United States District Court, D. Rhode Island
STEPHEN DEL SESTO, AS RECEIVER AND ADMINISTRATOR OF THE ST. JOSEPH HEALTH SERVICES OF RHODE ISLAND RETIREMENT PLAN, ET AL. Plaintiffs,
PROSPECT CHARTERCARE, LLC, ET AL., Defendants.
MEMORANDUM OF DECISION
WILLIAM E. SMITH, Chief Judge.
the Court is a request for final approval of a settlement
reached between Plaintiff Stephen Del Sesto
(“Receiver”), as state appointed receiver and
administrator of the St. Joseph Health Services of Rhode
Island Retirement Plan (“Plan”), Named Plaintiffs
Gail J. Major, Nancy Zompa, Ralph Bryden, Dorothy Willner,
Caroll Short, Donna Boutelle, and Eugenia Levesque,
individually and on behalf of others similarly situated
(collectively, “Plaintiffs”), and Defendants St.
Joseph Health Services of Rhode Island
(“SJHSRI”), Roger Williams Hospital
(“RWH”), CharterCARE Community Board
(“CCCB”), and CharterCARE Foundation
(“CCF”)(collectively, the “Settling
Defendants”). Two groups of defendants -- the Diocesan
Defendants and the Prospect Entities (collectively,
the “Non-Settling Defendants”) -- object to
approval of the settlement.
preliminary approval of the settlement, a fairness hearing
was held on August 29, 2019. At the conclusion of that
hearing, the Court GRANTED final approval of the settlement.
See Docket Min. Entry for Aug. 29, 2019. This
memorandum addresses the reasons for the Court's decision
and also certifies the class, class representatives, and
action stems from alleged underfunding of a retirement plan
for nurses and other hospital workers employed by SJHSRI. Am.
Compl. ¶ 54, ECF No. 60. According to the amended
complaint, the Plan, which has 2, 729 participants, is
insolvent. Id. After the Plan was placed into
receivership in 2017, the Receiver and several named
participants, individually and on behalf of a purported class
of plan participants, filed a twenty-three-count complaint in
this Court against several defendants, alleging violations of
the Employee Retirement Income Security Act
(“ERISA”) for failure to meet minimum funding
requirements and breach of fiduciary duty, as well as various
state law claims. See generally Am. Compl.
number of defendants have agreed to settle with Plaintiffs,
resulting in two separate settlement agreements. This
memorandum addresses the settlement agreement between
Plaintiffs and Defendants SJHSRI, RWH, CCCB, and CCF, ECF No.
77-2 (“Settlement B”). Pursuant to Settlement B,
the Receiver will be transferred $4.5 million for deposit
into the Plan assets by CCF and its insurer. See
Settlement B 13; Joint Motion for Settlement Class
Certification, Appointment of Class Counsel, and Preliminary
Settlement Approval 8 (“Joint Mot.”), ECF No
77-1. In exchange, Plaintiffs and Defendants SJHSRI, CCCB,
and RWH will release CCF and the Rhode Island
Foundation from liability. See Settlement
Agreement B 13. In addition, the Receiver will transfer to
CCF any rights he holds in CCF. See Joint Mot. 8.
and Settling Defendants sought preliminary approval of the
settlement, to which the Non-Settling Defendants objected.
See generally Joint Mot.; Diocesan Defs. Response in
Opp. To Joint Mot., ECF No. 80; Prospect Entities Opp. To
Joint Mot., ECF No 81. On May 17, 2019, the Court
preliminarily approved the settlement and directed the
settling parties to give notice to the purported class.
See Order Granting Preliminary Approval 13, 16, ECF
and Settling Defendants now seek final approval of the
settlement. One class member objects on the basis that the
$4.5 million amount transferred to the Plan is insufficient.
The Non-Settling Defendants also reiterate their objections
to the settlement, which will be explained in further detail
order to approve the settlement, the Court must first
determine that it has jurisdiction over the dispute. A
federal court has subject matter jurisdiction under 28 U.S.C.
§ 1331 so long as “the plaintiff's
well-pleaded complaint. . . exhibit[s], within its four
corners, either an explicit federal cause of action or a
state-law cause of action that contains an embedded question
of federal law that is both substantial and disputed.”
R.I. Fishermen's All. v. R.I. Dept. of Envtl.
Mgmt., 585 F.3d 42, 48 (1st Cir. 2009); see 28
U.S.C. § 1331. Plaintiffs' complaint alleges four
claims which arise under ERISA -- a federal statute.
Plaintiffs must meet statutory and constitutional
requirements for standing as part of the threshold
jurisdictional analysis. See In re Deepwater
Horizon, 739 F.3d 790, 798 (5th Cir. 2014). As to
statutory standing, the civil enforcement provision under
ERISA, 29 U.S.C. § 1132, allows claims by plan
participants, beneficiaries, and fiduciaries for breach of
fiduciary duty and equitable relief. See 29 U.S.C.
§ 1132(a)(2) & (3). The named plaintiffs are all
current participants of the Plan, and the purported class
includes participants and beneficiaries of the Plan. Am.
Compl. ¶¶ 3-9, 35. Furthermore, the Receiver is an
ERISA fiduciary because he, as Plan administrator,
“exercises discretionary control or authority over the
plan's management, administration, or assets[.]”
Mertens v. Hewitt Assoc., 508 U.S. 248, 251 (1993);
29 U.S.C. § 1102(a).
standing under Article III requires an injury in fact, a
causal connection between the injury and the defendant's
conduct, and the likelihood that a favorable outcome will
redress the injury. Lujan v. Defenders of Wildlife,
504 U.S. 555, 560-61 (1992). While an injury must be
particularized and concrete, “[t]his does not mean,
however, that the risk of real harm cannot satisfy the
requirement of concreteness.” Spokeo, Inc. v.
Robins, 136 S.Ct. 1540, 1549 (2016). “At the
pleading stage, general factual allegations of injury
resulting from the defendant's conduct may
suffice[.]” Lujan, 504 U.S. at 561; see In
re Deepwater Horizon, 739 F.3d at 804 (“[I]t is
sufficient for standing purposes that the plaintiffs seek
recovery for an economic harm that they allege they
have suffered because for each class member we must assume
arguendo the merits of his or her legal claim at the
Rule 23 stage.”) (internal citation omitted).
amended complaint, Plaintiffs allege that the Plan is
“grossly underfunded” because the Plan's
sponsor did not make required contributions for many years,
particularly from 2010 to 2016, and that Defendants knew that
the sponsor of the Plan faced liabilities well exceeding its
assets as of 2014. Am. Compl. ¶ 63, 448. Plaintiffs also
allege that, “[a]s a result of SJHSRI's failure to
fund the Plan in accordance with ERISA's minimum funding
standards, Plaintiffs pensions will be lost or at least
severely reduced.” Id. ¶ 458. Given that the
Court must accept these allegations as true at this stage of
the proceedings, the Court is satisfied that Plaintiffs have
alleged an injury sufficient for standing. See Dezelan v.
Voya Ret. Ins. Annuity Co., No. 3:16-cv-1251, 2017 WL
2909714, at *5 (D. Conn. July 6, 2017)(“Generally, a
plaintiff has standing to bring an ERISA claim where the
plaintiff alleges a causal connection between defendants'
actions and actual harm to an ERISA plan in which the
plaintiff participates.”)(citing LaRue v. DeWolff,
Boberg & Assoc., Inc., 552 U.S. 248, 255-56
(2008)(recognizing that an ERISA claim for breach of
fiduciary duty “does not provide a remedy for
individual injuries distinct from plan injuries” and
stating that “[m]isconduct by the administrators of a
defined benefit plan will not affect an individual's
entitlement to a defined benefit unless it creates or
enhances the risk of default by the entire plan.”)).
the Court finds that it has jurisdiction over the subject