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Spano v. Boeing Co.

April 17, 2007

GARY SPANO, JOHN BUNK, JAMES WHITE, JR., AND VICTOR DUBBS, AS REPRESENTATIVES OF A CLASS OF SIMILARLY SITUATED PERSON, AND ON BEHALF OF THE PLAN, PLAINTIFFS,
v.
THE BOEING COMPANY, EMPLOYEE BENEFITS PLANS COMMITTEE, AND SCOTT M. BUCHANAN, DEFENDANTS.



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

MEMORANDUM AND ORDER

This matter is before the Court on motions to dismiss brought by Defendants The Boeing Company ("Boeing"), Employee Benefits Plans Committee, and Scott M. Buchanan (Docs. 27, 28, 29) and on a motion to strike the demand for a trial by jury asserted by Plaintiffs Gary Spano, John Bunk, James White, Jr., and Victor Dubbs (Doc. 30).*fn1 For the following reasons, the motions to dismiss are DENIED. The motion to strike is GRANTED.

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, who are participants in The Boeing Company Voluntary Investment Plan (the "Plan") allege that Defendants are Plan fiduciaries who have breached their fiduciary duties under ERISA, see 29 U.S.C. § 1104, by failing to contain Plan costs and paying unreasonable fees to service providers to the Plan, as well as by failing to minimize costs associated with investment in employer securities under the Plan and holding a portion of the Plan's assets in cash. Plaintiffs assert claims under ERISA § 502(a)(2) and (a)(3), 29 U.S.C. § 1132(a)(2) and (a)(3), and seek certification of a class of similarly-situated persons. Defendants in turn have moved under Rule 12(b)(6) and 12(f) of the Federal Rules of Civil Procedure to dismiss Plaintiffs' complaint and to strike Plaintiffs' jury demand. Having reviewed carefully the submissions of the parties, the Court now is prepared to rule.

Discussion

1. Motions to Dismiss

The Rule 12(b)(6) motions before the Court seek dismissal of Plaintiffs' complaint on the following grounds: Plaintiffs have failed adequately to allege that Boeing and Buchanan are fiduciaries of the Plan; Plaintiffs' exclusive remedy in this instance is under ERISA § 502(a)(2), 29 U.S.C. § 1132(a)(2), precluding any claim under ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3); and Plaintiffs have failed adequately to allege claims of nondisclosure by Defendants. At the outset, the Court notes the familiar standard under which a Rule 12(b)(6) motion is evaluated. A court must accept all well-pleaded allegations in a plaintiff's complaint as true. See Fed. R. Civ. P. 12(b)(6); Cleveland v. Rotman, 297 F.3d 569, 571 (7th Cir. 2002). The purpose of a Rule 12(b)(6) motion is to test the legal sufficiency of the allegations of a complaint, not to determine the merits of a case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990); Coolsavings.Com, Inc. v. Catalina Mktg. Corp., No. 98 C 6668, 1999 WL 342431, at *1 (N.D. Ill. May 14, 1999). "Because the Federal Rules of Civil Procedure establish a liberal pleading system that requires only notice pleading, a 'complaint's mere vagueness or lack of detail is not sufficient to justify a dismissal.'" Brown v. SBC Communications, Inc., No. 05-cv-777-JPG, 2007 WL 684133, at *2 (S.D. Ill. Mar. 1, 2007) (quoting National Serv. Ass'n, Inc. v. Capitol Bankers Life Ins. Co., 832 F. Supp. 227, 230 (N.D. Ill. 1993)). A complaint should not be dismissed under Rule 12(b)(6) "unless 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)). See also Beam v. IPCO Corp., 838 F.2d 242, 244 (7th Cir. 1988).

Also worth noting at the outset is the fact that claims of breach of fiduciary duty under ERISA are subject to no pleading standard more stringent than Rule 8 of the Federal Rules of Civil Procedure, which requires a plaintiff to present only "a short and plain statement of the claim showing that the pleader is entitled to relief" and states that "[e]ach averment of a pleading shall be simple, concise, and direct." Fed. R. Civ. P. 8(a)(2), (e)(1). See also In re Enron Corp. Sec., Derivative & ERISA Litig., 284 F. Supp. 2d 511, 652 (S.D. Tex. 2003) ("ERISA does not have heightened pleading requirements, but is subject to the notice pleading standard of [Rule 8], i.e., . . . a short and plain statement of the claim showing that the pleader is entitled to relief . . . and that provides a defendant with fair notice of the claim against him."); In re WorldCom, Inc., 263 F. Supp. 2d 745, 759 (S.D.N.Y. 2003) (applying Rule 8 and finding that it was satisfied even though the complaint's allegations about a defendant's fiduciary status "[did] little more than track the statutory definition of a fiduciary."). Courts generally hold that this is so even when some allegations of a claim of breach of fiduciary duty under ERISA arguably sound in fraud or deceit. See, e.g., In re AEP ERISA Litig., 327 F. Supp. 2d 812, 822 (S.D. Ohio 2004) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002)) (holding that plan participants were not required to satisfy heightened pleading requirements for alleged material misstatements or omissions by plan fiduciaries: "[T]his Court can discern no reason why, generally, ERISA plaintiffs should have to meet heightened pleading requirements, as opposed to the 'simplified notice pleading standard [that] relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.'"); Rankin v. Rots, 278 F. Supp. 2d 853, 866 (E.D. Mich. 2003) ("Here, [the plaintiff] claims that [the defendants] violated their fiduciary duties under ERISA. While some of the allegations in support of [the] claim are similar to fraud allegations, i.e. that they provided false and misleading information, the gravamen of [the plaintiff's] claim is grounded in ERISA. The heightened pleading requirement under Rule 9(b) [of the Federal Rules of Civil Procedure] will not be imposed where the claim is for a breach of fiduciary duty under ERISA."). But cf. Lively v. Dynegy, Inc., 420 F. Supp. 2d 949, 955 (S.D. Ill. 2006) (holding that allegations by plan participants that plan fiduciaries made "false, misleading, incomplete and inaccurate disclosures and representations" to the participants were pleaded with insufficient particularity under Rule 9(b)).*fn2

Turning then to the issue of whether Plaintiffs have adequately alleged that Boeing and Buchanan are Plan fiduciaries, Defendants argue that they have not because the operative complaint in this cause alleges only that Boeing is the Plan sponsor and a fiduciary of the Plan, see Doc. 2 ¶ 7, ¶ 19, and that Buchanan "is Boeing's Director of Benefits Delivery and the individual designated by Boeing to sign as Plan Administrator of the Plan for filings with government regulators." Id. ¶ 21. Under ERISA, "a person is a fiduciary with respect to a plan to the extent (i) he exercises any discretionary authority or discretionary control respecting management of such plan or exercises any authority or control respecting management or disposition of its assets . . . or (iii) he has any discretionary authority or discretionary responsibility in the administration of such plan." 29 U.S.C. § 1002(21)(A). Thus, "ERISA makes the existence of discretion a sine qua non of fiduciary [status]." Pohl v. National Benefits Consultants, Inc., 956 F.2d 126, 129 (7th Cir. 1992). See also Health Cost Controls of Ill., Inc. v. Washington, 187 F.3d 703, 709 (7th Cir. 1999) (citing 29 U.S.C. § 1002(21)(A)) ("An ERISA fiduciary is . . . anyone who has substantial control over the assets, management, or administration of an ERISA plan.").

As Defendants point out, an employer does not automatically become a fiduciary merely because it establishes a benefits plan for its employees, if in fact that employer has no discretionary control over the management of the plan. See Senn v. United Dominion Indus., Inc., 951 F.2d 806, 816-18 (7th Cir. 1992); Fletcher v. Kroger Co., 942 F.2d 1137, 1139-40 (7th Cir. 1991). Similarly, a plan administrator whose "function under the plan [is] clerical, mechanical, [and] ministerial" is not an ERISA fiduciary. Pohl, 956 F.2d at 129. See also Stewart v. Allied Benefit Sys., Inc., No. 92 C 4158, 1993 WL 54594, at **1-2 (N.D. Ill. Feb. 23, 1993). Regulations promulgated by the Department of Labor concerning ERISA plans explain that employees who perform purely ministerial functions with respect to a plan within a framework of policies, rules, and procedures established by others do not exercise discretion and thus are not fiduciaries within the meaning of ERISA:

Q: Are persons who have no power to make any decisions as to plan policy, interpretations, practices or procedures, but who perform the following administrative functions for an employee benefit plan, within a framework of policies, interpretations, rules, practices and procedures made by other persons, fiduciaries with respect to the plan:

(1) Application of rules determining eligibility for participation or benefits;

(2) Calculation of services and compensation ...


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