Bronk v. Mountain States Tel. & Tel., Inc.
| Decision Date | 29 October 1996 |
| Docket Number | Civil Action No. 93-D-1961. |
| Citation | 943 F.Supp. 1317 |
| 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 Sanchez, Lynn Saxe, John Saxe, Ling Sigstedt, Steven Stollman, Donna Sly, Lydia Thomas, Robert Toannon, Frank Vigil, Cynthia Voigt, Colission Wells, and Lynn G. Wulf, individually and as representatives of a Class, Plaintiffs, v. MOUNTAIN STATES TELEPHONE & TELEGRAPH, INC., d/b/a US West Communications, a Colorado corporation; US West Inc.; US West Inc. Employees Benefit Committee; US West Defined Contributions Plan Committee; and US West Communications Base Benefits Committee, Defendants. |
| Court | U.S. District Court — District of Colorado |
Lee T. Judd, Todd J. McNamara, Denver, CO, for Plaintiffs.
Raymond W. Martin, Denver, CO, Craig E. Epperson, D. Ward Kallstrom, Erika M. Pardo, Lillick & Charles, San Francisco, CA, for Defendants.
This case is brought pursuant to the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. ("ERISA") against Mountain States Telephone & Telegraph ("MSTT") and US West Inc. ("US West") as the plan sponsors of certain employee pension and/or welfare plans. US West, Inc. Employee Benefit Committee ("EBC"), US West Defined Contribution Plans Committee ("DCPC") and US West Communications Base Benefits Committee ("BBC") are sued as "administrators" of the plans. The plans which are the subject of this Action include the US West Pension Plan (the "Pension Plan"), the US West Savings and Security Plan/ESOP (the "Savings Plan"), the US West Savings Plan/ESOP for Salaried Employees (the "Savings Plan for Salaried Employees"), the US West Payroll Stock Organization Plan/PAYSOP (the "PAYSOP"), the US West Sickness Accident Disability Plan (the "Sickness Plan"), the US West Health Care Plan (the "Health Care Plan"), and the US West Group Life Insurance Plan (the "Group Life Plan") (collectively "the Plans").
Plaintiffs assert claims pursuant to 29 U.S.C. § 1132(a)(1)(B) for damages and § 1132(a)(3) for equitable relief as a result of the Defendants' alleged wrongful denial of Plaintiffs' participation in the Plans. Plaintiffs bring this action on behalf of themselves and as a class action on behalf of "[a]ll persons providing services to either US West or MSTT or their respective subsidiaries, and who were paid through temporary service agencies or leasing agencies, and who fall within the common law definition of employee."
In support of their contention that they meet the common law definition of employee, Plaintiffs allege that (1) they were interviewed by US West, MSTT and/or their subsidiaries; (2) they did not provide services to any other organizations, and were completely directed and controlled by management personnel of US West, MSTT and/or their subsidiaries; (3) their duties were an integral part of US West's, MSTT's and/or their subsidiaries' operation, as their functions were necessary to the business; (4) they were employed with US West more than one year; and (5) US West, MSTT and/or their subsidiaries had the exclusive right to terminate their employment relationship. Defendants disagree, asserting that Plaintiffs are leased employees whose hiring, termination and payment are controlled by the leased companies. Moreover, at least some of the leasing contracts required each leasing company to provide insurance for its employees and provided that "[the leasing company] understands and agrees that [US West] will provide no benefits to [leased workers]." Also, at least some of the contracts made the leasing companies responsible for any claims or disputes by the leased workers relating to "employment or the termination thereof" and stated that "all workers shall be considered solely the employees or agents of the leasing company."
Plaintiffs claim they have exhausted all administrative remedies, which fact Defendants do not dispute. In that regard, Plaintiffs filed claims with US West in 1990-1991 asserting that each Plaintiff performed the "same or similar" functions as a US West employee and therefore should be allowed to participate in the Plans and receive benefits as "common law" employees. The BBC denied the claims because Plaintiffs allegedly did not satisfy the Plans' eligibility requirements. In 1991, Plaintiffs' counsel appealed this decision to the EBC. The EBC upheld the denial stating that the Plans limit coverage to "regular employees" as determined by the official service records of the Company.
Plaintiffs seek judgment as a matter of law as to their claims asserting that they are common law employees entitled to coverage under the Plans. Defendants deny that Plaintiffs are eligible to receive plan benefits and have filed a cross motion for summary judgment. Defendants assert that the Plans cover only "regular employees" as defined in the Plans, not common law employees, and that the Plans' language controls the determination of who received benefits.
The parties have filed lengthy motions for summary judgment with voluminous exhibits and lengthy responses and replies. The following discussion addresses those portions of the motions that are pertinent to my decision.
The essence of Plaintiffs' argument is that they, as common law employees of U.S. West, are entitled to participate in U.S. West's pension and welfare plans. They argue that the Plans' explicit coverage for "regular employees" only is not controlling because, although an employer is not required to maintain a pension plan, if it does it cannot discriminate against its employees or set up arbitrary distinctions as to who should be covered.1 Plaintiffs contend that Defendants admit that fiduciaries cannot administer a plan in a manner inconsistent with ERISA, which is precisely what the administrator did by disregarding and making a decision contrary to ERISA's definition of "employee" and its minimum participation requirements.
In short, Plaintiffs contend that the minimum application and and eligibility requirements are driven by the statutory language of ERISA, not the plans of the employer. As such, the primary question is whether or not the Plaintiffs are "employees" as defined by ERISA and common law. Plaintiffs rely on the Internal Revenue Code, the Tax Equity and Fiscal Responsibility Act, and decisions interpreting their meaning in support of their argument that they are common law employees. The primary case authorities urged by the Plaintiffs' in support of their position are 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).
Finally, Plaintiffs argue that a de novo standard of review should apply rather than the arbitrary and capricious standard. Plaintiffs acknowledge that courts apply an arbitrary and capricious standard when the Plan gives the administrator discretionary authority to determine eligibility for benefits, which is the case here. However, Plaintiffs assert that the de novo standard should apply because the deposition testimony of Defendants' designated representative establishes that the administrator, in reality, had no discretion to include temporary employees under the Plans' provisions. The administrator's representative acknowledged that the administrator had to summarily deny Plaintiffs' claims without any investigation of their status as an employee because of the Plans' language that limited coverage to "regular" employees. Plaintiffs also argue that the de novo standard of review is appropriate because of a conflict of interest which arose because US West used its own employees to administer the Plan. Further, Plaintiffs argue that even under an arbitrary and capricious standard of review, they should prevail on their summary judgment motion because the administrator failed to consider whether they were common law employees as required by law.
Defendants argue that the arbitrary and capricious standard of review is applicable rather than the de novo standard because the Plans conferred discretion on the administrator regarding all aspects of plan administration and interpretation. Thus, Defendants assert that the role of the Court is to determine whether the plan administrator made a rational decision based on the record before it at the time the decision was made.
Defendants argue that the administrator's decision was neither arbitrary nor capricious nor contrary to law, and that the administrator would have breached its fiduciary duties had it determined that Plaintiffs were entitled to coverage since the Plaintiffs were not "regular employees" on US West's official service records as required by the terms of the Plans. Defendants assert that the Plaintiffs concede this critical fact. Defendants further argue that Plaintiffs' primary argument that they were common law employees of US West and should be entitled to benefits is not even relevant since the inquiry is limited to whether they were eligible employees as defined by the Plans.
Defendants argue that the limitation in its Plans to coverage of "regular employees" is legal. Nothing in the ERISA minimum funding laws or other federal laws requires the inclusion of "non-regular" common law employees. Moreover, the IRS Code relied on by Plaintiffs does not prohibit a plan from excluding certain groups of employees from participation so long as the group that does participate is nondiscriminatory, and a violation of those sections would only operate to deprive a pension plan of qualified status, not make it illegal. Further, Defendants point out that there are legal impediments to US West covering "leased"...
To continue reading
Request your trial
-
Bronk v. Mountain States Telephone and Telegraph
...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 ......