United States District Court, N.D. Illinois
March 2, 2004.
IN RE SEARS, ROEBUCK & CO., ERISA LITIGATION
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff's, participants in a Sears Employee Retirement Income
Security Act of 1974 ("ERISA") plan, sued Defendants, Sears, Roebuck
& Co., Alan Lacy, Paul Liska, Thomas Bergmann, Greg Lee, and Glen
Richter, the Sears Board of Directors, unnamed members of the ERISA plan
Investment Committee, and the Investment Committee, for violations of
ERISA. Now before the Court is Defendants' Motion to Dismiss Plaintiffs'
Amended Complaint. For the following reasons, that motion is granted in
part and denied in part.
In reviewing a motion to dismiss, the court reviews all facts alleged
in the complaint and any reasonable inferences drawn therefrom in the
light most favorable to the plaintiff. See Marshall-Mosby v.
Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000). A
plaintiff is not required to plead the facts or elements of a claim, with
the exceptions found in Federal Rule of Civil Procedure 9. See
Swierkiewicz v. Sorema, 534 U.S. 506, 511 (2002); Walker v.
Thompson, 288 F.3d 1005, 1007 (7th Cir. 2002). Dismissal is
warranted only if "it appears beyond a doubt that the plaintiff
can prove no set of facts in support of his claim which would
entitle him to relief." Conley v. Gibson, 355 U.S. 41,
45-46 (1957). The "suit should not be
dismissed if it is possible to hypothesize facts, consistent with
the complaint, that would make out a claim." Graehling v. Village of
Lombard, Ill., 58 F.3d 295, 297 (7th Cir. 1995).
Generally, matters outside the pleadings cannot be considered on a
motion to dismiss. See, e.g., Corman Derailment Serv., LLC v. Int'l
Union of Operating Eng'rs Local Union 750, 335 F.3d 643, 647 (7th
Cir. 2003). However, documents that a defendant attaches to a motion to
dismiss may be considered if they are referred to in the plaintiff's
complaint and are central to the plaintiff's claim. Albany Bank &
Trust Co. v. Exxon Mobil Corp., 310 F.3d 969, 971 (7th Cir. 2002).
The facts, for the purposes of this motion, are taken as true from
Plaintiffs' Complaint. Plaintiff's, Bill Kehr, Michael G. Cheperka,
Kenneth Hawkins, and Margaret Villano, are participants in a 401(k)
Savings Plan (the "Plan"). Defendant Sears, Roebuck, and Co. ("Sears")
sponsored and administered the Plan. Another Defendant, the Investment
Committee, had the authority to choose the type of investment options, a
particular investment style, and make other investment decisions with
respect to the Plan. Defendant Alan Lacy was, at all relevant times, the
Chief Executive Officer, President, and Chairman of the Board at Sears.
The Investment Committee distributed Summary Plan Descriptions and Plan
prospectuses to all Plan participants, pursuant to relevant federal
Defendants Paul Liska, Thomas Bergmann, Greg Lee, and Glen
Richter who, at all relevant times, were high-ranking Sears
executive officers, were members of the Investment Committee, along with
thirty unnamed fiduciary Defendants (collectively the "Committee
Defendants"). The named members of the Investment Committee had
substantial knowledge of
Sears' business plans, operations, finances, and access to internal
company reports and memoranda. These Defendants were also familiar with
Sears' accounting and financial practices.
Defendants Hall Adams, Jr., Brenda Barnes, James Cantalupo,
Donald Carry, W. James Farrell, Michael Miles, Hugh Price, Dorthy Terell,
and Raul Yzaguire were, at all relevant times, members of the
Sears Board of Directors (collectively the "Director Defendants"). The
Sears Board of Directors is the primary personification through which
Sears effectuated its Plan-related duties.
Specific Plan Provisions
The Plan allows eligible employees to contribute to the Plan through
payroll deductions. Participants may then direct their investment into
one or more of several funds available under the Plan. One of the
available funds is the Company Stock Fund.
The Plan designates Sears as a named fiduciary, but only for the
non-investment operations of the Plan. The Plan delegates responsibility
for investment decisions to the Investment Committee, including those
related to the Sears Stock fund. The Board of Directors is given the
authority to appoint members to the Investment Committee. § 1.3.
The Plan also requires that a Company Stock Fund must exist, which is
"designed to invest exclusively in [Sears] Company Stock." Plan §
6.8. Sears is required to offer the Company Stock Fund as one of the
investment funds offered under the Plan. Plan § 6.1. Employer
matching contributions made in cash must be invested in the Company Stock
Fund, and Employer contributions made in Company Stock are held under the
Company Stock Fund.
The Employer contributions in the Company Stock Fund cannot be
transferred to any other investment except by the participating employee.
Plan § 6.3. However, to the extent that
the Plan requires matching participant contributions, a certain
portion of each Investment Fund, including the Company Stock Fund, may be
held in cash or cash equivalents, as considered appropriate by the
Investment Committee. Plan § 6.5.
Sears' Financial Statements
In financial reports filed with the Securities and Exchange Commission
("SEC"), Sears misrepresented its true financial health and
profitability. Specifically, in Sears' 2001 annual report, Sears stated
on SEC Form 10-K that its provisions for uncollectible accounts were
calculated to be $1.344 billion in 2001. Sears also represented that it
maintained an adequate allowance for its uncollectible accounts to
reflect losses inherent in the owned portfolio. Sears also filed numerous
press reports stating that the company was extremely profitable, revenue
was up, and earnings were expected to increase.
On May 7, 2002, Sears then filed its first quarter financial report on
SEC Form 10-Q. The report indicated that the provisions for uncollectible
accounts increased from $190 million to $371 million in the first
quarter. This change was the result of additional credit card receivable
balances recorded when Sears consolidated its securitization structure
for financial reporting purposes in the second quarter of 2001. Once
again, press reports issued by Sears projected substantial growth. Based
on all this information, and in spite of a general economic downturn
throughout the country, Sears stock reached $59.90 per share in the early
summer of 2002.
On August 9, 2002, Sears filed another quarterly Form 10-Q report with
the SEC. This report stated that Sears was making a conservative
accounting change in determining its uncollectible account allowances. In
October of 2002, Sears began to issue a series of reports stating that
the financial reports as originally reported for the first and second
quarters of 2002
were incorrect. Sears explained that it was amending its previous
reports, under interpretive guidance from the SEC. The provision for
uncollectible accounts were misstated and were required to be
significantly increased, while net operating income was significantly
reduced. Thereafter, Sears filed public statements attesting to similar
Sears also reported similar problems with its credit card division. On
October 4, 2002, Sears issued a press release stating that Defendant
Liska would take over the credit card division. On October 7, 2002, Sears
unexpectedly warned that its third quarter earnings would fall below
expectations because of a profit slowdown in its credit card division.
This forecast was true, and Sears' earnings went down significantly in
the third quarter of 2002. In reaction to all of Sears' announcements,
Sears stock price dropped significantly. On October 17, 2002, Sears stock
dropped from $33.95 a share to $23.15 a share, on trading of 36 million
Just before the Class Period began, on January 17, 2002, Sears had over
$1.1 billion of assets, representing one-third of all Plan assets, in the
Company Stock Fund. When the stock price dropped, Plaintiff's suffered
losses resulting from their own investments in the Company Stock and
matching investments made by Sears.
Plan Investment in Sears Stock Claims
Defendants first argue that Plaintiffs' claims against Sears and the
Committee Defendants based on Plan investments in Sears Stock (Counts I,
II, and VI) fail to state a claim. According to Defendants, the Amended
Complaint fails to establish that Sears was a fiduciary with respect to
investment decisions; and the actions claimed to be in breach of the
fiduciary duty were expressly permitted by ERIS A and required by the
Plan. The Defendants also claim that even if
the Committee Defendants had some discretion to override the terms
of the Plan, the Complaint fails to establish the Committee Defendants
abused their discretion in following Plan terms. Finally, the Defendants
argue that Plaintiff's failed to state a claim for a breach of the duly
Sears as a Fiduciary
A claim for a breach of a fiduciary duty under ERISA is only valid
against a fiduciary. Plumb v. Fluid Pump Serv., Inc.,
124 F.3d 849, 854 (7th Cir. 1997) (Plumb). Under ERISA,
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 the plan.
29 U.S.C. § 1002(21)(A). Under this definition, an entity "may
be an ERISA fiduciary for some purposes, but not others." The first place
courts look to determine whether a defendant is a fiduciary is the plan
documents. Plumb, 124 F.3d at 854.
The Sears Plan designates Sears as a named fiduciary for the
non-investment operations of the Plan, In addition, while Plan § 1.3
delegates responsibility for Plan investment decisions to the Investment
Committee, including those related to the Sears Stock Fund, numerous
places in the Plan place an "overarching fiduciary duty" on Sears in
discharging "its duties," in accordance with Plan § 13.6. Plaintiff's
also allege in their Amended Complaint that Sears, as the Plan
administrator, was a fiduciary. Thus, the determination of whether Sears
was a fiduciary with respect to investment decisions is a question of
fact that is not properly resolved by a motion
to dismiss. Accordingly, to the extent Defendants seek to dismiss
Sears as a fiduciary with respect to investment decisions, in Counts I,
II, and VI, that motion is denied.
Discretion to Override the Plan
Generally, an Employee Stock Ownership Plan ("ESOP") is an ERISA plan
"designed primarily to invest in qualifying employer securities," such as
shares of stock in the company sponsoring the plan.
29 U.S.C. § 1106(d)(6)(A). ESOPs are generally exempt from the general duty to
diversify plan assets and the duty of prudence insofar as it requires
diversification. 29 U.S.C. § 1104(a)(2). Despite this statute, "there
may come a time when such investments [in ESOPs] may no longer serve the
purpose of the" ERISA plan. Moench v. Robertson, 62 F.3d 553,
571 (3d Cir. 1995) (Moench).
Any inquiry into the investments of an ESOP fiduciary is limited. "[A]n
ESOP fiduciary who invests the assets in employer stock is entitled to a
presumption mat it acted consistently with ERISA by virtue of that
decision. However, the plaintiff may overcome that presumption by
establishing that the fiduciary abused its discretion by investing in
employer securities." Moench, 62 F.3d at 571. Some amount of
discretion by the entity controlling the plan is required to invoke a
fiduciary duty. Pohl v. Nat'l Benefits Consultants, Inc.,
956 F.2d 126, 129 (7th Cir. 1992).
Here, the Plan set up a Company Stock Fund, which was "designed to
invest exclusively in Company Stock." Plan § 6.8. Sears is required
to offer the Company Stock Fund as one of the investment funds offered
under the Plan. Plan § 6.1. Employer matching contributions made in
cash are then required to be invested in the Company Stock Fund, and
Employer contributions made in Company Stock are held under the Company
Stock Fund. The Employer contributions
in the Company Stock Fund cannot be transferred to any other
investment except by the participating employee. Plan § 6.3.
However, to the extent the Plan requires matching participant
contributions, a certain portion of each Investment Fund, including the
Company Stock Fund, may be held in cash or cash equivalents, as
considered appropriate by the Investment Committee. Plan § 6.5.
Moreover, 29 U.S.C. § 1104(a)(1)(D) only required the Investment
Committee to follow the Plan "insofar as such documents and instruments
were consistent with the provisions of" ERISA. Plaintiff's allege that
"blindly following" the Plan provisions requiring matching contributions
to be made in Sears stock would be imprudent, in violation of ERISA
fiduciary duties, when the Investment Committee knew or should have known
the price of the stock was fraudulently inflated. Accordingly,
Plaintiff's have stated a claim against the Investment Committee for
causing the Plan to continue to acquire and invest in Company matching
contributions of Sears stock.
Plaintiff's have also stated a claim for their remaining investment
plan allegations. Plaintiff's have alleged that the Investment Committee
knew or should have known the true financial condition of the Sears
credit business and that Sears misrepresented this condition. In contrast
to Defendants' authority of Crowley v. Corning, Inc.,
234 F. Supp.2d 222, 230 (W.D.N.Y. 2002), Plaintiff's have not simply rested on
this allegation. Instead, Plaintiffs' Complaint alleges that some of the
members of the Investment Committee were senior executives with
substantial knowledge of the business plans, operations, and finances of
Sears. These executives were in a position to know that Sears stock was
not a prudent investment because it was inflated through Sears'
inaccurate accounting practices. The Investment
Committee thereafter kept this knowledge secret and knowingly
disseminated material that was inaccurate and misleading to Plan
Defendants also rely on Hull v. Policy Mgmt. Sys. Corp., 2001
U.S. Dist. LEXIS 22343, No. 3:00-778-17, at * 25-27 (D.S.C. Feb. 9,
2001), for the proposition that an investment committee cannot be forced
to acquire inside information, in violation of federal securities laws,
to determine if the stock was irregularly inflated. However, the
Hull plaintiff's did not allege that the investment committee
had actual knowledge of any misinformation. On the contrary, here, the
Plaintiff's have specifically alleged that the Investment Committee knew
or should have known that investing in Sears stock was imprudent. Under
these circumstances, courts have found that defendants "cannot escape
potential liability on ERISA breach of duty claims because of any duties
they may have under securities laws." Rankin v. Rots,
278 F. Supp.2d 853, 878 (E.D. Mich. 2003) ("Ranking; see also In re
WorldCom, Inc., 263 F. Supp.2d 745, 765 (S.D.N.Y. 2003) ("In re
WorldCom") ("When a corporate insider puts on his ERISA hat, he is
not assumed to have forgotten adverse information he may have acquired
while acting in his corporate capacity.").
Duty of Loyalty
Plaintiff's have also sufficiently stated a cause of action for breach
of the fiduciary duty of loyalty under ERISA. ERISA specifically provides
that a sponsor of an employee benefit plan may appoint its own officers
to administer the plan. 29 U.S.C. § 1108(c)(3). However, Plaintiff's
have alleged that the officers who were appointed to the Investment
Committee could not be loyal to Plan participants because the officers'
compensation was significantly tied to the price of Sears stock.
Therefore, the officers had an incentive to heavily invest the Plan's
funds in Sears
stock instead of properly informing Plan participants of material
negative information concerning the irregularities. Defendants fail to
present any authority that these allegations are insufficient to
withstand a motion to dismiss.
Defendants also argue that the concealment allegations in Count 1
should he dismissed because those claims have not been pled with
particularity, in accordance with Federal Rule of Civil Procedure 9(b),
and that any concealment was not made in a fiduciary capacity.
Additionally, Defendants state that Plaintiffs' claims alleging that
Defendants failed to disclose non-public information fails to state a
Rule 9(b) applies to ERISA claims that allege misrepresentations.
Cook v, Exelon Corp., 2002 U.S. Dist. LEXIS 18125, at *13 (N.D.
Ill. Sept. 26, 2002); Adamczyk v. Lever Bros. Co., 991 F. Supp. 931,
939 (N.D. Ill. 1997). To satisfy Rule 9(b), Plaintiff's must allege
"the identity of the person who made the misrepresentation, the time,
place and content of the misrepresentation, and the method by which the
misrepresentation was communicated to the plaintiff." Viacom, Inc. v.
Harbridge Merchant Servs., 20 F.3d 771, 777 (7th Cir. 1994).
Plaintiffs' allegations meet these requirements. According to the
Complaint, the Investment Committee and its members were making the
misrepresentations. The misrepresentations then occurred in public
financial statements filed with the SEC during the class period, with key
misrepresentations being made during the first and second quarters of
2002. The alleged misrepresentations stated that Sears' credit card
uncollectible accounts method adequately allowed for losses. Finally, the
misrepresentations were communicated to Plaintiff's in financial
disclosure statements and prospectuses given to Plan participants.
Defendants also contend that any statement made in SEC filings cannot
be said to have been made in a fiduciary capacity. However, whether the
Investment Committee, based on their status as Sears officers, knew or
should have known of the SEC misrepresentations published by Defendants
is a question of fact. See In re WorldCom, Inc., 263 F. Supp.2d
at 765 ("When a corporate insider puts on his ERIS A hat, he is not
assumed to have forgotten adverse information he may have acquired while
acting in his corporate capacity.").
Failure to Disclose Claims
Defendants argue that absent a specific ERIS A requirement mandating a
duty to disclose pertinent information, the fiduciary duty provisions of
ERISA do not require a plan sponsor to disclose non-public information.
See Ehlman v. Kaiser Found. Health Plan, 198 F.3d 552, 555-56
(5th Cir. 2000). However, Plaintiff's do not simply allege that
Defendants failed to disclose non-public information. Instead,
Plaintiff's claim that Defendants kept material information secret, while
knowingly conveying misleading information that both incorrectly stated
the proper accounting of key accounts, such as account receivables, and
misstated financial statements. Federal securities laws require that this
information must be disseminated to plan participants, and; as mentioned
earlier, Defendants may be subject to ERISA liability if they knowingly
fail to disclose adverse information. See In re WorldCom,
263 F. Supp.2d at 767, n.14.
Defendants, in addition to their previously discussed arguments, seek
to dismiss Count VI, Plaintiffs' failure to diversify claim, for lack of
loss causation. Specifically, Count VI seeks recovery exclusively for
Sears stock held by the Plan on and after January 17, 2002.
Plaintiff's must allege a causal connection between the alleged breach
and the alleged losses incurred by the Plan. See, e.g., McTigue v.
City of Chicago, 60 F.3d 381, 382 (7th Cir.
1995). According to Defendants, this causal connection is
non-existent. If the Investment Committee, or any other Defendant, knew
about the allegedly true financial condition of Sears, that information
must be disclosed before the Investment Committee could act on it.
See generally United States v. O'Hagan, 521 U.S. 642, 651-52
(1997). Nothing in ERISA would exempt Defendants from this requirement.
29 U.S.C. § 1144(d). Therefore, if Defendants legally disclosed the
information and then attempted to sell existing Plan holdings in Sears
stock, the price would have dropped anyway, and the Plaintiff's would
have suffered losses.
This theory, known as the "efficient capital markets hypothesis," has
been embraced by both the Supreme Court and the Seventh Circuit.
Basic, Inc. v. Levinson, 485 U.S. 224, 246-47 (1988); West
v. Prudential Secs., Inc., 282 F.3d 935, 938 (7th Cir. 2002).
Plaintiff's, however, properly argue that issues of loss causation are
factual matters not proper to resolve on a motion to dismiss; thus,
Plaintiff's have sufficiently pled loss causation.
Furthermore, Plaintiff's also allege that publicly known macroeconomic
facts were available to Defendants before the start of the class period.
According to Plaintiff's, these factors, including increased competition
and the general downturn of the economy, indicated there was no reason
for the Plan to invest so heavily in Sears stock. Whether these
macroeconomic factors existed and their effect on Sears stock are
questions of fact. Therefore, Defendants' Motion to Dismiss Count VI is
Failure to Monitor
Defendants next argue that the Complaint fails to state a claim against
Sears, Lacy, or the Director Defendants based on their alleged failure to
monitor the Investment Committee defendants and provide them with
information. First, Defendants contend that the Amended
Complaint fails to show Lacy was a fiduciary with respect to
monitoring the Committee Defendants. Second, Defendants claim that
Plaintiff's fail to plead any of the relevant Defendants breached their
fiduciary duties to monitor the Investment Committee. Finally, Defendants
argue Plaintiff's fail to state a claim based on Defendants' failure to
provide non-public information to the Investment Committee.
Lacy as a Fiduciary
As stated earlier, a claim for a breach of a fiduciary duty under ERISA
is only valid against a fiduciary; and a person may be an ERISA fiduciary
for some purposes but not others. Plumb, 124 F.3d at 854. Under
ERISA guidelines, a fiduciary who delegates responsibility or appoints
other fiduciaries has a duty to monitor those delegates.
29 C.F.R. § 2509.75-8, FR-17; see also Ed Miniat, Inc. v.
Globe Life Ins. Group, Inc., 805 F.2d 732, 736 (7th Cir.
1986) (explaining that corporations may have a duty to monitor the
actions of the fiduciaries administering the plan); Leigh v. Engle,
727 F.2d 113, 135 (7th Cir. 1984) (holding that fiduciaries have
a duty to monitor their appointees).
Here, Plaintiff's allege that the Plan gave Sears, who acted through
its Board of Directors, the authority to appoint members to the
Investment Committee. Plan § 1.3. Defendants argue that Plaintiff's
allege no facts that show how Lacy or the other Director Defendants
functioned as fiduciaries with regard to the appointment or monitoring of
the Investment Committee. However, generally, when considering a motion
to dismiss, Plaintiff's only need to place Defendants on notice of the
claims. Therefore, Plaintiff's have alleged that Lacy and the other
Director Defendants are fiduciaries with respect to monitoring the
Breach of Duty to Monitor
Defendants next argue that Plaintiff's failed to state a breach of any
duty to monitor the Investment Committee. Under
29 C.F.R. § 2509.75-8, FR-17, the duty to monitor requires that:
[a]t reasonable intervals the performance of
. . . fiduciaries should be reviewed by the
appointing fiduciary in such a manner as may be
reasonably expected to ensure that their
performance has been in compliance with the terms
of the plan and statutory standards, and satisfies
the needs of the plan.
Here, Plaintiff's allege that the relevant Defendants, the fiduciaries
who appointed the Investment Committee members, failed to monitor the
performance of the Investment Committee. Specifically, Plaintiff's allege
that these Defendants, members of the Board of Directors, knew or should
have known that offering the Company Stock Fund was an imprudent
investment, and that they should have monitored the Investment Committee
and its members. Whether the relevant Defendants Sears, Lacy, and
the other Directors monitored the Investment Committee to
determine if the Committee was not acting consistently with ERISA is a
question of fact. Accordingly, Plaintiff's have stated a claim for breach
of duty for the failure to monitor the Investment Committee.
Defendants also claim that no breach of the duty to monitor can arise
from the failure to provide non-public information to the Investment
Committee. However, as discussed earlier, defendants "cannot escape
potential liability on ERISA breach of duty claims because of any duties
they may have under securities laws." Rankin, 278 F. Supp.2d at
878. This proposition also holds true for Lacy and the other Director
Defendants, who Plaintiff's allege had knowledge of the accounting
irregularities at Sears. Therefore, Defendants* Motion to Dismiss Count
VI on this ground is denied.
A co-fiduciary may be liable for another's breach of fiduciary duty if
he: (1) fails to follow his fiduciary duties, thus enabling another
fiduciary to commit a breach; and (2) has knowledge of the breach
committed by another fiduciary and takes no reasonable efforts to remedy
the breach. 29 U.S.C. § 1105(a)(2)-(3). Thus, as the both sides
agree, a primary breach must exist to plead a co-fiduciary liability
claim. Here, primary breaches have been upheld against Sears, Lacy, the
Director Defendants, the Investment Committee, and the individual
Investment Committee members.
Defendants argue that Plaintiff's have impermissibly lumped all
Defendants together without explaining how a particular Defendant enabled
another fiduciary to commit a breach or took no reasonable efforts to
remedy a knowledge of the breach. Plaintiff's allege that all fiduciaries
breached their duties, as required under § 1105(a)(2)-(3). However,
Count V of Plaintiffs' Complaint does not contain allegations that put
Defendants on notice of the particular charges against each Defendant.
Accordingly, Count V of Plaintiffs' Complaint is dismissed, with leave
to file an Amended Complaint, consistent with Federal Rule of Civil
Procedure, with respect to this Count.
Prohibited Transaction Claim
Defendants next move to dismiss Plaintiffs' prohibited transaction
claim, Count III of the Complaint, in that there are no allegations in
the Complaint that state the Plan purchased shares of Sears stock for
more than the market price. In response, Plaintiff's argue that because
Defendants purchased stock with knowledge it was inflated, the Plan
purchased stock for more than adequate consideration.
Fiduciaries are not permitted to enter into certain prohibited
transactions, such as purchasing securities for more than adequate
consideration. See 29 U.S.C. § 1106-1108. Defendants argue
that "in the case of a security for which there is a generally recognized
market," adequate consideration means paying "the price of the security
prevailing on a national securities exchange." 29 U.S.C. § 1002(18)(A)(i).
Defendants further contend the Sears stock was purchased
on the New York Stock Exchange. However, Plaintiff's allege the
transaction was prohibited because the market price of Sears stock was
inflated, without knowledge by the general public of the fair market
value of the stock, by Defendants' fraud in manipulating financial
reports. This allegation places Defendants on notice of the claim being
asserted. Therefore, Defendants' Motion to Dismiss Plaintiffs'
prohibited transaction claim is denied.
For the foregoing reasons, the Defendants' Motion to Dismiss is denied
in part and granted in part. Count V of Plaintiffs' Complaint is
dismissed, with leave to file an Amended Complaint, consistent with
Federal Rule of Civil Procedure, with respect to this count.
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