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Chao v. Gene Shawn Group

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA


February 20, 2009

ELAINE L. CHAO, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, PETITIONER,
v.
GENE SHAWN GROUP, A LIMITED LIABILITY CORPORATION ALSO DOING BUSINESS AS A-Q DENTAL LABORATORY; YOUNG JIN LEE, AN INDIVIDUAL; JULIETTE MYUNG LEE, AN INDIVIDUAL; AND THE A-Q DENTAL LABORATORY 401(K) PROFIT SHARING PLAN, AN EMPLOYEE PENSION BENEFIT PLAN. DEFENDANTS.

The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

CONSENT JUDGMENT & ORDER

Plaintiff ELAINE L. CHAO, Secretary of Labor, United States Department of Labor ("Secretary") pursuant to her authority under §§ 502(a)(2) and (5) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(a)(2) and (5), has filed a Complaint against Defendants GENE SHAWN GROUP, a limited liability corporation also doing business as A-Q DENTAL LABORATORY; YOUNG JIN LEE, an individual; JULIETTE MYUNG LEE, an individual; and the A-Q DENTAL LABORATORY 401(k) PROFIT SHARING PLAN, an employee pension benefit plan.*fn1

A. The Secretary hereby dismisses Defendant GENE SHAWN GROUP, a limited liability corporation also doing business as AQ DENTAL LABORATORY, from this action.

B. The Secretary, Young Jin Lee, Juliette Lee and the A-Q Dental Laboratory 401(k) Profit Sharing Plan (collectively, "the parties") admit that the Court has jurisdiction over this action pursuant to ERISA § 502(e)(1), 29 U.S.C. § 1132(e)(1), and that venue lies in the Eastern District of California pursuant to ERISA § 502(e)(2), 29 U.S.C. § 1132(e)(2).

B. The parties agree to the entry of this Consent Judgment & Order. The parties further agree that this Consent Judgment & Order shall fully settle all claims of the Secretary asserted in the Complaint.

IT IS HEREBY ORDERED, ADJUDGED, and DECREED that: 1. Defendants Young Jin Lee ("Young Lee") and Juliette Myung Lee ("Juliette Lee") are liable to the A-Q Dental Laboratory 401(k) Profit Sharing Plan (the "Plan") for $32,587.37, including interest, in losses caused to the Plan, arising out of their breaches of fiduciary duties under ERISA §§ 404 and 406, as more fully alleged in the Secretary's Complaint, and judgment is hereby entered against them in that amount.

2. Defendants Young Lee and Juliette Lee shall restore $32,587.37 in losses and lost opportunity costs to the Plan. It is anticipated that this debt will be fully or partially restored in the bankruptcy proceedings currently pending before the U.S. Bankruptcy Court, Eastern District of California, of In re Gene Shawn Group, LLC, Case No. 08-27406, and In re Juliette Myung Lee and Young Jin Lee, Case No. 08-27500 (the "bankruptcy cases"). In the event the losses and lost opportunity costs are not fully restored as a result of the bankruptcy proceedings, Defendants Young Lee and Juliette Lee shall restore any remaining losses to the Plan no later than thirty days following the completion or termination of any plan of reorganization adopted in the proceeding of In re Gene Shawn Group, LLC, Case No. 08-27406. If In re Gene Shawn Group, LLC, Case No. 08-27406 is ever converted to a case under Chapter 7 of the Bankruptcy Code, the entire balance owed to the Plan will become due and owing.

3. Defendants Young Lee and Juliette Lee are permanently enjoined and restrained from violating the provisions of Title I of ERISA, 29 U.S.C. §§ 1001-1191c.

4. Defendants Young Lee and Juliette Lee are hereby permanently enjoined and restrained from future service as a fiduciary of, or service provider to, any ERISA-covered employee benefit plan subject to the exception set forth in Paragraph 6, infra.

5. Defendants Young Lee and Juliette Lee are hereby removed as a fiduciary to the Plan subject to the exception set forth in Paragraph 6, infra.

6. Defendants Young Lee and Juliette Lee shall remain fiduciaries of the Plan solely to the extent necessary to restore losses to the Plan, make distributions of the assets of the Plan-either currently existing or restored as a result of this action or the Defendants' bankruptcy cases-and to wind down and terminate the Plan. Upon termination of the Plan, Defendants Young Lee and Juliette Lee shall provide documentation of such termination to Plaintiff and shall be removed from their positions as fiduciaries of the Plan.

7. Funds will not be deemed restored to the Plan until they are deposited with the Plan's custodial trustee, Nationwide Trust Company. In the event that Gene Shawn Group, LLC, fails to pay any administrative fees or expenses related to the administration or termination of the Plan, Defendants' Young Lee and Juliette Lee will become solely responsible for payment of any such expenses or fees.

8. The Secretary and Defendants shall each bear their own costs, expenses, and attorneys' fees incurred to date in connection with any stage of this proceeding, including but not limited to attorneys' fees which may be available under the Equal Access to Justice Act, as amended.

9. Defendants expressly waive any and all claims of any nature which they have or may have against the Secretary, the Department of Labor, or any of its officers, agents, attorneys, employees or representatives, arising out of or in connection with the allegations contained in the Complaint on file in this action, any other proceedings or investigation incident thereto or based on the Equal Access to Justice Act, as amended.

10. This consent judgment does not in any manner affect the right of the United States Department of Labor to assess a civil penalty of twenty percent ($6,517.47) on amounts recovered pursuant to ERISA § 502(l), 29 U.S.C. § 1132(l). Defendants do not dispute such assessment and agree to pay such assessment when due. The Defendants waive the notice of assessment and service requirement of 29 C.F.R. § 2570.83 and, within sixty days following termination of the Plan, Defendants Young Lee and Juliette Lee shall pay the Penalty Amount to the U.S. Department of Labor, by sending a certified or cashiers check payable to the United States Department of Labor (please write EBSA Case No. 70-013124(48) on the check) to:

Regular Mail U.S. Department of Labor ERISA Civil Penalty P.O. Box 70942 Charlotte, NC 28272-0942

11. Nothing in this Consent Judgment is binding on any governmental agency other than the United States Department of Labor, Employee Benefits Security Administration.

12. This Court retains jurisdiction of this action for purposes of enforcing compliance with the terms of this Consent Judgment & Order.

13. By signing their names to this Consent Judgment & Order, the parties represent that they are informed and understand the effect and purpose of this Consent Judgment & Order.

The Court directs the entry of this Consent Judgment & Order as a final order.

IT IS SO ORDERED.

Entry of this Consent Judgment is hereby consented to:

Dated: 02/06/2009

GREGORY F. JACOB Solicitor of Labor LAWRENCE BREWSTER Regional Solicitor DANIELLE L. JABERG Counsel for ERISA

Ian H. Eliasoph Trial Attorney Attorneys for the Plaintiff Defendants consent to the entry of this Consent Judgment.

Dated: 01/13/2009

Young Jin Lee (Original signature maintained by Ian H. Eliasoph)


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