United States District Court, N.D. California
ORDER RE MOTION TO DISMISS RE: DKT. NO. 24
DONATO United States District Judge.
Rasooly, a United States governmental employee, filed this
breach of fiduciary duty case on October 1, 2015. Rasooly
alleges that defendants Federal Retirement Thrift Investment
Board (FRTIB), and its executive director Gregory Long,
breached fiduciary duties to him while processing a request
to garnish his Thrift Savings Plan (“TSP”)
retirement savings to pay back child support. Dkt. No. 1. The
Court granted an earlier motion to dismiss by the FRTIB and
Long, with leave to amend. Dkt. No. 22. In the amended
complaint, Rasooly alleges a single claim for Breach of
Fiduciary Duty under 5 U.S.C. § 8477. Defendants have
moved to dismiss the amended claim under Federal Rule of
Civil Procedure 12(b)(6). Dkt. No. 24. The Court finds the
motion suitable for decision without oral argument pursuant
to Civil Local Rule 7-1(b), and grants the motion in part and
denies it in part.
alleged in the amended complaint, in November 2009, the
California Department of Child Social Services
(“DCSS”) in Contra Costa County began processing
“an Israeli religious court’s order for child
support” against Rasooly. Dkt. No. 23 ¶ 12.
Rasooly contends that the Israeli order and DCSS’s
handling of it were improper or illegal. Id.
¶¶ 13-18. In August 2012, DCSS sent a request to
the FRTIB seeking to garnish Rasooly’s TSP account to
cover over $158, 000 in child support payments. Id.
¶ 22. Rasooly alleges that defendants breached their
fiduciary duty to him under 5 U.S.C. § 8477 by
mishandling DCSS’s collection requests and extracting
the requested payments from his account.
survive a Rule 12(b)(6) motion to dismiss, the plaintiff must
allege “enough facts to state a claim to relief that is
plausible on its face.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 570 (2007). “A claim has
facial plausibility when the pleaded factual content allows
the court to draw the reasonable inference that the defendant
is liable for the misconduct alleged.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly
at 556). In evaluating a motion to dismiss, the Court must
assume that the plaintiff’s factual allegations are
true and must draw all reasonable inferences in his or her
favor. Usher v. City of Los Angeles, 828 F.2d 556,
561 (9th Cir. 1987). However, the Court need not
“accept as true allegations that are merely conclusory,
unwarranted deductions of fact, or unreasonable
inferences.” In re Gilead Scis. Sec. Litig.,
536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation
Section 8477(b)(1), defendants owe a duty to TSP participants
to perform their responsibilities “(A) for the
exclusive purpose of -- (i) providing benefits to
participants and their beneficiaries; and (ii) defraying
reasonable expenses, ” and “(B) with the care,
skill, prudence, and diligence under the circumstances then
prevailing that a prudent individual acting in a like
capacity and familiar with such matters would use.” 5
U.S.C. § 8477(b)(1). These duties exist to “the
extent not inconsistent with the provisions of this chapter
and the policies prescribed by the Board.” Id.
The parties agree that FRTIB potentially breaches this duty
when it fails to follow its own implementing procedures or
regulations. Dkt. No. 24 at 6; Dkt. No. 26 at 11.
Rasooly’s single claim alleges a variety of breaches on
the part of defendants -- some of these are sufficient to
move forward and others are not.
first allegation, that defendants did not verify that the
DCSS request complied with 5 C.F.R. Sections 1653.12-13,
plausibly states a claim. Under Section 1653.12(a), the TSP
“will only honor the terms of a legal process that is
qualifying under paragraph (b) of this section.” The
DCSS order referenced in the amended complaint, Dkt. No.
17-1, appears to come from a “competent authority,
” as required by Section 1653.12(b)(1), since the DCSS
is “an administrative agency of competent jurisdiction
in [a] State … of the United States.”
See 5 C.F.R. § 1653.11(b). It also specifically
references the “Thrift Savings Plan” and orders
the TSP to “[f]reeze the debtor’s assets up to
the amount” of “$158, 258.66, ” and
“remit” them after 10 days, as required by
Section 1653.12(b)(2) and (b)(3). See Dkt. No. 17-1
at 2, 6. On these elements, the DCSS request appears sound.
Rasooly also complains that the DCSS request was unsigned,
rendering the request invalid. Dkt. No. 23 ¶¶ 29,
34; see also id. ¶¶ 52, 53. Although
defendants say “the seal of the state of
California” on the document suffices to validate the
request, they do not cite to a regulation or anything else to
support that. Dkt. No. 27 at 5. Accordingly, the Court cannot
find at this stage that Rasooly’s claim is implausible,
and it may go forward on these grounds.
amended complaint also plausibly suggests that his claim was
mishandled in other ways. Rasooly alleges that FRTIB and Long
violated procedures when they failed to require two workers
to verify his account given the amount of the DCSS request,
Dkt. No. 23 ¶¶ 26, 48, 54, improperly processed the
DCSS letter as an order to deliver rather than an order to
withhold, id. ¶¶ 22-25, 28, 35, 43, 45,
56, failed to ascertain whether the request should have been
stayed due to parallel court proceedings, id. ¶
47, see also Section 1653.13(i), improperly
disclosed his personal information, id. ¶ 21,
and failed to maintain and provide copies of his TSP files
properly and adequately. Id. ¶¶ 36-42,
45-46, 55, 65. Defendants challenge these allegations on
factual grounds, Dkt. No. 24 at 7-10, and may prevail on them
at the appropriate stage, but resolving fact disputes is not
within the motion to dismiss procedure. And for
Rasooly’s allegation that an improper amount of tax was
withheld in the transfer, Dkt. No. 23 ¶¶ 27, 57,
defendants conceded this issue by failing to address
Rasooly’s arguments and meaningfully support it in
their reply. The claim may go forward on these grounds as
Rasooly’s remaining allegations do not state a
plausible claim for breach of fiduciary duty. His conclusory
assertions that FRTIB’s unspecified “hiring
practices” and “entire operating procedure and
management” constitute breaches of fiduciary duty,
id. ¶¶ 58, 60, 64, are vague and lack
meaningful factual support. His federal preemption claim is
equally bereft of any factual support. The allegation that
FRTIB breached its duties whenever it “put other
third parties ahead of it[s] participant clients, ”
id. ¶ 64, fails to take into account that the
duty extends only to “the extent not inconsistent with
the provisions of this chapter and the policies prescribed by
the Board.” 5 U.S.C. § 8477(b)(1). Nowhere does he
demonstrate that FRTIB compromised his interest in this way.
The allegation that defendants violated “Social
Security Act Title IV Part D” is incomprehensible. Dkt.
No. 23 ¶ 61. Rasooly’s claim is dismissed to the
extent it relies on the allegations of paragraphs 58-61 and
64. Rasooly has now had two tries at stating these claims,
and his failure to provide any concrete proposal for
amendment suggests further amendment is futile. The dismissal
is with prejudice. See Eminence Capital, LLC v. Aspeon,
Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).
claim is also dismissed to the extent it relies on the
allegations of paragraphs 62-63. Paragraphs 62 and 63 of the
amended complaint describe alleged violations of the DCSS and
provide no basis for a claim against FRTIB. Because this
problem cannot be cured by amendment, the dismissal is
without leave to amend.
motion to dismiss Rasooly’s amended complaint is
granted to the extent the claim relies on paragraphs 58-64,
without leave to amend. The motion to dismiss is otherwise
denied. Defendants should answer the amended complaint no
later than July 22, 2016. ...