LEFFLER v. CREATIVE HEALTH SERVICES, INC. et al

Filing 72

MEMORANDUM. SIGNED BY MAGISTRATE JUDGE HENRY S. PERKIN ON 9/29/17. 9/29/17 ENTERED AND COPIES E-MAILED.(mas, )

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IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
________________________________________________
:
:
Plaintiffs,
:
:
vs.
:
:
CREATIVE HEALTH SERVICES, INC., et al.,
:
Defendants. :
________________________________________________:
AUDREY LEFFLER, et al.,

CIVIL ACTION
NO. 16-1443

MEMORANDUM
Henry S. Perkin, M.J.

September 29, 2017

Plaintiffs, Audrey Leffler and Mark Merryman (“Plaintiffs”) have brought claims
and seek class status against Defendants Creative Health Services, Inc., Andrew Trentacoste,
Kathy Kumitis, Tim Aleva and Kevin Becker for violations of the Employment Retirement
Security Act (“ERISA”), the Pennsylvania Minimum Wage Act (“PMWA”), the Pennsylvania
Wage Payment Collection Law (“PWPCL”), the Fair Labor Standards Act (“FLSA”) and
common law conversion. This matter is before the Court on the Motion for Summary Judgment
filed by Defendants. Having reviewed and considered the contentions of the parties, the Court is
prepared to rule on this matter.1
I.

JURISDICTION.
The Court has jurisdiction over Plaintiffs’ federal claims pursuant to 28 U.S.C. §

1331 and jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367.

1

This case was originally assigned to the Honorable Joseph F. Leeson, Jr., and the parties consented
to the exercise of jurisdiction by a Magistrate Judge. Judge Leeson entered an April 12, 2017 Order pursuant to 28
U.S.C. section 636 (c) and Federal Rule of Civil Procedure 73 referring this case to the undersigned for resolution.

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II.

STANDARD OF REVIEW.
Pursuant to Rule 56(a), summary judgment is proper where there is no genuine issue

of material fact. FED. R. CIV. P. 56(a). In viewing the evidence in the light favorable to the
non-moving party, summary judgment will be granted against a party who does not make a
sufficient showing to establish “an element essential to that party’s case.” Celotex Corp. v.
Catrett, 477 U.S. 317, 322-23, 106 S. Ct. 2548, 2552-53, 91 L. Ed. 2d 265 (1986).
The moving party carries the initial burden to inform the court of the basis for its
summary judgment motion; to produce evidence to establish a prima facie case as to each
element; and to identify the absence of no genuine issue of material fact. Id. When the
non-moving party cannot establish an essential element and there is “no genuine issue as to any
material fact,” the moving party is entitled to summary judgment as a matter of law. Id. at 322.
Material facts are those that “might affect the outcome of the suit under the
governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Mere factual
disputes will not preclude summary judgment when they are irrelevant to the outcome of the suit.
Id. An issue is “genuine” if a reasonable trier of fact could return a favorable verdict for the
non-moving party. Mengel v. Reading Eagle Co., CIV.A. 11-6151, 2013 WL 1285477 (E.D. Pa.
Mar. 29, 2013)(citing Anderson, 477 U.S. at 248).
To defeat summary judgment, the non-moving party must go beyond the pleadings
and present “specific facts showing that there is a genuine issue for trial.” FED. R. CIV. P. 56(c).
Moreover, the non-moving party cannot rely on unsupported assertions, conclusory allegations,
or mere suspicions to survive a summary judgment motion. Williams v. Borough of W. Chester,
891 F.2d 458, 460 (3d Cir. 1989)(citing Celotex, 477 U.S. at 325). Where the non-moving party
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will have the burden of proof at trial, the moving party can make a showing that there is an
“absence of evidence to support the non-moving party’s case.” Jones v. Indiana Area Sch. Dist.,
397 F. Supp.2d 628, 642 (W.D. Pa. 2005)(quoting Celotex, 477 U.S. at 325).
III.

PROCEDURAL HISTORY.
Plaintiffs filed their Complaint in this action on March 30, 2016 and their

Amended Complaint on December 19, 2016. Dkt. Nos. 1, 27. The case was assigned to the
Honorable Joseph F. Leeson. On February 22, 2017, the instant Motion for Summary Judgment
was filed. Id. at 37. On April 12, 2017, the parties consented to try this case before the
undersigned.
In the Amended Complaint, Plaintiffs allege that the Defendants interfered with
the attainment of rights protected under the Employment Retirement Security Act (“ERISA”)
(Count VIII), the Pennsylvania Minimum Wage Act (“PMWA”) (Count III), the Pennsylvania
Wage Payment Collection Act (“PWPCA”) (Count IV), the Fair Labor Standards Act (“FLSA”)
(Counts I and II) and that Defendants are liable to Plaintiffs for an Accounting at Law and Equity
(Count V), Conversion (Count VI), and for failure to keep accurate records pursuant to Pa.
C.S.A. § 260.8 (Count VII). Oral argument on the Motion for Summary Judgment was held on
July 17, 2017.
III.

FACTS.
Defendant Creative is a not-for-profit and mental health social services and

goverment-funded agency based in Pottstown, Pennsylvania, providing psychiatric and
psychological evaluations, medication checks, and individual outpatient therapy, among other
services. Among other services, Creative provides outpatient counseling, psychotherapy and
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medication management services to more than 5,000 adults, children and families annually,
including low income residents of Berks, Montgomery and other southeastern Pennsylvania
counties. Defendant Andrew Trentacoste (“Trentacoste”) is Creative’s Chief Executive Officer.
Defendant Kathy Kumitis (“Kumitis”) is Creative’s Chief Operating Officer. Defendant Timothy
Alleva (“Alleva”) is Creative’s Director of Human Resources and the Plan Administrator for all
of Creative’s ERISA qualified employer sponsored employee health, welfare and retirement
plans. Defendant Karen Becker (“Becker”) is Creative’s Director of Outpatient Services.
Plaintiff Audrey Leffler worked for Creative from 1990 until 2015 performing
outpatient therapy services as a fee for service outpatient therapist. During that time, her
classification was changed from independent contractor to employee four times but her job
responsibilities remained largely unchanged and she performed the responsibilities of a clinical
mental health therapist throughout the entire period. On March 20, 2014, after she felt targeted
by Becker and told by Alleva that she had to be a contractor to work a four-day week, she
became a contractor again. At no time while she worked as a contractor was Leffler paid fees for
all of her services, at the agreed upon hourly rate, although it was required by the terms of her
contract.
Leffler holds a degree from West Chester University in Health and Physical
Education in 1972 and earned her masters from Southwestern University in 1988. In addition,
Leffler holds several certificates including for hypnotherapy; animal therapy (known as a
Tellington Touch Certification) as well as other related certifications as identified on her resume.
In 1990, Leffler joined Creative as an independent contractor – clinical therapist.
She was simultaneously working for Northwestern Human Services of Montgomery County and
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continued that dual employment from 1997 to 2001. Leffler also had other simultaneous
employment with Bornemann Psychiatric Associates from 2002 to 2007. Regardless of whether
an employee or independent contractor, in addition to working as an outpatient therapist Leffler
was a facilitator in Creative’s Stop Abuse Foster and Empowerment (“SAFE”) program for
children in domestic violence situations. Leffler split her time between the SAFE Program and
outpatient therapy. She was the only therapist at Creative who had a split schedule of this nature.
Leffler entered into two new Independent Contractor Agreements on March 17, 2014. Although
Leffler recognized her signature on the agreements she was not, as she explained, “contract
oriented” and does not remember the agreements. As an independent contractor, Leffler was able
to itemize certain expenses and write them off against her income, including office supplies she
claims to have purchased and insurance. In reference to her home office expense, the
work-related usage was both for her Creative related activities and those which she performed for
other agencies in reference to animal therapy. Leffler became a contrator because she felt she
was being picked on by Defendant Becker and her supervisor, Jena Stoltzfus. When she
expressed that she wanted to work four days per week, Defendant Alleva told her that she could
only do that as a contractor. She worked at Creative until June, 2015.
Plaintiff Mark Merryman was affiliated with Creative from 2007, when he began
work as an intern while he attended Bryn Mawr College to receive his Master’s Degree, through
August of 2016. Merryman became an independent contractor in May, 2008 and a Licensed
Clinical Social Worker in June, 2011. He could only see patients on medical assistance until he
was licensed. Merryman executed Creative’s standard Independent Contractor Agreement.
Unlike Leffler, Merryman never asked Creative to change his status from that of an independent
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contractor to an employee.
IV.

DISCUSSION.
A.

FLSA Claims.
Independent contractors are not covered under the FLSA. Rutherford Food Corp.

v. McComb, 331 U.S. 722, 728-29 (1947); Bamgbose v. Delta-T Group, Inc., 684 F. Supp.2d
660, 668-69 (E.D. Pa. 2010). Defendants move for summary judgment on the FLSA claims
against them basis that Plaintiffs are independent contractors, not employees, and are therefore
not covered under the FLSA. The question of whether an FLSA plaintiff is independent
contractor or an employee is a question of law for the Court. Todaro v. Township of Union, 27
F. Supp.2d 517, 533 (D.N.J. 1998)(citations omitted). The United States Court of Appeals for
the Third Circuit has set forth an “economic realities test” to determine whether an independent
contractor, in reality, is an employee subject to the FLSA. Criteria are: (1) the degree of the
alleged employer’s right to control the manner in which the work is to be performed; (2) the
alleged employee’s opportunity for profit or loss depending upon his managerial skill; (3) the
alleged employee’s investment in equipment of materials required for his task, or his
employment of helpers; (4) whether the service requires a special skill; (5) the degree of
permanence of the working relationship; and (6) whether the service rendered is an integral part
of the alleged employer’s business. Martin v. Selker Brothers, Inc., 949 F.2d 1286, 1293 (3d Cir.
1991). The Court should also consider whether, as a matter of economic reality, the individuals
are dependent upon the business to which they render service. Donovan v. DialAmerica Mktg,
Inc., 757 F.2d 1376, 1382-83 (3d Cir. 1985), cert. denied, 474 U.S. 919 (1985)(citations and
quotations omitted).
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1.

Defendants’ Responses to Plaintiffs’ Requests for Admissions.

In Plaintiffs’ opposition to Defendants’ motion for summary judgment, Plaintiffs
argue that the instant motion for summary judgment should be denied on the FLSA claims due to
Defendants’ admission in their responses to Plaintiffs’ Request for Admissions numbers one and
two that Plaintiffs are employees and Defendants are employers under the FLSA. Plaintiffs’ first
Request for Admission required the Defendants to admit or deny that “[T]he Plaintiff at all times
relevant hereto was an “employee” as that term is defined by 29 U.S.C. § 203(e).” See Pls.’
Opp’n. to Summ. J., Ex. 10. In the second Request for Admission, Defendants were asked to
admit or deny that “[Defendant Creative Health Services, Inc. at all times was an “employer” as
that term is defined by 29 U.S.C. § 203(d), (Exhibit “10”). The Requests for Admissions are
dated September 21, 2016. Pls.’ Opp’n. to Summ. J., Ex. 10, p. 3. Defendants responses to the
Requests for Admissions are dated November 1, 2016. Id., Ex. 10, p. 7. The responses to the
Requests contained General Objections which included “[t]he Requests require Defendant to
make legal conclusions.” Id., Ex. 10, p. 6. The Defendants’ response to both of the above
Requests was “Admitted.” Id.
On the basis of Defendants’ admission under Fed. R. Civ. P. 36 that Plaintiffs are
employees for the purposes of the FLSA, Plaintiffs request that this Court hold and declare that
the Defendants cannot now challenge their own admission in this motion for summary judgment
and that Plaintiffs and similarly situated class members are employees covered by the FLSA who
have “an actionable employer/employee relationship” with Defendants. Pls.’ Br. in Opp’n. To
Summ. J., p. 12. Plaintiffs further contend that the Defendants have waived their right to argue
that Leffler and Merryman, by virtue of the Economic Realities test, were, at the time complained
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of, independent contractors not entitled to the protections of the FLSA.
In Response, Defendants contend that the Requests for Admission have no
bearing upon this Motion, there has been no waiver of their right to argue that Plaintiffs were
independent contractors, and it has never been in dispute that Leffler transitioned from
independent contractor to full-time employee and then, to accommodate her schedule, returned to
contractor status. Defendants further argue that the only Plaintiff in this lawsuit at the time the
Requests for Admissions were answered was Leffler. Merryman was not added as a Named
Plaintiff until around one month after the Requests were answered and Plaintiffs’ Exhibit 10
shows that Defendants’ answers to Requests for Admission numbers 1 and 2 only applied to
Leffler because they were answered in the singular, not plural.
Defendants note that most of the time spent in depositions in this matter
concerned the “employee versus independent contractor” issue. Defendants’ position always has
been that Leffler’s choice to be an employee for a designated period of time has no impact on
whether the duties performed by Merryman or other mental health outpatient therapists at
Creative rendered them, as a matter of law, employees or independent contractors.
An admission formally made pursuant to the federal rules of court must be
deemed conclusively established. Pretorian Ins. Co. v. Site Insp., LLC., 604 F.3d 509 (8th Cir.
2010) (admission under Rule 36 cannot be overcome by offering contradictory evidence or
affidavit); Central Admixture Pharmacy Services, Inc. v. Advanced Cardiac Solutions, P.C., 482
F.3d 1347 (Fed. Cir. 2007); see also Civil Model Jury Instructions for the District Courts of the
Third Circuit (2010), Instruction 2.4, Comment (“This instruction could be applied to matters
admitted by way of pleading or a request for admission, as well as facts stipulated during the
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trial. If a stipulation or admission is as to a matter of fact, the jury is to be instructed that it must
consider the fact as true”).
A court may consider Rule 36 admissions when deciding whether parties agree to
a fact for purposes of summary judgment. See Fed. R. Civ. P. 36(b)(“A matter admitted under
this rule is conclusively established unless the court, on motion, permits the admission to be
withdrawn or amended.”); Fed. R. Civ. P. 56(c)(1)(A)(“A party asserting that a fact cannot be
disputed must support the assertion by (A) citing to particular parts of materials in the record,
including . . . admissions[.]”, and it provides that “[a] matter is admitted unless, within 30 days
after being served, the party to whom the request is directed serves on the requesting party a
written answer or objection addressed to the matter and signed by the party or its attorney. In the
Third Circuit, the United States Court of Appeals has “long recognized that deemed admissions
are sufficient to support orders of summary judgment.” Kelvin Cryosystems, Inc. v. Lightnin,
252 F. App’x 469, 472 (3d Cir. 2007)(citations omitted).
The issue whether Plaintiffs are employees or independent contractors is an issue
of law which this Court is tasked with determining. Requests that seek legal conclusions are not
allowed under Rule 36. 7 James Wm. Moore, et. al. Moore’s Federal Practice § 36.10[6] and
36.10[8] (3d ed. 1997). In this case, Plaintiffs are asking this Court to recognize that the
admissions are sufficient to defeat summary judgment on an issue of law which this Court must
decide, whether the Plaintiffs were employees or independent contractors within the meaning of
the FLSA. Martin, 949 F.2d at 1293 (citing Rutherford, 331 U.S. at 730); Jochim v. Jean
Madeline Educ. Ctr. of Cosmetology, Inc., 98 F. Supp.3d 750, 756 (E.D. Pa. 2015)(citing Martin,
949 F.2d at 1292). Looking at the circumstances of this case, the extremely broad nature of the
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FLSA’s definitions, coupled with the narrow wording of Requests for Admission nos. 1 and 2,
makes clear that Creative’s “admission” solely concerned Leffler’s status during the time she was
engaged as a full-time employee, not Creative’s longstanding position that the Plaintiffs cannot
satisfy the Economic Realities test. The admissions responses provide no reason to ignore the
Supreme Court emphasis that “that the courts should look to the economic realities of the
relationship in determining employee status under the FLSA.” Martin, 949 F.2d at 1293 (citing
Rutherford, 331 U.S. at 730). For all of these reasons, the Defendants’ Admissions are not
dispositive of the issue whether Leffler and Merryman are considered employees or independent
contractors.
2.

Whether Leffler and Merryman are Employees or Independent
Contractors and Eligibility to Assert Claims under the FLSA.

The United States Court of Appeals for the Third Circuit has set forth an
“economic realities test” to determine whether an independent contractor, in reality, is an
employee subject to the FLSA. Criteria are: (1) the degree of the alleged employer’s right to
control the manner in which the work is to be performed; (2) the alleged employee’s opportunity
for profit or loss depending upon his managerial skill; (3) the alleged employee’s investment in
equipment of materials required for his task, or his employment of helpers; (4) whether the
service requires a special skill; (5) the degree of permanence of the working relationship; and (6)
whether the service rendered is an integral part of the alleged employer’s business. Martin, 949
F.2d at 1293 (citations omitted). The Court should also consider whether, as a matter of
economic reality, the individuals are dependent upon the business to which they render service.
DialAmerica, 757 F.2d at 1382-83 (citations and internal quotations omitted). Each factor is

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considered seriatim.
a.

Integral Part of the Employer’s Business.

It is not disputed that mental health services are the essential part of Creative’s
business. This factor, therefore, weighs in favor of employee status.
b.

Investment in Equipment or Materials or Employment of Helpers.

This factor considers “the alleged employee’s investment in equipment or
materials required for his task, or his employment of helpers.” Luxama v. Ironbound Express,
Inc., Civ.A.No. 11-2224(ES), 2013 WL 3286081, at *6 (D.N.J. June 27, 2013)(citation omitted).
Plaintiffs were required, at their own expense, to maintain their license status, provide
professional liability insurance and participate in continuing professional education. Leffler
provided dogs and other related items in order to provide animal assisted therapy. Both Leffler
and Merryman deducted expenses as reflected on the Schedule C of their tax returns for supplies
and the use of their private homes as offices. Further, the Plaintiffs were solely responsible for
developing their own treatment plan and providing whatever materials were necessary, if any.
Plaintiffs do not contest that they did not and could not delegate any portion of
their work for Defendants to others not employed or engaged by Defendants. With regard to
equipment and materials, Defendants provided work and office space, common space, and
administrative support and equipment for Plaintiffs’ work. While this factor is not significant
given the fact that mental health therapy is not a profession requiring “equipment and materials,”
to the extent it is relevant, it too weighs in favor of independent contractor status.
c.

Degree of Permanence.

The next area of review this Court must examine is whether the worker works for
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the alleged employer exclusively and continuously. Defendants note that neither Leffler nor
Merryman worked exclusively for Creative and both were free as independent contractors to
work for other mental health providers and in fact, did so. For a period of seven years, Leffler
chose to be a full-time Creative employee and give up work with other providers and then
voluntarily chose to go back to independent contractor status. Among the reasons provided by
Leffler was the desire to reduce her hours and her stress. Merryman used his independent
contractor status to commence work at his current employer and transition from one base of
operation (Creative) to another (CAPPS). Merryman and Leffler both were free to work as much
or as little as they wanted for Creative while simultaneously working for other providers.
Plaintiffs do not contest that they have a very high degree of permanence in their
relationships with Defendants. While the Defendants argue that the Plaintiffs could work for
others, for periods of years at a time they did not do so. Merryman worked “full-time”
exclusively for Defendants from 2007 to March, 2015. Leffler worked “parttime”and “full-time”
interchangeably as an “employee” and as an “independent contractor” without change in nature
of work performed exclusively for Defendants from 1990 to 2015, except for the period from
2002 to 2007 when she worked 20 or fewer hours/week for a psychologist practice while
working part-time for Defendants. Courts have held that under these circumstances, such
evidence indicates that workers are employees. See DialAmerica, 757 F2d. at 1384-85
(correcting District Court for ignoring fact that workers worked continuously for the employer
for long periods and that such evidence “indicates [that workers] were employees”).
In this case, the Plaintiffs’ at-will term of employment with Defendants is no
different than Defendants’ employees’ at-will term of employment with Defendants, and the
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“permanence” of “independent contractor” relationships with Defendants - such as Defendant
Becker’s nineteen years working exclusively for Defendants as an “at-will” independent
contractor and five years working as an “at-will” employee - indicates a high degree of
permanence indicative of an employment relationship. This factor weighs in favor of employee
status.
d.

Degree of Employer’s Control.

The next factor is the degree of supervision over the worker, control over the
worker’s schedule and instruction as to how the worker is to perform his or her duties.
DialAmerica, 757 F.2d at 1383-84; Bamgbose, 684 F. Supp.2d at 669. The most significant
reason for both Plaintiffs’ decision to choose the independent contractor status was flexibility in
controlling their schedule, including both the number of hours they would work as well as the
ability to work with other providers and mental health services. Under the Independent
Contractor Agreements, both Leffler and Merryman could work as little as zero hours per week
and client assignments would only be made once they provided Creative with their availability.
Once a client was assigned, it was exclusively in the control of the therapist to set the time for an
appointment. In addition, the plan of treatment for each client was solely determined by the
Plaintiffs in their independent professional judgment and was not dictated by Creative. Leffler
utilized unorthodox treatment methods, including the use of pets. Treatment plans and progress
were reviewed by a psychiatrist, but the course of treatment and implementation was in the
exclusive hands of the therapist.
Plaintiffs argue that this factor weighs in favor of employee status because many
administrative responsibilities were maintained by the Defendants, including assignment of
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offices in which treatment of clients took place, each Plaintiff had assigned and dedicated
telephone extensions in the telephone system and client appointments were made through
Creative’s front desk staff for both “contractors” and “employed” therapists without reference to
whether the clinician was a “contractor” or “employee.” In addition, Plaintiffs were assigned
work and supervised by the same department managers who managed all therapists in their
departments regardless of whether “employed” or “contracted” and who were responsible for
scheduling and staffing work within their departments, regardless of whether they assigned the
work to “employed” or “contracted” therapists. Management of therapists was in a “generally
consistent manner of graduated management involvement, except that managers were not
required to document their management of “contracted” therapists, and department managers and
higher supervisory personnel exercised the same degree of discretion and control to
hire/fire/discipline therapists, regardless of classification as “employed” or “contracted.”
Defendants admit that they applied their policies and practices to “all therapists,” regardless of
“employed” status, admitting that they assert similar control over independent contractors as they
do over their employees. Plaintiffs argue that Defendants’ argument in this regard is an
admission that Defendants could and did assert a high level of control over Leffler’s work and in
how they managed Leffler, an “independent contractor,” by requiring her timely attendance at
meetings, dictating and managing her communications with those they assigned to be her
“superiors” at work, and imposing “important policies” controlling and managing how she
maintained client charts and audit records.
Defendants argue, conversely, that Creative performed only the administrative
burdens of obtaining reimbursements whereas the therapists devised a course of treatment and set
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schedules. Plaintiffs completely ignore the dictate of DialAmerica that evidence relevant to the
“control” factor is the degree of supervision, control over scheduling, and instruction as to how
the worker is to perform his or her duties. 757 F.2d at 1383-84. The fundamental task of therapy
was largely at the discretion of the therapist. Both Leffler and Merryman determined the
professional aspects of their therapies and set their own schedules. “Supervision” was limited to
billing issues (such as keeping proper records) to ensure that Plaintiffs and other therapists would
be paid. This factor weighs in favor of independent contractor status.
e.

Opportunity for Profit or Loss.

This factor weighs in favor of employee status because Merryman and Leffler
were paid only for work that Defendants’ in their sole discretion chose to submit for payment to
Defendants’ insurers, government health care programs and other payors. Plaintiffs had no
ability to directly bill those entities paying Defendants for the services Plaintiffs provided to
Defendants. Defendants paid Plaintiffs for work they performed only if Defendants determined
that they could submit a claim to be paid for Plaintiffs work from an insurer, government
program or other payor with which Defendants, and Defendants alone had a contract for payment
or reimbursement for the work Plaintiffs performed on Defendants’ behalf. Because Plaintiffs
had no control over what work was submitted to government programs, insurers, clients or other
payors, and because Defendants would pay them only for work that Defendants submit, Plaintiffs
ultimately had no control over their own profit/loss realized for the work they performed. In this
case, even if Plaintiffs decide to work longer hours, during more days of the week, and take more
client assignments, the effect of these decisions on profit/loss is illusory, because Defendants
control what gets submitted to payors and Plaintiffs get paid only for work performed that
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Defendants chose to submit.
f.

Special Skill.

Both Leffler and Merryman are highly trained mental health therapists with
masters degrees and special licenses to practice therapy. Leffler holds a Masters and several
specialized therapy certificates in hypnotherapy and animal therapy as well as other related
certifications set forth in her curriculum vitae. Merryman has a Masters in social services from
Bryn Mawr College and completed 3000 hours of clinical supervision to earn designation as a
licensed clinical social work designation. He also has a certification in cognitive behavioral
therapy.
Plaintiffs do not contest that Plaintiffs and class members are all skilled mental
health therapists and that the Defendants employ approximately 240 mental health therapists who
are all “engaged in therapeutic practice,” providing Defendants’ clients’ mental health therapy
under Defendants’ health care contracts with government programs, insurers and other payors,
but only “about 100” of these mental health therapists are classified as “independent contractors.”
Pls.’ Ex. 2, Alleva Dep., p. 17. Thus, Plaintiffs contend that while their skills may be considered
generally “special,” as opposed to skills required of other types of work and workers, they are not
“special” to Defendants’ workforce of mental health therapists, the majority of whom are
classified as “employees.” Even assuming their skills are special, Plaintiffs argue that “the use of
special skills is not indicative of independent contractor status, especially if the workers do not
use those skills in any independent way.” Martin, 949 F.2d at 1295 (citation omitted). Plaintiffs
further argue no aspects of the “special” skills of the “independent contractor” therapists is or
were used in any way to be indicative of independence or as “demonstrating business-like

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initiative” differently than those skills are or were used by the “employed” therapists.
Defendants contend that if the Plaintiffs were, in fact, full-time employees, their
professional status would deem them to be “learned professionals” exempt from coverage under
the FLSA. 29 U.S.C. § 213(a)(1). To qualify for the learned professional exemption, an
employee’s primary duty must be the performance of work requiring advanced knowledge in a
field of science or learning customarily acquired by a prolonged course of specialized intellectual
instruction. 29 C.F.R. §541.301(a). Mental health therapists with masters degrees have been
deemed “learned professionals” and exempt from coverage under the FLSA. Levine v. Unity
Health System, 847 F.Supp. 2d 507, 510-11 (W.D.N.Y. 2012); Chatfield v. Children’s Services,
Inc., 555 F. Supp.2d 532, 535-36 (E.D. Pa. 2008)(Ditter, J.). This factor weighs in favor of
independent contractor status, but even if this Court were to determine that this factor weighs in
favor of employee status, Plaintiffs would be precluded from coverage under the FLSA as
learned professionals.
g.

Dependence upon the Business.

The Third Circuit in DialAmerica stressed an additional consideration as the most
prominent of the factors, i.e., whether the Plaintiffs are “dependent upon the business to which
they render service . . . [that is] whether the workers are dependent on a particular business or
organization for their continued employment.” DialAmerica, 757 F.2d at 1385. A worker
“with numerous options for employment in the particular field at issue,” is “not economically
dependent on a single employer.” Krause v. Cherry Hill Fire District 13, 969 F.Supp. 270, 275
(D.N.J. 1997). As held in DialAmerica, “dependent” does not mean “whether the workers at
issue depend on the money they earn for obtaining the necessities of life . . . but [r]ather . . .

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whether the workers are dependent on a particular business or organization for their continued
employment” or are “in a position to offer their services to many different businesses or
organizations.” DialAmerica, 757 F.2d at 1385-86; Todaro, 27 F. Supp.2d at 534. Here, neither
Plaintiff was dependent on Creative in terms of their exclusive employment and were, in fact, “in
a position to offer their services to many different businesses or organizations,” and in fact did
so. Both Leffler and Merryman worked for other organizations during their tenure at Creative and
both immediately replaced their employment upon departure. While Merryman planned his exit,
Leffler was terminated and then immediately hired by her current employer. They were not, as
was the case in DialAmerica, only permitted to work for the Defendant. This factor weighs in
favor of independent contractor status.
In sum, four factors weigh in favor of finding that Plaintiffs are independent
contractors, and three factors weigh in favor of finding that Plaintiffs are employees. Courts have
repeatedly emphasized that this list is neither definitive nor exclusive. The presence or absence of
any of the factors is not in and of itself dispositive. See, e.g., DialAmerica, 757 F.2d at 1382;
Selker Bros., 949 F.2d at 1293. Therefore, in viewing “the circumstances of the whole activity,”
Martin, 949 F.2d at 1293 (internal citations and quotations omitted), this Court concludes that
Plaintiffs fail to demonstrate that they were employees of Creative. Consequently, the Court
dismisses the FLSA claims in Counts I and II of the Amended Complaint because relief is not
possible under the statute for employees.
D.

FLSA Retaliation Claims.
Non-covered employees cannot assert a good faith claim under the FLSA.

Marcotte v. City of Rochester, 2017 WL 392013, at *2 (2d Cir. 2017). Thus, Defendants’

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Motion for Summary Judgment is granted as to Plaintiffs’ FLSA Retaliation claim in Count II of
the Amended Complaint.
E.

Count VIII - Interference with the Attainment of ERISA Protected Rights.
Count VIII of the Complaint is a claim for “interference with the attainment of

ERISA protected rights.” ERISA’s protections are not, as a matter of law, available to
independent contractor plaintiffs. “[N]umerous courts, including the Third Circuit, have found
no ERISA violations where an employer’s plan excluded hourly employees, temporary
employees and independent contractors.” Schwartz v. Indep. Blue Cross, 299 F. Supp. 2d 441,
449 (E.D. Pa. 2003) (citing Bauer v. Summit Bancorp, 325 F.3d 155, 160 (3d Cir. 2003); Edes v.
Verizon Comms., Inc., 288 F. Supp.2d 55 (D. Mass. 2003); Williams v. American Int’l Group,
Inc., Civ.A. No. 01-9673, 2002 WL 31115184 (S.D.N.Y. Sept. 23, 2002). Accordingly,
Defendants’ Motion for Summary Judgment is granted as to Count VIII of the Amended
Complaint.
F.

State Law Claims.
Under 28 U.S.C. section 1367, there are explicit circumstances under which a

district court may decline to exercise supplemental jurisdiction. District courts may decline to
exercise jurisdiction where: (1) the claim raises a novel or complex issue of state law; (2) the
claim substantially predominates over the claim or claims over which the district court has
original jurisdiction; (3) the district court has dismissed all claims over which it has original
jurisdiction; or (4) in exceptional circumstances, there are other compelling reasons for declining
jurisdiction. 28 U.S.C. § 1367(c)(1-4). All of Plaintiffs’ claims over which this Court has
original jurisdiction have been dismissed and pursuant to 28 U.S.C. section 1367(c)(3), the Court

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declines to exercise jurisdiction over the remaining claims for violations of the Pennsylvania
Minimum Wage Act (“PMWA”), the Pennsylvania Wage Payment Collection Act (“PWPCA”),
an accounting at law and equity, Conversion and failure to keep accurate records pursuant to Pa.
C.S.A. § 260.8. Those claims are dismissed without prejudice for Plaintiffs to raise them in the
appropriate state court.
An appropriate Order follows.

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