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Bilello v. JPMorgan Chase Retirement Plan

March 9, 2009

FRANK BILELLO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
JPMORGAN CHASE RETIREMENT PLAN, JPMORGAN CHASE DIRECTOR OF HUMAN RESOURCES, AS ADMINISTRATOR OF THE JPMORGAN CHASE RETIREMENT PLAN, DEFENDANTS.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION AND ORDER

Plaintiff Frank Bilello filed this putative class action against his former employer's retirement plan, JPMorgan Chase Retirement Plan, and its administrator, JPMorgan Chase Director of Human Resources, alleging numerous violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. On November 16, 2007, defendants moved to dismiss Bilello's complaint on several grounds, including statutory standing under ERISA. Specifically, defendants argued that Bilello's recent retirement and receipt of a lump-sum payout of his retirement benefits deprived him of standing to pursue his claims because he was no longer an ERISA plan "participant" within the meaning of ERISA Section 502(a), 29 U.S.C. § 1132(a).*fn1

An Opinion of January 6, 2009 found that Bilello was a "participant" and declined to dismiss the complaint on this ground. Bilello v. JPMorgan Chase Retirement Plan, 592 F. Supp. 2d 654, 669 (S.D.N.Y. 2009) (the "January 6 Opinion").*fn2

On January 21, 2009, defendants moved pursuant to 28 U.S.C. § 1292(b) to certify an immediate appeal from the January 6 Opinion. Billelo's opposition contests that any of the three requirements for certification are met. The motion for certification is denied because no "substantial ground for difference of opinion" exists. 28 U.S.C. § 1292(b).

Section 1292(b) provides in part:

When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order. The Court of Appeals which would have jurisdiction of an appeal of such action may thereupon, in its discretion, permit an appeal to be taken from such order, if application is made to it within ten days after the entry of the order.

28 U.S.C. § 1292(b) (emphasis supplied); Casey v. Long Island R.R. Co., 406 F.3d 142, 146 (2d Cir. 2005). Section 1292 is to be "reserved for those cases where an intermediate appeal may avoid protracted litigation." Koehler v. Bank of Bermuda Ltd., 101 F.3d 863, 865-66 (2d Cir. 1996). This statute is to be narrowly construed, as "the power to grant an interlocutory appeal must be strictly limited to the precise conditions stated in the law." Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 25 (2d Cir. 1990) (citation omitted). It therefore "continues to be true that only 'exceptional circumstances' warrant certification." Id. (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978)). The three elements --- whether an appeal from a finding of statutory standing for a recipient of a lump-sum retirement benefit under a defined benefit plan would materially advance the ultimate termination of the litigation, whether it is a controlling question of law, and whether substantial ground for difference of opinion exists --- will each be considered.

1. Material Advancement of the Ultimate Termination of the Litigation

The issue of the statutory standing of the recipient of a lump-sum benefit under ERISA Section 502, 29 U.S.C. § 1132, is a question of substantial import to this case. Reversal on the issue, defendants correctly argue, would materially advance the ultimate termination of the litigation. Defendants point out that, had Bilello been found to lack statutory standing, all nine of his class-wide claims would have been dismissed. These claims include all of Bilello's claims relating to the conversion of his defined-benefit retirement plan to a cash balance plan and the subsequent plan amendments. His only remaining claims would be his two individual claims for statutory penalties for defendants' alleged failures to timely provide him with plan documents and provide a statement of his benefits in 2007. As defendants note, these two claims carry a maximum penalty of $100 per day, a recovery dwarfed by a potential recovery on the class-wide claims, which could force a recalculation of benefits for thousands of employees and a revocation of retirement plan formulas in place for nearly two decades should a class be certified and Bilello ultimately prevail.

Bilello argues that a reversal on the question of his statutory standing would nonetheless not "materially advance the ultimate termination of the litigation" because, among other reasons, some of the counts in the complaint would survive, as they do not arise under ERISA Section 502(a). Plaintiff's argument reads the phrase "materially advance" out of the statute, arguing that only an issue that entirely disposes of a lawsuit merits interlocutory review.

Finding that Bilello lacked standing would "avoid protracted litigation." Koehler, 101 F.3d at 866. It would terminate nearly all of Bilello's claims, any possibility of class certification, and diminish any possible recovery to a small fraction of what it is should his nine class-wide claims survive a motion to dismiss. It would therefore materially advance the ultimate termination of the litigation.

2. Controlling Question of Law

Arguing that statutory standing is also a controlling question of law, defendants note that it is a pure legal issue requiring statutory interpretation that will materially affect the outcome of the case, for reasons explained above. Bilello responds that the question of the statutory standing of a former employee who has received a lump-sum payout of his retirement benefit is not controlling because an alternative basis for finding that he has standing exists. Noting that he retired during the pendency of the lawsuit, but was a current employee of JPMorgan Chase at the time the lawsuit was filed, Bilello asserts that standing is determined at the time a lawsuit is filed, citing In re State Street Bank & Trust Co. ERISA Litigation, 579 F. Supp. 2d 512, 516 (S.D.N.Y. 2008). This argument is based on a line of cases concerned with constitutional standing under Article III, not statutory standing under ERISA. See, e.g., Coan v. Kaufman, 457 F.3d 250, 256 (2d Cir. 2006) (distinguishing statutory standing under ERISA from constitutional standing). Bilello's statutory ...


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