The opinion of the court was delivered by: Chin, District Judge.
In this case, the U.S. Department of Labor (the "government")
alleges that defendants, in violation of the Employee Retirement
Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001-1461,
misclassified workers as "temporary employees" and "independent
contractors," thereby depriving them of benefits to which they
otherwise would have been entitled. Defendants contend that
although the government's suit is styled as one for breach of
fiduciary duties, the case is really an impermissible action for
benefits. Defendants move to dismiss the complaint pursuant to
Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil
Procedure. For the reasons set forth below, the motion is denied.
The complaint alleges the following facts, which are assumed to
be true for purposes of this motion:
Defendant Time Warner, Inc. ("Time Warner") owns defendant Time
Inc. ("Time"), which in turn owns several divisions and
subsidiaries, including defendant Book-of-the-Month Club, Inc.
and defendant Time Distribution Services, Inc. Defendants publish
a number of national magazines, including Time, Sports
Illustrated, Fortune, Life, Money, and People. From at least
1984, defendants have sponsored various employee benefit plans,
including retirement plans and health and welfare plans.
Since at least 1990, defendants divided workers into two
groups: the Edit Group and the Publishing Group. The Edit
Group was comprised of journalists, photographers, graphic
designers, and others who produced Time's various publications.
The Publishing Group handled the financial matters associated
with publishing, including the Edit Group's budgets. Since at
least 1984 and continuing through the present, new workers were
classified for payroll purposes as "regular," "project,"
"supplementary," or "temporary" employees. Temporary
employees*fn1 were also called "Green Requisition employees" or
"Green Reqs." Other individuals were classified as "independent
contractors." Since at least 1990, a worker's classification
determined whether she or he was eligible to participate in the
employee benefit plans. Most of the plans exclude temporary
employees and independent contractors from participating.
The government contends that, since at least 1990, Time and
various of its divisions and subsidiaries have misclassified
workers as temporary employees and independent contractors when
they were in fact regular, project, or supplementary employees.
These employees, the government contends, would have been
eligible to participate in certain benefit plans if they had not
been misclassified. For the same time period, Time and various of
its divisions and subsidiaries allegedly manipulated breaks in
service for numerous temporary employees to maintain their
temporary status. By misclassifying temporary employees and
independent contractors, according to the government, defendants
prevented them from completing the length of service required to
be eligible to receive benefits.
2. The Benefit Plans and Their Fiduciaries
The various pension and other employee benefit plans sponsored
by defendants have different eligibility requirements. (See
Compl. ¶¶ 35-67). Generally, however, regular full-time and
part-time employees were eligible to participate in a plan after
meeting the service requirements. Temporary employees were
eligible to participate only in certain plans, and it appears
that independent contractors were not eligible for benefits under
any of the plans.
During the relevant period, a single committee (the
"Administrative Committee") administered all of these plans
pursuant to ERISA § 3(16). The individual defendants are or were
members of the Administrative Committee. The Administrative
Committee was a fiduciary of the plans pursuant to ERISA § 3(21)
because it had the sole authority to interpret the terms of the
plans, including eligibility terms, and to decide any matters
related to the administration of the plans. In addition, Time
Warner was a fiduciary of defendant Managed Mental Health and
Substance Abuse Program because it was responsible for
identifying workers eligible to participate in that plan.