Reyes et al v. SJ Services, Inc. et al
Filing
79
Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered denying 53 Motion for Summary Judgment; granting 59 Motion for Leave to File Document; granting in part (as to Counts I and III) and denying in part (as to Count II 64 cross motion for summary judgment; treating as moot 60 Motion for Extension of Time to Answer; granting 61 Motion to Strike. Count II is remanded to state court. (Woodlock, Douglas)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
VILMA REYES, PATRICIA MARTINEZ,
RAMON BREA, and BORYS PEREZ,
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Plaintiffs,
v.
S.J. SERVICES, INC., SHAWN SHEA
and DAVID SHEA,
Defendants.
CIVIL ACTION NO.
12-11715-DPW
MEMORANDUM AND ORDER
September 22, 2014
The plaintiffs in this putative class action are individuals
employed as cleaners by SJ Services, Inc.
Believing that they
have not been properly compensated by their employer for the time
that they worked, they have brought claims against SJ and its
officers, Shawn and David Shea, under the Massachusetts Wage Act.
They have moved for summary judgment on their claims and the
defendants have filed a cross motion for summary judgment.
Plaintiffs’ primary dispute concerns wages owed to unionized
employees.
A sub-set of non-unionized plaintiffs have brought
claims that they too were underpaid for hours worked and also
that they were promised, but not provided, health benefits.
Before undertaking to address the merits of this dispute
directly, I must first determine whether any of the claims are
preempted by the federal Labor Management Relations Act; to the
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degree preemption applies to any claims, these claims must be
dismissed in the circumstances of this case.
And, if preemption
is not applicable to some portion of plaintiffs’ claims, I must
determine whether any remaining state law claims should be
remanded to State Court.
I. FACTUAL BACKGROUND
A detailed discussion of the underling facts is necessary to
frame the issues before me.
The plaintiffs are employed by SJ as cleaners of buses, bus
shelters, and train platforms for the MBTA.
Vilma Reyes,
Patricia Martinez, and Borys Perez have been employed by SJ since
November 2011.
Ramon Brea was employed from December 2009
through his termination in July 2012.
He was rehired shortly
thereafter and continues to be employed by SJ.
Ms. Reyes and Ms. Martinez have been and continue to be
members of a union.
Mr. Brea was a member of a union until
November 2011, at which time he assumed a non-union position.
Mr. Perez was a member of a union until he assumed a non-union
position in August 2012.
A.
Contentions Regarding Hours Worked and Paid
The amount that each plaintiff was paid each week is
recorded in a payroll register maintained for SJ by a payroll
services firm.
That register provides the names of SJ employees
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as well as their employee identification numbers, and indicates
the hourly rate, the number of hours, and their total earnings
(calculated by multiplying the rate times the hours) as well as
deductions for items such as federal and state income taxes,
Medicare, Social Security, and union fees.
According to the
testimony of David Shea each dated entry refers to the
information for the prior week.
In certain instances, more than
one rate is listed on a single payroll entry; for instance, the
payroll entry dated January 11, 2013 indicates that Ms. Reyes
received pay of $15.95 per hour for six hours of work, and $16.15
per hour for twelve hours of regular work, six hours of holiday
and six hours of sick leave.
The payroll entries do not indicate how either the rate or
the number of hours for the employees were determined.
Mr. Shea,
in particular, testified that he did not know how the rates in
the payroll sheets were determined, but said that the hourly rate
indicated on the payroll entries was the rate to which the
plaintiffs were entitled and which they were actually paid.
The
plaintiffs themselves did not know how their pay rate was
determined or when and why their pay rate changed.
The plaintiffs were assigned work schedules, which varied
over the course of their employment.
In addition to their
scheduled shifts, the plaintiffs appear to have worked and been
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compensated for occasional additional work on special projects,
which are reflected in the payroll reports.
Ms. Reyes and Ms. Martinez testified in their depositions
that, in addition to their scheduled shifts--reflected in the
payroll reports--they began working five to ten minutes before
each scheduled shift and continued to work for fifteen to thirty
minutes after each shift.
Ms. Reyes testified that, when this
time is taken into account, her total weekly working hours were
31.5 hours, even though she was scheduled and paid for thirty
hours.
Mr. Brea testified that, at different times during his
employment, he worked for an additional five to forty-five
minutes past his scheduled shifts and for ten minutes before his
scheduled shifts began.
Mr. Perez testified that, during the
time he was working a five day per week schedule, he worked an
additional ten to fifteen minutes before the scheduled start of
his shifts and up to ten minutes after the end of his scheduled
shift.
In addition to their own testimony, the plaintiffs rely on
testimony from their supervisors at SJ suggesting that the
plaintiffs could not have performed their assigned tasks within
the time limits of their scheduled shifts and therefore must have
worked more than their scheduled--and compensated--time.
They
also point to this testimony as demonstrating that their
supervisors at SJ knew that they were working beyond their
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scheduled shifts because the amount of work could not be
completed in the scheduled time.
For example, Ms. Reyes
testified that she was expected to clean six buses per shift when
she was working at the Albany Street garage and her supervisor
estimated that it required between one-and-a-half and two hours
to clean a bus.
The mathematical inference is that six buses
could not be cleaned without working more than six hours, indeed
the arithmetic suggests that between nine and twelve hours would
be necessary to perform the tasks.
Similarly, Alfredo Pena,
another SJ employee and supervisor, testified that he and Mr.
Brea were expected to clean between thirty-six and thirty-nine
train platforms and that each platform required fifteen to twenty
minutes to clean.
Again, the arithmetic suggests that the tasks
assigned for a six hour shift would take between nine and
thirteen hours to accomplish.
The defendants counter this evidence in several ways.
They
point to testimony indicating that cleaners, such as the
plaintiffs, are not permitted to work outside of their scheduled
shifts.
Cleaners know how to contact supervisors, are in regular
contact with their supervisors, and are required to report any
deviation from their scheduled shifts to those supervisors.
Supervisors, in turn, are required to record any departure from a
scheduled shift and to make adjustments to spreadsheets recording
actual hours worked. Mr. Pena was unable to point to a single
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instance of an employee complaining that the employee’s
did not reflect the actual hours worked.
paycheck
In addition, upon
realizing that their estimates produced such large figures for
the total time required to complete the work assigned on a single
shift, Mr. Pena and Mr. Sanz recanted or modified their estimates
of the amount of time required to perform cleaning tasks either
during their deposition or in errata sheets submitted after the
deposition was completed.
Defendants also contend that the
estimated numbers cannot be correct because no direct evidence
suggests that any worker worked several hours beyond the worker’s
shift.
Defendants also point to facts that they believe indicate
that plaintiffs were, at times, overcompensated for the hours
they actually worked.
First, they claim that employees were
compensated for their entire shift despite the fact that all
scheduled shifts included a half-hour meal break during which
employees were not expected to work.
The plaintiffs testified,
however, that they often worked through the meal break.
Ms.
Reyes, Ms. Martinez, and Mr. Perez testified that they usually
only took two breaks per week.
Mr. Brea testified that he took
two or three lunch breaks per week during the times that he
worked on the B, C, and E line, but took breaks almost daily when
working at the Southhampton garage.
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Second, in addition to highlighting conflicting testimonial
evidence regarding the amount of hours actually worked by the
plaintiffs, defendants point to data from biometric hand-scanners
that were installed at the MBTA stations where plaintiffs work.
These scanners recorded the time when employees entered and left
MBTA facilities.
While the plaintiffs appear not to dispute that
these machines were accurate when operable, they testified that
they were frequently malfunctioning.
These scanners also were
not available throughout the plaintiffs’ tenure with SJ and were
not available at all the locations at which they worked.
In
addition, as defendants admit, the data recorded is often
facially implausible, indicating, for example, that an individual
was only checked in for a minute, or conversely stayed checked in
for multiple days.
Despite the defects in the data, the
defendants have provided tables summarizing and analyzing the
hand-scanner data.1
1
The hand-scanner data--received in response to a
subpoena issued to the MBTA--is attached to the affidavit of
Barry Miller, SJ’s attorney in this matter. Mr. Miller’s
affidavit provides a summary of relevant deposition testimony, a
narrative description of the hand-scanner data, and a discussion
of the results of an analysis of that data performed by the
defendants and attached as Exhibit C to Mr. Miller’s affidavit.
The basis for Mr. Miller’s understanding of the hand-scanner data
and the foundation for the opinions he offers in his affidavit,
including the analysis in Exhibit C, is unclear. I have concerns
generally about the propriety of relying on “evidence” that is
presented directly by attorneys of record in a case. At the very
least, if defendants intended to rely upon this evidence for
summary judgment, an appropriate witness, other than Mr. Miller,
should have provided it. I therefore simply note here the
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This tabular analysis (limited to those weeks in which
defendants believe that they have valid data) indicates that in
some weeks the amount of time that the plaintiffs were checked-in
exceeded the number of hours for which they were paid.
weeks, the converse is true.
In other
According to the defendants, when
the overpayment weeks are set-off against the underpayment weeks,
on net, Mr. Brea, Ms. Martinez, and Ms. Reyes were paid for more
hours than they were checked in--that is, they were overpaid.
When an additional deduction is made for two half-hour lunch
breaks, Mr. Perez was also overpaid.
B.
Health Insurance for Non-Union employees
SJ offers health insurance to all full-time non-union
employees.
According to Schedule A of the SJ Services, Inc.
Health and Welfare Benefits Plan, employees become eligible to
participate in the health plan on the first day of the month
following 60 days of employment.
Two non-union employees, Mr. Perez and Mr. Brea, claim that
they were not given health insurance benefits by SJ despite being
eligible to receive them.
Mr. Perez says that he asked his
supervisor, Mr. Pena, about signing up for health insurance
benefits once he became eligible by working over thirty hours a
week during the summer of 2012.
At that time, Mr. Pena told him
existence of this data and a possible conclusion that might be
drawn from it without placing weight on the specifics of Mr.
Miller’s affidavit.
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that he would get medical benefits.
Mr. Brea similarly discussed
health insurance benefits with his supervisor, Mr. Sanz, in July
2010, once Mr. Brea became eligible due to his full-time
schedule.
At that time, according to Mr. Brea, Mr. Sanz told Mr.
Brea that health insurance benefits would be made available to
him.
Neither Mr. Brea nor Mr. Perez were given additional
information about signing up for health insurance benefits until
February 2013, when they received the Health Insurance Open
Enrollment Package.
Mr. Perez declined SJ’s offer of benefits at
that point because he had obtained insurance through MassHealth
in January or March of 2013.
Mr. Brea enrolled in SJ’s health
insurance program on February 24, 2013.
B.
The Collective Bargaining Agreement
A collective bargaining agreement exists between Maintenance
Contractors of New England, a coalition of employers of
maintenance workers, and the Service Employees International
Union Local 615.
workers.
The CBA sets forth the pay schedule for
Under that agreement, an employee’s pay rate is
dependent upon a category reflecting the hours regularly
scheduled for work per week, the location or nature of the work,
and seniority.
The CBA also sets up a “Grievance Procedure” for disputes
“concerning the interpretation, application or a claimed
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violation of a specific provision of this Agreement,” which
“shall be the exclusive method for the presentation and
settlement of grievances.”
Without setting forth the specific
procedures mandated by the CBA, it is sufficient for present
purposes to observe that those procedures require that a
grievance first be pursued in a series of steps culminating in
arbitration and that plaintiffs have not pursued their claims
through the grievance processes set out in the CBA.2
II.
PROCEDURAL BACKGROUND
The first complaint in this matter was filed in state court
on behalf of seven plaintiffs--Ms. Reyes, Ms. Martinez, Mr. Brea,
and Mr. Perez, as well as Hector Diaz, Jose Luis Galdames, Hugo
Laureano, and Elmer Pineda.
The defendants removed the case to
federal court on the basis of preemption.
2
The record shows that Ms. Reyes approached her union with
a complaint that she was not being compensated for the full
amount of her time worked. In her discussion with her union,
however, the union calculated Ms. Reyes as having worked 27.5
hours per week when her breaks were accounted for and suggested
that instead of being owed additional compensation, she might owe
SJ. Based on this response, Ms. Reyes did not pursue her
complaint with the union. In its response to defendants’
statement of facts, the plaintiffs moved to strike the testimony
relating to Ms. Reyes’ complaint to the union as hearsay. I
conclude that the statement is not to be considered for the truth
of the matter, i.e. that she actually owed SJ for the lunch
breaks, but to show that a dispute exists here about whether and
how the lunch breaks should be counted and that the plaintiff’s
collective bargaining representative had been approached about
how to resolve it.
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Defendants then moved to dismiss the complaint, asserting
that the claims were preempted by Section 301 of the Labor
Management Relations Act, 29 U.S.C. § 85(a) and under the Garmon
preemption doctrine, San Diego Bldg. Trades Council v. Garmon,
359 U.S. 236 (1959).
In response, the plaintiffs amended their
complaint on January 11, 2013.
The First Amended Complaint (which is the operative pleading
before me) asserts three claims: (A) a claim under the
Massachusetts Wage Act, Mass. Gen. Laws c. 149 on behalf of those
plaintiffs who are unionized employees of SJ; (B) a claim under
the state Wage Act on behalf of non-unionized plaintiffs; and (C)
a claim under the state Wage Act and, alternatively, under ERISA
on behalf of non-unionized plaintiffs that the defendants failed
to provide promised health insurance benefits.
Defendants moved to dismiss the first amended complaint on
January 25, 2013 contending both that the asserted claims were
preempted and that the bare-bones complaint failed to satisfy the
pleading standards established by the Supreme Court in Ashcroft
v. Iqbal, 566 U.S. 662 (2009), and Bell Atlantic Corp. v.
Twombly, 550 U.S. 544 (2007).
During a hearing on March 27, 2013, I took the motion to
dismiss under advisement and directed that the plaintiffs,
following focused discovery, file a motion for summary judgment.
On June 24, 2013, before the plaintiffs filed their summary
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judgment motion, I dismissed with prejudice the claims asserted
by Hector Diaz, Jose Luis Galdames, Hugo Laureano, and Elmer
Pineda because of their failure to cooperate with the discovery
process.
On September 3, 2013, the plaintiffs filed a motion for
partial summary judgment requesting a determination that the Wage
Act claims are not preempted by the Labor Management Relations
Act, that the claims of the non-unionized plaintiffs for health
insurance benefits assert rights protected by the Massachusetts
Wage Act and are not preempted, and for a finding of liability on
the plaintiffs’ claims.
Defendants filed an opposition to
plaintiffs’ motion and a cross-motion for summary judgment.
In
addition, SEIU Local 615 has filed amicus briefs in support of
the plaintiffs.
Finally, plaintiffs have filed a motion to strike the
defendants’ Rule 68 offers.
III. ANALYSIS
A.
Preemption Under the Labor Management Relations Act of the
Massachusetts Wage Act Claims of the Unionized Plaintiffs.
Defendants contend that the claims brought under the
Massachusetts Wage Act by the unionized plaintiffs, Ms. Reyes and
Ms. Martinez, are preempted by the Labor Management Relations Act
and should be dismissed.
1.
The Massachusetts Wage Act
Massachusetts General Laws c. 149, § 148 provides that
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“[e]very person having employees in his service shall pay . . .
each such employee the wages earned” within a fixed period of
time.
“The purpose of the Wage Act is ‘to prevent the
unreasonable detention of wages.’”
Melia v. Zenhire, Inc., 967
N.E.2d 580, 587 (Mass. 2012) (quoting Boston Police Patrolmen’s
Ass’n v. Boston, 761 N.E.2d 479, 481 (Mass. 2002)).
Section 150
of the Wage Act authorizes the filing of a private suit by an
aggrieved employee and provides for the award of treble damages,
as well as costs and attorneys’ fees, to a prevailing plaintiff.
Mass. Gen. Laws c. 149, § 150.
The strictures imposed by the Wage Act are nonnegotiable and
nonwaivable.
“No person shall by a special contract with an
employee or by any other means exempt himself from this section
or from section one hundred and fifty.”
§ 148.
Mass. Gen. Laws c. 150,
An agreement to circumvent the Wage Act is illegal even
when “the arrangement is voluntary and assented to.”
Camara v.
Attorney Gen., 941 N.E.2d 1118, 1121 (Mass. 2011).
2.
The Scope of Preemption Under the LMRA
Section 301 of the Labor Management Relations Act confers
federal jurisdiction over suits for violation of contracts
between an employer and a labor organization, providing:
Suits for violation of contracts between an employer
and a labor organization representing employees in an
industry affecting commerce as defined in this chapter,
or between any such labor organizations, may be brought
in any district court of the United States having
jurisdiction of the parties, without respect to the
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amount in controversy or without regard to the
citizenship of the parties.
29 U.S.C. § 185(a).
The Supreme Court has treated § 301 as, in addition to
conferring jurisdiction upon federal courts, a mandate for the
development and application of federal common law regarding labor
matters and as a warrant for removing claims preempted by § 301
to federal court.
See Allis-Chalmers Corp. v. Lueck, 471 U.S.
202, 211 (1985).
In Lueck, the Supreme Court determined that an
employee’s claim that his employer had breached a duty of good
faith by improperly handling his insurance claim, a tort under
state law, was preempted by the LMRA.
Because the extent of the
duties allegedly breached “depend[ed] upon the terms of the
agreement between the parties” and “[t]he duties imposed and
rights established through the state tort . . . derive from the
rights and obligations established by the contract,” the validity
of the claims were to be determined according to federal labor
law and the state law claims were preempted.
Id. at 216 & 218.
In Lueck and succeeding cases, however, the Supreme Court
recognized that the LMRA did not preempt all disputes between a
unionized employee, working under a collective bargaining
agreement, and the worker’s employer.
Rather, the Supreme Court
in Lueck described the relevant determination as whether “the
[state law] tort action for breach of the duty of good faith as
applied here confers nonnegotiable state-law rights on employers
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or employees independent of any right established by contract,
or, instead, whether evaluation of the tort claim is inextricably
intertwined with consideration of the terms of the labor
contract.”
471 U.S. at 213.
Applying these principles in a decision after Lueck relating
to a retaliatory discharge claim, the Supreme Court explained
that none of the elements of such a claim “requires a court to
interpret any term of a collective-bargaining agreement . . . the
state-law remedy . . . is ‘independent’ of the collectivebargaining agreement in the sense of ‘independent’ that matters
for § 301 pre-emption purposes: resolution of the state-law claim
does not require construing the collective-bargaining agreement.”
Lingle v. Norge Div. Of Magic Chef, Inc., 486 U.S. 399, 407
(1988).
In Lingle, the Supreme Court made clear that state-law
remedies are not preempted merely because they overlap with
contractual remedies subject to federal law.
“[E]ven if the
dispute resolution pursuant to a collective-bargaining agreement,
on the one hand, and state law, on the other, would require
addressing precisely the same set of facts, as long as the statelaw claim can be resolved without interpreting the agreement
itself, the claim is ‘independent’ of the agreement for § 301
pre-emption purposes.”
Id. at 409-410.
Similarly, the Court
explained that a state law remedy will not be preempted simply
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because the calculation of damages--as opposed to determination
of liability--turns upon interpretation of a collective
bargaining agreement.
“A collective-bargaining agreement may, of
course, contain information such as rate of pay and other
economic benefits that might be helpful in determining the
damages to which a worker prevailing in a state-law suit is
entitled.
Although federal law would govern the interpretation
of the agreement to determine the proper damages, the underlying
state-law claim, not otherwise pre-empted, would stand.”
Id. at
413, n. 12.
The Supreme Court has since restated and elaborated upon
these principles in Livadas v. Bradshaw, 512 U.S. 107 (1994).
There, claims were brought under a state law requiring that an
employer pay an employee all wages owed to her immediately upon
her discharge.
Livadas, 512 U.S. at 111.
The Court concluded
that the employee’s claim was not preempted because “[t]he only
issue raised . . . was a question of state law, entirely
independent of any understanding embodied in the collective
bargaining agreement” and “[b]eyond the simple need to refer to
bargained-for wage rates in computing the penalty, the
collective-bargaining agreement is irrelevant to the dispute.”
Id. at 124.
For its part, the First Circuit has addressed preemption
under the LMRA in a series of cases.
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In Haggins v. Verizon New
England, Inc., the court explained that a state law claim depends
on the meaning of a collective bargaining agreement (and
therefore would be preempted) if either “(1) ‘it alleges conduct
that arguably constitutes a breach of duty that arises pursuant
to a collective bargaining agreement,’ or (2) ‘its resolution
arguably hinges upon an interpretation of the collective
bargaining agreement.’” 648 F.3d 50 (1st Cir. 2011) (citing
Flibotte v. Pennsylvania Truck Lines, Inc., 131 F.3d 21, 26 (1st
Cir. 1997)).
The First Circuit addressed in Cavallaro v. UMass Mem’l
Healthcare, Inc., 678 F.3d 1, 7 (1st Cir. 2012) whether claims
brought under the Massachusetts Wage Act seeking compensation for
meal breaks, training sessions, and work performed before and
after shifts were preempted by the LMRA.
The court explained
that the law governing preemption of nonwaivable provisions (such
as the Wage Act) is “evolving and it is not easy to tell in what
direction the Supreme Court may go.”
Id. at 7.
Faced with such
uncertainty, the First Circuit has “continued to treat state
regulatory claims in the economic area as preempted where they
were intertwined with the CBA and more than mere consultation of
the CBA is required.”
Id. at 8 (citing Adames v. Executive
Airlines, Inc., 258 F.3d 7, 12-16 (1st Cir. 2001)).
Finding the
claims preempted, the court distinguished Livadas on the basis
that Cavallaro presented a “a very different situation than
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Livadas, where the wages had been paid, there was no dispute
about the amount, and the claim turned on whether the wages had
been timely paid under the terms of the state law.”
Livadas, 512 U.S. at 124-25).
Id. (citing
Unlike Livadas, “determining what
(if anything) is owed . . . depend[ed] at least arguably on
interpretations and applications of the CBA at issue,” id., and,
accordingly, the claims in Cavallaro were considered preempted.
In reaching this conclusion, the First Circuit in Cavallaro
rejected the contention that the claims presented no
“interpretive dispute” about the CBA or the calculation of wages,
but only “a factual dispute as to whether plaintiffs were paid
for time spent working through meal breaks, before and after
work, and during training sessions.”
Id. at 8.
As the court
explained, these factual disputes required interpretation of the
CBA’s terms regarding whether such items as meal breaks and
training sessions were compensable.
In addition, even resolution
of the factual disputes would not resolve the Wage Act claims.
“Determining whether there are wages owed thus would require
construing and applying the various ‘peculiarities of
industry-specific wage and benefit structures’ embodied in the
CBA.”
Id.
(citing Adames, 258 F.3d at 13).
Going further, the
First Circuit explained that “any claim for compensation above
the state minima must be entirely dependent on the CBA.”
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Id.
3.
Application to Plaintiffs’ Wage Act Claims
a.
The Nature of the Factual Evidence and Dispute
A successful claim under the Massachusetts Wage Act, Mass.
Gen. Laws ch. 149, § 148, requires an employer to, “among other
things, prove there are wages owed.”
Cavallaro, 678 F.3d at 8.
The plaintiffs contend that their claim that they are owed wages
for hours worked beyond their scheduled shifts can be resolved
without reference (whether by “consultation with” “interpreting”
or “applying”) to the CBA.
The parties agree that the wage rates
reflected in the payroll are accurate.
Plaintiffs argue that all
that is required is a comparison of the hours for which the
plaintiffs were paid--which appears to be captured fully by the
payroll reports--with the hours that the plaintiffs actually
worked as established by the testimonial and other evidence.
If
the actual hours worked exceed the paid hours, plaintiffs claim
that they succeed on their claims.
They contend that as in
Livadas, where “the primary text for deciding whether Livadas was
entitled to a penalty was not the [CBA], but a calendar,” 512
U.S. at 115, the primary text for determining liability in this
case is not the CBA, but the payroll reports, and the testimony
and other evidence regarding the actual hours worked.
This focus on the factual dispute over hours worked is
reflected in the summary judgment submissions presented by both
parties.
Plaintiffs have measured the hours recorded in the
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payroll sheets against their own testimony--attesting that they
arrived early and stayed late in order to complete their assigned
tasks--and against testimony from their supervisors which, based
upon estimates of the time taken to perform tasks and the number
of tasks assigned to the plaintiffs, suggest that plaintiffs must
have worked longer than their assigned shifts.
Nowhere in their
argument do plaintiffs point to any terms of the CBA as necessary
support for their claims of liability.
While defendants mention various CBA provisions in
discussing preemption, their substantive opposition to
plaintiffs’ claims do not invoke any specific terms of the CBA in
arguing against plaintiffs’ position.
factual dispute about hours worked.
They focus instead on the
The defendants argue that
plaintiffs took half-hour lunch breaks during their work week and
that this break time offsets any extra time that plaintiffs
accrued by arriving early and leaving late.
In addition, the
defendants point to the data recorded by the MBTA’s hand
scanners, which they contend show that plaintiffs have actually
worked fewer hours than their schedules and payroll reports
indicate--and thus that the plaintiffs have been paid for more
hours than they actually worked.
The central dispute in this matter--as set forth by the
parties--concerns the hours worked, which on the surface seems to
be calculable without reference to the CBA itself.
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See Hawaiian
Airlines, Inc. v. Norris, 512 U.S. 246, 261 (1994) (“‘purely
factual questions’ about an employee’s conduct or an employer’s
conduct and motives do not ‘requir[e] a court to interpret any
term of a collective-bargaining agreement.’” (quoting Lingle, 486
U.S. at 407)).
I must, however, dig a bit deeper to address the
two questions central to the preemption analysis.
b.
Do Plaintiffs’ claims allege a breach of a duty created
by the CBA and without an existence independent of the
agreement?
The plaintiffs present their claim as seeking merely to
enforce their nonnegotiable state law right to the wages they
have already earned.
Defendants, however, argue that the rights
sought to be vindicated arise and exist solely by virtue of the
CBA.
This disagreement about the source of the rights they seek
to enforce is significant because the Supreme Court has held that
“a state-law tort action against an employer may be pre-empted by
§ 301 if the duty to the employee of which the tort is a
violation is created by a collective-bargaining agreement and
without existence independent of the agreement.”
Steelworkers v. Rawson, 495 U.S. 362, 369 (1990).
United
Plaintiffs
seek wages at the “regular rate” specified in the CBA, which
significantly exceeds the state minimum wage.
The wage rates are
not disputed in this case, and plaintiffs’ right to receive wages
at that rate is a result of the negotiated agreements
memorialized in the CBA.
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In Cavallaro, the First Circuit stated that “any claim for
compensation above the state minima must be entirely dependent on
the CBA.”
678 F.3d at 8.
At first glance, this statement might
seem to apply to preempt any claim for recovery of contractual
wages, such as those that the Supreme Court found not to be
preempted in Lingle and Livadas.
The relevant distinction
between Lingle and Livadas on the one hand, and Cavallaro on the
other, is that in the former cases, liability was created by
operation of state law independent of the contract.
The claim in
Lingle was that the employee was terminated for unlawful reasons
and paid nothing.
In Livadas, the employer failed to pay amounts
owed within the time prescribed by state law.
Liability,
therefore, was determined by measuring the employers’ conduct
against the minimal obligations of state law.
The claims of the
plaintiffs in Lingle and Livadas would have existed even in the
absence of a contract.
The court only needed to look to the CBA
to calculate damages once liability had been determined, and
referring to the CBA for purposes of establishing damages does
not preempt an otherwise valid state law claim.
Lingle, 486 U.S.
at 413, n. 12.
In Cavallaro, by contrast, the core issue of liability
depended on whether plaintiffs were paid the proper amount--an
inquiry that requires the court to measure the conduct of the
employer (the amount it has paid) against the duty imposed by the
-22-
contract (to pay some certain amount), rather than against a duty
imposed by state law.
The key inquiry, then, is whether a determination of
liability involves looking to a substantive floor created by
state law or one created by a CBA. In Cavallaro, the substantive
floor was set by the CBA; the Massachusetts Wage Act was invoked
as a mechanism to enforce the duties established in that
agreement.3
This case is similar in that regard to Cavallaro.
The determination of liability must be made by measuring SJ’s
performance (the amount paid) against the duty imposed by the CBA
(to pay some certain amount).
Plaintiffs’ suit is an attempt to
obtain the amounts owed by virtue of the CBA--not to seek a
remedy for a violation of a minimum obligation imposed by state
law.
The plaintiffs may not avoid this result by “‘relabeling’
as tort suits actions simply alleging breaches of duties assumed
in collective-bargaining agreements.”
Livadas, 512 U.S. at 123.
Because plaintiffs’ claims seek to enforce the promises made in
3
This same pattern focusing on the source of the right at
issue is apparent in other relevant cases cited by the parties.
Compare, e.g., Ralph v. Lucent Technologies, Inc., 135 F.3d 166
(1st Cir. 1998) (claims arising under Mass. Gen. Laws c. 151B, §
9 and the Americans with Disabilities Act were not preempted)
with, e.g., United Steelworkers v. Rawson, 495 U.S. 362, 369
(1990) (finding preempted state law claims that defendant
negligently performed duty created by CBA); Allis-Chalmers Corp.
v. Lueck, 471 U.S. 202, 211 (1985) (finding preempted state law
claims that defendant breached duty of good faith in performance
of obligations under CBA).
-23-
the CBA and therefore depend upon that agreement, the
Massachusetts Wage Act claims are preempted by § 301.
c.
Does resolution of this claim concerning wages owed
arguably require interpretation of the Collective
Bargaining Agreement?
The second preemption inquiry independently leads to the
same conclusion.
The defendants assert that time spent on lunch
breaks--for which the plaintiffs were paid--should be set off
against any extra time worked before or after shifts.
The data
presented by the defendants suggests that amounts of time spent
on lunch breaks may be sufficient to offset fully any extra time
plaintiffs spent working before and after shifts.
This defense is similar to that proposed by the defendant in
Cavallaro, in which the defendant argued that additional
compensation, such as for premium pay above the state mandatory
rate or additional pay for certain shifts, offset any
uncompensated time the plaintiffs might be claiming.
8.
678 F.3d at
In Cavallaro, however, the defendants identified specific
provisions of the collective bargaining agreement which would
have to be interpreted to determine the appropriate treatment of
such offsets.
Id.
Here, by contrast, the defendants have
pointed to no provisions of the CBA which address expressly
whether the employee plaintiffs must be paid for lunch breaks and
whether overpayments from one week may offset underpayments from
another.
And while defendants contend that time spent on lunch
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breaks is non-compensable and should be deducted from the working
hours when determining whether plaintiffs have been properly
compensated, at least one plaintiff, Mr. Brea, clearly testified
to his understanding that he would be paid for time spent on his
half-hour lunch break.
My review of the CBA indicates that it
is, in fact, silent on the issue whether plaintiffs were to be
compensated for time spent on their lunch breaks.4
Plaintiffs argue that using the lunch break as offsets is
without any legal foundation.
The Supreme Judicial Court has
held that an employer could not make an agreement with his
employees pursuant to which the employer would deduct accidentrelated damages from his employees’ earned wages.
N.E.2d 1118.
Camara, 941
Plaintiffs contend that time spent on lunch breaks
should be treated in the same manner as the “offsets” in Camara,
which were not permitted under Massachusetts law.5
4
Section 7.1 of the CBA, under the header “Wages,” states
only that “Wages, during the term of this agreement, shall be
paid as set forth in Appendix ‘A’, attached hereto . . .”
Appendix A simply sets forth applicable wages rates. Section
8.1, titled “Overtime,” provides that “[o]vertime shall be paid
at the rate of time and one-half . . . the employees’ regular
rate to all employees covered by this Agreement for all hours
actually worked in any week in excess of forty (40) hours.”
5
I note that Mass. Gen. Laws c. 149, § 100 provides that
“No person shall be required to work for more than six hours
during a calendar day without an interval of at least thirty
minutes for a meal.” That law, however, does not create a
private right of action. See Salvas v. Wal-Mart Stores, Inc.,
893 N.E.2d 1187, 1215-16 (Mass. 2008).
-25-
Offsets of time, however, present a different circumstance
than that at issue in Camara; in Camara, the wages were
admittedly earned by employees and then subject to deductions
pursuant to an agreement between the employer and employee.
Here, in contrast, the defendants assert that offsets for lunch
breaks reduce the amount of time actually worked--and thus the
amount of wages earned.
The lunch break offsets do not represent
ex post deductions from the amount of wages owed to employees
(the situation in Camara) but an ex ante reduction in the wages
actually earned by the employees.
Thus, Camara does not
determine the question whether lunch breaks are compensable.
In the larger analysis, however, I need not resolve here the
debate about whether the lunch breaks can be offset against hours
worked.
Irrespective of the specific facts of Camara, the very
existence of this debate is clear evidence of the need to
interpret the CBA.
The absence of guidance from either state law
or the text of the CBA on this issue poses an interpretive
problem that must be solved in order to determine the validity of
plaintiffs’ claims.
The gap in the CBA must be filled by the
common law--and the applicable common law is federal law.6
6
Nothing in this statement should be taken to suggest that
a state could not mandate substantive provisions in a collective
bargaining agreement (such as paid breaks, minimum wages, etc.).
The Supreme Court has repeatedly emphasized “that § 301 cannot
be read broadly to pre-empt non-negotiable rights conferred on
-26-
“[Q]uestions relating to what the parties to a labor agreement
agreed, and what legal consequences were intended to flow from
breaches of that agreement, must be resolved by reference to
uniform federal law.”
Lueck, 471 U.S. at 211 (1985).
This gap-
filling is not mere “consultation with” the CBA, but
interpretation of the terms of a contract which must be
undertaken in accordance with federal law.7
Livadas, 512 U.S. at
124. See also Lueck, 471 U.S. at 215 (rejecting state law claim
implying a right of good faith; “The assumption that the labor
contract creates no implied rights is not one that state law may
make.”); DiGiantommaso v. Globe Newspaper Co., Inc., 632 F. Supp.
individual employees as a matter of state law.”
512 U.S. at 123.
7
See Livadas,
In this regard, the present dispute is analogous to the
situation faced in Adames v. Executive Airlines, 258 F.3d 7, 14
(1st Cir. 2001), in which the First Circuit held preempted
disputes about how “deadheading” and “standby time” should be
treated for purposes of calculating airlines workers’
compensation. Although the agreement in Adames appears to be
somewhat more fulsome regarding what constituted compensable
hours, the First Circuit recognized that the agreement may still
require some interpolation: “this determination may require
examination of industry standards and extrinsic evidence related
to the collective bargaining process” because “cases sometimes
turn on ‘a norm that the parties have created but have omitted
from the CBA’s explicit language, rather than a norm established
by a legislature or a court.’” Id. (citing Hawaiian Airlines v.
Norris, 512 U.S. 246, 264 (1994)) (emphasis in original). See
also Pa. Fed'n of the Bhd. of Main. of Way Employees v. Nat'l
R.R. Passenger Corp., 989 F.2d 112, 115-16 (3d Cir. 1993)
(determining whether time spent traveling between work areas was
compensable required interpreting the CBA “to see exactly what
the duties of employees are.”)
-27-
2d 85, 88-89 (D. Mass. 2009) (holding preempted under § 301
claims “which depend on an implied obligation or duty” because
determining the existence of such obligations required “review .
. . of the past practices and bargaining history of the parties
and, inevitably, interpretation of the CBA”).
Plaintiffs contend that defendants’ argument about the paid
lunch breaks is a minor issue that cannot turn a state law claim
into a federal one.
The Supreme Court has cautioned against
federal law hijacking when it held that “a defendant cannot,
merely by injecting a federal question into an action that
asserts what is plainly a state-law claim, transform the action
into one arising under federal law.”
Williams, 482 U.S. 386, 398-99 (1987).
Caterpillar Inc. V.
Plaintiffs argue that, at
best, the offsets are relevant only to the question of damages.
Plaintiffs, however, far underestimate the importance of
these offsets.
Far from being minor or peripheral, the question
whether SJ owes plaintiffs unpaid wages is the central issue in
this case.
The precise amount of wages owed would be a question
for damages, but only after plaintiffs have established that
there is any amount owed at all.
“Determining whether there are
wages owed,” including whether “additional compensation...may
offset any deficiency created by other uncompensated time” is the
precise task that must be undertaken to determine whether
defendants are liable under the Wage Act.
-28-
Cavallaro, 678 F.3d at
8.
The paid lunch breaks combined with data from the biometric
hand scanning provided by the MBTA are, according to defendants,
sufficient to show that SJ did not in fact owe plaintiffs any
additional wages at all.
As in Cavallaro, id., therefore, the
factual disputes about whether wages on net were owed to
plaintiffs at all is neither peripheral nor relevant solely to
damages but rather is central to the question of liability.
*
*
*
*
*
At this point, it is worth stepping back to acknowledge the
legal and economic realities of this case.
My determination that
the plaintiffs’ claims are preempted by federal law likely marks
the end of the road for the plaintiffs’ pursuit of allegedly
unpaid wages.
I do not believe, however, that plaintiffs’
inability to vindicate their (potentially meritorious) claims
represents a procedural accident.
Rather, it is a function of
the bargain struck by the plaintiffs’ union and SJ, as well as of
federal policy governing such collective bargaining agreements.
As part of the collective bargaining process, the
Maintenance Contractors of New England and SEIU Local 615 agreed
to a grievance procedure, set forth in Article 37 of the CBA, for
resolving disputes arising from the terms of that agreement.
These procedures represent a competitive bargain struck between
those entities.
To the extent that the SEIU Local 615 or its
members relinquished valuable procedural rights, presumably they
-29-
were exchanged for something of similar value to the union’s
members.
“The ordering and adjusting of competing interests
through the process of free and voluntary collective bargaining
is the keystone of the federal scheme to promote industrial
peace.”
Local 174 v. Lucas Flour Co., 369 U.S. 95, 104 (1962).
The outcome of this bargaining process, which eschews judicial
procedures in favor of arbitration, is an outcome protected and
promoted by federal labor policy.
See Republic Steel Corp. v.
Maddox, 379 U.S. 650, 652 (1965) (“[F]ederal labor policy
requires that individual employees wishing to assert grievances
must attempt use of the contract grievance procedure agreed upon
by employer and union as the mode of redress.”); Avco Corp. v.
Machinists, 390 U.S. 557 559 (1968) (Ҥ 301 . . . was fashioned
by Congress to place sanctions behind agreements to arbitrate
grievance disputes.”).
Allowing the plaintiffs to sidestep this
procedure by bringing claims for wages owed by virtue of a CBA
under the garb of a state law cause of action would undermine
both federal labor policy and the bargain struck by the
Maintenance Contractors of New England and SEIU Local 615.
As described above, the First Circuit has outlined two
discrete categories of claims which are preempted by the LMRA.
The first are claims that “allege[] conduct that arguably
constitutes a breach of duty that arises pursuant to a collective
bargaining agreement.”
Haggins, 648 F.3d at 55.
-30-
Here, the
Massachusetts Wage Act does not establish the amount of wages or
the wage rate owed to plaintiffs.
Rather, that is set by the CBA
above the lower applicable floor established by the Massachusetts
Wage Act.
In this context, therefore, the plaintiffs are seeking
to employ the Massachusetts Wage Act as an enforcement mechanism
for obligations that “arise[] pursuant to a collective bargaining
agreement.”
The second category of claims preempted by the LMRA is those
whose “resolution arguably hinges upon an interpretation of the
collective bargaining agreement.”
Id.
Again, as discussed
above, resolution of a central issue in this case--what hours
count as working hours--is a question of contractual
interpretation governed by federal law.
Accordingly, the claims in Count I concerning unionized
plaintiffs8 “must either be treated as a § 301 claim ... or
dismissed as pre-empted by federal labor-contract law.”
Lueck,
471 U.S. 202, 220 (internal citation omitted). Here, the
unionized plaintiffs in Count I have failed to pursue their
claims through the grievance procedure set forth under the CBA,
precluding this court from treating those claims as having been
8
To the extent Count I concerns non-unionized plaintiffs,
it is entirely duplicative of Count II.
-31-
brought under § 301, and dismissal is thus required. See id. at
220-21.9
B.
The Massachusetts Wage Act Claims by the Non-Unionized
Plaintiffs
In addition to the unionized plaintiffs’ wage claims in
Count I, I am also presented in Count II with the wage claims of
non-union plaintiffs.
Although I will dismiss the wage claims of
the unionized employees because they arise under the CBA and
plaintiffs have failed to pursue the required grievance
procedure, I would continue to have authority as an exercise of
supplemental jurisdiction, 28 U.S.C. § 1367, to retain
jurisdiction over the claims of the non-unionized plaintiffs,
which arise from the same common nucleus of facts as those of the
union plaintiffs.
See Senra v. Town of Smithfield, 715 F.3d 34,
41 (1st Cir. 2013); Redondo Constr. Corp. V. Izquierdo, 662, F.3d
42, 49 (1st Cir. 2011); Rodriguez v. Doral Mortg. Corp., 57 F.3d
1168, 1177 (1st Cir. 1995) (“In an appropriate situation, a
federal court may retain jurisdiction over state-law claims
notwithstanding the early demise of all foundational federal
claims.”).
In the absence of independent federal jurisdiction, however,
I believe that it would be imprudent to maintain supplemental
9
This dismissal applies to both the unionized plaintiffs,
Ms. Reyes and Ms. Martinez, and to any claims on behalf of Mr.
Perez and Mr. Brea arising from work they performed under the
CBA–that is, before they switched to non-union positions.
-32-
jurisdiction in these circumstances.
Plaintiffs apparently
intend to proceed in the form of a class action on behalf of a
class of non-unionized employees.
Without making comment on
either the merits of the substance or the propriety of
maintaining such a class-action, I view it as inappropriate to
continue to sponsor complex litigation involving only in-state
residents and state law claims in a federal forum when the case
is essentially at the threshold.
Accordingly, I will remand the
claims of Mr. Brea and Mr. Perez to state court if the health
benefit claims, to which I now turn, do not provide independent
grants for federal jurisdiction.
Univ.,
F.3d
See Dunn v. Trustees of Boston
, 2014 WL 3733984 at *3 (1st Cir. July 30,
2014) (acknowledging that § 1367 permits remand to state court of
remaining state law claims).
C.
Health Benefit Claims
The non-unionized plaintiffs, Mr. Brea and Mr. Perez, have
asserted a claim for defendants’ failure to provide promised
healthcare benefits.
The plaintiffs have pled this as a Wage Act
claim or, alternatively, as a violation of ERISA.
Defendants
contend that such a claim may not be maintained under the Wage
Act, both because ERISA would preempt such a claim and because
the Wage Act does not encompass a failure to provide promised
health benefits.
In addition, defendants contend that
plaintiffs’ claim under ERISA fails on the merits.
-33-
ERISA § 514(a) preempts all claims that “relate to” an ERISA
benefit plan.
29 U.S.C. § 1144(a).
The ERISA preemption
provision is “conspicuous for its breadth.”
Holliday, 498 U.S. 52, 58 (1990).
FMC Corp. v.
The Supreme Court has
recognized the difficulty posed by ERISA’s “relates to” language:
The governing text of ERISA is clearly expansive ....
[O]ne might be excused for wondering, at first blush,
whether the words of limitation (“insofar as they ...
relate”) do much limiting. If “relate to” were taken to
extend to the furthest stretch of its indeterminacy,
then for all practical purposes pre-emption would never
run its course for, [r]eally, universally, relations
stop nowhere ... [W]e have to recognize that our prior
attempt to construe the phrase “relate to” does not
give us much help drawing the line here.
New York State Conf. of Blue Cross & Blue Shield Plans v.
Travelers Ins. Co., 514 U.S. 645, 655 (1995).
Here, the plaintiffs allege that SJ violated the
Massachusetts Wage Act when it failed to provide non-union, fulltime employees health insurance benefits that they were due under
the terms of their employment.
They are seeking damages,
injunctive relief, liquidated damages, and attorneys’ fees and
costs.
Plaintiffs argue that their Wage Act claims are not
preempted by ERISA because the dispute does not arise under the
plan--rather, they were denied benefits in their entirety because
they were never given access to the plan.
They contend that I
therefore need not interpret SJ’s health insurance plan at all to
determine liability.
Plaintiffs cite Boston Children’s Heart Foundation, Inc. v.
Nadal-Ginard for the principle that a case is not preempted by
-34-
ERISA when a “legal determination that [a defendant’s] conduct
constitutes a fiduciary breach does not require the resolution of
any dispute about interpretation or administration of the plan.”
73 F.3d 429, 440 (1st Cir. 1996).
Looking more closely at Nadal-
Ginard, however, it is apparent that the legal determinations in
that case were much further removed from the plan itself than
they are here.
Nadal-Ginard was a dispute between a non-profit
corporation and its former president who was alleged to have
violated his fiduciary duties by misrepresenting information to
induce the board to adopt a particular severence benefit plan
that provided him with significant personal benefits.
73 F.3d at
438.
The damages in Nadal-Ginard were determined under
Massachusetts law, based on the premise that a court can require
a person who violated his fiduciary duties to forfeit all of his
compensation and may consider equitable offsets.
Id. at 435-36.
In contrast, this case is a dispute between an employer and an
employee about whether the employer wrongfully withheld access to
health care benefits provided through an ERISA plan that the
employees had been promised access to as part of their
compensation.
The First Circuit has acknowledged confusion about the scope
of preemption, particularly when there are allegations of
misrepresentation.
Carlo v. Reed Rolled Thread Die Co., 49 F.3d
-35-
790, 793 (1st Cir. 1995).
Nonetheless, the First Circuit has
“consistently held that a cause of action ‘relates to’ an ERISA
plan when a court must evaluate or interpret the terms of the
ERISA-regulated plan to determine liability under the state law
cause of action...[and] that ERISA preempts state law causes of
action for damages where the damages must be calculated using the
terms of an ERISA plan.”
44, 52 (1st Cir. 2000).
Hampers v. W.R. Grace & Co., 202 F.3d
In Carlo, for example, the First Circuit
held that the plaintiff’s misrepresentation claim against his
employer was preempted because he sought damages that “would
require the court to refer to the [plan] as well as the
misrepresentation allegedly made by [the employer].
Thus, part
of the damages to which the [plaintiffs] claim entitlement
ultimately depends on an analysis of the [plan].”
794.
49 F.3d at
Similarly, in Hampers, the First Circuit noted that the
plaintiff “measured his damages by reference to” an ERISA plan to
which he claimed he was wrongfully denied access.
202 F.3d at
52.
This case does not require me to parse the language and
terms of coverage for particular health-related expenses, because
the claims are not about the denial of a particular benefit under
the plan.
However, I doubt that I could find that SJ wrongfully
denied health insurance benefits to the non-union plaintiffs
without looking to the terms of eligibility and enrollment
-36-
requirements specified under the plan.
Even clearer is the fact
that I would need to look to the plan to determine damages.
Plaintiffs are seeking damages and injunctive relief, both of
which can only be determined by reference to the benefits that
plaintiffs should have received in the absence of any misconduct
on the part of SJ.
Any other measure of damages would be based
on pure speculation.
Carlo, 49 F.3d at 794.
Resolution of this
case would require me to look to the plan at least to determine
damages, and likely liability as well, and therefore plaintiffs’
state law claims are preempted by ERISA § 514(a).
I turn now to the ERISA claim, which plaintiffs pled in the
alternative, to determine whether this claim can survive
defendants’ cross-motion for summary judgment.
I consider the
facts in the record in the light most favorable to the nonmoving
party, here the plaintiffs.
(1st Cir. 2014).
McGrath v. Tavares, 757 F.3d 20, 25
I previously took defendants’ motion to dismiss
for failure to state a claim under advisement, providing
plaintiffs with an opportunity to flesh out their claims through
discovery.
With respect to the healthcare benefit claims, they
have not done so.
The ERISA claim here concerns SJ’s capacity as fiduciaries
under ERISA.
After discovery, plaintiffs own proposed undisputed
facts are that (1) Mr. Brea and Mr. Perez received the March 2012
Health Insurance Open Enrollment Package Receipt on February 21,
-37-
2013 [PSUF ¶¶ 43, 44]; (2) non-union thirty-hour employees are
eligible to purchase health insurance through SJ, for which SJ
pays half of the premium [Id. at 45, 46, 48, 50]; (3) employees
become eligible for health benefits on the first day of the month
after sixty days of eligible employment [Id. at 47]; (4) Mr. Brea
claims he has worked over 30 hours a week since July 2010, but
there is no dispute that he did so as of November 2011. He
continues doing so today [Id. at 51]; and (5) Mr. Perez began
working more than 30 hours a week in July 2012 and continues
doing so today. [Id. at 52].
Significant gaps remain in these factual allegations.
The fact that Mr. Brea and Mr. Perez were eligible to enroll
in health benefits but did not receive benefits does not
plausibly demonstrate that SJ violated its fiduciary duties.
The record shows, and the parties do not dispute, that both
Mr. Brea and Mr. Perez were informed that they were eligible
for benefits once they started working a full time schedule.
There is no dispute that Mr. Brea never spoke with anyone
else about health insurance benefits after he was told he
would be eligible.
Mr. Perez testified that he became
eligible for health insurance benefits in July 2012, the
same month this suit was filed, and that he later inquired
of his supervisor once again about whether he would get
health insurance benefits and he was told he would, but the
-38-
supervisor did not know when.
There is no evidence that Mr.
Brea or Mr. Perez ever took steps to enroll in SJ’s health
plans (until Mr. Brea signed up for health benefits in
February 2013, at which point Mr. Perez declined coverage)
or that they were ever told that they were not in fact
eligible after they began working over thirty hours a week.
The plaintiffs have not fully developed their position about
the precise nature of the fiduciary breach under ERISA,10
but the mere facts that plaintiffs were eligible, were told
they were eligible, and did not receive benefits simply do
not add up to a claim for violation of a fiduciary duty.
Even after discovery, plaintiffs have not marshaled facts
that could lead a trier of fact reasonably to resolve this
issue in their favor; consequently, I will grant SJ’s motion
for summary judgment on the ERISA claim.
C.
Plaintiffs’ Motion to Strike Defendants’ Rule 68
Offers.
Plaintiffs have moved to strike (or rule ineffective)
10
To the extent plaintiffs allege a violation of ERISA’s
notice provisions, these “generally do not give rise to
substantive remedies outside § 1132(c) unless there are some
exceptional circumstances, such as bad faith, active concealment,
or fraud.” Watson v. Deaconess Waltham Hosp., 298 F.3d 102 (1st
Cir. 2002). Plaintiffs do not specify that they are pursuing a
claim under § 1132(c) and the evidence before me does not support
one. While the evidence before me suggests that two employees
were unsure of how to sign up for benefits for which they were
told they were eligible, it does not support a finding that SJ
actively concealed its policy or intentionally obfuscated the
process.
-39-
the defendants’ offers of judgment under Rule 68 of the
Federal Rules of Civil Procedure.
The four plaintiffs
brought claims under the Massachusetts Wage Act and other
provisions not only on behalf of themselves but as
representatives of a putative class of similarly situated
people.
Plaintiffs were presented with a Rule 68 offer of
judgment on August 30, 2013, the eve of their deadline to
file the motion for summary judgment as I directed them to
do.
The terms of this Rule 68 offer have not been
disclosed.
Plaintiffs contend, however, that it is
inappropriate to use offers under Rule 68 to “pick off”
individual named plaintiffs who may be tempted to accept the
offer prior to a motion for class certification.
I believe that my ruling with respect to the cross
motions for summary judgment may render this motion to
strike moot, except perhaps as to the wage claims of nonunionized employees, which I will remand.
However, given
the precertification procedural posture of the case at the
time of the motion to strike, I wish to record my concern by
granting the motion on grounds that it would be
inappropriate to invoke the cost shifting mechanism of Rule
68 when a case involving putative claims of aggregate
representation is at this stage.
As Judge Scirica has
explained, the application of Rule 68 “is strained when an
-40-
offer of judgment is made to a class representative” because
such an application threatens to undermine the class action
procedure put in place by Rule 23.
Weiss v. Regal
Collections, 385 F.3d 337, 344 (3rd Cir. 2004).
A rule
allowing the named plaintiff to be “picked off” by making an
offer of judgment would frustrate the objectives of wage act
statutes and the purpose of collective action provisions.
See Sandoz v. Cingular Wireless, LLC, 553 F.3d 913, 918 (5th
Cir. 2008).
I believe that this logic holds, not only when
a Rule 23 motion is pending, or has been acted upon, but at
early precertification stages of aggregate litigation as
well.
Accordingly, to the extent that it is not already
moot, I will grant plaintiffs’ motion to strike.
IV.
CONCLUSION
For the reasons set forth more fully above, plaintiffs’
motion for summary judgment (Docket No. 53) is DENIED.
Defendants’ cross motion for summary judgment (Docket No.
64) is GRANTED as to Count I and Count III.
The remaining
claims under Count II are hereby REMANDED to State Court.
Plaintiffs’ motion to strike (Docket No. 61) is GRANTED.
/s/ Douglas P. Woodlock
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT
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