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Wheeler v. Pension Value Plan For Employees of the Boeing Co.

September 5, 2007


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


This matter is before the Court on the motion for relief from judgment brought by Plaintiffs Larry Wheeler, David Keeton, Maral Keeton, and Vincent Parisi (Doc. 48). For the following reasons, the motion is DENIED.

I. Introduction

The Court recently granted a request by Defendants Pension Value Plan for Employees of the Boeing Company ("the Plan"), Boeing Company, and McDonnell Douglas Corporation to dismiss this case with prejudice for failure to state a claim upon which relief can be granted. See Wheeler v. Pension Value Plan for Employees of Boeing Co., No. 06-cv-500-DRH, 2007 WL 781908 (S.D. Ill. Mar. 13, 2007). In that order the Court outlined the nature of the case and its procedural history, see id. at *1, and it is unnecessary to repeat that recitation here. Plaintiffs have moved for vacatur of the judgment entered on the Court's March 13 order, seeking reinstatement of their claim that the Plan is excessively backloaded, in violation of ERISA § 204(b)(1)(B), 29 U.S.C. § 1054(b)(1)(B). In the March 13 order the Court rejected Plaintiffs' argument that the Plan is backloaded by virtue of potential swings in the interest rate on 30-year Treasury securities used to compute the "Interest Credits" allocated annually to Plan participants' "Credit Based Accounts" under the Plan's "cash balance" design. See Wheeler, 2007 WL 781908, at **1-5. The documents submitted by Plaintiffs in support of their motion for relief from judgment show that, some months before the Court dismissed Plaintiffs' case, they had recognized that their theory of backloading is incorrect. See Doc. 48, Ex. A at 8-10, 31-33; Id., Ex. B at 128-29, 130. Plaintiffs now wish to proceed on a new theory of backloading that they devised while the question of dismissal of their original complaint was sub judice, namely, that the Plan is backloaded because participants' benefits are improperly calculated under 26 C.F.R. § 1.411(b)-1(a) and (b)(2). See Doc. 48, Ex. A at 8-10, 31-33; Id., Ex. B at 187-90. Plaintiffs' motion for relief from judgment has been fully briefed and is ripe for decision, and the Court now is prepared to rule.

II. Discussion

Plaintiffs' chief argument for relief from the Court's judgment in favor of Defendants is that the Court violated liberal federal pleading standards by expecting Plaintiffs, in response to Defendants' motion to dismiss their complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, to articulate a viable legal basis for the backloading claim asserted in the complaint. The Court does not agree. It is highly questionable whether the claim for backloading set out in Plaintiffs' complaint satisfied even Rule 8 of the Federal Rules of Civil Procedure, which requires, of course, only that a plaintiff 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 . . . be simple, concise, and direct." Fed. R. Civ. P. 8(a)(2), (e)(1). Liberal though the federal "notice pleading" standard is, it embraces nonetheless the concept of "notice," which is to say, it contemplates that a complaint will give both courts and defendants "fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). To this end, a plaintiff must plead "sufficient facts . . . to allow the district court to understand the gravamen of the plaintiff's complaint." Phelan v. City of Chicago, 347 F.3d 679, 682 (7th Cir. 2003). See also Board of Trs., Sheet Metal Workers' Nat'l Pension Fund v. Elite Erectors, Inc., 212 F.3d 1031, 1038 (7th Cir. 2000) (a complaint must at least "notif[y] the defendant of the claim's nature[.]"); McKay v. Town & Country Cadillac, Inc., 991 F. Supp. 966, 969 (N.D. Ill. 1997) (although a plaintiff may plead conclusions, the conclusions must provide the defendant with at least minimal notice of the claim). Accord ReSource N.E. of Long Island, Inc. v. Town of Babylon, 80 F. Supp. 2d 52, 57 (E.D.N.Y. 2000) ("[T]he purpose of Rule 8 is to ensure that the courts and adverse parties can understand a claim and frame a response to it[.]"); Harper v. United States, 423 F. Supp. 192, 196 (D.S.C. 1976) ("[I]t is axiomatic that defendants in an action under the Federal Rules of Civil Procedure are entitled to . . . fair notice of actual wrong, openly stated on the basis of facts asserted . . . . Neither the court nor defendants should be required to speculate as to the actions and injuries of which the plaintiff complains.").

In this instance the allegations of Plaintiffs' now-dismissed complaint consisted of bald legal conclusions that the Plan is backloaded in violation of ERISA, forcing both Defendants and the Court to speculate as to the gravamen of the claim. A complaint that merely recites the language of the statute under which an action is brought does not satisfy even the lenient federal notice pleading standard. "[T]he guiding principle in fair notice pleading is that sufficient ultimate facts must be alleged to enable the trial judge to determine whether, if the allegations are true, a claim has been stated upon which relief can be granted. Neither a judge nor this court can test a pleading which merely copies some of the words of the statute, violation of which is the alleged basis of the complaint." Crest Auto Supplies, Inc. v. Ero Mfg. Co., 360 F.2d 896, 902 (7th Cir. 1966). See also Higgs v. Carver, 286 F.3d 437, 439 (7th Cir. 2002)(noting that a complaint for retaliation in violation of the First Amendment that alleged only that a prisoner was retaliated against by prison officials for filing a lawsuit, but which failed to identify the suit or the acts claimed to have constituted retaliation, would be inadequate under federal notice pleading standards); Kyle v. Morton High Sch., 144 F.3d 448, 457 (7th Cir. 1998) (holding that a civil-rights complaint was inadequate where the plaintiff alleged merely that he was terminated by his employer, a public school district, for "political and advocacy reasons," but "fail[ed] to identify any activity on his part, even in the most general terms, that triggered his termination."). "[T]he price of entry, even to discovery, is for the plaintiff to allege a factual predicate concrete enough to warrant further proceedings, which may be costly and burdensome." DM Research, Inc. v. College of Am. Pathologists, 170 F.3d 53, 55 (1st Cir. 1999) (emphasis in original). Further, "[c]onclusory allegations in a complaint, if they stand alone, are a danger sign that the plaintiff is engaged in a fishing expedition." Id. As the Supreme Court of the United States recognized recently, these concerns apply especially cogently where, as here, a plaintiff seeks on the basis of a "wholly conclusory statement of [a] claim" to subject a defendant to the "inevitably costly and protracted discovery phase" of a class action. Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1968, 1966 (2007).

More importantly, even assuming that the allegations of backloading in Plaintiffs' complaint were adequate under Rule 8, the law of this Circuit is clear that, when a challenge to a complaint is properly raised under Rule 12(b)(6), a plaintiff in turn must articulate a legally sufficient basis for a claim or face dismissal of the claim. The United States Court of Appeals for the Seventh Circuit has instructed that, while it is the case that "a complaint should be dismissed for failure to state a claim only if it appears 'beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief,'" this famous pronouncement of the United States Supreme Court "has never been interpreted literally." Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984) (quoting Conley, 355 U.S. at 45-46). What this means for purposes of this case is that, "when presented with a motion to dismiss, the non-moving party must proffer some legal basis to support his cause of action," and a court is not under an obligation to "invent legal arguments for litigants" in order to stave off dismissal of a complaint for failure to state a claim for relief. Stransky v. Cummins Engine Co., 51 F.3d 1329, 1335 (7th Cir. 1995). See also Gilmore v. Southwestern Bell Mobile Sys., L.L.C., 224 F. Supp. 2d 1172, 1175 (N.D. Ill. 2002) ("[I]n the complaint itself, it is unnecessary to specifically identify the legal basis for a claim as long as the facts alleged would support relief . . . . However, in response to a motion to dismiss that raises the issue, a plaintiff must identify the legal basis for a claim and make adequate legal arguments in support of it."); Carpenter v. City of Northlake, 948 F. Supp. 759, 765 (N.D. Ill. 1996) ("It is not necessary to specifically identify the legal basis or legal characterization of the claim in the complaint . . . . However, in responding to a motion to dismiss or motion for summary judgment, the legal basis of the claim must be identified.").

As this Court explained not long ago, "Our system of justice is adversarial, and our judges are busy people. If they are given plausible reasons for dismissing a complaint, they are not going to do the plaintiff's research and try to discover whether there might be something to say against the defendants' reasoning. An unresponsive response [to a motion to dismiss] is no response." Williams v. Miller, No. 03-524-DRH, 2006 WL 240413, at *3 (S.D. Ill. Jan. 31, 2006) (quoting Kirksey v. R.J. Reynolds Tobacco Co., 168 F.3d 1039, 1041 (7th Cir. 1999)). "In effect the plaintiff [can be] defaulted for refusing to respond to the motion to dismiss. And rightly so." Id. Cf. Lekas v. Briley, 405 F.3d 602, 614-15 (7th Cir. 2005) (a plaintiff waived an argument by failing to raise it in response to a motion to dismiss); Walker v. National Recovery, Inc., 200 F.3d 500, 504 (7th Cir. 1999) (if a plaintiff who files a formally sufficient complaint does nothing to back it up after the defendant moves for dismissal, the district court may enter judgment on the pleadings under Rule 12(c) of the Federal Rules of Civil Procedure); Teumer v. General Motors Corp., 34 F.3d 542, 545-46 (7th Cir. 1994) ("[W]hat is fatal to [a] theory on appeal is [plaintiff's] failure to mention it to the district court when the time . . . come[s] in the proceedings below to present legal arguments linking the claims described in the complaint to the relevant statutory (or other) sources for relief."). Accord Levin v. Childers, 101 F.3d 44, 47 (6th Cir. 1996) ("A plaintiff will be found to have waived a particular legal theory if he . . . fail[s] to mention it . . . . when he should have done" in opposition to a motion to dismiss).

Defendants never filed an answer in this case, but Plaintiffs' right under Rule 15 of the Federal Rules of Civil Procedure to file an amended complaint as a matter of course before the filing of a responsive pleading was terminated when the Court entered judgment for Defendants. See Fed. R. Civ. P. 15(a) ("A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served[.]"); Paganis v. Blonstein, 3 F.3d 1067, 1072-73 (7th Cir. 1993) ("The right under Rule 15(a) to amend 'once as a matter of course' is lost after the entry of judgment."). "In this circuit, after a judgment has been entered, a party must have the judgment reopened pursuant to Federal Rule of Civil Procedure 59(e) or 60(b) and then request leave to amend pursuant to Rule 15(a)." Amendola v. Bayer, 907 F.2d 760, 765 n.4 (7th Cir. 1990). Plaintiffs' motion for relief from judgment was brought within ten days after the Court's entry of judgment for Defendants and therefore is deemed to be brought pursuant to Rule 59 of the Federal Rules of Civil Procedure. See United States v. Deutsch, 981 F.2d 299, 301-02 (7th Cir. 1992); Disher v. Citigroup Global Mkts., Inc., 486 F. Supp. 2d 790, 795 (S.D. Ill. 2007); Koelling v. Livesay, 239 F.R.D. 517, 520 (S.D. Ill. 2006). Rule 59 permits a party to file, within ten days of the entry of a judgment, a motion to alter or amend the judgment. See Fed. R. Civ. P. 59(e). Motions under Rule 59(e) serve the limited function of allowing a court to correct manifest errors of law or fact or to consider newly discovered material evidence. See Caisse Nationale de Credit Agricole v. CBI Indus., Inc., 90 F.3d 1264, 1269 (7th Cir. 1996); Russell v. Delco Remy Div. of General Motors Corp., 51 F.3d 746, 749 (7th Cir. 1995); FDIC v. Meyer, 781 F.2d 1260, 1268 (7th Cir. 1986). Whether to grant or deny a Rule 59(e) motion "is entrusted to the sound judgment of the district court." In re Prince, 85 F.3d 314, 324 (7th Cir. 1996) (citing LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th Cir. 1995)). See also Andrews v. E.I. Du Pont De Nemours & Co., 447 F.3d 510, 515 (7th Cir. 2006) (the court of appeals reviews a denial of a Rule 59(e) motion for an abuse of discretion); Bordelon v. Chicago Sch. Reform Bd. of Trs., 233 F.3d 524, 529 (7th Cir. 2000) (same).

In this case it would be an appropriate and fair exercise of the Court's discretion to deny Plaintiffs' Rule 59 motion simply on the grounds of Plaintiffs' unjustified failure to present their latest theory of the Plan's allegedly unlawful backloading to the Court while Defendants' motion to dismiss Plaintiffs' complaint was sub judice. See County of McHenry v. Insurance Co. of the West, 438 F.3d 813, 819 (7th Cir. 2006) (a district court did not abuse its discretion by denying Rule 59 relief to a plaintiff on the basis of a legal argument that should have been raised in opposition to a motion to dismiss). This is because "Rule 59 does not give a party the opportunity to undo its own procedural failures or present new evidence or arguments 'that could and should have been presented to the district court prior to the judgment.'" Brown v. Alter Barge Line, Inc., 461 F. Supp. 2d 781, 784 (S.D. Ill. 2006) (quoting Moro v. Shell Oil Co., 91 F.3d 872, 876 (7th Cir. 1996)). See also Wilson v. Cahokia Sch. Dist. # 187, 470 F. Supp. 2d 897, 914 (S.D. Ill. 2007) (quoting Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir. 1995)) ("It is not the purpose of allowing motions for reconsideration to enable a party to complete presenting his case after the court has ruled against him. Were such a procedure to be countenanced, some lawsuits really might never end, rather than just seeming endless."). Nevertheless, in the interest of ensuring thorough appellate review of the legal sufficiency of Plaintiffs' theories of recovery in this case, the Court will proceed to evaluate whether Plaintiffs have satisfied the standard governing a grant of leave to file an amended complaint under Rule 15(a).

In this Circuit, as discussed, a plaintiff seeking to amend a complaint after judgment has been entered against him or her must first have the judgment reopened pursuant to Rule 59(e) or Rule 60(b) of the Federal Rules of Civil Procedure, then request leave to amend pursuant to Rule 15(a). The decision to grant or deny amendment is committed, of course, to a court's discretion. See Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1192 (7th Cir. 1990); United States Labor Party v. Oremus, 619 F.2d 683, 692 (7th Cir. 1980). Importantly, "the presumption in favor of liberality in granting motions to amend [under Rule 15(a)] is reversed after judgment has been entered." First Nat'l Bank of Louisville v. Continental Ill. Nat'l Bank & Trust Co. of Chicago, 933 F.2d 466, 468 (7th Cir. 1991). See also Twohy v. First Nat'l Bank of Chicago, 758 F.2d 1185, 1196 (7th Cir. 1985) (stating that "justice may require something less in post-judgment situations than in pre-judgment situations under Rule 15(a)[.]"). A post-judgment request for leave to amend a complaint can be denied for any of the ordinary reasons leave to amend may be denied, including undue delay, bad faith, prejudice to the opponent, dilatory motive on the moving party's part, or when amendment would be futile. See Crestview Vill. Apartments v. HUD, 383 F.3d 552, 558 (7th Cir. 2004) (post-judgment leave to amend may be denied where the proposed amendment would be futile); Rodriguez v. United States, 286 F.3d 972, 980 (7th Cir. 2002) (citing Bethany Pharmacal Co. v. QVC, Inc., 241 F.3d 854, 860-61 (7th Cir. 2001)) ("Under Rule 15, a court may deny [post-judgment] amendment due to undue delay, bad faith, dilatory motive, prejudice or futility.").

Although "in prejudgment amendment cases . . . delay alone is not reason enough to deny leave to amend," in the post-judgment context "[d]elay in presenting a post-judgment amendment when the moving party had an opportunity to present the amendment earlier is a valid reason for a district court not to permit an amendment." Giger v. Mobil Oil Corp., 823 F.2d 181, 184 (7th Cir. 1987) (quoting Twohy, 758 F.2d at 1196). See also Diersen v. Chicago Car Exch., 110 F.3d 481, 489 (7th Cir. 1997) (quoting Amendola, 907 F.2d at 764) (the trial court did not abuse its discretion in denying post-judgment leave to amend where "the amendments proposed by [the plaintiff] after the judgment was entered could and should have been suggested by him much earlier in the litigation," so that, had amendment been allowed, "the litigation would have been prolonged and the 'public interest in prompt resolution of legal disputes' impaired.") (emphasis omitted). Further, post-judgment leave to amend a complaint may be denied on the basis of undue delay even in the absence of prejudice to a defendant. See Figgie Int'l Inc. v. Miller, 966 F.2d 1178, 1181 (7th Cir. 1992). In this case Plaintiffs have offered no legitimate explanation for their failure to present their current theory of backloading to the Court before the dismissal of their complaint, and the Court holds therefore that amendment is barred by undue delay.

The Court holds further that Plaintiffs' proposed amendment of their backloading claim is futile. In general, leave to amend should be denied as futile "if the proposed amendment fails to cure the deficiencies in the original pleading, or could not survive a second motion to dismiss," so that granting leave to amend "would impose upon the defendants and the courts the arduous task of responding to an obviously futile gesture on the part of the plaintiffs." Perkins v. Silverstein, 939 F.2d 463, 472 (7th Cir. 1991) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). See also Bower v. Jones, 978 F.2d 1004, 1008 (7th Cir. 1992) ("[A]n amendment may be futile when it fails to state a valid theory of liability . . . or could not withstand a motion to dismiss."); Williams v. United States Postal Serv., 873 F.2d 1069, 1072 (7th Cir. 1989) ( "When an amendment will not cure the legal deficiencies of the original complaint, the district court does not abuse its discretion by refusing to grant leave to amend."). The Court finds that Plaintiffs' latest theory of alleged unlawful backloading of benefits under the Plan could not withstand challenge under Rule 12(b)(6).

As was discussed in the Court's March 13 order, the Plan is a "defined benefit plan" within the meaning of ERISA § 3(35), 29 U.S.C. § 1002(35), which means that it is required to comply with certain statutory prohibitions regarding excessive backloading of Plan benefits. See Wheeler, 2007 WL 781908, at *2. As was discussed also in the March 13 order, backloading, for ERISA purposes, is "a term of art describing a plan's use of a benefit accrual formula that postpones the bulk of an employee's accrual to [the employee's] later years of service." In re Citigroup Pension Plan ERISA Litig., 470 F. Supp. 2d 323, 333 (S.D.N.Y. 2006). In general, "ERISA's antibackloading provisions . . . prohibit defined benefit plans from establishing minimum accrual rates that cause a participant's benefits to accrue very slowly until the participant is near retirement age," Donaldson v. Pharmacia Pension Plan, 435 F. Supp. 2d 853, 858 (S.D. Ill. 2006), with "retirement age" in this instance being age 65 under both ERISA and the Plan. See Wheeler, 2007 WL 781908, at *2 (citing 29 U.S.C. § 1002(24)).

To prevent excessive backloading of plan benefits, ERISA § 204, 29 U.S.C. § 1054, provides that a participant's rate of benefit accrual under a defined benefit plan must satisfy certain minimum accrual rates:

(b)(1)(A) A defined benefit plan satisfies the requirements of this paragraph if the accrued benefit to which each participant is entitled upon his separation from the service is not less than -- (i) 3 percent of the normal retirement benefit to which he would be entitled at the normal retirement age if he commenced participation at the earliest possible entry age under the plan and served continuously until the earlier of age 65 or the normal retirement age specified under the plan, multiplied by (ii) the number of years (not in excess of 33 1/3) of his participation in the plan. In the case of a plan providing retirement benefits based on compensation during any period, the normal retirement benefit to which a participant would be entitled shall be ...

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