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Ruppert v. Principal Life Insurance Co.

July 9, 2007


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


This matter is before the Court on the motion for reconsideration (Doc. 57) and the motion for oral argument thereon (Doc. 61) brought by Plaintiff Joseph Ruppert. For the following reasons, the motions are DENIED.

I. 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. Ruppert, who is a trustee of the Fairmount Park, Inc. Retirement Savings Plan ("The Plan"), alleges that he is a fiduciary of the Plan and that the Plan is an employee benefit plan, specifically, a 401(k) plan or defined contribution plan, all within the meaning of ERISA. See 29 U.S.C. § 1002(21)(A), (2)(A), (3), (34). Defendant Principal Life Insurance Company ("Principal") is an Iowa-based company that provides investment options to the Plan, including mutual funds in which Plan participants can choose to invest their pre-tax earnings. Ruppert challenges agreements between Principal and the mutual funds offered in the Plan because the funds compensate Principal based on a percentage of the assets it channels into the funds. According to Ruppert, this arrangement violates ERISA in two ways. First, Ruppert alleges, Principal is a Plan fiduciary that is compensating itself with Plan assets, thereby breaching its fiduciary duties of loyalty and care under ERISA. See 29 U.S.C. § 1104(a)(1)(A), (a)(1)(B); 29 U.S.C. § 1109(a). Second, Ruppert alleges that Principal, as a Plan fiduciary, has created a quid pro quo arrangement -- inclusion of a fund as an investment option in the Plan in exchange for revenue sharing -- that constitutes a prohibited transaction under ERISA. See 29 U.S.C. § 1106(b). Ruppert brings this action pursuant to 29 U.S.C. 1132(a)(2) and seeks to represent a nationwide class of employee benefit plans to which Principal provides investment options and as to which Principal has "revenue sharing" agreements with mutual funds families whose mutual funds are offered in the plans.

On June 1, 2007, the Court ordered this action transferred to the United States District Court for the Southern District of Iowa pursuant to 28 U.S.C. § 1404. Transfer was stayed for ten days to permit Ruppert to pursue whatever appellate remedies he may have with respect to the transfer decision. See generally 15 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure § 3846 (3d ed. 1998 & Supp. 2007) ("Because appellate review of the transfer order and certain other matters, if it is available at all, . . . is more appropriate in the court of appeals in which the transferor court sits than in the court of appeals to which the case is transferred, the better practice . . . is to stay the effect of grants of transfer of venue routinely for a sufficient period to enable appellate review to be sought.") (collecting cases). On June 7, 2007, Ruppert moved for reconsideration of the transfer order, as well as for a stay of transfer. On June 8, 2007, the Court stayed transfer pending resolution of Ruppert's motion for reconsideration. Ruppert has requested oral argument as to his motion for reconsideration. Having reviewed the record carefully, the Court concludes that oral argument would not be helpful in this matter. The motion for reconsideration has been fully briefed and is ripe for decision, and the Court now is prepared to rule.

II. Discussion

An order granting or denying a motion to transfer venue under 28 U.S.C. § 1404 is interlocutory in character. See Hill v. Potter, 352 F.3d 1142, 1144 (7th Cir. 2003) ("Transfer orders, including ones transferring a case for the convenience of the parties and witnesses, . . . are not appealable final decisions."). Although the Federal Rules of Civil Procedure contain express provisions governing reconsideration of final orders and judgments, reconsideration of interlocutory decisions "is a matter of a district court's inherent power." Koelling v. Livesay, 239 F.R.D. 517, 519 (S.D. Ill. 2006). See also Canon U.S.A, Inc. v. Nippon Liner Sys., Ltd., No. 90C 7350, 1992 WL 137406, at *1 (N.D. Ill. June 2, 1992); Giguere v. Vulcan Materials Co., No. 87 C 7043, 1988 WL 107387, at *4 (N.D. Ill. Oct. 13, 1988). Such motions "serve a limited function: to correct manifest errors of law or fact or to present newly discovered evidence." Zurich Capital Mkts. Inc. v. Coglianese, 383 F. Supp. 2d 1041, 1045 (N.D. Ill. 2005) (quoting Publishers Res., Inc. v. Walker-Davis Publ'ns, Inc., 762 F.2d 557, 561 (7th Cir. 1985)). Reconsideration of an interlocutory order may be granted where: "the court has misunderstood a party; the court has made a decision outside the adversarial issues presented to the court by the parties; the court has made an error of apprehension (not of reasoning); a significant change in the law has occurred; or significant new facts have been discovered." Wilson v. Cahokia Sch. Dist. # 187, 470 F. Supp. 2d 897, 913 (S.D. Ill. 2007) (collecting cases).

Reconsideration of an interlocutory order is committed to a court's sound discretion.

See Harrisonville Tel. Co. v. Illinois Commerce Comm'n, 472 F. Supp. 2d 1071, 1074 (S.D. Ill. 2006); IMI Norgren, Inc. v. D&D Tooling & Mfg., Inc., No. 00 C 5789, 2003 WL 40499, at *2 (N.D. Ill. Jan. 6, 2003); Fisher v. National R.R. Passenger Corp., 152 F.R.D. 145, 149 (S.D. Ind. 1993). Further, "[m]otions for reconsideration generally are not encouraged." Johnson v. City of Kankakee, No. 04-2009, 2007 WL 1431874, at *1 (C.D. Ill. May 11, 2007) (quoting Wilson, 470 F. Supp. 2d at 913). See also Automatic Liquid Packaging, Inc. v. Dominik, No. 86 C 5595, 1987 WL 26149, at *1 (N.D. Ill. Dec. 2, 1987). This is because, "[i]n general, a district court's rulings 'are not intended as mere first drafts, subject to revision and reconsideration at a litigant's pleasure,' and 'ill-founded requests for reconsideration of matters previously decided . . . needlessly take the court's attention from current matters and visit inequity upon opponents who, prevailing in an earlier proceeding, must nevertheless defend their position again and again.'" Harrisonville Tel. Co., 472 F. Supp. 2d at 1074 (quoting Berger v. Xerox Ret. Income Guar. Plan, 231 F. Supp. 2d 804, 820 (S.D. Ill. 2002)). See also Asllani v. Board of Educ. of City of Chicago, 845 F. Supp. 1209, 1226 (N.D. Ill. 1993) (noting that, as a rule, motions for reconsideration "do nothing but express dissatisfaction with a prior ruling and ask the court to change its mind").

The Court turns to Ruppert's motion for reconsideration. To the extent Ruppert's motion can be said to present evidence, this evidence consists of a page from an Internet website maintained by Wal-Mart Stores, Inc., ("Wal-Mart") showing that the company operates 138 stores and "supercenters" in the State of Illinois, just one more than the number of employee benefit plans to which Principal has furnished services in this District, thus showing, according to Ruppert's attorneys, that this litigation has a substantial nexus with this District that precludes transfer. It is not clear why this evidence could not have been adduced earlier. See Drnek v. City of Chicago, 205 F. Supp. 2d 894, 895-96 (N.D. Ill. 2002) (quoting Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir. 1987)) (a motion for reconsideration "cannot in any case be employed as a vehicle to introduce new evidence that could have been adduced during pendency of the [underlying] motion.").*fn1 Additionally, the Court finds highly questionable the utility of the comparison drawn by Ruppert's attorneys between Principal and Wal-Mart. Even assuming for the sake of argument that any meaningful analogy can be drawn between the business models of Wal-Mart, on the one hand, and Principal, on the other, for the comparison to be at all useful the Court would have to know, at a minimum, what percentage of Wal-Mart's business is derived from its operations in Illinois. In this instance it is undisputed that less than half of one percent of the plans Principal services are located in this District.

Finally and most fundamentally, however, the overall number of plans serviced by Principal is a red herring, as the only plan at issue in this case is the one of which Ruppert is a trustee. "ERISA expressly confers standing on four classes of plaintiffs: beneficiaries, participants, fiduciaries, and the Secretary of Labor." Mutual Life Ins. Co. of N.Y. v. Yampol, No. 83 C 9701, 1986 WL 1426, at *1 (N.D. Ill. Jan. 13, 1986) (citing 29 U.S.C. § 1132(a)). See also Corbin v. Blankenburg, 39 F.3d 650, 653 (6th Cir. 1994) (citing Pressroom Unions-Printers League Income Sec. Fund v. Continental Assurance Co., 700 F.2d 889, 891-92 (2d Cir. 1983)) (in general, an action under ERISA for breach of fiduciary duty "may be brought only by a member of one of the categories of people (the Secretary of Labor, a plan participant, a plan beneficiary, a plan fiduciary, or (for suits against the Secretary) a plan administrator) specifically named in 29 U.S.C. § 1132."). The category of "fiduciaries" authorized to bring suit under ERISA includes trustees of an employee benefit plan. In Peoria Union Stockyards Co. Retirement Plan v. Penn Mutual Life Insurance Co., 698 F.2d 320 (7th Cir. 1983), the court held that "the participants, the trustees, and the plan itself all have standing to complain" of a breach of fiduciary duty. Id. at 326. See also Trustees of Hotel Employees & Rest. Employees Int'l Union Welfare Pension Fund v. Amivest Corp., 733 F. Supp. 1180, 1184 (N.D. Ill. 1990) ("The Trustees are fiduciaries of the pension plans and, therefore, are authorized to bring a civil ERISA claim for breach of fiduciary duty."); Freund v. Marshall & Ilsley Bank, 485 F. Supp. 629, 635 (W.D. Wis. 1979) (citing 29 C.F.R. § 2509.75-8, D-3) ("By the very nature of their positions, plan trustees and a plan administrator are fiduciaries with respect to a plan.").

However, while Ruppert is a fiduciary of the Plan with standing to sue on behalf of the Plan, he does not have standing to sue on behalf of plans of which he is not a fiduciary. "[I]n order to have standing to sue under ERISA as a 'fiduciary,' . . . a party must be (or have been) not merely a fiduciary of any ERISA plan, but rather, a fiduciary of the particular plan victimized by the alleged breach or victimized by the alleged breach of fiduciary duty." Weiler v. Lapkoff, No. 02 C 4263, 2002 WL 31749199, at *3 (N.D. Ill. Dec. 6, 2002) (quoting Pilkington PLC v. Perelman, 72 F.3d 1396, 1399 (9th Cir. 1995)). This position "is consistent with the requirement that the plaintiff be a fiduciary pursuant to 29 U.S.C. § 1132(a), and that a plaintiff allege that he has sustained a personal injury in fact that is fairly traceable to the defendant's alleged unlawful conduct and likely to be redressed by the relief requested." Id. (citing Johnson v. Allsteel, Inc., 259 F.3d 885, 887 (7th Cir. 2001)). See also Ossey v. Mardola, No. 96 C 296, 1997 WL 223070, at *2 (N.D. Ill. Apr. 28, 1997) (quoting Chemung Canal Trust Co. v. Sovran Bank/Maryland, 939 F.2d 12, 14 (2d Cir. 1991)) (a former plan fiduciary has no standing to sue for breach of fiduciary duty on behalf of a plan: "There is no indication of a legislative intent to grant a former fiduciary a continuing right to sue on behalf of the plan[.]"); Roncone v. Ligurotis, No. 92 C 4054, 1993 WL 321737, at **2-3 (N.D. Ill. Aug. 20, 1993)(a former fiduciary "no longer has standing under ERISA to seek judicial redress as a fiduciary."). Cf. Blackmar v. Lichtenstein, 603 F.2d 1306, 1310 (8th Cir. 1979) (a former trustee "ceased to be a fiduciary and no longer had the capacity to sue for violations which may have occurred under [ERISA].").

In sum, Ruppert's lack of standing to sue on behalf of plans of which he is not a fiduciary renders irrelevant the question of the total number of plans serviced by Principal in this District and elsewhere. See LoPresti v. Citigroup Inc., 171 Fed. Appx. 900, 901 (2d Cir. 2006) ("To recover on his ERISA claims, Appellant was required to establish that he was a fiduciary of an ERISA plan and that . . . [it is] the same plan in which the violations [of fiduciary duty] are alleged to have occurred."); Sanofi-Synthelabo Inc. v. Eastman Kodak Co., No. 99 Civ. 4888 LAP, 2000 WL 1611068, at **3-4 (S.D.N.Y. Oct. 27, 2000) (a plaintiff has no standing to bring suit for breach of fiduciary duty on behalf of a plan of which he was never a fiduciary); Modern Woodcrafts, Inc. v. Hawley, 534 F. Supp. 1000, 1013-14 (D. Conn. 1982) (trustees of an employee benefit plan lacked standing to sue for breach of fiduciary duty on behalf of a different employee benefit plan); Smith v. Hickey, 482 F. Supp. 644, 650 (S.D.N.Y. 1979) (plaintiff fiduciaries of an employee benefit plan lacked standing as "fiduciaries" under ERISA to sue the fiduciaries of a different plan because the plaintiffs had never been fiduciaries of the latter plan). See also Crichton v. Golden Rule Ins. Co., Civil No. 06-264-GPM, 2006 WL 2349961, at *3 (S.D. Ill. Aug. 11, 2006) (the class-action device cannot be used to manufacture standing that a class representative does not possess). Accordingly, in evaluating the propriety of transfer the Court places no significance on the matter of whether Principal provides services to a large number or a small number of plans within the District, and whether the number of such plans is greater or less than the number of stores operated by Wal-Mart in Illinois.

The remainder of the motion for reconsideration is devoted to rearguing points that were raised by Ruppert's attorneys in the briefing on Principal's motion for transfer and, in the Court's discretion, rejected. See Zurich Capital Mkts. Inc., 383 F. Supp. 2d at 1045 (quoting In re Oil Spill by "Amoco Cadiz" Off Coast of France on Mar. 16, 1978, 794 F. Supp. 261, 267 (N.D. Ill. 1992)) ("Motions to reconsider are not at the disposal of parties who want to 'rehash' old arguments."). Specifically, Ruppert argues that the Court erred in failing to accord controlling weight to his choice of forum. Also, Ruppert contends that the effect of transfer is to shift inconvenience from Principal to Ruppert, particularly as the cost of litigating in Iowa will be unduly burdensome for him and the Plan. With respect to the degree of deference to be accorded Ruppert's choice of forum, in general, of course, a plaintiff's choice of forum is entitled to "some" weight, especially when the action is brought in the plaintiff's home forum. Somers v. Flash Tech. Corp. of Am., No. IP00-455-C-B/S, 2000 WL 1280314, at *2 (S.D. Ind. Aug. 25, 2000) (quoting FDIC v. Citizens Bank & Trust Co. of Park Ridge, Ill., 592 F.2d 364, 368 (7th Cir. 1979)). On the other hand, the Court typically accords less deference to a plaintiff's choice of forum when, as here, an action is brought as a class action. See George v. Kraft Foods Global, Inc., No. 06-cv-798-DRH, 2007 WL 853998, at *5 (S.D. Ill. Mar. 16, 2007) (holding that "a plaintiff's choice of forum is entitled to some deference, albeit reduced, even in the class-action context.") (collecting cases). In any event, 28 U.S.C. § 1404(a) "accords broad discretion to district court, and [a] plaintiff's choice of forum is only one relevant factor for its consideration." Baymont Franchising, LLC v. Heartland Props., LLC, No. 05-C-0606, 2005 WL 2922225, at *3 (E.D. Wis. Nov. 3, 2005) (citing Norwood v. Kirkpatrick, 349 U.S. 29, 32 (1955)). See also Marquette Transp. Co. v. Trinity Marine Prods., ...

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