to qualifying partners from the Firm's general assets. Thus, we
must first determine whether this gross-up program constitutes a
plan protected by ERISA. We conclude it is not, and for this
reason dismiss Bilow's mismanagement claims. We also dismiss
Bilow's ERISA retaliation claim.
A. The Firm's Gross-Up Program is Not an ERISA Plan
As many courts have commented, ERISA does not clearly define
what constitutes an "employee welfare benefit plan." See, e.g.,
Massachusetts v. Morash, 490 U.S. 107, 113, 109 S.Ct. 1668, 104
L.Ed.2d 98 (1989) ("The precise coverage of ERISA is not clearly
set forth in the Act."). Instead, the statute defines the phrase
by reference to itself: "The terms `employee welfare benefit
plan' and `welfare plan' mean any plan, fund or program . . .
established or maintained by an employer . . . for the purpose of
providing for its participants or their beneficiaries, through
the purchase of insurance or otherwise, medical, surgical, or
hospital care or benefits." 29 U.S.C. § 1002(1)(A). The statute
does not define "plan, fund, or program."
Fortunately, valuable guidance has been provided by courts that
have previously struggled with the issue. Initially, we know that
"[t]here are no particular formalities that a plan must comply
with to be an ERISA welfare plan," Miller v. Taylor Insulation
Co., 39 F.3d 755, 760 (7th Cir. 1994); for example, "it need not
be in writing to be covered," Diak v. Dwyer, Costello & Knox,
P.C., 33 F.3d 809, 811 (7th Cir. 1994), and, in fact, "it need
not be funded," Miller, 39 F.3d at 760. To determine the
existence of an ERISA-governed plan, a court must evaluate
"whether from the surrounding circumstances a reasonable person
could ascertain the intended benefits, beneficiaries, source of
financing, and procedures for receiving benefits." Diak, 33
F.3d at 812 (quotation omitted).
Nevertheless, "an employee benefit program not funded through a
separate fund is not an ERISA plan." California Div. of Labor
Standards Enforcement v. Dillingham Const., N.A., Inc.,
519 U.S. 316, 326, 117 S.Ct. 832, 136 L.Ed.2d 791 (1997); see also id.
("The existence of [a] fund triggers ERISA."); Morash, 490 U.S.
at 116, 109 S.Ct. 1668 ("It is unlikely that Congress intended to
subject to ERISA . . . benefits which by their nature are payable
on a regular basis from the general assets of the employer."). By
way of explanation, the Supreme Court stated: "Benefits paid out
of an employer's general assets present risks indistinguishable
from `the danger of defeated expectations of wages for services
performed,' a hazard with which ERISA is unconcerned."
Dillingham, 519 U.S. at 327, 117 S.Ct. 832 (quoting Morash,
490 U.S. at 115, 109 S.Ct. 1668). In other words, the primary
concern of ERISA is "the mismanagement of funds accumulated to
finance employee benefits and the failure to pay employees
benefits from accumulated funds," not salary disputes. Morash,
490 U.S. at 115, 109 S.Ct. 1668.
The Firm does not dispute that its health insurance plan — by
which it means purchasing insurance for employees, withholding
premiums for those employees who want additional coverage, and
forwarding those premiums to the insurer — is governed by ERISA.
Instead it argues that the gross-up program is an informal and
discretionary payroll practice that is not referred to in any of
the Firm's health insurance literature or employee handbooks.
Essentially, the Firm contends that the gross-up program is
separate from its employee welfare plan, and that Bilow cannot
bootstrap her payroll dispute onto the health care plan to create
jurisdiction under ERISA. We agree.
In reaching this conclusion we do not rely exclusively on the
fact that the salary adjustments were paid from the Firm's
general assets;*fn5 the Seventh Circuit has made clear this
factor is not determinative.
See, e.g., Diak, 33 F.3d at 813 ("[P]ayment of benefits out of
general funds satisfies the requirement of an ascertainable
source of funding."); see also Fort Halifax Packing Co., Inc. v.
Coyne, 482 U.S. 1, 18, 107 S.Ct. 2211, 96 L.Ed.2d 1 (1987)
("[I]f an employer has an administrative scheme for paying
benefits, it should not be able to evade the requirements of the
statute merely by paying those benefits out of general assets.").
Rather, we believe the gross-up program is more like Morash,
490 U.S. 107, 109 S.Ct. 1668, 104 L.Ed.2d 98 (a promise to pay
employees for unused vacation time from general assets is not an
ERISA plan, even though ERISA governs vacation benefits), than
Brundage-Peterson v. Compcare Health Services Ins.,
877 F.2d 509 (7th Cir. 1989) (ERISA governs a plan whereby the employer
pays employees' health insurance and remits premiums withheld
from salary for dependent coverage).
The Firm's gross-up program is part of its compensation plan
for partners. The salary adjustment, although dependent on a
partner's utilization of the Firm's health insurance program for
dependents, is not integral to, and in no way impacts, the
provision of that insurance. Whether the Firm paid the gross-up
or not, Bilow and her family were insured. And that is what
Congress intended to accomplish via ERISA; ERISA is unconcerned
with the accuracy of Bilow's paycheck.
Because the Firm's gross-up program is not governed by ERISA,
Bilow has not stated a claim for relief under
29 U.S.C. § 1132(a).
B. ERISA Retaliation
Bilow claims that the Firm fired her in retaliation for her
complaints regarding the gross-up program. The Firm does not
present a separate argument for dismissal of this claim,
apparently assuming that the lack of an ERISA-governed plan
precludes a retaliation claim.
We refuse to apply the same assumption. Many of the standards
applied in ERISA retaliation cases are borrowed from Title VII
cases. See, e.g., Fairchild v. Forma Scientific, Inc.,
147 F.3d 567, 576 (7th Cir. 1998) (setting forth direct evidence and
McDonald Douglass burden-shifting methods of proof in an ERISA
retaliation case); Grottkau v. Sky Climber, Inc., 79 F.3d 70,
72-73 (7th Cir. 1996) (same, relying on Supreme Court cases
resolving issues under Title VII). And, in the Title VII context,
a plaintiff can state a claim for retaliation even if the
underlying discrimination complaint is meritless. See, e.g.,
Sweeney v. West, 149 F.3d 550, 554 (7th Cir. 1998) (Title VII
protects employees from retaliation for reasonable, good-faith
complaints of discrimination); Dey v. Colt Const. & Development
Co., 28 F.3d 1446, 1457-58 (7th Cir. 1994) (same). Further, the
purpose of Title VII's retaliation provisions — protecting
employees' good-faith attempts to enforce Title VII "without the
added burden of having to be right," Sweeney, 149 F.3d at 554 —
could equally apply to the ERISA retaliation provision. Although
we have not found any cases discussing this particular Title VII
doctrine in the ERISA context (and we ultimately conclude it does
not apply), a reasonable argument could be made that an ERISA
retaliation plaintiff may be able to state a claim even though
the underlying ERISA claim is unavailing.*fn6 Thus, the Firm's
assumption is unwarranted.
Nevertheless, after thoroughly reviewing the case law, we
conclude that the absence of an ERISA-governed welfare plan
necessarily forecloses an ERISA retaliation claim. Cf. Hite v.
Biomet, Inc., 38 F. Supp.2d 720, 730 (N.D.Ind. 1999) ("Biomet's
short term disability plan is a payroll practice and not an
employee benefit plan. . . . For this reason, the plan is not
subject to ERISA's requirements and Hite cannot maintain a § 510
[codified at 29 U.S.C. § 1140] claim."). First, unlike a Title
VII retaliation plaintiff, "a plaintiff in an ERISA [retaliation]
action must demonstrate that the employer had the `specific
intent' to violate the statute." Little v. Cox's Supermarkets,
71 F.3d 637, 642 n. 3 (7th Cir. 1995) (citing 29 U.S.C. § 1140);
see also Lindemann v. Mobil Oil Corp., 940 F. Supp. 189, 193
(N.D.Ill. 1996) ("To prove a § 510 violation, a plaintiff must
show that the defendant terminated her with the specific intent
of retaliating for, or preventing, her use of benefits.").
Logically, Bilow cannot possibly prove (or reasonably allege) the
Firm's specific intent to violate ERISA in the absence of an
Similarly, Bilow cannot reasonably allege that she is a member
of a class protected by ERISA, as required to state a prima facie
case of retaliation.*fn7 See Little, 71 F.3d at 642 ("[T]o
establish a prima facie case [of retaliation under ERISA], a
plaintiff must show she (1) belongs to the protected class.").
ERISA protects only employees who are participants and
beneficiaries of ERISA-governed plans. 29 U.S.C. § 1140 ("It
shall be unlawful for any person to discharge . . . a participant
or beneficiary for exercising any right . . . under the
provisions of an employee benefit plan."). Title VII, on the
other hand, protects "any individual" who acts under that
statute. 42 U.S.C. § 2000e-3. Because there is no plan, Bilow
cannot be a participant or beneficiary and, thus, cannot state an
ERISA retaliation claim.
For these reasons, we dismiss all of Bilow's claims purportedly
arising under ERISA.
II. Bilow's Title VII Claims
Bilow's Title VII claims also fall into two basic categories:
those related to the gross-up program, and those related to the
Firm's decision not to assign additional attorneys to the class
action. We address each separately.
A. Discrimination and Retaliation in the Gross-up Program
Bilow alleges that the Firm discriminated against her by
assuming, because she is a woman, that her husband had health
insurance from an independent source and not making a similar
assumption for male partners, in violation of
42 U.S.C. § 2000e-2(a). Additionally, she claims the Firm fired her in
retaliation for complaining about the gross-up discrimination, in
violation of 42 U.S.C. § 2000e-3(a). The Firm seeks dismissal of
these claims on the ground that Bilow's EEOC charge was untimely
and, in the context of the gross-up program, Bilow did not engage
in any activity protected by Title VII.
1. Bilow's EEOC Charge of Discrimination in the Gross-up was
In Illinois, a Title VII plaintiff must file a charge with the
EEOC within 300 days of the discrimination. Koelsch v. Beltone
Electronics Corp., 46 F.3d 705, 707 (7th Cir. 1995). Here, the
alleged discrimination (the Firm's purportedly sexist assumption)
took place no later than 1993, when the Firm began phasing-out
Bilow's gross-up payment, but Bilow did not file her EEOC charge
until November 1998. Thus, her EEOC charge complaining about the
discriminatory assumption was untimely.
Bilow attempts to avoid this conclusion by arguing that she did
not know, and
could not reasonably have discovered, the factual predicate for
her claim. We believe, although Bilow is not explicit, that she
urges equitable tolling of the limitations period. This argument
borders on ridiculous. We believe, as we must, that Bilow did not
actually discover the Firm's non-payment of the gross-up until
March 1998. However, the law requires reasonable diligence on the
part of a plaintiff seeking such relief. See, e.g., Chakonas v.
City of Chicago, 42 F.3d 1132, 1135 (7th Cir. 1994) ("Equitable
tolling is appropriate when the plaintiff, despite all due
diligence, is unable to obtain vital information bearing on the
existence of her claim."). A reasonable person in Bilow's
position exercising appropriate diligence would have discovered
long ago that each year she was not receiving $4,600 to which she
was entitled and why.
Similarly, Bilow argues — again, not explicitly — that the Firm
should be estopped from asserting a timeliness defense because it
affirmatively represented that she was receiving the gross-up.
Bilow relies on a compensation summary given to her by the Firm,
which stated "base salary (without insurance adjustment)," to
justify estoppel. (Second Am.Compl. at ¶ 30, citing Ex. F.) The
compensation form does not contain any other information about
insurance, and Bilow does not allege any other affirmative
representations by the Firm regarding the gross-up.
Equitable estoppel "comes into play when a defendant takes
active steps to prevent a plaintiff from suing on time."
Chakonas, 42 F.3d at 1136. As a matter of law, the compensation
summary does not constitute a representation by the Firm to Bilow
that it was paying her an insurance adjustment, or even that she
was entitled to one. Instead, the compensation summary (a form
letter, by the way) simply reports the partners' base salary with
the caveat that "base salary" does not include any insurance
adjustment that may or may not be warranted. No reasonable person
could read the compensation summary as a statement that the
recipient was receiving an insurance adjustment. Because Bilow
has not adequately alleged any active steps by the Firm that
impeded her ability to discover its allegedly discriminatory
assumption, equitable estoppel is not available to her.
Finally, Bilow contends that the Firm's allegedly
discriminatory assumption carried over into the limitations
period because that assumption was the basis for denying her the
annual gross-up, which in turn occurred during the appropriate
period. However, the "lingering effect of an unlawful act is not
itself an unlawful act, so it does not revive an already
time-barred illegality." Dasgupta v. University of Wis. Bd. of
Regents, 121 F.3d 1138, 1140 (7th Cir. 1997); see also id.
("[A]n untimely Title VII suit cannot be revived by pointing to
effects within the limitation period of unlawful acts that
occurred earlier.") (citing Delaware State College v. Ricks,
449 U.S. 250, 258, 101 S.Ct. 498, 66 L.Ed.2d 431 (1980)); cf.
Leavell v. Kieffer, 189 F.3d 492, 494-95 (7th Cir. 1999) ("A
person fired from his job effective in six months is injured (and
the clock starts to run) on the date of the discharge, not six
months later when the employment ends."). Here, the allegedly
unlawful act of assuming that Bilow's husband had an independent
source of health insurance occurred in 1993; the Firm's annual
failure to pay Bilow the gross-up was a "lingering effect" of
that assumption, not an independent discriminatory act. Thus,
Bilow cannot rely on a continuing violation theory to escape the
In sum, Bilow's EEOC charge that the Firm discriminated against
her by assuming her husband had independent insurance is
untimely. Furthermore, she has not alleged any facts justifying
or excusing her delay in filing the charge. Therefore, we grant
the Firm's motion to dismiss this claim.
2. Bilow Did Not Engage in Activities Protected by Title VII
It is axiomatic that a Title VII retaliation plaintiff must
allege that she engaged in activities or expression protected by
Title VII. See, e.g., Payne v. Milwaukee County, 146 F.3d 430,
434 (7th Cir. 1998); Ashkin v. Time Warner Cable Corp.,
52 F.3d 140, 143 (7th Cir. 1995). In the context of the gross-up program,
Bilow has not met her burden. She does not allege that she ever
complained to the Firm that it was administering the gross-up
program in a sexually discriminatory manner. Throughout her
complaint she asserts the underlying discrimination (which we
have already concluded is time-barred), but never that she
confronted the Firm about this allegedly discriminatory practice.
Lacking an allegation of protected activity, she cannot possibly
state a claim that the Firm retaliated for it. Thus, we grant the
Firm's motion to dismiss this claim.
B. Discrimination and Retaliation in Bilow's Working
Bilow's final Title VII claims are that the Firm discriminated
against her in her working conditions by requiring her, because
of her sex, to litigate a complex, document-heavy class action
without support, when it never required the same of male
partners; and that the Firm retaliated against her when, in the
partner survey, she complained about sex discrimination at the
The Firm characterizes its decision not to assign other
attorneys to the class action as a "business decision" that
cannot constitute an adverse employment action. Although the Firm
may have had any number of legitimate reasons for its decision,
the caselaw clearly establishes that depriving a person of
adequate support services, see, e.g., Knox v. Indiana,
93 F.3d 1327, 1334 (7th Cir. 1996), can constitute an adverse employment
action. "The question whether a change in an employee's job or
working conditions is material adverse, rather than essentially
neutral, is one of fact," Williams v. Bristol-Myers Squibb Co.,
85 F.3d 270, 273 (7th Cir. 1996), and thus inappropriate for
decision on a motion to dismiss. At this stage of the case, we
must assume Bilow was treated differently than male partners by
being subjected to significantly harsher working conditions
because she was a woman.*fn8 Because Bilow has adequately
pleaded discrimination in working conditions, we deny the Firm's
motion to dismiss this claim.
Similarly, we must deny the Firm's motion to dismiss Bilow's
allegation that the Firm fired her in retaliation for her
complaint of differential treatment. Approximately one week after
the Firm rejected Bilow's plea for help with the class action
lawsuit, she complained via the partner survey that, essentially,
female partners had no voice in management decisions at the Firm.
Two months later the Firm fired her, she says, in retaliation for
her complaint of discrimination. Bilow has adequately alleged
that she engaged in a protected activity and suffered an adverse
employment action because of that activity. That is enough to
save her claim from dismissal.
Although we agree with the Firm's contention that Bilow's
complaint was vague, it was not so vague as to justify dismissal
on the pleadings. Unlike those cases in which courts have held
that plaintiffs' complaints were not protected, here Bilow
explicitly complained about the gender makeup of the Firm's power
structure and implicitly complained that it was discriminatory.
Compare Zinn v. McKune, 143 F.3d 1353, 1363 (10th Cir. 1998)
("She reported incidents of `harassment' . . . but did not
complain that the harassment was sexual or otherwise
discriminatory."); Barber v. CSX Distribution Services,
68 F.3d 694, 701 (3rd Cir. 1995) ("Barber's letter . . .
complains about unfair treatment in general . . . but it does not
specifically complain about age discrimination."); Ashkin, 52
F.3d at 143 ("Ashkin had not in fact complained about any sexual
harassment[;] her expressed objections . . . were limited to his
managerial style."). Whether the Firm actually understood Bilow's
survey as complaining about discrimination and whether her
complaint informed its decision to fire her are questions of fact
to be resolved during later stages of the case. Therefore, we
also deny the Firm's motion to dismiss this claim.
While the scope of Ms. Bilow's lawsuit has been significantly
reduced, it is evident from this opinion that this case will
continue through the discovery phase and possibly to trial.
The Firm's motion to dismiss Ms. Bilow's second amended
complaint, (R. 16-1), is partially granted and partially denied
as indicated herein. All discovery in this case must be concluded
by December 31, 1999. Any dispositive motions will be due on or
before January 28, 2000.