Case 2:20-cv-02374-MSN-cgc Document 1 Filed 05/26/20 Page 1 of 11 PageID 1
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`UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TENNESSEE
`WESTERN DIVISION
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`
`
`DANNY WALKER, individually
`and on behalf of all others
`similarly situated,
`
`
`Plaintiff,
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`
`
`
`
`
`
`Case No.:
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`
`
`
`
`
`
`
`v.
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`SYSCO CORPORATION,
`
`Defendant.
`____________________________________/
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`
`
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`CLASS ACTION COMPLAINT
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`Plaintiff, Danny Walker, (“Plaintiff”), hereby files this Class Action Complaint alleging
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`Defendant, Sysco Corporation (“Sysco” or “Defendant”), violated the Employee Retirement
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`Income Security Act of 1974 (“ERISA”), as amended by the Consolidated Omnibus Budget
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`Reconciliation Act of 1985 (“COBRA”), by failing to provide him with a timely COBRA notice
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`that complies with the law.
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`BRIEF OVERVIEW
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`1.
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`Following an employee’s termination, federal law requires plan administrators to
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`notify the former employee of their right to receive continuation coverage. The notice must be
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`sufficient to permit the discharged employee to make an informed decision whether to elect
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`coverage.
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`2.
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`Despite having access to the Department of Labor’s Model COBRA form,
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`Defendant chose not to use the model form— presumably to save Defendant money by pushing
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`terminated employees away from electing COBRA.1
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`3.
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`The deficient COBRA notice2 at issue in this lawsuit, attached as Exhibit “A,”
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`both confused and misled Plaintiff. It also caused Plaintiff economic injuries in the form of lost
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`health insurance and unpaid medical bills, as well as informational injuries.
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`4.
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`Sysco Corporation, the plan sponsor and plan administrator of the Sysco
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`Corporation Group Benefit Plan (“Plan”), has repeatedly violated ERISA by failing to timely
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`provide participants and beneficiaries in the Plan with adequate notice, as prescribed by
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`COBRA, of their right to continue their health coverage upon the occurrence of a “qualifying
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`event” as defined by the statute.
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`5.
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`As a result of receiving the deficient COBRA enrollment notice, Plaintiff could
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`not make an informed decision about his health insurance and lost health coverage.
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`6.
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`Plaintiff suffered a tangible injury refrained from seeking medical treatment as he
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`was uninsured due to Defendant’s deficient COBRA notices.
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`7.
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`And, not only did Plaintiff lose his insurance coverage, after Plaintiff lost his
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`insurance, he lost the ability to direct his health-care related decisions.
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`8.
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`Defendant’s deficient COBRA notice also caused Plaintiff an informational injury
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`when Defendant failed to provide him with information to which he was entitled to by statute,
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`1 In fact, according to one Congressional research service study, “…[The] average claim costs for COBRA
`beneficiaries exceeded the average claim for an active employee by 53%. The average annual health insurance
`cost per active employee was $7,190.00, and the COBRA cost was $10,988.14. The Spencer & Associates
`analysts contend that this indicates that the COBRA population is sicker than active-covered employees and that
`the 2% administrative fee allowed in the law is insufficient to offset the difference in actual claims costs.” Health
`Insurance Continuation Coverage under COBRA, Congressional Research Service, Janet Kinzer, July 11, 2013.
`2 Plaintiff only received the Notice attached hereto (Exhibit “A”). Upon information and belief, at some time
`during the relevant time period, Defendant may have utilized a “dual” COBRA notification process, using a series
`of communications to notify participants of their COBRA rights. This notice process is also unlawful -
`participants should not be required to extrapolate critical information from multiple communications to understand
`their COBRA rights and requirements.
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`2
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`namely a compliant COBRA election notice containing all information required by 29 C.F.R. §
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`2590.6064(b)(4) and 29 U.S.C. § 1166(a).
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`9.
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`As a result of these violations, which threaten Class Members’ ability to maintain
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`their health coverage, Plaintiff seeks statutory penalties, injunctive relief, attorneys’ fees, costs
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`and expenses, and other appropriate relief as set forth herein and provided by law.
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`JURISDICTION, VENUE, AND PARTIES
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`10.
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`This Court has jurisdiction over this action pursuant to 29 U.S.C. § 1132(e) and
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`(f), and also pursuant to 28 U.S.C. §§ 1331 and 1355.
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`11.
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`Venue is proper in this District pursuant to 29 U.S.C. § 1132(e)(2). Additionally,
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`ERISA § 502(e)(2) provides that venue is proper “where the plan is administered, where the
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`breach took place, or where a defendant resides or may be found.” 29 U.S.C. § 1132(e)(2).
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`Because the breach at issue took place in this District, venue is also proper.
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`12.
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`Plaintiff is a former employee of Defendant. He was covered under Defendant’s
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`Health Plan, making him a participant/beneficiary under the Plan.
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`13.
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`Plaintiff experienced a qualifying event within the meaning of 29 U.S.C. §
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`1163(2), rendering him a qualified beneficiary of the Plan pursuant to 29 U.S.C. § 1167(3).
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`14.
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`Defendant is a foreign corporation but is registered to do business in the State of
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`Tennessee. Defendant employed more than 20 employees who were members of the Plan in
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`each year for the preceding 5 years.
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`15.
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`Defendant is the Plan sponsor within the meaning of 29 U.S.C. §1002(16)(B), and
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`the administrator of the Plan within the meaning of 29 U.S.C. § 1002(16)(A). The Plan provides
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`medical benefits to employees and their beneficiaries, and is an employee welfare benefit plan
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`3
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`within the meaning of 29 U.S.C. § 1002(1) and a group health plan within the meaning of 29
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`U.S.C. § 1167(1).
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`
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`FACTUAL ALLEGATIONS
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`COBRA Notice Requirements
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`16.
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`The COBRA amendments to ERISA included certain provisions relating to
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`continuation of health coverage upon termination of employment or another “qualifying event”
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`as defined by the statute.
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`17.
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`Among other things, COBRA requires the plan sponsor of each group health plan
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`normally employing more than 20 employees on a typical business day during the preceding year
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`to provide “each qualified beneficiary who would lose coverage under the plan as a result of a
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`qualifying event … to elect, within the election period, continuation coverage under the plan.”
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`29 U.S.C. § 1161.
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`18.
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`Notice is of enormous importance. The COBRA notification requirement exists
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`because employees are not expected to know instinctively of their right to continue their
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`healthcare coverage.
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`19. Moreover, existing case law makes it ostensibly clear that notice is not only
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`required to be delivered to covered employees but to qualifying beneficiaries, as well.
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`20.
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`COBRA further requires the administrator of such a group health plan to provide
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`notice to any qualified beneficiary notice of their continuation of coverage rights under COBRA
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`upon the occurrence of a qualifying event within 44 days. 29 U.S.C. § 1166(a)(4). This notice
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`must be “[i]n accordance with the regulations prescribed by the Secretary” of Labor. 29 U.S.C. §
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`1166(a).
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`4
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`21.
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`To facilitate compliance with notice obligations, the United States Department of
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`Labor (“DOL”) has issued a Model COBRA Continuation Coverage Election Notice (“Model
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`Notice”), which is included in the Appendix to 29 C.F.R. § 2590.606-4. The DOL website states
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`that the DOL “will consider use of the model election notice, appropriately completed, good faith
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`compliance with the election notice content requirements of COBRA.”
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`22.
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`In the event that a plan administrator declines to use the Model Notice and fails to
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`meet the notice requirements of 29 U.S.C. § 1166 and 29 C.F.R. § 2590.606-4, the administrator
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`is subject to statutory penalties of up to $110.00 per participant or beneficiary per day from the
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`date of such failure. 29 U.S.C. § 1132(c)(1). In addition, the Court may order such other relief as
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`it deems proper, including but not limited to injunctive relief pursuant to 29 U.S.C. § 1132(a)(3)
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`and payment of attorneys’ fees and expenses pursuant to 29 U.S.C. § 1132(g)(1). Such is the
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`case here. Defendant failed to use the Model Notice and failed to meet the notice requirements
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`of 29 U.S.C. § 1166 and 29 C.F.R. § 2590.606-4, as set forth below.
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`PLAINTIFF DANNY WALKER
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`23.
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`Plaintiff, Danny Walker is a former employee of Defendant and participant in
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`Defendant’s health plan.
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`24.
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`Plaintiff began working for Defendant on July 30, 2018. Plaintiff was abruptly
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`terminated on November 22, 2018. Plaintiff was not fired for gross misconduct.
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`25.
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`As a result of his termination, Plaintiff experienced a qualifying event as defined
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`by 29 U.S.C. § 1163(2).
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`26.
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`The notice Defendant sent Plaintiff violates the law. Among other things:
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`a. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(i) because it fails to include name of the plan under which
`continuation coverage is available;
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`b. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(ii) because it fails to include the name of the qualifying
`event;
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`c. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(iii) because it fails to include identification, by status or
`name, of the qualified beneficiaries who are recognized by the plan
`as being entitled to elect continuation coverage with respect to the
`qualifying event, and the date on which coverage under the plan
`will terminate (or has terminated) unless continuation coverage is
`elected;
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`d. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(iv) because it fails to include a statement that each
`individual who is a qualified beneficiary with respect to the
`qualifying event has an independent right to elect continuation
`coverage;
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`e. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(v) because it fails to include an explanation of the plan's
`procedures for electing continuation coverage, including an
`explanation of the time period during which the election must be
`made, and the date by which the election must be made;
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`f. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(vi) because it fails to include an explanation of the
`consequences of failing to elect or waiving continuation coverage;
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`g. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(vii) because it fails to include a description of the
`continuation coverage that will be made available under the plan, if
`elected,
`including
`the date on which such coverage will
`commence, either by providing a description of the coverage or by
`reference to the plan's summary plan description
`
`h. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(viii) because it fails to include an explanation of the
`maximum period for which continuation coverage will be available
`under the plan, if elected;
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`i. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(xi) because it fails to include a description of the amount, if
`any, that each qualified beneficiary will be required to pay for
`continuation coverage;
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`j. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(xii) because it fails to provide the address to which
`payments should be sent;
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`6
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`k. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(xii) because it fails to include a description of the amount,
`if any, that each qualified beneficiary will be required to pay for
`continuation coverage;
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`l. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-
`4(b)(4)(i) because it fails to provide the name, address and
`telephone number of the party responsible under the plan for
`administration of continuation coverage benefits, including as to
`both the Plan Administrator and COBRA Administrator;
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`m. Defendant’s COBRA form violates 29 C.F.R. § 2590.606-4(b)(4)
`because Defendant has failed to provide a notice written in a
`manner calculated
`to be understood by
`the average plan
`participant.
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`27.
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`Defendant’s COBRA notice confused Plaintiff and resulted in his inability to
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`make an informed decision as to electing COBRA continuation coverage.
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`28.
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`In fact, Plaintiff did not understand the notice and, further, Plaintiff was unable to
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`elect COBRA because of the confusing and incomplete COBRA notice provided by Defendant.
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`29.
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`For example, the COBRA’s notice omission of a payment address left Plaintiff
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`without information on where to mail payment if elected. Similarly, Exhibit “A” failed to
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`sufficiently explain how to enroll in COBRA.
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`30.
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`Defendant has in place no administrative remedies Plaintiff was required to
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`exhaust prior to bringing suit.
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`31.
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`Additionally, because no such administrative remedies exist, any attempt to
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`exhaust the same would have been futile.
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`32.
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`Plaintiff suffered a tangible injury in the form of economic loss, specifically the
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`loss of insurance coverage, due to Defendant’s deficient COBRA election notice.
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`33.
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`Additionally, after Plaintiff lost his health insurance he suffered further injury, the
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`loss of the comfort and security inherent in having health insurance coverage.
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`7
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`34.
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`Finally, Plaintiff suffered an informational injury as a result of Defendant’s
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`COBRA notice because he was never provided all information to which he was entitled by 29
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`C.F.R. § 2590.606-4(b).
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`CLASS ACTION ALLEGATIONS
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`35.
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`Plaintiff brings this action as a class action pursuant to the Federal Rules of Civil
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`Procedure on behalf of the following putative class of persons:
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`The Deficient COBRA Notice Class:
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`All participants and beneficiaries in the Defendant’s Health Plan in
`the United States who were sent a COBRA notice by Defendant in the
`form attached as Exhibit “A,” during the applicable statute of
`limitations period, as a result of a qualifying event as determined by
`Defendant, who did not elect continuation coverage.
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`
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`36.
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`No administrative remedies exist as a prerequisite to Plaintiff’s claims on behalf
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`of the Putative Class.
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`37.
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`As such, any efforts related to exhausting such non-existent remedies would be
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`futile.
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`38.
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`Numerosity: The Class is so numerous that joinder of all Class members is
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`impracticable. The class is comprised of thousands of putative members.
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`39.
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`Typicality: Plaintiff’s claims are typical of the Class. The untimely COBRA
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`notice that Defendant sent to Plaintiff was a form notice that was uniformly provided to all Class
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`members. As such, the COBRA notice that Plaintiff received is typical of the COBRA notices
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`that other Class Members received and suffered from the same issues.
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`40.
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`Adequacy: Plaintiff will fairly and adequately protect the interests of the Class
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`members, he has no interests antagonistic to the classes, and has retained counsel experienced in
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`complex class action litigation.
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`8
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`41.
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`Commonality: Common questions of law and fact exist as to all members of the
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`Class and predominate over any questions solely affecting individual members of the Class,
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`including but not limited to:
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`a. Whether the Plan is a group health plan within the meaning of 29
`U.S.C. § 1167(1);
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`b. Whether Defendant’s COBRA notice complied with
`the
`requirements of 29 U.S.C. § 1166(a) and 29 C.F.R. § 2590.606-4;
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`c. Whether statutory penalties should be imposed against Defendant
`under 29 U.S.C. § 1132(c)(1) for failing to comply with COBRA
`notice requirements, and if so, in what amount;
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`d. The appropriateness and proper form of any injunctive relief or
`other equitable relief pursuant to 29 U.S.C. § 1132(a)(3); and
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`e. Whether (and the extent to which) other relief should be granted
`based on Defendant’s failure to comply with COBRA notice
`requirements.
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`42.
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`Class Members do not have an interest in pursuing separate individual actions
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`against Defendant, as the amount of each Class Member’s individual claims is relatively small
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`compared to the expense and burden of individual prosecution.
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`43.
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`Class certification also will obviate the need for unduly duplicative litigation that
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`might result in inconsistent judgments concerning Defendant’s practices and the adequacy of its
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`COBRA notice.
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`44. Moreover, management of this action as a class action will not present any likely
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`difficulties. In the interests of justice and judicial efficiency, it would be desirable to concentrate
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`the litigation of all Class Members’ claims in a single action.
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`45.
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`Plaintiff intends to send notice to all Class Members to the extent required the
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`Federal Rules of Civil Procedure. The names and addresses of the Class Members are available
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`9
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`from Defendant’s records, as well as from Defendant’s third-party administrator, Alight
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`Solutions.
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`46.
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`47.
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`48.
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`CLASS CLAIM I FOR RELIEF
`Violation of 29 U.S.C. § 1166(a) and 29 C.F.R. § 2590.606-4
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`Plaintiff reincorporates by reference paragraphs 1-9 and 23-45 from above.
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`The Plan is a group health plan within the meaning of 29 U.S.C. § 1167(1).
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`Defendant is the plan sponsor and plan administrator of the Plan and was subject
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`to the continuation of coverage and notice requirements of COBRA.
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`49.
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`Plaintiff and the other members of the Class experienced a “qualifying event” as
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`defined by 29 U.S.C. § 1163, and Defendant was aware that they had experienced such a
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`qualifying event.
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`50. On account of such qualifying event, Defendant sent Plaintiff and the Class
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`Members a COBRA notice in the form attached hereto.
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`51.
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`The COBRA notice that Defendant sent to Plaintiff and other Class Members
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`violated 29 U.S.C. § 1166(a) and 29 C.F.R. § 2590.606-4 for the reasons set forth above (among
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`other reasons).
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`52.
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`These violations were material and willful.
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`53.
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`Defendant knew that its notice was inconsistent with the Secretary of Labor’s
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`Model Notice and failed to comply with 29 U.S.C. § 1166(a) and 29 C.F.R. § 2590.606-4, but
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`chose to use a non-compliant notice in deliberate or reckless disregard of the rights of Plaintiff
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`and other Class Members.
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`10
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`PRAYER FOR RELIEF
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`WHEREFORE, Plaintiff, individually and on behalf of the Class, prays for relief as
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`follows:
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`a.
`
`b.
`
`c.
`
`d.
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`e.
`
`f.
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`g.
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`Designating Plaintiff’s counsel as counsel for the Class;
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`Issuing proper notice to the Class at Defendant’s expense;
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`Declaring that the COBRA notice sent by Defendant to Plaintiff
`and other Class Members violated 29 U.S.C. § 1166(a) and 29
`C.F.R. § 2590.606-4;
`
`Awarding appropriate equitable relief pursuant to 29 U.S.C. §
`1132(a)(3), including but not limited to an order enjoining
`Defendant from continuing to use its defective COBRA notice and
`requiring Defendant to send corrective notices;
`
`Awarding statutory penalties to the Class pursuant to 29 U.S.C. §
`1132(c)(1) and 29 C.F.R. § 2575.502c-1 in the amount of $110 per
`day for each Class Member who was sent a defective COBRA
`notice by Defendant;
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`Awarding attorneys’ fees, costs and expenses to Plaintiff’s counsel
`as provided by 29 U.S.C. § 1132(g)(1) and other applicable law;
`and
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`Granting such other and further relief, in law or equity, as this
`Court deems appropriate.
`
`
`Dated this 26th day of May, 2020.
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`
`
`/s/ Marc R. Edelman
`MARC R. EDELMAN, ESQ.
`Florida Bar No.: 0096342
`GEORGE G. TRIANTIS, ESQ.
`Florida Bar No.: 1015574
`MORGAN & MORGAN, P.A.
`201 N. Franklin Street, Suite 700
`Tampa, Florida 33602
`Telephone: 813-223-5505
`Facsimile: 813-257-0572
`E-mail: MEdelman@forthepeople.com
`E-mail: GTriantis@forthepeople.com
`Attorneys for Plaintiff
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`11
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