A. Donati (admitted pro hac vice) William Benjamin Ryan (admitted pro hac vice) Donati Law, PLLC 1545 Union Avenue Memphis, TN 38104 Tel: (901) 278-1004 Email: robert@donatilaw.com Email: billy@donatilaw.com Counsel for Plaintiff 36