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KOENIG v. WASTE MANAGEMENT

July 20, 2000

JAMES E. KOENIG, PLAINTIFF,
V.
WASTE MANAGEMENT, INC. AND WASTE MANAGEMENT HOLDINGS, INC., DEFENDANTS.



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

  MEMORANDUM OPINION AND ORDER

Plaintiff James E. Koenig sued Defendants Waste Management, Inc. and Waste Management Holdings, Inc., alleging violations of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001-1461 (1999), and breach of his employment contract. On December 3, 1999, this Court denied the defendants' motion to dismiss. Koenig v. Waste Management, Inc., 76 F. Supp.2d 908 (N.D.Ill. 1999) ("Koenig I"). Currently before the Court are Plaintiff's Motion for Partial Summary Judgment and Defendants' Cross-Motion for Summary Judgment. After carefully reviewing the record, we grant summary judgment for the defendants and deny the plaintiff's motion.

RELEVANT FACTS*fn1

Koenig filed suit against the defendants seeking to recover his benefits under the Supplemental Executive Retirement Plan ("SERP"), which provided benefits to executive-level employees who had met certain conditions. After the merger that resulted in New Waste, SERP benefits were to be paid out to beneficiaries in lump sum payments. SERP benefits, however, could be forfeited if a plan participant, inter alia, performed acts of willful malfeasance or gross negligence. Under the First Amendment of the SERP, if a SERP participant was under investigation for gross negligence or willful malfeasance, his or her benefits would be directed to an interest-bearing escrow account, subject to forfeiture pending the conclusion of the investigation. The parties disagree as to which body was responsible for determining whether any current or former employees had committed willful malfeasance or gross negligence. Koenig asserts that the Audit Committee of the Board of Directors, and its duly appointed successor, made these determinations, while the defendants argue that only the full Board of Directors had final decision-making power.

In November 1998, New Waste notified Koenig of its decision to hold his benefits in escrow pending the outcome of the Audit Committee's investigation. The next month, New Waste distributed lump sum payments to virtually all SERP participants; Koenig, however, did not receive any SERP benefits. On January 18, 2000, New Waste wrote a letter to Koenig's counsel stating that the Audit Committee had unanimously decided that Koenig's actions constituted gross negligence. (R. 28, Pl.'s 56.1(a) Statement ¶ 29.)

Prior to the merger, disputed SERP claims were handled by the Compensation and Stock Option Committee of the Board of Directors. (R. 48, Pl.'s Resp. to Defs.' 56.1(b)(3) Statement ¶ 38.) The defendants assert that, after the merger, the Administrative Committee took over responsibility for reviewing claims that the full Board had denied. Koenig, on the other hand, argues that a successor to the Compensation Committee was never appointed. It is undisputed, however, that three other employees, who also were denied their SERP benefits, used the Administrative Committee review process to settle their claims. Koenig "admits that he never filed a claim for benefits, or otherwise attempted to invoke the SERP's Claims Procedure," (id. at ¶ 41); instead he filed his complaint in this Court.

Currently pending before the Court are Plaintiff's Motion for Partial Summary Judgment and Defendants' Cross-Motion for Summary Judgment. The defendants argue that this Court should grant them summary judgment because Koenig has not exhausted his available administrative remedies. Koenig, on the other hand, argues that his failure to exhaust should be excused because he had no meaningful access to review procedures and because utilizing the SERP's review process would be futile.

ANALYSIS

A. Standard of Review

Summary judgment should be granted when the evidence indicates "that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). In determining whether a genuine issue of material fact exists, courts must construe all facts in the light most favorable to the nonmoving party and draw all reasonable and justifiable inferences in favor of that party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). However, neither "the mere existence of some alleged factual dispute between the parties . . . nor the existence of some metaphysical doubt as to the material facts is sufficient to defeat a motion for summary judgment." Robyns v. Reliance Standard Life Ins. Co., 130 F.3d 1231 (7th Cir. 1997) (citations omitted). When both parties seek summary judgment, the court will "look to the burden of proof that each party would bear on an issue of trial; [the court] then require[s] that party to go beyond the pleadings and affirmatively to establish a genuine issue of material fact." Santaella v. Metropolitan Life Ins. Co., 123 F.3d 456, 461 (7th Cir. 1997) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

B. Exhaustion of Administrative Remedies

The defendants seek summary judgment in this case because, they argue, Koenig failed to exhaust the administrative remedies available to him under the SERP. Generally, a plaintiff must exhaust available administrative remedies before filing a federal claim alleging an ERISA violation. Robyns, 130 F.3d at 1235. Courts require exhaustion of administrative remedies to minimize frivolous lawsuits, promote a non-adversarial dispute resolution process and decrease costs associated with claims settlement. Lindemann v. Mobil Oil Corp., 79 F.3d 647, 650 (7th Cir. 1996); see also Challenger v. Local Union No. 1 of Int'l Bridge Structural and Ornamental Ironworkers, 619 F.2d 645, 649 (7th Cir. 1980) ("To make every claim dispute into a federal case would undermine the claim procedure contemplated by [ERISA].").

Courts, however, have the discretion to excuse a plaintiff's failure to exhaust administrative remedies. Robyns, 130 F.3d at 1236; Powell v. A.T. & T. Communications, Inc., 938 F.2d 823, 825 (7th Cir. 1991). In making this discretionary determination, "[a] district court may excuse a plaintiff's failure to exhaust administrative remedies (1) if there has been a lack of meaningful access to the review procedures or (2) if exhaustion of internal remedies would be futile." ...


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