PIERCE et al v. VISTEON CORPORATION et al

Filing 300

FINDINGS OF FACT AND CONCLUSIONS OF LAW after Bench Trial-The Court concluded that the defts have violated COBRA, when they failed to send timely notice of COBRA benefits to pltfs (the Class). The Court further concluded that the Class is entitled to a statutory award in the total amount of $1,852,500.00, to be shared equally among the Class; and to a reasonable attny's fee, the amount of which will be determined separately. Signed by Judge Larry J. McKinney on 6/25/2013.(CBU)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

DARRYL PIERCE and
SHARON PIERCE, On Behalf Of
Themselves And All Others Similarly
Situated,
Plaintiffs,
vs.
VISTEON CORPORATION, and
VISTEON SYSTEMS, LLC,
Defendants.

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No. 1:05-cv-01325-LJM-DKL

FINDINGS OF FACT AND CONCLUSIONS OF LAW AFTER BENCH TRIAL
Plaintiffs Darryl and Sharon Pierce (these two plaintiffs, collectively, “Plaintiffs”),
on behalf of themselves and all other similarly situated (collectively, the “Class”) and
Defendants Visteon Corporation and Visteon Systems, LLC (collectively, “Visteon”),
have submitted the Class allegations to the Court for ruling based on briefs supported
by evidence in lieu of a Bench Trial. Generally, the Class asserts that Visteon violated
the Consolidated Ominbus Reconciliation Act (“COBRA”), 29 U.S.C. § 1166, when it
failed to send timely notice of COBRA benefits to the class members. The Class seeks
to recover statutory and equitable damages and attorney’s fees pursuant to the
Employee Retirement Income Security Act (“ERISA”), 29, U.S.C. § 1132(c)(1). The

Court has considered the parties’ briefs and the evidence and now enters the following
Findings of Fact and Conclusions of Law.1
I. VISTEON’S MOTION TO STRIKE
As a preliminary matter, Visteon has moved to strike certain trial affidavits of
putative class members John Huffman (“Huffman”) and Leesa Wyatt (“Wyatt”). Dkt.
No. 256.

On February 27, 2013, the Court issued an Order to accommodate the

parties’ request to submit this case by briefs in lieu of a Bench Trial. Dkt. No. 246. In
relevant part, the Court directed counsel for Plaintiffs to “provide to Visteon all
declarations for the witnesses they have disclosed on or before Friday, March 1, 2013,
to allow Visteon to prepare for and schedule the requisite depositions. Plaintiffs shall
cooperate with Visteon, including making their witnesses available, to ensure that all
such depositions are completed on or before March 15, 2013.” Id. Thereafter, Plaintiffs
provided a single signed affidavit from each of the following eight individuals: Wyatt,
Kimberly Davidson, Alice Whitecotton, Jeanene Hensley (“Hensley”), Jessica Wells,
Donna Parrett, Katherine Alfred, and Greta Mae Steele. Dkt. Nos. 291-1 & 291-2.
On March 14, 2013, Visteon questioned the eight individuals for whom affidavits
had been provided.

Plaintiffs had an opportunity to redirect the witnesses as well.

During Hensley’s deposition, Plaintiffs’ counsel asked her whether or not her job had
moved to Mexico. Dkt. No. 291-3, Hensley Dep. at 20. Hensley answered the question
in the negative. Id. Apparently, if that were the case, Hensley might have a claim for

1

Where appropriate or necessary, each of the following Findings of Fact shall be
considered a Conclusion of Law, and each of the following Conclusions of Law shall be
considered a Finding of Fact.
2

Trade Adjustment Assistance (“TAA”) benefits. Dkt. No. 291, at 2. During Wyatt’s
deposition, Plaintiffs asked no questions. Dkt. No. 291-4, Wyatt Dep. at 32.
On April 2, 2013, Plaintiffs filed their Trial Brief and supporting evidence. Dkt.
No. 249. Part of Plaintiffs’ evidence was a previously undisclosed trial affidavit from
Huffman regarding his alleged entitlement to equitable monetary compensation and
purported eligibility for TAA benefits. Dkt. No. 256-2, Huffman Aff. In addition, Plaintiffs
filed a second trial affidavit of Wyatt. Dkt. No. 255-3, Wyatt 2d Aff. Wyatt’s second
affidavit addressed her purported eligibility for TAA benefits. Id.
Visteon asserts that it has been prejudiced by Plaintiffs’ failure to provide
Huffman’s affidavit and Wyatt’s second affidavit prior to the Court-ordered deadline.
The company argues that the non-disclosure prevented Visteon from deposing Huffman
at all and prevented Visteon from questioning Wyatt about her purported eligibility for
TAA benefits during her deposition. As further prejudice, Visteon cites Plaintiffs’ failure
to elicit Wyatt’s testimony about her purported TAA benefit eligibility themselves when
they had the opportunity to do so during her deposition. Because this is a trial based on
written briefs and submitted evidence, Visteon has been deprived of the opportunity to
cross-examine Huffman and Wyatt about their new assertions.
Although Visteon never cites a rule or standard, Rule 37 of the Federal Rules of
Civil Procedure (“Rule 37”), provides for sanctions under two of the circumstances
alleged here: failure to follow a discovery order and failure to disclose or supplement.
Fed. Rs. Civ. P. 37(b)(2)2 & 37(c)(1).3

2

The Court has “significant flexibility in the

Rule 37(b)(2)(A) states, in relevant part:
3

application of the rules in question, [but] that latitude is clearly constrained by the
principles of due process of law.” Slagado by Salgado v. Gen. Motors Corp., 150 F.3d
735, 740 (7th Cir. 1998). See also Musser v. Gentiva Health Servs., 356 F.3d 751, 75556 & 758-59 (7th Cir. 2004) (discussing the discretionary standard for sanctions under
Rule 37(c)(1) and the concept of proportionality).
Plaintiffs argue that they did not recognize the need for testimony regarding TAA
benefits until after settlement efforts failed. Dkt. No. 294, at 1. In addition, Plaintiffs
contend that Visteon was not prejudiced because it could not meaningfully crossexamine either Wyatt or Huffman about this subject because “either Ms. Wyatt and Mr.
Huffman have personal knowledge that they were eligible for TAA benefits or not.

If a party . . . fails to obey an order to provide or permit discovery,
including an order under Rule 26(f), 35, or 37(a), the court where the
action is pending may issue further just orders. They may include the
following: . . . (ii) prohibiting the disobedient party . . . from introducing
designated matters in evidence; (iii) striking pleadings in whole or in part .
...
In addition, Rule 37(b)(2)(C) states, in relevant part: “If a party fails to comply
with an order under Rule 35(a) requiring it to produce another person for examination,
the court may issue any of the orders listed in Rule 37(b)(2)(A)((i)-(vi), unless the
disobedient party shows that it cannot produce the other person.”
3

Rule 37(c)(1) states, in relevant part:
If a party fails to provide information or identify witnesses as required by
Rule 26(a) or (e), the party is not allowed to use that information or
witness to supply evidence . . . at a trial, unless the failure was
substantially justified or is harmless. In addition to or instead of this
sanction, the court, on motion and after giving an opportunity to be heard:
(A) may order payment of the reasonable expenses, including attorney’s
fees, caused by the failure;
***
(C) may impose other appropriate sanctions, including any of the orders
listed in Rule 37(b)(2)(A)(i)-(vi).
4

Cross examination would only result in confirmation of the testimony provided.” Id. at 2.
Further, Plaintiffs contend that Visteon has had “sufficient time to obtain and present
rebuttal evidence establishing the knowledge of Ms. Wyatt and/or Mr. Huffman was
incorrect.” Id. Plaintiffs also assert that Visteon’s late production of evidence has been
excused in this case multiple times; therefore, it is “okay” for Plaintiffs to disclose these
affidavits late as well. Id.
Under either aspect of Rule 37, Huffman’s affidavit and Wyatt’s second affidavit
must be excluded from evidence. Using the more specific standard enunciated in Rule
37(c)(1), the Court concludes that Plaintiffs were without substantial justification in
omitting Huffman as a witness and failing to disclose at Wyatt’s deposition that she was
also claiming that she was entitled to TAA benefits. This case has been pending since
2005. By approximately June 19, 2007, see Dkt. Nos. 87, 88, 97, 98 & 101, the date
that Plaintiffs obtained from Visteon the names of putative class members; but no later
than October 31, 2007, the approximate date that notice was sent to putative class
members, see Dkt. Nos. 107, 199; Plaintiffs had an opportunity to canvass putative
class members and discover whether any of them had either actual monetary damages
or other benefits-related claims. Plaintiffs’ failure to identify all putative class members
who might be entitled to TAA benefits in the ensuing time cannot be rewarded by
allowing them to provide such evidence late and in what amounts to a trial by ambush.
Further, Plaintiffs sought, and received, over Visteon’s objection, additional time to
name their witnesses as recently as February 20, 2013. Dkt. No. 244. Therefore, it is
difficult for the Court to conclude that there is any justification, much less substantial
justification, for Plaintiffs’ failure to name Huffman as a witness in a timely manner or to

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provide Wyatt’s testimony regarding her claim that she is entitled to TAA benefits within
the Court-ordered deadlines.
In addition, the Court agrees with Visteon that the late disclosures were not
harmless. This is a Bench Trial by brief. Therefore, the Court made it clear to the
parties that they must exchange the affidavits they intended to rely upon as evidence
within enough time for the opposing party to depose the affiant if they wished. Dkt. No.
246, at 2. That procedure was necessary to ensure that each party had an opportunity
to cross-examine the witnesses in the same manner they would have had if the
witnesses appeared in Court. Plaintiffs have deprived Visteon of that opportunity with
respect to Huffman’s testimony by affidavit in its entirety, and with respect to Wyatt’s
second affidavit regarding her allegations that she was entitled to TAA benefits.
Plaintiffs had ample opportunity to name Huffman prior to the deadline and to elicit
Wyatt’s testimony on the TAA benefits issue at her deposition, but did not do so.
Plaintiffs’ argument that Visteon has had plenty of time to collect rebuttal
evidence is also without merit in light of the timing presented above, which indicates that
Visteon’s first notice of Plaintiffs’ intent to rely upon Wyatt’s new affidavit and the
entirely new affidavit of Huffman was when Plaintiffs filed their trial brief. Moreover, the
Plaintiffs provide no evidence of the timing of any alleged settlement negotiations
regarding these claims; therefore, there is no other reasonable explanation for Plaintiffs’
failure to produce the affidavits timely except to surprise Visteon.
Further, Plaintiffs’ production of these new affidavits stands on different footing
than Visteon’s late production of evidence related to the COBRA notice provided to
certain putative class members. Plaintiffs had ample opportunity to review Visteon’s

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late production; to depose relevant witnesses if they chose; and to challenge
consideration of this evidence. The new affidavits, however, were filed with Plaintiffs’
bench brief, and are meant to stand in the place of testimony at trial in open court. As
previously stated, the Court stressed with the parties during the Final Pretrial
Conference that, because there would be no opportunity to present witnesses live and
thereby cross-examine them in open court, the parties must be provided the opportunity
to depose the witnesses the other party intended to rely upon before any briefs were
filed. Plaintiffs’ failure to follow the Court’s pretrial order in this regard has deprived
Visteon, and the Court, of testimony on cross-examination, which is regarded “as an
essential safeguard of the accuracy and completeness of testimony.” 1 McCormick on
Evid. § 19 (7th Ed. Mar. 2013). Indeed, it is for this very reason that the hearsay rule
exists – to ensure the reliability of evidentiary matters stated or made outside of the
courtroom. Absent meaningful cross-examination or some other indicia of reliability (for
which Plaintiffs provide no argument), Wyatt’s second affidavit and Huffman’s affidavit
are nothing more than out-of-court statements that Plaintiffs are relying upon for the
truth of the matters stated therein and are inadmissible under the hearsay rule. Fed.
Rs. Evid. 801(c) & 802.
For these reasons, Visteon’s Motion to Strike is GRANTED. The Court will not
consider the Huffman affidavit in its entirety or Wyatt’s second affidavit regarding TAA
benefit issues.

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II. FINDINGS OF FACT
A. VISTEON’S BENEFIT ADMINISTRATION SYSTEM
In January 2000, Visteon was incorporated as a wholly-owned subsidiary of Ford
Motor Company (“Ford”). Dkt. No. 268-1, Manley Decl. ¶ 4. Visteon was spun off from
Ford and became an independent company on June 29, 2000.

Dkt. No. 268-2,

Metzigian Dep. at 13. During the time period at issue in this case, Visteon had a
workforce of approximately 35,500 employees who worked at a network of
manufacturing sites, technical centers, sales offices and joint ventures located
throughout the United States and other geographic regions throughout the world.
Manley Decl. ¶ 3.
Visteon employees generally become eligible for healthcare benefits on the first
day of the fourth month following their date of hire. Metzigian Dep. at 405. Typical
benefits available include medical, dental and vision coverage.

Id. at 128-29.

Employees that elect to enroll in benefits are provided with a copy of Visteon’s summary
plan description (“SPD”) regarding those benefits. Dkt. No. 269-1, Metzgian Trial Decl.
¶ 10 (“Metzgian Tr. Decl.”). The SPD contains information about COBRA, including
information on the circumstances under which COBRA applies, and the duration of
COBRA. Id. The SPD also identifies the COBRA Administrator, provides the address
and telephone number of the COBRA Administrator, and directs employees to contact
the COBRA Administrator if the employee has any questions regarding COBRA. Id. In
the event an employee leaves employment at Visteon, their coverage does not
terminate immediately; rather the coverage will continue until the end of the month in
which the employee leaves the company. Metzigian Dep. at 216-17.

8

In general, Visteon uses an automatic data feed system that electronically
communicates changes in an employee’s personnel record to its payroll, benefits, and
COBRA administrators. Dkt. No. 269-2, Defs.’ Supp. Resps. To Pls.’ First & Second
Set of Interrogatories, at 7 (“Defs.’ Supp. ROG Resps.”).

For example, when an

employee is terminated, the information is entered into the timekeeping system by the
respective Visteon facility’s Human Resources (“HR”) Department. Metzigian Dep. at
33, 304. That information is then communicated electronically through an automatic
data feed, which first goes to the payroll administrator (to process final pay); then to the
benefits administrator (to terminate active coverage); and thereafter, to the COBRA
administrator (to send out a COBRA notice to the employee and to manage COBRA if
the employee elected benefits). Id. at 22-23, 26-27, 33, 304, 314. The COBRA notice
sent to the employee would apply to any and all coverage the employee was enrolled in
at the time of his or her qualifying event. Id. at 135.
The specifics of the process, however, appear more complicated because one
company did not necessarily perform all three functions.

In the year 2000, when

Visteon was spun off from Ford, Visteon inherited the same process and systems
utilized by Ford, including payroll, benefits and COBRA administration functions. Id. at
19; Metzigian Tr. Decl. ¶ 4. Visteon was the plan administrator for its group plans,
including medical, dental and vision benefits, but Visteon and Ford entered into a
service agreement in which Ford agreed to continue to manage all of the administration
of benefits for Visteon until Visteon could become independent in those areas.
Metzigian Dep. at 16. This agreement ran from June 29, 2000, to May 31, 2002. Id.
During that time period, Ford was the third-party administrator (“TPA”) for Visteon. Id.

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Ford’s system included entering a qualifying event into Ford’s timekeeping system,
which would then feed to the Ford payroll department, which would feed to the Ford
health care or health and welfare system. Id. at 33. The Ford payroll department would
generate a COBRA notice. Id. at 33, 314. However, Visteon was unaware that Ford’s
payroll department was sending out COBRA notices until sometime in late 2008. Id. at
346.
After the contract with Ford expired, Visteon had several benefit administrators:
From June 1, 2002, through May 31, 2008, Tower-Perrin, which later became EDS and
eventually became ExcellerateHRO, was a benefit administrator for certain Visteon
employees. Id. at 23. Towers-Perrin made an electronic feed weekly to the COBRA
administrator. Id. at 26. Unicare was the COBRA administrator until Conexis replaced
it in August 2004. Id. at 27, 29-30.
Visteon provided the following chart illustrating the administrators with whom
Visteon had contracts to perform various functions at various times relevant to the Class
claims:
Time Period
06/29/00 – 05/31/02
06/01/02 – 03/31/03
04/01/03 – 07/31/04
08/01/04 – 05/31/08
06/01/08 – 12/31/09
01/01/10 – Present

Payroll
Administrator
Ford Payroll
Ford Payroll
Fidelity
Fidelity
Fidelity
UltiPro

Benefits
Administrator
Ford NESC
Towers-Perrin
Towers-Perrin
Towers-Perrin
Morneau Sobeco
Morneau Sobeco

COBRA
Administrator
Unicare
Unicare
Unicare
Conexis
Morneau Sobeco
Morneau Sobeco

Metzingen Tr. Decl. Ex. A.
In addition, Visteon’s Manager of Health and Welfare and Worker’s
Compensation Benefits, Shirah Metzigian (“Metzigian”) testified that for an unknown

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period of time, Ceridian acted as both a benefit administrator and a COBRA
administrator for certain Visteon facilities. Id. at 30.
Also for an unspecified period of time, Diamond was a benefit administrator and
a COBRA administrator for certain Visteon facilities. Id. at 79. However, Infinisource
sent out COBRA notices for Diamond. Id. at 131-32.
Upon initial selection, Visteon conducted quality assurance testing with respect to
each payroll, benefits and COBRA administrator that it retained. Metzigian Dep. at 3132. The quality assurance testing lasted approximately sixty (60) days and involved
multiple meetings between Visteon and the relevant administrator groups. Id. at 15356, 162-63. Visteon also required its third-party vendors to keep records of their actions
as a condition of their retention. Metzigian Tr. Decl. ¶ 5. However, beyond the initial
testing, Visteon never did anything to check or make certain that COBRA notices were
being sent out by its TPAs. Metzigian Dep. at 159.
In fact, Visteon plants did not report to Visteon’s HR Department how many
people separated employment or how many people had qualifying events on any type of
periodic basis.

Id. at 42.

Nor was there a procedure in place for Visteon’s HR

Department to learn of such information. Id. at 301.
While the service agreement was in place with Ford, for example, Visteon did not
have any information about the status of its employees; Ford had all of this information.
Id. at 32-35.

Neither Ford nor Unicare communicated anything to Visteon about

qualifying events or confirmed that COBRA notices were sent. Id. at 152, 158-59, 30607. In addition, Visteon never audited Ford or Unicare to determine if the companies
had properly sent out COBRA notices. Id. at 152-53, 306-07.

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Similarly, neither Towers-Perrin/EDS nor Unicare communicated anything to
Visteon about data sent to the COBRA administrator. Id. at 158-59. Neither TowersPerrin/EDS nor Unicare reported to Visteon the names or number of employees who
had qualifying events and Visteon never asked for this information. Id. at 158-59, 30407. Like with Ford, Visteon never audited Towers-Perrin/EDS or Unicare. Id. at 305-06.
Conexis never reported to Visteon the type or number of COBRA notices sent
and Visteon never asked for this information. Id. at 307-08. Visteon never audited
Conexis to check or make certain that COBRA notices were sent. Id.
Ceridian never reported to Visteon, and Visteon never asked for information
regarding COBRA notices that were sent or to whom. Id. at 308-09. Visteon never
audited Ceridian to check or make certain that COBRA notices were sent. Id.
According to Visteon, if a supervisor or a HR representative received a call from
an employee concerning COBRA, he or she was responsible for directing the employee
to the Visteon Benefits Center at the company’s headquarters in Michigan or to a
COBRA administrator. Id. at 160-61. Visteon claims that no such calls were reported to
the Visteon Benefits Center. Id. at 159-62. After this lawsuit was filed and apparently
during its investigation of Plaintiffs’ claims, an undisclosed number of case notes, for an
undesignated period of time, from Visteon’s COBRA administrators were reviewed by
Visteon and there were no notes to indicate that employees had complained to
Visteon’s COBRA administrators about problems with issuance of COBRA notices. Id.
at 284-85. The union serving Visteon has not reported any issues regarding COBRA
notices either. Metzigian Tr. Decl. ¶ 7.

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However, Sharon Pierce (“Sharon”), Jessica Wells (“Wells”), Donna Parrett
(“Parrett”), Katherine Alford (“Alfred”) and Kimberly Davidson (“Davidson”), all putative
class members, testified that each of them had contacted the HR office at their
respective plant to inquire about COBRA benefits. Dkt. Nos. 254-1, Sharon Pierce Aff.
¶ 5 (“Sharon’s Aff.”); 255-1, Wells Dep. at 18-19; Parrett Aff. ¶ 8; 256-4, Parrett Dep. at
10-11, 13; 257-3, Alfred Aff. ¶ 18; 257-4, Alfred Dep. at 23-25; 258-1, Davidson Aff. ¶
17; 258-2, Davidson Dep. at 22-23.

There is also credible evidence that the

Department of Labor (“DOL”) had contacted Pam Hicks (“Hicks”), an HR representative
at the Connersville plant as well as the Visteon benefits center, regarding the Plaintiffs’
complaints about not receiving a COBRA notice. Metzigian Dep. at 163-65 & Dkt. No.
249-1, Metzigian Dep. Ex. 1, Dep’t of Labor Letter to the Hon. Michael R. Pence, U.S.
House of Representatives, Aug. 15, 2005 (“DOL Letter”).
In the summer of 2007, approximately two years after this suit was filed, Visteon
implemented a formal weekly auditing process with its TPAs to ensure that all qualifying
events line up with the issuance of a timely COBRA notice.

Metzigian Tr. Decl. ¶ 13.

The new process involves comparing the number of qualifying events reported to the
administrator with the number of COBRA packages actually sent and measuring
compliance with the statutory COBRA period for sending the notices. Id. ¶ 14. Other
performance criteria were also put in place to measure compliance with COBRA. Id. ¶
14; Dkt. No. 278-1, Metzigian Dep. in Shedlock v. Visteon Corp., at 32-33 (“Metzigian
Shedlock Dep.”). In addition, Visteon streamlined its COBRA notification process by
using the same administrator for both benefits and COBRA notices. Metzigian Tr. Decl.
Ex. A.

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B. EVENTS LEADING TO THIS LAWSUIT
1. Darryl & Sharon Pierce
Plaintiffs were employed at Visteon’s Connersville, Indiana, facility. Manley Decl.
¶¶ 18-19. In December 2004, Plaintiffs were laid off and their benefits expired at the
end of the month, per company policy, on December 31, 2004. Neither of the Plaintiffs
received a COBRA notice. Sharon’s Aff. ¶¶ 3-4.
Sharon made several phone calls to Hicks, the HR manager at the Connersville
plant where the Plaintiffs had worked, to inquire about their COBRA notices. Id. ¶ 5.
When they did not receive their notices despite Sharon’s calls, Sharon contacted the
office of then Congressman Michael R. Pence (“Congressman Pence”) regarding the
lack of notice. Id. ¶ 6.
In April 2005, Hicks contacted Visteon’s benefits center and reported that she
had received a call from the DOL regarding the Pierce’s complaint that they had not
received a COBRA notice. Metzigian Dep. at 163-65. The benefits center employee
who took Hicks’ call contacted Conexis, the COBRA administrator at the time, which
verified that the notices were late and mailed them out on April 18, 2005. Id. at 164.
Once they received the notice, Plaintiffs declined COBRA benefits because they
could not afford to pay the retroactive premiums due for four months in a single, lump
sum payment. Dkt. No. 95-2, Darryl Pierce Dep. at 31-33 (“Darryl Dep.”). Darryl Pierce
(“Darryl”) testified that the Plaintiffs delayed dentist checkups and doctor visits because
they could not afford them. Id. at 31-32.

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On September 6, 2005, the Plaintiffs filed a class action complaint alleging that
Visteon violated the COBRA provisions of ERISA when it failed to provide timely notice
of the putative class members’ COBRA rights. Dkt. No. 1, at 4-5.
2. Data Feed Error
Visteon testified that in February 2005, its Health and Welfare Department
discovered that some records for employees who had been laid off in late 2004 were
not flowing through the payroll/benefits system correctly. Metzigian Dep. at 166-69,
412-13. Specifically, 25% of the records for the laid off employees erroneously listed
them as active employees. Id. Visteon contacted the payroll administrator at the time,
Fidelity, and learned that the problem was a data feed error from Fidelity to the benefits
administrator, Towers-Perrin. Id. at 166-69. The issue was corrected, and COBRA
notices were sent out to the affected employees in April 2005. Id. at 166-69, 413.
Visteon’s testimony regarding whether the Plaintiffs were included in this group of
employees is unclear, although there is evidence that COBRA notices for some of the
other class members were sent on the same date as that for the Plaintiffs. See, e.g.,
Dkt. No. 248, Stipulation & Submission of Class Members, at 25 of 63, Record for
Taggart, Jim.
Visteon characterized this discovery as one that occurred when a Visteon
employee was doing her “normal day-to-day” activities. Metzigian Dep. at 167-68. See
also Dkt. No. 267, Visteon’s Trial Br. at 12-13 of 52. However, Metzigian’s testimony
reflects that the discovery was more happenstance than routine because she stated that
“randomly, any one of us one day could, . . . if we know there is a large number of
people, we might look at something.” Metzigian Dep. at 167.

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3. “Discharge” Coding Error
As part of its investigation into this matter in 2005, Visteon discovered an issue
concerning the termination code for “discharge.” Id. at 418; Metzigian Tr. Decl. ¶ 12.
Visteon had inherited a two-digit code for “discharge” from Ford that did not register as
a qualifying event for purpose of COBRA on the computer system. Metzigian Dep. at
418. The “discharge” code included not only employees separated because of gross
misconduct (grounds for withholding COBRA benefits pursuant to 29 U.S.C. § 1163(2)),
but also those separated for other reasons. Metzigian Tr. Decl. ¶ 12.
4. Potential Retirees
Although retried employees are not part of the Class, COBRA notice issues
related to retirees may provide evidence of notice or a pattern or practice. Fed. R. Evid.
406. Salaried employees who retire from Visteon’s various facilities at various points in
time were entitled to receive COBRA notices for benefits not covered by their retirement
program. Metzigian Dep. at 91, 96-97. In addition, there are at least three ways for
employees who are close to retirement to “grow into” a retirement benefit that would
include some, but not all the health, dental and vision benefits to which they were
entitled as an employee.

Metzigian Dep. at 48, 236-37, 241-42.

Each program

participant might have been entitled to receive a COBRA notice for those benefits not
included in their “grow in” program. Id. In addition, certain employees were offered an
opportunity to separate employment and be retirement eligible; however, Visteon did not
know whether these separating employees did in fact retire, and thus, were entitled to
COBRA notices for those benefits not covered by their retirement program. Id. at 242-

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43. Further, if a separating employee was eligible to retire, Visteon did not know if the
employee did in fact retire when they separated from the company. Id. at 238-39.
When a separating employee who is eligible to retire from Visteon does in fact
retire, then that employee should receive a COBRA notice for all of his or her benefits.
Metzigian Dep. at 239. However, the COBRA administrators for Visteon had no idea if
a separating employee had retired or not; rather, the COBRA administrator would only
know that qualifying event had occurred and that a COBRA notice should go out. Id. at
240-41.
Visteon has no explanation for why approximately 600 individuals who were
retirement eligible and separated from Visteon from June 2002 through July 2004 were
not sent COBRA notices. Id. at 227, 243-48; Dkt. Nos. 249-3 & 249-4, Metzigian Dep.
Ex. 7, Spreadsheet, Visteon Corporation Salaried Terminations, June 2002 thru July
2004.

Similarly, Visteon has no explanation for why the 588 individuals who were

retirement eligible and separated from Visteon from July 2004 through 2008 were not
sent COBRA notices.

Metzigian Dep. at 255, 262-63; Dkt. Nos. 250-1 & 250-2,

Metzigian Dep. Ex. 8, Spreadsheet, Visteon Salaried Terminations from August 2004 to
Present.
5. Communication Breakdowns Between Third-Party Administrators
In discovery responses from its third-party administrators generated as a result of
this law suit, Visteon learned that a variety of technical problems caused employees not
to receive timely COBRA notices. Metzigian Dep. at 324; Metzigian Tr. Decl. ¶¶ 12-13.
The problems included: (i) situations where a code regarding an employee’s qualifying
event was not properly fed from one administrator to another; (ii) situations where the

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benefits administrator did not communicate termination data to the COBRA
administrator or did so in an untimely manner; (iii) situations where the COBRA
administrator did not send the COBRA package to a terminated employee or sent it late;
and (iv) situations where an employee was a “term on term,” meaning that the employee
was on a non-COBRA eligible leave at the time that he or she subsequently had a
COBRA-qualifying event, but the second event was not captured on the transmission
from the benefits administrator to the COBRA administrator because the employee had
not been at work actively. Metzigian Dep. at 159-60, 166-72, 274, 278, 282; Metzigian
Tr. Decl. ¶ 12; Dkt. No. 278-1, Metzigian Shedlock Dep. at 24-25.
C. CERTIFICATION OF THE CLASS
By Orders dated September 14, 2006, and October 4, 2007, the Court certified a
class as follows:
All Qualified Beneficiaries of group medical, dental, and/or vision, benefit
plans administered by Visteon Corporation and/or Visteon Systems, LLC,
in the United States, who were entitled to be provided notice of their
COBRA rights due to a qualified event to a covered employee pursuant to
29 U.S.C. § 1163(a)(1), (2), and (4), and who were not provided said
notice in a timely fashion pursuant to 29 U.S.C. § 1166, and whose claims
arose within the statute of limitations applicable to the state of the facility
in which the Qualified Beneficiary employed by Visteon Corporation and/or
Visteon Systems, LLC, in the United States, worked and whose qualified
event took place on or before September 6, 2005.
Dkt. No. 116. The Court incorporates by reference the entirety of those orders, Docket
Nos. 67 and 116.
D. NOTICE TO THE CLASS
Notice was sent to the Class between October 19, 2007, and October 31, 2007.
Dkt. Nos. 107, 119.

18

E. CLASS MEMBERS
The parties have stipulated to a list of persons who are putative class members.
The total number of individuals on the list is 1,593. Dkt. No. 248-1. The parties agree
that the list includes 748 individuals who did not receive any COBRA notice or received
their COBRA notice in a tardy fashion. More specifically, 331 individuals have never
received a COBRA notice. Id. Of the remaining 417 of the 748, 221 individuals were
sent their COBRA notice over 470 days late, barely in advance of the 18-month COBRA
expiration period. Id. Also with respect to the remaining 417 of the 748 individuals, 222
COBRA notices were sent after January 1, 2006, when Visteon was on notice of the
Plaintiffs’ class allegations. Id.
The parties agree that fifty-four, 54, individuals out of the 1,593, should be
excluded from the Class because they were never enrolled in benefits that would
require a notice under COBRA. Dkt. No. 283-2; Dkt. No. 267, Visteon’s Resp. at 20-22;
Dkt. No. 292, Plaintiffs’ Reply, at 20.
The parties also agree that thirteen, 13, individuals out of the 1,593, should not
be part of the Class because they either waived coverage or had no loss of coverage.
Dkt. No. 267, Visteon’s Resp. at 18-20; Dkt. No. 292, Plaintiffs’ Reply, at 20. Over
Plaintiffs’ objection, the Court concludes that an additional three, 3, individuals, Michael
Munoz, Michael Simons and James Vendlinski, should also be excluded from the Class
because Visteon presented sufficient evidence that these individuals were released to
work for Ford successor companies and did not experience a loss of coverage. Dkt.
No. 279-2, Popp Decl. ¶ 18 & Ex. A thereto, at lines 791, 800 and 803.

19

Further, the Court concludes that an additional 770 individuals out of the 1,593,
should be excluded from the Class because they were sent a timely notice of COBRA
rights by Ford. Over Plaintiffs’ objection, the Court has allowed Visteon to present
evidence it discovered in September 2012, which shows that during the period
beginning in June 2000 through May 31, 2002, Ford included in its COBRA notices to
770 employees all the benefits in which the employee was enrolled at the time of that
employee’s qualifying event. Dkt. Nos. 269-3 to 277-1, Dalal Decl. & Exs. thereto; 2792 to 281-1, Popp Decl. & Exs. thereto.

To the extent it is necessary, the Court

incorporates by reference its Order dated January 14, 2013, granting Visteon’s Motion
for Consideration of Evidence. Dkt. No. 236. However, Visteon’s belated discovery of
this information is evidence of its lack of diligence with respect to its responsibilities as
benefits administrator and needlessly protracted this litigation.
Visteon argues that an additional four (4) individuals received timely notice,4 but
Plaintiffs dispute Visteon’s evidence with respect to those individuals: Julie Stabnick
(“Stabnick”), Michelle Jordan (“Jordan”), Anna Rader (“Rader”) and Robert Godfrey
(“Godfrey”). Dkt. Nos. 267, Visteon’s Resp. at 17-18; 292, Plaintiffs’ Reply, at 19-20;
299, Visteon’s Sur-Reply, at 1-2.

The Court agrees with Visteon that these four

individuals should be excluded from the Class because they received timely COBRA
notices. Stabnick was provided timely notice on July 29, 2004. Dkt. No. 249-3, at 3.
Jordan was also provided timely notice on September 15, 2004. Dkt. Nos. 281, Jordan
COBRA Notice; 269-1, Metzigian Dep. Ex. 7. Godfrey and Rader were also sent timely

4

Visteon argued that an additional five individuals received timely notice, but later
withdrew its argument with respect to Calin Ionescu, who remains part of the class. Dkt.
No. 296-1, at 2-3.
20

COBRA notices, within 11 and 18 days of their respective qualifying events. Dkt. Nos.
281; 269-1, Metzigian Dep. Exs. 3, E & G.
Visteon argues that an additional eight (8), individuals should be excluded from
the Class because they failed to disclose the existence of their COBRA claims in
bankruptcy proceedings.

Specifically, the following chart summarizes the pertinent

information:
Bankruptcy
Petition
Filed

Bankruptcy
Case
Discharged

8/15/2004
8/15/2004
10/25/2004

COBRA
Deadline/
Accrual of
Claim
9/28/2004
9/28/2004
12/8/2004

10/21/2004
5/26/2011
9/10/2004

3/18/2005
Pending
1/26/2005

10/31/2004
1/11/2005
9/30/2004
10/22/2004
10/31/2004

12/14/2004
2/24/2005
11/13/2004
12/5/2004
12/14/2004

7/24/2009
6/18/2009
10/29/2008
10/21/2004
4/27/2007

11/10/2009
4/15/2010
3/2/2009
3/18/2005
8/15/2007

12/27/2004

2/9/2005

5/15/2011

9/7/2011

Name

Qualifying
Event Date

Greta Adams
Greta Adams
Marcella
Flannery
Helen Frasher
Jason Kuster
Parrett
Brenda Smith
Alice
Whitecotton
Wyatt

Dkt. Nos. 284-1 to -3; 285-1 to -4; 286-1 to -4; 287-1 to -4; and 288-1 to -4. The
Court takes judicial notice of the filing dates of these petitions and their contents as well
as any other filings in those cases that are relevant to the issues in this matter, including
orders of discharge. See In re Salen, 465 F.3d 767, 771 (7th Cir. 2006).
The question of whether or not these individuals are included in the Class will be
addressed in the Conclusions of Law section of this Order.
F. EVIDENCE OF HARM TO CLASS MEMBERS
In addition to their own evidence regarding harm, Plaintiffs presented evidence of
harm to the following individuals: Jessica Wells (“Wells”), Wyatt, Whitecotton, Parrett

21

(also known as Donna Sherwood), Greta Steele (“Steele”), Hensley, Alfred, Kimberly
Davidson (“Davidson”), Huffman, Kevin Trent (“Trent”), Johnny Knight (“Knight”) and
Jody Capshaw (“Capshaw”). Dkt. No. 262, at 10-27, and Affidavits, Depositions and/or
Exhibits cited therein.
The Court has excluded Huffman’s affidavit and Wyatt’s second affidavit, both as
a sanction and because they are hearsay; therefore, the Court will not consider
evidence of any alleged economic damages suffered by Huffman and it will not consider
any evidence in Wyatt’s second affidavit with respect to her alleged entitlement to TAA
benefits.
1. Jessica Wells
As to Wells, the evidence shows that while working and being insured by
Visteon, Wells, her son, Tyler, and her daughters Meghann and Morgan, regularly saw
their doctors and a dentist (including braces adjustments for Meghann), and received
annual eye exams and/or received treatment from an Optometrist. Dkt. No. 254-3,
Wells Aff. ¶¶ 3-17.

During this time, Wells suffered from and was being treated for

arthritis in her neck and knees. Id. ¶ 4. Visteon terminated Wells’ employment on
December 27, 2004. Id. ¶ 23. At that time, Wells was thirty-five years old, Morgan was
thirteen years old, Tyler was fifteen years old and Meghann was sixteen years old.
Wells received a notice of COBRA rights sometime in June 2006.

Id. ¶ 22.

She

declined coverage at that time because she could not afford to pay eighteen (18)
months of premiums all at once. Id. ¶ 23. Wells did not quantify her damages, but
claims that she and Tyler went without prescription medication; that without the
medication Tyler experienced depression and then dropped out of school; and that

22

Wells was treated, without insurance, for nodules on her lungs, shingles and
depression. Id. ¶¶ 26-31. In addition to this pain and suffering, Wells states that she
was very distressed by not having insurance for her children. Id. ¶ 33. Wells testified
that she was eligible for TAA benefits. Dkt. No. 255-1, Wells Dep. at 24, 26.
2. Leesa Wyatt
As to Wyatt, the evidence shows that while working and being insured by
Visteon, Wyatt and her daughter, Tamara, regularly saw their doctor and a dentist and
had yearly eye exams.

Dkt. No. 255-2, 1st Wyatt Aff. ¶¶ 3-9.

Visteon terminated

Wyatt’s employment on December 27, 2004. Id. ¶ 12. At that time, Wyatt was thirtythree years old and Tamara was sixteen years old. Id. ¶¶ 10-11. Wyatt received a
notice of COBRA rights sometime in June 2006. Dkt. No. 255-1, Wyatt Dep. at 19. She
declined coverage because she could not afford to pay the eighteen (18) months of
premiums all at once. Dkt. No. 255-2, 1st Wyatt Aff. ¶ 14. Prior to losing her insurance,
Wyatt suffered from high blood pressure, colon issues and complications from a breast
reduction procedure. Id. ¶ 17. Without insurance, Wyatt had to pay for treatment for
these conditions out of pocket and Tamara was forced to forego annual check-ups. Id.
¶¶ 16, 18, 19, 22, 23. Wyatt incurred medical expenses in the amount of $4,245.50
between March 28, 2005, and April 6, 2006. Dkt. No. 255-4, Wyatt Medical Bills.
Wyatt filed a petition for bankruptcy on May 15, 2011. Dkt. No. 288-1, Wyatt Pet.
for Chap. 7 Bankruptcy, May 15, 2011. She did not list her claim in this lawsuit as an
asset in her petition, the content of which she affirmed was true under the penalty of
perjury. Id. at 8 & 23 of 40. The case was discharged on September 7, 2011. Dkt. No.
288-2, Wyatt Discharge of Debtor Order, Sept. 7, 2001.

23

3. Alice Whitecotton
With respect to Whitecotton, while working for Visteon and being insured
Whitecotton, her husband, Paul, a diabetic; her son, Brandon; and her daughter
Veronica; regularly saw their doctors and a dentist and received annual eye exams.
Dkt. No. 256-1, Whitecotton Aff. ¶¶ 3-14. Visteon terminated Whitecotton’s employment
on October 31, 2004. Id. ¶ 19. At that time, Whitecotton was forty-three years old, Paul
was forty-four years old, Brandon was sixteen years old, and Veronica was fifteen years
old. Id. at ¶¶ 15-18. Whitecotton received her notice of COBRA rights sometime in
April 2006. Id. ¶ 22. She declined coverage because she could not afford to pay
seventeen (17) months of coverage all at once. Id. ¶ 23. Whitecotton and her husband
were uninsured for the period between November 2004 and April 2006; however,
Brandon and Veronica were uninsured for only a short period of time until they received
Medicaid through the State of Indiana. Id. ¶¶ 24-25. In October 2005, Whitecotton had
surgery on her foot and incurred thousands of dollars in medical bills that she could not
afford to pay. Id. ¶ 29. In addition, following her surgery, she did physical therapy at
her home instead of with the assistance of a physical therapist. Id. ¶ 30.
Whitecotton filed a petition for bankruptcy on April 27, 2007. Dkt. No. 287-3,
Whitecotton Pet. for Chap. 7 Bankruptcy, Apr. 27, 2007. She did not list her claim in
this lawsuit as an asset in her petition, the content of which she affirmed was true under
the penalty of perjury. Id. at 7 & 25 of 40. The case was discharged on August 15,
2007. Dkt. No. 287-4, Whitecotton Discharge of Debtors Order, Aug. 15, 2007.

24

4. Donna (Sherwood) Parrett
With respect to Parrett, while working for Visteon and being insured, Parrett
regularly visited her dentist and had annual eye exams. Dkt. No. 256-3, Parrett Aff. ¶¶
3-4. Parrett retired from Visteon on September 30, 2004, when she was fifty-eight years
old. Id. ¶¶. 3-4. After her retirement from Visteon, she received medical benefits, but
not dental or vision benefits. Id. ¶ 7. Parrett received her notice of COBRA rights
sometime in April 2005, but she declined coverage because she could not afford to pay
six (6) months of premiums all at once. Id. ¶ 7. Parrett was uninsured for dental and
vision benefits for the period between October 2004 to March 2006. Id. ¶ 10. During
this period, Parrett was forced to forego regular dental and vision check-ups; lost her
partial plate denture and was unable to replace it; and could not afford new glasses. Id.
¶¶ 9-11.
Parrett contacted Hicks at the Connersville plant regarding her COBRA notice.
Dkt. No. 260-2, Sherwood Questionnaire. During the time she was uninsured, Parrett
had dental bills totaling $451.50. Dkt. No. 260-3.
Parrett filed a petition for bankruptcy on October 29, 2008.

Dkt. No. 286-3,

Parrett Pet. for Chap. 7 Bankruptcy, Oct. 29, 2008. She did not list her claim in this
lawsuit as an asset in her petition, the content of which she affirmed was true under the
penalty of perjury. Id. at 8 & 21 of 36. The case was discharged on March 2, 2009.
Dkt. No. 286-4, Discharge of Debtor Order, Mar. 2, 2009.
5. Greta Steele
With respect to Steele, while working for Visteon and being insured, Steele and
her sons Nicholas and Brandon regularly visited their doctors and a dentist and had

25

annual eye exams. Dkt. No. 257-1, Steele Aff. ¶¶ 3-9. During that time, Steele suffered
from fibromyalgia and Brandon was treated for ADHD. Id. ¶¶ 2 & 9. Visteon terminated
Steele’s employment on August 15, 2004. Id. ¶ 13. At that time, Steele was forty years
old, Nicholas was fourteen years old and Brandon was thirteen years old. Id. ¶¶ 10-12.
Steele received her notice of COBRA rights sometime in January 2006. Id. ¶ 14. She
declined coverage because she could not afford to pay the outstanding premiums all at
once. Id. ¶ 18. Parrett was uninsured for the entire period between September 2004
and February 2006. Id. ¶ 19. Steele’s sons, however, were uninsured for only a short
period of time until they received Medicaid through the State of Indiana. Id. ¶ 19.
6. Jeanene Hensley
With respect to Hensley, while working for Visteon and being insured, Hensley
regularly visited her doctor and a dentist. Dkt. No. 257-2, Hensley Aff. ¶¶ 3-4. Visteon
terminated Hensley’s employment on October 31, 2004. Id. ¶ 6. At that time, Hensley
was forty-four years old.

Id. ¶ 5.

Hensley received her notice of COBRA rights

sometime in April 2006. Id. ¶ 7. Hensley had benefits start at her new employer on
October 26, 2005. Id. ¶ 8. Hensley canceled or delayed medical and dental exams and
testing because she did not have insurance. Id. ¶¶ 9-11.
7. Katherine Alfred
With respect to Alfred, while working for Visteon and being insured, Alfred, her
husband and her son regularly visited their doctors and a dentist and had annual eye
exams. Dkt. No. 257-3, Alfred Aff. ¶¶ 3-12. During that time, Alfred suffered from and
was treated for high blood pressure, degenerative arthritis, COPD, emphysema, back
problems and depression. Id. ¶ 3.

In addition, Alfred’s husband was treated for heart

26

and lung diseases. Id. ¶¶ 6 & 7. Visteon terminated Alfred’s employment on March 14,
2005. Id. ¶ 16. At that time, Alfred was fifty-two years old, her husband was sixty-one
years old and her son was eighteen years old. Id. ¶¶ 13-15. Alfred never received her
notice of COBRA rights. Id. ¶¶ 17-18; Dkt. No. 257-4, Alfred Dep. at 23-25. Alfred and
her son were uninsured from April 2005 until September 2006, a period of eighteen
months.

Alfred Aff. ¶ 19.

During that period they were forced to forego regular

treatment and check-ups. Id. ¶¶ 20-21.
8. Kimberly Davidson
With respect to Davidson, while working for Visteon and being insured, Davidson,
her husband and her son regularly visited their doctors and a dentist and had annual
eye exams. Dkt. No. 258-1, Davidson Aff. ¶¶ 3-11. During that time, Davidson suffered
from and was treated for shoulder issues, carpel tunnel syndrome and chronic pain; her
husband suffered from and was treated for chronic pain, headaches and knee
problems; and her son suffered from and was treated for seizures. Id. ¶¶ 3, 4 & 9.
Visteon terminated Davidson’s employment on March 8, 2005. Id. ¶ 15. At that time,
Davidson was thirty-three years old, her husband was thirty-seven years old and her
son was ten years old. Id. ¶¶ 12-14. Davidson never received her notice of COBRA
rights. Id. ¶¶ 16 & 17; Dkt. No. 258-2, Davidson Dep. at 22-23. The Davidson family
was uninsured from April 2005 until January 2006, a period of nine months. Davidson
Aff. ¶ 18. During this time the Davidson family went without medication, Davidson’s
husband had to forego knee surgery, Davidson’s son’s seizures worsened and the
family had to forego regular treatment and check-ups. Id. ¶¶ 19-21.

27

9. Kevin Trent/Johnny Knight/Jody Capshaw
Plaintiffs presented evidence that Trent, Knight and Capshaw incurred dental
and/or medical expenses during the relevant period, but proffered no additional
information to corroborate their claims that the expenses were incurred because they
were not informed of their right to continuing coverage. Dkt. Nos. 260-1, Trent Medical
Bills; 261-1, Knight Medical Bills; 261-2, Capshaw Dental Bills.

Plaintiffs have

withdrawn any claim for monetary recovery by these class members. Dkt. No. 262, at 2
n.1.
III. CONCLUSIONS OF LAW
A. STATUTORY FRAMEWORK AND STANDARD
Under COBRA, after a qualifying event, an employer must provide notice to an
employee of his or her right to elect continued insurance coverage for up to eighteen
months. 29 U.S.C. §§ 1161, 1162(2)(A)(i). More specifically, an employer must notify
the benefit plan administrator that an employee has experienced a qualifying event
within thirty (30) days of the date of that event. 29 U.S.C. §§ 1166(a)(1) & (2). For the
qualifying events at issue in this case, the plan administrator has fourteen (14) days
from the date of such notification to send a COBRA notice to the qualified individual. 29
U.S.C. §§ 1166(a)(4)(A) & (c). Therefore, a benefit plan administrator must provide
notice of COBRA rights to qualifying terminated employees within forty-four days of the
date of the employee’s termination. “[T]he use of a TPA cannot shield the administrator
from liability for violations of COBRA’s notification requirements.” Gomez v. St. Vincent
Health, Inc., 649 F.3d 583, 590 (7th Cir. 2011). Visteon has the burden to prove that

28

adequate notice was provided. See Keegan v. Bloomingdales, Inc., 992 F. Supp. 974,
978 (N.D. Ill. 1998).
If a plan administrator fails to abide by the notice provisions of COBRA, the Court
may, in its discretion, award a penalty of up to $110.00 per day from the date of the
failure to provide timely notice. 29 U.S.C. § 1132(c)(1); 29 C.F.R. § 2575.502c-1. “The
purpose of this statutory penalty is to provide plan administrators with an incentive to
comply with the requirements of ERISA . . . and to punish noncompliance.” Starr v.
Metro Sys., Inc., 461 F.3d 1036, 1040 (8th Cir. 2006) (citation omitted) (cited with
approval in Gomez, 649 F.3d at 590-91). Factors that courts have considered when
determining whether or not to award such damages include the nature of the plan
administrator’s conduct, including its demonstration of good or bad faith, gross
negligence or ill intent; and prejudice to the Plaintiffs and/or the Class. See Gomez, 649
F.3d at 590-91 (citing, inter alia, Scott v. Suncoast Beverage Sales, Ltd., 295 F.3d 1223,
1232 (11th Cir. 2002); Starr, 461 F.3d at 1040); see also Fenner v. Favorite Brand Int’l,
Inc., 25 F. Supp. 2d 870, 875 (N.D. Ill. 1998); Gomez v. St. Vincent Health, Inc., No.
1:08-cv-153-SEB-DML, 2010 WL 1854106, at *3 (S.D. Ind. May 6, 2010). Statutory
penalties may be awarded even if the Court concludes there is no prejudice. See
Gomez, 649 F.3d at 590.
In addition to statutory penalties, the Court may “order such other relief as it
deems proper.” 29 U.S.C. § 1132(c)(1)(B). The Seventh Circuit has stated that “the
broad language of [this] subsection [] does not, on its face, preclude money damages.”
Gomez, 649 F.3d at 588. Although the Gomez court did not “condone without limitation
. . . [monetary] compensation in COBRA-notification violation cases,” it did affirm an

29

award of medical expenses incurred as a result of a COBRA notification violation, less
deductibles and premiums that the beneficiary would have paid to obtain coverage
under COBRA. Id. at 588-89.
Pursuant to 29 U.S.C. § 1132(g)(1), “the [C]ourt in its discretion may allow a
reasonable attorney’s fee and costs of [the] action to either party.” The Seventh Circuit
has described the analytical approach under this section in two ways. See Bowerman
v. Wal-Mart Stores, Inc., 226 F.3d 574, 592 (7th Cir. 2000). The first considers five
factors: (1) the degree of the losing party’s culpability or bad faith; (2) the ability of the
losing party to satisfy an award of fees; (3) whether an award of fees against the losing
party would deter others from acting under similar circumstances; (4) whether the party
requesting fees sought to benefit all participants and beneficiaries of an ERISA plan or
to resolve a significant legal question regarding ERISA; and (5) the relative merits of the
parties’ positions. Id. 592-93. The second test considers whether the losing party’s
position was “substantially justified.”

Id. at 593 (quotations and citations omitted).

“Regardless of which test is used . . . the question asked is essentially the same: ‘[W]as
the losing party’s position substantially justified and taken in good faith, or was that
party simply out to harass its opponent.’” Id. (quoting Quinn v. Blue Cross & Blue Shield
Ass’n, 161 F.3d 472, 478 (7th Cir. 1998)). See also Jackman Fin. Corp. v. Humana Ins.
Co., 641 F.3d 860, (7th Cir. 2011) (discussing the two approaches when a defendant is
successful); Anderson v. Hartford Life & Accident Ins., 772 F. Supp. 2d 1025, 1027
(S.D. Ind. 2011) (citing Bowerman).

30

B. VISTEON VIOLATED THE COBRA PROVISIONS OF ERISA BY FAILING TO
SEND OUT NOTICES IN A TIMELY FASHION
With respect to Plaintiffs and the putative class members, Visteon was the plan
administrator for purposes of COBRA and bore the responsibility to provide timely
notice of such benefits to employees who experience a qualifying event. Metzigian
Dep. at 16. The parties stipulated that 1525 members of Class [the number agreed to,
minus the number stipulated as being excluded] were entitled to receive a COBRA
notice but either did not receive a COBRA notice at all, or received a COBRA notice
beyond the forty-four day statutory limit for such notice. Dkt. Nos. 248-1, 283-2, 267 at
18-22; 292, at 20. Plaintiffs objected to Visteon’s late-discovered evidence that 771
putative class members received timely notice; however, the Court overruled Plaintiffs’
objection and concluded that the evidence showed that those individuals should be
excluded from the Class. Dkt. Nos. 269-3 to 277-1; 279-2 to 281-1; 236. In addition,
the Court concluded that Visteon had proven that and additional three individuals
(Michael Munoz, Michael Simons and James Vendlinski) should be excluded from the
class because they had not had a qualifying event. Dkt. Nos. 279-2 & Ex. A thereto.
C. PUTATIVE CLASS MEMBERS WHO FAILED TO INCLUDE THEIR CLAIM ON
THEIR BANKRUPTCY PETITIONS MAY NOT BRING THEIR CLAIMS
Visteon contends that eight individuals, Adams, Flannery, Frasher, Kuster,
Parrett, Smith, Whitecotton and Wyatt (“Bankrupt Plaintiffs”), should be excluded from
the Class as a matter of law because they failed to disclose the existence of their
COBRA claims in their bankruptcy petitions. Dkt. No. 267, at 25-27. More specifically,
Visteon argues that the Bankrupt Plaintiffs lack standing because, once in bankruptcy,
only the trustee may pursue claims on behalf of the debtor’s estate and/or the Court

31

should judicially estop the Bankrupt Plaintiffs from asserting their claims here because
they are inconsistent with their sworn statements in their bankruptcy proceedings. Id.
Plaintiffs contend that the Bankrupt Plaintiffs have standing to bring their COBRA
claims on behalf of their bankruptcy estates.

Dkt. No. 292, at 20-21.

In addition,

Plaintiffs assert that there is no evidence that the Bankrupt Plaintiffs deliberately misled
the bankruptcy courts or acted in bad faith to support a conclusion that these absent
class members were attempting to manipulate the system. Id. at 21-22.
Although Plaintiffs are correct that Chapter 13 debtors may file claims on behalf
of their bankruptcy estates, see, e.g., Fed. R. Bank. P. 6009; Cable v. Ivy Tech State
College, 200 F.3d 467, 472-74 (7th Cir. 1999), Plaintiffs have provided no evidence that
Adams, the only one to file under that Chapter, intended to do so in this case. Rather,
presenting no evidence of their own, Plaintiffs argue only that Visteon’s evidence does
not show that the Bankrupt Plaintiffs intentionally misled the bankruptcy courts or acted
in bad faith. This is not enough to show that Adams has standing nor is it enough to
preclude application of the doctrine of judicial estoppel to bar the remaining Bankrupt
Plaintiffs from participation as part of the Class.
In this case, there is only one Bankrupt Plaintiff who has an open bankruptcy
petition – Adams. Dkt. No. 284-1. Adams’ pending bankruptcy is under Chapter 13;
therefore, she could, if she raises the issue in her petition and so states, bring her claim
on behalf of her bankruptcy estate. Cable, 200 F.3d at 472-73. However, as previously
mentioned, Plaintiffs present no evidence that Adams intends to bring her claim on
behalf of her bankruptcy estate or has disclosed her claim in her pending bankruptcy.
In the absence of such evidence, Adams does not have standing to bring her claim.

32

Adams’ first bankruptcy petition was brought under Chapter 7, like those of the
other Bankrupt Plaintiffs. Under Chapter 7, “[t]he trustee has sole authority to dispose
of property, including managing litigation related to the estate.” Id. at 472 (citing 11
U.S.C. §§ 541(a)(1) & 704(1)). But, those bankruptcy petitions have been resolved;
therefore, the Court believes the better legal construct to address the viability of the
Bankrupt Plaintiffs’ claims with respect to the closed cases is under the doctrine of
judicial estoppel. Accord Canen v. U.S. Bank Nat’l Assoc., ___ F. Supp. 2d ___, Case
No. 3:10-cv-0081-PPS-CAN, 2012 WL 6566694, at *5-6 (distinguishing Biesek v. Soo
Line R.R. Co., 440 F.3d 410 (7th Cir. 2006), where the bankruptcy at issue was ongoing
and dismissing on standing grounds; from Cannon-Stokes v. Potter, 453 F.3d 446 (7th
Cir. 2006), where the bankruptcy was closed, but the debtor had failed to disclose the
pre-bankruptcy claim in the petition and applying judicial estoppel).
Judicial estoppel is an equitable doctrine that precludes the use of “intentional
self-contradiction as a means of obtaining unfair advantage” and “prevents the
perversion of the judicial process.” In re Cassidy, 892 F.2d 637, 641 (7th Cir. 1990). It
is well established “that a debtor in bankruptcy who denies owning an asset, including a
chose in action or other legal claim, cannot realize on that concealed asset after the
bankruptcy ends.” Cannon-Stokes, 453 F.3d at 448 (listing cases from Puerto Rico,
and the First, Third, Fifth, Eight, Ninth and Eleventh Circuits).

In making this

discretionary decision, courts also consider whether the omission on a bankruptcy
petition is the result of inadvertence or mistake, and whether or not the bankruptcy
petitioner has made any move to amend schedules or re-open bankruptcy proceedings

33

to correct their errors. See In re Cassidy, 892 F.2d at 642; Cannon-Stokes, 453 F.3d at
448.
After consideration of the evidence presented, the Court concludes that the
Bankrupt Plaintiffs may not maintain their status as part of the Class. First, the Court
takes judicial notice of the Bankrupt Plaintiffs’ petitions. Dkt. Nos. 284-1 through 288-4.
None of the petitions list this law suit as an asset. See id. Further, all of the Bankrupt
Plaintiffs’ claims against Visteon accrued prior to the filing of their bankruptcy petitions.
As previously discussed, Adams even has a second petition pending, filed as recently
as May 2011, but still failed to disclose her claim in this case as an asset and affirmed
under penalties of perjury that this was true. Dkt. No. 284-1, Adams Pet. for Chap. 13
Bankruptcy, May 26, 2011, at 9 & 22 of 41. In addition to Adams, four other Bankrupt
Plaintiffs filed false petitions after October 31, 2007, the approximate date by which they
would have received notice of this class action. Dkt. Nos. 284-1, Adams Pet. for Chap.
13 Bankruptcy, May 26, 2011, at 1; 285-3, Frasher Pet. for Chap. 7 Bankruptcy, July 24,
2009, at 1; 286-1, Kuster Pet. for Chap. 7 Bankruptcy, June 18, 2009, at 1; Parrett Pet.
for Chap. 7 Bankruptcy, October 29, 2008, at 1; 288-1, Wyatt Pet. for Chap. 7
Bankruptcy, at 1. Plaintiffs have relied upon the testimony and/or affidavits of three of
the Bankrupt Plaintiffs, Parrett, Whitecotton and Wyatt, to support their argument that
they are entitled to statutory damages and/or that these individuals themselves are
entitled to monetary compensation for medical bills they paid when they were without
insurance. Yet, Plaintiffs present no evidence that any of the Bankrupt Plaintiffs moved
to amend their petitions or moved to re-open their bankruptcy to include their claims for
the benefit of their creditors.

This is particularly troubling in light of the Plaintiffs’

34

position that the Court should impose the maximum penalty allowed, which would
amount to an award of approximately $55,000.00 per class member.
By hiding this lawsuit as an asset, the Bankrupt Plaintiffs seek to reap the
windfall benefit of both having a full discharge of their debts and obtaining for
themselves a judgment in an amount, in many cases, that exceeds that total debt
expunged. This is precisely the type of “perversion of the judicial process” that the
doctrine of judicial estoppel was designed to prevent. Cannon-Stokes, 453 F.3d at 448
(quoting In re Cassidy, 892 F.2d at 641).

Plaintiffs’ implication that the Bankrupt

Plaintiffs should be held to some lesser standard because they are “absent class
members” is unpersuasive in the light of the purpose of this doctrine to raise the costs of
lying and the responsibility to be truthful in all litigation no matter what your status
therein.

Cf. id. at 448-49 (applying judicial estoppel even when the trustee had

abandoned any interest in the litigation and the plaintiff had relied on the advice of
counsel); Wiggins v. Citizens Gas & Coke Utility, No. 1:03-cv-1882-SEB-JMS, 2008 WL
4530679, at * 1-5 (S.D. Ind. Oct. 7, 2008) (applying judicial estoppel to the claim of a
single litigant in a multi-plaintiff case alleging race discrimination based on disparate
impact).

The Court concludes that the Bankrupt Plaintiffs with closed cases are

judicially estopped from participation in the Class.5

5

The parties did not brief the potential evidentiary ramifications of exclusion of
the Bankrupt Plaintiffs from inclusion in the Class. The Court has considered the
testimony of the Bankrupt Plaintiffs on behalf of the remaining Class, but only as
evidence of notice to Visteon and/or the type of harm typical to class members. Fed.
Rs. Evid. 105, 402.
35

D. COMPOSITION OF THE CLASS
In summary, the Class is comprised of the 1593 stipulated individuals, minus
fifty-four (54) individuals who the parties agree were never enrolled; four (4) individuals
who received timely notice; the thirteen (13) individuals the parties agree waived or
never lost coverage; the additional three (3) individuals the Court concluded Visteon
had established never lost coverage; the 770 individuals that Ford provided notice to,
the evidence for which the Court admitted over Plaintiffs’ objection; and the eight (8)
Bankrupt Plaintiffs. The Class is comprised of the remaining 741 individuals.
E. THE CLASS IS ENTITLED TO STATUTORY PENALTIES
Plaintiffs argue that the unwieldy nature of Visteon’s COBRA notice system, its
failure to provide regular oversight of its TPAs and its lack of institutional knowledge
about the status of its employees provides the basis for a finding of bad faith.

In

addition, Plaintiffs contend that the evidence demonstrates a pattern of system failures,
some of which are addressed by this lawsuit, some that are not, that further justifies a
conclusion of at least gross negligence if not willful indifference and bad faith. Further,
Plaintiffs assert that, even though the Court need not find prejudice to award statutory
damages, the evidence supports such a finding in this case because class members
avoided medical and dental treatment absent insurance and were required to make
lump sum payments for retroactive coverage. Plaintiffs contend that Visteon’s behavior
justifies the maximum $110.00 per day penalty.
In contrast, Visteon alleges that the evidence does not justify statutory damages
because it did not willfully violate the law; the failure to send notices was the product of
communication glitches between its third-party vendors, not something within its direct

36

control. In addition, Visteon argues that prior to its discovery in 2007 of the technical
problems with data transmission between its TPA, it had no notice of problems with its
system; it reasonably believed the Plaintiffs’ COBRA notice issue was an isolated
incident. Further, Visteon asserts that Plaintiffs have provided very little evidence of
prejudice to the class members because very few responded to the survey and none
evidenced actual expenses that exceeded premium payments. Therefore, collectively,
there is little support for any statutory damages award, much less the maximum award.
The Court concludes that there is ample evidence in the record that Visteon was
grossly negligent or willfully ignored the COBRA notice provisions of ERISA prior to
2007 and that such disregard caused harm to its former employees who were entitled to
notice. Visteon’s COBRA notice system was not reasonably designed to ensure that
Visteon complied with the law. Although the Court acknowledges that corporations with
large workforces may need to utilize third-parties to administrate its various benefit
programs, there is no evidence in the record to support a conclusion that Visteon knew
whether or not its various (multiple) TPAs were properly administrating their individual
functions at any given time until 2007 when it implemented the weekly audit system.
Unlike the defendant corporation in Gomez (which had an audit system in place), until
2007, Visteon worked closely with its TPAs only in the first few months of a newlyformed relationship. Metzigian Dep. at 31-32. There is no evidence of ongoing checks
on the process or that Visteon kept tabs on the information flowing from its facilities to
its TPAs’ processing systems. In fact, Metzigian testified that Visteon had no system in
place to perform any routine checks. Metzigian Dep. at 32-35, 42, 152-38, 158-59, 301,
304-09.

37

In addition, it took Visteon nearly two years from the date this lawsuit was filed to
compile a list of potential class members and over seven years to determine that 770
individuals on its original list actually did receive a timely COBRA notice. Dkt. Nos. 87,
88, 97, 98, 107, 236, 269-3 to 277-1, 279-2 to 281-1. This is hardly evidence that
Visteon diligently supervised, controlled or managed its COBRA notice system. Further,
Visteon admitted that it did not know at any given time the employment status of its
employees, Metzigian Dep. at 32-35; therefore, it never knew when a qualifying event
occurred and, correspondingly, which employees, if any, were entitled to a COBRA
notice.

In other words, prior to 2007, Visteon never actively administered its own

COBRA notice system; rather it left compliance up to third parties. But, Visteon cannot
hide behind its TPAs because Visteon acknowledged that it was the administrator under
ERISA and as such, it is the responsible party. See Gomez, 649 F.3d at 590 (stating
that “in the absence of [] an oversight system, the use of a TPA cannot shield the
administrator from liability for violations of COBRA’s notification requirements”).
Visteon makes much of the fact that it never received calls from employees
regarding missing COBRA notices prior to that of the Plaintiffs’. This is not credible in
light of the multiple members of the Class who testified that they contacted a Visteon
human resources person about their missing notices and the DOL letter that references
a discussion with Hicks about Plaintiffs’ complaints. See Dkt. Nos. 254-1, Sharon’s Aff.
¶ 5; 255-1, Wells Dep. at 18-19; Parrett Aff. ¶ 8; 256-4, Parrett Dep. at 10-11, 13; 257-3,
Alfred Aff. ¶ 18; 257-4, Alfred Dep. at 23-25; 258-1, Davidson Aff. ¶ 17; 258-2, Davidson
Dep. at 22-23; 249-2, DOL Letter.

Visteon claims that if one of its human resources

persons received a call, they would have directed the employee to Visteon’s Benefits

38

Center or to a COBRA administrator. See Metzigian Dep. at 160-61. Yet Visteon points
to no written policy or training program regarding this procedure. In addition, in early
2005, Visteon itself discovered an error that occurred with employees who were laid off
in late 2004, but it did nothing at that time to determine if similar problems had occurred
with other large force reductions or even individual issues. Given the timing of this
discovery coupled with Plaintiffs’ complaints around the same time, Visteon surely was
on notice that it may have problems with its system for providing COBRA notices.
With the evidence that was presented, it is not too surprising that complaints
never reached Visteon’s headquarters or its TPAs because there is no evidence that it
was anyone’s job at Visteon to keep track of which employees experienced a qualifying
event, much less whether that individual received a COBRA notice.

As previously

stated, Visteon admitted that it did not know at any given time which employee had
experienced a qualifying event and were thus entitled to a COBRA notice. Metzigian
Dep. at 32-35. Visteon characterized it as “daily routine” for employees in Metzigian’s
department to check up on such things, but this is belied by the fact that Metzigian
admitted that it was by chance that anyone in the department caught the errors that
occurred with employees laid off at the end of 2004. Id. at 167-68. It is not even clear
from Metizigian’s testimony regarding that incident whether or not Visteon ever really
knew who was affected by that error. Id. at 166-69, 412-13. As previously discussed,
even after discovery of this coding error, it never thereafter implemented any kind of
standard review process to ensure that other similar errors were caught until 2007, two
years after this law suit was filed. This evidences that Visteon was indifferent to its
employees’ rights to a timely COBRA notice. Moreover, although they are not part of

39

this class action, the evidence shows that Visteon had no system in place for tracking
when retirees were entitled to a COBRA notice, which further supports the conclusion
that Visteon turned a blind eye to full ERISA compliance. In short, there is no evidence
that Visteon ever developed a comprehensive plan to ensure ongoing compliance with
the COBRA notice provisions of ERISA prior to 2007.
Taken together, these facts compel a conclusion that Visteon willfully violated the
COBRA notice provision of ERISA or, at best, was grossly negligent in performing its
COBRA notice responsibilities during the relevant period.
With respect to prejudice, Plaintiffs have established that the Class suffered harm
from Visteon’s failure to provide timely COBRA notices. Wells, Steele, Hensley, Alfred
and Davidson testified that they had ongoing medical issues in their family for which
they had to forego treatment because they did not have insurance. See Dkt. Nos. 2543, Wells Aff. ¶¶ 26-31; 257-1, Steele Aff. ¶¶ 20-21; 257-2, Hensley Aff. ¶¶ 9-11; 257-3,
Alfred Aff. ¶¶ 3, 20-21; 258-1, Davidson Aff. ¶¶ 3, 4, 9, 19-21. The evidence suggests
that foregoing treatment had significant consequences for family members in at least
two instances.

See Dkt. Nos. 254-3, Wells Aff. ¶¶ 27, 29 (son’s ADHD worsened

without medication); 258-1, Davidson Aff. ¶¶ 9, 19, 23 (son’s seizures worsened without
medication).

In addition, Wells, Steele, Hensley and Alfred testified that they

experienced stress and anxiety because they had to forego medical treatment. Dkt.
Nos. 254-3, Wells Aff. ¶¶ 32-33; 257-1, Steele Aff. ¶22; 257-2, Hensley Aff. ¶¶ 9-11;
257-3, Alfred Aff. ¶ 22. By foregoing treatment, the Class suffered prejudice. Accord,
Holdford v. Exhibit Design Consultants, 218 F. Supp. 2d 901, 909 (W.D. Mich. 2002).

40

Further, Wells, Wyatt, Whitecotton, Parrett and Steele testified that once they
received their COBRA notice, they declined coverage because they could not afford the
lump sum payment required to receive benefits retroactive to the effective date of their
qualifying event. Dkt. Nos. 254-3, Wells Aff. ¶ 25; 255-2, Wyatt 1st Aff. ¶ 14; 256-1,
Whitecotton Aff. ¶ 23; 256-3, Parrett Aff. ¶ 10; 257-1, Steele Aff. ¶ 17. These late offers
were ineffective because if the Class member remained unemployed and still needed
insurance, it was unlikely they could afford a lump-sum payment. Accord, DiGiovanni v.
Guardian Life Ins. Co. of Am., Civ. Action No. 98-10908-GAO, 2002 U.S. Dist. LEXIS
12380, at *22 (D. Mass. June 28, 2002). Although Metzigian testified that Visteon would
have worked out a payment plan for the premiums for any former employee who made
such a request, there is no evidence that such willingness was communicated to any of
the class members by Visteon or by any of the relevant TPAs. Therefore, the Class
was still prejudiced because they were unaware of any offers to compromise Visteon
may have made.
Moreover, Plaintiffs not only contacted Visteon directly about their missing
COBRA notices, they sought help from Congressman Pence. Plaintiffs received no
relief from their own inquiry until the DOL contacted Visteon. In addition, Plaintiffs hired
a lawyer to represent them in this suit to recover statutory penalties for themselves as
well as others who failed to receive notice.

Plaintiffs were prejudiced by Visteon’s

failure to react promptly to their concerns, which forced them to seek help outside the
Visteon system. Accord Garred v. Gen. Am. Life Ins. Co., 774 F. Supp. 1190, 1201
(W.D. Ark. 1991) (stating that “aggravation, frustration, and the need to hire an attorney
have been recognized as prejudice for the purpose of § 1132(c) claims”).

41

Wyatt and Parrett testified that they paid for medical, dental or eye-care services
while they were uninsured and seek equitable damages.

However, the Court has

concluded that these individuals are judicially estopped from bringing their claims;
therefore they may not recover any monetary damages. See Section III. C. The Court
considers this evidence only to the extent that some class members paid for health
expenses out-of-pocket while uninsured and is a form of prejudice.6

6

Even if the Court considered this evidence, neither Wyatt nor Parrett would
recover monetary amounts because their expenses did not exceed the premiums they
would have had to pay. It is unclear from Plaintiffs’ opening brief how they intended to
factor in the premiums that would be owed by these individuals to determine actual
damages; however, in Reply, Plaintiffs assert that the Court should use the premium for
a single insured; for the period of time for which the Class member required medical,
dental or eye-care services only (not the entire uninsured period); and for all expenses,
not just ones incurred prior to receipt of a COBRA notice. Dkt. No. 292, at 18-19.
Visteon asserts that the proper calculation includes a premium equivalent to the
coverage the Class member testified he or she would have chosen and its responsibility
for any expenses would properly end when the Class member received a COBRA
notice, regardless of timeliness. Dkt. No. 267, at 35-42.
The Court cannot agree with Plaintiffs’ argument that in calculating any amount
of recoverable expenses, the Court should ignore the class members’ testimony
regarding the type of coverage they would have elected if it were offered timely or
ignore completely the date upon which a particular Class member received notice of
their COBRA rights. Once notified, the individual was then fully informed of their
options, which is the purpose behind the COBRA notice provision. See Mansfield v.
Chi. Park Dist. Group Plan, 997 F. Supp. 1053, 1057 (N.D. Ill. 1998). Thus, the proper
method to calculate any amount owed to a particular Class member is expenses minus
deductibles and premiums incurred from the date of the qualifying event, to the date of
any COBRA notice. See Chenoweth v. Wal-Mart Stores, Inc., 159 F. Supp. 2d 1032,
1042 (S.D. Ohio 2001). Applying this rubric to Plaintiffs’ evidence, neither Wyatt’s nor
Parrett’s claims for monetary relief survive. The Court adopts Visteon’s calculations
with respect to the alleged equitable damages for both Wyatt and Parrett. See Dkt.
Nos. 289-4, Wyatt Dep. at 24-26, 30 & Ex. 3 thereto; 255-4, Wyatt Med. Bills; 267, at
36-38 & 40-41, Visteon Resp.; 289-2, Parrett Dep. at 14-16 & Ex. 2 thereto; 260-3,
Parrett Med. Bills; 262 at 37, Pls.’ Br.
Huffman’s claim for monetary damages was not considered at all by the Court
because of its ruling granting Visteon’s Motion to Strike.
42

In summary, the Court has concluded that Visteon willfully violated the COBRA
notice provision of ERISA and that there was some prejudice to the Class, although
equitable damages requiring monetary relief were not proven.

In weighing these

factors, the Court concludes that a statutory penalty in the amount of $1,852,500.00 is
warranted. The Court may award up to $110.00 per day, per violation. In many cases
brought by single plaintiffs courts have awarded amounts ranging from $5.00 to $100.00
per day, for totals ranging from $323.00 to $27,610.00 per plaintiff. See, e.g., Scott, 295
f.3d at 1231-32 (affirming a statutory penalty of $20.00 per day ($10,800 total), after
finding bad faith, but no prejudice); Holford v. Exhibit Design Consultants, 218 F. Supp.
2d 901, 909 (W.D. Mich. 2002) (awarding a statutory penalty of $55.00 per day
($27,610.00 total), after finding bad faith); Chenowith, 159 F. Supp. 2d at 1043-44
(awarding a statutory penalty of $5.00 per day ($1,020.00 total), after finding defendant
had not acted in bad faith, but plaintiff had suffered prejudice, including unpaid medical
expenses); O’Shea v. Childtime Childcare, Inc., No. 01-CV-1264(DRH), 2002 WL
31738936, at *7 (N.D.N.Y. Dec. 2, 2002) (awarding a statutory penalty of $50.00 per
day ($2,300.00 total), after finding prejudice to the plaintiff and the need for future
deterrence); DiGiovanni, 2002 U.S. Dist. LEXIS 12380, at *19-22 (awarding a statutory
penalty of $100.00 per day ($21,500.00 total), after finding no evidence of bad faith, but
prejudice in the form of inability to pay retroactive lump sum); see also Bartling v.
Fruehauf Corp., 29 F.3d 1062, 1068-69 (6th Cir. 1994) (affirming an award of
$25,200.00, to be split amongst all of the plaintiffs, pursuant to 29 U.S.C.
§1132(c)(1)(B), for failure to provide plaintiffs requested information about their benefit
plan after finding neither bad faith nor prejudice); Garred v. Gen. Am. Life Ins. Co., 774

43

F. Supp. 1190, (W.D. Ark. 1991) (awarding a statutory penalty of $50.00 per day
($15,775.00 total) pursuant to 29 U.S.C. § 1132(c)(1)(B), for failure to provide plaintiff
requested information about her benefit plan after concluding that the court could not
“determine whether the failure to respond was through neglect or misfeasance”);
Thomas v. Jeep-Eagle Corp., 746 F. Supp. 863, (E.D. Wis. 1990) (awarding $50.00 per
day ($6,450.00 total), pursuant to 29 U.S.C. § 1132(c)(1) for failing to respond to
plaintiff’s request for information, after concluding there was no justification for the
defendant’s failure to respond); Bova v. Am. Cyanamid Co., 662 F. Supp. 483, 490-91
(S.D. Ohio 1987) (awarding a statutory penalty of $10,000.00 pursuant to 29 U.S.C. §
1132(c), for the failure to provide timely information regarding a benefit plan, after
finding bad faith in, among other things, “a series of procedural errors”). Here, the total
penalty reflects the Court’s rejection of Visteon’s claims that it was a relatively innocent
bystander, but acknowledges that the Class’ evidence of prejudice is not substantial.
Each class member would receive $2,500.00, which is substantially more than the
award in the only other multi-plaintiff case the Court could locate pursuant to 29 U.S.C.
§ 1132(c).
The total penalty in this case is justified by Visteon’s lack of internal systems for
tracking the status of its employees, including the date upon which an employee
sustained a qualifying event under ERISA; its failure to provide oversight for its TPAs on
an ongoing basis until two years after this lawsuit was filed; the lack of a proven written
policy for terminated employees and/or human resources personnel to follow when a
terminated employee calls the company seeking information about COBRA coverage;
Visteon’s continued lack of acceptance of responsibility for its COBRA notice system as

44

plan administrator in this law suit; and its lack of diligence in discovering the names of
the class members and/or discovering exculpatory information, some of which was
uncovered as recently as September 2012. Although the Class did not show prejudice
in the form of recoverable equitable damages, this award of statutory penalties is further
justified by the evidence of prejudice to the Class. Specifically, prejudice occurred in
the form of delayed medical treatment; stress from such delays, as well as having to
pay for some medical treatment without insurance; the frustration of getting a late notice
requiring a lump sum payment for retroactive benefits without knowing that compromise
might be available; and, in the case of Plaintiffs (as well as others in the Class), the
frustration of notifying Visteon of a delay in receiving a COBRA notice, but not getting a
response apparently until the DOL got involved. This penalty is large enough to act as
a deterrent to Visteon and to others who similarly operate a large number of facilities
and choose to use multiple TPAs to perform various benefit functions, but not so large
as to be a windfall for the Class. Each member of the Class shall be entitled to an equal
share of the penalty. The total number of individuals in the Class combined with the
large number of total days late (on average, approximately 376 days late per class
member) makes this award adequate to serve the purpose of the penalty yet is
proportionate to the injury.
F. THE CLASS IS ENTITLED TO ATTORNEY’S FEES
In its discretion, the Court concludes that under either construct or test
enunciated by the Seventh Circuit, an award of reasonable attorney’s fees in this case
is justified.

As discussed at length in the prior section, Visteon’s system was not

reasonably designed to comply with COBRA until at least 2007, two years after this suit

45

was filed.

In addition, it took Visteon seven years to discover that 711 individuals

should be excluded from the Class because they received a timely COBRA notice. This
suggests a lack of due regard for the seriousness of this matter. Further, Visteon’s
continued reliance on its mutli-layered set of TPAs and faulty information exchanges
between them as an excuse for its failure to send COBRA notices in a timely fashion
evidences Visteon’s bad faith and cannot justify its position that no penalty should be
awarded in this case. Visteon had no oversight system in place to ensure that COBRA
notices were sent by its TPAs; therefore, this case is easily distinguishable from Gomez,
the case that Visteon relies upon to justify its position that the Court should not impose
a penalty against it, and further supports the Court’s conclusion that Visteon’s
arguments are without substantial justification. With revenues of $13.8 billion in 2012, it
is highly likely that Visteon can afford to pay both the penalty imposed by this Order and
Plaintiffs’ reasonable attorney’s fees.
Plaintiffs did not provide an affidavit or other evidence of the reasonable
attorney’s fees they seek in this matter. Therefore, Plaintiffs shall file their Motion for
Reasonable Attorney’s Fees, together with supporting affidavits and timesheets, on or
before July 23, 2013; Visteon shall file its Response thereto on or before August 6,
2013; Plaintiffs shall file their Reply on or before August 13, 2013. In order to facilitate
the closure of this matter, no extensions shall be granted absent a showing of
extraordinary hardship.

46

VI. CONCLUSION
The Court has concluded that Defendants Visteon Corporation and Visteon
Systems, LLC, have violated the Consolidated Omnibus Reconciliation Act (“COBRA”),
29 U.S.C. § 116, when they failed to send timely notice of COBRA benefits to Plaintiffs
Darryl and Sharon Pierce, on behalf of themselves and all other similarly situated and
as defined herein (collectively, the “Class”). The Court further concluded that the Class
is entitled to a statutory award in the total amount of $1,852,500.00, to be shared
equally among the Class; and to a reasonable attorney’s fee, the amount of which will
be determined separately.
IT IS SO ORDERED this 25th day of June, 2013.

________________________________
LARRY J. McKINNEY, JUDGE
United States District Court
Southern District of Indiana
Distribution:
Hannesson Ignatius Murphy
BARNES & THORNBURG LLP
[e-mail]
Koryn Michelle McHone
BARNES & THORNBURG LLP
[e-mail]
Robert Anthony Prather
BARNES & THORNBURG LLP
[e-mail]
Ronald E. Weldy
WELDY & ASSOCIATES
[e-mail]

47