defendant with at least minimal notice of the claim,”/d., and the plaintiff cannot
satisfy federal pleading requirements merely “by attaching bare legal conclusions to
narrated facts which fail to outline the bases of [his] claim.” Perkins, 939 F.2d at

466-67.

DISCUSSION

1 Whether the Plan is Governed by ERISA

Holansky’s ERISA claims are based upon the provisions of ERISA that
prohibit the forfeiture of employee contributions. Defendants seek to dismiss the
suit on the basis that the Plan is not governed by ERISA. ERISA governs plans that
fall within the definition of an “employee welfare benefit plan” or an “employee
pension benefit plan.” 29 U.S.C, § 1002(3). Holansky claims that the Plan
constitutes an employee pension benefit plan. An employee pension benefit plan is
defined as “any plan, fund, or program . . , to the extent that by its express terms or
as a result of surrounding circumstances such plan, fund, or program - (i) provides
retirement income to employees, or (ii) results in a deferral of income by employees

for periods extending to the termination of covered employment or beyond... .” 29

U.S.C. § 1002(2)(A). Holansky argues that the surrounding circumstances in this



Holansky, since the Internal Revenue Code provides that FICA taxes should be
withheld when there is a risk of forfeiture, PSI cannot enforce the forfeiture
provision. Holansky also makes much of the fact that PSI changed the tax treatment
of the Plan. Holansky’s arguments on this issue are completely without merit. The
the tax treatment of the Plan is not a basis for a valid claim. Holansky even
concedes that he received the benefit of the Plan’s revised tax treatment in the form
of a revised W-2.

Holansky also fails to show how his claim is an estoppel claim and has not
provided any law in support of his estoppel claim. While a plaintiff is not required
to specifically plead a cause of action and is not required to plead each element of a
cause of action, a plaintiff must provide at least the operative facts. Kyle, 144 F.3d
at 454-55. The doctrine of estoppel is based upon a reasonable reliance by a party to
its detriment. See e.g. Kennedy v. U.S., 965 F.2d 413, 417 (7" Cir. 1992); Estate of
Burne Hogarth v. Edgar Rice Burroughs, Inc, 342 F.3d 149, 165 (2" Cir. 2003).
Holansky fails to allege facts that would fit into that definition, There is no
indication that the Plan was operated in a manner other than Holanksy should have
expected. Estoppel is not simply a catchall cause of action which any plaintiff can
bring to estop a defendant from doing something. Therefore, for this reason and the

reasons stated above, we grant the motion to dismiss the estoppel claim.


understanding of the Plan was based on the information contained in the booklet and
was not based on oral statements made by others at PSI.

We find that it is premature to dismiss the ERISA claims at this juncture. It is
possible, based upon the allegations before us, that the Plan is governed by ERISA.
We cannot grant a motion to dismiss “unless 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, 355 U.S. at 45-46. Based upon the allegations before us, it is
possible that the surrounding circumstances at PST were such that the Plan was
governed by ERISA. PSI’s arguments are also overreaching at times because they
seck to question the veracity of Holansky’s allegations and implore the court to
accept PSI’s version of the facts which is improper at this stage of the proceedings.
It is possible that the Plan is governed by ERISA, if, for example, PSI promoted the
Plan as a retirement plan, its employees regularly utilized it as a retirement plan, and
the three year period was meaningless because it was routine to simply grant one
year extensions until retirement. Holansky is entitled to proceed on to discovery to
see if he can collect evidence that would show these facts or other facts that would
indicate that ERISA governed the Plan. In discussing our ruling as to the motion to
dismiss, we make no findings as to what facts may or may not meet Holansky’s

burden of proof. Therefore, we deny the motion to dismiss the ERISA claims.



case indicate that the Plan was an employee pension benefit plan and that it was thus
governed by ERISA.

Holansky argues that the Plan is an employee benefit pension plan because the
Plan defers taxation. PSI argues that the Plan defers taxation only for a discrete
period of time and does not systematically defer taxation until retirement.
According to PSI, the Plan provides for distribution during a participant’s
employment and that at the end of the three year period Plan participants have the
unrestricted right to the full value of their shares. However, the Plan allows
participants to request successive one year extensions after the three year period.
Holansky alleges that Plan participants routinely seek successive one year
extensions under the terms of the plan to continue deferment until retirement. PS]
argues that simply because employees may theoretically use a Plan to defer income
until retirement does not mean that the Plan is an employee benefit pension plan.
However, such matters although not conclusive, are relevant for the surrounding
circumstances inquiry.

Holansky also alleges that PSI promoted the Plan as an employee benefit
pension plan. He claims that PSI told new trainees that the Plan was to serve as a
pension plan and was a “great way to save for retirement.” (Ans 2). PSI points out

that when Holanksy joined the Plan he signed a form indicating that his



voluntary deductions only for “payments for insurance premiums, pension or health
and welfare benefits, contributions to charitable organizations, payments for United
States bonds, payments for dues or assessments to a labor organization, and similar
payments for the benefit of the employee.” (A Compl. 24). PST argues in its
memorandum in support of its motion that the New York Court of Appeals has
already considered the Plan in Marsh v. Prudential Securities Inc, 802 N.E.2d 610
(N.Y. 2003) and addressed this same issue and found that the Plan does not violate
New York Labor Law § 193.1, Holansky does not respond to this argument at all in
his answer brief. PSI argues expressly that Holansky, by his silence, concedes that
his claim is without merit and that “[a]l! parties thus agree that the claim fails.”
(Reply 14). Holansky has not sought leave to file a sur-reply to challenge this
statement and his continued silence is an acquiescence that his claim is baseless. A
teview of the case also reveals that PSI’s position is correct. Therefore, we grant

PSI’s motion to dismiss the New York Labor Law claim,

III. Estoppel Claim

PSI moves to dismiss the estoppel claim. Holansky contends that PST should
be estopped from enforcing the forfeiture provision because of the manner in which

PSI handled FICA taxes on monies that were invested in the Plan. According to



‘Minute Onder Form (0697)

United States District Court, Northern District of [linois

Na i dt r i n; er
Mor Magirate sage | Samuel Der-Yeghiayan | SN stoned Juage
CASE NUMBER 02 C 4820 DATE 6/17/2004
CASE Holansky vs. Prudential Financial
TITLE

{In the following bux (a) indicate the party filing the motivn, c.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
of the mation being presented.)

MOTION:

DOCKET ENTRY:

ql) o Filed motion of [ usc listing in “Motion” box above. ]

(2) Oo Brief in support of motion duc

(3) im) Answer brief to motion due . Reply to answer bricfdue____.

(4) o Ruling/Hearingon set for__—at_

(5) Oo Status hearing[held/continued to) [set for/re-set for]on___—ssct for__at

(6) Qo Pretrial conference{held/continued to] [set for/re-set for]on set for at.
(7) a Trial[set for/re-set for]on__ al

(8) o [Bench/Jury trial] [Hearing] held/continuedio ss at__

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

OFRCP4m) CLocal Rule 41.1 OFRCP41(@)(1) O FRCP41(a)(2).

ao) [Other docket entry] Status hearing set for 08/10/04 is stricken and reset to 07/20/04 at 9:00 a.m.
For the reason stated in the attached memorandum opinion, the Court hereby grants in part and denies in
part defendant’s motion to dismiss. The parties shall conduct a FRCP 26(f) conference and file a Joint
written Initial Status Report, not to exceed five pages in length by 07/01/04, as detailed on this Court’s
web page. Enter Memorandum Opinion.

qi) ff [For further detail see order attached to the original minute order]

No notices required, advised in open court

No notices required.

number of wotices

Notices mailed by judge's staff. JUN 91 2004

Notified counsel by telephone.

daty dockets

| Docketing to mail notices. Judge's staff aft
y

distributed Memorandutn Opinion. Lig

Mail AO 450 form, dua sy docking ini be

Copy to judge/magistrate judge.

date nied pa
courtroom ‘aled page

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initials tt

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CONCLUSION
Based on the foregoing analysis, we deny the motion to dismiss the ERISA
claims and grant the motion to dismiss the New York Jabor law claim and the

estoppel claim.

Samuel wee Mee 2 : 6

United States District Court Judge

Dated: June 17, 2004



We note that we are informed by PSI that we should not find that the Plan is
“draconian” and apparently should not find that it is governed by ERISA because
“the existence of the identical forfeiture provision did not stop six judges on the New
York Court of Appeals from unanimously holding” that the plan is valid under New
York Labor Law. (Reply 5). While this fact may have relevance on the New York
Labor Law claim, it has little relevance for our other determinations in this case.

PSI has also provided the court with a recitation of their previous successes across
the country in litigation. They warn us that “[n]o tribunal has ruled against PSI on
its motion for summary judgment.” (Mot. 5). However, none of PSI’s cited case
law is controlling precedent. We address each case before us on an individual basis
and decide according to the facts and law before us. PSI’s string of citations to other
cases, in which rulings were made in its favor, is not dispositive in this case. In fact,
other than statutory citations in its briefs, PSI relies exclusively on caselaw outside
of this district. Such law is technically persuasive authority, but is not controlling

authority.

IL New York Labor Law Claim

Holansky alleges in his amended complaint that the Plan’s payroll deductions

violated New York Labor Law § 193.1. Holansky alleges that the law permits



also brings a breach of fiduciary duty claim under ERISA, an equitable claim for
recovery of contributions, a New York labor law claim, and an estoppel claim.

Defendants have moved to dismiss the amended complaint in its entirety.

LEGAL STANDARD

In ruling on a motion to dismiss, the court must draw all reasonable inferences
that favor the plaintiff, construe the allegations of the complaint in the light most
favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in
the complaint. Thompson v, fllinois Dep't of Prof’ Regulation, 300 F.3d 750, 753
(7th Cir. 2002); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). The
allegations of a complaint should not be dismissed for a failure to state a claim
“unless 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 v. Gibson, 355 U.S. 41, 45-
46 (1957), Nonetheless, in order to withstand a motion to dismiss, a complaint must
allege the “operative facts” upon which each claim is based. Kyle vy. Morton High
School, 144 F.3d 448, 454-55 (7th Cir. 1998);Lucien v. Preiner, 967 F.2d 1166,
1168 (7th Cir, 1992). The plaintiff need not allege all of the facts involved in the
claim and can plead conclusions. Higgs v. Carter, 286 F.3d 437, 439 (7th Cir.

2002); Kyle, 144 F.3d at 455. However, any conclusions pled must “provide the



Advisors at PSI. Holansky quit his employment with PS] and PSI told him that his
contributions to the Plan were forfeited under the terms of the Plan. PSI claims that
before signing onto the Plan, Holansky received an informational booklet and signed
an election form that specifically disclosed the forfeiture provision in the plan.

PST argues that the individuals that participated in the Plan were Financial
Advisors and thus, were sophisticated individuals that were knowledgeable in
financial matters, Holansky contends that he was merely a Financial Advisor trainee
and that he and others were not trained in matters that would have enabled him to
understand the forfeiture provision.

Holansky also contends that PSI promoted the Plan as a pension plan and
claims that employees were pressured to join the Plan. According to Holansky, all
trainees were “strongly encouraged” to join the Plan and that non-participation in the
plan was considered an indication that the trainee did not plan to stay with PSI.
According to Holanksy, a substantial portion of a trainee’s salary was deducted as
contributions for the Plan.

Holansky brought the instant action against Defendant PS1 and Defendant
Judy Vance (hereafter included in references to “PSI”) who was PSI’s Director of

Human Resources, Holansky seeks to recover his contributions and attorneys’ fees

under § 502 of the Employee Retirement Income Security Act (“ERISA”), Holansky



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

YAAKOV B, HOLANSKY,
Plaintiff,

v. No. 02 C 4820

PRUDENTIAL FINANCIAL,
PRUDENTIAL SECURITIES
INCORPORATED MASTERSHARE
PLAN, and JUDY VANCE,

Defendants.

MEMORANDUM OPINION
SAMUEL DER-YEGHIAYAN, District Judge
This matter is before the court on Defendant’s motion to dismiss. For the

reasons stated below we deny the motion in part and grant the motion in part.

BACKGROUND
In 1999, Plaintiff Yaskov B. Holansky (“Holansky”) worked for Defendant
Prudential Securities Incorporated (“PSI”). During his employment Holansky
elected to participate in a compensation plan referred to as the MasterShare Plan

(“Plan”). The Plan is a compensation plan offered to employees called Financial

1