appropriateness of equitable relief. If, however, the other portions of the statute do not afford
adequate relief, then the Plaintiff's complaint must survive a motion to dismiss, as the
appropriateness of equitable relief is a fact-intensive inquiry.

Both the Plaintiff and the Defendant have merged the analysis with respect to Counts I}
and Il but for different reasons. Since both the breach of fiduciary duty claim (Count II) and the
equitable estoppel claim (Count I) are properly characterized as seeking equitable relief, cases
dealing with both types of claims tend to make broader statements about the appropriateness of
equitable relief generally. Both parties seek to gain advantage from the broader rules that are
spoken about in each set of cases relating to the propriety of equitable relief in ERISA cases. In
breach of fiduciary duty cases, courts all over the country have held that the remedy for improper
denial of plan benefits is adequate for alleged breaches of fiduciary duty. Defendants then seek
to apply the rule that emerged from those cases to the broader class of all cases that seek
equitable relief. The Plaintiff, meanwhile, relies on cases that involved misrepresentation (which
is an element of equitable estoppel) for the broader principle that equitable relief may be
appropriate where available legal relief is inadequate. In order to make sense of the rules that
both parties seek to broaden in their presentations, the Court will treat the merits of Count II and
Count III separately, beginning with Count III.

A. Count JU: Breach of Fiduciary Duty

Count [II of Plaintiff's Complaint alleges that Defendant breached fiduciary duties to
Plaintiff by “(i) inaccurately communicating material facts about the Plan and its claim and
appeal procedures; (ii) failing to follow the Plan’s claim and appeal procedures; and/or (iii)

failing to notify Plaintiff that the Plan contained and/or was utilizing defective and/or conflicting


him under the pension plan. This alleged misrepresentation was made in the context of
negotiations that would lead to the Plaintiff terminating his employment with his employer of
twenty-eight years. Plaintiff alleges he relied on that misrepresentation when he decided to
accept the severance package with Defendant. As the Seventh Circuit noted, “[W]hen an
employer has provided ‘repeated misinformation’ to an ERISA claimant, and that misinformation
prevented the claimant from making an election of benefits, estoppel should be applied to

prevent the employer from denying those benefits to the claimant.” Bowerman v. Wal-Mart

Stores, Inc., 226 F.3d at 587 (7th Cir. 2000) (citing Swaback v. American Info. Techs. Corp., 103

F.3d 535, 542-43 (7th Cir. 1996)).

Defendant relies heavily on the breach of fiduciary duty cases to assert that Plaintiff has
an adequate remedy for his estoppel claims through his claim for improperly denied benefits
under Section 1132(a)(1)(B) in Count I. Defendant’s reliance is misplaced, as the elements of
proof for breach of fiduciary duty would be different from estoppel. Count III for a breach of
fiduciary duty would be proven by reference to the plan and the ERISA statute. Count II,
alleging estoppel, would be proven by reference to the Defendant’s behavior and alleged
misrepresentations, without reference to the plan. Consequently, the logic about the relative
adequacy of the remedy does not follow the same course.

One of the cases that Defendant cites to did order dismissal of claims for breach of
fiduciary duty, injunctive relief, and equitable estoppel. See SunTrust Bank v. Aetna Life Ins.
Co., 251 F, Supp. 2d 1282, 1291 (E.D. Va. 2003). In that case, the plaintiff was a trustee of a
trust which was assigned the group life insurance policy benefits for a decedent. The breach of

fiduciary duty claim was dismissed because it was brought under Section 1132(a)(2), which, as


breach of fiduciary duty are going to be defined by reference to the plan itself. A plan beneficiary
who believes her benefits were denied improperly and files suit under Section 1132(a)(1)(B) of
ERISA (which authorizes direct challenges to the benefit determination) has an adequate avenue
for relief for improprieties in the administration of the plan. If the plan administrators breached
their fiduciary duties in reaching a decision about a plaintiffs claim for benefits, that will almost
invariably enter the analysis about the propriety of their benefits decision.

When a plan beneficiary files a claim for breach of fiduciary duty under Section
1132(a)(3) and a claim for improper denial of benefits under Section 1132(a)(1)(B), the
individual remedy sought in both claims is the same: a restoration of the level of benefits that the
beneficiary believes to have been required under the plan with or without a breach of fiduciary
duty. The relief sought under Section 1132(a)(1)(B) will be adequate to remedy the harm caused
by the alleged breach of fiduciary duty. Consequently, claims for breach of a fiduciary duty
under Section 1132(a)(3) will be unavailable as a matter of law to individual plan beneficiaries
who are also seeking a remedy for improper denial of benefits under Section 1132(a)(1)(B).

Plaintiff urges that this is a contradiction with the permissive rule for pleading alternative
theories embodied in Federal Rule of Civil Procedure 8(e)(2). See Fed. R. Civ. P. 8(e)(2).
Plaintiff is correct, but the result is in keeping with the Supreme Court’s decision in Varity Corp.
y. Howe, 516 U.S. 489 (1989), which limited the avenue of relief under Section 1132(a)(3) to
those claims which do not have an adequate remedy elsewhere in the statute. Where the
Supreme Court’s statutory interpretation comes into conflict with a rule of civil procedure, the
authoritative interpretation of the statute carries the day.

Asa final effort to survive the Motion to Dismiss with regard to Count III, Plaintiff



claim and appeal procedures.” (Comp. { 49)
ERISA authorizes claims for breach of fiduciary duty under both Section 1132(a)(2) and
Section 1132(a)(3). 29 U.S.C. § 1132(a)(2), (3). Claims under Section 1132(a)(2) must be

brought against the plan itself. See Massachusetts Mutual Life Ins. Co. v. Russell, 473 U.S. 134,

142 (1985) (holding that Section 1132(a)(2) is “primarily concerned with the possible misuse of
plan assets, and with remedies that would protect the entire plan, rather than with the rights of an
individual beneficiary”). Plaintiff in this case does not present a claim under Section 1132(a)(2).
Count III of Plaintiff's Complaint seeks a remedy for the alleged breaches of fiduciary
duty under Section 1132(a)(3). Defendant contends that Plaintiff has an adequate remedy for his
breach of fiduciary duty claims under Section 1132(a)(1)(B). The case law is nearly unanimous
in agreement with Defendant’s position. See. ¢.g., Tolson v. Avondale Industries, Inc., 141 F.3d
604, 610 (Sth Cir. 1998) (“Because [the plaintiff] has adequate relief available for the alleged
improper denial of benefits through his right to sue the Plans directly under section 1132(a)(1),
relief [on his breach of fiduciary duty claim] through the application of Section 1132(a)(3) would

be inappropriate.”), Wald v. Southwestern. Bell Corp. Customercare Med. Plan, 83 F.3d 1002,

1006 (8th Cir. 1996) (“Because [the plaintiff] is provided adequate relief by her right to bring a
claim for benefits under . . . 29 U.S.C. § 1132(a)(1)(B), . .. and she seeks no different relief in
Count II of her complaint [for breach of fiduciary duty], equitable relief would not be appropriate
in her case.”).” In the context of individual breach of fiduciary duty claims, the result reached in

these cases makes perfect sense. Both the alleged improper denial of benefits and the alleged

2For a more expansive list of cases, see Def. Mem. L. Supp. Mot. Dismiss, at 8-9; Def.
Rep. Br. Supp. Mot. Dismiss, at 4~5.



Section 1132(a)(1)(B) or the appropriateness of equitable relief, the breach of fiduciary duty
claim in a multiple plaintiff case would probably survive a motion to dismiss.

Where there is only one individual plan beneficiary involved, as here, the remedy for
improper denial of benefits is adequate to cure the harms alleged in the breach of fiduciary duty
count of the complaint. Count III of Plaintiff's Complaint will be dismissed.

B. COUNT II: Equitable Estoppel

Estoppel is an equitable doctrine that, if successfully applied, binds a party to the
representations that they made to a party-opponent. Four elements must be proved before
equitable estoppel can apply: (1) a knowing misrepresentation by the defendants; (2) in writing;
(3) with reasonable reliance by the plaintiff on the misrepresentation; and (4) to the plaintiff's

detriment. See Downs v. World Color Press, 214 F.3d 802, 805 (7th Cir. 2000).

The Seventh Circuit has held that “[e]stoppel principles can be applied to certain ERISA

actions,” Thomason v. Aetna Life Ins. Co., 9 F.3d 645, 650 (7th Cir. 1993); see also Gallegos v.

Mount Sinai Med. Ctr., 210 F.3d 803, 811 (7th Cir. 2000) (applying estoppel principles in
ERISA case). The Seventh Circuit has approved of applying estoppel principles in ERISA cases
“when countervailing ERISA principles would not be impeded and ‘one party has made a
misleading representation to another party and the other has reasonably relied to his detriment on

that representation.” Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 586 (7th Cir. 2000)

(quoting Gallegos v. Mount Sinai Med. Ctr., 210 F.3d at 811).

The allegations in Count II of Plaintiffs Complaint present the right circumstances for an
estoppel claim under ERISA to go forward. In Count II, the Plaintiff alleges that the Defendant

made an affirmative misrepresentation to him in writing about the amount of benefits owed to


Minute O62" Ppem (06/97)

United States District Court, Northern District of Iinois

Name of Assigned Judge David H. Coar Sitting Judge if Other
or Magistrate Judge than Assigned Judge

5
CASE NUMBER 02 C 8934 DATE 9/29/2003

CASE Kaliebe vs. Parmalat USA Corp., et al.
TITLE

MOTION: of the motion being presented.)

{In the following box (a) indicate the party filing the motion, e g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

Defendant Metz Baking Co.’s Motion to Dismiss

DOCKET ENTRY:

(a) Oo Filed motion of [ use listing in “Motion” box above.]
2)
Q)
(4)
(5)
(6)
7)
(8)
0)

Brief in support of motion due
Answer brief to motion due __. Reply to answer brief due.

Ruling/Hearing on set for at

Status hearing[held/continued to] {set for/re-set for) on set for at

Pretrial conference[held/continued to] {set for/re-set for] on set for _ at

Trial[set for/re-set for] on at_

[Bench/Jury trial] [Hearing] heid/continued to at

gooao0oacauoano 6g

This case is dismissed {with/without prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) ClLocal Rule 41.1 CFRCP41(a\(1) CO FRCP4I(a)(2).

to this order.

dl) @ (For further detail see order attached to the original minute order.}

(ce | [Other docket entry) Defendant Metz Baking Company’s Motion to Dismiss [Doc. 15] is denied
as to Counts | and I and granted as to Count II. For further detail, see the memorandum opinion attached

case

No notices required, advised in open court,

notices required,
No notices required, number of notices:

Docunient
Number

Notices mailed by judge’s staff. SEP 34 2003)

Notificd counsel by telephone. date docketed

a ~—
cociannclele Yaitals

wv | Docketing to mail notices.

Mail AO 450 form.

Copy to judge/magistrate judge
po

date mailed notice
courtroom,

jarfle deputy’s
initials

roiling deputy iniiats

a


In the context of estoppel claims, the Seventh Circuit has expressed a concern about the

actuarial soundness of pension benefit plans. See Black v. TIC Investment Corp., 900 F.2d 112,

115 (7th Cir. 1990) (“The reason ordinarily cited for this reluctance [to apply estoppel in ERISA
cases] . . . is a concern for the actuarial soundness of the ERISA plan.”). At this point in the
litigation, the Court has no information regarding the actuarial soundness of Defendant’s plan.
Evidence regarding any potential threat to the actuarial soundness of the plan that would flow
from the relief Plaintiff seeks in Count II would be admissible to determine the appropriateness
of equitable relief in this case. Such evidence would militate against granting Plaintiff monetary
relief on his estoppel claim, but it is not properly before the Court on a Motion to Dismiss.
Plaintiff's estoppel claim in Count II is sufficiently distinct, both factually and legally,
from his claim for improperly denied benefits in Count I that it will survive the Motion to
Dismiss. Plaintiff has presented sufficient allegations in his complaint to make out a claim for
equitable estoppel under Section 1132(a)(3) of ERISA. There are no legal reasons or policy
reasons to prevent the claim from proceeding to a determination on the merits, Defendant’s

Motion to Dismiss Count II is denied.

il


noted above, cannot support a claim for individual benefits. The court dismissed the claims for
injunctive relief, holding that they were “‘artfully pled’ claims for benefits.” Id. at 1291. In the
case of an individual plan beneficiary who seeks injunctive relief, as noted above, the injunctive
remedy is virtually equivalent to the remedy for improperly denied benefits; therefore, the
remedy under Section !132(a)(1)(B) is adequate. In a footnote, without any additional analysis,
the SunTrust court dismissed the plaintiffs estoppel claims with the assertion that it was
unnecessary “to reach the Defendants’ estoppel argument because [the Plaintiff] has an adequate
remedy elsewhere.” Id. at 1291 n.3. In addition to not being binding, this Court finds this
analysis unpersuasive. While the actual remedy sought under the estoppel theory might be the
same, i.e. the amount of benefits that the Plaintiff believes he is entitled to may be the same
amount that Defendant allegedly misrepresented to Plaintiff in 1992, the two claims are
sufficiently distinct to permit the two claims to survive a motion to dismiss.

Defendant’s final parry against Count II is that the Seventh Circuit has not explicitly held
that estoppel can be applied to pension plans under ERISA, it has only applied estoppel to
welfare plans under ERISA. The conclusion that Defendant seeks to draw from this hole in the
law is that the “cases preclude such application when the plan at issue is a pension plan like the
one at issue here.” (Def. Rep. Supp. Mot. Dismiss, at 9) The absence of a direct holding on the
subject proves nothing other than the fact that it was unnecessary to reach the issue in previous

cases? In this case, the Court must decide the question.

5After asserting that the absence of case law applying estoppel to pension benefit plans
precludes Plaintiff's position, Defendant takes the Plaintiff to task for suggesting that the absence
of direct holdings on the subject should support Plaintiffs position. (Def. Rep. Supp. Mot.
Dismiss, at 10) Instead of quarreling about the gap in the law, the parties would have been better
served to advance policy arguments to develop the law to support their respective positions.

10



asserts that it is premature at this stage to determine whether the remedy under Section
1132(a)(1)(B) is adequate, for it is possible that Plaintiff will not recover under that theory
(Count I). It is always possible that a plaintiff will not recover, but the inquiry is adequacy not
recoverability. One can determine the adequacy of the available remedy without regard to
Plaintiff's likelihood of success. In the case of an individual plan beneficiary who asserts both a
breach of fiduciary duty claim and an improper denial of benefits claim, the remedy for the
improper denial of benefits, if successful, would be adequate to cure the alleged harm to the
individual plan beneficiary. Therefore, the remedy for an alleged breach of fiduciary duty is
unavailable as a matter of law. In mostly unpublished cases, several other district courts have
agreed that dismissal of breach of fiduciary duty claims on a Motion to Dismiss under Rule

12(b)(6) is appropriate. See, e.g., Emil y. Unum Life Ins. Co. of America, 2003 WL 256781, No.

3:CV02-2019 (M.D. Pa. Feb. 5, 2003) (dismissing breach of fiduciary duty claims on Motion to

Dismiss); SunTrust Bank v. Aetna Life Ins. Co., 251 F. Supp. 2d 1282, 1291 (E.D. Va. 2003)

(same).

If this were a case with multiple plaintiffs involving similar allegations, the result might
be different. Where multiple plaintiffs allege both improper denials of benefits and breaches of
fiduciary duty, the similarity of the allegations would suggest a pattern of breaching fiduciary
duties. In such a case, it might be premature to resolve the adequacy question on a motion to
dismiss, as discovery may reveal a broader problem with the administration of the pian.
Moreover, in such a multiple plaintiff case, it would be similarly difficult (if not impossible) to
determine that equitable relief in the form of an injunction would be inappropriate at such an

early stage of the litigation. As it would be difficult to determine the adequacy of a remedy under


Court denied the Motion to Dismiss Count | of the Complaint in open court on February 24,
2003. (Pl. Resp. to Def. Mot. Dismiss, Ex. A, at 3, lines 22-25). Briefing is complete on the
Motion to Dismiss Counts II and III of the Complaint.
1 STANDARD OF REVIEW

In evaluating a motion to dismiss, the Court accepts as true all well-pleaded facts in the
complaint and draws all reasonable inferences in favor of the plaintiff. See Ameritech Corp. v.
McCann, 297 F.3d 582, 585 (7th Cir. 2002). Motions to dismiss for failure to state a claim will
only be granted if no set of facts exist that could support a judgment for the Plaintiff.

I. DISCUSSION

Defendant urges dismissal of Counts II and III of Plaintiff's Complaint. In its Motion to
Dismiss, Defendant contends that the Plaintiff is not entitled to seek equitable relief under
Section 1132(a)(3) when relief is available under Section 1132(a)(1)(B). In 1996, the Supreme
Court confronted the viability of claims for individual equitable relief under Section 1132(a)(3).
See Varity Corp v. Howe, 516 U.S. 489 (1996). The Court there held that Section 1132(a)(3)
does “offer appropriate equitable relief for injuries caused by violations that § 502 [of ERISA, 29
U.S.C. § 1132] does not elsewhere adequately remedy.” Varity Corp, v. Howe, 516 USS. 489, 512
(1996). The Court went on to note, though, that “where Congress elsewhere provided adequate
relief for a beneficiary’s injury, there will likely be no need for further equitable relief, in which
case such relief would normally not be ‘appropriate’.” Id. at 515. The inquiry that the Court sets
up in Varity is two-fold: (1) whether other portions of the statute provide adequate relief for an
alleged injury; and (2) whether the sought after equitable relief is appropriate. If the other

portions of the statute do provide adequate relief, then there would be no need to confront the



Metz Baking Company that indicated his monthly accrued benefit under the pension plan as of
December 31, 1990 was $3,067.

In August 1992, Metz sought to terminate Kaliebe’s employment. (Id. at 23) At around
the same time, Kaliebe received notice that his monthly accrued benefit under the pension plan as
of December 31, 1991 was $3,166. (Id, at 22, Ex. B) Kaliebe accepted the proposed severance
agreement in 1992 with the understanding that when he turned sixty-five, in 2001, he would
become eligible for his full pension benefit as described in his notice. (Id. at 25-26)

When Kaliebe applied for his pension benefit in 2001, he was notified in writing that his
monthly pension benefit would not exceed $969.91. (Id. at ]30) Plaintiff submitted a claim for
benefits of no less than $3,166 in December 2001. (Id. at 431) Defendant denied Plaintiff's claim
in February 2002 and his subsequent appeal of that denial in June 2002. (Id. at 432-34)

Plaintiff subsequently filed this three count complaint. Count I presents a claim for
recovery of improperly denied benefits due to Plaintiff under the pension plan pursuant to
Section 502(a)(1)(B) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. §
1132(a)(1)(B). Count II asserts that Defendant is estopped and barred by laches from denying the
obligation to pay Plaintiff pension benefits no less than $3,166. Count II] asserts that Metz,
along with its co-Defendants, breached their fiduciary duties to Plaintiff with respect to the
pension plan. Both Counts II and III seek equitable relief pursuant to Section 502(a)(3) of
ERISA, 29 U.S.C. § 1132(a)(3). For the sake of clarity, the Court will henceforth refer to the
statutory sections by their section numbers in the U.S. Code, Sections 1132(a)(1)(B) [claims for
improperly denied benefits} and 1132(a)(3) [claims for equitable relief].

Metz timely filed a Motion to Dismiss all three counts of Plaintiff's Complaint. The



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS ‘ 4

EASTERN DIVISION oir) ‘
er Ss © 2003
ROBERT A. KALIEBE, )
) No. 02 € 8934
Plaintiff, )
) HONORABLE DAVID H. COAR
v. )
)
PARMALAT USA CORPORATION et al., —_)
)
Defendants. , See 3y 2003

MEMORANDUM OPINION AND ORDER

This case comes before the Court on Defendant Metz Baking Company’s Motion to
Dismiss Plaintiff's Complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
For the reasons set forth below, Defendant Metz Baking Company’s Motion to Dismiss is
granted with respect to Counts II and III.

Factual and Procedural Background!

Plaintiff Robert Kaliebe (“Plaintiff” or “Kaliebe”) began working for a predecessor
corporation to Defendant Metz Baking Company (“Defendant” or “Metz”) in May 1964. (Comp.
49) When Plaintiff began work in 1964, he enrolled in the pension plan, which was then the New
Process Baking Company Pension Plan. (Id.) In 1991, Plaintiff was an employee of Metz Baking
Company and a participant in the Metz Baking Company Pension Plan for Non-Union

Employees. (Id. at J 15, 16, 23) In 1991, Plaintiff received a written statement of benefits from

‘The facts in this opinion are all taken from Plaintiffs Complaint, as is appropriate on a
motion to dismiss for failure to state a claim. They are provided as background to this
memorandum and they do not represent a conclusive determination of fact on any issue in this
litigation.

9%


CONCLUSION
For the reasons stated in this opinion, Defendant’s Motion to Dismiss is denied as to

Count II and granted as to Count III.
Enter:

Dowd

David H. Coar
United States District Judge

Dated: September 29, 2003

12