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Erickson v. ING Life Insurance & Annuity Co.

July 22, 2010

STEPHANIE ERICKSON, ET AL, PLAINTIFFS,
v.
ING LIFE INSURANCE & ANNUITY COMPANY, DEFENDANT.



The opinion of the court was delivered by: Honorable Edward J. Lodge U. S. District Judge

ORDER ADOPTING REPORT AND RECOMMENDATION

On June 9, 2010, United States Magistrate Judge Larry M. Boyle issued his Report and Recommendation in this matter. (Dkt. 53.) Pursuant to 28 U.S.C. § 636(b)(1), the parties had ten days in which to file written objections to the Report and Recommendation. Plaintiffs filed their objections on June 28, 2010. (Dkt. 54.) Defendant filed its response to the objections on July 8, 2010. The applicable federal rules, local rules and statutes do not provide for a reply to be filed.*fn1

Pursuant to 28 U.S.C. § 636(b)(1)(C) this Court "may accept, reject, or modify, in whole or in part, the findings and recommendations made by the magistrate judge." Moreover, this Court "shall make a de novo determination of those portions of the report which objection is made." Id. In United States v. Reyna-Tapia , 328 F.3d 1114, 1121 (9th cir. 2003) the court interpreted the requirements of 28 U.S.C. 636(b)(1)(C):

The statute [28 U.S.C. § 636(b)(1)(C)] makes it clear that the district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise. As the Peretz Court instructed, "to the extent de novo review is required to satisfy Article III concerns, it need not be exercised unless requested by the parties." Peretz v. United States , 501 U.S. 923, 939 (1991) (internal citation omitted). Neither the Constitution nor the statute requires a district judge to review, de novo, findings and recommendations that the parties themselves accept as correct. See United States v. Ciapponi , 77 F.3d 1247, 1251 (10th Cir. 1996) ("Absent an objection or request for review by the defendant, the district court was not required to engage in any more formal review of the plea proceeding."); see also Peretz , 510 U.S. at 937-39 (clarifying that de novo review not required for Article III purposes unless requested by the parties) . . . .

See also Wang v. Masaitis , 416 F.3d 993, 1000 & n.12 (9th Cir. 2005). Based on the objections filed in this case, the Court has conducted a de novo review of the record pursuant to 28 U.S.C. § 636(b).

FACTUAL AND PROCEDURAL BACKGROUND

The Court adopts and incorporates by reference the factual background as set forth in the Report and Recommendation on pages 1-4:

Building Materials Holding Corporation (BMHC) is a holding company which provides capital, management and administrative resources to its subsidiaries which provide building materials and residential construction services throughout the United States. Statement of Undisputed Material Facts Supporting Defendant's Motion for Partial Summary Judgment on Counts One and Two of Plaintiffs' Complaint (Docket No. 28) (" DSOF "), ¶¶ 1 & 3. Plaintiffs to this action include BMHC, as the sponsor and named fiduciary of one of its retirement plans*fn2 ("the Plan"), and the other named fiduciaries suing on behalf of the Plan. Defendant is ING Life Insurance & Annuity Company ("ILIAC").

ILIAC entered into a contract with the Plan trustees on behalf of the Plan to provide certain administrative services to the Plan in connection with ILIAC's holding the invested Plan funds in an annuity. DSOF, ¶ 1; Affidavit of Ian Dunn (hereafter, "Dunn Aff."), Exh. A (hereafter, "Contract") (Docket No. 31). The services included processing contributions to the Plan (Contract, § 3.01), allocating contributions according to the express instructions of the Plan's trustees or participants (id., § 3.02), and making payments to the Plan's participants or others as directed "in writing" by the Plan, (id., § 8.06). See also Plaintiffs' Statement of Facts In Response to ILIAC's Motion For Partial Summary Judgment Filed on January 4, 2010 (Clerks Docket 27), (Docket No. 37-1) (hereafter, "PSOF"), ¶¶ 1 - 4.

Under the Contract, ILIAC purchased investments with the contributions it received, as directed by the Plan trustees or participants, from a list of options pre-selected and approved by the trustees, and maintained individual record-keeping accounts for each Plan participant. See Contract, § 3. If ILIAC received a contribution, but no allocation instructions, the Contract provided that ILIAC would return the contribution. Contract, § 3.02.

Once Plan contributions were transmitted to ILIAC, the funds were held in open-ended mutual funds in the investment market. Dunn Aff., Exh. C; PSOF, ¶ 3. The Plan trustees and participants did not have direct access to the funds. PSOF, ¶¶ 1 - 4. ILIAC was the sole signatory on the Plan accounts, and had the exclusive authority to write checks on the accounts to make the payments or invest the funds as directed by the trustees or Plan participants. Id. The Contract provided, however, that the trustees directed all distributions, and could terminate the Contract at any time. See Contract, § 5.06 ILIAC made payments to itself for its administrative fees which were predetermined by formula set forth in the Contract on a quarterly basis. PSOF, ¶ 5.

The Contract specifically stated that ILIAC was "not the Plan administrator or the fiduciary and has no discretion or control over the Plan or its assets." Contract, § 2.01.

The Plan trustees, on behalf of the Plan, also signed several other documents in conjunction with the Contract:

* the "ING MAP Plus Contract Charges, Compensation, Disclosure, Fund Selection, and Plan Administrative Support" document which listed the administrative support services ILIAC agreed to provide under the Contract including certain record keeping services, ...


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