Beerry v. Allstate Inc. Co

Citation252 F.Supp.2d 336
Decision Date18 March 2003
Docket NumberNo. 1:98-CV-1758.,1:98-CV-1758.
PartiesLinda BERRY, Nancy Sellers, Terri Lynn Smith, Esther Stafford, Mary Sutter, Linda "Susan" Harrell, and others similarly situated, Plaintiffs, v. ALLSTATE INSURANCE COMPANY, Defendant.
CourtU.S. District Court — Eastern District of Texas

James Michael Papantonio and Bryan Frederick Aylstock of Levin, Middlebrooks, Mabie, Thomas & Mayes, Pensacola, FL, Karl E. Novak of Ness, Motley, Loadholt, Richardson & Poole, Mt. Pleasant, SC, Brent Wayne Coon, of Brent Coon & Associates, Beaumont, TX for Plaintiffs.

Richard Roland Brann of Baker Botts, LLP, Houston, TX, Brady Sherrod Edwards of Edwards & George, LLP, Houston, TX, for Defendant.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT'S FIRST MOTION FOR SUMMARY JUDGMENT AND DENYING ASS MOOT DEFENDANT'S SECOND MOTION FOR SUMMARY JUDGMENT

SCHELL, District Judge.

This matter is before the court on the following two motions: (1) "Defenda Motion for Summary Judgment" (Dkt.#23), filed on February 17, 1999; and (2) "Defendant's Second Motion for Summary Judgment" (Dkt.# 35), filed on March 5, 1999. Defendant's first motion for summary judgment is based on the statute of limitations and Defendant's second motion for summary judgment is based on the merits of the case. Plaintiffs filed a response to both of Defendant's motions on May 12, 1999. Defendant filed a reply to Plaintiffs' response on June 1, 1999 and a Supplement to its second motion for summary judgment on July 5, 2000, followed by Plaintiffs' Notice of Supplemental Authority on August 17, 2001, and Defendant's Supplemental Authority on August 23, 2001, and Second Supplemental Authority on November 4, 2002. Upon consideration of the parties' written submissions, exhibits, affidavits, and the applicable law, the court is of the opinion that Defendant's first motion for summary judgment should be GRANTED and Defendant's second motion for summary judgment should be DENIED as MOOT.1

I. BACKGROUND

Plaintiffs are six individuals who purport to represent a class of people who were employed as "leased" or "temporary" office staff ("office staff or "staff) at Allstate Insurance Company ("Allstate") between 1983 and the present.2 Plaintiffs allege that Allstate violated two federal acts: (1) § 510 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1140; and (2) the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968. Section 510 of ERISA makes it unlawful for an employer to:

discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan ... or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.

29 U.S.C. § 1140 (emphasis added). Section 510 consists of two components: (1) an anti-retaliation component, which prohibits an employer from retaliating against an employee for exercising ERISA rights; and (2) an anti-interference component, which prohibits an employer from interfering with an employee's future rights to benefits. Plaintiffs' Complaint alleges violations of the anti-interference component of § 510.

Specifically, Plaintiffs' Complaint alleges that Allstate violated § 510 by participating in two prohibited acts. First, Plaintiffs allege that in the early 1980s, Allstate "fired and rehired" its office staff in order to force them to obtain their employment through temporary agencies if they wanted to continue working for Allstate. According to Plaintiffs, Allstate's actions constituted a prohibited interference with their ERISA rights under § 510 because Allstate implemented its leased employee structure with the specific intent to exclude its office staff from all medical and pension benefits provided by Allstate. Of the six named Plaintiffs, only one, Esther Stafford ("Stafford") was actually "fired and rehired" during the time Allstate implemented its program. Stafford was originally employed by Allstate in December of 1985. In January of 1987, she was converted to a leased employee status when she was taken off of Allstate's payroll and employed through Olsten of Houston, a staff leasing company. Stafford was informed that she would no longer be eligible for Allstate's benefit programs at that time.

The second prohibited act Plaintiffs allege is that during the relevant time period Allstate fraudulently deceived them into believing they were not Allstate employees and were not entitled to participate in Allstate's benefit plans. According to Plaintiffs, Allstate knew that Plaintiffs were actually regular Allstate employees and that it was Allstate's intention to mislead Plaintiffs into believing otherwise. As to Stafford, Plaintiffs' Complaint suggests that she was mislead into believing she was no longer entitled to Allstate's benefit plans when she was "rehired" though the temporary agency in 1987. The remaining five named Plaintiffs, however, were initially hired through temporary agencies. Linda Berry ("Berry") was hired in 1987, Mary Sutter ("Sutter") and Susan Harrell ("Harrell") were hired in 1991, and Nancy Sellers ("Sellers") and Terri Smith ("Smith") were hired in 1995. Thus, according to Plaintiffs, Berry, Sutter, Harrell, Sellers, and Smith were mislead into believing they were not regular Allstate employees and ineligible for its benefit plans from the first day they were hired as office staff.

The facts are undisputed that Allstate informed Plaintiffs and others through several communications that Plaintiffs were leased employees and ineligible to participate in Allstate's benefit plans. For example, the facts are undisputed that Allstate requires its office staff to be hired through approved temporary agencies and that the staff receive their paychecks and W-2 forms from the temporary agencies. Both parties concede that Allstate "told [Plaintiffs] when they were hired that they were employees of temporary agencies and not of Allstate." Pits.' Complaint at 8. During their employment, Plaintiffs signed a non-competition agreement which stated that they are employees of their temporary agencies and not of Allstate. Additionally, Allstate has sent memoranda and letters to its agents stating that support staff are not Allstate employees, but are employees of their temporary agencies. The facts are further undisputed that Allstate controls the recruiting, hiring, training, managing, and firing of the office staff and that the staff are provided with Allstate business cards. Plaintiffs contend that except for Allstate's representations that they are leased employees, the facts demonstrate that they are treated in the same manner as regular Allstate employees. Therefore, Plaintiffs argue that Allstate's repeated representations to them and to others that office staff are not regular Allstate employees amounts to a conspiracy to continually violate § 510.

Finally, Plaintiffs' RICO count alleges that Allstate's actions constitute a pattern of racketeering activity because Allstate has continued to implement its scheme to defraud Plaintiffs into believing they are not Allstate employees through the use of mails, wire, radio and television communications.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). The initial burden is on the moving party to point out the absence of any genuine issue of material fact. See Int'l Shortstop, Inc. v. Rally's, Inc., 939 F.2d 1257, 1264 (5th Cir.1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). Once the initial burden is satisfied, the burden shifts to the opponent to demonstrate through the production of probative evidence that there remains an issue of fact to be tried. See id. An issue is material only if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In this analysis, the court reviews the facts and evidence and draws all inferences in the light most favorable to the nonmovant. See Colson v. Grohman, 174 F.3d 498, 506 (5th Cir.1999) (citing Anderson, 477 U.S. at 255, 106 S.Ct. 2505). However, the party opposing the motion may not rest on mere allegations or denials of pleading, but must set forth specific facts showing a genuine issue for trial. See Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Unsupported allegations, conclusory in nature, are insufficient to defeat a proper motion for summary judgment. See Simmons v. Lyons, 746 F.2d 265, 269 (5th Cir.1984).

III. ALLSTATE'S FIRST MOTION FOR SUMMARY JUDGMENT

Allstate's first motion for summary judgment argues that Plaintiffs' ERISA and RICO claims are barred by the statute of limitations. ERISA does not specify a limitations period for § 510 claims. When Congress does not provide a statute of limitations, federal courts look to state law for the most analogous limitations period. See Wilson v. Garcia, 471 U.S. 261, 266-67, 105 S.Ct. 1938, 85 L.Ed.2d 254 (1985); McClure v. Zoecon, Inc., 936 F.2d 777, 778 (5th Cir.1991) (holding that Texas wrongful discharge and employment discrimination claims have the most analogous state statute of limitations for § 510 claims). The parties agree that the applicable statute of limitations for a § 510 action brought in the state of Texas is two years. See id. The parties further agree that the applicable statute of limitations for Plaintiffs' civil RICO claim is four years. See Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143, 156, 107 S.Ct. 2759, 97...

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