Opinion
Civil Action No. 03-11557-REK.
September 13, 2005
Maria C. Burton, Ropes Gray LLP, Boston, MA, Attorney for The Gillette Company.
(Defendant) Eric M. Collins, Davis, White Sullivan, Boston, MA, Attorney for Gerald F. Walsh.
2604 Lewis O. Gray Drive, Saugus, MA, (Plaintiff) Phillip M. Davis, Davis, White Sullivan, Boston, MA, Attorney for Gerald F. Walsh.
(Plaintiff) Nathaniel Mandell, Ropes Grey, Boston, MA, Attorney for The Gillette Company.
(Defendant) Marc J. Tassone, Davis, White, Sullivan P.C., Boston, MA, Attorney for Gerald F. Walsh.
(Plaintiff) Richard P. Ward, Ropes Gray LLP, Boston, MA, Attorney for The Gillette Company.
Memorandum and Order
I. Pending Matters
Pending for decision are matters related to the following filings:
(1) Defendants' Motion to Dismiss and for Summary Judgment (Docket No. 30, filed December 13, 2004);
(2) Defendants' Memorandum of Law in Support of Motion to Dismiss and Motion for Summary Judgment (Docket No. 31, filed December 13, 2004);
(3) Defendants' Local Rule 56.1 Statement of Material Fact as to Which There is No Genuine Issue to be Tried (Docket No. 32, filed December 13, 2004);
(4) Appendix to Defendants' Motion to Dismiss and for Summary Judgment (Docket No. 33, filed December 13, 2004);
(5) Plaintiff's, Gerald Walsh, Response to Defendants' Rule 56.1 Statement (Docket No. 37, filed February 3, 2005);
(6) Plaintiff's, Gerald Walsh, Rule 56.1 Statement (Docket No. 38, filed February 3, 2005);
(7) Plaintiff's Gerald Walsh, Opposition to Defendants' Motion to Dismiss and Motion for Summary Judgment (Docket No. 39, filed February 3, 2005);
(8) Appendix to Plaintiff's Opposition to Defendants' Motion to Dismiss and Motion for Summary Judgment (Docket No. 40, filed February 4, 2005);
(9) Defendants' Reply Memorandum to Plaintiff's Opposition to Defendants' Motion to Dismiss and Motion for Summary Judgment (Docket No. 41, filed February 25, 2005);
(10) Motion to Strike Plaintiff's Rule 56.1 Statement and Plaintiff's Response to Defendants' Rule 56.1 Statement (Docket No. 42, filed March 9, 2005);
(11) Memorandum of Law in Support of Defendants' Motion to Strike Plaintiff's Rule 56.1 Statement and Plaintiff's Response to Defendants' Rule 56.1 Statement (Docket No. 43, filed March 9, 2005);
(12) Affidavit of Gail A. Goolkasian, Esq., in Connection with Motion to Strike Plaintiff's Rule 56.1 Statement (Docket No. 44, filed March 9, 2005); and
(13) Plaintiff's, Gerald Walsh, Opposition to Defendants' Motion to Strike Plaintiff's Rule 56.1 Statement and Plaintiff's Response to Defendants' Rule 56.1 Statement (Docket No. 45, filed March 18, 2005).
II. Factual and Procedural Background
Mr. Walsh began working for The Gillette Company (collectively with The Gillette Company Retirement Plan, "Gillette") in 1974, providing training and training materials. Amended Complaint and Jury Demand, ¶ 7. He continued to work for the company until 1998. Id. at ¶ 17. During this time, Gillette served as the plan sponsor, plan administrator, and named fiduciary of the Gillette Retirement Plan ("Plan"). Id. at ¶ 18. Throughout Mr. Walsh's time working for Gillette, Gillette classified Mr. Walsh as an independent contractor, not classifying him as an employee for tax purposes or benefit programs. Id. at ¶ 21. Mr. Walsh declared his income from Gillette as business income from a sole proprietorship, rather than wages, on his tax returns during this period, and submitted statements to Gillette for business expenses and "professional services." Tax returns and statements, attached as Exhibits 3 and 4 to Appendix to Defendants' Motion to Dismiss and for Summary Judgment.
Several times from October 1999 through 2000, Mr. Walsh's counsel requested information from Gillette concerning descriptions of the Plan. Amended Complaint and Jury Demand, ¶ 22-25. Mr. Walsh then presented a claim for ERISA benefits, which the Administrator of Gillette's Retirement, Savings and Stock Ownership Plans denied on April 10, 2002. Id. at ¶ 26-27. Mr. Walsh appealed this decision to the Gillette Company Retirement Plan Committee and Savings Plan Committee ("Appeal Committees").Id. at ¶ 28. On December 3, 2002, the Appeal Committees denied Mr. Walsh's claim for benefits. Id. at ¶ 29.
Mr. Walsh filed a complaint in the United States District Court for the District of Massachusetts on August 14, 2003. This complaint raises four separate counts. In Count I, Mr. Walsh alleges that Gillette failed to provide him with the benefits due to him under the Plan pursuant to 11 U.S.C. § 1132(a)(1)(B), ERISA § 502(a)(1)(B). In Count II, Mr. Walsh alleges that Gillette discriminated against him for the purpose of interfering with the attainment of the rights to which he is entitled under ERISA, in violation of 29 U.S.C. § 1140, ERISA § 510. In Count III, Mr. Walsh alleges that he was at all relevant times a common law employee and is thus entitled to benefits such as life, health and disability insurance benefits, vacation pay, performance bonuses, social security payments, and a reduced withholding of FICA taxes. In Count IV, Mr. Walsh alleges that Gillette violated its duties pursuant to 29 U.S.C. §§ 1021 and 1024 and 29 U.S.C. § 1132(c)(1)(B) by failing to provide him with the information he requested concerning the Plan.
On December 13, 2004, pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6) and Fed.R.Civ.P. 56, defendants filed a Motion to Dismiss and for Summary Judgment.
III. Analysis
A. Standard of Review
In deciding a motion to dismiss, this court must accept as true all well-pleaded factual assertions in the complaint and draw all reasonable inferences from those assertions in the plaintiff's favor. Aybar v. Crispin-Reyes, 118 F.3d 10, 13 (1st Cir. 1997). At a minimum, the plaintiff is "obliged to set forth factual allegations, either direct or inferential, respecting each material element necessary to sustain recovery under some actionable legal theory." Roth v. United States, 952 F.2d 611, 613 (1st Cir. 1991). The court may dismiss a claim only if it appears beyond doubt that the claimant can prove no set of facts that could support a recovery. Tamburello v. Comm-Tract Corp., 67 F.3d 973, 975 (1st Cir. 1995).
As outlined below, this court did not need to address defendants' motion for summary judgment. The different standard of review for motions for summary judgment is therefore inapplicable.
B. Subject Matter Jurisdiction
Pursuant to Fed.R.Civ.P. 12(b)(1), Gillette argues that this court does not have subject matter jurisdiction over Mr. Walsh's claims under ERISA § 502(a)(1)(B) and ERISA § 510 (Counts I and II). ERISA provides "a panoply of remedial devices" for participants and beneficiaries of benefit plans. Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 108 (1989) (quotingMass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146 (1985)). In order to provide these federal remedies, ERISA supersedes all state laws that relate to any employee benefit plan covered by ERISA. See 29 U.S.C. § 1144(a). This supersedure does not, however, apply to state law "with respect to any cause of action which arose, or any act or omission which occurred, before January 1, 1975." 29 U.S.C. § 1144(b)(1). Instead, claims arising from events that occurred before January 1, 1975 are not covered by ERISA, and this court thus lacks subject matter jurisdiction over them.
This court has held that a cause of action for recovery of benefits under ERISA accrues when a claimant's appeal for benefits is denied. Salcedo v. John Hancock Mut. Life Ins. Co., 38 F. Supp.2d 37, 43-44 (D. Mass. 1998). In this case, the Gillette Appeal Committees formally denied Mr. Walsh's request for ERISA benefits on December 3, 2002. Using this date as the date when the cause of action arose means that ERISA does supersede all relevant state laws and that this court does therefore have subject matter jurisdiction under 29 U.S.C. § 1144(b)(1).
Gillette contends, however, that federal courts do not have jurisdiction over this case pursuant to ERISA's supersedure provisions because 29 U.S.C. § 1144(b)(1) refers to acts or omissions as well as causes of action. As the First Circuit found in Quinn v. Country Club Soda Co., Inc., 639 F.2d 838, 840-41 (1st Cir. 1981), the phrase "act or omission" refers to significant facts that give rise to a claim but that fall short of establishing a cause of action. Defendants argue that, under this clause of 29 U.S.C. § 1144(b)(1), the relevant act or omission was Gillette's characterization of Mr. Walsh as an independent contractor when he was first hired in 1974. Since this act occurred before January 1, 1975, defendants contend that this court does not have jurisdiction over Mr. Walsh's claims.
Although the First Circuit has held that some acts or omissions occurring before January 1, 1975, are sufficient to deny federal subject matter jurisdiction over a claim arising from a benefits plan, see Quinn, 639 F.2d at 841 (finding the relevant act to be the benefit plan's classification of plaintiff as a non-participant in 1960); Cowan v. Keystone Employee Profit Sharing Fund, 586 F.2d 888, 894-95 (1st Cir. 1978) (finding the relevant act to be the benefit plan's adopting of an amendment in 1974), these qualifying acts or omissions have been "independent, actionable event[s]." Cowan, 586 F.2d at 894. In Cowan, the basic wrong of which the plaintiff complained was his exclusion from benefits due to a 1974 amendment to the earlier-established benefits plan. In Quinn, the basic wrong of which the plaintiff complained was his exclusion from benefits due to "a position consistently taken and communicated to plaintiff from the time the Plan was established." 639 F.2d at 841. In the instant case, however, the basic wrong of which Mr. Walsh complains is his exclusion from benefits plans that were not yet in existence at the time he commenced work for Gillette. Although his classification as an independent contractor may have occurred before January 1, 1975, the effect of this classification on his benefits could not have arisen until the benefits plans themselves had been established. Mr. Walsh's claim for benefits was denied with reference to the Retirement Plan as revised in 1976, and neither party has produced any evidence that the Savings Plan and Stock Plan that also underlie his claims were established prior to January 1, 1975.
Since no relevant act or omission occurred before January 1, 1975, 29 U.S.C. § 1144(b)(1) does not prevent this court from exercising federal subject matter jurisdiction over Mr. Walsh's claims pursuant to ERISA.
C. Statute of Limitation
Pursuant to Fed.R.Civ.P. 12(b)(6), Gillette next argues that Mr. Walsh's claims under ERISA § 502(a)(1)(B) and ERISA § 510 (Counts I and II, respectively) are time-barred.
When no shorter statute of limitation is provided within the plan, a claim for benefits under an ERISA plan is governed by the statute of limitation prescribed for contract actions in the state in which the claim is brought. Alcorn v. Raytheon Co., 175 F.Supp.2d 117, 120 (D. Mass. 2001) (citing Salcedo, 38 F.Supp.2d at 40). Massachusetts has a six-year statute of limitation for actions in contract. The question at issue is when the statute of limitation began to run. Defendants contend that plaintiff's claim accrued when he first discovered that he was classified as an independent contractor. Plaintiff argues that his claim did not accrue until his request for benefits was formally denied.
Although other courts have interpreted the "discovery rule," under which the plaintiff's claim accrues as soon as he discovers or should have discovered the injury that is the basis of the litigation, to find that the period of limitation began to run before the plaintiff was formally denied benefits, this earlier accrual date only applies when the earlier action was a "repudiation of the employee's claim for benefits by the fiduciary which is clear and made known to the beneficiary."Bolduc v. National Semiconductor Corp., 35 F. Supp.2d 106, 119 (D. Me. 1998). When the consequences of an earlier action on the plaintiff's benefits are not explicitly made clear to the plaintiff, this court finds that a cause of action for recovery of benefits under ERISA accrues when an application for benefits is formally denied. See Salcedo, 38 F.Supp.2d at 42. In the instant case, although Mr. Walsh was classified as an independent contractor at the time of his original hiring in 1974, Gillette did not notify him of the impact of this classification on his benefits to a sufficient extent to qualify as a clear repudiation of his claim for benefits. Mr. Walsh's cause of action did not begin to accrue until December 3, 2002, when the Gillette Appeal Committee formally denied his request for ERISA benefits. His ERISA § 502(a)(1)(B) claim thus falls well within the six-year statute of limitation and is not time-barred.
Mr. Walsh's second claim arises under ERISA § 510. The First Circuit has held that § 510 claims for benefits are most analogous to claims for wrongful termination or retaliatory discharge, and therefore that the Massachusetts three-year statute of limitation for tort, provided in Mass. Gen. Laws ch. 260, § 2A, applies. See Muldoon v. C.J. Muldoon Sons, 278 F.3d 31, 32 (1st Cir. 2002). The question is again when the statute of limitation began for Mr. Walsh's claim.
This court has held in Ede v. Verizon Communications, Inc., 288 F.Supp.2d 55, 59 (D. Mass. 2003), that the statute of limitation clock for an ERISA § 510 claim begins when plaintiffs were hired and classified as workers not eligible for employee benefits. This determination of when the cause of action accrues for statute of limitation purposes is again based on the discovery rule, however. See id. (citing cases referring to plaintiff's discovery of the employment decision). Therefore, although Gillette classified Mr. Walsh as an independent contractor at the time of his hiring in 1974, this act did not alert Mr. Walsh of the fact that he would not be eligible for benefits under the Retirement Plan, the Savings Plan, or the Stock Plan since none of the three was yet providing the benefits to which he now claims a right. The time at which Mr. Walsh was explicitly made aware that he would not receive benefits was on December 3, 2002, when the Gillette Appeal Committees formally denied his request for benefits. This is the date from which the three-year statute of limitation for plaintiff's § 510 claim runs, and Count II is therefore not time-barred.
D. Plaintiff's Standing Under 29 U.S.C. § 1132(a)(1)
Mr. Walsh brings Counts I, II, and IV pursuant to ERISA's civil enforcement provision, which provides that a "participant or beneficiary" may bring suit under ERISA to enforce the disclosure requirements or "to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1). Defendants move pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss on the basis that plaintiff lacks standing under this provision since he is not a participant, beneficiary, or fiduciary.
In this case, no doubt exists that Mr. Walsh is not a fiduciary. There is a question, however, as to whether he is a beneficiary or a participant. In Firestone, the Supreme Court defined a "participant" for these purposes to include two distinct categories: (1) "employees in, or reasonably expected to be in, currently covered employment," or (2) "former employees who have a reasonable expectation of returning to covered employment and/or a colorable claim to vested benefits."Crawford v. Lamantia, 34 F.3d 28, 32 (1st Cir. 1994) (citing 489 U.S. 101, 117, 109 (1989)). Mr. Walsh is unquestionably not a current employee of Gillette. Mr. Walsh is also not a former employee with a reasonable expectation of returning to employment. Mr. Walsh will also not be able to prove facts showing that he is a former employee with a colorable claim to vested benefits. Although Mr. Walsh contends that he was an employee of Gillette, the Plan Administrator and the Appeal Committees have found that he does not fit the Plan definition of an eligible employee, and thus that he does not have a colorable claim to vested benefits. Due to the deference that a court must show to that determination, that finding prevents Mr. Walsh from having the colorable claim necessary to be a "participant" for purposes of ERISA.
The First Circuit has recently held that, when a benefits plan reserves interpretive discretion to its administrator, judicial review of the administrator's eligibility determination is limited to ascertaining whether the administrator acted arbitrarily and capriciously. Kolling v. Am. Power Conversion Corp., 347 F.3d 11, 13 (1st Cir. 2003). Application of the arbitrary and capricious standard will affirm the factfinder's decision whenever the decision is plausible in light of the record as a whole. See Leahy v. Raytheon, 315 F.3d 11, 17 (1st Cir. 2002). Even when judicial review occurs as part of the analysis of another motion, the First Circuit applies the arbitrary and capricious standard, rather than the more stringent standard for the motion. See id. (applying the arbitrary and capricious standard when reviewing a determination by a plan administrator as part of the analysis of a motion for summary judgment).
The Retirement Plan gives the Retirement Plan Committee sole discretion over all determinations of any benefits payable under the Retirement Plan. This grant of interpretive discretion to the administrator exists in all versions of the Retirement Plan provided by the plaintiff and the defendant. See, e.g., The Gillette Company Retirement Plan Effective January 1, 1976, at page 24, attached as Exhibit D to the Appendix to Plaintiff's Opposition to Defendant's Motion to Dismiss and Motion for Summary Judgment ("The [Retirement Plan] Committee shall make all determinations as to the right to amount and level of any benefit payable under the Plan"), The Gillette Company Retirement Plan Effective September 21, 2000, at page 38, attached as Exhibit D to the Appendix to Defendants' Motion to Dismiss and for Summary Judgment ("The [Retirement Plan] Committee shall have such discretionary powers and authority as may be necessary or appropriate to . . . construe and interpret the Plan, decide all questions of eligibility, and determine the amount, manner and timing of payment of all benefits hereunder"). In reviewing the Appeal Committees' determination of Mr. Walsh's eligibility for benefits under the Retirement Plan, the court must therefore apply the arbitrary and capricious standard.
In reviewing the administrator's determination of eligibility, courts must determine only whether the administrator's action on the record before her was reasonable. See Liston v. Unum Corp. Officer Severance Plan, 330 F.3d 19, 23 (1st Cir. 2003). Here, the Retirement Plan Committee reviewed all correspondence provided by Mr. Walsh, as well as copies of Mr. Walsh's tax returns, invoices, and contracts. The decision that Mr. Walsh was not eligible for benefits was based on the Committee's interpretation of the Retirement Plan's definition of an eligible employee, which they deemed to be one who "(1) was subject to all Gillette personnel policies, practices and procedures, including those set forth in the Gillette Employee Handbook, and (2) was carried on and paid from the Gillette employee payroll for which income was reported on a Form W-2." Letter to Gerald F. Mr. Walsh, December 3, 2002, at page 7, attached as Exhibit 2 to the Appendix to Defendants' Motion to Dismiss and for Summary Judgment. Given the record before the Retirement Plan Committee, including Mr. Walsh's tax returns dating from 1976 through 1999 in which he reported his income from Gillette as profit from a sole proprietorship on Schedule C, rather than wages reported on a W-2, the finding that Mr. Walsh did not fall into this category does not strike me as unreasonable.
Mr. Walsh's contention that the Committee's denial of benefits to him was unreasonable because he fit the definition of a common law employee is insufficient to overturn the Committee's determination. Even if Mr. Walsh were to fit the definition of a common law employee, nothing in ERISA requires that a plan extend benefits to every common law employee. See Kolling, 347 F.3d at 14 (noting that this is true so long as the plan does not discriminate based on age or length of service). The language of the benefits plan, not common law status, controls who can be deemed eligible. Id. Here, the Committee reasonably interpreted the term "regular employee" as intending not to include those employees who were not receiving income in the form of wages required to be reported on a W-2 form.
Due to the Committees' determination that Mr. Walsh was not eligible for benefits, and thus cannot be considered a former employee with a colorable claim to vested benefits, Mr. Walsh does not meet the definition of a "participant." He thus only has standing if he meets the ERISA definition of a "beneficiary."
Section 1002(8) of Title 29 of the United States Code defines a "beneficiary" for ERISA purposes to be "a person designated by a participant, or by the terms of an employee benefit plan, who is or may become entitled to a benefit thereunder." 29 U.S.C. § 1002(8). Mr. Walsh was not designated by a participant, nor is he entitled to a benefit under the terms of the employee benefit plan due to the aforementioned determination by the Appeal Committees. Mr. Walsh therefore lacks standing under 29 U.S.C. § 1132 to bring his claims under ERISA, and I will grant the defendants summary judgment for Counts I, II, and IV.
D. Plaintiff's Claim for Other Benefits as a Common Law Employee
Along with his claims pursuant to ERISA, Mr. Walsh also claims that he was a common law employee of Gillette and was thus entitled to benefits other than those provided in the Gillette benefits plans. These alleged benefits include life, health and disability insurance benefits, vacation pay, performance bonuses, social security payments, and a reduced withholding of FICA taxes pursuant to 26 U.S.C. § 3100, et seq. Defendants have moved pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss this complaint for failure to state a claim upon which relief can be granted.
Despite the favorable standard of review for plaintiff, plaintiff has not stated a claim on which relief can be granted. Even if plaintiff does meet the definitions of common law employees as outlined in Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992), which I do not address here, plaintiff does not cite any common law right to the benefits to which he claims he is entitled. Common law employees do not have any right to benefits that are extended to other employees, Kolling, 347 F.3d at 14, and common law employees do not have any general right to the benefits claimed by Mr. Walsh. I thus grant defendants' motion to dismiss Count III.
E. Defendants' Motion to Strike
The Motion to Strike requests that the court strike certain paragraphs of Plaintiff's, Gerald Walsh, Rule 56.1 Statement and Plaintiff's, Gerald Walsh, Response to Defendants' Rule 56.1 Statement for failure to comply with Fed.R.Civ.P. 56(e) and Local Rule 56.1. Both Fed.R.Civ.P. 56(e) and Local Rule 56.1 are limited to the context of summary judgment. My decision to dismiss all of plaintiff's claims has rendered defendants' Motion for Summary Judgment immaterial and has thereby made it inappropriate to strike the plaintiff's statements in response to the Motion for Summary Judgment.
ORDER
For the foregoing reasons, it is ORDERED:(1) Defendants' Motion to Dismiss (Docket No. 30, filed December 13, 2004) is GRANTED; and
(2) Defendants' Motion to Strike Plaintiff's Rule 56.1 Statement and Plaintiff's Response to Defendant's Rule 56.1 Statement (Docket No. 42, filed March 9, 2005) is DISMISSED WITHOUT PREJUDICE; and
(3) The Clerk is directed to enter forthwith on a separate document a Final Judgment accordingly.
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