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Hamilton v. Partners Healthcare System, Inc.

United States District Court, D. Massachusetts

July 21, 2016

DIANE HAMILTON, LYNNE P. CUNNINGHAM and CLAIRE KANE, on behalf of themselves and all other similarly situated, Plaintiffs,
v.
PARTNERS HEALTHCARE SYSTEM, INC., PARTNERS COMMUNITY HEALTHCARE, INC., THE BRIGHAM AND WOMEN'S HOSPITAL, INC., BRIGHAM AND WOMEN'S/FAULKNER HOSPITALS, INC., MARTHA'S VINEYARD HOSPITAL, INC., THE MASSACHUSETTS GENERAL HOSPITAL, MCLEAN HEALTHCARE, INC., THE MCLEAN HOSPITAL CORPORATION, NANTUCKET COTTAGE HOSPITAL, NEWTON-WELLESLEY HOSPITAL, NEWTON-WELLESLEY HEALTHCARE SYSTEM, INC., NORTH SHORE CHILDREN'S HOSPITAL, INC., NORTH SHORE MEDICAL CENTER, INC., NSMC HEALTHCARE, INC., THE SALEM HOSPITAL, UNION HOSPITAL AUXILIARY OF LYNN, INC., and FAULKNER HOSPITAL, INC., Defendants.

          MEMORANDUM AND ORDER

          DOUGLAS P. WOODLOCK UNITED STATES DISTRICT JUDGE.

         Plaintiffs Diane Hamilton, Lynne P. Cunningham and Claire Kane (collectively, "Plaintiffs") brought this action raising federal claims on behalf of themselves and all other similarly situated employees of a number of healthcare facilities allegedly affiliated with Partners Healthcare System, Inc. Plaintiffs contend that their employers maintain policies in violation of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201 et seq. (First Cause) depriving them of compensation for time worked. Plaintiffs further contend that their employers' policies violate recordkeeping (Second Cause) and fiduciary (Third Cause) responsibilities under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and constitute a scheme to deceive Plaintiffs and deprive them of their wages using mail fraud in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. (Fourth Cause). The defendants moved [Dkt. No. 115] for judgment on the pleadings on all counts.[1] By endorsement, I have granted [Dkt. No. 221] the motion by endorsement. This Memorandum and Order provides the parties with the extended explanation I promised for that disposition of the motion.

         I. BACKGROUND

         The named defendants in this action are the following entities: Partners HealthCare System, Inc., Partners Community Healthcare, Inc., The Brigham and Women's Hospital, Inc., Brigham and Women's/Faulkner Hospitals, Inc., Martha's Vineyard Hospital, Inc., The Massachusetts General Hospital, McLean Healthcare, Inc., The McLean Hospital Corporation, Nantucket Cottage Hospital, Newton-Wellesley Hospital, Newton-Wellesley Health Care System, Inc., North Shore Children's Hospital, Inc., North Shore Medical Center, Inc., NSMC Healthcare, Inc., The Salem Hospital, Union Hospital Auxiliary of Lynn, Inc., and Faulkner Hospital, Inc.[2] Compl. ¶ 14.

         In their complaint, Plaintiffs also list 27 health care facilities and centers associated with the named defendants and over 100 "affiliated" health care facilities and centers. Id. ¶¶ 15-16. Plaintiffs refer to the named defendants, their facilities and centers, and the affiliated facilities and centers as "Partners" or "Defendants." Id. ¶ 17. With respect to the Plaintiffs themselves, the complaint merely states that they were "[a]t all relevant times . . . employees under the FLSA, employed within this District and resid[ing] within this District, " id. ¶ 76, and provides no further details regarding their employment.

         Plaintiffs' claims are premised on allegations that Defendants maintain pay policies that deny Plaintiffs their compensation for all hours worked. Id. ¶ 79. In particular, Plaintiffs allege that Defendants (1) automatically deduct thirty minutes of time per day from each employee's paycheck for meal breaks without ensuring that such breaks are taken, (2) suffer or permit Plaintiffs to work before and/or after each scheduled shift without compensation, and (3) suffer or permit Plaintiffs to attend compensable training programs without pay. Id. ¶¶ 80-108.

         Plaintiffs filed this action in this court on September 3, 2009. The next week, they filed a complaint in the Middlesex Superior Court asserting violations of Massachusetts wage laws, Mass. Gen. Laws ch. 149, §§ 148, 150 & ch. 151 §§ 1A, 1B, and claims under Massachusetts contract and tort law. On October 16, 2009 the Defendants removed the state claim action to this court, where it has been docketed as 09-cv-11725.

         The plaintiffs' complaint was met with a motion to dismiss the RICO count, asserting inadequate pleadings. [Dkt. No. 10]. When the parties reported that they were engaged in mediation before any hearing, I denied the motion to dismiss and the motion for remand "without prejudice to resubmittal if the ongoing protracted mediation process proves unsuccessful." (Unnumbered docket entry 05/6/2010).

         The mediation process ultimately generated two successive motions for preliminary approval of class and collective action settlements. At separate hearings on each wave of motions, I denied them because - for a variety of reasons - I could not find the settlements proposed had any prospect of final approval as fair, adequate or reasonable. See generally Dkt. No. 95 (Dec. 23, 2010 Tr. concerning initial motion for preliminary approval); Dkt. No. 110 (Mar. 2, 2011 Tr. concerning amended motion for preliminary approval). My fundamental concern, as expressed at those hearings, was that the settlement proposals -involving some 63, 000 employees in a multiplicity of job classifications at a multitude of institutional settings -raised inadequately addressed structural problems. Cf. In re Payment Interchange Fee and Merchant Discount Antitrust Litigation, 2016 WL 3563719 at *8 (2d Cir. June 30, 2016).[3]

         Although I informed the parties that I would entertain one last effort by them aimed at securing approval to notice a proposed settlement, the defendants instead resumed pleadings motion practice by filing motions for judgment on the pleadings as to all counts in both the federal claim and the state claim actions. At a scheduling conference after those motions were filed, Plaintiffs' Counsel voiced the possibility that they might seek leave to amend, but have never followed through with a proper motion to amend.[4] After an extended period of time I explain in this - and the related Memorandum and Order I enter in the state claims action today - the reasons why I am entering the final judgments in this and the related case on the basis of the operative complaint.

         II. STANDARD OF REVIEW

         Federal Rule of Civil Procedure 12(c) provides that a motion for judgment on the pleadings may be made "after the pleadings are closed - but early enough not to delay trial." A motion for judgment on the pleadings is evaluated under the same standard as a motion to dismiss. Remexcel Managerial Consultants, Inc. v. Arlequín, 583 F.3d 45, 49 n.3 (1st Cir. 2009) (citing Citibank Global Mkts., Inc. v. Rodríguez Santana, , 573 F.3d 17, 23 (1st Cir. 2009) ("[T]o survive a motion to dismiss (or a motion for judgment on the pleadings), the complaint must plead facts that raise a right to relief above the speculative level.")); see also Erlich v. Ouellette, Labonte, Roberge and Allen, P.A., 637 F.3d 32, 35 n.4 (1st Cir. 2011) (describing the standards for evaluating motions to dismiss and motions for judgment on the pleadings as "essentially the same").

         Motions to dismiss are reviewed "accepting as true all well-pleaded facts" in the complaint, "analyzing those facts in the light most hospitable to the plaintiff's theory, and drawing all reasonable inferences for the plaintiff." United States ex. rel. Hutcheson v. Blackstone Med., Inc., 647 F.3d 377, 383 (1st Cir. 2011).

         A complaint must provide a "short and plain statement of the claim showing that the pleader is entitled to relief" as required by Fed.R.Civ.P. 8(a)(2). While a complaint attacked on a motion to dismiss "does not need detailed factual allegations, a plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations omitted). The "[f]actual allegations must be enough to raise a right to relief above the speculative level, " id., and allow "the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The First Circuit has summarized the Twombly and Iqbal standard as requiring "an adequate complaint" under Rule 8(a)(2) to "provide fair notice to the defendants and state a facially plausible legal claim." Ocasio-Hernández v. Fortuño-Burset, 640 F.3d 1, 12 (1st Cir. 2011).

         Iqbal and Twombly set out two working principles underlying the standard for adequately pled complaints; these principles translate to a two-pronged approach for courts evaluating motions to dismiss. Id. The first principle is that "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Iqbal, 556 U.S. at 678. A court must therefore begin its analysis by "identifying and disregarding statements in the complaint that merely offer ‘legal conclusion[s] couched as . . . fact[ ]' or ‘[t]hreadbare recitals of the elements of a cause of action.'" Ocasio-Hernández, 640 F.3d at 12 (citations omitted) (alterations in original). Only factual allegations, not conclusory statements regarding the applicability of law, may be considered in assessing whether the Plaintiff has satisfied the pleading standard.

         The second working principle is that "only a complaint that states a plausible claim for relief survives a motion to dismiss." Iqbal, 556 U.S. at 679. If the recited facts "do not permit the court to infer more than the mere possibility of misconduct, " the complainant has failed to show entitlement to relief. Id. In evaluating the complaint, the "[n]on-conclusory factual allegations in the complaint must then be treated as true, even if seemingly incredible." Ocasio-Hernández, 640 F.3d at 12. The court may not assess the likelihood of proving the factual allegations but instead must evaluate facial plausibility based on whether the factual content, if proven, "‘allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.'" Id. (quoting Iqbal, 556 U.S. at 663).

         III. ANALYSIS

         At the threshold, Defendants challenge Plaintiffs' standing, citing Plaintiffs' failure to allege an employment relationship with any particular defendant. Defendants further argue that Plaintiffs fail to plead facts sufficient to allege plausible FLSA, ERISA, or RICO claims. I begin with a discussion of First Circuit case law considering similar complaints and then apply those decisions in the context of this case and the arguments the parties have made to me.

         A. The First Circuit's Treatment of Hospital Compensation Cases

         The First Circuit has addressed three related cases, which it refers to as "hospital compensation cases, " asserting substantially similar claims to those presented by Plaintiffs' Counsel here. See Manning v. Boston Medical Center Corp., 725 F.3d 34, 39 (1st Cir. 2013) ("Manning A")[5]; Cavallaro v. UMass Mem'l Healthcare Inc., 678 F.3d 1 (1st Cir. 2012) ("Cavallaro A"); Pruell v. Caritas Christi, 678 F.3d 10 (1st Cir. 2012) ("Pruell A-2"). Each complaint asserted that a hospital network violated federal and state wage-and-hour laws in precisely the same ways: by requiring or permitting unpaid work to be performed during meal breaks due to an automatic timekeeping deduction, before and after employee shifts, and in training programs. Thus, while "precise rules will always be elusive" in determining whether a complaint states an adequate claim for relief, Pruell A-2, 678 F.3d at 15, the First Circuit's three hospital compensation case opinions provide an unusually clear map of the relevant terrain. They lay out precisely what information must be alleged to state these wage-and-hour claims in the hospital context plausibly.

         In Pruell A-2, the First Circuit found conclusory and speculative the statement that plaintiffs "regularly worked hours over 40 in a week and were not compensated for such time." 678 F.3d at 13. The court also held that additional specificity provided by the alleged mechanisms for undercompensation - the unpaid meal breaks, pre- and post-shift work, and training sessions - was not enough to render the complaint adequately pled. Id. at 14. Without examples of the unpaid time, ideally including descriptions of the type of work performed, the complaint did not show that the relevant work was compensable (the court noted that various types of pre-shift work or training programs are non-compensable) or that the defendants did not make it up to the employees through premium pay of one form or another. Id.

         In Cavallaro A, the First Circuit focused on a different deficiency in the complaint: the failure to identify any employer for the named plaintiffs. 678 F.3d at 9-10. It also rejected plaintiffs' arguments that since under a "joint employer" or "integrated enterprise" theory liability could extend beyond a particular hospital to the network, it was not necessary to name any plaintiff's direct employer specifically. To the contrary, the First Circuit advised, "some direct employer needs to be identified before anyone in the group could be liable on the theory that some or all were responsible." Id. at 10.

         The complaint in this case suffers from both of these deficiencies. As with the Cavallaro complaint, it does not identify what defendant actually employed the plaintiffs. It states only that the named plaintiffs "were employees under the FLSA, employed within this District and reside within this District." [Dkt 1 ¶ 76]. And as with the Pruell complaint, only the most general allegations of undercompensation are provided without any of the examples or other forms of specificity that could show a plausible claim of wage-and-hour violations. Indeed, the complaint before me does not even allege that plaintiffs regularly worked more than 40 hours in a week, a most basic predicate fact for finding overtime violations.

         In contrast, the First Circuit in Manning A found the FLSA allegations to be sufficient. 725 F.3d at 47. That complaint identified the specific jobs of the named plaintiffs and what work they performed during their meal breaks and before and after shifts, describing nurses who chart or monitor patients during the breaks and an administrative assistant who made phone calls and drafted correspondence during her unpaid time. Id. at 45-46. The Manning complaint also included allegations that estimate how often the named plaintiffs worked forty hour-per-week shifts: some regularly, some once a month, and some once a year. Id. at 46-47. None of this detail, which the First Circuit found important in distinguishing the Manning pleading from the Pruell and Cavallaro complaints, appears in the complaint before me. Nor does any other form of specificity - not otherwise highlighted by the First Circuit - distinguish this complaint from those in Pruell or Cavallaro. No other information is provided that offsets the plaintiff's failure to identify their employers, their specific job descriptions, their staffing patterns or the type of work for which they were not compensated. Under clear precedent - precedent with the unusual benefit of analyzing complaints that to a large degree were "‘substantially identical' to the one at issue in this case, " Manning A, 725 F.3d at 42 (quoting District Court) - the complaint now before me fails adequately to state a claim under the FLSA.

         With this First Circuit case law regarding the pleading of hospital compensation cases as backdrop, I now turn to more detailed consideration of the specific shortcomings of the operative complaint in this case.

         B. Standing and Employment Relationship

         Defendants argue Plaintiffs lack standing because they have failed to allege that they were employed by any particular defendant, much less by all of the individual defendants or entities listed in the caption of the case or described in the complaint. Defendants argue that the complaint contains insufficient facts to demonstrate ...


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