Thomas Jones v. Singing River Health Svc Fdn, et a ( 2018 )

Case: 18-60130 Document: 00514587984 Page: 1 Date Filed: 08/06/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 6, 2018
No. 18-60130
Lyle W. Cayce
Clerk
THOMAS JONES, on behalf of themselves and others similarly situated;
JOSEPH CHARLES LOHFINK, on behalf of themselves and others similarly
situated; SUE BEAVERS, on behalf of themselves and others similarly
situated; RODOLFOA REL, on behalf of themselves and others similarly
situated; HAZEL REED THOMAS, on behalf of themselves and others
similarly situated,
Plaintiffs - Appellees
v.
SINGING RIVER HEALTH SERVICES FOUNDATION; SINGING RIVER
HEALTH SYSTEM FOUNDATION; SINGING RIVER HOSPITAL SYSTEM
FOUNDATION, INCORPORATED; SINGING RIVER HOSPITAL SYSTEM
EMPLOYEE BENEFIT FUND, INCORPORATED; SINGING RIVER
HOSPITAL SYSTEM; TRANSAMERICA RETIREMENT SOLUTIONS
CORPORATION; KPMG, L.L.P.; MICHAEL J. HEIDELBERG; MICHAEL D.
TOLLESON; TOMMY LEONARD; LAWRENCE H. COSPER; MORRIS G.
STRICKLAND; IRA POLK; STEPHEN NUNENMACHER; HUGO
QUINTANA; GARY C. ANDERSON; STEPHANIE BARNES TAYLOR;
MICHAEL CREWS; SINGING RIVER HEALTH SYSTEM; ALLEN
CRONIER; MARTIN BYDALEK; WILLIAM DESCHER; JOSEPH VICE;
ERIC WASHINGTON; MARVA FAIRLEY-TANNER; GRAYSON CARTER,
JR.,
Defendants - Appellees
v.
CYNTHIA N. ALMOND,
Interested Party - Appellant
____________________
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REGINA COBB, on behalf of themselves and others similarly-situated; ET
AL,
Plaintiffs
v.
SINGING RIVER HEALTH SYSTEM; BOARD OF TRUSTEES FOR THE
SINGING RIVER HEALTH SYSTEM; MICHAEL J. HEIDELBERG, in their
individual and official capacities; MICHAEL D. TOLLESON, in their
individual and official capacities; ALLEN L. CRONIER, in their individual
and official capacities; TOMMY L. LEONARD, in their individual and official
capacities; LAWRENCE H. COSPER, in their individual and official
capacities; MORRIS G. STRICKLAND, in their individual and official
capacities; IRA S. POLK, in their individual and official capacities;
STEPHEN NUNENMACHER, in their individual and official capacities;
HUGO QUINTANA, in their individual and official capacities; MARVA
FAIRLEY-TANNER, in their individual and official capacities; WILLIAM C.
DESCHER, in their individual and official capacities; JOSEPH P. VICE, in
their individual and official capacities; MARTIN D. BYDALEK, in their
individual and official capacities; ERIC D. WASHINGTON, in their
individual and official capacities; G. CHRIS ANDERSON, in their individual
and official capacities; KEVIN HOLLAND, in their individual and official
capacities,
Defendants - Appellees
v.
CYNTHIA N. ALMOND,
Interested Party - Appellant
____________________
MARTHA EZELL LOWE, individually and on behalf of a class of similarly
situated employees,
Plaintiff
v.
2
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No. 18-60130
SINGING RIVER HEALTH SYSTEM; TRANSAMERICA RETIREMENT
SOLUTIONS CORPORATION; KPMG, L.L.P.; GARY ANDERSON;
MICHAEL CREWS; MICHAEL TOLLESON; STEPHANIE BARNES
TAYLOR; MORRIS STRICKLAND; TOMMY LEONARD,
Defendants - Appellees
v.
CYNTHIA N. ALMOND,
Interested Party - Appellant
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 1:14-CV-447
Before HIGGINBOTHAM, DENNIS, and COSTA, Circuit Judges.
PER CURIAM:*
Singing River Health System (SRHS) is a not-for-profit health system
with approximately 2,400 employees. 1 In 1983, SRHS created the Employees’
Retirement Plan and Trust (the “Plan”), a defined benefits pension fund. 2 By
its own terms, the Plan could be modified or terminated at any time. 3 Since
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
1 The facts underlying this action are set forth in more detail in this Court’s prior
opinion in this matter. See Jones v. Singing River Health Servs. Found., 865 F.3d 285 (5th
Cir. 2017).
2 The Plan was established as a successor to the Public Employees’ Retirement System
of Mississippi.
3 Jones, 865 F.3d at 289 (noting that “although the Plan states it was established in
confidence that it would continue indefinitely,” it also contains a provision stating that SRHS
“reserve[s] the right to terminate the Plan . . . , in whole or in part, at any time”).
3
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2008, the Plan has required employees to contribute three percent of their
salary, while SRHS has “the sole responsibility for making the [actuarially
determined] contributions necessary to provide benefits under the Plan.” 4
From 2009 to 2014, SRHS “failed to make all but one of its contributions
needed to maintain the Plan’s fiscal integrity.” 5 In November 2014, the Board
decided to freeze and liquidate the Plan. Certain SRHS retirees immediately
sought injunctive relief in the Jackson County Chancery Court, which ordered
SRHS not to terminate the Plan. As a result of that order, the Plan was
“frozen,” meaning that no new contributions came in, but benefit payments
continued to go out. In August 2015, the Chancery Court held that, as a matter
of law, SRHS was indebted to the Plan for the missed contributions plus lost
earnings, a sum exceeding $55 million.
More lawsuits followed, including the three now-consolidated Rule 23
class actions that provide the basis for this appeal, styled as the Jones, Cobb,
and Lowe cases. After expedited discovery and several mediation sessions with
a court-appointed mediator, the parties developed a settlement agreement. The
Jones Plaintiffs moved for preliminary approval of the settlement, and the
court granted the motion, conditionally certified the class, and approved
procedures for notifying class members.
On April 1, 2016, the Jones Plaintiffs moved for approval of a final
settlement (the “Settlement Agreement”). At its core, the Settlement
Agreement requires SRHS to deposit a total of $149,950,000 into the
retirement trust under a thirty-five year schedule. This sum represents the
$55 million sum owed by SRHS to the Plan for missed contributions and lost
earnings from 2009-2014, calculated with a six percent discount rate. SRHS
4 Id.
5 Id.
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also agreed to pay attorneys’ fees of $6.45 million and expenses up to $125,000;
the payment schedule called for a full payout by September 2018. 6
On June 2, 2016, the district court concluded that the Settlement
Agreement was fair, reasonable, adequate, and not the product of collusion,
and entered an order granting final approval of the settlement. A group of
Objectors appealed that order to this Court, arguing that the settlement “is
illusory, provides no real protection for class members, and lacks any
specificity as to how different class members will be treated should the class
be certified and the settlement approved.” 7
On July 27, 2017, we issued an opinion considering each of the Objectors’
arguments in turn. Though we made several findings in favor of the proposed
Settlement Agreement, we also concluded that the district court “focused too
narrowly on SRHS’s proffered payments,” and not enough on “the hospital's
ability to sustain the promised settlement payments, how the settlement
affects the plaintiffs, and why class counsel should receive their multimillion
dollar fees up-front while significant uncertainty surrounds SRHS's future
compliance.” 8 We did not hold that “the settlement should not be approved, or
cannot be approved as modified.” 9 Instead, we held only that the settlement’s
terms “should have been more thoroughly examined prior to the court’s
approval.” 10 Accordingly, we vacated and remanded for further consideration
of four “illustrative” questions:
1. How, and how much, the future stream of SRHS’s payments
into the Plan, together with existing Plan assets and
prospective earnings, will intersect with future claims of Plan
6 Additional terms of the Settlement Agreement are discussed at length in our prior
opinion. See id. at 290–92.
7 Id. at 291.
8 Id. at 296.
9 Id. at 303.
10 Id.
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participants, including, but not limited to, what effect the
Settlement has on current retirees;
2. What are SRHS’s future revenue projections, showing dollar
amounts, assumptions[,] and contingencies, from which a
reasonable conclusion is drawn that SRHS has the financial
ability to complete performance under the settlement;
3. Why any payments from litigation involving KPMG,
Transamerica or related entities are permitted to defray
SRHS’s payment obligation rather than supplement the
settlement for the benefit of class members;
4. Why class counsel’s fees should not be tailored to align with the
uncertainty and risk that class members will bear. 11
On remand, the district court ordered supplemental briefing and
conducted a supplemental fairness hearing aimed at addressing each of our
concerns. After considering the new evidence, the district court once again
approved the Settlement Agreement after concluding that it was fair,
reasonable, and adequate. The Objectors appealed that order, arguing that
“the settling parties have failed to sufficiently answer the four questions asked
per the [our] mandate.”
Our review at this juncture is narrow. Our prior opinion in this matter
establishes the law of the case. 12 This means that we must follow our prior
decisions on all legal or factual issues, including “not only . . . issues decided
explicitly, but also . . . everything decided ‘by necessary implication.’” 13
Moreover, “[t]he mandate rule requires a district court to remand to effect [the
11 Id.
12 “The ‘law of the case’ doctrine provides that ‘a decision of a factual or legal issue by
an appellate court establishes the ‘law of the case’ and must be followed in all subsequent
proceedings in the same case in the trial court or on a later appeal in the appellate court . . .
.’” Lyons v. Fisher, 888 F.2d 1071, 1074 (5th Cir. 1989) (quoting Goodpasture, Inc. v. M/V
Pollux, 688 F.2d 1003, 1005 (5th Cir. 1982)). See also Musacchio v. United States, 136 S. Ct.
709, 716 (2016) (“The law-of-the-case doctrine generally provides that when a court decides
upon a rule of law, that decision should continue to govern the same issues in subsequent
stages in the same case.”) (internal quotation marks omitted).
13 In re Felt, 255 F.3d 220, 225 (5th Cir. 2001).
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appellate court’s] mandate and nothing else.” 14 This “forecloses relitigation of
issues expressly or impliedly decided by the appellate court.” 15 If an appellant
fails to brief an issue on the first appeal, that issue is ordinarily waived. 16
In light of the “strong judicial policy favoring the resolution of disputes
through settlement,” our appellate review is limited and “an approved
settlement will not be upset unless the court clearly abused its discretion.” 17
Having reviewed the briefs, the applicable law, and the pertinent portions of
the record—and with the benefit of oral argument—we are not persuaded that
the district court here abused its discretion. While the Objectors raise a
number of issues in their briefing, many of their claims have been waived or
merely repackage arguments already raised and rejected in their earlier
appeal, and their remaining arguments are without support in the record.
AFFIRMED. The Motion to Strike Appellant’s Brief is DENIED AS
MOOT.
14 Gen. Universal Sys., Inc. v. HAL, Inc., 500 F.3d 444, 453 (5th Cir. 2007) (quoting
United States v. Castillo, 179 F.3d 321, 329 (5th Cir. 1999)) (internal quotation marks
omitted).
15 Gen. Universal Sys., Inc., 500 F.3d at 453 (internal quotation marks omitted).
16 See, e.g., id. at 453–454.
17 Parker v. Anderson, 667 F.2d 1204, 1209 (5th Cir. Unit A 1982). See also Reed v.
General Motors Corp., 703 F.2d 170, 172 (5th Cir. 1983) (“The teaching of these cases is that
the district court’s approval of a proposed settlement may not be overturned on appeal absent
an abuse of discretion.”).
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