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Maranda v. Group Health Plan, Inc.: US District Court : LABOR | ERISA - plaintiffs' claim must be under FLSA, not ERISA

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Civil No. 07-4655(DSD/SRN)
Amy Maranda, on behalf of
herself and other individuals
similarly situated,
Plaintiffs,
v. ORDER
Group Health Plan, Inc., d/b/a
HealthPartners, Inc., a
Minnesota corporation,
Defendant.
Charles V. Firth, Esq, Joni M. Thome, Esq. and Halunen &
Associates, 220 South Sixth Street, Suite 2000,
Minneapolis, MN 55402, counsel for plaintiff.
Charles F. Knapp, Esq., G. Abam Mambo, Esq., Joel P.
Schroeder, Esq., Amy C. Taber, Esq. and Faegre & Benson,
2200 Wells Fargo Center, 90 South Seventh Street,
Minneapolis, MN 55402, counsel for defendant.
This matter is before the court upon defendants motion for
partial dismissal. Based upon a review of the file and record, the
proceedings herein, and for the following reasons, the court grants
defendants motion.
BACKGROUND
This employment dispute concerns employee classification for
the purposes of overtime and 401(k) benefits. Named plaintiff Amy
Maranda (Maranda) worked as a member services representative at
2
defendant Group Health Plan, Inc. (Group Health), a nonprofit
organization engaged in health care, health promotion, health care
financing and health care administration services. Group Health
classified Maranda as an administrative employee and accordingly
exempted her from the overtime requirements of the state and
federal fair labor standards acts (FLSA). Maranda and a
purported class of others similarly situated argue that Group
Health misclassified them as exempt employees.
Plaintiffs filed this action on November 19, 2007. They argue
that by failing to pay them overtime Group Health was unjustly
enriched and violated the Minnesota and federal FLSA and the
Employee Retirement Income Security Act (ERISA). On December 20,
2007, Group Health moved to dismiss plaintiffs ERISA and unjust
enrichment claims.
DISCUSSION
Pursuant to Federal Rule of Civil Procedure 8, a complaint
must contain a short and plain statement of the claim showing that
the pleader is entitled to relief. This statement does not
require detailed factual allegations so long as it give[s] the
defendant fair notice of what the ... claim is and the grounds upon
which it rests. Conley v. Gibson, 355 U.S. 41, 47 (1957).
However, a court will dismiss a complaint pursuant to Federal Rule
of Civil Procedure 12(b)(6) for failing to state a claim upon which
3
relief can be granted if, after taking all facts alleged in the
complaint as true, those facts fail to raise a right to relief
above the speculative level. Bell Atl. Corp. v. Twombly, 127
S.Ct. 1955, 1965 (2007).
I. ERISA Claims
Pursuant to Group Healths 401(k) Plan (the Plan), qualified
employees can contribute a percentage of their eligible earnings to
a 401(k) account. (Def. Ex. A at 6.) Group Health then makes a
matching contribution in an amount equal to the employees
contribution up to 5% of the employees eligible earnings. (Id. at
7.) The Plan defines eligible earnings as the total of all
compensation paid to [a participant] by the Participating Employer
for the portion of the Plan Year during which he or she is a
Qualified Employee of the Participating Employer. (Id. at 60-61.)
Group Health is both employer and Plan sponsor, with a Group Health
Plan Committee acting as administrator. The Committee has
discretionary power, authority and responsibility to interpret and
enforce the Plan and to evaluate claims.
Plaintiffs assert that Group Health breached its fiduciary
duty to them in violation of ERISA by failing to account for
overtime in administering the Plan. They seek injunctive and
declaratory relief pursuant to 29 U.S.C. 1132(a)(3) to remedy the
alleged transgressions. Defendant maintains that plaintiffs ERISA
claims are not legally cognizable because Plan contributions are
4
based on compensation actually paid to the employee, not on
allegedly owed overtime pay. Defendant further argues that the
choice to classify plaintiffs was a business decision and not a
matter involving a fiduciary duty under ERISA, that plaintiffs
claim is nothing more than an action for benefits dressed up as a
fiduciary duty claim and that plaintiffs failed to exhaust their
administrative remedies.
Plaintiffs rely on several unpublished opinions from district
courts in the Ninth Circuit to support their position. See
Rosenburg v. Intl Bus. Machs. Corp., No. 06-0430, 2006 WL 1627108
(N.D. Cal. June 12, 2006); In re Farmers Ins. Exch. Claims
Representatives Overtime Pay Litig., MDL No. 33-1439, 2005 WL
1972565 (D. Or. Aug. 15, 2005); Gerlach v. Wells Fargo & Co., No.
05-0585 (N.D. Cal. June 13, 2005) (Pls. Ex. A.). Each of these
cases closely parallels the facts of the instant action: plaintiffs
initiated ERISA claims against their employer-cum-plan
administrator for failing to credit them for claimed overtime
hours. In Farmers, the court acknowledged plaintiffs argument
that the decision not to credit them for overtime hours worked was
a fiduciary decision and without analysis allowed plaintiffs ERISA
claims to stand. See 2005 WL 1972565, at *4-5. Similarly, in
Rosenburg, the court detailed all of plaintiffs and defendants
arguments, declared the situation a close call and determined
that the ERISA claims could not be dismissed as a matter of law
5
without discovery. See 2006 WL 1627108, at *5. Gerlach, likewise,
upheld the ERISA claims on the basis that defendants argument was
not persuasive. (Pls. Ex. A at 5.) None of these nonbinding,
nonprecedential cases, however, adequately addresses defendants
argument that plaintiffs have failed to state a cognizable claim
based on the substance of the pension plan at issue.
As noted in Gerlach, once an employer has established a
pension plan, it is under an obligation to provide benefits
according to the terms of that plan. (Id.) (citing 29 U.S.C.
1102(a)(1)). Under the plain language of the Plan, a
participants eligible earnings are the total of all compensation
paid to the individual during the Plan year. (Id.) Eligible
earnings do not include compensation that should have been paid.
Therefore, the Plan Committee had no obligation to make
contributions based upon overtime hours for which plaintiffs
received no actual compensation and was indeed following the terms
of the Plan when it did not make such contributions. The Plan
Committees role as a fiduciary does not alter its obligation to
adhere to the Plans parameters. Plaintiffs primary claim is that
Group Health misclassified them as exempt employees. Any such
misclassification, however, does not concern the Plan, and
plaintiffs have not alleged that the Committee was responsible for
1 Because it has dismissed plaintiffs ERISA claims, the court
will not address the issue of whether plaintiffs properly seek
relief under 29 U.S.C. 1132(a)(3) or failed to exhaust
administrative remedies.
6
the classification. Rather, plaintiffs assert only a FLSA claim.
Therefore, the court dismisses plaintiffs ERISA claims.1
II. Unjust Enrichment
In addition to their statutory claims, plaintiffs filed a
common law unjust enrichment claim against defendant. Defendant
argues that unjust enrichment is an equitable claim that may not be
invoked when plaintiffs have an adequate remedy at law.
To establish a claim for unjust enrichment in Minnesota,
plaintiffs must show that defendant knowingly received something
of value, not being entitled to the benefit, and under
circumstances that would make it unjust to permit its retention.
See Southtown Plumbing, Inc. v. Har-Ned Lumber Co., 493 N.W.2d 137,
140 (Minn. Ct. App. 1992). An action for unjust enrichment may be
based on failure of consideration, fraud, mistake, and situations
where it would be morally wrong for one party to enrich himself at
the expense of another party. Heimbach v. Riedman Corp., 175 F.
Supp. 2d 1167, 1180 (D. Minn. 2001) (citing Anderson v. DeLisle,
352 N.W.2d 794, 796 (Minn. Ct. App. 1984)).
The right of recovery for unjust enrichment is equitable. See
Southtown Plumbing, 493 N.W.2d at 140 (citing Lundstrom Constr. Co.
v. Dygert, 94 N.W.2d 314, 319 (Minn. 1942)). The equity powers of
7
a court may not be invoked when a plaintiff has an adequate remedy
at law. Borom v. City of St. Paul, 184 N.W.2d 595, 598 (Minn.
1971). Thus, equitable relief is granted only upon a showing of
the inadequacy of any legal remedy. Zimmerman v. Lasky, 374
N.W.2d 212, 214 (Minn. Ct. App. 1985).
Here, plaintiffs have adequate legal remedies in the form of
state and federal FLSA claims. Although statute of limitations
periods for the FLSA and unjust enrichment claims are different,
plaintiffs have not argued that the difference has rendered the
available legal remedies inadequate nor have they explained why the
FLSA claims would not address Group Healths alleged
transgressions. Cf. Jackson v. Wal-Mart Stores, Inc., No. 258490,
2005 WL 3191394, at *8 (Mich. Ct. App. Nov. 29, 2005) (unjust
enrichment claim not precluded where FLSA failed to address
purportedly illegal actions). Accordingly, while plaintiffs are
generally free to plead in the alternative under Rule 8(e)(2), they
may not assert an unjust enrichment claim in this case. See
Heimbach, 175 F. Supp. 2d at 1180; Excel Homes of Minn., Inc. v.
Ivy Ridge Home Builders, Inc., No. 00-1686, 2001 WL 506782, at *3-4
(Minn. Ct. App. May 15, 2001); Southtown Plumbing, 493 N.W.2d at
140-41; see also Bongat v. Fairview Nursing Care Ctr., Inc., 341 F.
Supp. 2d 181, 189 (E.D.N.Y. 2004) (granting dismissal of unjust
8
enrichment where FLSA claim provided adequate remedy at law). For
these reasons, the court grants defendants motion to dismiss this
claim.
CONCLUSION
Therefore, IT IS HEREBY ORDERED that:
1. Defendant Group Healths motion for partial dismissal
[Doc. No. 11] is granted.
2. Plaintiffs ERISA claims are dismissed without prejudice.
3. Plaintiffs unjust enrichment claim is dismissed with
prejudice.
Dated: May 20, 2008
s/David S. Doty
David S. Doty, Judge
United States District Court
 

 
 
 

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