Stephen R. Bruce
Attorney for Plaintiffs
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PHILLIP C. ENGERS, WARREN J. MCFALL DONALD G. NOERR, and GERALD SMIT individually and on behalf of all others similarly situated,
Plaintiffs,
v.
AT&T and AT&T MANAGEMENT PENSION PLAN,
Defendants.

 

 

C.A. No. 98-CV-3660 (SRC-CCC)

PLAINTIFFS' OPPOSITION TO
DEFENDANTS' MOTION FOR PARTIAL DISMISSAL

 

 

PLAINTIFFS' OPPOSITION TO
DEFENDANTS' MOTION FOR PARTIAL DISMISSAL

Stephen R. Bruce
1667 K St. NW, Suite 410
Washington, DC 20006
(202) 289-1117

Edgar Pauk
Suite 600
144 E. 44th St.
New York, NY 10017

Jonathan I. Nirenberg
Deutsch, Resnick, Green & Grabell
One University Plaza, Suite 305
Hackensack, NJ 07601

Attorneys for Plaintiffs

 

Table of Contents

Introduction

I. Defendants' motion to dismiss is barred by the "law of the case"; Judge Politan has already ruled that Defendants' arguments "attempt to argue the merits of the new claims".

II. The Plaintiffs' Tenth and Eleventh Claims about AT&T's conditioning of benefit accruals set out legally sufficient claims.

III. Defendants have no basis to dismiss the Twelfth Claim that the application of actuarially excessive early retirement reduction factors takes away part of the value of protected benefits in violation of ERISA Section 204(g) 12 IV. Plaintiffs did not err in repleading claims in the amended Complaint that Judge Politan dismissed because the dismissals of those claims are subject to appeal.

Conclusion

 

Introduction

For a bird's eye view of the facts and legal allegations on which this case is based, counsel refers the Court to the Third Amended Complaint which was filed on November 29, 2001. Judge Politan granted leave for Plaintiffs to file the Third Amended Complaint, which contained three new claims, in a November 19, 2001 letter opinion. That decision came over AT&T's opposition, which is discussed further below. Judge Politan summarized the new claims in the Third Amended Complaint as follows:

"The new Third Amended Complaint essentially alleges that Section 4.06(a)(ii) of the new Plan unlawfully conditions payment of the accrued benefits from the cash balance plan. Plaintiffs assert that the amended Plan document contains rules that were not in the preceding Plan document or any amendment adopted by the AT&T Board of Directors or a duly-authorized delegate before Oct. 16, 2000.

In particular, the Tenth Claim alleges that the amended Plan makes the right to the cash balance benefit accruals conditional, in violation of ERISA Section 203(a), 29 U.S.C. Section 1053(a).

In the Eleventh Claim, Plaintiffs assert that the amended Plan violates ERISA Section 204(c)(3) because it deprives participants who retire before the normal retirement age of the actuarial value of their cash balance benefit accruals in 1998, 1999, 2000, and succeeding years.

In the new Twelfth Count, Plaintiffs contend that the amended Plan violates ERISA Section 204(g) by reducing "protected" benefits by "one-half percent" per month, or six percent per year, for commencement before age fifty-five, unless the participant has over thirty years of service."

Nov. 19, 2001 Ltr. Op. at 2-3 (paragraph breaks added).

 

I. Defendants' motion to dismiss is barred by the "law of the case"; Judge Politan has already ruled that Defendants' arguments "attempt to argue the merits of the new claims"

In opposing Plaintiffs' motion for leave to amend, Defendants asked Judge Politan to rule that the three new claims are "futile." Rely on Oran v. Stafford, 34 F.Supp. 2d 906, 914 (D.N.J. 1999), aff'd, 226 F.3d 275 (3d Cir. 2000), and Miller v. Beneficial Mgmt. Corp., 800 F.Supp. 990, 1001 (D.N.J. 1993), AT&T defined "futility" in terms of whether the proposed new claims would "withstand a motion to dismiss under Fed. R. Civ. P. 12(b)(6)." Defs. Br. filed Aug. 27, 2001, at 13. Defendants then argued in over 17 pages of briefing that the three new claims could not "withstand" a Rule 12 motion to dismiss because they "fail to state any violation of ERISA." Id. at 31; see also id. at 14, 23, 24, and 25. Plaintiffs responded that they found it difficult to follow Defendants' train of reasoning and, most importantly, that Defendants never addressed the statutory sections and regulations on which Plaintiffs' claims relied--much less offered authorities demonstrating that the claims were not valid under ERISA. Judge Politan concluded: "In opposition, the Defendants merely attempt to argue the merits of the new allegations, which is inappropriate for purposes of deciding a motion to amend." Nov. 19, 2001 Ltr. Op. at 4.

In the present motion, Defendants offer this Court the same arguments that were offered to Judge Politan. Cutting and pasting paragraphs and sentences, Defendants rehash the arguments to Judge Politan as if this were a revised draft of the same brief. Defendants' motion to dismiss does not cure the shortcomings of the arguments offered to Judge Politan.

Judge Politan's ruling that Defendants "merely attempt to argue the merits of the new allegations" is the "law of the case." See, e.g., Wright & Miller, Federal Practice & Procedure (2d ed.), vol. 18, Section 4478. Judge Politan rejected Defendants' argument that the new claims should be dismissed because they "fail to state any violation of ERISA." This Court need not revisit Judge Politan's rulings, which were issued just three months ago.

"The purpose of a motion under Rule 12(b)(6) is to test the formal sufficiency of the statement of the claim for relief; it is not a procedure for resolving a contest about the facts or the merits of the case." Wright & Miller, Federal Practice & Procedure, vol. 5A, Section 1356. The Court may dismiss the case only "if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spaulding, 467 U.S. 69, 73 (1984). Claims should be dismissed only when there is "some insuperable bar to relief"; they should not be dismissed based on a preliminary assessment that "the court doubts the plaintiff will prevail in the action." Wright & Miller, supra, Section1357, at p. 340 and 344 (. Defendants treat Rule 12 as if it were a device for defendants to elicit preliminary opinions or assessments from the Court about the likely merits of the claims. This is a misapplication of the rule; it is particularly objectionable when Defendants already attempted this with Judge Politan using virtually identical arguments.

In an excess of caution, Plaintiffs address Defendants' arguments to eliminate any doubts that the new claims in the Third Amended Complaint state valid claims under ERISA.

 

II. The Plaintiffs' Tenth and Eleventh Claims about AT&T's conditioning of benefit accruals set out legally sufficient claims

In Esden v. Bank of Boston, 229 F.3d 154, 167 (2d Cir. 2000), the Second Circuit established that ERISA's 133 1/3% accrual rule is the only one of ERISA's three accrual rules with which a cash balance plan can comply. Because that rule tests the "annual rate" of increase of the normal retirement benefit year by year, it by definition requires that pension plans have "annual rates" of accruals (in contrast with ERISA's other two schedules which allow accruals to be computed as of the separation of service). The "annual rates" of accruals required by the 133 1/3% rule must become nonforfeitable under ERISA's vesting rules after the requisite number of years of service. This means that receipt of those benefits must be "unconditional."

No amount of flim-flam can conceal that AT&T has attached conditions to the annual accruals offered to participants like the named Plaintiffs that are reducing the value of those accruals to $0.

ERISA Section 204(g), 29 U.S.C. Section 1054(g), protects the retirement benefits previously earned under AT&T's pension plan up to the date of AT&T's conversion to a cash balance plan (on 1/1/1998) against any reductions. Because the annual benefit accruals earned after that date must be "nonforfeitable," the annual accruals after 1997 must add to the protected benefits. AT&T's argument that the annual accruals may be conditional rests on a counter-intuitive approach with no legal authority to support it.

In more detailed form, Plaintiffs rely on the following facts and legal elements:

    1. Section 4.04 of AT&T's restated Plan document offers annual pay credits and interest as the principal features of the new cash balance plan. The Third Amended Complaint uses the benefit amounts of named Plaintiff Donald Noerr to illustrate. For Donald Noerr, the cash balance pay credits and interest offer annual increases in his accrued benefits of $1,218, $1,080, and $1,039 for 1998, 1999, and 2000, respectively.

    2. However, the payment provisions in Section 4.06 of the restated Plan document, which were adopted on October 16, 2000, attach a condition to Mr. Noerr's receipt of those annual retirement benefits. Although a footnote in AT&T's Brief contests this (inappropriately on a motion to dismiss), see Defs. Br. at 11, n.5, AT&T's Board of Directors has never approved Section 4.06. Third Amended Complaint, at ¶ 76.

    3. Section 4.06 of the restated Plan provides that Mr. Noerr, like the other plaintiffs, can receive the annual retirement benefits he has earned since 1998 if and only if he does not receive the $18,276 per year in early retirement benefits that he previously earned under the prior plan. Payment of benefits at early retirement is particularly important because AT&T employs almost no management employees past the age of 60.

    4. For Mr. Noerr to receive his annual cash balance accruals from 1998 to date, Section 4.06 requires that he defer retirement until close to the age 65 normal retirement age and thereby give up the value of the "protected" early retirement rights that he earned before 1998.

    5. Section 4.06 is tantamount to conditioning receipt of the annual benefits under the cash balance plan on a release or waiver of the "protected" early retirement benefits that he earned before the cash balance plan went into effect. Mr. Noerr must either lose the value of the annual accruals from 1998 forward or waive receipt of his previously earned early retirement benefits.

    6. Because cash balance plans base retirement benefits on each year's annual salary, the "only test" that a cash balance plan can "satisfy is the so-called 133 1/3 percent test under ERISA section 204(b)(1)(B), [29 U.S.C. Section1054(b)(1)(B)]." "That test requires that the value of the benefit accrued in any year . . . not exceed the value of a benefit accrued in any previous year by more than 33%." Esden v. Bank of Boston, 229 F.3d 154, 167 (2d Cir. 2000).

    7. In order for AT&T to satisfy ERISA Section 204(b)(1)(B)'s "anti-backloading" test, Mr. Noerr must have annual benefit accruals for 1998, 1999, 2000, etc. See also 26 C.F.R. 1.411(b)-1(b)(2)(i).

    8. If the accrued benefits for 1998, 1999, 2000, etc., count for compliance with ERISA Section 204(b)(1)(B), those accruals must become "nonforfeitable" under ERISA's vesting rules. ERISA Section 203(a), 29 U.S.C. Section1053(a), provides that benefit accruals must become nonforfeitable once a participant has the required years of service to be vested.

    9. A nonforfeitable right is as an "unconditional" right. ERISA Section 3(19), 29 U.S.C. Section1002(19). "A right which, at a particular time, is conditioned under the plan upon a subsequent event, subsequent performance, or subsequent forbearance which will cause loss of such right is a forfeitable right at that time." 26 C.F.R. 1.411(a)-4. IRS Notice 96-8, 1996-1 C.B. 359, also explains:

      If benefits . . . have accrued [but] those benefits are disregarded when benefits commence before normal retirement age, the plan has effectively conditioned entitlement to the benefits . . . on the employee not taking a distribution prior to retirement age.

    10. ERISA Section 203(a)(3), 29 U.S.C. Section1053(a)(3), only allows specified conditions to be attached to the receipt of nonforfeitable accrued benefits. Permissible forfeitures include provisions that benefits "may not be payable" on death, reemployment, or if the employer ceases pension contributions. See, e.g., Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 511 (1981).

    11. A nonforfeitable right to a benefit cannot be one that has a value of $1,218 per year under one narrow set of conditions, but $0 under others. ERISA Section 203(a)(3) does not contain a permissible condition under which payment of benefits earned after a Plan amendment can be made conditional on whether a participant foregoes early retirement benefits earned before 1997.

    12. If a company sponsoring a retirement plan was able to offer annual accruals but condition their receipt at early retirement so that nothing attributable to those accruals is paid, it would defeat Congress' purpose of protecting participants like Donald Noerr against forfeitures of benefit accruals.


Reviewing AT&T's motion to dismiss, it is unclear whether AT&T challenges that Section 4.06 of the restated Plan is conditioning Mr. Noerr's right to the cash balance benefit accruals. If AT&T is contesting this, it is up against hundreds of years of contract law. The Restatement (Second) of Contracts refers to conditions on an obligor's duty to pay such as "to be payable if . . ." and "no part of which shall be due if . . ." Res. (2d) Contracts, Sections 224-27. Moreover, in the brief submitted to Judge Politan on leave to amend, Defendants admitted that the Complaint's allegation that a participant like Donald Noerr will not receive the "yearly increases" in his accrued benefits if he retires before age 65 is "absolutely true." Def. Br. filed Aug. 27, 2001, at 21.

In the brief addressed to Judge Politan, Defendants asserted that the failure to receive the "yearly increases" is "devoid of any significance, legal or otherwise." Id. Defendants' assertion is simply unsupportable. As described above, the statutory and regulatory authorities show that AT&T's cash balance plan is required to offer "annual rates" of benefit accrual. Those benefits must become "nonforfeitable" after the employee has the requisite number of years of service required under ERISA Section 203(a). Treasury regulations provide that "a right which . . . is conditioned . . . upon a subsequent event, subsequent performance, or subsequent forbearance which will cause loss of such right is a forfeitable right."

Undeterred, AT&T asks that the Court not consider whether the annual benefit accruals are conditional, but look instead only at the total normal retirement benefit and ask whether Noerr is receiving at least an actuarial equivalent of the total benefit. Defendants state this in various ways:

  • "The plaintiffs' focus on each year's increment to the normal retirement benefit is wrong. Rather what matters is the total normal retirement benefit derived from the Cash Balance formula, and actuarially reduced for early retirement pursuant to section 4.06(a)(ii)(A)." Defs. Br. at 17.
  • Mr. Noerr does not "`forfeit' receipt of those annual increases in the normal retirement benefit, because those incremental amounts are included in the total normal retirement benefit which is actuarially reduced pursuant to section 4.06(a)(ii) of the Amended Plan." Br. at 15.
  • "Plaintiffs' allegations . . . misconstrue the application of the actuarial equivalence rule, seeking to have it somehow separately apply to each year's incremental addition to the normal retirement benefit. The proper legal focus is on whether the total early retirement benefit is the actuarial equivalent of the total normal retirement benefit." Br. at 16.

These sentences offer a good sample of the rhetorical arguments that Defendants intend to offer on the merits. But they are scarcely the basis for a motion to dismiss.

While compliance with two of ERISA's minimum accrual schedules could be tested on the basis of "total" accruals at separation, ERISA's 133% rule expressly requires "annual rates" of benefit accruals for each year. The Treasury Department's regulations on ERISA's 133% rule, which were adopted in 1977, specifically reject the notion that an employer can substitute a yearly average of a participant's total accrued benefits for years in which the actual annual rates of benefit accruals do not satisfy the 133% test. 26 C.F.R. 1.411(b)-1(b)(2)(iii) (Example 3) (even if the "average rate of accrual" looking at accruals over all years of participation "is not less rapidly than ratably," a plan does not satisfy the 133% test when the actual annual rates of accruals for particular years of participation do not satisfy the test).

Congress and the Treasury Department drew these distinctions for sound reasons. Plans like AT&T's cash balance plan must provide annual benefits based on employees' annual salaries. Those benefits are not computed with the employee's earlier years of service and salary and they are not to be conditioned on the same. It would make a mockery of ERISA's 133% rule to allow the rule to be satisfied with "annual rates" of accrual that the employer does not unconditionally have to pay. ERISA's vesting rules require that accrued benefits become "unconditional" after five years of service.

Even if, for argument's sake, we accepted AT&T's preferred focus on the "total" benefit accruals "derived from the Cash Balance formula," Section 4.06 of AT&T's restated Plan does not comply with ERISA. Section 4.06 conditions the payment of Donald Noerr's total cash balance benefit accruals for 1998 through 2001 of over $4,400, just as it conditions his annual accruals in 1998, 1999, 2000, etc.. When he recently retired on January 31, 2002, Mr. Noerr did not receive one red cent attributable to the cash balance accruals for 1998-2001 that were said to amount to over $4,400 per year.

Defendants act as if they can treat the accrual rules as a kind of stage play in which they are allowed to act as if Mr. Noerr has an annual rate of accrual of $1,218 in 1998, or a "total" accrual of over $4,400 per year for 1998-2001. But when the lights are turned off, AT&T does not think it should not actually have to pay those benefits. In advancing this argument, Defendants cite no authorities to distinguish the Treasury regulations on forfeitures. AT&T cannot offer an employee like Mr. Noerr annual accrued benefits totaling over $4,400 for 1998 through 2001, but condition the benefits for those years so no part of them is actually paid. ERISA was enacted as a employee pension protection act; it was not enacted to enable employers to offer sham accruals.

The same reasoning applies with respect to Plaintiffs' Eleventh Claim. Defendants offer no authority for the proposition that participants like Mr. Noerr can have nonforfeitable "annual rates" of accrual totaling over $4,400 per year for 1998-2001, whose actuarial equivalent is not actually paid. Accrued benefits cannot satisfy the test in ERISA Section 204(c)(3), 29 U.S.C. Section 1054(c)(3), if they amount to $4,400 per year at normal retirement age but are worth $0 when expressed in the form of a benefit payable at early retirement age.

Two other points show how AT&T's reasoning is faulty:

(1) If Mr. Noerr was a new AT&T employee hired at the start of 1998 with the same salary, his annual benefit accruals for 1998 - 2001 would not be conditional. The condition on payment that AT&T has imposed by Section 4.06 causes a loss of future benefit accruals only for the employees like Mr. Noerr who have years of service before 1997. There is no legal or policy reason why Mr. Noerr should receive less in retirement benefits for his employment in the years from 1998 to 2001 than a new employee who makes the same salary.

(2) In addition to being adopted after the fact, AT&T's conditioning of the Mr. Noerr's benefit accruals through Section 4.06 is not an inherent feature of a cash balance plan conversion. AT&T converted the pension plan covering its hourly employees to a cash balance plan without conditioning receipt of their annual cash balance accruals. Even Section 4.06 of the restated management pension plan has exceptions to the conditioning of annual cash balance accruals for certain groups of employees, such as occupational employees who are promoted to management positions.

Ironically, an AT&T representative succinctly summarized the employees' case in a videotaped seminar about cash balance, stating:

"It's a year later. I've got to get something for that year. Do any of you want to work for that year and not get anything for it (indicating to raise your hand if you do)? I didn't see any hands go up."

 

III. Defendants have no basis to dismiss the Twelfth Claim that the application of actuarially excessive early retirement reduction factors takes away part of the value of protected benefits in violation ERISA Section 204(g)

ERISA Section 204(g), 29 U.S.C. Section 1054(g), which has a parallel statutory provision in IRC Section 411(d)(6), 26 U.S.C. Section 411(d)(6), provides that no amendment to a pension plan shall have the effect of reducing early retirement benefits. When early retirement benefits are modified prospectively, ERISA Section 204(g) requires that participants' rights to the existing benefits be protected by allowing them to grow into eligibility under the prior rules.

Treasury regulations provide that a pension plan may not be amended to change conditions in a way that restricts the availability of a Section 411(d)(6) protected benefit. The regulations provide that the "any change to existing conditions that results in a further restriction" violates Section 411(d)(6). 26 C.F.R. 1.411(d)-4, Q&A 7. More recently, the Ninth Circuit held in Michael v. Riverside Cement Co. Pension Plan, 266 F.3d 1023, 1027 (9th Cir. 2001), that a plan amendment violates ERISA Section 204(g) when it takes away a "valuable component" or part of the "actuarial value" of the protected benefits.

Plaintiffs and AT&T agree that the prior AT&T Plan document provided that employees who "reached the age of 50 years and whose Term of Employment has been at least 25 years" could commence benefits with no reduction at age 55 or with a 6% per year reduction for retirements between ages 50 and 55. See Defs. Br. at 19. A lower 3% reduction factor was offered if a participant had 30 years of service.

AT&T's restated Plan document modified the Plan to apply the 6% per year reduction factor to retirements at any age without regard to whether participants could have grown into eligibility under the prior plan rules. This means that a 6% reduction is now applied to retirements before age 50 and is applied to circumstances in which the participant could otherwise have grown into eligibility for unreduced benefits or benefits subject to the 3% reduction factor.

A 6% per year reduction for retirements before the age of 50 is illegal in the absence of full disclosure to employees because it excessively reduces the benefit amounts available at age 55. A 6% factor is also illegal for retirements before and after age 50 when participants could have grown into eligibility for the 3% reduction.

To give an example, Dollie Dobbins is a member of the class certified by Judge Politan who resides in Maryland. Under a voluntary retirement incentive plan ("VRIP") which resulted in the separation of over 15,000 AT&T management employees, AT&T retired Ms. Dobbins in mid-1998. Using the 6% per year reduction, AT&T subjected Ms. Dobbins' "protected" age 55 benefits of $2,574 per month to a discount of 40.5% based on the age when she was "retired" of age 48 and 3 months. Exh. 2. However, before AT&T's amendment to the early retirement rules, Ms. Dobbins would been eligible with only one more month of employment to commence benefits at age 55 with no reduction, or to commence benefits before age 55 with the less steep 3% per year reduction. Thus, in exchange for speeding up her retirement eligibility by one month, AT&T's plan amendment discounted the value of her protected early retirement benefits by twice as much than if the 3% reduction had been applied. This reduced the value of her "protected" benefit by more than $85,000.

As shown by the declaration of Mr. Claude Poulin, F.S.A., 6% is a commonly-used reduction factor for reducing benefit amounts payable at age 65 to benefit amounts payable at ages 60 to 64. However, for retirements before age 50, reduction factors ranging from 2 to 4% of the age 55 amount should be applied (with the percentage dropping for earlier ages). Exh. 3.

The application of a 6% per year reduction in benefits to retirements before age 50 is analogous to when entrepreneurs offer individuals with life insurance policies, annuities, or other deferred rights more immediate payments based on sharply discounted values in exchange for a release or assignment of the individual's rights. An individual who commences payments at age 48 subject to a 6% per year reduction in the benefit amount would be better off actuarially if he or she could defer commencement until age 55. As Mr. Poulin's declaration makes clear, extending the application of an 6% reduction factor to the commencement of benefits before age 50 is not defensible. Indeed, at age 38 and 4 months or younger, the 6% reduction will wipe out any benefit. Whether the benefit amount at age 55 is $1,000 or $10,000, "zero" cannot be an actuarial equivalent.


AT&T knew that the application of the 6% reduction to employees retiring before age 55 drastically reduced the value of their benefits and had the potential to wipe out the value of previously earned benefits: In a posting on the Internet, AT&T observed that: "For anyone age 38 years 4 months or younger, the Early Payment discount [of 6% per year] reduces the benefit available to $0." Exh. 2.

AT&T's counsel unabashedly argues that this change "actually enhances," "significant[ly] increases," and "expands participants' [distribution] rights." Defs. Br. at 5, 18, and 20. AT&T's effort to portray this as a "good deed" for which Plaintiffs are trying to "punish" it, Defs. Br. at 4, takes some gall and should be transparent in light of the examples given above: Reducing the value of a benefit in excess of otherwise applicable reductions, including down to "$0," is not an increase or enhancement.

Modifying the Plan's rules to take away part of the value of protected benefits does not comply with ERISA Section 204(g). AT&T's violation of ERISA Section 204(g) is egregious because AT&T has never disclosed the loss of actuarial value from commencing benefits before 55 subject to a 6% per year reduction. Instead, AT&T explained the 6% reduction as if it offered the same "overall value" considering life expectancies. A booklet distributed in August 1997 explains:

"If you start receiving payments early, your monthly check will be less than if you started at age 55. But you still will receive payments for life, and the overall value of your pension likely will remain the same. That's because with a discounted pension, you're stretching the same pension dollars over a longer time span."

Exh. 4. Thus, instead of disclosing the losses in value that can occur with a 6% reduction, AT&T hid the issue and suggested that the "value" of the employees' discounted pensions "remain[s] the same."

For these reasons, Plaintiffs have stated a valid claim under ERISA Section 204(g). The amended rule violates ERISA's disclosure requirements because AT&T has not disclosed the disadvantages of commencing benefits early subject to an actuarially excessive reduction factor. The amended rule also violates ERISA Section 204(g) by applying the 6% reduction to earlier ages and circumstances in which it would not have applied before with no disclosure that the 6% factor takes away part of the value of protected benefit

 

IV. Plaintiffs did not err in repleading claims in the amended Complaint that Judge Politan dismissed because the dismissals of those claims are subject to appeal

Defendants argue that Plaintiffs should not replead a claim in an amended complaint that the district court has dismissed--even though the dismissal of the claim is subject to appeal so the claim is still part of the case. Defendants made this argument before, almost verbatim, in opposing leave for Plaintiffs to file the Third Amended Complaint. Compare Defs. Br. at 21-22 with Defs. Br. filed Aug. 27, 2001, at 29-30. Judge Politan rejected Defendants' argument.

 

Conclusion

Defendants have not come close to satisfying the standards for dismissal under Rule 12. Just three months ago, Judge Politan ruled that Defendants' same arguments "merely attempt to argue the merits of the new allegations." This is the "law of the case." Nothing has changed since. Defendants have not offered any new legal authorities to this Court showing that the Plaintiffs' claims are not valid. Instead, Defendants rehash arguments that they unsuccessfully used before Judge Politan. As demonstrated in the Third Amended Complaint and above, Plaintiffs have very strong claims on the merits. Accordingly, Defendants' motion to dismiss the new claims under Rule 12 should be rejected.

Respectfully submitted,

Stephen R. Bruce
1667 K St. NW, Suite 410
Washington, DC 20006
(202) 289-1117

Edgar Pauk
144 E. 44th St., Suite 600
New York, NY 10017
(212) 983-4000

Jonathan I. Nirenberg
Deutsch & Resnick
One University Plaza, Suite 305
Hackensack, NJ 07601
(201) 498-0900

Attorneys for Plaintiffs

 

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