Opinion
Civil Action No. 99-3595.
October 25, 2001.
ORDER AND REASONS
Before the Court are Defendanfs Motion to Summarily Dismiss the ERISA and COBRA Claims of Densel Stewart, Plaintiffs Opposition to Defendant's Motion to Summarily Dismiss, and Defendant's Supplemental Memorandum in Support of its Motion to Dismiss. For reasons set forth below, Defendant's Motion to Dismiss is DENTED.
I. BACKGROUND
Densel M. Stewart, a Mississippi resident, signed a consultant agreement with Project Consulting Services, Inc. ("PCS") on April 24, 1997 to work as a pipeline inspector. He worked for PCS until December 3, 1997. During that time, Stewart claims he was an employee and worked more than forty hours a week but received no compensation for overtime, sickness, holidays, vacation, or medical and dental expenses. Stewart now seeks various benefits available to employees of PCS including benefits related to healthcare, time for leave, and pension and insurance plans.
Stewart contends that he served as an employee of PCS because he was under its supervision, direction, and control. Accordingly, Stewart claims that he and other similarly situated workers are entitled to participate in the various benefits programs offered by PCS to its employees. These programs include benefits for medical, insurance, unemployment, and workers compensation plans. PCS maintains that it hired Stewart as an independent contractor and at no time did he qualify as a employee entitled to employee benefits.
Stewart raises several causes of action in his complaint. He brings federal claims under the Employment Retirement Insurance Security Act ("ERISA"), 29 U.S.C. § 1132, the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), 29 U.S.C. § 1161, the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, and 26 U.S.C. § 6051(a) concerning the Social Security Administration. Stewart contends that his ERISA claim arises under both § 1132 and § 1140 because PCS misclassified him as an independent contractor to prevent him from taking advantage of the benefits of its ERISA plan. Because COBRA provides a right to the continuation of ERISA coverage after termination, Stewart's COBRA claim is derivative of his ERISA claim. See Wolf v. Coca-Cola Co., 200 F.3d 1337, 1342 (11th Cir. 2000).
PCS now seeks dismissal of Stewart's ERISA and COBRA claims on the grounds that Stewart waived his right to pursue these claims in the Consultant Agreement entered into by and between the parties. The Agreement provides inter alia that "Consultant [plaintiff] shall be an independent contractor and shall not be an employee of the Company." The Agreement further provides that "[s]ince the Consultant is not an employee of the Company, he is not entitled to participate in any of the Company's employee benefit plans or other programs." Based on this language, PCS argues that Stewart contractually waived the ERISA and COBRA claims which he now pursues.
In opposing opposes PCS's motion to dismiss, Stewart claims that he did not contractually waive his rights. Further, Stewart maintains that the real issue in this case — whether, as a matter of federal law, plaintiff should be classified as an independent contractor or as a common law employee — requires the resolution of genuine issues of material fact which are in dispute.
Standard of Review
A district court can grant a motion for summary judgment only when the "`pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.'" Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)). When considering a motion for summary judgment, the district court "will review the facts drawing all inferences most favorable to the party opposing the motion." Reid v. State Farm Mut. Auto. Ins. Co., 784 F.2d 577, 578 (5th Cir. 1986). The court must find "[a] factual dispute . . . [to be] `genuine' if the evidence is such that a reasonable jury could return a verdict for the nonmoving party . . . [and a] fact . . . [to be] `material' if it might affect the outcome of the suit under the governing substantive law." Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
Law and Analysis
PCS points to the language of the Consultant Agreement, in particular its provision that "[s]ince the Consultant is not an employee of the Company, he is not entitled to participate in any of the Company's benefit plans or other programs" in support of its contention that Stewart waived any ERISA and COBRA based claims against PCS. PCS relies on the Tenth Circuit opinion in Capital Cities/ABC, Inc. v. Ratcliff, 141 F.3d 1405 (10th Cir. 1998), cert. denied, 525 U.S. 873, 119 S.Ct. 173 (1998) in arguing that one who signs an independent contractor agreement may in that agreement waive any ERISA based claim for employee benefits.
In Capital Cities/ABC, Inc., the Kansas City Star sought a declaratory judgment seeking to prevent newspaper carriers from claiming any entitlement to ERISA benefits. Id. at 1408. The newspaper carriers had signed "Agency Agreements," a provision of which designated the carriers as "independent contractors" and not employees. The Agency Agreements expanded the discussion of the relationship between the parties to include the following specific preclusion to expectations of benefits: "It is further expressly understood that, as an independent contractor, The Agent will not receive, and has no claim to, any benefits or other compensation currently paid by The Star to its employees or hereafter declared by The Star for the benefit of its employees."
The Fifth Circuit has not considered the exact question of whether by contract a worker, who is contractually designated as an independent contractor, may effectively waive all rights to proceed with an ERISA based claim for benefits regardless of the fact that the worker may be deemed to be an employee as a matter of federal law. However, this Court need not decide this issue because the Court finds that the language of the Consultant Agreement in this case lacks any waiver of claims under ERISA or COBRA.
The Agreement in this case provides that plaintiff is not entitled to employee benefits because he is not an employee. Unlike the Agency Agreement in Capital Cities/ABC, Inc., the agreement in this case is silent as to the ability or inability of a non-employee to pursue an ERISA (or COBRA) claim; it does not contain an expression by plaintiff that he will not pursue benefits nor that he relinquishes any right to claim such benefits under ERISA. Accordingly, the Court finds that plaintiff has not waived his right to pursue his ERISA and COBRA claims.
While plaintiff correctly notes that whether an individual is an employee or an independent contractor is a question of law involving the interpretation of ERISA, see Penn v. Howe-Baker Engineers, Inc., 898 F.2d 1096 (5th Cir. 1990) (adopting the multi-factor test applied in Holt v. Winpisinger, 811 F.2d 1532 (D.C. Cir. 1987)), this Court need not at this time determine the legal classification of plaintiff as "common law employee" or "independent contractor" because PCS seeks dismissal of this case only on the grounds of waiver. The Court notes, however, that, contrary to the assertions of plaintiff, that classification as employee would entitle him automatically to employee benefits, one's classification as a "common law employee" is not dispositive of whether that person has a right to employee benefits. See Shaw v. Della Air Lines, Inc., 463 U.S. 85, 103 S. Ct. 2890 (1983); Abraham v. Exxon Corp., 85 F.3d 1126 (5th Cir. 1996). Rather, claimant's eligibility is judged by the employee benefit plan. See Abraham, 85 F.3d 1131.
Conclusion
For reasons set forth above, the PCS's Motion to Summarily Dismiss the ERISA and COBRA Claims of Densel Stewart based on the doctrine of waiver is DENIED.