Employee Benefits • Standing • Summary Judgment • ERISA

Perelman v. Perelman, PICS Case No.14-0132 (E.D. Pa. Feb. 18, 2014) Padova, J. (25 pages).

Where plaintiff moved for leave to supplement his second amended complaint and granted summary judgment in favor of defendants on plaintiff’s remaining claims for equitable relief. Denied.

Plaintiff was a participant in the General Refractories Co. pension plan for salaried employees. He filed this action against the company and two individuals to seek monetary and equitable relief. Plaintiff sought to remove the plan fiduciaries, appoint an independent trustee, have the individual defendants disgorge improper profits and restore them to the plan, and have the indemnification provisions of the plan declared void as against public policy.

The court denied plaintiff’s motion to supplement because the court had already decided that issue and plaintiff had not demonstrated the existence of any extraordinary circumstances that justified reopening the matter. Furthermore, plaintiff had not alleged the plan would suffer a diminution in the value of plan assets, reduction in the benefits plaintiff would receive from the plan, or any risk the plan would default on its future obligations as the result of the plan’s alleged improper investments. Because plaintiff did not allege individual harm, he had no standing to bring these claims involving the plan. Only the plan or the plan sponsor had standing to raise the types of claims referenced in plaintiff’s complaint.

The court also considered defendants’ motion for summary judgment on plaintiff’s two remaining claims for equitable relief. Defendants asserted the company and its shareholders did not have control over management of the pension plan assets and payment of benefits to participants and beneficiaries. Defendants noted that the market value of the plan assets available to pay benefits exceeded the plan’s liabilities when calculated using the procedure required under the Internal Revenue Code, known as the MAP-21 rates.

In response to defendant’s summary judgment motion, plaintiff submitted the report of an expert claiming the plan was underfunded. However, that expert conceded that if the plan sponsor made an election under the IRC to use MAP-21, then the MAP-21 formula was mandatory for determining whether the plan was adequately funded. The court held defendants were entitled to summary judgment on plaintiff’s audit claim, because there was no genuine dispute that federal law permitted plan sponsors to use MAP-21 rates to determine how much sponsors were required to contribute to a plan and whether the plan was adequately funded. Because the plan was properly funded according to MAP-21 calculations, plaintiff was not entitled to audit relief.

The court also granted defendants’ motion for summary judgment on plaintiff’s equitable claim for an order declaring the indemnity provision of the plan’s prior trust agreement to be void as against public policy. Because plaintiff was not entitled to receive monetary forms of equitable relief, the indemnification clause could never have been used by defendants to recoup any monetary recovery by plaintiff. Additionally, only the plan itself had the right to assert the indemnification clause was void as against public policy, not plaintiff individually.