Brobeck, Phleger and Harrison

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1 This memorandum decision constitutes the Court’s findings
of fact and conclusions of law pursuant to Fed. R. Bankr. P.
7052(a).
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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	) Bankruptcy Case
) No. 03-32715DM
BROBECK, PHLEGER & HARRISON, LLP, 	)
)
Debtor. 	) Chapter 7
___________________________________)
MEMORANDUM DECISION ON TRUSTEE’S OBJECTION TO CLAIM OF
NICHOLAS L. SAAKVITNE, TRUSTEE OF BROBECK RETIREMENT SAVINGS PLAN
The trustee for debtor’s retirement savings plan filed a
claim against the estate for $4,416,786.73 due to unpaid employer
contributions for the year 2002. 	The case trustee objected,
asserting that such claims had been released or waived in prior
settlements. 	Because the claims were effectively released or
waived, the case trustee’s objection as to the unpaid
contributions is SUSTAINED, with a portion of the claim being
allowed in the amount of $215,179.71.
FACTS1
The dissolution of the law firm of Brobeck, Phleger &
Harrison, LLP (“Brobeck”) was announced to the firm’s partners and
employees on January 31, 2003. 	An amendment of Brobeck’s
partnership agreement appointed a Liquidation Committee as the
Signed and Filed: February 23, 2009
________________________________________
DENNIS MONTALI
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
February 23, 2009
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
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2 All citations are to ERISA, as amended, 29 U.S.C. §§ 1001
et. seq. unless otherwise noted.
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administrator of Brobeck’s retirement savings plan (“Plan”) to
carry out Brobeck’s dissolution. 	On March 25, 2003, due to the
resignation of UMB Bank, N.A. as the trustee of the Plan, the
Liquidation Committee appointed Nicholas L. Saakvitne as the
Plan’s successor trustee (“Plan Trustee”).
It is undisputed that the Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), 2 and is an “individual account plan” or “defined
contribution plan” under section 1002(34) that covered
substantially all employees and partners of Brobeck. 	It consists
of a 401(k) portion, a profit sharing portion for staff, and a
profit sharing portion for partners. 	The Plan is also subject to
a Trust Agreement, which provides, among other things, that a
trustee is the named fiduciary with the authority and
responsibility to invest, manage, and control the assets of the
Trust Fund. 	It is also undisputed that Brobeck did not make the
profit sharing and matching employer contributions to the Plan for
2002.
On September 17, 2003, a group of Brobeck’s largest creditors
commenced this bankruptcy case by filing an involuntary chapter 7
petition. 	The petition was uncontested, and on October 10, 2003,
this Court entered its order for relief and subsequently appointed
an interim trustee. 	Ronald F. Greenspan was elected case trustee
(“Case Trustee”) on November 21, 2003.
On January 23, 2004, the Plan Trustee, on behalf of the Plan,
filed a claim against the estate in the amount of $6,400,419.50,
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consisting of (1) a claim of $819,675.38 for “matching
contribution” required of Brobeck for the 2002 Plan Year, but
which remains unpaid; (2) a claim of $1,863,317.61 for a “profit
sharing contribution” for staff required of Brobeck for the 2002
Plan Year, but which remains unpaid; and (3) a claim of
$3,717,426.51 for “partner contributions” required of Brobeck for
the 2002 Plan Year, but which remains unpaid. 	A supplement to the
initial claim was filed on November 15, 2004, in the amount of
$2,281.24, bringing the total to $6,402,700.74.
On November 23, 2005, the Case Trustee filed a motion (the
“Employee Claims Settlement Motion”) through which he sought
authority under Bankruptcy Rule 9019(b) to enter into binding
settlements with former employees without further order of the
court (the “Employee Claims Settlement Program”). 	Under the terms
of the Employee Claims Settlement Program, settling employees
would receive allowed claims in the full amount of their missed
retirement plan contributions for 2002 as determined by an
actuarial analysis.
On January 19, 2006, this Court entered an order approving
the Employee Claims Settlement Program. 	The terms of that order
directed any settlements on account of Plan contributions to be
offset, dollar for dollar, against the Plan Trustee’s claims.
On May 27, 2008, pursuant to 11 U.S.C. § 502(b), the Case
Trustee filed an objection to the Plan Trustee’s claim. 	Since the
January 19, 2006 settlement order, the Case Trustee reached an
agreement with virtually all of Brobeck’s eligible former
employees on the missed 2002 contributions. 	As a result, the Case
Trustee asserted that the only portion of the Plan Trustee claims
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3 This amount consists of the 90 potential retirement plan
claims of former Brobeck employees who did not assert a retirement
plan claim, and who either (a) did not respond to the Employee
Claims Settlement Program, or (b) rejected the Trustee’s
settlement offer.
4 The release paragraph of the settlement agreement with the
Former Partners, in relevant part, provides:
The Former Partner shall and hereby does waive, release,
acquit, hold harmless, and forever discharge the Trustee,
Brobeck's 	bankruptcy 	estate, 	and 	Brobeck 	... 	but
excluding 	all 	former 	partners 	and 	employees 	of 	Brobeck
(the “Trustee Released Parties”) from any and all claims,
obligations, 	demands, 	actions, 	causes 	of 	action, 	and
liabilities of whatever kind and nature or character and
description ... that could have been or could be asserted
against the Trustee Released Parties based upon any fact,
circumstances, 	or 	occurrence 	relating 	to 	Brobeck,
Brobeck's 	chapter 	7 	estate, 	or 	the 	Bankruptcy 	Case
arising through and including the date of this Settlement
Agreement 	and 	Mutual 	Release, 	... 	including, 	without
limitation, 	claims 	... 	(iii) 	subject 	to 	paragraph 	12
hereof, for retirement and other benefits[.]
Paragraph 12, the “carve out” paragraph entitled “No
Impairment of Retirement Plan Rights,” reads:
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attributable to missed 2002 contributions on behalf of former
Brobeck employees is $215,179.71. 3
Prior to the settlement order in 2006, the Case Trustee began
investigating and identified several litigation claims that could
be asserted against Brobeck’s former partners (“Former Partners”).
He eventually reached settlements with all of the Former Partners.
The Case Trustee alleged that each of those settlements provided
for a withdrawal (or deemed disallowance) of the Former Partners’
proofs of claim, and included a global release as to any Plan
claims against the estate, but retained the Former Partners’
rights as to the Plan directly - viz., to get distributions from
funds already paid into the Plan. 4
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The Parties do not intend the foregoing releases, nor the
withdrawal 	and/or 	disallowance 	of 	claims 	provided 	for
herein, to release, waive, affect or impair any rights of
the Former Partner to receive, nor does the Trustee claim
any 	rights 	to 	or 	assert 	any 	interest 	in, 	any 	and 	all
distributions 	or 	payments 	or 	other 	benefits 	the 	Former
Partner may be entitled to receive from the assets of the
retirement plans. 	(Emphasis added).
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On July 2, 2008, the Plan Trustee filed a response in
opposition to the Case Trustee’s objection. 	The Plan Trustee had
no objection to the Case Trustee’s proposal that the former
employees claim be allowed in the amount of $215,179.71, and
agreed that this resolved the Plan claim in full for item (2),
$1,863,317.61 for “profit sharing contribution” for staff, the
staff share of the 2002 “matching contribution” claim in the
amount of $120,376.63, and all of the supplemental claim for 2003
in the amount of $2,281.24. 	Therefore, claims of the former
employees are no longer at issue in this case.
However, the Plan Trustee objected to the Case Trustee’s
proposal that the portion of the claim attributable to the
retirement claims of Former Partners be disallowed in its
entirety. 	In support, the Plan Trustee posed three arguments.
First, the terms of the Trust Agreement obligated Brobeck to make
the matching and profit sharing contributions to the Plan, and
since the claims being asserted here are contractual in nature, he
as Plan Trustee is responsible for enforcement of contributions,
and the proper party to bring a direct action or file a proof of
claim for damages for unpaid contributions, not the Former
Partners. 	Moreover, he asserted that this liquidated, undisputed
debt belongs to, and is an asset of, the Plan. 	Second, since
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5 These ERISA sections are actually 29 U.S.C. §§
1132(a)(1)(B) and 1132(a)(2), but generally referred to as
sections 502(a)(1)(B) and 502(a)(2).
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neither the Plan nor the Plan Trustee were parties to the
releases, and because the Plan never released its claims, the
settling Former Partners had no authority to release claims that
belonged to the Plan - a total of $4,416,786.73. 	Third, the Plan
Trustee disputed that the settling Former Partners released all
claims against the estate, arguing that paragraph 12 of the
release, “No Impairment of Retirement Plan Rights,” specifically
“carved out” not only assets that were in the Plan at the time,
but the “asset” consisting of its claim for contributions which
were contractually owed and remained unpaid. 	In other words, he
asserts that the Case Trustee’s position ignores the fact that the
claim for unpaid contributions is an “asset” of the Plan and under
the clear language of the carve out was not covered by the
release.
On July 11, 2008, the Case Trustee filed his reply. 	He
argued that the Former Partners are the proper parties-in-interest
regarding Plan claims pursuant to sections 502(a)(1)(B) and
502(a)(2). 5 	For claims under section 502(a)(2), the Case Trustee
cited the recent U.S. Supreme Court case, LaRue v. DeWolff, Boberg
& Assocs., __ U.S. __, 128 S.Ct. 1020, 1026 (2008), which held
that in cases of defined contribution plans where breaches of
fiduciary duties directly impair the value of plan assets in a
participant’s individual account, as distinct from plan injuries,
the participant has an individual remedy. 	Therefore, he alleged,
since the Former Partners had claims against Brobeck for unpaid
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contributions to their individual accounts, they had the legal
capacity to assert and compromise those missed contribution
claims. 	The Case Trustee also asserted that paragraph 12 (quoted
in footnote 4) did not reserve any claims against the estate; it
is a reservation that applied only to a Former Partners’ right to
receive distributions from assets that are in the Plan, not assets
of the bankruptcy estate. 	In other words, the Former Partners
released all of their claims against the estate, including claims
ERISA might give them to compel payment of missed contributions
for their benefit, but did not release their rights to obtain
distributions from the Plan out of the assets held within them.
At the end of a hearing on July 16, 2008, the parties were
ordered to provide supplemental briefing on the issue of whether
the Former Partners had standing under ERISA to sue Brobeck for
unpaid contributions to the Plan, or whether that claim could only
be brought by the Plan Trustee.
The Plan Trustee filed his supplemental brief on August 15,
2008. 	In short, he argued that participants such as the Former
Partners had no standing to sue for unpaid contributions for three
reasons: 1) both the Trust Agreement and ERISA vest the Plan
Trustee with full and exclusive authority (including settlements)
over Plan assets, which includes unpaid contributions; 2) that
section 502(a)(1)(B) and case law provides only for claims by
participants to enforce personal benefit rights and does not
provide for claims for unpaid contributions, but rather only the
Plan can bring such claims because any recovery goes to the Plan
rather than the individual; and 3) due to the common law of
trusts, on which much of ERISA is based, a beneficiary may only
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assert a claim for unpaid contributions derivatively when the plan
trustee has breached his fiduciary duty by failing to recover the
contributions, which has not occurred here. 	Therefore, since the
Former Partners lacked standing to bring a claim for the unpaid
contributions, then as a matter of law they could not have
released them.
In the Case Trustee’s supplemental brief filed on September
5, 2008, he argued that since the Former Partners had claims
against Brobeck for the unpaid contributions pursuant to sections
502(a)(1)(B) and/or 502(a)(2), then they were empowered to release
their statutory ERISA claims. 	Alternatively, even if they had no
ERISA remedy, they still were empowered to give knowing and
voluntary waivers of their rights to receive Plan benefits and the
Court should uphold the settlement agreements.
A further hearing on this matter was held on November 3,
2008. 	There, the Court raised the issue of whether the unpaid
contributions were indeed “assets” of the Plan, and further
ordered the parties to provide any case law supporting the notion
that the Former Partners had a claim under section 502(a)(1)(B),
the apparently more appropriate remedy in this case. 	The Court
also granted the Plan Trustee an opportunity to respond to the
Case Trustee’s “release or waiver” argument. 	The Case Trustee
asserted essentially his same previous arguments, but cited recent
case law suggesting that the Former Partners had individual claims
against Brobeck under section 502(a)(1)(B) to assert or release.
With regard to release or wavier, the Plan Trustee argued that:
(1) only he as trustee had the contractual claim against Brobeck
and thus the Former Partners as beneficiaries had no authority to
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6 The Court interprets the settlement language (quoted in
footnote 4) to mean the following: the general “release” was a
release of any and all claims by the Former Partners against
Brobeck and its chapter 7 estate, including any claims against the
Plan (except funds already paid into the Plan as carved out by
paragraph 12). 	Therefore, when the Court uses the term “release,”
it is referring to Plan claims against Brobeck or its estate and
the release of any such claims. 	When discussing “waiver,” the
Court is referring to the Former Partners’ waiver of any right to
share in the unpaid contributions, if ever collected by the Plan
Trustee.
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release such claim; (2) neither the Plan nor the Trust Agreement
contains any language allowing the Former Partners to waive
entitlement to funds collected by the Plan Trustee; (3) and even
if waiver was permitted, the settlement language was ambiguous and
the Former Partners did not “knowingly” and “voluntarily” waive
their right to share in the unpaid contributions. 6
ISSUES
1. 	Did the Former Partners have a claim against Brobeck under
502(a)(2) that could be released?
2. 	Did the Former Partners have a claim against Brobeck under
502(a)(1)(b) that could be released?
3. 	Even if the Former Partners have no cognizable ERISA claim
against Brobeck could they waive the right to share in any unpaid
employer contributions the Plan Trustee might collect?
DISCUSSION
Although the ultimate issue in this claim objection is
whether the Former Partners released their ERISA claims against
Brobeck for the 2002 contribution and/or waived their rights to
share in any funds collected, the question that must first be
answered is whether the Former Partners had a cognizable ERISA
claim against Brobeck to release. 	It is undisputed that the
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7 Section 1109 [409] in relevant part provides:
(a) Any person who is a fiduciary with respect to a plan
who breaches any of the responsibilities, obligations, or
duties imposed upon fiduciaries by this subchapter shall
be personally liable to make good to such plan any losses
to 	the 	plan 	resulting 	from 	each 	such 	breach, 	and 	to
restore to such plan any profits of such fiduciary which
have been made through use of assets of the plan by the
fiduciary, 	and 	shall 	be 	subject 	to 	such 	other 	equitable
or 	remedial 	relief 	as 	the 	court 	may 	deem 	appropriate,
including removal of such fiduciary. A fiduciary may also
be removed for a violation of section 1111 of this title.
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Former Partners are “participants” of the Plan as defined in
section 1002(7).
I. 	The Former Partners Did Not Have A Claim Under 502(a)(2).
A suit brought under section 502(a)(2) seeks to hold plan
fiduciaries liable in their personal capacities for breaches of
their duty to the plan. 	Section 502(a)(2) states:
A civil action may be brought —
(2) ... by a participant ... or fiduciary for appropriate
relief 	under 	section 	1109[ 7] 	[which 	makes 	a 	fiduciary
liable 	for 	losses 	to 	a 	plan 	resulting 	from 	the
fiduciary’s breach of fiduciary duties].
Until recently, participants could not bring claims under
section 502(a)(2) for losses to their individual accounts.
However, the prevalence of today’s defined contribution plans
rendering defined benefit plans obsolete, and the Supreme Court
decision in LaRue, 128 S.Ct. 1020, 1026, has changed the
landscape. 	There, the Court held that “although § 502(a)(2) does
not provide a remedy for individual injuries distinct from plan
injuries, that provision does authorize recovery for fiduciary
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breaches that impair the value of plan assets in a participant’s
individual account.” 	(Emphasis added). 	Thus, if a claim existed
against Brobeck under section 502(a)(2), the Former Partners as
individual participants would have had standing to bring it, or
release it. 	Consequently, this Court rejects the Plan Trustee’s
argument that only he and not the Former Partners could have a
section 502(a)(2) claim against Brobeck. 	However, as discussed
below, the Court finds that neither had any such claim.
A. 	Brobeck Was A Fiduciary Of The Plan.
Only plan fiduciaries may be sued for breach of fiduciary
duty under section 502(a)(2). 	Acosta v. Pac. Enters., 950 F.2d
611, 617 (9th Cir. 1991). 	Under ERISA, a person is a fiduciary
with respect to a plan to the extent he exercises any
discretionary authority or discretionary control over a plan’s
management, administration, or assets. 	Section 1002(21)(A).
(Emphasis added). 	This definition of fiduciary should be
liberally construed. 	Thomas, Head & Greisen Employees Trust v.
Buster, 24 F.3d 1114, 1117 (9th Cir. 1994).
Simply being the Plan’s administrator does not make Brobeck
(or the Liquidating Committee) a fiduciary of the Plan. 	Pegram v.
Herdrich, 530 U.S. 211, 225 (2000). 	However, Brobeck’s Plan and
Trust Agreement state:
The Committee shall be the Administrator of the Plan ...
and shall have the exclusive authority and responsibility
for 	all 	matters 	in 	connection 	with 	the 	operation 	and
administration of the Plan not specifically allocated to
the Trustee. 	(Plan, 16.02);
The 	Administrator 	has 	full 	discretionary 	authority 	to
administer and interpret the Plan ....(Plan, 16.03);
The 	Firm 	... 	shall 	have 	the 	authority 	to 	control 	and
manage 	the 	operation 	and 	administration 	of 	the 	Plan.
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(Trust Agreement, 1.1).
Therefore, by its own admissions, Brobeck is a fiduciary of the
Plan.
B. 	Brobeck’s Failure To Pay Its Share Of The Contributions
Was Not A Breach Of Its Fiduciary Duty.
Although the Court finds that Brobeck was a fiduciary of the
Plan, the analysis does not end there. 	ERISA requires that the
fiduciary with two hats, such as an employer who is also the
plan’s administrator, wear only one at a time, and wear the
fiduciary hat when making fiduciary decisions. 	Pegram, 530 U.S.
at 225. 	Actions such as creating, amending, and terminating a
plan are plan sponsor, not fiduciary, activities. 	Hughes Aircraft
Co. v. Jacobson, 525 U.S. 432, 443-444 (1999). 	It will only give
rise to ERISA liability if the defendant performed the act while
“wearing the hat” of an ERISA fiduciary, rather than the hat of a
corporate officer. 	Pegram, 530 U.S. at 225.
Therefore, the threshold question in an ERISA section
502(a)(2) claim is not whether the action by the person adversely
affected a plan participant’s interest, but whether was the person
performing a fiduciary function when taking the action subject to
the complaint? 	Id. at 226. 	Hence, was Brobeck carrying out its
discretionary authority or discretionary control over the Plan’s
management, administration, or assets when it failed to pay its
share of the contributions to the Plan for 2002?
Turning to the issue of Plan “assets,” at the November 3
hearing the Court inquired about whether the unpaid contributions
were an asset of the plan. 	Although the Court recognizes the
distinction between defined “benefit” and defined “contribution”
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plans as set forth in LaRue, when determining whether something is
an “asset” of a plan, the type of plan involved is of no
consequence to that analysis, as will be explained later.
Presumably, if the unpaid contributions were not an asset, it
follows that the Former Partners (or the Plan Trustee) would not
have a section 502(a)(2) claim to assert or release against
Brobeck under an asset theory.
The Plan Trustee asserts that the unpaid contributions became
assets when they were contractually due and owing, and cites U.S.
v. Jackson, 524 F.3d 532 (4th Cir. 2008), and U.S. v. Grizzle, 933
F.2d 943 (11th Cir. 1991) in support. 	The Case Trustee seems to
presume such unpaid contributions are an asset of the Plan. 	Both
trustees are incorrect.
With regard to employer contributions,“[u]ntil the employer
pays the employer contributions over to the plan, the
contributions do not become plan assets over which fiduciaries of
the plan have a fiduciary obligation; this is true even where the
employer is also a fiduciary of the plan.” 	Cline v. Indus. Maint.
Eng’g & Contracting Co., 200 F.3d 1223, 1234 (9th Cir.
2000)(emphasis added)(citing Local Union 2134, United Mine Workers
v. Powhatan Fuel, Inc., 828 F.2d 710, 714 (11th Cir. 1987)(holding
that until monies are paid by corporation to the plan there are no
assets in the plan under the provisions of ERISA). 	See Collins v.
Pension & Ins. Comm., 144 F.3d 1279, 1282 (9th Cir.
1998)(“[a]though ERISA does not explicitly define “‘plan assets,’”
a plain interpretation of the term does not encompass future
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8 Even if the Court applied the more lenient standard
recognized by other courts of looking to the Plan’s language to
determine whether unpaid contributions are an asset (see cases
cited below), Brobeck’s Plan and Trust Agreement have no specific
language addressing or even contemplating that unpaid employer
contributions are Plan assets. 	In fact, the Trust Agreement
suggests that contributions do not become a Plan asset until
“received,” which implies “when they are paid over” to the Plan
Trustee:
“All contributions made to the Plan shall be paid over to
the 	Trustee 	.... 	Contributions 	so 	received 	... 	shall
constitute the Trust.” 	(Article I, section 1.2).
[“Traditionally, the ‘proper rule, developed by caselaw [sic] is
that unpaid employer contributions are not assets of a fund unless
the agreement between the fund and the employer specifically and
clearly declares otherwise.’” Board of Trs. of the Ohio
Carpenters' Pension Fund v. Bucci (In re Bucci), 493 F.3d 635, 642
(6th Cir. 2007)(quoting ITPE Pension Fund v. Hall, 334 F.3d 1011,
1013 (11th Cir. 2003). 	See e.g., Trustees of Conn. Pipe Trades
Local 777 Health Fund v. Nettleton Mech. Contractors, Inc., 478 F.
Supp. 2d 279, 283 (D. Conn. 2007) (where fund agreements contained
language defining plan assets as “such sums of money as have been
or shall be paid to the Pension Fund by the Employers,” and “sums
of money that have or will be paid or which are due and owing to
the Fund by the Employers,” court determined that due but unpaid
contributions to plan are plan assets); Board of Trustees,
Adirondack Carpenters Pension Fund v. Parker (In re Parker), 388
B.R. 11, 20 (Bankr. N.D. N.Y. 2008)(recognizing exception; finding
that unpaid contributions were a contractual payment obligation
but no explicit fund language stated when contributions become
fund assets; therefore plan did not support plaintiff’s theory
that unpaid employer contributions became plan assets when
contractually due)].
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contributions not yet made.”). 8
Therefore, since the unpaid contributions were not “assets”
of the Plan, the Former Partners had no section 502(a)(2) claim to
assert or release against Brobeck. 	Even LaRue seems to imply that
an individual has a claim under section 502(a)(2) only for
fiduciary breaches that impair the value of plan assets in a
participant’s individual account. 	LaRue, 128 S.Ct. at 1026.
Yet, even if the unpaid contributions are not an asset of the
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Plan and the Court interprets LaRue too narrowly, could the Former
Partners still have a 502(a)(2) claim if Brobeck was carrying out
its discretionary authority or discretionary control over the
management or administration of the Plan when it failed to make
its share of the 2002 contributions? 	Both the Case Trustee and
Plan Trustee assert that Brobeck breached its fiduciary duty -
i.e., engaged in misconduct - when it failed to pay its share of
the 2002 contributions to the Plan.
The clear majority of the few courts dealing with the issue
of unpaid employer contributions, regardless of the plan type,
hold that choosing not to make employer contributions is a
business or corporate function, not a fiduciary function with
respect to a plan. 	See Navarre v. Luna (In re Luna), 406 F.3d
1192, 1203, 1207 (10th Cir. 2005)(financially strapped employer’s
decision to use their limited funds to pay other business expenses
rather than to make contributions, while adversely impacting the
plan, was not a breach of fiduciary duty because a contractual
obligation to fund a plan is not a discretionary decision
regarding management of plan or plan assets); Trustees of the
Graphic Commc’ns Int’l Union Upper Midwest Local 1M Health and
Welfare Plan v. Bjorkdal, 516 F.3d 719, 732 (8th Cir. 2008)
(corporate officer facing limited cash flow who chooses to pay
corporate obligations in lieu of employer contributions to an
ERISA plan does not breach a fiduciary duty when he makes those
decisions wearing his corporate hat rather than his fiduciary duty
hat); Local Union 2134, United Mine Workers of Am. v. Powhatan
Fuel, Inc., 828 F.2d 710, 714 (11th Cir. 1987)(corporate
president’s decision to pay bills other than insurance premiums to
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9 The Court notes that the Plan Trustee also has no section
502(a)(2) claim against Brobeck because he has control only over
“assets” of the Plan, and only the Plan’s assets constitute the
Trust. 	Since the unpaid contributions are not Plan assets, his
argument that only he could pursue or settle a claim for the 2002
unpaid contributions relies on a faulty premise and must be
rejected. 	Further, Brobeck’s failure to pay its share of the
contributions to the Plan Trustee would not be a breach of
fiduciary duty.
10 Section 502(a)(1)(B) also authorizes a “beneficiary” to
bring such an action. 	A “beneficiary” under ERISA is a person
designated to receive benefits based on a participant’s
eligibility. 	It is not at issue here.
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health plan was not made in his fiduciary capacity of the plan.
But see Trs. of the Conn. Pipe Trades Local 777 Health Fund v.
Nettleton Mech. Contractors, Inc., 478 F. Supp 279, 284 (D. Conn.
2007)(choosing to pay other creditors over funding the plan was a
breach of fiduciary duty, but the court first found that unpaid
contributions were an asset of the plan). 	The Court believes the
instant case to be more like the former majority of cases, and
less like the latter. 	Consequently, the Former Partners had no
section 502(a)(2) claim to assert or release. 9
II. 	The Former Partners Likely Had A Claim Against Brobeck Under
Section 502(a)(1)(B).
Section 502(a)(1)(B) provides that a “participant” has
standing to bring a civil action to recover benefits due to him
under the terms of the plan, to enforce his rights under the terms
of the plan, or to clarify his rights to future benefits under the
terms of the plan. 10 	Participants suing for monetary relief for
benefits to which they claim entitlement under the terms of a
benefit plan must proceed under ERISA section 502(a)(1)(B). 	That
section “deals exclusively with contractual rights under the
plan.” 	Varity Corp. v. Howe, 516 U.S. 489, 521 n. 2
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(1996)(Thomas, J., dissenting); Mass. Mut. Life Ins. Co. v.
Russell, 473 U.S. 134, 146 (ERISA section 502(a)(1)(B), is
designed "to protect contractually defined benefits.").
There is no dispute that Brobeck had a contractual obligation
to make the 2002 contributions. 	Therefore, if there is any claim
against Brobeck it would appear to be a claim for breach of
contract. 	Here, the appropriate action, if any, would be a Former
Partners’ claim to “recover benefits due.” 	Notably, since only
“participants” and “beneficiaries” have standing to assert claims
under section 502(a)(1)(B), the Plan Trustee as “fiduciary” lacks
standing to bring (or settle) a claim against Brobeck for the
unpaid contributions, at least under that section.
In Gelardi v. Pertec Computer Corp., 761 F.2d 1323, 1324 (9th
Cir. 1985), the Ninth Circuit held that suits to recover benefits
under section 502(a)(1)(B) can be brought only against the plan,
not the employer. 	However, it later recognized such suits may be
brought against plan administrators. 	See Taft v. Equitable Life
Assurance Soc’y, 9 F.3d 1469, 1471 (9th Cir. 1993)(“[t]he
beneficiary of an ERISA plan may bring a civil action against a
plan administrator” to recover benefits under [502](a)(1)(B));
Everhart v. Allmerica Fin. Life Ins. Co., 275 F.3d 751 (9th Cir.
2001)(recognizing Taft’s holding that section 502(a)(1)(B) suits
can be brought against plan administrators). 	Therefore, if the
Former Partners had a claim to the missed contributions as a
recovery of “benefits due,” such claim could be asserted against
Brobeck as the Plan’s administrator.
So, since Brobeck could be sued under section 502(a)(1)(B),
the question here is whether that section contemplates a
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participant’s claim for missed employer contributions as a proper
claim to “recover benefits due?” 	As the Plan Trustee notes,
published decisions regarding participant claims for unpaid
contributions under section 502(a)(1)(B) are essentially non-
existent. 	Claims typically brought by participants under that
section include challenges to adverse benefit determinations, such
as a plan’s denial of disability payments, health benefits,
pension benefits, and life insurance payments. 	However, as the
Court noted in LaRue, earlier precedent is limited to cases
involving defined benefit plans and does not control in cases for
defined contribution plans, such as Brobeck’s. 	LaRue, 128 S.Ct.
at 1025.
In his second supplemental brief, the Case Trustee cited a
recent post-LaRue Seventh Circuit case that suggests a participant
of a defined contribution plan can indeed bring a claim for unpaid
employer contributions under ERISA section 502(a)(1)(B). 	In
Leister v Dovetail, Inc., 546 F.3d 875 (7th Cir. 2008), an
employee participant, in what the Court determined was a “defined
contribution plan” despite the absence of an actual plan writing,
sued her employer under ERISA sections 502(a)(1)(B) and 502 (a)(2)
for, inter alia, the employer’s failure to make its contributions
to her plan account. 	The employer instead pocketed the money.
After a great deal of discussion on the statute of limitations
imposed on claims under either section, which is not at issue
here, the Seventh Circuit stated:
Contributions to a plan and benefits owed by a plan are
not 	necessarily 	equivalent, 	and 	section 	[502](a)(1)(B)
authorizes 	suit 	only 	for 	benefits. 	But 	the 	benefits 	to
which 	Leister 	was 	entitled 	were 	the 	assets 	that 	would
have 	been 	in 	her 	401(k) 	account 	had 	the 	defendants
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complied with their fiduciary duties.
Id. at 881. 	Therefore, the Dovetail court has held that unpaid
contributions are a “benefit due” and for which a participant can
sue under section 502(a)(1)(B).
Although the Dovetail court also found that the employer’s
failure to pay its share of the contributions was a breach of its
fiduciary duty, a finding not being made here, the end result is
the same; a participant of a defined contribution plan can bring a
claim for unpaid contributions as a “benefit due” under section
502(a)(1)(B). 	Because Dovetail dealt with a similar situation as
in this case - unpaid employer contributions in the context of a
defined contribution plan - the Court finds Dovetail persuasive
and adopts its holding.
The Case Trustee also cited Simons v. Midwest Tel. Sales and
Servs., Inc., 433 F. Supp 1007 (D. Minn. 2006). 	There, an
employee sued her employer for unpaid matching contributions to
her plan account under section 502(a)(1)(B). 	Although the
defendants conceded that they owed her the money under the terms
of the plan and summary judgment was therefore granted in favor of
the employee, the court never disputed that her claim for unpaid
contributions was a proper claim for “benefits due” under section
502(a)(1)(B). 	Id. at 1010.
Therefore, in light of Dovetail and Simons, and the trend
towards a recognition that contribution plans create rights that
are personal to the individual participants who make or for whom
the contributions are made, the Court finds that the Former
Partners likely had a claim to assert and thus release against
Brobeck for the unpaid contributions under section 502(a)(1)(B).
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Policy reasons also suggest that the participant Former
Partners would have a section 502(a)(1)(B) claim against Brobeck.
Clearly, Brobeck’s failure to make its share of the 2002
contributions provides a claim for something and there must be a
remedy. 	ERISA’s preemption provision was not supposed to leave
plan participants worse off than they had been under pre-ERISA
state law. 	Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101,
114 (1989). 	But-for ERISA, the Former Partners would likely have
a state law claim against Brobeck for breach of contract. 	The
ERISA parallel to this is section 502(a)(1)(B) to which only the
Former Partners would have standing.
The Court also points out that this matter does not come
before it in the context of a Fed. R. Civ. P. 12(b)(6) motion to
dismiss or some other dispositive motion; it comes in the form of
a claim objection and whether the Former Partners had standing to
release their individual ERISA claims against Brobeck for the 2002
missed contributions. 	Therefore, the Court need not decide the
merits of this potential ERISA (or non-ERISA) claim conclusively;
there is enough to establish to the Court’s satisfaction that the
Former Partners had something to release when they settled with
the Case Trustee. 	With that in mind, the Court now turns to the
question of whether the Former Partners waived their rights to
share in the 2002 unpaid contributions.
III. Even If The Former Partners Have No Cognizable ERISA Claim
Against Brobeck, They Waived The Right To Share In Any Unpaid
Employer Contributions The Plan Trustee Might Collect.
The Plan Trustee asserts that paragraph 12 “carves out” from
the release not only the assets that were in the Plan at the time,
but the “asset” consisting of the Plan’s claims for contributions
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11 Neither the Case Trustee nor the Court are asserting that
the Plan Trustee never had a contractual right to recover the
unpaid contributions. 	However, that right was abrogated when the
Former Partners waived their right to share in any funds collected
by the Plan Trustee should he succeed. 	Furthermore, neither the
Case Trustee nor the Court is asserting or concluding that the
Plan Trustee breached his fiduciary duties in any fashion with
respect to Brobeck’s Plan or the participants or beneficiaries
thereof. 	His compliance of his fiduciary duties has never been in
question.
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which were contractually owed and remained unpaid. 	He also
asserts that the release language was ambiguous and possibly the
Former Partners could have believed that their claims for the 2002
unpaid contributions were not being released or waived. 	The Case
Trustee argues that the Former Partners agreed to a global release
of Plan claims and retained only their rights to the assets
remaining in the Plan. 	The Court agrees that the Former Partners
retained only their rights to the assets that were already within
the Plan as of the settlement date.
Since the Court has found that the unpaid contributions were
not an asset of the Plan, the “carve out” of paragraph 12 as a
matter of law could not include them. 	Furthermore, no evidence
has been submitted from any of the participant Former Partners
stating that he or she did not intend to waive his or her right to
share in the 2002 unpaid contributions the Plan Trustee may
collect. 	As a result, the Court finds that any such right by the
Former Partners was waived. 11
There is a very practical aspect to the Court’s decision
quite apart from the foregoing legal analysis. 	At stake are
defined contribution plan benefits, and any funds collected by the
Plan Trustee would simply go back to each Former Partners’ account
(less Plan Trustee fees). 	Plainly, the essence of the Case
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12 On February 13, 2009, the Court received a letter from the
Plan Trustee’s counsel, directing the Court’s attention to a
recent U.S. Supreme Court case, Kennedy v. Plan Adm’r for DuPont
Sav. and Inv. Plan, ___ U.S. ___, 129 S.Ct. 865 (Jan. 26, 2009).
He offers Kennedy to support his argument that since nothing in
the Plan permitted the Former Partners to waive their right to
share in a contribution, they could not have done so.
The Court has read Kennedy and distinguishes it from the
instant case. 	The policy behind Kennedy is to protect plan
trustees from the extra burden of having to review and consider
extraneous documents outside of the plan to determine to whom
benefits are to be paid, and from potential litigation arising
from those decisions. 	Here, the Plan Trustee is not being called
upon to make a distribution. 	The issue is not about protecting
him and to whom he should pay the unpaid contributions, but rather
whether he is entitled to be paid. 	Further, Kennedy does not hold
that there can never be an effective waiver of benefits, but only
that the Plan Trustee is not bound by such waivers on the facts
presented there.
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Trustee’s settlement with the Former Partners was to leave to them
what was in the Plan, and to leave to him what was in the estate.
Thus, if the Court allowed the Plan Trustee’s claim it would be
duplicative of what the Former Partners already waived or
released. 12
CONCLUSION
Based on the foregoing reasons, the Case Trustee’s objection
to the Plan Trustee’s claim against the estate for $4,416,786.73
is SUSTAINED, with a portion of the claim being allowed in the
amount of $215,179.71. 	The Court is concurrently entering an
Order consistent with this Memorandum Decision.
**END OF MEMORANDUM DECISION**
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COURT SERVICE LIST
Bennett J. Murphy, Esq.
John L. Jones, II, Esq.
Hennigan, Bennett & Dorman LLP
865 So. Figueroa St., Ste. 2900
Los Angeles, CA 90017
Robert A. Goodin, Esq.
Francine T. Radford, Esq.
Keith E. Johnson, Esq.
Goodin, Macbride, Squeri, Day & Lamprey, LLP
505 Sansome St., Ste. 900
San Francisco, CA 94111
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