Henderson v. UPMC

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

________

No. 10-1377
_________

MARY C. HENDERSON, an individual,
on behalf of herself and all others similarly situated,
Appellant

v.

UPMC, doing business as
UNIVERSITY OF PITTSBURGH MEDICAL CENTER;
UPMC GROUP; UPMC PRESBYTERIAN SHADYSIDE;
UPMC SOUTHSIDE; UPMC ST. MARGARET;
UPMC MCKEESPORT; UPMC PASSAVANT;
UPMC BRADDOCK; UPMC HORIZON;
UPMC NORTHWEST; UPMC BEDFORD MEMORIAL;
MAGEE WOMENS HOSPITAL OF UPMC;
UPMC MERCY;
UPMC 401A RETIREMENT SAVINGS PLAN;
UPMC 403B RETIREMENT SAVINGS PLAN;
UPMC BASIC RETIREMENT PLAN

________

On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 3-09-cv-00187)
Magistrate Judge: Honorable Cathy Bissoon
_______

Argued December 16, 2010
 Before: SLOVITER, GREENAWAY, JR., and
GREENBERG, Circuit Judges

(Filed: April 5, 2011)
______

R. Bruce Carlson
Gary F. Lynch
Carlson Lynch
New Castle, PA l6l07

Ellen M. Doyle (Argued)
Joseph N. Kravec, Jr.
William T. Payne
Stember, Feinstein, Doyle & Payne, LLC
Pittsburgh, PA l5219

Paul A. Lagnese
Berger Law Firm
Pittsburgh, PA l5219

David J. Manogue
Specter, Specter, Evans & Manogue
Pittsburgh, PA l5219

James M. Pietz
Pittsburgh, PA 15219

Attorneys for Appellant

Mariah L. Klinefelter
John J. Myers (Argued)
Andrew T. Quesnelle
Eckert, Seamans, Cherin & Mellott
Pittsburgh, PA 15219

Attorneys for Appellee

2
 ____________

OPINION OF THE COURT
____________

SLOVITER, Circuit Judge.

Under Section 209(a)(1) of the Employee Retirement
Income Security Act of 1974 (“ERISA”), 29 U.S.C. §
1059(a)(1), an employer has an obligation to maintain records
sufficient to determine the benefits due or which may become
due to each of its employees. This appeal concerns the
circumstances under which an employer can be held liable for
failing to maintain such records. Appellant Mary Henderson
brought this putative class action against the University of
Pittsburgh Medical Center (“UPMC”), alleging that UPMC
failed to keep records of the hours Henderson had worked.
The District Court held that Henderson failed to state a claim
because under the applicable employee benefit plans, UPMC
was only required to keep records of wages paid and not
hours worked. Henderson appeals.

I.1

Henderson‟s Second Amended Complaint alleges that
while employed as a registered nurse for UPMC, she and
other nurses were required to work during their thirty-minute
unpaid “meal breaks,” but were never compensated for this
work. App. at 31. In addition, UPMC began increasing the
number of patients assigned to each nurse per shift. Nurses
were allocated thirty minutes of paid time at the beginning of
their shifts to review the status reports of the patients they
would cover during the upcoming shift. The complaint
alleges that as a result of the increased patient load, nurses
such as Henderson had to begin arriving at work and

1
We set forth only those facts that are relevant to our
holding and, where we do so, we view them in the light most
favorable to the appellant as set forth in her Second Amended
Complaint.
3
reviewing the status reports twenty to forty minutes prior to
the official start of their shift. Even though the nurses
clocked in when they arrived, UPMC would not start
crediting the nurses with paid work time until the official start
of the shift. Henderson filed a lawsuit in state court alleging
that UPMC violated the Pennsylvania Wage Payment and
Collection law and the Pennsylvania Minimum Wage Act.
Henderson v. UPMC, No. GD-09-13303 (Court of Common
Pleas, Allegheny County, Pa. filed July 23, 2009).2 That suit
remains pending.

She also brought this ERISA action based on her
participation in three retirement plans, all administered and
sponsored by UPMC. Under the 401A and 403B Retirement
Savings Plans, defined contribution plans which the parties
refer to collectively as the “Savings Plan,” plan participants
may direct a percentage of their compensation to their
individual savings accounts. Under those plans, after the
employee has worked for a year UPMC will pay into the
account of each participating employee a matching
contribution equal to fifty percent of the amount of the
participant‟s contribution, subject to a ceiling equal to a
percentage of the participant‟s compensation. It follows that
both the contributions of the participating employees and
UPMC are based on a percentage of the “Participant‟s
Compensation.” App. at 221, 340. “Compensation” is
defined as “the Employee‟s compensation as reportable on
Box 1 of Form W-2.” App. at 207, 324.

UPMC also offers a third plan, the Basic Retirement or
Cash Balance Plan, which is a defined benefit plan funded
entirely by UPMC. Each year in which a participant is paid
for at least 1,000 hours of work, the participant earns
retirement credits. Each retirement credit is based on a
percentage multiplied by the participant‟s pay, with the

2
Another nurse at UPMC filed a wage lawsuit under
the Fair Labor Standards Act in federal court, Camesi v.
UPMC, No. 09-CV-85-CB (W.D. Pa. filed Apr. 2, 2009).
Henderson attempted to join this suit, but her claim was
dismissed as untimely filed.
4
percentage being based upon the participant‟s age and years
of service. The plan provides that “Retirement Credits shall
be applied on the basis of the Employee‟s Compensation
earned while an Active Participant” in the Cash Balance Plan
during the Plan Year. App. at 521. “Compensation” here too
is defined as “an Active Participant‟s compensation as
reportable in Box 1 of Form W-2.” App. at 502.

Henderson contends that these plans and the ERISA
statute which controls them require that UPMC, as an
employer, keep records of the uncompensated hours she
worked and, as a fiduciary, to investigate and ensure that
contributions allegedly corresponding to the hours worked
were being provided so that the relevant fund can distribute
benefits to Henderson when she retires. Specifically, she
alleges that “UPMC failed to maintain records . . . sufficient
to determine the benefits due,” in violation of Section
209(a)(1) of ERISA. App. at 49. Henderson also claims that
UPMC breached its fiduciary duty under Section 404(a), 29
U.S.C. § 1104(a), “to act prudently and solely in the interests
of [Henderson and her coworkers] by failing to credit them
with all hours worked for which they were entitled to be paid
when calculating their pension benefits, or to investigate
whether such hours should be credited.” App. at 50. By way
of remedies, Henderson seeks equitable relief pursuant to
Section 502(a)(3), 29 U.S.C § 1132(a)(3), and “[a]ll
applicable statutory benefits and contributions” pursuant to
Section 502(a)(1)(B), 29 U.S.C § 1132(a)(1)(B). App. at 51.

UPMC moved to dismiss for failure to state a claim.
Without deciding whether an employee can “shoe horn” a
remedy for fair wage violations into an ERISA cause of
action, the District Court granted the motion and dismissed
the complaint with prejudice. The Court held that UPMC‟s
recording and fiduciary obligations were limited by the plan
language, which only required that UPMC document the
wages Henderson was paid, not the hours she allegedly
worked but was not paid. Henderson v. UPMC, No. 09-187J,
2010 WL 235117, at *3 (W.D. Pa. Jan. 11, 2010).

5
 II.

The District Court had jurisdiction under 28 U.S.C. §
1331, and we have appellate jurisdiction under 28 U.S.C. §
1291. We exercise plenary review of a district court‟s order
granting a motion to dismiss for failure to state a claim.
Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190
(3d Cir. 2009). In so doing, we must accept all well-pleaded
factual allegations contained in the complaint as true and
construe the complaint in the light most favorable to
Henderson. See id.

III.

ERISA permits employers who are also pension plan
administrators to wear separate “hats” and imposes different
duties on them depending on whether they are acting as
employers qua employers or employers qua administrators.
Varity Corp. v. Howe, 516 U.S. 489, 498 (1996). When
acting as the plan administrator, ERISA imposes fiduciary
duties “to ensure that a plan receives all funds to which it is
entitled, so that those funds can be used on behalf of
participants and beneficiaries.” Cent. States, Se. & Sw. Areas
Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 571
(1985); see also 29 U.S.C. § 1104(a)(1) (“[A] fiduciary shall
discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries.”).

Conversely, when making business or employment
decisions, ERISA permits an employer qua employer to make
decisions in its interest, rather than the interest of plan
participants. See Varity Corp., 516 U.S. at 498. That said,
ERISA contains a limited number of separate “employer”
duties wholly apart from any fiduciary obligations an
employer may incur while serving as a fiduciary. Section 209
is one of these employer duties. Section 209(a) provides that
“every employer shall . . . maintain records with respect to
each of his employees sufficient to determine the benefits due
or which may become due to such employees.” Subsection
(b) provides that if “any person who is required, under
subsection (a) [of this section], to furnish information or
6
maintain records for any plan year fails to comply with such
requirement, he shall pay to the Secretary [of Labor] a civil
penalty of $10 for each employee with respect to whom such
failure occurs.”

Cognizant of the different roles that an employer may
play, we easily conclude, in this case, that UPMC has a duty
as an employer to keep records sufficient to accurately
determine what benefits are due or may be due to plan
participants and, as a fiduciary, a duty to ensure that
contributions were being properly provided to the plan by the
employer. But the extent of those duties and the nature of the
records required to be maintained can only be determined by
looking to the language of the pension plans themselves,
which outline the contributions the employer must make and,
correspondingly, the benefits the participants are owed.

In so holding, we join the several other courts that
have determined the scope of the Section 209 record-keeping
duty, and its fiduciary corollary, by evaluating how
contributions are allocated under the pension plan. See Trs.
of the Chi. Painters & Decorators Pension v. Royal Int’l
Drywall & Decorating, Inc., 493 F.3d 782, 786 (7th Cir.
2007) (evaluating scope of Section 209 record-keeping duty
by looking to plan language); Mich. Laborers’ Health Care
Fund v. Grimaldi Concrete, Inc., 30 F.3d 692, 697 (6th Cir.
1994) (same); Combs v. King, 764 F.2d 818, 825 (11th Cir.
1985) (same); Zipp v. World Mortg. Co., 632 F. Supp. 2d
1117, 1125 (M.D. Fla. 2009) (same); see also Mathews v.
ALC Partner, Inc., No. 08-cv-10636, 2009 WL 3837249, at
*3-7 (E.D. Mich. Nov. 16, 2009) (evaluating scope of
fiduciary duty by looking to plan language); Steavens v. Elec.
Data Sys. Corp., No. 07-14536, 2008 WL 3540070, at *4
(E.D. Mich. Aug. 12, 2008) (same).

We look to the plans, three of which are relevant here.
As discussed, under the two Savings Plans, contributions
from both the employee and the employer are linked to a
percentage of the employee‟s compensation. Compensation
is defined as “the Employee‟s compensation as reportable on
Box 1 of Form W-2.” App. at 207, 324. Similarly, under the
7
Basic Retirement Plan “Retirement Credits shall be applied
on the basis of the Employee‟s Compensation earned while an
Active Participant with a Cash Balance Employer during the
Plan Year,” App. at 521, and “Compensation” is defined as
“an Active Participant‟s compensation as reportable in Box 1
of Form W-2,” App. at 502.

Compensation reportable in Box 1 of Form W-2 is
undeniably compensation paid. See 26 U.S.C. § 6051(a)
(requiring employers to send Form W-2 to each employee
outlining “the remuneration paid by [the employer] to such
employee during the calendar year”); App. at 953 (IRS
Instructions for Forms W-2 and W-3, providing: “Box 1—
Wages, tips, other compensation. Show the total taxable
wages, tips, and other compensation (before any payroll
deductions) that you paid to your employee during the
year.”). An employee does not have to report to the IRS or
pay taxes on compensation that she never receives, and an
employer does not have to report compensation that it never
paid.

Based on this plain plan language, we conclude that
contributions owed by UPMC are calculated based on
compensation paid to the employees and not based on
uncompensated hours worked. Henderson‟s focus on
language other than these straightforward definitions is
misguided. See Fields v. Thompson Printing Co., 363 F.3d
259, 268 (3d Cir. 2004) (declining to look beyond plain
language of employment agreement when determining
liability under ERISA).

First, Henderson emphasizes that the Basic Retirement
Plan links retirement credits to “Compensation earned.”
App. at 521 (emphasis added). But, as UPMC properly points
out, the use of the word “earned” by itself does not modify
the definition of Compensation, which is limited to W-2
reportable compensation, that is, compensation actually paid.
Appellees‟ Br. at 19. Moreover, in the face of the plans‟ clear
definitions for compensation, there is no basis for
Henderson‟s conclusion that “earned,” in this context, means
“hours worked.” Second, Henderson contends that
8
“compensation as reportable in Box 1 of Form W-2” is
conditional, and that reportable means “the compensation that
should have been paid and reported under the law.”
Appellants‟ Br. at 33 (emphasis in original). Again,
compensation is only reportable, and required to be reported
under the law, if it is actually paid. Accordingly,
Henderson‟s attempts to strain certain words or phrases as
requiring that contributions be made based on hours worked
are to no avail.3

Our interpretation of the plan language in this case is
consonant with the interpretation of similar language by other
courts. See Zipp, 632 F. Supp. 2d at 1125 (holding that plan
which defined compensation as “amounts paid by an
Employer to an Employee” meant that the employer was not
required to document amounts “earned”); Mathews, 2009 WL
3837249, at *5 (holding that plan, which based contributions
on compensation as reported on Form W-2, meant
compensation actually paid to employee); Steavens, 2008 WL
3540070, at *4 (holding that plan which tied contributions to
“earnings actually paid to an Employee by an Employer
during a calendar year and reported on the Federal income tax
withholding statement” meant compensation actually paid to
employee).

In contrast, when courts have held that an employer
must keep track of hours worked, the plan language has been
quite explicit in linking contributions to hours worked. See

3
We note that under the Basic Retirement Plan, an
employee is not eligible for Retirement Credits unless s/he
has been “paid for 1000 hours of service.” App. at 96.
Arguably, this means that an employee‟s access to benefits is
contingent on working 1,000 hours. However, this initial
threshold does not alter the fact that retirement credits, and
the benefits associated with them, are based on an employee‟s
pay or compensation. Nor does Henderson allege that she or
any of her purported class members were prevented from
satisfying the 1,000-hour threshold as a result of UPMC‟s
hour and wage practices. Significantly, the 1,000-hour
requirement is still linked to “paid” hours of service.
9
Trs. of the Chi. Painters & Decorators Pension, 493 F.3d at
786 (“The collective bargaining agreement in this case
required [the employer] to contribute benefits based on the
hours worked.”); Mich. Laborers’ Health Care Fund, 30 F.3d
at 694 (under the collective bargaining agreement, the
employer “was required to make payments to each of the
Funds for employees performing „covered‟ concrete-pouring
work”); Combs, 764 F.2d at 820 (plan specifically based
employer contributions on “hours worked” by employees).
The plans here contain no such language.4

Accordingly, in this case, the records “sufficient to
determine the benefits due” under Section 209 are the records
of the employee‟s compensation actually paid. Nowhere is it
alleged that UPMC in anyway failed to keep track of the
compensation it did, in fact, pay to Henderson or her
coworkers. Indeed, as outlined above, based on an
employer‟s payroll tax obligations to keep track of and report
employee compensation paid, it is unlikely such a claim could
be credibly made. Moreover, because Henderson has failed
to state a Section 209 claim against UPMC, any related claim
that UPMC failed its fiduciary obligation under Section 404
to investigate and ensure that contributions were being
accurately provided to the fund also fails. Ipso facto, to the
extent Henderson is attempting “to recover benefits due to
[her] under the terms of [her] plan” from UPMC as a
fiduciary pursuant to Section 502(a)(1)(B) or seek injunctive
relief under Section 502(a)(3), her claim fails because the

4
Henderson urges us to follow Gerlach v. Wells
Fargo & Co., No. C05-0585 CW, 2005 U.S. Dist. LEXIS
46788, *6-8 (N.D. Cal. June 13, 2005), where,
notwithstanding that the plan linked contributions to
compensation paid, the court held that the employer was
obligated to keep track of overtime that was never paid. As
evidenced by the long list of cases holding to the contrary,
Gerlach is an outlier in refusing to follow the plan language
and we decline to follow it.

10
plan links contributions and benefits due to compensation
paid.5

In so holding, we are careful to note that our decision
does not prevent Henderson from bringing a subsequent
action pursuant to ERISA Section 502(a)(1)(B) to recover
benefits associated with any unjustly withheld compensation
that she receives if she is successful in her state wage lawsuit.
Indeed, at oral argument, UPMC agreed that were it to be
established in state court that Henderson should have been
paid for the additional hours she alleges, UPMC will make
the corresponding contributions to these plans. Were that to
eventuate, Henderson would then have been paid reportable
W-2 compensation to which contributions are linked.
Accordingly, we see no reason to disturb the District Court‟s
ruling dismissing the complaint with prejudice with respect to
Henderson‟s claims for violations of Section 209 and any
corollary fiduciary responsibility to monitor and ensure that
contributions are being accurately provided. However, as just
stated, Henderson retains the right to bring a claim for
benefits under Section 502(a)(1)(B), if and when she is
successful in her state wage lawsuit.

Finally, having affirmed the District Court‟s dismissal
for the above stated reasons, we need not reach the alternative
issue raised by UPMC: whether plan participants are entitled
to bring a separate cause of action for violations of Section
209.

IV.

For the foregoing reasons, we will affirm the judgment
of the District Court.

5
Henderson argues that because UPMC does not
maintain records of the hours she claims to have worked, she
may receive reduced pension benefits were she to prevail in
her state court actions. UPMC correctly responds that it has
no responsibility to maintain such records under ERISA and
under its plans.
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