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Hughes v. Encyclopaedia Britannica Inc.

October 22, 1952

HUGHES ET AL.
v.
ENCYCLOPAEDIA BRITANNICA, INC.



Author: Finnegan

Before KERNER, FINNEGAN and SWAIM, Circuit Judges.

FINNEGAN, Circuit Judge.

This is an appeal from an order of the District Court for the Northern District of Illinois, Eastern Division, dismissing plaintiffs' cause of action.

The complaint, filed on November 27, 1950, on behalf of Roland B. Hughes, Armin Eastman and Edward J. Frick, alleges that they, and each of them, are residents of the State of Illinois; that the defendant Encyclopaedia Britannica, Inc., is a New York corporation; that the amount in controversy, exclusive of interest and costs, exceeds the sum of $3000. It is then alleged that the plaintiffs are former employees of the defendant corporation; that during their employment, and on towit, February 1, 1944, the defendant put into force and effect a certain Retirement Income Plan for its employees; a copy of the plan is attached to and made a part of the complaint by reference. Plaintiffs then alleged that they are entitled to the benefits under said plan as therein recited, that the plaintiff Hughes was employed by defendant from October, 1941, to April, 1950; plaintiff Eastman from November, 1945, to July, 1950; and plaintiff Frick from October, 1941 to January, 1950, except for the period between February, 1944, and March, 1945. It is then charged that all contributions to the plan were to be made by the defendant; that such contributions were to be used to purchase retirement insurance with the Equitable Life Assurance Society of the United States; that the defendant failed to make the necessary deposits with Equitable for the years 1948 and 1949, thereby depriving plaintiffs of their benefits for said years.

Plaintiffs allege that they bring the action on behalf of themselves and all other employees of the defendant similarly situated; that said employees number several hundred and it is therefore impracticable to bring them all before the court. The complaint seeks the following relief: (1) that defendant be summoned and required to answer, (2) that it be required to bring into court and pay over to Equitable the sum or sums of money necessary to continue in effect the Retirement Income Plan for the years 1948 and 1949, together with the remaining amounts to be deposited under Section 6 of the plan for the benefit of plaintiffs and other employees in similar situation.

By amendment of April 11, 1951, Elliott Williamson, employed by defendant from November, 1934, to July, 1950, and Fred Davis, employed from March, 1938, to June, 1949, were added as plaintiffs. At that time a copy of the agreement between Equitable and defendant, marked Exhibit B, was added to and made part of the complaint.

Defendant moved to dismiss the cause of action for the following reasons:

"1. The Court is without jurisdiction for the reason that the interest of each of the plaintiffs is less than the jurisdictional amount of $3000, and this is not a true class action wherein the claims of all the members of the class may be aggregated to reach the jurisdictional amount.

"2. The complaint fails to allege facts showing that the plaintiffs are proper representatives of the class which they purport to represent and, on the contrary, they are not such representatives of the class described in the complaint so as to entitle them to maintain this suit.

"3. The complaint fails to state a cause of action for the following reasons:

"(a) Plaintiffs fail to allege facts necessary to make out an equitable estoppel in their favor and there is, in fact, no basis for an equitable estoppel.

"(b) There exists no contract between plaintiffs and defendant upon which to base an action at law; at most, defendant's employee benefit plan constituted an unenforceable gratuity.

"(c) Even construing the Plan as a contract between plaintiffs and defendant, plaintiffs are bound by its terms and precluded from maintaining this action.

"(d) Even construing the Plan as a contract and refusing to give effect to its express provisions, sufficient notice was given plaintiffs by defendant to constitute an ...


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