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Hilton Worldwide, Inc. v. Caesars Entm't Corp.

United States District Court, E.D. Virginia, Alexandria Division

April 14, 2015

HILTON WORLDWIDE, INC. GLOBAL BENEFITS ADMINISTRATIVE COMMITTEE, et al., Plaintiffs,
v.
CAESARS ENTERTAINMENT CORPORATION, Defendant

Page 260

For Hilton Worldwide, Inc. Global Benefits Administrative Committee, Sheldon T. Nelson, Hilton Worldwide, Inc., Plaintiffs: Gary Alan Coad, LEAD ATTORNEY, Weil Gotshal & Manges LLP (DC), Washington, DC.

For Caesars Entertainment Corporation, Defendant: Anthony Tobias Pierce, LEAD ATTORNEY, Akin Gump Strauss Hauer & Feld LLP, Washington, DC; Melissa Danielle Chastang, Akin Gump Strauss Hauer & Feld LLP (DC), Washington, DC.

Page 261

MEMORANDUM OPINION

T.S. Ellis, III, United States District Judge.

Among the various issues presented on a threshold dismissal and transfer motion in this breach-of-contract, unjust enrichment and ERISA[1] case are:

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(1) Whether plaintiffs have alleged sufficient facts to hold a parent company liable for the alleged breaches of contract by its subsidiary where, as here, the parent company neither signed nor participated in the negotiation of the contracts and where, as here, the complaint lacks factual allegations to support a claim of alter ego liability or domination.
(2) Whether plaintiffs' unjust enrichment claim fails to state a claim upon which relief can be granted where, as here, plaintiffs' unjust enrichment claim is premised on violations of existing contracts.
(3) Whether plaintiffs have stated a valid claim under ERISA where, as here, the statutorily mandated minimum funding standard for the plan at issue has been satisfied and the complaint lacks factual allegations to support the claim that there is an immediate or imminent threat that the minimum funding standard will not be met.
(4) Whether plaintiffs' breach-of-contract and ERISA claims should be dismissed under Rule 12(b)(7), Fed. R. Civ. P., for failing to join a necessary and indispensable party to this action.
(5) Whether transfer of this case is appropriate under 28 U.S.C. § 1412, which implicates the following issues: (i) whether, if transferred, the instant case is related to an ongoing Chapter 11 proceeding in the bankruptcy court for the Northern District of Illinois such that if this case is transferred, that court will have jurisdiction over the transferred case; (ii) whether transfer pursuant to § 1412 is appropriate given that the instant case did not arise under Title 11; and (iii) assuming § 1412 applies, whether transfer of this case to the bankruptcy court for the Northern District of Illinois is in the interests of justice, would expedite administration of the bankruptcy estate, and avoid inconsistent legal rulings.

The parties have fully briefed and argued these issues, as well as other issues raised by defendant's dismissal motion. Thus, defendant's motion is now ripe for disposition.

I.

The relevant facts are derived chiefly from plaintiffs' Amended Complaint, as required by the principle that in evaluating a motion to dismiss, a " court must accept as true all of the allegations contained in a complaint. . . ." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Other facts, as noted herein, are appropriately judicially noticed.[2]

o Plaintiff Hilton Worldwide, Inc. (" Hilton" ) is a corporation organized under the laws of Delaware with its principal place of business located in McLean, Virginia. Founded in 1919, Hilton is one of the largest hospitality companies in the world, operating chains of hotels in 91 different countries and territories. Amended Complaint ¶ ¶ 10-11.
o Plaintiff Hilton Worldwide, Inc. Global Benefits Administrative Committee

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(" GBAC" ) is the Named Fiduciary and Plan Administrator of the Hilton Hotels Retirement Plan (the " Plan" ). Plaintiff Sheldon T. Nelson is a representative member of the GBAC, and both GBAC and Nelson are " fiduciaries" with respect to the Plan. Amended Complaint ¶ 7.
o Defendant Caesars Entertainment Corporation (" CEC" ) is a corporation organized under the laws of Delaware with its principal place of business located in Las Vegas, Nevada. CEC is a diversified casino-entertainment provider that owns, operates, or manages, through its subsidiaries, 52 casinos around the world. Amended Complaint ¶ ¶ 12-13.
o Caesars Entertainment Operating Company, Inc. (" CEOC" ) is a majority-owned subsidiary of CEC, as CEC owns 95 % of the shares of CEOC. CEOC is also a Delaware corporation with its principal place of business located in Las Vegas, Nevada, and provides casino entertainment services in 44 gaming and resort properties in the United States and five other countries. Amended Complaint ¶ ¶ 15-18.
o On December 31, 1998, Hilton executed a Distribution Agreement with Park Place Entertainment Corporation (" Park Place" ). The Distribution Agreement governed the " spin-off" of certain gaming operations, assets, and liabilities from Hilton to Park Place. Amended Complaint ¶ ¶ 24-25.
o Under the terms of the Distribution Agreement, Park Place agreed to indemnify Hilton " from and against any and all Indemnifiable Losses incurred or suffered by any of the Hilton Indemnitees and arising out of or due to the failure or alleged failure of Park Place, any Gaming Subsidiaries, or any of their respective Affiliates to pay, perform, or otherwise discharge in due course any of the Gaming Group Liabilities." Amended Complaint ¶ 27.
o The Distribution Agreement defines Indemnifiable Losses as " all losses, Liabilities, damages, and expenses (including, without limitation, the reasonable costs and expenses, including reasonable attorneys' fees, in connection with any such investigations, Actions, or threatened Actions)." Amended Complaint ¶ 28.
o The Distribution Agreement defines Hilton Indemnitees as " Hilton and each of the Retained Business Subsidiaries, and each of their respective past or present directors, officers, employees, agents and Affiliates and each of the heirs, executors, successors and assigns." Amended Complaint ¶ 29.
o The Distribution Agreement defines Gaming Group Liabilities as " [a]ll of the Liabilities of the Gaming Group under, or to be retained or assumed by Park Place or any of the Gaming Subsidiaries pursuant to this Agreement or any of the Related Agreements." Amended Complaint ¶ 30.
o The Distribution Agreement provides that the remedy for any breach of the Agreement would be " specific performance in addition to any other appropriate relief or remedy." Amended Complaint ¶ 31. It also notes that " each party waives any objection to the imposition of such relief." Amended Complaint ¶ 33.
o In connection with the spin-off, Hilton and Park Place also entered into an Employee Benefits and Other Employment Matters Allocation Agreement (" Allocation Agreement" ). Under the terms of the Allocation Agreement, Hilton agreed to be responsible for the administration of the Plan, and both Hilton and Park Place agreed to specific

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contribution obligations with respect to funding the Plan. Amended Complaint ¶ ¶ 34-35.
o The Plan is a multiple-employer defined benefit pension plan sponsored by Hilton and administered by GBAC. Benefits under the Plan are based upon an employee's years of service and ...

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