Baker v. Kingsley, 03 C 1750.
| Citation | 294 F.Supp.2d 970 |
| Decision Date | 10 December 2003 |
| Docket Number | No. 03 C 1750.,03 C 1750. |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | James A. BAKER, Raymond Wolfe, and William Pate, on behalf of themselves and all others similarly situated, Plaintiffs, v. Alfred D. KINGSLEY, Gary D. Duberstein, James Rusk, David D. Jones, Jr., Roger L. Fix, Richard Katz, Ronald Hiram, Frank Sica, and Greenmarine Holdings, LLC., Defendants. |
Thomas Howard Geoghegan, Deborah L. Mahoney, Despres Schwartz & Geoghegan, Chicago, IL, for James A Baker, Raymond Wolfe, on behalf of themselves and all others similarly situated, plaintiffs.
John F. Verhey, Peter Graham Hallam, Seidler & McErlean, Chicago, IL, for Alfred D. Kingsley, Gary D. Duberstein, defendants.
Joseph Anthony Cancila, Jr., Heidi Dalenberg, Schiff, Hardin & Waite, Chicago, IL, for James D. Rusk, defendant.
Irving M. Geslewitz, John Hester Ward, Much, Shelist, Freed, Denenberg, Ament & Rubenstein, P.C., Chicago, IL, for Dabid D. Jones, Jr., defendant.
Karina H. Zabicki, Quinlan & Crisham, P.C., Chicago, IL, Caesar A. Tabet, Karina H DeHayes, Tabet DiVito & Rothstein, LLC, Chicago, IL, for Roger L. Fix, defendant.
Mark H Alcott, Mark D Meredity, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, Peter Benjamin Bensinger, Jr., Paul J Skiermont, Bartlit, Beck, Herman, Palenchar & Scott, Chicago, IL, for Greenmarine Holdings, LLC, defendant.
Paul J Skiermont, Bartlit, Beck, Herman, Palenchar & Scott, Chicago, IL, for Richard Katz, Ronald Hiram, Frank Sica, defendants.
Plaintiffs James Baker, Raymond Wolfe, and William Pate, individually and on behalf of all others similarly situated, initiated the instant suit through the filing of a one-count complaint in the Circuit Court for the Nineteenth Judicial Circuit, Lake County, Illinois, against defendants Alfred Kingsley, Gary Duberstein, James Rusk, David Jones, Jr., Roger Fix, and Greenmarine Holdings, LLC., arising from an alleged violation of the Illinois Wage Payment and Collection Act, 820 ILCS § 115/5. After defendants removed the instant case to this court, plaintiffs filed a first amended complaint which added a claim under the fiduciary provisions of Sections 102 and 404 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1022 and 1104 (Count II). On May 29, 2003, the court granted plaintiffs' motion to voluntarily dismiss James Rusk, add defendants Richard Katz, Ronald Hiram, and Frank Sica, and file a second amended complaint which was "revised solely for the purpose of adding and dropping such parties."1
Defendants Kingsley, Duberstein, Fix, Sica, and Greenmarine Holdings LLC have moved to dismiss Counts I and II pursuant to Fed.R.Civ.P. 12(b)(6), and defendant Katz has moved to dismiss based on improper service pursuant to Fed.R.Civ.P. 12(b)(2) & (5). For the reasons stated below, the court grants defendants' motion to dismiss Count II, quashes service as to Katz, and remands Count I, which is not preempted by federal law, to state court.
Baker and Wolfe, named plaintiffs in Count I of the second amended complaint, were employees of the Waukegan, Illinois, manufacturing and production facility of Outboard Marine Corporation ("OMC"). According to the second amended complaint, on or about September 11, 1997, Greenmarine completed a takeover of OMC and designated four of OMC's six directors, effectively installing its own management team that included the individual defendants. Defendant David Jones was hired as the president and chief executive officer of OMC, and defendant Roger Fix was hired to replace Jones as president on August 28, 2000. Defendant Alfred Kingsley was nominated to be OMC's chairman.
In September 1999, as part of the takeover, the individual defendants allegedly anticipated having to close OMC's Waukegan plant, preferably over a two-year period. The then-existing collective bargaining agreement of the International Marine and Machinists Association ("IMMA") was set to expire in October 1999, however. Accordingly, the individual defendants allegedly negotiated an extension of the collective bargaining agreement by promising to pay IMMA members, including plaintiffs Baker and Wolfe and others similarly situated, certain enhanced severance and retention payments if they worked to the end of the new agreement, or until the shutdown of the Waukegan plant (the "Shutdown Agreement").
Sections 18(f) and 19(f) of the Shutdown Agreement, attached to plaintiffs' original complaint and incorporated by reference into the second amended complaint, provide that retention and severance payments "shall be paid in a lump sum within ten (10) calendar days after the earlier of: (i) ninety (90) calendar days from the date the employee is terminated or permanently laid off, or (ii) the effective date of the sale of the Waukegan plant."
On December 21, 2000, the Waukegan plant was closed by the individual defendants and Greenmarine, and on December 22, 2000, the individual defendants and Greenmarine allegedly caused OMC to file for bankruptcy in the Northern District of Illinois. Although plaintiffs allegedly filed claims for their severance and retention benefits under the Shutdown Agreement against OMC in the bankruptcy court, OMC has not paid plaintiffs.
According to Count I of the second amended complaint, defendants denied plaintiffs their statutory rights under the Illinois Wage Payment and Collection Act (the "Wage Act"), 820 ILCS § 115/5, to have their earned vacation pay, severance pay, and retention pay paid to them upon termination. Plaintiffs allege that IMMA members did not appreciate the likelihood that the entire OMC enterprise might be liquidated (and thus unable to pay plaintiffs' severance and retention benefits).2
In Count II, plaintiffs Baker, Wolfe and Pate, as participants of the OMC Health Plan, allege that defendants violated their fiduciary duty by failing to inform plaintiffs and others similarly situated that defendants might exercise their purported right to terminate the OMC Health Plan without notice. Although the Summary Plan Description ("SPD") of the OMC Health Plan, which was distributed to all participants, stated that coverage would end when "the Plan is terminated by the Company," it did not specify the manner in which the Plan could be terminated. The OMC Health Plan itself, which was attached as an exhibit to the first amended complaint and incorporated by reference into the second amended complaint, effectively provides that no notice of termination of the OMC Health Plan need be given to plan participants. According to the second amended complaint, however, the OMC Health Plan was not provided to all participants.
The OMC Health Plan defines the Administrator of the plan as "The Committee," which consists of at least three persons appointed by the Board of Directors of the Company. The OMC Health Plan provides that the Committee "shall have full power and authority to administer the Plan, to interpret its provisions, to establish, amend and rescind rules and regulations for its efficient administration and to determine all questions relating to the eligibility of Participants and Dependents hereunder." The OMC Health Plan further provides for the establishment of a "Management Committee," which is appointed by the Board of Directors and responsible for assisting in the investment of the plan's assets.
According to plaintiffs, on February 20, 2001, OMC filed a motion in the bankruptcy court to approve the defendants' termination of the OMC Health Plan. Notwithstanding the IMMA's objection to that motion, in which the IMMA asked for a 120-day delay of termination of the OMC Health Plan to permit participants to seek alternative group coverage, the bankruptcy court approved termination of the OMC Health Plan on February 28, 2001. Plaintiffs allege that the individual defendants' failure to notify plaintiffs of the impending termination of the OMC Health Plan prevented them from obtaining alternative insurance without a break in coverage and constitutes a violation of their fiduciary duty under ERISA. Moreover, according to plaintiffs, defendant Greenmarine is liable either as a fiduciary itself, or as a nonfiduciary acting in concert with the individual defendants in breach of their fiduciary duty.
Defendants Kingsley, Duberstein, Jones, Fix, Sica and Greenmarine have moved pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss Counts I and II of the second amended complaint. In considering a Rule 12(b)(6) motion, the court is obligated to accept all well-pleaded facts in the counterclaim as true and draw all reasonable inferences in favor of the non-moving party. Northern Trust Co. v. Peters, 69 F.3d 123, 129 (7th Cir.1995). The consideration of a Rule 12(b)(6) motion is generally restricted to the pleadings, which include the complaint, any exhibits attached thereto, and supporting briefs. Thompson v. Illinois Department of Professional Regulation, 300 F.3d 750, 753 (7th Cir.2002).
In Count II, plaintiffs Baker, Wolfe, and Pate, on behalf of all active and retired participants in the OMC Health Plan, seek damages and equitable relief "for loss of the health insurance benefits they could have obtained as a group without a break in coverage if they had received reasonable advance notice of the termination of the OMC Health Plan." In their motion to dismiss, defendants argue that plaintiffs have mischaracterized the termination of the OMC Health Plan as being driven by defendants rather than the February 28, 2001, order of the bankruptcy court. The court agrees.
ERISA, Section 3(21)(A), 29 U.S.C. § 1002(21)(A), states that an individual is a fiduciary with respect to a plan to the extent,
(i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control...
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Baker v. Kingsley
...Circuit. Argued September 15, 2004. Decided October 27, 2004. Appeal from the District Court for the Northern District of Illinois, 294 F.Supp.2d 970, Gettleman, COPYRIGHT MATERIAL OMITTED COPYRIGHT MATERIAL OMITTED Thomas H. Geoghegan (argued), Despres, Schwartz & Geoghegan, Chicago, IL, P......