United States District Court, N.D. Illinois, Eastern Division
FRANCIS T. FOSTER, Plaintiff,
JOSEPH COSTELLO, individually, and PRINCIPAL LIFE INSURANCE COMPANY, Defendants.
MEMORANDUM OPINION AND ORDER
REBECCA R. PALLMEYER, District Judge.
Until February 2011, Plaintiff Francis Foster worked as an attorney on issues concerning certain pension and 401(k) plans available to mass transit workers. Though Foster alleges that he "represented [certain] jointly administered plans, " the court notes that a plan is not an entity subject to representation, and understands Foster to mean that he represented the committees who sponsored the plans, and was responsible to ensure that the plans met legal requirements. After he provided legal advice that was apparently unwelcome, Foster was removed from his position by officials of the Pace Suburban Bus Division ("Pace") of the Regional Transportation Authority ("RTA"). Plaintiff then sued Pace, ultimately settling his claims against Pace in October 2012. See Foster v. Pace Suburban Bus Div. of the Reg'l Transp. Auth. , No. 11-cv-9307 (N.D. Ill.) (dismissed Oct. 25, 2012) ("Pace Litigation").
Foster then filed this lawsuit against Defendants Joseph Costello, Executive Director of the Regional Transportation Authority ("RTA"), and Principal Life Insurance Company ("Principal"), the entity that paid Foster's salary. In his amended complaint, Foster asserts that Costello and Principal are also liable for his removal-Costello, under 42 U.S.C. § 1983 and the Illinois Whistleblower Act, for failing to reinstate Foster; and Principal, for refusing to continue paying Foster's salary. Costello and Principal both separately moved to dismiss the complaint. Costello argues that Foster lacks standing, that his allegations are insufficient to state a claim, that the claims are untimely, and that Costello has qualified immunity from any personal liability. Principal also challenges Foster's standing to sue, and contends that Foster fails to state a claim for tortious interference with prospective business relationship. In addition to his motion to dismiss, Costello seeks Rule 11 sanctions against Foster and his attorney for filing a frivolous complaint. For the reasons discussed below, Costello and Principal's motions to dismiss [26, 29] are granted, and Costello's motion for Rule 11 sanctions  is entered and continued.
The following facts are set forth in the Amended Complaint and attached exhibits, and are presented in a light most favorable to Plaintiff.
I. Factual Background
According to his allegations, Plaintiff Foster has, since the 1980s, "represented seven jointly administered pension and 401(k) plans" ("the Plans") under collective bargaining agreements between the unions and RTA and/or Pace. (Am. Compl.  ¶ 1.) Pace is a municipal corporation and a division of RTA, another municipal corporation that manages the transit systems throughout Chicago and its surrounding areas. ( Id. ¶ 15.) Six of the Plans provide benefits for Pace employees ("Pace Plans"), and the seventh is a 401(k) plan for RTA employees ("RTA Plan"). ( Id. ¶ 1.) The Plans are considered "private trusts" for the benefit of Pace or RTA employees. ( Id. ¶ 2.) Each plan is governed by a committee, composed of representatives from the union and from RTA or Pace management. ( Id. ) The Plan Committees were responsible for retaining an attorney ( id. ), and in 2003, adopted a resolution to retain Foster on a contractual basis. ( Id. ¶ 18.) The Pace Plan Committees instructed Principal, as acting trustee for the Pace plans,  to pay Foster a fixed monthly rate from the Pace Plans' jointly administered trust fund. ( Id. )
On January 6, 2011, Plaintiff wrote a memorandum addressed to Pace and the Pace Board of Directors, warning the Board that Pace was in violation of the Illinois Pension Code, 40 ILCS 5/22-103(c), which requires the RTA and/or Pace to make a contribution to the Plans whenever the funding ratio to an "affected" plan, defined in Section 103(a), falls below ninety percent. Foster explained that, in order to comply with the Illinois Pension Code, Pace was required to make two payments into the Pace West Division Pension Plan for the years 2009 and 2010 of $181, 360 and $235, 190 plus interest, respectively. (Am. Compl. ¶¶ 3, 21; Letter from Foster to Pace Bd. of Dirs. & Pace of 1/6/11, Ex. C to Am. Compl., hereinafter "Jan. 6 Memo.")
Foster alleges that Pace resisted this advice. In a letter dated January 13, 2011, Pace General Counsel Thomas Ciecko questioned Foster's calculations, and challenged Foster's authority to send the January 6 Memo on behalf of the Plan Committees. (Letter from Ciecko to Foster of 1/13/11, Ex. B to Am. Compl.) Ciecko also asserted that Foster's demand interfered with the collective bargaining agreement between the union and Pace. ( Id. at 1-2.) Ciecko suggested, further, that Foster's January 6 Memo constituted a violation of several Illinois Supreme Court Rules of Professional Conduct. ( Id. at 2.) Finally, Ciecko announced his belief that Foster's "ability to function as the attorney for the Plan has been irrevocably compromised." ( Id. ) Ciecko sent another brief letter to Foster on January 28, 2011, requesting copies of "any Contracts, Letters of Engagement, or the like by which your [ sic ] represent Pace, or any pension plan on [ sic ] 401(k) plan for any of its divisions." (Letter from Ciecko to Foster of 1/28/11, Ex. B to Am. Compl.)
Plaintiff alleges that the Pace Board of Directors did eventually authorize the pension contribution he had advised, but nevertheless remained "very displeased" with him. (Am. Compl. ¶ 22.) In a letter dated February 24, 2011, Joseph Ellyin, a Pace employee, informed Foster that his representation of "any" Pace Plan was terminated effective February 28, 2011. (Letter from Ellyin to Foster of 2/24/11, Ex. D to Am. Compl.) Ellyin echoed Ciecko's January 28 request for copies of "any Contract, Letters of Engagement on similar agreements by which you purport to represent those plans or committees." ( Id. ) Though Ellyin's letter expressly terminated Foster's representation, Foster characterizes this letter as an "attempt" on the part of "Pace and a number of its employees... to terminate [his] representation on [ sic ] the Plans." (Am. Compl. ¶ 22). Foster asserts that he could not be lawfully terminated "without the participation and support of the union member(s) of the Pace Plans." ( Id. )
In a letter to Ellyin, Plaintiff responded: "I intend to continue my representation as always unless and until I am relieved by proper authority." (Letter from Foster to Ellyin of 3/7/11, Ex. E to Am. Compl.) Foster asserted that he could not be unilaterally terminated because such an action must come from a vote of each Plan's governing committee, including its union members. (Am. Compl. ¶ 23; Letter from Foster to Ellyin of 3/7/11.) He also asserted that the attempted termination was a retaliatory action prohibited under the "RTA Whistleblower Policy." ( Id. ) In response to the request for copies of his agreements with Pace and other pension plans, Foster directed Ellyin to his contract with the RTA Plan, and pointed out that the "Pace purchasing department" had a copy of it. (Letter from Foster to Ellyin of 3/7/11.)
Pace General Counsel Ciecko replied, stating that "notice is given" that "Mullen and Foster['s]" contract to provide legal services for the RTA Plan "is terminated, effective upon [Plaintiff's] receipt of this notice, " and that the only relevant contract that Pace appears to have had on record between Mullen & Foster and Pace, dated May 30, 2007, had expired on May 31, 2010. (Letter from Ciecko to Foster of 3/17/11, Ex. F to Am. Compl, at 1.) As Foster had failed to produce any documents evidencing his continued representation of the Pace Plans, Ciecko continued, Foster was "not employed by Pace or any plan." ( Id. ) Plaintiff responded on April 6, 2011, contesting Ciecko's (and presumably Pace's) ability to terminate Plaintiff's representation of the Pace Plans and the RTA Plan, and stating that Plaintiff would file a "formal complaint to report the above violations of the Whistleblower Act, Illinois Pension Code, Internal Revenue Code, and Regional Transportation Act." (Letter from Foster to Ciecko of 4/6/11, Ex. B to Am. Compl.) The letter also includes a "distribution list" of people to whom Plaintiff sent a copy of the letter, including Joseph Costello in his capacity as the RTA's representative on the RTA Plan Committee. ( Id. )
Following this exchange, that same day, Plaintiff wrote to RTA's General Counsel Clinton McHugh to file a formal complaint under the RTA Whistleblower Policy. Plaintiff's letter asserted that Pace had retaliated against him by attempting to fire him for reporting that it was in violation of (1) the Illinois Pension Code, (2) the Illinois Whistleblower Act ("IWA"), (3) the Internal Revenue Code "governing qualified plans, " and (4) Section 2.18 of the Regional Transportation Act, 70 ILCS 3615/2.18 (requiring the RTA to "deal with and enter into written contracts with [RTA] employees" through union representatives on matters including retirement benefits). (Am. Compl. ¶¶ 6, 26; Letter from Foster to McHugh of 4/6/11, Ex. B to Am. Compl.) Foster also repeated, this time to McHugh, that Pace was in violation of the Illinois Pension Code (Letter from Foster to McHugh of 4/6/11)-a statement that, according to Foster, should have put McHugh on notice that RTA was in violation of the RTA Act, 70 ILCS 3615/4.02b (requiring RTA to "continually review the payment" of employer contributions, and to make contributions on behalf of a division if it is more than one month overdue). (Am. Compl. ¶¶ 27-28.) In his amended complaint, Foster alleges that RTA Executive Director, Defendant Costello, "retaliated" against Foster for reporting these alleged violations by "refus[ing] to act in good faith on Foster's disclosures" and "by authorizing, abetting, assisting, ordering, directing, encouraging, suggesting or inducing the RTA 401(k) Plan Committee to terminate Foster's representation, " and "cover[ing] up" the alleged violations. ( Id. ¶¶ 8, 29-31.)
Pace also "unilaterally and wrongfully issued instructions to Principal" to stop making monthly fee payments to Foster for any work performed for the Pace Plans on or after March 1, 2011. (Am. Compl. ¶ 25.) Foster alleges that, as trustee for the Pace Plans, Principal has a fiduciary duty "to follow the plan documents" and "to follow the instructions of the plan committee." ( Id. ¶¶ 32-33.) Darrell Washington, a Principal employee, stopped paying Foster his fees at the direction of individual(s) at Pace whom he refused to identify. ( Id. at ¶¶ 35-36.) On May 4, 2011, Foster warned Washington that Pace's actions were retaliatory, that only the Pace Plan Committees could stop payments to Foster, and therefore, that "Pace's instructions were unauthorized and null and void." ( Id. at ¶¶ 36-37.) Washington responded that he would follow instructions from Pace alone, not from the Pace Plan Committees. ( Id. at ¶ 37.) Principal maintained this decision even after June 23, 2011, when Foster produced signed statements from the union representatives on the Pace Plan committees confirming that they did not authorize the decision to stop payments to Foster. ( Id. at ¶ 38.)
II. Procedural Background
Plaintiff Foster sued Pace and various Pace employees on December 30, 2011 in the Northern District of Illinois. In that case, assigned to Judge Aspen of this court, Foster alleged claims arising from facts similar to those presented here, including: a § 1983 claim for retaliation in violation of the First Amendment (Count I), a claim under the IWA (Count IV), and a claim for intentional interference with prospective economic advantage (Count V). (Compl. in Foster v. Pace Suburban Bus Div. of the Reg'l Transp. Auth. , No. 11-cv-9307 , hereinafter "Foster v. Pace Compl.") The ...