Gray et al v. FedEx Ground Package System, Inc.

Filing 585

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendant FedEx Ground Package System, Inc.'s Renewed Motion for Judgment as a Matter of Law Regarding Plaintiffs Claims for Damages Related to Employee Benefits 555 is DENIED. Signed by District Judge John A. Ross on 9/5/14. (ARL)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION

REGINALD GRAY, et al.,
Plaintiffs,
v.
FEDEX GROUND PACKAGE SYSTEM,
INC.,
Defendant.

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No. 4:06-CV-00422 JAR

MEMORANDUM AND ORDER
This matter is before the Court on Defendant FedEx Ground Package System, Inc.’s
Renewed Motion for Judgment as a Matter of Law Regarding Plaintiffs’ Claims for Damages
Related to Employee Benefits. (Doc. No. 555) The motion is fully briefed and ready for
disposition.1 For the following reasons, the motion will be denied.
Plaintiffs asserted state law damages claims for the value of the employee benefits they
would have received had they been properly classified by FedEx as employees. Plaintiffs’
damages expert, Douglas Miller, included in his reports annualized figures of $6,000 for
“Medical, Dental, & Vision Insurance, Disability Insurance, Life Insurance, Travel & Accident
Insurance” and $1,000 for “Estimated Retirement Benefits - Pension Plan and 401(K) Match” for
each Plaintiff. FedEx asserts that apart from travel and accident insurance, all of these benefits
were provided by its employee benefit plans, which are subject to and governed by ERISA.
In support of its motion, FedEx contends that Plaintiffs could only have sought damages
for employee benefits in the context of the nationwide MDL ERISA class claim in Craig v.
1

The parties have incorporated by reference their briefing on FedEx’s Motion in Limine No. 2 to Exclude Evidence
or Argument Regarding Damages Related to Employee Benefits. (Doc. Nos. 434, 482, 491)

FedEx Ground Package Sys., Inc., Cause No. 3:05CV530 RLM (N.D. Ind.). The MDL ERISA
claims were dismissed without prejudice for failure to exhaust administrative remedies, see In re
FedEx Ground Package System, Inc. Employment Practices Litigation, 722 F.Supp.2d 1033,
1052 (N.D. Ind. 2010), which ruling was not appealed.2 FedEx argues that having lost that claim
in the MDL, Plaintiffs cannot now seek those same benefits indirectly as damages for fraudulent
misrepresentation. FedEx further argues that Plaintiffs’ damages claims “relate to” an ERISA
benefit plan and are, therefore, pre-empted under 29 U.S.C. § 1144.3
To bring a claim under ERISA, a plaintiff must be “a participant, beneficiary or
fiduciary” of an ERISA plan. 29 U.S.C. § 1132(a)(2); Bendsen v. George Weston Bakeries
Distribution Inc., 2008 WL 4449435, at *2 (E.D.Mo. Sept. 26, 2008) (citing Hastings v. Wilson,
516 F.3d 1055, 1060 (8th Cir. 2008)). ERISA defines “participant” as “any employee or former
employee of an employer, or any member or former member of an employee organization, who
is or may become eligible to receive a benefit of any type from an employee benefit plan which
covers employees of such employer or members of such organization, or whose beneficiaries
may be eligible to receive any such benefit.” 29 U.S.C. § 1002(7). The Supreme Court has
interpreted this definition of “participant” to include, “employees in, or reasonably expected to
be in, currently covered employment, or former employees who have .... a reasonable
expectation of returning to covered employment or who have a colorable claim to vested

2

Plaintiffs’ counsel states that to their knowledge none of the Plaintiffs herein were part of the limited nationwide
MDL ERISA class. (Doc. No. 434 at 1, 9)
3

ERISA’s preemption clause provides:
Except as provided in subsection (b) of this section, the provisions of this subchapter and subchapter III of
this chapter shall supersede any and all State laws insofar as they may now or hereafter relate to any
employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b) of this
title … (Emphasis added.)

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benefits.” Bendsen, 2008 WL 4449435, at *2-3 (citing Firestone Tire and Rubber Co. v. Bruch,
489 U.S. 101 (1989) (internal quotations and citations omitted).
FedEx has always maintained that Plaintiffs were independent contractors as a matter of
law. Because FedEx’s benefits plans only covered its employees, Plaintiffs could not have
asserted a claim in Craig until they litigated their employment status, which they did here. This
Court concluded based on the evidence that FedEx had the right to control and did control the
manner and means of Plaintiffs’ work to such an extent that they were employees of FedEx and
not independent contractors.4 FedEx required that packages be delivered and picked up at certain
times, dictated the drivers’ dispatches, set the pricing, and even controlled what they wore, all to
protect the FedEx brand. While Plaintiffs could sell their routes and hire drivers, they could do so
only subject to FedEx’s stringent guidelines. For this reason, FedEx’s argument that Plaintiffs
should have asserted their claims in the ERISA class action is not tenable.
FedEx further argues that Plaintiffs’ attempt to recover the value of employee benefits as

damages through their common law fraud claims “relates to” FedEx’s ERISA benefits plans and
is, therefore, pre-empted under § 1144. A state law “relates to” an ERISA plan within the
meaning of § 1144(a) if it (1) expressly refers to an ERISA plan, or (2) has a connection with
such a plan. Shea v. Esensten, 208 F.3d 712, 717 (8th Cir. 2000) (citing California Div. of Labor
Standards Enforcement v. Dillingham Const., N. A., Inc., 519 U.S. 316, 324 (1997); Wilson v.
Zoellner, 114 F.3d 713, 716 (8th Cir. 1997)). FedEx does not assert that the common law
invoked by Plaintiffs makes “reference to” an ERISA plan. Missouri's common law on
misrepresentation is of “general application,” and “does not actually or implicitly refer to ERISA
4

The Court notes the conflicting state and federal opinions around the country addressing FedEx’s classification of
its drivers and its independent contractor model. Most recently, the 9th Circuit ruled that FedEx Ground and Home
Delivery drivers are employees of the company, rather than the independent contractors that FedEx characterizes
them as. See Alexander v. FedEx Ground Package System, Inc., --F.3d--, 2014 WL 4211107 (9th Cir. Aug. 27,
2014).

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plans.” See Wilson, 114 F.3d at 717; In Home Health, Inc. v. Prudential Ins. Co. of America, 101
F.3d 600, 605 n. 6 (8th Cir. 1996). The same is true of Missouri's common law on estoppel,
fraudulent inducement, and good faith. Thrailkill v. Amsted Industries Inc., 102 F.Supp.2d 1129,
1132-33 (W.D.Mo. 2000). Thus, the issue for this Court’s determination is whether this state law
claim has a “connection with” an ERISA plan.
The Eighth Circuit has defined several factors to be considered in determining whether a
state law has a connection with an ERISA plan. The factors include whether the state law: (1)
negates an ERISA plan provision; (2) affects relations between primary ERISA entities; (3)
impacts the structure of ERISA plans; (4) impacts the administration of ERISA plans; (5) has an
economic impact on ERISA plans; (6) is consistent with other ERISA provisions; and (7) is an
exercise of traditional state power. Arkansas Blue Cross and Blue Shield v. St. Mary’s Hosp.,
Inc., 947 F.2d 1341, 1344-45 (8th Cir. 1991). Courts must look at the totality of the state law’s
impact on the ERISA plan, and no one factor is determinative of the pre-emption issue. Id.
After careful consideration of these factors, the Court concludes that Plaintiffs’ claims do
not have a prohibited connection to an ERISA plan and are therefore not pre-empted by ERISA.
These are not claims to recover benefits due under the terms of FedEx’s plans, to enforce rights
under the terms of the plans or to clarify rights to future benefits under the terms of the plans.
Rather, Plaintiffs seek the value of employee benefits denied them based on their
misclassification as independent contractors; any damages would come from FedEx, not from
the plan itself.5 See In Home Health, 101 F.3d at 605 (holding that negligent misrepresentation
claims under state law were not pre-empted where plaintiff sued Prudential for damages, not for
5

Plaintiffs’ claims require reference to the plans for calculation of damages, and thus in some sense “relate to” a
benefit plan. Nevertheless, the Supreme Court has recognized that the term “relates to” cannot be taken “to extend to
the furthest stretch of its indeterminacy,” or else “for all practical purposes pre-emption would never run its course.”
New York Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655 (1995).

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plan benefits). See also Stewart v. Pershing Health System, 182 F.Supp.2d 856, 861 (E.D. Mo.
2001) (“Plaintiffs are not suing for plan benefits or challenging a provision of the [Plan]. Instead,
they allege that Defendants withheld information about the imminent sale of the company and
therefore prevented them from making an informed analysis about whether they would be
eligible for plan benefits. This assertion does not negate any provision of the ERISA plan
itself.”). For that reason, Plaintiffs’ state law claims would not have any significant economic
impact on FedEx’s plans. Wilson, 114 F.3d at 719 (holding that indirect economic influences are
insufficient to support pre-emption.)
Moreover, this action does not affect relations between ERISA entities, impact plan
structure or affect plan administration because Plaintiffs are not before the Court as ERISA
participants. Prudential Ins. Co. of America v. Doe, 46 F.Supp.2d 925, 936 (E.D. Mo. Mar. 31,
1999). C.f. Arkansas BCBS, 947 F.2d at 1345 (where assignment statute at issue would have
forced the plan administrator to alter the way in which it processed claims and “would have
imposed significant administrative burdens on the administrator in determining whether a
beneficiary had assigned his or her benefits to a health care provider.”). As to whether preemption would be consistent with other ERISA provisions, the Court does not believe this factor
is implicated here. Stewart, 182 F.Supp.2d at 862; In Home Health, 101 F.3d at 605. Finally, the
Court finds that the fraudulent misrepresentation claims represent a traditional exercise of state
power. St. John’s Mercy Health System v. Healthlink, Inc., 2008 WL 4204721, at *6 (E.D. Mo.
Sept. 9, 2008) (citing Stewart, 182 F.Supp.2d at 862).
For these reasons, the Court concludes that Plaintiffs’ damages claims are not pre-empted
by ERISA. FedEx’s motion for judgment as a matter of law will be denied.
Accordingly,

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IT IS HEREBY ORDERED that Defendant FedEx Ground Package System, Inc.’s
Renewed Motion for Judgment as a Matter of Law Regarding Plaintiffs’ Claims for Damages
Related to Employee Benefits [555] is DENIED.

Dated this 5th day of September, 2014.

_________________________________
JOHN A. ROSS
UNITED STATES DISTRICT JUDGE

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