Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-00585/USCOURTS-cand-4_05-cv-00585-0/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1331 Fed. Question: Fair Labor Standards

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

JASMIN GERLACH, on behalf of

herself and all others similarly

situated,

Plaintiff,

v.

WELLS FARGO & CO.,

Defendant.

 /

No. C 05-0585 CW

ORDER DENYING

DEFENDANT'S

MOTION TO

DISMISS

Defendant Wells Fargo & Co. moves, pursuant to Federal Rule

of Civil Procedure 12(b)(6), to dismiss the first and second

claims for relief in the complaint filed by Plaintiff Jasmin

Gerlach. Plaintiff opposes the motion. The matter was heard on

May 20, 2005. Having considered the parties' papers and oral

argument on the motion, the Court DENIES Defendant's motion to

dismiss. 

BACKGROUND

The following facts are alleged in Plaintiff's complaint. 

Plaintiff, from October, 1995 to October, 2004, worked as a

business systems employee for Wells Fargo in Phoenix, Arizona. 

At all times relevant to this action, Plaintiff was covered by

the Wells Fargo Cash Balance Plan (Plan), a pension benefits

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plan organized under the Employee Retirement Income Security Act

(ERISA). Defendant is both the Plan's sponsor and the Plan's

administrator.

During her employment with Defendant, Plaintiff routinely

worked more than forty hours per week. However, she was not

paid overtime compensation (one and one-half times her regular

hourly wage) for her overtime work because Defendant illegally

classified her and all other business systems employees as

exempt from the Fair Labor Standards Act (FLSA). Plaintiff was

not exempt from the FLSA because her job duties involved little

or no exercise of discretion and did not require special

expertise. In addition, Defendant failed to keep proper time

records of Plaintiff's overtime work. 

Under the Plan, participants' pension benefits are

determined in large part by the total amount of certified

compensation they earn. By withholding Plaintiff's premium

overtime pay, Defendant failed to take into account all

certified compensation owed to Plaintiff, thereby illegally

reducing the amount of pension benefits to which she is

entitled.

On February 9, 2005, Plaintiff filed her complaint, which

alleges three causes of action. The first two causes of action,

on behalf of Plaintiff and all business systems employees

employed by Defendant within the past six years (ERISA class),

allege 

(1) failure to maintain adequate records for purposes of

calculating ERISA benefits, and (2) violation of ERISA section

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404(a)(1) for breach of fiduciary duty. Plaintiff requests,

pursuant to section 502(a)(3), that Defendant credit her and the

ERISA class with all earned overtime pay as certified

compensation. Plaintiff's third cause of action, on behalf of

herself and all business system employees employed by Defendant

within the last three years (FLSA class), alleges that Defendant

violated the FLSA by failing adequately to compensate non-exempt

employees for overtime work. On April 8, 2005, Defendant moved

to dismiss the first and second causes of action.

LEGAL STANDARD

A motion to dismiss for failure to state a claim will be

denied unless it is “clear that no relief could be granted under

any set of facts that could be proved consistent with the

allegations.” Falkowski v. Imation Corp., 309 F.3d 1123, 1132

(9th Cir. 2002), citing Swierkiewicz v. Sorema N.A., 534 U.S.

506 (2002). A complaint must contain a “short and plain

statement of the claim showing that the pleader is entitled to

relief.” Fed. R. Civ. P. 8(a). “Each averment of a pleading

shall be simple, concise, and direct. No technical forms of

pleading or motions are required.” Fed. R. Civ. P. 8(e). These

rules “do not require a claimant to set out in detail the facts

upon which he bases his claim. To the contrary, all the Rules

require is ‘a short and plain statement of the claim’ that will

give the defendant fair notice of what the plaintiff’s claim is

and the grounds on which it rests.” Conley v. Gibson, 355 U.S.

41, 47 (1957).

DISCUSSION

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I. Whether Unpaid Overtime Qualifies as Certified Compensation

Defendant's first argument is that Plaintiff's ERISA claims

should be dismissed because the Plan's definition of certified

compensation does not include owed but unpaid overtime. Under

section 2.9 of the Plan, certified compensation is defined as

"all compensation paid to the Participant by the Participating

Employer during a particular calendar quarter for service as an

Active Participant which is reportable on Form W-2." Thus,

certified compensation has three required elements, according to

Defendant: (1) it must have been paid, (2) during a calendar

quarter, and 

(3) it must be reportable on the employee's W-2 form. Defendant

argues that Plaintiff's ERISA claims fail because Plaintiff

requests pension credits for allegedly owed overtime

compensation that was never paid.

Defendant further argues that it is allowed to define what

constitutes compensation for purposes of calculating pension

benefits. In support of this argument, Defendant cites Haberern

v. Kaupp Vascular Surgeons Ltd. Life Defined Benefit Pension

Plan, 24 F.3d 1491, 1502 (3rd Cir. 1994), in which the Third

Circuit held that a pension plan could exclude certain types of

pay, including bonus pay, from its definition of compensation.

Plaintiff does not dispute that Defendant could have

defined certified compensation to exclude certain types of pay,

specifically overtime pay. Plaintiff notes, however, that the

Plan does not exclude overtime pay from its definition of

certified compensation. What Plaintiff argues is that, once

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Defendant has established a pension plan, it is under an

obligation to provide benefits according to the terms of that

plan. See 29 U.S.C. 

§ 1102(a)(1).

Defendant's argument is not persuasive. Under Defendant's

interpretation of the Plan, a Plan participant could earn wages

that qualify, under terms of the Plan, as certified

compensation, but could be deprived of the corresponding pension

credits if Defendant illegally withheld those wages. The

central allegation of the complaint, which must be accepted as

true for purposes of this motion, is that Defendant violated the

FLSA by not paying Plaintiff overtime wages for overtime work. 

As Plaintiff argues, Defendant should not be permitted to create

the illusion of establishing a pension benefit plan under ERISA,

only to avoid thereafter the obligation to pay benefits by

violating federal law.

II. Whether Plaintiff Can Bring a Section 502(a)(3) Claim

Defendant next argues that Plaintiff may not bring her

second cause of action, which seeks injunctive relief under

section 502(a)(3) for breach of fiduciary duty, because

Plaintiff requests credit to her pension account, for which

section 502(a)(3) does not provide. Defendant notes that

section 502(a)(3) of ERISA provides only for injunctive relief

or "other appropriate equitable relief." 29 U.S.C. §

1132(a)(3).

In support of its argument, Defendant cites Pengilly v.

Guardian Life Ins. Co. of Am., 81 F. Supp. 2d 1010 (N.D. Cal.

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2000). In Pengilly, the plaintiff sought, under section

502(a)(3), to have his disability benefits increased because he

argued that the company benefits plan had breached its fiduciary

duty by impermissibly under-calculating his monthly income,

thereby reducing his disability benefit payment. 81 F. Supp. 2d

at 1025. A judge of this District dismissed the claim, ruling

that the plaintiff's claim was not encompassed by section

502(a)(3) because that provision was a "catchall" meant to

provide equitable relief where section 502 did not otherwise

provide for adequate remedies. Id. at 1026, citing Varity Corp.

v. Howe, 516 U.S. 489, 512 (1996). According to the Pengilly

court, section 502(a)(1)(B) "already provides plaintiff an

adequate remedy if in fact Guardian has deprived him of benefits

due him under his ERISA plan." Id. Defendant also relies on

Forsyth v. Humana, Inc., 114 F.3d 1467 (9th Cir. 1997). In

Forsyth, the court similarly ruled that relief was not available

under section 502(a)(3) where adequate remedies were available

elsewhere in the statute. 114 F.3d at 1475.

Both Forsyth and Pengilly are distinguishable. In Forsyth,

the Ninth Circuit rejected the plaintiffs' attempt to bring a

section 502(a)(3) claim because they had already won a judgment

for damages on a section 502(a)(1) claim arising out of the same

conduct. 114 F.3d at 1475. In Pengilly, the plaintiff's

section 502(a)(3) claim sought direct payment of pension

benefits that the plaintiff alleged he was owed; the judge ruled

that section 502(a)(1)(B) provided the plaintiff with an

adequate remedy. 81 F. Supp. 2d at 1025. Here, Plaintiff does

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not seek relief under section 502(a)(3) arising out of conduct

for which she has already recovered under a different provision

of section 502, nor does she seek direct payment of pension

benefits. Rather, Plaintiff seeks equitable relief under

section 502(a)(3). Plaintiff relies primarily upon Matthews v.

Chevron Corp., 362 F.3d 1172 (9th Cir. 2004). In that case, the

plaintiffs sued Chevron, their former employer, for breach of

fiduciary duty because they alleged that they should have been

classified as "involuntarily terminated," thus becoming eligible

for a special enhancement benefit. Id. at 1176-77. The Ninth

Circuit ordered the defendant, pursuant to section 502(a)(3), to

modify its records and label the plaintiffs "involuntarily

terminated," thereby making them eligible for the enhancement

package. Id. at 1186. Addressing the defendant's argument that

the order was, in substance, an order to pay damages, and was

therefore outside of the scope of section 502(a)(3), the court

ruled, "On its face, an order to modify plan records is not an

award of monetary damages. More importantly, the relief granted

by the district court here is also equitable in substance." Id.

Matthews applies here. In Plaintiff's second cause of

action, she seeks an injunction requiring Defendant to correct

the Plan's record of her pension account, and the accounts of

all other similarly-situated business systems employees, to

include compensation that she alleges the class should have been

paid for working overtime. It is true that, should Plaintiff

prevail in this lawsuit, Defendant would be obliged to pay

Plaintiff and others similarly situated higher pension benefits. 

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However, as the Matthews court noted, "the mere payment of money

does not necessarily render the award compensatory 'monetary

damages'" that are not permissible under section 502(a)(3). 

Here, on its face, correcting the Plan's records of pension

accounts to include owed certified compensation is not an award

of money damages; and, the relief, should it ultimately be

granted, is equitable in substance.

At the hearing, Defendant attempted to distinguish Matthews

by arguing that, in that case, the plaintiffs could not sue

under any provision of section 502 other than section 502(a)(3). 

Defendant asserted that, in this case, Plaintiff's claim arises

under section 502(a)(1)(B), so she may not seek relief under

section 502(a)(3). That is not the case. Plaintiff's claim is

not a direct claim for benefits, which would fall under section

502(a)(1)(B), but, rather, a claim for an injunction requiring

Defendant to correct the Plan's records to credit Plaintiff with

allegedly earned certified compensation. As the Matthews court

ruled, the fact that correcting the Plan's records would

increase the benefits to which Plaintiff would be entitled does

not preclude this relief. Defendant also argued at the hearing

that the plaintiffs in Matthews were no longer employed by

Chevron and, thus, no longer covered by the company's

unemployment plan. However, Plaintiff is also a former employee

of Wells Fargo, and is no longer covered by the Plan.

For the foregoing reasons, Plaintiff may pursue her second

cause of action under section 502(a)(3).

CONCLUSION

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For the foregoing reasons, Defendant's motion to dismiss

Plaintiff's complaint (Docket No. 8) is DENIED.

IT IS SO ORDERED.

Dated: 6/13/05 /s/ CLAUDIA WILKEN 

CLAUDIA WILKEN

United States District Judge

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