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MCDOUGALL v. DONOVAN

November 23, 1982

HOWARD MCDOUGALL, THOMAS F. O'MALLEY, R.V. PULLIAM, SR., ROBERT J. BAKER, LORAN W. ROBBINS, MARION M. WINSTEAD, HAROLD J. YATES AND EARL L. JENNINGS, JR., AS TRUSTEES OF CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, PLAINTIFFS,
v.
RAYMOND J. DONOVAN, SECRETARY OF LABOR, DEFENDANT-COUNTERPLAINTIFF, HOWARD MCDOUGALL, THOMAS F. O'MALLEY, R.V. PULLIAM, SR., ROBERT J. BAKER, LORAN W. ROBBINS, MARION M. WINSTEAD, HAROLD J. YATES AND EARL L. JENNINGS, JR., INDIVIDUALLY AND AS TRUSTEES OF CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, AND EARL N. HOEKENGA, AND CENTRAL STATES PENSION FUND, AND THE CENTRAL CONFERENCE OF TEAMSTERS, COUNTERDEFENDANTS.



The opinion of the court was delivered by: Aspen, District Judge:

MEMORANDUM OPINION AND ORDER

Plaintiffs ("the Trustees"), trustees of the Central States, Southeast and Southwest Areas Pension Fund ("the Fund"),*fn1 filed a complaint against the Secretary of Labor ("the Secretary") seeking, inter alia, a declaratory judgment that the Trustees' acquisition on behalf of the Fund of a Falcon 20F jet aircraft from the Falcon Jet Corporation ("Falcon") was not a "prohibited transaction" under § 406 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1106 (1976). Falcon had acquired the aircraft as a trade-in from the Central Conference of Teamsters ("the CCT").

The Secretary responded with an answer as well as a counterclaim against the Trustees individually and as trustees alleging, inter alia, that the acquisition in January, 1979, of the 20F aircraft and the leasing of hangar space by the Trustees from the CCT since at least 1975 constitute "prohibited transactions" under ERISA § 406, 29 U.S.C. § 1106, and that the on-going ownership, modification and usage of private aircraft by the Trustees since at least 1975 constitute breach of their fiduciary obligations under ERISA §§ 404, 405 and 409, 29 U.S.C. § 1104, 1105 and 1109. The Secretary joined as counterdefendants the Fund, the CCT and Earl N. Hoekenga ("Hoekenga"), a former trustee of the Fund.

The matter is before the Court on various procedural motions of the parties, motions to dismiss Hoekenga and the Fund, cross-motions for partial summary judgment on the counterclaim and a motion by the Trustees for summary judgment on their complaint. Jurisdiction is invoked pursuant to 29 U.S.C. § 1132.

I.

Counterdefendants Hoekenga and the Fund each move for a more definite statement of the counterclaim under Rule 12(e), Fed.R.Civ.P. Both contend that the counterclaim is vague and ambiguous, making preparation of a defense impossible.*fn2

Under Rule 8 of the Federal Rules of Civil Procedure, a complaint need only contain a short, plain statement of the claim, indicating that the plaintiff is entitled to relief. "[A] complaint is sufficient if it `will give defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.'" Mathes v. Nugent, 411 F. Supp. 968 (N.D.Ill. 1976), citing Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 103, 2 L.Ed.2d 80 (1957). See Archie v. Chicago Truck Drivers Etc., 585 F.2d 210, 217 (7th Cir. 1978). The standard for granting a motion for a more definite statement is whether the complaint is so vague that a party cannot reasonably be required to frame a responsive pleading. 5 Wright & Miller, Federal Practice and Procedure § 1216 (1969).

In this case, the Secretary's counterclaim satisfies the
requirements of Rule 8. With respect to Hoekenga, the
counterclaim specifies the acts and omissions allegedly
comprising breaches of fiduciary duty on the part of the
Fund's trustees, the time period during which Hoekenga was a
trustee, and  the legal bases for the claims.*fn3

Taken together, these allegations give Hoekenga fair notice of
the claims against him and the grounds upon which they rest.
With respect to the Fund, the activities from which the
Secretary seeks to enjoin the Fund are enumerated with
sufficient specificity.*fn4

II.

Next, counterdefendants Hoekenga and Trustees respectively move under Rule 10(b) for an order compelling separate statements of the claims against them. The Secretary's counterclaim lists and classifies the transactions and occurrences upon which he bases his claims.*fn5 Many if not most of the alleged actions were on-going; the Secretary asserts that the transactions spanned the tenures of the various counterdefendant trustees. Although the Secretary does not attempt to specify which of the transactions occurred or were occurring during each individual trusteeship, allegations as to the dates of tenure of the various trustees are set forth.*fn6

Hoekenga and the Trustees contend that the Secretary's failure at the pleading stages to link specific transactions with specific trusteeships will cause the case to "explode into unavoidable confusion."*fn7 Fear of explosion is not the appropriate standard. Rule 10(b) simply requires "that each claim founded on a separate transaction or occurrence be stated in a separate count `whenever a separation facilitates the clear presentation of matters set forth.'" Mathes v. Nugent, supra, 411 F. Supp. at 972 (emphasis added). In his counterclaim, the Secretary has set forth the transactions and occurrences giving rise to his claims in separate paragraphs.*fn8 He has indicated that each allegation pertains to each trustee during his respective tenure. Under Rule 10(b), where the gist of the complaint is a scheme, plan or course of conduct, there is no requirement that each claim be stated separately merely because all the defendants may not be involved in each act or transaction. Securities and Exchange Commission v. Quing N. Wong, 252 F. Supp. 608, 614 (D.P.R. 1966), 5 Wright & Miller, Federal Practice and Procedure § 1324 (1969). The Secretary's counterclaim is sufficiently clear; further separation of his claims is unnecessary.*fn9

III.

Counterdefendants Hoekenga and the Fund each move to dismiss the Secretary's counterclaim under Rule 12(b).*fn10 Their motions will be discussed separately.

1. Motion of Hoekenga

Hoekenga seeks dismissal of the claims against him on the ground that the transactions alleged in the counterclaim as the basis for the trustees' individual liability occurred before and after — but not during — his tenure as trustee.

It is true, as Hoekenga points out, that ERISA § 409(b), 29 U.S.C. § 1109(b) limits a fiduciary's liability for breach of duty to those breaches committed during his tenure.*fn11 Hoekenga asserts that his term of service as trustee began in May, 1977, and concluded in February, 1978.*fn12 Therefore, he contends, he cannot be liable for the alleged initial purchase of a private aircraft ...


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