KALKSMA et al v. KONICA MINOLTA BUSINESS SOLUTIONS U.S.A., INC.
Filing
23
OPINION. Signed by Judge Dickinson R. Debevoise on 08/22/2011. (nr, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DOROTHY KALKSMA and BARBARA
BEUCLER,
Plaintiffs,
v.
Civ. No. 10-2829 (DRD)
OPINION
KONICA MINOLTA BUSINESS
SOLUTIONS U.S.A., INC.,
Defendant.
Appearances by:
SCHIFFMAN, ABRAHAM, KAUFMAN & RITTER, P.C.
by:
Evan L. Goldman, Esq.
Three University Plaza
Hackensack, New Jersey 07601
Attorneys for Plaintiffs
GIBBONS P.C.
by:
Richard S. Zackin, Esq.
One Gateway Center
Newark, New Jersey 07102-5310
Attorneys for Defendant
DEBEVOISE, Senior District Judge
This case concerns employee misclassification and ERISA. Defendant Konica Minolta
Business Solutions U.S.A., Inc. (“KMBS”) is an information technology company that provides
imaging and printing services to businesses. Plaintiffs Kalksma and Beucler are employees of
KMBS who claim that they were improperly excluded from participation in KMBS benefit plans
due to their misclassification as independent contractors. Plaintiffs allege that they were denied
the benefits owed to them as employees and were wrongfully retaliated against when they
attempted to correct their misclassification. Plaintiffs sue under the Employee Retirement
Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq., and New Jersey common law seeking
damages for lost benefits and retaliation. Defendant claims that Plaintiffs were not entitled to
benefits for the period in which they were engaged as independent contractors and that Plaintiffs
were not retaliated against.
Defendant now moves for summary judgment on all counts. For the reasons set forth
below, Defendant’s motion is GRANTED. Plaintiffs’ complaint is DISMISSED.
I.
BACKGROUND
Headquartered in Ramsey, New Jersey, Defendant KMBS provides a variety of printing
and imaging services to its business clients, including office printer systems, bulk production
printers, printing and imaging software applications, and information technology strategy and
consulting. Like many companies, it engages in substantial marketing efforts to attract and retain
business clients.
Plaintiffs Kalksma and Beucler have been involved in marketing for KMBS for many
years. (Pl. SOF ¶¶ 1,7). Both originally applied for positions as full time employees, but were
told that they were ineligible because they insisted on working part time hours. (Zackin Ex. A at
2
10-13) (Zackin Ex. B. at 7-9). To accommodate this request, KMBS hired each as an
independent contractor or consultant, and instructed each Plaintiff to invoice KMBS for her
hours actually worked. (Zackin Ex. A at 22) (Zackin Ex. B. at 9-10).
Between 1999 and 2009 Kalksma worked within KMBS’s Marketing Communications
Department. (Def. SOF ¶ 1). In that capacity, Kalksma appears to have had a variety of
responsibilities related to the production of marketing materials. (Pl. SOF ¶ 12). While serving as
an independent contractor, Kalksma submitted invoices for her time and was paid an hourly
wage with no associated benefits or payroll tax withholding. (Def. SOF ¶ 3). Similarly, Beucler
served in the Marketing Communications Department between 2003 and 2009. Id. at 2. While
there, Beucler was responsible for creating sales materials for use in the US market. (Pl. SOF ¶
3). She was also paid an hourly wage with no associated benefits or payroll tax withholding.
(Def. SOF ¶ 3).
Both Beucler and Kalksma were dissatisfied with this arrangement and claim to have
periodically inquired about becoming formal employees. (Pl. SOF ¶ 12). After being repeatedly
rebuffed, in November of 2008, Beucler filed a Form SS-8 with the Internal Revenue Service,
requesting that the IRS determine the federal employment tax status of her services to KMBS. Id.
¶ 19. On June 3, 2009, the IRS released a compliance opinion in which it determined that
because of the nature of Beucler’s responsibilities, KMBS could not treat her as an independent
contractor for tax purposes and owed employment tax on her wages. (Warwick Ex. 1).
Consequently, KMBS was directed to pay past due employment taxes to the IRS. (Goldman Ex.
D, 12:7-16).
After receiving the IRS determination, KMBS conducted an internal investigation and
identified four other individuals whose classification as independent contractors could run afoul
3
of the ruling. Id. at 7:16-8:8. One of the other individuals was Plaintiff Kalksma. After reviewing
the compliance opinion, KMBS offered Kalksma and Beucler positions as ordinary employees.
(Warwick Cert. ¶ 6). Kalksma and Beucler accepted the offer and the parties negotiated new
employment terms, including job title, salary, benefits, and hours. Id. At these negotiations,
Plaintiffs were represented by counsel. Id. After agreeing to the new terms of employment,
Plaintiffs were placed in the KMBS payroll as employees effective December 14, 2009. Id.
Since they were hired as employees, Plaintiffs claim to have experienced “retaliation”
because of the change in their status. Most substantially, the hourly rates negotiated by Plaintiffs
as employees were 30% lower than the hourly rates that they were paid as independent
contractors. (Pl. SOF ¶ 45). Plaintiffs also complain that their formal job titles within the
company computer system have changed since rehiring, though they have been directed to refer
to themselves, both internally and to outsiders, by the same title. Id. ¶¶ 33-39. Plaintiffs finally
complain that as employees they are frequently called upon to assist coworkers and work
overtime. Id. ¶¶ 42-43.
On June 2, 2010, Plaintiffs filed suit against KMBS, seeking damages for unpaid benefits
and retaliation under ERISA. (Doc. No. 1). Plaintiffs claim that they were entitled to full benefits
as employees during the time period in which they worked as independent contractors. Plaintiffs
further claim that are entitled to retain the same hourly rates, job titles, and responsibilities that
they enjoyed as independent contractors despite renegotiating the terms of their employment in
2009.
There are two benefit plans at issue. The first is the KMBS 401(k) Savings and
Retirement Plan. (“401k Plan”) (Warwick Ex. 2). The 401k Plan defines an "Employee" for
eligibility purposes as follows:
4
An "Employee" means any person who is classified by an Employer, in
accordance with its payroll records, as an employee of the Employer, other than
any such person who is either (i) covered by a collective bargaining agreement
that does not specifically provide for coverage under the Plan, (ii) a nonresident
alien who does not receive United States source income or (iii) covered by any
other qualified pension plan sponsored by the Konica Minolta controlled group.
Any individual who is not treated by an Employer as a common law employee of
the Employer shall be excluded from Plan participation even if a court or
administrative agency determines that such individual is a common law employee
and not an independent contractor.
Id. at Art. 1.
The second plan is the KMBS Cafeteria Plan (“Cafeteria Plan”) (Warwick Ex. 3). The Cafeteria
Plan defines an "Employee" for eligibility purposes as follows:
Employee means a person who is a common law employee of the Employer,
provided, however, that an Employee does not include any person who is (A) a
person who is classified by the Employer as working on discrete projects; (B) a
person who is classified by the Employer as an independent contractor as
evidenced by its action in not withholding taxes from his or her compensation,
regardless of whether the person is the Employer's common law employee…
Id. at Art. 2.9.
Like many ERISA plans, the KMBS benefits plans provide significant discretion to the
Plan Administrator to make eligibility determinations. The 401k Plan states that “the plan
administrator ... shall have all such powers and authorities as may be necessary to carry
out the provisions of the Plan, including the power and authority to interpret and construe the
provisions of the Plan, to make benefit determinations, and to resolve any disputes which arise
under the Plan.” (Warwick Ex. 2 at Art. 18.1). Similarly, the Cafeteria Plan permits the Plan
Administrator to “determine all questions concerning the eligibility of any individual to
participate in, be covered by, and receive benefits under the Plan pursuant to the provisions of
the Plan.” (Warwick Ex. 3 at Art. 7.3). The Plan Administrator for each plan is Donald Warwick,
a Vice President of Human Resources at KMBS. (Warwick Cert. ¶¶ 1,7). Warwick has submitted
5
a sworn certification in which he states that he reviewed Plaintiffs’ claims and determined that
they were not eligible for benefits under either the 401k Plan or the Cafeteria Plan. Id. ¶ 7.
On the basis of these facts, Defendant now moves for summary judgment.
II.
A.
DISCUSSION
Standard of Review
Summary judgment is proper where “there is no genuine issue as to any material fact
and . . . the moving party is entitled to judgment as a matter of law.” Rule 56(a). For an issue to
be genuine, there must be “a sufficient evidentiary basis on which a reasonable jury could find
for the non-moving party.” Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir. 2006). For a
fact to be material, it must have the ability to “affect the outcome of the suit under governing
law.” Id. Disputes over irrelevant or unnecessary facts will not preclude a grant of summary
judgment.
In a motion for summary judgment, the moving party has the burden of showing that no
genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When
the moving party does not bear the burden of proof at trial, the moving party may discharge its
burden by showing that there is an absence of evidence to support the non-moving party’s case.
Id. at 325. If the moving party can make such a showing, then the burden shifts to the
non-moving party to present evidence that a genuine issue of fact exists and a trial is necessary.
Id. at 324. In meeting its burden, the non-moving party must offer specific facts that establish a
genuine issue of material fact and do not merely suggest “some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986).
6
A party must support its assertions that a fact cannot be or is genuinely disputed “by (A)
citing to particular parts of materials in the record…or (B) showing that the materials cited do
not establish the absence or presence of a genuine dispute, or that an adverse party cannot
produce admissible evidence to support the fact.” Rule 56(c)(1). If a party “fails to properly
support an assertion of fact or fails to properly address another party's assertion of fact as
required by Rule 56(c), the court may…(2) consider the fact undisputed for purposes of the
motion…” Rule 56(e).
In deciding whether an issue of material fact exists, the Court must consider all facts and
their reasonable inferences in the light most favorable to the non-moving party. See Pa. Coal
Ass’n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). The Court’s function, however, is not to
weigh the evidence and determine the truth of the matter, but, rather, to determine whether there
is a genuine issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). If there
are no issues that require a trial, then judgment as a matter of law is appropriate.
The meaning of a contract may be decided by summary judgment where “the contract
language is unambiguous and the moving party is entitled to judgment as a matter of law.”
Arnold M. Diamond, Inc. v. Gulf Coast Trailing Co., 180 F.3d 518, 522 (3d Cir. 1999).
However, to grant summary judgment, the court must “conclude that the contractual language is
subject to only one reasonable interpretation.” Id.; see also Tamarind Resort Associates v.
Government of Virgin Islands, 138 F.3d 107, 111 (3d Cir. 1998) (“a contract is unambiguous if it
is reasonably capable of only one construction”).
Many of the issues facing the Court here involve the interpretation of an unambiguous
contract. Consequently summary judgment is appropriate. The Court will examine each of the
contentions raised by Plaintiffs in turn.
7
B.
Were Plaintiffs Intentionally Misclassified?
Plaintiffs claim that Defendants intentionally misclassified them as independent
contractors in order to deny them benefits due under ERISA. (Pl. Br. 4). Plaintiffs do not argue
that the language of the 401k Plan or Cafeteria Plan supports Plaintiff’s eligibility. Rather,
Plaintiffs urge the court to ignore the “terms within these plans” and focus instead on the
“underlying intent for misclassification, and the damages resulting from same.” Id. Plaintiffs
offer no support for this free form mode of analysis. Consequently, the Court will evaluate
Plaintiffs’ claims in accordance with the language of the relevant benefits plans and controlling
ERISA caselaw.
As a threshold matter, the Court is obligated to apply a deferential standard of review to
determinations made by an ERISA Plan Administrator acting within its explicit discretion. In
Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) the Supreme Court set forth a rubric
controlling judicial review of ERISA benefit eligibility decisions. Under Firestone, courts are to
be “guided by principles of trust law” in evaluating the conclusions of Plan Administrators.
Firestone, 498 U.S. at 111. These “principles of trust law require courts to review a denial of
plan benefits ‘under a de novo standard’ unless the plan provides to the contrary. Metropolitan
Life Ins. Co. v. Glenn, 554 U.S. 105, 111 (2008) quoting Firestone, 498 U.S. at 115.
However “[w]here the plan provides to the contrary by granting the administrator or
fiduciary discretionary authority to determine eligibility for benefits, trust principles make a
deferential standard of review appropriate….” Metropolitan Life, 554 U.S. at 111 (internal
citations omitted).1 Specifically, “[i]f the plan gives the administrator or fiduciary discretionary
authority to make eligibility determinations, we review its decisions under an abuse-of-discretion
1
See also Firestone, 489 U.S. at 111-112 (“Trust principles make a deferential standard of
review appropriate when a trustee exercises discretionary powers.”).
8
(or arbitrary and capricious) standard.” Viera v. Life Ins. Co. of North America, 642 F.3d 407,
413 (3d Cir. 2011). An administrator's decision is only arbitrary and capricious “if it is without
reason, unsupported by substantial evidence or erroneous as a matter of law.” Miller v. American
Airlines, Inc., 632 F.3d 837, 845 (3d Cir. 2011) (internal citation omitted). 2
Here each benefits plan specifically provides that the Plan Administrator shall have broad
discretion to make eligibility determinations. While “[t]here are no ‘magic words’ determining
the scope of judicial review of decisions to deny benefits”, the explicit language vesting the Plan
Administrator with discretionary responsibility over benefits determination obligates the Court to
treat such a determination with deference. Viera, 642 F.3d at 413.
Plaintiffs have introduced no evidence that the eligibility determinations made by the
Plan Administrator were “arbitrary and capricious.” Indeed, Defendant notes that all individuals
hired as independent contractors were treated in a like manner. (Warwick Cert. ¶ 7). Defendant
has also introduced sworn statements from the Plan Administrator in which he describes why, in
the exercise of his discretion, he determined that Plaintiffs and other similarly situated
individuals were ineligible for benefits. Id. While Plaintiffs may not agree with the Plan
Administrator’s conclusions, they have advanced no argument that his reasoning is
unsupportable based on the language of the relevant agreements.
2
In conducting its deferential review, the Court is also required to consider the conflict of
interest that a Plan Administrator who is also an employee of the funding company may have.
Metropolitan Life, 554 U.S. at 108. How exactly this differs from a true abuse of discretion
review or a de novo review is somewhat uncertain. Id. at 119-120 (“The majority would accord
weight, of varying and indeterminate amount, to the existence of such a conflict in every
case where it is present.”) (Roberts, C.J., dissenting). However in this case the clear language of
the plan documents and absence of any evidence of an improper motive for denial makes the
ambiguous review standard less significant. Under a deferential standard, a de novo standard, or
anything in between, Plaintiffs’ claims fail.
9
Indeed, even if the Court were to subject the 401k Plan and Cafeteria Plan under a more
rigorous de novo review, Plaintiffs’ claims would still fail. The plain text of each plan states that
KMBS’s classification of Plaintiffs as independent contractors rather than employees renders
them ineligible for benefits even if that classification is subsequently found to be legally
erroneous.3 The current situation—where independent contractors are later held to be common
law employees—was clearly contemplated and provided for when each plan was drafted.
Plaintiffs’ “misclassification” argument fails because each plan specifically excludes
misclassified employees from benefits.4
Plaintiff contends that their eligibility for benefits cannot determined by the “labels” used
by their employment contracts, and quotes Sharkey v. Ultramar Energy Ltd.5 in support.
However the benefits plan at issue in Sharkey applied to all employees. As a consequence, the
court in Sharkey was only required to determine whether the Sharkey plaintiff was a common
law employee, not whether he fell into a specific category of employees covered by the benefit
3
Warwick Ex. 2 at Art. 1 (“Any individual who is not treated by an Employer as a
common law employee of the Employer shall be excluded from Plan participation even if a court
or administrative agency determines that such individual is a common law employee and not an
independent contractor.”); Warwick Ex. 3 at Art. 2.9 (“Employee does not include any person
who is … classified by the Employer as an independent contractor as evidenced by its action in
not withholding taxes from his or her compensation, regardless of whether the person is the
Employer's common law employee”).
4
Nor is it surprising that a benefits plan would be written in this fashion. The record
demonstrates that Plaintiffs were paid a higher wage as independent contractors because they
were not provided benefits. When a company offers outside consultants higher wages to
compensate them for diminished benefits, it would be foolish not to attempt to protect itself from
being forced later to pay both the higher wages and the benefits if it receives an adverse judicial
ruling.
5
70 F. 3d 226 (2d Cir. 1995).
10
plan.6 The Sharkey decision does not hold that a court should ignore plan language restricting
eligibility to specific categories of employees. Indeed, ERISA does not require employers to
offer all benefits plans to all employees or even to offer benefits plans at all. Bellas v. CBS, Inc.,
221 F.3d 517, 522 (3d Cir. 2000) (“ERISA neither mandates the creation of pension plans nor in
general dictates the benefits a plan must afford once created.”).7 Under ERISA, employers have
the freedom to craft benefits plans that exclude specific categories of employees and to have
those decisions respected. Dade v. North American Philips Corp., 68 F.3d 1558, 1562 (3d Cir.
1995) (“we are required to enforce the Plan as written unless we can find a provision of ERISA
that contains a contrary directive.”). What employers may not do is alter the definition of
“employee” for the purposes of the ERISA statute or otherwise limit the application of the statute
to employee benefit plans that they do choose to provide. But KMBS does not argue that
Plaintiffs do not meet the definition of “employees” under ERISA or the tax code. KMBS merely
argues that the language of the plans specifically exclude them. And it is correct.
Plaintiffs also urge reliance upon Vizcaino v. Microsoft Corp., 97 F.3d 1187 (9th Cir.
1996), vacated en banc 120 F. 3d 1006. In Vizcaino, the Court of Appeals for the 9th Circuit held
that freelancers who had been misclassified by Microsoft as independent contractors were
entitled to benefits under a series of ERISA plans offered by the company. While the facts of
Vizcaino are superficially similar, its holding cannot control here.
6
Note that the district court in Sharkey had dismissed the case in a two page summary
order with little justification. In reversing and remanding the decision, the Court of Appeals for
the Second Circuit merely directed the district court to more fully explicate its reasoning for
finding that benefits were not due. It specifically rejected the Sharkey plaintiff’s argument that
he was entitled to summary judgment in his favor. 70 F. 3d at 232.
7
See also Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995) (“ERISA does
not create any substantive entitlement to employer-provided health benefits or any other kind of
welfare benefits. Employers or other plan sponsors are generally free under ERISA, for any
reason at any time, to adopt, modify, or terminate welfare plans.”).
11
First, the Vizcaino court premised its decision on ambiguity in the plan agreements at
issue in that case. Vizcaino, 97 F.3d at 1194 (“the terms of the SPP are susceptible to two
reasonable interpretations and therefore are ambiguous”). Indeed, the court in Vizcaino found
that the relevant eligibility language in one of the plans was so ambiguous that it could not be
resolved even through recourse to extrinsic evidence. Id. at 1195-1196 (“the extrinsic evidence
on which Microsoft relies does not resolve the ambiguity in its favor.”). Finding no other means
by which it could resolve the dispute, the Court relied upon the doctrine of contra proferentem,
and construed the contract against the drafter—in that case, Microsoft. Id. at 1196. But in this
case there is no ambiguity in the plan agreements. The 401k Plan and Cafeteria Plan explicitly
state that individuals who are treated as independent contractors and do not have wages withheld
by KMBS are not eligible for benefits, even if the decision not to withhold wages is later found
to be improper. (Warwick Ex. 2 at Art. 1) (Warwick Ex. 3 at Art. 2.9). Absent any ambiguity,
there is no need to resort to extrinsic evidence or the contra proferentem doctrine.8
Moreover, the Vizcaino decision does not bind this Court. As a matter of law, this Court
is obligated to follow the decisions and legal reasoning of the Court of Appeals for the Third
Circuit.9 But even ignoring geography, the Vizcaino decision upon which Plaintiffs rely was
subsequently vacated by an en banc decision of the Court of Appeals for the Ninth Circuit. 120
F. 3d 1006. In vacating the decision, the court distinguished between the two plans at issue in the
8
Even if the Court were to resort to extrinsic evidence, it would not change the result.
Plaintiffs do not claim that they expected to receive benefits when they were hired. (Goldman
Ex. A at 22) (Goldman Ex. B. at 9-10). Under New Jersey law, a court may not “fashion a better
contract for the parties than they themselves made….” Loigman v. Township Committee of the
Tp. of Middletown, 297 N.J. Super. 287, 301 (App. Div. 1997).
9
See, e.g., Magnin v. Beeler, 110 F.Supp.2d 338, 344 (D.N.J. 2000) (“This Court is bound
to follow not only the holding but also the reasoning set forth by the Third Circuit.”).
12
case. It held that the determination of eligibility for one of the plans should have been properly
left to the Plan Administrator, and not to the court. Id. at 1013 (“we have determined that we
should not allow ourselves to be seduced into making a decision which belongs to the plan
administrator in the first instance.”). In the other, the court found that the Plaintiffs had not made
the necessary contributions to receive benefits. Id. at 1015. The court fully recognized that in the
absence of evidence of a clear abuse of discretion, decisions about eligibility were properly made
by the plan administrator and not the courts. Id. at 1009 (“when reviewing the decision of a plan
administrator who has discretion, the exercise of that discretion is reviewed under the arbitrary or
capricious standard, or for abuse of discretion, which comes to the same thing.”).
Other courts in this district have come to similar conclusions regarding the treatment of
employees classified as independent contractors.10 In Sturgis v. Mattel, Inc., 525 F.Supp.2d 695
(D.N.J. 2007), a worker who had signed an independent contractor agreement brought suit
against Mattel seeking benefits under various ERISA plans. The court upheld the determinations
of the plan administrators, finding that even if the plaintiff were a common law employee, she
would still have been excluded from eligibility by the language of the benefits agreements.
Sturgis, 525 F.Supp.2d at 706-707 (“Plaintiff's entitlement to benefits turns not only on whether
she meets the statutory definition of “employee,” but also whether she meets the plans'
definitions for eligible participants. It was not arbitrary or capricious for Mattel, in making its
10
Nor is this reasoning limited to the District of New Jersey. For example, in Gustafson v.
Bell Atlantic Corp., 171 F.Supp.2d 311, 321 (S.D.N.Y. 2001), the court held that a group of
plaintiffs were not eligible for ERISA benefits even though they were entitled to damages as
employees under the Fair Labor Standards Act.
13
benefits determination, to find that Plaintiff, whom Mattel concededly had always classified as
an independent contractor, was not eligible for benefits.”) (internal citations omitted).11
Last, the Court notes that Plaintiffs have introduced no evidence of intentional
misclassification. While Plaintiffs’ brief is peppered with accusatory language stating that their
classification as independent contractors was some sort of “intentional”12 scheme by which
Plaintiffs were “cloaked… in the label of independent contractors”13 to “interfere with
[Plaintiffs’] attainment of … rights”14 for Defendant’s “own self serving reasons”15 they
introduce zero evidence of actual fraud or malfeasance. While Defendant’s intent is essentially
irrelevant to Plaintiffs’ eligibility for benefits under an employee compensation plan, it is
surprising that Plaintiffs offer so little evidence of KMBS’s subjective motivations when so
much of their argumentation appears predicated upon it.
What testimony Plaintiffs have introduced suggests that KMBS hired Plaintiffs as
independent contractors because it believed that the nature of Plaintiffs’ responsibilities and part-
11
Plaintiffs claim that Sturgis is inapplicable because the IRS has ruled that they were
common law employees and KMBS has acknowledged this status by offering them full time
employment. (Pl. Br. 6). But this argument carries no weight. First, these facts do not actually
distinguish the case—the court in Sturgis noted that Mattel had all but acknowledged that the
Sturgis plaintiff was a common law employee. Sturgis, 525 F.Supp.2d at 705. Second, it is hard
to see how a subsequent offer of employment by KMBS has any bearing on the existence of preexisting ERISA liability. It would be a perverse result that punished KMBS for offering
Plaintiffs a normal job by holding that the job offer constituted an admission of ERISA liability.
Last, Plaintiffs do not address the actual holding of Sturgis, that an ERISA plaintiff must show
both that he or she was a common law employee and that he or she was eligible under the
language of the relevant benefit plans. Like the Sturgis plaintiff, Plaintiffs here focus only on the
first element and ignore the second.
12
Pl. Br. 1, 4, 5.
13
Pl. Br. 8.
14
Pl. Br. 4.
15
Pl. Br. 9.
14
time status made such a classification appropriate. When it turned out that this status did not
comply with tax laws, KMBS remedied it by offering Plaintiffs jobs. To the extent that KMBS
failed to pay the necessary federal taxes, it has already been punished. Nothing before the Court
suggests some nefarious plot to cheat Plaintiffs out of their due. Nor were Plaintiffs mislead
concerning the terms of the employment bargain they struck. Plaintiffs offer no reason why they
should be permitted to renegotiate the terms of their new employment or collect an economic
windfall.
Plaintiffs have failed to demonstrate that they are eligible for benefits under the language
of the 401k Plan or Cafeteria Plan. Even if the Court were to assume that Plaintiffs were
common law employees, this is not sufficient to sustain their cause of action for unpaid benefits.
As such, Plaintiffs’ ERISA claims will be DISMISSED.
C.
Are Plaintiffs Entitled to Damages for Retaliation?
Plaintiffs also seek damages for retaliation, claiming that they have been discriminated
against for attempting to collect on ERISA benefits to which they were lawfully entitled. Section
510 of ERISA provides that “[i]t shall be unlawful for any person to discharge, fine, suspend,
expel, discipline, or discriminate against a participant or beneficiary for exercising any right to
which he is entitled under the provisions of an employee benefit plan….”29 U.S.C.A. § 1140.
To recover under § 510, a plaintiff must show that: “1) she is a member of an ERISA plan, 2) she
was qualified for the position, and 3) she was [retaliated against] under circumstances that
provide some basis for believing that [her employer] intended to deprive her of benefits.”
Kampmier v. Emeritus Corp.,472 F.3d 930, 943 (7th Cir. 2007).
15
As stated above, Plaintiffs were not eligible for benefits under any ERISA plan. As such,
their claim for retaliation must fail, whether brought under Section 510 or New Jersey common
law.16 Plaintiffs’ retaliation claims are DISMISSED.
III.
CONCLUSION
For the foregoing reasons, Defendant’s motion is GRANTED. Plaintiffs’ complaint is
DISMISSED.
s/ Dickinson R. Debevoise
DICKINSON R. DEBEVOISE, U.S.S.D.J.
Dated: August 22, 2011
16
Defendants claim that there is no cause of action for retaliation under New Jersey
common law. (Def. Br. 13). In response, Plaintiffs can point to no authority suggesting that this
cause of action exists, and cite instead a case brought under Illinois law before the Court of
Appeals for the Seventh Circuit. (Pl. Br. 13). In any event, because Plaintiffs were not entitled to
benefits under any KMBS Plans, this Court need not opine on the existence of a cause of action
for retaliation under New Jersey law.
16
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