Mejia et al v. Verizon Management Pension Plan et al

Filing 88

MEMORANDUM Opinion and Order Signed by the Honorable Harry D. Leinenweber on 3/29/2013: Case terminated.Mailed notice(wp, )

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

RAMON MEJIA and MARIO BOERI,
Individually, and on Behalf of
a Class of All Similarly
Situated Persons,
Plaintiffs,
v.

Case No. 11 C 3949

VERIZON MANAGEMENT PENSION
PLAN; VERIZON EXCESS PENSION
PLAN; VERIZON EXECUTIVE LIFE
INSURANCE PLAN; VERIZON INCOME
DEFERRAL PLAN; VERIZON
EMPLOYEE BENEFITS COMMITTEE;
VERIZON COMMUNICATIONS, INC.;
AON CORPORATION; WELLS FARGO &
COMPANY; FMR LLC; MORGAN
STANLEY SMITH BARNEY LLC; and
JOHN DOES 1-25,

Hon. Harry D. Leinenweber

Defendants.

MEMORANDUM OPINION AND ORDER
Before the Court are Defendant Aon Corporation’s (“Aon”)
Motion to Dismiss (ECF No. 64) and a Combined Motion to Dismiss
(ECF No. 68) by all the other Defendants in this matter.

For the

reasons stated herein, the Motions are granted.
I.

BACKGROUND

The Court provided a thorough description of this matter in
ruling on the Defendants’ first round of motions to dismiss, so
only a brief summary of the relevant issues will be provided here.
See 5/2/12 Order, ECF No. 52. Plaintiffs Ramon Mejia (“Mejia”) and

Mario Boeri (“Boeri”) are foreign citizens who worked for Defendant
Verizon Communications Inc. (“Verizon”) outside of the United
States. Both participated in Verizon-sponsored benefits plans that
are

governed

by

the

Employee

(“ERISA”), 29 U.S.C. §§1001-1461.

Retirement

Income

Security

Act

Because Plaintiffs never worked

or resided in the United States, they claim that their employment
income and benefits were “foreign source” benefits not subject to
U.S. taxes.

However, both claim to have had tens of thousands of

dollars withheld as taxes by the Verizon plans.

Both Mejia and

Boeri allegedly took extensive steps to rectify the withholding
issues and acquire their wrongfully withheld benefits, but had
limited success.
On June 9, 2011, Plaintiffs filed a Class Action Complaint.
Count 1 sought benefits against the plans, arguing Plaintiffs were
due the withheld tax monies.

Count 2 alleged breach of fiduciary

duty against Verizon and the Verizon Employee Benefits Committee
(“VEBC”).

In Counts 3 and 5, Plaintiffs alleged aiding and

abetting a breach of fiduciary duty against all Defendants and
asked for an injunction against them that would prohibit future
wrongful withholdings.

Count 4 charged Verizon and the VEBC with

co-fiduciary liability. Count 6 claimed VEBC and Verizon failed to
furnish ERISA plan documents requested by Mejia.
were

pled

in

the

alternative,

in

the

construed not to be governed by ERISA.

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event

Counts 7 and 8
any

claims

were

On May 2, 2012, the Court dismissed the Complaint.
5/2/12 Order.

See

Counts 1-5 were dismissed with prejudice to the

extent they sought to recoup benefits from the plans because 26
U.S.C. § 7422 establishes an absolute prohibition on seeking tax
refunds from private tax collectors. However, the Court recognized
that Plaintiffs may be able to plead a claim for injunctive relief
or a declaratory judgment under a narrow exception to 26 U.S.C.
§ 7421.

So to the extent Plaintiffs sought non-monetary relief,

the Court dismissed Counts 1-5 without prejudice.

Counts 6-8 were

also dismissed.
Plaintiffs filed an Amended Complaint on June 21, 2012.
Amended Complaint retained only Counts 1-5.

The

The Defendants have

again moved to dismiss.
II.

LEGAL STANDARD

On a motion to dismiss, all of a Plaintiff’s allegations are
treated as true.

FED. R. CIV. P. 12(b)(6); Wigod v. Wells Fargo

Bank, N.A., 673 F.3d 547, 555 (7th Cir. 2012).

Complaints will

survive a motion to dismiss if they contain sufficient factual
matter to state a claim to relief that is plausible on its face.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

“Threadbare recitals

of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.”

Id.

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III.

ANALYSIS

The Court first notes that, despite dismissing with prejudice
Counts 1-5 of the Original Complaint to the extent they sought to
recoup benefits from the plans, Plaintiffs acknowledge they have
retained

“nearly

complaint.”

all

the

same

allegations

Pls.’ Resp. at 1, ECF No. 72.

as

the

initial

They have done so “to

preserve Plaintiff’s right to appeal the Court’s prior opinion in
its entirety,” and “[t]o the extent the Court does not wish to
reconsider its prior ruling on the dismissed-with-prejudice counts,
then, it need not.”

Id.

The Court stands by its rationale and

dismissal with prejudice of Counts 1-5 in its May 2, 2012 Order,
and incorporates them herein.

See 5/2/12 Order.

To the extent

Plaintiffs have edited or added allegations related to those
claims, the Court has not considered them.

As such, what is left

is to determine whether Plaintiffs have repled sufficiently their
claims for non-monetary relief.
A.

The Court finds they have not.

The Combined Motion to Dismiss (ECF No. 68)
1.

26 U.S.C. §§ 7421 and Irreparable Harm

The Anti-Injunction Act, 26 U.S.C. § 7421 provides that “no
suit for the purpose of restraining the assessment or collection of
any tax shall be maintained in any court by any person. . . .”
U.S.C. § 7421(a).

26

The purpose of this statute is to permit the

United States to assess and collect taxes alleged to be due without
judicial intervention, and to require that the legal right to the
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disputed sums be determined in a suit for refund.

Enochs v.

Williams Packing & Navigation Co., 370 U.S. 1, 7 (1962).

It has

been broadly interpreted to apply not just to the assessment and
collection of taxes, but to “activities which are intended to or
may culminate in the assessment or collection of taxes.”

United

States v. Dema, 544 F.2d 1373, 1376 (7th Cir. 1976).
Under § 7421, courts may impose an injunction regarding tax
collection practices, but only if two requirements of a narrow
exception are met:

(1) that it is apparent, under the most liberal

view of the law and the facts, that the United States cannot
establish its claim to the funds, and (2) the taxpayer demonstrates
that collection would cause him irreparable harm.

See Williams

Packing, 370 U.S. at 6-7.
The Court dismissed the non-monetary component of Counts 1-5
because Plaintiff failed to meet the second requirement to the
Williams

Packing

irreparable harm.

exception:

Plaintiffs

failed

to

allege

Plaintiffs claim that the Amended Complaint now

makes clear that the class has suffered and “will continue to
suffer irreparable harm without the forms of relief that the Court
identified as ‘affecting tax collection,’ including clarification
of the plan terms, replacement of the current fiduciaries, and an
independent audit.”

Pls.’ Resp. at 6.

The irreparable harms

Plaintiffs claim are that Defendants will continue to withhold
amounts wrongfully, and that lack of a court order settling what
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level of withholding is allowed will result in “uncertainty.”
Pls.’ Resp. at 6-7. This uncertainty would impose on Plaintiffs “a
life-long duty to monitor Verizon’s actions and file new IRS-refund
actions – all from foreign nations thousands of miles away – each
time amounts are improperly withheld.”

Id. at 7.

The Defendants contest both alleged “irreparable injuries.”
First, they argue that there are no allegations to support the idea
that Verizon will continue to make improper withholdings.

Even if

there was, the injury would not be irreparable, since Plaintiffs
could obtain a refund from the IRS.
Plaintiffs

have

cited

no

case

to

“uncertainty” is an irreparable harm.

Second, they argue that

support

their

theory

that

Finally, Verizon Defendants

argue that the Amended Complaint does not allege that Plaintiffs
themselves will suffer any irreparable harm for which they seek
equitable relief.
The Court agrees with Defendants.

The irreparable harm

standard is a high one to meet, and even assuming Plaintiffs’
allegations that the Defendants will continue to withhold money
wrongfully, the harm is not irreparable, because Plaintiffs can
pursue a refund action.

This is especially true for the named

Plaintiffs, who are aware of the alleged withholding situation.
Indeed, according to the Amended Complaint Mejia was able to get a
refund from the IRS.
accept

Plaintiffs’

See Amend. Compl. ¶ 63.
contention

that

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The Court does not

uncertainty

regarding

the

benefits that are due is an irreparable harm.

Plaintiffs fail to

cite a single case that stands for such a proposition.

In fact,

Plaintiffs spell out in their brief how such uncertainty can be
dealt with – monitor the benefits, and if it appears that Verizon
has shorted them, institute a refund action.

Pls.’ Resp. at 7.

Plaintiffs claim this imposes a “lifelong duty” to monitor the
benefits they receive, but that “duty” is no different than the
diligence

and

prudence

exercised

by

anyone

who

monitors

his

benefits to make sure they are receiving their proper share.

That

these

such

Plaintiffs

monitoring

live

outside

inconvenient,

but

of
not

the

country

irreparably

may

make

harmful.

The

possibility that Defendants may continue to withhold money, or that
the class may face uncertainty as to how much will be withheld, are
simply not irreparable harms.
The Court notes that Plaintiffs allege repeatedly that the
class members “will suffer irreparable harm because the statute of
limitations in IRC § 6511 is continually running, cutting off their
ability to recover from the IRS the amounts wrongfully withheld
from their

benefits

withholding.”

under

the

auspices

of United

See Amend. Compl. ¶¶ 95, 110, 116, 120.

States

tax

Despite the

words “irreparable harm” appearing in these paragraphs, Plaintiffs
do not cite to them as support for their claim that they properly
pled irreparable harm.

Instead, Plaintiffs argue that these

allegations support their claims for notice-based relief, discussed

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below.

Plaintiffs thus appear to recognize these allegations are

insufficient to support irreparable harm, and are better suited for
their notice argument.

Indeed, Mejia and Boeri cannot claim to

suffer such an irreparable harm, as they are aware of the statute
of limitations.

In addition, the remedy of a refund action is

available up until the statute of limitations runs.
Because

Plaintiffs

failed

to

meet

the

irreparable

harm

requirement, the Court declines to analyze whether they have pled
successfully the first prong of the Williams Packing exception,
that the government cannot establish its claim to the funds.

The

Court also declines to determine whether the Government is a
necessary

party

to

this

case

under

Federal

Rule

of

Civil

Procedure 19, an issue that the Department of Justice addressed in
a February 8, 2013, letter to this Court.
2.

Allegations Not Seeking a Declaratory Order
or Injunction Affecting Tax Collection

In the Court’s May 2, 2012 Order, it noted “narrow fact
scenarios alleged by Plaintiffs that do not seek the de facto
return of paid taxes or an injunction or declaratory judgment
affecting tax collection.”

5/2/12 Order at 22.

Such a scenario

would not be subject to § 7421 scrutiny, and Plaintiffs would not
have to meet the difficult Williams Packing exception.
Plaintiffs only addressed one of the identified scenarios in
its Amended Complaint.

Plaintiffs’ requested injunctive relief of

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giving notice to plan participants that they may be due a tax
refund and informing them how to seek one would:
in no way impede the collection of taxes by
the federal government. It merely would serve
to bring similarly situated plan participants
out of the dark on what, allegedly, is a
mistake that Verizon itself believes it has
made.
Beneficiaries would then be free to
pursue or not pursue a refund action directly
with the government.
Id. Plaintiffs’ problem was that, with respect to the notification
issue, the Original Complaint never said how or if Plaintiffs were
damaged by the lack of notice.

Plaintiffs failed, for example, to

“allege that the failure to notify prevented Plaintiffs from
recovering their wrongfully withheld taxes due to statute of
limitations issues.”

Id. at 23.

Plaintiffs now claim that they have adequately alleged damages
caused by Verizon’s breaches of fiduciary duties which authorize
notice-based relief.

Specifically, the Amended Complaint states

that VEBC and Verizon did not notify class members that the amounts
wrongfully withheld could be recovered from the IRS for years not
foreclosed

by

the

statute

of

limitations,

and

as

such

“many

participants have missed their opportunity to recover amounts from
the IRS due to the statute of limitations.”

Amend. Compl. ¶ 100.

In addition, Plaintiffs allege that the class members will be
injured because the statute of limitations is continually running,
cutting off their ability to recover funds from the IRS.
Amend. Compl. ¶¶ 95, 110, 116, 120.
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See

These allegations are insufficient, however, because they fail
to state how the Plaintiffs were injured by the failure to notify.
“If none of the named plaintiffs purporting to represent a class
establishes

the

requisite

of

a

case

or

controversy

with the

defendants, none may seek relief on behalf of himself or any other
member of the class.”

O’Shea v. Littleton, 414 U.S. 488, 494

(1974). In the Court’s previous Order, it stated specifically that
the Original Complaint was deficient because, with respect to the
notification issue, “the Complaint never says how or if Plaintiffs
were damaged by this.”

5/2/12 Order at 23 (emphasis added).

The

Amended Complaint suffers the same deficiency. Plaintiffs argue in
their briefs that Boeri was injured by a lack of notification, and
direct the Court to ¶¶ 64-65 of the Amended Complaint.
at 9-10.

Pls.’ Resp.

These paragraphs describe Boeri complaining about the

withholding of taxes from his benefits payments and having Verizon
deny his claim.

What these paragraphs do not allege is that he was

injured by a lack of notification.

Indeed, these paragraphs are

unchanged from the Original Complaint, which the Court noted
previously failed to state how or if Plaintiffs were damaged by the
lack of notification.
In addition, Defendants also argue that Plaintiffs cannot
obtain notice-based relief, arguing that Mejia and Boeri already
know their tax status and their ability to seek a refund.
Mot.

to

Dismiss

at

8,

ECF

No.

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69.

Plaintiffs

Defs.’

argue

that

Defendants’ argument creates a “catch-22,” whereby being aware of
one’s tax status and ability to seek a refund would disqualify any
plaintiff from seeking notice-based relief.

This is because “the

moment a potential plaintiff learned enough of the core facts to
bring suit, his cause of action would evaporate.”
11.

Pls.’ Resp. at

Plaintiffs argue that this cannot be the state of the law, and

direct

the

support.

Court

to

the

“inherently

transitory”

doctrine

as

That doctrine allows a putative class member whose claim

has been mooted to pursue an action where (1) the claim is unlikely
to remain live long enough for any plaintiff to obtain class
certification, and (2) there is a “constant class of persons”
suffering from defendant’s conduct.

See Olson v. Brown, 594 F.3d

577, 581-82 (2010).
Plaintiffs’ arguments have been made unsuccessfully before in
this District.
brought

suit

In Mink v. University of Chicago, plaintiffs

on

diethylstilbestrol

behalf

(“DES”)

conducted by defendants.
F.Supp. 713,

722

of

themselves
as

part

and

of

1,000

women

a

medical

given

experiment

Mink v. University of Chicago, 460

(N.D. Ill.

1978).

Plaintiffs

alleged

that

defendants breached their duty to notify plaintiffs that they had
been given DES while pregnant and that children born from that
pregnancy should consult a medical specialist.

Id.

Plaintiffs

abandoned all their claims for damages on that count because of
their inability to allege personal physical injury.
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Id. at 723.

They then sought injunctive relief on behalf of other class members
who would be injured in the future if no relief were granted.

Id.

They sought specifically to compel defendants to notify all women
given

DES

of

the

risks

to

recommended precautions.

them

Id.

and

their

children,

and

of

Plaintiffs admitted they were

already aware of the “DES menace” and did not require further
notice.

Id.

Defendants moved to dismiss on the grounds of

mootness, and plaintiffs argued dismissal was improper based on
considerations similar to the inherently transitory doctrine.

Id.

The court found for defendants, stating that it did not believe
plaintiffs could put themselves within that exception. Id. As the
court explained:
More basically, however, plaintiffs cannot
show that they had a live controversy at the
time
the
complaint
was
filed,
another
requirement articulated in Sosna. The named
plaintiffs were aware of the dangers of DES at
the time the complaint was filed, and thus,
had no right to be warned.
It is somewhat
anomalous to speak of this case being moot.
In a sense, there has never been a case or
controversy that could be mooted.
Id. (citing Sosna v. Iowa, 419 U.S. 393 (1975)).
dismissed

the

plaintiffs’

notification of the class.

claim

for

The court then

injunctive

relief

for

Id.

Plaintiffs here face the same problem as the plaintiffs in
Mink:

their claim for notification never became live, because as

soon as they became aware of the alleged wrongful withholding

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situation and ability to seek a refund, they had no right to be
warned.

They do not fit within the inherently transitory doctrine

because the doctrine applies generally to situations in which the
named plaintiff had standing when he filed the suit, but lost that
standing prior to the court certifying the class.
Olson, 594 F.3d 577 at 581-82.

See, e.g.,

Indeed, the first requirement is

that it is uncertain that a claim “will remain live for any
individual who could be named as a plaintiff. . . .”
(emphasis added).

Id. at 582

Plaintiffs claim for notification was never

“alive.”
Plaintiffs
information

argue

Defendants

notification.

that

Mejia

may

be

and

Boeri

obligated

may

to

benefit

include

in

from
any

However, the goal of the notification would be to

inform unaware class members that there may have been wrongful
withholding of their benefits and that they could pursue a refund
action, and Plaintiffs already received such notice.
Plaintiffs have failed to allege how they were harmed by a
lack of notice, and failed to show that they can obtain noticebased relief.
insofar

as

For the reasons stated above, Plaintiffs’ claims,
they

sought

injunctive

relief

with

respect

to

notification of plan participants, are dismissed.
3.

The Verizon Benefits Center Letter

The Court instructed Plaintiffs “to explain what damages were
caused by the November 20, 2009 [Verizon Benefits Center] letter
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asking beneficiaries to attest a company ID number was their Social
Security number.” 5/2/12 Order at 23-24. Plaintiffs added several
allegations to the Amended Complaint, claiming that the letter
created a “chilling effect” on class members. Amend. Compl. ¶ 105.
On information and belief, Plaintiffs claim some class members were
unwilling to come forward in this case based on the fear that
Verizon might retaliate against them.

Id.

Also, on information

and belief, Plaintiffs claim that “the letter’s threat to suspend
benefits caused unidentified class members to delay or forego
filing claims for refunds or even researching if such funds were
due from the IRS for fear that they committed perjury or that
Verizon would suspend their benefits.”

Id. ¶ 79.

In addition,

Plaintiffs claim that being coerced by a fiduciary into making a
false statement under oath is a stand-alone injury.
These allegations are insufficient.
Amended Complaint

does

it

state

suffered due to this letter.

what

Id. ¶ 106.

First, nowhere in the
damages

Mejia

or Boeri

There is no allegation that they

signed the allegedly false affidavit or that it kept them from
filing claims for refunds. As stated previously, a named plaintiff
must have an actual case or controversy, and Plaintiffs here have
not alleged that they sustained any injury from this letter.
Second, Plaintiffs offer no support for their contention that
“Plaintiffs and the putative class members were injured merely by
being pressured by their fiduciaries into making a false statement

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under oath.”

Pls.’ Resp. at 14.

Finally, all of these conclusory

allegations lack factual basis in the Amended Complaint, and are
insufficient to support a cause of action.

As such, to the extent

Plaintiffs’ claims were based on the November 20, 2009 letter, they
are dismissed.
For the reasons stated above, to the extent Counts 1-5 seek
injunctive relief or declaratory judgment, they are dismissed.
B.

Aon’s Motion to Dismiss

Plaintiffs concede that, under the Court’s previous Order,
they have no claim against Aon.

Plaintiffs have previously denied

that they were claiming Aon was a fiduciary, and make no argument
in

their

briefing

to

the

contrary

here.

In

addition,

they

acknowledge that they cannot establish a claim against the nonfiduciary Defendants for aiding and abetting Verizon’s fiduciary
breaches under the Court’s ruling that a non-fiduciary must have
actual knowledge that the conduct complained of violates ERISA,
rather than knowledge of the underlying conduct.
16-17.
either.

Pls.’ Resp. at

As such, Count 5 of the Amended Complaint cannot survive,
Id. at 17.

Yet Plaintiffs request that all Defendants be kept in the case
for purposes of Count 3, because the non-fiduciary Defendants may
be

necessary

relief. Id.

for

purposes

of

obtaining

appropriate

equitable

The Court is not convinced that this would be an

appropriate ground to keep a non-fiduciary in the case even if
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Plaintiffs had successfully pled Count 3.

But since the Court has

dismissed Count 3, it need not reach that question.
IV.

CONCLUSION

For the reasons stated herein, and in its Order of May 2, 2012
to the extent Plaintiffs reincorporated their previously dismissed
claims, Aon’s Motion to Dismiss is granted and the remaining
Defendants’

Combined

Plaintiffs

already

Motion
failed

to

Dismiss

once

to

is

granted.

remedy

their

Because
pleading

deficiencies, the Complaint is dismissed in its entirety with
prejudice.

IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
DATE: 3/29/2013

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