Kifafi v. Hilton Hotel Retire

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
JAMAL J. KIFAFI, individually and on
behalf of all others similarly situated,
Plaintiff, Civil Action No. 98-1517 (CKK)
v.
HILTON HOTELS RETIREMENT PLAN,
et al.,
Defendants.
MEMORANDUM OPINION
(December 2, 2011)
Presently before the Court is Defendants’ Motion for a Stay Pending Appeal and Request
for Expedited Treatment.1 Defendants (or “Hilton”) have requested expedited briefing of their
Motion, which seeks to stay the Court’s August 31, 2011 Order requiring Hilton to adopt the
Court’s backloading remedy and to make new payments to new and previously vested
participants, pending resolution of Defendants’ appeal of the backloading issue. In response to
the Court’s November 28, 2011 Order requiring the parties to meet and confer regarding a
briefing schedule for Defendants’ Motion, Plaintiff filed a [284] Motion for Temporary Stay and
Schedule for Briefing a Stay Under FRCP 62(c). Defendants also filed a [285] Proposed
Briefing Schedule. For the reasons stated below, Plaintiff’s motion for a temporary stay shall be
GRANTED IN PART and DENIED IN PART. The Court shall grant a temporary stay of the
relevant portions of the August 31, 2011 Order pending the Court’s decision on Defendants’
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Defendants also filed a [282] Motion for Leave to File Motion for Stay and Declaration
of Andrew M. Lacy Under Seal. The Court will address Defendants’ motion to seal in a separate
order.
Motion or the posting of a Court ordered or approved bond by Defendants. The Court shall also
adopt Plaintiff’s proposed briefing schedule. Defendants’ request for a more expedited briefing
schedule, and Plaintiff’s request for an order requiring Defendants to produce additional
financial information shall be denied.
I. BACKGROUND
On August 31, 2011, the Court entered a final judgment in this case. See ECF No. [258].
The Order, among other things, required Hilton to amend the Hilton Hotels Retirement Plan (the
“Plan”) to remedy violations of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), 29 U.S.C. §§ 1001 et seq., specifically ERISA’s anti-backloading
provision, 29 U.S.C. § 1054(b)(1). Id. at 7. Pursuant to that order, Hilton was required to amend
the Plan, and by no later than January 1, 2012, “award back payments and commence increased
benefits for all class members.” Id. at 9. Defendants’ proposed plan amendment (ECF No.
[269]) purported to utilize an effective date of the later of
[insert the Date of Execution of Amendment 2011-1], or 30 days after the entry of
a final judgment in the Kifafi Litigation and the expiration of all proceedings
arising out of an appeal therefrom [], provided however that the final judgment
entered in the Kifafi Litigation on August 31, 2011 is not reversed, vacated, or
otherwise modified.
Attach. 1, ECF No. [269], at 1-2. The Court rejected Defendants’ attempt to circumvent the
Order, and declined Defendants’ invitation to enact a “sua sponte” stay without the benefit of
briefing from the parties. See 11/23/11 Mem. Opin., ECF No. [281], at 6. Instead, the Court
ordered Defendants to enact the proposed plan amendment with an effective date of January 1,
2012, and certain other revisions. 11/23/11 Order, ECF No. [280]. Defendants filed the Motion
to Stay on November 28, 2011, requesting an expedited briefing schedule with Plaintiff’s
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opposition due December 5, 2011, and Defendants’ reply due December 8, 2011. Contrary to
the requirements of Local Civil Rule 7(m), Defendants failed to meet and confer with Plaintiff
regarding the motion and proposed briefing schedule prior to filing the motion with the Court.
The Court ordered the parties to confer regarding a schedule, and the parties filed their
competing proposals on November 29, 2011. See ECF Nos. [284], [285]. Plaintiff proposed
implementing a temporary stay and extended briefing schedule, in addition to requiring Hilton to
re-file its motion with additional financial disclosures. Pl.’s Mot. for Temp. Stay and Proposed
Schedule for Briefing on a Stay Under FRCP 62(c), ECF No. [284]. Defendants’ proposal
advocated for their expedited schedule, or in the event of a temporary stay, briefing according to
the normal timeline provided in the Local Rules. Defs.’ Proposed Briefing Schedule, ECF No.
[285].
II. DISCUSSION
A. Temporary Stay
Plaintiff proposes temporarily staying certain portions of the Court’s August 31, 2011
Order regarding backloading so as to allow adequate time to brief Defendants’ Motion.
Curiously, Plaintiff’s proposal would stay the effect of the Court’s only through the briefing of
the motion, and not the Court’s decision. Defendants request that the stay be extended until
thirty days after the Court rules on Defendants’ motion. The Court agrees that a temporary stay
would be beneficial, but that it should not expire before the Court renders its decisions.
Although Defendants are only appealing the backloading issues, Defendants’ Motion requests a
broader stay, encompassing the payment of benefits to newly vested Plan participants under the
Court’s vesting orders. While the right of these newly vested Plan participants to receive
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benefits is not in question, the amount of benefits these individuals should receive may vary
based on the resolution of the attorney’s fee issue. See Defs.’ Mot. at 13. Thus on the record
currently before the Court, payment of benefits to newly vested Plan participants shall be stayed
along with the provisions of the Court’s Order under appeal by Hilton. Therefore, the Court will
stay the following provisions of the Court’s August 31, 2011 Order:
(1) Hilton’s obligation to amend the Plan to comply with Section II.A and B;
(2) Back payments to new and previously vested Plan participants;
(3) Increased benefits to previously vested Plan participants; and
(4) Benefits to newly vested Plan participants.
Hilton shall be required to continue to make scheduled payments to previously vested Plan
participants under the existing terms of the Plan. This stay shall be in effect until:
(1) Thirty days after the Court renders a decision on Defendants’ Motion for a Stay
Pending Appeal;
OR
(2) Defendants post a supersedeas bond ordered or approved by the Court.
This will enable the parties adequate time to brief the motion and the Court adequate time to
resolve the merits of the motion before Hilton must implement the ordered changes. If the Court
were to deny Defendants’ motion, Hilton would also have sufficient time to make the necessary
preparations to implement the plan amendment, and/or seek a stay with the Court of Appeals.
However, if the parties reach an agreement as to a supersedeas bond amount, and the bond is
approved by the Court and posted by Defendants before the Court’s decision is rendered, the
Court would enter a stay pending resolution of Defendants’ appeal.
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B. Briefing Schedule
With the temporary stay in place, there is no need to truncate the briefing schedule for
Defendants’ motion. Furthermore, given the complexity of the issues surrounding the request for
a stay (including the relationship between Plaintiff’s potential request for attorney’s fees from
the common fund and the amount of benefits and back payments to be distributed by
Defendants), the Court finds there is good cause to allow the Plaintiff additional time to prepare
his opposition. Therefore, Plaintiff’s opposition shall be due no later than December 22, 2011,
and Defendants’ reply due no later than December 30, 2011. There will be no further extensions.
C. Plaintiff’s Request for Additional Financial Documents
Plaintiff’s motion for a temporary stay requests the Court to order Hilton to re-file it’s
motion with “supporting declaration(s) from Hilton Worldwide’s CFO or other executive
officers” and documents addressing “[p]ension liability adjustments,” and increased annual
funding to the Plan. Pl.’s Mot. at 3. Plaintiff further seeks Hilton’s consolidated balance sheets
for 2007 through 2010. Id. The Court declines to order Hilton to re-file its Motion or provide
additional supporting documentation. Defendants have agreed to provide “additional supporting
material relating to paragraph 5 of Mr. Duffy’s affidavit,” concerning the issue of increased Plan
funding requirements. Def.’s Proposed Briefing Schedule at 4. Plaintiff failed to explain why
the information provided is inadequate, or how the additional requested materials are relevant to
the issues before the Court. Moreover, the burden is on Hilton to provide the Court with
adequate documentation and other evidence supporting its assertion that Hilton Worldwide, Inc.,
is sufficiently solvent to justify a stay without a bond, or a bond in the amount requested by
Defendants. Defendants have taken the risk that the Court will not find the motion as filed to be
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adequate for those purposes and will deny the stay, or require Hilton to post a larger bond. The
Court will not order Hilton to produce documents in order to meet Hilton’s burden on its own
motion.
III. CONCLUSION
For the foregoing reasons, the Court finds that the parties and the Court will be best
served by temporarily staying the portions of the Court’s August 31, 2011 requiring Defendants
to amend the Plan and to provide back payments and new or increased benefits to previously and
newly vested Plan participants by January 1, 2012. The stay shall be in effect until thirty days
after the Court renders its decision on Defendants’ motion to stay the Order pending appeal, or
until the Defendants post a supersedeas bond ordered or approved by the Court. Furthermore, in
light of the complexity of the issues raised by Defendants’ motion and the reduced urgency with
the temporary stay in place, the Court shall adopt the briefing schedule proposed by Plaintiff.
The Court shall deny Defendants’ request for an expedited briefing schedule, and deny
Plaintiff’s request that the Court order Defendants to produce additional financial information in
support of their own motion.
An appropriate Order accompanies this Memorandum Opinion.
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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