Nahigian v. Leonard, CIV.A.02-11144-WGY.

Citation233 F.Supp.2d 151
Decision Date22 November 2002
Docket NumberNo. CIV.A.02-11144-WGY.,CIV.A.02-11144-WGY.
PartiesRobert NAHIGIAN, on behalf of himself and those similarly situated, Plaintiff, v. Gerald R. LEONARD, Timothy M. Byrd, and Shannon Tvrdik, Defendants.
CourtUnited States District Courts. 1st Circuit. United States District Courts. 1st Circuit. District of Massachusetts

Howard M. Brown, Bartlett, Hackett, Feinberg, Gentilli, Liston, Brown & Phalen, PC, Boston, MA, for Plaintiff.

John F. Tocci, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., Eileen Sunshine, Sullivan & Worcester, LLP, Heidi E. Harvey, Fish & Richardson, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

YOUNG, Chief Judge.

I. INTRODUCTION

The plaintiff Robert Nahigian ("Nahigian") alleges that his wages were never paid during the bi-weekly period before he was terminated by his former employer, Marketing Specialists Corp. ("Marketing Specialists"). He further alleges that during the same bi-weekly period, Marketing Specialists never forwarded the money that was supposed to be withheld from his wages and forwarded to flexible spending and health insurance accounts. In addition, he alleges that his fellow Marketing Specialists employees — virtually all of whom were terminated along with Nahigian — also failed to receive their wages and benefits.

Nahigian sued three officers of the corporation — Gerald R. Leonard ("Leonard"), Timothy M. Byrd ("Byrd"), and Shannon Tvrdik ("Tvrdik") — in the Massachusetts Superior Court sitting in and for the county of Norfolk, alleging violations of several Massachusetts statutes. In response to Nahigian's claim that his money was not forwarded to a flexible spending account and health insurer as expected, Tvrdik submitted that this cause of action was "completely preempted" by the federal Employee Retirement Income Security Act ("ERISA"), and removed the action to this court, pursuant to Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

Tvrdik and Byrd now move to dismiss the action for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2), and for failure to state a claim upon which relief can be granted pursuant to Fed.R.Civ.P. 12(b)(6). This Court rejects both of those arguments, but holds that it lacks subject matter jurisdiction over Nahigian's complaint, and thus remands it to the Massachusetts Superior Court sitting in and for the County of Norfolk.

II. BACKGROUND

Nahigian is a former employee of Marketing Specialists, which had its principal place of business in Canton, Massachusetts. After Marketing Specialists filed for Chapter 11 bankruptcy on May 24, 2001, it terminated Nahigian and virtually all of his fellow employees on May 31, 2001. Marketing Specialists itself is not a party to this lawsuit (indeed, it is unclear whether it still exists). During all periods relevant to this lawsuit, Gerald R. Leonard is alleged to have been president and chief executive officer of Marketing Specialists, Byrd is alleged to have been the chief financial officer, and Tvrdik is alleged to have been the treasurer.

Nahigian's complaint arises from Marketing Specialists' inability to fund its payroll in May 2001, just before Nahigian and his colleagues had their employment officially terminated. His three claims all relate to the final two-week pay period between May 13 and May 26, 2001. First, Nahigian claims that when Marketing Specialists terminated his employment on May 31, 2001, he was owed $3,758.46 in unpaid wages, and that this amount remains unpaid. He alleges that this failure to pay wages constitutes a violation of Mass. Gen. L. ch. 149, § 148, which makes it a crime for an employer not to pay wages regularly to her employees. Civil lawsuits to remedy such violations (including treble damages and reasonable attorney's fees) are authorized by Mass. Gen. L. ch. 149, § 150. Second, Nahigian alleges that during the two-week pay period in question, Marketing Specialists withheld certain monies from his pay to fund the purchase of health insurance, but failed to forward those funds to the health insurers. Third, Nahigian alleges that an additional $423.30 was withheld from his pay for use in a flexible spending account, but never transferred to that account. Nahigian states that these second and third claims violate Mass. Gen. L. ch. 149, § 150C, which makes it a crime to take money from employees for the purposes of buying insurance and then not actually purchasing the insurance. Civil lawsuits to remedy such violations (again including treble damages and reasonable attorney's fees) are authorized by Mass. Gen. L. ch. 149, § 150.

Prior to filing suit, Nahigian filed a complaint with the Massachusetts Attorney General as required by Section 150. In his initial complaint, Nahigian named as defendants only Marketing Specialists and Leonard (Byrd and Tvrdik were not named). Nahigian subsequently received permission from the Attorney General to proceed with a civil lawsuit. After filing this civil action, Nahigian filed a second complaint on June 13, 2002 that specifically named Byrd and Tvrdik as parties. Howard M. Brown Aff., Ex. F. [Docket No. 13]. The attorney general gave Nahigian leave to proceed with a civil action based on this second complaint on June 26, 2002. Howard M. Brown Aff., Ex. G.

Alleging that Nahigian's second and third claims, although based on state law, are "completely preempted" by ERISA, Tvrdik removed the action to federal court on June 7, 2002. Under the complete preemption doctrine established in Metropolitan Life Insurance Co., 481 U.S. at 66, 107 S.Ct. 1542, such removal is proper as long as ERISA preempts the stated cause of action and the action falls within the scope of ERISA's exclusive civil enforcement provision, 29 U.S.C. § 1132(a). If these standards are met, then the state law claims asserted by Nahigian are automatically "converted into federal claims." Hall v. Blue Cross Blue Shield of Alabama, 134 F.3d 1063, 1065 (11th Cir.1998). Thus, this Court has federal question jurisdiction over Nahigian's second and third claims. This Court has supplemental jurisdiction over Nahigian's first claim (nonpayment of wages), which arises purely under state law. As noted above, Nahigian is also suing "on behalf of others similarly situated," which is explicitly permitted by Section 150.

Byrd and Tvrdik have both filed motions to dismiss, raising two grounds. First, they move to dismiss under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction. Specifically, they allege that they do not reside within the state and cannot be subjected to jurisdiction under the Massachusetts Long Arm statute because any contacts that they had with the state were not "but for" causes of the harm alleged by Nahigian. Mass. Gen. L. ch. 223A, § 3(a). Second, they have moved to dismiss under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. They argue 1) that the definition of "employer" under Mass. Gen. L. ch. 149, § 150 does not include officers of a company, and 2) that Nahigian failed to exhaust the administrative remedies required under section 150, because Byrd and Trvdik were not personally named in the first complaint. Their motions to dismiss under Rule 12(b)(6) relate only to Nahigian's pendent state law claim (refusal to pay wages); Nahigian's other claims are no longer state law claims but have been converted into federal claims under ERISA.

With respect to personal jurisdiction, the relevant facts are as follows: Marketing Specialists Corporation was one of the largest food brokerage firms in the United States. During the relevant period, Marketing Specialists' primary executive and corporate office (40,700 sq. ft) was in Texas, although a large 45,000 sq. ft. executive office was located in Canton, Massachusetts, the former headquarters of Merkert Enterprises, a Marketing Specialists merger partner. Both Leonard and Nahigian worked out of the Canton office.

Leonard is a resident of Massachusetts. Byrd and Tvrdik, however, are residents of Texas. Byrd served as Marketing Specialists Chief Financial Officer from October 1999 to August 2000, and from January 2001 to May 2001. Tvrdik served as the company's Treasurer from March 2000 to October 2001; prior to holding that position, she served as Northern Division Controller from August 1999 to February 2000. Neither individual worked directly for Marketing Specialists while holding these posts; rather, both worked for a company, Richmont Marketing Specialists Corp. ("Richmont"), that was the primary investor in the company. Tvrdik owns no property in Massachusetts and has only visited the state three times: twice during her term as Treasurer and once (for several weeks) while serving as Northern Division Controller. Byrd had visited Massachusetts approximately five times as a tourist before taking the Chief Financial Officer position, and about eight times since becoming involved with the Marketing Specialists.

Both Tvrdik and Byrd admit to making "sporadic" phone, e-mail, and fax contacts with the Canton office. Byrd Aff., ¶ 7 [Docket No. 4]; Tvrdik Aff., ¶ 12 [Docket No. 7]. Nahigian challenges the characterization of these contacts as "sporadic" as patently incredible, in light of Canton's status as a major office of the company, and Leonard's statement in an earlier (bankruptcy) deposition that Byrd and Tvrdik both worked closely with Leonard, who was situated in the Canton office. Pl.'s Opp'n to Motion to Dismiss at pp. 5-6 [Docket No. 11]. Both Byrd and Nahigian state in their affidavits that none of their travels related to the company's payroll, and that in none of their phone, fax, and e-mail contacts with the Canton office did they instruct anyone to refrain from distributing Marketing Specialists' May 2001 payroll. Byrd Aff., ¶ 9, Tvrdik Aff., ¶ 12. Byrd further adds that he was responsible primarily for debt-restructuring and capitalization of the company, and not day-to-day operations. Byrd ...

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