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Board of Trustees of the Health ) and Welfare Department of the v. Kory L. Kruzan ) and ) Braden Olson Draper

December 8, 2011

BOARD OF TRUSTEES OF THE HEALTH ) AND WELFARE DEPARTMENT OF THE CONSTRUCTION AND GENERAL ) LABORERS' DISTRICT COUNSEL OF ) CHICAGO AND VICINITY, PLAINTIFF,
v.
KORY L. KRUZAN ) AND ) BRADEN OLSON DRAPER, LLP, DEFENDANTS.



The opinion of the court was delivered by: Honorable Marvin E. Aspen U.S. District Court Judge

MEMORANDUM OPINION & ORDER

Board of Trustees of the Health and Welfare Department of the Construction and General Laborers' District Council of Chicago and Vicinity ("Board of Trustees") filed an action under § 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(3),against Kory Kruzan ("Kruzan") and Braden Olson Draper, LLP ("BOD"). Both Defendants filed motions to dismiss for lack of venue; BOD filed a motion to dismiss for lack of personal jurisdiction; and Kruzan filed an alternative motion to transfer pursuant to 28 U.S.C. § 1404. Each motion is discussed below. For the following reasons, we transfer the case to the Eastern District of Wisconsin.

I. BACKGROUND

Board of Trustees is a fiduciary of the Chicago Laborers' Welfare Fund Plan ("Plan"), a multiemployer, self-funded employee welfare benefits plan within the meaning of ERISA, 29 U.S.C. § 1002(1). (Compl. ¶ 6.) Board of Trustees consists of trustees that represent employers and unions, located in Chicago, Northwest Indiana, and Southeast Wisconsin, that have entered into collective bargaining agreements related to the Chicago Laborers' Welfare Fund. (Resp. to Kruzan at 2.) Kruzan worked as a union employee for Fabcon, Inc. in Franklin, Wisconsin. (Id.) At all relevant times, he was a resident of Wisconsin and a Plan participant covered by the Plan. (Compl. ¶ 8.) BOD is an law firm registered as a Wisconsin Limited Liability Partnership that represented Kruzan in his recovery for personal injuries related to his employment. (Id. ¶ 9.)

On September 6, 2006, Kruzan sustained injuries in the scope of his employment. The Plan subsequently paid $153,249.50 in medical expenses and income replacement benefits to or on behalf of Kruzan. (Id. ¶ 14.) In addition, Kruzan, represented by his attorney at BOD, pursued a personal injury claim against the State of Wisconsin-Department of Workforce Development ("DWD"). (Id. ¶ 13.) Board of Trustees alleges that Kruzan and his attorney reached a compromise agreement on this claim in the amount to $100,000.00. (Id. ¶ 16.) It further alleges that, under subrogation and reimbursement provisions in the Plan, Kruzan was obligated to use the settlement funds to reimburse the Plan for all benefit payments made on behalf of Kruzan, and Kruzan derogated the terms of the Plan by failing to make such payments. (Id. ¶¶ 19, 21.) Finally, Board of Trustees asserts that both Kruzan and BOD are in possession or constructive possession of the $100,000 settlement that rightfully belongs to the Plan. Accordingly, Board of Trustees has filed this action against both defendants seeking appropriate equitable relief pursuant to § 502(a)(3), 29 U.S.C. § 1332(a)(3).

II. DISCUSSION

Defendant BOD moves to dismiss the complaint for lack of personal jurisdiction and for improper venue.*fn1 While courts generally address personal jurisdiction before addressing venue, "personal jurisdiction is not fundamentally preliminary in the same way that subject matter jurisdiction is, [therefore] a court may consider venue first, before it considers the issue of personal jurisdiction, when there are sound reasons for doing so." Leon C. Baker, P.C. v. Bennett, 942 F. Supp. 171, (S.D.N.Y. 1996) (citing Leroy v. Great Western United Corp., 443 U.S. 173, 180 (1979) ("[W]hen there is a sound prudential justification for doing so . . . a court may reverse the normal order of considering personal jurisdiction and venue.")). In this case we find that venue is proper in the Northern District of Illinois, but that the convenience of parties and witnesses dictates that we transfer the case to the Eastern District of Wisconsin. As Wisconsin clearly has personal jurisdiction over both defendants,*fn2 we choose to address venue first to avoid deciding a disputed issue of personal jurisdiction that will have no bearing on the outcome.

A. Venue is proper in the Northern District of Illinois

Board of Trustees brings the claim pursuant to ERISA, which includes a liberal venue provision:

Where an action under this subchapter is brought in a district court of the United States, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.

29 U.S.C. § 1132(e)(2). Defendants argue that because BOD is not in privity with the Plan and is not a Third Party as defined by ERISA or the Plan, BOD is not subject to ERISA, and thus § 1132(e)(2) cannot be used to find venue. While true that BOD is not in privity with the Plan, BOD's conclusion is inaccurate.

The present action is properly brought under § 1132(a)(3) of ERISA, which authorizes civil action by a participant, beneficiary, or fiduciary:

(A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan[.]

29 U.S.C. § 1132(a)(3). While this statute limits the parties who may bring suit, it "admits of no limit (aside from the 'appropriate equitable relief' caveat . . . ) on the universe of possible defendants." Harris Trust and Savings Bank v. Salomon Smith Barney, Inc., 530 U.S. 238, 246, 120 S. Ct. 2180, 2187 (2000). "Indeed, § 502(a)(3) makes no mention at all of which parties may be proper defendants-the focus, instead, is on redressing the 'act or practice which violates any provision of [ERISA Title I].'" Id. (emphasis and alteration in original). The Supreme Court specifically rejected the Seventh Circuit's conclusion that, "absent a substantive provision of ERISA expressly imposing a duty upon a nonfiduciary party in interest, the nonfiduciary party may not be held liable under § 502(a)(3), one of ERISA's remedial provisions." Id. at 245. At a later time, BOD may seek to argue that it is not liable under ERISA because it is not in privity with the Plan. At the current ...


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