Valdivieso v. Cushman & Wakefield Inc.
Filing
39
ORDER: GRANTING-IN-PART and DENYING-IN-PART #22--motion to dismiss; granting (Doc. #33 at 17) motion to amend the complaint; permitting Valdivieso to amend the complaint no later than 06/09/2017; denying as moot #36--motion to stay discovery and class certification until the disposition of the motion to dismiss; denying as moot #37--motion for leave to reply to Valdivieso's response. Signed by Judge Steven D. Merryday on 5/18/2017. (BK)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
LUIS A. VALDIVIESO,
Plaintiff,
v.
CASE NO. 8:17-cv-118-T-23JSS
CUSHMAN & WAKEFIELD, INC.,
Defendant.
____________________________________/
ORDER
Cushman & Wakefield, Inc., terminated Luis Valdivieso’s employment and
provided Valdivieso with a “continuation coverage election notice” that informs him
about COBRA. Valdivieso, who can read English but speaks Spanish as a native
language, sues (Doc. 14) Cushman & Wakefield under ERISA and alleges three
violations of COBRA’s notice requirements. Cushman & Wakefield moves
(Doc. 22) to dismiss the action under Rule 12(b)(6), Federal Rules of Civil Procedure.
DISCUSSION
1. 29 C.F.R. § 2590.606–4(b)(4)
Valdivieso alleges a violation of Section 2590.606–4(b)(4), which requires the
administrator of a group-health plan to provide a COBRA notice “written in a
manner calculated to be understood by the average plan participant.” The complaint
alleges that the notice is not “written in a manner calculated to be understood by the
average plan participant.” (Doc. 14 at ¶ 20)
Under Rule 8(a), a complaint must include factual allegations sufficient to
state a plausible claim for relief. A “threadbare recital of a cause of action” fails to
comply with Rule 8(a). Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although
Valdivieso might not have understood the notice, the complaint suggests that
Valdivieso — a 68-year old who “cannot read English very well” (Doc. 14
at ¶¶ 20–21) — is not an “average” plan participant. Supporting that conclusion,
Valdivieso alleges that Cushman & Wakefield “failed to take into consideration the
fact that these particular Qualified Beneficiaries, Plaintiff and his spouse, are 68 and
61 years-old before providing a notice typed in one of the smallest font sizes available
in a second language.” (Doc. 14 at ¶ 26) Insufficient facts support the conclusory
statement that an “average” plan participant cannot understand the notice.
2. 29 C.F.R. § 2590.606–4(b)(4)(viii)
Under Section 2590.606–4(b)(4)(viii), a COBRA notice must include an
“explanation of the maximum period for which continuation coverage will be
available” and an “explanation of the continuation coverage termination date.”
Valdivieso alleges that Cushman & Wakefield violated the regulation by failing to
include in the notice “the specific date coverage will end.” (Doc. 14 at ¶ 31)
Cushman & Wakefield responds that the notice need not specify the day on which
coverage ends.
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In a section titled “Duration of COBRA Coverage,” the notice states that
“coverage may generally last for up to 18 months.”* (Doc. 14-2 at 14) Validivieso
alleges that he cannot determine “whether this monthly coverage would end at the
beginning or the end of the 18th month or whether it would end on whichever day
was exactly 18 months in the future.” (Doc. 14 at ¶ 35) Although the 18-month
language satisfies the requirement that an employer include an “explanation of the
maximum period for which continuation coverage will be available,” the regulation’s
inclusion of the phrase “termination date” suggests that the employer must identify
the day on which coverage ends. Valdivieso states a plausible claim for violation of
29 C.F.R. § 2590.606–4(b)(4)(viii).
Citing Scott v. Suncoast Beverage Sales, Ltd., 295 F.3d 1223, 1230–31
(11th Cir. 2002), which suggests that an employer’s good-faith attempt to comply
with COBRA’s notice requirements discharges the employer’s notice obligation,
Cushman & Wakefield argues that the notice permitted Valdivieso to “make an
informed decision whether to elect coverage.” (Doc. 22 at 5) COBRA requires an
employer to notify, “in accordance with regulations prescribed by the Secretary,” a
qualifying beneficiary about the beneficiary’s continuing eligibility for health care
*
Under Rule 10(c), a “written instrument that is an exhibit to a pleading is a part of the
pleading.” Garner’s Dictionary of Legal Usage equates “written instrument” with “instrument” and
defines “instrument” as a “formal legal document that entails rights, duties, and liabilities.” The
notice, which describes Valdivieso’s rights under COBRA, is an instrument and can contribute to the
resolution of the motion to dismiss. Also, neither party disputes the authenticity of the notice, which
is “central” to the plaintiff’s claims. See Brooks v. Blue Cross and Blue Shield of Florida, Inc., 116 F.3d
1364, 1369 (11th Cir. 1997) (holding that an indisputably-authentic document “central to the
plaintiff’s claim” warrants consideration in resolving a Rule 12(b)(6) motion).
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under COBRA. 29 U.S.C. § 1166 (1997). Although COBRA contemplates a
regulation that expounds the notice requirement, for several years after COBRA’s
passage the Secretary of Labor promulgated no notice regulation. Lacking regulatory
guidance, employers “operate[d] in good[-]faith compliance with a reasonable
interpretation of what adequate notice entails.” Degruise v. Sprint Corp., 279 F.3d 333,
336 (5th Cir. 2002) (Mills, J.) (internal quotation omitted); accord Smith v. Rogers
Galvanizing Co., 128 F.3d 1380, 1384 (10th Cir. 1997) (Briscoe, J.). In 2004, the
Secretary of Labor promulgated a notice regulation, Section 2590.606–4, which
includes no “good-faith” defense. Because a “good-faith” attempt to comply with the
law no longer excuses an employer’s purported breach of the notice requirement, the
pre-2004 decisions are inapposite. Griffin v. Neptune Tech. Grp., 2015 WL 1635939
at *10 (M.D. Ala. Apr. 13, 2015) (Thompson, J.) (“[N]ow that regulations have been
promulgated, employers . . . must turn to them for guidance.”).
3. 29 C.F.R. § 2590.606–4(b)(4)(xii)
The notice must include “the address to which payments should be sent.”
Valdivieso alleges that the notice fails to mention the address to which he must send
payment. (Doc. 14 at ¶ 40) Rather than include an address to remit payment, the
notice states that “monthly invoices will provide a remittance address” and that
“[a]dditional information about payment will be provided to you after the election
form is received.” (Doc. 14-2 at 2–5) Cushman & Wakefield argues (Doc. 22 at 8)
that the notice complies with the “model notice.” 29 C.F.R. § 2590.606–4(g) states
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that the “use of the model notice, appropriately modified and supplemented, will be
deemed to satisfy the notice content requirements.” Cushman & Wakefield’s notice
states:
If you choose to elect COBRA coverage, you do not have to send any
premium payment(s) with the COBRA Coverage Election Form.
Additional information about payment will be provided to you after
you make your election.
(Doc. 14-2 at 2–3) As Cushman & Wakefield correctly observes, the model notice
includes the same language. (Doc. 14-1 at 4) But the model notice states:
Your first payment and all periodic payments for continuation
coverage should be sent to:
[enter appropriate payment address]
(Doc. 14-1 at 8 (italics original)) Because Cushman & Wakefield’s notice neither
includes a payment address nor duplicates the model notice, Valdivieso states a
plausible claim for violation of 29 C.F.R. § 2590.606–4(b)(4)(xii).
4. Failure to exhaust administrative remedies
Cushman & Wakefield requests dismissal because Valdivieso purportedly
failed to exhaust administrative remedies and “has not alleged that he attempted to
do so or that exhaustion would be futile.” A plaintiff who sues under ERISA must
exhaust an administrative remedy unless the remedy is “futile” or “inadequate.”
Counts v. Am. Gen. Life and Ass. Ins. Co., 111 F.3d 105, 108 (11th Cir. 1997). In the
class-action portion of the complaint, Valdivieso alleges that “[n]o administrative
remedies exist as a prerequisite to Plaintiff’s claim on behalf of the putative class.”
(Doc. 14 at ¶ 48) Although the evidence might reveal that Valdivieso failed to
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exhaust an administrative remedy, the complaint states a plausible claim. See Iqbal,
556 U.S. at 679 (explaining that an order resolving a motion to dismiss must assume
the truth of the plaintiff’s allegations).
CONCLUSION
The motion (Doc. 22) to dismiss is GRANTED-IN-PART and
DENIED-IN-PART. Insufficient facts support the alleged violation 29 C.F.R.
§ 2590.606–4(b)(4), but the complaint states a claim for violations of 29 C.F.R.
§ 2590.606–4(b)(4)(viii) and (xii). Valdivieso’s request (Doc. 33 at 17) to amend the
complaint is GRANTED. No later than JUNE 9, 2017, Valdivieso may amend the
complaint. The motion (Doc. 36) to stay discovery and class certification until the
disposition of the motion to dismiss is DENIED AS MOOT. The motion (Doc. 37)
for leave to reply to Valdivieso’s response is DENIED AS MOOT.
ORDERED in Tampa, Florida, on May 18, 2017.
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