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BAKER v. KINGSLEY

June 10, 2005.

JAMES A. BAKER, RAYMOND WOLFE, and WILLIAM PATE, and INDEPENDENT MERCHANTS AND MACHINISTS ASSOCIATION, Plaintiffs,
v.
ALFRED D. KINGSLEY, GARY D. DUBERSTEIN, DAVID D. JONES, JR., ROGER L. FIX, RICHARD KATZ, RONALD HIRAM, FRANK SICA, and GREENMARINE HOLDINGS, LLC.,[fn1] Defendants.



The opinion of the court was delivered by: ROBERT GETTLEMAN, District Judge

*fn1 The court notes that plaintiffs' third amended complaint does not include a complete caption. Unlike previous complaints, the current caption does not state that Baker, Wolfe, and Pate bring the action "on behalf of themselves and all others similarly situated." The third amended complaint, however, includes class allegations and plaintiffs' counsel referenced putative classes during oral argument. The third amended complaint also fails to list all of the defendants, as required by Fed.R.Civ.P. 10(a), but lists only "Albert Kingsley, et. al."

MEMORANDUM OPINION AND ORDER

Plaintiffs James Baker, Raymond Wolfe, and William Pate, individually and on behalf of all others similarly situated, filed a two-count second amended complaint against Alfred Kingsley, Gary Duberstein, James Rusk,*fn2 David Jones, Jr., Roger Fix, Richard Katz, Ronald Hiram, Frank Sica, and Greenmarine Holdings, LLC ("Greenmarine"). Count I of the two-count second amended complaint stated a claim under the Illinois Wage Payment and Collection Act ("Wage Act"), 820 ILCS § 115/5, and Count II stated a claim under the fiduciary provisions of § 102 and § 404 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1022 and 1104. In its memorandum opinion and order dated December 10, 2003, this court granted defendants' motion to dismiss plaintiffs' ERISA claim, held that the Wage Act claim was not preempted by § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and remanded the case to state court. Baker v. Kingsley, 294 F. Supp. 2d 970 (N.D. Ill. 2003).

  On appeal, the Seventh Circuit reversed the dismissal of the ERISA claim, held that the Wage Act claim was preempted by § 301 of the LMRA,*fn3 and remanded the case for further proceedings consistent with its opinion. Baker v. Kingsley, 387 F.3d 649 (7th Cir. 2004). After remand to this court, plaintiffs were granted leave to amend. On December 22, 2004, plaintiffs filed a six-count third amended complaint, which added the Independent Merchants and Machinists Association ("IMMA") as a plaintiff.*fn4 In Counts I, II, and IV of the third amended complaint, the individual plaintiffs state claims under the Wage Act for vacation benefits (Count I), and severance and retention benefits (Counts II and IV). In Count III, the IMMA states a claim, in the alternative, for severance and retention benefits under § 301 of the LMRA. In Count V, the individual plaintiffs allege an ERISA violation for failure to fund a health and welfare plan.*fn5 Defendants Kingsley, Duberstein, Sica, Jones, and Greenmarine filed a joint motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6) & (7). Defendant David Jones ("Jones") also filed a separate memorandum of law, arguing that the complaint against him should be dismissed under Fed.R.Civ.P. 8 and 9(b). Defendant Roger Fix ("Fix") filed a separate motion to dismiss pursuant to Fed.R.Civ.P. 8, 9(b), and 12(b)(6) & (7).*fn6 After reviewing the parties' written submissions and hearing oral argument on the instant motion, the court denies in part and grants in part defendants' motion to dismiss, denies Fix's motion to dismiss, and denies Jones's motion to dismiss.

  FACTS*fn7

  Plaintiffs Baker, Wolfe, and Pate were employees of Outboard Marine Corporation ("OMC"), in its Waukegan, Illinois manufacturing and production facility. Plaintiff IMMA is a labor organization within the meaning of § 301 of the LMRA and a signatory to the collective bargaining agreement ("CBA") with OMC. According to the third amended complaint, the individual plaintiffs worked for OMC at the Waukegan plant until the shutdown of the plant on December 20, 2000, and were terminated on December 21, 2000. At the time of their termination, the individual plaintiffs were active or retired participants in OMC's health and welfare plan ("OMC Health Plan") and were working under a shutdown agreement ("Shutdown Agreement), signed by OMC and the IMMA. Under the Shutdown Agreement, a copy of which is attached to the third amended complaint, the individual plaintiffs had earned rights to severance, retention and vacation pay at the time of their termination. OMC did not pay these benefits. OMC filed for Chapter 11 bankruptcy on December 22, 2000. The individual plaintiffs, at the direction of their union, the IMMA, filed claims in the bankruptcy court for payment from OMC. During the bankruptcy proceedings, OMC admitted the amounts owed for severance, retention, and vacation pay. On February 9, 2001, the bankruptcy court approved the sale of substantially all of the assets of OMC for approximately $90 million.

  Section 12(b) of the Shutdown Agreement provides that employees "who are terminated or permanently laid off during the term of this Agreement shall be paid their earned but unused Vacation." Sections 18 and 19 provide for retention and severance benefits for employees terminated or permanently laid off pursuant to Section 8(I)(b). Section 8(I) enumerates seven circumstances in which an employee shall be considered terminated. Section 8(I)(b) provides:
"An employee is permanently laid off or terminated due to the transfer or relocation of work (including work-in-progress), equipment or materials to other OMC facilities, subcontracting of work to outside companies (including loaning, selling or otherwise transferring equipment, materials or products to subcontractors), subcontracting of work to subcontractors to perform bargaining unit work within the plant on equipment loaned, leased, sold or otherwise transferred to the subcontractor, and/or the consolidation or discontinuance of operations, and has not performed any work for the Company for ninety (90) calendar days."
  Section 20(a) of the Shutdown Agreement also provides severance and retention benefits. It states, "In the event that the Waukegan plant is sold, rather than shut down . . . a Bargaining Unit employee whose employment with the Company is terminated or who is permanently laid off, pursuant to Section 8(I)(c), and is not offered employment with the purchaser, shall be eligible to receive retention benefits pursuant to Section 18 of this Agreement, severance benefits pursuant to Section 19 of this Agreement, and. . . ." (Emphasis in original.) Section 8(I)(c) states, "An employee is permanently laid off or terminated due to the sale of all or substantially all of the assets of the Waukegan Plant."

  A copy of the OMC Health Plan, effective January 1, 1993, is also attached to the third amended complaint. Section X of the OMC Health Plan, titled "Plan Financing," states, "The Employer shall make contributions in such amounts and at such times as determined by the Company in accordance with a funding method and policy consistent with Plan objectives. All contributions under this Plan shall be paid to the Trustee. All assets of the Trust Fund, including investment income, shall be retained for the exclusive benefit of Participants and their beneficiaries . . . and shall not revert to or inure to the benefit of the Employer."

  DISCUSSION

  I. Preemption of the Wage Act claims (Counts I, II, and IV)

  The third amended complaint asserts three separate counts under the Wage Act, for vacation benefits (Count I), severance and retention benefits (Count II), and unpaid wages (Count IV). Defendants argue that plaintiffs' renewed attempt to bring any claim under the Wage Act is precluded by the Seventh Circuit's holding on appeal that plaintiffs' Wage Act claims as pled in the second amended complaint were preempted by § 301 of the LMRA. The Seventh Circuit found that resolution of plaintiffs' Wage Act claims requires interpretation of the Shutdown Agreement, and directed this court on remand to consider defendants' arguments in favor of dismissal of the § 301 claim.

  After the case was remanded to this court, plaintiffs were granted leave to file a third amended complaint. The third amended complaint alleges that the individual plaintiffs were laid off due to a sale of the assets of the Waukegan Plant within the meaning of § 8(I)(c) of the Shutdown Agreement. Plaintiffs had previously argued that they were laid off due to a "discontinuance of operations" within the meaning of § 8(I)(b). Defendants argued to the Seventh Circuit that §§ 18 and 19, which provide severance and retention benefits to employees terminated pursuant to § 8(I)(b), necessarily exclude employees terminated or permanently laid off pursuant to § 8(I)(c), and that the sale of assets pursuant to a bankruptcy proceeding could be considered a sale within the meaning of § 8(I)(c).*fn8 The Seventh Circuit held that such an interpretation was "at least tenable," and that "[t]o determine plaintiffs' entitlement to the wage supplements, a court would have to interpret, not merely reference, these provisions of the Shutdown Agreement. Accordingly, the claim is preempted by § 301 of the LMRA." Baker, 387 F.3d at 659.

  Plaintiffs now stipulate that they were terminated pursuant to § 8(I)(c), and argue that regardless of whether § 8(I)(b) or (c) applies, they are entitled to the same severance and retention benefits pursuant to §§ 18 and 19, or § 20, respectively. Plaintiffs' argument hinges on their assertion that the Seventh Circuit held that § 8(I) of the Shutdown Agreement is the only section that requires interpretation. Plaintiffs interpret the Seventh Circuit to say more than it does. The Seventh Circuit's opinion merely points to § 8(I) as an example of a provision that requires interpretation, and does not suggest that it is the only such provision. Moreover, the court of appeals' discussion of the competing interpretations of §§ 8(I)(b) and (c) highlights its holding that any amount of contract interpretation, in contrast to mere reference, mandates preemption of the claim. Baker, 387 F.3d at 659. Defendants argue that even after repleading for the third time and including a stipulation that § 8(I)(c) applies, plaintiffs' Wage Act claims continue to require interpretation of the Shutdown Agreement and are thus preempted. The court agrees.

  Defendants point to several provisions of the Shutdown Agreement that must be interpreted. For example, § 20(a) of the Shutdown Agreement provides that only employees who were "not offered employment with the purchaser" are eligible for benefits. Interpretation is required to determine what constitutes an offer of employment, and which members of the putative class, if any, were made such an offer. Similarly, § 20(h) states, "Prior to their receipt of any retention and/or severance benefits required by this section as well as any other benefits provided under this Agreement, Bargaining Unit employees shall be required to sign a Confidential Release and Severance Agreement, in the attached form." To determine whether putative class members met this precondition for benefit eligibility requires more than ...


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