Brooks v. Pactiv Corp.

• Decision Date: 06 September 2013
• Docket Number: No. 12–1155.,12–1155.
• Citation: 729 F.3d 758
• Parties: James BROOKS, Plaintiff–Appellant, v. PACTIV CORPORATION and Prairie Packaging, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

729 F.3d 758

James BROOKS, Plaintiff–Appellant,

v.PACTIV CORPORATION and Prairie Packaging, Inc., Defendants–Appellees.

No. 12–1155.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 5, 2012.

Decided Sept. 6, 2013.

Shelly Geppert, Attorney, Christine M. Johnson, Attorney, Eimer Stahl, Chicago, IL, for Plaintiff–Appellant.

Bradley D. Hergott, Attorney, William J. Ryan, Attorney, Scandaglia & Ryan, Chicago, IL, for Defendants–Appellees.

Before POSNER, KANNE, and SYKES, Circuit Judges.

SYKES, Circuit Judge.

In 1999 James Brooks, an assembly-line operator for Prairie Packaging, Inc., was seriously injured in an on-the-job accident and lost his left hand, wrist, and forearm. He filed a workers' compensation claim that same year seeking recovery for a permanent and total disability. That claim remains pending. Following Brooks's injury, Prairie Packaging kept him in its employ despite his inability to work, treating him as a disabled employee on a company-approved leave of absence. This allowed Brooks to continue to receive healthcare coverage under the company's employee-benefits plan. His significant ongoing medical costs were paid by his employer-based health insurance, supplemented by payments through the workers' compensation proceeding.

Pactiv Corporation acquired Prairie Packaging in 2007 and for a few years continued this arrangement. Early in 2010 Pactiv sent Brooks a letter instructing him to submit documentation verifying his ability to return to work; failure to submit the required verification would mean the termination of his employment. Because his injury was totally disabling, Brooks did not submit the required verification and Pactiv fired him. As a consequence, he lost his healthcare coverage under the company's employee-benefits plan.

Brooks responded by filing this action against Pactiv and Prairie Packaging asserting claims under ERISA ¹ for benefits due and breach of fiduciary duty. He also asserted a claim for retaliatory discharge under Illinois law. The district court dismissed the complaint for failure to state a claim and Brooks appealed.

We affirm in part and reverse in part. The district court correctly dismissed the ERISA claim for benefits because Brooks has not alleged that the company's employee-benefits plan promised him postemployment benefits. The ERISA fiduciary-duty claim also fails because Pactiv acted in its capacity as an employer, not as a fiduciary, when it terminated Brooks's employment and canceled his health insurance.

Although the complaint fails to state a valid ERISA claim, it does allege facts sufficient to state a claim for common-law retaliatory discharge. Illinois recognizes a limited cause of action for discharges committed in retaliation for an employee's pursuit of a workers' compensation claim. Brooks's allegations, taken as true, are sufficient to state a claim that Pactiv retaliated against him by requiring him to certify, on pain of termination, that he was able to return to work. The parties were at an impasse in Brooks's long-running workers' compensation claim, and one plausible interpretation of Pactiv's ultimatumwas that it was retaliatory. So this claim must be reinstated; because it sounds in state law, however, the district court may wish to consider relinquishing supplemental jurisdiction over it. See28 U.S.C. § 1367(c)(3) (2012).

I. Background

Brooks was employed as a foam-line operator at Prairie Packaging's plant in Bedford Park, Illinois, working on an assembly line manufacturing Styrofoam plates. In 1999 while he was working on the line, his left hand and arm were pulled into a grinder machine, causing grave injuries. In a series of surgeries that followed, doctors amputated his left hand, wrist, and forearm. Health complications, both physical and mental, continue to plague him.

Within six months of the accident, Brooks filed a claim with the Illinois Workers' Compensation Commission seeking compensation for his ongoing expenses and a monetary award for permanent and total disability based on the loss of his left arm. That claim is as yet unresolved; efforts to settle on an amount for the total disability have been unsuccessful. In the meantime, the workers' compensation proceeding has covered some of Brooks's medical expenses and provided more than $100,000 in wage compensation.

After the accident Prairie Packaging continued to retain Brooks in its employ, treating him as a disabled employee on a company-approved leave of absence. Under this arrangement Brooks, like other employees, continued to be eligible for benefits under the Prairie Packaging Inc. Benefits Program (“the Plan”), the company's employee-benefits plan. The Plan offered employees access to various benefits, including health insurance, dental insurance, short-term and long-term disability insurance, and life insurance. Employees received “Annual Enrollment Guides” summarizing the benefits available under the Plan. The Guides specified that disabled employees could continue receiving benefits under the Plan and further explained that electing long-term disability insurance would allow employees with long-term disabilities to continue receiving benefits until they reached the age of 65 or were able to return to work, whichever was earlier. Brooks opted for health and dental insurance for himself and his children. During the years following his accident, he continued to receive these benefits as a disabled employee on a leave of absence. Nothing in the second amended complaint indicates that Brooks elected any of the other benefits available under the Plan.

Pactiv acquired Prairie Packaging in 2007 and also took over as administrator of the Plan. For the next three years, Pactiv continued Prairie Packaging's arrangement with Brooks. From January 2007 to May 2010, BlueCross BlueShield of Illinois provided health insurance under the Plan and covered many of Brooks's medical bills, although as we said, some of his medical expenses were paid through the workers' compensation proceeding.

Early 2010 saw an increase in Brooks's medical costs. In two days alone—on January 15 and 19—he incurred $7,407 in medical charges, all but $18 of which were submitted to BlueCross BlueShield. The insurer paid $6,521 of these charges. At this point Pactiv reevaluated Brooks's employment status. On March 1, 2010, the company sent Brooks a letter informing him that it had been reviewing all open workers' compensation cases since it purchased Prairie Packaging. The letter instructed Brooks to submit documentation verifying that he was able to return to work in a safe and effective manner. Failure to do so by March 31, Pactiv warned, would result in the termination of his employment.Finally, the letter informed Brooks that the termination of his employment would end his health and welfare benefits but would not affect his workers' compensation benefits.

Brooks found himself in a quandary. He was unable to return to work and thus could not provide the verification necessary to remain in Pactiv's employ. And certifying that he was able to work would undercut his workers' compensation case, in which he claimed a permanent and total disability. Yet his failure to submit the required verification would mean the end of his employment and the loss of his health insurance through the Plan.

Brooks did not submit the required verification. On May 3, 2010, Pactiv terminated his employment. As a consequence, Brooks was no longer eligible for health and dental insurance under the Plan, and his insurance coverage was canceled.

Brooks then filed this action against Prairie Packaging and Pactiv asserting claims under ERISA and the Illinois common-law doctrine of retaliatory discharge. (For simplicity we refer to the defendants jointly as “Pactiv.”) Brooks amended his complaint twice; the second amended complaint asserts four causes of action: an ERISA claim for retaliatory termination, see29 U.S.C. § 1140; an ERISA claim for breach of fiduciary duty, see id. § 1132(a)(3); an ERISA claim for benefits due, see id. § 1132(a)(1)(B); and a tort claim for retaliatory discharge under Illinois law.

Pactiv moved to dismiss the second amended complaint for failure to state a claim. SeeFed.R.Civ.P. 12(b)(6). The district court granted the motion, holding as follows: (1) the ERISA retaliatory-termination claim failed because Brooks's injuries made him unqualified for his position and he failed to plausibly allege a retaliatory motive; (2) the ERISA fiduciary-duty claim failed because Pactiv did not act as a fiduciary when it terminated his employment; (3) the ERISA-benefits claim failed because Brooks did not name the Plan as the defendant and did not allege that the terms of the Plan gave him a right to continued benefits postemployment; and (4) the state-law retaliatory-discharge claim failed because the allegations in the complaint did not show a causal link between the workers' compensation claim and the termination of Brooks's employment.

II. Discussion

We review the dismissal of Brooks's complaint de novo, accepting the factual allegations as true and drawing reasonable inferences in Brooks's favor. See McReynolds v. Merrill Lynch & Co., 694 F.3d 873, 879 (7th Cir.2012). To survive Pactiv's motion to dismiss, Brooks needed to include sufficient factual content in his complaint to plausibly state a claim for relief. See Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The plausibility standard requires more than a mere possibility that the claim is valid; something akin to a non-eligible probability is required, although plausibility does not equate to the preponderance standard that applies at trial. Atkins v. City of Chicago, 631 F.3d 823, 831–32 (7th Cir.2011).

Brooks has not challenged the dismissal of his ERISA claim for retaliatory termination, so we confine our review to the ERISA claims for recovery of benefits due and breach of fiduciary duty and the state...