Friedman v. Lippman

Background

Steven Friedman brought a claim under section 502(a)(1)(B) of the Employee Retirement Income Security Act, a federal law governing employee-benefit plans. He alleged that he had accrued $164,920 in benefits under Chiat-Day’s Employee Profit Sharing and 401(k) Plan while working for Chiat-Day from 1985 through 1993.

The opinion states that Chiat-Day combined with or was acquired by TBWA in 1995 and that Friedman alleged the plan was later terminated and its assets liquidated. In 2016, Friedman received a Social Security Administration statement showing benefits under the plan in the amount of $164,920. He then contacted Omnicom Group, Inc., identified in the complaint as TBWA’s parent company, and Chiat-Day’s former chief operating officer. Friedman received conflicting information about the plan’s status and whether the benefits had been paid. He maintained that he had never received them.

Friedman sued the plan, TBWA Worldwide Inc., plan trustees Michael Kooper and Stacey Lippman, and other defendants to recover the benefits. The opinion states that Colette Chestnut and National Union Fire Insurance Company of Pittsburgh, PA, were voluntarily dismissed from the action. The ruling addressed Kooper’s motion to dismiss the claim against him in his individual capacity.

Kooper’s Motion to Dismiss

Kooper moved to dismiss under Rule 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. He argued that, under Second Circuit precedent, a claimant seeking benefits under section 502(a)(1)(B) may sue the plan and its administrators or trustees only in their official plan capacities, not personally.

Friedman argued that this limitation should not apply because the plan was defunct. He also argued that section 1132(d)(2) contemplated individual liability and that denying him the ability to sue Kooper personally would deprive him of due process. The opinion notes that Friedman expressly disclaimed alleging a breach of fiduciary duty under section 1109(a).

Court’s Analysis

The court relied on Second Circuit precedent holding that, in a benefits-recovery claim, only the plan and its administrators and trustees acting in their plan capacities may be held liable. The court also considered section 1132(d)(2), which provides that a money judgment against an employee-benefit plan is enforceable against another person only if that person’s individual liability is established under the statute.

The court explained that the statute establishes individual liability for a fiduciary who breaches fiduciary responsibilities, obligations, or duties. Because Friedman did not allege such a breach, the court concluded that he did not state a claim against Kooper in his individual capacity. The court found no authority supporting individual trustee liability merely because a retirement plan had been terminated or lacked sufficient assets to pay a benefits judgment.

The court separately rejected Friedman’s due-process argument. It explained that due process protects against arbitrary government action, but no government entity was named in the case and Friedman did not allege government action depriving him of rights. The court therefore concluded that the due-process argument did not preserve his claim against Kooper.

Disposition

The court granted Kooper’s motion to dismiss. The opinion does not state that the dismissal was with or without prejudice. The Clerk was directed to terminate the motion, and the caption was amended to reflect the termination of Chestnut and National Union Fire Insurance as defendants.