No. 01 C 2963 Page 4

by not having any forms available.” Even if distribution request forms were not available
during all of the relevant time period (and the evidence establishes that the period or periods
of unavailability were brief), plaintiffs have produced no evidence that requests for the forms
went unmet, thus thwarting their attempt to submit the forms before the ESOP amendments.

Blakenship and Sparks maintain that their action differs from the Armstrong plaintiffs’
action in its theories of liability as well. They argue that unlike the other plaintiffs they are
entitled to relief because the defendants eliminated the lump sum cash distribution in violation
of § 11.5(d) of the then current ESOP plan document. This attempt to distinguish their case
fails because defendants did not violate the plan by amending the manner of distribution.
Section 11.3 of the plan prohibits amendments that deprive participants of their interest in their
accounts or eliminate or reduce early retirement, retirement-type, or optional benefits, “except
as permitted by applicable law” (Amsted ESOP Plan Document, effective 10/1/1995, § 11.5(b),
(d)). Defendants’ amendments were permitted by law. Section 204 of ERISA limits the manner
in which plan administrators can decrease plan participants’ accrued benefits by amendment,
but it also states that a non-discriminatory ESOP amendment of distribution options does not
violate the section. 29 U.S.C. § 1054, As defendants’ amendments were permitted by law, they
were also permitted by the terms of the plan, specifically § 11.5. As this claim cannot be
pursued, it does not distinguish Blakenship and Sparks’ action from that of the Armstrong
plaintiffs, /

Finally, plaintiffs argue that the Armstrong class is not a mandatory class impeding their

>This argument actually appears in plaintiffs’ response to defendants motion for summary judgment.
However, it is relevant to plaintiffs’ motion for clarification. If they would have submitted their redemption
forms before the ESOP amendments, had the forms been available, then the only reason that Blakenship and
Sparks’ situation would not be distinct from the Armstrong plaintiffs would be due to the actions of

defendants.


No. 01 C2963 Page 7

benefit on March 13, 1990, two months before the benefit was eliminated in May 1990. Id. at
835, By contrast, Blakenship and Sparks had not given any notice regarding their intent to
redeem their ESOP shares before the amendments were passed. The only notice plaintiffs had
given was to trigger their eligibility for the Prudential annuity.

As discussed above, plaintiffs’ assertion that § 11.5 of the ESOP plan document
prohibited the passage of the 2000 amendments is without merit. Therefore, their claims that
defendants violated § 204 of ERISA, despite the exception for ESOP’s, and breached the terms
of the plan in violation of contract law, fail. Finally, defendants would be entitled to summary
judgment on plaintiffs’ claim that defendants “prevented Plaintiffs from retiring while giving
serious consideration to the Plan Amendements....” As already discussed, plaintiffs have not
evidenced that defendants interfered with their ability to submit their ESOP redemption forms.
Nor have plaintiffs evidenced that defendants misled them regarding the amendments while
they were under serious consideration. Several circuit courts have found that a fiduciary must
truthfully answer questions about benefits that are under serious consideration. Bins v. Exxon
Co., U.S.A. 220 F.3d 1042, 1053 (9" Cir. 2000); McAuley y. International Business Machines
Corp. Inc., 165 F.3d 1038, 1043 (6" Cir. 1999); Maez v. Mountain States Telephone and
Telegraph, Inc., 54 F.3d 1488, 1500 (10% Cir. 1995). Though fiduciaries do not have a duty to
volunteer information regarding seriously considered plan changes, if they choose to speak of
the changes before their approval, they must speak honestly. Though plaintiffs claim that
misleading statements were made regarding the seriously-considered amendments to the
Amsted ESOP, they cite to no examples and provide no evidence of such statements. As it is
unnecessary for a determination in this action, we reserve opinion on whether the serious

consideration test should be applied at all under circumstances such as these, where the


No, 01. € 2963 Page 3

received distributions at a share price other than $184.41 per share. This memorandum was
submitted to Blakenship and Sparks’ counsel.

Plaintiffs have not shown their situations to be so different from the Armstrong class as
to justify their separate action. Plaintiffs maintain that both the circumstances of their case and
the nature of their claims differ from the Armstrong plaintiffs. Blakenship and Sparks assert
that while the Armstrong plaintiffs were not vested and eligible to receive ESOP benefits before
the plan was amended in 2000, they both were. However, Armstrong plaintiffs were vested and
eligible to receive benefits before the amendments (See Armstrong Complaint). Blakenship and
Sparks also argue that they differ from the Armstrong plaintiffs because Amsted was notified
of their retirement prior to the ESOP amendments. Both Blakenship and Sparks notified
Amsted of their retirements about a year before their intended retirement date. These
notifications ensured that they would receive a lump sum payment from the Prudential
Annuity. This notification is not a relevant distinction for Blakenship and Sparks’ claims
because it did not serve to inform the ESOP of their retirement. To receive their ESOP
retirement benefits plaintiffs were required to submit an ESOP distribution request form,
which was typically distributed to employees two to three months before retirement. Neither
plaintiff submitted this form before the ESOP amendments were enacted. Had plaintiffs begun
the process of redeeming their ESOP shares only to have defendants apply the amendments to
their pending distribution requests, then they might well have had a distinct claim. Blakenship

and Sparks argue that defendants prevented them from submitting ESOP distribution requests


No. 01 C 2963 Page S

opting out. They argue that a mandatory class is appropriate in cases where the source of
recovery is limited and claims by those outside the class would harm class members by seeking
recovery from the same finite source. See Ortiz v. Fiberboard Corp., 527 U.S. 815 (1999). As
both defendants and the Armstrong plaintiffs point out, class certification in Ortiz was granted
under a limited fund theory pursuant to Federal Rule of Civil Procedure 23(b)(1)(B), while class
certification in Armstrong was not. Ortiz does not stand for the proposition that limited funds
are the only appropriate reasons for denying plaintiffs’ requests to opt out ofa class. Rejecting
an opt-out provision for a certified class is also appropriate to avoid creating inconsistent
determinations or placing inconsistent obligations on defendants. See Montgomery v. Aetna
Plywood, Inc., 1996 WL 189347 at *5 (N.D.Il. 1996). Given that Blakenship and Sparks fall
within the definition of the Armstrong class, that there is no significant distinction between
their claims and those in Armstrong, and that allowing them to pursue a separate action creates
a risk of inconsistency, we deny plaintiffs’ motion for clarification and find that they must
pursue their claims as Armstrong class members. As members of the Armstrong class,
Blakenship and Sparks, are subject to our memorandum opinion and order, issued in
conjunction with this opinion, granting summary judgment to defendants on all claims.
Even if Blakenship and Sparks do not properly fall within the Armstrong class,
defendants would be entitled to summary judgment on their claims. In ruling on a motion for
summary judgment the court must determine if there is a genuine issue of material fact for
trial. Anderson v. Li Lobby, Inc., 477 U.S. 242, 249 (1986). If the evidence on file shows
that no such issue exists, and that the moving party is entitled to judgment as a matter of law,
we will grant the motion. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); Bennett v.

Roberts, 295 F.3d 687, 694 (7" Cir. 2002). When reviewing a motion for summary judgment,



No. 01 C2963 Page 8

amendments under serious consideration were intended to save the ESOP from the ruin that
could have resulted from a further increase in plan redemptions.

CONCLUSION

For the foregoing reasons, plaintiffs’ motion for clarification or modification of our class
certification order in Armstrong is denied. As members of the Armstrong class, plaintiffs are

subject to the grant of summary judgment for defendants in that case.

Sehior Judge, U. S. District Court
im 31,2004.



Minute, Order Form (0657)

United States District Court, Northern District of Mlinois

N of Assi; id Sith if Or!
nar Magistrate Judge James B, Moran than Asigned Judge

CASE NUMBER 01 C 2963 (MDL 1417) DATE 7129/2004

CASE JEFFREY BRADLEY, et al vs. AMSTED INDUSTRIES, INC., et al

TITLE

[ln the following box (a) indicate the pany filing the motion, e.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
MEMORANDUM OPINION AND ORDER

DOCKET ENTRY:

(lt) im Filed motion of [ use listing in “Motion” box above.]

(2) Oo Brief in support of motiondue __.

@) (a) Answer brief to motion due. . Reply to answer briefdue___.

(4) oOo Ruling/Hearing on setfor at

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

(6) Oo Pretrial conference[held/continued to} [set for/re-set for]on___—ssetfor__—sat_.
(7) oO Trial[set for/re-set for]on__at

(8) Qa (Bench/Jury trial] [Hearing] held/continuedto______sat

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

OFRCP4(m) CLocalRule 41.1 OFRCP41(a)(1) C1 FRCP41(a)(2).

(0) =x [Other docket entry) Enter Memorandum Opinion And Order. The motion for clarification or
modification of our class certification order in Armstrong is denied. As members of the Armstrong class,
plaintiffs are subject to the grant of summary judgment for defendants in that case. All pending motions
and dates are now moot.

(ij) off [For further detail see order attached to the original minute order.)
No notices required, advised in open court.

No notices required.

Notices mailed by judge's staff.
Notified counsel by telephone.
o | Docketing to mail notices.
[| Mail 40450 form.

HUL

Copy to judge/magistrate judge. 1yno3 jarursid ‘sn
is depunys fo :OlWY O8 TNC r002
initials os TENE!
cen rete



No. 01 C 2963 Page 6

we draw all inferences in the light most favorable to the non-movant. DeValk Lincoln Mercury,
Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7" Cir. 1987).

Plaintiffs provide several theories of defendants’ liability for breach of fiduciary duty,
some of which we have already addressed — all of which fail. Plaintiffs do not create an issue
of fact regarding defendants’ alleged efforts to impede plaintiffs from turning in their ESOP
redemption forms before the plan amendments were instituted. Though the evidence indicates
that there was some brief period or periods of time during which ESOP redemption forms were
not available to retiring employees, plaintiffs have not produced any evidence that they
requested these forms when they were unavailable. In fact, Blakenship admits that even after
he was encouraged to file his forms because of the possibility of a second round of amendments,
he chose not to (Blakenship Dep. 29-32, 45-48, 53-56). Likewise, plaintiffs’ claim of estoppel
due to defendants’ misleading statements that plaintiffs could not apply for their ESOP benefits
under the old forms also fails. To bring an estoppel claim for misrepresentation related to an
ERISA plan, plaintiffs must evidence a written misrepresentation on which they relied.
Gallegos v. Mount Sinai Medical Center, 210 F.3d 803, 809 (7" Cir. 2000). Plaintiffs have not
evidenced either a written or oral misrepresentation by defendants regarding the ESOP
redemption forms.

Plaintiffs also argue that defendants breached their fiduciary duty by applying the
amendments to plaintiffs after they had notified Amsted of their intent to retire. Plaintiffs rely
on Auwarter v. Donohue Paper Sales Corp., 802 F. Supp. 830 (E.D.N.Y. 1992), in which the
court found a breach of fiduciary duty where a plan amendment, eliminating a lump sum
payment option, was applied to plaintiffs who had notified defendants of their retirement. Id.

In Auwarter, the plaintiffs had given written notice of their election of the plan’s lump sum



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

EASTERN DIVISION
DOCKETED
JEFFREY BRADLEY, et al., )
) JUL 3 0 2004
Plaintiffs, )
)
vs. ) No. 01 C 2963
) MDL 1417
AMSTED INDUSTRIES, INC.,, et al, =)
)
Defendants, )

MEMORANDUM OPINION AND ORDER

This memorandum opinion and order is issued in conjunction with our opinion on the
summary judgment motions filed in Armstrong v. Amsted, No. 01 C 2963, a corollary case
assigned to this court by the judicial panel on multi-district litigation. For a full discussion of
the background to this action, see our Memorandum Opinion and Order in that case dated July
29,2004. In this action, nine retirees formerly employed by Amsted Industries, Inc. (Amsted),
sued Amsted, the Amsted Employees’ Stock Ownership Plan (ESOP), members of the ESOP
committee, Plan administrators and various Amsted directors, for their actions during the
company’s financial crisis in the year 2000. Seven of the nine plaintiffs entered into a
settlement agreement with the defendants. Defendants maintain that the two remaining
plaintiffs, Rennie Blakenship and Judy Sparks, fall within the definition of the plaintiff class
in Armstrong, and thus should be incorporated into that case. Blakenship and Sparks have
filed a motion for clarification or modification of the class certification, seeking to exclude
themselves from the Armstrong class and to pursue their claims through an independent action.
Defendants object to the motion for clarification, but have also filed a motion for summary

judgment in the event plaintiffs are allowed to maintain their claims.

va



No, 01 C 2963 Page2

InInre Amsted Industries, Inc., “ERISA” Litigation, 2002 WL 31818964 (N.D.IL 2002)

(hereinafter Armstrong), we certified a plaintiff class consisting of “All ESOP Plan
Participants, excluding DEFENDANTS and excluding those Plan Participants who retired and
whose benefits under the ESOP were calculated for the purpose of distribution at $184.41 per
share.” Blakenship and Sparks were plan participants in the Amsted ESOP. They do not fall
under the class exclusions because they are not defendants and, though they retired in October
2000 and October 2001, respectively, neither retiree’s ESOP benefits were calculated at the
$184.41 share price. Despite the fact Blakenship and Sparks fall within Armstrong’s class
definition, plaintiffs argue they should be allowed to pursue their own claims because they have
been treated as retiree plaintiffs since the commencement of the action, their situation differs
from the Armstrong plaintiffs, and the Armstrong class is not a mandatory class. Plaintiffs’
arguments do not justify excluding them from the Armstrong class, and allowing them to
pursue separate claims,

Contrary to their claims, Blakenship and Sparks did have notice that defendants
believed that some of the Bradley plaintiffs fell into the class definition proposed by the
Armstrong plaintiffs. In defendants’ memorandum in opposition to the Armstrong plaintiffs’
motion for class certification, dated August 21, 2002, they stated that the proposed class
“includes individuals whom Defendants understood Plaintiffs specifically intended to exclude;
namely, Plaintiffs already represented by counsel in the consolidated Bradley et al. y.

AMSTED,et al., case” (Defs’ Opp. 9, n.5). Defendants explained that these Bradley plaintiffs

While we did not there Specifically designate the class as a Rule 23(b)(1)(A) class, as distinguished
from a Rute 23(b)(3) class, it implicitly recognized that the class was under Rule (b)(1)(A) since the suit
sought a remedy for the Plan and the prosecution of separate actions would create a risk of inconsistent
adjudications, See Armstrong, 2002 WL 31818964 at *2.