Case v. Generac Power Systems Inc

CourtDistrict Court, E.D. Wisconsin
DecidedMarch 26, 2024
Docket2:21-cv-01100
StatusUnknown

This text of Case v. Generac Power Systems Inc (Case v. Generac Power Systems Inc) is published on Counsel Stack Legal Research, covering District Court, E.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Case v. Generac Power Systems Inc, (E.D. Wis. 2024).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

DERECK CASE,

Plaintiff, Case No. 21-cv-1100-pp v.

GENERAC POWER SYSTEMS, INC., et al.,

Defendants.

ORDER GRANTING PLAINTIFF’S MOTION FOR LEAVE TO FILE SECOND AMENDED COMPLAINT (DKT. NO. 80) AND DENYING AS MOOT DEFENDANTS’ MOTION TO DISMISS (DKT. NO. 55)

On June 8, 2021, the plaintiff filed in the United States District Court for the Western District of Washington a class action under the Employee Retirement Income Security Act (ERISA), alleging that the defendants had breached fiduciary duties owed to beneficiaries of the Generac Power Systems, Inc. Employees 401(k) Savings Plan (the “Plan”). Dkt. No. 1. On September 3, 2021, Chief Judge Ricardo S. Martinez of the Western District of Washington granted the defendants’ motion to transfer venue to this court. Dkt. No. 35. Just shy of two months after the case arrived in this court, the plaintiff filed an amended complaint, alleging that the defendants had violated the duties of loyalty and prudence required of ERISA-governed defined plan fiduciaries by, among other things, “(1) authorizing the Plan to pay unreasonably high fees for recordkeeping services; and (2) failing to objectively, reasonably, and adequately review the Plan’s investment portfolio with due care to ensure that each investment option was prudent, in terms of cost and performance.” Dkt. No. 46. On December 3, 2021, in lieu of an answer, the defendants filed a motion to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1) and

12(b)(6). Dkt. No. 55. The defendants’ motion relies heavily on the Seventh Circuit’s decision in Divane v. Northwestern University, 953 F.3d 980 (2020),1 and the plaintiff’s response—filed on January 14, 2022—focuses on what the plaintiff characterizes as the defendants’ misreading of that decision. See Dkt. No. 56 (defendants’ brief in support, citing Divane on eleven of twenty-five pages); Dkt. No. 59 (plaintiff’s opposition brief, citing Divane on five of twenty- eight pages and arguing that the defendants have misread Divane). The plaintiff’s opposition brief also relied on the Supreme Court’s 2015 decision in

Tibble v. Edison International, 575 U.S. 523 (2015). See Dkt. No. 59 at 7. Five months before the defendants filed their motion to dismiss, the Supreme Court had granted certiorari to review the Seventh Circuit’s decision in Divane. Hughes v. Northwestern University, 141 S. Ct. 2882 (Mem) (July 2, 2021). On January 24, 2022—ten days after the plaintiff filed his response to the defendants’ motion to dismiss—the Supreme Court vacated the Seventh Circuit’s decision in Divane and remanded the case for further proceedings.

1 The defendants also repeatedly cite two other Seventh Circuit decisions— Loomis v. Exelon Corp., 658 F.3d 667 (7th Cir. 2011) and Hecker v. Deere & Co., 556 F.3d 575 (7th Cir. 2009)—and argue that, with Divane, these cases demonstrate that the plaintiff’s “allegations are insufficient to state a claim for relief under Rule 12(b)(6) based on Seventh Circuit case law.” Dkt. No. 56 at 8- 9. Hughes, 595 U.S. 170 (2022). In vacating Divane, the Supreme Court cited its 2015 decision in Tibble, asserting that the “categorical rule” applied by the Seventh Circuit “is inconsistent with the content-specific inquiry that ERISA requires and fails to take into account respondents’ duty to monitor all plan

investments and remove any imprudent ones.” Id. at 173 (citing Tibble, 575 U.S. at 530). Approximately two weeks after the Supreme Court vacated and remanded the Seventh Circuit’s decision in Divane, the defendants filed their reply brief in support of their motion to dismiss. Dkt. No. 61. The defendants acknowledge that the Supreme Court in Hughes “determined that the Seventh Circuit’s analysis [in Divane] had been shaped by a ‘categorical rule’ that was inconsistent [with the Court’s earlier precedent],” and that the Court had, on

that basis, “vacated and remanded [Divane] to the Seventh Circuit for reconsideration without application of that ‘categorical rule.’” Id. at 11-12 (citing Hughes, 595 U.S. at 173, 176-77). Nonetheless, the defendants argue that Hughes “reinforced key principles that inform any evaluation of claims alleging a breach of ERISA’s duty of prudence . . . at the pleadings stage,” and that “evaluating Plaintiff’s claims through the lens of Hughes amplifies the deficiencies in the Amended Complaint.” Id. at 12. So, while the defendants

concede that Hughes mooted an aspect of their motion to dismiss—namely, their argument that “Plaintiff’s investment-fee claims fail as a matter of law because the Plan offers a mix of investments with a reasonable range of fees[]”—they assert that “Plaintiff’s claims remain subject to dismissal in their entirety under Rule 12(b)(6).” Id. at 11. On February 9, 2022—one day after the defendants filed their reply brief—the plaintiff filed an expedited non-dispositive motion for leave to file a

proposed surreply in light of the Supreme Court’s decision in Hughes. Dkt. No. 62. The plaintiff reasoned that his “surreply [was] necessary in order for the Court to be able to fully and fairly consider his positions and arguments and so that he may correct the many misstatements concerning Hughes and related cases that Defendants make in their Reply Brief.” Id. at 2. In response to that motion, the defendants sought permission to file a “sur-surreply responding to Plaintiff’s proposed surreply, which [they argued] mischaracterizes Hughes and its effect on Defendants’ pending motion to dismiss the Amended Complaint.”

Dkt. No. 63 at 2. Approximately two months later, on April 8, 2022, the court issued a text-only order granting the plaintiff’s motion for leave to file his surreply and the defendants’ request to file their sur-surreply. Dkt. No. 64. Both documents were filed that same day. Dkt. Nos. 65, 66. Approximately five months later, on August 30, 2022, the plaintiff filed an expedited non-dispositive motion under this court’s Civil Local Rule 7(h) for leave to file a second amended complaint, dkt. no. 70, with his proposed

second amended complaint attached, dkt. no. 70-1. The plaintiff explained that “[w]hile the Seventh Circuit has yet to decide Divane on remand, on August 29, 2022, the Seventh Circuit decided Albert v. Oshkosh Corp., [47 F.4th 570 (7th Cir. 2022)].” Dkt. No. 70 at 2. The plaintiff asserted that Albert “offered guidance to litigants as to the types of factual averments that create ‘the kind of context that could move this claim from possibility to plausibility’ in light of Hughes and existing Seventh Circuit precedent.” Id. (citing Albert, 47 F.4th at 580).

On September 6, 2022, the defendants responded to the plaintiff’s request for leave to amend, arguing not only that the request “runs afoul of the Court’s Local Civil Rules,” but also that allowing the plaintiff to file the proposed second amended complaint would be futile because the proposed pleading failed to present any plausible claims under the standard articulated in Albert. Dkt. No. 71 at 2-3. Nonetheless, the defendants thought the futility issue “would be more effectively and fairly addressed in the context of a motion to dismiss on a non-expedited basis, and with the benefit of briefing within the

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Related

Loomis v. Exelon Corp.
658 F.3d 667 (Seventh Circuit, 2011)
Arreola v. Godinez
546 F.3d 788 (Seventh Circuit, 2008)
Hecker v. Deere & Co.
556 F.3d 575 (Seventh Circuit, 2009)
Aaron McCoy v. Iberdrola Renewables, Inc.
760 F.3d 674 (Seventh Circuit, 2014)
Tibble v. Edison Int'l
575 U.S. 523 (Supreme Court, 2015)
Laura Divane v. Northwestern University
953 F.3d 980 (Seventh Circuit, 2020)
Hughes v. Northwestern Univ.
595 U.S. 170 (Supreme Court, 2022)
Andrew Albert v. Oshkosh Corporation
47 F.4th 570 (Seventh Circuit, 2022)

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Case v. Generac Power Systems Inc, Counsel Stack Legal Research, https://law.counselstack.com/opinion/case-v-generac-power-systems-inc-wied-2024.