No. 22 C 01458
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION
March 31, 2025
Judge Rebecca R. Pallmeyer
MEMORANDUM OPINION AND ORDER
Jose Luis Acosta, Armando Garcia, Maria Sanchez, Glynndana Shevlin, and Maria Buenrostro (“Named Plaintiffs“) move to certify a class of current and former plan participants of UNITE HERE Health (“UHH“), an ERISA-covered healthcare plan. The Named Plaintiffs allege that the Board of Trustees of UHH (“Defendant“) breached its fiduciary duties by taking on exorbitant administrative costs and distributing costs disproportionately among “Plan Units.” They seek relief under ERISA §§ 409, 502(a)(2), 502(a)(3), codified at
BACKGROUND
I. Factual Background
The facts underlying this action are set out in two prior opinions ruling on Defendant‘s motions to dismiss. See Acosta v. Bd. of Trs. of UNITE HERE Health, No. 22 C 1458, 2023 WL 2744556, at *1–2 (N.D. Ill. Mar. 31, 2023) (Leinenweber, J.); Acosta v. Bd. of Trs. of UNITE HERE Health, No. 22 C 1458, 2024 WL 3888862, at *1–2 (N.D. Ill. Aug. 21, 2024). The court, nonetheless, summarizes the facts relevant to the parties’ arguments for and against certification.
A. UHH‘s Structure and Cost Allocation
UHH is a Taft-Hartley multiemployer trust fund providing healthcare coverage to approximately 110,000 employees working for hundreds of employers nationwide. (Am. Compl. [46] ¶¶ 1-2.) Given the discrepancies in cost and coverage needs across geography and industries, UHH divides its coverage into “Plan Units,” which function as independent, self-sustaining benefit programs with different benefit options and independent operating budgets. (Simon Decl. [84-3] ¶ 4.) The Plan Units are divided in different ways, some by geography (e.g. Boston Plan, Detroit Plan), some by industry (e.g. Food Service Plan, Chicago Hotels/Casinos Plan). (See generally UHH 2022-23 Dashboard [78-18] at UHH040200.) The health plans offered in each Plan Unit fall into three categories: fully-insured plans, self-insured plans, and partially-insured plans. (Am. Compl. ¶¶ 46–49); see also Acosta, 2023 WL 2744556, at *2. In fully-insured plans, benefits claims are paid through third-party insurance, and UHH funds are used to pay the insurance premiums. (Id.) In self-insured plans, UHH funds are used to directly pay for the cost of benefits, without the use of third-party insurance. (Id.) Partially-insured plans are hybrid plans in which some benefits are fully-insured and others are self-insured by UHH. (Id.)
Three Plan Units are relevant to the claims in this case: Unit 178, Unit 278, and Unit 150. Plan Unit 178 covers employers in Los Angeles County, California. (Id. ¶ 109.) Plan Unit 278 covers employers in Orange County and Long Beach, California. (Id. ¶ 126.) Both Unit 178 and Unit 278, for all relevant times, have been fully-insured plans with respect to medical, vision, and life insurance benefits. (Id.
1. Projection of Administrative Expenses
UHH is funded almost exclusively by the periodic contributions paid into it by participant employers and employees. (See Pls. Mem. [78-1] at 3, O‘Donnell Decl. [78-2] ¶ 53.) Employers contribute to the fund at rates set by collective bargaining with the employee unions. (See Minimum Standards [78-6] at UHH0406694–96.) But while the precise contributions made by employers to UHH are set by collective bargaining, there is a floor: UHH sets a minimum threshold (also known as a “target contribution rate” or “published rate“) that each employer must contribute to cover the cost of benefits, maintain a surplus, and account for administrative expenses. (See id. at UHH0406696; see also Simon Dep. Tr. [78-37] at 56:15–57:2.) In bargaining with the union, an employer may agree to contribute more than the minimum threshold set by UHH but may not contribute less than the target rate without UHH‘s permission. (See Simon Decl. [84-3] ¶ 17, Minimum Standards at UHH056696.) Alternatively, some employers come to “bucket allocation” agreements through collective bargaining. In bucket allocations, in contrast to the previously described “published-rate” agreements, an employer does not agree to pay a specific rate in contributions to UHH, but instead agrees to provide a pool of funds to the union and leaves it to the union‘s discretion to divide the available funds for payment of healthcare costs (i.e. contributions to UHH), wages, pension funds, and other benefits. (Simon Decl. ¶ 16.) In the bucket-allocation scenario, UHH does not create a minimum requirement, but provides a target rate as a recommendation to the union to maintain the self-sufficiency of the fund; the union has the final say on how much to contribute. Simon Dep. Tr. at 191:24–192:5.)
In calculating target employer contribution rates, Units 178 and 278 are treated differently than other Plan Units; they are subdivided further into “employer categories,” for which UHH‘s underwriters develop different target contribution rates as if each category were a Plan Unit itself. (See Simon Decl. ¶ 10.)1 For each employer
As described above, administrative expenses enter UHH‘s calculation of target contribution rates at step three; administrative expenses are estimated as a “factor” or percentage of total benefit costs. The calculation of the factor itself is standardized. The administrative expense factor (i.e. the specific percentage), unlike the PEPM benefit costs, is not calculated at the employer-category level, but is consistent across all employer-categories within Units 178 and 278; indeed, UHH uses the same factor for Unit 178 and Unit 278 plans. (See Simon Dep. Tr. at 50:18-51:4.) Importantly, the administrative expense factor covers not only Unit-specific costs but also administrative expenses for the fund as a whole. (See id. at 51:5–14.) UHH has decreased the factor for Units 178 and 278 in recent years from 7.5% to 6.5% as administrative expenses have become a smaller percentage of the fund‘s overall costs. (Id.) Additionally, UHH ascribes a discounted administrative expense factor to Units 178 and 278 (relative to other Units) because they are fully-insured plans—meaning that UHH has fewer administrative costs in providing benefits than UHH has in providing benefits to other, partially-insured Units. (Id. at 51:20-52:12.) See also Acosta, 2024 WL 3888862, at *2 (explaining how fully-insured plans have fewer administrative costs than partially-insured plans).
2. Actual Allocation of Administrative Expenses
The projection of administrative expenses performed by UHH‘s underwriters is unrelated to the method used by UHH‘s finance department for allocating actual administrative expenses among Plan Units at the end of the fiscal year. (See Simon Dep. Tr. at 49:10–50:1.) At this stage, UHH has a pool of funds from each Plan Unit that the Unit has contributed during the year, and UHH must determine how much to take from each Unit‘s pool to pay
But there is a caveat to this “proportional” distribution of administrative expenses: UHH‘s Allocation Policy also gives discounts to specific Units in allocating expenses, including a 33.3% weighting3 to contributions from Unit 150 (then called “APBA“) for administrative expenses relating to Executive and Accounting Staff because “[UHH staff members] expend some effort for the [Unit 150] but, because their efforts are less, we believe a special [lower rate] is warranted.” (Allocation Policy at UHH63820.)4 The discounting of Unit 150‘s contributions has a significant impact on the administrative expense borne by other Plan Units, as Unit 150 is by far the largest unit in the fund—in fiscal year 2022–23, Unit 150‘s contributions to the fund were roughly equivalent to the contributions of all other Units put together. (See UHH 2022–23 Dashboard at UHH040201–02 (comparing Unit 150 contributions and expenses to “All Non-Culinary Plans,” i.e. all other units).) Indeed, the claims in this action arise from the effects of this discounting: because Unit 150‘s administrative expense burden is greatly reduced, every other unit (including Units 178 and 278) must pick up the slack and pay an amount of administrative expenses disproportionate to their relative size (in terms of contributions) in the fund.
The basic methodology of shared expense allocation appears to have remained
B. Defendant‘s Alleged Breaches
Named Plaintiffs claim that Defendant breached its fiduciary duties of loyalty and prudence by failing “to ensure that plan expenses are allocated among participants in a manner reasonably related to the services furnished to individual participants.” (See Am. Compl. ¶ 182.) In short, Plaintiffs allege that, as a result of two unjustified decisions, UHH charged the participants of Units 178 and 278 administrative expenses in excess of the value of the benefits they received. (See generally id. ¶¶ 180-93.)
First, Plaintiffs claim that Defendant‘s internal allocation of administrative expenses between Plan Units was not reasonably related to the value of services, resulting in fully-insured Units like 178 and 278 paying more in administrative expenses (per participant) than the partially-insured Unit 150 despite receiving a lower standard of healthcare benefits. (Id. ¶ 185.) Between fiscal years 2016 and 2023, Units 178 and 278 paid at least 80% (and as much as 100%) more in administrative expenses per participant than Unit 150. (See O‘Donnell Decl. ¶¶ 56–57.)
Second, UHH‘s cost-allocation method aside, Plaintiffs also allege that UHH took on exorbitant fund-wide administrative costs when compared to reasonably analogous multiemployer healthcare funds. (See Am. Compl. ¶¶ 187–93.) Using data available from the Department of Labor,5 Plaintiffs compared UHH‘s total administrative expenses with the reported expenses of other self-insured and partially self-insured healthcare funds having at least 20,000 participants between April 2016 and 2023 (the most recent data available). (See O‘Donnell Decl. ¶¶ 62-73.) From this comparison, Plaintiffs assert that UHH took on $72,836,445.10 more in administrative expenses than the average, comparable self-insured plan, and $235,845,102.96 more in administrative expenses than the average partially self-insured plan. (Id. ¶¶ 74–75.) Combined with Defendant‘s disproportionate allocation of administrative expenses among Plan Units, Plaintiffs claim that they were assessed an
Plaintiffs further allege that Defendant‘s breach of its fiduciary duties resulted in lost wages and benefits on the part of plan participants. Specifically, Plaintiffs allege that because Units 178 and 278 were charged for exorbitant expenses, the target contribution rates for Unit 178 and 278 employers were inflated to subsidize expenses properly attributable to Unit 150 and Defendant‘s overspending. (See Am. Compl. ¶¶ 197–98.) Had the target contribution rate been reasonably related to the healthcare benefits received by Unit 178 and 278 participants, Plaintiffs claim, the dollars spent on administrative expenses could have been spent (either by the employer in a published-rate allocation, or by the union in a bucket allocation) towards wages or other benefits. (Id. ¶ 8); see also Acosta, 2023 WL 2744556, at *3–4 (finding that Plaintiffs had standing to bring ERISA claim by tying Defendant‘s alleged breach to lost wages).
C. The Named Plaintiffs
The five named plaintiffs in this action are current or former participants of Units 178 and 278 who allege they were subject to exorbitant administrative expenses described above. Relevant to the court‘s determination of Named Plaintiffs’ suitability as representatives of the proposed class is their precise relationship to the fund and their participation in the litigation of their claims so far.
1. Named Plaintiffs’ Relation to Fund
Plaintiff Acosta has been a bartender for the Manhattan Beach Wesdrift Hotel since 1987 and was a participant in UHH Plan Unit 178 from approximately 2012 to 2022. (Am. Compl. ¶ 12.) Plaintiff Garcia works as a Senior Lead Steward for Westin Bonaventure Hotel & Suites in Los Angeles, California, and was a participant in UHH between 2012 and November 1, 2020. (Id. ¶ 13.) Since November 1, 2020, he has received benefits through a multiemployer plan called the Santa Monica UNITE HERE Health Benefit Trust Fund (hereinafter “Santa Monica Fund“). (Id.) Plaintiff Sanchez works as a banquet server for Aramark Sports, LLC, a position she has held since 1986, and was a participant in UHH Plan Unit 278 from approximately 2012 to 2022. (Id. ¶ 14.) Plaintiff Shevlin has been employed by Walt Disney Parks and Resorts since 1988, currently working as a Food and Beverage Concierge. (Id. ¶ 15.) She was a participant in UHH Plan Unit 278 from at least 2012 until October 1, 2021; thereafter, she received benefits through the Santa Monica Fund. (Id.) Plaintiff Buenrostro has been employed by the Los Angeles Convention Center since 2000, where she currently works as a banquet server. (Id. ¶ 16.) She has been a participant in Plan Unit 178 from at least 2012 to present. (Id.) All named Plaintiffs reside in and around Los Angeles or Orange County, California,6 and all are represented by UNITE HERE Local 11 (“Local 11“) in collective bargaining with their respective employers. (See id. ¶¶ 12-16.)
2. Plaintiffs’ Participation in the Litigation
Each of the Named Plaintiffs has responded to UHH‘s interrogatories and requests for documents, and each claims to understand the responsibilities of serving as class representatives, including reviewing documents and monitoring the case. (See Acosta Decl. [78-57] ¶ 9, Buenrostro Decl. [78-58] ¶ 11, Garcia Decl. [78-59] ¶ 10, Sanchez Decl. [78-60] ¶ 10, Shevlin
II. Procedural History
Plaintiffs filed their original complaint [1] on March 21, 2022, and, following Judge Leinenweber‘s partial grant [31] of Defendant‘s first motion to dismiss [19], filed a first amended complaint [46] on October 3, 2023. Defendant‘s motion to dismiss that amended complaint [49], was denied [120].
On April 16, 2024, Plaintiffs moved for class certification [76]. They define the proposed class as including “[a]ll current and former participants in UNITE HERE Health Plan Unit 178 or Plan Unit 278, who are or were participants in such Plan Units at any point from March 21, 2016, through the date of judgment in this action.” (Pls.’ Mot [76] at 2.) The motion is now fully briefed.
LEGAL STANDARDS
“To be certified, a proposed class must satisfy the requirements of
DISCUSSION
I. Rule 23(a) Requirements
A. Numerosity
A class may only be certified under
Here, Plaintiffs propose a class of all individuals who were or are participants of Unit 178 and 278 at any point between March 16, 2016, and the conclusion of this action. They assert that the putative class consists of at least 7,513 individuals. (Pls.’ Mem. at 8–9.) Plaintiffs arrive at this number by looking to UHH‘s financial dashboards between 2016 and 2023, which detail the number of participants in Units 178 and 278 for each relevant year. (See O‘Donnell Decl. ¶ 51.) Those dashboards show that the number of Unit 178 and 278 (combined) participants peaked (within the 2016–2023 period) at the end of the 2019–20 fiscal year (March 2020) with 7,513 participants. (See UHH 2019-20 Dashboard [78-15] at UHH040147.) It is reasonable to conclude, based on this data, that the proposed class will include at least as many individuals as were Unit 178 and 278 plan participants in March 2020, or 7,513 individuals. This meets
B. Commonality
Plaintiffs assert that there are a number of questions common to the class, including: (1) whether Defendant breached
Defendant counters that such questions are not common to all class members, as “UHH determines each employer‘s recommended contribution rate through a complex process that estimates administrative expenses as a percentage of the cost of health benefits.” (Opp. [84] at 3.) Defendant argues that “determining whether UHH charged too much in administrative expenses will require analysis of the UHH underwriters’ projected benefit costs for each year for numerous separate employers or employer groups.” (Id.) But Defendant confuses “whether” with “how much.” It is true that, in absolute terms, the amount of projected administrative expenses assigned to each employer is a function of the cost of the benefits, calculated at the employer category level. See supra pp. 4–5. But the administrative expense factor, which functionally determines how much administrative expense is allocated to each employer, is not set at the employer category level; it is set at the Unit level with no distinction between Unit 178 and Unit 278. See id. Whether the shared administrative expense factor set for Units 178 and 278 between March 2016 and present was inflated due to unfair allocation or exorbitant spending is a question common to all members of the purported class.
Moreover, as Plaintiffs observe, “commonality is quite likely to be satisfied” for fiduciary breach claims brought under ERISA § 502(a)(2). (Pls.’ Mem. at 9 (quoting In re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 599 n. 11 (3d Cir. 2009)).) This is because § 502(a)(2) claims challenge the Defendant‘s actions in managing the plan, which generally consist of standardized conduct with respect to the various plan members. See, e.g., Brieger v. Tellabs, Inc., 245 F.R.D. 345, 349 (N.D. Ill. 2007) (finding commonality where “defendants’ actions and decisions pertaining to the Plan amount to a common course of conduct vis-à-vis the putative class“). This case is no exception;7 Plaintiffs’ claims arise from Defendant‘s conduct in managing the fund in ways that affect all class members similarly. Plaintiffs claim that UHH shifted administrative costs from Unit 150 to other Units and took on more administrative costs than other multiemployer health insurance plans, as reported by the Department of Labor. Whether this conduct was reasonably justified or constituted a breach of Defendant‘s fiduciary duty are
C. Typicality
Plaintiffs argue that their claims are typical of the putative class because they arise from the same actions taken by UHH in projecting and allocating administrative expenses. (Pls.’ Mem. at 10–11.) They note that “Defendant‘s allocation policy does not distinguish between participants within Plan Units 178 and 278 in any way,” thus “[i]f the allocation scheme is unlawful, it follows that it had a common effect on all participants in the Plan Units.” (Id.)
Defendant does not contest that claims of the Named Plaintiffs arise from the same conduct that gives rise to all claims in the putative class. Instead, Defendant raises a scattershot of arguments against typicality, none of which are persuasive. First, the Board argues that because of the “complex examination of numerous projections used to estimate target rates for individual employers of categories of employers,” Plaintiffs cannot show that “the claim of a UHH participant who works for one employer is typical of the claim of a participant who works for a different employer.” (Opp. at 5–6.) But Defendant overstates the complexity of UHH‘s projection of administrative expenses. As discussed above, while UHH‘s process for arriving at a target contribution rate for each employer is “complex” in an arithmetic sense, it treats administrative expenses simply: there is one factor used across all employers in Units 178 and 278. Claims brought by the Named Plaintiffs are typical of those of all Unit 178 and 278 participants.
Defendant also challenges typicality on the basis that four of the five Named Plaintiffs are former participants in UHH who do not share an interest in pursuing the prospective relief available to current participants (Id. at 6.) But Defendant cites no authority for the position that each Named Plaintiff must be eligible for the identical relief due to all other members of a putative class. On the contrary, courts routinely certify class actions for prospective relief in ERISA cases where a named plaintiff is a former participant in the plan at issue. See, e.g., Brieger v. Tellabs, Inc., 245 F.R.D. at 350 (finding typicality of named plaintiffs including former participants for injunctive relief); George v. Kraft Foods Glob., Inc., 251 F.R.D. 338, 345–46 (N.D. Ill. 2008) (same); Smith v. Aon Corp., 238 F.R.D. 609, 615–16 (N.D. Ill. 2006) (finding former plan participants have standing to pursue prospective relief on behalf of class). What matters for typicality is that Named Plaintiffs base their claims in the same conduct as the putative class, on the same theory of breach of fiduciary duties that represents the claims of the class. See Keele, 149 F.3d at 595.8
Next, Defendants argue that Named Plaintiffs’ claims are not typical because they “seek to raid the UHH fund . . . which would harm those class members who still receive health benefits through UHH.” (Opp. at 6.) As discussed below, the court is sensitive to this concern, but believes it relates to the adequacy of the Named Plaintiffs, not the typicality of their substantive claims.9
Defendant then argues that Plaintiffs ignore the distinction between class members who are subject allocations and those subject to published-rate allocations, suggesting that a class member subject one form of allocation agreement is not typical of class member who is subject to another. (Id. at 7.) But whether a class member is allocated exorbitant administrative costs through a published rate or by bucket allocations, their substantive claim under ERISA does not change—the claim still turns on the propriety of UHH‘s administrative spending and cost allocation standard across the class. Finally, Defendants argue that “[t]he claim of a UHH participant working for one employer is not typical of the claim [of] a UHH participant working for a separate employer” because the contribution made by an employer depends on the bargaining agreement between employer and employee union. (Id.) Not so. UHH treats all employers within Units 178 and 278 equally in projecting administrative costs as a factor of their cost of benefits; as Defendant‘s actions are typical across the putative class, so are the claims.
D. Adequacy of Representation
Adequacy of representation requires that “the representative parties will fairly and adequately protect the interests of the class.”
Named Plaintiffs argue that they are adequate to represent the class because they “suffered the same injury as those of the class” and thus have a “strong interest
Defendant disputes that the Named Plaintiffs and their counsel are adequate under
1. Antagonistic Claims Between Former and Current Participants
Defendant‘s first argument against adequacy concerns the relief sought by the Named Plaintiffs. As Defendant observes, Plaintiffs seek to “transfer plan assets attributable to contributions on behalf of Named Plaintiffs and class members to a health plan that currently provides their benefits.” (Id. at 8; see Am. Compl at 54.) This requested relief, according to Defendant, is antagonistic to the class members who are still receiving benefits through UHH and have an interest in the “continued solvency” of the fund. (Opp. at 8.)
As a preliminary point, a transfer of funds out of UHH and into a different health plan would indeed advantage only those class members who are no longer receiving benefits through UHH. Should Plaintiffs succeed in proving their entitlement to monetary compensation from Defendant, current-participant class members will have to be compensated in some other way. Named Plaintiff‘s prayer for relief does not inhibit this court‘s “broad discretion to determine the appropriate remedy for a breach of fiduciary duty” under ERISA. See Mintjal v. Prof. Benefit Tr., No. 08-CV-5681, 2018 WL 11353294, at *8 (N.D. Ill. Apr. 23, 2018) (citing Donovan v. Est. of Fitzsimmons, 778 F.2d 298, 302 (7th Cir. 1985)).
As for the claim that the interests of former class members in moving funds out of UHH is antagonistic to the interest of current participants, Defendant fails to demonstrate a genuine conflict of interest between class members. Defendant properly articulates the interests of current participants of the fund: their interest is in the solvency of the fund, not the level of surplus or numerical value of assets. Even if the court were to assume that Plaintiffs’ high estimate of monetary harm of $19,446,307.83 is correct, and further assume that this full amount must be transferred out of the fund, the amount recovered by Plaintiffs would still be dwarfed by UHH‘s $1.26 billion in total assets, as reported to the Department of Labor.10 UHH‘s solvency does not appear to be at risk even in the event of a fantastical recovery for the Plaintiffs. Absent such risk, there is no identifiable risk of harm to the current UHH participants, and no conflict for the purposes of
2. Plaintiffs’ Counsel‘s Conflict of Interest
Defendant‘s argument that Plaintiffs’ counsel has a conflict of interest because of their concurrent or past representation of Local 11 fails for similar reasons. The argument goes that
Local 11 has a “substantial interest in the Santa Monica Fund,”12 creating a conflict between Local 11 and class members who do not currently receive benefits through the Santa Monica Fund, which extends to counsel that represents (or has represented) both Local 11 and the members of the proposed class. (See Opp. at 10-11.)13 But, for now, this conflict is purely hypothetical—any interest that Local 11 has in diverting funds to the Santa Monica Fund becomes relevant only when and if Plaintiffs are found to be entitled to monetary compensation. Until that point, even if the court accepts unsubstantiated (see Reply [91] at 15) claims of Local 11‘s interest in the Santa Monica Fund, Local 11 has a shared interest in ascertaining Defendant‘s ERISA liability. By certifying this action for only the issues of liability and injunctive relief, but not monetary damages (as the court ultimately decides to do), Defendant‘s alleged conflict between Local 11 and current UHH plan members will not materialize.
3. “Figurehead” Plaintiffs
Defendant‘s final and most forceful argument against adequacy is that the Named Plaintiffs have demonstrated insufficient knowledge and involvement in this litigation. (Opp. at 9-12.) They cite to portions
Plaintiffs’ showing in this case was modest at best. In their depositions, Named Plaintiffs, who attested in their declarations to understanding the term “class representatives,” were unable to provide a suitable definition in their deposition testimony. And when asked at their depositions about relevant documents, they could not recall having reviewed them. But this testimony, while disappointing, does not necessarily disqualify them as adequate class representatives. In T.S. v. Twentieth Cent. Fox TV, 548 F. Supp. 3d 749 (N.D. Ill. 2021), for example, the court found that proposed class representatives who could not recall viewing an amended complaint or their own interrogatory responses were nonetheless adequate because the court was “confident that counsel understands the need to continue updating [named plaintiffs] about the litigation.” 548 F.Supp. 3d at 802-03, rev‘d and remanded on other grounds T.S. v. Cnty. of Cook, Illinois, 67 F.4th 884 (7th Cir. 2023). In In re Ocean Bank, No. 06 C 3515, 2007 WL 1063042 (N.D. Ill. Apr. 9, 2007), the court found that a named plaintiff who was unable to define the term “class representative” was nonetheless adequate because “[w]hether or not [plaintiff] can define his duties as class representative, he has demonstrated the ability to fulfill them” by “participat[ing] in discovery by sitting for a deposition.” 2007 WL 1063042, at *5.
Named Plaintiffs here have similarly demonstrated their adequacy. They have testified at depositions, maintained communication with counsel, and responded to discovery requests throughout the nearly three years of litigation. (See Weiner Decl. ¶ 10.) Moreover, in the same depositions that Defendant cites, each Named Plaintiff demonstrated a clear understanding of what this case is about, see supra p. 10,
II. Rule 23(b) Requirements
Having found the
A.
Insofar as Plaintiffs seek injunctive relief under
The court nevertheless hesitates to certify this action under
But this rationale does not extend to claims brought under
Nor can the monetary compensation sought by Plaintiffs be characterized as “incidental to the injunctive or declaratory relief.” Cf. Johnson v. Meriter Health Servs. Emp. Ret. Plan, 702 F.3d 364, 369 (7th Cir. 2012) (quoting Wal-Mart, 564 U.S. at 360). Monetary relief is considered incidental—and thus does not necessitate heightened notice and opt-out measures—when “the award of monetary relief will just be a matter of . . . computing the employee‘s entitlement by subtracting the benefit already credited it to him from the benefit to which the reformed plan document entitles him.” Id. at 371. The circumstances here are different: the monetary award the Plaintiffs seek is not the amount they would collectively be due under a reformed plan; they want compensation for what they would have earned, had the administrative expenses charged to their employer been reasonable. As the court describes explains below, calculating these damages will necessarily be individualized, requiring evidence of specific collective bargaining agreements.
Plaintiffs’ claims here are thus better understood as requests for individual monetary awards15, thus properly analyzed under
Before turning to
B.
1. Predominance
The predominance requirement is met when “common questions represent a significant aspect of a case and . . . can be resolved for all members of a class in a single adjudication.” Messner, 669 F.3d at 815 (quotation omitted). A question is a “common question” when “the same evidence will suffice for each member to make a prima facie showing or the issue is susceptible to generalized, class-wide proof.” Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 453 (2016) (quotations omitted).
When determining whether common questions predominate in a particular
Defendant does not dispute that it is UHH‘s designated fiduciary. (See Answer to Am. Compl. [36] ¶ 1.) As for the second element—whether Defendant breached fiduciary duties by taking on excessive administrative expenses and allocating disproportionately low administrative costs to Unit 150—the focus is solely on the Board‘s conduct; it is a purely common question. See Allen, 835 F.3d at 679 (holding that ERISA plaintiffs can prove breach of fiduciary duty claims by “compar[ing] whatever steps [fiduciary] actually took with the procedures that a prudent fiduciary would use“). Any evidence that one class member would submit to show that Defendant‘s actions were imprudent or unreasonable would be sufficient for any other class member to prove a breach of Defendant‘s fiduciary duty. Finally, as to the third element, Plaintiffs allege a class-wide harm that is similarly susceptible to class-wide proof. They claim that because they were paying excessive administrative expenses, Plan Units 178 and 278 were unable to use those funds to improve the benefit options available to the class members. (See Pls.’ Mem. at 14.) Resolving whether UHH‘s expense allocation policies in fact reduced the standard of benefits for Plan Units 178 and 278 is another purely common question across the putative class members.
Defendant does not dispute that determining whether its conduct constituted a breach of fiduciary duties is a purely common question. Instead, Defendant focuses solely on the question of individualized damages; Defendant urges that, should this court reach the question of monetary compensation, the inquiry will be highly individualized and unsuitable for class-based resolution. As Defendant argues, administrative expenses projected for each Unit are based on a percentage of the cost of benefits by employer-category, and the degree of alleged overcharging depends on whether a particular employer agrees to a “bucket” or “published-rate” allocation. (Opp. at 4-5; see also supra p. 3.) Class members compensated (presently or in the past) from bucket allocations will need to show that every dollar (or a percentage of every dollar) the union contributed to the fund would otherwise have been paid in wages or employee benefits. Class members who are part of published rate allocations, on the other hand, would need to show that every dollar (or percentage of every dollar) contributed by their employer towards the fund would otherwise be paid in wages or benefits.17 As Plaintiffs’ submissions in response to Defendant‘s first motion to dismiss show, such evidence is generally found in the collective bargaining agreement between Local 11 and a specific employer. (See Pls.’ Opp. to First Mot. to Dismiss at 15-17.) Therefore, resolution of whether (and how much) a particular class member is entitled
Plaintiffs, for their part, admit that calculating damages will involve “individualized questions,” but argue that “aggregate damages” can be resolved on a class-wide basis. (Reply at 2.) Specifically, they urge that aggregate damages can be approximated by taking the difference between the administrative expenses they were actually allocated and the administrative expenses they would have been allocated, had they been assigned the same rate of expenses-per-participant as Unit 150. (See id.) This approach fails for two reasons. First, the discounted rate of administrative expenses allocated to Unit 150 is not the rate that Unit 178 and 278 “should have paid,” under Plaintiffs’ theory of recovery. Indeed, they contend that Defendant breached its duty by assigning a rate of administrative expenses to Unit 150 that was unjustifiably low, forcing other Plan Units to pick up the slack. (See Pls.’ Mem. at 5 (“[T]he Las Vegas Plan Unit is allocated only one-third of its fair share of these expenses.“).) Presumably, a fair distribution would result in participants in all units bearing an equal burden—less costly for Units 178 and 278 but more costly for Unit 150. More fundamentally, what matters for calculating the monetary harm owed to the class members is the target employer contribution rate, not the actual allocation of costs at the end of the fiscal year. Employers (in published rate allocations) and unions (in bucket allocations) negotiate how much to pay into the fund based on the target rates set by the underwriters, not the actual allocation of administrative expenses at the end of the fiscal year. See supra p. 3. A proper calculation of what an individual class member is owed in restitution, therefore, involves comparing what their employer or union actually paid into the fund compared to what they would have paid, had the administrative expense factor been reasonable—Plaintiffs have not submitted a formula for how this harm can be readily aggregated.
The fact that individual questions will eventually predominate in this case, should it reach the point of calculating damages, need not defeat certification under
In light of this guidance from the Seventh Circuit, the court finds that the following issues in this action meet the predominance requirement and can be properly certified under
2. Superiority
“The superiority inquiry requires courts to assess the fairness and efficiency of class adjudication ‘with an eye toward other available methods.‘” Quinn v. Specialized Loan Servicing, LLC, 331 F.R.D. 126, 133 (N.D. Ill. 2019) (quoting Mullins, 795 F.3d at 664) (internal quotation omitted).
(A) the class members’ interests in individually controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action.
CONCLUSION
Plaintiffs’ motion for class certification is granted [76, 78] as explained in this order. The court hereby certifies a class composed of all current and former participants in UNITE HERE Health Plan Unit 178 or Plan Unit 278, who are or were participants in such Plan Units at any point from March 21, 2016, through the date of judgment in this action. Under this court‘s authority under
- Whether Defendant had a policy of discounting contributions from Las Vegas Unit 150 by 66% in allocating administrative expenses, and whether such policy was a breach of Defendant‘s fiduciary duties under
ERISA, 29 U.S.C. ch. 18 . - Whether Defendant took on administrative costs that were significantly greater than those of similar health benefit plan, and whether such conduct was a breach of Defendant‘s fiduciary duties under
ERISA, 29 U.S.C. ch. 18 . - Whether members of the class are entitled to injunctive relief.
The parties are directed to meet and confer to propose a form of class notice, see
ENTER:
REBECCA R. PALLMEYER
United States District Judge
Dated: March 31, 2025