No. 01 C 2963 Page 4

is appropriate.

Defendants rely on Frahm to support their contention that since the alleged statements

were correct as to the plan in force when they were made, they cannot be considered “incorrect

representations.” But the representations in Frahm were not only statements of present

intention, they were also “honest (if at times incautious) projections of present plans into the
future.” 137 F.3d at 961. Here plaintiffs have alleged that defendants misled them, answering
questions and providing information about plan benefits that they knew would not allow
plaintiffs the payment option they were allegedly promised. Plaintiffs have successfully alleged
that defendants provided repeated misinformation which kept them from making an election
of benefits in a timely fashion. On these facts plaintiffs have established an equitable estoppel
claim. See Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 586-587 (7th Cir. 2000).

Defendants next argue that even if we find that plaintiffs adequately identified an
incorrect representation, the alleged speakers of the statement were not the defendants and
there are no allegations that the speakers knew of the proposed changes. Plaintiffs have
alleged that it is through authorized representatives and plan administrators that the
defendants misinformed them. These allegations can support the conclusion that the
representations were made by agents who had authority to make the statements on the
defendants’ behalf. Under the Rule 12(b)(6) standard, this is enough.

CONCLUSION
For the above reasons, defendants’ motion to dismiss count III of retiree plaintiffs’

consolidated complaint is denied.

fuse &_, 2002.

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



No. 01 C 2963 Page 3

DISCUSSION
In deciding a Fed.R.Civ.P, 12(b)(6) motion to dismiss, we acceptas true all well-pleaded
factual allegations of the complaint, drawing all reasonable inferences in a plaintiff's favor.

Midwest Grinding Co. v. Spitz, 976 F.2d 1016, 1019 (7" Cir. 1992), A claim survives if relief

can be granted under any set of facts that can be proved consistent with the allegations.
Hishon v. King & Spalding, 467 U.S, 69, 73 (1984) citing Conley v. Gibson, 355 U.S. 41, 45-46
(1957). While a complaint does not need to specify the correct legal theory to withstand a
Rule 12(b)(6) motion, it must allege all elements of a cause of action necessary for recovery.
Ellsworth y. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985) cert. denied, 475 U.S. 1047 (1986).

Equitable estoppel is part of the federal common law used to plug gaps in ERISA.

Miller v. Taylor Insulation Company, 39 F.3d 755, 758 (7th Cir, 1994). To state such a claim,

plaintiffs must allege that they reasonably relied on defendants’ incorrect representations of
fact to their detriment. Frahm v. Equitable Life Assurance Society, 137 F.3d 955, 961 (7th Cir.
1998). Representations about ERISA plans can provide a basis for an estoppel claim if, at the
time the statements were made the speaker actually had a different intention. Id.
Defendants assert that plaintiffs have failed to allege any incorrect representations,
arguing that the facts in the complaint establish that the alleged representations were accurate
when made and only became inaccurate as a result of the April amendments. According to
defendants, the alleged statements were made during the time when the prior ESOP was in
force and were therefore true at that time. Plaintiffs counter that the defendants knew that
the ESOP was to be amended and that the recommended procedure and deadlines for payment

election would not provide plaintiffs the opportunity to elect the promised option, and estoppel


7

Minute sore Form (06097)
United States District Court, Northern District of Illinois
verte Magistrate Judge James B. Moran “than Asied Sage
CASE NUMBER 01 C 2963 - (MDL 1417) DATE 6/6/2002
CASE Jeffrey Bradley et al. 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.}
Memorandum Opinion and Order
DOCKET ENTRY:
ql) oO Filed motion of [ use listing in “Motion” box above.]
(2) oO Brief in support of motion due
(3) a Answer brief to motion due___. Reply to answer briefdue___.
(4) im} Ruling/Hearingon___—_ssetfor___—_att
(5) oO Status hearing[held/continued to] [set for/re-set for] on setfor_ at
(6) a Pretrial conference[held/continued to] [set for/re-set for)on____setfor____—at__
(7) oOo Trial(set for/re-set for]on___—_at
(8) oO [Bench/Jury trial] [Hearing] held/continued to_____at
(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

OOFRCP4(m) OGeneral Rule 21 OFRCP41(a)(1) C FRCP41(a)(2).

IM of retiree plaintiffs’ consolidated complaint is denied.

(i) ff [For further detail see order attached to the original minute order.]

do) [Other docket entry] Enter Memorandum Opinion and Order. Defendants’ motion to dismiss count

No notices required, advised in open court,

No notices required.
" umber of notices

Notices mailed by judge’s staff,

JUN

Notified counsel by telephone. UK 0.7 2092

wo | Docketing to mail notices. (
Mail AO 450 form. Lungs HAV Lsia “SA docilging dopuy initials

Copy to judge/magistrate judge.

ited not
courtroom date mailed notice

WAH deputy’s
initials

central Clerk's Office mailing deputy initiats



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

EASTERN DIVISION
JEFFREY BRADLEY, et al, ) S
) cD
Plaintiffs, ) yu 0
) yt ww
vs. ) No. 01. € 2963 su
)
AMSTED INDUSTRIES, INC., et al, )
)
Defendants, )

MEMORANDUM OPINION AND ORDER

Plaintiffs bring this complaint against Amsted Industries, Inc. (Amsted), Amsted
Industries Incorporated Employees’ Stock Ownership Plan (ESOP) , and various individual
defendants under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001,
et seq., alleging wrongful denial of claims and benefits, breach of fiduciary duty, equitable
estoppel, interference with protected rights, and unlawful plan amendments. Defendants move
to dismiss plaintiffs’ equitable estoppel claim. For the following reasons, defendants’ motion
is denied.

BACKGROUND

Plaintiffs have previously filed various individual and collective complaints against
defendants, On August 21, 2001, the Judicial Panel on Multi-District Litigation transferred
these actions to this court for coordinated pretrial hearings. On October 4, 2001, we ordered
the filing of two amended consolidated complaints, one brought by Amsted retirees and the
other brought on behalf of non-retirees, Defendants currently have three dismissal and/or
summary judgment motions pending before this court. We now address the motion to dismiss

count III of the retiree plaintiffs’ consolidated complaint.


No. 01 € 2963 Page 2

The facts here are taken from plaintiffs’ complaint. Allegedly, plaintiffs have
accumulated stock or securities held in the Amsted Incorporated Employees’ Stock Ownership
Plan (ESOP). The ESOP is a benefit plan that makes employees owners of the company and
annually distributes shares of stock to the participants’ individual ESOP retirement accounts.
These account values change with the company’s stock price fluctuations. Under section 7.5
of the ESOP plan in effect prior to April 25, 2000, employees separating with either 30 years
of service or after attaining the age 55 were entitled, at their election, to receive the value of
their ESOP account in a lump sum cash payment.

Plaintiffs claim that they are participants in and beneficiaries of the ESOP, and all gave
notice of retirement before April 24, 2000. They allege that defendants, either directly or
through representatives, informed them that they could elect to receive their ESOP benefits
in a lump sum payment upon retirement. These alleged representations include instructions
and recommendations regarding how and when to file distribution election forms. One such
example is a letter attached to plaintiffs complaint allegedly sent on April 7, 2000, to plaintiff
Schilling. In addition to a description of his retirement plan, the letter provides: “We have
also enclosed the distribution and withdrawal forms for the Employee Stock Ownership Plan,
...{I]f you wish to withdraw your account balance for the quarter ending June 30, 2000, you
will need to return these forms no later than June 23, 2000.” Plaintiffs assert that they relied
on the alleged information to their detriment in that they did not submit their forms before the
ESOP was amended on April 25, 2000, and as a result their requests for lump sum payments

have been denied.