966 F.2d 1078 (7th Cir. 1992), 90-2450, Martin v. Consultants & Administrators, Inc.

Docket Nº:90-2450, 90-2568 and 90-3113.
Citation:966 F.2d 1078
Party Name:Lynn MARTIN, [*] Secretary of the United States Department of Labor, Plaintiff-Appellant/Cross-Appellee, v. CONSULTANTS & ADMINISTRATORS, INCORPORATED, James F. Norton, Paul A. DiFranco, et al., Defendants-Appellees, and Walter Hardy, Joseph J. Spingola, L.E. Gianetti, et al., Defendants-Appellees/Cross-Appellants. Lynn MARTIN, Secretary of the Uni
Case Date:June 18, 1992
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 1078

966 F.2d 1078 (7th Cir. 1992)

Lynn MARTIN, [*] Secretary of the United States

Department of Labor, Plaintiff-Appellant/Cross-Appellee,

v.

CONSULTANTS & ADMINISTRATORS, INCORPORATED, James F. Norton,

Paul A. DiFranco, et al., Defendants-Appellees,

and

Walter Hardy, Joseph J. Spingola, L.E. Gianetti, et al.,

Defendants-Appellees/Cross-Appellants.

Lynn MARTIN, Secretary of the United States Department of

Labor, Henry Argenta, Joseph DeRose, et al.,

Plaintiffs-Appellees,

v.

CONSULTANTS & ADMINISTRATORS, INCORPORATED, James F. Norton

and Paul A. Fosco, Defendants-Appellants.

Nos. 90-2450, 90-2568 and 90-3113.

United States Court of Appeals, Seventh Circuit

June 18, 1992

Argued May 31, 1991.

Rehearing Denied Sept. 29, 1992.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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Gillum Ferguson, Asst. U.S. Atty., Crim. Div., Steven J. Mandel, Allen H. Feldman, Kerry L. Adams, Dept. of Labor, Appellate Litigation, Edward D. Sieger, argued, Bruce F. Rinaldi, William Zuckerman, Dept. of Labor, Office of the Sol., Washington, D.C., John H. Secaras, Sol. Gen., Leonard A. Grossman, Dept. of Labor, Chicago, Ill., Marc I. Machiz, Dept. of Labor, Office of the Sol., Washington, D.C., for Elizabeth Dole.

Phillip J. Zisook, argued, Samuel J. Betar, Paul J. Petit, Altheimer & Gray, Chicago, Ill., for Consultants & Administrators, Inc. and James F. Norton, Paul A. Fosco.

Thomas A. Foran, Carmen D. Caruso, Jack J. Carriglio, Foran & Schultz, Chicago, Ill., for Paul A. DiFranco, D.D.S., Ltd.

Francis D. Morrissey, Michael A. Pollard, William J. Linklater, Baker & McKenzie, Chicago, Ill., for Catherine Milano.

William J. Hurley, III, James M. Crowley, Mara S. Georges, Rock, Fusco, Reynolds & Garvey, Chicago, Ill., for Edward Hurley.

Phillip J. Zisook, Samuel J. Betar, Judy Smith, Altheimer & Gray, Chicago, Ill., for Pinckard & Associates, James H. Pinckard.

Carl M. Walsh, Chicago, Ill., for James Caporale, Alfred Pilotto.

Dan K. Webb, argued, Deborah Gage Haude, James R. Vogler, Gregory M. Garger, Winston & Strawn, Chicago, Ill., Steven J. Sacher, Johnson & Gibbs, Washington, D.C., for Walter Hardy, Joseph J. Spingola, L.E. Gianetti, Henry Argenta, Joe DeRose, Ernest Kumerow, Joe Neroni, James O'Brien, Frank Riley, Raymond R. Becker, Walter Bombard, William O. Kinast, Dante Orfei, Sam Vinci.

Wayne B. Giampietro, Witwer, Burlage, Poltrock & Giampietro, Chicago, Ill., for Vincent F. DeRose.

John J. Toomey, Hugh B. Arnold, Arnold & Kadjan, Chicago, Ill., Steven J. Sacher, Johnson & Gibbs, Washington, D.C., for Health & Welfare Dept. of the Const. and General Laborers' Dist. Council of Chicago and Vicinity, Henry Argenta, Joe DeRose, Ernest Kumerow, Joe Neroni, James O'Brien, Frank Riley, Raymond R. Becker, William O. Kinast, Dante Ortei and Sam Vinci.

Steven J. Mandel, Allen H. Feldman, Kerry L. Adams, Dept. of Labor, Appellate Litigation, Edward D. Sieger, argued, Bruce F. Rinaldi, William Zuckerman, Dept. of Labor, Office of the Solicitor,

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Washington, D.C., John H. Secaras, Sol. Gen., Leonard A. Grossman, Dept. of Labor, Chicago, Ill., Marc I. Machiz, Dept. of Labor, Office of the Solicitor, Washington, D.C., for Ann E. McLaughlin.

Allan E. Lapidus, Patricia Cook, Thomas L. O'Brien, Vedder, Price, Kaufman & Kammholz, John J. Toomey, Hugh B. Arnold, Arnold & Kadjan, Chicago, Ill., for Donald W. Dvorak, Alfred N. Bederman.

Before CUDAHY, POSNER and RIPPLE, Circuit Judges.

CUDAHY, Circuit Judge.

In this appeal from the entry of partial summary judgment, the parties dispute the district court's ruling with respect to the viability of certain claims brought pursuant to the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §§ 1001-1461. The district court held that while some claims survived the statute of limitations, others did not. We affirm in part, reverse in part and remand.

I.

On May 1, 1987, the Department of Labor (DOL) filed suit against both the trustees of a multi-employer health and welfare fund and Consultants & Administrators, Inc. (C & A), a corporation that supplied the fund with dental services. The welfare fund was operated by the Construction and General Laborers District Council of Chicago and Vicinity to provide medical and related services to affiliated union members. The DOL charged that the trustees had violated certain provisions of ERISA by awarding noncompetitive contracts to C & A, by operating a kickback scheme with C & A and by otherwise violating their fiduciary duties.

The defendants named in the DOL's lawsuit fell into two groups. In the first group were two former trustees--Alfred Pilotto and James Caporale--and the C & A defendants, who were directly implicated in the kickback scheme. The alleged scheme began when C & A was awarded the dental services contract. C & A paid ten percent of its gross revenue to Pinckard & Associates, a company owned by Pilotto's son-in-law, which funneled the money to Pilotto and Caporale in the form of kickbacks. Caporale, Pilotto and four C & A defendants were convicted of charges stemming from their roles in this kickback scheme. 1 The DOL sued this group of defendants (whom we refer to as "C & A defendants") to recover the kickbacks.

The second group of defendants in the DOL's action comprised the remaining trustees--or in the district court's phrase, the "innocent trustees" (we refer to this group simply as "trustees"). These trustees claimed to have no knowledge of the kickback scheme with C & A. The DOL maintained, however, that the trustees had violated ERISA in three ways: (1) by failing to monitor adequately C & A's services to ensure that C & A's prices were not excessive (the "monitoring claim"); (2) by twice renewing the dental services contract with C & A (in 1983 and again in 1986) without soliciting comparable bids from other dental service providers (the "bidding claim"); and (3) by failing to take steps to recover the kickbacks paid to Caporale and Pilotto by C & A (the "kickback claim").

The trustees brought their own suit against the C & A defendants on May 29, 1987. Like the DOL's suit filed 28 days earlier, the trustees' action sought recovery of the kickbacks paid to Caporale and Pilotto. 2

All the defendants soon filed motions for summary judgment on the ground that the

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claims were barred by the statute of limitations. In the DOL's suit against the trustees, the trustees asserted that all three claims (the monitoring, bidding and kickback claims) were barred by the three-year statute because the DOL knew about the relevant conduct before May 1, 1984. The district court agreed in part, but held that some of the trustees' allegedly improper activity (specifically the later monitoring and bidding conduct) occurred within the three-year limitations period and therefore was not barred. The court granted summary judgment to the trustees on claims arising before May 1, 1984, but allowed claims based on activity occurring after that date. It thus held that the monitoring and bidding claims were partially barred, but that the kickback claim was fully barred since the trustees' duty to sue to recover the kickbacks arose before May 1, 1984. 3

The C & A defendants also moved for summary judgment on statute of limitations grounds in both the DOL's and the trustees' suits for recovery of the kickbacks. The district court, finding a six-year limitations period applicable because the suits involve fraud, held that both the DOL's and the trustees' claims against the C & A defendants survived the statute of limitations. 4

II.

We begin by addressing this court's jurisdiction over these appeals. In both the DOL's and the trustees' actions against the C & A defendants, the district court found the suits to be timely and accordingly denied the defendants' motions for summary judgment. In an order dated May 4, 1990, the district court certified this ruling for interlocutory appeal pursuant to 28 U.S.C. § 1292(b), finding that it involved a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal may materially advance the ultimate termination of the litigation. A panel of this court granted leave to appeal on September 4, 1990, concluding that "all questions concerning the statute of limitations" should be resolved in a single appeal. The C & A defendants' appeal in No. 90-3113 is properly before the court.

In the DOL's suit against the trustees, the district court granted summary judgment in favor of the trustees as to certain claims (specifically, the pre-May 1, 1984 bidding and monitoring claims and the kickback claim). The district court entered final judgment on those claims on May 4, 1990, certifying under Fed.R.Civ.P. 54(b) that there was no just reason for delay. We agree with the district court that the three prerequisites for an appealable judgment under Rule 54(b) are met here: first, the action involves separate claims; second, there is a final decision as to at least one of these claims; and third, there has been an express--and proper--determination that there is no just reason for delay. Stearns v. Consolidated Management, Inc., 747 F.2d 1105, 1108 (7th Cir.1984). In particular, allowing this case to proceed to trial before a final resolution of the statute of limitations issues might necessitate a second trial after a later appeal. The DOL's appeal (No. 90-2450) from the order granting partial summary judgment is therefore proper.

That leaves the trustees' cross-appeal from the district court's partial denial of their summary judgment motion. (The court denied summary judgment as to the...

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