IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION TATHAM & ASSOCIATES, INC. 401(K) ) PLAN, DENNIS TURNER, as TRUSTEE, et al., ) ) Plaintiffs, ) ) v. ) ) SAGEPOINT FINANCIAL, INC. et al., ) ) Defendants. ) No. 3:09-cv ) Judge Nixon Magistrate Judge Knowles SAGEPOINT FINANCIAL, INC. et al., ) ) Counterclaimants, ) ) v. ) ) DENNIS TURNER, as TRUSTEE for the ) TATHAM & ASSOCIATES, INC. 401(K) ) PLAN, et al., ) ) Counter-Defendants. ) ORDER Pending before the Court is Plaintiffs and Counter-Defendants Tatham & Associates, Inc. 401(k) Plan et al. s ( Counter-Defendants or the Trustees ) Motion to Dismiss Defendants Counterclaims (Doc. No. 20) ( Motion ). Defendants and Counterclaimants SagePoint Financial, Inc. et al. ( Counterclaimants or SagePoint ) filed a Response (Doc. No. 12) ( Response ), and Counter-Defendants then filed a Reply (Doc. No. 32) ( Reply ). For the reasons stated below, Counter-Defendants Motion is GRANTED. 1 Case 3:09-cv Document 67 Filed 01/24/11 Page 1 of 16 PageID #: 1306

2 I. BACKGROUND A. Factual Background 1 Counter-Defendants engaged Barry Stokes and his company 1Point Solutions, LLC ( 1Point ) to provide investment services for numerous employee benefit plans (the Plans ) across the country for which they were the respective trustees. The Plans are ERISA plans governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001, et seq., which regulates employee benefit plans, including the duties of plan fiduciaries. From October 2005 to September 15, 2006, Stokes was a registered representative of AIG Financial Advisors, Inc. ( AIGFA ), known as SagePoint since December Previously, from March 2001 to October 2005, Stokes was a registered representative of Spelman & Co., Inc., a dissolved company whose assets and liabilities were assumed by AIGFA in October Stokes was arrested in 2006, and in 2008 he pled guilty to over 30 federal criminal counts and admitted to converting assets belonging to each of the Plans in this case. (Doc. No. 27 at 2.) He was sentenced to 151 months of imprisonment and ordered to pay nearly $20 million in restitution, including over $2.1 million to the Plans. Id. Subsequently, having made claims against the bankruptcy estates of Stokes and 1Point as well as claims against other related entities, the Trustees brought this action alleging that SagePoint, AIGFA, and Spelman (collectively, SagePoint ) are liable for the damages to the Plans caused by Stokes and 1Points actions. Id. at 3. The Trustees proceed under theories of negligent and reckless supervision, common law fraud, aiding and abetting fraud, aiding and abetting conversion, and breach of fiduciary duty. (Doc. No. 4 at ) SagePoint now claims 1 All facts are drawn from Counter-Plaintiffs Answer to the Amended Complaint and Counterclaim (Doc. No. 9) unless otherwise noted. 2 Case 3:09-cv Document 67 Filed 01/24/11 Page 2 of 16 PageID #: 1307

3 entitlement to contribution, costs, expenses, attorney s fees, and other general relief against Counter-Defendants on theories of negligent supervision, negligence, and breach of fiduciary duty. B. Procedural Background On August 14, 2009, the Trustees filed a Complaint (Doc. No. 1) in this case, and later filed an Amended Complaint on August 31, 2009 (Doc. No. 4). SagePoint filed its Answer to the Amended Complaint and Counterclaim on September 28, (Doc. No. 9.) The Trustees moved to dismiss the counterclaims on November 18, 2009 pursuant to Fed. R. Civ. P. 12(b)(6) (Doc. No. 20), and SagePoint filed a Response on December 16, 2009 (Doc. No. 27). Subsequently, the Trustees filed a Reply Brief on December 29, (Doc. No. 32.) II. LEGAL STANDARD To withstand a Fed. R. Civ. P. 12(b)(6) motion to dismiss, a complaint must allege [e]nough facts to state a claim to relief that is plausible on its face. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Most recently, the Supreme Court clarified the standard in Ashcroft v. Iqbal, stating [a] claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. 129 S.Ct. 1937, 1949 (2009). Plausibility requires [m]ore than a sheer possibility that a defendant has acted unlawfully. Id. The moving party has the burden of proving that Plaintiff has not stated a claim. Total Benefits Planning Agency v. Anthem Blue Cross and Blue Shield, 552 F.3d 430, 434 (6th Cir. 2008). When ruling on a motion to dismiss, the Court [c]onstrue[s] the complaint liberally in the plaintiffs favor and accept[s] as true all factual allegations and permissible inferences therein. Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir. 1994). 3 Case 3:09-cv Document 67 Filed 01/24/11 Page 3 of 16 PageID #: 1308

4 III. ANALYSIS Counter-Defendants move to dismiss SagePoint s counterclaims, pursuant to Rule 12(b)(6), on numerous grounds: the Trustees are not parties to the case and thus may not be subject to counterclaims; SagePoint s state-law counterclaim for negligent supervision is preempted by ERISA; SagePoint lacks standing under ERISA to assert its counterclaims for negligence and breach of fiduciary duty; there is no right of contribution between SagePoint and the Trustees due to a lack of shared liability under ERISA; SagePoint fails to allege that the Trustees served in that capacity in the relevant time period; SagePoint s allegation that the Trustees failed to obtain a bond is not a basis for a claim in negligence; SagePoint s boilerplate allegations do not satisfy Twombly and Iqbal; and there is no basis for an award of attorney s fees. (Doc. No. 20, Att. 3 at ii.) A. Capacity of the Trustees to Face SagePoint s Counterclaims The Trustees first argue that SagePoint s Counterclaims must be dismissed because the Trustees are not parties to the case and thus may not face counterclaims in this litigation. (Doc. No at 4.) The Trustees argue that they are named as representatives of the Plans, not as individuals seeking any personal relief, for the purpose of establishing diversity. Id. at 5. In support of this argument, the Trustees cite two cases from the Western District of New York in which the same district court judge held that counterclaims for contribution and indemnity must be dismissed against trustees who brought actions in their representative capacities. Rubin v. Valicenti Advisory Servs., Inc., 326 F. Supp. 2d 427, 228 (W.D.N.Y. 2004); Lee v. Mfrs & Traders Trust Co., 219 F.R.D. 265, 266 (W.D.N.Y 2004). Judge Larimer explained in Lee that [i]t appears that the pleaded counterclaims are asserted against the wrong party. The Trustees 4 Case 3:09-cv Document 67 Filed 01/24/11 Page 4 of 16 PageID #: 1309

5 commenced this action as representatives of the Plan. It is the Plan, therefore, not the Trustees individually, that seeks relief and recovery from M & T Bank for the alleged breach of the bank's fiduciary obligations. Lee, 219 F.R.D. at 266. SagePoint responds that the Trustees are parties to the case, as evidenced by the fact that their names appear in the caption and in the Parties section of the Amended Complaint, and that it would be unnecessary for the Trustees to be named in this action solely for diversity purposes in light of 29 U.S.C. 1132(d)(1) (which allows an employee benefit plan to sue or be sued as an entity). (Doc. No. 27 at 6.) Further, SagePoint argues that Fed. R. Civ. P. 13(b), which enables a party to counterclaim in its answer against an opponent, reflects a liberal policy aimed at reducing the number of suits. Id. at 7 (citing Abraham v. Selig, 29 F. Supp. 52, 52 (S.D.N.Y. 1939)). Generally, if a party has brought suit in a representative capacity, he may not be counterclaimed against individually. Id. at 7 (citing 6 CHARLES ALAN WRIGHT, ARTHUR R. MILLER, MARY KAY KANE & RICHARD L. MARCUS, FEDERAL PRACTICE AND PROCEDURE 1404 (3d ed. 1998)). SagePoint argues that exceptions exist where a representative party filed suit but will benefit individually from recovery, and where principles of equity and judicial economy support a counterclaim against a party in a capacity other than that in which he brought suit. Id. (citing Blanchard v. Katz, 117 F.R.D. 527, (S.D.N.Y. 1987)). In light of these precedents, SagePoint argues first that the counterclaim does in fact implicate the Trustees in the very same capacity in which they filed suit as fiduciaries of the Plans beneficiaries and, second, that even if the Court were to find the capacities to be different, both of the exceptions to the same-capacity rule apply in this case. The Court agrees with SagePoint that the Trustees are being sued in the same capacity in which they brought this action, such that the counterclaim is not procedurally defective. The 5 Case 3:09-cv Document 67 Filed 01/24/11 Page 5 of 16 PageID #: 1310

6 Trustees are parties to the action, as is clear from their appearance in the caption and list of Parties in the Amended Complaint (Doc. No. 4 at 2-5). SagePoint s Counterclaim seeks contribution, costs and expenses from the Trustees on the basis of alleged breaches of the Trustees fiduciary relationships with the Plans. (Doc. No. 9 at ) Each of the three counts against Counter-Defendants (negligent supervision, negligence, and breach of fiduciary duty) is premised on the notion that they were, in various ways, deficient in their duties as trustees. Id. The Trustees sue and are sued only in their role as trustees of employee benefit plans, so this Court sees no procedural barrier to the Counterclaim going forward. See Rhodes, Inc. v. Morrow, 937 F. Supp (M.D.N.C. 1996). As to the cases Counter-Defendants cite in the Western District of New York, these brief opinions provide little insight as to the facts of either case beyond the fact that contribution and indemnity was sought, or into the reasoning applied by the judge. Although the Court respects the opinion of Judge Larimer, the persuasive force of the Trustees argument is limited by the fact that the only two cases they cite are not from this circuit and were decided by one judge, the later case relying on the earlier case (in the same year). Nor do Counter-Defendants provide analysis that convinces the Court that these precedents are on point and must be followed here. Thus, the Court must follow its own judgment that the Counterclaim is properly brought against the Trustees. B. Preemption of SagePoint s Counterclaims Next, Plaintiffs Motion asserts that SagePoint s state law claim for negligent supervision must be dismissed for failure to state a claim because it is preempted by ERISA. (Doc. No at 6-7.) In the Trustees subsequent Reply, they expand their reasoning to encompass all three of 6 Case 3:09-cv Document 67 Filed 01/24/11 Page 6 of 16 PageID #: 1311

7 the claims SagePoint has asserted against them. (Doc. No. 32 at 4-7.) Count One of the Counterclaim asserts that the Trustees breached a common-law duty to monitor, supervise, and control Stokes and 1Point with respect to the Plans, and that this negligent supervision was a proximate cause of the Plans losses. (Doc. No. 9 at 22, ) Count Two alleges that the Trustees were negligent in failing to obtain a fidelity bond to protect the Plans, as required by ERISA (29 U.S.C. 1112), and that this negligence was also a proximate cause of the Plans losses. Id. at 23, Finally, Count Three alleges that the Trustees are fiduciaries as defined under ERISA (29 U.S.C. 1002(21)) and breached related duties to supervise Stokes and 1Point and to obtain a fidelity bond, also proximately causing the Plans losses. Id. at 23-24, As such, SagePoint asserts that, if it is found liable for the Plans losses, it is entitled to contribution from the Trustees. Id. at 22-24, 29, 35 & 44. ERISA explicitly preempts any and all State laws insofar as they may now or hereafter relate to any employee benefit plan. 29 U.S.C. 1144(a). There is no dispute in this case that the Plans, and the Trustees obligations to the Plans, are subject to ERISA. The Trustees point to ERISA s preemption clause and courts findings within this circuit that state law claims that attempt to enforce fiduciary duties, such as asset management, for an ERISA plan are preempted because Congress has created the only remedy for such claims. (Doc. No at 8 (citing Penny/Ohlmann/Nieman, Inc.v. Miami Valley Pension Corp., 399 F.3d 692 (6th Cir. 2005) [hereinafter PONI]; Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272 (6th Cir. 1991)).) SagePoint may not simply attach a new, state-law label to what is effectively an ERISA claim for breach of fiduciary duty, the Trustees argue, by asserting a counterclaim for contribution under the common law. (Doc. No at 8 (citing Smith v. Provident Bank, 170 F.3d 609 (6th Cir. 1999).) 7 Case 3:09-cv Document 67 Filed 01/24/11 Page 7 of 16 PageID #: 1312

8 In response, SagePoint refers the Court to the 2005 PONI decision, in which the Sixth Circuit noted that the Supreme Court had recently narrowed the scope of ERISA preemption, particularly in New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645 (1995). (Doc. No. 27 at 11.) PONI identified three categories of state laws preempted by ERISA, only one of which could conceivably apply here, SagePoint argues alternative enforcement mechanisms to those contained in the statutory scheme. Id. (citing PONI, 399 F.3d at 698). However, SagePoint continues, the case emphasized that ERISA is not meant to preempt traditional state-based laws of general applicability that do not implicate the relations among the traditional ERISA plan entities, including the principals, the employer, the plan, the plan fiduciaries, and the beneficiaries. Id. As such, ERISA will only preempt state law claims in two scenarios not present here: where the claimant is a participant, beneficiary or fiduciary of a plan, id. at (citing Mich. Affiliated Healthcare Sys., Inc. v. CC Sys. Corp., 139 F.3d 546 (6th Cir. 1998)); and where a claimant seeks to recover ERISA plan benefits, id. at (citing Lion s Volunteer Blind Indus., Inc. v. Automated Grp. Admin. 195 F.3d 803 (6th Cir. 1999)). i. Nature and Applicability of ERISA Preemption It is important to note that the scope of ERISA s preemption clause, 29 U.S.C. 1144(a), is quite broad on its face, reaching any state law that relates to an employee benefit plan. PONI s limitation on the scope of ERISA preemption excluding generally applicable laws that do not implicate the relations among the traditional ERISA plan entities, 399 F.3d at 698 puts a finer point on when a state law treads on ERISA s ground, and forwards a preemption analysis focused on ERISA s scheme and objectives, id. This analytical approach was applied, the PONI court explained, in Smith, which held that an ERISA plan's state-law 8 Case 3:09-cv Document 67 Filed 01/24/11 Page 8 of 16 PageID #: 1313

9 claims against a trustee were preempted because Congress established the exclusive means by which fiduciary duties would be enforced[,] but noted that state law could control an ERISA plan s relationship with an entity not governed by ERISA. Id. (quoting Smith, 170 F.3d at 617). In Smith itself, the circuit court explained that it would find preemption of claims that... merely attach new, state-law labels to the ERISA claims for breach of fiduciary duty and recovery of benefits, for the apparent purpose of obtaining remedies that Congress has chosen not to make available under ERISA. It is not the label placed on a state law claim that determines whether it is preempted, but whether in essence such a claim is for the recovery of an ERISA plan benefit. 170 F.3d at 615 (quoting Cromwell, 944 F.2d at 1726). These precedents, which emphasize the essence of the law or claim considered in relation to the ERISA scheme, must underlie the Court s analysis of whether SagePoint s common law Counterclaim for contribution may proceed. As described above, the Counterclaim seeks to recover from the Trustees the share of the Plans damages allegedly caused by the Trustees failure to exercise reasonable care in protecting the Plans from the illegal actions of Stokes and 1Point. SagePoint states in the preamble to the three counts that the Plans are governed by ERISA, and the Trustees are fiduciaries of the Plans; accordingly, duties to monitor, supervise and control arose under ERISA or otherwise. (Doc. No. 9 at 21, 19.) The Counterclaim itself is not explicit as to whether its basis is state or federal common law, but SagePoint has answered the Motion so as to make clear that state law is the source of the contribution claim. (Doc. No. 27 at 11 ( Here, ERISA does not preempt SagePoint s state law claims... ).) Although the claim seeks contribution, the duty being sued upon is that created by the fiduciary relationship between the trustees and beneficiaries of an employee benefit plan, which is governed by ERISA and is subject to its civil enforcement provisions. 9 Case 3:09-cv Document 67 Filed 01/24/11 Page 9 of 16 PageID #: 1314

10 The purpose of ERISA preemption was to avoid conflicting federal and state regulation and to create a nationally uniform administration of employee benefit plans ; therefore, the Act preempts state laws that provide alternate enforcement mechanisms. PONI, 399 F.3d at 698 (citation omitted). 29 U.S.C creates certain civil enforcement mechanisms for specific parties involved in ERISA-governed benefit plans. The Supreme Court has voiced reluctance to tamper with the carefully-drawn scheme Congress created (in 1132) to enforce the rights of participants, beneficiaries, or fiduciaries of ERISA plans. Great-West Life & Annuity Inurance Co. v. Knudson, 534 U.S. 204, 209 (2002). SagePoint does not allege that 1132 enables it to enforce the rights of plan beneficiaries (and asserts that it is not a plan participant, beneficiary or fiduciary), yet is in essence asking to recover from the Trustees their share of losses caused to the Plans by allegedly breaching fiduciary duties owed to ERISA plans. Allowing SagePoint to receive contribution from the Trustees would essentially be creating an alternate, state-law enforcement mechanism to This is precisely what PONI indicated would not be permissible in light of the preemptive effect of the federal ERISA scheme. Further, in Smith, the circuit court indicated that ERISA preemption doctrine barred the use of new, state-law labels to the ERISA claims for breach of fiduciary duty and recovery of benefits, for the apparent purpose of obtaining remedies that Congress has chosen not to make available under ERISA. 170 F.3d at 615. Although there is a circuit split on the availability of contribution under ERISA, about which the Sixth Circuit has yet to weigh in, district courts within this circuit have found that no such remedy exists under the ERISA scheme or the federal common law. See, e.g., Fedex Corp. v. N. Trust Co., No STA-dkv, 2010 WL , at *3 (W.D. Tenn. July 16, 2010) (citing May v. Nat l Bank of Commerce, 390 F.Supp.2d 674 (W.D. Tenn. 2004)). To allow a state-law remedy that courts within this district have found 10 Case 3:09-cv Document 67 Filed 01/24/11 Page 10 of 16 PageID #: 1315

11 unavailable under the federal regulatory scheme implicated in this case would seem to defy the directive from Smith cited above. ii. Claims Outside the Realm of ERISA s Preemptive Scope The Court is not persuaded by either of SagePoint s arguments that attempt to place its Counterclaim within realms where SagePoint asserts that preemption will not occur: where the claimant is not a participant, beneficiary, or fiduciary of an ERISA plan, or where the claim does not seek to recover plan benefits. In Michigan Affiliated Healthcare Systems, Inc., the Sixth Circuit noted that 1132 preempts state claims by participants or beneficiaries to enforce certain rights guaranteed by ERISA. Claims by anyone other than a participant or beneficiary, however, fall outside the scope of ERISA's civil enforcement section. 139 F.3d at 550. SagePoint argues that this case indicates that its claim for contribution against the Trustees is not preempted by ERISA, because, as the parties agree, SagePoint is not a participant, beneficiary, or fiduciary of the Plans. (Doc. No. 27 at ) Even if the Trustees were to point to Cromwell for the proposition that ERISA can preempt a state law claim where the claimant is not a participant or beneficiary of an ERISA plan, SagePoint continues, the actual holding of the case is found in a concurrence, which would require finding that the plaintiff is a participant or beneficiary before turning to preemption. Id. at 13 (citing Cromwell, 944 F.2d at 1279 (Suhrheinrich, J., concurring)). As to whether a claim seeks recovery of plan benefits, SagePoint relies on Lion s Volunteer Blind, 944 F.3d at 808, where the circuit court stated that [i]t is not the label placed on a state law claim that determines whether it is preempted, but whether in essence such a claim is for the recovery of an ERISA plan benefit. (Doc. No. 27 at 13.) SagePoint argues that it is not seeking plan benefits, but instead aims to protect its own interests by lessening its potential liability. Id. at Case 3:09-cv Document 67 Filed 01/24/11 Page 11 of 16 PageID #: 1316

12 The Trustees respond to both of these arguments by emphasizing that it is the essence, and not the label, of the action that determines whether a state-law claim is preempted by ERISA. (Doc. No. 32 at 5-7 (citing Smith, 170 F.3d at 615; Lion s Volunteer Blind, 195 F.3d at 808).) They argue that there is no support for the claim that ERISA only preempts claims that seek to recover plan benefits and that ERISA s preemption clause is plainly broader than this reading. (Doc. No. 32 at 5.) Even if it is true that ERISA preemption only applies to plan benefits, SagePoint is essentially seeking the return of plan benefits from the Trustees by claiming for contribution. Id. The Trustees further argue that Michigan Affiliated Healthcare Systems does not render the Counterclaim permissible because, again, it is the essence of the claim that matters rather than the identity of the one who recovers, and because the facts of that case are very different from those present here: there, the court considered a breach-of-contract action between a hospital system and a third-party administrator for an ERISA plan, whereas here, SagePoint is seeking to stand in the shoes of the plan beneficiaries for alleged breaches of fiduciary duty. Id. at 7. a. Preemption Where the Claimant is Not a Participant, Beneficiary, or Fiduciary of a Plan 2 First, we address whether ERISA preemption may apply in an instance where the plaintiff is not a participant or beneficiary of the ERISA plan in question. In Michigan Affiliated Healthcare Systems, the circuit court stated that [c]laims by anyone other than a participant or beneficiary... fall outside the scope of ERISA's civil enforcement section and thus are not 2 Although Counterclaimant argues generally that ERISA will not preempt state law claims where the claimant is not a participant, beneficiary, or fiduciary of the plan, the precedents cited make no reference as to whether preemption may occur when a claimant is not a fiduciary of a plan they focus only on the claimant s status as a participant or beneficiary. As such, the Court will refer in the subsequent paragraphs to the claimant s status as a participant or beneficiary of an ERISA plan, as Counterclaimant s cases present no argument as to fiduciaries specifically. 12 Case 3:09-cv Document 67 Filed 01/24/11 Page 12 of 16 PageID #: 1317

13 subject to ERISA preemption. 139 F.3d at 550. In that case, the question before the court was not directly whether the claims were preempted by ERISA, but whether jurisdiction was proper in a district court. Id. at If plaintiff had been a plan participant or beneficiary (and not an employer hospital proceeding on a breach-of-contract theory against a third-party administrator for expenses incurred in treating a plan-member employee in regards to a disputed claim) then ERISA might have been implicated and federal court jurisdiction might have been appropriate. Id. at 550. In response to the defendant s argument that the employer was acting on behalf of the plan beneficiary, the circuit court distinguished from Cromwell, where there had been a valid assignment of benefits to the healthcare provider bringing the claim, while in Michigan Affiliated the employer simply proceeded on a contract theory on its own behalf. Id. The quote from Michigan Affiliated on which SagePoint relies for the proposition that ERISA preemption only applies where the plaintiff is a participant or beneficiary of an ERISA plan seems less clear on this point to the Court than it apparently does to SagePoint. The Michigan Affiliated court first noted that a procedural defect rendered jurisdiction improper, and then moved to its discussion of preemption, which was relatively brief and geared toward resolving the broader jurisdictional issue. The opinion s reference to the facts in Cromwell also leaves unanalyzed the issue of whether and when a plaintiff might stand in the shoes of a participant or beneficiary so as to fall within ERISA s scope. Additionally, in Cromwell (which was cited positively in PONI and Smith), the circuit court s opinion emphasized that the essence rather than label of a claim, and whether the claim [is] at very heart of issues within the scope of ERISA s exclusive regulation is what matters in ERISA preemption analysis. 944 F.2d at This statement would seem to suggest that ERISA s preemptive effect is more expansive than simply applying to claims brought by 13 Case 3:09-cv Document 67 Filed 01/24/11 Page 13 of 16 PageID #: 1318

14 plan participants, beneficiaries, or fiduciaries. Further, the court found that claims by the plan participant s healthcare provider not itself a plan participant or beneficiary which had been assigned benefits by a plan beneficiary, were clearly preempted by ERISA. Id. SagePoint correctly points out, however, that a concurring opinion necessary to achieving a majority in the case asserted that, Supreme Court and Sixth Circuit precedent clearly require that a district court make an independent inquiry at the outset to determine whether the plaintiff is a participant or beneficiary within the meaning of ERISA, before it turns to the issue of preemption. Id at 1279 (Suhrheinrich, J., concurring). In making this statement, Judge Suhrheinrich agreed that the claims in question were preempted, but criticized the majority approach in coming to this conclusion. Although this qualification on the majority opinion does emphasize that attention should be paid to the status of a claimant as a participant or beneficiary, it does not diminish entirely the opinion s persuasive force the Sixth Circuit has continued to cite the opinion, including the language focusing on the essence rather than label of a claim (see, e.g., PONI, 399 F.3d at 702). Thus, this Court is not wholly convinced that Sixth Circuit precedent requires the claimant to be a participant or beneficiary of an ERISA plan in order for preemption to apply. Even if such a requirement does exist, however, the claims here are still subject to preemption. By seeking contribution, SagePoint is essentially attempting to stand in the shoes of the Plans participants and beneficiaries with respect to the Trustees, and to recover what is owed to the Plans due to the Trustees share of the fault in managing Stoke and 1Point. SagePoint brings the claims to protect its own interests, but in doing so it raises the rights of others, whose ability to sue is governed by ERISA, in a fashion not provided for by the Act. 14 Case 3:09-cv Document 67 Filed 01/24/11 Page 14 of 16 PageID #: 1319

15 b. Preemption Where the Claim Does Not Seek to Recover Plan Benefits Next, we turn to SagePoint s argument that ERISA does not preempt the Counterclaim because it is not seeking to recover plan benefits. The Court disagrees with the Trustees assertion that no cases SagePoint cites support this proposition (Doc. No. 32 at 5), but ultimately finds that this argument, too, does not preclude the preemption of SagePoint s claims. The Sixth Circuit in Lion s Volunteer Blind, a case SagePoint cites that addresses the issue of ERISA preemption, focused in its analysis on whether in essence... a claim is for the recovery of an ERISA plan benefit. 195 F.3d at 808 (quoting Cromwell, 944 F.2d at 1276). First, the language of the case, contrary to SagePoint s assertions, does not require strictly that a claim be for plan benefits to be subject to preemption. Rather, the circuit court focused explicitly on the essence of what the claim seeks to recover. The court found that a state-law misrepresentation claim asking for damages in the amount of medical expenses incurred by the plaintiff was preempted by ERISA because, regardless of the phrasing of the prayer for relief, a court... would be forced to calculate the benefits that would have been owed to [plaintiff]. Id. at 809. The court distinguished this sort of request from scenarios in which the prayed-for relief does not depend on an ERISA plan. Id. Thus, Lion s Volunteer Blind does not relegate preemption doctrine solely to instances in which a party explicitly prays for recovery of plan benefits, but instead focuses on the essence of what the claimant is seeking to recover. Here, although in name SagePoint asks for contribution, it is in fact asking for recovery dependent on losses to ERISA plans whatever the Trustees share might be based on their level of fault in monitoring Stokes and 1Point. The claim essentially raises the rights of the Plans (and their participants and beneficiaries) against the Trustees, their fiduciaries under ERISA, and seeks recovery of those Plan funds (or benefits) lost due to any alleged mismanagement. While 15 Case 3:09-cv Document 67 Filed 01/24/11 Page 15 of 16 PageID #: 1320

16 SagePoint s claim is for contribution, ERISA provides the only means for raising the rights implicated by it. As such, ERISA preempts the Counterclaim. IV. CONCLUSION In light of the reasoning above, the Court need not proceed any further in addressing Counter-Defendants arguments. Counter-Defendants Motion is GRANTED with respect to all counts of the Counterclaim, which is DISMISSED. It is so ORDERED. Entered this the 20 th day of January, Case 3:09-cv Document 67 Filed 01/24/11 Page 16 of 16 PageID #: 1321