Matthews v. Guest Services, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

CIVIL ACTION NO. 3:23-CV-00910-KDB-SCR

TRACY BOWSER, DENNIS HUNTER,

CHRIS CHAPPELL, JAMIE

GODFREY, MATTHEW BATEMAN,

JOHN PARRISH, GERRI WHITE,

TIMOTHY WARDEN, GREGORY

BROWN, MARCUS WHITE, ROBERT

MATTHEWS, DAVID PERRY,

LAWRENCE JACKSON, GARY

SPELLMAN, EDWARD JORDAN,

TAMA SPELLMAN, JAMIE SUTTON,

WILLIS DANCHISE, ROY FELTON,

RONALD CLARK, THOMAS

WIGGINS, JOHN PIERCE,

JEFFERSON BROUGHTON, CATHY

HARRELL LOWRY, JEFFREY

JOHNSON, AND WELTON FEREBEE,

Plaintiffs,

v. ORDER

GERARD T. GABRYS,

GUEST SERVICES, INC., AND

GUEST SERVICES, INC.

TERMINATION PAY PLAN,

Defendants.

THIS MATTER is before the Court on Defendants Guest Services, Inc. (“GSI”) and

Gerard T. Gabrys’s Motion to Dismiss Plaintiffs’ First Amended Complaint (Doc. No. 18).1 The

Court has carefully considered this motion and the parties’ briefs and exhibits. For the reasons

discussed below, the Court will GRANT the motion.

1 GSI’s Terminal Leave Pay policy is also a named Defendant in this lawsuit, but because

it is not a legal entity that can be sued, the Court will not list it among the moving Defendants.

I. LEGAL STANDARD

Under Federal Rule of Civil Procedure 8(a)(2), 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)(2).

However, “Rule 8(a)(2) still requires a ‘showing,’ rather than a blanket assertion, of entitlement to

relief.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 n.3 (2007).

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for “failure to state a

claim upon which relief can be granted” tests whether the complaint is legally and factually

sufficient. See Fed. R. Civ. P. 12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atlantic

Corp., 550 U.S. at 570; Coleman v. Maryland Court of Appeals, 626 F.3d 187, 190 (4th Cir. 2010),

aff'd sub nom. Coleman v. Court of Appeals of Maryland, 566 U.S. 30 (2012). In evaluating

whether a claim is stated, “[the] court accepts all well-pled facts as true and construes these facts

in the light most favorable to the plaintiff,” but does not consider “legal conclusions, elements of

a cause of action, ... bare assertions devoid of further factual enhancement[,] ... unwarranted

inferences, unreasonable conclusions, or arguments.” Nemet Chevrolet, Ltd. v.

Consumeraffairs.com, Inc., 591 F.3d 250, 255 (4th Cir. 2009). Construing the facts in this manner,

a complaint must only contain “sufficient factual matter, accepted as true, to state a claim to relief

that is plausible on its face.” Id. (internal quotations omitted). Thus, a motion to dismiss under

Rule 12(b)(6) determines only whether a claim is stated; “it does not resolve contests surrounding

the facts, the merits of a claim, or the applicability of defenses.” Republican Party of North

Carolina v. Martin, 980 F.2d 943, 952 (4th Cir. 1992).

Also, in analyzing a Rule 12 motion, a court may consider “documents incorporated into

the complaint by reference and matters of which a court may take judicial notice.” See Tellabs,

Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322, 127 S. Ct. 2499, 168 L.Ed.2d 179 (2007).

In particular, “a court may consider official public records, documents central to plaintiff's claim,

and documents sufficiently referred to in the complaint ... so long as the authenticity of these

documents is not disputed.” Chapman v. Asbury Auto. Grp., Inc., No. 3:13 cv 679, 2016 WL

4706931, at *1, 2016 U.S. Dist. LEXIS 121043 (E.D. Va. Sept. 7, 2016) (quoting Witthohn v. Fed.

Ins. Co., 164 F. App'x 395, 396-97 (4th Cir. 2006)); see also Goines v. Valley Cmty. Servs. Bd.,

822 F.3d 159 (4th Cir. 2016).

II. FACTS AND PROCEDURAL HISTORY

GSI is a government contractor that provides hospitality management and business support

services for the federal government. See Doc. No. 16 at ⁋ 35. In October 2021, GSI lost a contract

it held with the federal government to Boeing, who took over the contract. Id. at ⁋ 73. GSI’s then-

CEO, Defendant Gabrys, allegedly met with employees on the project the week before the contract

switched to Boeing to thank them for their years of service. In response to employee questions, he

also allegedly told them that by leaving GSI to work for Boeing, rather than retiring from the

workforce all together, the employees were not eligible to receive money under GSI’s Terminal

Leave Pay policy (“the Policy”). Id. at ⁋⁋ 71, 73. In this case, Plaintiffs allege that they are in fact

entitled to be paid under this Policy and to receive other compensation for their work for GSI.

The Policy provides that “year-round, full-time hourly employees who were hired before

January 1, 2009 and have worked exclusively in units 703X, 704X, 705X; or 7066 [but] have not

participated in the Guest Services’ salaried employees’ retirement plan; and who are permanently

retiring from the workforce after their last day of work with Guest Services” are eligible for a one-

time payment at the rate of two days’ pay per every full year of continuous employment with GSI.

Doc. No. 19-2 at 2. To be eligible, employees who meet the above description must also have

worked at least 10 full, continuous years for GSI and their age plus their total years worked for

GSI must equal at least 65. Id. The Policy was last amended in 2019 but began as early as 1995.

Id. Plaintiffs allege that until the 2019 amendments, the Policy’s only eligibility requirement was

that the employee was not terminated for cause.2 See Doc. No. 16 at ⁋ 36.

Plaintiffs also allege that GSI improperly deducted money from their paychecks. These

deductions were allegedly listed as “Deferred Pay” on Plaintiffs’ paystubs. Id. at ⁋ 54. Plaintiffs

allege that these amounts were not deducted for any 401(k) or retirement plan sponsored by GSI,

but instead were intended to fund benefits under the Policy. Id. at ⁋⁋ 56, 59. They further claim

that GSI failed to pay Plaintiffs an additional wage or in-kind fringe benefits of over $4 per hour,

which they were required to do as government contractors. Id. at ⁋ 66.

Plaintiffs left GSI to work for Boeing in 2021 and filed this action in December 2023. See

Doc. No. 1. Plaintiffs allege that the Policy is governed by the Employee Retirement Income

Security Act of 1947 (“ERISA”), 29 U.S.C. § 1001, et seq., and bring two claims under that law,

in addition to a cause of action for attorneys’ fees.3 See Doc. No. 16 at ⁋⁋ 83-106. They also bring

two state law claims, one for failure to pay wages in violation of the North Carolina Wage and

Hour Act, N.C. Gen. Stat. § 95-25.1, et seq., and for breach of contract. Id. at ⁋⁋ 109-129. After

Defendants filed their first motion to dismiss in March 2024, Plaintiffs filed an Amended

Complaint in April 2024, and the Court accordingly administratively denied the first motion to

dismiss as moot the next day. See Doc. Nos. 12, 16, 17. Defendants filed the pending motion to

2 Neither party has provided a written copy of the alleged pre-2019 Policy and Plaintiffs

specifically allege that they were never given any documents at the time the original Policy was in

effect.

3 Defendants point out that a request for attorneys’ fees is more appropriately raised as a

claim for relief rather than an independent cause of action as Plaintiffs’ have alleged. Doc. No. 19

at 7 n.9. Plaintiffs did not acknowledge this argument. See Doc. No. 21. However, the Court need

not address this argument because, as discussed below, the Court finds that the Plan is not governed

by ERISA.

dismiss the Amended Complaint two weeks later in late April 2024. The motion has been fully

briefed and is ripe for the Court’s ruling.

III. DISCUSSION

Defendants’ primary argument for why Plaintiffs’ ERISA claims should be dismissed is

that the Policy is not governed by ERISA.4 They also argue that the North Carolina state law claims

must be dismissed for lack of subject matter jurisdiction and because they are preempted by the

federal Service Contract Act, 41 U.S.C. § 6701 et seq. For the reasons discussed below, the Court

finds that the Policy does not fall under ERISA and that the state law claims must be dismissed for

lack of subject matter jurisdiction. It does not reach the issue of preemption by the Service Contract

Act.

A. Considering Materials “Outside” the Pleadings

Plaintiffs argue that the Court must convert Defendants’ motion into one for summary

judgment (and accordingly grant leave for discovery) if it considers the “various materials and

documents” relied upon by Defendants outside of Plaintiffs’ Amended Complaint, including

Plaintiffs’ paystubs and the pre-2019 Policy. See Doc. No. 21 at 7-8. Because the Court does not

reach the pay-related claims on the merits, it need not consider Plaintiffs’ argument regarding the

paystubs.

As discussed above, with respect to the Policy documents, a “document that is not attached

or explicitly incorporated by reference, but that is authentic and integral to the complaint, may be

4 Plaintiffs allege that GSI intended the Policy to comply with ERISA requirements. Doc.

No. 16 at ⁋⁋ 41-42. However, taking that factual allegation as true (although the Court sees no

mention of ERISA in the Policy document), an employer’s “belief that the [plan] constituted an

ERISA plan … does not transform an otherwise deficient plan into one covered by the ERISA

statute.” Mazer v. Safeway, Inc., 398 F. Supp. 2d 412, 420 (D. Md. 2005); see Doc. No. 19-2 at 2-

3.

considered without converting the motion to a Rule 56 motion.” O'Neill v. Open Water Adventures

Inc., No. 3:20-CV-00476-GCM, 2021 WL 2652950, at *2 (W.D.N.C. June 28, 2021) (citing

Goines v. Valley Cmty. Servs. Bd., 822 F.3d 159, 164–66 (4th Cir. 2016)). The Amended

Complaint makes numerous factual assertions regarding the age of the Policy, eligibility criteria

before and after the alleged 2019 amendments, and asserts that “Plaintiffs met the only criteria for

entitlement to benefits under the Plan, to wit, none of Plaintiffs were terminated for cause before

leaving employment with Defendant GSI,” which is a direct reference to the alleged eligibility

criteria for the original Policy. Doc. No. 16 at ⁋⁋ 36-53. Plaintiffs’ first cause of action specifically

argues that the alleged 2019 amendments violate the anti-cutback rules under ERISA and thus

were unlawful amendments to the original Policy. Id. at ⁋⁋ 83-85. Further, there has been no claim

that the written Policy, as amended in 2019, in the record is not authentic.

Thus, Plaintiffs themselves have explicitly relied on both versions of the Policy. Moreover,

the fact that Plaintiffs specifically pled that they were entitled to benefits under the original Policy,

id., and rely on the “for cause” language of the original Policy to support their present argument

that the language created sufficient discretion to make the Policy an ERISA plan, see Doc. No. 21

at 11, fatally undercuts their contention that these materials fall outside the pleadings or that

discovery is needed before resolution of this motion to determine the terms of the original Policy,

its authenticity, “or whether it is applicable to Plaintiffs’ claims.” Id. at 9.

B. ERISA Claims

ERISA is a “comprehensive and reticulated statute” that “governs employee benefit plans,

including retirement plans.” Stegemann v. Gannett Co., Inc., 970 F.3d 465, 468 (4th Cir. 2020)

(quoting DiFelice v. U.S. Airways, Inc., 497 F.3d 410, 417 (4th Cir. 2007) (internal quotation

marks omitted)). Importantly, ERISA only governs employment benefit plans, not merely

employee benefits. See Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 8-9 (1987).

In Fort Halifax, the Supreme Court established the test for analyzing whether an employee

benefit plan exists. According to the Fort Halifax test, an employment contract or state statute

establishes an ERISA plan if the benefits provided by their very nature require “an ongoing

administrative program.” Id. at 11. Pursuant to this test, the Fort Halifax Court concluded that a

Maine statute requiring employers to provide a one-time severance payment to employees who

lost their jobs as a result of a plant closing did not implicate ERISA. The Court stated that:

The Maine statute neither establishes, nor requires an employer to maintain, an

employee benefit plan. The requirement of a one-time, lump-sum payment

triggered by a single event requires no administrative scheme whatsoever to meet

the employer's obligation. The employer assumes no responsibility to pay benefits

on a regular basis, and thus faces no periodic demands on its assets that create a

need for financial coordination and control. Rather, the employer's obligation is

predicated on the occurrence of a single contingency that may never materialize.

The employer may well never have to pay the severance benefits. To the extent that

the obligation to do so arises, satisfaction of that duty involves only making a single

set of payments to employees at the time the plant closes. To do little more than

write a check hardly constitutes the operation of a benefit plan.

Fort Halifax, 482 U.S. at 12.

Thus, an employee benefit plan exists if an arrangement between an employee and an

employer requires an ongoing administrative program to meet the employer’s obligations. Four

factors often considered are:

(1) whether the payments are one-time lump sum payments or continuous

payments; (2) whether the employer undertook any long-term obligation with

respect to the payments; (3) whether the severance payments come due upon the

occurrence of a single, unique event or whenever the employer terminates

employees; and (4) whether the severance arrangement under review requires the

employer to engage in a case-by-case review of employees.

Donovan v. Branch Banking & Tr. Co., 220 F. Supp. 2d 560, 564–65 (S.D.W. Va. 2002) (citing

Emmenegger v. Bull Moose Tube Co., 197 F.3d 929, 934-35 (8th Cir.1999)); Mullaly v. Ins. Servs.

Office, Inc., 395 F. Supp. 2d 290, 295 (M.D.N.C. 2005) (same). “Typically, none of [the factors]

on its own is determinative,” Donovan, 220 F. Supp. 2d at 565 (quoting D'Oliviera v. Rare

Hospitality Int'l, Inc., 150 F.Supp.2d 346, 351 (D.R.I. 2001)), but the degree of employer discretion

“is perhaps the most significant factor.” Mann v. Power Home Solar, LLC, No. 521-CV-166-KDB-

DSC, 2022 WL 602196, at *4 (W.D.N.C. Feb. 28, 2022) (citing Blair v. Young Phillips Corp., 158

F. Supp. 2d 654, 658–59 (M.D.N.C. 2001)).

There is no dispute that payments under the Policy were made via one-time, lump-sum

checks, which weighs in favor of finding that there was no ongoing administrative scheme. Nor

do the parties appear to contest that GSI did not take on any longer-term obligations with respect

to these payments, which again counsels in favor of finding that the Policy is not a plan subject to

ERISA.

As for the third factor, Plaintiffs contend that the Policy is triggered by recurring events

rather than a single, unique event such as an entire factory closing as happened in Fort Halifax. As

alleged by Plaintiffs “[u]pon information and belief, many GSI employees received a payout under

this Plan...” and GSI “has paid out over $400,000 to retirees of GSI’s Defense Unit over the last

ten years” under the Policy. Doc. No. 16 at ⁋⁋ 37, 43; see Doc. No. 21 at 12. Plaintiffs further plead

that “GSI’s obligations are recurring as employees retire, which necessarily involves ongoing

administration. While payment would be at a single occasion, that single occasion could be

triggered at different times depending on when the eligible employee retired from GSI (which is

true of many ERISA-covered plans, including 401(k) profit-sharing plans).” Doc. No. 16 at ⁋ 40.

Taking the facts, but not the legal conclusions, in the light most favorable to Plaintiffs, as the Court

is required to do, Plaintiffs have alleged that the Policy has existed in some form for many years,

many eligible employees have received these benefits, and payments are made upon a common

triggering event for which the date, but not the occasion, is unique to each eligible employee.

However, the Court has not found, nor has Plaintiff cited, any authority stating that such

circumstances categorically create an ERISA plan. In fact, there is a sizable line of cases finding

that “an arrangement requiring only a lump sum payment after a triggering event is not a ‘plan’

under ERISA.” Donovan, 220 F. Supp. 2d at 568 (collecting cases). Moreover, at least one court

in this Circuit has found that a severance payment, “triggered by a single event, that is, the decision

of the eligible [employee] to retire” did not constitute an ERISA plan. Child-Olmsted v. Loyola

Coll., No. CIV.A. CCB-04-3559, 2005 WL 1000085, at *5 (D. Md. Apr. 28, 2005). Thus, the

Court finds that the third factor likely weighs against finding the Policy was an ERISA plan.

Even if the Court found differently on the third factor as Plaintiffs’ request, the lack of

employer discretion does not support a finding that there is sufficient case-by-case review of

employees to establish an ERISA plan. The Policy is implemented in the following way: Eligible

employees are automatically mailed a request form one week after retiring. Once the employee

returns the form, an employee in GSI’s human resources department uses four yes-or-no questions

to confirm eligibility with the Policy’s criteria before entering the bonus amount, which is

calculated by employing the same mathematical formula for every eligible employee. Human

resources then submits this information to payroll, which issues a check. See Doc. Nos. 19 at 5;

192 at 3-4. Plaintiffs contend that the original Policy provided GSI discretion because it had to

determine whether the employee had been terminated “for cause,” which it notes “likely involved

the interpretation of certain qualifying terms or Company policies.” Doc. No. 21 at 11. However,

many courts have found that determining whether an individual was terminated “for cause” does

not suggest meaningful discretion, particularly where good cause “is specifically and narrowly

defined, rather than entirely a matter of [the employer’s] discretion.” Donovan, 220 F. Supp. 2d.

at 568; Robbins v. Friedman Agency, Inc., 760 F. Supp. 3d 564, 568 (E.D. Va. 2010)

(distinguishing a plan in which the defendant determined value of the benefit based on plaintiff’s

book of business from plans involving “mechanical calculations” and “formula[s] involving the

term of service.”). Others have made clear that “[a]ssessing whether an employee complied with

… provisions [of a policy] appears to be a purely ministerial task” and such a “minimal amount of

discretion does not necessarily imply an ongoing administrative scheme. Mazer, 388 F. Supp. 2d

at 421. In other words, merely looking at a personnel file to determine whether an employee has

been terminated for cause or is leaving for a different reason involves no discretion (even if a “for

cause” termination itself likely reflects an employer’s discretion). Moreover, GSI’s use of existing,

routine administrative procedures to administer the Policy suggests no ongoing administrative

scheme existed. See Emery v. Bay Capital Corp., 354 F. Supp. 2d 59, 594 (D. Md. 2005) (“Simply

continuing to pay Plaintiffs salary for six months after his termination, presumably out of

Defendant's general fund, does not require the establishment of a separate, ongoing administrative

scheme to administer these severance benefits.”).

In short, the Policy, as alleged by Plaintiffs, is only a one-time lump-sum payment

determined by a consistent formula that is offered to eligible retiring employees as part of the

Defendant’s existing infrastructure. The Court therefore concludes that there is no ongoing

administrative plan required in connection with GSI’s alleged obligations and thus no ERISA

benefit plan. As a result, no ERISA claim may arise from the alleged Policy and the ERISA claims

will be dismissed.

C. North Carolina State Law Claims

“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of

America, 511 U. S. 375, 377 (1994). They accordingly may only hear cases “as far as Article III

permits and Congress chooses to confer.” Navy Fed. Credit Union v. LTD Financial Servs., LP,

972 F.3d 344, 352 (4th Cir. 2020) (citing U.S. Const. Art. III, § 1, cl. 2; Sheldon v. Sill, 49 U.S. (8

How.) 441, 448–49, 12 L.Ed. 1147 (1850); cf. Martin v. Hunter's Lessee, 14 U.S. (1 Wheat.) 304,

328–31, 4 L.Ed. 97 (1816)). One of those bases for jurisdiction, relevant here, is diversity

jurisdiction, which has two requirements: (1) complete diversity, meaning that no plaintiff has the

same citizenship of any defendant, and (2) the amount in controversy exceeds $75,000. 28 U.S.C.

§ 1332(a).5 It is axiomatic that the plaintiff bears the burden of proving that the Court has subject

matter jurisdiction. See Demetres v. East West Const. Inc., 776 F.3d 271, 272 (4th Cir. 2015) (citing

Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999)).

The parties disagree over whether Plaintiffs have sufficiently alleged that the amount in

controversy exceeds $75,000. To answer this question, “a court must look to the Complaint and

determine whether a plaintiff has set forth a claim in good faith that meets the amount in

controversy requirement. Campbell v. Uptowner Inns, Inc., No. CV 3:22-0417, 2023 WL 6466218,

at *2 (S.D.W. Va. Oct. 4, 2023) (citing Wiggins v. N. Am. Equitable Life Assur. Co., 644 F.2d

1014, 1016 (4th Cir. 1981)). Importantly, “‘it must be clear from the face of the complaint’ that

the amount-in-controversy requirement is met.” Withers v. BMW of N. Am., LLC, 560 F. Supp. 3d

1010, 1016 (W.D.N.C. 2021) (quoting Lanier v. Norfolk S. Corp., 256 F. App'x 629, 631 (4th Cir.

2007)).

5 Federal question jurisdiction does not exist in this case because the Policy is not an ERISA

plan. Thus, Plaintiffs’ state law claims may only proceed if they independently invoke the Court’s

jurisdiction.

In response to Defendants’ Motion, Plaintiffs assert that they have alleged sufficient facts

supporting that one or more unidentified Plaintiffs have damages that exceed $75,000. Doc. No.

21 at 25. The supporting language they cite to in their Amended Complaint says that “the amount

of damages in controversy exceeds $75,000 and there is complete diversity of citizenship between

all Plaintiffs and Defendants. One or more individual Plaintiffs has damages that exceed $75,000.”

Doc. No. 16 at ⁋ 4. The Amended Complaint, however, is devoid of any factual allegations to

support this conclusion. The Court further considers that Plaintiffs were on notice of their need to

bolster these allegations. Defendants raised this same concern in their first motion to dismiss. See

Doc. No. 13 at 12-14. Plaintiffs responded by filing an Amended Complaint, which only differs

from the original complaint by noting without the requisite specificity that “one or more” Plaintiffs

have adequate damages. Compare Doc. Nos. 1 at ⁋4, 16 at ⁋ 4.

Plaintiffs cannot meet their burden with mere conclusory statements. They especially

cannot do so, nor claim to have satisfied this requirement in good faith, after being put on notice

of this exact issue by a prior motion to dismiss and failing to provide any supporting factual

allegations in the Amended Complaint (or their response to the motion to dismiss). The Court

therefore finds that Plaintiffs have not plausibly pled that this Court has subject matter jurisdiction

over the state law claims and will dismiss them.

IV. ORDER

NOW THEREFORE IT IS ORDERED THAT:

1. Defendants’ Motion to Dismiss Plaintiffs’ First Amended Complaint (Doc. No. 18)

is GRANTED; and

2. The Clerk is directed to close this matter in accordance with this Order.

SO ORDERED ADJUDGED AND DECREED.

Signed: August 21, 2024

Kenneth D. Bell

United States District Judge HOU

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