Su v. IProcess Online, Inc.

District Court, D. Maryland·Decided April 21, 2025·No. 1:24-cv-00061·Unknown

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

. * VINCENT MICONE, . Plaintiff, *

* _ Civil No, 24-61-BAH IPROCESS ONLINE, INC., et ai.,_ * Defendants. □ * : * * * * * * * ok * * * * *

| MEMORANDUM OPINION

Vincent Micone!, Acting Secretary of Labor in the United States Department of Labor (“Plaintiff”) brought suit against iProcess Online, Inc. (the “Company”), Michelle Leach-Bard (along with the Company, the “Fiduciary Defendants”), and iProcess Online, Inc. 401(k) Plan (the “Plan”) (collectively, “Defendants”) alleging violations of the Employee Retirement Income Security Act (“ERISA”) of 1974, as amended, 29 U.S.C. § 1001 et seq. See ECF 1? (complaint). On December 2, 2024, the Court granted in part and: denied in part Plaintiff's motion for default judgment, ECF 18. The Court found that Plaintiff established liability as to Defendants’ breach of fiduciary duties under ERISA, but Plaintiff failed to provide adequate record evidence to support the request for monetary and injunctive relief. Jd. The Court afforded Plaintiff one opportunity to supplement the record on damages by January 10, 2025. Jd.

Pursuant to Rule 25(d) of the Federal Rules of Civil Procedure, Acting Secretary of Labor Vincent Micone is automatically substituted as Plaintiff in this action. 2 The Court references all filings by their respective ECF numbers and page numbers by the ECE- generated page numbers at the top of the page.

Plaintiff subsequently filed additional documentation to support the damages request on December 27, 2024. See ECFs 23, 24.7 On February 26, 2025, Plaintiff filed updated correspondence regarding the damages request. ECF 27. The Court has reviewed all relevant - filings and finds that no hearing is necessary. See Loc. R. 105.6 (D. Md. 2023). Accordingly, for the reasons stated below, the Court AMENDS the default judgment order and awards Plaintiff the requested relief. I. BACKGROUND : A. Factual Allegations Plaintiff brings this suit under ERISA § 502(a)(2), codified at 29 U.S.C. § 1132(a)(2), ‘which provides a cause of action for breach of fiduciary duty.* The Company is a payroll processing company located in Baltimore, Maryland. ECF 1, at3 ] 17. The Company established _the Plan effective 2009. Jd. at 4 18. The Plan was an employee behefit plan as that term is . defined in 29 U.S.C. §§ 1002(2) and (3). Id. at3 416. The Company was the sponsor of the Plan, the Plan’s administrator, and had discretionary authority to administer and manage the Plan. □□ 11, 12. Plaintiff asserts that Defendant Leach-Bard was an officer of the Company, handled day-to-day operations for the Company and the Plan, and exercised authority or control over Plan

3 Plaintiff filed a motion to seal two exhibits, ECF 22, which will be addressed below. The sealed exhibits can be found at ECF 24.

4 Litigants “cannot bring suit under § 502(a)(2) to recover personal damages for misconduct, but rather must seek recovery on behalf of the plan.” David v. Alphin,.704 F.3d 327, 332 (4th Cir. 2013) (explaining that “all relief must go to the Plan itself’); see also Mass. Mut Life Ins. Co. v. . Russell, 473 U.S. 134, 140 (1985); LaRue v. DeWolff, Boberg & Assocs., Inc,, 552 U.S. 248, 250 (2008). 5 Under 29 U.S.C. §§ 1002(2) and (3), an employee behefit plan is a “plan, fund, or program,” which is “established or maintained by an employer or by an employee organization” that “provides retirement income to employees,” or “results in deferral of income by employees for periods extending to the termination of covered employment or beyond.”

lh 9

administration and assets. /d. {7 14, 15 . The Plan was funded by employee contributions through □

payroll deductions and employer matches. Jd. at 4719. From approximately 2014 through 2021, the Fiduciary Defendants “consistently withheld employee contributions from employee paychecks for the stated purpose of remitting this money to employees’ accounts in the [Plan.]” Jd at 1 According to Plaintiff, Fiduciary Defendants □□ did not remit all employee contributions to the Plan, and instead allowed the money to remain unsegregated in the Company’s general operating account thus commingling it with the Company’s assets. Id ; see also id. at 4 1 23. Plaintiff maintains that “[t]o date, Fiduciary Defendants have failed to remit these employee contributions.” fd. J 22. Fiduciary Defendants also allegedly failed to ensure that all employer matching contributions for employees were made to the Plan and also failed to process requests for. participant distributions including rollovers from the Plan.® Jd. at 1 2; see also id. at 4 24-26.

In accordance with 29 C.F.R. § 2510.3-102, “[w]ithheld employee contributions became assets as soon they could have reasonably been segregated them from the Company’s general assets, and at most seven days after the end of the month in which they would have been payable to the employee.” ECF 1, at 5 § 29. According to the Motion, participants suffered monetary losses resulting from Fiduciary Defendants’ failure to forward employee contributions and collect required employer contributions. ECF 17-1, at 9. In addition to the damages award, Plaintiff also requests appointment of an independent fiduciary. Jd. at 10-11. Plaintiff asserts that because □□□

_ Fiduciary Defendants breached ERISA, the statute expressly permits their removal.” Jd. at 10

‘ The Plan’s governing document stated that the Company would make a matching contribution to _ the Plan for each contributing employee. ECF 1, at 4 § 24. Plaintiff also filed a status report on November 20, 2024, notifying the Court that since the filing of the Motion for Default Judgment, Defendant Michelle Leach-Bard has been convicted of

; .

(citing 29 U.S.C. § 1109(a)). The United States Department of Labor Employee Benefits Security Administration (“EBSA”) yeviewed several fee proposals from persons. willing to act as independent fiduciaries for the Plan. ECF 17-1, at 11, EBSA recommends the appointment of AMI Benefit Plan Administrators, Inc. as the independent fiduciary. Id B. Supplemental Documentation Supporting Damages Request In the memorandum opinion issued on December 2, 2024, this Court held that the affidavit submitted by Labor Department Investigator Joanna Turcotte was “not sufficiently detailed, and the Motion [did] not.include adequate supporting documentation.” ECF 19, at 13. The Court aranted Plaintiff one opportunity to supplement the record on damages, and Plaintiff subsequently:

filed additional documentation. On December 27, 2024, Plaintiff submitted an updated affidavit from Turcotte, which contained ample information about Turcotte’s investigation and the allegedly withheld contributions. See generally ECF 24.

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Su v. IProcess Online, Inc., (D. Md. 2025).

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