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Bailey v. Osf Healthcare System

United States District Court, C.D. Illinois, Peoria Division

March 23, 2017

BONNIE BAILEY, PEGGY WISE, and JUNE SCHWIERJOHN, individually and on behalf of themselves and all others similarly situated, Plaintiffs,
v.
OSF HEALTHCARE SYSTEM, THE SISTERS OF THE THIRD OF ST. FRANCIS EMPLOYEES PENSION PLAN ADMINISTRATIVE COMMITTEE, THE SAINT ANTHONY'S HEALTH CENTER RETIREMENT COMMITTEE, and JOHN DOES 1-20, Defendants.

          ORDER

          SARA DARROW, UNITED STATES DISTRICT JUDGE

         Before the Court are Plaintiffs' motion for an order designating their present counsel, Kessler Topaz Meltzer & Check, LLP, Izard Kindall and Raabe LLP, and the Janssen Law Center, as interim lead class counsel pending a motion for class certification, ECF No. 17; proposed intervenors Kasandra Anton and Sheilar Smith's (“the Smith plaintiffs”) motion to intervene, ECF No. 23; their motion to transfer this case to the Southern District of Illinois, ECF No. 25; their motion for leave to file a reply to the responses thereto, ECF No. 33; Defendants' motion for a hearing on the motions to intervene and transfer, ECF No. 34; and Plaintiffs' motion to file a notice of supplemental information, ECF No. 44. For the following reasons, the motion to appoint interim lead counsel is DENIED WITHOUT PREJUDICE, the motion to intervene GRANTED as specified herein, the motion to transfer DENIED, the motion for hearing DENIED, and the motions for leave to file GRANTED.

         BACKGROUND

         This lawsuit was filed on May 3, 2016, initially only by Plaintiffs Bailey and Wise. Compl., ECF No. 1. They alleged that Defendant OSF HealthCare System (“OSF”) maintains a retirement savings plan (“the plan”) for the benefit of its employees, but that this plan is underfunded by at least $350 million. Id. at 1-2. Bailey and Wise alleged that this was so because, while OSF claims that the plan falls within the “church plan” exemption to the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (“ERISA”), the plan does not fall within the exemption and must be funded at the level ordinarily required by ERISA. Id. at 2. Both plaintiffs were or had been employees at OSF's Saint Francis Medical Center (“Saint Francis”) in Peoria, Illinois. They purported to sue on behalf of themselves and “[a]ll participants in and beneficiaries of The Sisters of the Third Order of St. Francis Employees Retirement Savings Plan . . . .” Id. at 4.

         However, OSF operates eleven hospitals, only six of which, including Saint Francis, are located within the Central District of Illinois. See Defs.' Resp. Mot. Transfer 3, ECF No. 32. One hospital, Saint Anthony's Medical Center (“Saint Anthony's”), is located in the Southern District of Illinois. Id. Six days before Bailey and Wise filed this suit in the Central District, prospective intervenor Smith, a former employee of Saint Anthony's, filed a similar lawsuit in the Southern District alleging much the same thing as to all OSF retirement plans-that OSF is justifying underfunding its retirement plan by treating it as a church plan exempt from the requirements of ERISA. Smith Compl. 2, ECF No. 1; Smith v. OSF, No. 3:16-cv-00467-SMY-RJD (S.D. Ill. Apr. 27, 2016) (hereafter “Smith”). Smith purported to sue on behalf of “all participants and beneficiaries of defined benefit pension plans that are established, maintained, administered, and/or sponsored by OSF, OSF's affiliates, ” or other OSF committees. Id. at 1.

         Both sets of plaintiffs have since amended their initial complaints, adding plaintiffs. The plaintiffs in this case have added one plaintiff, Schwierjohn, who is a participant in the plan run by Saint Anthony's. Pls.' Mot. Leave File Notice 2.

         OSF, a named defendant in both cases and represented by the same counsel in both, moved on June 13, 2016 in the Southern District to transfer Smith to the Central District. ECF No. 33; Smith. On July 25, 2016, Judge Yandle denied that motion. ECF No. 37; Smith. Plaintiffs filed their motion for an order appointing their counsel interim lead counsel on July 19, 2016. The Smith plaintiffs then filed their motions to intervene and transfer on August 9, 2016.

         DISCUSSION

         I. The Motion to Intervene

         The Smith plaintiffs, because they are not parties to this case, must intervene in order to move for the transfer of the case, as they concede. Mem. Supp. Mot. Intervene 1, ECF No. 24. They argue that the court must permit their intervention, pursuant to Federal Rule of Civil Procedure 24(a), because disposition of this case could impair their interest in the outcome of theirs, and because their interests in that disposition may not adequately be protected by Plaintiffs. Id. at 8-10. In the alternative, they argue that the Court should permit them to intervene pursuant to Rule 24(b), because their suit shares questions of law and fact with Plaintiffs'. Id. at 11. Plaintiffs argue that the Smith plaintiffs cannot intervene “of right, ” but concede that the Court should permit the intervention under Rule 24(b). Pls.' Resp. Mot. Intervene 1; ECF No. 28. Defendants echo the position. Defs.' Resp. Mot. Intervene 1; ECF No. 31.

         a. Standard on a Motion to Intervene

         Rule 24 provides for two kinds of intervention by a non-party to a suit. “On timely motion, the court must permit anyone to intervene who” is supplied such a right by statute, or who “claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, unless existing parties adequately represent that interest.” Fed.R.Civ.P. 24(a) (emphasis added). This kind of intervention is called intervention of right. Id. Alternatively, the court “may permit anyone to intervene, ” termed permissive intervention, when someone so moves who is given a conditional right to do so by statute, or who “has a claim or defense that shares with the main action a common question of law or fact.” Fed.R.Civ.P. 24(b) (emphasis added). On a motion for intervention of right under Rule 24(a), the movant bears the burden of showing that the requirements of the rule are met, which the Seventh Circuit has summarized as requiring him to “(1) make a timely application, (2) have an interest relating to the subject matter of the action, (3) be at risk that that interest will be impaired by the action's disposition and (4) demonstrate a lack of adequate representation of the interest by the existing parties.” Vollmer v. Publishers Clearing House, 248 F.3d 698, 705 (7th Cir. 2001).

         Interventions of right may be subject to “appropriate conditions or restrictions responsive among other things to the requirements of efficient conduct of the proceedings.” Fed.R.Civ.P. 24(a)(2) advisory committee's notes to 1966 amendment. On a motion for permissive intervention, the latter three requirements for an intervention of right are dropped, and all that an intervenor need show is that (1) their motion is timely and (2) “the applicant's claim or defense and the main action have a question of law or fact in common.” Flying J, Inc. v. Van Hollen, 578 F.3d 569, 573 (7th Cir. 2009).

         b. ...


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