DuPont heirs' pension suit transferred to Delaware

Two duPont heirs must take their fight over the alleged mismanagement of a pension trust for the duPont family's personal employees to Delaware, a Maryland federal judge has ruled.

The M.C. duPont Clark Employee Pension Trust was created by Mary Chichester duPont Clark in 1947 to provide retirement benefits for household employees of the duPont family. Beneficiaries of the trust include those who worked at that time for the duPont family as butlers, maids, landscapers and gardeners. It also provided benefits for workers employed by her children and grandchildren.

DuPont Clark funded the trust with shares of DuPont corporate stock that eventually became worth more than $6 million, according to court documents. She is perhaps best known for helping launch the Chichester duPont Foundation and the Clark Fund in 1947. The Clark Fund provides grants to programs concerned about the environment, health care, education and social services.

DuPont Clark's grandchildren, Helena duPont Wright and James Mills, along with two of their employees, Joseph Wright and T. Kimberly Williams, allege the pension trust's administrators mismanaged it. Wright and Williams assist the duPont grandchildren with management of their affairs, including accounting and scheduling.

Their lawsuit alleged the trust's operators paid individuals who were not eligible to receive benefits, including a trust administrator. As a result, the pension trust's assets have been reduced and it is approaching insolvency, the plaintiffs claimed. In addition, the plaintiffs alleged qualified individuals have been denied payments and the fund is not in compliance with the Employee Retirement Income Security Act of 1974, or ERISA, the federal law that regulates pension plan funding and participation.

The defendants include the Elton Corp., a Greenville-based operator of the pension trust between 1989 and 2015; the fund's current manager, First Republic Trust of Delaware LLC; and Gregory Fields, a Delaware attorney who oversees the Chichester duPont Foundation's grant distributions and an Elton employee. Elton became the sole trustee after A. Felix DuPont passed away in 1996.

Fields, who was responsible for investing the pension's assets and deciding who was eligible for benefits, was working on behalf of the Elton Corp. and his role with the pension trust is unrelated to his position at the Chichester duPont Foundation, according to his attorney, Curtis J. Crowther of Young Conaway Stargatt & Taylor, a Delaware firm.

The defendants responded with a motion to dismiss, alleging ERISA does not apply because the fund is a Delaware statutory trust, not a pension. Their motion contends ERISA can only be applied to trusts created by a private-sector employer, which must maintain a minimum level of funding. In contrast, when a statutory trust runs out of cash, it must be terminated.

Furthermore, the defendants argued the plaintiffs are not the trustees, therefore they have no standing to pursue litigation and Maryland is an inappropriate venue since the trust was created in Delaware.

Wright, a Maryland resident, filed the lawsuit there because an unidentified number of employees receiving benefits live in that state.

U.S. District Judge Richard D. Bennett ruled last week the case should be transferred to a Delaware federal court. Bennett said the trust has a number of Delaware connections that favor transfer, including that the trust has always been administered in Delaware, duPont Clark was a Delaware resident when she created the trust, it was funded with shares of stock in a Delaware company and some of the beneficiaries live in Delaware.

"In sum, Delaware is the clear center of gravity for nearly every aspect of this case," Bennett said.

The judge ruled that the case's fundamental question – whether the pension trust is subject to ERISA laws – involves interpretation of Delaware trust law. Bennett said transferring the case to Delaware would ensure that those most familiar with the state's laws would oversee the case.

Currently, the case is unassigned in Delaware. Crowther, the defendants' attorney, said he has already filed motions to dismiss it.

"We certainly think, venue-wise, this case is appropriate in Delaware, but we think other issues should prevent the case from moving forward," he said. "There are a number of issues including constitutional and statutory standing including whether the people who are seeking to pursue claims have any right to do so."

Stephen Rosenberg, a Boston attorney who is representing the plaintiffs, did not return calls seeking comment. Bryan Bolton, a Baltimore-based lawyer who served as local counsel on the case, referred all calls to Rosenberg.

Contact Jeff Mordock at (302) 324-2786, on Twitter @JeffMordockTNJ or jmordock@delawareonline.com.