Selected docket entries for case 10−5480 · PDF file · 2010-12-2304/28/2010...

Selected docket entries for case 10−5480

Generated: 12/23/2010 16:43:28

Filed Document Description Page Docket Text

04/28/2010 Case Opening Letter 4 Bankruptcy Case Docketed. Notice filed by Appellant JohnC. McLemore. Transcript needed: n.

04/28/2010 The case manager for this case is: Diane Schnur

05/04/2010 appearance form 7 APPEARANCE filed for Appellant John C. McLemore andDebtor 1 Point Solutions, LLC by Phillip G. Young, Jr..Certificate of Service: 05/04/2010.

05/04/2010 APPEARANCE filed for Appellant John C. McLemore andDebtor 1 Point Solutions, LLC by Robert M. Garfinkle.Certificate of Service: 05/04/2010. (Attorney instructed torefile using the correct login information)−−[Edited05/07/2010 by DS]

05/05/2010 civil appeal statement of partiesand issues

8 CIVIL APPEAL STATEMENT OF PARTIES ANDISSUES filed by Attorney Mr. Robert Martin Garfinkle forAppellant John C. McLemore. Certificate ofService:05/05/2010.

05/05/2010 transcript order 9 TRANSCRIPT ORDER FORM filed by Mr. Robert MartinGarfinkle for John C. McLemore; No hearings held inDistrict Court. Certificate of Service: 05/05/2010.

05/06/2010 appearance form 11 APPEARANCE filed for Appellee Regions Bank by JohnR. Wingo. Certificate of Service: 05/06/2010.

05/06/2010 APPEARANCE filed for Appellee Regions Bank byMatthew C. Blickensderfer. Certificate of Service:05/06/2010. (Attorney instructed to refile using the correctlogin information)−−[Edited 05/07/2010 by DS]

05/06/2010 corporate disclosure 12 CORPORATE DISCLOSURE STATEMENT filed byAttorney Mr. John Rex Wingo for Appellee Regions BankCertificate of Service: 05/06/2010.

05/07/2010 appearance form 13 APPEARANCE filed for Appellee Regions Bank byMatthew C. Blickensderfer. Certificate of Service:05/07/2010.

05/07/2010 motion 14 MOTION filed by Mr. Robert Martin Garfinkle for John C.McLemore to consolidate cases 10−5941. Certificate ofService: 05/07/2010.

05/07/2010 appearance form 16 APPEARANCE filed for Appellant John C. McLemore byRobert M. Garfinkle. Certificate of Service: 05/07/2010.

05/21/2010 ORDER filed to consolidate for briefing and submissioncases 10−5480, 10−5491. [10−5480, 10−5491] Clerk Order−Consolidate Briefing

and Sub17

Cover Letter 19

06/16/2010 Briefing Letter 21 BRIEFING LETTER SENT setting briefing schedule:appellant brief due 07/26/2010;. appellee brief due08/30/2010. [10−5480, 10−5491]

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https://ecf.ca6.uscourts.gov/docs1/006110555141













07/26/2010 appellant brief 23 APPELLANT BRIEF filed by Mr. Robert Martin Garfinklefor John C. McLemore. Certificate of Service:07/26/2010.Argument Request: requested.

08/05/2010 corporate disclosure 63 CORPORATE DISCLOSURE STATEMENT filed byAttorney Mr. Robert Martin Garfinkle for Appellant JohnC. McLemore Certificate of Service: 08/05/2010.

08/23/2010 motion 65 MOTION filed by Mr. Matthew C. Blickensderfer forRegions Bank in 10−5480, 10−5491 to extend time to filebrief. Certificate of Service: 08/23/2010. [10−5480,10−5491]

08/23/2010 Reset Briefing Schedule Letter 68 LETTER SENT granting motion to extend time to file brief[4236530−2] filed by Mr. Matthew C. Blickensderfer forRegions Bank in 10−5480, resetting briefing schedule:appellee brief now due 09/20/2010. [10−5480, 10−5491]


09/14/2010 Reset Briefing Schedule Letter 73 LETTER SENT granting motion to extend time to file brief[4248207−2] filed by Mr. Matthew C. Blickensderfer forRegions Bank, resetting briefing schedule: appellee briefnow due 10/04/2010. [10−5480, 10−5491]


10/04/2010 appellee brief 79 APPELLEE BRIEF filed by Mr. Matthew C.Blickensderfer for Regions Bank in 10−5480, 10−5491.Certificate of Service:10/04/2010. Argument Request:waived. [10−5480, 10−5491]

10/12/2010 Cover Letter 120 LETTER SENT granting motion to extend time to file brief[4257784−2] filed by Mr. Matthew C. Blickensderfer forRegions Bank. [10−5480, 10−5491]

10/13/2010 motion 121 MOTION filed by Mr. Robert Martin Garfinkle for John C.McLemore to extend time to file brief. Certificate ofService: 10/13/2010.

10/14/2010 Cover Letter 124 LETTER SENT granting motion to extend time to filereply brief [4265000−2] filed by Mr. Robert MartinGarfinkle for John C. McLemore. Appellant's reply brief isnow due by 11/12/2010. [10−5480, 10−5491]

11/12/2010 REPLY filed by Mr. Robert Martin Garfinkle for John C.McLemore regarding brief of Appellee. Certificate ofService: 11/12/2010. [10−5480, 10−5491] (Counselinstructed to refile as reply brief.)−−[Edited 11/15/2010 byDS]

11/16/2010 reply brief 125 REPLY BRIEF filed by Attorney Mr. Robert MartinGarfinkle for Appellant John C. McLemore. Certificate ofService:11/16/2010.

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https://ecf.ca6.uscourts.gov/docs1/006010712899?caseId=87551&dktType=dktPublic












11/19/2010 appearance form 149 APPEARANCE filed for Amicus Curiae DOL by LeonardH. Gerson. Certificate of Service: 11/19/2010.

11/19/2010 motion to file amicus brief 150 MOTION to file AMICUS BRIEF filed by Leonard HGerson for Hida L. Solis, Secretary of the U.S. Departmentof Labor. Certificate of Service: 11/19/2010.

11/19/2010 amicus curiae brief 155 AMICUS BRIEF filed by Mr. Leonard Howard Gerson forDOL. Certificate of Service:11/19/2010.

11/22/2010 Cover Letter 184 LETTER SENT granting motion to file amicus brief out oftime. [4287469−2].

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UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Leonard Green Clerk

100 EAST FIFTH STREET, ROOM 540 POTTER STEWART U.S. COURTHOUSE

CINCINNATI, OHIO 45202-3988 Tel. (513) 564-7000

www.ca6.uscourts.gov

Filed: April 28, 2010 Mr. Robert Martin Garfinkle Garfinkle, McLemore & Walker 2000 Richard Jones Road Suite 250 Nashville, TN 37215 Mr. John Rex Wingo Frost Brown Todd 424 Church Street Suite 1600 Nashville, TN 37219

Re: Case No. 10-5480, In re: 1 Point Solutions, LLC, et al v. Regions Bank Originating Case No. : 08-00021

Dear Counsel,

This appeal has been docketed as case number 10-5480 with the caption that is enclosed on a separate page. The appellate case number and caption must appear on all filings submitted to the Court.

Before preparing any documents to be filed, counsel are strongly encouraged to read the Sixth Circuit Rules at www.ca6.uscourts.gov. If you have not established a PACER account and registered with this court as an ECF filer, you should do so immediately. Your password for district court filings will not work in the appellate ECF system.

The following forms should be downloaded from the web site and filed with the Clerk's office by May 12, 2010.

Appellant:

Appearance of Counsel Civil Appeal Statement of Parties & Issues Disclosure of Corporate Affiliations (if applicable) Application for Admission to 6th Circuit Bar (if applicable)

Case: 10-5480 Document: 006110555141 Filed: 04/28/2010 Page: 1

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Appellee:

Appearance of Counsel Disclosure of Corporate Affiliations (if applicable) Application for Admission to 6th Circuit Bar (if applicable)

More specific instructions are printed on each form. If appellant's initial forms are not timely filed, the appeal will be dismissed for want of prosecution. If you have questions after reviewing the forms and the rules, please contact the Clerk's office for assistance.

Sincerely yours,

s/Diane Schnur Case Manager Direct Dial No. 513-564-7037 Fax No. 513-564-7094

Enclosure


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OFFICIAL COURT OF APPEALS CAPTION FOR 10-5480

In re: 1 POINT SOLUTIONS, LLC, Debtor ------------------------------ JOHN C. MCLEMORE, Trustee, Appellant EFS, INC. v. REGIONS BANK, as Successor in Interest by Merger to AmSouth Bank, Appellee


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6ca-689/08

UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

Appearance of Counsel

Sixth CircuitCase No.: Case Manager:

Case Name: vs.

Client’s or Clients’ Name(s): (List all clients on this form, do not file a separate appearance form for each client.)

AppellantAppellee

PetitionerRespondent

Amicus CuriaeIntervenor

Criminal Justice Act (Appointed)

Lead counsel must be designated if a party is represented by more than one attorney or law

firm. Check if you are lead counsel.

Name: Admitted: (Sixth Circuit admission date only)

Signature:

Firm Name:

Business Address:

Suite: City/State/Zip:

Telephone Number: (Area Code) Fax:

Primary E-mail Address:

Additional E-mail Address:

CERTIFICATE OF SERVICE

I certify that on _____________________________________ the foregoing document was served on all parties ortheir counsel of record through the CM/ECF system if they are registered users or, if they are not, by placing a trueand correct copy in the United States mail, postage prepaid, to their address of record.

s/


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6CA-53Rev. 6/08


CIVIL APPEAL STATEMENT OF PARTIES AND ISSUES

Case No: Case Manager:

Case Name:

Is this case a cross appeal? Yes NoHas this case or a related one been before this court previously? Yes NoIf yes, state:

Case Name: Citation: Was that case mediated through the court’s program? Yes No

Please Identify the Parties Against Whom this Appeal is Being Taken and the Specific Issues YouPropose to Raise:

This is to certify that a copy of this statement was served on opposing counsel of record this day of

, .Name of Counsel for Appellant


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lcornwell

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Robert M. Garfinkle

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READ INSTRUCTIONS ON THE NEXT PAGETRANSCRIPT ORDER

List on this form all transcript you are ordering from one court reporter. Use a separate form for each reporter and docket each form separately in the Sixth Circuit ECF database.

District Court District Court Docket Number

Short Case Title

Date Notice of Appeal Filed by Clerk of District Court COA#

PART 1 (TO BE COMPLETED BY PARTY ORDERING TRANSCRIPT, THE FORM MUST BE SIGNED WHETHER OR NOT TRANSCRIPT IS ORDERED).

A. Complete one of the following:

No Hearings

Transcript is unnecessary for appeal purposes

Transcript is already on the file in District Court Clerk’s Office

This is to order a transcript of the following proceedings: (specify exact dates of proceedings)

JUDGE MAGISTRATE HEARING DATE(S) COURT REPORTER

Pre-trial proceedings

Testimony (specify witnesses)

Other (specify)

TRANSCRIPT OF THE FOLLOWING PROCEEDINGS WILL BE PROVIDED ONLY IF SPECIALLY AUTHORIZED. SEE ITEM 13 CJA FORM 24

Voir Dire Opening statement of plaintiff Opening statement of defendant

Jury Instructions Closing argument of plaintiff Closing argument of defendant

FAILURE TO SPECIFY IN ADEQUATE DETAIL THOSE PROCEEDINGS TO BE TRANSCRIBED, OR FAILURE TO MAKE PROMPT SATISFACTORY FINANCIAL ARRANGEMENTSFOR TRANSCRIPT, ARE GROUNDS FOR DISMISSAL OF THE APPEAL.

B. This is to certify that satisfactory financial arrangements have been completed with the court reporter for payment of the cost of the transcript.

This method of payment will be:

Criminal Justice Act (Attach copy of CJA Form 24)

Private Funds

Date:

Signature Print Name Counsel for

Address Telephone

ALLOWANCE BY THE COURT OF LEAVE TO PROCEED IN FORMA PAUPERIS IN A CIVIL APPEAL

DOES NOT ENTITLE THE LITIGANT TO HAVE TRANSCRIPT AT GOVERNMENT EXPENSE.

PART II. COURT REPORTER ACKNOWLEDGMENT (To be completed by the Court Reporter and forwarded to the Court of Appeals within 10 days after receipt).

Date transcript order received

Estimated completion date; if not within 45 days of the date financialarrangements made, motion for extension to be made to Court of Appeals

Estimated number of pages

Arrangements for payment were made onArrangements for payment have not been made pursuant to FRAP (10(b))

Date Signature of Court Reporter Telephone

PART III. NOTIFICATION THAT TRANSCRIPT HAS BEEN FILED IN THE DISTRICT COURT (To be completed by Court Reporter on date of filing transcript in District Courtand notification must be forwarded to Court of Appeals on the same date).

This is to certify that the transcript has been completed and filed with the District Court today.

Actual Number of Pages Actual Number of Volumes

Date Signature of Court Reporter


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INSTRUCTIONS FOR ANYONE ORDERING TRANSCRIPT

YOU HAVE TEN DAYS AFTER FILING YOUR NOTICE OF APPEAL TO COMPLETE THIS FORM BY DOING THEFOLLOWING:

1. Complete Part 1. Sign the form whether or not transcript is ordered. If ordering transcript list on theform all transcript being ordered from one court reporter.

2. Contact each court reporter involved in reporting the proceedings to make arrangements for payment. A separate transcript order form must be prepared for each court reporter and then docketseparately in the Sixth Circuit ECF database.

3. Send four (4) copies to each court reporter.

4. Attorney’s must electronically file with the Clerk’s office. Pro Se litigants are to mail the form.

Clerk’s Office Mailing Address

United States Court of Appeals540 Potter Stewart U.S. Courthouse100 East Fifth StreetCincinnati, Ohio 45202

5. Send a copy to appellee(s). Make additional photocopies if necessary.

6. Retain a copy for your files.

SHOULD SATISFACTORY ARRANGEMENTS FOR TRANSCRIPT PRODUCTION, INCLUDING NECESSARYFINANCIAL ARRANGEMENTS, NOT BE MADE WITHIN TEN (10) DAYS AFTER FILING YOUR NOTICE OF APPEAL,YOUR APPEAL CAN BE DISMISSED.

If you have further questions, contact the Clerk's Office, U.S. Court of Appeals for the Sixth Circuit:513-564-7000.


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��Case: 10-5480 Document: 006110620584 Filed: 05/06/2010 Page: 1

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��Case: 10-5480 Document: 006110620625 Filed: 05/06/2010 Page: 1

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6ca-689/08




Case Name: vs.


AppellantAppellee







Signature:

Firm Name:

Business Address:







s/


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In re: 1POINT SOLUTIONS, LLC, Debtor. ----------------------------- JOHN C. McLEMORE, TRUSTEE, Appellant, v. Case No. 10-5480 REGIONS BANK, as Successor in Interest by Merger to AmSouth Bank, Appellee.

APPELLANT’S MOTION TO CONSOLIDATE THIS APPEAL WITH APPEAL NUMBER 10-5941

Appellant John C. McLemore, Trustee, respectfully moves the Court, pursuant to Federal

Rule of Appellate Procedure 3(b)(2), to consolidate this appeal with appeal number 10-5491.

These two cases were consolidated in the District Court below because they raise virtually

identical claims and issues as to the same defendant, Regions Bank. Also, the issues on appeal

are the same in each case and concern the same rulings by the trial court.

Appellant submits that it would be most efficient for the Court and the parties if the two

cases were consolidated for appellate purposes.


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An identical motion is being filed by Appellants in case number 10-5491.

Respectfully submitted,

GARFINKLE, McLEMORE & YOUNG, PLLC /s/ Robert M. Garfinkle Robert M. Garfinkle Tn. Bar No. 5354 2000 Richard Jones Rd., Ste. 250 Nashville, TN 37125-8249 (615) 383-9495 (phone) (615) 292-9848 (fax) [email protected] Attorney for the Appellant


I certify that this document has been filed on May 7, 2010, with the Court’s ECF system and will be forwarded to : John R. Wingo Matthew C. Blickensderfer Frost Brown Todd LLC Frost Brown Todd LLC 424 Church Street, Suite 1600 2200 PNC Center, 201 East Fifth Street Nashville, TN 37219 Cincinnati, OH 45202 Attorneys for Regions Bank /s/ Robert M. Garfinkle Robert M. Garfinkle


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mailto:[email protected]

6ca-689/08




Case Name: vs.


AppellantAppellee







Signature:

Firm Name:

Business Address:







s/


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Case No. 10-5480 /10-5491


ORDER

In re: 1 POINT SOLUTIONS, LLC, Debtor ------------------------------ JOHN C. MCLEMORE, Trustee, Appellant EFS, INC. v. REGIONS BANK, as Successor in Interest by Merger to AmSouth Bank, Appellee

The court having determined that consolidation of the above causes for purposes of briefing

and submission is appropriate,

It is ORDERED that the causes be and they hereby are consolidated for the purposes stated

above. Each appellant shall file a separate brief and the appellee shall file one consolidated brief.

ENTERED PURSUANT TO RULE 45(a), RULES OF THE SIXTH CIRCUIT Leonard Green, Clerk

Issued: May 21, 2010

___________________________________


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Leonard Green Clerk




Filed: May 21, 2010

Mr. Matthew C. Blickensderfer Frost Brown Todd 201 E. Fifth Street Suite 2200 PNC Center Cincinnati, OH 45202 Mr. H. Naill Falls Jr. Falls & Veach 1143 Sewanee Road Nashville, TN 37220 Mr. Robert Martin Garfinkle Garfinkle, McLemore & Walker 2000 Richard Jones Road Suite 250 Nashville, TN 37215 Mr. John Rex Wingo Frost Brown Todd 424 Church Street Suite 1600 Nashville, TN 37219 Mr. Phillip Gary Young Jr. Garfinkle, McLemore & Young 22 Public Square Suite 12 Columbia, TN 38401

Re: Case No. 10-5480 /10-5491 , In re: 1 Point Solutions, LLC, et al v. Regions Bank Originating Case No. : 08-00021


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Dear Sir or Madam,

The Court issued the enclosed (Order/Opinion) today in this case.

Sincerely yours,


Enclosure


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Leonard Green Clerk




Filed: June 16, 2010 Mr. Matthew C. Blickensderfer Frost Brown Todd 201 E. Fifth Street Suite 2200 PNC Center Cincinnati, OH 45202 Mr. H. Naill Falls Jr. Falls & Veach 1143 Sewanee Road Nashville, TN 37220 Mr. Robert Martin Garfinkle Garfinkle, McLemore & Walker 2000 Richard Jones Road Suite 250 Nashville, TN 37215 Mr. John Rex Wingo Frost Brown Todd 424 Church Street Suite 1600 Nashville, TN 37219 Mr. Phillip Gary Young Jr. Garfinkle, McLemore & Young 22 Public Square Suite 12 Columbia, TN 38401


Dear Counsel,


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The briefing schedule for this case is listed below. The briefs must be filed electronically with the Clerk's office no later than these dates. If the appellant's principal brief is filed late, the case is at risk of being dismissed for want of prosecution.

The Court has ceased its use of the electronic Record on Appeal (ROA). In lieu of the ROA, the Court will access directly the electronic record in the district court. To assist the Court, counsel must include in an addendum in the principal brief, a designation of relevant district court documents, identifying each document by record entry number and a succinct description.

If any relevant documents are not available electronically, the parties must file an electronic appendix with the briefs. To determine if this appeal requires an appendix and how to prepare it, counsel are strongly encouraged to read the latest version of the Sixth Circuit Rules at www.ca6.uscourts.gov, in particular Rules 28 and 30.

Appellant's Principal Brief Appendix (if required by 6th Cir. R. 30(a))

Filed electronically by July 26, 2010

Appellee's Principal Brief Appendix (if required by 6th Cir. R. 30(a)) and (c)(2))

Filed electronically by August 30, 2010

Appellant's Reply Brief (Optional Brief) Filed electronically 17 days after

the appellee's brief. See Fed. R. App. P. 26(c)

A party desiring oral argument must include a statement in the brief setting forth the reason(s) why oral argument should be heard. See 6th Cir. R. 34(a). If the docket entry for your brief indicates that you have requested oral argument but the statement itself is missing, you will be directed to file a corrected brief.

In scheduling appeals for oral argument, the court will do what it can to avoid any dates which counsel have called to its attention as presenting a conflict. If you have any such dates, you should address a letter to the Clerk advising of the conflicted dates.

Sincerely yours,



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CASE NUMBER 10-5480


In re: 1POINT SOLUTIONS, LLC, Debtor, --------------------------------------------- JOHN C. McLEMORE, TRUSTEE, Plaintiff - Appellant, vs. REGIONS BANK, as Successor in Interest by Merger to AmSouth Bank,

Defendant - Appellee.

On Appeal From The United States District Court For The Middle District of Tennessee Nashville Division

BRIEF OF APPELLANT Robert M. Garfinkle, Tn. Bar No. 5354 Phillip G. Young, Jr., Tn. Bar No. 21087 Garfinkle, McLemore & Young, PLLC 2000 Richard Jones Road, Suite 250 Nashville, Tennessee 37215 (615) 383-9495


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6CA-18/08 Page 1 of 2


Disclosure of Corporate Affiliationsand Financial Interest

Sixth CircuitCase Number: Case Name:

Name of counsel:

Pursuant to 6th Cir. R. 26.1, Name of Party

makes the following disclosure:

1. Is said party a subsidiary or affiliate of a publicly owned corporation? If Yes, list below theidentity of the parent corporation or affiliate and the relationship between it and the namedparty:

2. Is there a publicly owned corporation, not a party to the appeal, that has a financial interestin the outcome? If yes, list the identity of such corporation and the nature of the financialinterest:


I certify that on _____________________________________ the foregoing document was served on allparties or their counsel of record through the CM/ECF system if they are registered users or, if they are not,by placing a true and correct copy in the United States mail, postage prepaid, to their address of record.

s/

This statement is filed twice: when the appeal is initially opened and later, in the principal briefs, immediately preceding the table of contents. See 6th Cir. R. 26.1 on page 2 of this form.


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John C. McLemore, Trustee v. Regions Bank,as Successor in Interest by Merger to AmSouth Bank

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Garfinkle, McLemore & Young, PLLC 2000 Richard Jones Road, Suite 250 Nashville, Tennessee 37215

6CA-18/08 Page 2 of 2

6th Cir. R. 26.1DISCLOSURE OF CORPORATE AFFILIATIONS

AND FINANCIAL INTEREST

(a) Parties Required to Make Disclosure. With the exception of the United Statesgovernment or agencies thereof or a state government or agencies or political subdivisions thereof,all parties and amici curiae to a civil or bankruptcy case, agency review proceeding, or originalproceedings, and all corporate defendants in a criminal case shall file a corporate affiliate/financialinterest disclosure statement. A negative report is required except in the case of individual criminaldefendants.

(b) Financial Interest to Be Disclosed.

(1) Whenever a corporation that is a party to an appeal, or which appears as amicuscuriae, is a subsidiary or affiliate of any publicly owned corporation not named in the appeal, counselfor the corporation that is a party or amicus shall advise the clerk in the manner provided bysubdivision (c) of this rule of the identity of the parent corporation or affiliate and the relationshipbetween it and the corporation that is a party or amicus to the appeal. A corporation shall beconsidered an affiliate of a publicly owned corporation for purposes of this rule if it controls, iscontrolled by, or is under common control with a publicly owned corporation.

(2) Whenever, by reason of insurance, a franchise agreement, or indemnity agreement,a publicly owned corporation or its affiliate, not a party to the appeal, nor an amicus, has a substantialfinancial interest in the outcome of litigation, counsel for the party or amicus whose interest is alignedwith that of the publicly owned corporation or its affiliate shall advise the clerk in the manner providedby subdivision (c) of this rule of the identity of the publicly owned corporation and the nature of its orits affiliate's substantial financial interest in the outcome of the litigation.

(c) Form and Time of Disclosure. The disclosure statement shall be made on a formprovided by the clerk and filed with the brief of a party or amicus or upon filing a motion, response,petition, or answer in this Court, whichever first occurs.


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TABLE OF CONTENTS Table of Authorities ......................................................................................... i Statement in Support of Oral Argument ........................................................ iii Jurisdictional Statement .................................................................................. 1 Statement of Issues.......................................................................................... 2 Statement of the Case...................................................................................... 2 Statement of Facts ........................................................................................... 4 Summary of Argument.................................................................................. 14 Argument....................................................................................................... 17 I. Standard of review on appeal. ........................................................... 17 II. The District Court erred in finding that Regions/AmSouth was not an ERISA fiduciary...................................................................... 17 A. Whether Regions/AmSouth was an ERISA fiduciary is a fact-intensive inquiry that should not have been decided by the District Court on a motion to dismiss. ................................... 18 B. The Trustee pled sufficient facts in his complaint to establish that Regions/AmSouth was an ERISA fiduciary. ........................ 21 III. The District Court erred in finding that the Trustee’s state law claims against Regions/AmSouth are preempted by ERISA............. 28 Conclusion .................................................................................................... 30 Certificate of Compliance ............................................................................. 31 Certificate of Service .................................................................................... 32 Designation of Relevant District Court Documents ...................... Appendix 1


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i

TABLE OF AUTHORITIES

Federal Cases Am. Council of Life Insurers v. Ross, 558 F.3d 600, (6th Cir. 2009)..................................................................... 17 Ashcroft v. Iqbal, 556 U.S.__, 129 S. Ct. 1937 (2009)................................................... 16, 26 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955 (2007)................................................. 16, 26 Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006)................................................... 16, 22, 25, 26 Hamby v. Morgan Asset Management, Inc., 692 F. Supp. 2d 944 (W.D. Tenn. 2010) ........................................... 15, 19 In re AEP Litig., 327 F. Supp. 2d 812 (S.D. Ohio 2004) .............................................. 15, 19 In re Elec. Data Sys. Corp. ERISA Litig., 305 F. Supp. 2d 658 (E.D. Tex. 2004)............................................... 15, 19 IT Corp. v. General Am. Life Ins. Co. 107 F.3d 1415 (9th Cir. 1997)................................................................... 27 Jelosvsek v. Bredesen, 545 F.3d 431 (6th Cir. 2008)...................................................................... 17 Miller v. Champion Enterprises, Inc., 346 F.3d 660 (6th Cir. 2003)...................................................................... 17 Moeckel v. Caremark RX Inc., 385 F. Supp. 2d 668 (M.D. Tenn. 2005)............................................ 15, 21 Rankin v. Rots, 278 F. Supp. 2d 853 (E.D. Mich. 2003)............................................. 15, 19


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ii

Tullis v. UMB Bank, N.A., 515 F.3d 673 (6th Cir. 2008)..................................................................... 27

Federal Statutes 28 U.S.C. § 157(b) .......................................................................................... 1 28 U.S.C. § 1291............................................................................................. 1 28 U.S.C. § 1332............................................................................................. 1 28 U.S.C. § 1334............................................................................................. 1 28 U.S.C. § 1409............................................................................................. 1 29 U.S.C. § 1001............................................................................................. 6 29 U.S.C. § 1002(21) .......................................................................... 6, 15, 21

Federal Rules of Appellate Procedure FRAP Rule 28(i) ........................................................................................... 30

Federal Rules of Civil Procedure Fed. R. Civ. P. 12(b)(6)................................................................................. 17 Fed. R. Civ. P. 12(c)...................................................................................... 17


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iii

STATEMENT IN SUPPORT OF ORAL ARGUMENT

Appellant John C. McLemore, Trustee, respectfully requests that the Court

schedule oral argument in this appeal. This case raises issues of significant

importance to ERISA plans and participants, specifically the right of Plans to seek

relief from certain parties. The District Court improperly dismissed the Trustee’s

ERISA claims against Regions/AmSouth, finding that Regions/AmSouth was not a

fiduciary. The District Court also incorrectly ruled that the Trustee’s state law

claims were each preempted by ERISA. The Trustee believes that oral argument

will assist the Court in correctly resolving the issues raised by this appeal.


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1

JURISDICTIONAL STATEMENT

The District Court had subject matter jurisdiction pursuant to 28 U.S.C. §

1334 because this case arises or is related to a Chapter 11 bankruptcy case. It is a

non-core proceeding pursuant to 28 U.S.C. § 157(b) and venue was proper

pursuant to 28 U.S.C. §1409.

The District Court also had subject matter jurisdiction pursuant to 28 U.S.C.

§ 1332 because the amount in controversy with respect to the claims of several

different plaintiffs exceeds $75,000, exclusive of interest and costs, and there is

complete diversity of citizenship in this case.

The Trustee Appellant (hereinafter, the “Trustee”) appeals to this Court from

a final decision of the United States District Court for the Middle District of

Tennessee dismissing this action. This Court, therefore, has appellate jurisdiction

pursuant to 28 U.S.C. § 1291.

The District Court dismissed the ERISA claims of the Trustee in a

memorandum and order entered on September 9, 2008. Record Entry No.

(“R.E.”) 33, 34. By memorandum and order entered on March 18, 2010, the

District Court dismissed the Trustee’s remaining causes of action. R.E. 135,136.

Judgment was entered on March 22, 2010. R.E. 137.

Trustee timely filed his notice of appeal on April 20, 2010. R.E. 138.


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STATEMENT OF ISSUES

(1) Did the District Court err in dismissing the Trustee's ERISA causes of action

on grounds that Regions/AmSouth was not an ERISA fiduciary?

(2) Did the District Court err in dismissing the Trustee's state law causes of

actions on grounds that they were preempted by ERISA?

STATEMENT OF THE CASE

On September 26, 2006, an involuntary petition for Chapter 11 was filed

against 1 Point Solutions, LLC, in the United States Bankruptcy Court for the

Middle District of Tennessee. Case No. 06-05400, Bankruptcy Docket No. 1. An

Order of Relief was entered by the Bankruptcy Court on September 27, 2006,

Bankruptcy Docket No. 11, and John C. McLemore (the “Trustee”) was appointed

as Chapter 11 Trustee in this matter on September 28, 2006. Bankruptcy Docket

No. 18.

On August 20, 2007, the Trustee initiated an adversary proceeding in the

Bankruptcy Court (Case No. 07-AP-00283) by filing his Complaint against

Regions Bank, along with other defendants. R.E. 18, Att. 16. Among other things,

the Complaint alleged that Regions Bank, as Successor in Interest by Merger to

AmSouth Bank, was an ERISA fiduciary and, as such, breached its fiduciary


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duties. The Complaint also alleged a number of state law claims, including

negligence, recklessness and aiding and abetting fraud.

On February 11, 2008, the reference was withdrawn from the Bankruptcy

Court, which transferred the case to the United States District Court for the Middle

District of Tennessee (Case No. 08-00021). R.E. 7. The Defendants to the suit,

including Regions/AmSouth, filed motions to dismiss all claims against them.

R.E. 18, Att. 8.1

On September 9, 2008, the District Court granted in part

Regions/AmSouth’s Motion to Dismiss. R.E. 34. In the September 9, 2008,

Order, the District Court dismissed the Trustee’s ERISA claims against

Regions/AmSouth, finding that Regions/AmSouth was not a fiduciary under

ERISA. The Court also found that certain state law claims were not pre-empted by

ERISA and could proceed.

Subsequent to the dismissal of the ERISA claims, the Trustee filed an

Amended Complaint (on July 24, 2009, R.E. 80) and a Second Amended

Complaint (on November 18, 2009, R.E. 99). Because the ERISA claims had been

dismissed by the District Court, those complaints did not allege ERISA causes of

1 District Court Case No. 08-1003, EFS, Inc., et al. v. Regions Bank, was consolidated with this action in the District Court. R.E. 17. That case, Case No. 10-5491, has likewise been consolidated with this appeal before the Court.


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action. The amended complaints did, however, provide additional facts to support

all causes of action against Regions/AmSouth.

Regions/AmSouth filed a Motion for Judgment on the Pleadings as to the

remaining causes of action alleged by the Trustee. R.E. 106. The District Court

granted that Motion on March 18, 2010, dismissing the Trustee’s remaining state

law causes of action against Regions/AmSouth. R.E. 136. The District Court

found that all state court causes were preempted by ERISA. The Trustee timely

filed his notice of appeal on April 20, 2010. R.E. 138.

STATEMENT OF FACTS

Because all causes of action in this matter were dismissed on a judgment on

the pleadings and an order granting a motion to dismiss, the facts relevant to this

appeal are alleged in the Trustee’s Complaint, Amended Complaint, and Second

Amended Complaint. Unless otherwise noted, all references herein are to the

Trustee’s Second Amended Complaint, R.E. 99.

John C. McLemore is the duly appointed and acting Trustee in Bankruptcy

for 1Point Solutions, LLC, (“1Point”) and Barry Stokes (“Stokes”) in

administratively consolidated Chapter 11 bankruptcy cases. ¶ 1. He filed the

Complaint, Amended Complaint and Second Amended Complaint in that capacity.

Id. The Defendant, Regions Bank, is the successor in interest by merger to


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AmSouth Bank. ¶ 2. Regions Bank and AmSouth Bank are throughout referred to

as “Regions/AmSouth.”

Stokes was the sole owner of 1Point. ¶ 7. 1Point was formed2 in 2000 to

act as a third party administrator (“TPA”) for employee plans established under

federal statutes to provide tax-advantaged benefits to employees. ¶ 8. 1Point

began its operations working for 401(k) plans. ¶ 12. If the 1Point customer had an

established plan, it was instructed to liquidate the securities held by the plan and

send the proceeds to an account in the name of 1Point at Mid Atlantic Capital

Corporation (“MACC”). ¶ 13. Generally, 401(k) plan customers of 1Point were

instructed to send checks for their periodic 401(k) contributions to 1Point, which

deposited them in accounts at Regions/AmSouth in the name of 1Point, usually an

account named 1Point 401-K. Id. Stokes also caused the transfer of customers’

money at MACC to an account or accounts at Regions/AmSouth. Id. At the close

of operations, 1Point was TPA for 52 401(k) plans (the “Depleted 401(k) Plans”).

¶ 14. There was not enough money to pay the amount owed the Depleted 401(k)

Plans. Id.

1Point also acted as TPA for FSAs (flexible spending accounts), HSAs

(health spending accounts), HRAs (Health Reimbursement Arrangements), and

2 The company was initially called 1Point Administrative Services, LLC, upon its formation on September 18, 2000. Its name was formally changed to 1Point Solutions, LLC, on September 25, 2002.


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DCAs (dependent care accounts). ¶ 15. 1Point also acted as third party

administrator for a few dental plans and transportation plans. Id. All of these

plans are collectively referred to as the “Cafeteria Plans.” At the outset, 1Point

opened several bank accounts at Regions/AmSouth to hold Cafeteria Plan funds.

¶ 17. These include accounts named 1Point FSA, 1Point FSA Depository Acct,

1Point HSA, and 1Point Solutions DCA. Stokes opened at least 58 bank accounts

at Regions/AmSouth. Id. 1Point customers were instructed to send all funds to

1Point, which deposited the funds into these accounts. Id. At the commencement

of the case, 1Point was the TPA for 751 Cafeteria Plans. ¶ 18. These are referred

to hereinafter as the “Depleted Cafeteria Plans.” There was not enough money to

pay the amount owed the Depleted Cafeteria Plans. Id. The Depleted 401(k) Plans

and the Depleted Cafeteria Plans are hereinafter collectively referred to as the

“Victim Plans.”

Most of the plans for which 1Point provided services are subject to the

Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001, et seq

(“ERISA”). ¶ 2. The District Court found that the Trustee is a fiduciary within the

meaning of 29 U.S.C. § 1002(21). R.E. 33, Memorandum p. 13. As such, the

Trustee has standing to pursue ERISA causes of action. Id.

Regions/AmSouth was supposed to have computer and other systems in

place at all relevant times to assure its compliance with the federal laws and


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banking regulations. ¶ 34. Throughout the years relevant to this case,

Regions/AmSouth failed egregiously, and on an ongoing basis, to comply with

those federal law obligations. ¶ 35. In October 2004, the U.S. Financial Crimes

Enforcement Network (“FinCEN”) and various other federal authorities filed a

cease and desist order, monetary penalty assessments, a criminal information, and

a deferred criminal prosecution agreement against Regions/AmSouth. ¶ 36. In

these papers, the federal authorities concluded that during 2000-2004

Regions/AmSouth had violated the civil and criminal laws of the United States in a

number of respects, including:

• Knowingly and willfully, which demonstrates reckless disregard for

obligations under law or regulation, violating the anti-money laundering

program and suspicious activity reporting requirements of the Bank

Secrecy Act.

• Failing to report suspicious activities in a timely and accurate manner as

a result of systemic deficiencies in the bank.

• Failing to develop an anti-money laundering program reasonably

designed to prevent Regions/AmSouth from being used to launder

money.

• Failing to implement sufficient policies and procedures across the bank to

provide for the capture of suspicious activity information.


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• Failing to provide adequate board and management oversight and

adequate training to ensure compliance with anti-money laundering

program and suspicious activity reporting requirements.

• Failing to assess the bank’s risks and vulnerabilities to money laundering.

• Failing in a number of instances to note and respond to the circumstances

in which the bank’s accounts were being used to further Ponzi schemes,

embezzlement, and other fraudulent misconduct.

• Failing to have procedures to identify and monitor customers with cash-

intensive activity to determine if the activity was suspicious.

• Failing to develop a method to determine if actual activity lacked any

apparent business or legal purpose.

¶ 36.

As a result of this and other misconduct, federal authorities charged

Regions/AmSouth with criminal misconduct, fined it $10 million, required an

additional $40 million payment by Regions/AmSouth in the Deferred Prosecution

Agreement, and required that Regions/AmSouth hire outside consultant firms to

assist in the creation and implementation of policies and procedures to bring

Regions/AmSouth into compliance with federal law. ¶ 37. Unfortunately,

Regions/AmSouth failed during 2005 and 2006 to remedy its failure to comply

with the federal laws and regulations addressed above. ¶ 39.


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Regions/AmSouth knew from the outset of its relationship with 1Point that

1Point was a TPA, and that as part of its business, 1Point received contributions

from employers and employees to be held as property of ERISA plans and

distributed solely in furtherance of the purposes of the participants and

beneficiaries of those plans. ¶ 40. 1Point was a large customer of

Regions/AmSouth in Dickson, TN, depositing and withdrawing large sums of

money each month. ¶ 41. Stokes and his employees went to the Regions/AmSouth

branch in Dickson, TN, almost every business day, depositing large numbers of

checks, purchasing cashier’s checks, and transferring money from one account to

another. Id. Regions/AmSouth opened a number of accounts for 1Point with

names that directly reference the business of 1Point as TPA, such as 1Point 401(k),

1Point FSA and 1Point HSA. ¶ 42. Regions/AmSouth knew that the funds

deposited in such accounts came from customers of 1Point, and that the funds did

not belong to 1Point, but were held in trust to be used solely for the participants

and beneficiaries of ERISA plans. Id.

Each month, Regions/AmSouth received deposits by check or ACH from

employers representing contributions to their 401(k) plans. ¶ 43.

Regions/AmSouth knew that these were deposits for such purpose, and that the

funds did not belong to 1Point, but were held solely for the benefit of the plans and

their participants. ¶ 42. Depleted 401(k) Plans deposited in excess of


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$5,700,000.00 at Regions/AmSouth. ¶ 43. Cafeteria Plan customers sent an

estimated $45,000,000.00 to accounts opened by 1Point at Regions/AmSouth. Id.

An additional estimated $1,400,000.00 was transferred from Fifth Third Bank,

where 1Point briefly banked in early 2006, to 1Point accounts at

Regions/AmSouth. Id.

1Point intended from the outset to set up for each client its own account at

Regions/AmSouth. ¶ 44. Regions/AmSouth said that this could not be done

because the “know your customer” rules required the bank physically to meet and

to collect proper identification from the customer. Id. Rather than comply with

applicable law, Regions/AmSouth insisted that accounts be opened in the name

“1Point Solution, “Customer Name,” under 1Point’s tax ID number. Id.

1Point established at least 58 accounts at Regions/AmSouth. ¶ 44.1. As

directed by Regions/AmSouth, accounts bore the name of both 1Point and the

customer, for example, 1Point FSA Metro Government Account. Id.

Regions/AmSouth told 1Point that the bank could make access to the new accounts

available to each respective “Customer Name” through its internet banking system.

¶ 44.2. With the accounts set up as directed by Regions/AmSouth, Stokes was able

to transfer money among and out of any of the accounts. ¶ 44.3.

The transactions in the 1Point accounts at Regions/AmSouth triggered red

flags under the FinCEN law and guidance. ¶ 45. The red flags in turn triggered a


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duty on the part of Regions/AmSouth to investigate to determine whether it had

further duties under the FinCEN laws, including the requirement that it file a SAR.

Id.

The 1Point accounts did not function as would be normal for Cafeteria Plans

and 401(k) accounts, which should have triggered red flags. ¶ 46. For example:

• HSA accounts are by statute unique to each individual. None of the HSA

accounts can be identified to an individual. Deposits to the 1Point HSA

account were commingled with other 1Point accounts at Regions/AmSouth.

¶ 46.1.

• Accounts for other Cafeteria Plans are unique for each employer. Deposits

to 1Point’s accounts for such Cafeteria Plans were commingled.

Substantially all deposits were made to a single account. Then some funds

were transferred to other accounts, including accounts in the name of an

employer, and to 1Point operating accounts. ¶ 46.2.

• TPAs typically do not have custody of customer funds. That 1Point did so is

by itself outside the expected business of a TPA. ¶ 46.3.

• At random times, the 1Point 401(k) accounts at Regions/AmSouth received

large infusions of cash. Wire advices for those infusions show that they

were sent from the same source, MACC. ¶ 46.4.


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• Checks were drawn on the 1Point 401(k) Plan account at Regions/AmSouth

in small, odd dollar amounts typical of Cafeteria Plans, not the smaller

number of larger, even dollar, irregular payments that would be expected in

the bank account of a 401(k) Plan. ¶ 46.5.

• Funds in the 1Point accounts at Regions/AmSouth were regularly used to

pay 1Point’s business expenses. It is not normal to pay business expenses

from accounts of Cafeteria Plans or 401(k) Plans. ¶ 46.6.

On many occasions between January, 2003, and September, 2006, Stokes

withdrew substantial sums from his business and personal accounts in the form of

cashier’s checks or cash in amounts which individually did not trigger the

requirement for a Currency Transaction Report ($10,000.00), but taken together

did require such a report. ¶ 47. For example, during the period October 1, 2003 to

December 31, 2003, Stokes cashed 18 checks written on his personal account at

Regions/AmSouth. Id. Total cash exceeded $125,000.00. Id. Of these checks,

eleven were cashed in amounts greater than $9,000.00 but less than $10,000.00.

Id. These transactions should have triggered Currency Transaction Reports, and

should have been brought to the attention of responsible officers at

Regions/AmSouth. Id.

During the period October 1, 2003, to December 31, 2003, Stokes transferred

over $400,000.00 from the 1Point 401(k) account at Regions/AmSouth into his


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personal account at Regions/AmSouth. ¶ 48. These transfers enabled him to

withdraw cash and purchase cashier’s checks from his personal account in excess

of $300,000.00. Id.

On a number of occasions, Stokes withdrew funds from the Regions/AmSouth

1Point 401(k) account for his personal use. ¶ 49. For example, on August 16,

2002, Stokes obtained a cashier’s check from the 1Point 401(k) account in the

amount of $246,045.10 made payable to himself. Id. On August 30, 2002, Stokes

obtained a cashier’s check from the 1Point 401(k) account in the amount of

$115,308.27 made payable to himself. Id. On May 31, 2005, Stokes wired

$659,398.48 from MACC to the 1Point 401(k) account at Regions/AmSouth. Id.

That same day, he obtained a cashier’s check in the amount of $155,286.81 made

payable to himself. Id. Contemporaneously with each of these transfers, Stokes

purchased real estate in Dickson, TN, in his own name using the cashier’s checks.

Id.

Stokes regularly transferred money from one Regions/AmSouth bank account

to another. ¶ 50. These transfers took place by ACH, wire transfer, check, counter

check, and telephone transfer. Id. Many of these transfers took place to make up

for overdrafts in the accounts. Id. Stokes regularly used money in the

Regions/AmSouth accounts to pay 1Point’s business and operating expenses and

for personal purposes. ¶ 51. Regions/AmSouth regularly withdrew its fees and


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analysis charges from the trust funds it held. Id. The aggregate of such fees was in

excess of $500,000.00. Id.

1Point moved its accounts from Regions/AmSouth to Fifth Third Bank

effective January 2, 2006. ¶ 52. Almost immediately, the new accounts showed

large overdrafts and related charges. Id. Fifth Third closed most of the accounts in

late March 2006, for improper activity. 1Point moved back to Regions/AmSouth.

Id.

In spite of these detailed allegations, the District Court dismissed the Trustee’s

ERISA claim against Regions/AmSouth. The Court incorrectly found that the

Trustee had failed to allege adequate facts to support the claim that

Regions/AmSouth was a fiduciary.

SUMMARY OF ARGUMENT

The orders issued by the United States District Court for the Middle District

of Tennessee, interpreting the complex statutory ERISA framework, have left

hundreds of ERISA plans without any recourse against a bank that negligently and

in bad faith mishandled ERISA-protected funds. In the proceeding below, the

District Court granted Regions/AmSouth’s Motion to Dismiss all ERISA claims

alleged by the Trustee against Regions/AmSouth. The District Court held that the

Trustee had failed to allege sufficient facts to support its claim that


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Regions/AmSouth was an ERISA fiduciary. In that same order, the District Court

found that the Trustee’s state law negligence claims were not preempted by ERISA

and could proceed. In a subsequent order, the District Court then dismissed the

Trustee’s state law claims against Regions/AmSouth, finding that they were

preempted by ERISA. The Trustee respectfully submits that these findings were in

error.

A determination of whether Regions/AmSouth was an ERISA fiduciary was

inappropriate on a motion to dismiss. Numerous courts have held that such inquiry

is very fact-intensive and should be reserved until after discovery has been

conducted. See, e.g., Hamby v. Morgan Asset Management, Inc., 692 F.Supp. 2d

944, 964 (W.D. Tenn. 2010); In re AEP Litig., 327 F.Supp. 2d 812, 827 (S.D. Ohio

2004); In re Elec. Data Sys. Corp. ERISA Litig., 305 F.Supp. 2d 658, 665 (E.D.

Tex. 2004); Rankin v. Rots, 278 F.Supp. 2d 853, 879 (E.D. Mich. 2003). Adequate

allegations of fact were raised that made dismissal by the District Court premature.

See Moeckel v. Caremark RX Inc., 385 F.Supp. 2d 668, 682-84 (M.D. Tenn. 2005).

Even if it is sometimes appropriate for a court to determine that a party is not

an ERISA fiduciary on a motion to dismiss, it was inappropriate in this case. In

order for a party to be deemed an ERISA fiduciary, it merely has to exercise “any

authority or control respecting management or disposition” of a plan’s assets. 29

U.S.C. § 1002(21)(A). In dismissing the Trustee’s ERISA claims against


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Regions/AmSouth, the District Court discounted the significance of the numerous

factual allegations made in the Complaint regarding Regions/AmSouth’s authority

and/or control over plan assets. Regions/AmSouth, like the third party

administrator in Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006), unilaterally disposed

of funds. Even under the strict pleading standards of Twombly and Iqbal, the

Trustee’s ERISA claims should have survived a motion to dismiss.

The District Court’s dismissal of the Trustee’s ERISA claims also serves to

frustrate the very Congressional intent of the ERISA statutes. ERISA was intended

by Congress to provide a broad range of remedies for injured plans and employees.

The District Court’s premature dismissal of these ERISA claims strips the plans of

a substantial remedy.

Additionally, the District Court erred in holding that the Trustee’s state law

claims against Regions/AmSouth are preempted by ERISA. The District Court

erred in finding that ERISA preempted all state law claims against

Regions/AmSouth on the one hand, but on the other hand, finding that

Regions/AmSouth was not an ERISA fiduciary.


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ARGUMENT

I. Standard of review on appeal.

The Sixth Circuit reviews de novo: (1) the dismissal of an action pursuant to

Federal Rule of Civil Procedure 12(b)(6), Miller v. Champion Enterprises, Inc.,

346 F.3d 660, 671 (6th Cir. 2003); (2) the dismissal of an action pursuant to Federal

Rule of Civil Procedure 12(c), Jelosvsek v. Bredesen, 545 F.3d 431, 434 (6th Cir.

2008); and (3) whether a state law claim is preempted by ERISA. Am. Council of

Life Insurers v. Ross, 558 F.3d 600, 603 (6th Cir. 2009).

II. The District Court erred in finding that Regions/AmSouth was not an

ERISA fiduciary.

In its Memorandum dated September 9, 2008 (R.E. 33, “Memorandum”), the

United States District Court for the Middle District of Tennessee granted

Regions/AmSouth’s Motion to Dismiss (R.E. 18, Att. 8, “Motion to Dismiss”) all

ERISA claims alleged by the Trustee against Regions/AmSouth. Specifically, the

District Court held: “As there are no factual allegations that indicate that

Regions/AmSouth exercised discretionary authority over plan management or any

authority or control with respect to the plans’ assets, the Trustee’s claims that

Regions/AmSouth was a fiduciary and breached its duties under ERISA will be

dismissed.” R.E. 33, Memorandum p. 25. The Trustee respectfully submits that

this finding was in error. First, the District Court should not have decided the issue


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of whether Regions/AmSouth was an ERISA fiduciary on a motion to dismiss.

Such an inquiry is very fact-intensive and should be reserved until after discovery

has been conducted. Second, even if the District Court properly considered the

matter on a motion to dismiss, the District Court erred in finding that the

Complaint lacked sufficient factual allegations to sustain a claim that

Regions/AmSouth was an ERISA fiduciary. The District Court’s finding ignored

the numerous factual allegations made in the Complaint, contradicted well-

established law of this Circuit, and violated the Congressional intent of ERISA.

A. Whether Regions/AmSouth was an ERISA fiduciary is a fact-intensive inquiry that should not have been decided by the District Court on a motion to dismiss.

The District Court found, on a motion to dismiss, that the Trustee had not

alleged sufficient facts to establish that Regions/AmSouth was a fiduciary under

ERISA. In so holding, the District Court acknowledged that the question of

whether a party is an ERISA fiduciary is “generally a mixed question of law and

fact,” but found that the “the facts relevant to the question of whether the

defendants are fiduciaries under ERISA are not in dispute, and thus the question

may be resolved as a matter of law.” R.E. 33, Memorandum p. 16. The Trustee

respectfully submits that this finding was in error.

Many courts within this circuit have noted the difficulty of considering the

issue of ERISA fiduciary status on a motion to dismiss. One of the most succinct


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recitations of the law in this regard was authored by the United States District

Court for the Western District of Tennessee in a recent opinion, Hamby v. Morgan

Asset Management, Inc., 692 F. Supp. 2d 944, 964 (W.D. Tenn. 2010):

Fiduciary status is "a fact-intensive inquiry, making the resolution of that issue inappropriate for a motion to dismiss." In re AEP Litig., 327 F. Supp. 2d 812, 827 (S.D. Ohio 2004) (citation omitted); see also Rankin v. Rots, 278 F. Supp. 2d 853, 879 (E.D. Mich. 2003) ("[T]he manner in which each defendant . . . operated is for now something of a black box. To expect a plaintiff to be able to turn on the light and point to particular individuals who exercised decision making authority is simply too much to require at this stage of the case."); In re Elec. Data Sys. Corp. ERISA Litig., 305 F. Supp. 2d 658, 665 (E.D. Tex. 2004) ("It is typically premature to determine a defendant's fiduciary status at a motion to dismiss stage of the proceedings."). Indeed Stokes, 1Point and Regions/AmSouth operated in something of a

“black box” with regard to the disposition of the assets of the Victim Plans. Before

filing the original complaint, the Trustee had enough information to allege that

Regions/AmSouth knew that the funds it held belonged to the Victim Plans (R.E.

18, Att. 16, Complaint ¶¶ 72-75, 82; pp. 14-15); that Regions/AmSouth allowed

Stokes to transfer the plan funds among 401(k) and healthcare plan accounts,

including substantial funds to his personal Regions/AmSouth account (R.E. 18,

Att. 16, Complaint ¶¶ 75, 77-79, 82, 85-86; pp. 14-16); that Regions/AmSouth paid

itself over $500,000 in fees and analysis charges (R.E. 18, Att. 16, Complaint ¶¶

80, 95; pp. 15, 17); and that Regions/AmSouth exercised authority or control over


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the management or disposition of the trust funds in its custody. (R.E. 18, Att. 16,

Complaint ¶ 83, p. 16).

After the District Court had dismissed the ERISA claims against

Regions/AmSouth, the parties conducted some initial discovery. Through this

discovery, the Trustee also learned that Regions/AmSouth instructed Stokes and

1Point to open their bank accounts in such a way as to allow Regions/AmSouth to

make an end-run around the “Know Your Customer” banking regulations. Stokes

would ultimately take advantage of the freedom that this banking account

framework provided to defraud the Victim Plans. Regions/AmSouth’s

involvement is described in Paragraph 44 of the Second Amended Complaint:

1Point intended from the outset to set up for each client its own account at Regions/AmSouth. Regions/AmSouth said that this could not be done because the “know your customer” rules described in ¶¶ 28 and 29 above required the bank physically to meet and to collect proper identification from the customer. Rather than comply with applicable law, Regions/AmSouth insisted that accounts be opened in the name “1Point Solution, “Customer Name,” under 1Point’s tax ID number. 44.1. 1Point established at least 58 accounts at Regions/AmSouth. As directed by Regions/AmSouth, accounts bore the name of both 1Point and the customer, for example, 1Point FSA Metro Government Account. 44.2. Regions/AmSouth told 1Point that the bank could make access to the new accounts available to each respective “Customer Name” through its internet banking system. 44.3. With the accounts set up as directed by Regions/AmSouth, Stokes was able to transfer money among and out of any of the accounts.

R.E. 99, Second Amended Complaint, pp. 13-14.


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Based upon these additional facts demonstrating the control exercised by

Regions/AmSouth, the Trustee amended his Complaint to allege acts constituting

bad faith. In finding that the Trustee’s claims were valid under the Uniform

Fiduciary Act, the District Court noted that the Trustee “alleged facts suggesting

that Regions acted in bad faith.” R. E. 135, Memorandum p. 14.

Whether Regions/AmSouth was an ERISA fiduciary is a question not

properly decided on a motion to dismiss. Adequate allegations of fact were raised

that made dismissal by the District Court premature. See Moeckel v. Caremark RX

Inc., 385 F.Supp.2d 668, 682-84 (M.D. Tenn. 2005).

B. The Trustee pled sufficient facts in his complaint to establish that Regions/AmSouth was an ERISA fiduciary.

Even if it were appropriate under some circumstances for a court to

determine that an entity was not an ERISA fiduciary on a motion to dismiss, it was

inappropriate in this case. The Trustee pled facts with sufficient particularity to

establish that Regions/AmSouth was a fiduciary under ERISA. The District Court

erred in dismissing the Trustee’s ERISA claims at this early stage in the litigation.

The term “fiduciary” is defined in ERISA, 29 U.S.C. § 1002(21)(A), which

reads in part: “Except as otherwise provided in subparagraph (B), a person is a

fiduciary with respect to a plan to the extent (i) he exercises any discretionary

authority or discretionary control respecting management of such plan or exercises

any authority or control respecting management or disposition of its assets….”


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(emphasis added). Courts have found that the plain language of the statute

establishes that the exercise of any authority or control of plan assets creates a

fiduciary relationship under ERISA. See, e.g., Briscoe v. Fine, 444 F.3d 478, 491

(6th Cir. 2006). ERISA does not require a party to exercise discretion over the

management or disposition of assets in order to create a fiduciary relationship; any

authority or control is sufficient. Id.

The District Court dismissed the Trustee’s ERISA claims against

Regions/AmSouth, noting that “there are no factual allegations that indicate that

Regions/AmSouth exercised discretionary authority over plan management or any

authority or control with respect to the plans’ assets. . . .” R.E. 33, Memorandum

p. 25. The Trustee respectfully disagrees with this conclusion of the District Court.

The Trustee alleged that Regions/AmSouth exercised authority or control over the

management or disposition of the trust funds in its custody and was a fiduciary.

R.E. 18, Att. 16, Complaint ¶ 83, p.16. In light of the well-established case law

finding that a court should rarely determine whether a party is an ERISA fiduciary

on a motion to dismiss (see Section A infra), this allegation should be sufficient to

survive a motion to dismiss. However, the Trustee did not stop with that

allegation; he made much more specific allegations with regard to

Regions/AmSouth’s knowledge and/or control.


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The Trustee pled a substantial set of facts showing that Regions/AmSouth

was in possession of assets of Plans, and that it knew that the assets it was holding

were assets of Plans. R.E. 18, Att. 16, Complaint ¶¶ 70, 72, 83, 96, pp. 13-17. The

names of the accounts themselves indicated that the funds belonged to Plans. R.E.

18, Att. 16, Complaint ¶ 72, p. 14. The accounts were set up as directed by

Regions/AmSouth in the name of 1Point Solutions, Customer Name. R.E. 18, Att.

16, Complaint ¶ 72, p.14. Regions/AmSouth received the money from the Plans in

wires and checks which showed the nature of the business of 1Point. R.E. 18, Att.

16, Complaint ¶ 73, p. 14. Deposits included transfers from MACC from accounts

called 1Point 401k Plan, as well as direct deposits of funds from 401k Plans and

Cafeteria Plans. R.E. 18, Att. 16, Complaint, ¶¶ 73, 75.4, 78, pp. 14-15.

In his Complaint, the Trustee asserted that activities of 1Point were not

consistent with the business practices of TPAs who do business in accordance with

the laws regulating 401(k) Plans and Cafeteria Plans. For example, the Trustee

alleged that TPAs do not handle customer funds. R.E. 18, Att. 16, Complaint ¶ 75,

pp. 14-15. The Trustee alleged that HSAs, one form of Cafeteria Plan, require a

separate account for each participant, but 1Point did not establish separate accounts

for its clients, let alone its participants. R.E. 18, Att. 16, Complaint ¶ 75, pp. 14-

15. The Trustee described a number of transactions of 1Point and Stokes that

require at least investigation by Regions/AmSouth, including transactions that


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would trigger the filing of Currency Transaction Reports. R.E. 18, Att. 16,

Complaint ¶¶ 76-77, p. 15. Of specific note, the Trustee alleged that

Regions/AmSouth allowed Stokes to transfer more than $400,000 out of the 401(k)

account and into Stokes’ personal banking account with Regions/AmSouth. R.E.

18, Att. 16, Complaint ¶ 77, p. 15.

The Trustee explained the regulatory framework which required

Regions/AmSouth to know the business of its customers and to assess the risks

inherent in that business. Regions/AmSouth was subject to an order of the Federal

Reserve Board, its primary regulator, to establish a system of such controls. R. E.

18, Att. 16, Complaint ¶ 36.2, pp. 8-9. The Trustee further showed that under

applicable law the activities of 1Point and Stokes raised red flags requiring

investigation and reporting. R. E. 18-16, Complaint ¶¶ 35, 70-96, pp.8, 13-17.

Most significant for this appeal, the Trustee specifically alleged facts to

demonstrate that Regions/AmSouth exercised direct authority or control over plan

assets. Paragraph 80 of the Complaint alleged: “Regions/AmSouth regularly

withdrew its fees and analysis charges from the trust funds it held. The aggregate

of such fees was in excess of $500,000.00.” R.E. 18, Att. 16, Complaint, ¶ 80,

p.15. Again, in Paragraph 95 of the Complaint, the Trustee alleged that

Regions/AmSouth collected a total of $508,210.70 from 1Point in bank fees, which

it should have known was unreasonable given the nature of the accounts. R.E. 18,


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Att. 16, Complaint, ¶ 95, p. 17. These facts are important because they are

analogous to the facts presented this Court in Briscoe v. Fine, 444 F.3d 478 (6th

Cir. 2006).

In Briscoe, this Court was asked to determine whether a plaintiff’s ERISA

action against his former employer and its third party administrator, PHP, was

properly dismissed on summary judgment by the District Court. The District Court

previously found that PHP, as third party administrator, was performing merely

ministerial duties and was not a “fiduciary” under ERISA. This Court held that

“[a]lthough the functions that PHP performed as third-party administrator did not

convert it into an ERISA fiduciary, we believe that PHP exercised sufficient

control over plan assets to so qualify.” Id. at 488. The Court noted that, after PHP

had terminated its relationship as third party administrator for the plan, it returned

the balance of the funds to the employer minus a $5,793.40 administrative fee that

it retained. Id. at 484. The Court held, “PHP’s unilateral disposition of funds held

in an account over which it exerted control makes it a fiduciary to the extent it

exercised such control upon the termination of its relationship with the Company.”

Id. at 490.

In this matter, Regions/AmSouth likewise exercised control over the Plans’

assets throughout the relationship. Like the third party administrator in Briscoe,


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Regions/AmSouth retained over $500,000 for itself in fees and analysis charges,3

as alleged in Paragraphs 80 and 95 of the Complaint. Further, the Trustee has

alleged that Regions/AmSouth had extensive knowledge that plan funds were

being misused and converted, including knowledge that over $400,000 was

transferred to Barry Stokes’ individual bank account at Regions/AmSouth. These

facts, combined with the other facts alleged by the Trustee, are more than sufficient

to establish a claim that Regions/AmSouth was a fiduciary under ERISA.

The Trustee has met the stringent pleading requirements of Iqbal and

Twombly. The Supreme Court, in Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

127 S.Ct. 1955 (2007), explained that a complaint need not plead “detailed factual

allegations,” but the allegations “must be enough to raise a right to relief above the

speculative level.” Id. at 1964-65. The Court noted that “a formulaic recitation of

the elements of a cause of action will not do.” Id. In this case, the Trustee has not

relied on formulaic statements of elements of applicable law. The Complaint lays

out a quite detailed factual and legal foundation for the assertion that

Regions/AmSouth knew that it was holding funds of employee benefit plans, that it

3 The Trustee asserts that the fees and analysis charges withheld by Regions/AmSouth go beyond the simple “administrative fees” withheld by PHP in the Briscoe case. The full nature of the fees withheld by Regions/AmSouth is, at least, a factual issue that should have been determined by the District Court prior to dismissal.


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was enabling 1Point and Stokes to misuse that money, and that it was exercising

authority and/or control over those funds.

Finally, the District Court’s grant of Regions/AmSouth’s motion to dismiss

was not only legally flawed, but decisions such as this also serve to frustrate the

very purpose of ERISA. This Court explained in part the Congressional intent of

ERISA in Tullis v. UMB Bank, N.A., 515 F.3d 673, 679 (6th Cir. 2008):

Congress created a ‘broad remedial’ scheme when it enacted ERISA in response to the economic collapse of the Studebaker-Packard Corporation, an event that left many terminated employees without their promised pensions. Consequently, while ERISA may have reflected Congress's attempt to define available remedies, the overarching goal of the statute was to ensure that such relief was available in cases of fiduciary breaches.

The Ninth Circuit Court of Appeals has noted that ERISA’s primary purpose is

“assuring that people who have practical control over an ERISA plan's money have

fiduciary responsibility to the plan's beneficiaries.” IT Corp. v. General Am. Life

Ins. Co., 107 F.3d 1415, 1421 (9th Cir. 1997).

Regions/AmSouth had practical control over the funds of the Victim Plans.

As detailed in the Complaint and further explained in the Second Amended

Complaint, Regions/AmSouth assisted Barry Stokes and 1Point in defrauding

numerous ERISA plans. Regions/AmSouth knew that the funds belonged to plans

and knew (or should have known) that they were being misappropriated, yet it did

nothing to prevent the damage caused to the plans’ beneficiaries.


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Regions/AmSouth’s direction of how the accounts had to be set up was an exercise

of authority and control. This allowed Stokes the freedom to defraud the Victim

Plans. Regions/AmSouth also exercised direct control by paying itself fees and

analysis charges. This Court should hold fast to the Congressional intent of

ERISA and its prior holdings regarding ERISA fiduciaries, and reverse the lower

court’s grant of Region/AmSouth’s motion to dismiss the Trustee’s ERISA claims.

III. The District Court erred in finding that the Trustee’s state law claims

against Regions/AmSouth are preempted by ERISA. As detailed above, the District Court erred in determining that the Trustee

has failed to support its claim that Regions/AmSouth was an ERISA fiduciary.

Additionally, or in the alternative, the District Court erred in finding that the

Trustee’s state law claims against Regions/AmSouth are each preempted by

ERISA. The import of these two decisions, taken together, is grave for ERISA

plans. The District Court has stripped plans of any remedy they might have against

a bank for its mishandling of ERISA plan funds. Accordingly, the District Court’s

orders should be reversed.

In its September 9, 2008 memorandum, the District Court dismissed the

Trustee’s ERISA claims against Regions/AmSouth, finding that Regions/AmSouth

was not a fiduciary under ERISA. R.E. 33, Memorandum. In the same

memorandum, the District Court found that the Trustee’s state law based


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negligence claims against Regions/AmSouth were not preempted by ERISA and

could proceed. Id. at p. 35. Subsequently, the Trustee amended his complaint to

add state law causes of action for violation of the Tennessee Consumer Protection

Act and unjust enrichment, in addition to his negligence claim. R.E. 99, Second

Amended Complaint.

In its March 18, 2010, memorandum, the District Court reversed field from

its first decision and found that each of the Trustee’s state law claims, including his

original claim against Regions/AmSouth for negligence, was preempted by

ERISA. R.E. 135, Memorandum.4 The Trustee recognizes that ERISA preemption

is a complicated area of the law that deserves careful examination; however, he

respectfully submits that the District Court should not have reconsidered and

altered its original holding.

The Trustee hereby adopts and incorporates the arguments asserted in the

brief contemporaneously filed in the consolidated case, Case No. 10-5491, by

Plaintiffs EFS, Inc., et al. as its argument regarding ERISA preemption of the

4 It is interesting to note that the District Court reviewed its original finding sua sponte, since Regions/AmSouth acknowledged in its Response to Plaintiffs’ Motion to File Surreply, R.E. 128 p. 2, “Regions has not argued, and did not intend to argue, that the alleged negligence claim itself is preempted by ERISA.” The District Court did not review its finding regarding Region/AmSouth’s status as an ERISA fiduciary, notwithstanding the additional allegations in the Second Amended Complaint. R.E. 99, ¶ 44, 13-14.


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Trustee’s state law claims, as permitted by Rule 28(i) of the Federal Rules of

Appellate Procedure.

CONCLUSION

The District Court’s decisions in this case have effectively stripped ERISA

plans of any remedy they might have, under state law or federal law, against a

banking institution that negligently, or in bad faith, mishandles plan funds.

Wherefore, the Trustee respectfully requests that this Court (1) reverse the

District Court’s order granting Regions/AmSouth’s motion for dismissal of the

Trustee’s ERISA claims; (2) reverse the District Court’s order granting

Regions/AmSouth’s motion for judgment on the pleadings with regard to the

Trustee’s state law claims; and (3) remand this matter to the District Court for

further proceedings.

Respectfully submitted, /s/ Robert M. Garfinkle Robert M. Garfinkle, Tn. Bar No. 5354 Phillip G. Young, Jr., Tn. Bar No. 21087 Garfinkle, McLemore & Young, PLLC 2000 Richard Jones Road, Suite 250 Nashville, Tennessee 37215 Phone: (615) 383-9495 Fax: (615) 292-9848 E-mail: [email protected] [email protected] Attorneys for John C. McLemore, Trustee, Plaintiff - Appellant


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CERTIFICATE OF COMPLIANCE REQUIRED BY FED. R. APP. P 32(a)(7)(C)

Plaintiffs’ counsel certifies that this brief contains 637 lines and 6,746

words.

/s/ Robert M. Garfinkle Robert M. Garfinkle, Tn. Bar No. 5354 Phillip G. Young, Jr., Tn. Bar No. 21087 Garfinkle, McLemore & Young, PLLC 2000 Richard Jones Road, Suite 250 Nashville, Tennessee 37215 Phone: (615) 383-9495 Fax: (615) 292-9848 E-mail: [email protected] [email protected] Attorneys for John C. McLemore, Trustee, Plaintiff - Appellant


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I certify that the foregoing document has filed with the court’s ECF system and will be forwarded this 26th day of July, 2010, to: John R. Wingo Frost Brown Todd LLC 424 Church Street, Suite 1600 Nashville, TN 37219 and Matthew C. Blickensderfer Frost Brown Todd LLC 2200 PNC Center, 201 East Fifth Street Cincinnati, OH 45202 Attorneys for Regions Bank, Defendant – Appellee

H. Naill Falls, Jr. John B. Veach, III Falls & Veach 1143 Sewanee Road Nashville, Tennessee 37220 Attorney for EFS, Inc., el al., Plaintiffs – Appellants in Case No. 10-5491 in the United States Court of Appeals For the Sixth Circuit



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Appendix 1

DESIGNATION OF RELEVANT DISTRICT COURT DOCUMENTS

Pursuant to Sixth Circuit Rule 30(b), the Trustee designates the following District Court documents as relevant:

Date filed in District Court

Record Number

Description of Record Entry

02/11/2008 7 Order

03/05/2008 12 Defendants’ Joint Motion to Set Deadline for Trustee to Respond to Motions to Dismiss and for Leave to File Replies

03/14/2008 17 Order

04/04/2008 18 United States Bankruptcy Court Docket Sheet

18, Att. 8 Defendant Regions Bank’s Motion to Dismiss

18, Att. 16 Complaint

09/09/2008 33 Memorandum

09/09/2008 34 Order

07/24/2009 80 Amended Complaint of Plaintiff John C. McLemore, Trustee

11/18/2009 99 Second Amended Complaint of Plaintiff John C. McLemore, Trustee

12/04/2009 106 Regions Bank’s Motion for Judgment on the Pleadings as to All Claims Asserted in Trustee’s Second Amended Complaint Filed in Case No. 3:08-cv-21

03/18/2010 135 Memorandum

03/18/2010 136 Order

03/22/2010 137 Entry of Judgment

04/20/2010 138 Notice of Appeal


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6CA-18/08 Page 1 of 2


Disclosure of Corporate Affiliationsand Financial Interest

Sixth CircuitCase Number: Case Name:

Name of counsel:

Pursuant to 6th Cir. R. 26.1, Name of Party

makes the following disclosure:

1. Is said party a subsidiary or affiliate of a publicly owned corporation? If Yes, list below theidentity of the parent corporation or affiliate and the relationship between it and the namedparty:

2. Is there a publicly owned corporation, not a party to the appeal, that has a financial interestin the outcome? If yes, list the identity of such corporation and the nature of the financialinterest:


I certify that on _____________________________________ the foregoing document was served on allparties or their counsel of record through the CM/ECF system if they are registered users or, if they are not,by placing a true and correct copy in the United States mail, postage prepaid, to their address of record.

s/

This statement is filed twice: when the appeal is initially opened and later, in the principal briefs, immediately preceding the table of contents. See 6th Cir. R. 26.1 on page 2 of this form.


63

lcornwell

Text Box

John C. McLemore, Trustee v. Regions Bank, as Successor in Interest by Merger to AmSouth Bank

lcornwell

Text Box

Garfinkle, McLemore & Young, PLLC 2000 Richard Jones Road, Suite 250 Nashville, Tennessee 37215

6CA-18/08 Page 2 of 2

6th Cir. R. 26.1DISCLOSURE OF CORPORATE AFFILIATIONS

AND FINANCIAL INTEREST

(a) Parties Required to Make Disclosure. With the exception of the United Statesgovernment or agencies thereof or a state government or agencies or political subdivisions thereof,all parties and amici curiae to a civil or bankruptcy case, agency review proceeding, or originalproceedings, and all corporate defendants in a criminal case shall file a corporate affiliate/financialinterest disclosure statement. A negative report is required except in the case of individual criminaldefendants.

(b) Financial Interest to Be Disclosed.

(1) Whenever a corporation that is a party to an appeal, or which appears as amicuscuriae, is a subsidiary or affiliate of any publicly owned corporation not named in the appeal, counselfor the corporation that is a party or amicus shall advise the clerk in the manner provided bysubdivision (c) of this rule of the identity of the parent corporation or affiliate and the relationshipbetween it and the corporation that is a party or amicus to the appeal. A corporation shall beconsidered an affiliate of a publicly owned corporation for purposes of this rule if it controls, iscontrolled by, or is under common control with a publicly owned corporation.

(2) Whenever, by reason of insurance, a franchise agreement, or indemnity agreement,a publicly owned corporation or its affiliate, not a party to the appeal, nor an amicus, has a substantialfinancial interest in the outcome of litigation, counsel for the party or amicus whose interest is alignedwith that of the publicly owned corporation or its affiliate shall advise the clerk in the manner providedby subdivision (c) of this rule of the identity of the publicly owned corporation and the nature of its orits affiliate's substantial financial interest in the outcome of the litigation.

(c) Form and Time of Disclosure. The disclosure statement shall be made on a formprovided by the clerk and filed with the brief of a party or amicus or upon filing a motion, response,petition, or answer in this Court, whichever first occurs.


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Case Nos. 10-5480 and 10-5491

IN THE

United States Court of AppealsFOR THE SIXTH CIRCUIT

IN RE: 1 POINT SOLUTIONS, LLC,

Debtor.

_______________________________

JOHN C. MCLEMORE, TRUSTEE,

Appellant.

EFS, INC.,

Appellant,

V.

REGIONS BANK,

Appellee.

On Appeal from the U.S. District Courtfor the Middle District of Tennessee

APPELLEE REGIONS BANK’S MOTION FOREXTENSION OF TIME FOR FILING ITS BRIEF

Appellee Regions Bank respectfully requests a three-week extension of the

deadline for filing its brief in these consolidated appeals. The extension is


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2

requested because the undersigned appellate counsel (1) has a brief due in the Ohio

Supreme Court on the same day as Regions Bank’s brief is currently due in these

appeals, and (2) is new to this case and needs additional time to analyze the issues.

Regions Bank’s brief is currently due on August 30, 2010. With the

requested extension, Regions Bank’s brief would be due on September 20, 2010.


/s/ Matthew C. BlickensderferMatthew C. BlickensderferFROST BROWN TODD LLC2200 PNC Center201 East Fifth StreetCincinnati, Ohio 45202(513) 651-6162(513) 651-6981 (facsimile)

John R. WingoFROST BROWN TODD LLC424 Church Street, Suite 1600Nashville, Tennessee 37219(615)251-5582(615) 251-5551 (facsimile)[email protected]

Attorneys for Appellee Regions Bank


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3

CERTIFICATION OF SERVICE

I hereby certify that on this 23rd day of August, 2010, I electronically filedAppellee Regions Bank’s Motion for Extension of Time for Filing Its Brief withthe Clerk of the Court using the CM/ECF system, which will send notification ofsuch filing to all registered counsel of record.

/s/ Matthew C. Blickensderfer

CINLibrary 0000000 . 0001536 2172192v1


67


Leonard Green Clerk




Filed: August 23, 2010 Mr. Matthew C. Blickensderfer Frost Brown Todd 201 E. Fifth Street Suite 2200 PNC Center Cincinnati, OH 45202 Mr. H. Naill Falls Jr. Falls & Veach 1143 Sewanee Road Nashville, TN 37220 Mr. Robert Martin Garfinkle Garfinkle, McLemore & Walker 2000 Richard Jones Road Suite 250 Nashville, TN 37215 Mr. John Rex Wingo Frost Brown Todd 424 Church Street Suite 1600 Nashville, TN 37219 Mr. Phillip Gary Young Jr. Garfinkle, McLemore & Young 22 Public Square Suite 12 Columbia, TN 38401


Dear Counsel,

Appellee’s motion for an extension of time to file a brief has been GRANTED.


68

The briefing schedule for this case has been reset and the briefs listed below must be filed electronically with the Clerk's office no later than these dates. Counsel are strongly encouraged to read the latest version of the Sixth Circuit Rules at www.ca6.uscourts.gov, in particular Rules 28 and 30.

Appellee's Brief Appendix (if required by 6th Cir. R. 30(a)) and (c)(2))

Filed electronically by September 20, 2010





Sincerely yours,



69

Case Nos. 10-5480 and 10-5491

IN THE



Debtor.

_______________________________


Appellant.

EFS, INC.,

Appellant,

V.

REGIONS BANK,

Appellee.



Appellee Regions Bank respectfully requests a short, additional two-week

extension of the deadline for filing its brief in these consolidated appeals. The


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2

extension is requested because of the undersigned appellate counsel’s other

professional obligations, including multiple briefs due in this Court within the next

week (Cases 10-3784 and 10-5117/5118/5119). Appellate counsel also is new to

this case and requests additional time to analyze the issues.

Regions Bank’s brief is currently due on September 20, 2010. With the

requested extension, Regions Bank’s brief would be due on October 4, 2010.






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3


I hereby certify that on this 14th day of September, 2010, I electronicallyfiled Appellee Regions Bank’s Motion for Extension of Time for Filing Its Briefwith the Clerk of the Court using the CM/ECF system, which will send notificationof such filing to all registered counsel of record.


CINLibrary 0000000.0001536 2182247v1


72


Leonard Green Clerk




Filed: September 14, 2010 Mr. Matthew C. Blickensderfer Frost Brown Todd 201 E. Fifth Street Suite 2200 PNC Center Cincinnati, OH 45202 Mr. H. Naill Falls Jr. Falls & Veach 1143 Sewanee Road Nashville, TN 37220 Mr. Robert Martin Garfinkle Garfinkle, McLemore & Walker 2000 Richard Jones Road Suite 250 Nashville, TN 37215 Mr. John Rex Wingo Frost Brown Todd 424 Church Street Suite 1600 Nashville, TN 37219 Mr. Phillip Gary Young Jr. Garfinkle, McLemore & Young 22 Public Square Suite 12 Columbia, TN 38401


Dear Counsel,



73

The briefing schedule for this case has been reset and the briefs listed below must be filed electronically with the Clerk's office no later than these dates. Counsel are strongly encouraged to read the latest version of the Sixth Circuit Rules at www.ca6.uscourts.gov, in particular Rules 28 and 30.

Appellee's Brief Appendix (if required by 6th Cir. R. 30(a)) and (c)(2))

Filed electronically by October 4, 2010





Sincerely yours,



74

Case Nos. 10-5480 and 10-5491

IN THE



Debtor.

_______________________________


Appellant.

EFS, INC.,

Appellant,

V.

REGIONS BANK,

Appellee.



Appellee Regions Bank respectfully requests a short, additional one-week

extension of the deadline for filing its brief in these consolidated appeals. The


75

2

extension is requested because of the undersigned appellate counsel’s other

professional obligations, including briefs due in two other cases in this Court in the

next four business days. Appellate counsel has needed extra time to analyze the

issues in these consolidated appeals, and now requests this short additional

extension to permit the client to have sufficient time to review the draft brief. No

further extension will be requested.

Regions Bank’s brief is currently due on October 4, 2010. With the

requested extension, Regions Bank’s brief would be due on October 11, 2010.






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3


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4


I hereby certify that on this 30th day of September, 2010, I electronicallyfiled Appellee Regions Bank’s Motion for Extension of Time for Filing Its Briefwith the Clerk of the Court using the CM/ECF system, which will send notificationof such filing to all registered counsel of record.


CINLibrary 0000000.0001536 2189435v1


78

Case Nos. 10-5480 and 10-5491

IN THE



Debtor.

_______________________________


Appellant.

EFS, INC.,

Appellant,

V.

REGIONS BANK,

Appellee.


BRIEF FOR APPELLEE REGIONS BANK


Matthew C. BlickensderferFROST BROWN TODD LLC2200 PNC Center201 East Fifth StreetCincinnati, Ohio 45202(513) 651-6162(513) 651-6981 (facsimile)[email protected]



79

��Case: 10-5480 Document: 006110620625 Filed: 05/06/2010 Page: 1Case: 10-5480 Document: 006110750360 Filed: 10/04/2010 Page: 2

80

ii

TABLE OF CONTENTS

TABLE OF CONTENTS.......................................................................................... ii

TABLE OF AUTHORITIES ....................................................................................iv

JURISDICTIONAL STATEMENT ..........................................................................1

STATEMENT OF THE ISSUES...............................................................................1

STATEMENT OF THE CASE..................................................................................2

STATEMENT OF FACTS ........................................................................................4

SUMMARY OF ARGUMENT .................................................................................6

ARGUMENT .............................................................................................................7

The trustee’s ERISA claims fail as a matter of law becauseRegions Bank was not an ERISA fiduciary ....................................................7

The trustee lacks standing to pursue claims for the recoveryof plan funds ..................................................................................................13

The trustee’s claims are barred by the doctrines of in pari delictoand unclean hands..........................................................................................16

The plaintiffs’ state law claims are preempted to thelimited extent that they are not barred by state law.......................................18

ERISA preempts state claims, like those asserted by theplaintiffs, that seek an alternative remedy for themishandling of ERISA plan assets ...........................................................18

The plaintiffs have waived any challenge to the districtcourt’s ruling that their negligence and TennesseeConsumer Protection Act claims were barred by theTennessee Uniform Fiduciaries Act .........................................................20


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iii

The plaintiffs’ negligence claims are barred by Tennessee’sUniform Fiduciaries Act...........................................................................21

The plaintiffs’ Tennessee Consumer Protection Actclaims are barred by Tennessee’s Uniform Fiduciaries Act ....................27

The plaintiffs’ unjust enrichment claim is preempted byERISA because it is an attempt to recover ERISA plan assets ................29

CONCLUSION........................................................................................................30

CERTIFICATION OF COMPLIANCE ..................................................................33

CERTIFICATION OF SERVICE............................................................................34

DESIGNATION OF RECORD ...............................................................................35


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iv


CASES PAGE

Aetna Health, Inc. v. Davila, 542 U.S. 200 (2004)................................18, 19, 20, 30

American Fed’n of Unions Local 102 v. Equitable Life Assurance Soc’y,841 F.2d 658 (5th Cir. 1988) .............................................................................15

Arizona State Carpenters Pension Trust Fund v. Citibank, 125 F.3d 715(9th Cir. 1997) ...................................................................................................10

Assocs. in Adolescent Psychiatry v. Home Life Insurance Company,941 F.2d 561, (7th Cir. 1991) ............................................................................10

Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299 (1985)....................16

Beddall v. State Street Bank & Trust Co., 137 F.3d 12 (1st Cir. 1998)...................10

Brandt v. Grounds, 687 F.2d 895 (7th Cir. 1982) ...................................................10

Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006) ..................................................passim

C-Wood Lumber Co., Inc. v. Wayne County Bank, 233 S.W.3d 263(Tenn. Ct. App. 2007)........................................................................................22

Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272 (6th Cir. 1991) .........18

Dixon v. Clem, 492 F.3d 665, 673 (6th Cir. 2007) ..................................................13

In re Cannon, 277 F.3d 838 (6th Cir. 2002) ......................................................13, 14

In re Dublin Securities, et al., 133 F.3d 377 (6th Cir. 1997)...................................17

In re Mushroom Transportation Co., 382 F.3d 325 (3d Cir. 2004) ........................10

In re Van Dresser Corp., 128 F.3d 945 (6th Cir. 1997) .................................... 13-14

IT Corp. v. General American Life Ins. Co., 107 F.3d 1415 (9th Cir. 1997) ..........10


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v

Marks v. Newcourt Credit Group, Inc., 342 F.3d 444 (6th Cir. 2003)..............19, 24

Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) .........................................1

Moench v. Robertson, 62 F.3d 553 (3d Cir. 1995) ..................................................15

Official Committee of Unsecured Creditors of PSA, Inc. v. Edwards,437 F.3d 1145 (11th Cir. 2006).........................................................................17

O’Toole v. Arlington Trust, 681 F.2d 94 (1st Cir. 1982).........................................10

Pagan v. Fruchey, 492 F.3d 766, 769 n.1 (6th Cir. 2007) (en banc) ......................21

Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp.,399 F.3d 692 (6th Cir. 2005) ...........................................................19, 20, 25, 28

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) .................................................30

Ramsey v. Formica Corp., 398 F.3d 421 (6th Cir. 2005) ..................................19, 24

Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) ............................................18, 24

Srein v. Frankford Trust, 323 F.3d 214 (3d Cir. 2003) ...........................................10

St. Marys Foundry, Inc. v. Employers Ins. of Wausau, 332 F.3d 989(6th Cir. 2003). ..................................................................................................12

STATUTES AND RULES PAGE

11 U.S.C. § 541........................................................................................................13

28 U.S.C. § 1331........................................................................................................1

29 U.S.C. § 1002............................................................................................9, 15, 16

29 U.S.C. § 1109........................................................................................................7

29 U.S.C. § 1132..............................................................................................7, 8, 29

29 U.S.C. § 1144......................................................................................................18

Tenn. Code Ann. § 35-2-111 ................................................................... 7, 22-23, 27


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1

JURISDICTIONAL STATEMENT

The district court had subject matter jurisdiction in the trustee’s case under

28 U.S.C. § 1331 because the trustee asserted federal claims under the Employee

Retirement Income Security Act, 29 U.S.C. § 1001 et seq. Regions Bank

otherwise concurs with the jurisdictional statements of the trustee, including the

other asserted bases for the district court’s subject matter jurisdiction.

The district court had subject matter jurisdiction in the EFS plaintiffs’ case

under 28 U.S.C. § 1331 because ERISA preemption (unlike most other forms of

preemption) confers federal question jurisdiction. See Metropolitan Life Ins. Co. v.

Taylor, 481 U.S. 58, 65-66 (1987); Briscoe v. Fine, 444 F.3d 478, 496 (6th Cir.

2006). Regions Bank otherwise concurs with the jurisdictional statement of the

EFS plaintiffs, including the other asserted bases for the district court’s subject

matter jurisdiction.

STATEMENT OF THE ISSUES

1. Did the trustee’s ERISA claims fail as a matter of law because

Regions Bank, as a mere custodian of plan funds, is not an ERISA fiduciary?

2. Did the trustee lack standing to assert his claims because he sought to

recover property that is not part of his debtors’ estates?

3. Are the trustee’s claims barred by the doctrines of in pari delicto and

unclean hands because he stepped in the shoes of a thief?


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2

4. Were the plaintiffs’ negligence and Tennessee Consumer Protection

Act claims barred by the Uniform Fiduciaries Act?

5. Did the plaintiffs waive their right to argue otherwise by not

challenging the district court’s Uniform Fiduciaries Act ruling?

6. Were the plaintiffs’ state law bad faith claims preempted by ERISA

because they sought recovery for the mishandling of ERISA plan assets?


John C. McLemore, the bankruptcy trustee for 1Point Solutions, LLC, filed

an action against Regions Bank to recover for losses to various employee benefit

plans. R. 1, Complaint (Case No. 3:07-ap-00283). The trustee’s complaint alleged

claims under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.

§ 1001 et seq., as well as various Tennessee state law claims. Id. The district court

granted Regions Bank’s motion to dismiss as to all but one of the trustee’s claims.

R. 34, Order (Case No. 3:08-cv-00021). Only the trustee’s claim for negligence

survived the motion to dismiss. R. 33, Memorandum Opinion (Case No. 3:08-cv-

00021).

A group of fiduciaries of individual employee benefit plans, including EFS,

Inc., filed a second action against Regions Bank. R. 1, Complaint (Case No. 3:08-

cv-01003). The EFS complaint asserted only state law causes of action. The


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3

district court consolidated the lawsuits filed by the trustee and the EFS plaintiffs.

R. 17, Order (Case No. 3:08-cv-01003).

After both sets of plaintiffs twice amended their complaints and alleged

additional claims, the district court granted Regions Bank’s motion for judgment

on the pleadings. R. 136, Order (Case No. 3:08-cv-00021). The district court

dismissed the remaining claims alleged by the trustee. It also dismissed all claims

in the EFS action asserted by fiduciaries of ERISA plans, while holding that some

claims asserted by fiduciaries of non-ERISA plans survived. R. 135,

Memorandum Opinion (Case No. 3:08-cv-00021).

The district court severed the two actions, making the ruling in the trustee’s

action final and appealable. R. 136, Order (Case No. 3:08-cv-00021). Pursuant to

Federal Rule of Civil Procedure 54(b), the district court subsequently entered a

final judgment in the EFS action with respect to the ERISA-plan fiduciaries’

claims. R. 26, Order (Case No. 3:08-cv-01003). These timely appeals followed.

R. 138, Notice of Appeal (Case No. 3:08-cv-00021); R. 28, Notice of Appeal (Case

No. 3:08-cv-01003).


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STATEMENT OF FACTS1

1Point Solutions, LLC was a third party administrator for various employee

benefit plans, including 401(k) retirement plans, flexible spending account plans,

health saving account plans, dependent care plans and some dental and

transportation plans. R. 99, Second Amended Complaint, ¶ 8 (Case No. 3:08-cv-

00021); R. 100 Second Amended Complaint, ¶ 25 (Case No. 3:08-cv-00021). As a

third-party administrator, 1Point was entrusted with funds to invest or hold for the

benefit of the plans. Barry Stokes owned and operated 1Point. R. 99, Second

Amended Complaint, ¶ 7 (Case No. 3:08-cv-00021); R. 100 Second Amended

Complaint, ¶ 24 (Case No. 3:08-cv-00021).

1Point opened various accounts at AmSouth Bank, the predecessor in

interest to defendant Regions Bank. R. 99, Second Amended Complaint, ¶ 17

(Case No. 3:08-cv-00021); R. 100 Second Amended Complaint, ¶ 33 (Case No.

3:08-cv-00021). The plaintiffs allege that Regions Bank knew that 1Point was a

third-party administrator for various plans and that 1Point received funds to be

held or invested on behalf of the plans or their participants. R. 99, Second

Amended Complaint, ¶ 40 (Case No. 3:08-cv-00021) R. 100 Second Amended

Complaint, ¶ 61 (Case No. 3:08-cv-00021). They do not allege that Regions Bank

1 The statement of facts is drawn from the plaintiffs’ complaints, which areaccepted as true only for purposes of this appeal.


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had any contractual or other type of direct relationship with any of the various

plans in question.

Stokes defrauded the plans for which 1Point was a third party administrator.

Stokes withdrew substantial sums of money from the 1Point accounts, transferring

money among the accounts and obtaining cashier’s checks from the accounts. R.

99, Second Amended Complaint, ¶ 47 (Case No. 3:08-cv-00021); R. 100 Second

Amended Complaint, ¶ 53 (Case No. 3:08-cv-00021). Stokes used the cashier

checks, wire transfers, and other forms of transactions for his own personal benefit.

R. 99, Second Amended Complaint, ¶ 49 (Case No. 3:08-cv-00021); R. 100

Second Amended Complaint, ¶ 55 (Case No. 3:08-cv-00021). Acting in his

capacity as principal and sole owner of 1Point, Stokes converted the plan assets for

his own use and benefit and for the use and benefit of 1Point.

The plaintiffs allege that Regions Bank knew or should have known that “it

was allowing fiduciary accounts to be commingled and overdrawn.” R. 99, Second

Amended Complaint, ¶ 66 (Case No. 3:08-cv-00021); R. 100 Second Amended

Complaint, ¶ 74 (Case No. 3:08-cv-00021). More generally, the plaintiffs allege

that Regions Bank knew or should have known that 1Point’s transactions were

improper, without legitimate purpose, and unreasonable.


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SUMMARY OF ARGUMENT

The trustee’s ERISA claims were correctly dismissed because the trustee did

not, and could not, allege facts to establish that Regions Bank was an ERISA

fiduciary. It is well settled that a depositary bank is not an ERISA fiduciary

merely because it has custody of plan funds.

The trustee’s ERISA claims should have been dismissed on two alternative

grounds as well. First, a bankruptcy trustee has no standing to assert claims for the

recovery of property unless that property belongs to the debtor’s estate. Here the

debtor was the thief, so the trustee is attempting to recover property that belongs to

someone else. Second, the bankruptcy trustee stands in the shoes of his debtor and

is subject to defenses to which the debtor would be subject. Here the debtor is

subject to the defenses of in pari delicto and unclean hands, which bars the

trustee’s claims.

The plaintiffs’ state law claims were all preempted by ERISA because they

sought to impose monetary liability on a non-fiduciary for the alleged mishandling

of plan assets (or for failing to stop the mishandling of plan assets). The state law

claims therefore attempt to impose an alternative enforcement mechanism not

authorized by ERISA’s comprehensive remedial scheme.

Furthermore, the plaintiffs’ negligence and Tennessee Consumer Protection

Act claims were barred by the Tennessee Uniform Fiduciaries Act, Tenn. Code


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Ann. § 35-2-111, which precludes bank liability based on the actions of a bank

customer who is a fiduciary. To the extent the plaintiffs could assert a claim for

bad faith that was not barred by the Uniform Fiduciaries Act, that claim was

preempted because it was based on Regions Bank’s purported knowledge of

1Point’s and Stokes’s fiduciary duties under ERISA.

Finally, the plaintiffs’ unjust enrichment claim was preempted by ERISA

because it sought the recovery of ERISA plan funds, and thus was an “alternative

enforcement mechanism” that is not permitted. Indeed, the unjust enrichment

claim was nothing more than an ERISA claim (which the district court had already

dismissed) with a new label.

ARGUMENT

I. The trustee’s ERISA claims fail as a matter of law because RegionsBank was not an ERISA fiduciary.

ERISA’s remedial scheme draws a sharp distinction between the relief

available against fiduciaries and that available against non-fiduciaries. A fiduciary

is personally liable to an ERISA plan for any damages caused by a breach of the

fiduciary’s duties. 29 U.S.C. § 1109; 29 U.S.C. § 1132(a)(2). Relief against a

non-fiduciary, on the other hand, is limited to “appropriate equitable relief.” Id.

§ 1132(a)(3). “Plaintiffs seeking more than the ‘appropriate equitable relief’

available under § 1132(a)(3) . . . thus must demonstrate that the person violating a


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duty imposed by ERISA is a fiduciary.” Briscoe v. Fine, 444 F.3d 478, 486 (6th

Cir. 2006).

The trustee asserted both types of ERISA claims against Regions Bank. He

attempted to recover bank fees charged by Regions Bank on the theory that

Regions Bank was not an ERISA fiduciary and that the recovery of these fees was

an equitable form of relief. R. 1, Complaint ¶¶ 169-73 (Case No. 3:07-ap-00283).

The district court disagreed that the remedy sought was equitable in nature and

dismissed the claim. R. 33, Memorandum Opinion (Case No. 3:08-cv-00021).

That ruling has not been appealed.

The trustee also alleged claims under provisions of ERISA applicable to

fiduciaries. Proving fiduciary status was the only way the trustee could obtain

“personal liability” – i.e., money damages – against the bank under ERISA. 29

U.S.C. § 1132(a)(2); Briscoe, 444 F.3d at 486. Because the trustee did not allege

any facts to establish that Regions Bank was an ERISA fiduciary, the district court

correctly dismissed these ERISA claims.

ERISA provides a three-part definition of a fiduciary:

[A] person is a fiduciary with respect to a plan to the extent (i) heexercises any discretionary authority or discretionary controlrespecting management of such plan or exercises any authority orcontrol respecting management or disposition of its assets, (ii) herenders investment advice for a fee or other compensation, direct orindirect, with respect to any moneys or other property of such plan, orhas any authority or responsibility to do so, or (iii) he has any


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discretionary authority or discretionary responsibility in theadministration of such plan.

29 U.S.C. § 1002(21)(A). Only the first of these definitions is at issue here, as

there is no allegation that Regions Bank rendered any investment advice to the

plans in question or that Regions Bank had any discretionary authority or

responsibility for plan administration.

Thus, to state a viable ERISA claim, the trustee had to allege facts showing

that Regions Bank had discretionary authority over plan management or that

Regions Bank had any authority or control over plan assets. Briscoe, 444 F.3d at

488. It did not and could not do so. As the district court concluded, the allegations

establish nothing more than that Regions Bank was a depositary bank that merely

had possession and custody of plan funds. R. 33, Memorandum Opinion, p. 24

(Case No. 3:08-cv-00021). Regions Bank had no authority or control over the

funds; instead, its role was limited to carrying out the instructions of those who did

have authority and control over the funds, 1Point and Stokes. Indeed, the entire

case is premised on the idea that Regions Bank should have exerted authority or

control over the funds, rather than following the instructions of 1Point and Stokes,

and that it is liable for not having done so.

It is well-settled that, without evidence of actual authority or control of plan

assets, a depositary bank for plan assets is not an ERISA fiduciary. As this Court

has explained, “[o]ur reading of ERISA’s statutory definition will not extend


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fiduciary status to every person who exercises mere possession, or custody over the

plans’ assets.” Briscoe , 444 F.3d at 494 (internal quotation and citation omitted).

Legions of cases across the country have reached the same conclusion that a

depositary bank, without more, is not an ERISA fiduciary based on its possession

or custody of plan funds.2

The district court correctly held that Regions Bank was not an ERISA

fiduciary as a matter of law. The trustee complains that fiduciary status is a fact-

intensive question that is inappropriate to decide at the pleading stage. But when

the facts are not in dispute, fiduciary status is a question of law. Briscoe, 444 F.3d

at 486. Here the facts were not in dispute because the allegations of the complaint

were taken as true for purposes of the motion to dismiss. Regions Bank’s fiduciary

status was therefore a question of law that was entirely appropriate for a motion to

dismiss. See Brandt v. Grounds, 687 F.2d 895, 898-90 (7th Cir. 1982) (affirming

the dismissal of an ERISA claim based on absence of fiduciary status); O’Toole v.

Arlington Trust, 681 F.2d 94 (1st Cir. 1982) (same).

2 E.g., In re Mushroom Transportation Co., 382 F.3d 325, 347 (3d Cir. 2004);Srein v. Frankford Trust, 323 F.3d 214, 222 (3d Cir. 2003); Beddall v. State StreetBank & Trust Co., 137 F.3d 12, 18 (1st Cir. 1998); Arizona State CarpentersPension Trust Fund v. Citibank, 125 F.3d 715, 720 (9th Cir. 1997); IT Corp. v.General American Life Ins. Co., 107 F.3d 1415, 1422 (9th Cir. 1997); Assocs. inAdolescent Psychiatry v. Home Life Insurance Company, 941 F.2d 561, 568 (7thCir. 1991); O’Toole v. Arlington Trust, 681 F.2d 94, 96 (1st Cir. 1982); Brandt v.Grounds, 687 F.2d 895, 898 (7th Cir. 1982).


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The trustee relies on his allegations that Regions Bank knew or should have

known about 1Point’s and Stokes’s misconduct, but none of these allegations show

that the bank had authority or control over the funds sufficient to make the bank a

fiduciary. The trustee argues that Regions Bank knew that the funds in its custody

were plan assets. Even if true, knowing that funds are plan assets is a far cry from

having control over those assets. The trustee argues that 1Point did not handle its

accounts like a “typical” third-party administrator of employee benefit plans and

that Regions Bank should have been alerted by that fact to the problems. But the

issue here is not what Regions Bank knew or should have known. The issue is

whether it had authority or control over the funds sufficient to make the bank a

fiduciary. The state of the bank’s knowledge has nothing to do with whether it had

that authority or control. The trustee also points to various bank laws and

regulations, apparently in an effort to show that Regions Bank should have caught

and stopped the misconduct. Once again, these bank laws and regulations are

irrelevant to the issue here because they have no impact on whether Regions Bank

had authority or control over the funds.

The trustee offers one final argument to try to establish fiduciary status, but

that argument has been waived. Citing Briscoe, 444 F.3d at 491-92, he argues that

Regions Bank charged 1Point over $500,000 in fees, and that the bank therefore

had control or authority over the plan assets. The trustee never made this argument


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in the district court, and therefore it is waived. See St. Marys Foundry, Inc. v.

Employers Ins. of Wausau, 332 F.3d 989, 996 (6th Cir. 2003).

In any event, the argument is wrong. In Briscoe, this Court held that a third-

party administrator of ERISA plans was a fiduciary to the extent of an

administrative fee paid from plan funds. The Court reached this conclusion

because the third party administrator had the power to write checks on the plan

account and had unilaterally exercised that power to pay itself an administrative

fee out of plan assets after its contractual relationship with the plan had ended.

Briscoe, 444 F.3d at 494.

Nothing of the sort occurred here. There is no allegation that Regions Bank

had the power to write checks on the 1Point account. Indeed, there is no allegation

that Regions Bank did anything other than follow the instructions given by 1Point

or Stokes. Furthermore, there is no allegation that Regions Bank unilaterally

exercised any power to pay itself the alleged fees, and no allegation that these fees

were anything other than ordinary and customary charges as specified in the

depositary agreement between 1Point and Regions. If ordinary bank fees were

sufficient to make a bank an ERISA fiduciary, then every bank holding plan funds

would automatically be an ERISA fiduciary. As discussed earlier, however, it is

settled law that a depositary bank, without more, is not an ERISA fiduciary.


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Finally, the trustee launches a misguided policy attack on the district court’s

ruling. The decision, he argues, frustrates ERISA’s goal of making relief available

for breaches of fiduciary duty. This argument simply assumes its own conclusion.

The trustee cannot establish a breach of fiduciary duty by assuming that the bank is

a fiduciary in the first place. That, after all, is the question to be answered. And,

as the district court correctly held, the trustee’s allegations failed to establish that

the bank held that status. Regions Bank was not an ERISA fiduciary, and therefore

cannot be “personally liable,” 29 U.S.C. § 1102, for money damages under ERISA.

II. The trustee lacks standing to pursue claims for the recovery of planfunds.

The dismissal of the trustee’s state law and ERISA claims may also be

affirmed for other reasons. This Court may affirm the judgment on any ground

supported by the record, including a ground rejected by the district court. Dixon v.

Clem, 492 F.3d 665, 673 (6th Cir. 2007).

The first such ground is that the trustee lacks standing to pursue any claims

for the recovery of plan funds. A bankruptcy trustee has no authority to bring

claims for the recovery of money unless the funds are owed to the debtor’s estate.

In re Cannon, 277 F.3d 838 (6th Cir. 2002). Put another way, a bankruptcy

trustee’s causes of action are limited to those that the debtor itself could have

asserted as of the filing of the bankruptcy petition. See 11 U.S.C. § 541; see also

In re Van Dresser Corp., 128 F.3d 945 (6th Cir. 1997) (if the “cause of action does


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not explicitly or implicitly allege harm to the debtor,” then it “could not have been

asserted by the debtor at the commencement of the case, and thus is not property of

the estate.”). A bankruptcy trustee therefore has no authority, and lacks standing,

to assert causes on behalf of creditors. See Cannon, 277 F.3d at 856 (“Because the

[bankruptcy] code precludes a recovery that benefits anyone other than the estate,

the trustee lacks standing to maintain an adversary proceeding seeking such a

recovery.”).

The trustee’s claims against Regions Bank exceed his powers under his

bankruptcy appointment. The trustee himself alleges that the pilfered funds did not

belong to 1Point, but rather were held in trust solely for the benefit of the

participants and beneficiaries of the plans in question. E.g., R. 99, Second

Amended Complaint, ¶ 4.1 (Case No. 3:08-cv-00021). Neither 1Point nor Stokes

has any cognizable interest in the funds. Furthermore, neither 1Point nor Stokes

could have asserted these claims against Regions Bank, which is a prerequisite for

the trustee’s ability to do so. Thus, the trustee is attempting to recover funds not

for the benefit of the estate he represents, but instead for the benefit of creditors.

This he cannot do. The trustee lacks standing to assert these claims.

The district court erred in rejecting this argument. It held that the trustee is

an ERISA fiduciary and that ERISA empowers fiduciaries to pursue relief on

behalf of the affected plans. R. 33, Memorandum Opinion, pp. 10-13 (Case No.


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3:08-cv-00021). But the fact that the trustee may be an ERISA fiduciary for some

limited purposes does not give him the powers of a fiduciary for all purposes.

Fiduciary status under ERISA exists only “to the extent” that a person meets one of

the three tests in 29 U.S.C. § 1002(21)(A). It is “not an all or nothing concept,”

and the relevant question is “whether a person is a fiduciary with respect to the

particular activity in question.” Briscoe v. Fine, 444 F.3d 478, 486 (6th Cir. 2006)

(quoting Moench v. Robertson, 62 F.3d 553, 561 (3d Cir. 1995)). “A person is a

fiduciary only with respect to those portions of a plan over which he exercises

discretionary authority or control.” American Fed’n of Unions Local 102 v.

Equitable Life Assurance Soc’y, 841 F.2d 658, 662 (5th Cir. 1988).

The trustee’s claim to fiduciary status rests on his supposed control over

certain plan funds that were recovered in accounts at Regions Bank. Nowhere

does the trustee allege which plans own these funds, and thus there is no allegation

that the trustee is a fiduciary for any particular plan. Furthermore, if he is an

ERISA fiduciary, it is only to the extent of the limited funds recovered in accounts

at Regions Bank.3 The trustee is not an ERISA fiduciary with respect to the funds

stolen by 1Point and Stokes, because neither he nor 1Point is the current plan

3 It is doubtful that the trustee is an ERISA fiduciary at all. The funds on which hebases his claim of fiduciary status have been deposited with the district court, andthe trustee has no ability to take any action with respect to these funds without acourt order.


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administrator for any of the affected plans. Thus, the trustee simply does not meet

ERISA’s test for fiduciary status with respect to the stolen funds. He has no

discretionary authority or control over management of the affected plans. He has

no authority or control over the stolen assets. He has not rendered any investment

advice to the affected plans. And he has no discretionary authority or

responsibility for administration of the affected plans. See 29 U.S.C.

§ 1002(21)(A). In short, he (arguably) has nothing more than control over a subset

of funds that are not the funds at issue in this case. His fiduciary status therefore is

limited to that subset of funds.

With respect to the funds at issue in this case, the trustee has no fiduciary

status. ERISA therefore does not give him the authority to pursue these claims.

And the Bankruptcy Code precludes him from doing so. The trustee lacks standing

to pursue these claims, and the judgment against the trustee may be affirmed on

that alternative basis.

III. The trustee’s claims are barred by the doctrines of in pari delicto andunclean hands.

The dismissal of the trustee’s claims may also be affirmed on another

alternative basis – the doctrines of in pari delicto and unclean hands. The

doctrines stand for the proposition that courts will not provide relief to a

wrongdoer. E.g., Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299,

306 (1985). The trustee’s complaint clearly establishes that 1Point and Stokes


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stole money from the plans in question. R. 99, Second Amended Complaint,

¶¶ 47-51, 70 (Case No. 3:08-cv-00021). Had 1Point and Stokes attempted to assert

claims against Regions Bank to recover the stolen funds, those claims would

obviously have been barred by these two doctrines.

A bankruptcy trustee steps into the shoes of its debtor and is subject to the

all of the legal defenses to which the debtor would be subject. This Court and

others have therefore applied the doctrines of in pari delicto and unclean hands to

bar claims of bankruptcy trustees where the debtor was blameworthy. In In re

Dublin Securities, et al., 133 F.3d 377, 380 (6th Cir. 1997), for example, this Court

applied the in pari delicto doctrine and affirmed the dismissal of a trustee’s

complaint that “conceded, for example, that the debtors intentionally defrauded

their investors.” See also Official Committee of Unsecured Creditors of PSA, Inc.

v. Edwards, 437 F.3d 1145 (11th Cir. 2006) (applying the in pari delicto doctrine

to bar a bankruptcy trustee’s complaint).

The trustee is therefore subject to these defenses, which are clearly

established by his own complaint, and his claims are barred as a matter of law.

The district court, however, concluded that, as an ERISA fiduciary, the trustee is

not subject to these defenses because any recovery would accrue to the benefit of

the affected plans. R. 33, Memorandum Opinion, pp. 14-15 (Case No. 3:08-cv-

00021). This was an error of law. For starters, as discussed above, the trustee has


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no authority to pursue a recovery on behalf of any person or entity other than the

debtors’ estates. The affected plans are, of course, free to sue for themselves, or

free to have their current fiduciaries sue on their behalf. Furthermore, as also

discussed above, the trustee’s purported fiduciary status is limited and does not

extend to the recovery of stolen funds. The trustee’s claims are therefore barred by

the doctrines of in pari delicto and unclean hands.

IV. The plaintiffs’ state law claims are preempted to the limited extent thatthey are not barred by state law.

A. ERISA preempts state claims, like those asserted by the plaintiffs,that seek an alternative remedy for the mishandling of ERISAplan assets.

ERISA’s civil remedial scheme “supersede[s] any and all State laws insofar

as they may now or hereafter relate to any employee benefit plan”. 29 U.S.C.

§ 1144. This “expansive” provision, Aetna Health, Inc. v. Davila, 542 U.S. 200,

208 (2004), is so broad that “virtually all state law claims relating to an employee

benefit plan are preempted by ERISA . . . .” Cromwell v. Equicor-Equitable HCA

Corp., 944 F.2d 1272, 1276 (6th Cir. 1991). A state law claim “relates to” an

employee benefit plan, and is therefore preempted, “if it has a connection with or

reference to such a plan.” Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97

(1983).

The Supreme Court has instructed that “any state-law cause of action that

duplicates, supplements, or supplants the ERISA civil enforcement remedy


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conflicts with the clear congressional intent to make the ERISA remedy exclusive

and is therefore pre-empted.” Davila, 542 U.S. at 209. The focus is on the remedy

sought by the plaintiff and its relation to the employee benefit plan. Ramsey v.

Formica Corp., 398 F.3d 421, 424 (6th Cir. 2005); Marks v. Newcourt Credit

Group, Inc., 342 F.3d 444, 453 (6th Cir. 2003). This Court has further refined the

ERISA preemption analysis by defining several categories of state law that are

clearly preempted:

ERISA preempts state laws that (1) mandate employee benefitstructures or their administration; (2) provide alternative enforcementmechanisms; or (3) bind employers or plan administrators toparticular choices or preclude uniform administrative practice, therebyfunctioning as a regulation of an ERISA plan itself.

Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp. (“PONI”), 399 F.3d

692, 698 (6th Cir. 2005) (quotation and citation omitted).

Under these standards, the plaintiffs’ state law claims were necessarily

preempted. The plaintiffs challenge the dismissal of only three of the various state

law claims they alleged: negligence, violation of the Tennessee Consumer

Protection Act, and unjust enrichment. No matter what label is attached or how

they are characterized, these state law claims seek to impose monetary liability for

the alleged mishandling of ERISA plan funds (or the failure to stop the

mishandling of those funds).


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Because Regions Bank is not an ERISA fiduciary, however, it cannot be

liable for money damages under ERISA. See Briscoe v. Fine, 444 F.3d 478, 486

(6th Cir. 2006). The state law claims are a back-door effort to impose monetary

liability that is precluded by ERISA. Those claims therefore provide an

“alternative enforcement mechanism” to ERISA’s remedial scheme and are

preempted. PONI, 399 F.3d at 698. State law claims cannot “supplement” the

exclusive remedies provided by ERISA. Davila, 542 U.S. at 209.

The state law claims were properly dismissed for other reasons as well, as

discussed in the next sections.

B. The plaintiffs have waived any challenge to the district court’sruling that their negligence and Tennessee Consumer ProtectionAct claims were barred by the Tennessee Uniform FiduciariesAct.

The district court held that two of the state law claims on appeal –

negligence and the Tennessee Consumer Protection Act – were barred, or at least

sharply limited, by Tennessee’s Uniform Fiduciaries Act, which immunizes banks

from liability for the conduct of their customers who are fiduciaries. R. 135,

Memorandum Opinion, pp. 7-10 (Case No. 3:08-cv-00021). And, the district court

held, any claim that survived the Uniform Fiduciaries Act would be preempted by

ERISA. Id. at 15-18.

Neither the trustee nor the EFS plaintiffs so much as mention the Uniform

Fiduciaries Act in their briefs, let alone analyze the statute or challenge the district


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court’s application of the statute. Instead, they simply pretend as if the district

court held that every garden-variety negligence or Consumer Protection Act claim

would be preempted by ERISA. Indeed, they argue that the district court

“reversed” its earlier ruling that the negligence claim was not preempted. All of

this is divorced from the reality of what the district court actually held.

Because the plaintiffs have not challenged the district court’s ruling on the

scope and application of the Uniform Fiduciaries Act, they have waived any

argument against that ruling. See Pagan v. Fruchey, 492 F.3d 766, 769 n.1 (6th

Cir. 2007) (en banc). As a result, the only thing that the plaintiffs may challenge

with respect to their negligence and Consumer Protection Act claims is the district

court’s holding that ERISA preempts any state law claim that requires proof of

Regions Bank’s actual knowledge of, or bad faith with respect to, 1Point’s and

Stokes’ wrongdoing.

C. The plaintiffs’ negligence claims are barred by Tennessee’sUniform Fiduciaries Act.

While the plaintiffs have waived any argument to the contrary, Tennessee’s

Uniform Fiduciaries Act eliminates bank liability based on the acts of a bank

customer who is a fiduciary:

(c)(1) Knowledge on the part of the bank or savings institution of theexistence of a fiduciary relationship or the terms of the relationshipshall not impose any duty or liability on the bank or savings institutionfor any action of the fiduciary.


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(2) A bank or savings institution has no duty … to limit transactions in[an account established for a fiduciary] … unless, in its discretion, itcontracts in writing with the fiduciary to establish or limit transactionswith respect to such an account . . . .

Tenn. Code Ann. § 35-2-111(c)(1) and (2) (emphasis added). This statute “was

designed to facilitate banking transactions by relieving depository banks of the

responsibility of assuring that an authorized fiduciary used entrusted funds for

proper purposes.” C-Wood Lumber Co., Inc. v. Wayne County Bank, 233 S.W.3d

263, 273-74 (Tenn. Ct. App. 2007). The statute “places the burden on the principal

to employ honest fiduciaries.” Id.

The Uniform Fiduciaries Act barred the plaintiffs’ negligence claim as a

matter of law. That claim alleged that Regions Bank knew or should have known

that 1Point and Stokes were fiduciaries of the plans, that Regions Bank should

have known the fiduciaries were converting plan assets, and that the plaintiffs were

damaged by Regions Bank’s failure to act to stop the conversion. This is precisely

the type of claim the Uniform Fiduciaries Act prohibits. The Act provides that

Regions Bank’s alleged knowledge of the fiduciary status of 1Point and Stokes

cannot create any liability based on the fiduciaries’ actions. Tenn. Code Ann.

§ 35-2-111(c)(1). The Act further provides that Regions Bank had no duty to limit

transactions in the 1Point accounts notwithstanding any knowledge of 1Point’s

fiduciary status with respect to those accounts. Tenn. Code Ann. § 35-2-


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111(c)(2).4 The negligence claim simply could not survive the Uniform

Fiduciaries Act.

The district court agreed that the Uniform Fiduciaries Act barred a

negligence claim like the one asserted by the plaintiffs. It held, however, that

allegations of a bank’s bad faith with respect to the fiduciary’s wrongdoing could

state a claim not barred by the Act. R. 135, Memorandum Opinion, p. 10 (Case

No. 3:08-cv-00021). The district court generously found that the complaints

sufficiently alleged Regions Bank’s bad faith with respect to 1Point and Stokes’s

theft of plan assets. Id. at 14.

In so holding, the district court simply misinterpreted the Uniform

Fiduciaries Act. That statute could not be any clearer that a bank has no liability

for any action by a fiduciary customer even if the bank knows of the fiduciary

status or the requirements of the fiduciary relationship. Tenn. Code Ann. § 35-2-

111(c)(1). And the statute could not be any clearer that a bank has no duty,

regardless of what knowledge it has, to limit transactions in the fiduciary’s

account. Tenn. Code Ann. § 35-2-111(c)(2). Thus, there is no “bad faith”

exception to the Uniform Fiduciaries Act’s prohibition on bank liability.

4 The Act provides that a bank may have a duty to limit transaction in a fiduciary’saccount if the bank has contracted so to limit transactions. Tenn. Code Ann. § 35-2-111(c)(2). There is no allegation of any such agreement here.


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Ultimately, however, the district court dismissed this bad faith claim

anyway. It held that any bad faith claim was inescapably premised on 1Point’s and

Stokes’s fiduciary duties under ERISA and Regions Bank’s purported knowledge

of those duties and the violation of them.5 Therefore the district court held that the

bad faith claim was preempted. R. 135, Memorandum Opinion, pp. 14-20 (Case

No. 3:08-cv-00021).

Assuming for purposes of argument that a bad faith claim would not be

barred by the Uniform Fiduciaries Act, this preemption ruling was entirely correct.

The harm on which the bad faith claim was based was the theft of plan assets. The

claim depended on (1) the existence of ERISA fiduciaries (1Point and Stokes), (2)

Regions Bank’s knowledge of their fiduciary duties under ERISA, (3) Regions

Bank’s knowledge that the fiduciaries were violating their ERISA duties, and (4)

Regions Bank’s alleged duty to stop the fiduciaries’ violation of their ERISA

duties. The claim necessarily required an analysis of ERISA duties. And it was

fundamentally an effort to impose liability for the handling of ERISA plan assets.

The bad faith claim therefore “relates to” an ERISA plan. Shaw, 463 U.S. at

96-97. The remedy sought is the recovery of plan assets. See Ramsey, 398 F.3d at

424; Marks, 342 F.3d at 453. And that remedy is an “alternative enforcement

5 The district court held that this was not the case with respect to the non-ERISAplans. R. 135, Memorandum Opinion, p. 20 (Case No. 3:08-cv-00021). Only the

(footnote continued on next page)


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mechanism” to the civil remedies provided by ERISA. PONI, 399 F.3d at 698.

For all of these reasons, the bad faith claim is preempted (assuming, erroneously, it

was not altogether barred the Uniform Fiduciaries Act).

The plaintiffs offer several arguments to escape preemption of this claim,

none of which eliminates the inescapable connection of the claim to ERISA. First,

the plaintiffs claim that no understanding of the ERISA plan or of the plan

participants’ rights is necessary to show that Regions Bank knew 1Point and

Stokes were stealing funds. That argument is just fanciful. The accounts at issue

were established by 1Point. As a general rule, the funds in a depositary account

can be withdrawn or otherwise used at the depositor’s discretion. It is only

because those funds were ERISA plan assets that the depositor’s discretion here

was limited. Without the existence of an ERISA plan, and without ERISA

imposing fiduciary duties on 1Point and Stokes, there could be no claim of any sort

based on 1Point’s and Stokes’s use of these funds. To understand that 1Point was

mishandling the funds in those accounts, one must necessarily understand that

those funds were ERISA plan funds. And one must necessarily understand what

1Point’s and Stokes’s duties were with respect to those funds. Those duties are

established by ERISA.

(footnote continued from previous page)ERISA plans at issue in these appeals, however.


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Second, the plaintiffs argue that Stokes’s misconduct is undisputed because

he was convicted for the theft of plan funds after these lawsuits were filed.

Therefore there is no need, the argument goes, to examine his conduct. This

argument fares no better than the first one. The issue is not whether there is a

dispute about Stokes’s conduct. The issue is whether Stokes’s conduct is governed

by, and whether the remedies for his misconduct arise from, ERISA. It is, and they

do. Whether Stokes’s conduct is disputed or undisputed, his duties arose from

ERISA. And Regions Bank’s knowledge of those duties, and any duty to prevent

Stokes’s violation of his duties, necessarily arises from ERISA as well.

Third, the plaintiffs argue that both ERISA and non-ERISA plans were

harmed by the conduct at issue (although only ERISA plans are involved in this

appeal). It is not clear why the plaintiffs believe this makes any difference.

Presumably the plaintiffs’ argument is that it is inconsistent to permit

representatives of non-ERISA plans to pursue a negligence claim (as the district

court did) while finding that the bad faith claim of representatives of the ERISA

plans is preempted. But there is nothing inconsistent or unusual about this

scenario. ERISA and non-ERISA employee benefit plans are governed by distinct

bodies of law. It is hardly surprising that those distinct bodies of law provide

different results in a particular situation. Indeed, the very point of ERISA


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preemption is to ensure that the law that applies to ERISA plans is different from

the law that applies to other types of employee benefit plans.

D. The plaintiffs’ Tennessee Consumer Protection Act claims arebarred by Tennessee’s Uniform Fiduciaries Act.

The plaintiffs’ Consumer Protection Act claim, like their bad faith claim,

was another effort to recover plan assets misappropriated by 1Point and Stokes.

The Consumer Protection Act claim therefore met the same fate as the bad faith

claim, and deservedly so.

First, the Uniform Fiduciaries Act precludes any bank liability on the very

grounds on which the plaintiffs allege Regions Bank is liable. As already

explained, the Act prohibits bank liability for any act of a fiduciary who is the

bank’s customer, even if the bank knows that customer is a fiduciary and knows

the fiduciary’s obligations. Tenn. Code Ann. § 35-2-111(c)(1). The Act also

provides that a bank has no duty to limit transactions in funds for which the bank’s

customer is a fiduciary, and that no liability can be premised on any failure to limit

such transactions. Id. § 35-2-111(c)(2). The District Court therefore held that the

plaintiffs had no viable Consumer Protection Act claim except to the extent they

could establish Regions Bank’s bad faith in connection with the wrongdoing by


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1Point and Stokes.6 R. 135, Memorandum Opinion, p. 21 (Case No. 3:08-cv-

00021). No plaintiff has challenged this ruling in these appeals.

Second, the district court held that any claim that met the Uniform

Fiduciaries Act’s bad faith standard would be preempted by ERISA. Id. Any such

claim was necessarily premised on 1Point’s and Stokes’s fiduciary duties under

ERISA and Regions Bank’s purported knowledge of those duties and the violation

of them. Such a claim therefore was preempted.

To the extent the Consumer Protection Act was viable at all (and it was not),

the district court correctly held it was preempted. The claim was premised on the

theft of plan assets, and the remedy sought was the recovery of those assets. Proof

of the claim required proof that 1Point and Stokes were ERISA fiduciaries, that

Regions Bank knew of that status, that Regions Bank knew they were breaching

their fiduciary duties under ERISA, and that Regions Bank had a duty to stop the

breach of those ERISA duties. At bottom, the Consumer Protection Act claim was

an attempt to impose liability for the loss of ERISA plan assets. It was, in other

words, an “alternative enforcement mechanism” to the civil remedies provided by

ERISA and plainly preempted. PONI, 399 F.3d at 698.

6 As explained above, even this was an overly generous – and erroneous –interpretation of the Uniform Fiduciaries Act, which eliminates bank liabilityregardless of what the bank knows about the fiduciary’s obligations and conduct.


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E. The plaintiffs’ unjust enrichment claim is preempted by ERISAbecause it is an attempt to recover ERISA plan assets.

The district court correctly held that the plaintiffs’ unjust enrichment claim

was nothing more than an ERISA claim dressed in different garb. R. 135,

Memorandum Opinion, p. 23 (Case No. 3:08-cv-00021). This claim sought the

recovery of ordinary bank fees charged by Regions Bank for the 1Point accounts.

It was therefore a claim for the recovery of plan assets, which is governed

exclusively by ERISA.

Indeed, the same claim was dismissed earlier by the district court when it

was explicitly pleaded by the trustee as an ERISA claim The trustee sought

disgorgement of bank fees paid to Regions Bank under 29 U.S.C. § 1132(a)(3),

which permits equitable relief against persons who or entities that are not ERISA

fiduciaries. The district court held that relief under this ERISA provision was not

available because the statute is limited to equitable relief and the trustee’s claim

sought money damages. R. 33, Memorandum Opinion, pp. 26-27 (Case No. 3:08-

cv-00021). Neither plaintiff has appealed from this ruling, and thus they may not

challenge the district court’s conclusion that ERISA does not allow them to seek

recovery of bank fees from Regions Bank.

The problem for the plaintiffs is that their unjust enrichment claim is the

same as the dismissed ERISA claim – with a new label attached. As the district

court correctly held, the unjust enrichment claim is a “reframing” of the dismissed


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ERISA claim, seeks the same remedy as the dismissed ERISA claim, and is

preempted because ERISA provides the exclusive remedy. R. 33, Memorandum

Opinion, p. 27 (Case No. 3:08-cv-00021). ERISA does not permit plaintiffs to

“elevate form over substance and allow parties to evade the preemptive scope of

ERISA simply by relabeling” their claims. Davila, 542 U.S. at 214 (quotation and

citation omitted). Preemption is about the substance of claims, not semantics.

But even if the unjust enrichment claim were not simply the same, dismissed

ERISA claim with new nomenclature, it would still be preempted. In Briscoe v.

Fine, 444 F.3d 478, 500-01 (6th Cir. 2006), this Court held that a state-law

conversion claim based on administrative fees taken out of plan assets was

preempted by ERISA. As the Court explained, the claim involved the distribution

of plan assets and therefore was governed by ERISA. Id. at 501. Likewise, any

state-law claim regarding the bank fees at issue here – whether the claim is

described as unjust enrichment or conversation or something else – is necessarily a

claim relating to plan assets and is therefore preempted.

CONCLUSION

The district court correctly applied ERISA’s broad preemption provision and

its comprehensive scheme of remedies, which Congress intended to be exclusive.

Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987). ERISA’s remedial scheme,

while broad, does not provide a remedy against every person who has any


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connection to an ERISA plan. And, in the context of this case, ERISA does not

itself provide a remedy – and does not permit a remedy from elsewhere – against a

depositary bank that merely followed its customer’s instructions. Congress could

have could have chosen to impose liability on depositary institutions that have

ERISA funds on deposit. It did not do so, and for good reason. This Court should

respect that choice and not stretch the law to impose liability where Congress has

chosen not to impose or permit it.

The plaintiffs cannot circumvent this Congressional choice by pleading state

law claims that seek the same relief. For starters, the Tennessee legislature has

precluded, in the clearest possible terms, any bank liability for the acts of

fiduciaries who are bank customers. And to the extent that any of the plaintiffs’

state law claims is not barred by the Uniform Fiduciaries Act, the claim is

preempted by ERISA because it is premised on the mishandling of ERISA plan

funds and the duties owed by ERISA fiduciaries.

The judgment of the district court should be affirmed.


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/s/ Matthew C. BlickensderferJohn R. WingoFROST BROWN TODD LLC424 Church Street, Suite 1600Nashville, Tennessee 37219(615)251-5582(615) 251-5551 (facsimile)[email protected]

Matthew C. BlickensderferFROST BROWN TODD LLC2200 PNC Center201 East Fifth StreetCincinnati, Ohio 45202(513) 651-6162(513) 651-6981 (facsimile)[email protected]

Counsel for Appellee Regions Bank


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CERTIFICATION OF COMPLIANCE

I hereby certify that this Brief for Appellee Regions Bank America complies

with the type-volume limitation of Fed. R. App. P. 32(a)(7). Excluding the

corporate disclosure statement, table of contents, table of authorities, certification

of compliance, and certification of service, this brief contains 7,108 words.



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I hereby certify that on this 4th day of October, 2010, I electronically filed

the Brief for Appellee Regions Bank with the Clerk of the Court using the

CM/ECF system, which will send notification of such filing to all registered

counsel of record.



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DESIGNATION OF RELEVANT DISTRICT COURT DOCUMENTS

Pursuant to Sixth Circuit Rule 30(b), Appellee Regions Bank designates the

following relevant district court documents:

Description of Entry RecordEntry

NumberComplaint (Case No. 3:07-ap-00283) 1Complaint (Case No. 3:08-cv-01003) 1Second Amended Complaint 99Second Amended Complaint 100Memorandum Opinion (Case No. 3:08-cv-00021) 33Memorandum Opinion (Case No. 3:08-cv-00021) 135

CINLibrary 0000000.0001536 2190851v2


119


Leonard Green Clerk




Filed: October 12, 2010

Mr. Matthew C. Blickensderfer Frost Brown Todd 201 E. Fifth Street Suite 2200 PNC Center Cincinnati, OH 45202


Dear Counsel,


Sincerely yours,


cc: Mr. H. Naill Falls Jr. Mr. Robert Martin Garfinkle Mr. John Rex Wingo Mr. Phillip Gary Young Jr.


120

CASE NUMBER 10-5480 (CONSOLIDATED WITH CASE NO. 10-5491)





APPELLANT JOHN C. McLEMORE, TRUSTEE’S MOTION FOR EXTENSION OF TIME FOR FILING HIS REPLY BRIEF

Appellant John C. McLemore, Trustee, respectfully requests a three-week

extension of the deadline for filing his reply brief in this appeal.


121

The Appellee’s brief raised cross-appeal issues that were not addressed in

Appellant’s brief because the District Court had ruled in favor of the Appellant on

those issues. Appellant requests the additional time in order to address those issues

in the reply brief along with the issues initially briefed.

The Appellant’s reply brief is currently due on October 21, 2010. With the

requested extension, the Appellant’s reply brief would be due on November 11,

2010. Appellant respectfully submits, with authorization of counsel of the

consolidated Appellant, that the reply brief in the consolidated case (No. 10-5491)

should also have the same extended deadline.



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I certify that this 13th day of October, 2010, I electronically filed Appellant John C. McLemore, Trustee’s Motion for Extension of Time for Filing his Reply Brief with the Clerk of the Court using the CM/CEF system, which will send notification of such filing to all registered counsel of record.

/s/ Robert M. Garfinkle Robert M. Garfinkle

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123


Leonard Green Clerk




Filed: October 14, 2010

Mr. Robert Martin Garfinkle Garfinkle, McLemore & Walker 2000 Richard Jones Road Suite 250 Nashville, TN 37215


Dear Counsel,

Your motion for an extension of time to file a reply brief has been GRANTED. The reply brief is now due by 11/12/2010.

Sincerely yours,


cc: Mr. Matthew C. Blickensderfer Mr. H. Naill Falls Jr. Mr. Keith Throckmorton Mr. John Rex Wingo Mr. Phillip Gary Young Jr.


124

CASE NUMBER 10-5480





REPLY BRIEF OF APPELLANT JOHN C. McLEMORE, TRUSTEE

Robert M. Garfinkle, Tn. Bar No. 5354 Phillip G. Young, Jr., Tn. Bar No. 21087 Garfinkle, McLemore & Young, PLLC 2000 Richard Jones Road, Suite 250 Nashville, Tennessee 37215 (615) 383-9495


125

TABLE OF CONTENTS Table of Contents ............................................................................................. i Table of Authorities ........................................................................................ ii Statement in Support of Oral Argument ......................................................... 1 Introduction..................................................................................................... 2 Argument......................................................................................................... 3 I. The Trustee is the proper party to pursue the recovery of the plan funds sought in this suit. ............................................................. 3 A. The Trustee has standing to pursue these claims as an ERISA fiduciary for the Victim Plans. ..................................... 4 B. The Trustee’s claims are not barred by the equitable doctrines of in pari delicto or unclean hands. ................................ 9 II. Regions/AmSouth was an ERISA fiduciary for the Victim Plans. ................................................................................................. 11 III. The Trustee’s State Law Claims are not preempted, barred or waived, and should proceed. ............................................................. 14 A. The Trustee’s State Law Claims are not barred by the UFA, nor has the Trustee waived any right to assert the State Law Claims. ........................................................................ 15 B. The Trustee’s State Law Claims against Regions/AmSouth are not preempted by ERISA. ...................................................... 16 Conclusion .................................................................................................... 17 Certificate of Compliance ............................................................................. 19 Certificate of Service .................................................................................... 20

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Federal Cases Abercrombie & Fitch Stores, Inc. v. Am. Eagle Outfitters, Inc., 280 F.3d 619, 629 (6th Cir. 2002) ............................................................... 4 American Fed’n of Unions Local 102 v. Equitable Life Assurance Soc’y, 841 F.2d 658, 662 (5th Cir. 1988) .............................................................. 6 Ashcroft v. Iqbal, 556 U.S.__, 129 S. Ct. 1937 (2009)......................................................... 12 Bateman Eichler v. Berner, 472 U.S. at 306 (1985) ............................................................................. 10 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955 (2007)....................................................... 12 Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006) ..................................................................... 13 Dixon v. Clem, 492 F.3d 665, 673 (6th Cir. 2007) ............................................................. 3 Donovan v. Schmoutey, 592 F. Supp. 1361 (D. Nev. 1984) ........................................................... 10 Estate of Thomas P. Quirk v. Comm’r, 928 F.2d 751, 756-57 (6th Cir. 1991) ........................................................ 13 In re Cannon, 277 F.3d 838 (6th Cir. 2002) ........................................................................ 5 Mutual Life Ins. Co. of N.Y. v. Yampo, 804 F.2d 421 (7th Cir. 1988) ....................................................................... 5 Sec. & Exch. Comm’n v. Capital Consultants, L.L.C., No. Civ. 00-1290-KI, 2002 WL 32502450 (D. Or. 2002) ......................... 5

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St. Marys Foundry, Inc. v. Employers Ins. Of Wausau, 332 F.3d 989, 996 (6th Cir. 2003) ...................................................... 12, 13

Federal Statutes

11 U.S.C. § 704(a)(11) ................................................................................... 6 29 U.S.C. § 1002(21)(A) ............................................................................ 5, 6

Federal Rules of Appellate Procedure

Fed. R. App. P. 28(i) ............................................................................. 16, 17 Fed. R. App. P. 32(a)(7)(C) .......................................................................... 19

State Statutes Uniform Fiduciaries Act, Tenn. Code Ann. § 35-2-101, et seq ............................................ 14, 15, 16 Tenn. Code Ann. § 35-2-111, (c) .................................................................. 16 Tennessee Consumer Protection Act, Tenn. Code Ann. §47-18-101, et. seq ................................................. 14, 15

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STATEMENT IN SUPPORT OF ORAL ARGUMENT

Appellant John C. McLemore, Trustee, respectfully requests that the Court

schedule oral argument in this appeal. This case raises issues of significant

importance to ERISA plans and participants, specifically the right of Plans to seek

relief from certain parties. The District Court improperly dismissed the Trustee’s

ERISA claims against Regions/AmSouth, finding that Regions/AmSouth was not a

fiduciary. The District Court also incorrectly ruled that the Trustee’s state law

claims were each preempted by ERISA. The Trustee believes that oral argument

will assist the Court in correctly resolving the issues raised by this appeal.

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INTRODUCTION

Aided by the actions and inactions of Regions Bank, as successor in interest

by merger to AmSouth Bank (“Regions/AmSouth”), 1Point Solutions, LLC

(“1Point”) and Barry Stokes (“Stokes”) were permitted to steal millions of dollars

from ERISA plans and their participants before they became bankruptcy debtors.

Regions/AmSouth now attempts to escape this liability by hiding behind a complex

web of distorted ERISA definitions and contradictory positions regarding ERISA

preemption. Nowhere is this contradiction more evident than in the conclusion of

Regions/AmSouth’s Brief (“Regions/AmSouth Brief”), wherein, on the one hand,

it describes ERISA’s remedies as “broad” and “exclusive”, then on the other hand

would ask this Court to find: “in the context of this case, ERISA does not itself

provide a remedy – and does not permit a remedy from elsewhere. . . .”

Regions/AmSouth Brief, pp. 30-31.

On behalf of the ERISA plans, Appellant John C. McLemore, Trustee (the

“Trustee”), properly pled an exhaustive set of facts that, taken as true, demonstrate

that he, as an ERISA fiduciary, has valid causes of action against

Regions/AmSouth under both federal and state law. Unfortunately for the Victim

Plans,1 the District Court prematurely dismissed these actions before all facts could

1 The term “Victim Plans” is defined in the Trustee Brief, pp. 5-6.

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be properly discovered and tried, despite well-established case law suggesting that

these matters are fact-intensive and should survive motions to dismiss.

For the reasons set forth below, which refute the arguments posited by

Regions/AmSouth in the Regions/AmSouth Brief, and in addition to the reasons

set forth in the Trustee’s Appellant Brief (“Trustee Brief”), the Trustee respectfully

requests that the Court reverse the District Court’s dismissal of these causes of

action, and remand this matter to the District Court for further proceeding.

ARGUMENT

I. The Trustee is the proper party to pursue the recovery of the plan funds

sought in this suit.

In its brief, Regions/AmSouth asks this Court to affirm the District Court’s

dismissal of the Trustee’s ERISA causes of action against Regions/AmSouth

based, in part, on grounds not previously appealed to this Court. Specifically,

citing Dixon v. Clem, 492 F.3d 665, 673 (6th Cir. 2007), Regions/AmSouth asks

this Court to reverse the District Court’s prior finding that the Trustee (1) has

standing to pursue these claims as an ERISA fiduciary; and (2) is not barred from a

recovery against Regions/AmSouth by in pari delicto or the doctrine of unclean

hands. While this Court has the authority to review these findings de novo, it must

only do so based upon the facts in the record or, in this case, the allegations

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contained in the Trustee’s Complaint, Amended Complaint and Second Amended

Complaint (collectively the “Complaints”).2 Abercrombie & Fitch Stores, Inc. v.

Am. Eagle Outfitters, Inc., 280 F.3d 619, 629 (6th Cir. 2002).

Based upon the allegations contained in the Complaints, the District Court

properly concluded that the Trustee, as an ERISA fiduciary, has standing to pursue

these recovery claims against Regions/AmSouth and that he is not barred from a

recovery by the doctrines of in pari delicto or unclean hands. The Trustee

respectfully submits that these legal findings are correct and that this Court should

not reverse the District Court on those issues.

A. The Trustee has standing to pursue these claims as an ERISA

fiduciary for the Victim Plans.

Regions/AmSouth contends that the Trustee lacks standing to pursue the

claims at issue in this matter. With this argument, Regions/AmSouth argument

2 On September 9, 2008, the District Court granted in part Regions/AmSouth’s Motion to Dismiss. R.E. 34. In the September 9, 2008, Order, the District Court held that the Trustee has standing as an ERISA fiduciary and is not barred from recovery by in pari delicto or unclean hands. The District Court, however, dismissed the Trustee’s ERISA claims against Region/AmSouth, finding that Regions/AmSouth was not a fiduciary under ERISA. The Court also found in that Order that certain state law claims were not preempted by ERISA and could proceed. Subsequent to the dismissal of the ERISA claims, the Trustee filed an Amended Complaint (on July 24, 2009, R.E. 80) and a Second Amended Complaint (on November 18, 2009, R.E. 99). In this Reply Brief, the Trustee will cite to the record entry for any specific factual allegation; for more general statements regarding facts that are contained throughout the three Complaints, the Trustee will cite more generally to the “Complaints.”

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continues to ignore the legal principle that one party may be both a bankruptcy

trustee, charged with recovery of estate assets, and an ERISA fiduciary, charged

with recovery of plan assets. Indeed, the Trustee serves both roles in this matter.

Regions/AmSouth’s contention that “[a] bankruptcy trustee has no authority

to bring claims for the recovery of money unless the funds are owed to the debtor’s

estate,” Regions/AmSouth Brief, p. 13, rests primarily upon its stretched

application of In re Cannon, 277 F.3d 838 (6th Cir. 2002), to the facts of this case.

As noted by the District Court, neither Cannon nor any other case cited by

Regions/AmSouth implicates ERISA or the responsibilities of ERISA fiduciaries,

as is the case here. R.E. 33, pp. 8-9. On the other hand, courts have specifically

held that a party (such as the Trustee here) may serve as both a trustee for an estate

and a fiduciary to an ERISA plan. See, e.g., Mutual Life Ins. Co. of N.Y. v.

Yampol, 804 F.2d 421 (7th Cir. 1988) (Director of Insurance serving as trust

liquidator and ERISA fiduciary); Sec. & Exch. Comm’n v. Capital Consultants,

L.L.C., No. Civ. 00-1290-KI, 2002 WL 32502450 (D. Or. 2002) (serving as

receiver appointed by bankruptcy court and ERISA fiduciary). The Bankruptcy

Code itself contemplates the potential duality of this role, conferring upon a

bankruptcy trustee the following duty: “if, at the time of the commencement of the

case, the debtor (or any entity designated by the debtor) served as the administrator

(as defined in section 3 of the Employee Retirement Income Security Act of 1974)

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of an employee benefit plan, continue to perform the obligations required of the

administrator. . . .” 11 U.S.C. § 704(a)(11). Based upon clearly established case

law and federal statute, the Trustee may function as both an ERISA fiduciary and

as bankruptcy trustee.

As an alternative argument, Regions/AmSouth contends that, if the Trustee

is indeed an ERISA fiduciary, he serves as an ERISA fiduciary for only “limited

purposes,” yet lacks standing to sue Regions/AmSouth. This argument is legally

unsupported and relies wholly upon misstatements to the record herein.

In its Brief, Regions/AmSouth quotes American Fed’n of Unions Local 102

v. Equitable Life Assurance Soc’y, 841 F.2d 658, 662 (5th Cir. 1988), for the

proposition that “[a] person is a fiduciary only with respect to those portions of a

plan over which he exercises discretionary authority or control.”

Regions/AmSouth Brief, p. 15. Regions/AmSouth takes that proposition and

layers it onto the misstatement that the “Trustee’s claim to fiduciary status rests on

his supposed control over certain plan funds that were recovered in accounts at

Regions Bank,” to reach the conclusion that “if he is an ERISA fiduciary, it is only

to the extent of the limited funds recovered in accounts at Regions Bank.” Id.

This argument ignores the plain language of ERISA, which explicitly defines a

fiduciary for an ERISA plan as one who exercises “any authority or control

respecting management or disposition of its assets.” 29 U.S.C. § 1002(21)(A).

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The Trustee has exercised control over management and disposition of the assets

of the Victim Plans; therefore, he is an ERISA fiduciary and has all authority

inherent with that responsibility.

In addition to this legal fallacy, Regions/AmSouth’s conclusion that the

Trustee must be a “limited” ERISA fiduciary is based entirely upon misstatements

of the record. Regions/AmSouth contends that the Trustee’s Complaint fails to

allege which plans own these funds, or that the Trustee is a fiduciary for any

particular plan. Regions/AmSouth Brief, p. 15. To the contrary, the Trustee

alleges:

Paragraph 4.2, Second Amended Complaint, R.E. 99: “The Trustee has taken possession of assets of 1Point, including cash in banks and real and personal property. Most of the assets were either directly property of plans subject to ERISA, or were purchased for the benefit of Stokes or 1Point with assets of plans subject to ERISA. The Trustee currently exercises discretionary control over assets of plans subject to ERISA. Therefore, the Trustee is functionally a fiduciary within the meaning of ERISA.” Paragraph 4.3, Second Amended Complaint, R.E. 99: “Pursuant to documents executed by the parties, or by the plan documents, or by agreement, or otherwise, 1Point and/or Stokes acted as fiduciaries for plans subject to ERISA. The Trustee is a fiduciary for each of the plans, or is the successor fiduciary to the position of 1Point and/or Stokes as fiduciary for each of the plans.” Paragraph 170, Complaint, R.E. 18, Att. 16: “Stokes and 1Point were fiduciaries within the meaning of ERISA with respect to the Victim Plans. The Plaintiff is a fiduciary with respect to each of the Plans, and is the successor fiduciary to Stokes and/or 1Point as fiduciary with respect to each of the Plans.”

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These facts, taken as true, are more than sufficient to establish the Trustee’s role as

ERISA fiduciary over all of the Victim Plans, whose funds were held at

Regions/AmSouth.

In Footnote 3, Regions/AmSouth then makes a confounding statement: “It

is doubtful that the trustee is an ERISA fiduciary at all. The funds on which he

bases his claim of fiduciary status have been deposited with the district court, and

the trustee has no ability to take any action with respect to these funds without

court order.” This is simply untrue; no funds have been deposited with the District

Court.3 The Trustee maintains possession and control over all funds of the

Debtor’s estate as well as all plan funds not previously distributed to the Victim

Plans.4 As such, the Trustee continues his exercise of authority and/or control

respecting management and/or disposition of Victim Plan assets, including those at

issue in this case.

The Complaints filed by the Trustee in this matter contain concrete

allegations that are legally sufficient to establish his standing to initiate this suit as

an ERISA fiduciary on behalf of the Victim Plans. Accordingly, this Court should

not affirm a dismissal of the Trustee’s actions for lack of standing.

3 Regions/AmSouth’s reliance upon such faulty statements of fact highlights the prematurity of the District Court’s decision on the Motions to Dismiss. As stated in the Trustee’s Brief this matter should be remanded for further factual discovery. 4 The Trustee reconciled Victim Plans’ accounts and has already made 184 distributions totaling $248,523.37 of traceable funds to Victim Plans.

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B. The Trustee’s claims are not barred by the equitable doctrines of

in pari delicto or unclean hands.

Next, Regions/AmSouth argues that this Court should reverse the finding of

the District Court and find that the Trustee’s claims against Regions/AmSouth are

barred by the equitable doctrines of in pari delicto and/or unclean hands. 5

Regions/AmSouth’s argument in this regard rests entirely upon the success of its

prior contention; that is, that the Trustee should not be an ERISA fiduciary for the

Victim Plans. Because the Trustee is an ERISA fiduciary, the Court likewise

should reject this argument.

The Trustee readily admits that the Complaints allege that 1Point and Stokes

stole money from the Victim Plans. The Trustee further concedes that some cases,

such as those cited by Regions/AmSouth in its brief, have found that bankruptcy

trustees may be barred from asserting certain causes of action because of the

wrongdoing of the debtor, into whose shoes the trustee steps. As noted by the

District Court, however, those cases are inapplicable in the ERISA context.

Regions/AmSouth has not cited any case whereby an ERISA fiduciary, as opposed

to a bankruptcy trustee, has been barred from asserting a cause of action based

upon in pari delicto or unclean hands. 5 In its brief, Regions/AmSouth seems to use the doctrines of in pari delicto and unclean hands interchangeably. The District Court noted in a footnote that its rejection of the in pari delicto doctrine applied equally to the doctrine of unclean hands.

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The District Court thoroughly and properly analyzed the application of these

doctrines in its September 9, 2008 Memorandum:

Underlying the doctrine of in pari delicto is the principle that “courts should not lend their good offices to mediating disputes among wrongdoers” and that “denying judicial relief to an admitted wrongdoer is an effective means of deterring illegality.” Bateman Eichler, 472 U.S. at 306. This principle is not implicated, however, by the ERISA claims brought by the Trustee, because those claims are brought on behalf of the affected ERISA plans, who are victims of wrongdoing rather than participants therein. Moreover, any recovery on those claims would not benefit the Trustee or the bankruptcy estate, but rather the affected plans themselves. The case of Donovan v. Schmoutey, 592 F. Supp. 1361 (D. Nev. 1984), is instructive. There, the court rejected the defendants’ in pari delicto defense to the plaintiffs’ ERISA claims, finding that the plaintiff had not participated in the transactions alleged to violate ERISA and that application of the defense would harm the plan participants and beneficiaries. Id. at 1403. Although the analogy to this case may be imperfect, as the plaintiff in Donovan was not a bankruptcy trustee but rather the Secretary of Labor, who brought claims on the behalf of ERISA plan participants and beneficiaries, at the very least Donovan supports the conclusion that in pari delicto does not apply in an ERISA case where, as here, the claims at issue exist between the victims of the wrongdoing and one of the wrongdoers, rather than between two wrongdoers, and where application of the defense would negatively impact the plan participants and beneficiaries – the very parties whom ERISA was enacted to protect.

R.E. 33, p. 14. Because the Trustee is an ERISA fiduciary for the Victim Plans,

the doctrines of unclean hands and/or in pari delicto do not bar him from asserting

these causes of action against Regions/AmSouth.

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II. Regions/AmSouth was an ERISA fiduciary for the Victim Plans.

Regions/AmSouth also asks that the Court affirm the District Court’s

dismissal of these actions on the ground that, as a matter of law, Regions/AmSouth

was not an ERISA fiduciary for the Victim Plans. In so doing, Regions/AmSouth

ignores the voluminous and detailed facts alleged by the Trustee in its Complaints

(and summarized in the Trustee’s Brief) that support the allegations that

Regions/AmSouth exercised any authority or control over Victim Plan assets, as

required by ERISA. To the extent Regions/AmSouth addresses these facts in its

Brief, it does so by seemingly questioning the extent of Regions/AmSouth’s

authority or control over plan assets, not whether it exercised authority or control.

This attack further highlights the prematurity of the District Court’s dismissal of

these actions without further factual proceeding and, therefore, the need for

remand.

Regions/AmSouth misunderstands the Trustee’s argument regarding

Regions/AmSouth’s role as a fiduciary. The Regions/AmSouth Brief summarizes

the Trustee’s argument as follows: “Indeed, the entire case is premised on the idea

that Regions Bank should have exerted authority or control over the funds, rather

than following the instructions of 1Point and Stokes, and that it is liable for not

having done so.” Regions/AmSouth Brief, p. 9. This statement misses the point.

As alleged in the Complaints, it is Regions/AmSouth’s exercise of control or

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authority over the Victim Plans’ assets that makes it a fiduciary. Those actions

include: Regions/AmSouth dictating to 1Point and/or Stokes the way in which

each account was to be opened in violation of know your customer rules, R.E. 99, ¶

44; Regions/AmSouth failing to monitor accounts consistent with banking

regulations, including investigation of Currency Transaction Reports, R.E. 99, ¶

47; and Regions/AmSouth withdrawing for itself more than $500,000 of fees and

analysis charges from the accounts of the Victim Plans, R.E. 99, ¶ 51. These

allegations far exceed mere possession of plan funds by a depositary institution,

and directly contradict the conclusory statement proffered by Regions/AmSouth in

its brief: “Indeed, there is no allegation that Regions Bank did anything other than

follow the instructions given by 1Point or Stokes.” Regions/AmSouth Brief, p. 12.

Furthermore, the degree of specificity of these allegations highlighted above

clearly meets the Twombly and Iqbal pleading standards, a point that

Regions/AmSouth never disputes in its brief.

The Regions/AmSouth Brief does offer one novel attack on the Trustee’s

allegation that Regions/AmSouth was an ERISA fiduciary; that is, that the Trustee

has somehow “waived” his right to assert that Regions/AmSouth’s retention of

over $500,000 in fees and charges indicates control or authority over Victim Plan

assets. In support of this “waiver” argument, Regions/AmSouth cites St. Marys

Foundry, Inc. v. Employers Ins. Of Wausau, 332 F.3d 989, 996 (6th Cir. 2003).

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The St. Marys Foundry court discusses the appellate courts’ discretion in

determining whether to rule on an “issue not decided below.” Here, the question

of whether the fees retained by Regions/AmSouth constitutes an exercise of

authority or control is not an “issue not decided below.” The factual allegations

were clearly raised by the Trustee in the Complaint, although the District Court

chose not to focus on that particular allegation in reaching its decision. At any

rate, the concern expressed by the St. Marys Foundry court is not present here;

namely, that permitting an appellate court to review an “issue not decided below”

allows an appellant to make an end-run around the standard of review.6 In this

case, where the Court must review the District Court’s dismissal of these actions

de novo, such concern is not implicated.

In more substantive response to the allegation that Regions/AmSouth

exercised authority or control over Victim Plan assets by retaining for itself over

$500,000 in fees and charges, Regions/AmSouth attempts to distinguish this

Court’s holding in Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006), limiting that

decision as one based strictly upon the bank’s authority to write checks on ERISA

plan accounts. This interpretation of Briscoe ignores the importance of this

6 The St. Marys Foundry opinion quotes Estate of Thomas P. Quirk v. Comm’r, 928 F.2d 751, 756-57 (6th Cir. 1991), in part: “By thus obliterating any application of a standard of review, which may be more stringent than a de novo consideration of the issue, the parties could affect their chances of victory merely by calculating at which level to better pursue their theory.”

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Court’s discussion of the bank’s withholding of “administrative fees.” As

discussed in the Trustee’s Brief, the nature and extent of the fees and analysis

charges withheld by Regions/AmSouth, as well as the basis for withholding such

fees and analysis charges, is a disputed fact that should have been determined

before a dismissal of this action.

The Complaints filed by the Trustee in this matter allege sufficient facts to

legally support the contention that Regions/AmSouth was an ERISA fiduciary for

the Victim Plans. As such, this Court should reverse the District Court’s dismissal

of the Trustee’s Complaint and remand this matter for further proceedings.

III. The Trustee’s State Law Claims are not preempted, barred or waived,

and should proceed.

Regions/AmSouth contends that the Trustee’s claims against it for

negligence, violation of the Tennessee Consumer Protection Act, and/or unjust

enrichment (collectively, the “State Law Claims”) are each (a) barred by the

Uniform Fiduciaries Act (the “UFA”), with the Trustee now having waived his

right to challenge that holding because of positions taken during the pendency of

this appellate process and/or (b) preempted by ERISA. The Trustee respectfully

submits that Regions/AmSouth has misinterpreted the District Court’s holding with

regard to the application of the UFA to this matter, and further submits that the

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Trustee’s State Law Claims against Regions/AmSouth are not preempted by

ERISA.

A. The Trustee’s State Law Claims are not barred by the UFA, nor

has the Trustee waived any right to assert the State Law Claims.

Regions/AmSouth makes a series of arguments that rest upon the

proposition that, as a matter of law, the UFA acts as an absolute bar to each of the

Trustee’s State Law Claims against Regions/AmSouth. The District Court

considered and rejected this argument, finding: “As an initial matter, the court

rejects the defendant’s apparent argument that section 35-2-111(c) completely

immunizes banks from all liability, in any circumstances, arising from a fiduciary’s

actions.” R.E. 135, p. 10.

Indeed, the District Court found that the Trustee’s State Law Claims would

survive application of the UFA: “The plaintiffs have, in fact, alleged that

Regions/AmSouth knew that Stokes was breaching his fiduciary duty by

withdrawing money from fiduciary accounts and using it for his own personal

benefit. They have also alleged facts suggesting that Regions/AmSouth acted in

bad faith. Thus, their claims are valid under the UFA.” R.E. 135, p. 14. Despite

this finding by the District Court, Regions/AmSouth now argues that “The

plaintiffs have waived any challenge to the district court’s ruling that their

negligence and Tennessee Consumer Protection Act claims were barred by the

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Tennessee Uniform Fiduciaries Act.” Regions/AmSouth Brief, p. 20. The

Trustee is confused by Regions/AmSouth’s waiver argument, given that the

District Court held that the UFA did not bar the State Law Claims.

The Trustee respectfully submits that the District Court properly concluded

that the UFA does not bar the Trustee’s State Law Claims, and asks this Court to

leave that finding intact. As further support for his argument that the UFA does

not bar the State Law Claims, the Trustee hereby adopts and incorporates the

arguments asserted in the reply brief contemporaneously filed in the consolidated

case, Case No. 10-5491, by Plaintiffs EFS, Inc., et al., as permitted by Rule 28(i) of

the Federal Rules of Appellate Procedure.

B. The Trustee’s State Law Claims against Regions/AmSouth are not

preempted by ERISA.

While Regions/AmSouth argues that neither it nor the Trustee is an ERISA

fiduciary, Regions/AmSouth nevertheless contends that each of the Trustee’s State

Law Claims is preempted by ERISA. In an awkward attempt at legal gymnastics,

Regions/AmSouth characterizes the Trustee’s State Law Claims as an “alternative

remedy for the mishandling of ERISA plan assets,” then notes “[b]ecause Regions

Bank is not an ERISA fiduciary, however, it cannot be held liable for money

damages under ERISA. Regions/AmSouth Brief, pp. 19-20. Between its two

opinions in this matter, the District Court has essentially created a zone of legal

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immunization for any bank that mishandles ERISA funds, even if done in bad

faith. The Trustee respectfully submits that such an outcome is both legally flawed

and in contradiction with the public policy underlying ERISA.

As an additional argument, or in the alternative to his ERISA claims, the

Trustee submits that his State Law Claims are not preempted by ERISA. As

further support for his argument that the State Law Claims are not preempted, the

Trustee hereby adopts and incorporates the arguments asserted in the reply brief

contemporaneously filed in the consolidated case, Case No. 10-5491, by Plaintiffs

EFS, Inc., et al., as permitted by Rule 28(i) of the Federal Rules of Appellate

Procedure.

CONCLUSION

For the reasons set forth above, this Court should reverse the District Court’s

orders granting the Motion to Dismiss and Motion for Judgment on the Pleadings

of Regions/AmSouth, and remand this matter to the District Court for further

proceedings.

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CERTIFICATE OF COMPLIANCE REQUIRED BY FED. R. APP. P 32(a)(7)(C)

Plaintiffs’ counsel certifies that this brief contains 369 lines and 3,925

words.


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I certify that the foregoing document has filed with the court’s ECF system and will be forwarded this 12th day of November, 2010, to: John R. Wingo Frost Brown Todd LLC 424 Church Street, Suite 1600 Nashville, TN 37219 and Matthew C. Blickensderfer Frost Brown Todd LLC 2200 PNC Center, 201 East Fifth Street Cincinnati, OH 45202 Attorneys for Regions Bank, Defendant – Appellee

H. Naill Falls, Jr. John B. Veach, III Falls & Veach 1143 Sewanee Road Nashville, Tennessee 37220 Attorney for EFS, Inc., el al., Plaintiffs – Appellants in Case No. 10-5491 in the United States Court of Appeals For the Sixth Circuit


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CASE NUMBER 10-5480


In re: 1POINT SOLUTION, LLC

Debtor,


Plaintiff-Appellant,

vs.

REGIONS BANK, as Successor in Interest by Merger to AmSouth Bank

Defendant-Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE

DIVISION

MOTION OF THE SECRETARY OF LABOR, HILDA L. SOLIS, FOR LEAVE TO FILE A BRIEF OUT OF TIME AS AMICUS CURIAE IN

SUPPORT OF APPELLANT

M. PATRICIA SMITH NATHANIEL I. SPILLER Solicitor of Labor Counsel for Appellate and Special Litigation TIMOTHY D. HAUSER Associate Solicitor for Plan LEONARD H. GERSON Benefits Security Division Trial Attorney U.S. Department of Labor Plan Benefits Security Division 200 Constitution Avenue, N.W. Room N-4611 Washington, D.C. 20210 Tel. (202) 693-5615 Fax. (202) 693-5610


150

Hilda L. Solis, the United States Secretary of Labor (the "Secretary"),

respectfully moves this Court for leave to file, on this day, November 19,

2010, a brief as amicus curiae to address certain issues involving the

Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §

1001et seq., raised in this case by Appellee Regions Bank ("Regions"). In

support of this motion, the Secretary, through undersigned counsel, states as

follows:

1. Apellant John McLemore is appealing two decisions of the United

States District Court for the Middle District of Tennessee, Nashville

Division issued on September 9, 2008 ("McLemore I") and March 18, 2010

("McLemore II"). McLemore is the chapter 11 trustee in the jointly

administered chapter 11 cases of 1Point Solutions, LLC ("1Point") and

Barry Stokes ("Stokes") (collectively, the "Debtors").

2. This case involves claims against Regions, a bank that held and

allegedly facilitated the misappropriation and embezzlement by the Debtors

of the funds of various employee benefit plans for which the Debtors were

fiduciaries.

3. In McLemore I, the Secretary filed an amicus curiae brief in

support of McLemore addressing the issues of whether a bankruptcy trustee,

who also is an ERISA fiduciary, has standing to bring an ERISA action on


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2

behalf of ERISA plan participants, and whether such an action may be

barred by the unclean hands doctrine of in pari delicto. As the federal

officer statutorily responsible for interpreting and enforcing the provisions of

ERISA, the Secretary believes the Court may benefit from her views on

these important issues regarding the protection of employee benefit plans.

4. These issues, which were decided favorably to McLemore by the

district court in McLemore I, were not raised on appeal until Regions

addressed them in its response brief as alternative grounds for affirming the

district court's dismissal of McLemore's ERISA claim against it. Under Rule

29(e) of the Federal Rules of Appellate Procedure, the Secretary should have

filed an amicus brief seven days after Appellant McLemore's principal brief

in anticipation of the issues in which she had an interest being raised in the

subsequent Appellee Regions's response brief. In keeping with the spirit of

Rule 29(e) of the Federal Rules of Appellate Procedure, the Secretary is

seeking leave of the Court to file her brief, which will solely address these

two issues, on November 19, 2010, seven days after the reply brief filed by

McLemore, with whom the Secretary's positions on the two issues is

aligned.


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5. McLemore has consented to the filing of the brief. Regions is

withholding consent to the filing of an amicus brief by the Secretary pending

its review of the Secretary's brief.

WHEREFORE, the Secretary moves for leave to file an amicus brief

on these two issues on November 19, 2010.


M. PATRICIA SMITH Solicitor of Labor

TIMOTHY D. HAUSER Associate Solicitor for Plan Benefits Security Division

NATHANIEL I. SPILLER Counsel for Appellate and Special Litigation s/ Leonard H. Gerson LEONARD H. GERSON Trial Attorney U.S. Department of Labor 200 Constitution Avenue, N.W. Room N-4611 Washington, D.C. 20210 Tel. (202) 693-5615 Fax. (202) 693-5610

NOVEMBER 19, 2010


153


I hereby certify that on this 19th day of November, 2010, I

electronically filed the Motion of the Secretary of Labor, Hilda L. Solis, For

Leave To File A Brief Out Of Time As Amicus Curiae In Support of

Appellant, with the Clerk of the Court using the CM/ECP system, which

will send notification of such filing to all registered counsel of record.

s/ Leonard H. Gerson LEONARD H. GERSON


154

Case No. 10-5480


In re: 1POINT SOLUTION, LLC Debtor,

JOHN C. MCLEMORE, TRUSTEE, Plaintiff-Appellant,

vs.

REGIONS BANK, as Successor in

Interest by Merger to AmSouth Bank Defendant-Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE

DIVISION

BRIEF OF THE SECRETARY OF LABOR, HILDA L. SOLIS, AS AMICUS CURIAE SUPPORTING APPELLANTS

M. PATRICIA SMITH NATHANIEL I. SPILLER Solicitor of Labor Counsel for Appeallate and Special Litigation TIMOTHY D. HAUSER Associate Solicitor for Plan LEONARD H. GERSON Benefits Security Division Trial Attorney U.S. Department of Labor Plan Benefits Security Division 200 Constitution Avenue, N.W. Room N-4611 Washington, D.C. 20210 (202) 693-5615(p), (202) 693-5610(f)


155

TABLE OF CONTENTS TABLE OF AUTHORITIES.......................................................................... ii STATEMENT OF THE ISSUES ................................................................... 1 INTERST OF THE SECRETARY OF LABOR............................................ 1 STATEMENT OF THE CASE ...................................................................... 2 SUMMARY OF THE ARGUMENT ............................................................. 5 ARGUMENT.................................................................................................. 9

I. The Bankruptcy Trustee, McLemore, Who Also Is An ERISA Fiduciary, Has Standing To Bring An ERISA Action On Behalf Of Plan Participants Against A Former Fiduciary Of An Employee Benefit Plan....................................................... ....... 9

II. The Defense of In Pari Delicto Cannot Be Asserted Against An

Innocent ERISA Fiduciary Seeking To Remedy A Fiduciary Breach Caused By The Defendant Fiduciary..................... ..... 18

CONCLUSION............................................................................................. 22


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ii


Federal Cases: American Fed'n of Unions Local 102 v. Equitable Life Assurance Soc'y, 841 F.2d 658 (5th Cir. 1988)..................................................................... 13 Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 306 (1985) .............................................................. 19, 20, 21 Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006)..................................................................... 13 Chao. v. Day, 436 F.3d 234, 236 (D.C. Cir. 2006) .......................................................... 11 Donovan v. Schmoutey, 592 F. Supp. 1361 (D. Nev. 1984) ............................................................ 20 Henry v, Champlain Enter., Inc., 288 F. Supp.2d 202,227 (N.D.N.Y. 2003) ................................................ 12 In re Cannon, 277 F.3d 838 (6th Cir. 2002)........................................................... 6, 15, 16 In re Dublin Securities et al, 133 F.3d 377 (6th Cir. 1997)............................................................... 19 n.6 In re Trans-Industries, Inc., 419 B.R. 21 (E.D. Mich. 2009) ................................................................. 17 Lopresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir. 1997) .................................................................. 11 Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 140 n.8 (1985) ...................................................................... 9 Mutual Life Ins. Co. of N. Y. v. Yampol, 840 F.2d 421, 426, n.6 (7th Cir. 1988)...................................................... 14


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iii

Official Comm. of Unsecured Creditors of PSA, Inc. v. Edwards, 437 F.3d 1145 (11th Cir. 2006)........................................................... 19 n.6 Perma Life Mufflers v. International Parts Corp., 392 U.S. 134, 138 (1968) .................................................................... 18, 21 Pinter v. Dahl, 486 U.S. 622, 638 (1988) .......................................................................... 21 Secretary of Labor v. Fitzsimmons, 805 F.2d 682, 692-93 (7th Cir. 1986) (en banc) ......................................... 1 Zuni Pub. Sch. Dist. v. Dep't of Educ., 550 U.S. 81, 93 (2007) .............................................................................. 14 Federal Statutes: Bankruptcy Code: 11 U.S.C. § 704(a)(11).................................................................................. 17 Employement Retirement Income Security Act of 1974, as amended, 29 U.S.C. 1001 et seq.: 29 U.S.C. § 1001............................................................................................. 1 29 U.S.C. § 1002(21)(A) ........................................................ 6, 10, 13 n.5, 14 29 U.S.C. § 1002(21)(A)(1)............................................................................ 9 29 U.S.C. § 1002(21)(A)(i)..................................................................... 13 n.5 29 U.S.C. § 1102........................................................................................... 11 29 U.S.C. § 1104........................................................................................... 11 29 U.S.C. § 1104(a)(1).................................................................................. 19 29 U.S.C. § 1104(a)(1)(A) ............................................................................ 11


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iv

29 U.S.C. § 1104(a)(1)(B) ............................................................................ 11 29 U.S.C. § 1105........................................................................................... 19 29 U.S.C. § 1105(a)(3)............................................................................ 12, 21 29 U.S.C. § 1109(b) ...................................................................................... 19 29 U.S.C. § 1132......................................................................................... 2, 9 29 U.S.C. § 1132(a) .............................................................................. 4, 7, 12 29 U.S.C. § 1132(a)(2)...................................................................... 13, 14, 15 29 U.S.C. § 1132(a)(2)...................................................................... 13, 14, 15 29 U.S.C. § 1132(a)(3)...................................................................... 13, 14, 15 29 U.S.C. §§ 1104(a)(1)................................................................................ 18 29 U.S.C. §§ 1105........................................................................................... 9 29 U.S.C. §§ 1105(a)(3)................................................................................ 15 29 U.S.C. §§ 1132(a)(2)................................................................................ 12


159

STATEMENT OF THE ISSUES

1. Whether a bankruptcy trustee, who also is an ERISA fiduciary, has

standing to bring an ERISA action on behalf of plan participants against a

former fiduciary of an employee benefit plan.

2. Whether the defense of in pari delicto can be asserted against an innocent

ERISA fiduciary seeking to remedy a fiduciary breach caused by the

defendant fiduciary.

INTEREST OF THE SECRETARY OF LABOR

The Secretary of Labor directs the federal agency which has primary

authority to interpret and enforce the provisions of Title I of the Employee

Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et

seq. See Secretary of Labor v. Fitzsimmons, 805 F.2d 682, 692-93 (7th Cir.

1986) (en banc) (Secretary's interests include promoting the uniform

application of the Act, protecting plan participants and beneficiaries, and

ensuring the financial stability of plan assets). The Secretary has a strong

interest, both with regard to her own litigation and private litigation, in

ensuring that the full range of ERISA remedies intended by Congress are

afforded to ERISA plaintiffs. Therefore, the Secretary, who participated as

amicus curiae in the district court on the issues addressed in this brief, has a

strong interest in ensuring that bankruptcy trustees who also are fiduciaries


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2

of ERISA plans have standing pursuant to 29 U.S.C. § 1132 to bring suit to

remedy violations of ERISA, and are not subject to a defense (in pari

delicto) imported from bankruptcy law that, in any event, has no force when

applied to a completely innocent plaintiff.


This is an appeal from two decisions of the United States District

Court for the Middle District of Tennessee, Nashville Division. Both

decisions were decided on the pleadings. The appellant, McLemore, is the

chapter 11 trustee in the jointly administered chapter 11 cases of 1Point

Solutions, LLC ("1Point") and Barry Stokes ("Stokes"). R.E. 99, Amended

Complaint, ¶ 1.1

1Point (which was solely owned and managed by Stokes) was the

third party administrator for fifty-two 401(k) plans and 751 "cafeteria plans"

(including flexible spending accounts, health spending accounts, health

reimbursement accounts, and dependent care accounts) (collectively, the

"Plans") at the time 1Point's involuntary bankruptcy was commenced in

2006. Id. at ¶¶ 7, 14 and 18. The Plans' funds were held in at least 58

commingled accounts at AmSouth Bank, which subsequently merged into

Regions Bank ("Regions"). Id. at ¶ 44. Stokes embezzled the Plans' assets

1 All references herein are to the Chapter 11 Trustee’s Second Amended Complaint, R.E. 99, unless otherwise indicated.


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for his personal use and the use of 1Point and used the deposited assets of

one Plan to meet the demands of other Plans and Plan participants. Id. at ¶¶

47-55. When the bankruptcies were commenced there was a substantial

shortage of dollars in the Plan accounts. Id. at ¶¶ 14 and 18. McLemore

asserts that Regions, rather than being simply a depository for the Plans'

funds, became a fiduciary to the Plans by its assertion of control over the

funds. R.E. 18, Complaint, ¶ 142.

In its first decision ("McLemore I"), which issued September 9, 2008,

the district court dismissed multiple ERISA claims for relief brought by

McLemore against Regions and Mid-Atlantic Capital Corp ("MACC"), a

registered broker-dealer used by 1Point, on the grounds that neither of the

defendants was an ERISA fiduciary. R.E. 33, McLemore I, pp. 18-25.

Before dismissing the ERISA claims, the district court first held that

McLemore, while serving as the chapter 11 trustee, was also an ERISA

fiduciary because he had taken over the control of Plan assets, and that in

this capacity, he had standing to bring ERISA actions to recover losses to the

Plans caused by Regions' and MACC's fiduciary breaches. The court agreed

with the contention of the Secretary and the Trustee that McLemore was an

ERISA fiduciary "by virtue of the fact that he has taken possession of

1Point's assets, including cash and real and personal property that either


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4

belongs to the affected ERISA plans or that was purchased on behalf of

those plans using the plans’ own funds." Id. at 12. The court then held that

McLemore's status as an ERISA fiduciary gave him a separate basis for

standing to bring his ERISA action, apart from his status as chapter 11

trustee. Because ERISA "enables any fiduciary of an ERISA plan to pursue

relief under the statute on behalf of the plan for which it is a fiduciary, see

29 U.S.C. § 1132(a)," the district court concluded that "the fact that he

[McLemore] serves simultaneously as a bankruptcy trustee does not defeat

his standing as an ERISA fiduciary to bring an ERISA claim." Id. at 9, 13.

The district court also accepted the Secretary's view that the in pari

delicto defense, which is an unclean hands doctrine that could otherwise

constitute an equitable bar to a suit by a bankruptcy trustee stepping into the

shoes of a wrongdoing debtor, was not a bar to the ERISA action. Id. at 14-

15. Rather than benefiting the wrongdoers (1Point and Stokes), the district

court emphasized that:

[I]n pari delicto does not apply in an ERISA case where, as here, the claims at issue exist between the victims of the wrongdoing and one of the wrongdoers, rather than between two wrongdoers, and where the application of the defense would negatively impact the plan participants and beneficiaries – the very parties whom ERISA was enacted to protect.

Id. at 14.


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In McLemore I, the district court also dismissed a non-fiduciary

ERISA claim against Regions on the grounds that the funds the chapter 11

trustee sought were not identifiable, and state law aiding and abetting claims

against Regions and MACC on the grounds that they were preempted by

ERISA. Id. at 27, 32-35. The district court ruled, however, that the state

law negligence claims against Regions and MACC could go forward.2 Id. at

35. In a subsequent decision issued March 18, 2010 ("McLemore II"),

however, the district court dismissed the remaining state law claims against

Regions on preemption grounds. 3 R.E. 135.

SUMMARY OF THE ARGUMENT

1. Suits by fiduciaries to remedy violations of ERISA are one of

the primary ways Congress has chosen to protect employee benefit plans.

Under ERISA, any fiduciary has the right, and in many situations the duty,

to seek to recover losses to the plan caused by another fiduciary's breach.

In seeking dismissal of appellant McLemore's ERISA fiduciary breach claim

against it, however, Regions essentially argues that McLemore lacks

2 MACC is no longer in the case, after entering a settlement following McLemore I with the chapter 11 trustee and various ERISA plans that had been clients of 1Point. 3 The Secretary did not address the other issues decided in McLemore I and McLemore II in her district court amicus brief, nor is she doing so here.


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standing under ERISA because he is a bankruptcy trustee and therefore

either cannot be an ERISA fiduciary or cannot exercise the authority ERISA

gives a fiduciary to bring such suit. Regions is mistaken as a matter of law

and policy.

Anyone who has authority or control over the disposition of the assets

of an ERISA plan is considered a fiduciary under the functional definition

promulgated by Congress in section 3(21)(A) of ERISA, 29 U.S.C. §

1002(21)(A). McLemore is the bankruptcy trustee of an estate in which the

debtors (1 Point and Stokes) were fiduciaries (albeit breaching ones)

respecting the assets of numerous ERISA-covered plans that had entrusted

them to serve as third-party administrator. By assuming control over the

bankruptcy estate, McLemore also gained control over plan assets, thereby

fully meeting the ERISA definition of fiduciary. As the district court

properly held, such a distinct status and independent set of obligations brings

with it an independent basis for standing in order for a trustee to satisfy his

fiduciary obligations under ERISA.

Regions seeks to curtail McLemore's ERISA standing based primarily

upon a prior decision by this Court in In re Cannon, 277 F.3d 838 (6th Cir.

2002). Cannon addressed the standing of a trustee in bankruptcy, when the

trustee was seeking to exercise powers and fulfill obligations exclusively


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under the Bankruptcy Code. Under such circumstances, this Court rationally

determined that any action must be for the benefit of the bankruptcy estate

rather than for the debtor's former clients. But it was equally rational and

correct for the district court here to distinguish Cannon on the basis that

Cannon did not involve a trustee exercising standing and authority under

another federal statute such as ERISA.

Without providing any precedent or other legal authority, Regions

further argues that the scope of an ERISA fiduciary's standing is limited to

suits involving those functions. The clear and unambiguous language of

section 502(a) of ERISA, 29 U.S.C. § 1132(a), the provision which grants

standing to an ERISA fiduciary to commence an action, contains no such

limitation. Congress has chosen to broadly define who may be a fiduciary in

order to maximize the protections afforded under ERISA. Thus, to exclude

certain ERISA fiduciaries from their duties, based solely upon their status as

bankruptcy trustees, would contravene the plain meaning of the statute and

defeat the intent of Congress to protect the interests of participants in

employee benefit plans.

2. Regions attempt to bar the suit by McLemore by use of the in

pari delicto defense is equally unavailing. The in pari delicto defense is an

unclean hands doctrine that, where applicable, bars wrongdoers from


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obtaining recoveries in actions for wrongs for which they have been the

perpetrators. Its application in this type of case would be contrary to

ERISA, which generally requires fiduciaries to act with complete loyalty and

prudence towards plan participants, unqualifiedly confers standing on them

to bring suits for fiduciary breach, and specifically directs successor

fiduciaries to seek to remedy a prior or co-fiduciary's breach of fiduciary

duty. In addition, the in pari delicto defense should not be applied to bar

suits being undertaken to further important public policies, such as the

protection of employee benefit plans.

As the district court concluded, it particularly makes no sense to

impose an in pari delicto bar on McLemore. McLemore has committed no

wrong, but is seeking to correct a wrong. Moreover, he is suing Regions not

on behalf of the debtors or the debtors' estates, but in a representative

capacity as a fiduciary of the ERISA plans, to recover losses to those plans

for the benefit of plan participants who were the victims of the debtors'

wrongdoings. Thus, the in pari delicto defense simply has no application to

this case.


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ARGUMENT

I. THE BANKRUPTCY TRUSTEE, MCLEMORE, WHO ALSO IS AN ERISA FIDUCIARY, HAS STANDING TO BRING AN ERISA ACTION ON BEHALF OF PLAN PARTICIPANTS AGAINST A FORMER FIDUCIARY OF AN EMPLOYEE BENEFIT PLAN A central mechanism for enforcing ERISA is the granting of standing

to a fiduciary in 29 U.S.C. § 1132 to bring suit against entities who have

violated ERISA. See also 29 U.S.C. § 1105 (co-fiduciary liability). In this

case, Stokes literally stole millions of dollars in assets belonging to

numerous plans that had entrusted the assets to the debtors, who

administered the plans. Asserting standing as an ERISA fiduciary,

McLemore, the chapter 11 trustee, brought an ERISA suit (in the form of an

adversary proceeding in the bankruptcy court, which was referred back to

the district court) to recover losses to the plans caused by wrongful actions

the debtors committed allegedly in concert with Regions.

The threshold question is whether McLemore became an ERISA

fiduciary when assuming his duties as bankruptcy trustee. ERISA defines

"fiduciary" functionally to include anyone who "exercises any authority or

control respecting . . . disposition of [a plan’s] assets." 29 U.S.C. §

1002(21)(A)(1). As bankruptcy trustee, McLemore legally stepped into the

shoes of the debtors who, prior to bankruptcy, functioned as fiduciaries

(albeit breaching ones) respecting the various plans' assets that had been


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entrusted to them in their capacity as third-party administrator. By assuming

control over the bankruptcy estate, McLemore also gained control over plan

assets. The district court held that, "regardless of how the Trustee came to

have control over the plans' assets, the fact is that he now does exercise

control over plan assets and, therefore, he is a fiduciary under the express

terms of the statute." McLemore I, at 12.

That holding is exactly right. ERISA 3(21)(A), 29 U.S.C. §

1002(21)(A), provides that "any authority or control" respecting the

"management or disposition of" plan assets is enough to confer fiduciary

status on a person with respect to those assets. Here, the debtors controlled

plan assets in their capacity as third party administrators. By assuming

control over the bankruptcy estate, McLemore also gained control over the

disposition of the plan assets. McLemore has possession of the assets and is

responsible for their management and disposition.4 Consequently, he is an

ERISA fiduciary.

ERISA was deliberately written to be as expansive as possible in this

regard to ensure that all plan assets are impressed with a trust and subject to

4 Although not explicitly addressed below, the fact that plan assets are commingled does not alter their status as plan assets. FAB 2006-1, available at www.dol.gov/ebsa (intermediaries who receive distributions in securities settlements for plan customers are fiduciaries with respect to those commingled assets).


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ERISA’s fiduciary obligations. See generally 29 U.S.C. § 1102, 1104.

Ensuring the fiduciary management of plan assets is central to how ERISA

protects plan participants. Mass. Mut. Life Ins. Co. v. Russell, 473 U.S.

134, 140 n.8 (1985) (recognizing that fiduciary oversight is the "crucible" of

ERISA's protections). Persons who have "any" authority over plan assets

must manage those assets prudently and with undivided loyalty to the plans'

participants. 29 U.S.C. § 1104(a)(1)(A) and (B). Accordingly, for example,

when an employer misuses his employees' plan contributions for his own

corporate purposes, he is a fiduciary by virtue of his control over plan assets,

and liable for the diversion of those assets. Lopresti v. Terwilliger, 126

F.3d 34, 40 (2d Cir. 1997). Similarly, when an insurance broker

misappropriates hundreds of thousands of dollars paid by twenty-nine

ERISA plans for insurance coverage, the broker is liable as a fiduciary for

his misconduct. Chao. v. Day, 436 F.3d 234, 236 (D.C. Cir. 2006)

("discretionary" authority over plan assets is unnecessary for fiduciary

status; it was sufficient that the insurance broker exercised authority over

plan assets).

As an ERISA fiduciary, McLemore has standing under ERISA section

502(a)(2) to bring a fiduciary breach suit to recover losses to the plans. See

29 U.S.C. § 1132(a)(2) ("[a] civil action may be brought . . . by a . . .


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fiduciary for appropriate relief under section 1109 of this title [i.e., the

section on 'liability for breach of fiduciary duty']." Thus, McLemore's

pursuit of litigation on behalf of the plans is consistent both with ERISA's

express statutory grant of standing to plan fiduciaries, and consistent with

his duties of prudence and loyalty as a fiduciary. Indeed, those duties may

have required him to file this action if necessary to protect the interests of

the plans' participants. Henry v, Champlain Enter., Inc., 288 F. Supp.2d

202,227 (N.D.N.Y. 2003); see also section 405(a)(3) of ERISA, 29 U.S.C. §

1105(a)(3) ("a fiduciary with respect to a plan shall be liable for a breach of

fiduciary responsibility of another fiduciary . . . if he has knowledge of a

breach by such other fiduciary, unless he makes reasonable efforts under the

circumstances to remedy the breach"). Bringing suit under section 502(a)(2)

is one way to satisfy this duty. If McLemore is successful, the recovery will

be allocated exclusively among the Plans.

Regions argues that even if McLemore is an ERISA fiduciary, he only

is a fiduciary for limited purposes, which do not extend to bringing suit

against Regions for breach of Regions' fiduciary duties. Regions Brief at 15.

The argument is unfounded. While it is true that McLemore is a fiduciary

only "to the extent" that he has authority over the management or disposition

of plan assets, the statute does not, in any way, qualify his authority to bring


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suit as a plan fiduciary.5 Instead, ERISA simply states that an action for

fiduciary breach may be brought "by the Secretary, or by a participant,

beneficiary or fiduciary…" without in any way limiting or qualifying the

right of plan fiduciaries to bring suit. 29 U.S.C. § 1132(a)(2), (3). Under a

plain reading of the statute, as a fiduciary McLemore has standing to bring

suit. The significance of the "to the extent" limitation on McLemore's

fiduciary status is only that he cannot be held liable as a defendant for plan

activities and responsibilities that are unrelated to his authority over plan

assets – the sole basis for his status as a plan fiduciary. Accordingly, the

cases cited by the defendants merely stand for the proposition that the scope

of a fiduciary defendant's liability is circumscribed by the scope of his

fiduciary actions. See Briscoe v. Fine, 444 F.3d 478 (6th Cir. 2006) (issue

of whether defendant officers and directors were functional fiduciaries);

American Fed'n of Unions Local 102 v. Equitable Life Assurance Soc'y, 841

F.2d 658 (5th Cir. 1988) (issue of whether defendant administrator of health

and welfare fund was a functional fiduciary). The cases neither challenge

5 29 U.S.C. § 1002(21)(A) provides that persons are fiduciaries only "to the extent" that they have the requisite authority or engage in the requisite activities. Thus, assuming McLemore is a fiduciary solely by virtue of his authority over plan assets, he is a plan fiduciary only to the extent that he "exercises any authority or control respecting management or disposition of [the plans'] assets." 29 U.S.C. § 1002(21)(A)(i).


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the standing of fiduciaries, like McLemore, to bring suit, nor create an

exception to ERISA's express grant of standing to such fiduciaries.

Thus, there is no basis for arguing that a person who is a fiduciary by

virtue of his authority over plan assets lacks authority to bring suit under 29

U.S.C. §§ 1132(a)(2) or (a)(3). The civil enforcement provisions of ERISA

upon which McLemore relies for standing simply state that an action may be

brought "by the Secretary, or by a participant, beneficiary or fiduciary." 29

U.S.C. §§ 1132(a)(2), (a)(3). The statute does not provide that only some

fiduciaries may bring fiduciary breach actions only for some purposes.

Instead, it draws no distinctions between different classes of fiduciaries.

Any fiduciary has standing to bring suit for fiduciary misconduct. See

Mutual Life Ins. Co. of N. Y. v. Yampol, 840 F.2d 421, 426, n.6 (7th Cir.

1988) ("it is clear that under the ERISA scheme any person who falls within

the scope of the § 1002(21)(A) definition is a fiduciary and therefore may

bring a cause of action pursuant to 29 U.S.C. § 1132(a)(2)") cf., e.g., Zuni

Pub. Sch. Dist. v. Dep’t of Educ., 550 U.S. 81, 93 (2007) (when the

language of a statute is unambiguous, the plain meaning of the statute

controls). Moreover, McLemore’s lawsuit against Regions is, in any event,

directly tied to the authority and activities that made him a fiduciary in the

first place. He is a fiduciary by virtue of his authority over plan assets and


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he is bringing suit to recover assets lost as a result of violations to which the

debtors were parties. Accordingly, there is no statutory basis for denying his

standing to pursue litigation against Regions.

In addition to clashing with the plain meaning of section 502,

Regions' interpretation of the statute would undermine ERISA's policy of

protecting employee benefit plans through fiduciary actions against co-

fiduciaries who breach their obligations to plans. ERISA makes a co-

fiduciary "liable for a breach of fiduciary responsibility of another fiduciary

with respect to the same plan . . . if he has knowledge of a breach by such

other fiduciary" and does not "make reasonable efforts under the

circumstances to remedy the breach," 29 U.S.C. § 1105(a)(3), and confers

standing equally on any "fiduciary" to bring suit, if necessary, to effect such

remedy. Id. § 1132(a)(2), (3). The statute thus specifically contemplates

that a fiduciary in McLemore's position can bring suit and, as discussed

above, may even require him to institute proceedings if necessary to protect

plan participants.

Relying principally on the Cannon decision, however, Regions

contends that the Bankruptcy Code effectively limits the ability of a

bankruptcy trustee to bring an action for the benefit of a distinct group of

creditors. Regions Brief at 13-14. Cannon involved an attorney who


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diverted funds that he held in escrow for clients to his own personal use.

Cannon, 277 F.3d at 843-44. After Cannon filed for bankruptcy and pleaded

guilty to embezzlement and fraud, the bankruptcy trustee brought an

adversary proceeding against a third-party commodities broker with whom

Cannon maintained an account and made investments with the

misappropriated funds, alleging violations of federal commodities laws,

breach of fiduciary duties, and fraud, among other claims. Id. at 846. The

defendant challenged the trustee's standing, as bankruptcy trustee, to bring

the suit. Id. The Sixth Circuit noted that the bankruptcy trustee had "only

those powers conferred upon him by the Bankruptcy [Code]." Id. at 853.

Generally, under the Bankruptcy Code, "if Cannon himself could have

pursued the claims asserted against Defendants . . . then the trustee has

standing to maintain [the claims]." Id. at 854. However, since the funds that

Cannon misappropriated were held in trust, and as such were not part of his

estate property, the court held that "any action brought by the trustee against

Defendants would not bring property into the estate for the benefit of the

creditors" and, therefore, the plaintiff lacked standing to maintain his claims.

Id. at 855.


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The district court in McLemore I aptly distinguished Cannon:

What the defendants ignore, however, is the role that ERISA plays in this case. None of the cases on which the defendants rely, most notably Cannon, are directly analogous to this case, as none of them involved the duties and responsibilities imposed by the federal ERISA statute, as is the case here.

McLemore I, at 8-9. Cannon addressed only the standing of a bankruptcy

trustee to bring an adversary action under the Bankruptcy Code. Here,

however, McLemore does not bring suit as a bankruptcy trustee seeking to

recover assets for the debtors, but rather as an ERISA fiduciary seeking to

recover assets for the plans to which he owes fiduciary duties under ERISA.

His obligations and authority as an ERISA plan fiduciary are independent of

his obligations as a trustee for the bankruptcy estate. In short, McLemore, as

a fiduciary under ERISA, has standing to bring this action pursuant to

ERISA, seeking remedies unique to ERISA (i.e., the recovery of losses to

the plans that were caused by Regions' alleged fiduciary breaches).

Finally, Congress, in a somewhat different context has recognized that

a bankruptcy trustee can play a dual role as both a representative of the

bankruptcy estate and a representative of an ERISA plan. In 2005, Congress

amended the Bankruptcy Code to make clear that a bankruptcy trustee also

had to fulfill the duties of an ERISA plan administrator, if those duties were

performed by a debtor prior to the bankruptcy. 11 U.S.C. § 704(a)(11).


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Thus, in In re Trans-Industries, Inc., 419 B.R. 21 (E.D. Mich. 2009), the

opinion explicitly states that it was undisputed that § 704(a)(11) of the

Bankruptcy Code gave the chapter 7 trustee standing to bring an adversary

proceeding for breach of fiduciary duty, even though any recovery would go

to the plan rather than to the bankruptcy estate. Even if this provision is not

directly applicable to this case (because the debtor's own plan is not at issue

and McLemore is not the plan administrator of the various plans whose

assets he controls), the provision reflects Congress's clear understanding that

a bankruptcy trustee may have fiduciary status under ERISA at the same

time that he is trustee to a debtor's estate under the Bankruptcy Code.

II. THE DEFENSE OF IN PARI DELICTO CANNOT BE ASSERTED AGAINST AN INNOCENT ERISA FIDUCIARY SEEKING TO REMEDY A FIDUCIARY BREACH CAUSED BY THE DEFENDANT FIDUCIARY.

The use of the in pari delicto defense as a means of barring a

bankruptcy trustee from bringing an action under ERISA against an entity

involved in a fiduciary's embezzlement would unreasonably limit an

important means of enforcing ERISA. The in pari delicto doctrine bars "a

plaintiff [from] seeking damages or equitable relief [where the plaintiff] is

himself involved in some of the same sort of wrongdoing." Perma Life

Mufflers v. International Parts Corp., 392 U.S. 134, 138 (1968). The

doctrine "derives from the Latin, in pari delicto potior est condition


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defendentis: 'In a case of equal or mutual fault . . . the position of the

[defending] party . . . is the better one.' The defense is grounded on two

premises: first, that courts should not lend their good offices to mediating

disputes among wrongdoers, and second, that denying judicial relief to an

admitted wrongdoer is an effective means of deterring illegality." Bateman

Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 306 (1985). Neither of

these purposes would be furthered by the application of the in pari delicto

doctrine in this action.

First, McLemore, who is the chapter 11 trustee by appointment of the

bankruptcy court was not the wrongdoer. Under ERISA a fiduciary is not

liable for the breaches of its predecessor. 29 U.S.C. § 1109(b). Instead,

where prudent, a fiduciary is obligated to take action to remedy a

predecessor's prior breach, an obligation which McLemore is fulfilling by

bringing this action. See 29 U.S.C. §§ 1104(a)(1) and 1105(a)(3).

Second, McLemore is not bringing the suit to further his own interests

or even the interests of the bankruptcy estate. Instead he is suing Regions to

vindicate the interests of the victims of the wrongdoers, the ERISA plans.6

6 In the two cases relied upon by Regions (br. at 17), In re Dublin Securities et al, 133 F.3d 377 (6th Cir. 1997), and Official Comm. of Unsecured Creditors of PSA, Inc. v. Edwards, 437 F.3d 1145 (11th Cir. 2006), the plaintiff bankruptcy trustees brought suit for the benefit of the bankruptcy estates, rather than as fiduciaries for an ERISA plan.


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As the district court correctly understood:

This principle [the in pari delicto defense] is not implicated, however, by the ERISA claims brought by the Trustee, because those claims are brought on behalf of the affected ERISA plans, who are victims of wrongdoing rather than participants therein. Moreover, any recovery on those claims would not benefit the Trustee or the bankruptcy estate, but rather the affected plans themselves.

McLemore I at 14. In Donovan v. Schmoutey, 592 F. Supp. 1361 (D. Nev.

1984), the court ruled that the in pari delicto defense did not bar a suit

against pension trustees for breach of their fiduciary duties under ERISA by

making imprudent loans, failing to diversify the pension fund's investments

and engaging in prohibited transactions. Id. at 1368. The court explained:

“[A]n in pari delicto defense is inappropriate where, as here, its application

would harm the persons - participants and beneficiaries -protected by the law

claimed to have been violated.” Id. at 1403. As in Schmoutey, if the in pari

delicto defense were accepted in this proceeding, it would be the innocent

victims of Regions' alleged fiduciary violations who would be further

victimized and Regions would be inappropriately shielded from liability.

Third, the Supreme Court has warned against a broad application of

the in pari delicto defense, where it would bar private suits that enforce

public policy. Thus, in Bateman, it refused an attempt by the defendants to

bar a Rule 10-b insider information suit by investor "tippees," because the


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Securities Exchange Act of 1934 (the "1934 Act") only provided an implied,

rather than an explicit, private cause of action. Bateman, 472 U.S. at 310.

"[B]arring private actions in cases such as this," the Court reasoned, "would

inexorably result in a number of alleged fraudulent practices going

undetected by the authorities and unremedied." Id. at 315. Accord, Perma

Life Mufflers, 392 U.S. at 139 (application of the in pari delicto defense

"would only result in seriously undermining the usefulness of private actions

as a bulwark of antitrust enforcement"). Such policy considerations were

made even clearer by Congress in ERISA than in the 1934 Act by explicitly

making private suits by fiduciaries a major means of protecting employee

benefit plans.

The Supreme Court has advised lower courts that the in pari delicto

defense is not applicable where it would "offend the underlying statutory

policies." Pinter v. Dahl, 486 U.S. 622, 638 (1988). As described above,

section 502(a) of ERISA grants fiduciaries standing to remedy violations of

the statute. Where such an action is prudent, bringing suit to remedy past

violations of former fiduciaries is not merely an option, but rather may be an

obligation under section 405(a)(3) of ERISA, 29 U.S.C. § 1105(a)(3).

Indeed, nothing in ERISA prevents a breaching fiduciary from bringing suit

to recover losses to the plan caused by a predecessor or co-fiduciary. Thus,


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if the in pari delicto defense were interpreted to apply to suits brought by

successor, and entirely innocent, fiduciaries, such as McLemore, an

important remedy provided by Congress would be undermined.

Accordingly, the in pari delicto defense is not a bar to the action brought by

McLemore against Regions.

CONCLUSION

For the reasons stated above, the order of the district court with

respect to the issue of fiduciary standing and the applicability of the defense

of in pari delicto should be affirmed.

Respectfully submitted, M. PATRICIA SMITH Solicitor of Labor TIMOTHY D. HAUSER Associate Solicitor for Plan Benefits Security Division NATHANIEL I. SPILLER Counsel for Appellate and Special Litigation s/ Leonard H. Gerson LEONARD H. GERSON Trial Attorney U.S. Department of Labor 200 Constitution Avenue, N.W. Room N-4611 Washington, D.C. 20210 Tel. (202) 693-5615 NOVEMBER, 2010 Fax. (202) 693-5610


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CERTIFICATE OF COMPLIANCE I hereby certify that the fore going brief complies with the type-

volume limitations provided in Fed. R. App. P. 32(a)(7)(B). The foregoing

brief contains 4,922 words of Times New Roman (14 point) regular type.

The word processing software used to prepare this brief was Microsoft

Office Word 2003.

s/ Leonard H. Gerson Leonard H. Gerson Trial Attorney

Dated: November 19, 2010


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I hereby certify that on this 19th day of November, 2010, I

electronically filed the Brief for Amicus Curiae, Hilda L. Solis, Secretary of

Labor, with the Clerk of the Court using the CM/ECP system, which will

send notification of such filing to all registered counsel of record.

s/ Leonard H. Gerson LEONARD H. GERSON


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Leonard Green Clerk




Filed: November 22, 2010

Mr. Matthew C. Blickensderfer Frost Brown Todd 201 E. Fifth Street Suite 2200 PNC Center Cincinnati, OH 45202 Mr. Robert Martin Garfinkle Garfinkle, McLemore & Walker 2000 Richard Jones Road Suite 250 Nashville, TN 37215 Mr. Leonard Howard Gerson U.S. Department of Labor Office of the Solicitor P.O. Box 1914 N-4611 Washington, DC 20013 Mr. John Rex Wingo Frost Brown Todd 424 Church Street Suite 1600 Nashville, TN 37219 Mr. Phillip Gary Young Jr. Garfinkle, McLemore & Young 22 Public Square Suite 12 Columbia, TN 38401


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Re: Case No. 10-5480 , In re: 1 Point Solutions, LLC, et al v. Regions Bank Originating Case No. : 08-00021

Dear Counsel

The motion for permission to file an amicus curiae brief out of time has been GRANTED.

Sincerely yours,



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Selected docket entries for case 10−5480 · PDF file · 2010-12-2304/28/2010...

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