Opinion ID: 201737
Heading Depth: 2
Heading Rank: 2

Heading: Interference with Attainment of Plan Participation Rights

Text: 12 Plaintiffs allege that Defendants misclassified them as off-payroll employees for the purpose of interfering with their attainment of plan participation rights in violation of ERISA § 510, 29 U.S.C. § 1140. That statute provides, in relevant part: 13 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 ERISA or an ERISA plan], or for the purpose of interfering with the attainment of any right to which such participant may become entitled. 14 29 U.S.C. § 1140. 15 The district court held that Plaintiffs could not state a claim for relief under this provision for two independent reasons. First, an employer may hire employees under terms that render them ineligible to receive benefits given to other employees without violating [ERISA] § 510. Edes, 288 F.Supp.2d at 59. Plaintiffs argue that the district court's analysis ignored the language in ERISA § 510 prohibiting employers from discriminating against a participant or beneficiary for the purpose of interfering with the attainment of any right to which such participant may become entitled  under an ERISA plan. 29 U.S.C. § 1140 (emphasis added). Plaintiffs argue that whether or not Defendants permissibly excluded them from plan eligibility at the time they were hired as off-payroll employees, Defendants failed to move them to the GTE payroll after they were hired, for the purpose of interfering with the attainment of participation rights to which they should have become entitled. 6 16 We need not decide the circumstances, if any, under which employees who are ineligible for ERISA benefits at the time of hiring may state a claim under ERISA § 510, based on a defendant's failure to reclassify them, because the district court properly dismissed the claim on the alternate ground that it was time-barred. See Edes, 288 F.Supp.2d at 59. The district court determined the applicable statute of limitations by reference to state law. See Muldoon v. C.J. Muldoon & Sons, 278 F.3d 31, 32 (1st Cir.2002) (per curiam) (Because Congress did not provide a statute of limitations in the ERISA statute for section 510 claims, federal courts must apply the limitations period of the state-law cause of action most analogous to the federal claim.). The claimed wrong here is the misclassification of Plaintiffs in April 1994 when they went on the payroll of the agency rather than the company. Consequently, the district court properly applied Massachusetts' three-year statute of limitations for torts, Mass. Gen. Laws ch. 260, § 2A, to Plaintiffs' claim under ERISA § 510. 17 The district court next applied federal law to determine the date on which Plaintiffs' claim accrued and started the clock on the three-year statute of limitations. Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1138 (7th Cir.1992) (federal common law determines date of accrual of cause of action under ERISA § 510); N. Cal. Retail Clerks Unions v. Jumbo Markets, Inc., 906 F.2d 1371, 1372 (9th Cir.1990) (federal common law determines when cause of action by trust funds to recover employer's contribution accrues under ERISA). For a claim under ERISA § 510, it is the [challenged employment] decision and the participant's discovery of this decision that dictates accrual of Plaintiffs' cause of action. Tolle, 977 F.2d at 1140-41. Applying this rule in light of Plaintiffs' allegation that they were directed to sign on with third-party payroll agencies at their time of hire, the district court concluded that [t]he statute of limitations clock began on [P]laintiffs' claim when [P]laintiffs were hired in April 1994 and classified as employees of a temporary payroll agency instead of as regular employees of GTE. Edes, 288 F.Supp.2d at 59. 18 Plaintiffs argue that even if they discovered the factual basis for their claim as early as April 1994, their complaint alleges a continuing tort that tolled the statute of limitations until they received their last paychecks. 7 Under this theory, in Plaintiffs' words, [e]very time [Plaintiffs] received a paycheck from [a] third-party payroll company while still being denied benefits under any of the GTE ERISA plans they were incurring new injury, as a result of [Defendants'] continuing wrongful behavior. As authority for this argument, Plaintiffs cite Doe v. Town of Blandford, 402 Mass. 831, 525 N.E.2d 403 (1988), a case in which a claimant under the Massachusetts Tort Claims Act alleged the continuing torts of negligent supervision and failure to fire, which tolled the time period for presentment of her claim to an executive officer of a public employer as required by statute. 19 Even assuming for the sake of argument that Massachusetts' continuing tort doctrine is applicable to a federal claim under ERISA § 510 (an issue we do not decide), 8 Plaintiffs have not alleged a continuing tort. While Plaintiffs may have felt the ongoing effects of their ineligibility for ERISA benefits every time they received a paycheck from a third-party payroll agency, Plaintiffs' own allegations make clear that Defendants' wrongful conduct, if any, involved the misclassification of Plaintiffs as off-payroll employees at their time of hire in April 1994. See Berry v. Allstate Ins. Co., 252 F.Supp.2d 336, 346 (E.D.Tex.2003) (Allstate's refusal to allow Plaintiffs to participate in its benefit plans was the single act that served as the basis for the alleged wrongful discrimination.), aff'd, 84 Fed.Appx. 442 (5th Cir.2004). The district court properly dismissed Plaintiffs' ERISA § 510 claim as time-barred. 9