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Case: 1:12-cv-08039 Document #: 146 Filed: 07/31/13 Page 1 of 21 PageID #:2209



No. 12 C 8039

Judge Virginia M. Kendall



AT&T, INC., as Plan Administrator, and




Plaintiff Gregory Nemitz filed an amended complaint against Defendants Metropolitan

Life Insurance Company, AT&T Inc., AT&T Umbrella Benefit Plan No. 1, AT&T Umbrella

Benefit Plan No. 2, Fidelity Workplace Services LLC (collectively, the “Corporate Defendants”)

and Kent Magnuson for, among other things, denial of a claim for life insurance benefits and for

breach of fiduciary duty. The Corporate Defendants moved to dismiss, pursuant to Federal Rule

of Civil Procedure 12(b)(6), the breach of fiduciary duty claims asserted against them pursuant to

29 U.S.C. § 1132(a)(3). Magnuson moved separately pursuant to Rule 12(b)(6) to dismiss all

claims asserted against him. The Plaintiff sought to conduct additional discovery in this case.

For the reasons set forth below, the Corporate Defendants’ partial motions to dismiss are granted,

Magnuson’s motion to dismiss is denied and Nemitz is allowed to conduct limited discovery.

Case: 1:12-cv-08039 Document #: 146 Filed: 07/31/13 Page 2 of 21 PageID #:2210


The following facts are taken from the complaint and are assumed to be true for purposes

of this Motion to Dismiss. See Voelker v. Porsche Cars North America, Inc., 353 F.3d 516, 520

(7th Cir. 2003); Murphy v. Walker, 51 F.3d 714, 717 (7th Cir. 1995). In 1979, AT&T employed

Nancy Nemitz and offered her benefits, including life insurance benefits payable upon her death

to designated beneficiaries. Doc. 66, First Amended Complaint, at ¶ 12. If no beneficiary was

properly designated, the life insurance benefits would be payable to her spouse. Id. Nancy

Nemitz, unmarried at the time, filled out a beneficiary form that named her mother, Betty

Magnuson, as the beneficiary of her life insurance benefits under Group Policy No. 18004-G,

and her brother, Kent Magnuson, as contingent beneficiary under the same policy. Id. at ¶ 13.

In 1991 and 1992, Nancy Nemitz completed additional beneficiary forms and submitted

them to AT&T or Fidelity. Id. at ¶ 14. In 1995, Nancy Nemitz accepted a buy-out from AT&T

following a reduction in force and her employment with AT&T terminated. Id. at ¶ 15. As a

result, her life insurance benefits terminated in 1995. Id. at ¶ 16. Nancy then married Plaintiff

Gregory Nemitz in 1997. Id. at ¶ 17.

In 2001, AT&T rehired Nancy. Id. at ¶ 18. Therefore, she became eligible again for

employment benefits, including life insurance benefits administered by MetLife. Id. at ¶ 19.

Nemitz contends that Nancy was considered a new employee upon being rehired. Id. at ¶ 18.

Nancy then completed a new life insurance beneficiary designation form that named her

husband, Gregory Nemitz, as the primary beneficiary of her death benefit. Id. at ¶ 20. The

Nemitzes then purchased optional supplemental life insurance benefits through AT&T to

increase the benefit payable to Greg Nemitz upon Nancy’s death. Id. at ¶ 24. When Nancy

decided to retire in 2010, she met with representatives from AT&T and Fidelity to discuss her


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benefits upon retirement. Id. at ¶ 26. Both Fidelity and AT&T confirmed that the Plaintiff was

her dependent and beneficiary under the life insurance plans and that no other beneficiary was

named on the forms. Id. at ¶¶ 28-29.

Nancy died in May 2011. Id. at ¶ 33. Following her death, the Plaintiff contacted

AT&T, MetLife and Fidelity to inform them of Nancy’s death and to claim the life insurance

benefits. Id. at ¶ 36. However, the Corporate Defendants refused to provide Nemitz with

information concerning the benefits, including who they considered the beneficiary to be. Id. at

¶ 37. At this time, Defendant Kent Magnuson, Nancy’s brother, agreed to assist the Plaintiff in

obtaining the life insurance benefits. Id. at ¶ 38. He further agreed to deal with the Corporate

Defendants on the Plaintiff’s behalf. Id. In reliance on this representation, the Plaintiff

authorized the Corporate Defendants to deal directly with Magnuson. Id. at ¶ 39.

On December 8, 2011, MetLife denied Nemitz’s claim for life insurance benefits. Id. at ¶

41. It also informed the Plaintiff it had paid the benefits to Magnuson. Id. Shortly thereafter,

Nemitz learned that MetLife had paid approximately $116,000 to Magnuson based on the

beneficiary form Nancy executed in 1979. Id. at ¶ 42. Nemitz appealed the denial of his claim

to the Plan Administrator on March 30, 2012. Id. at ¶ 44. MetLife upheld the denial of the

claim on July 12, 2012. Id. at ¶ 45. Nemitz then filed the instant action in this Court on October

8, 2012.


The Standard of Review

When considering a motion to dismiss under Rule 12(b)(6), the Court accepts as true all


facts alleged in the complaint and construe all reasonable inferences in favor of the plaintiff. See

Murphy, 51 F.3d at 717. To state a claim upon which relief may be granted, a complaint must


Case: 1:12-cv-08039 Document #: 146 Filed: 07/31/13 Page 4 of 21 PageID #:2212

contain a “short and plain statement of the claim showing that the pleader is entitled to relief”.

Fed. R. Civ. P. 8(a)(2). “Detailed factual allegations are not required, but the plaintiff must allege

facts that when “accepted as true... ‘state a claim to relief that is plausible on its face.” Ashcroft

v. Iqbal, 120 S. Ct. 1937, 1949 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

555 (2007)). In analyzing whether a complaint meets this standard, the “reviewing court [must]

draw on its judicial experience and common sense.” Iqbal, 129 S. Ct. at 1950. When there are

well-pleaded factual allegations, the Court assumes their veracity then determines if they

plausibly give rise to an entitlement to relief. Id.




The Breach of Fiduciary Duty Claims Asserted Against the Corporate
Defendants under Section 502(a)(3) Are Dismissed

Count I of the Complaint asserts a claim against Defendants Met Life and the AT&T

Umbrella Plans for a failure to provide benefits under Title 29 U.S.C. § 1132(a)(1)(B). This

section provides in relevant part that:

A civil action may be brought by a participant or beneficiary [of an ERISA plan]
to recover benefits due to him under the term of his plan, to enforce his rights
under the terms of the plan, or to clarify his rights to future benefits under the
terms of the plan.

29 U.S.C. § 1132(a)(1)(B). Pled in the alternative to Count I’s failure to provide benefits claim,

Nemitz also asserts breach of fiduciary duty claims against the Corporate Defendants in Counts

I, III, IV and V under § 502(a)(3). This section provides in relevant part that a civil action may

be brought by a participant, beneficiary or fiduciary:

(A) to enjoin any act or practice which violates any provision of this subchapter or
the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to
redress such violations or (ii) to enforce any provisions of this subchapter or the
terms of the plan.

29 U.S.C. § 1132(a)(3).


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The Corporate Defendants argue that the counts premised on a breach of fiduciary duty –

Counts I, III, IV and V – should be dismissed because they are repackaged claims for benefits

under § 502(a)(1)(B) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.

1132(a)(1)(B). According to the Corporate Defendants, equitable relief under § 502(a)(3) is

unavailable as a matter of law if a claim for benefits is available under § 502(a)(1)(B). The

Court agrees.

In Varity Corp. v. Howe, the Supreme Court described § 502(a)(3) as a “catchall”

provision that acts “as a safety net, offering appropriate equitable relief for injuries caused by

violations that § 502 does not elsewhere adequately remedy.” 516 U.S. 489, 515 (1996). As a

result, individuals may be able to recover under § 502(a)(3) but “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 normally would not be appropriate.” Id. at 515

(internal quotation omitted).

The majority of circuits have interpreted Varity to bar relief under § 502(a)(3) if relief is

available under § 502(a)(1)(B). See, e.g., Antolik v. Saks, Inc., 463 F.3d 796, 803 (8th Cir.

2006); Ogden v. Blue Bell Creameries U.S.A., Inc., 348 F.3d 1284, 1287-88 (11th Cir. 2003);

Tolson v. Avondale Indus., Inc., 141 F.3d 604, 610-11 (5th Cir. 1998); Wilkins v. Baptist

Healthcare Sys., 150 F.3d 609, 615-16 (6th Cir. 1998); Forsyth v. Humana, Inc., 114 F.3d 1467,

1474-75 (9th Cir. 1997); Wald v. Sw. Bell Corp. Customcare Medical Plan, 83 F.3d 1002, 1006

(8th Cir. 1996); Korotynska v. Metropolitan Life Insurance Co., 474 F.3d 101, 107 (4th Cir.

2006).1 Additionally, courts in this district have nearly uniformly adopted this rule. See, e.g.,

1 The Seventh Circuit has not expressly determined whether Varity bars a claim under § 502(a)(3) where relief is
available under § 502(a)(1)(B); however, it has noted that the majority of circuits have ruled this way. See Mondry
v. Am. Family Mut. Ins. Co., 557 F.3d 781, 805 (7th Cir. 2009) (stating that a majority of the circuits interpret Varity


Case: 1:12-cv-08039 Document #: 146 Filed: 07/31/13 Page 6 of 21 PageID #:2214

Roque v. Roofers’ Union Welfare Trust Fund, No. 12 C 3788, 2013 WL 2242455, at *6 (N.D. Ill.

May 21, 2013) (collecting cases); but see Murphy v. U.S. Life Insurance Co., No. 04 C 2930,

2005 WL 711982, at *1 (N.D. Ill. Mar. 23, 2005). This interpretation of Varity makes sense

because courts necessarily consider whether a fiduciary has maintained its obligations in

determining whether a denial of benefits was proper. See Korotynska, 474 F.3d at 107 (quoting

Booth v. Wal-Mart Stores, Inc. Assocs. Health & Welfare Plan, 201 F.3d 335, 342-43 (4th Cir.

2000) (stating that a review of a benefits determination “should consider, among other factors,

‘whether the decisionmaking process was reasoned and principled,’ ‘whether the decision was

consistent with the procedural and substantive requirements of ERISA,’ and ‘the fiduciary’s

motives and any conflict of interest it may have.’”).

Nemitz contends that this authority is not as hefty as it once was in light of the United

States Supreme Court’s decision in Cigna Corp v. Amara, 131 S.Ct. 1866 (2011). Amara,

according to Nemitz, “makes clear that a plaintiff who pleads under both sections of ERISA

should not have its claims under one theory dismissed solely because he has pled both.” Doc.

112 at 10. This is incorrect. See, e.g., Roque, 2013 WL 2242455, at *7 (holding that Amara

does not alter the rule announced in Varity); Krase v. Life Ins. Co. of N. Am., No. 11 C 7659,

2012 WL 4483506, at *3 (N.D. Ill. Sept. 27, 2012) (same); Biglands v. Raytheon Employee

Savings & Inv. Plan, 801 F. Supp. 2d 781, 786 (N.D. Ind. 2011) (same). Rather, Amara simply

held that a plaintiff may seek monetary relief under § 502(a)(3) where relief is not available

under a separate section of ERISA.

Thus, where § 502(a)(1)(B) provides adequate relief, identical relief is not available

under § 502(a)(3). This means an ERISA plaintiff is not permitted to “repackage” a denial of

as holding that “if relief is available to a plan participant under subsection (a)(1)(B), then that relief is un available
under subsection (a)(3).”) (emphasis in original).


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benefits claim as a § 502(a)(3) claim. See, e.g., Roque, 2013 WL 2242455, at *7-8; Zuckerman

v. United of Omaha Life Ins. Co., No. 09 C 4819, 2010 WL 2927694, at *5-6 (N.D. Ill. July 21,

2010). It should be noted that contrary to Nemitz’s suggestion, adequate relief does not mean

recovery, it means that an adequate remedy is available. See, e.g., Hakim v. Accenture United

States Pension Plan, 656 F. Supp. 2d 801, 810-11 (N.D. Ill. 2009) (collecting cases and stating

“whether [p]laintiff’s § 502(a)(1)(B) claim will succeed is irrelevant; the pertinent inquiry is

whether [p]laintiff can state a claim under § 502(a)(1)(B)”); Roque, 2013 WL 2242455, at *7

(“In conducting this inquiry, the Court notes that whether Roque can actually recover under §

502(a)(1)(B) is not the relevant question. Rather, the issue is simply whether an adequate

remedy is available.”).

There is no question in this case that the § 502(a)(3) claims in Counts I, III, IV and V

merely repackage the denial of benefits claim also located in Count I. Nemitz’s claim for denial

benefits in Count I requests “[a]n order requiring the MetLife or the Plans, jointly and severally,

to pay Gregory Nemitz $58,000 in life insurance benefits arising from Nancy Nemitz’ death

under the AT&T Umbrella Benefit Plan No. 1 and its underlying AT&T Medical Group Life

Insurance Plan; An order requiring the MetLife or the Plans, jointly and severally, to pay

Gregory Nemitz $58,000 in life insurance benefits arising from Nancy Nemitz’ death under the

AT&T Umbrella Benefit Plan No. 2 and its underlying AT&T Supplementary Group Life

Insurance Plan.” Doc. 66, Count I, at 15. The § 502(a)(3) claim in Count I requests the exact

same relief. See id. In near identical fashion, Count III asks for relief under either §

502(a)(1)(B) or § 502(a)(3) and requests “[a]n order finding that the Defendants, by failing to

provide Nemitz with copies of all beneficiary forms has failed to provide Nemitz with a full and

fair review of his claims and enjoining the Defendants from relying on the 1979 beneficiary form


Case: 1:12-cv-08039 Document #: 146 Filed: 07/31/13 Page 8 of 21 PageID #:2216

completed by Nancy Nemitz in which Magnuson is named as a contingent beneficiary or,

alternatively, declaring MetLife’s decision that Nemitz was not Nancy Nemitz’s designated

beneficiary is void.” Id. at 23-24. Count IV makes the same request for relief. See Id. at 29

(requesting relief for violation of § 502(a)(3) in the form of “[a]n order requiring Defendants to

put Plaintiff in the position he would have been had the Defendants properly provided,

maintained and relied upon all of the beneficiary forms that Nancy Nemitz completed or

attempted to complete or would have completed.”). Finally, Count V effectively duplicates this

request against by requesting “[a]n order requiring the Defendants to pay the life insurance

benefits in accordance with Nancy Nemitz’s intent” and “[a]n order determining that the 1979

beneficiary form completed by Nancy Nemitz is invalid, in light of her subsequent termination,

marriage, rehire, entry into the Plans as a participant, and retirement.” Id. at 33-34.

Indeed, other courts in this district have found similar allegations to constitute

repackaging of denial of benefits claims as § 501(a)(3) claims. See, e.g., Roque, 2013 WL

2242455, at *7 (holding that request for “monetary relief in an amount equal to the cost of

services [plaintiff] incurred because of the breaches of fiduciary duty” under § 502(a)(3) was

identical to a request for monetary relief “in the form of all past due benefits on [plaintiff’s]

claims for his second surgery”) (internal quotations omitted); Krase, 2012 WL 4483506, at *3

(“Krase seeks the same relief for the same injury under both subsections: life insurance benefits

owed to him in the amount of $226,000.”) (internal quotations omitted). Accordingly, since the

relief Nemitz seeks on the breach of fiduciary duty claims is the same as the denial of benefits

claim, i.e., payment of the $116,000, there is no injury separate and distinct from the claim for

benefits. Thus, these claims must be dismissed under Varity. Since certain breach of fiduciary


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duty claims and allegations are intermingled within the allegations for the failure to pay benefits

claim, the Plaintiff is directed to file an amended complaint that removes the dismissed claims.2


The Claims Against Magnuson Are Sufficiently Alleged

In addition to the claims asserted against the Corporate Defendants under ERISA,

Plaintiff asserted three common law claims against his brother-in-law, Kent Magnuson: (1)

common law breach of fiduciary duty; (2) inducement of breach of fiduciary duty; and (3) unjust

enrichment. Plaintiff has adequately pleaded these claims.


Magnuson’s Breach of Fiduciary Duty

The elements of a claim for breach of fiduciary duty under Illinois law are: (1) a fiduciary

relationship; (2) a breach of the fiduciary duty; and (3) injury resulting from the breach. See,

e.g., Foodcomm Int’l v. Barry, 463 F. Supp. 2d 818, 827 (N.D. Ill. 2004) (quoting Romanek v.

Connelly, 753 N.E.2d 1062, 1072 (Ill. App. Ct. 2001)); Polansky v. Anderson, No. 04 C 3526,

2007 WL 4162807, at *6 (N.D. Ill. Nov. 20, 2007) (internal citations omitted); Lucini Italia Co.

v. Grappolini, No. 01 C 6405, 2003 WL 1989605, at *13 (N.D. Ill. Apr. 28, 2003) (internal

citations omitted). Magnuson contends that Plaintiff has failed to sufficiently allege each of

these elements.

Principles and agents owe each other fiduciary duties as a matter of law. See Mullaney v.

Savage, 78 Ill. 2d 534, 546 (1980); see also, e.g., Polansky, 2007 WL 4162807, at *6; Pommier

v. Peoples Bank Marycrest, 967 F.2d 1115, 1119 (N.D. Ill. 1999). The test for agency is

“whether the alleged principal has the right to control the manner and method in which work is

carried out by an alleged agent and whether the alleged agent can affect the legal relationships of

2 Defendant AT&T Inc. concedes that Count II, a claim for failure to produce documents, is adequately alleged.
However, it moves to strike certain allegations that are incorporated into the Count because they do not pertain to
AT&T Inc. Plaintiff has agreed to the removal of those allegations. However, because the Court has now ordered
the Plaintiff to file an amended complaint, the motion to strike is moot. If it needs to be re-raised after the filing of
the amended complaint, AT&T is directed to raise it then.


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the principal.” Chemtool, Inc. v. Lubrication Techs., 148 F.3d 742, 745 (7th Cir. 1998). To

adequately plead the existence of an agency relationship, “a plaintiff must allege a factual

predicate to create the inference of agency.” Frazier v. U.S. Bank Nat. Ass’n, No. 11 C 8775,

2013 WL 1337263, at *4 (N.D. Ill. Mar. 29, 2013); see also, e.g., Addison Automatics, Inc. v.

RTC Group, No. 12 C 9869, 2013 WL 3771423, at *5 (N.D. Ill. July 16, 2013); Whitley v. Taylor

Bean & Whitacker Mortgage Corp., 607 F. Supp. 2d 885, 895 (N.D. Ill. 2009). Here, Plaintiff

sufficiently alleges that Magnuson acted as his agent. Plaintiff alleges that: (1) “Magnuson

agreed to assist Nemitz in obtaining the life insurance benefits” (Doc. 67 at ¶ 162); and (2)

“Nemitz signed an authorization form giving Fidelity and MetLife authority to discuss Nancy’s

life insurance benefits directly with Magnuson on behalf of and for the benefit of Nemitz.” Doc.

67 at ¶¶ 39, 165.) These allegations are sufficient to create the factual predicate for the inference

of agency because they demonstrate that Nemitz and Magnuson entered into an agreement

whereby Magnuson agreed to act on Nemitz’s behalf and had the express power to affect

Nemitz’s legal relationships with respect to his attempts to collect the benefits allegedly owed


Nemitz’s allegation that Magnuson then sought Nancy Nemitz’s life insurance benefits

for his own use is sufficient to allege a breach of the fiduciary duty owed by Magnuson to

Nemitz because an agent is obligated to act solely for the benefit of the principal in all matters

connected with his agency. See Mullaney, 78 Ill. 2d at 580; see also, e.g., Lyssenko v. Internal

Titanium Powder, LLC, No. 07 C 6678, 2010 WL 5317007, at *4 (N.D. Ill. Dec. 17, 2010) (“an

agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters

connected with his agency.”) (internal citations omitted); Riad v. 520 S. Michigan Avenue

Associates, 78 F. Supp. 2d 748, 763 (N.D. Ill. 1999) (same). Therefore, Nemitz adequately



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pleaded a breach because he alleged that Magnuson, his agent, used the agency relationship to

obtain the life insurance benefits for himself instead of for Nemitz. Finally, Nemitz pleaded

damage from the breach because he alleged that Magnuson’s actions resulted in MetLife paying

the benefits to Magnuson and not to Nemitz. Thus, the breach of fiduciary duty claim is

sufficiently alleged to withstand Magnuson’s Rule 12(b)(6) challenge.


Magnuson’s Inducement of Breach of Fiduciary Duty

In order to maintain a cause of action for tortious inducement of a breach of a fiduciary

duty, Nemitz must allege: (1) collusion by the defendant with a fiduciary in committing a breach;

(2) knowing participation in or inducement of the breach of duty; and (3) knowing acceptance of

the benefits resulting from the breach. See Borsellino v. Goldman Sachs Group, Inc., 477 F.3d

502, 508 (7th Cir. 2007) (citing Regnery v. Meyers, 679 N.E.2d 74, 80 (Ill. App. Ct. Ct. 1997)).3

Magnuson does not dispute that the Complaint sufficiently alleges the second and third elements;

however, he contends that the Plaintiff failed to adequately plead collusion.

Nemitz alleges that “[w]ithout knowledge, authorization, or approval of Nemitz,

Magnuson colluded with MetLife and Fidelity to obtain life insurance benefits for himself, which

were properly payable to Nemitz.” Doc. 66 at ¶ 182. This single allegation would be

insufficient by itself to plausibly raise an inference of collusion; however, the Complaint

contains a number of other allegations that make the inference plausible. For example, the

Complaint alleges that: (1) “In 2010. . . Nancy Nemitz met with representatives from AT&T and

Fidelity to discuss her benefits upon retirement” (Id. at ¶ 26); (2) “Fidelity and AT&T advised

Nancy Nemitz that Greg Nemitz was her beneficiary for the life insurance and supplemental life

3 Magnuson does not assert that the heightened pleading standard of Federal Rule of Civil Procedure 9(b) should
apply to this claim. See, e.g., Borsellino, 477 F.3d at 507-08 (holding that tortious inducement claim was subject to
Rule 9(b) because complaint sounded in fraud). Therefore, the Court will limit its determination to simply whether
the claim is adequate under Rule 8.



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insurance benefits offered by the Plans” (Id. at ¶ 29); (3) “Following her retirement, in reliance

on the representations made by Fidelity and AT&T. . .Nancy Nemitz and Greg Nemitz continued

to submit monthly payments for the optional and supplemental life insurance. . . with the belief,

understanding, and intent that Greg Nemitz would receive the benefits” (Id. at ¶ 32); (4) Nemitz

authorized Magnuson to pursue the benefits on his behalf (Id. at ¶ 39); and (5) Magnuson then

contacted Fidelity and MetLife and sought the benefits on his own behalf (Id. at ¶¶ 153-185).

These allegations are sufficient for the Court to reasonably infer that Fidelity and AT&T were

aware that the Plaintiff is the beneficiary of the life insurance policies but nevertheless contrived

to pay the benefits to Magnuson instead of Nemitz due to Magnuson’s inducements. As a result,

these allegations sufficiently raise the inference of collusion between Magnuson and the Plans’

fiduciaries for purposes of stating this claim.


Magnuson’s Unjust Enrichment

Finally, Nemitz has sufficiently alleged a claim for unjust enrichment against Magnuson.

In Illinois, “[t]o state a cause of action based on a theory of unjust enrichment, a plaintiff must

allege that the defendant has unjustly retained a benefit to the plaintiff’s detriment, and that

defendant’s retention of the benefit violates the fundamental principles of justice, equity, and

good conscience.” HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc., 545 N.E.2d 672, 679

(1989). Here, Nemitz alleges that Magnuson retained the $116,000 that should have allegedly

been paid to Nemitz. He also alleges that Magnuson’s retention of this benefit violates

fundamental principles of justice, equity and good conscience because Magnuson knew that: (1)

Nancy Nemitz intended the Plaintiff to be the recipient of her life insurance benefits; and (2) the

Plaintiff “made monthly payments for supplemental coverage under the Plans and that such



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coverage was purchased in order to provide payments to Greg Nemitz upon Nancy Nemitz’s

death.” Doc. 68, ¶ 159. These allegations are sufficient to state a claim for unjust enrichment.

Magnuson’s contention that unjust enrichment is not an independent cause of action does

dictate a different result. First, the Illinois Supreme Court has repeatedly found unjust

enrichment to constitute a stand-alone cause of action. See Raintree Homes, Inc. v. Village of

Long Grove, 807 N.E.2d 439, 445 (2004); Indep. Voters v. Illinois Commerce Commission, 510

N.E.2d 850, 852-58 (1987). Therefore, Magnuson’s citation to an intermediate Illinois appellate

court that reached the opposite conclusion is of little weight. See Doc. 117, Magnuson

Memorandum at 8 (citing Martis v. Grinnell Mut. Reinsurance Co., 905 N.E.2d 920 (Ill. App. Ct.

2009)). Second, the Seventh Circuit has also found unjust enrichment to be a viable claim under

Illinois law. See Cleary v. Philip Morris Inc., 656 F.3d 511, 517 (7th Cir. 2009). While unjust

enrichment claims tend to stand or fall with related claims of wrongdoing, Nemitz’s claim is

viable at this juncture because he has adequately stated the claim for breach of fiduciary duty

upon which the unjust enrichment claim is based. Therefore, he has sufficiently pleaded this

claim as well.


Nemitz also contends that he is entitled to conduct limited discovery in this case. The

Court enjoys broad discretion to permit discovery in denial of benefits cases. See Semien v. Life

Insurance Co. of North America, 436 F.3d 805, 814 (7th Cir. 2006). However, the determination

as to whether discovery is required generally turns on the applicable standard of review. If a

denial of benefits case is reviewed under the de novo standard, the Court may “permit the

introduction of additional evidence necessary to enable it to make an informed and independent

judgment.” Patton v. MFS/Sun Life Fin. Distribs., Inc., 480 F.3d 478, 490 (7th Cir. 2007)



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(quoting Casey v. Uddeholm Corp., 32 F.3d 1094, 1099 (7th Cir. 1994)); see also, e.g., Ehas v.

Life Insurance Company of North America, No. 12 C 3537, 2012 WL 5989215, at *1 (N.D. Ill.

Nov. 29, 2012). However, with limited exceptions, discovery beyond the administrative record

is generally not allowed in cases reviewed under an arbitrary and capricious standard. See

Perlman v. Swiss Bank Corp., 195 F.3d 975, 982 (7th Cir. 1999).


Standard of Review

ERISA does not set out the appropriate standard of review for actions under §

1132(a)(1)(B) challenging benefit eligibility determinations. To fill this gap, courts have held

that denial of insurance benefits is reviewed de novo under ERISA “unless the benefit plan gives

the administrator or fiduciary discretionary authority to determine eligibility for benefits or to

construe the terms of the plan.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 114-15

(1989); see also Conkright v. Frommert, 559 U.S. 506 (2010); Black v. Long Term Disability

Ins., 582 F.3d 738, 743 (7th Cir. 2009); Perlman, 195 F.3d at 980. When the plan gives the

administrator discretionary authority, the standard of review is deferential and the court “will set

aside an administrator’s decision only if it is arbitrary and capricious.” Black, 582 F.3d at 743-

44 (citing Herzberger v. Standard Ins. Co., 205 F.3d 327, 332 (7th Cir. 2000)); Aschermann v.

Aetna Life Ins. Co., 689 F.3d 726, 728 (7th Cir. 2012). In order for a plan to grant discretionary

authority to the fiduciary, “[t]he reservation of discretion must be communicated clearly in the

language of the plan, but the plan need not use any particular magic words.” Gutta v. Standard

Select Trust Ins. Plans, 530 F.3d 614, 619 (7th Cir. 2008); Semien, 436 F.3d at 810 (plan should

“clearly and unequivocally state that it grants discretionary authority”).

In this case, the Defendants cite to various provisions of Summary Plan Descriptions

(“SPDs”) to establish that the AT&T Umbrella Plans gave discretion to MetLife to determine



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eligibility for benefits or to construe the terms of the plan. The SPD for the AT&T Rules for

Employee Beneficiary Designations (the “Rules”) defines itself as “the official document of” the

Rules. Doc. 58-7, Administrative Record, at MET00630; see also MET00632 (The SPD also

states that it is “the official plan document for the AT&T Rules for Employee Beneficiary

Designations.”). This document governs and is the “final authority on the terms of the Rules for

the Programs that adopt them.” Id. One of the “Key Points” of the Rules is that the Rules

“determine who will receive the Proceeds from the Programs that have adopted the Beneficiary

Designation Rules.” Id. at MET00632.

The SPD for the AT&T Medical and Group Life Insurance Plan – Group Life Insurance;

AT&T Supplementary Group Life Insurance Program adopts the Rules and provides that “basic

life insurance, supplementary life insurance. . . will be paid in accordance with the AT&T

Beneficiary Designation Rules.” Doc. 58-8 at MET00722; see also Doc. 58-7 at MET00632-33

(“The Rules are generally applicable for Programs that adopt them, including, but not limited to,

the following Programs. . . AT&T Medical and Group Life Insurance Plan – Group Life

Insurance . . . AT&T Supplementary Group Life Insurance Program.”).

The Rules identify Fidelity Service Center (“Fidelity”) as the Beneficiary Designation

Administrator. Doc. 58-7 at MET00638-39; MET00654. The Life Insurance SPD designates

MetLife, the insurer of the life insurance programs, as the Program Administrator for the Plans.

Doc. 58-9 at MET00744. As Program Administrator, MetLife was vested with the duty to

distribute the life insurance proceeds upon the death of the participant. Doc. 58-7 at MET00648

(“Proceeds are distributed by the Program Administrators based on the most current Form(s) on

file.”). The Rules give MetLife full discretion to fulfill this duty. Specifically, the Rules provide




Case: 1:12-cv-08039 Document #: 146 Filed: 07/31/13 Page 16 of 21 PageID #:2224

AT&T, the Beneficiary Designation Administrator, the Program Administrators
and each Person to whom authority has been delegated to make all determinations
of fact or eligibility for Proceeds under the Rules shall have full and exclusive
authority and discretion to make such decisions under the Rules and the
applicable Program. The decision of . . . the Program Administrators or any
delegate, as applicable, made in good faith in accordance with the Rules and the
applicable Program, will be final and conclusive and will not be subject to further

Doc. 58-7 at MET00635-36. Therefore, the Rules, i.e., the plan document, make a clear grant of

discretionary authority to the Program Administrator, i.e., MetLife, to determine who is eligible

to receive life insurance benefits under the Plans. As a result, MetLife’s decision to deny

Nemitz’s claim for benefits under the Plans will be reviewed under the arbitrary and capricious


Plaintiff’s arguments to contrary are unpersuasive. First Plaintiff is incorrect because, as

set forth above, the Rules make a clear grant of discretion to the Program Administrator. Since

the Plans identify MetLife as their Program Administrator, there is a clear grant of discretion to

MetLife regardless of the fact that MetLife is not specifically mentioned in the Rules. Second,

the discretionary clause is not contradictory. It gives the Plan Administrator, the Beneficiary

Designation Administrator and the Program Administrators discretionary authority in carrying

out their distinct duties. The duty to decide claims and pay benefits is vested with the Program

Administrator. The discretionary clause gives a claimant clear notice that the Program

Administrator possesses discretion in carrying out this duty. Finally, the procedural violations

alleged by Nemitz do not establish that de novo review is warranted. See Wetizenkamp v. Unum

Life Insurance Company of America, 661 F.3d 323, 329 n. 3 (7th Cir. 2011) (citing Metro. Life

Ins. Co. v. Glenn, 554 U.S. 105, 115 (2008)) (noting that “alleged procedural violations do not

mandate a different standard of review but instead will be considered as factors in determining



Case: 1:12-cv-08039 Document #: 146 Filed: 07/31/13 Page 17 of 21 PageID #:2225

whether Unum’s decision to discontinue benefits was arbitrary and capricious.”). Accordingly,

the Court will apply the arbitrary and capricious standard of review.4


The Plaintiff Is Entitled to Limited Discovery

In Semien, the Seventh Circuit held that even when the arbitrary and capricious standard

applies, discovery is permitted in exceptional circumstances where the claimant can “identify a

specific conflict of interest or instance of misconduct” and “make a prima facie showing that

there is good cause to believe limited discovery will reveal a procedural defect.” Semien, 436

F.3d at 815. However, based on the Supreme Court’s subsequent decision in Metropolitan Life

Insurance v. Glenn, the Seventh Circuit has found the Semien holding to be both applicable but

“soften[ed].” See Dennison v. MONY Life Ret. Inc. Sec. Plan. for Employees, 710 F.3d 741, 746-

47 (7th Cir. 2013). While the softened standard is not specifically defined, the Court finds that

limited discovery is warranted in this case even applying the former standard.

Plaintiff has identified two conflicts of interest. The first is that MetLife suffers from the

classic structural conflict of interest because it is both the payor of benefits and the entity vested

with authority to determine whether benefits should be paid. See, e.g., Baxter v. Sun Life

Assurance Co., 713 F. Supp. 2d 766, 773 (N.D. Ill. May 20, 2010) (allowing discovery on

structural conflict of interest when arbitrary and capricious standard applies); Garvey v. Piper

Rudnick LLP Long Term Disability Insurance Plan, 264 F.R.D. 394, 399 (N.D. Ill. 2009)

4 Plaintiff also contends that because MetLife did not review the claim within the time allowed, the claim is
“deemed denied” and any review is de novo. Plaintiff is incorrect. Title 29 C.F.R. § 2560.503-1(l) provides that
when an administrator does not comply with the required claims procedure, the claimant is “deemed to have
exhausted the administrative remedies available under the plan and shall be entitled to” bring a suit in federal court.
Thus, Nemitz could have brought his claim after the time period expired and he would have been entitled to de novo
review. However, he did not do this. Instead, he waited to bring his claim until after MetLife rendered a decision
and after the appeal. Thus, Nemitz has waived the untimeliness issue. See, e.g., Jacobson v. SLM Corp. Welfare
Benefit Plan, No. 8 C 267, 2009 WL 2841086, at *5 (S.D. Ind. Sept. 1, 2009) (holding that despite the fact the claim
was denied late, plaintiff “waived her chance to take advantage of a more deferential standard of review” because
she did not file suit until after the administrative appeal.); Neal v. Christopher & Banks Comprehensive Major
Medical Plan, 651 F. Supp. 2d 890, 905 (E.D. Wis. 2009) (holding that deferential standard of review applied
despite untimely appeal decision).



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(finding plaintiff “demonstrat[ed] that [defendant] has an inherent conflict of interest as both

administrator of the Plan and payor of benefits”); Hoffman v. Sara Lee Corp., No. 11 C 3899,

2012 WL 404496, at *4-5 (N.D. Ill. Feb. 8, 2012) (same). The second alleged conflict of interest

is that instead of making an independent determination on the merits of the Plaintiff’s claim,

MetLife allowed AT&T to determine the claim and then rubber-stamped AT&T’s decision

because AT&T is MetLife’s client. The Court believes there is sufficient evidence in the

Administrative Record to allow inquiry on these two issues.

As set forth above, the benefits were distributed to Magnuson under the 1979 form

executed by Nancy Nemitz, the decedent. However, the Administrative Record shows that if

Nancy Nemitz had left AT&T for reasons other than retirement, than she should have been

treated as a “new-hire” when she rejoined the company in 2001. See Doc. 58-3 at MET00268.

Under this scenario, the 1979 form that was relied on would be invalid. See id.; see also Doc.

58-6 at MET00568. Instead, the benefits would be paid out according to the hierarchical default

procedure in which the decedent’s spouse is given first priority. See Doc. 58-7 at MET00637

(explaining how benefits are paid under the Rules if there is no beneficiary designation on file).

Even though it paid benefits to Magnuson, MetLife still has a structural conflict because

Nemitz made a separate claim for benefits. If Nemitz’s claim is valid, MetLife could potentially

be liable for this claim. The Administrative Record contains e-mails and memoranda generated

by MetLife employees that raise a question as to whether the claim paid to Magnuson was done

accurately and in good faith. For example, one memorandum dated August 15, 2011 states that

“[a] paid in good faith would not be advisable at this time, as we should have questioned some of

the informaiton [sic] in the file.” See Doc. 58-2, at MET00183. Another one states that “advised

if statement is true, then we were supplied incorrect designation by Recordkeeper. This is not



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‘good faith.’ Before we make determination contact Rk and verify information . . .” Doc. 58-2

at MET00208. Yet another memorandum states that “[t]he only beneficiary designation on file

dates back to 1979. We made payment to Kent Magnuson on 6/21 based on this designation.

We had no knowledge about the EE’s interrupted work history.” Doc 58-3 at MET00269.

Therefore, Nemitz has identified a structural conflict of interest and made a prima facie showing

of good cause that limited discovery into this conflict could reveal a procedural defect.

Additionally, Nemitz has established that a separate conflict of interest arose for MetLife

when it allegedly abrogated its decision-making authority to AT&T. MetLife paid the benefits to

Magnuson with apparently no knowledge of the decedent’s interrupted work history. See Doc.

58-3 at MET00269. This interruption would allegedly have invalidated the 1979 designation

because the decedent should have been treated as a new hire when she was rehired in 2001.

Under this scenario, Nemitz, as the decedent’s spouse, would be the beneficiary of the policy

unless the decedent executed a new beneficiary form in 2001, or thereafter, naming a different

beneficiary. See Doc. 58-3 at MET00268; Doc. 58-7 at MET00637. However, AT&T

intervened and told MetLife that the decedent’s employment “bridged” back to her original date

of hire after she had been reemployed for five years. Doc. 58-2 at MET00162 (MetLife

memorandum stating “I explained AT&T’s position: Since the EE was re-hired in 2001 and

worked until 2006, after 5 years they bridged her employment back to 1995 as if she had not

left.”); MET00179

(MetLife memorandum discussing communication

from AT&T

representative that states “[f]rom what we can determine on eLink and in FileNet. She was a

‘rehire’ and her service bridged in 11/2006 after 5 years of continuous employment to 7/19/1985

for vacation purposes.”). Thus, according to AT&T, the 1979 beneficiary form was valid

because the decedent had been reemployed for five years. MetLife appears to have relied on



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AT&T’s representations about this rule in making its decision. See Doc. 58-2 at MET00186

(MetLife memorandum stating “[a]dvised that ATT [sic] made decision we will be mailing him a

letter advised they accepted the 1979 one. . .”); see also Doc 58-2 at MET00162, 179, 189; Doc

58-6 at MET00565-68.

However, neither MetLife nor AT&T’s position paper identifies any provision in the

Plans for this “bridging” rule. MetLife points to a provision in the Rules that “[a] Beneficiary

Designation for a Program in which you are not participating, or for which your participation is

suspended or ceases, will apply for that Program when you begin or resume participation unless

you submit a new Form for that Program.” Doc. 58-7 at MET00635. This does not support the

existence of the “bridging” rule. The provision could be read to mean the 1979 Form was

effective the instant AT&T rehired the decedent but cannot be read to mean an old beneficiary

form is reactivated five years after rehire. Thus, based on the Administrative Record, it does not

appear that AT&T or MetLife relied on this provision in denying Nemitz’s claim. Thus, Nemitz

established that MetLife operated with a conflict of interest when it allegedly allowed AT&T to

decide Nemitz’s claim. MetLife has a financial interest in maintaining its relationship with

AT&T. It may have acted in that interest when it ratified AT&T’s decision with respect to

Nemitz’s claim notwithstanding the fiduciary duties it owes to the beneficiary of the Plans.

Given these circumstances, Nemitz shall be permitted to conduct limited discovery on this

conflict as well.

MetLife is correct, however, that most of Nemitz’s requests for discovery are directed

towards the merits of MetLife’s decision. Not whether a conflict of interest affected the

decision. In his response to MetLife’s position paper, Nemitz identifies seven subjects upon

which he would like to conduct to discovery. See Doc. 84 at 13-14. However, the only subject



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appropriate for discovery is Nemitz’s No. 6: “did MetLife’s multiple conflicts of interest impact

its decision.” Id. at 14. Nemitz does not specify what discovery would be required to determine

this. Accordingly, the parties are directed to meet and confer to determine what discovery they

believe is required based on this order. Within 28 days of the entry of this order, the parties are

further directed to report to the Court on what discovery will be required. The report shall

identify any categories of documents that will be requested, the names of any deponents, the

expected subject matters upon which the deponents will testify and will also propose a discovery

cut-off date.


For the reasons set forth above, the Corporate Defendants’ motions to dismiss are

granted. To the extent Count I alleges a claim under 29 U.S.C. § 1132(a)(3), the claim is

dismissed. Counts III, IV and V are dismissed. Plaintiff shall file an amended complaint that

conforms to this Court’s Order within fourteen days of the entry of the Order. Defendant AT&T

Inc.’s motion to strike is denied as moot. Defendant Magnuson’s motion to dismiss is denied.

Plaintiff shall be allowed to conduct limited discovery on the conflict of interest issues.

Date: July 31, 2013


Virginia M. Kendall
United States District Court Judge
Northern District of Illinois