Bamgbose v. Delta-T Group, Inc.

• Decision Date: 06 July 2009
• Docket Number: Civil Action No. 09-667.
• Citation: 638 F.Supp.2d 432
• Parties: Temi BAMGBOSE, Individually and on Behalf of All Others Similarly Situated v. DELTA-T GROUP, INC., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

638 F.Supp.2d 432

Temi BAMGBOSE, Individually and on Behalf of All Others Similarly Situated v. DELTA-T GROUP, INC., et al.

Civil Action No. 09-667.

United States District Court, E.D. Pennsylvania.

July 6, 2009.

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Laura Carlin Mattiacci, Console Law Offices, LLC, Philadelphia, PA, Michele R. Fisher, Paul J. Lukas, Rebekah L. Bailey, Nichols Kaster PLLP, Minneapolis, MN, for Temi Bamgbose, Individually and on Behalf of All Others Similarly Situated.

Brandon L. Spurlock, Gerald L. Maatman, Jr., Seyfarth Shaw LLP, Chicago, IL, Devjani Mishra, Seyfarth Shaw LLP, New York, NY, Kenneth Sulzer, Seyfarth Shaw LLP, Los Angeles, CA, Stephen M. Orlofsky, Jordana Cooper, Michael J. Hanlon, Patricia Kennedy Barrett, Blank Rome LLP, Philadelphia, PA, for Delta-T Group, Inc., et al.

MEMORANDUM

McLAUGHLIN, District Judge.

The plaintiff seeks to prosecute a nationwide collective action under the Fair Labor Standards Act ("FLSA"). He argues, on behalf of himself and others similarly situated, that the defendants willfully and maliciously classified him and other healthcare workers as independent contractors in order to evade FLSA overtime compensation requirements. He also plans to bring a class action under the Employee Retirement Income Security Act ("ERISA") on the basis that the misclassified individuals have been denied certain employee benefits to which they otherwise would have been entitled, but for the misclassification.

The defendants have moved to dismiss the plaintiff's ERISA claims pursuant to Federal Rules 12(b)(6), 12(b)(7), and 19(a). They argue that the ERISA claims should be dismissed in their entirety for failure to comply with the statute of limitations. They also argue that the plaintiff's breach of fiduciary duty claim should be dismissed for failure to state a claim, and that the plaintiff's denial of benefits claim should be dismissed for failure to join all necessary parties. The Court agrees that the named plaintiff's ERISA claims were not brought within the applicable statute of limitations periods. Those claims will therefore be dismissed.

I. Background¹

Delta-T is a Pennsylvania corporation that recruits, hires, places, schedules, and supervises healthcare workers who provide temporary services to client facilities. Although the workers are assigned to client facilities, they maintain a continuous and ongoing relationship with Delta-T. Am. Compl. ¶ ¶ 7-8, 20.

On November 30, 1999, the plaintiff entered into an independent contractor broker agreement ("ICBA") with Delta-T. The ICBA states that the plaintiff is a "self-employed independent contractor, . . . with Delta-T having no control, direction, or influence whatsoever over" his actions in performing duties for clients. The ICBA also states that because the plaintiff "is engaged in [his] own independently established business, . . . [he] is not eligible for, and shall not participate in, any employee pension, health, or other fringe benefit plans of Delta-T . . . ." Defs.' Mot. Ex. A.

The plaintiff alleges that the defendants administer and sponsor employee retirement and welfare plans. These plans offer benefits that include health insurance, 401(k) matching contributions, long-term disability insurance, group term life insurance, vacation compensation, and tuition reimbursements. According to the plaintiff, the defendants deny certain healthcare workers access to these benefits by misclassifying them as independent contractors. Am. Compl. ¶ ¶ 23-25.

In addition to being denied employee benefits, the plaintiff alleges that being misclassified as independent contractors further affects healthcare workers by preventing them from receiving overtime payment. The plaintiff claims that he and others similarly situated regularly and customarily work in excess of forty hours per week for the defendants and their clients. These individuals, the plaintiff alleges, are compensated at a flat hourly rate, with no additional compensation for overtime hours worked. Id. ¶¶ 28-30.

II. Discussion

The plaintiff argues that the defendants' misclassification of healthcare workers as independent contractors violates ERISA in two respects. First, he argues that he and others similarly situated have been improperly denied employee and plan benefits. Second, he argues that the defendants' conduct amounts to a breach of fiduciary duty. The defendants move to dismiss the plaintiff's ERISA claims on three grounds: (1) that the claims should be dismissed in their entirety because they were brought outside the applicable statute of limitations periods; (2) that the plaintiff's breach of fiduciary duty claim should be dismissed for failure to state a claim; and (3) that the plaintiff's denial of benefits claim should be dismissed for failure to join all necessary parties. Because the claims were not brought within the applicable limitations periods, the Court will grant the defendants' motion.²

A. Statute of Limitations

The defendants argue that the plaintiff's ERISA claims are untimely under the relevant statute of limitations periods. The Court agrees.

1. Denial of Benefits Claim

ERISA does not contain a statute of limitations period for non-fiduciary claims. For such claims, the applicable statute of limitations is that of the forum state claim most analogous to the ERISA claim at hand. Miller v. Fortis Benefits Ins. Co., 475 F.3d 516, 520 n. 2 (3d Cir. 2007); Gluck v. Unisys Corp., 960 F.2d 1168, 1179 (3d Cir.1992). A claim for denial of benefits under ERISA § 502(a)(1)(B) is most analogous to a breach of contract claim under Pennsylvania law. See Hill v. Conn. Gen. Life Ins. Co., No. 07-1706, 2008 WL 4200161, at *2-3 (W.D.Pa. Sept. 8, 2008); Keen v. Lockheed Martin Corp., 486 F.Supp.2d 481, 486 (E.D.Pa.2007); see also Syed v. Hercules, Inc., 214 F.3d 155, 159 (3d Cir.2000) ("Although this Circuit has not decided which state statute of limitations is applicable to ERISA § 502(a) (1)(B), every other circuit to address the issue has applied the statute of limitations for a state contract action." (footnote omitted)). The statute of limitations for Pennsylvania contract actions is four years. 42 Pa. Cons.Stat. § 5525(a).

At oral argument, defense counsel stated that she had found cases from the Third Circuit suggesting that the correct statute of limitations for the plaintiff's denial of benefits claim might be three years.³ The Court assumes that counsel was referring to those cases discussing the similarities between claims under ERISA and claims under the Pennsylvania Wage Payment and Collection Law ("WPCL"), which provides a three-year statute of limitations. See Gluck, 960 F.2d at 1181; Henglein v. Colt Indus. Operating Corp., 260 F.3d 201, 208-09 (3d Cir.2001). These courts did not decide, however, that a WPCL claim is the forum state claim most analogous to a § 502(a)(1)(B) claim for benefits. See Syed, 214 F.3d at 159; Miller v. Aetna Healthcare, No. 01-2443, 2001 WL 1609681, at *2 (E.D.Pa. Dec. 12, 2001).

The WPCL allows an employee to collect wages that an employer owes him contractually. See generally 43 Pa. Cons. Stat. § 260.1-301. The WPCL does not create a right to compensation, but rather, merely provides employees a statutory remedy to recover wages that are already due to them as a matter of contract. De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 309 (3d Cir.2003); Oberneder v. Link Computer Corp., 548 Pa. 201, 696 A.2d 148, 150 (1997).

The heart of the plaintiff's claim in this case is not that independent contractors were or should have been entitled to benefits based on the contract they signed, but rather, that individuals who were made to sign ICBAs instead should have been allowed to sign employment agreements. The alleged wrongdoing is the defendants' categorical decision to misclassify workers as independent contractors so as to deny them benefits in the first instance. This is not a claim for benefits that were contractually due, but rather, a claim based on an inherent defect in the contracts signed by the plaintiff and those similarly situated.

The Court concludes that the plaintiff's denial of benefits claim is more analogous to a contract claim than to a claim under the WPCL.⁴ Accordingly, it will apply Pennsylvania's four-year statute of limitations for contract actions. The plaintiff filed suit on February 17, 2009. This claim is therefore timely if it accrued on or after February 17, 2005.

The accrual date for federal claims is governed by federal law, irrespective of the source of the limitations period. When there is no controlling federal statute, federal law uses a "discovery rule" to determine the accrual date of a federal claim. Under this rule, the statute of limitations begins to run when a plaintiff discovers or should have discovered the injury that forms the basis of the claim. Miller, 475 F.3d at 520 (citing Romero v. Allstate Corp., 404 F.3d 212, 221-22 (3d Cir.2005)).

In the denial of benefits context, the discovery rule has developed into a more specific "clear repudiation" rule, whereby a non-fiduciary cause of action accrues when a claim for benefits has been denied. The rule does not require a formal denial of a claim for benefits, as long as there has already been a repudiation of the benefits by the fiduciary which was "clear and made known" to the beneficiary. Id. at 521. In other words, some event other than a denial of a claim may trigger the statute of limitations by clearly alerting the plaintiff that his entitlement to benefits has been repudiated. See id. at 520-23 (concluding that a plaintiff who had been underpaid for fifteen years before he discovered the error was sufficiently made aware that he was underpaid and that his right to a greater award had been repudiated when he received the first check for the lower amount); Keen, 486 F.Supp.2d at 489 (dismissing as untimely the claim of a plaintiff who "understood from the start of...