Stone et al v. Signode Industrial Group LLC et al

Filing 175

MEMORANDUM Opinion and Order: Plaintiff's Motion to Compel [dkt. 149] is granted in part and denied in part. The parties are ordered to file an updated joint status report on 7/23/21 with any proposed discovery schedule necessary to complete discovery in this matter. - Signed by the Honorable Susan E. Cox on 7/9/2021. [For further details see order] Mailed notice (np, )

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
HAROLD STONE, et al.,

)
)
Plaintiff,
)
)
v.
)
SIGNODE INDUSTRIAL GROUP LLC, )
et al.,
)
)
Defendants.

No. 1:17-cv-5360
Judge John Kness
Magistrate Judge Susan E. Cox

MEMORANDUM OPINION AND ORDER
Plaintiff’s Motion to Compel [dkt. 149] is granted in part and denied in part. The motion
is granted to the extent it seeks information and documents related to Defendants’ profits,
“consequential gains,” and “saved expenditures” regarding Defendants’ failure to provide health
benefits for retirees. The motion is denied to the extent it seeks discovery regarding Defendants’
compliance with the District Court’s permanent injunction. The parties are ordered to file an
updated joint status report on 7/23/21 with any proposed discovery schedule necessary to complete
discovery in this matter.
I.

Background
This matter is brought by two individual retirees on behalf of other similarly situated

retirees of the Acme Packaging Plant in Riverdale, Illinois.1 [Dkt. 152 at 1.] Defendant Signode
Industrial Group, LLC (“Signode”) assumed an obligation to pay health-care benefits to retirees
under an agreement that stated that those benefits would not be “terminated . . . notwithstanding
the expiration” of the underlying agreement. Stone v. Signode Industrial Group, LLC, 943 F.3d
381, 382 (7th Cir. 2019). Eventually, Signode terminated the underlying agreement and stopped

1

A full factual background of this case can be found in Stone v. Signode Industrial Group, LLC, 943 F.3d 381
(7th Cir. 2019). The Court only recites the limited facts necessary to determine the issues currently before it.

1

providing the health-care benefits to the retirees. Id. Plaintiffs then filed the instant suit, alleging
that Defendants had breached the agreement “in violation of both § 301 of the Labor-Management
Relations Act, 29 U.S.C. § 185, and § 502(a)(1)(B) of the Employee Retirement Income Security
Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B).” Id. at 384. On summary judgment, the District
Judge held that Signode did not have the right to terminate the health-care benefits and entered a
permanent injunction ordering Signode to re-instate the benefits; that decision was upheld on
appeal. Id. at 384, 390.
On remand, proceedings in this matter continue regarding damages, discovery, class
certification, and fees and costs. [Dkt. 136.] As part of discovery on damages, Plaintiffs served
document requests and interrogatories on Defendants. The parties reached impasse on two issues,
which led to the instant motion to compel; specifically, Plaintiffs move to compel Defendants to
produce information regarding: (1) “saved expenditures” and “other consequential gains” realized
after Defendants ceased providing healthcare benefits in 2016, and (2) “injunction compliance”
regarding the restoration of health-care benefits. For the reasons discussed more fully below, the
motion is granted as to the first issue and denied as to the second.
II.

Discussion
A.

Saved Expenditures and Consequential Gains

Plaintiffs are seeking to compel documents and interrogatory responses related to
Defendants’ profits, “consequential gains,” and “saved expenditures” regarding Defendants’
failure to provide health benefits for retirees. Plaintiffs are seeking disgorgement and restitution of
these gains as an equitable remedy under section 502(a)(3) of ERISA. Defendants make several
arguments why such discovery should not be allowed in this suit. While many of Defendants’
arguments may be persuasive in a dispositive motion, a discovery motion is not the proper vehicle
to raise such assertions, and the Court rejects them for purposes of this motion.
2

First, Defendants argue that the discovery Plaintiffs seeks is irrelevant because “the
Supreme Court held long ago that ERISA did not allow extracontractual damages in cases seeking
wrongfully denied benefits.” [Dkt. 152 at 6 (citing Mass. Mut. Life Ins. Co. v. Russell, 473 U.S.
134, 148 (1985)).] However, the case law in this circuit is not as cut and dried as Defendants’ brief
suggests. Compare Resnick v. Schwartz, 2018 WL 4191525 at *9 (N.D. Ill. Sept. 3, 2018)
(dismissing claim for disgorgement); with Mondry v. Am. Fam. Mut. Ins. Co., 557 F.3d 781, 806
(7th Cir. 2009) (allowing restitution under § 502(a)(3) for “the lost time value of the money
[plaintiff] was forced to expend on [her son’s] speech therapy until at last she . . . was able to
prevail in her Level Two appeal.”). In short, the issue of whether extra-contractual equitable relief
is available on Plaintiffs’ claims under § 502(a)(3) is a highly fact-specific question that is not
amenable to being resolved on a motion to compel. In fact, a review of the case law cited by the
parties in their briefs shows that these issues are almost exclusively determined on dispositive
motions. Here, a finding that Plaintiff’s damages claims are not viable would be tantamount to a
ruling on the merits of those claims and not within this Court’s jurisdiction. For purposes of this
motion, discovery is available for any information that is relevant to the claims that are live in the
case. See Fed. R. Civ. P. 26(b). As it stands, Plaintiffs’ claims for disgorgement of “consequential
gains” and “saved expenditures” are still in the case, and the discovery Plaintiffs seeks on these
issues is relevant. The Court rejects Defendants’ arguments.
Second, Defendants argue that Plaintiffs cannot bring a claim pursuant to § 502(a)(3)
because Plaintiff’s § 502(a)(1)(B) claim for money damages would make them whole, thereby
precluding a § 502(a)(3) claim for equitable relief. This argument is certainly compelling and there
is ample case law to support Defendants’ arguments. See, e.g., Nemitz v. Metropolitan Life Ins.
Co., 2013 WL 3944292 (N.D. Ill. July 31, 2013). However, a ruling in Defendants’ favor on this
issue would require the Court to make a finding on the merits that Plaintiffs’ are made whole by
3

the damages they seek in their § 502(a)(1)(B) claims; quite literally, the Court would be asked to
find that Plaintiffs’ § 502(a)(3) claim is not viable and should be dismissed, which is not
appropriately done via a motion to compel.2 As such, the Court likewise rejects Defendants’
second argument; Plaintiffs’ § 502(a)(3) claim is currently a claim still in the case and Plaintiffs
should be allowed to explore discovery related to equitable relief under that section.
Third, Defendants argue Plaintiffs are required to show that the funds they seek to recover
as restitution can be specifically identified and remain in Defendants’ possession. See Montanile
v. Bd. Of Trustees of the National Elevator Industry Health Benefit Plan, 577 U.S. 136 (2016).
Again, the Court does not take issue with Defendants’ reading of the case law; the Supreme Court’s
decision in Montanile was clear and decisive. However, Defendants’ argument poses dispositive
issues and questions of fact and law that are not properly decided on a motion to compel, and the
Court will not reach them here. To the extent Defendants believe that such claims are improper or
unavailable, they must file the appropriate motion to dispose of those claims. The scope of
discovery is only limited to whether the material sought is “relevant to any party’s claim or defense
and proportional to the needs of the case.” Fed. R. Civ. P. 26(b). Plaintiffs have made a claim for
restitution and the discovery they seek in the motion to compel is relevant to that issue. Until that
claim is dismissed from the suit, the Court must allow discovery to move forward. The Court
rejects Defendants’ argument on this point.
Finally, Defendants contend the Court should deny Plaintiffs’ motion because it is based
on “outdated” Seventh Circuit case law in light of the aforementioned Montanile case. Defendants
claim that “[t]he Seventh Circuit is explicit that Plaintiffs’ cases are no longer good law.” [Dkt. 152

2

The cases cited by Defendants in the section of their brief related to this argument are all opinions on motions to
dismiss pursuant to Rule 12(b)(6). While such a motion would not be available to Defendants because they have
already answered the complaint, a limited summary judgment motion before the District Judge might provide the
relief Defendants seek here.

4

at 11.] The citation for this proposition, however, is a district court case and is not binding
precedent on this Court; the Seventh Circuit Court of Appeals had made no such finding
overturning or abrogating the case law cited by Plaintiffs. Nonetheless, even if Defendants were
correct, the Court reiterates that this is wrong vehicle in which to raise such an argument.
Because none of Defendants’ arguments demonstrate that Plaintiffs’ discovery requests are
irrelevant to claims that are still live in this lawsuit, the Court rejects them and grants Plaintiffs’
motion to compel discovery regarding Defendants’ profits, “consequential gains,” and “saved
expenditures” related to Defendants’ failure to provide health benefits for retirees.
B.

Injunction Compliance

The motion is denied to the extent Plaintiffs seek discovery on compliance with the District
Court’s permanent injunction. The Plaintiffs have won a permanent injunction requiring Signode
to reinstate the health-care benefits for retirees. To the extent Plaintiffs believe Defendants have
failed to comply with the court-ordered injunction, they should file a motion to enforce that
injunction before the District Judge, who can then order briefing or any evidentiary hearing
necessary to determine whether Defendants have followed the injunction order. 3 The Court will
not instead allow Plaintiffs to go on the proverbial fishing expedition to explore whether
Defendants are reinstating health-care benefits in a manner that is consistent with the requirements
of the permanent injunction before a motion to enforce is filed. Plaintiffs are attempting to
accomplish through standard discovery what should be attempted through post-judgment
enforcement proceedings before the District Judge. Just as Defendants raised their arguments as
to the viability of Plaintiffs’ claims via the incorrect procedural method, so too have the Plaintiffs
on this issue. As such, the Court denies Plaintiffs’ motion to the extent it seeks discovery on

3

As Defendants noted in their brief, the District Judge has repeatedly advised Plaintiffs to bring a motion to enforce
if they had any issue with Defendants’ compliance with the injunction. [Dkt. 152 at 13.]

5

Defendants’ injunction compliance.
III.

Conclusion
Plaintiff’s Motion to Compel [dkt. 149] is granted in part and denied in part. The parties

are ordered to file an updated joint status report on 7/23/21 with any proposed discovery schedule
necessary to complete discovery in this matter.

Entered: 7/9/2021
________________________________
U.S. Magistrate Judge, Susan E. Cox

6