In Their Opinion : Seventh Circuit Court of Appeals Commentary : Lawyer & Attorney Michael E. Rigney : Kelley Drye & Warren Law Firm

LINE CONSTRUCTION BENEFIT FUND v. ALLIED ELECTRIC CONTRACTORS (January 8, 2010)

Allied Electric Contractors has been a member of the National Electrical Contractors Association (NECA), an association of union employers, since 2002. It has been making employee benefit contributions to Line Construction Benefit Fund since the 1990s. In 2005, NECA entered into a Collective Bargaining Agreement (CBA) with the union. It set forth the terms of employer contributions to the Fund and increased the hourly contribution by a quarter. By its own terms, it bound all employers who signed a letter of consent. Although Allied did not sign a letter of consent until December of 2006, it continued to make the required contributions, including the extra quarter, until July 2006. It failed to make contributions for July, August, and December of 2006 as well as for January and February of 2007. The Fund brought suit under ERISA. The court denied Allied's motion to dismiss and granted summary judgment to the Fund. Allied appeals.

In their opinion, Judges Cudahy, Wood, and Tinder affirmed. The Court first addressed Allied's argument that the Fund had no cause of action under ERISA. It concluded that a multiemployer plan is authorized to bring suit under section 502(e) of ERISA as a plan fiduciary, reaffirming its holding in Vanguard Car Rental. The Court then rejected Allied's position that the CBA requirement of a signed letter of consent excused its nonpayment. Conduct manifesting consent, said the Court, is sufficient. Here the undisputed events, including the payments in early 2006 and the payments reflecting the additional quarter contribution, established that consent. Finally, the Court concluded that the CBA met the LMRA's requirement that an employer must have a written agreement before it makes contributions to employee benefit funds.

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CRICHTON v. GOLDEN RULE INSURANCE COMPANY (August 5, 2009)

For almost ten years, John Crichton purchased group health insurance from Golden Rule Insurance Co. He did so as a member of the Federation of American Consumers and Travelers ("Federation"). He filed a class action in 2002, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act ("ICFA"), class allegations under other states’ consumer fraud statutes, RICO and common law fraud. The basis of each of the claims was that Golden Rule failed to disclose, when it sold its insurance, that renewal premiums escalated dramatically. The district court dismissed the claims for failure to state a cause of action. Crichton appeals.

In their opinion, Judges Kanne, Evans and Sykes affirmed. With respect to the ICFA count, the Court relied on the Illinois Supreme Court's decision in Avery. Avery held that a non-resident of Illinois did not have a cause of action under the ICFA unless the transaction at issue occurred primarily and substantially in Illinois. Crichton lives in Florida and Golden Rule has its principal place of business in Indiana. Golden Rule is incorporated in Illinois and maintains an office in Illinois but that is not enough to support an ICFA claim. The Court also agreed with the district court that, to the extent Crichton was asserting a claim under Florida's statute, it failed because Florida does not allow suits against insurers. The Court then held that an element of the common law claim of fraudulent concealment was a duty to disclose. No such duty existed on the part of Golden Rule, either through its relationship with Crichton or its partial disclosures. Finally, the Court concluded that the RICO claim was properly dismissed. A RICO claim must identify the "enterprise." Crichton simply describes the marketing relationship between Golden Rule and the Federation. That relationship is insufficient to amount to an enterprise on which a RICO claim can be based. 

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