Richards v. General Motors Corp., No. 91-CV-10104-BC

CourtUnited States District Courts. 6th Circuit. United States District Court (Western District Michigan)
Citation850 F. Supp. 1325
Decision Date31 March 1994
PartiesRobert RICHARDS, Plaintiff, v. GENERAL MOTORS CORPORATION and General Motors Savings-Stock Purchase Program, Defendants. Robert W. CAMPBELL, Jr., Plaintiff, v. GENERAL MOTORS CORPORATION and General Motors Savings-Stock Purchase Program, Defendants.
Docket Number93-CV-10122-BC.,No. 91-CV-10104-BC

850 F. Supp. 1325

Robert RICHARDS, Plaintiff,
v.
GENERAL MOTORS CORPORATION and General Motors Savings-Stock Purchase Program, Defendants.

Robert W. CAMPBELL, Jr., Plaintiff,
v.
GENERAL MOTORS CORPORATION and General Motors Savings-Stock Purchase Program, Defendants.

Nos. 91-CV-10104-BC, 93-CV-10122-BC.

United States District Court, E.D. Michigan, N.D.

March 31, 1994.


850 F. Supp. 1326
COPYRIGHT MATERIAL OMITTED
850 F. Supp. 1327
Michael J. Forester, Saginaw, MI, Harry P. Gill, Bay City, MI and Jeffrey J. Endean, Saginaw, MI, for plaintiffs

David M. Davis, Terence V. Page, Birmingham, MI and Francis S. Jaworski, Stuart R. Cohen, General Motors Corp., Detroit, MI, for defendants.

MEMORANDUM OPINION AND ORDER

CLELAND, District Judge.

I. INTRODUCTION

These consolidated cases are before the court on Plaintiffs' respective Motions in Support of Jury Demand. Also before the court is Defendants' Motion to Dismiss Count II of Plaintiff Campbell's original Complaint. For the reasons stated herein,

IT IS ORDERED that the Plaintiffs' respective Motions in Support of Jury Demand are denied, and

IT IS FURTHER ORDERED that Defendants' Motion to Dismiss Count II of Plaintiff Campbell's original Complaint is granted in part and denied in part. Specifically, the court holds that the portions of the Amended Complaint which assert an individual action for "breach of fiduciary duties" (¶¶ 43, 44, 45, and 46) are dismissed, pursuant to Fed. R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted.

II. BACKGROUND

Plaintiffs are both former employees of defendant General Motors Corporation ("G.M."). As part of its various employee benefit plans covered by the Employee Retirement Income Security Act ("ERISA"), codified at 29 U.S.C. § 1001 et seq., G.M. offered a Savings-Stock Purchase Plan ("S-SPP" or "Plan"). Under the Plan, the plaintiffs could direct G.M. to withhold up to fifteen percent of their salaries to purchase G.M. stock and other investments under a myriad of different options (for a detailed version of the facts, see Richards v. General Motors Corp., 991 F.2d 1227 (6th Cir.1993)).

Up to four times per year, employees were permitted to transfer existing funds between the stock-based investments, to alter the percentage of their salaries withheld for purchases, and to change the formula under which the withheld funds were divided to purchase stock-based investments. Id. at 1229. G.M. alleges that, with the cooperation of the local Plan Administrator, plaintiffs were able to "back-date" their investment transactions. This allowed plaintiffs to take advantage of the knowledge of how the market had performed before making their investment decisions (the functional equivalent of betting on a horse race after win, place, and show are announced). Both plaintiffs were terminated after G.M. discovered that they were making these retroactive investment decisions which, according to G.M., allowed them to make windfall profits.

Each of the plaintiffs has filed a Complaint and an Amended Complaint, asserting a cause of action against the defendants under various provisions of ERISA.1 The Amended

850 F. Supp. 1328
Complaints allege causes of action under ERISA involving the eligibility of each plaintiff to receive pension benefits from the Plan

Plaintiff Richards' Amended Complaint includes two claims2: Count I — Breach of Fiduciary Duties (alleging that by their bad faith actions and omissions in terminating plaintiff and by unilaterally offsetting his non-forfeitable benefits in the S-SPP, the defendants breached their fiduciary duties under §§ 404(a) and 409 of ERISA, 29 U.S.C. §§ 1104(a)3 and 11094); and Count III—Violation of § 510 of ERISA, 29 U.S.C. § 11405 (unlawful interference with attainment of a benefit or retaliation for exercising a lawful right under a benefit plan).

Plaintiff Campbell's Amended Complaint, which is identical to Richards' Amended Complaint in several respects, alleges: Count I — Breach of Contractual Fiduciary Duties and Count III — Violation of § 510 of ERISA, 29 U.S.C. § 1140.6

III. ISSUES

Two issues are before the court: 1) whether plaintiffs are entitled to a jury trial, under the Seventh Amendment, for their respective ERISA causes of action under 29 U.S.C. § 1132(a)(1)(B), § 1132(a)(2), or § 1132(a)(3)7 and, 2) whether plaintiff Campbell's claim for Breach of Fiduciary Duties should be dismissed, pursuant to Fed. R.Civ.P. 12(b)(6), for failure to state a claim upon which relief can be granted.8

IV. DISCUSSION

A. JURY TRIAL UNDER ERISA

The Seventh Amendment provides that "in Suits at Common law, where the

850 F. Supp. 1329
value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved...." U.S. Const. amend. VII. Under the Seventh Amendment, the right to a jury trial exists only in "suits in which legal rights ... are recognized and determined, in contradistinction to those where equitable rights alone ... are recognized, and equitable remedies ... are administered." Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 41, 109 S.Ct. 2782, 2790, 106 L.Ed.2d 26 (1989) (quotation omitted). Most courts which had previously considered this issue have held that no right to a jury trial exists under ERISA claims in general. See Crews v. Central States, Southeast & Southwest Areas Pension Fund, 788 F.2d 332, 338 (6th Cir. 1986) (citing all of the other circuit courts which had rejected the notion that a jury trial existed in an action for benefits under Sec. 502(a)(1)(B)).9 The reasoning applied was that such suits for pension benefits were grounded in the law of trust and thus were equitable in nature. In a recent grouping of cases, the Supreme Court has provided guidance for determining whether a party is entitled to a jury trial under the Seventh Amendment. In Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, 494 U.S. 558, 110 S.Ct. 1339, 108 L.Ed.2d 519 (1990), the Court held that there was a right to a jury trial in a section 301 Labor Management Relations Act ("LMRA") claim against a union for breach of its fair duty of representation. Although Terry was an LMRA case, the Court has determined that § 301 of that Act is analogous to § 502(a)(1)(B) of ERISA; therefore, courts have applied Terry's rationale to ERISA actions. The Terry Court considered two issues in determining whether a trial by jury was to be afforded under the Seventh Amendment: (1) the nature of the issues involved (vis-a-vis the eighteenth century actions brought in English courts prior to the merger of law and equity) and (2) the nature of the remedy sought — legal or equitable. The second inquiry is "more important" to Seventh Amendment analysis. Terry, 494 U.S. at 565, 110 S.Ct. at 1345 (citing Granfinanciera S.A. v. Nordberg, 492 U.S. 33, 42, 109 S.Ct. 2782, 2790, 106 L.Ed.2d 26 (1989))

In Terry, the plaintiffs were required to prove that their employer violated § 301 of the LMRA by breaching the collective-bargaining agreement and that the union breached its duty of fair representation. The plaintiffs sought compensatory damages in the form of back pay and benefits. Because the nature of the hybrid claim was both equitable and legal, and because the nature of the remedy sought is the crucial factor under the Seventh Amendment, the Court focused on the recovery sought. Due to the fact that the relief sought was in the form of money damages only (including back pay) the Court determined that the action was a legal one in which a jury trial is afforded under the Seventh Amendment.

Shortly after the Supreme Court's decision in Terry, the Court decided Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 111 S.Ct. 478, 112 L.Ed.2d 474 (1990). In that case a Texas employee allegedly was fired so that his pension would not vest. He sued his previous employer for wrongful discharge seeking compensatory, mental anguish, and punitive damages. The Texas Supreme Court held that the action was not preempted by ERISA because the plaintiff was not seeking lost pension benefits, but was instead seeking legal damages. The Supreme Court reversed, holding that the case was indeed preempted under § 514(a) 29 U.S.C. § 1144(a) of ERISA. At the very end of the Court's opinion, Justice O'Connor (writing on behalf of the Court), stated:

Not only is § 502(a) 29 U.S.C. § 1132(a)(1) and (3) the exclusive remedy for vindicating § 510 protected rights, there is no basis in § 502(a)'s language for
850 F. Supp. 1330
limiting ERISA actions to only those which seek "pension benefits." It is clear that the relief requested here compensatory, mental anguish, and punitive damages is well within the power of federal courts to provide. Consequently, it is no answer to a preemption argument that a particular plaintiff is not seeking recovery of pension benefits.

Id., 498 U.S. at 145, 111 S.Ct. at 486 (emphasis added).

The above-cited dicta from Ingersoll-Rand, read together with the Court's decision in Terry, lead to a plethora of decisions by various district courts holding that ERISA sometimes affords plaintiffs a right to a jury trial. See e.g. International Union, United Auto., etc. v. Midland Steel Products Company, 771 F.Supp. 860 (N.D.Ohio 1991) (Ingersoll-Rand conclusively establishes the availability of legal remedies — and thus a right to a jury trial — under ERISA); McDonald v. Artcraft Elec. Supply Co., 774 F.Supp. 29 (D.D.C.1991) (Ingersoll-Rand provides powerful support for the proposition that Congress intended for ERISA to provide a statutory right to a jury trial); Blue Cross and Blue Shield of Alabama v. Lewis, 753 F.Supp. 345 (N.D.Ala.1990) (fact that Ingersoll-Rand now recognizes tort-like damages in ERISA cases leads inexorably to the right to a jury trial thereunder); see also Steeples v. Time Ins. Co., 139 F.R.D. 688 (N.D.Okla.1991) (jury trial was afforded in action to recover money damages for insurer's failure to pay medical costs because employees were...

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12 practice notes
  • Smith v. St. Regis Corp., No. 3:85-cv-140WS.
    • United States
    • United States District Courts. 5th Circuit. Southern District of Mississippi
    • March 31, 1994
    ...in order to preclude the grant of summary judgment. Matsushita Electric Industrial Co. Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 850 F. Supp. 1325 586-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 Accordingly, this court finds that summary judgment should be granted in favor of the defenda......
  • Iwans v. Aetna Life Ins. Corp., Civ. No. 2:92CV00764 (AHN).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Connecticut)
    • June 8, 1994
    ...not violations of the terms of the plan which would be actionable under § 1132(a)(1)(B). Cf. Richards v. General Motors Corp., 850 F.Supp. 1325, ___ (E.D.Mich.1994). Firestone Tire and Farrell v. Automobile Club of Mich., 870 F.2d 1129 (6th Cir.1989), cited by Iwans, are thus inapplicable. ......
  • Unisys Corp. Retiree Medical Ben. ERISA Litigation, In re, No. 94-1875
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • June 28, 1995
    ...for such relief are sections 409 and 502(a)(2) of ERISA, 29 U.S.C. Secs. 1109 and 1132(a)(2). See Richards v. General Motors Corp., 850 F.Supp. 1325 (E.D.Mich.1994), and Kaiser Permanente Employees Pension Plan v. Bertozzi, 849 F.Supp. 692, 700 (N.D.Cal.1994) (concluding that recovery under......
  • Markert v. PNC Fin. Servs. Grp., Inc., Civil Action No. 11–4918.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • November 14, 2011
    ...a breach of fiduciary duty is different from an action to recover plan benefits under § 1132(a)(1)(B). Richards v. Gen. Motors Corp., 850 F.Supp. 1325, 1331 (E.D.Mich.1994) (citing Anweiler v. Am. Elec. Power Serv. Corp., 3 F.3d 986, 992 (7th Cir.1993)). When a claim is for breach of fiduci......
  • Request a trial to view additional results
12 cases
  • Smith v. St. Regis Corp., No. 3:85-cv-140WS.
    • United States
    • United States District Courts. 5th Circuit. Southern District of Mississippi
    • March 31, 1994
    ...in order to preclude the grant of summary judgment. Matsushita Electric Industrial Co. Ltd. v. Zenith Radio Corporation, 475 U.S. 574, 850 F. Supp. 1325 586-88, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 Accordingly, this court finds that summary judgment should be granted in favor of the defenda......
  • Iwans v. Aetna Life Ins. Corp., Civ. No. 2:92CV00764 (AHN).
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Connecticut)
    • June 8, 1994
    ...not violations of the terms of the plan which would be actionable under § 1132(a)(1)(B). Cf. Richards v. General Motors Corp., 850 F.Supp. 1325, ___ (E.D.Mich.1994). Firestone Tire and Farrell v. Automobile Club of Mich., 870 F.2d 1129 (6th Cir.1989), cited by Iwans, are thus inapplicable. ......
  • Unisys Corp. Retiree Medical Ben. ERISA Litigation, In re, No. 94-1875
    • United States
    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
    • June 28, 1995
    ...for such relief are sections 409 and 502(a)(2) of ERISA, 29 U.S.C. Secs. 1109 and 1132(a)(2). See Richards v. General Motors Corp., 850 F.Supp. 1325 (E.D.Mich.1994), and Kaiser Permanente Employees Pension Plan v. Bertozzi, 849 F.Supp. 692, 700 (N.D.Cal.1994) (concluding that recovery under......
  • Markert v. PNC Fin. Servs. Grp., Inc., Civil Action No. 11–4918.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • November 14, 2011
    ...a breach of fiduciary duty is different from an action to recover plan benefits under § 1132(a)(1)(B). Richards v. Gen. Motors Corp., 850 F.Supp. 1325, 1331 (E.D.Mich.1994) (citing Anweiler v. Am. Elec. Power Serv. Corp., 3 F.3d 986, 992 (7th Cir.1993)). When a claim is for breach of fiduci......
  • Request a trial to view additional results

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