United States District Court, S.D. Illinois
SHEILAR SMITH, et al., On Behalf of Themselves and All Others Similarly Situated, and On Behalf of the OSF Plans Plaintiffs,
OSF HEALTHCARE SYSTEM, et al., Defendants.
MEMORANDUM AND ORDER
M. YANDLE UNITED STATES DISTRICT JUDGE.
the Court is Defendants' Motion to Dismiss Counts X-XIV
of Plaintiffs' Third Amended Class Action Complaint (Doc.
130). Plaintiffs filed a response (Doc. 140).
For the following reasons, the motion is
OSF is an Illinois 501(c)(3) non-profit
corporation. OSF operates eleven acute care hospitals,
home health care services and other health care facilities in
Illinois and Michigan. As part of its operations, OSF
maintains at least two defined-benefits plans covering its
own direct employees (“St. Francis Plan”) and
employees of the recently-acquired St. Anthony's Health
Center (“St. Anthony's Plan”). Defendant
Retirement Committee for the Retirement Plan for Employees of
Saint Anthony's Health Center (“St. Anthony's
Committee”) is the administrator of the St.
Anthony's Plan. Defendant Sisters of the Third Order of
St. Francis Employees Pension Plan Administrative Committee
(“St. Francis Committee”) is the administrator of
the St. Francis Plan.
Sheilar Smith and June Schwierjohn were employed at Saint
Anthony's Health Center until 2015 and 2016 respectively.
Both are vested participants in the St. Anthony's Plan.
Plaintiffs Kasandra Anton, Bonnie Bailey and Peggy Wise were
employed by OSF and are vested participants in the St.
this case involved only claims asserted under the Employee
Retirement Income Security Act of 1974 (“ERISA”),
Pub.L. 93-406, 88 Stat. 840 as amended. Specifically,
Plaintiffs allege that OSF and related entities had
improperly treated the St. Anthony's Plan and St. Francis
Plan (collectively, “The Plans”) as “church
plans, ” which are exempt from the requirements of
ERISA. 29 U.S.C. § 1003(b)(2). Plaintiffs further allege
that OSF has failed to adequately fund the Plans' trust
accounts to the level required under ERISA to cover all
accrued benefits, that the defendants failed to follow
certain notice, disclosure and managerial requirements, and
that the defendants had breached their duties as fiduciaries.
the case was filed, the Supreme Court issued its Opinion in
Advocate Health Care Network v. Stapleton, 137 S.Ct.
1652 (2017) which resolved some, but not all of the issues in
this litigation. Plaintiffs subsequently filed a Third (and
later Fourth) Amended Complaint adding five
“alternative” causes of action “for relief
under State law if the Court determines that the OSF Plans
are ‘church plans' exempt from ERISA.” (Docs.
120 and 138 at n. 4). The state law counts (Counts X-XIV) all
center on OSF's alleged failure to make adequate
contributions to the Plans to ensure that there were
sufficient funds to pay accrued benefits.
asserts a breach of contract claim against OSF based on
express and implied promises by OSF and its predecessors to
“(1) pay to Plaintiffs and other Class members, upon
retirement, defined benefit pensions in amounts that
increased with each year of service; and (2) make ongoing
contributions to the OSF Plan trusts that were sufficient, on
an actuarial basis, to pay for the accrued pension
benefits.” (Doc. 138 at ¶251). Plaintiffs allege
that these promises were made in “summary plan
descriptions, benefits statements, and other OSF Plan
documents” as inducements for employees to continue
their employment, and that the “offer” was
accepted by the putative class members by beginning or
continuing their employment with the organizations covered by
the Plans. (Id. at ¶¶ 253-54). Plaintiffs
further allege that OSF has breached its contractual
obligations and violated the implied covenant of good faith
and fair dealing by failing to fund the Plans' trusts
sufficiently to pay accrued benefits, and request specific
performance of that promise. (Id. at ¶¶
XI is the equity alternative to Count X's contract claim,
in the event no enforceable contract is found to exist. It is
premised on the same alleged promises and asserts a claim for
promissory estoppel, on the theory that the Plaintiffs and
putative class members relied on these representations in
starting or continuing their employment with the covered
organizations. (Id. at ¶¶ 267-70). Again,
Plaintiffs request that the Court require OSF to increase
funding of the Plans to a level sufficient on an actuarial
basis to meet the amount of accrued benefits. Count XII also
sounds in equity, asserting that OSF's enjoying the
benefits of the class members' work while retaining funds
which should have been contributed to the Plans' trust
accounts amounts to unjust enrichment. (Id. at
remaining two counts assert claims for the breach of common
law fiduciary duties by OSF (Count XIII) and the St. Francis
and St. Anthony's Committees (Count XIV). Count XIII
alleges that Plaintiffs and the putative class are
beneficiaries of the trusts which hold the Plans' assets,
that OSF is “a fiduciary pursuant to the OSF Plan
documents” and that it has breached its fiduciary
obligations by retaining funds that should have been
contributed to fund the Plans' future obligations.
(Id. at ¶¶ 292-99).
XIV asserts that the St. Francis and St. Anthony's
Committees are “trustees, ” “fiduciary
trust managers” or “trust protectors within the
meaning of the common law of trusts” of the Plans'
trusts, as well as “fiduciaries pursuant to the OSF
Plan documents.” (Id. at ¶¶ 303-4).
Plaintiffs allege that the St. Francis and St. Anthony's
Committees breached their fiduciary duties in “failing
to use reasonable diligence to take control of trust property
without unnecessary delay, including by failing to take
reasonable steps to hold OSF to its obligation to make
contributions that were sufficient, on actuarial basis, to
fund all accrued benefits under the OSF Plans.”
(Id. at ¶ 311). In both counts, Plaintiffs seek
to compel the defendants to perform their duties and make
good any losses caused by the alleged breaches of those
argue that the state law counts must be dismissed on numerous
grounds pursuant to Federal Rules of Civil Procedure 12(b)(1)
and 12(b)(6). First, they contend that Plaintiffs lack
standing to assert their claims under Counts X through XII as
there is no harm or imminent threat harm. Second, they assert
that Counts X through XIV are time-barred. Finally, the
defendants attack the “merits” of each State Law
motion to dismiss asserts a lack of subject matter
jurisdiction under Rule 12(b)(1) as well as Rule 12(b)(6)
defenses, a court should consider the jurisdictional
challenge first. Bellv. Hood, 327 U.S.
678, 682 (1946). Rule 12(b)(1) permits the Court to dismiss
an action for lack of jurisdiction over the subject matter,
pursuant to a motion by the defendant. Fed.R.Civ.P. 12(b)(1).
The Court may also dismiss a claim sua sponte if its
review of the pleadings reveals that it lacks subject matter
jurisdiction. Moreover, “[i]t is the responsibility of