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LePage v. Blue Cross and Blue Shield of Minn.: US District Court : ERISA | EMPLOYMENT - minimum wage, ERISA claims regarding pre-work time fails; unjust-enrichment claim survives

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Sarah LePage and Brenda Knutson,
on behalf of themselves and other
individuals similarly situated,
Plaintiffs,
Civ. No. 08-584 (RHK/JSM)
MEMORANDUM OPINION AND
ORDER
v.
Blue Cross and Blue Shield of Minnesota,
a Minnesota corporation,
Defendant.
Clayton D. Halunen, Charles V. Firth, Halunen & Associates, Minneapolis, Minnesota,
for Plaintiffs.
Andrew J. Voss, Jeffrey A. Timmerman, Marko J. Mrkonich, Littler Mendelson, PC,
Minneapolis, Minnesota, for Defendant.
INTRODUCTION
Plaintiffs Sarah LePage and Brenda Knutson, on behalf of themselves and other
individuals similarly situated (Plaintiffs), filed this action, alleging that by failing to
pay them overtime, Defendant Blue Cross and Blue Shield of Minnesota (Blue Cross)
was unjustly enriched and violated the minimum wage and overtime provisions of the
federal Fair Labor Standards Act (FLSA),1 the minimum wage, overtime, and record-
1 29 U.S.C. 216(b).
2
keeping provisions of the Minnesota FLSA,2 and the record-keeping and fiduciary-duty
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).3 Blue
Cross now moves for partial dismissal. For the reasons set forth below, the Court will
grant that Motion in part and deny it in part.
BACKGROUND
Blue Cross is a nonprofit health-service-plan corporation. (Am. Compl. 6-7.)
Plaintiffs, formerly employed by Blue Cross as customer-service representatives, allege
that Blue Cross failed to pay them for work they performed before and after their
scheduled work shifts. (Id. at 4-5, 11.) In particular, they allege that Blue Cross failed
to pay them for booting-up their computers, logging onto their computers, reviewing email,
and logging onto telephone systems and other software applications. (Id. at 11-
12, 14.) Plaintiffs assert that they spent at least 20 minutes per day performing these
activities during the relevant time period. (Id. at 12.)
Blue Cross now moves to dismiss Plaintiffs Minnesota FLSA claims (Counts 2
and 3), ERISA claims (Counts 4 and 5), unjust-enrichment claim (Count 6), and part of
their FLSA claim (Count 1).
STANDARD OF DECISION
The standard for evaluating a motion to dismiss is set forth in Bell Atlantic Corp.
v. Twombly, __ U.S. __, 127 S. Ct. 1955 (2007). When a court reviews a motion to
2 Minn. Stat. 177.24, 177.25, 177.30.
3 29 U.S.C. 1059(a)(1), 1104.
3
dismiss, the complaint must be liberally construed, assuming the facts alleged therein as
true and drawing all reasonable inferences from those facts in the plaintiffs favor.
Schaaf v. Residential Funding Corp., 517 F.3d 544, 549 (8th Cir. 2008) (citing
Twombly, 127 S. Ct. at 1964-65). To avoid dismissal under Rule 12(b)(6), a complaint
must include enough facts to state a claim to relief that is plausible on its face.
Twombly, 127 S. Ct. at 1974. While Rule 8 of the Federal Rules of Civil Procedure does
not require the pleading of detailed factual allegations, a plaintiff nevertheless must
plead sufficient facts to provide the grounds of his entitle[ment] to relief, [which]
requires more than labels and conclusions, and [for which] a formulaic recitation of the
elements of a cause of action will not do. Id. at 1964-65 (citation omitted). A complaint
cannot simply le[ave] open the possibility that a plaintiff might later establish some set
of undisclosed facts to support recovery. Id. at 1968 (citation omitted). Rather, the
facts set forth in the complaint must be sufficient to nudge[] the[] claims across the line
from conceivable to plausible. Id. at 1974. Thus, Twombly appears to require
plaintiffs to gather relevant information before filing complaints, to ensure that they are
not merely pleading claims based on hunches, but rather are pleading the grounds upon
which the claims rest.4
4 Courts and commentators have been trying to ascertain Twomblys meaning and reach. See,
e.g., Iqbal v. Hasty, 490 F.3d 143, 155 (2d Cir. 2007) (recognizing that [c]onsiderable
uncertainty concerning the standard for assessing the adequacy of pleadings has been created by
Twombly). Shortly after Twombly was decided, the Supreme Court reaffirmed notice pleading
in federal court and emphasized that under Rule 8 [s]pecific facts are not necessary; the
statement need only give the defendant fair notice of what the . . . claim is and the grounds upon
which it rests. Erickson v. Pardus, __U.S. __, 127 S. Ct. 2197, 2200 (2007) (quoting
Twombly, 127 S. Ct. at 1964); see also Airborne Beepers & Video, Inc. v. AT&T Mobility LLC,
4
ANALYSIS
I. Partial Dismissal of the FLSA Claim (Count 1)5
A. The FLSA minimum-wage claim will be dismissed
The FLSA requires that employers pay a minimum wage of .85 per hour to their
employees who in any workweek [are] engaged in commerce or in the production of
goods for commerce. See 29 U.S.C. 206(a). Thus, to establish a violation of the
minimum-wage requirements of the FLSA, a plaintiff must demonstrate that he was
engaged in compensable activity within the meaning of the statute and that the wages
received for that activity, if any, were below the statutory minimum wage. Hensley v.
MacMillan Bloedel Containers, Inc., 786 F.2d 353, 355 (8th Cir. 1986). But there is no
violation of the FLSAs minimum-wage provisions so long as the total weekly wage
paid by an employer meets the minimum weekly requirements of the statute, such
minimum weekly requirement being equal to the number of hours actually worked that
week multiplied by the minimum hourly statutory requirement. Id. at 357 (citation
omitted).
Blue Cross argues that Plaintiffs failed to identify their hourly pay rates or any
facts that would permit the Court to infer that they were actually paid less than the
minimum wage required under the FLSA in any workweek. The Court agrees. Plaintiffs
499 F.3d 663, 667 (7th Cir. 2007) (construing Erickson and Twombly to be saying only that at
some point the factual detail in a complaint may be so sketchy that the complaint does not
provide the type of notice of the claim to which the defendant is entitled under Rule 8).
5 Blue Cross has not moved to dismiss that portion of Count 1 alleging that Plaintiffs were not
paid overtime.
5
have alleged that Blue Cross permitted them to work hours each week without minimum
wage compensation which violated the FLSAs minimum-wage requirements. (See Am.
Compl. 24-25, 45-46.) This conclusory pleading is not sufficient under Twombly.
See Schaaf, 517 F.3d at 549 (explaining that a plaintiff must include sufficient factual
information to provide the grounds on which the claim rests, and to raise a right to relief
above a speculative level) (citing Twombly, 127 S. Ct. at 1964-65 & n.3).
Plaintiffs assert that there may have been instances during the relevant limitations
period for which they did off-the-clock work and were not paid the minimum wage rate.
(Pls. Oppn Mem. at 8-9.) But under Twombly, Plaintiffs cannot simply hope that
discovery will uncover facts indicating that Blue Cross violated the minimum-wage
provisions of the FLSA. See 127 S. Ct. at 1968 (stating that complaint cannot simply
le[ave] open the possibility that a plaintiff might later establish some set of undisclosed
facts to support recovery). Rather, Plaintiffs are required to plead facts that would, if
proved, establish a violation of the minimum-wage provisions of the FLSA. Plaintiffs
have not done that here; accordingly, they have failed to state a claim for violation of the
FLSAs minimum-wage provisions.
B. Blue Crosss statute of limitations argument fails
Ordinarily, a violation of the FLSA is subject to a two-year statute of
limitations. Smith v. Heartland Auto. Servs., Inc., 418 F. Supp. 2d 1129, 1141 (D.
Minn. 2006) (Kyle, J.) (citing 29 U.S.C. 255). But, the statute of limitations may be
extended to three years if the employers violation is willful, i.e., the employer either
6
knew or showed reckless disregard for the matter of whether its conduct was prohibited
by statute. Id. (citing McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988)).
In Count 1, Plaintiffs allege that Blue Cross knew, or showed reckless disregard
for the fact, that it failed to pay its employees a minimum wage and overtime
compensation for their hours worked before and after the beginning of their scheduled
work shift. (Am. Compl. 48.) Blue Cross asserts that Plaintiffs have simply alleged
the legal elements for extending the statute of limitations without factual support. In
particular, Blue Cross argues that Plaintiffs have failed to plead any facts suggesting how
it purportedly knew its conduct was prohibited by the FLSA or how it acted with reckless
disregard. (Def.s Mem. at 9.) But the applicability of the statute of limitations is an
affirmative defense. See Fed. R. Civ. P. 8(c)(1); Mumbower v. Callicott, 526 F.2d 1183,
1187 n.5 (8th Cir. 1975) (explaining that 29 U.S.C. 255(a) was intended to serve as a
conventional limitation on the remedy, not upon the right to bring the action, and must be
pleaded as an affirmative defense in compliance with Fed. R. Civ. P. 8(c)). And it is
well settled that plaintiffs are not required to negate an affirmative defense in their
complaint. See, e.g., La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir.
2004). Thus, Blue Cross has attempted to foist on Plaintiffs a pleading requirement that
does not exist. Ventrassist Pty Ltd. v. Heartware, Inc., 377 F. Supp. 2d 1278, 1282
(S.D. Fla. 2005). Only if it is apparent from the face of the complaint that the time limit
for bringing the claim has passed, will dismissal under Rule 12(b)(6) be appropriate. See
La Grasta, 358 F.3d at 845.
7
Here, it is not apparent from the face of the Complaint that the time limit for
bringing the claim has passed or that Blue Cross did not willfully violate the FLSA. In
particular, Plaintiffs have alleged that they worked for Blue Cross; were not properly paid
for that work during the relevant time period; that Blue Cross failed to maintain accurate
records of their overtime hours; and that such actions were willful and intentional. (See
Am. Compl. 5, 8, 11, 15, 48.) At this early stage, Plaintiffs general assertions satisfy
the requirements of pleading a willful violation of the FLSA. See Fed. R. Civ. 9(b)
(Malice, intent, knowledge, and other conditions of a persons mind may be alleged
generally.); see also Elwell v. Univ. Hosps. Home Care Servs., 276 F.3d 832, 843 (6th
Cir. 2002) (an employers recordkeeping practices may nonetheless corroborate an
employees claims that the employer acted willfully in failing to compensate for
overtime). And because the applicability of this affirmative defense often involves a
factual inquiry, it is not generally amenable to resolution on a Rule 12(b)(6) motion. See,
e.g., Morrison v. Quality Transports Servs., Inc., 474 F. Supp. 2d 1303, 1309 (S.D. Fla.
2007) (The issue of willfulness under 255(a) is a question of fact for the jury not
appropriate for summary disposition.). Accordingly, the Court will deny Blue Crosss
Motion as to the statute-of-limitations issue in Count 1.
II. The Minnesota FLSA minimum wage and overtime claims are insufficiently
pleaded (Count 2)
Blue Cross argues that Plaintiffs have failed to sufficiently plead their Minnesota
FLSA claim for minimum wage and overtime compensation. The Court agrees.
8
The Minnesota FLSA establishes minimum wage and overtime compensation
standards that apply to all employees who are not specifically exempt from the
requirements of the Act. Milner v. Farmers Ins. Exch., 748 N.W.2d 608, 611 (Minn.
2008) (citations omitted). The minimum-wage provisions of the Minnesota FLSA
require that Blue Cross pay its employees a minimum wage of .15 an hour. See Minn.
Stat. 177.24, subd. 1(b). The minimum wage must be paid for all hours worked,
Minn. R. 5200.0120, Subpart 1 (2008), and [t]he period of time used for determining
compliance with the minimum wage rate . . . is the workweek, which is defined as a fixed
and regularly recurring period of 168 hours, seven consecutive 24-hour periods. Minn.
R. 5200.0170, Subpart 1.
Here, like their minimum-wage claim under the FLSA, Plaintiffs have failed to
identify their hourly pay rates or any facts that would permit the Court to infer that they
were actually paid less than the minimum wage required under the Minnesota FLSA in
any workweek. This is not sufficient under Rule 8 or Twombly. See 127 S. Ct. at 1964-
65.
With respect to Plaintiffs overtime claim, the Minnesota FLSA prohibits an
employer from employing an employee for a workweek longer than 48 hours, unless the
employee receives compensation for employment in excess of 48 hours in a workweek at
a rate of at least 1-1/2 times the regular rate at which the employee is employed. Minn.
Stat. 177.25, subd. 1. The period of time used for determining compliance with . . .
overtime compensation . . . is the workweek. Minn. R. 5200.0170, Subpart 1.
9
Here, Plaintiffs have not even alleged that they worked more than 48 hours in any
workweek. Instead, they have simply recited the legal elements for a violation of the
overtime provisions of the Minnesota FLSA. (See Am. Compl. 51-54.) But Plaintiffs
cannot simply rely on labels and conclusions. Twombly, 127 S. Ct. at 1965. Nor is the
Court bound to accept as true a legal conclusion couched as a factual allegation.
Papasan v. Allain, 478 U.S. 265, 286 (1986). Plaintiffs, however, assert that it is
possible that the record evidence in this case, as it is developed through discovery, will
substantiate [their] claims for overtime under the MN FLSA. (Pls. Oppn Mem. at 16).
Yet, the Supreme Court requires more namely, that there are factual allegations that
raise a right to relief above the speculative level. Twombly, 127 S. Ct. at 1965.
Accordingly, the Court concludes that Plaintiffs have failed to state a claim for a
violation of the overtime provisions of the Minnesota FLSA.
III. The Minnesota FLSA record-keeping claim will be dismissed (Count 3)
Plaintiffs allege that Blue Cross violated the record-keeping requirements of the
Minnesota FLSA, which requires employers to maintain wage and hour records
concerning their employees. See Minn. Stat. 177.30. In particular, an employer must
keep a record of (1) the name, address, and occupation of each employee; (2) the rate of
pay, and the amount paid each pay period to each employee; [and] (3) the hours worked
each day and each workweek by the employee . . . . Id. Employers are required to
retain these records for three years. Id. And the Minnesota Supreme Court recently
stated in Milner that an employee may bring a private suit for the violation of any
10
section of the MFLSA, including a failure to maintain records. 748 N.W.2d at 617
(citing Minn. Stat. 177.27, subd. 8.) (emphasis in original). Plaintiffs seek injunctive
relief, civil penalties, attorneys fees, and costs.6 (See Am. Compl. 57, 59, L, M, N, O,
S.) Blue Cross, however, argues that Plaintiffs record-keeping claim should be
dismissed because they have failed to state a legally cognizable claim. The Court agrees.
Plaintiffs spend considerable time discussing Milner to support their position that
they can assert such a claim. (See Pls. Oppn Mem. at 17-20.) But Plaintiffs must first
sufficiently plead such a claim, and that they have not done. In Milner, the defendants
admitted that they did not keep any time records pursuant to the Minnesota FLSA. See
748 N.W.2d at 610, 618. That is not the case here. But more importantly, Plaintiffs have
not alleged that Blue Cross failed to keep any time records or that such records were
inaccurate based on the time cards Plaintiffs submitted to Blue Cross. Rather, Plaintiffs
have alleged that Blue Cross failed to maintain records for certain time before and after
their scheduled shift. In other words, Plaintiffs are claiming that Blue Cross should have
maintained records for this off-the-clock time even though they never reported it on their
time cards. The Court fails to understand how this translates into a record-keeping
violation. In the end, Plaintiffs are attempting to take their substantive claim that they
were not paid overtime, and bootstrap a record-keeping violation into their Complaint.
Therefore, the Court will dismiss Count 3 of Plaintiffs Complaint.
6 Plaintiffs allege that as a result of any such record-keeping violation, they are entitled to a
penalty of up to ,000 for each violation for each employee. (Am. Compl. 59.) The
Minnesota Supreme Court, however, has held that civil penalties are payable to the State and not
to individual litigants. Milner, 748 N.W.2d at 618.
11
IV. The ERISA claims will be dismissed (Counts 4 and 5)
Plaintiffs assert that Blue Cross violated ERISA by failing to record all of the
hours they worked, which resulted in its failure to maintain records sufficient to
determine the benefit accrual rights under the Employee Savings Plan and Pension Equity
Plan (Count 4). (See Am. Compl. 64 (citing 29 U.S.C. 1059(a)(1)).) Plaintiffs also
allege that Blue Cross breached its fiduciary duty to them in violation of ERISA by
failing to account for overtime in administering the Employee Savings Plan and Pension
Equity Plan (Count 5). (See id. 71 (citing 29 U.S.C. 1104).) Plaintiffs seek injunctive
relief for their ERISA claims pursuant to 29 U.S.C. 1132(a)(3). (See id. 65, 72.)
Blue Cross has set forth many arguments in support of its Motion, but the Court need
only address one: are Plaintiffs ERISA claims legally cognizable? The Court concludes
that they are not.
Setting compensation levels is a business decision or judgment made in
connection with the on-going operation of a business. See Eckelkamp v. Beste, 201 F.
Supp. 2d 1012, 1023 (E.D. Mo. 2002), affd, 315 F.3d 863 (8th Cir. 2002).
Consequently, ERISA does not govern Blue Crosss business decision about how to
classify an employee for payroll and FLSA purposes. Nor do Plaintiffs dispute this.
(Pls. Oppn Mem. at 27-28.) Instead, they make the very fine distinction that Blue
Cross, as plan administrator, has a fiduciary duty to double-check this business decision
and evaluate whether employees had some legal claim to additional compensation. (Id. at
22, 27-30.) But no such duty exists:
12
An employers discretion in determining salaries is a business judgment
which does not involve the administration of an ERISA plan or the
investment of an ERISA plans assets. Such a decision may ultimately
affect a plan indirectly but it does not implicate fiduciary concerns
regarding plan administration or assets. Business decisions can still be
made for business reasons, notwithstanding their collateral effect on
prospective, contingent employee benefits.
Eckelkamp, 201 F. Supp. 2d at 1023; see also Hickman v. Tosco Corp., 840 F.2d 564,
566 (8th Cir. 1988) (holding that ERISA does not require day-to-day corporate business
transactions, which may have a collateral effect on prospective, contingent employee
benefits, be performed solely in the interest of plan participants). ERISA clearly states
that a fiduciary must discharge its duties in accordance with the documents and
instruments governing the plan . . . . 29 U.S.C. 1104(a)(1)(D); see also Egelhoff v.
Egelhoff, 532 U.S. 141, 150 (2001) (recognizing ERISAs requirements that plans be
administered, and benefits be paid, in accordance with plan documents). Thus, Blue
Cross, as plan administrator, has a fiduciary duty to credit Plaintiffs with the
compensation that is required to be credited under the terms of the plan.
Here, the Employee Savings Plan (the 401(k) Plan) defines Eligible Earnings
as the total earnings paid to the Participant by the Participating Employer during such
Plan Year that is reported by the Participating Employer on Internal Revenue Service
Form W-2 as wages, tips, or other compensation for purposes of federal income tax . . . .
(Voss Aff. Ex. 2 at 2.08.)7 Notably, the terms of the 401(k) Plan do not impose a duty
7 The Pension Equity Plan specifically excludes overtime pay for purposes of calculating an
eligible participants Accrued Benefit. (See Voss Aff. Ex. 3 at 4.1, 4.3, 4.4(a)).) Even if
Plaintiffs were to establish that Blue Cross owes them overtime pay, such pay would not be
13
to double-check the employers compensation determinations or investigate whether each
employee might have a legal claim that could produce additional compensation. To the
contrary, the 401(k) Plan only requires that participants be credited for compensation that
was actually paid to them.
The crux of Plaintiffs argument is that Blue Cross had a fiduciary duty to credit
them for unpaid overtime. But Plaintiffs were never actually paid overtime. And under
the terms of the 401(k) Plan, Eligible Earnings do not include compensation that should
have been paid. Thus, Blue Cross followed the terms of the Plan when it did not make
contributions based upon overtime hours for which Plaintiffs received no actual
compensation. So there are no records to correct because they properly reflect the
compensation actually paid to the Plan participants. And Blue Crosss decision not to
pay Plaintiffs overtime does not pertain to the administration of the 401(k) Plan; rather it
is a business decision and, though the decision may have impacted Plaintiffs benefits
under the Plan, it does not state a claim for breach of fiduciary duty under ERISA. See,
e.g., Ballaris v. Wacker Siltronic Corp., No. Civ. 00-1627, 2002 WL 926272, at *2 (D.
Or. Feb. 7, 2002) (dismissing a claim for breach of fiduciary duty under ERISA because
employers decision concerning whether to pay wages for changing time has only an
credited to the Pension Equity Plan because overtime pay is not included in this Plans
calculation of benefits. Moreover, based on the pleadings, Plaintiff LePage was not an eligible
participant. (Id. at 5.1(a); see also Def.s Mem. at 30.) The Court notes that Plaintiffs did not
address these issues in their opposition memorandum and consequently appear to have
abandoned their ERISA claims with respect to the Pension Equity Plan. See, e.g., Thomsen v.
Ross, 368 F. Supp. 2d 961, 974 n.9 (D. Minn. 2005) (finding that plaintiff had abandoned claims
not addressed in his summary-judgment submissions). Nevertheless, as explained below,
Plaintiffs ERISA claims will be dismissed for failing to state a legally cognizable claim upon
which relief can be granted.
14
extremely indirect connection to the administration of the ERISA plan and therefore
employer was not acting as an ERISA fiduciary in this regard).8 Inescapably then,
Plaintiffs ERISA claims are not based on any duty with respect to the plan, 29 U.S.C.
1104; rather, they are based solely on the claim that Blue Cross, in its role as employer,
should have paid them overtime. As such, Plaintiffs have failed to state a legally
cognizable claim with respect to the retirement plan at issue.
Plaintiffs, however, urge this Court to adopt the reasoning in several unpublished
district court decisions. See Rosenburg v. Intl Bus. Machs. Corp., Civ. 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)
(Firth Aff. Ex. A.). Each case closely parallels the facts here. In Rosenberg, the court set
forth the arguments of plaintiffs and defendants and summarily concluded that it was a
close call, and that plaintiffs ERISA claims could not be dismissed as a matter of law
without further discovery. 2006 WL 1627108, at *5. In Farmers, the court stated that
[p]laintiffs draw a very fine line between business and fiduciary decisions in pressing
this novel theory and hold[ing] the two ERISA claims in abeyance and defer[ring] any
further activity on the claims (including class certification, discovery, summary
8 Plaintiffs also argue that Blue Cross could avoid its fiduciary duty to pay benefits under ERISA
by illegally withholding payment of overtime. (See Pls. Oppn Mem. at 23.) Plaintiffs,
however, are not without recourse because the employer would be subject to liability under
federal and state FLSA statutes. Plaintiffs offer no reason why an employers decision to
illegally withhold overtime wages should be considered a breach of the fiduciary duty by a plan
administrator who follows the terms of the plan documents and is not involved in the employers
decision not to pay overtime.
15
judgment), until [the court] rule[d] on defendants liability for overtime pay. 2005 WL
1972565, at *5. Likewise, in Gerlach, the court allowed the ERISA claims to survive on
the basis that the defendants argument was not persuasive and the concern that the
defendant could illegally withhold overtime wages and then deprive plaintiffs of the
corresponding pension benefits. (Firth Aff. Ex. A at 5.)
But this Court is not persuaded by those decisions; they did not adequately address
whether there is a fiduciary duty to review an employers business decision for
classifying employees as exempt or nonexempt for payroll purposes and a corresponding
fiduciary duty to investigate whether the employees had some legal claim to additional
compensation. See Maranda v. Group Health Plan, Inc., Civ. No. 07-4655, 2008 WL
2139584, at *2 (D. Minn. May 20, 2008) (Doty, J.) (rejecting the reasoning in Rosenberg,
Farmers, and Gerlach, and dismissing nearly identical ERISA claims because plaintiffs
failed to state a cognizable claim based on the substance of the pension plan at issue).
Furthermore, the decisions relied upon by Plaintiffs did not address the policy
implications of recognizing such a sweeping fiduciary duty. In this case, Plaintiffs draw
an extremely fine line between business and fiduciary decisions namely, that a plan
administrator has a fiduciary duty to second guess the employers classification of all of
its employees as exempt or nonexempt. Such a far-reaching duty would send the
administration of the plan into gridlock and dramatically increase the cost of
administering the plan. And the Supreme Court has repeatedly warned that Congress did
not intend that ERISA be a system that is so complex that administrative costs, or
16
litigation expenses, unduly discourage employers from offering . . . benefit plans in the
first place. Varity Corp. v. Howe, 516 U.S. 489, 497 (1996). The Court will dismiss
Plaintiffs ERISA claims.
V. The unjust-enrichment claim survives (Count 6)
Plaintiffs have also filed a common law unjust-enrichment claim against Blue
Cross. Blue Cross asserts that unjust enrichment is an equitable claim that may not be
invoked when Plaintiffs have an adequate remedy at law in this case, a federal FLSA
claim. Nonetheless, a party may plead alternative theories of relief under both legal and
equitable grounds. See Fed. R. Civ. P. 8(d)(2). While Plaintiff[s] may not obtain
double recovery, [they are] free to pursue relief under the FLSA as well as unjust
enrichment . . . . Marquez v. Partylite Worldwide, Inc., Civ. No. 07-2024, 2007 WL
2461667, at *6 (N.D. Ill. Aug. 27, 2007). Accordingly, the Court will not dismiss this
claim.9
9 Alternatively, Blue Cross argues that the Court should decline to exercise supplemental
jurisdiction over Plaintiffs Minnesota FLSA claims and unjust-enrichment claim because the
opt-out adjudication of these claims would circumvent the opt-in procedure of Plaintiffs FLSA
claim. (See Def.s Mem. at 14-19, 32-32 (citing 28 U.S.C. 1367(c)(4)).) The Eighth Circuit
addressed the distinction between an FLSA collective action and a Rule 23 class action as
follows: Rule 23(c) provides for opt out class actions. FLSA 16(b) allows as class members
only those who opt in. These two types of class actions are mutually exclusive and
irreconcilable. Schmidt v. Fuller Brush Co., 527 F.2d 532, 536 (8th Cir. 1975) (quoting
LaChapelle v. Owens-Illinois, Inc., 513 F.2d 286, 289 (5th Cir. 1975). But such arguments
about the propriety of class treatment are premature at present and can be appropriately resolved
when Plaintiffs move to certify the respective classes. Resnick v. Oppenheimer & Co., Civ. No.
07-80609, 2008 WL 113665, at *4 (S.D. Fla. Jan. 8, 2008).
17
CONCLUSION
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
ORDERED that Blue Crosss Motion for Partial Dismissal (Doc. No. 8) is GRANTED
IN PART and DENIED IN PART as follows:
1. The Motion is GRANTED as to Count 1 insofar as Plaintiffs have
alleged a violation of the FLSAs minimum-wage provisions; and this
portion of Count 1 is DISMISSED WITHOUT PREJUDICE. The
Motion is DENIED as to Count 1 with respect to the statute of
limitations;
2. The Motion is GRANTED as to Counts 2, 3, 4, and 5 and these Counts
are DISMISSED WITHOUT PREJUDICE; and
3. The Motion is DENIED as to Count 6.
Date: June 25, 2008
s/Richard H. Kyle
RICHARD H. KYLE
United States District Judge
 

 
 
 

  What day were you injured?

  / /


  What caused your injuries?
Traffic/Bicycle Accident
Work-Related Injury
Wrongful Death
Dog Bite
Slip and Fall
Other:


  How have your injuries affected

  your life?

 


  What kinds of medical care
  professionals have you seen?

 


  What has your treatment cost?

 

  Is Insurance Involved?
My insurance may cover
        this.

Someone else's insurance
        may cover this.

I already filed a claim.
I rejected a settlement
        offer.

I accepted a settlement
        offer.

  Were there any witnesses?
Bystanders Witnessed This.
Police Responded and Filed
        a Police Report

Police Responded but Did
        Not File a Police Report


 

 

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Copyright © Michael E. Douglas, Attorney at Law, Saint Paul MN. All Rights Reserved.
Minnesota Law Firm representing Personal Injury, Car / Auto Accident, Workers Compensation, Medical Malpractice, Social Security Disability claims.
Dedicated to Injured Workers, Victims of Negligence, Car Accidents, Victims of Fraud, and those in need of legal assistance.