Placht v. Argent Trust Company

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

CAROLYN PLACHT, on behalf of the )

Symbria Inc. Employee Stock Ownership )

Plan and on behalf of a class of all other persons )

similarly situated, )

)

Plaintiff, )

) No. 21 C 5783

v. )

) Judge Ronald A. Guzmán

ARGENT TRUST COMPANY, JILL )

KRUEGER, THOMAS NOESEN, JR., JOHN )

R. CALLEN, CENTRAL BAPTIST VILLAGE, )

COVENANT RETIREMENT )

COMMUNITIES, INC., FRANCISCAN )

SISTERS OF CHICAGO SERVICE )

CORPORATION, LIFELINK CORPORATION,)

LUTHERAN HOME AND SERVICES FOR )

THE AGED, INC., MATHER LIFEWAYS, )

NORWEGIAN LUTHERAN BETHESDA )

HOME ASSOCIATION, NORWOOD LIFE )

CARE FOUNDATION, FRIENDSHIP )

SENIOR OPTIONS, NFP, REST HAVEN )

ILLIANA CHRISTIAN CONVALESCENT )

HOME, ST. PAUL’S HOUSE & )

HEALTHCARE CENTER, and UNITED )

METHODIST HOMES & SERVICES, )

)

Defendants. )

MEMORANDUM OPINION AND ORDER

For the reasons explained below, the motion of Defendant Argent Trust Company to

dismiss under Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6), joined by all Defendants as

to the arguments under Rule 12(b)(1), is denied; the motion of Defendants Jill Krueger and

Thomas Noesen, Jr. to dismiss under Federal Rule of Civil Procedure 12(b)(6), joined by

Defendant John R. Callen, is denied; and the motion of Defendants Mather Lifeways, Covenant

Retirement Communities, Inc., United Methodist Homes & Services, St. Paul’s House &

Healthcare Center, Norwood Life Care Foundation, Central Baptist Village, Lifelink

Corporation, Norwegian Lutheran Bethesda Home Association, Friendship Senior Options, NFP,

Rest Haven Illiana Christian Convalescent Home, Franciscan Sisters of Chicago Service

Corporation, and Lutheran Home and Services for the Aged, Inc. to dismiss the complaint under

Rule 12(b)(6) is granted.

RELEVANT BACKGROUND

This is an ERISA1 action brought individually and on behalf of a putative class by

Carolyn Placht, a participant in the retirement plan (the “Plan”) of Symbria Inc. (“Symbria”),

regarding the October 31, 2015 purchase of all issued and outstanding shares of Symbria by the

Plan and its Trust, the Symbria Inc. Employee Stock Ownership Trust; the stock purchase is

referred to as the “ESOP Transaction.” Defendants are Argent Trust Company (“Argent”), the

Plan’s Trustee leading up to and through the ESOP Transaction, and the sellers of the Symbria

shares (collectively, the “Selling Shareholders”), which the parties sort into two groups: (1) the

“Management Shareholders,” made up of Jill Krueger, then President and CEO of Symbria;

Thomas Noesen, Jr., then CFO of Symbria; and John R. Callen, then President of a Symbria

Subsidiary, Alliance Rehab/Symbria Rehab; and (2) the “Organizational Shareholders” (or

“Community Defendants”), made up of Mather Lifeways; Covenant Retirement Communities,

Inc.; United Methodist Homes & Services; St. Paul’s House & Healthcare Center; Norwood Life

Care Foundation; Central Baptist Village; Lifelink Corporation; Norwegian Lutheran Bethesda

Home Association; Friendship Senior Options, NFP; Rest Haven Illiana Christian Convalescent

Home; Franciscan Sisters of Chicago Service Corporation; and Lutheran Home and Services for

the Aged, Inc.

Prior to the ESOP Transaction, Symbria’s Board of Directors had fourteen directors

appointed by the then-owners of its shares. The twelve Organizational Shareholders held

thirteen of the fourteen “ownership interests” in Symbria. Each Organizational Shareholder

owned one such share, entitling each to appoint one director to Symbria’s Board of Directors.

Plaintiff presumes that one of the organizations held a second ownership interest. The

Management Shareholders collectively held the final ownership interest in Symbria.

In the ESOP Transaction, the Plan and Trust paid $66,500,000.00 to purchase the

outstanding Symbria shares, using the proceeds of a loan guaranteed by Symbria and a loan, at a

2.64% interest rate, from the Management Shareholders and Organizational Shareholders.

Without vouching for the accuracy of the valuations, Plaintiff asserts that the stock was revalued

at $9,300,000.00 on March 31, 2016; $7,800,000.00 in 2017; $11,000,000.00 in 2018;

$10,900,000.00 in 2019; and $8,650,000.00 in 2020, while Symbria contributed millions of

dollars to the Plan.

Plaintiff deems it likely that evidence will support that the Plan and Trust paid more than

fair market value for the stock and “paid a control premium for Symbria” despite not acquiring

control over the Symbria Board of Directors in the ESOP Transaction. Plaintiff attributes the

overpayment to Argent’s failure to use due diligence during the ESOP Transaction by relying

“on unrealistic growth projections, unreliable or out-of-date financials, improper discount rates,

inappropriate guideline public companies for comparison, and/or [] fail[ing] to test [], . . .

question or challenge underlying assumptions.” (ECF No. 1, Compl., ¶ 71.)

1The Employee Retirement Income Security Act (“ERISA”) is codified at 29 U.S.C. § 1001 et

seq., and the Court will cite the codified statute for ease of reference.

Plaintiff concludes that Argent violated its fiduciary duties as Trustee by: (1) causing

prohibited transactions during the ESOP Transaction, in the form of: (a) a purchase of property

from a party or parties in interest; (b) borrowing money from parties in interest; and (c) a direct

or indirect transfer to, or use by or for the benefit of, a party in interest of any assets of the Plan;

(2) failing to conduct a thorough investigation into the merits of the investment and approving

the ESOP Transaction; and (3) to the extent Argent has done so, seeking indemnification from

Symbria as to Argent’s breaches of ERISA. (ECF No. 1, Counts I-III.)

According to Plaintiff, the ESOP Transaction provided tax advantages to the Selling

Shareholders, and the Management Shareholders received other economic incentives through the

ESOP Transaction. Plaintiff insists that the Selling Shareholders: (1) were Argent’s co-

fiduciaries and should be held liable for Argent’s breaches of fiduciary duty; and (2) constituted

parties in interest, as ERISA defines the term, in the ESOP Transaction and had sufficient

knowledge to subject them to liability for equitable remedies under ERISA as to the allegedly

prohibited transactions and Argent’s breaches of fiduciary duty. (id., Counts IV-V.)

Plaintiff claims that Defendants’ actions caused Plan participants to suffer diminutions of

Plan account values due to the ESOP Transaction overpayment and an ongoing excessive debt

burden due to Argent’s failure to correct the overpayment.

Argent moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(1)

and 12(b)(6). The Organizational Shareholders and Management Shareholders join Argent’s

motion under Rule 12(b)(1) and separately move to dismiss the complaint under Rule 12(b)(6).

The motions are fully briefed.

DISCUSSION

The Court first will address Defendants’ unified motion to dismiss for lack of subject

matter jurisdiction and then proceed to address their various arguments as to why the counts

against them should be dismissed for failure to state a claim on which relief may be granted.

I. Motion to Dismiss for Lack of Subject-Matter Jurisdiction

Defendants argue that Plaintiff lacks standing because she has not plausibly alleged an

injury-in-fact. (ECF No. 33, Mem. Supp. Def. Argent Trust Co.’s Mot. Dismiss, at 11-14; ECF

No. 30, Mem. Supp. Defs. Krueger & Noesen’s Mot. Dismiss, at 5; Mem. Supp. Community

Defs.’ Mot. Dismiss, at 9-10.)2 “Without injury, there can be no Article III standing, which

requires a plaintiff to show an injury-in-fact that is fairly traceable to the defendant’s conduct

and that could likely be redressed by a favorable court decision.” Abbott v. Lockheed Martin

Corp., 725 F.3d 803, 808 (7th Cir. 2013).

2 Throughout this memorandum opinion and order, for consistency, citations refer to the docket

paginations stamped at the top of each filed document, rather than those found at the bottom of

the pages.

Defendants insist that Plaintiff’s allegations demonstrate that she suffered no injury.

They acknowledge Plaintiff’s comparison of the $65,000,000.00 Symbria stock purchase price in

the ESOP Transaction with the $9,300,000.00 stock valuation (the accuracy of which Plaintiff

disavows) five months later (see ECF No. 1 ¶ 69), but they deem it a “misinformed stock-price

comparison” that is debunked in Lee v. Argent Trust Co., No. 5:19-cv-156-BO, 2019 WL

3729721 (E.D.N.C. Aug. 7, 2019). (ECF No. 33 at 13-14.) The Lee court analogized an ESOP

transaction to a home purchase through mortgage financing and reasoned that, if a buyer

mortgages the entire purchase price of the home at its exact value, the buyer should have no

change in equity from the transaction because the house value would be fully offset by the

mortgage debt incurred. Id. at *3. The court then extended that reasoning to financed stock

purchases—that the purchaser should experience no change in equity when financing the full

purchase price of stocks that are correctly valued; thus, the court concluded that, immediately

after the ESOP transaction, “the expected value of the . . . ESOP’s shares—at least in the short

term—would be $0.” Id. at *4. Because the Lee plaintiff had alleged only a post-sale positive

valuation, the court found that she had apparently realized a benefit, rather than a concrete and

particularized injury, from the transaction and therefore lacked standing to pursue an ERISA

claim. Id.; see also Plutzer v. Bankers Trust Co. of S.D., No. 1:21-cv-3632 (MKV), 2022 WL

596356, at *5 (S.D.N.Y. Feb. 28, 2022) (adopting the Lee court’s reasoning where the plaintiff

alleged that post-ESOP-transaction valuations over the next four years showed that the stock

value “had ‘decreased 92.6553% from its purchase price in 2015, and 68.1818% from the post-

ESOP Transaction high . . . at the end of 2017’”).

The Court declines to follow Lee for two reasons. First, the Seventh Circuit has rebuffed

similar arguments at the pleading stage, because “[i]njury-in-fact for standing purposes is not the

same thing as the ultimate measure of recovery.” Abbott, 725 F.3d at 808. The Abbott court

explained that a plaintiff “satisfie[s] [her] burden” of establishing “injury-in-fact for pleading

purposes” by “alleging [] harm[] [from the defendant’s] mismanagement of the [fund].” Id. at

809 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992) (“‘[G]eneral factual

allegations of injury resulting from the defendant’s conduct may suffice’ to establish standing at

the pleading stage[.]”); Alliant Energy Corp. v. Bie, 277 F.3d 916, 919-20 (7th Cir. 2002)); see

also Allen v. GreatBanc Trust Co., 835 F.3d 670, 680 (7th Cir. 2016) (“GreatBanc argues that

the post-transaction decline in stock value is precisely what economists predict should happen

after an ESOP transaction, and therefore it is not evidence of fiduciary breach. But whether the

22% decline in value—a decline that lasted not months but years and ballooned to nearly 50%—

was the result of normal economic forces or something more sinister is a matter for a later stage

of litigation.”).

Second, even accepting the Lee premise that a purchaser would incur no change in equity

before and after a properly priced financed purchase transaction is anticipated to be unchanged

does not require a determination that Plaintiff here was uninjured in the ESOP Transaction.

Plaintiff does not include allegations regarding the ESOP’s equitable positions before and after

the transaction and thus has not pleaded a lack of (or positive) change in equitable position.

Instead, she alleges that the asset purchased (here, the Symbria stock) was significantly devalued

(with valuations between $7,800,000.00 and $11,000,000.00 as compared to the $66,500,000.00

purchase price) following the purchase. The Lee court did not explain the consequences of a

negative post-sale house valuation, and a purchase of privately held stock in any event differs

from that of a home in material respects. Unlike real estate, for which valuation estimations are

widely publicly available and mortgages are secured by outside providers, privately held stock

valuations typically are not public, see Zavala v. Kruse-W., Inc., 398 F. Supp. 3d 731, 745 (E.D.

Cal. 2019) (“[W]here, as here, the stock is privately held, . . . [t]here is no objective price of the

stock to serve as a baseline. Rather than the price of the stock being set by the ‘wisdom of the

crowd,’ the price is simply what the buyer ultimately pays.”), and the transaction is financed by

parties to the transaction. The extensive nature of ERISA’s protections also undermines the

applicability of “caveat emptor” to such transactions. See Lewis v. Merrill Lynch, Pierce, Fenner

& Smith, Inc., 431 F. Supp. 271, 275–76 (E.D. Pa. 1977) (“ERISA may logically be considered

the most recent stride in Congress’s grand march to modify the rule of caveat emptor as applied

to securities transactions.”). Finally, even were the Court to assume that Plaintiff’s valuations

referred to the ESOP’s equitable position, Plaintiff also alleges that Symbria later paid millions

of dollars into the ESOP, and the Court is unable to assess at this early stage to what extent those

contributions may have affected subsequent valuations.

Plaintiff has sufficiently alleged an injury for this stage of the case. See McMaken v.

GreatBanc Trust Co., No. 17 C 4983, 2019 WL 1468157, at *10 (N.D. Ill. Apr. 3, 2019)

(holding that plaintiff had standing for stock overvaluation claim even though plaintiff alleged

shares had gone up since purchase, as it was “sufficient that [he] has alleged a plausible harm to

the true value of the stock . . . as a result of [the trustee’s] misvaluation”).

II. Motions to Dismiss for Failure to State a Claim on Which Relief May Be Granted

For the purposes of a motion to dismiss under Rule 12(b)(6), the Court construes the

complaint in the light most favorable to the plaintiff, accepts as true all well-pleaded facts

therein, and draws all reasonable inferences in the plaintiff’s favor. See Bell v. City of Chi., 835

F.3d 736, 738 (7th Cir. 2016). To survive a Rule 12(b)(6) motion, a complaint “must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Id. (citing Twombly, 550 U.S. at 556).

ERISA is a “comprehensive [federal] statute” that “sets various uniform standards,

including rules concerning . . . fiduciary responsibility, for both pension and welfare plans.”

Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90-91 (1983). As is relevant here, ERISA: (1)

imposes duties of loyalty and prudence upon any person acting as a “fiduciary” to an employee

retirement plan and liability for breaches of those duties, Allen, 835 F.3d at 678; (2) forbids

fiduciaries from “causing” their plan to enter into “insider” transactions that are ”presumably not

at arm’s length,” Lockheed Corp. v. Spink, 517 U.S. 882, 893 (1996); (3) subjects plan

fiduciaries to liability if they “knowingly participate in,” “enable,” or “have knowledge of” a

breach by another plan fiduciary; and (4) even provides for liability (limited to equitable relief)

as to certain non-fiduciaries related to ERISA breaches, 29 U.S.C. § 1132(a)(3); see Harris Trust

& Sav. Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 250-51 (2000) (holding that the

authorization in § 502(a)(3) [29 U.S.C. § 1132(a)(3)] for “a ‘participant, beneficiary, or

fiduciary’ of a plan to bring a civil action to obtain ‘appropriate equitable relief’ to redress

violations of ERISA Title I . . . extends to a suit against a nonfiduciary ‘party in interest’ to a

transaction barred by § 406 [29 U.S.C. § 1106]”). Plaintiff seeks to pursue claims within those

four categories; she also contends that any indemnification provision requiring Symbria to

indemnify Argent for its own fiduciary breaches would be “void.”

A. Breach of Fiduciary Duties or Co-Fiduciary Responsibility for Fiduciary Breach

Plaintiff alleges in Count II that Argent breached its fiduciary duties of prudence and

loyalty, based on its alleged failure to discover overstated valuations and overzealous projections

shared by Symbria in connection with the ESOP Transaction, and therefore caused the Plan to

purchase Symbria shares in a financed transaction at an inflated price. In Count V, Plaintiff

alleges that all Selling Shareholders are liable as co-fiduciaries.

In relevant part, 29 U.S.C. § 1104(a)(1) holds plan fiduciaries to a “prudent man standard

of care”:

[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;

(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). “In order to state a claim for breach of fiduciary duty under

ERISA, the plaintiff must plead (1) that the defendant is a plan fiduciary; (2) that the defendant

breached its fiduciary duty; and (3) that the breach resulted in harm to the plaintiff.” Allen, 835

F.3d at 678 (internal punctuation and citation omitted).

Fiduciaries also can be held responsible for breaches by other fiduciaries under some

circumstances. “[A] fiduciary with respect to a plan shall be liable for a breach” by another

fiduciary: “(1) if he participates knowingly in, or knowingly undertakes to conceal, an act or

omission of such other fiduciary, knowing such act or omission is a breach; . . . or (3) if he has

knowledge of a breach by other such fiduciary, unless he makes reasonable efforts under the

circumstances to remedy the breach.” 29 U.S.C. § 1105(a). Because ERISA plaintiffs generally

have no access to inside information regarding a fiduciary’s decision-making process, they need

not plead minute details, as long as the facts alleged tell a plausible story. Allen, 835 F.3d at 678.

1. Whether Defendants Are Plan Fiduciaries

“The threshold question in all cases charging breach of fiduciary duty is whether the

defendant was ‘acting as a fiduciary (that is, was performing a fiduciary function) when taking

the action subject to complaint.’” Scott v. Aon Hewitt Fin. Advisors, LLC, No. 17 C 679, 2018

WL 1384300, at *3 (N.D. Ill. Mar. 19, 2018) (quoting Pegram v. Herdrich, 530 U.S. 211, 226

(2000)). ERISA fiduciaries are “persons named as fiduciaries by a benefit plan” or “anyone else

who exercises discretionary control or authority over the plan’s management, administration, or

assets.” Mertens v. Hewitt Assocs., 508 U.S. 248, 251 (1993); see 29 U.S.C. § 1002(21)(A). The

former are often referred to as “named fiduciaries,” while the latter are frequently labeled

“functional fiduciaries.” Teets v. Great-W. Life & Annuity Ins. Co., 921 F.3d 1200, 1206 (10th

Cir. 2019). A party “exercising discretionary control over a plan’s management or

administration . . . is to that extent behaving as a fiduciary,” as is a party “to the extent that it

exercises de facto control over plan decisions through the plan administrators it selects.” Howell

v. Motorola, Inc., 633 F.3d 552, 562–63 (7th Cir. 2011).

There appears to be no dispute that Argent, the trustee, qualifies for pleading purposes as

a fiduciary, as both a named fiduciary and a functional fiduciary due to its “discretionary

authority or discretionary control respecting management or disposition of the Plan’s assets,” and

“sole and exclusive authority to negotiate and approve the ESOP Transaction and to authorize

the Transaction on the Plan’s behalf.” (ECF No. 1 ¶¶ 16-17, 50, 51.) The remaining Defendants

are not claimed to have been named as fiduciaries in the benefit Plan, and they dispute Plaintiff’s

classification of them as functional fiduciaries who could be held liable as co-fiduciaries for any

fiduciary breach by Argent.

a. Management Shareholders

The Management Shareholders argue that Plaintiff failed to plead facts showing that they

exercised discretionary authority or control over the ESOP or its assets. (ECF No. 30 at 8-10.)

Plaintiff counters that: (1) Krueger and Noesen were officers of Symbria, and Callan was

the officer of one of Symbria’s subsidiaries; (2) as of the ESOP Transaction they collectively

owned one ownership interest in Symbria and thus shared the right to appoint one Symbria

director; (3) they probably, either directly or through “an ESOP ‘Steering Committee’” under

their “control[], appointed Argent as trustee, or presented Argent for appointment”; (4) Noesen

signed the Plan’s Form 55003 in 2016; and (5) one of the three likely was a director. (ECF No. 1

¶¶ 19-21, 57,-58, 60; ECF No. 48, Pl.’s Opp’n, at 11-13.) Plaintiff also argues that Krueger

signed the letter agreement confirming Argent as trustee for the ESOP Transaction. (ECF No. 48

at 16.)

Because a functional fiduciary is so labeled due to authority or control over the plan’s

management or assets, a person’s role as an officer of the employer company, here Symbria (or

3 “Form 5500 is an annual report disclosing financial and actuarial information that is required to

be filed with the Secretary of Labor under ERISA.” Bolssen v. Unum Life Ins. Co. of Am., 629 F.

Supp. 2d 878, 882 (E.D. Wis. 2009) (citing 29 U.S.C. §§ 1023, 1024).

its subsidiary), does not, without more, determine that person’s fiduciary status as to the plan.

Int’l Painters & Allied Trades Indus. Pension Fund v. Clayton B. Obersheimer, Inc., No. CIV.A.

ELH-12-1000, 2013 WL 594691, at *10 (D. Md. Feb. 13, 2013) (“[A] district court is ‘not free

to conclude that [an individual’s] status as an officer of [a company] ma[kes] him a fiduciary of

[an ERISA] Plan.’”) (alterations in original) (quoting Finkel v. Romanowicz, 577 F.3d 79, 86 (2d

Cir. 2009)). Nor does the Management Shareholders’ collective authority to appoint a single

member of the fourteen-member board of directors tie the Management Shareholders themselves

to Plan management or asset authority or control.

Plaintiff therefore argues that the Management Shareholders took other actions indicating

the requisite authority or control, including signing forms. But, although Krueger signed

Argent’s trustee appointment on Symbria’s behalf, Plaintiff specifically alleged that Symbria

approved Argent’s appointment. (ECF No. 1 ¶ 50.) Krueger being empowered to sign the

resulting trustee appointment on behalf of the company, which cannot sign without such an actor,

does not, without more, indicate her requisite control or authority over the Plan’s management or

the management or disposition of its assets. Noesen’s signature on a post-ESOP-Transaction

Form 5500 also does not indicate his level of authority or control over Plan management or asset

control or disposition at the time he signed in 2016, see Reed v. Queens Village Committee for

Mental Health for J-CAP, Inc., No. 18CV3114AMDJO, 2019 WL 4452386, at *6 (E.D.N.Y.

Sept. 17, 2019) (“The authority to fill out and sign annual forms is not the same as

‘discretionary authority or discretionary control respecting management’ of plan assets or

respecting ‘administration’ of the plan.”), much less at the time of the ESOP Transaction in

2015.

Plaintiff has more success with her final allegation as to the three Management

Shareholders—that they likely directly or through a steering committee they controlled,

appointed Argent. Taking that allegation as true for the purposes of the present motion, it is

reasonable to infer that these Defendants may constitute fiduciaries as to Argent’s appointment

as trustee for the Plan in advance of the anticipated ESOP Transaction, resulting in a duty to

monitor Argent, see Howell, 633 F.3d at 573 (explaining that those who appoint plan

administrators “have an ongoing fiduciary duty under ERISA”). The fact that Plaintiff cannot

allege these Defendants’ involvement with greater specificity does not compel dismissal. See

Teamsters Loc. Union No. 727 Health & Welfare Fund v. De La Torre Funeral Home &

Cremation Servs., Inc., No. 19 C 6082, 2021 WL 843453, at *3 (N.D. Ill. Mar. 5, 2021)

(declining to grant motion to dismiss where allegations upon information and belief were related

to matters internal to the business and defendants’ knowledge); R.R. Maint. & Indus. Health &

Welfare Fund v. Hacker, No. 10-3305, 2011 WL 5008311, at *5 (C.D. Ill. Oct. 20, 2011)

(explaining that “the role of a corporate director and officer in the internal decisions of the

company is peculiarly within the Defendants’ knowledge” and may be pleaded upon information

and belief ).

b. Organizational Shareholders

The Organizational Shareholders argue that, as to the ESOP Transaction, Plaintiff has not

alleged facts indicating that they were fiduciaries. Plaintiff alleges in the Complaint that these

Defendants “were directors (or persons having powers or responsibilities similar to directors) . . .

with express or functional authority to appoint and remove the Trustee[,]” making each “a

fiduciary with respect to the Plan at the time of the ESOP Transaction.” (ECF No. 1 ¶ 126.)

After scrutiny, the Court agrees with these Defendants that Plaintiff’s allegations are insufficient

to permit a reasonable inference that they were fiduciaries.

Although Plaintiff alleges that the Organizational Shareholders were each permitted to

appoint one4 board member of Symbria’s fourteen-member board, it does not follow that the

entities themselves were board members or had like powers and responsibilities. Those

allegations do not plausibly suggest that any Organizational Shareholder itself had “discretionary

authority or discretionary responsibility in the management of” the Plan.

Plaintiff insists that such responsibility can be inferred because Symbria appointed

Argent as trustee and had directorial control over the Plan or its assets, but those allegations, too,

fail to factually link the Organizational Shareholders themselves to the necessary control or

authority over the Plan. See Howell, 633 F.3d at 562–63 (explaining that, even assuming

company had appointed all committee members administering plan, that fact alone was

insufficient to indicate that the company itself was a plan fiduciary). Plaintiff does not bridge the

gap with apposite caselaw analyzing the potential fiduciary status of an entity with the power to

appoint one member of a large board. Instead, Plaintiff relies first upon cases generally

analyzing the fiduciary status of boards of directors or directors themselves, which are inapposite

given that the Organizational Shareholders were not board members or directors. She also cites

one case involving a named plan trustee who had abstained from votes in the subject ESOP

transactions but, under “the two hats doctrine,” nevertheless had exercised fiduciary authority

because he fired an “appraiser for being too thorough,” hired a replacement, influenced valuation

outcomes, “ma[de] his personal preferences known to” the other trustees, and “actively

participat[ed] in all meetings related to the transactions.” (See ECF No. 47 at 17 n.11 (citing,

inter alia, Perez v. Bruister, 823 F.3d 250, 259-60 (5th Cir. 2016)). Because the Organizational

Shareholders were not themselves on the board, each had authority limited to appointing a

member of the fourteen-member board, and they are not said to have worn “two hats” as to the

ESOP Transaction or to have directly acted to influence the stock valuation as did the plan

trustee in Perez, none of the cases are illustrative.

Plaintiff then shifts gears and lumps together the Organizational Shareholders, arguing

that, collectively, they could appoint thirteen board members (implying that they could align to

functionally control Symbria’s fourteen-person Board). (ECF No. 74, at 17.) Again, though,

Plaintiff provides no facts connecting the organizations with each other or demonstrating that the

organizations themselves, together or separately, had sufficient authority, control, or

responsibility over the Plan or its assets. Finally, that each Organizational Shareholder

ultimately agreed in writing to sell its shares in the ESOP Transaction does not tend to suggest

that each or any had the necessary control or authority as to the Plan or its assets. The

allegations do not plausibly suggest that any Organizational Shareholder was a Plan fiduciary.

4 It is inconsequential to the functional-fiduciary analysis that one of the Organizational

Shareholders may have owned two Symbria shares and the ability to appoint two of the fourteen

board members, as opposed to one.

2. Whether Defendants Are Plausibly Alleged to Have Breached Their Fiduciary

Duties

a. Trustee

In Count II, Plaintiff alleges that Argent violated its fiduciary duties under 29 U.S.C.

1104(a) by failing “to conduct a thorough investigation into the merits of the investment” and

thus “approving the Plan’s purchase of Symbria stock at the [allegedly inflated] price agreed to

in the ESOP Transaction,” causing the Plan to incur an overlarge debt. (ECF No. 1 ¶ 96.)

Plaintiff says that stock valuation decreased from $9,300,000.00 five months after the sale to

$8,650,000.00 in 2020.

Argent labels these allegations “spare” and attacks them as insufficient. Plaintiff

counters that she “cannot plead additional facts regarding Argent’s investigation into the

Symbria stock or business information related to the company’s value because that is non-public

confidential information.” (ECF No. 46 at 18.) Under the circumstances, the Court agrees that

Plaintiff need not allege more regarding either Argent’s alleged failures or the company

valuation. See Allen, 835 F.3d at 677 (“[I]nformation about . . . how a stock was valued is

confidential information” generally unavailable absent “the protections of the discovery

process”).

Plaintiff has sufficiently alleged a plausible breach of fiduciary duty by Argent. Argent

was required to fulfill the duties of loyalty and prudence. “Loyalty requires a fiduciary to act

‘for the exclusive purpose’ of providing benefits to participants.” Id. at 678 (citing 29 U.S.C. §

1104(a)(1)(A)-(B)). “Prudence requires the fiduciary to act ‘with the care, skill, prudence, and

diligence under the circumstances then prevailing that a prudent [person] 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.’” Id. (quoting 29 U.S.C. § 1104(a)(1)(A)-(B), alteration in original). The

prudence standard is process-based, not outcome-based. Martin v. CareerBuilder, LLC, No. 19

C 6463, 2020 WL 3578022, at *4 (N.D. Ill. July 1, 2020). In the case of an ESOP transaction,

“[t]he trustee only need[s] to focus on paying no more than a fair price for the [company] shares

on the ESOP’s behalf.” Acosta v. Vinoskey, 310 F. Supp. 3d 662, 681 (W.D. Va. 2018).

Here, the subject stock was not publicly traded, and Plaintiff asserts that the price paid

did not adequately reflect its value and that the ensuing debt, financed by the Selling

Shareholders, was excessive; she therefore sufficiently alleges a breach of Argent’s duty of

prudence, particularly considering the decreased valuations as Symbria continued to funnel

money into the plan. See Allen, 835 F.3d at 678-79 (holding that plaintiff met burden by alleging

a drop in stock price, a loan from sellers rather than an outside entity, and a high interest rate);

Lysengen v. Argent Trust Co., 498 F. Supp. 3d 1011, 1022-23 (C.D. Ill. 2020) (“[T]he Court is

satisfied that Plaintiff’s assertion that the loan came from the employer and seller, that the

valuation had flaws, and that the subsequent price drop reflects a lack of due diligence is enough

to nudge her claim ‘across the line from conceivable to plausible.’”); Zavala, 398 F. Supp. 3d at

745-46 (finding that similar allegations were “essentially indistinguishable from those in Allen,

in which it also was alleged that ‘GreatBanc failed to conduct an adequate inquiry into the value

of Personal-Touch’s stock’”); Blackwell v. Bankers Trust Co. of S.D., No. 3:18-CV-141-CWR-

FKB, 2019 WL 1433769, at *3-4 (S.D. Miss. Mar. 29, 2019) (denying motion to dismiss claims

of breach of fiduciary duty by trustee where plaintiff alleged that trustee relied upon unrealistic

growth projections and unreliable financials without sufficient investigation). This conclusion

dovetails with ERISA’s status as a “remedial statute to be liberally construed in favor of

employee benefit fund participants.” Allen, 835 F.3d at 673 (quoting Kross v. W. Elec. Co., 701

F.2d 1238, 1242 (7th Cir. 1983)). Of course, Plaintiff will be required to elaborate on her

allegations and prove her claims as the case proceeds.

b. Alleged Co-Fiduciaries

In Count IV, Plaintiff alleges that the Selling Shareholders are subject to co-fiduciary

liability for Argent’s alleged breaches. ERISA provides for such liability under the following

circumstances:

(1) if [the named fiduciary] participates knowingly in, or

knowingly undertakes to conceal, an act or omission of such other

fiduciary, knowing such act or omission is a breach;

(2) if, by [the named fiduciary’s] failure to comply with section

1104(a)(1) of this title in the administration of his specific

responsibilities which give rise to his status as a fiduciary, he has

enabled such other fiduciary to commit a breach; or

(3) if [the named fiduciary] has knowledge of a breach by such

other fiduciary, unless he makes reasonable efforts under the

circumstances to remedy the breach.

29 U.S.C. § 1105(a).

i. Management Shareholders

The Management Shareholders are alleged to have appointed the plan administrator,

giving them “an ongoing fiduciary duty under ERISA to monitor the activities of their

appointees.” See Howell, 633 F.3d at 573. “The Department of Labor has explained that the duty

[to monitor] requires reviewing ‘the performance of trustees and other fiduciaries’ at ‘reasonable

intervals’ and ‘in such [a] manner as may be reasonably expected to ensure that their

performance has been in compliance with the terms of the plan and the statutory standards, and

satisfied the needs of the plan.’” Bartnett v. Abbott Labs., No. 20 C 2127, 2021 WL 428820, at

*5 (N.D. Ill. Feb. 8, 2021) (citing 29 C.F.R. § 2509.75-8 at FR-17 (Department of Labor

questions and answers)).

Although Defendants argue that Plaintiff has not plausibly alleged their actual knowledge

or that they enabled a fiduciary breach by Argent (ECF No. 30 at 9-11), Plaintiff’s allegations

that the Management Shareholders caused the appointment of Argent to oversee the ESOP

Transaction and knew the company’s true valuation but failed reasonably to monitor Argent’s

ensuing performance suffice for this stage in the case. See Gamino v. KPC Healthcare Holdings,

Inc., No. 5:20-CV-01126-SB-MRW, 2021 WL 5104382, at *7 (C.D. Cal. Nov. 1, 2021) (holding

that plaintiff sufficiently alleged knowledge on part of in-house attorney who was longstanding

personal attorney to principal in business and also sold shares at same price on the same day as

principal); Foster v. Adams & Assocs., Inc., No. 18-CV-02723-JSC, 2020 WL 3639648, at *4

(N.D. Cal. July 6, 2020) (holding that “allow[ing] the trustee to misvalue the shares of a private

company based on an inaccurate picture of the company’s financial status” can suffice as to

certain defendants); Pizzella v. Reliance Trust Co., No. CV-19-03178-PHX-JJT, 2020 WL

805527, at *2-3 (D. Ariz. Feb. 18, 2020) (concluding that plaintiff pleaded actual knowledge of

co-fiduciary breach where company’s principal officer, sole shareholder, and sole director, who

appointed the trustee, provided an operations overview and company outlook, and rushed the

transaction timeline); Acosta v. Saakvitne, 355 F. Supp. 3d 908, 923 (D. Haw. 2019) (holding

that allegations that owner/board members “knowingly provid[ed] [the ESOP trustee] with

flawed information about the Company, permitt[ed] him to overstate the value of the Company’s

shares, and permitt[ed] him to direct the ESOP to purchase the shares for more than they were

worth” were “sufficient” for claims against the owner-board members “for a breach of duty to

monitor” the trustee and co-fiduciary liability under §§ 1105(a)(1) and (3));5 Gedek v. Perez, 66

F. Supp. 3d 368, 384-85 (W.D.N.Y. 2014) (denying motion to dismiss where plaintiff had

alleged defendants’ knowledge of company’s financial insecurities but reiterating that “this is not

meant to suggest that the Court believes that this claim has merit,” which “is not the issue before

me on these motions to dismiss”); Chesemore v. Alliance Holdings, Inc., 886 F. Supp. 2d 1007,

1057 (W.D. Wis. 2012) (holding that company violated its duty to monitor ESOP trustee’s

performance by “fail[ing] to adopt any system for monitoring [trustee’s] actions as the trustee of

the Alliance ESOP in a fashion reasonably designed to prevent him from breaching his duty of

loyalty under § 404(a) or entering prohibited transactions under § 406(b) [29 U.S.C. § 1106]”);

see also 29 U.S.C. § 1105(a)(3) (providing for liability “if [the named fiduciary] has knowledge

of a breach by such other fiduciary, unless he makes reasonable efforts under the circumstances

to remedy the breach”). Plaintiff therefore may proceed against these Defendants on this claim.

ii. Organizational Shareholders

Plaintiff argues that the Organizational Shareholders, as co-fiduciaries who willingly sold

stock through an ESOP transaction and with knowledge of Argent’s breach, also are responsible

for Argent’s alleged breaches of fiduciary duty. The Court, though, has already found that the

allegations of the complaint are insufficient for an inference that the Organizational Shareholders

were fiduciaries. They thus do not fall within the terms of 29 U.S.C. § 1105(a)(1)-(3). There

also is no basis to assume they should have known or did know of any flaws in the stock or

company valuation or any deficiencies in Argent’s evaluation. That they knew the sale price for

the stock they were selling, without more, is not enough to plausibly suggest liability under §

1105(a).

5 As the court emphasized, “[w]hether [defendants, who were owners/board members,] in fact

knew that the LVA valuation reports were overstated valuations based on their expertise and

understanding of the Company’s financial projections is a question beyond the scope of the

present motion.” Saakvitne, 355 F. Supp. 3d at 924.

B. ERISA Breach Through Prohibited Transactions

Section 1106(a) pertains to transactions between a plan and a “party in interest” and

provides that a plan fiduciary “shall not cause the plan to engage in” certain transactions. 29

U.S.C. § 1106(a)(1). In Count I, Plaintiff claims that Symbria and every Selling Shareholder

constituted a party in interest under ERISA and that Argent, the Plan fiduciary, violated ERISA,

29 U.S.C. § 1106(1)(1)(A) and (B), by engaging in a transaction that Argent knew or should

have known constituted a direct or indirect sale or exchange or lending of money or extension of

credit between the Plan and the Selling Shareholders. In Count IV, she alleges that the Selling

Shareholders were parties in interest with actual or constructive knowledge of the conditions

making the transaction unlawful. Defendants move to dismiss these claims.

1. Trustee

Argent argues that Plaintiff has affirmatively pleaded facts demonstrating that the ESOP

Transaction satisfied two ERISA exemptions because: (1) the transaction involving “the

acquisition by a plan of qualifying employer securities” was “for adequate consideration” and no

commission was charged; and (2) the loan the ESOP assumed in the ESOP Transaction was

permissible as “primarily for the benefit of participants” and “at an interest rate which [wa]s not

in excess of a reasonable rate.” (See ECF No. 33 at 19-20 (quoting 29 U.S.C. §§ 1108(e),

1108(b)(3))).

Although ERISA does exempt transactions satisfying either of the above from being

prohibited transactions, the Seventh Circuit has held that “an ERISA plaintiff need not plead the

absence of exemptions to prohibited transactions.” Allen, 835 F.3d at 675 (citing Fish v.

GreatBanc Trust Co., 749 F.3d 671, 685 (7th Cir. 2014)); see also United States v. N. Trust Co.,

372 F.3d 886, 888 (7th Cir. 2004) (observing that a complaint must only state a claim on which

relief may be granted and need not “plead around defenses”).

Plaintiff thus did not need to plead that any exemption did not apply. And her allegations

do not affirmatively plead that either exemption applies, i.e., that consideration was

incontrovertibly adequate or that the loan was at a reasonable rate of interest and primarily

benefited the participants.

As to the § 1108(e) exemption, although Argent would like the Court to infer, based upon

the reasoning in Lee, 2019 WL 3729721, that the Plan’s reported valuations of between

$7,800,000.00 and $11,000,000.00 indicate that the stocks were worth more than Plaintiff paid

(see ECF No. 33, at 19), the Court declines to draw that inference from the pleadings alone, for

the reasons stated above. Plaintiff’s allegations plausibly suggest an overpayment in the ESOP

Transaction, which is sufficient for this stage. See Lysengen, 498 F. Supp. 3d at 1019-20

(concluding that “Plaintiff has plausibly alleged that the stock price movement is suspicious and

suggests the ESOP overpaid” and that “defendants cannot defeat Plaintiff’s claims based on their

assertion that the stock price was reasonable”); Gamino, 2021 WL 162643, at *3 (“But Lee[,

2019 WL 3729721,] did not involve the additional allegations here—the prior purchase at a

significantly lower price and subsequent financial distress—which support (at least for the

purposes of a 12(b)(6) motion) the plausible inference that the 2015 transaction was not for fair

market value.”). The Court similarly declines to determine at this stage the applicability of the

exception in 1108(b)(3); the Court cannot on this record determine the primary beneficiaries of

the loan or the reasonableness of its interest rate. See Schmalz v. Sovereign Bancorp, Inc., 868 F.

Supp. 2d 438, 458 (E.D. Pa. 2012) (“[T]he reasonableness of the interest rate is generally a

question of fact that requires the presentation of evidence.”).

2. Selling Shareholders

Plaintiff alleges in Count IV that the Selling Shareholders are parties in interest that

knowingly participated in the ESOP Transaction and therefore can be held liable for “appropriate

equitable relief” for transactions prohibited under 29 U.S.C. § 1106(a) and Argent’s violations of

fiduciary duty under 29 U.S.C. § 1104(a)(1)A), (B). (ECF No. 47 at 9) (citing 29 U.S.C. §

1132(a)(3); Harris, 530 U.S. at 250-51). These Defendants variously attack the viability of the

claims and whether they are “parties in interest” as to the ESOP Transaction.

a. Viability of Claim as to Violations of § 1104

In Harris, the Supreme Court held that the authorization in 29 U.S.C. § 1132(a)(3) for “a

‘participant, beneficiary, or fiduciary’ of a plan to bring a civil action to obtain ‘appropriate

equitable relief’ to redress violations of ERISA Title I . . . extends to a suit against a nonfiduciary

‘party in interest’ to a transaction barred by § 406 [29 U.S.C. § 1106].” 430 U.S. at 241. The

Management Shareholders insist that the Supreme Court’s rationale as to claims under § 406

should not be extended to claims invoking § 404 [29 U.S.C. § 1104].6 (ECF No. 30 at 11-12

(citing Appvion, Inc. Ret. Sav. & Emp. Stock Ownership Plan v. Buth, 475 F. Supp. 3d 910, 947

(E.D. Wis. 2020), for proposition that “no such cause of action exists”)).

The Management Shareholders have provided no logical or textual basis for

distinguishing a claimed violation of 29 U.S.C. § 1104 from one under 29 U.S.C. § 1106, and the

Court agrees with the Seventh Circuit’s supposition that “Harris’s reasoning would seem to

extend equally to a § 404 [29 U.S.C. § 1104] fiduciary duty claim.” Halperin v. Richards, 7

F.4th 534, 553 n.3 (7th Cir. 2021). Accordingly, the Management Shareholders’ motion to

dismiss on this ground is denied.

b. Status of Selling Shareholders as Parties in Interest

“Congress defined ‘party in interest’ to encompass those entities that a fiduciary might

be inclined to favor at the expense of the plan’s beneficiaries.” Harris, 530 U.S. at 242. In

relevant part, ERISA defines “‘party in interest’ to mean[]”:

as to an employee benefit plan—

(A) any fiduciary . . . , counsel, or employee of such employee

benefit plan;

6 The Organizational Shareholders appear to accept that a plan beneficiary could bring a lawsuit

for appropriate equitable relief as to a violation of § 404. (ECF No. 27 at 12).

. . .

(C) an employer any of whose employees are covered by such

plan;

. . .

(E) an owner, direct or indirect, of 50 percent or more of—(i) the

combined voting power of all classes of stock entitled to a vote or

the total value of shares of all classes of stock of a corporation;

. . .

(G) a corporation . . . of which (or in which) 50 percent or more

of—(i) the combined voting power of all classes of stock entitled

to vote or the total value of shares of all classes of stock of such

corporation, . . . is owned directly or indirectly by persons

described in subparagraph (A) . . . or (E);

[or]

(H) an employee, officer, director (or an individual having powers

or responsibilities similar to those of officers or directors), or a 10

percent or more shareholder directly or indirectly, of a person

described in subparagraph . . . (C) . . . (E), or (G), or of the

employee benefit plan[.]

29 U.S.C. § 1002(14). “The term ‘person’ means an individual, partnership, joint venture,

corporation, mutual company, joint-stock company, trust, estate, unincorporated organization,

association, or employee organization.” 29 U.S.C. § 1002(9).

Defendants Krueger and Noesen, both Symbria officers, do not challenge Plaintiff’s

suggestion that they were parties in interest to the ESOP Transaction (ECF No. 1 ¶ 58); (see ECF

No. 30 at 12-14 (challenging Plaintiff’s allegations as to “knowing participation” of Management

Shareholders), and Defendant Callan, the President of a Symbria subsidiary, adopts their

arguments.7 (ECF No. 35, 37, 54, 63.) The Court accordingly assumes, for the purposes of this

motion, that the Management Shareholders are parties in interest.

The Organizational Shareholders, though, insist that they are not within the above

definition of parties in interest, from whom Plaintiff may seek appropriate equitable relief after

Harris. Plaintiff asserts that they qualify within subsection (H) because each of the twelve “had

the power to appoint a director.” (ECF No. 47 at 9-10.)8 But the definition of “party in interest”

7 At least as to Noesen and Krueger, the reasoning is clear enough, as they appear to fall within

the definition of 29 U.S.C. § 1002(14)(C), (H), as “employee[s], officer[s], or director[s] of” “an

employer whose employees are covered by” the Plan. Callan does not seem to fit as neatly

within that definition, but he does not contest the point.

8 Plaintiff argues also that the organization-appointed directors “together constituted a

controlling block” of the Board. (ECF No. 47 at 10.) Plaintiff, though, provides no facts linking

directors appointed by the separate Organizational Shareholders, and, in any event, Plaintiff

points to no portion of the “party in interest” statutory definition that would apply. Further, that

does not encompass those who “had the power to appoint a director.” 29 U.S.C. § 1002(14)(H).

Plaintiff also alleges that these Defendants were “persons” with “powers or responsibilities” akin

to those of a director and therefore fall within the above definition. (ECF No. 1 ¶¶ 126-127.)

The definition, though, includes “individuals,” not “persons” who have such powers and

responsibilities, and thus does not include entities like the Organizational Shareholders. After

all, given the definition of “person” above, “individual” and “person” cannot be read to be

synonymous; “individual” must be read to refer to a natural person. See Mohamad v. Palestinian

Auth., 566 U.S. 449, 454-56 (2012) (explaining that the ordinary meaning of “individual,” the

fact that “federal statutes routinely distinguish between an ‘individual’ and an organizational

entity of some kind,” and that the Court “generally seek[s] to respect Congress’ decision to use

different terms to describe different categories of people or things” contributed to its

determination that “individual” as used in the Torture Victim Protection Act of 1991 referred to a

natural person). The Organizational Shareholders were not directors, and they are not

“individual[s]” with similar powers, and therefore do not fall within the definition of party in

interest that Plaintiff invokes. Accordingly, Plaintiff has failed to allege facts plausibly

suggesting that the Organizational Shareholders are parties in interest to the ESOP Transaction.9

c. Prohibited Transaction

Given the allegations of a seller-financed stock transaction between the Plan and parties

in interest, the complaint alleges a prohibited transaction for the purposes of 29 U.S.C. §

1106(a)(1). See Lysengen, 498 F. Supp. 3d at 1020.

d. Knowing Participation in Prohibited Transaction

“A plan fiduciary that knows the details of a prohibited transaction ‘knows or should

know’ that the transaction is prohibited.” Neil v. Zell, 753 F. Supp. 2d 724, 732 (N.D. Ill. 2010)).

Thus, Plaintiff has sufficiently alleged Argent’s knowing participation in the prohibited

transaction.

The Management Shareholders argue that Plaintiff failed to plead their knowing

participation in the ESOP Transaction. (ECF No. 27 at 11-12; ECF No. 30 at 12-14; ECF No.

37.) The Court agrees with Plaintiff that allegations that “high-ranking Symbria officers” knew

or should have known the content of projections, company valuations, and other information

provided by Symbria, both because of their positions and their participation in the transaction,

are sufficient for this stage of the litigation. Plaintiff need not plead more under the

the ESOP Transaction was listed as a “party-in-interest” investment in Symbria’s annual filings,

(id.), does not indicate that the Organizational Shareholders themselves are parties in interest; the

Management Shareholders, after all, do not presently contest that they were parties in interest to

that transaction.

9 Plaintiff suggests that one Defendant organization may have owned two Symbria shares, which

would constitute ownership of more than ten percent and put that entity within the second half of

the definition of party in interest in 29 U.S.C. § 1002(H). (ECF No. 1 ¶ 56.) Plaintiff may,

consistent with Federal Rule of Civil Procedure 11, timely amend her complaint to include such

allegations against the pertinent Defendant in an amended complaint.

circumstances. See Lysengen v. Argent Trust Co., No. 20-1177, 2022 WL 854818, at *5 (C.D.

Ill. Mar. 22, 2022) (“The Court is persuaded that Plaintiff has at least pleaded that the Selling

Shareholders had constructive knowledge that the transaction was unlawful due to (1) the

overvaluation of stock, (2) their direct or indirect involvement of the company as shareholders

and family members, and (3) the fact that this benefitted the Selling Shareholders by overpaying

them millions of dollars[,]” which are “sufficient facts to survive a motion to dismiss.”); see also

Allen, 835 F.3d at 678 (“ERISA plaintiffs generally lack the inside information necessary to

make out their claims in detail unless and until discovery commences.”); De La Torre, 2021 WL

843453, at *3 (declining to grant motion to dismiss where allegations upon information and

belief were related to matters internal to the business and defendants’ knowledge); Hacker, 2011

WL 5008311, at *5 (“Although the allegation regarding Defendant Herman’s involvement in the

decision making process is based only on information and belief, the role of a corporate director

and officer in the internal decisions of the company is peculiarly within the Defendants’

knowledge.”). While, again, the factual link appears weaker as to Callan, he has not developed

any argument differentiating himself from Noesen and Krueger. The Court therefore declines to

dismiss the Management Shareholders on this ground.

The Organizational Shareholders also argue their lack of knowing participation in the

ESOP Transaction as parties in interest. Although the Court has determined that the

Organizational Shareholders are not parties in interest, for completeness, the Court will address

this issue. Unlike the Management Shareholders, who may be presumed to be aware of the true

state of the company and its share valuation, the complaint provides no indication that the

Organizational Shareholders could or should have had such insider knowledge of the Symbria

valuations and projections. Accordingly, Plaintiff has not sufficiently alleged the Organizational

Shareholders’ knowing participation in a prohibited transaction.

e. Appropriate Equitable Relief

The Management Shareholders next assert that Plaintiff failed to plead any entitlement to

“appropriate equitable relief.” (ECF No. 30 at 14.) Courts have held that “equitable restitution

(including its disgorgement variant) generally requires specifically identifiable property or its

traceable proceeds” and dismissed claims purporting to seek “appropriate equitable relief” when

plaintiffs did not identify such property or proceeds. See Depot, Inc. v. Caring for Montanans,

Inc., 915 F.3d 643, 660-65 (9th Cir. 2019); Teets, 921 F.3d at 1229 (“We conclude summary

judgment was properly granted because Mr. Teets failed to identify the particular property in

Great-West’s possession over which he can ‘assert title or right to possession.’”) (citation

omitted); but see Fish v. GreatBanc Trust Co., 109 F. Supp. 3d 1037, 1042 n.3 (N.D. Ill. 2015)

(“Because plaintiffs seek to recover specific funds that were transferred to MFF by the Morgan

defendants, this is not a case in which the plaintiffs seek essentially legal relief that is merely

cloaked in terms in equity in order to trigger the applicability of § 1132(a)(3).”) (citations

omitted). Plaintiff has not identified property or proceeds in the manner described in Depot and

Teets. Without reaching the issue of what identification ultimately will be necessary, the Court

is disinclined to dismiss Plaintiff’s remaining party-in-interest claims at the pleading stage

merely because she has not at the outset provided specific identification unlikely to be available

to her at this stage. See Teets, 921 F.3d at 1227-31 (addressing grant of summary judgment

rather than motion to dismiss). The Management Shareholders, after all, remain in this case both

as co-fiduciaries and as parties in interest to a prohibited transaction.

C. ERISA Breach Through “Void” Indemnification Agreement

ERISA generally declares “any provision in an agreement or instrument which purports

to relieve a fiduciary from responsibility for any responsibility, obligation, or duty under this

part” to “be void as against public policy.” 29 U.S.C. § 1110(a). Excepted from that declaration

are some types of insurance coverage. Id. § 1110(b).

Plaintiff in Count III alleges that Argent’s indemnification agreement with Symbria is

void under § 1110(a), and any attempt by Argent to enforce the void indemnification provision

would violate § 1104(a)(1)(A). (ECF No. 1 ¶¶ 106-07.) Without quoting the language of the

agreement, Argent contends that its indemnification provision falls within the insurance

exceptions because Argent cannot seek indemnification in the event of a proved fiduciary-duty

breach. (ECF No. 33 at 20-21 (citing ECF No. 34-4, Decl. David H. Williams in Supp. Argent

Trust Co.’s Mot. Dismiss, Ex. 4, ¶ 6)). Plaintiff retorts that, because the “carve out from

Symbria’s obligation to indemnify” that Argent references is limited to “a ‘claim, damage,

expense, liability, or loss . . . [] attributable to any Indemnitee’s breach of fiduciary duty under

ERISA, gross negligence, or willful misconduct,’” Argent may be able to seek indemnification as

to “Count I [§ 1106(a)] prohibited transaction claims,” for which there is “per se liability.” (ECF

No. 46, Pl.’s Opp’n Def. Argent Trust Co.’s Mot. Dismiss, at 20 (emphasis added)). Argent

replies “[i]t is self-evident that a fiduciary’s duties under ERISA include a duty not to cause non-

exempt prohibited transactions.” (ECF No. 57 at 20.)

The Court declines to dismiss Count III at this stage. See Lysengen, 498 F. Supp. 3d at

1023 (declining to dismiss identical provision, explaining that, “at best, this provision is

ambiguous” and could not be resolved “at this early stage in litigation,” and “the indemnification

would indirectly place the indemnification burden on the ESOP, which is impermissible under

ERISA”); but see McMaken, 2019 WL 1468157, at *5 (holding that plaintiff plausibly stated a

claim that a different indemnification provision was void under § 1110 “because it potentially

provides indemnification for GreatBanc’s per se violations under ERISA § [1106]” and

distinguishing a provision excluding “indemnification for a final judgment resulting from ‘the

violation of any fiduciary duty imposed under ERISA’” because that would “encompass[]

ERISA § [1106] violations”).

CONCLUSION

The motion of Defendant Argent Trust Company to dismiss under Federal Rules of Civil

Procedure 12(b)(1) and 12(b)(6) [32], joined by all Defendants as to the arguments under Rule

12(b)(1), is denied. The motion of Defendants Jill Krueger and Thomas Noesen, Jr., joined by

John R. Callen, to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6) [29]

[37] is denied. The motion of Defendants Mather Lifeways; Covenant Retirement Communities,

Inc.; United Methodist Homes & Services; St. Paul’s House & Healthcare Center; Norwood Life

Care Foundation; Central Baptist Village; Lifelink Corporation; Norwegian Lutheran Bethesda

Home Association; Friendship Senior Options, NFP; Rest Haven Illiana Christian Convalescent

Home; Franciscan Sisters of Chicago Service Corporation; and Lutheran Home and Services for

the Aged, Inc. to dismiss under Federal Rule of Civil Procedure 12(b)(6) [26] is granted. The

claims against Defendants Mather Lifeways; Covenant Retirement Communities, Inc.; United

Methodist Homes & Services; St. Paul’s House & Healthcare Center; Norwood Life Care

Foundation; Central Baptist Village; Lifelink Corporation; Norwegian Lutheran Bethesda Home

Association; Friendship Senior Options, NFP; Rest Haven Illiana Christian Convalescent Home;

Franciscan Sisters of Chicago Service Corporation; and Lutheran Home and Services for the

Aged, Inc. are dismissed without prejudice. The remaining Defendants shall answer the

complaint by August 31, 2022.

DATE: August 10, 2022

Hemet Ce ggasi

Hon. Ronald A. Guzman

United States District Judge

19