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ADAMCZYK v. LEVER BROS. CO.

November 14, 1997

WESLEY H. ADAMCZYK, et al., Plaintiffs,
v.
LEVER BROTHERS COMPANY, a division of Conopco, a corporation, Defendant.



The opinion of the court was delivered by: HART

 Plaintiffs Wesley Adamczyk, Robert Boskovich, Matthew Boyle, David Brubaker, Robert Mergesky, Thomas Miller, Thomas Pieters Sr., Ronald Schuttrow, Stanley Wood and James Yager bring this suit against defendant, Lever Brothers Company, their former employer. The amended complaint contains claims pursuant to the Employee Retirement Income Security Act ("ERISA") 29 U.S.C. § 1001 et seq. It comprises ten counts, one in respect of each of the plaintiffs. Count I sets out Adamczyk's claim, the terms of which are incorporated by reference into the remaining counts. Defendant has moved to dismiss all ten counts pursuant to Fed. R. Civ. P. 12(b)(6) and 9(b) for failure to state a claim upon which relief can be granted and for failure to plead alleged misrepresentations constituting breach of fiduciary duty with particularity.

 Each of the plaintiffs voluntarily retired from defendant's employment between May 1 and October 1, 1995. On November 30, defendant announced a voluntary termination package ("VTP") offering retirement to its employees on terms more favorable than those offered to plaintiffs. The essence of plaintiffs' claims is that defendant misled them regarding its intention to introduce the VTP, both on the basis of what defendant represented as well as what it failed to represent, and that but for defendant's actions they would have delayed retirement so as to avail themselves of the VTP's enhanced benefits. Plaintiffs allege that defendant's actions constitute a breach of fiduciary duties under 29 U.S.C. § 1104 and that defendant is liable for equitable civil relief pursuant to 29 U.S.C. § 1109(a) and 29 U.S.C. § 1132(a)(3). Plaintiffs contend that, if defendant continues to bar them from participating in the plan, defendant will be unjustly enriched and plaintiffs will suffer substantial and irreparable harm, such as to warrant the issuance of injunctive relief.

 Defendant moves to dismiss each count of the amended complaint on the following grounds: (1) plaintiffs failed to adequately plead exhaustion of administrative remedies; (2) defendant is not a fiduciary within the meaning of the statute; and (3) plaintiffs failed to state an actionable claim for breach of fiduciary duty in three respects: negligent misrepresentations are not actionable under ERISA, plaintiffs failed to plead intentional misrepresentation with particularity as required by Fed. R. Civ. P. 9(b) and, finally, an employer is not obliged to disclose information regarding the availability of future benefits.

 On a motion to dismiss, a plaintiff's well-pleaded allegations of fact are taken as true and all reasonable inferences are drawn in the plaintiff's favor. Leatherman v. Tarrant County Narcotics Unit, 507 U.S. 163, 164, 122 L. Ed. 2d 517, 113 S. Ct. 1160 (1993); Swofford v. Mandrell, 969 F.2d 547, 549 (7th Cir. 1992). A complaint need not set forth all relevant facts or recite the law; all that is required is a short and plain statement showing that the party is entitled to relief. Fed. R. Civ. P. 8(a); Doherty v. City of Chicago, 75 F.3d 318, 322 (7th Cir. 1996). A plaintiff in a suit in federal court need not plead facts; conclusions may be pleaded as long as the defendant has at least minimal notice of the claim. Fed. R. Civ. P. 8(a)(2); Jackson v. Marion County, 66 F.3d 151, 153-54 (7th Cir. 1995). It is unnecessary to specifically identify the legal basis for a claim as long as the facts alleged would support relief. Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1078 (7th Cir. 1992). It is also true, however, that a party can plead out of court by alleging facts showing no viable claim. Jackson, 66 F.3d at 153-54; Tregenza v. Great American Communications Co., 12 F.3d 717, 718 (7th Cir. 1993), cert. denied, 511 U.S. 1085, 128 L. Ed. 2d 465, 114 S. Ct. 1837 (1994); Early v. Bankers Life & Casualty Co., 959 F.2d 75, 79 (7th Cir. 1992). Additionally, as long as they are consistent with the allegations of the complaint, a party may assert additional facts in response to a motion to dismiss. Travel All Over the World, Inc. v. Kingdom of Saudi Arabia, 73 F.3d 1423, 1428 (7th Cir. 1996); Highsmith v. Chrysler Credit Corp., 18 F.3d 434, 439-40 (7th Cir. 1994); Hrubec v. National Railroad Passenger Corp., 981 F.2d 962, 963-64 (7th Cir. 1992).

 Exhaustion of Administrative Remedies

 In the amended complaint, it is alleged that plaintiffs have exhausted all administrative remedies. Defendant contends that this conclusory allegation is insufficient and that the case should be dismissed for failure to adequately plead exhaustion.

 The enforcement provision of ERISA on which plaintiffs rely does not expressly require exhaustion of administrative remedies as a prerequisite to the bringing of a civil suit. 29 U.S.C. § 1132. Exhaustion is not a jurisdictional requirement, but a judicially created doctrine furthering the strong federal policy of encouraging private resolution of ERISA-related disputes. Kross v. Western Elec. Co., 701 F.2d 1238, 1244 (7th Cir. 1983); Healy v. Axelrod Const. Co. Pension Plan & Trust, 787 F. Supp. 838, 842 (N.D. Ill. 1992). It is well settled in this circuit that the decision to require exhaustion is a matter within the discretion of the trial court. Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir. 1996); Powell v. A.T. & T. Communications, Inc., 938 F.2d 823, 825 (7th Cir. 1991). As a general rule, an ERISA plaintiff must exhaust all available administrative remedies, but the requirement is relaxed in two instances: when a plaintiff is denied meaningful access to administrative procedures and when exhaustion would prove futile. Wilczynski v. Lumbermens Mutual Casualty Co., 93 F.3d 397, 402-03 (7th Cir. 1996); Smith v. Blue Cross & Blue Shield United of Wis., 959 F.2d 655, 658-59 (7th Cir. 1992); Evans v. SwedishAmerican Corp., 1993 U.S. Dist. LEXIS 16624, 1993 WL 487538, *5 (N.D. Ill. Nov. 15, 1993); Hartness v. Printing & Graphic Arts Union No. 3, 1988 U.S. Dist. LEXIS 12007, 1988 WL 117496, *5 (N.D. Ill. Oct. 24, 1988); Carter v. Signode Industries, Inc., 688 F. Supp. 1283, 1286-88 (N.D. Ill. 1988).

 There is a split among the circuits as to whether the exhaustion doctrine applies to actions for breach of fiduciary duties. Some federal courts of appeal hold that plaintiffs should be able to proceed directly to federal court where the claim involves alleged violations of statutory rights. Zipf v. A.T. & T. Co., 799 F.2d 889, 891-92 (3d Cir. 1986); Amaro v. Continental Can Co., 724 F.2d 747, 752 (9th Cir. 1984). However, the Seventh Circuit has stated that the statutory basis of a claim for breach of fiduciary duties is insufficient to override federal policies underlying the exhaustion doctrine. Powell, 938 F.2d at 825; Kross, 701 F.2d at 1245. Accord, Mason v. Continental Group, Inc., 763 F.2d 1219, 1227 (11th Cir. 1985), cert. denied, 474 U.S. 1087, 88 L. Ed. 2d 902, 106 S. Ct. 863 (1986). In exercising discretion, some courts in this district have refrained from requiring exhaustion under these circumstances. Korchek v. Nichols-Homeshield, 1997 U.S. Dist. LEXIS 15284, 1997 WL 619869,*6 (N.D. Ill. Sept. 29, 1997); Bartz v. Carter, 709 F. Supp. 827, 828 (N.D. Ill. 1989).

 In the present case, it is not necessary to determine how to exercise the discretion. Exhaustion of administrative remedies is properly raised not as an element of a claim but as an affirmative defense. If defendant believes plaintiffs have failed to meet the exhaustion requirement, it should be raised as such. An affirmative defense will only support a motion to dismiss under Rule 12(b)(6) when a plaintiff's allegations clearly point to the existence of the defense. ALA, Inc., v. CCAIR, Inc., 29 F.3d 855, 859 (3rd Cir. 1994); Kansa Reinsurance Co. v. Congressional Mortgage Corp. of Texas, 20 F.3d 1362, 1366 (5th Cir. 1994). See also 5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357, at 348-56 (2d ed. 1990). In other words, the fact that a plaintiff has failed to exhaust administrative remedies must appear plainly on the face of the complaint. Pueblo de Cochiti v. United States, 647 F. Supp. 538, 542 (D. N.M. 1986).

 The amended complaint states that all administrative remedies have been exhausted. On its face, it reveals no suggestion to the contrary. The pleadings of defendant and plaintiffs in support of and against the motion to dismiss, respectively, offer conflicting accounts as to the nature and sufficiency of the steps plaintiffs took to exhaust administrative remedies. However, it is more appropriate to consider these arguments on a motion for summary judgment or at trial, should defendant decide to raise the issue. At that time, the questions of meaningful access to administrative procedures and of futility may also be addressed. Accordingly, the claims will not be dismissed for failure to adequately plead exhaustion.

 Employer as Fiduciary

 ERISA was enacted in part to protect the "interests of participants in employee benefit plans . . . by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans." 29 U.S.C. § 1001(b). The United States Supreme Court has stated that the statutory provisions relating to fiduciary duties should be interpreted bearing in mind their common law origins and the nature and purpose of the statute. Varity Corp. v. Howe, 516 U.S. 489, 116 S. Ct. 1065, 1072-73, 134 L. Ed. 2d 130 (1996).

 This case is unusual in that plaintiffs assert an entitlement to participate in a plan that came into existence after they retired and after the alleged breach of fiduciary duties took place. The statute applies to a benefit offering that amends an existing ERISA plan or when the offering constitutes an ERISA plan in its own right. Mullins v. Pfizer, Inc., 23 F.3d 663, 666 (2d Cir. 1994). The parties agree that the VTP is an "employee welfare benefit plan" as defined by 29 U.S.C. § 1002(1). The amended complaint does not expressly set out an alternative allegation that the VTP is an amendment to an existing ERISA plan. It appears from the record that defendant's existing plans were also covered by ERISA. *fn1" ...


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