# Oliver v. Black Knight Asset Management, LLC

> District Court, District of Columbia · September 26, 2011 · 812 F. Supp. 2d 2

URL: https://www.frixlaw.com/law-library/cases/2663610

## Case

- **Full name:** Carlotta OLIVER, Et Al., Plaintiffs, v. BLACK KNIGHT ASSET MANAGEMENT, LLC, Et Al., Defendants
- **Court:** District Court, District of Columbia
- **Decided:** September 26, 2011
- **Citations:** 812 F. Supp. 2d 2; 52 Employee Benefits Cas. (BNA) 2777; 2011 U.S. Dist. LEXIS 109149; 2011 WL 4442665
- **Precedential status:** Published
- **Opinion:** Opinion by Sullivan
- **Judges:** Judge Emmet G. Sullivan
- **Nature of suit:** Civil
- **Cited by:** 3 later opinions in the Frix Law Library

## Citator (automated)

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## Opinion text

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
________________________________
)
CARLOTTA OLIVER, et al., )
)
Plaintiffs, )
) Civil Action No. 10-1443 (EGS)
v. )
)
BLACK KNIGHT ASSET MANAGEMENT, )
LLC, et al., )
)
Defendants. )
)

MEMORANDUM OPINION

Plaintiffs Carlotta Oliver and Joe Seymour1 brought an

eight-count Amended Complaint alleging breaches of contract,

unjust enrichment, retaliation, breach of settlement agreement,

and violations of federal securities and employment benefit

statutes against their former employer, Black Knight Asset

Management, LLC (“Black Knight” or “the Company”), and its

controlling officers, Daryl Dennis and Stanley Snow.2 In the

Amended Complaint, plaintiff Oliver alleges that defendants

failed to compensate her in accordance with the terms of her

1
Mr. Seymour has only brought suit for one count of
breach of contract, and thus, the bulk of defendants’ motion to
dismiss addresses claims specific to Ms. Oliver.
2
Defendant Daryl Dennis is Black Knight’s President and
Chief Executive Officer. Am. Compl. ¶ 5. Defendant Stanley
Snow is described as an organizer of Black Knight, but there is
no further description of his current role in the Company. See
id.
employment agreement, terminated her in retaliation for filing a

wage and hour claim, and deprived her of benefits under the

Company’s welfare and benefit plans.

Pending before the Court is defendants’ motion to dismiss

under Rule 12(b)(1) for lack of jurisdiction or, in the

alternative, under Rule 12(b)(6) for failure to state a claim

upon which relief can be granted on any of the federal claims.

In addition, pending before the Court is plaintiffs’ motion for

partial summary judgment. Upon consideration of the motions,

the responses and the replies thereto, the applicable law, and

for the reasons set forth below, the motion to dismiss for lack

of jurisdiction is DENIED,3 the motion to dismiss for failure to

state a claim is GRANTED IN PART AND DENIED IN PART, and the

motion for partial summary judgment is DENIED.

I. BACKGROUND

Plaintiff Oliver was hired by Black Knight as Managing

Director, Business Development, in March 2007. Am. Compl. ¶ 2.

Under the terms of Ms. Oliver’s employment agreement, Black

Knight was required to pay her salary and related entitlements

and benefits. Id. ¶ 11. According to plaintiff, in June 2008,

without justification and in violation of her employment

3
Because the Court finds below that plaintiffs have
alleged sufficient facts to state a claim under ERISA on one of
their alleged counts, the Court concludes that it has subject-
matter jurisdiction over this action under Rule 12(b)(1).

2

agreement, Black Knight unilaterally and unlawfully attempted to

modify her pay structure. Id. Black Knight ceased paying Ms.

Oliver altogether in January 2010. Id. ¶ 12. Shortly

thereafter, she filed a complaint with the District of Columbia

Wage and Hour Office. Id. ¶ 13. In response, Black Knight’s

CEO, Daryl Dennis, represented to the Wage and Hour Office that

Black Knight would pay all compensation owed to Ms. Oliver--

approximately $24,000--the following day. Id. Instead, and as

plaintiff alleges, in retaliation for her wage and hour claim,

Black Knight terminated Ms. Oliver on February 26, 2010, a few

days short of the date on which, under Black Knight’s equity

participation plan, her five percent equity interest in the

Company was to vest. Id. ¶ 14. On May 26, 2010, upon learning

that Ms. Oliver intended to file the instant action, Black

Knight paid Ms. Oliver $18,000. Id. ¶ 15. To date, defendant

has not paid Ms. Oliver the remainder of what it had promised to

pay her, nor has it paid her the equity interest to which she

alleges she is entitled under the Company’s equity participation

plan. Id. Plaintiff also alleges that Black Knight was

obligated to pay her six months’ severance plus health benefits

if she was terminated without cause; it has failed to honor this

obligation. Id.

Plaintiff Seymour was hired by Black Knight in April 2008

to direct the Company’s 401(k) business development division.

3

Id. ¶ 4. Under the terms of his employment agreement with Black

Knight, he was entitled to be paid a base salary plus a

percentage of the assets he developed for Black Knight, as well

as his expenses. Id. ¶ 54. Although Mr. Seymour developed

business and incurred expenses in compliance with his agreement,

Black Knight has failed to pay him his base salary or his

percentage of assets, or to reimburse his expenses, since

October 2009. Id. ¶ 55. On May 26, 2010, upon learning that

Mr. Seymour intended to file suit for bad faith refusal to

compensate, Black Knight paid Mr. Seymour $7,700, a portion of

what he is owed. Id. Black Knight has failed to pay Mr.

Seymour the remainder of what he was owed under his employment

agreement.

Plaintiffs filed their initial complaint on August 25, 2010

alleging breaches of contract, retaliation, and unjust

enrichment. On September 16, 2010, defendants filed a motion to

dismiss the case under Rule 12(b)(1) due to a lack of complete

diversity of citizenship, as several members of the LLC,

including defendant Stanley Snow, are, like plaintiff Oliver,

citizens of Maryland. Defs.’ Mem. at 1. Plaintiffs then filed

an Amended Complaint on September 30, 2010, adding two claims

under the Employee Retirement Income Security Act (“ERISA”), 29

U.S.C. §§ 1001 et seq., and one claim under the Investment

Advisers Act, 15 U.S.C. § 80b-1 et seq. In response, defendants

4

filed another motion to dismiss, in which they argue that

plaintiffs have failed to state claims for any violations of

ERISA or the Investment Advisers Act, such that the Court does

not have federal question jurisdiction over this case.

Defendants also argue that plaintiffs have failed to make any

allegations as to defendants Daryl Dennis and Stanley Snow in

their individual capacities, and that the case should be

dismissed as to them. On April 19, 2011, plaintiffs filed a

motion for partial summary judgment concerning the issue of

whether Ms. Oliver has retained her five unit equity interest in

the Company. The motion to dismiss and the motion for partial

summary judgment are now ripe for determination by the Court.

II. LEGAL STANDARD

A. Rule 12(b)(1)

On a motion to dismiss for lack of subject-matter

jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of

Civil Procedure, the plaintiff bears the burden of establishing

that the court has jurisdiction. Lujan v. Defenders of

Wildlife, 504 U.S. 555, 561 (1992). The subject-matter

jurisdiction of the federal district courts is limited and is

set forth generally at 28 U.S.C. §§ 1331 and 1332. Under those

statutes, federal jurisdiction is available only when a “federal

question” is presented, or the parties are of diverse

citizenship and the amount in controversy exceeds $75,000. See

5

Arbaugh v. Y & H Corp., 546 U.S. 500, 513 (2006). A party

seeking relief in the district court must plead facts that bring

the suit within the court’s jurisdiction. See Fed. R. Civ. P.

8(a). Failure to plead such facts warrants dismissal of the

action. See Fed. R. Civ. P. 12(h)(3); see also Bell v. Hood,

327 U.S. 678, 682-83 (1946) (stating that a suit may be

dismissed for lack of jurisdiction where “the alleged claim

under the Constitution or federal statutes clearly appears to be

immaterial and made solely for the purpose of obtaining

jurisdiction”); Tooley v. Napolitano, 586 F.3d 1006, 1009 (D.C.

Cir. 2009) (“A complaint may be dismissed on jurisdictional

grounds when it ‘is patently insubstantial, presenting no

federal question suitable for decision.’” (quoting Best v.

Kelly, 39 F.3d 328, 330 (D.C. Cir. 1994))). If the court

concludes that it lacks subject-matter jurisdiction, the court

must dismiss the complaint in its entirety. See Arbaugh, 546

U.S. at 514.

In deciding a Rule 12(b)(1) motion, moreover, the court

must give the plaintiff’s factual allegations closer scrutiny

than would be required for a Rule 12(b)(6) motion because

subject-matter jurisdiction focuses on the court’s power to hear

the claim. See Macharia v. United States, 334 F.3d 61, 64, 69

(D.C. Cir. 2003). Thus, to determine whether it has

jurisdiction over a claim, the court may consider materials

6

outside the pleadings where necessary to resolve disputed

jurisdictional facts. Herbert v. Nat’l Acad. of Scis., 974 F.2d

192, 197 (D.C. Cir. 1992); Alliance for Democracy v. Fed.

Election Comm’n, 362 F. Supp. 2d 138, 142 (D.D.C. 2005).

B. Rule 12(b)(6)

A motion to dismiss under Rule 12(b)(6) tests the legal

sufficiency of a complaint. Browning v. Clinton, 292 F.3d 235,

242 (D.C. Cir. 2002). A complaint must contain “a short and

plain statement of the claim showing that the pleader is

entitled to relief, in order to give the defendant fair notice

of what the . . . claim is and the grounds upon which it rests.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal

quotation marks and citations omitted). “‘[W]hen ruling on a

defendant’s motion to dismiss, a judge must accept as true all

of the factual allegations contained in the complaint[,]’”

Atherton v. D.C. Office of the Mayor, 567 F.3d 672, 681 (D.C.

Cir. 2009) (quoting Erickson v. Pardus, 551 U.S. 89, 94 (2007)),

and grant the plaintiff “the benefit of all inferences that can

be derived from the facts alleged.” Kowal v. MCI Commc’ns

Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). A court need not,

however, “accept inferences drawn by plaintiffs if such

inferences are unsupported by the facts set out in the

complaint. Nor must the court accept legal conclusions cast in

the form of factual allegations.” Id. In addition,

7

“[t]hreadbare recitals of the elements of a cause of action,

supported by mere conclusory statements, do not suffice.”

Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “[O]nly a

complaint that states a plausible claim for relief survives a

motion to dismiss.” Id. at 1950.

C. Rule 56

Summary judgment should be granted only if the moving party

has shown that there are no genuine issues of material fact and

that the moving party is entitled to judgment as a matter of

law. See Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477

U.S. 317, 325 (1986). “A fact is material if it ‘might affect

the outcome of the suit under the governing law,’ and a dispute

about a material fact is genuine ‘if the evidence is such that a

reasonable jury could return a verdict for the nonmoving

party.’” Steele v. Schafer, 535 F.3d 689, 692 (D.C. Cir. 2008)

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986)). The moving party bears the initial burden of

demonstrating the absence of genuine issues of material fact.

See Celotex, 477 U.S. at 322-23. In determining whether a

genuine issue of material facts exists, the Court must view all

facts in the light most favorable to the non-moving party. See

Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986); Keyes v. Dist. of Columbia, 372 F.3d 434, 436 (D.C.

Cir. 2004). The non-moving party’s opposition, however, must

8

consist of more than mere unsupported allegations or denials;

rather, it must be supported by affidavits or other competent

evidence setting forth specific facts showing that there is a

genuine issue for trial. See Fed. R. Civ. P. 56(c)(1); Celotex,

477 U.S. at 324. “The mere existence of a scintilla of evidence

in support of the [non-movant]’s position will be insufficient;

there must be evidence on which the jury could reasonably find

for the [non-movant].” Anderson, 477 U.S. at 252.

III. ANALYSIS

A. Motion to Dismiss

1. ERISA Claims

a. Count II, 29 U.S.C. § 1140

Section 510 of ERISA provides, in relevant part, that it

“shall be unlawful for any person to discharge, fine, suspend,

expel, discipline, or discriminate against a participant or

beneficiary . . . for the purpose of interfering with the

attainment of any right to which such participant may become

entitled under the [employee benefit] plan . . . .” 29 U.S.C.

§ 1140. The enforcement of section 510 is provided for in 29

U.S.C. § 1132, which permits a beneficiary to bring an action:

“(A) to enjoin any act or practice which violates any provision

of this title or the terms of the plan, or (B) to obtain other

appropriate equitable relief (i) to redress such violations or

9

(ii) to enforce any provisions of this title or the terms of the

plan . . . .” Id. § 1132(a)(3).

In interpreting ERISA, the D.C. Circuit follows the burden

shifting approach employed in Title VII and Age Discrimination

in Employment Act (“ADEA”) cases. See May v. Shuttle, Inc., 129

F.3d 165, 169-70 (D.C. Cir. 1997); Lurie v. Mid-Atlantic

Permanente Med. Group, P.C., 729 F. Supp. 2d 304, 322 (D.D.C.

2010). Under that framework, the plaintiff is required to first

make out a prima facie case of prohibited employer conduct

before the burden shifts to the defendant to articulate a

legitimate reason for its action. May, 129 F.3d at 169. The

burden then shifts back to the plaintiff to prove that the

presented reasons are pretextual. Id. at 169-70.

In Count II, plaintiffs argue that “[d]efendants purported

to terminate Ms. Oliver’s rights under the Company’s equity

participation plan, thereby wrongfully depriving her of the

Plan’s benefits.” Am. Compl. ¶ 19. Defendants concede that the

plan at issue is an “employee pension benefit plan” under

ERISA,4 and that Black Knight is subject to ERISA as “an

4
The parties refer to three different plans in the
pleadings: (i) the equity participation plan, (ii) the 401(k)
plan, and (iii) the health care plan. Although plaintiffs refer
to all three in the complaint, plaintiffs’ ERISA claims are
focused on the equity participation plan, under which Ms. Oliver
was supposed to receive a five percent equity interest in the
Company. While defendants conceded that “the plan at issue” is
an ERISA qualified plan (see Defs.’ Mem. at 2; Defs.’ Reply Br.
10

employer engaged in commerce.” Defs.’ Mem. at 2; see also

Defs.’ Reply Br. at 5 & n.2. Defendants argue, however, that

plaintiffs fail to allege what the defendants did to violate

ERISA, other than conclusory allegations such as: “Through the

misconduct set forth in this [C]omplaint, Defendants improperly

caused Oliver to be removed as a participant in the Plans,

improperly removed the benefits to which she [is] entitled, and

improperly terminated her in violation of ERISA.” Defs.’ Mem.

at 2 (citing Am. Compl. ¶ 28). According to defendants,

plaintiff Oliver failed to allege that her termination was for

the purpose of interfering with the attainment of any right

available under the Company’s plan; rather, the Amended

Complaint is replete with allegations that plaintiff was

terminated in retaliation for filing a wage and hour claim.

Defs.’ Mem. at 5-6.

Defendants’ arguments on this point are unpersuasive.

Plaintiffs have alleged that Black Knight fired Ms. Oliver

without cause (i) in retaliation for filing a wage and hour

at 5), defendants also refer numerous times to the fact that
plaintiff Oliver withdrew from the health and benefit plans
before her termination. See, e.g., Defs.’ Mem. at 6 (“[D]espite
Oliver’s position that she was unlawfully deprived of her rights
under the plan by way of the termination on February 26, 2010,
she had voluntarily stopped participating in the 401(k) Plan in
September of 2009 and was no longer a participant in the health
care plan as of September, 2009 as well.”). The defendants
offer nothing to suggest that Ms. Oliver withdrew from or was
not entitled to benefits from the equity participation plan.

11

claim, and (ii) specifically for the purpose of depriving her of

her five percent interest under the equity participation plan,

thus depriving her of benefits she was entitled to under ERISA.

See Am. Compl. ¶¶ 19-21, 28. Plaintiffs state that Black Knight

terminated Oliver days before her interest was to vest. See id.

¶ 14. Under the lenient pleading standards of Rule 8, these

allegations are sufficient to state a claim at the motion to

dismiss stage and shift the burden to defendants to articulate a

legitimate reason for their action. Defendants have nowhere

offered a legitimate reason for their action in order to shift

the burden back to plaintiffs. Accordingly, defendants’ motion

to dismiss Count II of the Amended Complaint is DENIED.

b. Count III, 29 U.S.C. § 1109

Section 404 of ERISA requires every fiduciary of a plan to

“discharge his duties with respect to a plan solely in the

interest of the participants and beneficiaries and . . . in

accordance with the documents and instruments governing the plan

. . . .” 29 U.S.C. § 1104(a)(1). A “fiduciary” is defined as a

person who “exercises any discretionary authority or

discretionary control respecting management of [a] plan or

exercises any authority or control respecting management or

disposition of its assets . . . or has any discretionary

authority or discretionary responsibility in the administration

of such plan.” Id. § 1002(21)(A). Under section 409 of ERISA,

12

“[a]ny person who is a fiduciary with respect to a plan who

breaches any of the responsibilities, obligations, or duties

imposed upon fiduciaries . . . shall be personally liable to

make good to such plan any losses to the plan resulting from

each such breach . . . and shall be subject to such other

equitable or remedial relief as the court may deem appropriate.”

Id. § 1109(a). Section 502 specifically authorizes a

beneficiary to bring an action for a violation of section 409.

See id. § 1132(a)(2) (a civil action may be brought “by a

participant, beneficiary or fiduciary for appropriate relief

under section 409”).

In Count III, plaintiffs allege that Black Knight and Daryl

Dennis breached fiduciary duties to the plaintiffs in violation

of ERISA. Am. Compl. ¶ 34. Defendants make three arguments

refuting these allegations. First, defendants argue that

plaintiffs have failed to allege that the defendants exercised

any “authority or discretionary control” respecting the

management and/or disposition of any assets under the plan.

Defs.’ Mem. at 7. Second, defendants argue that plaintiffs fail

to state how a fiduciary duty was breached by either defendant.

Id. According to defendants, the mere fact that plaintiff

Oliver was terminated from the Company and deprived of her right

to participate in the “plan” does not lead to the conclusion

that the defendants breached any fiduciary duty to her. Id. at

13

3. Third, defendants argue that, although plaintiffs have

attempted to bring a claim on behalf of the plans, “it is clear

that [plaintiff Oliver’s] complaint is aimed at recovering on

her own behalf, not on behalf of any other purported plan

members, as she has raised no allegations that any other plan

members were injured in any manner because they were not.” Id.

at 7.

i. Fiduciary Status

Plaintiffs allege that both Black Knight and Daryl Dennis

were fiduciaries with respect to the Company’s plans.5 First,

plaintiffs allege that the administrator of a plan is a

fiduciary, but no administrator was designated in Black Knight’s

plan documents. Am. Compl. ¶ 31. Where a plan administrator is

not designated, the plan sponsor is the administrator. See 29

U.S.C. § 1002(16)(A). Plaintiffs thus assert that Black Knight,

as the sponsor of the plans, was the administrator and thus was

a fiduciary with respect to the plans. Am. Compl. ¶ 31; see

also 29 U.S.C. § 1002(16)(B) (defining “plan sponsor” as “the

employer in the case of an employee benefit plan established or

maintained by a single employer”). In addition, plaintiffs

allege that defendant Dennis had discretionary authority and

responsibility in the administration and management of Black

5
As discussed supra n.4, defendants have conceded that
the equity participation plan was an ERISA-qualified plan.

14

Knight’s plans, as well as authority and control respecting the

management or disposition of the plans’ assets. Am. Compl.

¶ 32.

In contrast to plaintiffs’ claims, however, ERISA defines

an administrator as a fiduciary “only to the extent that he acts

in such a capacity in relation to a plan.” Pegram v. Herdrich,

530 U.S. 211, 225-26 (2000) (citation omitted). Thus, in every

case charging a breach of fiduciary duty under ERISA, the

threshold question is “whether that person was acting as a

fiduciary (that is, was performing a fiduciary function) when

taking the action subject to complaint.” Id. at 226. Not all

actions taken by an ERISA fiduciary implicate these

responsibilities because an ERISA plan administrator “may wear

different hats.” Id. at 225. For example, it has long been the

rule that an employer or plan sponsor does not act in a

fiduciary capacity when adopting, modifying or terminating an

employee benefit plan. See Beck v. PACE Int’l Union, 551 U.S.

96, 101-02 (2007); Lockheed Corp. v. Spink, 517 U.S. 882, 890-91

(1996) (applying rule to pension benefit plan); Curtiss-Wright

Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995) (applying rule to

welfare benefit plan); Hartline v. Sheet Metal Workers’ Nat’l

Pension Fund, 286 F.3d 598, 599 (D.C. Cir. 2002). Rather than

acting as fiduciaries, employers or plan sponsors amending a

plan are “analogous to the settlors of a trust.” Lockheed, 517

15

U.S. at 890. This is because such acts are business decisions

that do not fall within the ambit of fiduciary duties.

Plaintiffs have not pled sufficient facts to show that

Black Knight was acting in its fiduciary capacity as an

administrator, rather than an employer or sponsor, when it

terminated Ms. Oliver’s employment and removed her from the

plans. In addition, plaintiffs have not alleged how defendant

Dennis possessed the discretionary authority of a fiduciary with

respect to the plans, other than as President and CEO of the

Company. However, even assuming, arguendo, that plaintiffs

could show that both Black Knight and Dennis were fiduciaries,

plaintiffs have failed to allege that defendants breached their

fiduciary duties, as described below.

ii. Breach of Fiduciary Duties

Plaintiffs assert that defendants improperly caused and/or

knowingly participated in (1) Oliver’s removal as a participant

in the plans; (2) removal of the benefits to which she was

entitled; and (3) her termination. According to plaintiffs, in

doing so, defendants breached their fiduciary duties to act “for

the purpose of benefiting the plans’ participant, i.e. Oliver,

and to prudently and loyally maintain the plans’ assets.” Am.

Compl. ¶ 34. However, as the Supreme Court has held, fiduciary

activity under ERISA is limited to discretionary acts of plan

16

“management” and “administration.” See Varity Corp. v. Howe,

516 U.S. 489, 502 (1996); see also Lockheed, 517 U.S. at 890.

Under ERISA, fiduciaries have a duty to invest the assets

of a plan prudently and to provide accurate information about

the plan to participants. For example, “managing or

administering the investment and use of [] trust assets are

deemed fiduciary functions.” Hartline v. Sheet Metal Workers’

Nat’l Pension Fund, 134 F. Supp. 2d 1, 13 (D.D.C. 2000), aff’d,

286 F.3d 598 (D.C. Cir. 2002) (citation omitted). A plan

administrator breaches his or her fiduciary duties by, inter

alia, deceiving a plan’s beneficiaries into withdrawing from

their old plan, forfeiting their benefits, and enrolling in a

new plan in order to save the employer money at the

beneficiaries’ expense. See Varity, 516 U.S. at 492-94, 506.

Additionally, the D.C. Circuit has found that a failure to

disclose material information to beneficiaries is a breach of a

fiduciary’s duties. See Eddy v. Colonial Life Ins. Co. of Am.,

919 F.2d 747, 750 (D.C. Cir. 1990).

By contrast, the Supreme Court has made clear that acts

such as terminating a fund in its entirety or allowing a plan to

become insolvent do not implicate fiduciary duties because there

are no more benefits for the fiduciary to guarantee. See Beck,

551 U.S. at 101-02, 106. As stated supra, Section III.A.1.b.i.,

such actions are business decisions that do not trigger

17

fiduciary obligations. According to the Supreme Court, “plan

participants and beneficiaries must rely primarily (if not

exclusively) on state-contract remedies if they do not receive

proper payments or are otherwise denied access to their funds.”

Id. at 106. Termination of employment and removal from a plan

are not the types of actions that implicate fiduciary duties and

are instead more akin to business decisions not subject to

ERISA’s fiduciary obligations. For these reasons, plaintiffs

have not stated sufficient facts to support a claim for relief

under 29 U.S.C. § 1109.

iii. Recovery on Behalf of Individual

Finally, defendants argue that plaintiffs cannot seek to

recover individually for an alleged breach of fiduciary duties,

but rather must seek to recover on behalf of the plan as a

whole. See Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134,

140-42 (1985). Because plaintiffs have not stated sufficient

facts to show that Ms. Oliver seeks to recover on behalf of the

plan as a whole, defendants argue that plaintiffs’ claim for

breach of fiduciary duties should be dismissed. Defs.’ Mem.

at 7. Even assuming, arguendo, that plaintiffs could make a

claim to recover individually,6 plaintiffs have not stated

6
See, e.g., Varity, 516 U.S. at 510-13, 515 (holding
that in an action for equitable relief, a companion subsection,
29 U.S.C. § 1132(a)(3), can, in fact, provide plaintiffs with a
18

sufficient facts to show that defendants breached any fiduciary

duties. Accordingly, the motion to dismiss Count III of the

Amended Complaint is GRANTED, and plaintiffs’ claim for breach

of fiduciary duties is DISMISSED.

2. Investment Advisers Act Claim

Section 206 of the Investment Advisers Act (“IAA”)

provides, in relevant part, that it is unlawful for any

investment adviser to “engage in any act, practice, or course of

business which is fraudulent, deceptive, or manipulative.” 15

U.S.C. § 80b-6(4). Section 215 of the Act provides a private

right of action to void or rescind a contract where an

investment adviser has engaged in manipulative or unlawful

conduct. 15 U.S.C. § 80b-15. As the Supreme Court has stated,

sections 206 and 215 were intended to benefit the clients of

investment advisers. See Transamerica Mortg. Advisors v. Lewis,

444 U.S. 11, 17 (1979);  SEC v. Capital Gains Research Bureau,

Inc., 375 U.S. 180, 187-88 (1963); see also Paul S. Mullin &

Assocs., Inc. v. Bassett, 632 F. Supp. 532, 537 (D. Del. 1986)

(“Courts have held uniformly that only an investment adviser and

its clients (or prospective clients) are proper parties in a

private suit under the [IAA].”); Reserve Mgmt. Corp. v. Anchor

remedy for a breach of fiduciary duty in their individual
capacity, rather than solely on behalf of the plan).

19

Daily Income Fund, Inc., 459 F. Supp. 597, 608 (S.D.N.Y. 1978)

(same).

In Count IV, plaintiffs allege that defendants’ unlawful

termination of Oliver’s participation in the equity

participation plan constituted a manipulative or deceptive

practice proscribed by the IAA. According to plaintiffs,

defendants engaged in manipulative conduct “when they terminated

Ms. Oliver’s plan participation on a pretextual basis in

retaliation for her exercise of [her] lawful right to file a

wage and hour claim.” Am. Compl. ¶ 39. However, as defendants

correctly argue, plaintiffs have not properly stated a claim

under the IAA because an employer-employee relationship is not

the type of relationship the IAA was intended to protect. In

addition, claims brought under the IAA generally must allege

elements similar to those required to prove securities fraud

violations,7 and plaintiffs have not even alleged these basic

elements.

Defendants argue that plaintiffs have failed to identify

how the “unlawful termination” of plaintiff Oliver is a

7
See, e.g., SEC v. Steadman, 967 F.2d 636, 641-42, 6447
(D.C. Cir. 1992); SEC v. Wall Street Publ’g Inst., Inc., 591 F.
Supp. 1070, 1082-84 (D.D.C. 1984); see also Vernazza v. SEC, 327
F.3d 851, 858-59 (9th Cir. 2003) (equating the materially false
statement or omission requirement in the IAA to that to that
required to prove violations of the Securities and Exchange
Acts, 15 U.S.C. §§ 77q(a) and 78j(b)).

20

“manipulative or deceptive practice.” Defs.’ Mem. at 3, 9

(citing Am. Compl. ¶ 38). Defendants here are correct.

Although the Act does not define “manipulative” and “deceptive”

practices, case law provides examples of the types of behavior

that will suffice to establish claims for violations of section

206. See, e.g., Wall Street Publ’g Inst., 591 F. Supp. at 1081-

87 (involving violations arising out of false and misleading

statements published in defendant’s magazine and defendant’s

failure to disclose consideration received in connection with

the publication of feature articles). The Supreme Court has

interpreted the IAA to impose upon the investment adviser “an

affirmative duty of utmost good faith, and full and fair

disclosure of all material facts,” as well as an “affirmative

obligation to employ reasonable care to avoid misleading” its

clients. Capital Gains Research Bureau, 375 U.S. at 194

(internal citations and quotation marks omitted). Plaintiffs’

primary claim here is that Ms. Oliver was wrongfully terminated.

See Am. Compl. ¶¶ 38-39. Plaintiffs have presented no

allegations that defendants committed any fraud or made any

untrue statements and/or omissions of material fact to

plaintiffs or anyone else. Without more, these allegations do

not suffice to make out a claim of a fraudulent, manipulative,

or deceptive act.8

8
Defendants further argue that plaintiffs fail to
21

Plaintiffs have failed to state any facts which could be

construed as providing the basis for a claim that defendants

engaged in any fraudulent, manipulative, or deceptive practice.

Accordingly, the motion to dismiss on this claim is GRANTED, and

plaintiffs’ claim under the IAA is DISMISSED.

3. Dismissal of Individual Defendants

Defendants argue that plaintiffs have not alleged

sufficient facts to support allegations against either Stanley

Snow or Daryl Dennis individually, as opposed to in their

official capacities as officers of the Company. Officers of a

corporation do not fall within ERISA’s definition of an

“employer,”9 and thus officers cannot be held personally liable

for a corporation’s alleged ERISA violations by virtue of their

relationship to the employer alone.10 See Connors v. P & M Coal

Co., 801 F.2d 1373, 1378 (D.C. Cir. 1986); see also Int’l Bhd.

allege any facts supporting their position that the Company’s
private placement offering (which contained the equity
participation plan) is an “Investment Advisers Contract,” as
defined in the Act. Defs.’ Mem. at 9. Plaintiffs wholly failed
to address this issue in their opposition, and therefore, the
Court finds that this point has been conceded.
9
ERISA defines an employer as one who acts “directly as
an employer, or indirectly in the interest of an employer, in
relation to an employee benefit plan; and includes a group or
association of employers acting for an employer in such
capacity.” 29 U.S.C. § 1002(5).
10
Even assuming, arguendo, that the individual
defendants could be held personally liable under the Investment
Advisers Act, as discussed supra Section III.A.2., a claim under
the IAA is wholly inappropriate in this context.

22

of Painters & Allied Trades Union v. George A. Kracher, Inc.,

856 F.2d 1546, 1548-50 (D.C. Cir. 1988) (affirming district

court’s conclusion that liability for a corporation’s delinquent

pension contributions does not extend to an individual who is

the organization’s chief officer and principal shareholder).

Once corporate liability has been established under ERISA,

“officers may be held personally liable for their corporations’

obligations under ERISA if they have acted as the ‘alter egos’

of their corporations or otherwise met the requirements that

justify ‘piercing the corporate veil’ under traditional common

law principles.” Connors, 801 F.2d at 1378 (citations omitted);

see also Bd. of Trs. v. Northern Steel Corp., 657 F. Supp. 2d

155, 160-61 (D.D.C. 2009).

In Labadie Coal v. Black, 672 F.2d 92 (D.C. Cir. 1982), the

D.C. Circuit identified a two-prong test for deciding when it is

appropriate to pierce the corporate veil: (1) whether there is

such unity of interest and ownership that the separate

personalities of the corporation and the individual no longer

exist; and (2) if the acts are treated as those of the

corporation alone, whether an inequitable result will follow.

See 672 F.2d at 96. Under the first prong, the court should

consider “the degree to which formalities have been followed to

maintain a separate corporate identity.” Id. The factors that

should weigh in the court’s determination include: (1) the

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nature of the corporate ownership and control; (2) failure to

maintain adequate corporate records; (3) failure to maintain

corporate formalities; (4) commingling of funds and corporate

assets; (5) diversion of the corporation’s funds or assets; and

(6) use of the same office or business location by the

corporation and the individual shareholders. Id. at 97-99.

As to defendant Snow, defendants assert that the Amended

Complaint has not made a single factual allegation against Mr.

Snow to permit recovery against him individually. Defs.’ Mem.

at 10. As the D.C. Circuit has held, mere reference to an

individual’s role as an officer in a company is insufficient to

establish liability. See Int’l Bhd. of Painters & Allied Trades

Union, 856 F.2d at 1548. Indeed, the Amended Complaint contains

only one sentence related to Mr. Snow: “Defendant Stanley Snow

is an organizer of Black Knight.” Am. Compl. ¶ 5.11 Plaintiffs

11
Plaintiffs attempt to incorporate additional facts
into their opposition as to Snow. See Pls.’ Opp. at 2 (“Black
Knight, through defendants Snow and Dennis, in June 2008
unilaterally and unlawfully attempted to modify Ms. Oliver’s pay
structure.”); id. at 3 (“Black Knight, at the behest of Stan
Snow and Daryl Dennis, wrongfully terminated Ms. Oliver on
February 26, 2010.”); id. (“Stan Snow caused Black Knight to pay
Ms. Oliver $18,000.00 . . . .”); id. at 8 (“On information and
belief, the actions taken by defendants have been taken at the
express direction of defendant Snow. Defendant Snow has exerted
dominion and control over Black Knight due to its financial
struggles.”). Because plaintiffs have not sought to amend their
complaint, these facts cannot be read into the complaint when
raised for the first time in the opposition. See Ghawanmeh v.
Islamic Saudi Acad., 672 F. Supp. 2d 3, 15 (D.D.C. 2009)
(“[S]uppositions in an opposition to a motion to dismiss are no
24

have not alleged that Snow did anything either on behalf of the

Company or in his individual capacity. Without more, the

complaint does not give defendant Snow notice of the claims

against him and the grounds upon which they rest. For this

reason, the motion to dismiss as to defendant Snow is GRANTED.

Defendants similarly argue that plaintiffs have not pled

sufficient facts in Counts I-IV to recover against defendant

Dennis individually. With respect to Mr. Dennis, plaintiffs

allege that Dennis occupied the role of President and CEO of

Black Knight; that he represented to the D.C. Wage and Hour

Office that Black Knight would pay Ms. Oliver the compensation

owed to her and then wrongfully terminated her instead; that he

had the responsibilities and obligations of Black Knight as

administrator of the Company’s equity participation and health

and benefit plans; and that he offered in writing to settle Ms.

Oliver’s claim and then refused to honor the terms of the draft

settlement agreement. See Am. Compl. ¶¶ 5, 13-14, 32, 50-51.

Plaintiffs have failed, however, to allege that Dennis did

anything outside of his role as President and CEO of the Company

that would permit him to be held personally liable under the

veil piercing or alter-ego theories discussed above.

substitute for the specific factual allegations plaintiff must
make in her complaint.”).

25

Accordingly, the motion to dismiss as to defendant Dennis is

GRANTED.

B. Motion for Partial Summary Judgment

In the motion for partial summary judgment, plaintiffs seek

an order entering judgment in Ms. Oliver’s favor on the issue of

whether she retained her equity units in Black Knight.

According to plaintiffs, the equity units were provided for

under the terms of Ms. Oliver’s employment and Black Knight’s

Offering Memorandum, and, under the terms of the employment

agreement, any forfeiture of the equity units was required to be

in writing. See Pls.’ Mot. Summ. J. at 1-4. Because no writing

evidencing forfeiture of Ms. Oliver’s equity exists, plaintiffs

argue that they are entitled to summary judgment on this issue.

Defendants argue that the employment agreement contains no

requirement that the Company obtain a document from plaintiff

evidencing a forfeiture of her interests, but rather, that the

agreement operates to divest the equity ownership automatically

when an employee is terminated prior to her third anniversary of

employment with the Company. See Defs.’ Opp. at 3-5.

Defendants further argue that genuine issues of material fact

exist at this stage of the litigation, in which minimal

discovery has been taken. See id. at 1-2, 7. Because the Court

is persuaded that genuine issues of material fact exist that

26

preclude summary judgment at this time, plaintiffs’ motion for

partial summary judgment is DENIED without prejudice.

IV. CONCLUSION

For the foregoing reasons, the Court concludes that

plaintiffs have failed to state a claim for breach of fiduciary

duties under ERISA, 29 U.S.C. § 1109 (Count III), or for relief

under the IAA, 15 U.S.C. § 80b-15 (Count IV). The Court

additionally concludes that plaintiffs have failed to state

claims against either Stanley Snow or Daryl Dennis in their

individual capacities. However, the Court concludes that

plaintiffs have alleged sufficient facts at this stage to make

out a claim for relief under section 510 of ERISA, 29 U.S.C. §

1140 (Count II). Accordingly, defendants’ motion to dismiss is

GRANTED IN PART AND DENIED IN PART. In addition, because

genuine issues of material fact exist that preclude summary

judgment at this time, plaintiffs’ motion for partial summary

judgment is DENIED without prejudice. A separate Order

accompanies this Memorandum Opinion.

SO ORDERED.

Signed: EMMET G. SULLIVAN
United States District Judge
September 26, 2011

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/2663610. Public record. Not legal advice.