Hatch v. Pitney Bowes, Inc.

• Citation: 485 F.Supp.2d 22
• Decision Date: 24 April 2007
• Docket Number: C.A. No. 05-155S.
• Parties: Stephen HATCH, Plaintiff, v. PITNEY BOWES, INC., Defendant.
• Court: U.S. District Court — District of Rhode Island

485 F.Supp.2d 22

Stephen HATCH, Plaintiff, v. PITNEY BOWES, INC., Defendant.

C.A. No. 05-155S.

United States District Court, D. Rhode Island.

April 24, 2007.

COPYRIGHT MATERIAL OMITTED

Noelle K. Clapham, Esq., South Kingstown, RI, for Plaintiff.

Andrew C. Sullivan, Esq., Nicole A. Diller, Esq., Morgan, Lewis & Bockius LLP, San Francisco, CA, Thomas J. McAndrew, Esq., Providence, RI, for Defendant.

DECISION AND ORDER

SMITH, District Judge.

Before this Court is a Report and Recommendation ("R & R"), issued on December 1, 2005, by United States Magistrate Judge David L. Martin. Plaintiff Stephen Hatch and defendant Pitney Bowes, Inc. each filed timely objections to the R & R. Although Hatch argues that the Magistrate Judge's recommendation to dismiss his ERISA claim is in error, the central issue with which this court must contend is whether Title I of the Americans With Disabilities Act, pursuant to 42 U.S.C. § 12112, contemplates a cause of action for a totally disabled claimant. The Magistrate Judge, concluding that it did, recommended denying Pitney Bowes's motion to dismiss this claim. Review of the R & R is de novo. Fed.R.Civ.P. 72(b). This Court heard oral argument on January 23, 2006.¹

I. Background²

Plaintiff Stephen Hatch seeks redress for alleged discrimination, retaliation, and wrongful reduction of his long term disability ("LTD") benefits by his, former employer, Pitney Bowes. For over 25 years, Hatch worked in the sales department for Pitney Bowes in its Rhode Island office. In July, 1997, he took a medical leave of absence due to a mental disability ("first leave"). He returned to work in October of 1997, and continued working until January 1, 1998, when he was forced to take a second medical leave ("second leave"). Hatch remains on medical leave.

Shortly after his second leave began, Hatch received a letter from Pitney Bowes, dated April 16, 1998, informing him that he had been approved for LTD benefits effective February 1, 1998. This letter further explained that his LTD benefit amount was based on his 1997 earnings, and that he would receive a monthly check from Pitney Bowes' Payroll Department in the amount of $4,868.17. After a Social Security Disability Income offset of $1,449.00, Hatch's monthly LTD benefit total was $3,419.17. This amount remained constant, and was consistently confirmed by Pitney Bowes through various letters, until August 2003.

In 1999, Hatch lodged complaints against Pitney Bowes with the Rhode Island Commission for Human Rights ("RICHR") and the United States Equal Employment Opportunity Commission ("EEOC"), alleging illegal disability discrimination. In addition, Hatch instituted a civil suit to redress the alleged illegal disability discrimination ("first action"). Ultimately, the parties entered into a mutually agreeable settlement on February 20, 2002.

Then, on August 7, 2003 Pitney Bowes sent Hatch a letter informing him that he had been overpaid by $133,075.14 due to a calculation mistake in his LTD benefits. This letter explained that the mistake had been caused by erroneously basing his LTD benefits payments on his 1997 salary, when the benefits should have been calculated based on his 1996 salary. The letter advised Hatch that according to Pitney Bowes's Long-Term Disability Plan ("Plan"), benefits are calculated by using the earnings from the full calendar year prior to the date of total disability and, because Hatch's total disability began in 1997 with his first leave, the appropriate earnings base was his 1996 salary, not his 1997 salary.³ Basing the calculation on his 1996 salary, the letter notified Hatch that he would receive a monthly LTD benefit of $2,851.88 per month instead of $3,419.17. The letter also informed Hatch that his payments would cease until the entire amount of overpayment had been recouped.

On May 26, 2004, Hatch again filed complaints with the RICHR and the EEOC ("second action"). This second action alleged that the so-called mistake in calculating his benefits was a pretext for illegal retaliation and discrimination. On April 14, 2005, after receiving right to sue letters, Hatch filed a nine count complaint in this Court. The nine counts are captioned as follows: I. Violation of 29 U.S.C. § 1132; II. Breach of Contract (Settlement Agreement); III. Equitable Estoppel; IV. Retaliation and On-going Discrimination Violation of 42 U.S.C. § 12101 et seq. Americans With Disabilities Act ("ADA"); V. Retaliation and Discrimination Violation of R.I.G.L. § 28-5-7 Rhode Island Fair Employment Practices Act (FEPA); VI. Retaliation and Discrimination Violation of R.I.G.L. § 42-112-1 Rhode Island Civil Rights Act; VII. Breach of Contract (LTD Plan); VIII. Breach of Fiduciary Duty; and IX. Injunctive Relief.

On July 11, 2005, Pitney Bowes filed a Motion to Dismiss, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, seeking dismissal of all nine counts and dismissal of Hatch's demand for a jury trial.⁴ This Court referred that motion to Magistrate Judge Martin for preliminary review, findings, and recommended disposition pursuant to 28 U.S.C. § 636(1)(1)(B).

II. The R & R

The R & R recommends granting in part and denying in part Pitney Bowes' Motion to Dismiss. Specifically, the Magistrate Judge recommends granting the Motion to Dismiss as to Counts I (ERISA), II (contract), III (equitable estoppel), VII (breach of contract), VIII (ERISA), and IX (injunctive relief) and denying the Motion to Dismiss as to Counts IV, V, and VI (collectively, "discrimination claims").

After review of the R & R, this court finds that the Magistrate Judge's thorough analysis for Counts II, III, VII, and IX is supported by the factual record and the applicable law. This court therefore accepts and adopts the recommended disposition for these Counts.⁵ See R & R at 18-28; 40-41.

Turning to Counts I and VIII (the ERISA claims), in addition to recommending dismissal of both counts, the Magistrate Judge also recommended permitting Hatch to file an amended complaint. Id. at 6-18. Hatch objects to the recommended dismissal of Counts I and VIII. After review of Hatch's two arguments — that the Magistrate Judge applied the wrong legal standard and that Pitney Bowes is a proper defendant because it was a de facto plan administrator and a cofiduciary — this Court finds that both arguments lack merit. Thus, the Magistrate Judge's reasoning and recommendation regarding Counts I and VIII are adopted. This court also adopts the recommendation that Hatch be permitted to file an amended complaint.⁶

However, this court respectfully disagrees with part of the Magistrate Judge's analysis regarding Counts IV, V, and VI, see R & R at 28-40, and writes separately here to explain.

III. Analysis

A. Count IV

In Count IV, Hatch alleges that Pitney Bowes violated the Americans with Disabilities Act of 1990, 42 U.S.C. § 12101 et seq, by both retaliating and discriminating against him. Hatch contends that the so-called benefits calculation "mistake" constitutes both a continuing course of illegal discrimination and retaliation against him because he filed the first action. Hatch does not hinge his claims under the ADA on retaliation or discrimination arising out of his actual employment. By agreeing in February 2002 to a settlement of the first action, which included a release of any and all claims related to his employment, Hatch effectively waived any claim premised on any adverse employment action. Any claim under the ADA or its state corollary must, consequently, relate exclusively to the denial of benefits under the Plan.

1. Discrimination

Title I of the ADA provides that "[n]o covered entity shall discriminate against a qualified individual with a disability because of the disability...." 42 U.S.C. § 12112. Further, the ADA defines "a qualified individual with a disability" as "an individual with a disability who, with or without reasonable accommodation, can perform the essential function of the employment position that [the] individual holds or desires." 42 U.S.C. § 12111(8). Hatch, however, has at all relevant times been "totally disabled," including at the time Pitney Bowes reduced his benefits. It is additionally without dispute that Hatch's total disability prevents him from "perform[ing] the essential function of the employment position" for which he was previously employed and that he falls under the Plan's definition of "totally disabled." 42 U.S.C. § 12111(8); see Complaint ¶ 17. The implicated question, then, is whether an employee or former employee who is no longer able to perform the essential functions of his job or former job (who is, in other words, totally disabled), may bring a claim under the ADA alleging discrimination as a "qualified individual with a disability." The discrimination facet of Hatch's claim thus turns on whether Hatch can establish that he is a "qualified individual with a disability" in spite of his status as both a former employee and one who has been determined to be totally disabled from employment and receiving LTD benefits.

The Magistrate Judge concluded that a totally disabled individual, like Hatch, could, in fact, be a qualified individual under the ADA and could therefore bring a claim of discrimination to address the benefit reduction. Consequently, the Magistrate Judge declined to recommend dismissal. Pitney Bowes argues that this conclusion was in error because a totally disabled claimant, like Hatch, by definition cannot be a qualified individual with a disability under the plain meaning of the ADA, and therefore cannot bring any claim for discrimination.

As the Magistrate Judge correctly noted, the Court of Appeals for the First Circuit has yet to squarely address this issue. However, the First Circuit has held, in a somewhat analogous situation, that a totally disabled person could not assert a claim under a Massachusetts antidiscrimination statute because she was not a "qualified handicapped...