# Raya v. Barka

> District Court, S.D. California · January 3, 2023

URL: https://www.frixlaw.com/law-library/cases/10086945

## Case

- **Court:** District Court, S.D. California
- **Decided:** January 3, 2023
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10086945

## How later opinions describe it (automated extraction)

- stating that relief for retaliatory discharge may include reinstatement
- recognizing that plan beneficiaries 14 can sue on behalf of plans if they satisfy the Article III injury requirement by having “a 15 concrete stake in the outcome of the proceedings”
- explaining that 25 plaintiffs may present “alternative—rather than duplicative—theories of liability” and that 26 a claim under the catchall provision “can proceed simultaneously if [it] plead[s] distinct 27 remedies”

## Opinion text

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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
10
11 ROBERT RAYA, Case No.: 19-cv-2295-WQH-AHG

12 Plaintiff,
ORDER
13 v.
14 DAVID BARKA; NOORI BARKA;
EVELYN BARKA; CALBIOTECH,
15
INC.; CALBIOTECH, INC. 401(k)
16 PROFIT SHARING PLAN;
CALBIOTECH, INC. PENSION PLAN,
17
Defendants.
18

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DAVID BARKA; NOORI BARKA;
20
EVELYN BARKA; CALBIOTECH,
21 INC.; CALBIOTECH, INC. 401(k)
PROFIT SHARING PLAN;
22
CALBIOTECH, INC. PENSION PLAN,
23
Counter Claimants,
24
v.
25
ROBERT RAYA,
26
Counter Defendant.
27

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1 HAYES, Judge:
2 The matter before the Court is the Motion for Summary Judgment filed by
3 Defendants/Counter Claimants David Barka, Noori Barka, Evelyn Barka, Calbiotech, Inc.
4 (“Calbiotech”), Calbiotech, Inc. 401(k) Profit Sharing Plan (the “401(k) Plan”), and
5 Calbiotech, Inc. Pension Plan (the “Pension Plan”). (ECF No. 118.)
6 I. BACKGROUND
7 On December 2, 2019, Plaintiff Robert Raya, proceeding pro se, filed a Complaint
8 against Defendants. (ECF No. 1.) On December 9, 2020, Plaintiff filed a First Amended
9 Complaint (“FAC”). (ECF No. 39.) The FAC alleged that Defendants engaged in illegal
10 conduct relating to the administration of the Pension Plan and 401(k) Plan and unlawfully
11 terminated Plaintiff in retaliation for his requests for plan documents. The FAC brought
12 four claims on behalf of Plaintiff and on behalf of the retirement plans under the Employee
13 Retirement Income Security Act of 1974 (“ERISA”), as well as claims under California
14 state law.
15 On December 22, 2020, Defendants filed a Motion to Dismiss the FAC. (ECF No.
16 40.) On June 3, 2021, the Court issued an Order dismissing several claims in the FAC and
17 striking the request for a jury trial. (ECF No. 45.)
18 On June 17, 2021, Defendants filed an Answer to the FAC and a counterclaim for
19 breach of contract. (ECF No. 46.) The counterclaim alleges that Plaintiff/Counter
20 Defendant (hereinafter, “Plaintiff”) breached the terms of a separation agreement by filing
21 complaints with the United States Department of Labor, this lawsuit against
22 Defendants/Counter Claimants (hereinafter, “Defendants”), and a related lawsuit against
23 Calbiotech. On July 8, 2021, Plaintiff filed an Answer to the counterclaim. (ECF No. 50.)
24 On September 8, 2021, Plaintiff filed the operative Second Amended Complaint
25 (“SAC”), alleging four ERISA claims. (ECF No. 64.) The first claim alleges that
26 Calbiotech, the Pension Plan, the 401(k) Plan, and the plan administrators violated 29
27 U.S.C. § 1132(a)(1)(B) by not enrolling Plaintiff in the Pension Plan and by failing to make
28 “[a]utomatic or mandatory employer contributions described in 401(k) Plan documents.”
1 Id. ¶ 67. The second claim alleges that the fiduciaries of the retirement plans—Defendants
2 Calbiotech, David Barka, Noori Barka, and Evelyn Barka—violated 29 U.S.C. §§ 1109(a)
3 and 1132(a)(2) by failing to lawfully discharge their duties as fiduciaries when they (1)
4 “intentionally withheld plan documents for both retirement plans from participants
5 resulting in missed contributions and losses for both plans”; (2) “failed to disclose the
6 existence of the [ ] Pension Plan ... resulting in a failure to enroll eligible employees and
7 missed contributions to the Pension Plan”; (3) “introduced an invalid, backdated, and
8 fraudulent document,” which described the “illegal” and “discriminatory” 2008
9 Amendment to the Pension Plan; (4) “misled participants regarding Calbiotech[’s] [ ]
10 mandatory contributions under the [401(k) Plan] ... resulting in missed employer
11 contributions and losses to the plan”; and (5) “failed to remit employee payroll deductions
12 to 401(k) accounts.” Id. ¶ 73. The third claim alleges that the same course of conduct by
13 plan fiduciaries harmed Plaintiff in violation of 29 U.S.C. §§ 1109(a) and 1132(a)(3). The
14 fourth claim alleges that David Barka, Noori Barka, and Calbiotech violated 29 U.S.C. §§
15 1140 and 1132(a)(3) by terminating Plaintiff “in retaliation [for] [Plaintiff] exercising his
16 rights under ERISA to request [p]lan [d]ocuments.” Id. ¶ 82. The SAC requests the
17 recovery of benefits under the retirement plans, “the removal of Defendants as fiduciaries
18 and trustees” of the retirement plans, the “appointment of an independent actuary to
19 accurately quantitate total losses suffered,” and other relief. Id. ¶ 86.
20 From August 23, 2021, to February 25, 2022, the parties filed eight motions. Plaintiff
21 filed four Motions for Partial Summary Judgment. (ECF Nos. 60, 79, 92, 102.) Defendants
22 filed a Motion to Dismiss (ECF No. 77), a Motion for Partial Judgment or Alternatively
23 Summary Adjudication (ECF No. 83), a Cross-Motion for Legal Findings and Conclusions
24 (ECF No. 97), and a Cross-Motion for Partial Summary Judgment (ECF No. 106). On
25 March 28, 2022, the Court issued an Order adjudicating all pending motions. (ECF No.
26 114.) The Order granted Defendants summary judgment on “(1) the first claim in the SAC;
27 (2) the second and third claims in the SAC to the extent those claims assert ERISA
28 violations relating to the Pension Plan; and [(3)] the second and third claims in the SAC to
1 the extent those claims seek payment of benefits under the 401(k) Plan to Plaintiff.” Id. at
2 36. The Order further dismissed the fourth claim in the SAC for ERISA interference
3 brought against Defendant Noori Barka. The following claims remain to be adjudicated in
4 this action: (1) Plaintiff’s second and third claims against Defendants Calbiotech, David
5 Barka, Noori Barka, and Evelyn Barka for breach of fiduciary duty in the administration
6 of the 401(k) Plan, to the extent those claims seek equitable relief and not payment of
7 benefits; (2) Plaintiff’s fourth claim for ERISA retaliatory discharge against Defendants
8 David Barka and Calbiotech; and (3) Defendants’ counterclaim for breach of the separation
9 agreement.
10 On May 31, 2022, Defendants filed the Motion for Summary Judgment. (ECF No.
11 118.) On June 27, 2022, Plaintiff filed a Response in opposition to the motion. (ECF No.
12 122.) On July 1, 2022, Defendants filed a Reply. (ECF No. 125.)
13 II. FACTS
14 Plaintiff became a participant in the 401(k) Plan on September 1, 2009, the first day
15 of the plan year. On the day Plaintiff became a participant in the 401(k) Plan, the 401(k)
16 Plan was governed by an Adoption Agreement and Basic Plan Document made effective
17 as of the beginning of the prior plan year, on September 1, 2008. The 2008 Adoption
18 Agreement provides that “[t]he Company’s Matching Contribution shall be allocated to
19 eligible Participants who have met the [age and service] requirements … as follows …: An
20 amount and allocation formula as determined by the Board.” (ECF No. 118-7 at 3.) The
21 2008 Basic Plan Document further provides that “[m]atching contributions shall be made
22 to the Plan and promptly allocated to the Matching Contribution Accounts of Participants
23 … and in the amount [specified in the Adoption Agreement].” (ECF No. 118-8 at 2.)
24 A restated Adoption Agreement and Basic Plan Document were made effective as
25 of September 1, 2011. The 2011 Adoption Agreement and Basic Plan Document contain
26 the same language quoted above as the 2008 documents. (See ECF Nos. 118-9 at 3, 118-
27 10 at 2.)
28
1 On October 19, 2012, Plaintiff took out an $8,000 loan from his 401(k) account,
2 which contained both employee and employer contributions. An amount of $85.36 was
3 deducted from each of Plaintiff’s subsequent paychecks to repay the 401(k) loan. Charts
4 provided to Plaintiff by Principal Financial reflect that each time a “Member Loan
5 Payment” was made, an amount of $14.86 was listed in the “Elective Deferral” column
6 and an amount of $70.50 was listed in the “Employer Discretionary” column. (ECF Nos.
7 118-18, 118-19.) An additional chart presented by Defendants and produced by Plaintiff in
8 discovery shows the outstanding balance of Plaintiff’s loan decreasing by $85.36—the
9 amount deducted from each of Plaintiff’s paychecks—each pay period. (See ECF No. 118-
10 5.)
11 Plaintiff received notice that he was terminated from his position at Calbiotech on
12 November 29, 2016. On December 13, 2016, Plaintiff requested plan documents. On
13 December 14, 2016, the third-party administrator of the 401(k) Plan provided Plaintiff with
14 a Summary Plan Description (“SPD”) that states that it “describes the [401(k)] Plan as
15 restated effective January 1, 2015.” (ECF No. 118-15 at 9.)
16 On September 1, 2016, the Board of Calbiotech issued a resolution authorizing the
17 adoption of a restatement of the 401(k) Plan for 2016, which states that “the Corporation
18 has maintained the [401(k) Plan)] since 9-1-2011.” (ECF No. 122-13 at 2.) A restated
19 Adoption Agreement and Basic Plan Document were adopted on April 3, 2017, effective
20 as of September 1, 2016. The 2016 Adoption Agreement states that the 401(k) Plan was
21 intended to be a Safe Harbor 401(k) plan with an enhanced match of “100% of salary
22 deferrals up to 4% of Plan Compensation.” (ECF No. 118-13 at 9.) The 2016 Basic Plan
23 Document provides:
24 The Employer may elect [in the Adoption Agreement] to apply the Safe
Harbor 401(k) Plan provisions under this Section [ ]. For this purpose, the
25
Plan satisfies the requirements of this Section [ ] if the Plan is a Safe Harbor
26 401(k) Plan, as described in subsection (a) …. If the Plan qualifies as a Safe
Harbor 401(k) Plan, the ADP Test … [and] ACP Test [are] deemed satisfied
27
[subject to additional conditions]. To qualify as a Safe Harbor 401(k) Plan,
28 the requirements under this Section [ ] must be satisfied for the entire Plan
1 Year …. [I]t is impermissible to use the ADP and ACP Test for a Plan Year
in which the Plan is intended to be a Safe Harbor 401(k) Plan and the
2
requirements of this Section [ ] are not satisfied for the entire Plan Year.
3
(ECF No. 118-14 at 3.) Subsection (a) further provides that to “qualify as a Safe Harbor
4
401(k) Plan, the Plan must provide a Safe Harbor Contribution” and must satisfy various
5
requirements, including the provision of advance notice to participants. Id. at 3-4.
6
On November 28, 2018, Plaintiff received an email from a representative of
7
Calbiotech that stated that the 2011 plan documents were “in effect from September 1,
8
2011 through August 31, 2016.” (ECF No. 122-11 at 2.) On February 5, 2019, Defendants
9
produced the Administrative Record to Plaintiff in connection with his administrative
10
claim. The Administrative Record produced to Plaintiff on that date did not include the
11
SPD previously provided to Plaintiff on December 14, 2016, or other plan documents
12
documenting a 2015 restatement of the 401(k) Plan. Defendants later produced to Plaintiff
13
additional plan documents concerning the purported 2015 restatement, including an
14
Adoption Agreement that states that it was adopted on April 26, 2016, and effective as of
15
January 1, 2015. The 2015 Adoption Agreement further provides that “[t]he date specified
16
[as the effective date] for an amended and restated plan … may not be earlier than the first
17
day of the Plan Year during which the amended and restated Plan is adopted by the Plan
18
Sponsor.” (ECF No. 125-6 at 5.)
19
On March 19, 2019, the Department of Labor opened an investigation of the 401(k)
20
Plan. On July 30, 2020, the Department of Labor sent Defendants a letter stating that the
21
Department found “that from January 2015 through December 2019, [Defendants] failed
22
to timely remit $27,729.47 in employee contributions and loan payments and failed to remit
23
$1,182.67 in loan payments withheld from participants’ paychecks to the Plan” in violation
24
of ERISA. (ECF No. 122-4 at 3.) The letter further states that the Department of Labor
25
found “that, from September 2016 through December 2019, [Defendants] failed to make
26
mandatory safe harbor employer contributions to the accounts of each eligible participant”
27
in violation of ERISA. Id. On December 9, 2020, Defendants responded to the letter,
28
1 disputing their liability. On May 11, 2021, the Department of Labor replied, stating that
2 “we believe our original position is correct,” but that “[d]espite your refusal to undertake
3 the full corrective action we deem necessary, we have decided that legal action by the
4 Department will not be commenced at this time.” (ECF No. 122-6 at 2.)
5 III. LEGAL STANDARD
6 “A party may move for summary judgment, identifying each claim or defense—or
7 the part of each claim or defense—on which summary judgment is sought. The court shall
8 grant summary judgment if the movant shows that there is no genuine dispute as to any
9 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
10 56(a). A material fact is one that is relevant to an element of a claim or defense and whose
11 existence might affect the outcome of the suit. See Matsushita Elec. Indus. Co. v. Zenith
12 Radio Corp., 475 U.S. 574, 586-87 (1986). The materiality of a fact is determined by the
13 substantive law governing the claim or defense. See Anderson v. Liberty Lobby, Inc., 477
14 U.S. 242, 248 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986).
15 The moving party has the initial burden of demonstrating that summary judgment is
16 proper. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 153 (1970). Where the party moving
17 for summary judgment bears the burden of proof at trial, the moving party “must come
18 forward with evidence which would entitle it to a directed verdict if the evidence went
19 uncontroverted at trial.” Houghton v. South, 965 F.2d 1532, 1536 (9th Cir. 1992) (citation
20 omitted). Where the party moving for summary judgment does not bear the burden of proof
21 at trial, “the burden on the moving party may be discharged by ‘showing’—that is, pointing
22 out to the district court—that there is an absence of evidence to support the nonmoving
23 party’s case.” Celotex, 477 U.S. at 325; see also United Steelworkers v. Phelps Dodge
24 Corp., 865 F.2d 1539, 1542-43 (9th Cir. 1989) (“[O]n an issue where the plaintiff has the
25 burden of proof, the defendant may move for summary judgment by pointing to the absence
26 of facts to support the plaintiff’s claim. The defendant is not required to produce evidence
27 showing the absence of a genuine issue of material fact with respect to an issue where the
28 plaintiff has the burden of proof. Nor does Rule 56(c) require that the moving party support
1 its motion with affidavits or other similar materials negating the nonmoving party’s claim.”
2 (citations omitted)).
3 If the moving party meets the initial burden, the burden shifts to the opposing party
4 to show that summary judgment is not appropriate. Anderson, 477 U.S. at 256; Celotex,
5 477 U.S. at 322, 324. The nonmoving party must “go beyond the pleadings and by her own
6 affidavits, or by the depositions, answers to interrogatories, and admissions on file,
7 designate specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S.
8 at 324. The nonmoving party cannot defeat summary judgment by demonstrating “that
9 there is some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586; see
10 Anderson, 477 U.S. at 252 (“The mere existence of a scintilla of evidence in support of the
11 [nonmoving party’s] position will be insufficient.”). The pleadings of pro se plaintiffs are
12 construed liberally. See Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir.
13 1988).
14 IV. BREACH OF FIDUCIARY DUTY CLAIMS
15 Defendants contend that they are entitled to summary judgment on the second and
16 third claims in the SAC for breach of fiduciary duty pursuant to 29 U.S.C. §§ 1132(a)(2)
17 and (a)(3) because “the evidence proves no breach of fiduciary duty occurred.” (ECF No.
18 118-1 at 18.) Defendants contend that there was no breach caused by “‘missed
19 contributions’ to the 401(k) Plan as alleged by Plaintiff” because Calbiotech “was under
20 no obligation to make any contribution.” Id. at 21. Defendants contend that there was no
21 breach caused by a failure to remit payroll deductions because “the monies deducted from
22 Plaintiff’s paychecks … were in fact remitted … in their entirety.” Id. Defendants contend
23 that Plaintiff lacks standing to bring claims against Defendants for breach of fiduciary duty.
24 Defendants contend that Plaintiff may not seek the same relief under his second and third
25 claims.
26 Plaintiff contends that the following evidence demonstrates that Defendants
27 breached their fiduciary duties to the 401(k) Plan: (1) Defendants’ failure to make matching
28 contributions to the 401(k) Plan, as required by the 2008 and 2011 plan documents; (2)
1 Defendants’ failure to remit loan payments deducted from participants’ paychecks to their
2 401(k) accounts; and (3) Defendants’ failure to make safe harbor matching contributions
3 to the 401(k) Plan. Plaintiff contends that the Department of Labor investigation of the
4 401(k) Plan demonstrates “that Defendants have breached their fiduciary duties in a
5 manner alleged by Plaintiff”—namely, by failing to make mandatory employer
6 contributions or remit loan payments withheld from participants’ paychecks. (ECF No. 122
7 at 3.) Plaintiff contends that he “does not seek duplicative relief or double recovery” and
8 that “claims under different subsections of ERISA may proceed simultaneously so long as
9 there is no double recovery.” Id. at 12 (quotation omitted).
10 1. Matching Contributions
11 The 2008 and 2011 Adoption Agreements each indicate that matching contributions
12 are “permitted” and provide that “[t]he Company’s Matching Contribution shall be
13 allocated to eligible Participants who have met the [age and service] requirements … as
14 follows …: An amount and allocation formula as determined by the Board.” (ECF Nos.
15 118-7 at 2-3, 118-9 at 2-3.) The corresponding Basic Plan Documents further provide that
16 “[m]atching contributions shall be made to the Plan and promptly allocated to the Matching
17 Contribution Accounts of Participants … and in the amount [specified in the Adoption
18 Agreement].” (ECF Nos. 118-8 at 2, 118-10 at 2.)
19 The phrase “an amount … as determined by the Board,” (ECF Nos. 118-7 at 3, 118-
20 9 at 3), expressly gives the Board of Calbiotech discretion to set the amount of the matching
21 contribution and does not preclude the Board from setting the amount to zero. The Basic
22 Plan Documents require matching contributions set by the Board to be allocated but do not
23 limit the Board’s authority to determine the amount of the contribution. Plaintiff does not
24 present evidence that the Board’s discretion in setting the amount of the matching
25 contribution is otherwise limited or that the Board set any matching contribution amounts
26 that were not allocated. The uncontroverted evidence establishes that Defendants did not
27 breach their fiduciary duties by failing to make or allocate matching contributions pursuant
28 to the 2008 and 2011 plan documents.
1 2. Loan Payment Remittances
2 The record reflects that on October 19, 2012, Plaintiff took out an $8,000 loan from
3 his 401(k) account and that an amount of $85.36 was deducted from each of Plaintiff’s
4 subsequent paychecks to repay the loan. However, Plaintiff asserts that only $14.86 of the
5 $85.35 deducted from each of the paychecks was actually remitted by Defendants to
6 Plaintiff’s account and that Defendants converted the remainder, in breach of their
7 fiduciary duties.
8 On January 15, 2019, Principal Financial emailed Plaintiff a chart recording the
9 contributions and loan payments to his 401(k) account. (See ECF No. 118-18.) On February
10 4, 2019, Principal Financial emailed Plaintiff a second chart recording the same
11 contributions and loan payments that contained an additional column not included in the
12 first email and that stated: “It seems during our first email not all of the information was
13 provided.” (ECF No. 118-19 at 2.) Other than a difference in which columns were included
14 in the two charts provided to Plaintiff, the charts’ data are identical.
15 The charts show that each time a “Member Loan Payment” was made, an amount of
16 $14.86 was listed in the “Elective Deferral” column and an amount of $70.50 was listed in
17 the “Employer Discretionary” column. (ECF Nos. 118-18, 118-19.) These figures sum to
18 the amount deducted from each of Plaintiff’s paychecks for loan repayment, $85.36. (See,
19 e.g., ECF No. 118-17.) The presence of separate columns for “Elective Deferral” and
20 “Employer Discretionary” reflects the fact that Plaintiff’s account contained both employee
21 and employer contributions and that a loan taken by Plaintiff from the 401(k) account
22 would be derived from (and later repaid to) these two sources. (See ECF No. 118-16.) This
23 interpretation of the charts is also supported by a third chart, offered by Defendants and
24 produced by Plaintiff in discovery, that shows the outstanding balance of Plaintiff’s loan
25 decreasing by $85.36—the amount deducted from each of Plaintiff’s paychecks—each pay
26 period. (See ECF No. 118-5.) The uncontroverted evidence presented by the parties
27 demonstrates that Defendants remitted Plaintiff’s loan payments to his account in their
28 entirety.
1 Plaintiff cites the findings of a 2019-2021 Department of Labor investigation of the
2 401(k) Plan in support of his contention that Defendants failed to remit loan payments to
3 participants’ accounts. Plaintiff presents evidence that on July 30, 2020, the Department of
4 Labor sent Defendants a letter stating that it found “that from January 2015 through
5 December 2019, [Defendants] failed to timely remit $27,729.47 in employee contributions
6 and loan payments and failed to remit $1,182.67 in loan payments withheld from
7 participants’ paychecks to the Plan” in violation of ERISA. (ECF No. 122-4 at 3.) Plaintiff
8 presents evidence that after Defendants responded to the letter and disputed their liability,
9 the Department of Labor replied, stating that “we believe our original position is correct,”
10 but that “[d]espite your refusal to undertake the full corrective action we deem necessary,
11 we have decided that legal action by the Department will not be commenced at this time.”
12 (ECF No. 122-6 at 2.)
13 While the Department of Labor found that Defendants failed to remit (or failed to
14 timely remit) loan payments to other participants, the remittance schedule the Department
15 provided demonstrates that Plaintiff’s account was not affected—the first untimely or
16 unremitted payment identified by the Department occurred after Plaintiff’s loan was repaid
17 in full. (See ECF No. 125-3 at 8 (identifying the first unremitted payment as occurring on
18 July 8, 2016, and the first untimely payment as occurring on October 14, 2016); ECF No.
19 118-5 at 4 (stating that Plaintiff’s loan was paid in full as of June 3, 2016).) More
20 fundamentally, the findings of the Department of Labor are not binding on this Court and
21 are not themselves evidence because the imposition of civil liability against Defendants—
22 who disputed the Department’s findings—would have required the Department to prove
23 its case in court. See 29 U.S.C. § 1132 (stating that the Department of Labor has the power
24 to enforce the provisions of ERISA by filing a civil action); see also ECF No. 125-3 at 4
25 (stating that if Defendants did not correct the violations identified by the Department of
26 Labor, the Department of Labor “may refer the matter to the Office of the Solicitor of Labor
27 for possible legal action”).
28 ///
1 3. Safe Harbor Matching Contributions
2 The 2016 Adoption Agreement and Basic Plan Document were adopted on April 3,
3 2017, effective retroactive as of September 1, 2016, the beginning of the plan year in which
4 Plaintiff was terminated. (See ECF No. 118-3 at 10-11.) The 2016 Adoption Agreement
5 states that the 401(k) Plan is intended to be a safe harbor plan with an enhanced match of
6 “100% of salary deferrals up to 4% of Plan Compensation.” (See ECF No. 118-13 at 9.)
7 Safe harbor status enables a 401(k) plan to automatically satisfy certain nondiscrimination
8 requirements by making safe harbor matching contributions to eligible participants’
9 accounts without having to pass the Actual Deferral Percentage (“ADP”) and Actual
10 Contribution Percentage (“ACP”) nondiscrimination tests. See 26 C.F.R. §§ 1.401(k)-3,
11 1.401(m)-3; 26 U.S.C. §§ 401(k)(12), (m)(11).
12 The Basic Plan Document provides:
13 The Employer may elect [in the Adoption Agreement] to apply the Safe
Harbor 401(k) Plan provisions under this Section [ ]. For this purpose, the
14
Plan satisfies the requirements of this Section [ ] if the Plan is a Safe Harbor
15 401(k) Plan, as described in subsection (a) …. If the Plan qualifies as a Safe
Harbor 401(k) Plan, the ADP Test … [and] ACP Test [are] deemed satisfied
16
[subject to additional conditions]. To qualify as a Safe Harbor 401(k) Plan,
17 the requirements under this Section [ ] must be satisfied for the entire Plan
Year …. [I]t is impermissible to use the ADP and ACP Test for a Plan Year
18
in which the Plan is intended to be a Safe Harbor 401(k) Plan and the
19 requirements of this Section [ ] are not satisfied for the entire Plan Year.
20 (ECF No. 118-14 at 3.) Subsection (a) further provides that to “qualify as a Safe Harbor
21 401(k) Plan, the Plan must provide a Safe Harbor Contribution” and must satisfy various
22 requirements, including the provision of advance notice to participants. Id. at 3-4. The
23 evidence presented by the parties demonstrates that Defendants did not provide notice of
24 safe harbor status or make safe harbor matching contributions for the plan year beginning
25 on September 1, 2016.
26 Defendants contend that the 401(k) Plan failed to qualify as a safe harbor plan
27 because no advanced notice was provided to participants. Defendants contend that it would
28 have been impossible for such notice to have been provided for the plan year beginning on
1 September 1, 2016, because the 2016 Adoption Agreement and Basic Plan Document were
2 not adopted until April 3, 2017, midway through the plan year. Defendants contend that
3 because the 401(k) Plan did not (and could not) qualify as a safe harbor plan, Defendants
4 were not obligated to make safe harbor matching contributions.
5 Defendants are correct that notice to plan participants is a prerequisite to a 401(k)
6 plan properly claiming safe harbor status. However, Defendants do not provide any support
7 for the position that a plan intended to operate as a safe harbor plan that fails to provide
8 adequate notice can proceed as if it were a non-safe harbor plan—i.e. by opting to perform
9 the nondiscrimination testing and not make safe harbor matching contributions. To the
10 contrary, the statement in the Basic Plan Documents that “it is impermissible to use the
11 ADP and ACP Test for a Plan Year in which the Plan is intended to be a Safe Harbor 401(k)
12 Plan and the requirements of this Section [ ] are not satisfied for the entire Plan Year,”
13 (ECF No. 118-14 at 3), explicitly forbids plan administrators from reverting to the default
14 testing requirements. This suggests that an operational failure such as a failure to provide
15 notice must be remedied in other ways and does not justify withholding of safe harbor
16 matching contributions. See also Fixing Common Plan Mistakes – Failure to Provide a
17 Safe Harbor 401(k) Plan Notice, Internal Revenue Serv., https://www.irs.gov/retirement-
18 plans/fixing-common-plan-mistakes-failure-to-provide-a-safe-harbor-401k-plan-notice
19 (“The failure to provide a safe harbor notice is a failure to operate the plan in accordance
20 with its safe harbor provisions. The plan has an operational failure because it failed to
21 operate in accordance with the terms of the plan document. The plan sponsor cannot ‘opt
22 out’ of safe harbor plan status for the year simply by performing the ADP/ACP tests for
23 the year of the failure…. The appropriate correction for a late safe harbor 401(k) notice
24 depends on the impact on individual participants. For example, if the missing notice results
25 in an employee not being able to make elective deferrals to the plan (either because he was
26 not informed about the plan, or informed about how to make deferrals to the plan), then the
27 employer may need to make a corrective contribution that is similar to what might be
28 required to correct an erroneous exclusion of an eligible employee.”). Defendants’ further
1 assertion that advance notice was impossible because the 2016 plan documents were not
2 adopted until mid-year and were made retroactively effective does not change this result,
3 particularly given that guidance on mid-year changes to safe-harbor plans has been issued
4 by the IRS. See IRS Notice 2016-16 (Feb. 16, 2016). The Court concludes that Plaintiff
5 provides evidence that establishes a genuine dispute of material fact as to whether
6 Defendants breached their fiduciary duties by failing to make safe harbor matching
7 contributions to the 401(k) Plan pursuant to the 2016 plan documents.
8 4. Standing
9 Defendants assert in the alternative that Plaintiff lacks Article III and statutory
10 standing to bring his second and third claims. ERISA plaintiffs must satisfy the Article III
11 requirement of demonstrating a cognizable injury caused by the defendant’s conduct and
12 redressable by the Court. See Glanton ex rel. ALCOA Prescription Drug Plan v.
13 AdvancePCS Inc., 465 F.3d 1123, 1127 (9th Cir. 2006) (recognizing that plan beneficiaries
14 can sue on behalf of plans if they satisfy the Article III injury requirement by having “a
15 concrete stake in the outcome of the proceedings”). To have statutory standing, an ERISA
16 plaintiff must also be a “participant, beneficiary or fiduciary” of the plan. 29 U.S.C. §
17 1132(a). The term “participant” means “any employee or former employee of an employer
18 … who is or may become eligible to receive a benefit of any type from an employee benefit
19 plan which covers employees of such employer.” 29 U.S.C. § 1002(7).
20 The Court has determined that there is a genuine dispute as to whether Defendants
21 breached their fiduciary duties by failing to make safe harbor matching contributions to the
22 401(k) Plan in 2016, including to Plaintiff’s individual account. Further, while the Court
23 previously determined that Plaintiff’s claims for benefits in this action were barred by the
24 limitations period provided by the 401(k) Plan (see ECF No. 114 at 19), Plaintiff remains
25 a participant in the 401(k) Plan for standing purposes because, at a minimum, he may be
26 entitled to reinstatement should he prevail on his ERISA retaliatory discharge claim. See
27 Firestone Tire and Rubber Co. v. Bruch, 489 U.S. 101, 118 (1989) (stating that a former
28 employee with a “reasonable expectation of returning to covered employment” is a
1 participant under ERISA (quotation omitted)); McBride v. PLM Intern., Inc., 179 F.3d 737,
2 744 (9th Cir. 1999) (stating that relief for retaliatory discharge may include reinstatement).
3 The Court concludes that Plaintiff has standing at this time.
4 5. Duplicative Relief
5 Defendants assert in the alternative that they are entitled to summary judgment on
6 Plaintiff’s third claim, brought under ERISA’s catchall provision, 29 U.S.C. § 1132(a)(3),
7 because the claim is duplicative of Plaintiff’s second claim for breach of fiduciary duty
8 under 29 U.S.C. § 1132(a)(2). Plaintiff contends that he seeks distinct remedies under the
9 two claims and that claims under different subsections of ERISA may proceed
10 simultaneously so long as there is no double recovery.
11 In Moyle v. Liberty Mut. Retirement Ben. Plan, 823 F.3d 948 (9th Cir. 2016), the
12 Court of Appeals held that ERISA plaintiffs can proceed simultaneously on a claim for
13 benefits under § 1132(a)(1)(B) and on a claim for equitable relief under 29 U.S.C. §
14 1132(a)(3) “so long as there is no double recovery.” Id. at 961. However, plaintiffs may
15 not utilize the catchall provision to seek the same relief available under a separate ERISA
16 subsection. See Wise v. Verizon Comms., Inc., 600 F.3d 1180, 1190 (9th Cir. 2010).
17 In this case, Plaintiff’s second and third claims are both premised on the same theory
18 of liability regarding Defendants’ breach of fiduciary duty. Further, the Court has granted
19 summary judgment to Defendants on Plaintiff’s first claim for benefits, and on the second
20 and third claims to the extent those claims seek the payment of benefits. Plaintiff lists
21 several remedies he seeks but does not identify any remedy that remains available under §
22 1132(a)(3) that is not also available under § 1132(a)(2). The Court concludes that
23 Defendants are entitled to summary judgment on Plaintiff’s third claim on the grounds that
24 it is duplicative of Plaintiff’s second claim. See Moyle, 823 F.3d at 961 (explaining that
25 plaintiffs may present “alternative—rather than duplicative—theories of liability” and that
26 a claim under the catchall provision “can proceed simultaneously if [it] plead[s] distinct
27 remedies”).
28 ///
1 V. RETALIATORY DISCHARGE CLAIM
2 Defendants contend that they are entitled to summary judgment on the fourth claim
3 in the SAC for retaliatory discharge pursuant to 29 U.S.C. § 1132(a)(3) because “Plaintiff’s
4 allegations of ‘fraudulent concealment’”—the basis for tolling the statute of limitations on
5 the claim—are “entirely unfounded.” Id. Defendants contend that the SPD provided to
6 Plaintiff on December 14, 2016, (the “Disputed 2015 SPD”), did not conceal the basis for
7 Plaintiff’s interference claim because it was a “truthful and accurate copy” that described
8 the 401(k) Plan then in effect, as restated in plan documents made effective as of 2015. Id.
9 at 22-23.
10 Plaintiff contends that tolling of the statute of limitations on his interference claim
11 is appropriate due to Defendants’ fraudulent concealment of the claim. Plaintiff contends
12 that his assertion of fraudulent concealment is supported by evidence demonstrating the
13 inauthenticity of the Disputed 2015 SPD, as well as other plan documents documenting a
14 purported restatement of the 401(k) Plan in 2015.
15 Plaintiff claims that he was terminated in 2016 in retaliation for requesting 401(k)
16 Plan documents. The Court has previously determined that the statute of limitations that
17 applies to this claim expired on November 29, 2018, more than one year before Plaintiff
18 initiated this action. (See ECF No. 45 at 20.) However, tolling of the statute of limitations
19 is appropriate if Plaintiff can provide evidence to support his allegations that shortly after
20 his termination, he was provided fraudulent plan documents that “rule[d] out his suspicions
21 that his termination was connected to his request for documents” until he became aware of
22 the fraudulent nature of the documents in January 2019. (ECF No. 64 ¶ 55); see Hexcel
23 Corp. v. Ineos Polymers, Inc., 681 F.3d 1055, 1060 (9th Cir. 2012) (“A statute of
24 limitations may be tolled if the defendant fraudulently concealed the existence of a cause
25 of action in such a way that the plaintiff, acting as a reasonable person, did not know of its
26 existence.”).
27 The parties present evidence that on December 14, 2016, less than three weeks after
28 Plaintiff received notice of his termination, the third-party administrator of the 401(k) Plan
1 provided Plaintiff with the Disputed 2015 SPD, which states that it “describes the [401(k)]
2 Plan as restated effective January 1, 2015.” (ECF No. 118-15 at 9.) Defendants further
3 present the Declaration of David Barka, which states that the Disputed 2015 SPD provided
4 to Plaintiff was “a truthful and accurate copy of the 401(k) Plan’s then-latest updated SPD.”
5 (ECF No. 118-6.) To carry his burden at summary judgment, Plaintiff must present
6 evidence that establishes a genuine dispute as to whether the Disputed 2015 SPD was
7 authentic.
8 Plaintiff presents four documents in support of his assertion that the Disputed 2015
9 SPD was fraudulent. First, Plaintiff presents the Administrative Record produced to him
10 February 5, 2019, which does not include the Disputed 2015 SPD or other purported 2015
11 plan documents. Second, Plaintiff presents an email from a representative of Calbiotech
12 sent on November 28, 2018, that states that the 2011 plan documents were “in effect from
13 September 1, 2011 through August 31, 2016.” (ECF No. 122-11 at 2.) Third, Plaintiff
14 presents the purported 2015 Adoption Agreement, which states that it was adopted on April
15 26, 2016, and effective January 1, 2015, but further provides that “[t]he date specified [as
16 the effective date] for an amended and restated plan … may not be earlier than the first day
17 of the Plan Year during which the amended and restated Plan is adopted by the Plan
18 Sponsor.” (See ECF No. 125-6 at 5.) Fourth, Plaintiff presents a September 1, 2016,
19 resolution by the Board of Calbiotech authorizing the adoption of a restatement of the
20 401(k) Plan in 2016, which states that “the Corporation has maintained the [401(k) Plan)]
21 since 9-1-2011.” (ECF No. 122-13 at 2.)
22 The absence of the 2015 plan documents from the Administrative Record initially
23 produced to Plaintiff and Calbiotech’s representation that the 2011 version of the 401(k)
24 Plan was in effect until 2016 support an inference that the Disputed 2015 SPD and other
25 purported 2015 plan documents are inauthentic. While Defendants’ contention that these
26 discrepancies were the result of inadvertent errors rather than fraud is plausible,
27 “[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate
28 inferences from the facts” are functions of the factfinder, “not those of a judge” at summary
1 ||judgment. Anderson, 477 U.S. at 255. The Court concludes that summary judgment on
2 || Plaintiff's claim for interference should be denied because Plaintiff has provided adequate
3 || evidence for a fact-finder to find that Defendants fraudulently concealed Plaintiffs claim,
4 || tolling the statute of limitations.
5 CONCLUSION
6 IT IS HEREBY ORDERED that the Motion for Summary Judgment is granted in
7 and denied in part. The motion is granted as to Defendants’ request for summary
8 ||judgment on the following: (1) Plaintiff's second claim under 29 U.S.C. § 1132(a)(2) to
9 || the extent the claim is based on Defendants’ failure to make matching contributions to the
10 |/401(k) Plan, as required by the 2008 and 2011 plan documents or Defendants’ failure to
11 |/remit loan payments deducted from participants’ paychecks to their 401(k) accounts; and
12 Plaintiff's third claim under 29 U.S.C. § 1132(a)(3). The motion is otherwise denied.
13
14 || Dated: January 3, 2023 Nitta Z. Ma
15 Hon, William Q. Hayes
16 United States District Court
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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10086945. Public record. Not legal advice.