Capital Cities/Abc, Inc. v. Ratcliff

• Decision Date: 24 January 1997
• Docket Number: Civil Action No. 94-2488-GTV.,Civil Action No. 95-2212-GTV.
• Citation: 953 F.Supp. 1228
• Parties: CAPITAL CITIES/ABC, INC., et al., Plaintiffs, v. Rockie RATCLIFF, et al., Defendants. Robert HUTSELL, et al., Plaintiffs, v. The KANSAS CITY STAR COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Kansas

953 F.Supp. 1228

CAPITAL CITIES/ABC, INC., et al., Plaintiffs, v. Rockie RATCLIFF, et al., Defendants.

Robert HUTSELL, et al., Plaintiffs, v. The KANSAS CITY STAR COMPANY, et al., Defendants.

Civil Action No. 94-2488-GTV.

Civil Action No. 95-2212-GTV.

United States District Court, D. Kansas.

January 24, 1997.

Joseph R. Colantuono, Polsinelli, White, Vardeman & Shalton, Overland Park, KS, Michael S. Horne, John M. Vine, Covington

& Burling, Washington, DC, for plaintiffs in No. 94-2488.

Robert J. Bjerg, Lynne C. Kaiser, Rachel H. Baker, Seigfreid, Bingham, Levy, Selzer & Gee, Kansas City, MO, J. Brett Milbourn, R. Frederick Walters, Walters, Bender & Strohbehn, Kansas City, MO, for defendants in No. 94-2488.

Robert J. Bjerg, Lynne C. Kaiser, Rachel H. Baker, Seigfreid, Bingham, Levy, Selzer & Gee, Kansas City, MO, J. Brett Milbourn, R. Frederick Walters, Walters, Bender & Strohbehn, Kansas City, MO, for plaintiffs in No. 95-2212.

Joseph R. Colantuono, Cathy J. Dean, Polsinelli, White, Vardeman & Shalton, Overland Park, KS, Michael S. Horne, John M. Vine, Jeffrey B. Coopersmith, Covington & Burling, Washington, DC, for defendants in No. 95-2212.

MEMORANDUM AND ORDER

VAN BEBBER, Chief Judge.

These are consolidated cases involving the question of whether current and former newspaper carriers of The Kansas City Star and The Kansas City Times are entitled to employee benefits under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq. The court will review the procedural posture of the consolidated cases to assist in the understanding of the motions now pending before the court.

On November 30, 1994, Capital Cities/ABC, Inc., The Kansas City Star Co., the Star's four ERISA plans and the plans' claims committees (collectively referred to as "The Star") filed a declaratory judgment action in this court, Capital Cities/ABC, Inc., et al. v. Ratcliff, Case No. 94-2488-GTV, and named three newspaper carriers as defendants. In that action, The Star sought a judgment declaring that the members of the defendant class of newspaper carriers are bound by their contractual commitment that they have no rights to benefits under the four ERISA plans (Count I); the term "employees" as used in the four ERISA plans does not include the defendant class (Count II); the defendant class is estopped from pursuing claims for benefits under the four ERISA plans (Count III); and the decisions of the four claims committees to deny benefits should be upheld (Count IV).

On December 2, 1994, thirty-one Kansas City Star newspaper carriers ("the Carriers") filed an action against the Kansas City Star Company, its ownership corporations, the four ERISA plans and the claims committees in the United States District Court for the Western District of Missouri. Hutsell, et al. v. The Kansas City Star, et al., our Case No. 95-2212-GTV. On May 4, 1995, Judge Joseph E. Stevens, Jr. of the Western District of Missouri transferred the Hutsell action to the District of Kansas, where it was subsequently consolidated with the Ratcliff action pending before this court.

In the Hutsell action, the Carriers seek benefits and other relief under both ERISA and several state law claims. Specifically, the Carriers' ERISA claims include: a claim for benefits pursuant to § 502(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B) (Count I); breach of fiduciary duty and removal of the administrators of the Plans pursuant to § 502(a)(2) of ERISA, 29 U.S.C. § 1132(a)(2) (Count II); and a claim for injunctive relief pursuant to § 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3) (Count III).

The Carriers' state law causes of action include: breach of contract (Count IV); fraudulent misrepresentation (Count V); negligent misrepresentation (Count VI); illegal deductions from wages pursuant to the Kansas Wage Payment Act, K.S.A. § 44-319 (Count VII); illegal non-payment of overtime compensation pursuant to the Kansas Minimum Wage and Maximum Hour Law, K.S.A. § 44-1201 et seq. (Count VIII); illegal nonpayment of overtime compensation pursuant to the Missouri Minimum Wage Law, Mo. Stat.Ann. § 290.500 et seq. (Count IX); and breach of contract for employee fringe benefits (Count X).

In an order dated September 20, 1996, the court formally certified a defendant class of Carriers defined as:

All persons who have been home delivery or single copy agents for the Kansas City Star Company pursuant to agency agreement since the delivery agent system was implemented by The Star in or about 1978.

The court further ordered that The Star give notice of these pending suits to all potential class members.

I. PENDING MOTIONS

The consolidated cases are now before the court on The Star's motion for summary judgment in both actions (Doc. 73), and the Carriers' motions to strike the declarations of Dermot R. Hayes (Doc. 82) and F. David Lake, Jr. (Doc. 83).

The court has reviewed the briefing of the parties regarding the preceding motions and is now prepared to rule.¹ For the reasons set forth below, the motion to strike the declaration of Hayes is granted in part and denied in part, the motion to strike the declaration of Lake is denied as moot, and the Star's motion for summary judgment is granted.

II. FACTUAL BACKGROUND²

The Kansas City Star Company publishes The Kansas City Star. Until March 1990, it also published The Kansas City Times, a separate morning newspaper. The Kansas City Star Company is a wholly owned subsidiary of Capital Cities/ABC, Inc.

As part of its compensation package, The Star offers to certain of its employees two employee pensions plans and two employee welfare benefit plans, as those terms are defined under ERISA § 3(2)(A), 29 U.S.C. § 1002(2)(A), and § 3(1), 29 U.S.C. § 1002(1). These plans are: The Capital Cities/ABC, Inc. Savings & Investment Plan ("the Savings Plan"); The Capital Cities Publishing Pension Plan ("the Pension Plan"); The Kansas City Star Company Group Insurance Plan ("the Insurance Plan"); and The Kansas City Star Spending Account Program ("the Spending Account Program"). A single benefits committee serves as the plan administrator for the Savings Plan and the Pension Plan. A separate single benefits committee serves as the plan administrator for the Insurance Plan and the Spending Account Program. These committees will be referred to as the "Plan Committees."

The Carriers are individuals who currently or formerly delivered The Kansas City Star and/or The Kansas City Times. Each carrier entered into an Agency Agreement with The Star. The Agency Agreements provide that:

The Agent is and will continue to be a self-employed independent contractor and not an employee or servant of The Star....

It is expressly understood and agreed between the parties that The Agent will not be treated as an employee for federal, state, or local tax purposes....

It is further expressly understood that, as an independent contractor, the Agent will not receive, and has no claim to, any benefits or other compensation currently paid by The Star to its employees or hereafter declared by The Star for the benefit of its employees. The Agent's compensation under this Agreement shall consist, in its entirety, of the fees set forth in paragraph 8 below.

Paragraph 8 of the Agency Agreement provides for a series of fees, including a delivery fee of a specified amount for each paper delivered, a delivery service incentive fee, and a collection incentive fee.

In September 1994, twenty-three Carriers made a formal request for benefits to the Plan Committees for themselves and all carriers similarly situated. On November 30, 1994, the Plan Committees denied the benefit claims in identical decisions. The Committees gave three bases for their decisions. First, they held that each of the newspaper carriers expressly agreed in an Agency Agreement that the carrier would not receive, and had no claim to, any benefits under The Star's benefit plans. Second, the Committees held that the newspaper carriers do not qualify as "employees" under the Plans. Finally, the Committees held that the newspaper carriers fall outside the common law definition of "employee" and therefore are not entitled to participate in the benefit plans under ERISA.

III. STANDING

The court must determine whether the parties have standing to pursue their actions prior to addressing the substance of the motions pending before it. The Star has brought the Ratcliff action pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, seeking a determination that current and former newspaper carriers are not eligible for employee benefits created and governed under ERISA. The Carriers have brought claims in Counts I through III of the Hutsell action seeking benefits to which they are allegedly entitled under ERISA.

An individual claiming benefits under an ERISA plan must be either a "participant" or a "beneficiary." 29 U.S.C. § 1132(a)(1). ERISA defines "participant" as:

any employee or former employee of an employer ... who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer or members of such organization, or whose beneficiaries may be eligible to receive any such benefit.

29 U.S.C. § 1002(7). ERISA defines "employee" as "any individual employed by an employer." 29 U.S.C. § 1002(6). Because the definition of employee under ERISA is circular, the United States Supreme Court has adopted the common law agency test for determining whether an individual is an employee. Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318, 323, 112 S.Ct. 1344, 1348, 117 L.Ed.2d 581 (1992). ERISA defines "beneficiary" as "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C. § 1002(8).

The Carriers' standing to bring suit under ERISA must be based upon their status as employees of The Star who are or may become eligible for benefits under...