Na. 01 C 2963 Page 4

LaSalle allowed Amsted to violate its fiduciary duty to the beneficiaries, constituting violation
of ERISA section 405. 29 U.S.C. § 1105(a). While LaSalle may be able to defeat these
allegations, plaintiff successfully states a claim that LaSalle breached the fiduciary duty owed
to the plan and may seek damages on behaif of the plan.

LaSalle cites In re McKesson HBOC, Inc. ERISA Litig., 2002 WL 31431588 (N.D. Cal.

2002), to stand for the proposition that a case seeking benefits for the plan may not be brought
asa class action. In McKesson, the court avoided ruling on this issue, but stated that there was
doubt as to whether the class could be certified because the class may lack typicality. We find
no reason in this case to prevent the class from bringing this action on behalf of the plan.
Defendants do not argue that plaintiffs’ desired relief would be incompatible or that there is
somehow a conflict of interest in filing suit ‘on behalf of the plan as well as individually.’
Moreover, the Seventh Circuit has determined that in similar cases plaintiffs seeking recovery
on behalf of a plan must sue as either representatives of the plan in a derivative action or as
representatives of the beneficiaries in a class action suit. See Thornton v. Evans, 692 F.2d
1064, 1080 (7 Cir. 1983) (holding that an action against non-fiduciaries for a conspiracy with
fiduciaries to violate trust obligations must be brought as a derivative suit or class action
because it will avoid multiple litigation while providing the beneficiaries with a forum to
adjudicate claims against the fund as a whole). We find no reason that this plaintiff class
cannot adequately pursue relief on behalf of the ESOP.

LaSalle also argues that plaintiff cannot alternatively plead so as to state claims for

‘LaSalle argues that plaintiffs fail to state a claim because they fail to allege damage to the plan. The
list of relief that they seek does not include recovery by the plan, but only by individuals. It seems clear from
the complaint, however, that plaintiffs explicitly include recovery by the plan of any lost assets as part of their
desired recovery (First Amended Consolidated Complaint, pp. 56-57, B, M).


No. 01 C 2963 Page3

assets. Counts IV and V are also dismissed.
Count J ~ Breach of Fiduciary Duty

Plaintiffs allege that LaSalle, as the plan’s trustee, breached the fiduciary duty owed
to the plan beneficiaries pursuant to section 409 of ERISA, 29 U.S.C. § 1109, LaSalle contends
that any fiduciary duty was owed to the plan, rather than the individual beneficiaries, and
therefore plaintiffs’ claim against LaSalle must fail.

While it is true that, as trustee, LaSalle owed a fiduciary duty to the ESOP, rather than
the plan participants individually, this does not preclude plaintiffs from bringing this suit
against defendants. ERISA section 409(a) provides:

Any person who is a fiduciary with respect to a plan who breaches any

of the responsibilities, obligations or duties imposed upon fiduciaries by

this subchapter shall be personally liable to make good to such plan any

losses to the plan resulting from each such breach, and to restore to such

pian any profits of such fiduciary which have been made through use of

assets of the plan by the fiduciary, and shall be subject to such other

equitable or remedial relief as the court may deem appropriate,

including removal of such fiduciary.

29 U.S.C. § 1109(a), ERISA section 502(a)(2) allows a participant or beneficiary of a plan to
bring a civil action seeking appropriate relief under section 409. 29 U.S.C. § 1132.

Defendant LaSalle is correct in arguing that the plaintiff class, as beneficiaries of the
plan, cannot directly collect money damages from LaSalle. Section 502(a)(2) gives the
plaintiffs the right to bring an action to prevent or remedy any breach of fiduciary duty owed
to the plan. In doing so, plaintiffs may seek money damages only to the extent that they are
paid to the plan to restore any money lost due to the alleged breach. See Massachusetts Mut.

Life Ins. Co. v. Russell, 473 U.S. 134, 139-144 (1985). Plaintiffs’ claim contains allegations that

LaSalle actively breached a fiduciary duty owed to the plan. Plaintiffs alternatively allege that


No. 01 C 2963 Page 5

both damages arising from a breach of fiduciary duty and for denial of benefits. As stated
above, plaintiff concedes that any claim for denial of benefits against LaSalle must be
dismissed. LaSalle argues that count I should be dismissed anyway, so as to discourage artful
pleading. The cases defendant relies on, however, stand only for the proposition that a
plaintiff may not use a claim for breach of fiduciary duty to get around the ERISA statute if
it is not otherwise eligible to file a claim for denial of benefits. See Coyne & Delaney Co. v.
Blue Cross & Blue Shield of Virginia, Inc., 102 F.3d 712 (4" Cir. 1996) (holding that fiduciaries
may not sue for benefits simply by using section 502(a)(2)). Here, because plaintiffs are
beneficiaries of the plan, they are granted the power by ERISA section 502(a)(1)(B) to file a
claim to recover wrongfully denied benefits. 29 U.S.C. § 1132(a)(1)(B). The breach of
fiduciary duty claim under section 502(a)(2) is simply an additional claim, not the way around
a jurisdictional bar.

Count III - Unlawful Plan Amendments

Defendants argue that plaintiffs’ claim for unlawful amendments must be dismissed
because only Amsted, as the plan’s settlor, had the actual power to amend the plan. See

Hughes Aircraft Co. v. Jacobson, 525 U.S. 432 (1999) (holding that plan amendments are a

settlor, rather than a trustee, function). We read count III as to LaSalle as basically a second
claim for breach of fiduciary duty. Plaintiffs allege that LaSalle knew of the plan amendments
—in one case LaSalle’s consent was required — and allowed Amsted to make the amendments
regardless of any harmful effect to the plan. If LaSalle knew of a beach of fiduciary duty on
the part of Amsted and did nothing to prevent or remedy the breach, this may give rise to a

violation of ERISA section 405. 29 U.S.C. § 1105(a). Again, plaintiffs may well be unable to



NY rm Order Form (06/97)

United States District Court, Northern District of Illinois

(y)

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge James B, Moran than Assigned Judge
CASE NUMBER 01 C 2963 - (MDL 1417) DATE 3/17/2003
CASE Juan Armstrong etal. Vs, Amsted Industries, Inc. et al.
TITLE .
[in the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented,] we
Memorandum Opinion and Order

DOCKET ENTRY: :

qd) a Filed motion of [ use listing in “Motion” box above.]

(2) oO Brief in support of motion due

(3) Qa Answer brief to motion due. . Reply to answer brief due

(4) Qo Ruling/Hearing on set for at

(5) Qa Status hearing[held/continued to] [set for/re-set for] on set for at

(6) im Pretrial conference[held/continued to] [set for/re-set for] on set for at .

(7) Q Trial[set for/re-set for] on at

(8) o {Bench/Jury trial] [Hearing] held/continued to at

(9) Qo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

COFRCP4(m) Local Rule 41.1 CIFRCP41(a)(1) OFRCP41(a)(2).

(10) Mf [Other docket entry] Enter Memorandum, Opinion and Order. For the foregoing reasons, defendant
LaSalle’s motion to dismiss is granted as to counts I, IV and V and denied as to counts I and III insofar
as plaintiffs seek recovery on behalf of the ESOP.

di) @ [For further detail see order attached to the original minute order.]

No notices required, advised in open court,
No notices required, umber of notices
Notices mailed by judge’s staff, MAR
Notified counsel by telephone. 18 2003
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No. 01 C 2963 Page 6

prove that LaSalle had knowledge of the plan amendments or any potentially harmful effect
to the plan, but these are not issues for a motion to dismiss. Insofar as count III alleges a
breach of fiduciary duty, plaintiffs successfully state a claim. As with count I, the potential
remedy for any such breach is the payment of funds into the plan, rather than the collection
of money damages by the plaintiff.
CONCLUSION
For the foregoing reasons, defendant LaSalle’s motion to dismiss is granted as to counts

II, IV and V and denied as to counts I and II] insofar as plaintiffs seek recovery on behalf of

the ESOP.

BR Wer

JAMES B. MORAN
ior Judge, U. S. District Court

Mach, )_, 2002.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

IN RE AMSTED INDUSTRIES, INC.
“ERISA” LITIGATION

THIS DOCUMENT RELATES TO:

JUAN ARMSTRONG, et al.,

Plaintiffs, S
8 2003

pos

vs. No. 01 C 2963 MAR
AMSTED INDUSTRIES, INC., et al.,

Defendants.

eee eee ee eS LES Se

MEMORANDUM OPINION AND ORDER

Plaintiff class filed suit against numerous defendants alleging violations of the
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., (ERISA), seeking
various remedies available under the Act. Defendant LaSalle Bank National Association
(LaSalle) filed a motion to dismiss the claims against it pursuant to Federal Rule of Civil
Procedure 12(b)(6), arguing that plaintiffs failed to state a claim upon which relief could be
granted. For the following reasons, LaSalle’s motion to dismiss is granted in part and denied
in part.

BACKGROUND

This case arises from various changes in Amsted’s Employee Stock Ownership Plan

(ESOP) beginning in 1999. Plaintiff class alleges that defendants’ mismanagement of the

ESOP resulted in the depletion of plan assets. and the loss in value of the plaintiffs’ retirement

(Ue


No. 01 C 2963 Page2

accounts. These actions were filed separately and transferred to this court by the judicial
panel on multi-district litigation, where we granted certification of the plaintiff class.

Defendant LaSalle operated as the trustee of the ESOP as defined by ERISA. See 29
U.S.C. § 1103. LaSalle’s role in managing the trust was limited to the responsibilities detailed
in its agreement with Amsted, the settlor of the plan. This agreement severely limited the
discretion of LaSalle in handling the assets of the claim and making decisions with respect to
the trust.

DISCUSSION

In deciding a Rule 12(b)(6) motion to dismiss we must assume the truth of all well-
pleaded allegations, making all inferences in the plaintiff's favor. Sidney S. Arst Co. v.
Pipefitters Welfare Educ. Fund, 25 F.3d 417, 420 (7" Cir. 1994). The court should dismiss a
claim only if it appears “beyond doubt that the plaintiff can prove no set of facts in support
of his claim which would entitle him to relief.” Conley vy. Gibson, 355 U.S. 41, 45-46 (1957).
While the complaint does not need to provide the correct legal theory to withstand a Rule
12(b)(6) motion, it must allege all of the elements necessary to recover. Ellsworth v. City of
Racine, 774 F.2d 182, 184 (7" Cir. 1985), cert. denied, 475 U.S. 1047 (1986).

Plaintiff class’ consolidated complaint.consists of five counts: breach of fiduciary duty,
wrongful denial of claims and benefits, unlawful plan amendments, breach of contract and
conversion. In their response memorandum plaintiffs concede that the wrongful denial claim
must be dismissed. Likewise, plaintiffs present no argument in their memorandum as to the
breach of contract or conversion claims. They fail to plead either that LaSalle had a contract

with the plaintiffs or that LaSalle was somehow enriched through possession of plaintiffs’