Bronk v. Mountain States Telephone and Telegraph

• Decision Date: 07 April 1998
• Docket Number: No. 97-1069.,No. 97-1078.,97-1069.,97-1078.
• Citation: 140 F.3d 1335
• Parties: Clay BRONK, Maurine Burk, Mark Damilini, Jacqueline Enriquez, Chuck Fletcher, Natalie Franz, John Gierka, Randolph Gilmore, Mark Hay, Kim Johnson, John Kennedy, Jane Knutson, Carol Major, Sandra Martinskis, Alfred Mulford, Terry Reyes, Roy R. Salinas, Larry Sanchez, Lynn Saxe, John Saxe, Ling Sigstedt, Steven Stollman, Donna Sly, Lydia Thomas, Robert Toannon, Frank Vigil, Cynthia Voigt, Colission Wells, Lynn G. Wulf, individually and as representatives of a Class, Plaintiffs — Appellees, v. MOUNTAIN STATES TELEPHONE AND TELEGRAPH, INC., a Colorado corporation, dba U.S. West Communications; U.S. West, Inc., a Colorado corporation; U.S. West, Inc., Employees Benefits Committee; U.S. West Defined Contributions Plan Committee; U.S. West Communications Base Benefits Committee, Defendants — Appellants, ERISA Industry Committee; National Association of Temporary and Staffing Services; Chamber of Commerce of the United States of America, Amici Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

140 F.3d 1335

Clay BRONK, Maurine Burk, Mark Damilini, Jacqueline Enriquez, Chuck Fletcher, Natalie Franz, John Gierka, Randolph Gilmore, Mark Hay, Kim Johnson, John Kennedy, Jane Knutson, Carol Major, Sandra Martinskis, Alfred Mulford, Terry Reyes, Roy R. Salinas, Larry Sanchez, Lynn Saxe, John Saxe, Ling Sigstedt, Steven Stollman, Donna Sly, Lydia Thomas, Robert Toannon, Frank Vigil, Cynthia Voigt, Colission Wells, Lynn G. Wulf, individually and as representatives of a Class, Plaintiffs — Appellees, v. MOUNTAIN STATES TELEPHONE AND TELEGRAPH, INC., a Colorado corporation, dba U.S. West Communications; U.S. West, Inc., a Colorado corporation; U.S. West, Inc., Employees Benefits Committee; U.S. West Defined Contributions Plan Committee; U.S. West Communications Base Benefits Committee, Defendants — Appellants, ERISA Industry Committee; National Association of Temporary and Staffing Services; Chamber of Commerce of the United States of America, Amici Curiae.

No. 97-1069.

No. 97-1078.

United States Court of Appeals, Tenth Circuit.

April 7, 1998.

Raymond W. Martin, Parcel, Mauro, Hultin & Spaanstra, P.C., Denver, CO (D. Ward Kallstrom, Lillick & Charles, LLP, San Francisco, CA, and Colleen M. Rea, U.S. West, Inc., Denver, CO, with him on the briefs), for Appellants.

Lee Thomas Judd, Andrew T. Brake, P.C., Englewood, CO (Todd J. McNamara, Todd J. McNamara, P.C., Denver, CO, with him on the brief), for Appellees.

John M. Vine, Covington & Burling, Washington, DC, filed an amicus curiae brief for the ERISA Industry Committee.

Kenneth B. Siegel, Sherman & Howard, L.L.C., Denver, CO, and C. Frederick Oliphant III and Alvaro Ignacio Anillo, Miller & Chevalier, Chartered, Washington, DC, filed an amicus curiae brief for National Association of Temporary and Staffing Services.

Robin S. Conrad, National Chamber Litigation Center, Inc., Washington, DC, and Hollis T. Hurd, The Benefits Department, Pittsburgh, PA, filed an amicus curiae brief for Chamber of Commerce of the United States of America.

Before SEYMOUR, Chief Judge, ANDERSON, and LUCERO, Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

This is an interlocutory appeal from an order holding that the minimum participation, vesting and funding requirements of the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-1461 ("ERISA") mandate the inclusion in the defendants' pension plans of "leased" employees who meet the definition of common-law employees. The district court also held that such employees were properly excluded from the defendants' welfare plans. We reverse the district court's decision on the pension plans. We do not address the court's decision on the welfare plans as the matter is not properly before us.

BACKGROUND

Plaintiffs, twenty-nine individuals who claim to represent a class of similarly situated individuals ("Workers"), performed services between approximately January 1984 and June 1991 for defendant Mountain States Telephone & Telegraph, Inc. ("MSTT"), d/b/a U.S. WEST Communications, pursuant to leasing contracts between U.S. WEST and various leasing companies.¹ The leasing contracts provided that the leasing company was the "employer" of the leased workers and that "[a]ll [w]orkers shall be considered solely the employees or agents of [the leasing company]." Defendants/Appellants' App. Vol. I at 208.² The Workers were not on U.S. WEST's payroll nor in its official service records.

In December 1990, eleven of the Workers filed ERISA claims requesting the right to participate in pension and welfare plans maintained by U.S. WEST.³ The Workers claimed that they performed the "same or similar" functions as U.S. WEST employees and were therefore entitled to participate in the pension and welfare plans. Others filed comparable claims in June and July 1990. Defendant U.S. WEST Communications Base Benefits Committee ("BBC") denied them benefits. They appealed that denial to defendant U.S. WEST, Inc. Employee Benefit Committee ("EBC"). The EBC denied the appeals, concluding that the plans only covered "regular employees" and that the Workers were not "regular employees."

The district court reviewed the EBC's decision. Both sides filed motions for summary judgment. The district court characterized the issue before it as "whether the minimum participation standards of ERISA require U.S. West to cover leased employees in its Plans if they meet the definition of a `common law' employee." Bronk v. Mountain States Tel. & Tel., Inc., 943 F.Supp. 1317, 1322-23 (D.Colo.1996). The court held that leased employees who meet the common law definition of employees are not entitled to participate in U.S. WEST's welfare plans. It accordingly granted defendants' summary judgment motion and denied plaintiffs' summary judgment motion with respect to the welfare plans. With respect to the pension plans, the court held that, regardless of the language of such plans, the minimum participation, vesting and funding requirements of ERISA mandated the inclusion of the Workers, provided they met the common law definition of employees. Because it could not determine from the record whether the Workers met that definition, the court ordered supplemental briefing and an evidentiary hearing on the issue. The district court then certified its decision for interlocutory appeal pursuant to 28 U.S.C. § 1292(b). This appeal followed.⁴ Amicus briefs have been filed by the Chamber of Commerce of the United States of America, the National Association of Temporary and Staffing Services, and the ERISA Industry Committee, all in support of defendants.

DISCUSSION

Section 202(a) of ERISA, 29 U.S.C. § 1052(a)(1)(A) and (4), provides as follows:

(a)(1)(A) No pension plan may require, as a condition of participation in the plan, that an employee complete a period of service with the employer or employers maintaining the plan extending beyond the later of the following dates

(i) the date on which the employee attains the age of 21; or

(ii) the date on which he completes one year of service.

....

(4) A plan shall be treated as not meeting the requirements of paragraph (1) unless it provides that any employee who has satisfied the minimum age and service requirements specified in such paragraph, and who is otherwise entitled to participate in the plan, commences participation in the plan no later than the earlier of —

(A) the first day of the first plan year beginning after the date on which such employee satisfied such requirements, or

(B) the date 6 months after the date on which he satisfied such requirements.

29 U.S.C. § 1052(a)(1)(A) & (4) (emphasis added). The district court clearly held that those minimum participation standards required the inclusion in U.S. WEST's pension plans of all leased employees who met the test for common law employees, regardless of whether or not the actual language of the plans would include such employees. We disagree with that interpretation of those ERISA provisions.

It is well established that ERISA does not prohibit an employer from distinguishing between groups or categories of employees, providing benefits for some but not for others. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91, 103 S.Ct. 2890, 2896-97, 77 L.Ed.2d 490 (1983) ("ERISA does not mandate that employers provide any particular benefits, and does not itself proscribe discrimination in the provision of employee benefits."); Abraham v. Exxon Corp., 85 F.3d 1126, 1130-31 (5th Cir.1996); Averhart v. U.S. WEST Management Pension Plan, 46 F.3d 1480, 1488 (10th Cir.1994). It simply may not make such distinctions based upon age or length of service. Accordingly, an employer need not include in its pension plans all employees who meet the test of common law employees. See Hockett v. Sun Co., 109 F.3d 1515, 1525 (10th Cir.1997) ("We are doubtful that the [plan] defines `employee' in a manner identical to the common law...."). While not decisive, the language of ERISA § 202(a) supports this conclusion. Section 202(a)(4) imposes a deadline by which a plan must admit an employee satisfying the minimum age and service requirements of § 202(a)(1)(A) and "who is otherwise entitled to participate in the plan." As U.S. WEST and amici argue, the "otherwise entitled to participate" language would be superfluous unless Congress intended that plans could impose other participation requirements besides age or length of service.

In reaching its conclusion — that ERISA § 202(a) requires the inclusion of leased employees who are common law employees and satisfy § 202(a)'s minimum age and length of service requirements — the district court relied upon Renda v. Adam Meldrum & Anderson Co., 806 F.Supp. 1071 (W.D.N.Y. 1992) and Crouch v. Mo-Kan Iron Workers Welfare Fund, 740 F.2d 805 (10th Cir.1984), and it rejected the reasoning of Abraham v. Exxon Corp., 85 F.3d 1126 (5th Cir.1996). We find the reasoning of Abraham to be more persuasive than that of Renda, and we do not read Crouch as inconsistent with that reasoning.

The Renda court, and in turn the district court below, held that certain provisions of the Internal Revenue Code and Treasury Department regulations were effectively incorporated into ERISA's substantive requirements and compelled the result they reached. They relied on Crouch in so concluding: "[i]t is apparent from cases like Crouch that the[] [Treasury] regulations are not to be implemented only for the narrow purpose of determining tax qualification. They are useful for extracting subtler shades of meaning necessary to paint a more detailed portrait of an individual's substantive rights under ERISA." Renda, 806 F.Supp. at 1083. That overlooks the critical fact that the plans at issue in Crouch stated that they must comply with ERISA, the Internal Revenue Code and Treasury Department regulations governing tax-qualification.⁵ Thus, construction of the plans in that case to comply with the Code and Treasury regulations, as well as ERISA, was compelled by the...