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George v. Kraft Foods Global

March 16, 2007

GERALD GEORGE, CATHY DUNN, JEANETTE BURGHY, TIMOTHY STREFF, AND ANDREW SWANSON, INDIVIDUALLY AND AS REPRESENTATIVES OF A CLASS OF SIMILARLY SITUATED PERSONS, PLAINTIFFS,
v.
KRAFT FOODS GLOBAL, INC., KRAFT FOODS GLOBAL, INC. ADMINISTRATIVE COMMITTEE, BENEFITS INVESTMENT COMMITTEE, AND JIM DOLLIVE, KAREN MAY, MARC FIRESTONE, AND PAMELA KING, ALL IN THEIR CAPACITIES AS MEMBERS OF THE BENEFITS INVESTMENT COMMITTEE, DEFENDANTS.



The opinion of the court was delivered by: David R. Herndon United States District Judge

MEMORANDUM AND ORDER

This matter is before the Court on the motion to dismiss, motion to strike, or, in the alternative, motion for a more definite statement (Doc. 20) and the motion to transfer venue (Doc. 22) brought by Defendants Kraft Foods Global, Inc., Kraft Foods Global, Inc. Administrative Committee, Benefits Investment Committee, and Jim Dollive, Karen May, Marc Firestone, and Pamela King, in their capacities as members of the Benefits Investment Committee. For the following reasons Defendants' motion to dismiss, motion to strike, or, in the alternative, motion for a more definite statement is DENIED. Defendants' motion to transfer venue is GRANTED and, pursuant to 28 U.S.C. § 1404(a), this action is TRANSFERRED to the United States District Court for the Northern District of Illinois.

Introduction

This case is a putative class action for breach of fiduciary duty brought pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001-1461. Plaintiffs Gerald George, Cathy Dunn, Jeanette Burghy, Timothy Streff, and Andrew Swanson allege that they are participants in the Kraft Foods Global Inc. Thrift Plan, Plan No. 125 ("the Plan"), that the Plan is an employee benefit plan, and that Defendant Kraft Foods Global, Inc., ("Kraft") is the sponsor of the Plan, all within the meaning of ERISA. See 29 U.S.C. § 1002(7), (2)(A), (3), (16)(B). Plaintiffs allege also that Kraft, as well as Defendants Kraft Foods Global, Inc. Administrative Committee, Benefits Investment Committee, Jim Dollive, Karen May, Marc Firestone, and Pamela King, are fiduciaries with respect to the Plan within the meaning of ERISA. See 29 U.S.C. § 1002(21)(A).

The Plan is a so-called "401(k) plan," see Boeckman v. A.G. Edwards, Inc., 461 F. Supp. 2d 801, 803 n.1 (S.D. Ill. 2006), and it appears from the allegations of Plaintiffs' complaint that investment options under the Plan include employer securities.*fn1 Under ERISA a fiduciary of an employee benefit plan must carry out its responsibilities "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of like character and with like aims." 29 U.S.C. § 1104(a)(1)(B). A fiduciary who fails to exercise the requisite prudence may be required to make good any plan losses resulting therefrom either to the plan or to participants in the plan. See 29 U.S.C. § 1109(a); Id. § 1132(a)(2), (a)(3). Plaintiffs allege that Defendants have breached their duty of prudence by failing to contain Plan costs and by permitting the Plan to pay unreasonable fees to service providers to the Plan for, inter alia, trustee, record-keeping, administration, investment advisory, investment management, brokerage, insurance, consulting, accounting, legal, printing, mailing, and other services. See Doc. 2 ¶ 54. For example, Plaintiffs allege that in 2004 the Plan paid Hewitt Associates $3,381,789 for record-keeping services, an amount Plaintiffs contend is unreasonable. See id.¶ 57, ¶¶ 58-59. Plaintiffs assert that the allegedly excessive costs and fees paid by the Plan to service providers have been passed on to Plan participants.*fn2 Plaintiffs allege also that Defendants breached their duty of prudence by failing to minimize costs associated with investment in employer securities under the Plan, and by holding a portion of the Plan's assets in cash, which generates, of course, no investment return.*fn3

Plaintiffs assert claims under ERISA § 502(a)(2) and (a)(3), 29 U.S.C. § 1132(a)(2) and (a)(3), and seek to represent a proposed class defined as,

All persons, excluding the Defendants, the Committees and their members and/or other individuals who are or may be liable for the conduct described in this Complaint, who are or were participants or beneficiaries of the Plan and who are, were or may have been affected by the conduct set forth in this Complaint, as well as those who will become participants or beneficiaries of the Plan in the future.

Doc. 2 ¶ 24 (emphasis in original). Plaintiffs have moved for certification of their claims as a class action under Rule 23(b)(1)(B), (b)(2), and (b)(3) of the Federal Rules of Civil Procedure. Defendants in turn have moved to dismiss Plaintiffs' complaint, to strike specific paragraphs of the complaint, or for a more definite statement of Plaintiffs' claims. Defendants also have moved for transfer of this case to the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. § 1404. On December 22, 2002, the Court granted Plaintiffs' request for leave to conduct limited discovery for the purpose of preparing an adequate response to Defendants' request for transfer of this case. See George v. Kraft Foods Global, Inc., No. 06-cv-798-DRH, 2006 WL 3842169, at **1-2, *3 (S.D. Ill. Dec. 22, 2006). As per the Court's order, Plaintiffs' filed their response to the transfer motion on or before February 24, 2007. Defendants' motion to dismiss, to strike, or for a more definite statement and Defendants' motion for transfer are ripe for decision, and the Court now is prepared to rule.

Discussion

A. Motion to Dismiss, to Strike, or for a More Definite Statement

Defendants have moved to dismiss Plaintiffs' claims under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which permits dismissal of a complaint, of course, when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Johnson v. Martin, 943 F.2d 15, 16 (7th Cir. 1991) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)). Defendants request also that the Court strike paragraphs 1-9, 30, 39-53, 56, 60, 63-69, 79, 81-83, 97, and 109 of Plaintiffs' complaint pursuant to Rule 12(f) of the Federal Rules of Civil Procedure, which authorizes a court to strike matter from a pleading in rare cases when "the allegations being challenged are so unrelated to plaintiff's claim as to be void of merit and unworthy of any consideration . . . and . . . the allegations are unduly prejudicial" in that the challenged matter "has the effect of confusing the issues or is so lengthy and complex that it places an undue burden on the responding party." Robinson v. City of Harvey, No. 99 C 3696, 1999 WL 617655, at *1 (N.D. Ill. Aug. 11, 1999). See also Michael v. Caprice, No. 99 C 2313, 1999 WL 529561, at *1 (N.D. Ill. July 20, 1999) ("Motions to strike are strongly disfavored."); Western Publ'g Co. v. MindGames, Inc ., 944 F. Supp. 754, 755 n.1 (E.D. Wis. 1996) ("Motions to strike are generally disfavored and information . . . will not be stricken unless it is evident that it has no bearing upon the subject matter of the litigation."). Finally, Defendants ask the Court to order Plaintiffs to furnish a more definite statement of their claims under Rule 12(e) of the Federal Rules of Civil Procedure, which authorizes such relief when a complaint belongs to the "small" class of pleadings that, though "sufficiently intelligible for the court to be able to make out one or more potentially viable legal theories on which the claimant might proceed," nonetheless are "so vague or ambiguous that the opposing party cannot respond, even with a simple denial, in good faith or without prejudice to himself." Vician v. Wells Fargo Home Mortgage, No. 2:05-CV-144, 2006 WL 694740, at *9 (N.D. Ind. Mar. 16, 2006). See also Metso Paper, Inc. v. Enerquin Air Inc., No. 06-C-1170, 2007 WL 486635, at *5 (E.D. Wis. Feb. 12, 2007) (noting that "Rule 12(e) motions . . . are generally disfavored and are not intended as a substitute for the . . . normal discovery process."); Parus v. Cator, No. 05-C-0063-C, 2005 WL 1458770, at *3 (W.D. Wis. June 17, 2005) ("Rule 12(e) motions are rarely granted . . . ; indeed, . . . judges are admonished to exercise their discretion sparingly in ordering more definite statements.").

The chief ground for Defendants' motion is the supposed prolixity of Plaintiffs' complaint, which, Defendants argue, violates the familiar requirement under Rule 8 of the Federal Rules of Civil Procedure that a pleading present "a short and plain statement of the claim showing that the pleader is entitled to relief" and that "[e]ach averment of a pleading shall be simple, concise, and direct." Fed. R. Civ. P. 8(a)(2), (e)(1). Although the Court generally regards Rule 8 as a shield for pleaders rather than a sword for those pleaded against, it is true that in unusual cases an excessively lengthy complaint may be so confusing and disjointed as to warrant dismissal for failure to comply with Rule 8. See, e.g., United States v. Lockheed-Martin Corp., 328 F.3d 374, 376-78 (7th Cir. 2003) (a complaint with 400 paragraphs covering 155 pages followed by ninety-nine attachments, replete with undefined acronyms and mysterious cross-references, was so confused that neither the court nor the adverse parties should be required to "try to fish a gold coin from a bucket of mud"); Richee v. Velasco, No. 02 C 7761, 2002 WL 31455982, at **1-2 (N.D. Ill. Nov. 1, 2002) (dismissing with leave to amend an 85-page handwritten pro se complaint consisting of 329 paragraphs); Fernandez v. Supreme Ct. of Ill., No. 02 C 3402, 2002 WL 1008468, at *1 (N.D. Ill. May 17, 2002) (dismissing for failure to state a claim for relief an 81-page complaint that was "unnecessarily lengthy, redundant, and confusing, making it difficult to determine which alleged wrongdoings, if any, constitute the claimed violations of federal and state law"); Dudley Enters., Inc. v. Palmer Corp., 822 F. Supp. 496, 499-500 (N.D. Ill. 1993) (dismissing a complaint under the Racketeer Influenced and Corrupt Organizations Act and state law that contained 111 allegations with extensive subparagraphs spread over 46 pages and was organized in a confusing, disjointed, and repetitive manner). See also Gay v. Shannon, No. CIV.A.02-4693, 2002 WL 31750212, at *2 (E.D. Pa. Dec. 6, 2002) (dismissing a rambling pro se complaint of over 100 pages in length with instructions to file an amended complaint of no more than 25 pages); Peck v. Merletti, 64 F. Supp. 2d 599, 602 (E.D. Va. 1999) (dismissing a pro se complaint that contained "hundreds of pages" of "gibberish or nonsensical rambling").

It is obvious to the Court that this is not one of the unusual cases in which purported violations of Rule 8 warrant dismissal. Plaintiffs' complaint is a bit garrulous perhaps, but it is eminently possible for persons of reasonable intelligence to discern from a reading of the complaint the nature of Plaintiffs' claims, as the Court's short synopsis of those claims in the introductory portion of this Order demonstrates. Although, as noted, it is not entirely clear from the complaint whether Plaintiffs assert claims based on prohibited transactions and breach of the fiduciary duty of loyalty, Plaintiffs are not required, of course, to plead legal theories to pass muster under Rule 8. See Higgs v. Carver, 286 F.3d 437, 439 (7th Cir. 2002) (quoting Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th Cir. 1999)). The Court notes that sister courts have forgiven pleading sins far more egregious than those of Plaintiffs in this case. See, e.g., Manuel v. Lucenti, No. 04-C-2531, 2004 WL 2608355, at *2 (ND. Ill. Nov. 16, 2004) (denying a motion to strike 25 of the pro se plaintiff's 244 paragraphs even though the 25 paragraphs largely contained background material); ReSource N.E. of Long Island, Inc. v. Town of Babylon, 80 F. Supp. 2d 52, 57 (E.D.N.Y. 2000) (declining to dismiss a complaint that contained 49 pages and 215 paragraphs because, while "needlessly prolix and somewhat redundant," the complaint was "not so opaque as to defy understanding or prevent the Defendants from answering."); Wolfson v. Lewis, 168 F.R.D. 530, 533-34 (E.D. Pa. 1996) (a complaint of 108 pages, containing more than 600 paragraphs, was not subject to dismissal under Rule 8); Government Guar. Fund v. Hyatt Corp., 166 F.R.D. 321, 324 (D.V.I. 1996) (a 98-page complaint, though "hardly a paragon of pithiness," was "quite comprehensible and provide[d] enough information to allow [the defendant] to frame a responsive pleading," thus satisfying the requirements of Rule 8). See also Sonnino v. University of Kan. Hosp. Auth., No. Civ.A. 02-2576-KHV, 2003 WL 1562551, at *2 (D. Kan. Mar. 24, 2003) (in evaluating the propriety of a complaint under Rule 8, "courts correctly focus on the quality and not exclusively on the tonnage of the complaint, i.e., whether the complaint provides adequate notice of plaintiff's claims.").

Finally, as to Defendants' attack on the adequacy of paragraph 105 of Plaintiffs' complaint regarding "investment losses" caused by Defendants' alleged breaches of fiduciary duty, the challenged portion of the complaint deals with Defendants' ability to maintain a defense under ERISA ...


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