Otitigbe v. Rensselaer Polytechnic Inst.
| Decision Date | 12 September 2019 |
| Docket Number | 904767-18 |
| Citation | 65 Misc.3d 798,110 N.Y.S.3d 268 |
| Parties | Jessica O. OTITIGBE, on behalf of herself and all others similarly situated, Plaintiff, v. RENSSELAER POLYTECHNIC INSTITUTE, Defendant. |
| Court | New York Supreme Court |
Girvin & Ferlazzo, P.C. (Scott P. Quesnel, of counsel), 20 Corporate Woods Boulevard, Albany, New York 12211, Pattison, Sampson, Ginsberg & Griffin, PLLC, Attorneys for Plaintiff
(Rhiannon I. Spencer, of counsel), 22 First Street, P.O. Box 208, Troy, New York 12181-0208, Attorneys for Defendant
Richard M. Platkin, J. Plaintiff Jessica O. Otitigbe is a former employee of defendant Rensselaer Polytechnic Institute ("RPI"). She commenced this putative class-action lawsuit on behalf of herself and others similarly situated on the basis of allegations that RPI violated Labor Law § 193 by wrongfully deducting the cost of parking from employees' wages. Following joinder of issue and focused discovery, RPI moves pursuant to CPLR 3212 for summary judgment dismissing plaintiff's complaint. Plaintiff opposes the motion.
Plaintiff was employed by RPI from November 8, 2004 until March 16, 2018 (see NY St Cts Electronic Filing [NYSCEF] Doc No. 1 ["Complaint"], ¶ 6). Beginning in 2005, plaintiff worked on RPI's 256-acre main campus in Troy, New York ).
RPI owns, operates and maintains 12 lots for faculty and staff parking (see Complaint, ¶ 8; Quesnel Aff., ¶ 4; NYSCEF Doc No. 47 ["Preston Aff."], ¶ 6). According to the Complaint, RPI requires all vehicles parked in these lots to have a parking permit, and this permit only can be purchased from RPI (see Complaint, ¶¶ 9-11). "RPI employees can purchase an RPI parking permit through pro-rated payroll deductions, cash or check," but "[m]ost RPI employees chose to purchase an RPI parking permit through pro-rated, pre-tax payroll deductions," a practice that has been authorized "since at least 2003" (id ., ¶¶ 13-15). The cost to purchase a parking permit is said to have ranged from $135 to $375 per year at relevant times (see id. , ¶ 16).
Plaintiff alleges that, "[b]eginning in August 2005, RPI made deductions from [her] wages to purchase an RPI parking permit" (id ., ¶ 17). (id ., ¶ 18).
Plaintiff's sole cause of action alleges that RPI's practice of deducting the cost of parking from employee wages violates Labor Law § 193 because the parking program does not qualify as discounted parking and RPI employees, including plaintiff, did not voluntarily and knowingly authorize deductions from their wages (see id ., ¶¶ 34-50). On the basis of these allegations, plaintiff contends that she and members of the putative class are entitled "to recover all amounts deducted from their wages to purchase an RPI parking permit or any other parking fees deducted from their wages" — an amount that is said to be in excess of $1 million (id ., ¶¶ 51-55).
In its answer, RPI denied the pertinent allegations of the Complaint and alleged a number of affirmative defenses (see Spencer Aff., Ex. B ["Answer"] ). As is relevant here, RPI asserted that it complied with the requirements of Labor Law § 193(1)(a) "because the payroll deductions for parking are part of an employer-sponsored pre-tax contribution plan" pursuant to the Internal Revenue Code (26 U.S.C. ["IRC"] ) § 132(f)(1)(C) (Answer, ¶ 66). RPI further alleged, in the alternative, that its parking program constitutes "discounted" parking for the benefit of employees, within the meaning of Labor Law § 193(1)(b)(vii) (id ., ¶ 67).
Following the exchange of focused discovery,1 RPI moved for the summary dismissal of plaintiff's Complaint. RPI argues principally that its parking program complies with Labor Law § 193(1)(a) and (2) because the program is an "employer sponsored pre-tax contribution plan approved by the IRS" that is administered in compliance with applicable rules and regulations. Thus, RPI contends that it need not demonstrate compliance with Labor Law § 193(1)(b). In any event, RPI maintains that the challenged deductions also are authorized under Labor Law § 193(1)(b) as "discounted parking" and/or "payments for the benefit of ... employee[s]."
"[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact," and the "[f]ailure to make such [a] showing requires a denial of the motion, regardless of the sufficiency of the opposing papers" ( Alvarez v. Prospect Hosp. , 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ). If this showing has been made, "the burden shifts to the party opposing the motion ... to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action" ( id . ; see Zuckerman v. City of New York , 49 N.Y.2d 557, 562, 427 N.Y.S.2d 595, 404 N.E.2d 718 [1980] ). On such a motion, all evidence must be viewed in the light most favorable to the non-moving party (see Ortiz v. Varsity Holdings, LLC , 18 N.Y.3d 335, 340, 937 N.Y.S.2d 157, 960 N.E.2d 948 [2011] ).
Labor Law § 193 provides, in relevant part:
RPI's principal argument in support of summary judgment is that its parking program complies with Labor Law § 193(1)(a) and (2) because the challenged deductions are made in accordance with an "employer sponsored pre-tax contribution plan approved by the IRS" (NYSCEF Doc No. 49 ["RPI's MOL"], pp. 4-8).
Labor Law § 193(1)(a) allows wage deductions "made in accordance with the provisions of any law or any rule or regulation issued by any governmental agency."
Labor Law § 193(2) further provides that "[d]eductions made in conjunction with an employer sponsored pre-tax contribution plan approved by the IRS ..., shall be considered to have been made in accordance with [ Labor Law § 193(1)(a) ]." Thus, an employer-sponsored pre-tax contribution plan is a permitted wage deduction under Labor Law § 193, so long as the deductions are made in accordance with an IRS-approved plan.
Under IRC § 61(a)(1), "gross income" ordinarily includes the "fringe benefits" received by an employee, but other provisions of the IRC may exclude a "particular fringe benefit" ( 26 CFR 1.61-21 [a][2] ). As is relevant here, IRC § 132(a)(5) excludes from gross income any fringe benefit that is a "qualified transportation fringe" ("QTF").
The term QTF includes "[q]ualified parking" ( id ., § 132 [f][1][C] ), which "means parking provided to an employee on or near the business premises of the employer" ( id ., § 132 [f][5][C] ). Parking is considered to be "provided by an employer" if the parking is "on property that the employer owns or leases" ( 26 CFR 1.132-9 [b][Q & A4] ).
According to the IRS, "[e]mployers may provide employees with... parking benefits either (1) in addition to employees' stated compensation (salary supplement), or (2) by reducing employees stated compensation (salary reduction)" ( IRS INFO 2010-0146; 2010 WL 2666469 ). In a salary reduction arrangement, "the employee is allowed to designate a portion of the amount he [or she] would otherwise receive as salary to be set aside to fund [QTF] benefits that he [or she] then receives from the employer," and such portion is not included in the employee's income and wages for federal tax purposes ( id . ). This arrangement often is referred to as a "pretax" plan or a "compensation reduction agreement" ( id . ; see 26 CFR 1.132-9 [b] [Q & A11-12(a) ] ).
IRS regulations do not require QTF benefit plans to be in writing (see 26 CFR 1.132-9 [b][Q & A6] ). However, if an employer elects to offer a QTF via a compensation reduction agreement, the agreement must satisfy the "election requirement," which obliges the employer to provide the employee with the right to elect whether to receive either fixed, taxable cash compensation or the pre-tax QTF. Such an election: (1) "must be in writing," or some other permanent form, "such as electronic"; (2) "must contain the date of the election"; and (3) "must relate to a fixed dollar amount or fixed percentage of compensation reduction" ( 26 CFR 1.132-9 [b][Q & A11-12(a) ] ). This election may be automatically renewed when, upon "adequate notice" of any change to the program, the employee does not object to continued participation ( 26 CFR 1.132-9 [b][Q & A11-12(b) ] ).
Through the affidavit of its parking...
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