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Robert Grayson et al. v. Pacesetter Capital Group

May 18, 2011


Name of Assigned Judge Sitting Judge if Other or Magistrate Judge John A. Nordberg than Assigned Judge


Defendant Village of Alsip's motion to dismiss [61] is granted.

O[ For further details see text below.] Docketing to mail notices.


Plaintiffs allege that four employees working for the Burr Oak Cemetery ("BOC") in Alsip, Illinois, engaged in a scheme in which they dug up over 300 graves and moved bodies to different locations, in order to re-sell the plots for a profit. (First Am. Cmplt. ¶ 1.) The scheme was revealed on July 9, 2009, and had been going on for some time. (Id. ¶¶ 1, 3.) Plaintiffs have family members who are buried in the cemetery and whose graves have been disturbed. Plaintiffs seek to represent a class of similarly situated individuals. Jurisdiction is based on the Class Action Fairness Act because there is minimal diversity and the damages sought are over $5 million.

Plaintiffs have not named the four BOC employees as defendants. Instead they have sued the owners of BOC, which are a series of corporations based in Texas and Arizona, and BOC's CEO and CFO (collectively, the "BOC defendants"). Plaintiffs have also named the Village of Alsip ("Alsip") as a defendant. After this lawsuit began, the BOC defendants filed for bankruptcy in the Northern District of Illinois. The proceeding is still pending according to the parties. At several subsequent status hearings, the parties were uncertain about whether this case could go forward while the bankruptcy was proceeding. Ultimately, plaintiffs decided to file an amended complaint in which they have eliminated all counts except for two against defendant Alsip. But plaintiffs' apparent intent is to assert those claims later, as they leave the BOC defendants in the caption and state in the body of the complaint that no relief is currently being sought against those defendants because of the automatic stay.

The two claims against Alsip are Illinois common law claims, one for aiding and abetting and one for civil conspiracy. The aiding and abetting claim asserts that Alsip knew about the scheme and thereby "substantially assisted BOC and its employees in committing the tortious conduct." (¶ 32.) The conspiracy claim alleges that Alsip "impliedly agreed" at a March 21, 2005 meeting "to participate in the unlawful act of digging up burial plots of interred bodies in order to re-sell them for a profit." (¶ 35.)

Now before the Court is Alsip's motion to dismiss these two counts. Alsip relies on both the Illinois common law public duty rule and the Illinois Tort Immunity Act, 745 ILCS 10/4-102, and argues that the complaint must be dismissed because plaintiffs are merely seeking to hold Alsip liable for failing to prevent, detect, or investigate possible crimes. Plaintiffs recognize that if they can only show Alsip failed to investigate or detect the scheme, they cannot prevail. Instead, for both counts now at issue, plaintiffs must meet a higher burden of showing Alsip's "knowledgeable participation" in the fraudulent scheme. (Pls. Resp. at 7.) Alsip argues that the facts alleged fail to show it knew of the scheme.

Before addressing this argument, we must first briefly consider Alsip's jurisdictional argument, which is a two-paragraph argument inserted at the end of Alsip's opening brief. Alsip argues that jurisdiction under the Class Action Fairness Act ("CAFA") no longer exists because the amended complaint no longer seeks relief against the BOC defendants, thus allegedly destroying diversity because the named plaintiffs live in Illinois and Alsip is located in Cook County. Alsip seems to agree that CAFA jurisdiction was present initially when the original complaint was filed because at least some of the BOC corporations have their principal place of business in Texas. No one disputes that the amount in controversy exceeds the $5 million threshold.

In their response to this argument, which is also a two paragraph argument tucked at the end of their brief, plaintiffs raise three points. First, they assert it is reasonable to assume that some class members live outside of Illinois. Second, the "object of this class action remains the acts entered into by all eight original defendants." (Resp. at 9.) Third, since jurisdiction existed when the lawsuit was filed, it still exists under the Seventh Circuit's "once jurisdiction, always jurisdiction" principle under which CAFA jurisdiction is not lost by developments after suit is filed. (Id. at 10, citing Cunningham Charter Corp. v. Learjet, Inc., 592 F.3d 805, 806 (7th Cir. 2010).)

We find plaintiffs' arguments persuasive. Plaintiffs apparently are still pursuing claims against the BOC defendants, and their assertion that some class members likely live outside of Illinois is not really contested by Alsip in its reply brief. At a minimum, this issue would require further discovery. Based on these points and given the brief treatment of the issue by the parties, we are not persuaded by Alsip's argument that jurisdiction has been lost.

We therefore turn to the main issue. Does the amended complaint contain enough specific facts to survive a Rule 12(b)(6) motion to dismiss? The question hinges, as both parties agree, on how we apply the new Rule 12(b)(6) "plausibility" standard set forth by the Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009). The Court held that the "mere possibility of misconduct" is not enough to survive a motion to dismiss. Iqbal, 129 S.Ct. at 1950. A plaintiff instead must plead facts showing the claim is plausible, although it need not be probable. Id. at 1949. As the Seventh Circuit recently observed, where the Twombly line is drawn is "not an easy question to answer" and courts have struggled with it. Swanson v. Citibank, 614 F.3d 400, 403 (7th Cir. 2010). Moreover, as the Supreme Court stated in Iqbal, the plausibility question is a "context-specific task" requiring a court "to draw on its judicial experience and common sense." 129 S.Ct. at 1950.

In reviewing these two Supreme Court cases, we find Twombly provides the best analytical framework as well as the closer factual parallel to this case. Twombly involved a class action antitrust claim arising out of the breakup of AT&T. Plaintiffs' case rested on an initial factual premise, which was the absence of meaningful competition among the regional Baby Bells created after the AT&T breakup. This fact posed an implicit question -- why no competition? Plaintiffs answered the question by suggesting the absence was due to a conspiratorial agreement not to compete. 550 U.S. at 551. But a competing explanation existed. The competitors could have independently come to the same self-interested business conclusion. The alternative explanation was one recognized by both courts and antitrust commentators who agreed that "mere interdependent parallelism" is normally not enough to establish a conspiratorial agreement. Id. at 553-54. As the Court summarized: "[t]he inadequacy of showing parallel conduct or interdependence, without more, mirrors the ambiguity of the behavior; consistent with conspiracy, but just as much in line with a wide swath of rational and competitive business strategy unilaterally prompted by common perceptions of the market." Id. at 554. This choice between the two explanations was alliteratively described by the lower court in Twombly as one between "collusion" and "coincidence." Id. at 553. Given the two possible explanations, one legal and one not, the Court held that a plaintiff seeking to survive a Rule 12(b)(6) motion to dismiss must plead enough facts to show "plausible grounds to infer an agreement." Id. at 556. A mere possibility is not enough because "there is no reason to infer that the companies had agreed among themselves to do what was only natural anyway." Id. at 566. One rationale underlying this conclusion was the practical concern about far-reaching discovery covering an extremely large class over a 7-year period and also the possible in terrorem effect on settlement. Id. at 557-58.

Although not an antitrust case, this case involves a similar analytical framework. Like Twombly, it begins with a factual premise The premise, taken as true by both sides for purposes of this motion, is that four BOC employees engaged in a widespread scheme (moving over 300 bodies) over a wide time period (going back perhaps before 2000). This fact in turn raises a natural question with regard to defendant Alsip: why did ...

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