IN RE: Litigation Arising from the Termination of the Retirement Plans for Employees of Fireman's Fund Insurance Co. and/or Its Affiliates

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Case MDL No. 247 Document 2 Filed oxi iaroadpdlr |JUTITIAL RANT oN
BEFORE THE JUDICIAL PANEL	107 Li"GATioN :
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MULTIDISTRICT LITIGATION, | 1078	[572 Had S10 :
IN RE LITIGATION ARISING FROM THE - ) PATH T.i" v7) |
TERMINATION OF THE RETIREMENT PLAN ) CL=RdGr THEraiiL |
FOR EMPLOYEES OF FIREMAN'S FUND ) DOCKET NO. 247 oo
INSURANCE CO. AND/OR ITS AFFILIATES ) i Joy :
OPINION AND ORDER / rs
BEFORE JOHN MINOR WISDOM, CHAIRMAN, AND EDWARD WEINFELD, EDWIN
A. ROBSON, WILLIAM H. BECKER, JOSEPH S. LORD, III, STANLEY A.
WEIGEL*, AND ANDREW A. CAFFREY, JUDGES OF THE PANEL
PER CURIAM
In 1957, the American Insurance Company, the American
Automobile Insurance Company, and the Associated Indemnity
Corporation (the Affiliated Companies) established a revised
retirement plan for their employees (TARP). After the
acquisition of the Affiliated Companies by Fireman's Fund
Insurance Company (FFIC) in 1964, TARP was amended and
"frozen," thereby requiring its participants to make no
further contributions to the plan. Thereafter, later
employees of the companies became participants in a different
retirement plan, not at issue herein.
* Judge Weigel was unable to attend the Panel hearing and,
therefore, took no part in the consideration or decision
of this matter.

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TARP expressly provides that the Affiliated Companies
may terminate the plan at any time. Upon termination, the
assets of the plan are to be distributed in a certain order
of priority. First in the order of priorities ig the pur-
chase of insurance or annuity contracts sufficient to
guarantee all TARP beneficiaries full payment of all amounts
to which they are entitled under the retirement plan. After
the satisfaction of the priority liabilities, TARP provides
that the Affiliated Companies are entitled to any balance
of the net assets of the plan's trust fund which may remain
® because of erroneous actuarial computations.
In the Fall of 1975, the Affiliated Companies decided
to terminate TARP in accordance with its terms and provisions.
Accordingly, on two occasions, notices were sent to participants,
retirees and vested employees, explaining the companies’
intention to terminate TARP. These notices provided that all
participants would become fully vested, regardless of their
length of service, and that all affected persons would receive
a fully insured right to the retirement income to which they
would have been entitled under TARP. Finally, the notices
stated that it was contemplated that an existing actuarial
®

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surplus in the approximate amount of $12,000,000 would be
returned to the Affiliated Companies, in accordance with
the terms of TARP.
A number of persons responded to the notices, many of
whom challenged the propriety of the return of the actuarial
surplus to the Affiliated Companies. One of the factual
bases asserted in opposition to the plan of termination was
certain language contained in descriptive booklets previously
delivered to participants, stating that in the event the
plan was terminated, all the funds held in trust would be
® used for the benefit of retired employees, active participants
and the beneficiaries of deceased employees.
Fireman's Fund American Life Insurance Company (FFALIC),
which had issued a group annuity contract to fund TARP and
serves as a fiduciary therefor, subsequently instituted an’
action in the District of New Jersey pursuant to the
Declaratory Judgment Act, 28 U.S.C. §§2201 and 2202, and the
Employment Retirement Income Security Act of 1974 (ERISA),
29 U.S.C. §1001 et sed.. against the Affiliated Companies
and FFIC for a judgment declaring the proper disposition of
the actuarial surplus upon the termination of TARP, and
®

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whether the proposed termination plan both complies with
the terms and provisions of TARP and is lawful under all
applicable state and federal laws.
Thereafter, an action was commenced in the Western
District of Missouri by six TARP participants on behalf of
themselves and all other similarly situated TARP participants
against FFALIC, FFIC, TARP, the Affiliated Companies, and two
officers of all these defendants' Employee Benefit Adminis-
tration Committee, questioning the legality of the proposed
plan of termination. This action was also instituted pur-
[ suant to ERISA and the Declaratory Judgment Act, and seeks
a declaration that the monies held by defendant TARP belong
to plaintiffs, as well as compensatory damages because of
defendants' alleged breach of their fiduciary duties to
plaintiffs.
In the New Jersey action, the defendants answered
with a counterclaim against plaintiff FFALIC for a
judgment declaring that the proposed termination plan both
conforms to the termination provisions of TARP and is lawful
under all federal and state laws, and that the Affiliated
Companies are entitled to receive the actuarial surplus
®

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® accrued in TARP upon termination of the plan. Later,
Francis Van Orman, a pensioner under TARP and a former
general counsel, vice president and director of FFIC, moved
to intervene as a defendant on his own behalf and on behalf
of all similarly situated TARP participants. Leave to
intervene was granted by the New Jersey court, and Mr.
Van Orman, as a purported class representative, filed a
counterclaim against plaintiff, and a cross-claim against
the corporate defendants, challenging the termination plan
and asserting that any actuarial surplus should be accrued
® for the benefit of the class. The corporate defendantsthen cross-claimed against defendant Van Orman for a judgment
declaring that the proposed termination plan is proper both
under the termination provisions of TARP and all state and
federal laws, and that the Affiliated Companies are entitled
to receive the actuarial surplus accrued in TARP upon its
termination. Mr. Van Orman next filed a motion seeking
class certification pursuant to Rule 23(b) (1) and (Db) (2)
of the Federal Rules of Civil Procedure, which the New Jersey
x/
court later granted.
1l/ After actual knowledge of the pendency of the New Jersey
action and actual notice of the motion for class certification,
® the Missouri plaintiffs sent a letter to the court objectingto Mr. Van Orman as the class representative because of his
close ties to FFIC. The Missouri plaintiffs did not appear at	the class certification hearing, however. After the New Jersey
court's ruling, plaintiffs continued to challenge Mr. Van Orman
as the proper class representative by writing letters to the	court.

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® In the Missouri action, the defendants filed a
counterclaim against plaintiffs for a judgment declaring
that the proposed termination plan both complies with the
termination provisions of TARP and is lawful pursuant to
all federal and state laws, and that the defendant Affiliated
Companies are entitled to receive the actuarial surplus of
TARP upon its termination. The defendants then moved that
the Missouri action be stayed pending tae final adjudication
of the New Jersey action, or that the action be transferred
to the District of New Jersey under 28 U.S.C. §1404(a) on
the grounds that the major parties and operative legal and
® factual issues were identical in the Missouri and New Jersey
actions. The Missouri court denied this motion without
prejudice to renewal before trial. In addition, the Missouri
plaintiffs moved for class certification pursuant to
Rule 23(b) (1) and (b) (2) of the Federal Rules of Civil Pro- :
cedure. This requested plaintiffs' class action is identical
to the intervening-defendant class action previously certified
in the New Jersey action. Plaintiffs' motion for class
certification has not yet been decided.
®

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» The Missouri plaintiffs have moved the Panel for an
order transferring the New Jersey action to the Western
District of Missouri pursuant to Section 1407. FFALIC, the
sole plaintiff in the New Jersey action and a defendant in
the Missouri action, the Affiliated Companies and FFIC,
defendants in both actions, and the two individuals and TARP,
defendants in the Missouri action, initially opposed transfer,
but have subsequently cross-moved the Panel for an order
transferring the Missouri action to the District of New Jersey
for Section 1407 treatment with the action pending there.
® Mr. Van Orman, representative of the intervening-defendant
class in the New Jersey action, opposes Section 14C7
proceedings in this litigation and, in the alternative,
favors the District of New Jersey as the transferee forum.
We find that these actions share common questions of
fact and that transfer of the Missouri action to the District
of New Jersey under Section 1407 will best serve the con-
venience of the parties and witnesses and promote the just
and efficient conduct of the litigation.
All parties, with one exception, agree that Section
1407 transfer is warranted because these actions involve
® virtually identical factual questions and parties. In addi-
tion, the Missouri plaintiffs favor transfer to a single

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® forum because of the possibility, if not the likelihood,
of inconsistent or overlapping class action determinations
in these actions. Defendant Van Orman acknowledges that
these actions share complex questions of fact and common
parties, and that the common factual questions predominate
over any issues unique to either action; nevertheless, he
opposes Section 1407 proceedings in this litigation because,
he contends, the New Jersey court's certification of a |
Rule 23(b) (1) and (b) (2) class clearly includes the Missouri
plaintiffs and will have the effect of barring the prosecution
® of the Missouri action. Mr. Van Orman argues that theMissouri plaintiffs' Section 1407 motion is nothing more
than an attempt to collaterally attack his qualifications as
: the representative of the New Jersey class.
We agree that these actions share complex questions
of fact concerning the proper distribution of TARP's alleged
actuarial surplus and that these common factual questions
are predominant. Thus, transfer of these actions to a
single forum under Section 1407 will prevent duplication of
discovery. Another compelling reason for transfer of these
actions to a single district for coordinated or consolidated
®

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pretrial proceedings is the need to eliminate the possibility
of overlapping or inconsistent class determinations by courts
of coordinate jurisdiction. See In re Equity Funding Corpora-
tion of America Securities Litigation, 375 F. Supp. 1378,
1385-86 (J.P.M.L. 1974); In re Clark Oil and Refining Corpora-
tion Antitrust Litigation, 364 F. Supp. 458, 459 (J.P.M.L.
1973). Furthermore, the assignment of these actions to the
same judge is surely the most efficient way to resolve the
questions of proper class representation and the effect of
each of these actions on the other.
® The Missouri plaintiffs urge the Western District of
Missouri as the transferee forum for this litigation principally
on the assertion that that district is more centrally and
conveniently located in relation to the majority of the
relevant documents and witnesses. We believe that either
the Western District of Missouri or the District of New
Jersey could be described as an appropriate transferee
district for this litigation. On balance, however, we are
presuaded that the District of New Jersey is the more
preferable transferee forum because, on the basis of the
record before us, the pretrial proceedings in the New Jersey
action appear to be more advanced than those in the Missouri
® action. See In re Bestline Products Securities and Antitrust
Litigation, 375 F. Supp. 926, 928 (J.P.M.L. 1976).

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® IT IS THEREFORE ORDERED that the action listed on the
following Schedule A and pending in the Western District of
Missouri be, and the same hereby is, transferred to the
District of New Jersey and, with the consent of that court,
assigned to the Honorable H. Curtis Meanor for coordinated
or consolidated pretrial proceedings, pursuant to 28 U.S.C.
§1407, with the action pending in that district and listed
on Schedule A.
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C MDL-247 -- IN RE LITIGATION ARISING FROM THE TERMINATION OFTHE RETIREMENT PLAN FOR EMPLOYEES OF FIREMAN'S
FUND INSURANCE CO. AND/OR ITS AFFILIATES
SCHEDULE A
WESTERN DISTRICT OF MISSOURI
Ulice M. Hoover, et al. v. Fireman's Civil Action
Fund Insurance Co., et al. No. 75 Cv8l4-wW-1
DISTRICT OF NEW JERSEY
Fireman's American Life Insurance Co., V. Civil Action
The American Insurance Co., et al. No. 75-2007