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KEACH v. U.S. TRUST COMPANY

December 30, 2002

DEBRA KEACH AND PATRICIA SAGE, PLAINTIFFS,
V.
U.S. TRUST COMPANY, N.A., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Michael M. Mihm, United States District Judge

ORDER

Now before the Court is Defendant Valuemetrics Advisors, Inc.'s ("Valuemetrics") Motion for Summary Judgment. For the reasons set forth below, the Motion for Summary Judgment [#382] is GRANTED.

FACTUAL BACKGROUND

The basic factual background has been sufficiently set forth in the prior orders of this Court, and familiarity therewith is presumed. The present motion is brought by Valuemetrics, the financial consulting firm that performed appraisals of F&G stock for the ESOP from 1988 through 1994 and 1996 through 2001, and also provided consulting services to F&G and its Board of Directors in connection with the 1995 ESOP transaction. The matter is now fully briefed and ready for resolution. This Order follows.

DISCUSSION

Summary judgment should be granted where "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party has the responsibility of informing the Court of portions of the record or affidavits that demonstrate the absence of a triable issue. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party may meet its burden of showing an absence of disputed material facts by demonstrating "that there is an absence of evidence to support the non-moving party's case." Id. at 325. Any doubt as to the existence of a genuine issue for trial is resolved against the moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Cain v. Lane, 857 F.2d 1139, 1142 (7th Cir. 1988).

If the moving party meets its burden, the non-moving party then has the burden of presenting specific facts to show that there is a genuine issue of material fact. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986). Federal Rule of Civil Procedure 56(e) requires the non-moving party to go beyond the pleadings and produce evidence of a genuine issue for trial. Celotex, 477 U.S. at 324. Nevertheless, this Court must "view the record and all inferences drawn from it in the light most favorable to the [non-moving party]." Holland v. Jefferson Nat. Life Ins. Co., 883 F.2d 1307, 1312 (7th Cir. 1989). Summary judgment will be denied where a reasonable fact-finder could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Hedberg v. Indiana Bell Tel. Co., 47 F.3d 928, 931 (7th Cir. 1995).

Valuemetrics has moved for summary judgment based on the argument that it was not a fiduciary to the ESOP plan. A fiduciary is one who owes duties to the plan participants and beneficiaries; a fiduciary must exercise care, skill, prudence, and diligence in fulfilling those duties. 29 U.S.C. § 1104(a).

Under ERISA, an individual or entity can become a fiduciary in three ways: (1) being named as a fiduciary in the written plan instrument, 29 U.S.C. § 1102(a); (2) being named and identified as a fiduciary pursuant to a procedure specified in the written plan instrument, 29 U.S.C. § 1102(a)(2); or (3) meeting the definition of a fiduciary contained in 29 U.S.C. § 1002(21):

[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, (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan, or has any authority or responsibility to do so, or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan.

29 U.S.C. § 1002(21)(A).

For purposes of addressing this motion, it is undisputed that Valuemetrics was never named as a fiduciary or as an investment manager in the ESOP plan documents. It was never involved in administering the ESOP and had no discretionary authority or control over the ESOP's administration. However, Plaintiffs argue that Valuemetrics was a fiduciary to the ESOP plan under § 1002(21)(A) because it exercised control over plan assets and rendered investment advice with respect to the property of the plan.

In this circuit, "a fiduciary is a person who exercises any power of control, management or disposition with respect to monies or other property of an employee benefit fund, or has the authority or responsibility to do so." Farm King Supply v. Edward D. Jones & Co., 884 F.2d 288, 292 (7th Cir. 1989), citing Forys v. United Foor & Commercial Worker's International Union, 829 F.2d 603, 607 (7th Cir. 1987). Under this definition, a showing of authority or control requires "actual decision-making power" rather than the type of influence that a professional advisor may have with respect to decisions to be made by the trustees or fiduciaries that it advises. Id.; Pappas v. Buck Consultants, Inc., 923 F.2d 531, 535 (7th Cir. 1991). Professionals who do no more than provide advice to plan trustees are not fiduciaries. Pappas, 923 F.2d at 535; Laborers' Pension Fund v. Arnold, 2001 WL 197634, at *3-5 (N.D.Ill. Feb. 27, 2001).

Here, Valuemetrics had made annual valuation appraisal reports for the ESOP. On March 16, 1995, Valuemetrics wrote a letter to F&G and the ESOP Administrative Committee proposing an offer to assist the two entities in formulating a stock purchase transaction with the ESOP. However, the ESOP never accepted Valuemetrics' offer. In mid-1995, Valuemetrics was retained, not by the ESOP but by the F&G Board of Directors, to update its valuation analysis, determine an optimal structure for the proposed 1995 ESOP transaction to maximize the value received by selling shareholders, prepare a transaction memorandum for the sale, negotiate with the ESOP trustee, and present the Board of Directors of F&G with an opinion on the fairness of the transaction. The documents produced in connection with the ...


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