The underlying litigation centered on a 1990 and 1997 deferred compensation plan created by CTC Corporation founder Bruce Laumeister. Starting in 2004, Laumeister withdrew funds from the plan to cover corporate operating expenses. Plan administrator Lucille Launderville and participant Donna Browe knew of the shortfall but remained silent while negotiating a side deal with Laumeister to personally fund their own benefits.
When the side deal collapsed in 2015, Launderville and Browe joined other participants in suing CTC Corporation and Laumeister for breach of fiduciary duty, wrongful denial of benefits, and ERISA reporting violations. The case has traversed two appeals to the Second Circuit before returning to Judge Reiss for fee determinations.
In today’s order, Judge Reiss denied Defendants’ request for $822,424.47 in fees against the Remaining Plaintiffs—Tyler Burgess, Bonnie Jamieson, Philip Jordan, and the Estate of Beverly Burgess—who successfully proved their claims. The court found Defendants acted with gross negligence in administering the plan and that awarding fees to the prevailing participants would deter future fiduciary misconduct.
However, the court granted Defendants’ fee request against Plaintiff Launderville, finding she acted in bad faith. The Second Circuit previously determined her claims were time-barred because she knew of the breaches years before filing. Judge Reiss noted Launderville’s conduct was "knowing, voluntary, and intentional" rather than merely negligent.
The court denied fees against Plaintiff Browe, concluding she did not act in bad faith and that her claims were not entirely devoid of merit. The court emphasized the policy favoring good-faith ERISA plaintiffs to avoid chilling suits that vindicate statutory rights.
Both parties were ordered to submit supplemental documentation regarding the precise amounts of fees sought within thirty days, consistent with the court’s rulings on liability and culpability.