By Pension and Benefits Editorial Staff
Claims by a fired Marriott housekeeper that the COBRA notice she received, which Marriott admittedly sent to about 15,000 other terminated employees over a four-year period, was deficient were certified as a Rule 23 class by a federal district court in Florida. Although Marriott tried to defeat class certification by arguing, in essence, that the housekeeper’s claims were not typical of the class because of her personal characteristics, including not understanding English, and that resolution of the claims would require inquiry into the motivations of thousands of class members, this was not the question. Rather, whether a COBRA notice is adequate information is based on an objective determination of whether notice complies with the letter of the statute and is understandable by an average plan participant, stressed the court.
COBRA notice. After she was fired for a "verbal altercation" with another employee after almost 18 years as a Marriott housekeeper, the housekeeper received a COBRA notice of rights to continued health care coverage, which she claimed was deficient. Specifically, she contended that the COBRA notice was not provided in Spanish, it failed to adequately explain the procedures to elect health care coverage, failed to identify itself as the plan administrator, and failed to provide a notice that an average plan participant would understand.
Class claims. Claiming that both the housekeeper and her husband lost their health care insurance coverage for approximately two months, incurred significant medical expenses, and have unpaid medical bills as a result of receiving deficient notice, she sought Rule 23 class certification for all participants who were beneficiaries in Marriott’s Health Plan who: (1) were sent the same COBRA notice by Marriott, during the applicable four-year statute of limitations period as a result of a qualifying event, as determined by Marriott, and (2) did not elect continuation coverage. Marriott opposed the motion on every applicable Rule 23 factor, but the court certified the class anyway.
Ascertainable. Class members are ascertained by reference to objective criteria, and here the class was identified by Marriott’s own objective criteria—they were sent a COBRA notice through Marriott’s "myHR benefits system." The court was not persuaded by Marriott’s argument that the class definition was unworkable because it included individuals who experienced no impact, as this went to damages, not whether the class was adequately defined and ascertainable, which the court found that it was.
Numerosity. In the Eleventh Circuit, less than 21 is inadequate; more than 40 is adequate, and numbers in between depend on additional factors. But here, Marriott’s evidence was that more than 15,000 individuals were sent the contested COBRA notification and elected not to continue coverage during the relevant four-year period. Marriott argued that the housekeeper failed to show numerosity because she had not alleged that all members of her purported class were identically harmed; however, finding numerosity was established, the court pointed out Marriott’s argument was not an element of the numerosity determination.
Typicality. Even if some factual differences exist between the claims of the named representatives and the claims of the class, the court pointed out that all that is necessary is that the claims “arise from the same event or pattern or practice and are based on the same theory.” The housekeeper said her claims were typical of the class because she received the same allegedly deficient COBRA notice. Although Marriott called her claims atypical because "she could not understand English, could not understand the Marriott COBRA Notice once she had it translated, does not use computers, and could not afford COBRA continuation coverage," this was not the question. Rather, whether a COBRA notice provides adequate information is not based on an individual’s understanding but on an objective determination of whether notice complies with the letter of the statute and is understandable by an average plan participant. Accordingly, her claim was typical of all members of the class and did not depend on the housekeeper’s personal characteristics. And, while Marriott again raised the housekeeper’s alleged injuries as not typical of the putative class member, individual variations among class members' claims about the extent of their damages do not defeat typicality.
Adequate representation. Marriott said the housekeeper was not an adequate representative because her personal motivations, rather than any alleged notification violations by it, were why she did not elect COBRA coverage, and those motivations were not shared with other class members, making her an inadequate representative. But the court reiterated that the relevant inquiry is whether the COBRA Notice objectively complied with statutory and regulatory requirements, which had to be determined separately from the housekeeper’s personal knowledge or understanding of the COBRA requirements.
Gross misconduct? The court seemed specifically unimpressed by Marriott’s newly asserted argument that the housekeeper was inadequate because "she was allegedly terminated for violating Marriott’s non-violence policy, rendering her ineligible for COBRA coverage" as having committed gross misconduct. Marriott did not, however, raise the gross misconduct issue in its motion to dismiss or answer to the complaint; in fact, it admitted in its answer that the housekeeper was not terminated for gross misconduct, that her termination was a qualifying event, and that she was a qualified beneficiary of the Marriott Plan (something Marriott’s HR rep also testified).
This claimed "gross misconduct" was a verbal altercation between the housekeeper and another employee, and there was no record evidence of Marriott’s alleged nonviolence policy, her alleged violation of this policy, or whether this alleged policy violation was defined by Marriott policy as gross misconduct as a matter of Marriott policy. The only evidence was the testimony of Marriott’s corporate representative that she "suspected" this would be gross misconduct—a suspicion the court found unwarranted.
Indeed, the court questioned Marriott’s procedure for determining gross misconduct, since it sent the COBRA Notice form to all terminated employees, regardless of why they were terminated, and only addressed the gross misconduct issue "after—and if—the individual attempts to elect coverage." The court found this a "convenient" ex post facto determination of gross misconduct, raising further questions about Marriott’s compliance with COBRA’s statutory and regulatory requirements. It was insufficient to defeat adequacy here.
Predominance. Marriott argued no predominance because "individualized proof of the motivations of thousands of putative class members is required" to determine its liability. No, corrected the court, whether the COBRA Notice complied with the law did not break into individualized inquiries; it is an objective determination and central to the resolution of any claims of any purported class members. Individual class members’ motivations were irrelevant to this. The same was true with the penalty claim. Marriott suggested that an individualized inquiry into whether each putative class member suffered the same injury would be required, but that was incorrect. ERISA authorizes the assessment of a penalty of up to $110 per day for failure to provide adequate COBRA notice, which was "squarely within the trial court’s discretion," and "unrelated to any injury suffered by the plan participant," according to the Eleventh Circuit.
Superiority. More than 15,000 potential class members received the allegedly deficient COBRA Notice. If the housekeeper prevailed, for many class members, their claims will be small in relation to the costs and expenses of litigating the claims, making it unlikely that the claims would be pursued individually—enough for the court to find superiority and certify the class.
SOURCE: Vazquez v. Marriott International, Inc. (M.D. Fla.), No. 8:17-cv-00116-MSS-MAP, August 7, 2018.
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