United States District Court, N.D. Illinois, Eastern Division
July 15, 2004.
RIGOBERTO CORTES, Plaintiff,
MIDWAY GAMES, INC., Defendant.
The opinion of the court was delivered by: GEORGE MAROVICH, Senior District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Rigoberto Cortes ("Cortes") filed a two-count
Complaint against his employer, Midway Games Inc. ("Midway") on
January 23, 2004. Cortes alleges that Midway violated
42 U.S.C. § 1983 and breached its fiduciary duty by changing to a new
insurance provider that does not supply the same level of care.
Cortes seeks injunctive relief requiring Midway to provide the
same level of insurance benefits that it provided in the past. In
response, Midway now moves to dismiss pursuant to Federal Rules
of Civil Procedure 12(b)(1) and (6). For the reasons set forth
below, the Motion to Dismiss is granted.
Cortes is an employee of Midway, who participates in Midway's
medical insurance plan, which was provided by Blue Cross Blue
Shield of Illinois ("BCBS") until September 1, 2003. Under that
plan, Cortes received coverage for his son's spinal muscular
atrophy, a severe, chronic medical condition requiring constant
monitoring. As part of its service, BCBS provided the Cortes
family with 112 hours per week of in-home health care from a
registered nurse year round. On September 1, 2003, Midway changed its insurance provider to United Health Care ("United"). This new
company only provides sixteen hours per day of in home health
care from a registered nurse for 120 days per calendar year.
United fulfilled its obligations to the Cortes family for the
last four months of 2003 and indicated its intention to fulfill
its obligation for the first four months of 2004.
I. Standard for a Motion to Dismiss
When considering a motion to dismiss, a court must view the
complaint's allegations in the light most favorable to the
plaintiff, and all well-pleaded facts in the complaint must be
accepted as true. Wilson v. Formigoni, 42 F.3d 1060, 1062
(7th Cir. 1994). Dismissal is proper only if it appears
beyond a doubt that plaintiff can prove no set of facts in
support of a claim which would entitle him to relief. Conley v.
Gibson, 355 U.S. 41, 45-46 (1957).
II. Section 1983 Claim
In its Motion to Dismiss, Midway contends that the § 1983 claim
should fail because Cortes cannot establish the required cause of
action to assert valid subject matter jurisdiction. Section 1983
Every person who, under color of any statute,
ordinance, regulation, custom, or usage, of any State
or Territory, subjects or causes to be subjected, any
citizen of the United States or other person within
the jurisdiction thereof to the deprivation of any
rights, privileges, or immunities secured by the
Constitution and laws, shall be liable to the party
injured in an action at law, suit in equity, or other
proper proceeding for redress.
42 U.S.C. § 1983. To develop a cognizable claim, Cortes must
show: 1) he was deprived of a right secured by the Constitution
and laws of the United States; and 2) the conduct complained of was committed under color of law. Fries v.
Helsper, 146 F.3d 452
, 457 (7th Cir. 1998). "Section 1983 is
not a jurisdictional statute; it is an enabling statute allowing
individuals to sue state officers." Anderson v. Luther,
521 F. Supp. 91
, 96 (N.D. Ill. 1981). "In order to allege a federal
cause of action . . . plaintiff must allege . . . a violation of
some federally protected or constitutionally guaranteed right."
Moore v. Kusper, 465 F.2d 256
, 258 (7th Cir. 1972).
Although Cortes fails to state exactly which statute grants this
Court jurisdiction, the possible statutes are 28 U.S.C. § 1331
and 1343(a)(3) and (4). In order to establish jurisdiction under
§ 1331, the catchall federal-question provision, the alleged
claim must arise under the laws of the United States and cannot
be made for the sole purpose of obtaining jurisdiction. Bell v.
Hood, 327 U.S. 678
, 682-83 (1946). "28 U.S.C. § 1343(a)(3) and
(4) generally provide federal courts with jurisdiction over civil
actions brought to redress constitutional deprivations under
color of state law." Chavez v. Illinois State Police, No. 94 C
5307, 1996 U.S. Dist. LEXIS 1540 at *9 (N.D. Ill. February 9,
1996). Section 1343(a)(3) and (4) state:
(a) The district court shall have original
jurisdiction of any civil action authorized by law to
be commenced by any person
(3) To redress the deprivation, under color of any
State law, statute, ordinance, regulation, custom or
usage, of any right, privilege or immunity secured by
the Constitution of the United States or by any Act
of Congress providing for equal rights of citizens or
of all persons within the jurisdiction of the United
(4) To recover damages or to secure equitable or
other relief under any Act of Congress providing for
the protection of civil rights, including the right
28 U.S.C. § 1343(a)(3) and (4). Furthermore, "[t]he plaintiff has
the burden of demonstrating that the district court has subject
matter jurisdiction." Id. at 7.
Cortes contends that he stated a § 1983 claim because he was
deprived of the right to maintain the same medical insurance
coverage that was previously provided by Midway. He claims that this right was recognized by the district
court in Wayne Chemical, Inc. v. Columbus Agency Service Corp,
426 F. Supp. 316 (N.D. Ind.), aff'd, 567 F.2d 692 (7th Cir.
1977). However, that case deals with the failure of an insurance
agency to provide the services that it contracted to perform.
There was no discussion, in either the District Court or the
Seventh Circuit opinions, even in dicta, creating an obligation
on the part of the employer to continue providing equivalent
medical insurance to its employees. Accordingly, Cortes fails to
show which federal right was deprived by Midway's change of
insurance providers. As such, Cortes has not stated a claim
sufficient under any of the relevant statutes to establish
Assuming this Court had valid jurisdiction, the claim also
fails to state a valid cause of action. To prove that a private
entity was in violation of § 1983 by acting under color of law,
Cortes must show that the state controls Midway's actions or that
the state delegated a public function to Midway. Payton v.
Rush-Presbyterian, 184 F.3d 623, 628 (7th Cir. 1999). The
existence of detailed regulations of a private entity does not
make the entity a state actor. Jackson v. Metropolitan Edison
Co., 419 U.S. 345, 350 (1974). Encouragement and support are not
enough to find a private entity to be a state actor, rather the
state must utilize some coercive power so that the choice would
be deemed to be that of the state. Hinman v. Lincoln Towing
Service Inc., 771 F.2d 189, 192 (7th Cir. 1985). In this
case, the mere fact that state and federal laws regulate employee
insurance policies is insufficient to show that Midway is a state
actor. Neither the federal government nor the State of Illinois
coerced Midway nor were either involved in Midway's decision to
change their insurance plans. Accordingly, Cortes's § 1983 claim
fails to state a cause of action. III. Breach of Fiduciary Duty Claim
Cortes also incorrectly contends that § 1331 grants this Court
subject matter jurisdiction over his claim that Midway breached
its fiduciary duty. It is well settled that a federal district
court "shall have original jurisdiction of all civil actions
arising under the Constitution, laws, or treaties of the United
States." 28 U.S.C. § 1331. Federal common laws are rules
fashioned by court decisions and fall within the term "laws"
which grant the court jurisdiction. National Farmers Union
Insurance v. Crow, 471 U.S. 845, 850 (1985). The court should
only create federal common law in two narrow circumstances: 1)
when it is necessary to protect a unique federal interest; or 2)
when Congress has given the courts the power to develop
substantive law. Northrop Corp. v. AIL Systems Inc.,
959 F.2d 1424, 1426 (7th Cir. 1992).
Cortes incorrectly states that a federal common law cause of
action for breach of fiduciary duty was created in Pegram v.
Herdrich, 530 U.S. 211 (2000). In that case, the issue was
whether a physician who was part-owner of an HMO was acting as a
fiduciary under the meaning of the Employee Retirement Income
Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., when
making treatment decisions. Pegram, 530 U.S. at 214. In
determining what actions define a fiduciary within ERISA, the
Court cited a secondary authority and commented on the types of
activities that characterize a fiduciary at common law. Id. at
231. (citing Bogert & Bogert, Law of Trusts and Trustees, §§ 551,
741-47, 751-75, 781-99). However, the Court did not explicitly,
or implicitly, establish a cause of action or recognize an
employer's breach of fiduciary duty as a federal common law
claim. Furthermore, the Court did not describe, and this Court
does not find, a unique federal interest or authority from
Congress to establish such a claim. Since the Supreme Court previously noted the narrow circumstances in which
federal common law could be established, it seems highly unlikely
that they intended to create such a claim in that case.
Furthermore, when the Sixth Circuit recognized subject matter
jurisdiction over a federal common law cause of action for fraud
and misrepresentation, they cautioned that a plaintiff must
proffer reasoned arguments that require answering. Musson v.
Modernage Photo Services, 89 F.3d 1244, 1248-1249 (6th Cir.
1996). A plaintiff cannot obtain federal jurisdiction by simply
alleging a federal common law question, there must be
substantive, thoughtful questions that necessitate the district
court's attention. Id. In the current case, however, Cortes
shows no unique questions or reasoning that warrant the
determination of a federal claim for breach of fiduciary duty or
the establishment of such a cause of action. This claim is
therefore dismissed as there is no basis for this court to
exercise subject matter jurisdiction over the matter of breach of
For the reasons set forth above, Midway's Motion to Dismiss is
© 1992-2004 VersusLaw Inc.