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ANAEL v. INTERSTATE BRANDS CORP.

August 14, 2003

NINOS ANAEL, RICH HARDIN, DANIEL WAGGENER, AND JOHN COLON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
INTERSTATE BRANDS CORP., A DELAWARE CORPORATION DOING BUSINESS IN ILLINOIS; INTERSTATE BAKERIES CORP., A DELAWARE CORPORATION DOING BUSINESS IN ILLINOIS; CHARLES SULLIVAN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; ROBERT MORGAN, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; DANIEL ANGST, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; VINCE CALABRESE, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; RATHINASAMY RAYAPPA, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; ROBERT KNORRECK, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; RUSSELL HINKLE, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; NANCY YDE, INDIVIDUALLY AND IN HER OFFICIAL CAPACITY; PETER TAGALOS, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; CHARLES SHRINER, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; ARMANDO IANELLI, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; JAMES CARR, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; JESUS TORRES, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; VINCE JOLLY, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY; AND JOHN TELO, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY, DEFENDANTS



The opinion of the court was delivered by: John W. Darrah, District Judge [ Page 2]

MEMORANDUM OPINION AND ORDER

Plaintiffs, Ninos Anael ("Anael") and Richard Hardin ("Hardin"), filed a two-count complaint against Defendants, Interstate Brands Corporation, Interstate Bakeries Corporation, Charles Sullivan, Robert Morgan, Daniel Angst, Vince Calabrese, Rathinasamy Rayappa, Robert Knorrek, Russell Hinkle, Nancy Yde, Peter Tagalos, Charles Schriner, Armando lanelli, James Carr, Jesus Torres, Vince Jolly, and John Telo (collectively "Defendants"), in the Circuit Court of Cook County, Illinois.

Defendants removed the action to this Court and subsequently moved to dismiss. In response to Defendants' initial motions to dismiss, Plaintiffs were granted leave to file an amended complaint, which added two new plaintiffs, Daniel Waggener ("Waggener") and John Colon ("Colon"). Defendants, pursuant to Federal Rule of Civil Procedure 12(b)(6), move to dismiss the First Amended Complaint

Three previous suits have been filed by one or more of the Plaintiffs against some of the Defendants in the present action. In the first action, Anael filed a complaint against Interstate Bakeries Corporation in the Northern District of Illinois, alleging employees at the Schiller Park facility had been injured by exposure to asbestos partly as a result of the removal of insulation from a hot water tank in January 1998 and by ingesting contaminated snack cakes. See Anael v. Interstate Bakeries Corp., No. 98 C 1057 (N.D. Ill. filed Feb. 17, 1998) (Anael I)*fn1. The court held that the [ Page 3]

Illinois Workers' Compensation Action ("IWCA"), 820 Ill. Comp. Stat 305/1 et seq., was the employees' exclusive remedy and dismissed their claims. On September 18, 1998, Anael voluntarily dismissed the remaining claims.

In the second action, Anael, Colon, and another employee filed a lawsuit in the Northern District of Illinois against Interstate Brands Corporation, alleging discrimination based on race or national origin and retaliation by exposure to asbestos and threats. See Anael v. Interstate Brands Corp., No. 98 C 1969 (N.D. Ill. filed Apr. 1, 1998) (Anael II). On June 14, 1999, the action was dismissed with prejudice; and, on January 31, 2000, costs in the amount of $3,009.77 were taxed to Anael.

In the third action, Anael sued Interstate Brands in the Northern District of Illinois, alleging discrimination and retaliation based on his national origin and his complaint to OSHA and the EPA of alleged asbestos exposure in January 1998 and that he was discharged in August 1999 in violation of Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e et seq., and the Toxic Substances Control Act, 15 U.S.C. § 2622. See Anael v. Interstate Brands Corp., No. 00 C 6765 (N.D. Ill. filed Oct. 30, 2000) (Anael III). Anael's discrimination and retaliation claims were dismissed with prejudice on May 31, 2001. On September 19, 2002, the court granted Interstate Brands' motion for summary judgment, dismissed Anael's claims with prejudice and denied Anael's motion to amend the complaint to add RICO claims. Costs in the amount of $8,251.09 were taxed to Anael.

Defendants move to dismiss on the additional grounds of res judicata. [ Page 4]

The 12(b)(6) Motion

When considering a motion to dismiss, well-pleaded allegations in the complaint are accepted as true. Turner/Ozanne v. Hyman/Power, 111 F.3d 1312, 1319 (7th Cir. 1997). Any ambiguities in the complaint are construed in favor of the plaintiff Kelly v. Crosfield Catalysts, 135 F.3d 1202, 1205 (7th Cir. 1998). Dismissal is proper only when it appears beyond doubt that Plaintiff can prove no set of facts to support the allegations in his or her claim. Strasburger v. Board of Education, 143 F.3d 351, 359 (7th Cir. 1998).

"Although the Federal Rules of Civil Procedure do not require a plaintiff `to set out in detail the facts upon which he bases his claim,' . . . he must `set out sufficient factual matter to outline the elements of his cause of action or claim, proof of which is essential to his recovery.'" Benson v. Cady, 761 F.2d 335, 338 (7th Cir. 1985) (internal citation omitted). A complaint will not avoid dismissal if it contains "bare legal conclusions" absent facts outlining the basis of the claims. Perkins v. Silverstein, 939 F.2d 463, 467 (7th Cir. 1991).

For purposes of these Motions to Dismiss, the following allegations are taken as true.

Interstate Brands Corporation ("Interstate Brands") is a wholly owned subsidiary of Interstate Bakeries Corporation ("Interstate Bakeries") (collectively "Corporate Defendants"). Interstate Brands operates a baking facility in Schiller Park, Illinois, producing a variety of products under the "Hostess" brand name. The individual Defendants are all present or former employees of the Corporate Defendants.

In 1995, Interstate Bakeries and Interstate Brands acquired the Schiller Park facility. At that time, the Schiller Park facility had asbestos-lined pipes and older ovens and machinery, which required the use of graphite lubricants to maintain them in operating condition. In order to maintain [ Page 5]

the ovens in good working condition, the ovens would be shut down two to three days a year for cleaning. Due to its age, the plant required upgrading and modernization to produce food products safely.

In the mid-1990's, Interstate Bakeries devised a scheme to maximize income through the acts described as follows. Interstate Bakeries provided Interstate Brands with an annual budget Expenditures outside the budget had to be approved by Interstate Bakeries' corporate headquarters in Kansas City, Missouri. However, Interstate Bakeries discourages such expenditures even if they are for food or employee safety or for facility maintenance. Interstate Bakeries also set production goals for Interstate Brands. Whether or not the production goals are met is a factor in determining whether the facility's managers are eligible for bonuses and stock purchase plans. However, whether the facility's food product and machinery are safe and whether the facility is complying with federal laws is not a factor in determining management's compensation.

Although Interstate Bakeries knows that the ovens need to be maintained, the necessary shutdown and cleaning of the ovens has not taken place for at least three or four years. Due to complaints made to the Occupational Safety and Health Administration ("OSHA") and the Federal Food and Drug Administration ("FDA"), Interstate Bakeries is aware that food products made at the Schiller Park facility are contaminated with graphite from the machinery. Interstate Bakeries adopted a corporate policy of contesting OSHA and other governmental violations and delaying the time by which it will have to remove the machinery from production.

From 1995 until the present time, Interstate Bakeries: failed to provide employees with necessary safety precautions in the workplace to avoid harmful exposure to toxic and poisonous substances, namely asbestos and graphite; permitted contamination of food products with asbestos [ Page 6]

and graphite; sold these contaminated products at a discount to employees; permitted and failed to correct serious OSHA violations; harassed and dismissed employees who reported safety or health violations to government authorities; encouraged its employees to harass and dismiss employees who report such violations; permitted untrained employees to use chemicals, resulting in OSHA violations and injuries. Interstate Bakeries undertook this course of conduct in order to maximize its profits and reduce costs. Interstate Bakeries has posted substantial profits and recently announced a secondary public offering of its stock.

Patrick Andrew Kelleher ("Kelleher"), a non-party, was formerly employed by Continental Baking. In 1994, the Schiller Park facility was owned by Ralston-Purina, Inc. At that time, Defendants, Vince Chuck Shriner ("Shriner"), Armando lanelli ("lanelli"), and Vince Calabrese ("Calabrese"), were employed as supervisors in the Maintenance Department, positions they continued to occupy after the Schiller Park facility was acquired by Interstate Brands in 1995. Defendant, Rathinasamy Rayappa("Rayappa"), was the head of the ...


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