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Stanton v. Couturier

December 16, 2009

DARLEEN STANTON AND KELLY MORRELL, PLAINTIFFS,
v.
BRUCE P. COUTURIER, DEFENDANT, AND THE EMPLOYEE OWNERSHIP HOLDING COMPANY, A DELAWARE CORPORATION, NOMINAL DEFENDANT.



The opinion of the court was delivered by: Ralph R. Beistline United States District Court Judge

ORDER REGARDING MOTION TO DISMISS AT DOCKET 23

I. INTRODUCTION

Before the Court is Defendant Bruce Couturier with a Rule 12(b)(6) Motion to Dismiss and Rule 12(f) Motion to Strike at Docket 23. Couturier seeks dismissal of this case on several legal grounds, including insufficiency of the ERISA claims, the passing of the statute of limitations, and the doctrine of laches, among other reasons. Plaintiffs Darleen Stanton and Kelly Morrell oppose at Docket 27.

II. BACKGROUND

Because the parties are familiar with the facts of this case, they need not be restated in great detail. Plaintiffs have alleged that Bruce Couturier, as a corporate officer and later director of what was once known as Noll Manufacturing Company, was involved in a scheme to defraud the TEOHC Employee Stock Ownership Plan ("the Plan"), an ERISA plan in which the Plaintiffs are participants.

Plaintiffs have alleged that during his tenure as a corporate director, Bruce Couturier had a fiduciary duty to the Plan which he violated by allowing his brother, Clair Couturier, to receive an allegedly excessive compensation package.*fn1 They also allege that Bruce Couturier participated in a series of prohibited transactions, including the corporate board's approval of his own compensation and indemnity agreements. These agreements were allegedly granted to him in exchange for his participation in the scheme to defraud the Plan.*fn2 In addition to the ERISA causes of action, Plaintiffs seek derivative relief under the provisions of California state law.*fn3

This Court has already preliminarily enjoined any advancement of fees under the indemnification agreement signed by Bruce Couturier while he was still with the company, because Plaintiffs can likely show that such advancement of fees would violate ERISA.*fn4

III. RULES OF DECISION

A motion to dismiss for failure to state a claim made pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims in the complaint. A claim should only be dismissed if "it appears beyond doubt that a plaintiff can prove no set of facts in support of his claim which would entitle him to relief."*fn5 A dismissal for failure to state a claim can be based on either "the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory."*fn6 In reviewing a Fed. R. Civ. P. 12(b)(6) motion to dismiss, "[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party."*fn7 The court is not required to accept every conclusion asserted in the complaint as true; rather, the court "will examine whether conclusory allegations follow from the description of facts as alleged by the plaintiff."*fn8

Civil Rule 12(f) provides that "the court may order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter".*fn9 The court construes all well-pleaded facts as admitted.*fn10

IV. DISCUSSION

The Court will first address the sufficiency of Plaintiffs' ERISA claims before addressing their state law claims.

A. Plaintiffs Have Validly Pled a Prohibited Transaction Claim Under 29 U.S. § 1106

Couturier argues that Plaintiffs' claims under ERISA § 406, 29 U.S.C. § 1106, are not tenable because Bruce Couturier was not a "party in interest" with regard to the Plan, and because Plaintiffs have not properly alleged that ...


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