ORDER RE: MOTION FOR
SUMMARY JUDGMENT OR
JUDGMENT IN THE ALTERNATIVE
Plaintiff United States Department of Labor has filed a motion pursuant to Federal Rule of Civil Procedure 56 for summary judgment or partial summary judgment in the alternative against defendants Explore General, Inc., Jaime M. Gonzalez and Paul K. Gong. Having reviewed the pleadings of record and all competent and admissible evidence submitted, the Court finds there are no genuine issues of material fact and that the movant is entitled to judgment as a matter of law. Accordingly, the Court grants the motion for summary judgment.
II. FACTS AND PROCEDURAL BACKGROUND
On June 25, 2010, plaintiff Hilda L. Solis, Secretary of Labor, United States Department of Labor (hereinafter referred to as "Plaintiff") filed its complaint against defendants Explore General, Inc. ("Explore General"), Jaime M. Gonzalez ("Gonzalez"), Paul K. Gong ("Gong") and Explore General, Inc. 401(k) Profit Sharing Plan ("the Plan"), asserting one cause of action for violations of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq.*fn1 In the complaint, Plaintiff alleges as follows:
"4. The Explore General, Inc. 401(k) Profit Sharing Plan (the 'Plan' or '401(k) Plan') is an employee benefit plan within the meaning of ERISA § 3(3), 29 U.S.C. § 1002(e), which is subject to the provisions of Title I of ERISA pursuant to ERISA § 4(a), 29 U.S.C. § 1003(a). [¶] 5. . . . Defendant Explore General, Inc. ('Explore General' or 'Company'), was and is the sponsor, Named Fiduciary, and Plan Administrator of the 401(k) Plan . . . . [¶] 6. . . . Defendant Jaime M. Gonzalez, was and is the President and owner of Explore General; exercised discretionary authority and control respecting the management and disposition of the 401(k) Plan and its assets; exercised discretionary authority and responsibility in the administration of the 401(k) Plan, was and is a fiduciary of the Plan . . . and was and is a party in interest to the Plan . . . . [¶] 7. On or about August 19, 2005, Mr. Gonzalez appointed Paul K. Gong the primary Plan administrator of the Plan. Mr. Gong was a vice President of Explore General until approximately December 2007, when he separated from the Company. After his appointment as primary Plan administrator, and until his separation from the Company, Mr. Gong exercised discretionary authority and control respecting the management and disposition of the 401(k) Plan and its assets, exercised discretionary authority and responsibility in the administration of the 401(k) Plan, was a fiduciary of the Plan . . . and was a party in interest to the Plan[.]" Plaintiff further alleges:
"16. During the period of January 1, 2002 through at least March 2005, Defendant Jaime Gonzalez and Explore General caused Explore General to withhold approximately $76,000 from employees' pay for salary reduction contributions to the 401(k) Plan, but failed to timely remit the amounts so withheld into the 401(k) Plan's account, and instead retained and commingled the withheld contributions with the company's accounts and used the amounts withheld for non-Plan purposes prior to remitting the contributions late. [¶] 17. The 401(k) Plan's governing Plan documents required that employee contributions be remitted to the Plan on the earliest date that they could reasonably be segregated from the assets of Explore General, the Employer, but no later than the fifteenth business day of the month following the month in which the Contributions would have been paid in cash to the participant.
Based on a review of the Employer's demonstrated pattern and practice, the employee contributions so withheld from the employees' pay could have reasonably been segregated from Explore General's assets within ten business days." Plaintiff further alleges:
"19. The 401(k) Plan's governing Plan documents required Explore General to make mandatory employer/prevailing-wage contributions to the Plan for employees working on projects covered by the schedule published by the U.S. Department of Labor and/or State Department of Labor indicating the minimum hourly wage and fringe benefits (including retirement benefits) required to be paid to employees working on jobs contracted by governmental entities. [¶] 20. As the Plan Administrator and the Named Fiduciary, Explore General had a duty to appoint a trustee of the Plan with the full discretion, responsibility and authority to collect and remit contributions owed to the Plan. [¶] 21. The Plan documents do not identify a Trustee. [¶] 22. On or about August 19, 2005, Jaime Gonzalez signed a letter requesting that the third party administrator of the Plan remove Yolanda Delgado as Trustee, and James Buffo as primary administrator. While the letter appointed Paul Gong as the primary plan administrator, it did not appoint a new Trustee. Upon information and belief, no new Trustee was appointed."
Plaintiff further alleges:
"23. During the period from December 1, 2002 through at least March 2005, Defendants Explore General and Jaime Gonzalez, with pervasive control over the administration of the Plan and as a functional fiduciary thereto and as a co-fiduciary of the Plan, caused mandatory employer/prevailing-wage contributions in the amount of approximately $194,000 not to be timely collected as required by the Plan and by the contracts with governmental entities, and instead allowed the funds to be retained and commingled with Company assets and used for non-Plan purposes. Based on information provided by Explore General, approximately $114,000 in mandatory employer/prevailing-wage contributions remains uncollected."
Plaintiff further alleges:
"24. The Plan required the mandatory employer/prevailing-wage contributions to be made to the Plan monthly, and to be made without regard to current or accumulated net income, earnings or profits of Explore General. A review of the Company's assets indicates that the Company had the ability to pay said employer/prevailing-wage contributions on or about the dates that they were due. Moreover, Explore General received payments, including payments for fringe benefits (including employer/prevailing wage contributions) from governmental entities for the work Explore General and its employees' [sic] performed on various projects pursuant to contracts. These payments from these governmental entities were greater than the amounts Explore General owed its employees for hourly wages and employer/prevailing-wage contributions owed pursuant on such projects." Plaintiff further alleges:
"27. Starting in at least August 19, 2005, Defendants failed to administer the Plan as required by ERISA, including failing to distribute to participants Summary Plan Descriptions, statements, and other documents required pursuant to ERISA §§ 101, 102, and 105, and failing to secure a fidelity bond as required by ERISA § 412. [¶]
28. Paul Gong signed a Board Resolution stating that Explore General would be terminating the 401(k) Plan ...