Opinion
Civil Action No. 96-0187-CB-C
April 13, 2001
ORDER
This matter came before the Court on the motion of Plaintiff, Alexis M. Herman, Secretary of the United States Department of Labor ("Secretary"), for summary judgment. On August 9, 2000, this Court issued a Memorandum Opinion and Order granting the Secretary's motion for summary judgment and denying the cross-motion of Dairy Fresh Corporation ("Dairy Fresh") for summary judgment.
Based upon the Findings of Fact and Conclusions of Law contained in the August 9, 2000 Order, the Court ordered the removal of Dairy Fresh and Victor Poole, respectively, as administrator and trustee of the Dairy Fresh Employee Stock Ownership Plan ("ESOP") and immediately and permanently enjoined both from acting as fiduciaries on behalf of the ESOP. The Court also asked the Secretary to submit the names of independent fiduciaries proposed to serve as Administrator and Trustee of the ESOP.
On August 22, 2000, the Secretary submitted the names of proposed independent fiduciaries for the ESOP. After review of the qualifications of the proposed independent fiduciaries, it is ORDERED, ADJUDGED and DECREED that:
1. ASA Fiduciary Counselors, Inc. is hereby appointed as the Independent Fiduciary of the ESOP (the "Independent Fiduciary").
2. The term of this Order is three (3) years and may be shortened only upon application by the Secretary to this Court.
3. Dairy Fresh and Victor Poole and their fiduciaries, agents, employees, service providers, depositories, banks, accountants, attorneys, and any other party acting in concert with or at the direction of Dairy Fresh or Victor Poole, are enjoined from expending, transferring, hypothecating, secreting or otherwise obligating or disposing of any assets of the ESOP and from destroying, altering or secreting any of the ESOP books, records or documents.
4. Dairy Fresh and Victor Poole shall require their officers, employees, attorneys, agents, advisers, representatives, and all persons who serve in any capacity that involves decision making authority for them to act and discharge their duties in full compliance with the terms of this Order and shall require that they not take any action in the discharge of such duties that is inconsistent with the terms of this Order. Dairy Fresh and Victor Poole shall also require their officers, employees, attorneys, agents, advisers, representatives and all persons who serve in any capacity that involves decision making authority for them, as a condition of maintaining their relationships with them, to cooperate fully with the Independent Fiduciary in the performance of its duties and responsibilities. In furtherance thereof, Dairy Fresh and Victor Poole shall provide a copy of this Order to all of their officers, employees, attorneys, agents, advisers, representatives and all persons who serve in any capacity that involves decision making authority for them, within ten (10) days after the entry of this Order.
5. The Independent Fiduciary shall be free to consult with the Secretary, the Internal Revenue Service and other federal, state and local governmental agencies concerning any activities which it performs.
6. The Independent Fiduciary shall have exclusive responsibility and authority to control and manage all assets of the ESOP including, but not limited to:
a. The authority to exercise all fiduciary responsibilities relating to the ESOP including, but not limited to, the responsibility to act as the administrator and/or trustee of the ESOP;
b. The exclusive authority to appoint, replace and remove such administrators, trustees, attorneys, agents and in its sole discretion, determine are necessary to aid it in the exercise of its powers, duties and responsibilities to the ESOP; and,
c. Except as provided herein, the authority to delegate to such administrators, trustees, attorneys, agents and service providers such fiduciary responsibilities as the Independent Fiduciary shall determine is appropriate. The Independent Fiduciary may not, however, delegate its authority to appoint, replace and service providers or its responsibility to monitor the activities of the ESOP's administrators, trustees, attorneys, agents and service providers.
Prior to appointing, replacing or removing any administrators, trustees, attorneys, agents and service providers, the Independent Fiduciary shall notify both the Secretary and Dairy Fresh of such action.
7. Subject to the terms of this Order and ERISA, the Independent Fiduciary shall to the extent practical (1) use Dairy Fresh personnel to continue to perform those administrative services which have been performed for the ESOP by Dairy Fresh personnel in the past and (2) delegate other administrative activities to individuals or entities with the capability to perform those activities in the most cost-effective basis.
8. The Independent fiduciary shall have full access to all documents, books, records, personnel, files and information of whatever type or description in the possession, custody or control of the ESOP. In addition, the Independent Fiduciary shall have full access to all documents, books, records, files and information of whatever type or description relating to the ESOP in the possession of Dairy Fresh or Victor Poole or their fiduciaries, agents, employees, service providers, depositories, banks, accountants, attorneys, and any other party acting in concert with or at their direction.
9. The Independent Fiduciary shall obtain fiduciary liability insurance in an amount equal to the ESOP's assets and a bond which conforms to the requirements of ERISA section 412, 29 U.S.C. § 1112 at Dairy Fresh's expense.
10. The Independent Fiduciary shall not be discharged or terminated during the duration of this Order except by leave of Court upon application by either the Secretary or the Independent Fiduciary. Upon termination, discharge, death, incapacity or resignation of the Independent Fiduciary during the term of this Order, the Secretary shall recommend a successor Independent Fiduciary for appointment by the Court. Recommendations for a successor Independent Fiduciary shall be made by the Secretary within such periods as the Court, by further order, may provide.
11. On a monthly basis, Dairy Fresh shall pay:
a. The Independent Fiduciary its fees and expenses reasonably and actually incurred in the exercise of its powers, duties and responsibilities; and
b. The administrators, trustees, attorneys, agents, and service providers appointed by the Independent Fiduciary their fees and expenses reasonably and actually incurred by them in the exercise of their powers, duties and responsibilities.
On a quarterly basis, the Independent Fiduciary shall provide the Secretary with a report of all significant actions taken and all funds expended.
12. The terms of the documents governing the ESOP are hereby amended to include the terms of this Order. This Order shall, for the term of this Order, supercede any and all other provisions in any documents governing the ESOP which are inconsistent with the terms of this Order including, but not limited to, any plan documents, trust agreements and/or shareholder agreements.
13. Nothing in this Order shall be construed:
a. To limit the powers and responsibilities of any officer or employee of the United States under ERISA or any other law, or
b. To relieve the ESOP or any of its administrators, fiduciaries, officers, trustees, custodians, attorneys, agents, employees, advisers, providers of goods or services, consultants, representatives in any capacity, or persons who serve in any capacity that involves decision making authority or custody or control of the moneys, funds or assets of the ESOP of any duty, responsibility or liability under ERISA or any other law.
14. The Independent Fiduciary shall cooperate fully with the Secretary in the exercise of her enforcement responsibilities under ERISA, inter alia, by promptly providing such documents, information and persons under its control as the Secretary from time to time may request. Nothing herein shall be construed to limit the rights the Secretary otherwise enjoys of access to documents, information or persons; to preclude the ESOP from seeking appropriate orders from this Court protecting it against the Secretary's unauthorized dissemination of documents or information; or to waive or restrict the exercise by any individual of his or her constitutional rights.
15. This Court shall retain jurisdiction over the parties and subject matter of this action for the purpose of enforcing this Order.
16. Provisions of this Order requiring notice to Dairy Fresh, Victor Poole, the Independent Fiduciary or the Secretary shall be satisfied by delivering it in writing as follows:
To Dairy Fresh:
Dairy Fresh Corporation, Post Office Box 159, Greensboro, Alabama, 36744
To Victor Poole:
Wade B. Perry, Esq., Johnstone, Adams, Bailey, Gordon Harris, 104 St. Francis Street, Eighth Floor, Mobile, Alabama 36602
To the Secretary:
(If by mail), United States Department of Labor, Office of the Solicitor, Plan Benefits Security Division, Post Office Box 1914, Washington, D.C. 20013
(If by delivery), United States Department of Labor, Office of the Solicitor, Plan Benefits Security Division, 200 Constitution Ave., N.W. Rm. N-4611, Washington, D.C. 20210
To the Independent Fiduciary:
ASA Fiduciary Counselors, Inc., 601 Pennsylvania Avenue, N.W., Suite 900 South Building, Washington, D.C. 20004
The parties to this Order may, as they deem necessary, change from time to time the designation of persons to receive notice on their behalf by filling with the Court notification of such change and serving a copy thereof on the other party or parties to this Order.
FINAL JUDGMENT
Pursuant to the Court's Order dated August 9, 2000, granting summary judgment in favor of the Secretary of Labor, it is hereby ORDERED, ADJUDGED and DECREED that Dairy Fresh Corporation be and hereby is removed as Administrator of the Dairy Fresh Employee Stock Ownership Plan, that Victor Poole be and hereby is removed as Trustee of the Dairy Fresh Stock Ownership Plan, and that Dairy Fresh Corporation and Victor Poole be and hereby are immediately and permanently ENJOINED from acting as fiduciaries on behalf of the Dairy Fresh Employee Stock Ownership Plan. It is further ORDERED, ADJUDGED and DECREED that an Independent Fiduciary shall be appointed by separate order to serve as Administrator and Trustee of the Dairy Fresh Employee Stock Ownership Plan.
Each party shall bear its own costs and attorneys' fees in this action.