Green et al v. Baltimore City Board of School Commissioners

Filing 17

MEMORANDUM AND ORDER vacating the Court's Memorandum and Order dated 1/22/15; suspending Briefing on Plaintiff's Motion to Certify Class and for Further Relief; and directing parties to submit a modified Scheduling Order. Signed by Judge William M Nickerson on 3/17/2015. (bmhs, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND

ANNA D. GREEN, et al.

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v.
BALTIMORE CITY BOARD OF
SCHOOL COMMISSIONERS

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Civil Action No. WMN-14-3132

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MEMORANDUM AND ORDER

Before the Court is an unexpected and unusual request by
Plaintiffs Anna Green and Carolyn Richards to withdraw the
Court’s Memorandum Opinion and Order granting summary judgment
in their favor.

ECF No. 15.

On March 10, 2015, Plaintiffs

proactively disclosed to the Court that the parties had operated
under the misapprehension that the Employee Retirement Income
Security Act (ERISA) as amended by the Comprehensive Omnibus
Budget Reconciliation Act of 1985 (COBRA) governed Defendant
Baltimore City Board of School Commissioners’ administration of
its health insurance plan.

For the reasons that follow, the

Court will grant Plaintiffs’ request, withdraw its Memorandum
and Order dated January 22, 2015, and will direct parties to
provide a suggested schedule for further proceedings to the
Court within 30 days.

On January 22, 2015, this Court issued a Memorandum and
Order granting summary judgment in favor of Plaintiffs and
denying the motion to dismiss, or in the alternative, for
summary judgment, filed by the Board.

ECF Nos. 7 and 8.

In

granting summary judgment to Plaintiffs, the Court relied on the
body of precedent interpreting ERISA and the COBRA amendments to
ERISA to conclude that Defendant violated its COBRA obligations
and its fiduciary duties under ERISA by failing to provide
adequate notice of the change in their health care coverage when
their hours were “taken down to zero.”

See ECF No. 7 at 10-11

(“The reduction of hours that occurred when they were suspended
without pay was, therefore, a qualifying event. . . . [T]he
Board did not meet its notification obligations under COBRA and
the Court will grant summary judgment to Plaintiffs on Counts I
and III.”) and 17 (“[T]he Court finds that the Board breached
its fiduciary responsibility to disclose how the System would
handle continuing health insurance coverage after Plaintiffs
were suspended without pay.”).
In reaching its conclusion, the Court weighed the following
arguments by Defendant: (1) that Plaintiffs were timely notified
of COBRA rights after each affirmatively terminated their
relationship with the Board, ECF No. 4-1 at 8-13; (2) that
Plaintiffs failed to exhaust their administrative remedies with
regards to their ERISA claim, id. at 13-14; (3) that Plaintiffs
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sought damages to benefit themselves rather than the Plan as a
whole, as required by ERISA, id. at 14-16; and (4) that
Plaintiffs failed to assert a breach of duty under ERISA.
at 16.

Id.

In turn, the Court considered the following arguments by

the Plaintiffs in opposition: (1) that Defendant was required to
notify Plaintiffs of their COBRA rights when they were placed on
leave without pay, ECF No. 5-1 at 9-21; (2) that Defendant
breached its fiduciary duty by failing to provide material
information regarding their coverage, id. at 21-25; and (3) that
exhaustion was not relevant in this case.

Id. at 25-28.

Then, on March 10, 2015, as part of supplemental briefing
for class action status and further relief, Plaintiffs submitted
a letter bringing to the attention of the Court a provision of
ERISA previously unaddressed by either party.

Specifically, the

letter explained that 29 U.S.C. § 1003(b)(1) establishes that
ERISA does not apply to a “governmental plan.” See Robinette v.
Unsecker, 66 A.3d 1093, 1110 (Md. Ct. Spec. App. 2013)
(“[G]overnment plans – without a shadow of a doubt – are not
subject to ERISA.”).

A “governmental plan” includes “a plan

established or maintained for its employees by . . . any State .
. . agency or instrumentality . . . .”

29 U.S.C. § 1002(32).

Defendant is such an agency or instrumentality.

See Lee-Thomas

v. Prince George’s Cnty. Pub. Sch., 666 F.3d 244, 248 n. 5 (4th
Cir. 2012) (“Maryland Law treats [boards of education] as
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instrumentalities of the State.”).

As a result, ERISA and the

sections of COBRA relied on by both parties during briefing are
inapplicable.

Instead, the Public Health Service Act (PHSA), as

amended by COBRA, guides the standards and regulations of
Defendant’s plan administration.
seq.1

See 42 U.S.C. § 300bb-1 et

Plaintiffs’ counsel requested that, in light of this

discovery, the Court suspend briefing on their Motion for Class
Action or Further Relief, withdraw its January 22 Memorandum and
Order, and provide a schedule that allows for a “period of
discovery on jurisdictional facts and class certification,”
amendment of the Complaint, and a new round of motions on the
merits, class certification, and remedies.

ECF No. 15 at 2.

Defendant has filed an Opposition, ECF No. 16, to
Plaintiffs’ Motion to Certify Class and for Further Relief, ECF
No. 11, and now states that “[i]t is well established that
school board and/or school district plans are ‘governmental
plans’ that are exempt from ERISA requirements pursuant to 29
U.S.C. § 1003(b)(1).”

ECF No. 16-1 at 9.

Apparently the law is

not so well established that the Office of Legal Counsel for
Baltimore City Public Schools is generally aware of this
exemption as a matter of course.

In its Motion to Dismiss, or

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In 1985, COBRA amended both ERISA and the PHSA. Therefore,
while one could say colloquially that Defendant had obligations
under COBRA, these obligations derive from different sections of
the Act.
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in the Alternative, for Summary Judgment, Defendant includes in
its “Statement of Undisputed Facts” that “Defendant Board
employs more than 20 employees and is subject to Consolidated
Omnibus Reconciliation Act of 1985 amendment to the Employee
Retirement Income Security Act of 1974.”

ECF No. 4-1 at 4.

In

23 pages of briefing, Defendant was silent as to any
governmental plans exception, relied on ERISA and the COBRA
amendments to ERISA and pertinent case law, and in its final
conclusion, even argued that “[t]he Board has fully complied
with the requirements if [sic] ERISA and the COBRA notification
statutes.”

ECF No. 6 at 2.

It is clear from Defendant’s

submissions to the Court that, at the time of the original
cross-motions, the Board was operating under the same assumption
as Plaintiffs that it was governed by ERISA.
Even now, the Board has not demonstrated that it can
clearly identify the law to which it is subject although it is
now “well established” that it is exempt from ERISA.
Defendant’s Opposition argues that the Court need not vacate its
prior decision because “for purposes of addressing the remaining
issues at hand” ERISA’s governmental exception has “no impact on
whether or not the purported COBRA class should be certified, or
whether or not civil penalties should be imposed.”
at 10.

ECF No. 16-1

Yet, the governmental exception does implicate the

availability of civil penalties and Defendant’s Opposition as to
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that issue continues under the assumption that the Board is
governed by ERISA.

Plaintiffs’ Motion for Further Relief –

filed before the governmental exception disclosure - requested
that the Court impose civil penalties on Defendant pursuant to
29 U.S.C. § 1132(c)(1).

ECF No. 11-2 at 15-19.

Section 1132,

however, is part of ERISA, a statute that Defendant and
Plaintiffs acknowledge does not govern the Board.

Rather than

recognizing that it cannot be subject to § 1132 penalties,
however, the Board in its Opposition argues on the merits that
“while imposing such penalties is within this court’s
discretion, there is no legal support for imposing the maximum
penalty based upon the facts presented in this case, as there is
no evidence of prejudice, bad faith, failure to respond to
requests for information, or any of the factors that are
considered before imposing a civil penalty pursuant to 29 U.S.C.
§ 1132(c)(1).”

ECF No. 16-1 at 2-3.

Defendant also argues that

the imposition of civil penalties is time-barred, citing to
ERISA case law.

Id. at 14-16.

These arguments demonstrate that

there is continuing confusion on the part of Defendant as to
what law governs the Board’s conduct.2

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Defendant also argues on the merits that Plaintiffs failed to
meet the five factor test for an attorney’s fees award under 29
U.S.C. § 1132(g) rather than highlighting that this provision
also falls under ERISA. See ECF No. 16-1 at 18.
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And while the Court anticipates that its analysis of what
constitutes a “qualifying event” under the PHSA will be
consistent with its previous opinion, See Thomas v. Town of
Hammonton, 351 F.3d 108, 115 (3d Cir. 2003) (“The COBRA
provisions in the PHSA and ERISA represent parallel statutory
schemes.”), the relief available under the PHSA is significantly
different from that available under ERISA such that, combined
with Defendant’s continued reliance on ERISA, new briefing is
warranted.

To clarify the grounds upon which parties should

make their arguments and because the Court’s ruling on Counts II
and IV of Plaintiffs’ complaint is no longer accurate, the Court
will vacate its January 22, 2015, Memorandum and Order and
direct the parties to submit a modified schedule for further
discovery, briefing, and proceedings.
Accordingly, it is this 17th day of March, 2015, Ordered
that:
(1)

The Court’s Memorandum and Order dated January 22,
2015, ECF Nos. 7 and 8, is hereby VACATED;

(2)

Briefing on Plaintiff’s Motion to Certify Class and
for Further Relief, ECF No. 11, is SUSPENDED;

(3)

Within 30 days of this Order, Parties shall submit to
the Court a modified Scheduling Order detailing
deadlines for limited jurisdictional discovery,

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amended pleadings, dispositive motions, and other
deadlines as needed; and
(4)

The Clerk of Court shall transmit a copy of this
Memorandum and Order to all counsel of record.

______________/s/__________________
William M. Nickerson
Senior United States District Judge

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