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Reschke v. Pactiv, LLC

United States District Court, N.D. Illinois, Eastern Division

July 20, 2015

ROBERT RESCHKE, Plaintiff,
v.
PACTIV, LLC, Defendant.

MEMORANDUM OPINION AND ORDER

MARVIN E. ASPEN, District Judge:

On June 19, 2014, Plaintiff Robert Reschke filed a five-count complaint against his former employer, Defendant Pactiv, LLC. Defendant filed a partial motion to dismiss, which we granted on December 12, 2014. (Dkt. No. 22.) At that time, we dismissed Plaintiff’s fraudulent misrepresentation claim (Count IV) without prejudice. Plaintiff then filed an amended Count IV on January 28, 2015. Presently before us is Defendant’s motion to dismiss the amended Count IV, pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). (Dkt. No. 27.)

For the reasons stated below, we deny Defendant’s motion. We also order Plaintiff to file an amended complaint on or by August 31, 2015, synthesizing the original complaint and the amended Count IV, without making any further substantive changes.

BACKGROUND

In 1992, Plaintiff began working as a Finishing Manager for Dopaco, Inc., and was promoted to Plant Manager in 1998. (Am. Count IV ¶ 9 (Dkt. No. 23).) In July 2000, Plaintiff entered into an “Employment Stay Bonus and Severance Agreement” (the “Dopaco Agreement”) with Dopaco. (Id. ¶ 11 & Ex. C.) The Dopaco Agreement as amended provides that in the event of a “Change of Control” or of Plaintiff’s termination either for “Good Reason” or “Without Cause, ” Plaintiff could receive severance pay equal to 100% of his “Two Year Average Compensation, ” plus benefits. (Id. ¶ 14.)

Defendant acquired Dopaco on May 20, 2011, through a stock purchase agreement. (Id. ¶ 12.) Plaintiff alleges that the acquisition bound Defendant to the Dopaco Agreement. (Id. ¶ 13.) In April 2012, Defendant changed the bonus structure that had entitled Plaintiff to a bonus for the prior fifteen years. (Id. ¶¶ 16–18.) Plaintiff alleges that because this change resulted in a permanent reduction of his compensation, he elected to exercise his severance option under the Dopaco Agreement on June 23, 2013.[1] (Id. ¶ 19 & Ex. D.) Plaintiff claims that Defendant then used the exercise of his option to “terminate his employment, and to impose a departure date.” (Id. ¶ 21.)

In his amended Count IV, Plaintiff claims that Defendant-through its agent Brian Bronson, Plaintiff’s immediate supervisor-made fraudulent misrepresentations in an email to Plaintiff on June 27, 2013. (Id. ¶ 21.) Plaintiff alleges that in this email, sent after Plaintiff elected severance, Bronson proposed a last day of August 31, 2013 for Plaintiff with the intention of terminating his employment. According to Plaintiff, Bronson thus indicated that Defendant accepted Plaintiff’s request for severance, while he also stated that Defendant needed to evaluate that request. (Id. ¶ 21 & Ex. E.) On July 18, 2014, Defendant’s in-house counsel, Steven Karl, sent an email to Plaintiff indicating that Defendant would take a few weeks to undertake a legal review to determine whether Defendant assumed the contract with Dopaco. (Id. ¶ 23 & Ex. F.) In that email, Karl explicitly stated that Plaintiff would “get an answer before [his] last day.” (Id., Ex. F.)

Based on these facts, Plaintiff claims that Defendant conspired to defraud Plaintiff and induced him into accepting the unilaterally imposed last day of employment date. (Id. ¶¶ 25, 39.) Plaintiff further alleges that Defendant intentionally stalled and waited until after his departure to tell Plaintiff that it had no intention of paying him the severance package. (Id. ¶ 25.) Plaintiff claims that if Defendant told him the “truth” (i.e., that it would not pay him the severance package), he would have withdrawn the election to take the severance package and remained employed with Defendant. (Id. ¶¶ 29–30.) Plaintiff claims he was “unaware of the true facts” and reasonably relied on the representations of Defendant. (Id. ¶ 38.) As damages for Defendant’s allegedly fraudulent conduct, Plaintiff seeks 100% of his two-year average compensation, in addition to life insurance, medical insurance, and disability insurance for one year. (Id. ¶ 41.)

STANDARD OF REVIEW

A motion to dismiss under Rule 12(b)(6) is meant “to test the sufficiency of the complaint, not to decide the merits” of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990) (quoting Triad Assocs., Inc. v. Chi. Hous. Auth., 892 F.2d 583, 586 (7th Cir. 1989)). To survive a motion to dismiss, the complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Specifically, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 540 U.S. 544, 570, 127 S.Ct. 1955, 1973 (2007)). The plausibility standard “is not akin to a ‘probability requirement, ’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. Thus, while a complaint need not give “detailed factual allegations, ” it must provide more than “labels and conclusions, and a formulaic recitation of the elements of a cause of action.” Twombly, 540 U.S. at 555, 127 S.Ct. at 1964– 65; Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618–19 (7th Cir. 2007); see also Tamayo v. Blagojevich, 526 F.3d 1074, 1083 (7th Cir. 2008). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff’s favor. Thompson v. Ill. Dep’t of Prof’l Reg., 300 F.3d 750, 753 (7th Cir. 2002).

ANALYSIS

Defendant argues that Plaintiff’s amended claim of fraudulent misrepresentation (Count IV) should be dismissed for failure to state a claim and failure to do so with particularity. Under Illinois law, a claim for fraud must include the following elements: “(1) a false statement of material fact; (2) defendant’s knowledge that the statement was false; (3) defendant’s intent that the statement induce the plaintiff to act; (4) plaintiff’s reliance upon the truth of the statement; and (5) plaintiff’s damages resulting from reliance on the statement.” Tricontinental Indus., Ltd. v. PricewaterhouseCoopers, LLP, 475 F.3d 824, 841 (7th Cir. 2007) (quoting Connick v. Suzuki Motor Co., Ltd., 174 Ill.2d 482, 496, 675 N.E.2d 584, 591 (Ill. 1996)).

Additionally, Federal Rule of Civil Procedure 9(b) requires plaintiffs who assert fraud claims to “state with particularity the circumstances constituting fraud.” Fed.R.Civ.P. 9(b). To satisfy the particularity requirement, an allegation of fraud must include the “who, what, when, where, and how: the first paragraph of any newspaper story.” DiLeo v. Ernst & Young, 901 F.2d 624, 627 (7th Cir. 1990); accord Borsellino v. Goldman Sachs Grp., Inc., 477 F.3d 502, 507 (7th Cir. 2007); Hoffman v. Nationwide Mut. Ins. Co., 10 C 3841, 2011 WL 3158708, at *3 (N.D. Ill. July 26, 2011). Although Rule 9(b) does not require the plaintiff to plead facts sufficient to prove that the alleged misrepresentations were false, it does require the plaintiff to state “the identity of the person making the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff.” Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732, 737 (7th Cir. 2014) (quoting Uni*Quality, Inc. v. Infotronx, Inc., 974 F.2d 918, 923 (7th Cir. 1992) (citations omitted)).

Based on our liberal reading of the amended complaint, we perceive that Plaintiff seeks to allege two separate but related misrepresentations. Plaintiff asserts that: (1) Defendant misrepresented through its conduct that it would pay him the severance package, (Am. Count IV ¶¶ 21, 25, 31–32, 35, 37); and (2) it misrepresented that it would inform him whether it would pay the severance prior to his departure date, (id. ¶¶ 21–25, 28–30, 35, 37). Plaintiff’s allegations rest primarily on the specific written communications from Brian Bronson and Steven Karl, as well as on ...


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