Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 93 C 451--V.
Sue Shields, Magistrate Judge.
Before COFFEY, MANION and KANNE, Circuit Judges.
DECIDED FEBRUARY 14, 1997
Diana Mira and her children, James and Delores, brought suit against Nuclear Measurements Corporation ("NMC") and three of its officers, seeking to recover damages for the defendants' alleged breach of fiduciary duties as the administrators of an employee benefit plan governed by the Employment Retirement Income Security Act of 1974, 29 U.S.C. secs. 1001 et seq. ("ERISA"). The plaintiffs also asserted a claim under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. secs. 1962 and 1964(c) ("RICO"), alleging that the defendants engaged in a pattern of racketeering activity with multiple violations of Title 18 U.S.C. sec. 664. The district court granted summary judgment in favor of the defendants with respect to both the ERISA breach-of-fiduciary-duty claim and the RICO claim, and shortly thereafter denied the Miras' motion for class certification, pursuant to Federal Rule of Civil Procedure 23(c). We affirm.
A. Diana Mira and the NMC Employee Benefit Plan
The defendant corporation NMC, located in Indianapolis, Indiana, is a small company with fewer than two-dozen employees which manufactures instruments that detect and measure radiation. These devices are used by the U.S. Department of Energy Laboratories as well as various commercial nuclear power facilities to protect their workers through the monitoring of possible releases of radiation into the environment.
NMC was owned by defendants Larry Vaughn and Donald L. DeMoss, who also served as NMC's Chairman and President respectively. Defendant Joyce M. Kramer was NMC's Vice President of Operations and Human Resources Director. In addition to being officers of the company, DeMoss, Vaughn, and Kramer were salaried employees and participated in the firm's employee benefit plan ("the plan"), which is governed by ERISA.
Beginning in 1989, Diana Mira worked as a solderer in the wiring department at NMC, earning approximately $5 an hour. She participated in the company's employee benefit plan, which provided health insurance for herself and her children, and her children were plan beneficiaries as defined by 29 U.S.C. sec. 1002(8). The defendants, through a firm known as Acordia Small Business Benefits, Inc. ("Acordia"), purchased health insurance coverage for its employees through Blue Cross/Blue Shield of Indiana. The defendants, as plan administrators, were obligated to forward the health insurance premiums to Acordia, in a timely fashion, on behalf of the plan's participants and beneficiaries in order to maintain the health insurance coverage agreed upon. NMC contributed two-thirds of each employee's monthly health insurance premium, while each employee was expected to contribute the remaining third. The employees' contributions were paid through deductions from their weekly paychecks (in Mira's case, $26.58 per week for health insurance coverage for herself and her family).
During May, June, July, August, and September of 1992, NMC encountered serious financial difficulties and, instead of applying the employees' payroll deductions to the health insurance premiums as it was obligated to do, the company used all of its available funds to cover day-to-day operating expenses. As DeMoss explained in his deposition, "Our company was suffering extreme cash flow problems at the time. In fact, we were having trouble making payroll. I elected--I knew we were going to pay [the premiums], that [they] would be paid. I elected not to lay anyone off, to try to keep everyone working and to stretch this out as long as I could." DeMoss' strategy was to keep the company afloat by giving priority to the payment of the day-to-day operating expenses of the company.
On September 2, 1992, Acordia notified NMC that its employees' group insurance coverage had been canceled, effective May 1, 1992, as a result of NMC's non-payment of premiums since May 1992 or earlier. NMC, through DeMoss and Kramer, took steps to ensure that the past-due amounts would be paid and employee insurance coverage reinstated. DeMoss testified that NMC was "trying like hell to get [the past-due premiums] paid." He explained: "We expended extraordinary effort to get things out the door. That means labor . . . working overtime, working weekends, whatever it took to get it out the door, to get the monies in." As of early September, however, neither Acordia nor NMC had notified Mira or any of NMC's other employees about the insurance coverage crisis.
On September 8, 1992, shortly after NMC learned of the lapse of health insurance coverage from Acordia, Diana Mira received a claim denial letter from Blue Cross/Blue Shield of Indiana informing her that her health insurance coverage had been canceled due to NMC's failure to pay premiums and that the health insurance coverage had not been in effect in July 1992, at which time she incurred $101 worth of medical services for her daughter Delores. On September 14, Mira met with an Indianapolis attorney to discuss the matter of the unpaid health care insurance premiums. Mira's attorney contacted Joyce Kramer, NMC's Vice President of Operations, to discuss the situation, and Kramer assured the attorney that the unpaid premiums would be paid, that health insurance coverage would be reinstated by September 15, and that all claims for past medical expenses would be paid retroactive to May 1, 1992. Mira's attorney memorialized his client's position in a letter protesting the lapse of insurance coverage. His letter claimed that Mira was being "threatened [with] suit on unpaid medical expenses," and warned that if Mira's medical bills were not paid by September 30, legal action would follow.
On September 15, the day after meeting with her attorney, Mira returned to her place of employment. NMC had been notified by Acordia that all of its employees would be required to execute a Blue Cross/Blue Shield reinstatement form before the insurer would agree to reinstate health insurance coverage for the plan participants. Joyce Kramer, NMC's Human Resources Director, requested that Mira complete one of these forms. When Mira refused to do so, Kramer informed her that filling out the form was required and that Mira could not continue working until the necessary paperwork was submitted. This agitated Mira, who (according to the defendants) became loud and disruptive and repeatedly asked if she was being "fired." Kramer finally told Mira to "go home until things are resolved." Mira refused to return to work at NMC. At this juncture, NMC informed its other employees for the first time that the health insurance had lapsed and that the company was taking the necessary steps to have the coverage reinstated.
After Mira had been absent from work for several days, Kramer informed her by letter that she could return to work as soon as the reinstatement form was completed and returned. Separately, NMC's counsel forwarded a letter to Mira's counsel, dated September 25, 1992, which advised that Mira's employment had not been terminated and stated that Mira's "only hope of reinstating her insurance is to fill out those forms," noting that the "reinstatement forms for the balance of the NMC employees ha[d] already been completed and submitted to the insurer." Although NMC had thus made it very clear that Mira was welcome to return to her job upon completion of the necessary paperwork, Mira not only refused to complete the reinstatement form, but also remained away from work and applied for state unemployment benefits, which were denied after the Indiana Department of Employment and Training Services determined that Mira "was not discharged" by NMC. As far as we are able to determine from the record, Mira has to date failed to offer any explanation for her unwillingness to complete these forms and/or return to work at NMC.
Notwithstanding Mira's failure to complete a reinstatement form, NMC paid all of the past premiums due and all of the employees' health insurance coverage (including Mira's) was reinstated retroactive to May 1, 1992. Thus, all of Mira's claims were paid in full. NMC learned that its employees' health insurance coverage had been reinstated on November 2, 1992, and there is no evidence in the record that Mira had to wait for an undue amount of time before having her ...