Boddicker v. ESURANCE INC.

Citations: 770 F. Supp. 2d 1016; 2011 U.S. Dist. LEXIS 21519; 2011 WL 830545Docket: CIV. 09-4027-KES

Court: District Court, D. South Dakota; March 2, 2011; Federal District Court

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Ryan Boddicker sued Esurance Inc. for violations of the Family Medical Leave Act (FMLA), the Uniformed Services Employment and Reemployment Rights Act (USERRA), and the Consolidated Omnibus Budget Reconciliation Act (COBRA). The court granted Esurance's motion for summary judgment on several claims, including COBRA. Boddicker subsequently filed a motion for reconsideration regarding the COBRA claim, asserting new evidence that Esurance is its own COBRA plan administrator, contrary to the court's previous finding that Ceridian Benefits Services, Inc. was the administrator. 

The case background highlights that Boddicker, a military veteran, experienced panic attacks after active duty and took FMLA leave for Post Traumatic Stress Disorder (PTSD). After changing his address to a street location, he did not update Ceridian's records, resulting in Esurance sending COBRA notices to an outdated post office box address, which Boddicker never received. 

In discussing the motion for reconsideration, the court referenced Federal Rule of Civil Procedure 60(b), which allows for relief from a final judgment under specific circumstances, including newly discovered evidence. The court's decision to grant Boddicker's motion indicates that this new evidence may warrant further examination of the COBRA claim.

Boddicker has filed a motion for reconsideration under Rule 60(b), asserting that relief is warranted based on one of four specified grounds. The court determines that the motion is properly made under Rule 60(b)(3), which permits reconsideration if fraud, misrepresentation, or misconduct by the opposing party is demonstrated. It clarifies that Rule 60(b) is not intended for mere reargument of the case and requires the moving party to show exceptional circumstances. To succeed under Rule 60(b)(3), the movant must provide clear and convincing evidence of fraud or misrepresentation that hindered their ability to adequately present their case. The court has broad discretion in granting Rule 60(b) relief, with appellate review limited to instances of abuse of discretion.

In analyzing the case, the court reviews Esurance's initial representations regarding its COBRA plan administrator, Ceridian. Esurance consistently stated that Ceridian was the administrator and described its responsibilities, emphasizing that the plan administrator, not the employer, is responsible for issuing COBRA notices. Boddicker contends that Esurance should have supervised Ceridian but fails to provide legal support for this claim, as established case law indicates that the plan administrator bears the duty. The court's summary judgment relied on the representations made by Esurance that Ceridian was the plan administrator.

Boddicker has introduced new evidence suggesting that Esurance is, in fact, the plan administrator for COBRA benefits, specifically referencing a 2007 Form 5500 filed by Esurance that identifies Esurance, Inc. as the plan sponsor.

Esurance identified itself as the COBRA plan administrator in its 2007 and 2008 Forms 5500, which were signed by Sandra P. Hynes under penalty of perjury. Despite this, Esurance contended in its opposition to Boddicker's motion for reconsideration that summary judgment should still stand, without disputing the forms' statements regarding its role as the plan administrator. For Boddicker to prove misrepresentation or fraud by Esurance, he must demonstrate by clear and convincing evidence that Esurance's misrepresentation prevented him from adequately presenting his case. The court had relied on Esurance's incorrect assertion that Ceridian was the plan administrator when granting the summary judgment, thus limiting its determination to that representation. Had Esurance not misrepresented the identity of its COBRA plan administrator, the court could have assessed the summary judgment on different grounds. Boddicker successfully established that Esurance's misrepresentation hindered both his case and the court's consideration of the COBRA claim, warranting reconsideration of the summary judgment. Esurance argued that Boddicker was time-barred from introducing new evidence in his motion for reconsideration, as per Rule 60(b), which requires a "justifiable excuse" for new evidence presented after a summary judgment ruling. However, Boddicker's justification stemmed from Esurance's misrepresentation about Ceridian's role, indicating exceptional circumstances that could support his motion for reconsideration.

Litigation is governed by federal rules that prohibit parties from engaging in dishonesty or fraud during discovery and in legal filings. Specifically, Federal Rules of Civil Procedure (Fed. R. Civ. P.) 11 and 26 require parties to ensure the accuracy and completeness of their submissions. Ethical rules, such as S.D. R. Prof. Conduct 8.4(c), further prohibit attorneys from dishonesty or misrepresentation. Violations can lead to sanctions, reinforcing the expectation that factual representations are truthful.

Esurance argued that Boddicker had prior access to certain forms through a public website, suggesting that any misrepresentation did not warrant reconsideration. However, the court rejected this stance, asserting it would allow Esurance to benefit from its own misconduct. Consequently, Boddicker has satisfied the criteria for demonstrating fraud or misrepresentation under Rule 60(b)(3), prompting the court to reconsider the motion for summary judgment concerning the COBRA claim.

In addressing summary judgment, Fed. R. Civ. P. 56(c)(2) allows for judgment when there is no genuine dispute over material facts, emphasizing the moving party's responsibility to prove the absence of such disputes. The court must view evidence in favor of the nonmoving party, granting reasonable inferences from the records.

Under COBRA, employees must receive notifications regarding their rights after qualifying events, like termination. The plan administrator is responsible for ensuring that notifications are sent in a manner reasonably calculated to reach the employee, as outlined in 29 U.S.C. § 1166(a)(4)(A) and related case law.

Plan administrators are responsible for proving compliance with COBRA notification requirements. Esurance, as the plan administrator, asserts that employees must maintain accurate mailing addresses in the Ceridian system. Upon an employee's departure, a COBRA notice is generated using the last known address, which in Boddicker's case was a post office box in Sioux Falls. However, this post office box had not been registered to Boddicker since mid-2006, and he claims that subsequent mailings from Esurance in late 2007 were returned as undeliverable.

Esurance produced a draft letter addressed to Boddicker's correct street address, indicating awareness of his proper address. Patti Simpson, a human resources representative, testified that she consistently uses addresses from the Ceridian system when preparing correspondence. Although Boddicker's resignation occurred on November 5, 2007, a letter dated October 16, 2007, included his correct address, raising questions about whether Esurance's actions were "reasonably calculated to reach" him.

While Esurance cited precedent supporting the validity of sending notices to last known addresses, the crux of the issue is whether Boddicker's last known address was indeed the post office box or the street address. Esurance argued that the presence of two addresses justified their reliance on the post office box, especially since Boddicker's pay stubs and W-2 were mailed there. However, they did not address the fact that the U.S. Postal Service had previously returned mail sent to that post office box as undeliverable before the COBRA notice was dispatched.

Given these circumstances, a genuine issue of material fact persists regarding Esurance's compliance with COBRA notification requirements, resulting in the denial of summary judgment on Boddicker's COBRA claim.

Esurance's argument for summary judgment is based on the assertion that Boddicker is not entitled to penalties under 29 U.S.C. § 1132(c)(1)(A) for COBRA violations, a point not raised in its original briefs. Courts typically do not permit new arguments in motions for reconsideration that could have been addressed earlier. A Rule 60(b) motion is not a platform for rearguing substantive issues or introducing new arguments. Even if Esurance had properly presented its damages argument, it wouldn't change the denial of summary judgment.

COBRA is governed by ERISA, and under 29 U.S.C. § 1132(c)(1), a plan administrator who fails to provide required notices may be held liable for up to $100 a day. The penalty aims to incentivize compliance and penalize noncompliance. The Eighth Circuit suggests that the court should consider the prejudice to the plaintiff and the administrator's conduct when exercising discretion over penalties. However, good faith actions by the administrator and the absence of harm do not exempt them from penalties.

Esurance claims it sent the COBRA notice to Boddicker in good faith and argues that he suffered no harm as he later received veterans' benefits. However, the determination of whether Boddicker experienced any prejudice or financial loss, as well as Esurance's good faith, are factual issues to be resolved at trial. Therefore, Esurance's arguments for summary judgment are deemed unpersuasive.

Additionally, Boddicker's claims against Esurance for violations of 29 U.S.C. §§ 1132 and 1166 are equitable in nature, meaning there is no right to a jury trial, as established by Eighth Circuit precedent.

A district court errs by submitting a plaintiff's ERISA claims to a non-advisory jury, as established in Houghton v. SIPCO, Inc. Boddicker and Esurance concur that if summary judgment is denied on the COBRA claim, the issue should be tried in court. As a result, after each day of the jury trial on Boddicker's FMLA interference claim, the court will hear evidence related to the COBRA claim from previously testifying witnesses outside the jury's presence. Boddicker's motion for reconsideration regarding the denial of summary judgment on his COBRA claim was based on new evidence indicating that Esurance is its own COBRA plan administrator. The court found that Esurance had misrepresented facts in its earlier briefs, leading to the granting of Boddicker's motion for reconsideration. Upon reviewing both the original and new briefs, the court denied summary judgment on the COBRA claim due to genuine issues of material fact, ordering a bench trial for the COBRA claim. The court's previous grant of summary judgment on December 15, 2010, is vacated. Additionally, Esurance has noted a name change in recent briefs but the court will retain the original caption until a motion for change is filed.