Jetdirect AviationDirect Aviation
The SOVEREIGN BANK's request for rejection .
The McCormack Firm, LLC, Boston, MA, für JetDirect Aviation, Inc. JetDirect Aviation, LLC, JetDirect Aviation Holdings, LLC, Gregory S. Campbell und John Doe Vorstandsmitglieder. Mr Laura G. Ryan, The McCormack Firm LLC, Boston, MA, für JetDirect Aviation Holdings, LLC. LLP, Boston, MA for Robert P. Pinkas and Wayfarer Aviation, Inc.
Applicants cited in this lawsuit are present and former JetDirect Aviation (JDA) personnel, an airline operating corporation. Claimants filed this lawsuit singly and as nominee classmates under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et sqq. Claimants claim that the respondents unlawfully detained the pension fund assets and deducted them from their salary checks to fulfill JDA's liabilities to their debtors.
In an oral proceeding on September 29, 2009, the Tribunal partially and partially dismissed the defendants' requests for dismissal, so that Count I (violation of ERISA's duty of loyalty), Count II (violation by ERISA co-trustees) and Count III (ERISA prohibition transactions) were able to live, rejecting the corporate public policy rights mentioned in Counts IV and V (as anticipated by ERISA).
The defendants  then lodged a third appeal against the succession of JDA, Wayfarer Aviation, Inc. Wayfarer (f/k/a JDA Acquisition Company (JDAAC)) and one of the JDA's holders, Sovereign Bank (Sovereign), alleging violations of trust obligations (Count I), contributions (Count II) and compensation (Count III). P. 12(b)(6) Request for dismissal of the third parties' actions on 20 January 2010.
JDA's 2008 schedule began to disentangle when consumer interest in privately owned charters began to collapse. Sovereign announced on 3 March 2009 that JDA was in arrears and began the seizure of JDA's property, which included money held in JDA's general accounts with Sovereign. Without the sovereign's knowledge, JDA had aggregated employees' benefits payments, as well as employees' 401 (k) pension payments, in the income statement.
Sovereign divested the remainder of JDA's tangible asset portfolio to JDAAC on March 19, 2009. In addition, Bertella claims that the respondent Gregory S. Campbell, the President, Chairman and Chief Executive Officer of JDA, was "the individual who [d] exercises discretion or discretion with regard to the administration of the 401k Plan or the individual who [d] exercises authority or control with regard to the administration or disposal of its property.
Tona also explained that'the senior managers are conscious of the company's commitments under the scheme. The following week Tona sent a second e-mail to the staff confirming "delays in financing the 401(k) February  plan" and recognising the delay in financing other services. Tona explained in additional to the scheme that the staff's flexibility expense account was affected by the JDA's pecuniary problems:
An appeal must be rejected by the Tribunal if, after having accepted all well-founded facts and on the basis of all rational conclusions in favour of a claimant, it finds that the appeal'does not allege 'a right to which an appeal may be made'. To reject a request for rejection, a grievance must contain "sufficient facts to give rise to a valid presumption that the finding will uncover evidence" in support of the alleged allegations.
The JDA claims that Sovereign has violated its obligation as an ERISA trustee under 29 U.S.C. § 1109(a), which states: An individual who is a Trustee in relation to a scheme that violates any of the liabilities, commitments or obliga-tions assigned to such Trustees by this sub-chapter shall be individually responsible for compensating all loss arising out of such violation and returning to such scheme all gains made by the Trustee's use of any of the Plan's property.
Any trustee may also be dismissed for infringement of Section 1111 of this title. Can an ERISA trustee hold a banking institution accountable if it confiscates money from an arrears holding accounts of a defaulting borrower into which pension assets have been interfered? ERISA allows trustees to be divided into one of two categories:
Designated trustees are "defined as those who are included in the planning documentation as trustees or those who are otherwise designated as trustees in accordance with a scheduled process. ERISA's legal terminology is as follows to define a trustee: an individual is a trustee in relation to a scheme to the extent that ( i) he/she exercise any discretion or discretion in relation to the administering of such scheme or exercise any agency or oversight in relation to the administering or disposal of his/her estate, (ii) he/she provides or has any power or oversight in relation to, or has any discretion or discretion in relation to, the administering of any such scheme, or ( iii) he/she provides financial advisory services in exchange for a charge or other form of remuneration, directly or indirectly, in relation to funds or other properties of such scheme, or (iv) he/she has any discretion or oversight in relation to the administering of any such scheme.
"It is the main determining factor for the qualification of a trustee as a functioning trustee whether that trustee is exercising margin of discretion over an ERISA scheme, its management or its property (e.g. through advisory services). "Since ERISA's trustee responsibilities are directly and exclusively based on the ownership or use of discretion ary powers, the trustee's responsibilities do not arise in general language in certain steps related to the delegation or use of certain trustee duties in the course of the operation of the Plan.
The First Circuit has explained that "discretion is an indispensable prerequisite for trustership. There is no doubt that Sovereign is not a trustee of plans. The JDA arguments the alternate theory that Sovereign became a functioning trustee when he took custody of the mixed fund plans in JDA's general corporate accounts.
ERISA's Board of Curators filed a lawsuit against the company for alleged violation of ERISA's duty of loyalty. O'Toole Court found that "[w]e cannot establish that the institution is a trustee within the sense of the law. Souverän states that, apart from the fact that they, too, had no discretion with regard to the plan, the bank's activities in O'Toole were "far less defensible".
" Unlike Sovereign, who had no idea that he held mixed money, the O'Toole branch of the Sovereign branch settled'deposit balances which appeared to be in the name of the performance schemes and not in the name of the company's debtors'. The ERISA statutes do not provide for an explicit right of participation or compensation.
There is, however, a division between the courts of appeal and even the magistrates of that county as to whether there is a federally enacted public right to ERISA funding and compensation. In the positive side, Judge Neiman (in a Ponsor adopted report) found a tacit Fed. commons legal right to contributions and compensation under ERISA "based on the principle of the Trusteeship Act and the encouragement of rigorous trustee nursing standards".
He took this as a clear direction to the judiciary to abstain from making inventive efforts to draft the ERISA National Codes, which the Congress for some apparent reasons did not uphold. Without a nationwide uniform ERISA fee and compensation right, the JDA entitlements in Graf II and III can only exist as state company measures.
12 ] However, as Souverän argued, these are anticipated by ERISA. Paragraph 514(a) of ERISA, 29 U.S.C. 1144(a), prevents all government entitlements that "relate to" a pension scheme. An Act "refers" to a scheme included in ERISA when (1) it is associated with such a scheme or (2) it refers to such a scheme.
ERISA's supremacy is not limitless, it is far-reaching. The Supreme Court, in defining the range of the ERISA pre-emption, warned against a verbatim interpretation of the "reference standard" of ERISA 514(a) and decided that the tribunals "must instead look to the aims of the ERISA Charter as a guideline for the extent of constitutional justice that Congress has grasped and would outlive.
ERISA's aims are to ensure "unified management of ERISA schemes at Member State level" and to avoid the inconsistency of government regulations governing such schemes. 1 ) those who delegate performance structure or management; 2) those who commit planning managers to a particular election; and 3) pleas that offer alternate means of enforcing ERISA's own system of enforcing.
The Congress drew with a wide paintbrush when it added an explicit pre-emptive condition to the ERISA-screen. It is strongly expected that public rights interfering with ERISA's civilian law enforcement system will be anticipated. Also see Carlo v. Reed Rolled Thread Die Co., 49 F.3d 790, 794 (1st Cir. 1995) (Negligent false representation in connection with ERISA cover is excluded, Pace v. Reed Rolled Thread, Signal Tech.
469, 472, 664 N.E.2d 5 (1996) (unlawful right of dismissal due to retaliatory measures for the performance of a plaintiff's trust obligations under ERISA is excluded); Kelly v. Fort Dearborn Life Ins. Co., 422 Mass. 15, 17, 660 N.E.2d 1100 (1996) (Misrepresentations by insurance companies or planning administrations about the extent of ERISA land cover are almost consistently preferred with reference to national cases).
First Circuit has previously outlined the reasons for ERISA prevention: 502 (a) contains a broad system of judicial assertion that carefully weighs the need for fast and equitable claim adjustment proceedings against the general interest in promoting the creation of pension schemes.
Political decisions, mirrored in the incorporation of certain appeals and the expulsion of others under the federated system, would be totally eroded if the ERISA Plan members and recipients were free to obtain appeals under national laws that the Congress in ERISA was against. In line with this review, other courts have determined that ERISA represents the supremacy of state contributory and compensatory damages under current legislation.
Travelers, 497 F.3d at 868 ("To recognise a state law cause of action that supplements the federal scheme[where case arise from breaches of duties by a treuary in a ERISA-regulated plan] would constitute an impediment to the purpose and aims of the Congress, and the State's public service rights [to contributions and compensation] are therefore excluded.
" Atrix Int'l, Inc. v. Hartford Life Group Ins. Co., 2008 WL 151614, at *5 (D.Minn. Jan. 15, 2008) (government contributions and compensation excluded); Hopper v. Standard Ins. Co.., WL 433369, at *2 (D. N.H. Feb. 7, 2007) (equal); Westchester Teamsters Local 456 v. Fleet Nat'l Bank, 2006 WL 2385261, at *10 (S. D.N.Y. Aug. 18, 2006) (state compensation excluded).
Whilst the JDA does not deny this precedent, the JDA has argued that if Sovereign is not an ERISA trustee, any prosecution of contributions or indemnities must necessarily be without connection to the JDA's ERISA Plan and is therefore not prevented. In Aubuchon, the Tribunal considered when ERISA would prevent pleas against third-party trustees ("who are not normally trustees within the ERISA meaning").
1.'Claims by entrants or recipients claiming compensation for non-performance were anticipated'; and 2.'c]laims on account of schemes. against third parties for violation of contracts or misconduct on the part of the profession in general.
In fact, however, Aubuchon was confined to an infringement suit, which was allowed to continue under the long-standing rule that ERISA's schemes were not constrained by the Service Contracts Act. Here it is not possible to conceive how counts II and III could not "refer" to an ERISA scheme if the whole JDA complaint was based on a reaction to a threat of collective redress on the part of the members of the scheme.
In addition, the aim is to facilitate the disbursement of the confiscated planning resources "owed to the plans" by the sovereign. Since such an appeal cannot be provided by the Tribunal without referring to the scheme, ERISA Section 514 counts II and III are prematurely terminated. Refer me Carlo, 49 F.3d bei 794 ("[B]epuisque l'enquête du tribunal doit porter sur le régime, " les réclamations[des demandeurs] sont écartées en vertu du premier critère décrit dans Ingersoll-Rand, 498 U.S. at 140, 111 S. Ct. 478. ").
The JDA also argues that its public service rights should not be excluded if its complaint under ERISA is overturned. The Sovereign is right that he is not a trustee as he cannot successfully isolate himself from public service contributions and compensation based on pre-emption.
The sovereign's arguments would prevent it from under any circumstance repaying monies to beneficiaries, whether under ERISA or through State contributions and compensation entitlements. But even if one argues that JDA has asserted all possible rights, the case on which JDA is based leads to a contrary inference to that which JDA suggests to the tribunal.
"The ERISA reservation may also be applied where the outcome results in a loophole in the implementation regime. Wilmington Shipping Co. v. New England Life Ins. Co., 496 F.3d 326, 341 (4 Cir. 2007) ("The preventive extent of ERISA is not reduced merely because a find of pre-emption left a void in the reliefs available to a claimant.
2004 ) ("It is correct that our view does not address the inconvenient opportunity that claimants may not have the authority to file ERISA claims but may then be barred from filing a government complaint and from seeking redress in the District Tribunal under Section 514. "Spain v. Aetna Life Ins. Co., 11 F.3d 129, 132 (9 Cir. 1993) ("Although we do not disregard that our reading of the pre-emptive provision creates a loophole in the legal redress within a law protecting plan members, the absence of an ERISA legal redress does not influence a pre-emptive review.
162 F.3d 28, 38-39 (Cir. 1, 1998) (claims under constitutional provisions in connection with the pension scheme which were asserted prematurely despite rejection of the ERISA claim). Eventually, even if the counts II and III are not anticipated, Sovereign convincingly arguments that the firing of count I is crucial. According to Massachusetts laws, the entry is only available if two or more individuals become criminally responsible.
"Participation rights are derived and not new pleas. There is no right to cooperate without responsibility from unlawful acts... ... Since the JDA theorem is based on the fruitless violation of the trust obligation requirements, there is no illicit act here and thus no right of codetermination. "Compensation, on the other water, allows someone who is not at his own fault and who is legally obliged to protect himself against the unlawful act of another to obtain the full amount of the losses, plus appropriate legal costs, from the offender.
Here, too, it is true that Count III also collapses for this ground, because JDA does not assert any "unlawful act" of the sovereign, apart from his collapsed violation of the trust deed. According to ERISA's implementation provisions, an employer is permitted to pay employees' contribution into a retirement scheme until the "15th workingday of the month following the month", the date of a pay cheque deduction.
Matt Thurber, JDAAC is planning payments to current, former employees, Aviation International News, 2 April 2009 (Sec. Am. Compl.-Ex. D). Refer to Vest v. Gleason & Fritzshall, 832 F. Supp. 1216, 1217 n. 4 (N.D.Ill. 1993) (O'Toole as "an outrageous example" of the weak attitude of court towards banking when acting as depositary under ERISA).
P. 10 (b), a third party's complaint also states that "the Sovereign has conducted illicit operations in breach of ERISA. Insofar as third-party claimants also assert a clear right of actions for "prohibited transactions" according to 29 U.S.C. 1106, such an action will fail because in the present situation it would only apply to ERISA trustees.
12 ] Although not claimed in the third complaint, Massachusetts has legal claims for contributions and damages. In other words, a state suit is anticipated when a claimant, in order to enforce, must invoke it and the tribunal must determine that an ERISA scheme is in place or, if there is no explicit priority, that the filing of the suit directly interferes with an ERISA suit.