Edes v. Verizon Communications, Inc.

• Decision Date: 25 July 2003
• Docket Number: No. CIV.A.01-011742-PBS.,CIV.A.01-011742-PBS.
• Citation: 288 F.Supp.2d 55
• Parties: Ronald R. EDES, Kevin Lyons, and John Parsons, Plaintiffs, v. VERIZON COMMUNICATIONS, INC., et al., Defendants.
• Court: U.S. District Court — District of Massachusetts

288 F.Supp.2d 55

Ronald R. EDES, Kevin Lyons, and John Parsons, Plaintiffs, v. VERIZON COMMUNICATIONS, INC., et al., Defendants.

No. CIV.A.01-011742-PBS.

United States District Court, D. Massachusetts.

July 25, 2003.

Michael M. McArdle, Munroe and McArdle, Marblehead, MA, Earl D. Munroe, Munroe and Chew, Salem, MA, for Plaintiffs.

Sara L. Govotti, Jeffrey G. Huvelle, Covington & Burling, Washington, DC, Matthew L. Lunenfeld, Douglas K. Mansfield, Casner & Edwards, LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

SARIS, District Judge.

INTRODUCTION

Plaintiffs bring this proposed class action alleging that their former employer, defendant Verizon Communications, Inc. (previously GTE, Inc.), interfered with plaintiffs' rights to participate in various employee benefit plans in violation of the Employee Retirement Income Security Act of 1974 ("ERISA") as well as state common law.¹ Defendants assert that plaintiffs were temporary employees who were ineligible for participation in GTE's employee benefits plans, and have moved to dismiss the complaint. After hearing and several rounds of briefing, the defendants' motion to dismiss is ALLOWED.

BACKGROUND

The complaint alleges the following facts:

Plaintiffs each began working at GTE Services Corporation, a division of GTE, in April 1994. Each plaintiff was interviewed and hired directly by GTE managers at GTE's place of business, but was instructed upon his hiring to sign on with an independent temporary payroll agency. Throughout their employment plaintiffs received paychecks only from two temporary payroll agencies—FISC, Inc. and Benetemps, Inc.—and did not receive any salary or employee benefits directly from GTE. Otherwise, plaintiffs were indistinguishable from GTE's other employees. They received all their training and evaluations from GTE management, participated in peer review programs with other GTE employees, served on in-house committees, had authority to compose and sign letters on GTE letterhead, possessed office keys, shared internal e-mail and telephone listings, were invited to GTE company-sponsored functions, including picnics and Christmas parties, and were instructed by GTE management to identify themselves to outsiders as GTE employees and not as "temporary employees."

At all relevant times, GTE divided workers into at least two different groups for the purpose of determining eligibility for participation in GTE's employee benefit plans. The first group was comprised of "regular" employees, including full and part-time staff, who were paid directly by GTE and were eligible to participate in the benefit plans. The second group included, among other "special status" employees, "seasonal," "leased" and "temporary" workers who were not paid directly by GTE. The latter group was not eligible for participation in defendants' employee benefit plans. Because they did not receive their paychecks directly from GTE, plaintiffs were deemed ineligible for participation in any GTE benefits programs, and plaintiffs never received any such benefits from defendants during their tenure with the company.

Plaintiffs Edes and Lyons discontinued their employment at GTE on December 31, 1998, and plaintiff Parsons discontinued his employment in August of 1998, when GTE closed its facility in Danvers. On May 3, 1999 the plaintiffs, after each of them had left GTE, made their first demand for benefits to the Human Resources Department of GTE. By letter GTE denied that plaintiffs were eligible for benefits. Defendants offered the plaintiffs no administrative review of the denial. On October 10, 2001, plaintiffs filed this action.

LEGAL ANALYSIS

I. Motion to Dismiss Standard

For purposes of this motion, the Court takes as true "the well-pleaded facts as they appear in the complaint, extending [the] plaintiff every reasonable inference in [her] favor." Coyne v. City of Somerville, 972 F.2d 440, 442-43 (1st Cir.1992) (citing Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir.1990)). A complaint should not be dismissed under Fed. R.Civ.P. 12(b)(6) unless "`it appears beyond doubt that the plaintiff can prove no set of facts in support of [her] claim which would entitle [her] to relief." Roeder v. Alpha Industries, Inc., 814 F.2d 22, 25 (1st Cir.1987) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).

II. The ERISA Claims

A. Benefits Due Under the Terms of the Plans (¶ 7.1)²

Plaintiffs claim they are plan participants eligible to recover benefits due to them under the terms of the ERISA plans.³ See 29 U.S.C. § 1132(a)(1)(B). The GTE Savings Plan states that the term "Eligible Employee ... shall not include ... an individual whose basic compensation for services rendered on behalf of the Company or a Participating Affiliate is not paid directly by the Company or an Affiliate." The plan also excluded other categories of workers like leased employees. The submitted documents for the other plans similarly exclude employees not paid "directly" by the defendants.⁴ Thus, by the terms of the plans, plaintiffs are not entitled to benefits because they are not paid directly by GTE, but instead are paid by temporary payroll agencies.

The fact that plaintiffs may be common law employees is not by itself enough to state a valid claim for benefits under ERISA. See Wolf v. Coca-Cola Co., 200 F.3d 1337, 1340 (11th Cir.2000) (holding that to maintain an action to recover ERISA benefits, a plaintiff must establish that (1) she is an employee of the employer and (2) she meets all the participation requirements contained in the ERISA plan). "The plaintiff must be eligible for benefits under the terms of the plan itself. This requirement is necessary because companies are not required by ERISA to make their ERISA plans available to all common law employees." Id.Accord Bauer v. Summit Bancorp, 325 F.3d 155, 161, 166 (3d Cir.2003) (holding that to succeed on ERISA claim plaintiffs must show both that they are employees and that they are eligible for participation under terms of the plans); Bronk v. Mountain States Tel. & Tel., Inc., 140 F.3d 1335, 1338 (10th Cir.1998) (same); Abraham v. Exxon Corp., 85 F.3d 1126, 1129-30 (5th Cir.1996) (same); Jaeger v. Matrix Essentials, Inc., 236 F.Supp.2d 815, 825 (N.D.Ohio 2002) (finding defendant not obligated to make ERISA plans available to all common law employees); cf. Vizcaino v. Microsoft, 120 F.3d 1006, 1009-10 (9th Cir.1997) (holding that common law employees payrolled through temporary agencies were eligible employees under the terms of the Microsoft plans).

B. Interference Claim Under 29 U.S.C. § 1140 (¶ 7.2)

Plaintiffs claim that defendants mis-classified them as "indirectly" paid employees for the purpose of interfering with plaintiffs' attainment of ERISA rights, in violation of ERISA, § 510, 29 U.S.C. § 1140. That section provides that

It shall be unlawful for any person to ... discriminate against a participant or beneficiary ... for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this title, or the Welfare and Pension Plans Disclosure Act.

29 U.S.C. § 1140. Section 510 prohibits interfering with employment arrangements for the purpose of depriving an employee of employee benefits that would otherwise be owed to her. See Benham v. Lenox Sav. Bank, 292 F.3d 46, 47 (1st Cir.2002); Sandberg v. KPMG Peat Marwick, L.L.P., 111 F.3d 331, 334 (2d Cir. 1997).

Plaintiffs' § 510 argument fails for two reasons. First, an employer may hire employees under terms that render them ineligible to receive benefits given to other employees without violating § 510. See Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91, 103 S.Ct. 2890, 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); Becker v. Mack Trucks, Inc., 281 F.3d 372, 380-383 (3d Cir.2002) (holding that § 510 does not apply to hiring and rehiring decisions); Williams v. American Int'l Group, Inc., 01-CIV-9673-CSH, 2002 WL 31115184, at *2 (S.D.N.Y. Sept. 23, 2002) (citing Becker and rejecting claim that assigning a plaintiff to temporary status is discrimination within the meaning of § 510).

Second, plaintiffs' § 510 claim is time-barred. The Massachusetts three-year limitations period for torts, Mass. Gen. Laws ch. 260, § 2A, applies to actions under ERISA § 510. See Muldoon v. C.J. Muldoon & Sons, 278 F.3d 31, 32 (1st Cir.2002). The statute of limitations clock began on plaintiffs' claim when plaintiffs were hired in April 1994 and classified as employees of a temporary payroll agency instead of as regular employees of GTE. See Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1140-41 (7th Cir.1992) ("[I]t is the [employment] decision and the participant's discovery of this decision that dictates accrual."); Berry v. Allstate Ins. Co., 252 F.Supp.2d 336, 342 (E.D.Tex.2003) (holding that the statute of limitations for a § 510 claim begins to run when the discriminatory decision is made and communicated to the plaintiff and rejecting continuing violation theory to extend the statute of limitations); Potter v. ICI Americas Inc., 103 F.Supp.2d 1062, 1073 (S.D.Ind.1999) (holding that "it is the adverse employment decision, that is, the change in employment status that indicates that the employer may be discriminating against a plaintiff's ability to collect benefits, that starts the clock ticking, not when a plaintiff is ultimately denied those benefits.") (emphasis in original); Bolduc v. National Semiconductor Corp., 35 F. Supp.2d 106, 119-20 (D.Me.1998) (holding that ERISA claim accrued when plaintiff "was aware that he would not receive benefits by virtue of his independent contractor status even though he worked in the same position as other employees who received these benefits."); Williams, 2002 WL 31115184, at *5 (where plaintiff claimed her...