Montesano v. Xerox Corp. Retirement Income
| Citation | 117 F.Supp.2d 147 |
| Decision Date | 22 August 2000 |
| Docket Number | No. 399CV1197(AHN).,399CV1197(AHN). |
| Parties | George MONTESANO, et al. v. XEROX CORP. RETIREMENT INCOME GUARANTEE PLAN, et al. |
| Court | U.S. District Court — District of Connecticut |
Donald L. Sapir, Victoria De Toledo, William Frumkin, White Plains, NY, for plaintiff.
Jeffrey Hellman, Risa Cherry, Bridgeport, CT, for defendant.
RULING ON PENDING MOTIONS
The plaintiffs are former and current supplemental contract workers who perform services for the defendant, Xerox Corporation ("Xerox") through third-party leasing agencies. They bring this ERISA action on their own behalf and on behalf of a putative class of similarly situated individuals throughout the United States to, inter alia, recover benefits allegedly due them under Xerox's employee benefit plans.
Now pending before the court is Xerox's Rule 12(c), Fed.R.Civ.P., motion for judgment on the pleadings. Also pending is a motion to amend the complaint, which the plaintiffs filed in response to the 12(c) motion. The amended complaint addresses issues raised in Xerox's motion for judgment on counts two and three.
For the following reasons, the motion to amend the complaint [doc. # 31] is GRANTED. The motion for judgment on the pleadings [doc. # 19] is also GRANTED.
"After the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." Rule 12(c), Fed.R.Civ.P. A court may enter a judgment on the pleadings where the material facts are undisputed and a judgment on the merits is possible merely by considering the pleading's contents. See Sellers v. M.C. Floor Crafters, Inc., 842 F.2d 639, 642 (2d Cir.1988). The legal standards governing the court's consideration of a Rule 12(c) motion are the same as those standards governing its consideration of a Rule 12(b)(6) motion to dismiss. See George C. Frey Ready-Mixed Concrete, Inc. v. Pine Hill Concrete Mix Corp., 554 F.2d 551, 553 (2d Cir.1977). The court must accept as true the wellpleaded facts of the complaints and may not dismiss the action unless the court is convinced that the plaintiff can prove no set of facts which would entitle him to relief. See Dahlberg v. Becker, 748 F.2d 85, 88 (2d Cir.1984).
The plaintiffs assert that they are common law employees and have, since at least 1982, provided services to Xerox at its facilities in the Rochester, New York area through third-party staffing agencies such as TAD, Kelly, Man Power and Superior.
Xerox sponsors a number of employee benefit plans that provide medical, insurance, pension, savings and employee stock ownership benefits (the "Plans")1 to certain of its employees. The plaintiffs claim that Xerox wrongfully failed to inform them of the existence of these Plans and to provide them benefits.
On two occasions in 1998, the plaintiffs filed claims with the Xerox plan administrator (the "Plan Administrator") for benefits under the Plans to which they claimed they were entitled. They claimed they were entitled to benefits because they were common law employees of Xerox and were not excluded from participation under the terms of the Plans. The Plan Administrator denied the claims. Their appeal of the Plan Administrator's decision was also denied.
The Plan Administrator found that the plaintiffs failed to meet the Plans' eligibility requirements because, inter alia, they were not on the Xerox payroll, they did not receive compensation from Xerox, and were "leased employees," a category that was excluded from coverage under the Plans.
In this action the plaintiffs appeal the Plan Administrator's decision and seek benefits under the Plans pursuant to § 502(a)(1)(B), ERISA's civil enforcement provision, 29 U.S.C. § 1132(a)(1)(B). In addition, the plaintiffs assert a claim under § 510 of ERISA, 29 U.S.C. § 1140, which prevents employers from interfering with an employee's rights to benefits. The plaintiffs claim that Xerox violated § 510 by adopting a policy restricting the use of supplemental contract workers to a maximum time of 18 continuous months. The plaintiffs also assert § 502(a)(3) claims for breach of fiduciary duty against the Plans' fiduciaries and individual Xerox directors under 29 U.S.C. §§ 1104(a) and 1132(a)(3), and for vacation pay under New York Labor Law § 193.
Xerox asserts that the plaintiffs are not entitled to benefits because ERISA does not require employers to provide welfare or pension plans, but merely regulates those that an employer elects to sponsor. See Shaw v. Delta Air Lines, 463 U.S. 85, 91, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). Thus, it maintains that an employer is free to include or exclude from coverage categories of contingent workers, such as leased employees, even if the workers meet the legal definition of common law employee. Xerox argues that the plaintiffs' simplistic conclusion that common law employees can not be excluded from ERISA plans is wrong. Even if a worker is deemed to be a common law employee, Xerox maintains that the worker must also meet a plan's eligibility criteria to be entitled to benefits. See Wolf v. Coca-Cola Co., 200 F.3d 1337 (11th Cir.2000) (); Bronk v. Mountain States Tel. & Tel., Inc., 140 F.3d 1335 (10th Cir.1998) ().
Xerox contends that the Plan Administrator carefully analyzed each Plan and correctly concluded that the plaintiffs did not meet its eligibility requirements. It maintains that the court should defer to the Plan Administrator's decision under an arbitrary and capricious standard of review. In opposition, the plaintiffs maintain that the court must review the Plan Administrator's decision de novo, and that, under de novo review, Xerox's motion must be denied and they should be allowed discovery and an opportunity to develop the record.
II. The Plan Administrator's Decision
The Plan Administrator stated that she reviewed the Xerox Plan documents dating back to 1989 and that these documents indicated that eligibility had been limited to Xerox employees who were on the Xerox payroll and that leased employees and independent contractors were excluded. She concluded that Xerox never intended to provide benefits under the Plans to persons who provided services through third-party agencies. This intent was, she noted, reflected in Xerox's 1993 summary plan description ("SPD"), which expressly stated that independent contractors, leased employees, supplemental contract workers, consultants or any other third-party personnel who perform services for the company were neither eligible for, nor covered by, the Plans.
Specifically, the Plan Administrator denied benefits to the plaintiffs under the ESOP, the PSSP and the RIGP on the grounds that (1) they were not Xerox employees,2 (2) they were not on Xerox's payroll and did not receive compensation from Xerox,3 and (3) they were excluded as leased employees.4
The Plan Administrator found that the plaintiffs did not receive compensation from Xerox because the term was historically defined as the amount reported by Xerox to the federal government for withholding tax purposes and was presently defined as amounts paid under Xerox's specific payroll codes. Thus, because Xerox did not report any amount to the federal government for the plaintiffs, and because they were not paid pursuant to any of Xerox's payroll codes, the Plan Administrator concluded that they did not receive "compensation" and were thus not employees of the company.
The Plan Administrator also relied on the fact that the Plans specifically excluded leased employees from the definitions of "employee". She noted that the intent to exclude leased employees was clarified in 1995, when the ESOP and PSSP plans were amended to state that, in addition to leased employees, supplemental contract workers, other third-party personnel and anyone Xerox classified as such were excluded. She stated that these amendments were designed as a proactive measure to avoid claims for benefits from workers who were never intended to be covered under the Plans.
Her decision with respect to all the Plans was also based on language in the 1993 SPD which expressly provided that independent contractors, including leased employees, supplemental contract workers, consultants or other third-party personnel were not eligible nor covered by the Plans.5 She also concluded that they were not eligible under the pre-1993 SPD because they were not regular employees.
The Plan Administrator's decision that the plaintiffs were not covered under the RMP or the ELIP was based on the language in the SPDs and the policies of insurance.6 She concluded that the plaintiffs were not eligible for the RMP because they were not considered "regular employees," had not been identified as eligible, were not members of the group arranging for coverage, and no insurance contract was ever issued on their behalf. She further found that the plaintiffs were not eligible for the ELIP because they were excluded under the SPDs because they were not "salaried employees," and were also not eligible under the insurance contracts.7
In addition, the Plan Administrator's decision with respect to all Plans was based in part on the agreements between Xerox and the staffing agencies and the agreements between the staffing agencies and the plaintiffs. These agreements provided that the staffing agency "would be responsible for all employer obligations, including withholding and compliance with all employment laws applicable to their employees," and in certain instances, provided that the agencies would make benefit plans available to the plaintiffs, including 401(...
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