Shepherd, Finkelman, Miller & Shah is pleased to announce that, on October 23, 2007, Defendants’ Motions to Dismiss were denied in the action captioned, Phones Plus, Inc. v. The Hartford Financial Services Group, Inc., Hartford Life Insurance Company (collectively, “The Hartford”) and Neuberger Berman Management, Inc. (“Neuberger”) (Civil Action No. 3:06CV01835 (AVC)). The opinion was authored by the Honorable Alfred V. Covello of the United States District Court for the District of Connecticut.
The case was brought by Plaintiff, Phones Plus, Inc. (“Phones Plus” or “Plaintiff”), individually, and on behalf of all similarly situated persons and entities, under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§1001 et seq., for Defendants’ alleged breaches of fiduciary duties, prohibited transaction rules and other provisions of ERISA, including dealing with the assets of Plaintiff’s 401K retirement plan (the “Plan”) in The Hartford’s own interest and contrary to the interests of the Plan.
Both Defendants The Hartford and Neuberger moved to dismiss Plaintiff’s Amended Complaint for a purported failure to state a claim upon which relief could be granted. In opposition, Phones Plus argued that it sufficiently alleged violations of ERISA by The Hartford and Neuberger and that The Hartford Financial Services Group, Inc. (“HFSG”) had direct liability as a fiduciary of the Plan, or, in the alternative, was jointly and severally liable to the Plan as a co-fiduciary for Hartford Life Insurance Company’s breaches of fiduciary duty; and that, to the extent that any of the Defendants were not deemed fiduciaries or co-fiduciaries under ERISA, each of the Defendants were liable to the Class as non-fiduciaries that knowingly participated in a breach of trust.
The Court rejected The Hartford’s argument that it was not a fiduciary of the Plan under ERISA. Instead, the Court upheld Counts I and II of Plaintiff’s Amended Complaint and found that Phones Plus had specifically alleged that each of the Defendants is a fiduciary of the Plan and had alleged sufficient facts to support claims under ERISA.
The Court also upheld Count III of Plaintiff’s Amended Complaint and found that Plaintiff’s allegations were sufficient to support a claim for relief for a non-fiduciary’s knowing participation in a breach of trust by an ERISA fiduciary. Further, the Court found that Phones Plus sufficiently alleged a breach of fiduciary duty by Neuberger and that The Hartford knowingly participated in Neuberger’s breach, and that damages resulted from this conduct. The Court also found that the allegations in Plaintiff’s Amended Complaint were sufficient to raise claims for relief against HFSG, which The Hartford Defendants had argued was a holding company that was not a party to any contract with Plaintiff.
Finally, the Court denied Neuberger’s Motion to Dismiss, thereby rejecting Neuberger’s argument that it was not a proper party to the action. The Court concluded that Phones Plus sufficiently alleged that Neuberger is an ERISA fiduciary with respect to the conduct alleged in Phones Plus’ Amended Complaint.
Shepherd, Finkelman, Miller & Shah congratulates attorneys James E. Miller, Patrick A. Klingman and Douglas P. Dehler for their exceptional work on this matter.