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Acosta v. Dewalt

United States District Court, E.D. Washington

June 7, 2019

R. ALEXANDER ACOSTA, Secretary of Labor, United States Department of Labor, Plaintiff
v.
JAMES DEWALT, ET AL., Defendants.

          CONSENT ORDER

          THOMAS O. RICE CHIEF UNITED STATES DISTRICT JUDGE

         Plaintiff R. Alexander Acosta, Secretary of Labor, United States Department Labor (“Secretary”) filed a complaint (“Complaint”) in the above captioned action against James DeWalt; Robert G. Bakie; Jack L. Fallis, Jr.; Jeffrey A. Barton; Associated Industries Management Services, Inc. (“AIMS”); Associated Industries of the Inland Northwest (“AIIN”); and Associated Employers Health and Welfare Trust (collectively, the “Defendants”) under Title I of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., as amended. After negotiation, the Secretary, the Defendants, and the Trusts that are signatories to this consent order (collectively referred to as the “Parties, ” or individually as a “Party”) hereby stipulate to the findings and consent to the terms and this Court's entry of this consent order (“Order”) as the sole and complete memorialization of the final resolution and settlement of all claims and issues in this action.

         1. The Secretary alleged that Defendants violated their ERISA fiduciary duties and engaged in transactions prohibited by ERISA from 2009 through 2014. The alleged violations involved payments to defendant AIMS for administrative services rendered to numerous ERISA-covered employee benefit plans and to the Associated Employers Health and Welfare Trust (the “AET Trust”). The alleged payments were made using assets held in trust by the AET Trust for those plans. In his complaint, the Secretary named the AET Trust as a defendant under Fed.R.Civ.P. 19(a) solely to enable the Court to award complete relief.

         2. Five other trusts, which are successors to the AET Trust, are signatories to this Order. These five other trusts are: the Associated Employers Trust Commercial Construction Health and Welfare Trust, the Columbia Retail Benefits Trust, the Greater Columbia Manufacturing Benefits Trust, the Greater Northwest Health Industry Benefits Trust, and the Pacific Business Resource Benefits Trust. Each of these trusts has voluntarily submitted itself to this Court's jurisdiction for the purposes of enforcing this Order. This Order refers to the AET Trust and these five trusts collectively as the “Trusts.”

         3. The Court has jurisdiction over the subject matter of this action and has jurisdiction over the Parties.

         4. The Parties agree that venue of this action properly lies in this Court.

         5. In agreeing to this Order, Defendants neither admit nor deny any allegation in the Secretary's complaint, except those allegations that concern federal jurisdiction and venue. To that end, Defendants admit that federal jurisdiction exists over this action and that venue in this Court is proper.

         6. As part of his basis for agreeing to this Order, the Secretary has relied on written and sworn financial disclosures from defendants James DeWalt, Robert G. Bakie, and AIIN.

         7. The Parties waive any trial of all issues arising from the Secretary's complaint in this action.

         8. The Parties consent to the terms and entry of this Order by the Court. Furthermore, the Parties expressly authorize their respective attorneys or agents to make the relevant agreements set forth in this Order, to sign this Order, and to consent to the Court's entry of this Order as submitted by the Parties. The Parties represent that counsel of their choosing has informed them of the Order's effects and purposes, including its settlement terms.

         9. As part of the settlement, Defendants James DeWalt; Robert G. Bakie; Jack L. Fallis, Jr.; Jeffrey A. Barton; Associated Industries Management Services, Inc.; and Associated Industries of the Inland Northwest (“Paying Defendants”) agree to pay, or cause to be paid on their behalf, $1, 000, 000.00 (the “Settlement Amount”), to AIIN. AIIN agrees to segregate and hold the Settlement Amount in trust for the benefit of the participants and beneficiaries of the participating ERISA plans, pending the appointment of an Independent Fiduciary as set forth herein. Upon appointment of the Independent Fiduciary, AIIN agrees to pay the Settlement Amount to the Independent Fiduciary, who shall hold the Settlement Amount in trust for use only as set forth herein. Furthermore, the Paying Defendants agree to pay, or cause to be paid on their behalf, $200, 000.00 to the U.S. Department of Labor, representing a penalty assessed by the Secretary under ERISA § 502(1), 29 U.S.C. § 1132(1).

         10. The Secretary and his employees, agents, other representatives, predecessors in interest, and successors in interest forever release and otherwise discharge any and all claims (including any civil money penalty under ERISA section 502(1), 29 U.S.C. § 1132(1)) arising all or in part from the AET Trust's payments to AIMS during the period June 2010 through February 2014 for administrative services that AIMS provided to the AET Trust and the plans during 2009 through 2013, as against (a) James DeWalt; (b) Robert G. Bakie; (c) Jack L. Fallis, Jr.; (d) Jeffrey A. Barton; (e) Associated Industries Management Services, Inc. and its officers, directors, agents, employees, administrators, predecessors in interest, and successors in interest; (f) Associated Industries of the Inland Northwest and its officers, directors, agents, employees, administrators, predecessors in interest, and successors in interest; and (g) the Trusts and their officers, directors, agents, trustees, employees, administrators, predecessors in interest, and successors in interest.

         11. The Trusts and all Defendants, and their employees, agents, other representatives, administrators, predecessors in interest, and successors in interest forever waive, release, and discharge any and all claims that any of them may have against the Secretary, his employees, agents, other representatives, predecessors in interest, or successors in interest, arising all or in part from the Secretary's investigation, filing, prosecution, maintenance, or settlement of this action, including but not limited to, any claims arising under the Equal Access to Justice Act, 28 U.S.C. § 2412.

         12. This Order is the sole record and sets forth all terms of the settlement of this action. The settlement memorialized herein becomes effective only upon the Court's entry of this Order upon the docket, and can only be modified by a subsequent Court order.

         BASED on the Court's findings and the undersigned Parties' admissions, stipulations, and agreements set forth above, the Court hereby ORDERS, AND DECREES as follows:

         13. This Order fully resolves all claims that the Secretary pleaded, alleged or could have pleaded, based on the facts alleged in the Secretary's complaint in this action.

         14. Within 20 calendar days after the Court enters this Order, Paying Defendants shall pay, or cause to be paid on their behalf, a total of $1, 000, 000.00 (the “Settlement Amount”) to AIIN to be segregated and held in trust pending the Independent Fiduciary's appointment as set forth herein. Upon the Independent Fiduciary's appointment, AIIN shall pay the Settlement Amount to the Independent Fiduciary who shall hold the Settlement Amount in trust and for use as set forth herein.

         15. Within 20 calendar days after the Court enters this Order, Paying Defendants shall pay, or cause to be paid on their behalf, $200, 000.00 (the “502(1) Payment”) to the U.S. Department of Labor, representing a penalty assessed by the Secretary under ERISA § 502(1), 29 U.S.C. § 1132(1).

         If sent through the U.S. Postal Service, this payment shall be sent to:

U.S. Department of Labor ERISA Civil Penalty P.O. Box 71360 Philadelphia, PA 19176-1360

         The check will be made payable to the United States Department of Labor and will reference EBSA Case No. 71-010457(48). If Paying Defendants or a payor on their behalf want to send this check by commercial express courier, they shall contact Soroosh Nikouei at the Department of ...


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