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April 21, 1994



The opinion of the court was delivered by: JOHN A. NORDBERG

Plaintiff Willard Mollfulleda has sued Defendants Al Phillips, Chicago Health Clubs, Inc. ("CHC") and Bally's Health and Tennis Corporation ("Bally's"), in a three count First Amended Complaint alleging a violation of his equal rights to make and enforce contracts pursuant to 42 U.S.C. § 1981, malicious prosecution, and false arrest. Phillips has filed a Cross-claim against Bally's and CHC (collectively, the "Bally Defendants"); and, the Bally Defendants have filed a Cross-claim Phillips. Before the Court are three motions: the Bally Defendants' Motion to Dismiss Phillips's Cross claim; Phillips's Motion to Dismiss Counts I and II of the Bally Defendants' Cross-claim, and Phillips's Motion to Dismiss Count III of the Bally Defendants' Cross-claim. *fn1"

 Plaintiff Mollfulleda is a Hispanic of Puerto Rican descent. He was employed as a general manager by Defendant CHC, an Illinois Corporation having its principal place of business in Chicago, Illinois, at one of CHC's clubs. He alleges that during 1988 to 1991 he recruited new members to the club using his ties to Puerto Rican community and thereby dramatically increased the Spanish membership at that club.

 Defendant Phillips was employed by Bally's for twenty-nine and a half years; and, during the events leading to Plaintiff's lawsuit, Phillips acted as an officer of Bally's and an agent of both Bally's and CHC. As Bally's Senior Area Director for the Chicago Metropolitan Area, Phillips was in charge of the administration and operations of all Bally's health club facilities in that area, including the club at which Mollfulleda worked. Among Phillips's authorized duties were the hiring, firing, disciplining, and promoting of employees.

 Mollfulleda alleges that he often stayed at his club after closing to complete his own work out regime; he alleges that his supervisors were aware of this practice and authorized its continuance. Plaintiff was completing one such workout on December 19, 1991 at approximately 12 a.m. when he was detained inside the facility by two uniformed Chicago Police officers. The police conducted a strip search looking for controlled substances but discovered nothing. After the failed search, one of the officers called Defendant Phillips seeking further instructions. After speaking with Phillips, the police placed Plaintiff in custody for criminal trespass. On December 21, 1991, Phillips terminated Mollfulleda's employment. The criminal trespass charge against Mollfulleda was dismissed on May 6, 1992, when Phillips failed to appear in court to support it.

 Mollfulleda has now brought this lawsuit claiming that he had been fired due to his race in violation of 42 U.S.C. § 1981 and that he was subjected to a malicious prosecution and false arrest. He has requested a jury trial on each of the three counts claimed in his First Amended Complaint.


 A. Standard on Motions to Dismiss

 In ruling on a motion to dismiss made pursuant to Rule 12(b)(6), the Court must accept as true all well-pleaded facts and reasonable inferences based on those facts. Bane v. Ferguson, 890 F.2d 11, 13 (7th Cir. 1989). However, the Court need not accept as true conclusory legal allegations, Coronet Ins. Co. v. Seyfarth, 665 F. Supp. 661, 665 (N.D. Ill. 1987), or strain to find inferences from the complaint's allegations, P & P Mktg., Inc. v. Ditton, 746 F. Supp. 1354, 1357 (N.D. Ill. 1990). A motion to dismiss may be granted only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 2 L. Ed. 2d 80, 78 S. Ct. 99 (1957).

 B. Choice of Law

 The Bally Defendants' Cross-claim makes claims for indemnity and contribution under 42 U.S.C. § 1981 (1988) and under the common law of the State of Illinois. Defendant Phillips's Cross-claim makes claims for indemnity and contribution under the common law of the State of Illinois and under the Age Discrimination in Employment Act, 29 U.S.C. § 623(d) (1988). In analyzing these claims, the Court looks to federal law to determine the parties indemnity and contribution rights under sections 1981 and 623(d) but looks to the common and statutory law of the State of Illinois to determine such rights under the Illinois common law. See In re Olympia Brewing Co. Sec. Litig., 674 F. Supp. 597, 608 (N.D. Ill. 1987); Central Ill. Sav. & Loan Ass'n v. DuPage County Bank of Glendale Heights, 622 F. Supp. 1493, 1495 (N.D. Ill. 1985).

 C. The Bally Defendants' Motion to Dismiss Defendant Phillips's Cross-Claim

 Defendant Phillips has filed a three count Cross-Claim for indemnity, Counts I and II, and for retaliation in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. The Bally Defendants have filed a Motion to Dismiss the Cross-claim, contending that Phillips has no right of implied indemnity and that Phillips's ADEA claim is barred by the settlement agreement in a prior law suit between the parties.

 1. Phillips's Claims for Indemnity

 In Counts I and II of his Cross-claim respectively, Phillips claims that he is entitled to be indemnified "pursuant to Bally's bylaws or other corporate documents" and pursuant to 805 ILCS 5/8.75 (Smith-Hurd 1993). The Bally Defendants argue that neither of these allegations is sufficient to establish a right to indemnification. Defendants also argue that Defendant Phillips is not entitled to an implied right of indemnification. As it affects both parties' Cross-claim, the Court addresses this last argument first.

 a. Implied Indemnification

 With the institution of the Illinois Contribution Among Joint Tortfeasors Act, 740 ILCS 100/1 - 100/5 (Smith-Hurd 1993) [hereinafter the "Contribution Act"], formerly Ill. Rev. Stat. ch. 70, paras. 301-305 (1991), the doctrine of "equitable implied indemnity" was abolished. See American Nat'l Bank & Trust Co. v. Columbus-Cuneo-Cabrini Medical Ctr., 154 Ill. 2d 347, 609 N.E.2d 285, 287, 181 Ill. Dec. 917 (Ill. 1992). That doctrine, also known as the "active/passive" negligence doctrine, was based on the injustice in allowing a more culpable or "active" tortfeasor to escape liability based on the plaintiff's choice of which defendant to sue. See id. Since the Contribution Act addresses that concern, the doctrine is no longer viable.

 However, according to the Illinois Supreme Court, the Contribution Act did not adequately address quasi-contractual cases of vicarious liability and indemnity claims based on such relationships. See id. at 288-89. As a result, the Illinois Supreme Court has held that the Contribution Act did not abolish all forms of common law implied indemnity; it acknowledge the viability of implied indemnity actions based on quasi-contractual relationships. Id. at 288-89. The American National Court specifically held:

The viability of implied indemnity in the quasi-contractual situation insures that a blameless principal cannot be found legally accountable. We therefore hold that common law implied indemnity was not abolished by the Contribution Act in quasi-contractual relationships involving vicarious liability.

 Id. at 289.

 In contrast with the Bally Defendants' claim for implied indemnity, which is discussed below, any claim for implied indemnity on Defendant Phillips's part would have to be based on the doctrine of "equitable implied indemnity", since Plaintiff makes no allegation indicating that Phillips might be vicariously liable for the acts of the Bally Defendants. As indicated above, such a cause of action has been abolished. Therefore, to state a claim for indemnity, Defendant Phillips must show that Illinois law permits an action for ...

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