Scott v. AT&T Inc.
- James Donato
- 3:20-cv-07094
- U.S. District Court · Northern District of California
- 3
In Scott v. AT&T Inc., Judge Donato denied AT&T Services’ dismissal motion except for dismissing the Plan as a defendant.
The ruling affects the plaintiffs, AT&T Services, Inc., AT&T Inc., and the Plan. The plaintiffs’ fiduciary-breach claim may proceed at the pleading stage, while the Plan is no longer named as a defendant.
What happened
In Scott v. AT&T Inc., the plaintiffs brought claims under the Employee Retirement Income Security Act, including a claim that AT&T Services breached fiduciary duties and caused losses to the Plan.
AT&T Services argued that the plaintiffs were seeking only individual recovery, not recovery for losses suffered by the Plan, so the fiduciary-breach claim should be dismissed.
The court found that the complaint plausibly sought to restore losses to the Plan and denied the motion to dismiss in all other respects, but dismissed the Plan as a defendant. Judge Donato issued the order.
The detailed version
- Scott v. AT&T Inc. · No. 3:20-cv-07094
- James Donato
- June 29, 2022
Background
AT&T Services, Inc. moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. The motion targeted the plaintiffs’ fiduciary-breach claim under Section 502(a)(2) of the Employee Retirement Income Security Act, mainly stated in Count IV of the Second Amended Complaint. AT&T Services argued that the plaintiffs had not plausibly alleged a claim seeking to remedy losses suffered by the Plan and instead sought only individual relief.
Section 502(a)(2) allows plan participants to sue a fiduciary for relief that makes good losses to the plan. The court explained that this type of claim remedies injuries to the plan as a whole, not injuries suffered only by individual participants.
Court’s Analysis
The court concluded that the Second Amended Complaint plausibly alleged an injury to the Plan. The complaint said that the plaintiffs sought remedies against AT&T Services to make good all losses caused to the Plan by violations of the statute. It also alleged that AT&T Services breached duties of prudence and loyalty by calculating retirement benefits in a way that violated the statute’s actuarial-equivalence requirement, allowing AT&T Inc. to reduce the amount it had to contribute to fund benefits.
The requested remedies included restoring losses to the Plan, disgorging benefits and profits, and paying the Plan amounts owed to class members because of the alleged fiduciary breach. The court said that references to amounts owed to individual class members, individualized restitution, and restoration of losses to plan participants did not require dismissal at the motion-to-dismiss stage. The court left open the question of the proper scope of remedies for later consideration.
The court also addressed whether the Plan could remain a defendant. It stated that a plan itself cannot be sued for breach of fiduciary duty, while recognizing that participants may join the Plan in an action to obtain the requested relief. Because the plaintiffs agreed that the Plan need not be named as a defendant, the court dismissed the Plan on that basis.
Disposition
The court denied AT&T Services’ motion to dismiss, with one exception: the Plan was dismissed as a defendant. The court stated that dismissal was denied in all other respects. Judge James Donato entered the order on June 29, 2022.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.