Summary
finding that the failure to post notice might have resulted in equitable tolling but for the retention of an attorney regarding a proposed employment contract that included compensation figures
Summary of this case from Lisa ASP & Paulette Mertes v. Milardo Photography, Inc.Opinion
02 Civ. 7382 (LAK)
November 17, 2003
ORDER
By letter dated October 20, 2003, plaintiffs counsel has brought to the Court's attention the fact that the order of October 14, 2003 deals with the defendants' motion addressed to the first amended complaint notwithstanding that plaintiff had filed a second amended complaint after the motion dealt with by the October 14, 2003 order was made. This appears to be correct and a product of the exceptional confusion that the parties have created by a flurry of motions, supplemental motions, and pleadings and, in at least one case, the continuation of briefing on a motion addressed to the amended complaint notwithstanding the intervening filing of a second amended complaint. The situation, however, is readily clarified.
The second amended complaint contains four claims for relief: (1) a claim for overtime pay under the Fair Labor Standards Act and state law; (2) a claim for benefits under Section 502(a)(1)(B) of ERISA, (3) a claim of discrimination and retaliation under Section 510 of ERISA, and (4) a claim for breach of contract. The parties have had a full opportunity to brief and, to the extent relevant, submit evidence with respect to all motions. The motions already briefed, to the extent relevant, are deemed applicable to the second amended complaint and disposed of as follows:
The Fair Labor Standards Act Claim Is Time Barred
The first claim for relief asserts that plaintiff was an employee of defendants The Council on the Environment of New York City and Council on the Environment, Inc. (collectively the "Council Defendants") from 1983 until June 30, 1998 and that he worked a great deal more than 40 hours per week in that period. He seeks recovery, under Section 7 of the Fair Labor Standards Act, 29 U.S.C. § 207(a)(1) (the "FSLA"), and Sections 653 and 665 of the New York Labor Law, at the rate of time and a half for the hours worked in excess of 40 per week. Defendants seek dismissal on the ground that the claim is barred by the statute of limitations.
Claims for unpaid overtime wages under the FLSA accrue at the end of each pay period. An action to recover for a given pay period must be commenced within two years of the date of accrual except for willful violations, in respect of which claims must be commenced within three years. 29 U.S.C. § 255(a). As plaintiffs most recent claim for unpaid overtime wages accrued no later than June 30, 1998, more than three years prior to the commencement of this action on September 13, 2002, the claim is barred unless plaintiff has created a genuine issue of material fact with respect to equitable tolling.
The second amended complaint makes three allegations in support of the equitable tolling claim, viz. Council Defendants knowingly and wilfully misled plaintiff regarding his status as an employee and his entitlement to overtime pay and failed to post information required by 29 U.S.C. § 211, 29 C.F.R. § 516.4 and 12 N.Y.C.R.R. § 142-2.8. Sec Am Cpt ¶¶ 92-94. It says nothing, however, about when and how defendants allegedly misled plaintiff. Plaintiffs declaration states only that the defendants never informed him that, as an employee, he was entitled to overtime pay for hours in excess of forty per week and that the Council on the Environment, Inc. did not post any information concerning an employee's statutory right to overtime pay until on or around September 15, 2000. Patraker Decl. ¶¶ 13-14. It is undisputed also that in or around May or June 1998, plaintiff asked an attorney to assist him in reviewing a proposed employment agreement that he had received from the Council Defendants. Id. ¶ 17; Def. First 56.1 St. ¶ 6; Pl. First 56.1 St. ¶ 6.
The Court assumes that equitable tolling would be available in an appropriate case with respect to the limitations period under the FLSA. The doctrine, however, is exceedingly narrow. As the Court of Appeals wrote in Johnson v. Nyack Hospital, 86 F.3d 8, 11 (2d Cir. 1996):
Equitable tolling allows courts to extend the statute of limitations beyond the time of expiration as necessary to avoid inequitable circumstances. Bowers v. Transportacion Maritima Mexicana, S.A., 901 F.2d 258, 264 (2d Cir. 1990). This Court has applied the doctrine "as a matter of fairness" where a plaintiff has been "prevented in some extraordinary way from exercising his rights, or h[as] asserted his rights in the wrong forum." Miller v. International Tel. Tel. Corp., 755 F.2d 20, 24 (2d Cir.), cert. denied, 474 U.S. 851, 106 S.Ct. 148, 88 L.Ed.2d 122 (1985). * * *
Equitable tolling requires a party to pass with reasonable diligence through the period it seeks to have tolled. See Dodds v. Cigna Sees., Inc., 12 F.3d 346, 350 (2d Cir. 1993) (equitable tolling will stay running of statutory period "only so long as the plaintiff has exercised reasonable care and diligence" (internal quotation marks omitted)), cert. denied, 511 U.S. 1020, 114 S.Ct. 1401, 128 L.Ed.2d 74 (1994); Bowers, 901 F.2d at 264 (equitable tolling not satisfied in the absence of "affirmative action on the part of [plaintiff] to preserve its right"); accord Singletary v. Continental Illinois Nat'l Bank Trust Co., 9 F.3d 1236, 1241 (7th Cir. 1993) (equitable tolling "permits a plaintiff to sue after the statute of limitations has expired if through no fault or lack of diligence on his part he was unable to sue before").
Here, plaintiff has not alleged, either in the amended complaint or in his declaration, any affirmative deception by the defendants. He complains only that the defendants never told him that he was entitled to overtime pay. There is nothing extraordinary about that. Indeed, to hold that a failure to disclose that an employee is entitled to overtime pay is sufficient to work an equitable toll would be tantamount to holding that the statute is tolled in all or substantially all cases seeking unpaid overtime, as it would be a rare employer who failed to pay overtime but announced to its employees that they were entitled to overtime compensation.
The alleged failure to post a notice stands plaintiff in no better stead. To be sure, Section 516.4 of 29 C.F.R. provides in relevant part: "Every employer employing any employees subject to the Act's minimum wage provisions shall post and keep posted a notice explaining the Act, as prescribed by the Wage and Hour Division, in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy." And the Court assumes that the failure to post that notice, in other circumstances, might result in equitable tolling. But not here.
In this case, plaintiff retained an attorney in the spring of 1998 to advise him regarding his proposed employment contract with defendants which included, among other things, his post — July 1, 1998 compensation. Patraker Aff. ¶ 6. Once he did so, any failure to post the required notice became immaterial. See, e.g., Keyse v. California Texas Oil Corp., 590 F.2d 45, 47-48 (2d Cir. 1978) (tolling inappropriate where plaintiff represented by counsel); Smith v. Am. President Lines, Ltd., 571 F.2d 102, 109-10 (2d Cir. 1978) (tolling inappropriate, despite failure to post notice of rights under Title VII, where plaintiff retained attorney during limitations period and thus "had access to a means of acquiring knowledge of his rights"); Unterreiner v. Volkswagen of Am., Inc., 8 F.3d 1206, 1213 (7th Cir. 1993) (failure to post ADEA notice tolls statute until plaintiff hires attorney); Stallcop v. Kaiser Founds. Hasps., 820 F.2d 1044, 1050 (9th Cir.), cert. denied, 484 U.S. 986 (1987) (no equitable tolling where plaintiff consulted counsel during period). This is no more than a common sense application of the basic principles that equitable tolling is reserved for situations in which "a plaintiff has been `prevented in some extraordinary way from exercising his rights'" and that it is available "only so long as the plaintiff has exercised reasonable care and diligence." Once the plaintiff hired a lawyer to advise him concerning his employment situation, the means of knowledge of his rights were at his disposal. Surely he knew that he had been working more than forty hours a week for over 15 years. If he failed to ask the attorney his rights in that circumstance, he cannot be said to have acted with due diligence. He cannot hide behind the allegedly limited scope of his retainer of the attorney for the simple reason that the limitation of the scope reflects his own lack of due diligence. The FLSA claim therefore will be dismissed. The ERISA Benefit Claim
The second claim for relief seeks benefits under Section 502(a)(1)(B) of ERISA on the theory that plaintiff was an employee of the Council from 1983 to 2002.
The Application for Benefits
On May 31, 2002, plaintiff applied for benefits under the Plan for the period he worked on the Greenmarket program prior to July 1, 1998. Sec Am Cpt Ex. 2; Def. Second 56.1 St. [docket item 44] ¶ 6; Pl. Second 56.1 St. [docket item 51] ¶ 6. After reviewing the application and unspecified records maintained by the Council, the Administrator, by letter dated July 2, 2002, notified plaintiff that his claim for benefits was denied because he was "not an employee of the Council or an Affiliated Employer prior to July 1, 1998" and thus was "not a Participant in the Plan prior to that date." Def. Second 56.1 So. [docket item 44] ¶ 8; Pl. Second 56.1 St. [docket item 51] ¶ 8; Laughlin Decl., Jan. 24, 2003, ¶¶ 8, 10. On August 30, 2002, plaintiff appealed the Administrator's determination. A hearing was held on October 28, 2002, at which time plaintiff was the opportunity to review the documents relied upon by the Administrator. Def. Second 56.1 St. [docket item 44] ¶ 9; PI. Second 56.1 St. [docket item 51] ¶ 9; Patraker Decl., May 21, 2003, ¶ 37. On October 29, 2003, plaintiffs counsel were provided with copies of documents produced at the hearing. McLaughlin Decl. ¶ 12. On October 31, 2002, plaintiffs counsel submitted another letter to the Administrator in support of his appeal. Id. ¶ 13. By letter dated November 8, 2002, the Administrator notified plaintiff that his appeal was denied. Def. 56.1 Second St. [docket item 44] ¶ 10; PI. 56.1 Second St. [docket item 51] ¶ 10.
The conditions for eligibility are set forth in the Plan. Rumelt Decl., Aug. 1, 2003, Ex. 1 ("Plan Doc.") §§ 1.12-1.14, 3.1
The Plan
The Plan provides that:
"The Administrator shall determine the eligibility of each Employee for participation in the Plan based upon information furnished by the Employer. Such determination shall be conclusive and binding upon all persons, as long as the same is made pursuant to the Plan and the Act. Such determination shall be subject to review per Section 2.13." Plan Doc. § 3.4 (emphasis added).
As a general matter, this broad grant of discretion to the Administrator to determine eligibility renders the decision subject to review only on the deferential arbitrary and capricious standard. E.g., Miller v. United Welfare Fund, 72 F.3d 1066, 1070-71 (2d Cir. 1995). In determining whether the Administrator's decision was arbitrary and capricious, moreover, a court "is limited to the administrative record" and may not consider other evidence. E.g., id., at 1071.
Analysis
In this case, the Administrator determined that (a) the Greenmarket program, the activity in which plaintiff allegedly was employed by the Council prior to July 1, 1998, in fact was run by Barry Benepe as a consultant to the Council and that Benepe had "primary responsibility for all aspects of the operations and administration of . . . [the program including] responsibility for recruiting, hiring, training, supervising, paying and discharging all Greenmarket personnel," (b) the Council did not direct plaintiffs work or assign any duties or projects to him, (c) the Council did not hire, train or pay plaintiff or determine the amount and tax treatment of his compensation ( id.), (d) the Council did not provide plaintiff with any benefits or reimburse him for any business expenses, (e) the Council did not track plaintiffs hours, (f) the Council lacked authority to fire plaintiff, and (g) plaintiff had other business interests during the relevant period. Sec Am Cpt ¶¶ 2, 5. The Administrator therefore concluded that plaintiff had not been an employee of the Council during the relevant period. This determination was a product of the application of the appropriate factors under Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318, 323 (1992). Certainly if the ordinary arbitrary and capricious standard were applied, there would be no merit at all to plaintiffs position.
Plaintiff nevertheless contends that the determination actually was one of law, that it therefore is subject to de novo review, and that consideration of evidentiary materials submitted to this Court demonstrates the existence of genuine issues of material fact as to employee status. But the argument ultimately is unpersuasive.
This much can be said for plaintiffs argument regarding the standard of review. As this Court previously noted, there is a circuit conflict on the scope of review of plan determinations of employee status. Compare Hockett v. Sun Co., 109 F.3d 1515, 1525-26 (10th Cir. 1997) (plan determination of employee status is question of fact reviewable for clear error), and Roth v. American Hospital Supply Corp., 965 F.2d 862, 865 (10th Cir. 1992) (same), with Holt v. Winpisinger, 811 F.2d 1532, 1536 (D.C. Cir. 1987) (plan determination of employee status is question of law reviewable de novo). The Second Circuit has yet to decide the question. The closest it has come is to hold, in the Fair Labor Standards Act context, that a district court's determinations with respect to factors relevant to distinguishing between employees and independent contractors are findings of fact reviewable only for clear error while the ultimate conclusion to be drawn from those facts is a question of law that is reviewable de novo. Brock v. Superior Care, Inc., 840 F.2d 1054, 1058-59 (2d Cir. 1988). Brocktims suggests that a plan's determination of the facts pertinent to reaching an ultimate conclusion on employee status will be disturbed only if those factual determinations themselves are arbitrary and capricious.
Brockis not particularly helpful as to the scope of review of aplan's ultimate determination of employee status, as there is no decision maker in a position analogous to the plan in FLSA cases.
This conclusion, however, may not get plaintiff very far. Given the fact that the Plan confers discretionary authority on the Administrator to determine eligibility and makes those determinations binding, there is no reason to depart from the principle that review of such decisions is limited to the administrative record. Thus, to overturn the Administrator's decision, plaintiff would have to demonstrate either that the Administrator (a) committed clear error, given the record before the Administrator, in one or more material factual determinations, or (b) applied an incorrect legal standard.
In contending that the Administrator erred as a matter of fact, plaintiff relies on declarations of plaintiff and Mr. Manneta submitted to this Court. PI. Mem. 15-19. In so doing, however, he ignores the fact that review is limited to the record before the Administrator and that these declarations therefore may not be considered. He thus is between the proverbial rock and hard place. To whatever extent the materials in these declarations were not before the Administrator, they may not be considered. To whatever extent they were before the Administrator, he could prevail only if the Administrator clearly erred given all of the evidence.
The record before the Administrator, as indicated above, consisted of plaintiffs application for benefits, his letter appealing the denial and the exhibits thereto, his attorneys' post-hearing letter, and unspecified documents reviewed by the Administrator and, at the hearing on October 28, 2003, by plaintiff. These materials all are before the Court except the unspecified documents. It is undisputed, however, that copies of those documents were provided to plaintiffs counsel on October 29, 2002. McLaughlin Decl. ¶ 12.
Plaintiff of course disagrees with the Administrator's determination that he was not an employee prior to July 1, 1998. Naturally, the parts of the administrative record he has submitted — submissions made by him or on his behalf — support his view. But that is not all that was before the Administrator, who reviewed also the unspecified Council documents that were made available to plaintiff at the hearing and subsequently provided to him. While plaintiff avers that these "did not contradict the basis of my claim for employee status," Patraker Decl., July 31, 2003, ¶ 30, neither side has seen fit to place them before the Court.
It is movant's burden to demonstrate the absence of any genuine issue of material fact. In these circumstances, it bears the burden of adducing the complete administrative record. In its absence, the Court cannot determine whether the Administrator clearly erred in any factual determinations. In consequence, defendants' motion for summary judgment dismissing the second claim for relief must be denied. ERISA Retaliation
Plaintiffs claim of retaliation under Section 510 of ERISA, 29 U.S.C. § 1140, his third claim for relief, has undergone a substantial change. The first amended complaint alleged that plaintiff applied for benefits on May 31, 2002 and was told less than a month later that he would be terminated on June 30, 2002. Am Cpt ¶¶ 98-100. He now asserts that on or about September 12, 2001, his lawyer wrote to the Pension and Welfare Benefits Administration to solicit an investigation of the Plan, that a copy of this letter was sent to the Council Defendants, and that this letter was "the `last straw' in the decision to terminate" him. Patraker Decl. ¶¶ 25-28.
Section 510 of ERISA provides in relevant part:
"It 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 . . . or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan."
In order to prevail on a Section 510 claim, the plaintiff must demonstrate that an employer, in taking adverse employment action against the employee, "was at least in part motivated by the specific intent to engage in activity prohibited by § 510." Dister v. Continental Group, Inc., 859 F.2d 1108, 1111 (2d Cir. 1988). In the context of this case, plaintiff must come forward with admissible evidence that his termination in 2002 was motivated at least in part by a specific intent "to discharge, fine, suspend, expel, discipline or discriminate against" him "for exercising any right to which he is entitled under the provisions of the Plan "or for the purpose of interfering with the attainment of any right to which" he might have become entitled.
The September 12, 2001 letter, McLaughlin Supp. Decl. Ex. B, post-dated plaintiffs entry into an employment contract with the Council on the Environment, Inc. and related to an alleged failure to give him and Anthony Manetta, both of whom were represented by the same attorney, full credit for prior service for vesting purposes and to make appropriate contributions. Inasmuch as the Council, in November 2001, acquiesced in plaintiffs position in order to resolve this dispute with both plaintiff and Manetta and then, in January 2002, extended Manetta's employment contract for an additional four year term, McLaughlin Decl. ¶¶ 8-9, it seems unlikely that plaintiff will prevail on this claim. Nevertheless, there is a genuine issue of material fact as to whether plaintiffs assertion that he was entitled to prior service credit for vesting purposes under the Plan played a part in the decision to terminate him. Accordingly, the motion for summary judgment dismissing the ERISA retaliation claim is denied.
The State Law Claims
The question remains whether so much of the first claim for relief as seeks overtime compensation for the 1983-1998 period under state law as well as the fourth claim for relief, a state law breach of contract claim, ought to be retained here.
Section 1367(a) of the Judicial Code, as amended, 28 U.S.C. § 1367(a), which defines the scope of a district court's power to decide a claim, codifies the preexisting holding of the Supreme Court in the Gibbs case. IUE AFL-CIO Pension Fund v. Hermann, 9 F.3d 1049, 1052 n. 2 (2d Cir. 1993); Promisel v. First Am. Artificial Flowers, Inc., 943 F.2d 251, 254 (2d Cir. 1991), cert. denied, 502 U.S. 1060 (1992); Smylis v. City of New York, 983 F. Supp. 478, 483 (S.D.N.Y. 1997); 13B CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE: JURISDICTION 2o § 3567.1 (Supp. 2002). A court thus has the power to exercise supplemental jurisdiction over state claims if they derive from "a . . . nucleus of operative fact" common to the jurisdiction-conferring claim and if they "are such that [the claimant] would ordinarily be expected to try them all in one judicial proceeding. . . ."
United Mine Workers v. Gibbs, 383 U.S. 715 (1996).
Promisel, 943 F.2d at 254 (quoting United Mine Workers, 383 U.S. at 725-26) (internal quotation marks omitted); see, e.g., Kirschner v. Klemons, 225 F.2d 227, 239 (2d Cir. 2000) (holding that the court has supplemental jurisdiction over plaintiff's state law claims because they emanate from "the same set of facts that give rise to an anchoring federal question claim").
Plaintiffs only remaining federal claim is the contention that his employment was terminated as of June 30, 2002 in retaliation for his September 12, 2001 complaint to the PWBA. The state law claim embraced in the first claim for relief is that he was not paid overtime at the rate of time and a half, as allegedly required by state law, during the period 1983-1998. The contract claim asserted in the fourth claim for relief is that the defendants wrongfully failed to pay him severance, the value of unused vacation, sick, personal and holiday days, and the cost of maintaining his life and health insurance when they terminated him in 2002.
Clearly, the state law claim within the first claim for relief does not arise from a common nucleus of operative fact as the ERISA retaliation claim. The same cannot be said of the fourth claim
Conclusion
The prior motions addressed to the complaint and the amended complaint are deemed applicable to the second amended complaint and incorporated in defendants' motion to dismiss, or for summary dismissing, the second amended complaint. Defendants' motions are granted to the extent that the first claim for relief is dismissed, the Fair Labor Standards Act claim on the merits and the state law claim based on the same allegations for lack of subject matter jurisdiction. They are denied in all other respects. The denial of the motion for summary judgment dismissing the second claim for relief is without prejudice to renewal on the full administrative record.
This order disposes of any and all pending motions. The parties shall complete discovery no later than February 16, 2004. Consistent with the determination that review of the Administrator's decision denying benefits under the Plan is limited to the administrative record, there shall be no discovery with respect to the second claim for relief absent further order of the Court. The joint pretrial order, any motions for summary judgment, and any requests to charge shall be filed no later than March 1, 2004.
SO ORDERED.