Opinion
Civil No. 03-5478 (JRT/RLE).
April 19, 2005
Joseph V. Ferguson and Jessica L. Durbin, JOHNSON, KILLEN SEILER, P.A., for plaintiff.
Robert C. Maki and Shawn B. Reed, MAKI OVEROM, CHARTERED, Duluth, MN, for defendant.
MEMORANDUM OPINION AND ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Plaintiff Lloyd Rengo ("Rengo") alleges that his former employer, defendant Lakehead Oil Company ("Lakehead"), failed to provide him with adequate notice of his statutory right to elect continued health insurance coverage as required under the Consolidated Omnibus Reconciliation Act of 1985 ("COBRA"). Defendant moves for summary judgment, asserting that plaintiff was not qualified for continuing coverage under COBRA or, in the alternative, that plaintiff was provided adequate notice. For the following reasons, the Court denies defendant's motion.
BACKGROUND
Rengo was previously employed by Lakehead as a fuel tank driver. Lakehead owns and operates a number of gas stations/convenience stores. On October 6, 2001, Rengo was assigned to deliver fuel to Lakehead's London Road Spur store location. Rengo loaded his truck at Murphy Oil in Superior, Wisconsin and then drove towards the London Road store. While en route from the loading station to the store, Rengo's wife called him and informed him of a plumbing emergency at the building that they own and out of which she operates her business. Rengo also received a call from Jim Brewster, the manager of Lakehead's Travel Plaza gas station, advising Rengo that the London Road store was either out of, or nearly out of, unleaded fuel. Rengo informed Brewster of the plumbing emergency and, according to Rengo, was told to get to the London Road station as quickly as possible. Rengo attempted to contact Lakehead's dispatcher on her cell phone and at home in order to notify her of his emergency and the delay in the delivery, but was unable to reach her. Lakehead asserts that Rengo then should have attempted to notify Lakehead's Vice President, James Tracy, and, if unable to contact Tracy, an emergency pager service.After speaking to his wife, Rengo drove to Lakehead's Travel Plaza location, where Lakehead has a staff room. Rengo parked and secured his truck, and clocked out at 7:12 p.m. A friend met him there, and the two went to the building, investigated the plumbing problem, went to a hardware store to purchase parts for the troubled toilet, and then fixed the plumbing problem. Rengo then returned to the Travel Plaza, clocked back in at 8:01 p.m., and completed his delivery. When he arrived at the London Road store, the clerk told him that they had run out of fuel approximately half an hour earlier, and that between five and seven customers had unsuccessfully attempted to purchase fuel.
On October 11, 2001, Tracy met with Rengo and terminated him. During the meeting, Tracy informed Rengo that he would be able to elect to continue his health insurance coverage and that the paperwork would be forwarded to him. Tracy, who is also Lakehead's Plan Administrator, maintains that he mailed the appropriate paperwork to Rengo along with Rengo's last paycheck. After receiving no response from Rengo, Tracy terminated Rengo's coverage. Rengo asserts that he never received the election forms, and that Tracy did not return several messages requesting the forms.
Rengo alleges that Lakehead failed to provide him with adequate notice of his statutory right to elect continued health insurance coverage as required under COBRA. Lakehead asserts that it was not required to provide COBRA notice to Rengo. In the alternative, Lakehead argues that Rengo received sufficient notice. Lakehead moves for summary judgment.
ANALYSIS
I. Standard of Review
Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." However, summary judgment is not appropriate if a dispute over facts that might affect the outcome of the suit under the governing substantive law remains. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In other words, summary judgment is to be granted only where the evidence is such that no reasonable jury could return a verdict for the nonmoving party. Id. The court views all facts in the light most favorable to the nonmoving party, which is also entitled to the benefit of all reasonable inferences to be drawn from the underlying facts in the record. Vette Co. v. Aetna Casualty Surety Co., 612 F.2d 1076, 1077 (8th Cir. 1980).
II. COBRA
COBRA provides that "each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event is entitled, under the plan, to elect, within the election period, continuation coverage under the plan." 29 U.S.C. § 1161(a). It is undisputed that Rengo is a qualified beneficiary. However, Lakehead disputes that Rengo lost coverage as a result of a "qualifying event," and, in the alternative, asserts that Rengo was provided adequate notice of his right to elect continuation coverage.
A. Qualifying Event
Termination, for a reason other than the employee's gross misconduct, is a qualifying event. 29 U.S.C. § 1163(2). Lakehead asserts that Rengo was terminated for gross misconduct and, therefore, is not entitled to continuation coverage.
COBRA does not provide a definition of "gross misconduct." Federal courts have attempted to develop a definition from various sources, including state laws with purposes similar to COBRA and the ordinary meaning of the statutory terms. See, e.g., Richard v. Indus. Commercial Elec. Corp., 337 F. Supp. 2d 279, 282 (D. Mass. 2004); Zickafoose v. UB Servs., Inc., 23 F. Supp. 2d 652, 655 (S.D. W.Va. 1998); Burke v. Am. Stores Employee Benefit Plan, 818 F. Supp. 1131, 1135 (N.D. Ill. 1993); Paris v. F. Korbel Bros., Inc., 751 F. Supp. 834, 838 (N.D. Cal. 1990). Generally, courts have concluded that gross misconduct must involve more than ordinary negligence or incompetence, and requires conduct that is intentional, wanton, willful, deliberate, reckless, or in deliberate indifference to an employer's interest. Mlsna v. Unitel Communications, Inc., 91 F.3d 876, 881 (7th Cir. 1996); Nakisa v. Cont'l Airlines, 2001 WL 1250267, at *2 (S.D. Tex. May 10, 2001); Lloynd v. Hanover Foods Corp., 72 F. Supp. 2d 469, 478-79 (D. Del. 1999); Collins v. Aggreko, Inc., 884 F. Supp. 450, 453 (D. Utah 1995) ( citing Burke, 751 F. Supp. at 1135). A deliberate violation or disregard of standards of behavior required by an employer, particularly if repeated, or which an employer has a right to expect from employees may also constitute gross misconduct. See Nakisa, 2001 WL 1250267, at *2-3; Bryant v. Food Lion, Inc., 100 F. Supp. 2d 346, 376 (D.S.C. 2000); Paris, 751 F. Supp. at 838; Houston v. Int'l Data Transfer Corp., 645 N.W.2d 144 (Minn. 2002). These definitions are in accord with the definition of "employment misconduct" contained in the Minnesota unemployment compensation statutes. See Minn. Stat. § 268.095, subd. 6(a) (defining employment misconduct as "any intentional, negligent, or indifferent conduct, on the job or off the job (1) that displays clearly a serious violation of the standards of behavior the employer has the right to reasonably expect of the employee, or (2) that displays clearly a substantial lack of concern for the employment).
Whether Rengo knew that the station was actually out of fuel, whether Rengo was directed to proceed immediately to the station or directed to get to the station as soon as possible, and the extent of damage that Lakehead suffered as a result of Rengo's actions are all questions of fact that remain in dispute. These facts are directly related to whether Rengo's decision to delay delivery of his load constitutes gross misconduct. Therefore, the Court cannot determine, as a matter of law, that Rengo was terminated for gross misconduct, thereby eliminating Lakehead's obligation to offer continuation benefits.
B. Notice
Assuming the existence of a qualifying event, the plan administrator, in this case Tracy, must notify the employee within 60 days of learning of the termination of his right to elect continuation coverage. 29 U.S.C. § 1163(2). Lakehead asserts that Tracy notified Rengo of his right orally and by mailing him the appropriate forms. Rengo contends that neither method was adequate.
"[S]ufficient oral notice satisfies the notice requirement" under COBRA. Chestnut v. Montgomery, 307 F.3d 698 (8th Cir. 2002). In Chestnut, the court determined that information detailing the coverage the beneficiary was entitled to receive and the money owed in order to maintain this coverage, or that allowed the qualified beneficiary to make an informed decision whether to elect coverage was sufficient oral notice. Id. According to Rengo, Tracy told him that he would continue to have insurance coverage for 30 days or until he received paperwork that would explain and allow him to elect continuation coverage. This information alone would not have been sufficient to allow Rengo to make an informed decision regarding continuation coverage. Therefore, the Court cannot determine, as a matter of law, that the oral notice Rengo received from Tracy during the October 11 meeting satisfied the requirements of COBRA.
Some courts have held that COBRA requires only that an employer cause notice to be sent to the employee in a good-faith manner reasonably calculated to reach the employee, such as by mail. See, e.g., Jachim v. KUTV, 783 F. Supp. 1328 (D. Utah 1992); Brown v. Neely Truck Line, Inc., 884 F. Supp. 1534 (M.D. Ala. 1995). Based on these cases, Lakehead argues that its assertion that the appropriate forms were mailed to Rengo along with his final paycheck, which he received, entitles it to summary judgment. Rengo contends that he left several messages for Tracy requesting the paperwork, thereby putting Lakehead on notice that the paperwork had not reached him. If Lakehead knew that Rengo had not received the forms, the fact that it may have mailed them is not sufficient to satisfy the COBRA requirements. See Wooderson v. Am. Airlines, Inc., 2001 WL 300545 (N.D. Tex. Mar. 23, 2001). Whether Rengo received adequate written notice of his right to elect continuation coverage remains a disputed question of material fact.
This case will be placed on the Court's next available trial calendar
ORDER
Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that defendant's motion for summary judgment [Docket No. 21] is DENIED.