Lindell v. Landis Corporation 401(k) Plan ( 2009 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
__________________________________________
)
NATHAN LINDELL, )
)
Plaintiff, )
)
v. ) Civil Action No. 08-1462 (PLF)
)
THE LANDIS CORPORATION 401(K) PLAN; )
LANDIS CONSTRUCTION COMPANY; )
ETHAN LANDIS, individually and in his capacity )
as an officer; HUGH JEFFREY FOX, PLAN )
ADMINISTRATOR of the LANDIS )
CORPORATION 401(K) PLAN; and JOHN )
DOES 1-5, Fiduciaries, )
)
Defendants. )
__________________________________________)
MEMORANDUM OPINION
This matter is before the Court on defendants’ motion to dismiss for failure to
state a claim upon which relief can be granted under Rule 12(b)(6) of the Federal Rules of Civil
Procedure (“Mot.”), plaintiff’s opposition (“Opp.”) and defendants’ reply. For the reasons
discussed below, the Court finds that the issues raised in this motion are better understood as a
challenge to subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil
Procedure. Having carefully considered the parties’ arguments and the relevant case law, the
Court will grant defendants’ motion to dismiss as to defendants Landis Construction Company
and Ethan Landis, individually and in his capacity as an officer, and the Court will deny
defendants’ motion to dismiss as to defendants Landis Corporation 401(k) Plan, Hugh Jeffrey
Fox, and John Does 1-5, Fiduciaries.
I. BACKGROUND
Plaintiff Nathan Lindell, a former employee of Landis Construction Company
(“the company”), brought this action under the Employee Retirement Income Security Act of
1974, as amended, 29 U.S.C. §§ 1001 et seq., (“ERISA”), for unpaid and untimely contributions
by the company to its 401(k) Plan in which Mr. Lindell was a participant. Plaintiff also alleges
that defendant Fox and the John Doe fiduciaries breached their fiduciary duty to him in their
capacity as administrators of the plan. Defendants now move to dismiss on the ground that the
claim is barred by a settlement agreement entered into by the parties in a related case concerning
unpaid overtime wages. Defendants further argue that this claim is barred by the doctrine of res
judicata in light of the same settlement agreement.
II. DISCUSSION
A. Standard of Review
Federal courts are courts of limited jurisdiction. Under Article III’s case or
controversy requirement, federal courts may only decide “real and substantial controvers[ies]”.
North Carolina v. Rice, 404 U.S. 244, 246 (1971) (quoting Aetna Life Ins. Co. v. Haworth, 300
U.S. 227 (1937)). Federal courts have no jurisdiction over moot cases, see Worth v. Jackson,
451 F. 3d 854, 857 (D.C. Cir. 2006), and such cases must be dismissed for lack of subject matter
jurisdiction pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. The Court has “an
affirmative obligation to ‘ensure that it is acting within the scope of its jurisdictional authority’
. . . which includes the obligation to consider the possibility of mootness.” Abu Ali v. Gonzales,
387 F. Supp. 2d 16, 17 (D.D.C. 2005) (quoting Grand Lodge of Fraternal Order of Police v.
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Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C. 2001)). Claims that have been resolved by earlier
settlement agreements, and therefore present no ongoing controversy, are moot. See Allen v.
Nicholson, 573 F. Supp. 2d 35, 38 (D.D.C. 2008) (citing Aulenback, Inc. v. Federal Highway
Admin., 103 F.3d 156, 161 (D.C. Cir. 1997)). Accordingly, the Court will analyze defendants’
motion to dismiss for failure to state a claim based on a prior settlement agreement as a motion to
dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1).
Under Rule 12(b)(1), the plaintiff bears the burden of establishing subject matter
jurisdiction. See Brady Campaign to Prevent Gun Violence v. Ashcroft, 339 F. Supp. 2d 68, 72
(D.D.C. 2004). When deciding a motion to dismiss for lack of subject matter jurisdiction under
Rule 12(b)(1), the Court must construe the complaint in the plaintiff’s favor and treat all well-
pled factual allegations as true. See Allen v. Nicholson, 573 F. Supp. 2d at 38. The Court is not
required, however, to accept unsupported inferences or “legal conclusions cast as factual
allegations.” Id. at 38 (quoting Rann v. Chao, 154 F. Supp 2d 61, 64 (D.D.C. 2001)) (internal
quotation marks omitted). Under Rule 12(b)(1), the Court may dispose of the motion on the
basis of the complaint alone or it may consider materials beyond the pleadings, such as the
proffered settlement agreement, “as it deems appropriate to resolve the question whether it has
jurisdiction to hear the case.” Scolaro v. D.C. Board of Elections and Ethics, 104 F. Supp. 2d 18,
22 (D.D.C. 2000).
B. The Settlement Agreement
On February 11, 2008, plaintiff sued the company and its CEOs, Ethan Landis and
Christopher Landis, in their individual capacities for unpaid overtime wages. See Lindell v.
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Landis Constr. Corp., Civil Action No. 08-0229, Complaint, Dkt. No. 1 (D.D.C. February 11,
2008). On August 26, 2008, the parties in that case agreed to prepare a joint stipulation of
dismissal. See Mot. at 2. On September 8, 2008, the parties filed a stipulation, agreeing to
dismiss the case under Rule 41(a)(1)(A)(ii) of the Federal Rules of Civil Procedure. See Lindell
v. Landis Constr. Corp., Stipulation of Dismissal, Dkt. No. 15 (D.D.C. Sept. 8, 2008). The one-
page handwritten settlement agreement was signed by Ethan Landis on behalf of all the
defendants in the case. See Mot., Exhibit 1 (the “Settlement Agreement”). For the purpose of
this action, the relevant information in the Settlement Agreement is contained in its paragraph
four, which states simply: “This is a settlement and release of all claims between the parties.” Id.After signing the Settlement Agreement, Mr. Lindell filed the lawsuit currently before the Court.
The parties do not dispute the legitimacy of the Settlement Agreement. Rather,
the question is whether the earlier settlement bars all of plaintiff’s current claims. Settlement
agreements are contracts, and courts interpret them accordingly. See 13B CHARLES ALAN
WRIGHT , ARTHUR R. MILLER & EDWARD H. COOPER , FEDERAL PRACTICE AND PROCEDURE
§ 3533.2 (2d ed. 2002); see also Dodge v. Trustees of Nat. Gallery of Art, 326 F. Supp. 2d 1, 9
(D.D.C. 2004) (“When a case is settled extra-judicially through settlement agreements, this Court
has applied the principles of contract law . . . . to determine what claims the parties intended to
foreclose from future litigation.”) (internal citations omitted). In such situations, “‘the judicial
task . . . is to give effect to the mutual intent of the parties,’ and ‘when the language of a contract
is clear and unambiguous on its face, a court will assume that the meaning ordinarily ascribed to
those words reflects the intention of the parties.’” Pigford v. Schafer, 536 F. Supp. 2d 1, 10
(D.D.C. 2008) (quoting Mesa Air Group, Inc. v. Dep’t of Transp., 87 F.3d 498, 503 (D.C. Cir.
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1996)). Any assertions of ambiguity in the terms of the agreement must be established by
objective evidence. See id.Plaintiff argues that the Settlement Agreement is limited to his wage payment
claims. Nothing in the plain language of the Settlement Agreement provides for such a
limitation, however. The unambiguous and expansive language provides for the release of “all
claims” between the parties. Settlement Agreement ¶ 4. The Settlement Agreement therefore
bars all of Mr. Lindell’s claims, including the ones in the instant lawsuit before this Court,
against the signatories to the agreement — namely, the company and Ethan Landis, individually
and in his capacity as an officer. The Court concludes that plaintiff’s claims against these
defendants are moot and will grant the motion to dismiss as to those defendants.
The Settlement Agreement does not, however, bar Mr. Lindell’s claims against
parties who were not signatories to the agreement. In the settled case Mr. Lindell sued the
company, but he did not name as defendants the 401(k) Plan or any of its administrators.1
Defendants obliquely suggest that these parties are functionally identical to the signatories to the
Settlement Agreement, but they have not given the Court adequate evidence or authority to
support such a conclusion.2 The Court concludes therefore that the Settlement Agreement does
1
ERISA specifies that an employee benefit plan may be sued as an entity. See 29
U.S.C. §1132(d).
2
The parties’ exhibits raise a factual dispute over whether defendant Hugh Jeffrey
Fox is the 401(k) Plan administrator, and therefore, whether he is an appropriate defendant to this
action. Exhibit 2 of defendants’ motion is a declaration by Mr. Fox denying that he has ever
served as a plan administrator of the company’s 401(k) plan, see Mot., Exhibit 2 ¶ 3, while
Exhibit 1 of plaintiff’s opposition shows Mr. Fox’s signature as a plan administrator on
plaintiff’s plan enrollment form. See Opp., Exhibit 1. Construing the facts alleged in plaintiff’s
favor, as the Court must do at this point, the Court for now will treat Mr. Fox as the plan
administrator and as an appropriate defendant in this action.
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not moot Mr. Lindell’s claims against these parties.
C. Res Judicata
Defendants also argue that this action is barred by the doctrine of res judicata.
Under the doctrine of res judicata, a final judgment on the merits in an action precludes the same
parties from litigating claims that were or could have been raised in that action. See Medelius
Rodriguez v. U.S. Citizenship and Immigration Service, 605 F. Supp. 2d 142, 146 (D.D.C. 2009)
(quoting Allen v. McCurry, 449 U.S. 90, 94 (1980)). If the settlement agreement reached by the
parties in Lindell v. Landis Construction Corporation, Civil Action No. 08-0229, had been
approved by the Court as a judgment on the merits or in the form of a consent decree, res
judicata might bar plaintiff’s claims. But “[r]es judicata cannot operate in the absence of a
judgment. A settlement agreement that has not been integrated into a consent decree [or order of
a court] is not a judgment and cannot trigger res judicata.” Carver v. Nall, 172 F.3d 513, 515
(7th Cir. 1999); see also Bailey v. DiMario, 925 F. Supp. 801, 810-11 (D.D.C. 1995) (precluding
claims on res judicata grounds that were the subject of a court-approved class action settlement).
To have preclusive effect, a court judgment must be rendered in some form; otherwise a
settlement agreement on its own is effective only as a contract. See 18A WRIGHT , MILLER &
COOPER , § 4443 (2d ed. 2002). In Civil Action No. 08-0229, the parties entered into a
stipulation of dismissal under Rule 41(a)(1)(A)(ii), with no judgment entered by the Court. Rule
41(a)(1)(A)(ii) provides: “[T]he plaintiff may dismiss an action without court order by filing . . .
a stipulation of dismissal signed by all the parties who have appeared.” FED . R. CIV . P.
41(a)(1)(A)(ii). In the absence of a court order, the settlement agreement has no preclusive
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effect. Defendants’s arguments as to res judicata therefore are misplaced, and the Court will not
dismiss the case on those grounds.
D. Plaintiff’s Proposed Amendment
In his opposition to defendants’s motion to dismiss, plaintiff requested that he be
permitted to amend his complaint to include Ethan Landis and Christopher Landis in their
capacities as plan administrators of the Landis Construction Corporation 401(k) plan as
defendants. Under Rule 15(a)(1)(A), a party may amend its pleading once as a matter of course
before being served with a responsive pleading. See FED . R. CIV . P. 15(a)(1)(A). To do so,
however, Local Civil Rule 7(i) requires that the party file an original of the proposed pleading as
amended. See L. CV . R. 7(i). The plaintiff has not done so and until he does, the Court will
continue to rely upon the original complaint.
III. CONCLUSION
The Court will grant defendants’ motion to dismiss with respect to defendants
Landis Construction Company and Ethan Landis, individually and in his capacity as an officer.
Defendants’ motion to dismiss is denied with respect to defendants Landis Construction
Company 401(k) Plan, Hugh Jeffrey Fox and John Doe fiduciaries. An Order accompanying this
Memorandum Opinion will issue this same day.
/s/
PAUL L. FRIEDMAN
United States District Judge
DATE: July 28, 2009
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