Malloy v. Walgreen Co.
| Decision Date | 20 July 2021 |
| Docket Number | 20-cv-5686 |
| Parties | DANIEL MALLOY, Plaintiff, v. WALGREEN CO., NEWPORT GROUP, INC., and WALGREEN CO. 1988 EXECUTIVE DEFERRED COMPENSATION/CAPITAL ACCUMULATION PLAN, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
In his governing first amended complaint [1-1] at 49 et seq. (“Complaint”), Plaintiff Daniel Malloy (“Plaintiff”) brings suit against Walgreen Co. (“Walgreen”), Newport Group, Inc. (“Newport”), and Walgreen Co. Executive Deferred Compensation/Capital Accumulation Plan (the “Plan”) (collectively, “Defendants”) for various state and federal claims arising out of Defendants' refusal to pay Plaintiff retirement benefits that he is allegedly owed pursuant to the terms of the Plan. Currently before the Court is Defendants' motion to dismiss the complaint for failure to state a claim [9]. For the following reasons, Defendants' motion to dismiss [9] is denied. Plaintiff's joint status report, which should include a discovery plan and statement regarding settlement discussions to date and settlement potential, is due by August 3, 2021.
The following facts are drawn from the Complaint. All well-pled facts are presumed to be true for purposes of Defendants' motions to dismiss. See White v. United Airlines Inc., 987 F.3d 616, 620 (7th Cir. 2021). Plaintiff is an Illinois resident. Defendant Walgreen is an Illinois corporation with its principal place of business and corporate headquarters in Illinois. Defendant Newport is the administrator of the Plan, which was created by Walgreen for certain Walgreen employees.
Plaintiff began working for Walgreen in 1972 as a dishwasher at Walgreen's restaurant in Hammond, Indiana, when he was a teenager. Plaintiff was promoted numerous times, raising through the ranks of assistant manager, general manager of various Walgreen's restaurant locations, district manager overseeing up to eight restaurants, and, in 1987, to Director of Food Service Administration. In 1988, Plaintiff was a Walgreen's Salary Grade 14 employee and therefore qualified to participate in the Plan. On January 1, 1988 Plaintiff paid the required consideration of $6, 514.00, deducted from his paycheck, to participate in the Plan.
According to the Complaint, the Plan “provided for annual interest rates for projected payments between 19.00 - 24.00% compounded annually depending upon the age at time of deferral.” [1-1] at 51. Pursuant to the Plan, “the agreed projected payments to Plaintiff were … four Interim Payments once per year from 1995-1998, and fifteen Installment Payments once per year after age 65.” Id. at 52. The Complaint alleges that the payments from 1995 to 1998 were to be $6, 514.00 each year and the payments from 2022 to 2036 were to be $29, 454.00 each year, for total projected payments of $467, 866.00. Id. at 52-53.
Subsection 4.C(2) of the Plan, as summarized by the Complaint, provides that Walgreen was obligated to pay an employee who was involuntarily terminated in the amount of his deferred compensation accumulating at 20% interest compounded annually. [1-1] at 54. In June 1988, Walgreen sold its Food Service Division, including all Walgreen's restaurants, to the Marriott Corporation (“Marriott”). Plaintiff's employment with Walgreen therefore ended in October 1988. However, Plaintiff continued as Director of Food Service Administration for Marriott. According to the Complaint, Walgreen never paid Plaintiff the lump sum payment allegedly due to him under Subsection 4.C(2) of the Plan.
In January of each subsequent year, including in 2018, 2019, and 2020, Plaintiff received a letter from Walgreen making representations to him of his projected payments under the Plan. [1-1] at 55. Additionally, on the first of January in each year between 1995 and 1998, Walgreen paid Plaintiff an Interim Payment of $6, 514.00, as provided for in the Plan. When Plaintiff planned for his retirement, he relied on Walgreen's representations that he would also receive Installment Payments of $29, 454.00 each for fifteen years upon reaching age 65. Plaintiff turned 65 on May 13, 2021. According to the Complaint, other Walgreen employees whose employment ended with the sale of the Walgreen Food Service Division received their Installment Payments under the Plan.
In April 2019, Walgreen “slashed its forecast for 2019 earnings to flat from previous guidance of 7-12 percent for full year earnings in 2019, and announced that Walgreen Co. planned to cut costs by more than $1.5 billion by 2022.” [1-1] at 56. In October of that year, Walgreen announced that it was laying off employees at its corporate headquarters, cutting bonuses for store managers, and planned to cut more than $1.8 billion by 2022. In the third quarter of 2020, Walgreen reported a $1.7 billion GAAP Net Earnings loss, down 266.6% compared to the third quarter of 2019.
In June 2020, Walgreen, through its agent Kristin A. Blumka, Senior Analyst, Retirement Plans, “made the material misrepresentation to Plaintiff that he did not meet the eligibility criteria for the Plan.” [1-1] at 57. She also acknowledged to Plaintiff that Walgreen never made the lump sum payment to him as set forth in Subsection 4.C. (2) of the plan. She further advised Plaintiff that “Walgreen elected to exercise the provisions of Subsection 4.C. (2) of the Plan, which required
Walgreen to pay Plaintiff the principal of his deferral amounts plus accrued interest at the rate found in the provisions of Subsection 4.C(2) of the Plan.” Id. Blumka allegedly promised Plaintiff that Walgreen would “do the right thing” and that she would discuss Plaintiff's compensation with Walgreen's general counsel. Plaintiff calculates that the lump sum payment he would be entitled to would be at least $2, 671, 953, which is his 1988 deferred compensation payment of $6, 514.00 plus twenty percent interest compounded annually. See id. at 58.
On July 14, 2020, Blumka informed Plaintiff that he “did not meet the eligibility criteria for the Plan because he did not attain ‘retirement status' by ‘attaining age 55 with at least 10 years of service prior to termination of employment with Walgreens.” [1-1] at 59. She also told Plaintiff that he did not qualify for the Interim Payments that he had already received between 1995 and 1998 and did not qualify for the Installment Payments that were to begin in 2022. Instead, Blumka told Plaintiff, the amount due to him under Subsection 4.C. (2) of the Plan was $7, 527.69. Blumka asserted that this payment had already been satisfied through Plaintiff's receipt of Interim Payments from 1995 to 1998 and that he would be receiving no further payments. Blumka informed Plaintiff that the communications he had received from Walgreen over the preceding 32 years were “not properly administered, ” an “error that occurred in the administration of your benefits, ” and “administrative error.” Id. at 60. She further informed Plaintiff that Walgreen had a right to reimbursement for the Interim Payments made from 1995 through 1998, which Plaintiff perceived as a threat intended to prevent him from seeking to enforce Walgreen's obligations under the Plan.
Based on Defendants' alleged failure to pay him amounts due under the Plan, Plaintiff asserts six legal theories for recovery, the first five under Illinois state law and the sixth under federal law: breach of fiduciary duty of good faith and fair dealing (Count I); fraud and deceit (Count II); conversion (Count III); violation of the Illinois Wage Payment and Collection Act (Count IV); breach of contract (Count V); and a claim under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132(a), and federal common law to enforce the Plan (Count VI). Under the first five legal theories, Plaintiff seeks $2.5 million in damages and reserves the right to request punitive damages. In the ERISA count, Plaintiff seeks to enforce the terms of the Plan. Currently before the Court is Walgreen's and the Plan's motion to dismiss [9], in which Newport has joined. See [28] & [32].
Federal Rule of Civil Procedure 8(a)(2) provides that, to state a claim for relief, a complaint “must contain … a short and plain statement of the claim showing that the pleader is entitled to relief.” “The questions under [this rule] are whether the defendant has fair notice of what he must defend himself against and whether there is some reason to believe he could be found liable at the end of the case.” Williams v. Dart, 967 F.3d 625, 638 (7th Cir. 2020). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must allege facts which, when taken as true, “‘plausibly suggest that the plaintiff has a right to relief, raising that possibility above a speculative level.'” Cochran v. Illinois State Toll Highway Auth., 828 F.3d 597, 599 (7th Cir. 2016) (quoting EEOC v. Concentra Health Servs., 496 F.3d 773, 776 (7th Cir. 2007)). For purposes of a motion to dismiss under Rule 12(b)(6), the Court “‘accept[s] as true all of the well-pleaded facts in the complaint and draw[s] all reasonable inferences in favor of the plaintiff.'” Calderon-Ramirez v. McCament, 877 F.3d 272, 275 (7th Cir. 2018) (quoting Kubiak v. City of Chicago, 810 F.3d 476, 480-81 (7th Cir. 2016)). However, this “tenet … is inapplicable to legal conclusions.” Iqbal, 556 U.S. at 678, which “can [be] reject[ed] at the motion to dismiss stage.” Dix v. Edleman Financial Services, LLC, 978 F.3d 507, 514 (7th Cir. 2020).
The Court reads the complaint and assesses its plausibility as a whole. See Atkins v. City of Chicago, 631 F.3d 823 832 (7th Cir. 2011). The Court may also consider “documents that are attached to the complaint, documents that are...
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