Stanton v. Larry Fowler Trucking, Inc.

• Decision Date: 04 April 1995
• Docket Number: 94-2360,Nos. 94-2221,s. 94-2221
• Citation: 52 F.3d 723
• Parties: , 19 Employee Benefits Cas. 1189, Pens. Plan Guide P 23909D Jimmy STANTON, Appellee, v. LARRY FOWLER TRUCKING, INC., Appellant. Jimmy STANTON, Appellant, v. LARRY FOWLER TRUCKING, INC., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 723

52 F.3d 723

63 USLW 2672, 19 Employee Benefits Cas. 1189,

Pens. Plan Guide P 23909D

Jimmy STANTON, Appellee, v. LARRY FOWLER TRUCKING, INC., Appellant.

Jimmy STANTON, Appellant, v. LARRY FOWLER TRUCKING, INC., Appellee.

Nos. 94-2221, 94-2360.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 15, 1994.

Decided April 4, 1995.

Stephen Curry, Little Rock, AR, argued, for appellant.

Joan C. Maxey, Little Rock, AR, argued (Tracy F. Bagwell, on the brief), for appellee.

Before MAGILL and BEAM, Circuit Judges, and SHANAHAN, ^* District Judge.

MAGILL, Circuit Judge.

Larry Fowler Trucking, Inc. appeals the district court's judgment in favor of Jimmy Stanton in Stanton's ERISA/COBRA action. Fowler Trucking alleges the district court erred in: refusing to grant its motion to amend the judgment or for j.n.o.v., determining Fowler Trucking had the burden of proving Stanton received notice required by 29 U.S.C. Sec. 1166(a)(4) (1988), and determining Fowler Trucking did not meet this burden; awarding attorney's fees to Stanton; and failing to award Fowler Trucking attorney's fees. Stanton cross-appeals, alleging the district court erred in granting summary judgment against Stanton on his state law claim for wrongful discharge. We affirm in part and reverse in part.

I. BACKGROUND

Larry Fowler Trucking, Inc. (Fowler Trucking) is a flatbed, long-haul, common carrier. In 1989, Fowler Trucking consisted of forty-three company-owned trucks, with an equivalent number of driver employees. At the time of the trial, Fowler Trucking had expanded to seventy-six company-owned trucks. Fowler Trucking provided a group health insurance plan (the plan) to its employees at no charge as a fringe benefit. Employees became eligible for coverage upon completing an initial ninety days of employment. The plan also offered family coverage to employees at an additional charge. This additional charge was usually deducted from the employee's paycheck. Arkansas Blue Cross/Blue Shield provided the plan insurance. Fowler Trucking has a dual role--it is both the employer and the administrator of the plan. The plan is subject to the requirements of the Employee Retirement Income Security Act (ERISA), as amended by the Consolidated Omnibus Budget Reconciliation Act (COBRA).

Stanton initially began working as a driver for Fowler Trucking in June 1989. Upon completion of ninety days of employment, he became eligible under the plan for health insurance, received copies of all relevant insurance material and elected family coverage. Stanton resigned from Fowler Trucking on December 4, 1989, due to medical problems. At that time, Sylvia Fowler met with Stanton and explained Stanton's options with respect to continuing his health insurance coverage. Ms. Fowler gave Stanton a form that he could use to elect to continue his health insurance. This form was completed and mailed directly to Arkansas Blue Cross/Blue Shield, and he elected to continue his health insurance after termination of his employment with Fowler Trucking.

In February 1990, Stanton was rehired by Fowler Trucking. Stanton once again received a copy of the Blue Cross/Blue Shield Insurance Benefit Summary and again elected family coverage upon the expiration of his first ninety days of employment. On June 20, 1990, Stanton suffered a work-related injury to his back. He was unable to work as a result of this injury and began receiving workers' compensation benefits. He never returned to work.

On July 2, 1990, Stanton met with Sylvia Fowler. Stanton informed Ms. Fowler that he was unsure when he would be able to return to work. The parties dispute what occurred at the rest of this meeting. Stanton states that Ms. Fowler informed him that his coverage under the plan would continue to be provided by Fowler Trucking as long as he remained an employee. Stanton states that Ms. Fowler informed him that if he wanted to continue his family coverage, he would have to pay the premiums himself, as he no longer was receiving a paycheck from which they could be withheld. Ms. Fowler asserts that she informed Stanton that if he wanted to continue his coverage under the plan, he would have to remit the premiums to her while he was on disability leave. Ms. Fowler asserts that Stanton signed a card at this meeting, evidencing his rights to continue his health insurance under COBRA. This card is undated. Stanton asserts that he signed this card in December 1989 when he left Fowler Trucking the first time and that he received no notice of his COBRA rights at the July 2, 1990 meeting with Ms. Fowler.

In October 1990, Stanton was hospitalized for an unrelated cardiac disorder. Stanton states that during this hospitalization, he became aware that he did not have health insurance. Stanton informed the hospital that he had coverage through his employer, Fowler Trucking. Stanton states that the hospital employees followed up on this information and then informed him that he was no longer employed by Fowler Trucking and he did not have health insurance.

Stanton sued in federal district court to recover for the tort of outrage, wrongful discharge and failure to comply with ERISA/COBRA. Immediately prior to trial, the district court granted summary judgment in favor of Fowler Trucking on Stanton's outrage and wrongful discharge claims.

The case then proceeded to a bench trial on the ERISA/COBRA issue. The main issue at trial was whether Stanton received notice pursuant to 29 U.S.C. Sec. 1166. Fowler Trucking asserted that it hand-delivered the required notice to Stanton. Stanton denied receiving this notice, asserting that Fowler Trucking informed him that he was still covered under the plan, but that he would have to pay the premiums if he wanted to continue his family insurance coverage. The court determined that the evidence was in equipoise as to this factual issue and resolved it against the party bearing the burden of proof: Fowler Trucking. Accordingly, the court entered judgment in favor of Stanton and awarded him attorney's fees with respect to his ERISA/COBRA claim. Fowler Trucking moved to amend the judgment and for j.n.o.v., arguing that the district court erred in shifting to Fowler Trucking the burden of proving notice pursuant to 29 U.S.C. Sec. 1166 and in finding that Fowler Trucking did not meet this burden. The district court denied this motion.

Fowler Trucking appealed, raising the following issues: (1) the district court erred in denying its motion to amend the judgment; (2) the district court erred in awarding Stanton attorney's fees; and (3) the district court erred by refusing to award Fowler Trucking attorney's fees with respect to Stanton's state law claims. Stanton cross-appealed, alleging the district court erred in determining that Ark.Code Ann. Sec. 11-9-107(e) (Supp.1993) applied retroactively to bar his wrongful discharge claim.

II. DISCUSSION

A. ERISA/COBRA Claims

Fowler Trucking argues that the district court erred in determining that it bore the burden of proving Stanton received the notice required by 29 U.S.C. Sec. 1166. The district court noted that this involves an issue of first impression. We review the district court's legal conclusions de novo and affirm. ¹

COBRA requires that employers give former employees the opportunity to continue their health insurance under the employer's plan if a qualifying event occurs. 29 U.S.C. Sec. 1161 (1988). COBRA also requires the insurance plan to provide employees notice of their rights under COBRA on two separate occasions. The first notice must be given when coverage commences under the plan, in this case after the initial ninety-day period of employment. 29 U.S.C. Sec. 1166(a)(1). The second notice must be given to the employee by the plan administrator after a qualifying event occurs. 29 U.S.C. Sec. 1166(a)(4). The parties agree that a qualifying event occurred on July 2, 1990, and that Stanton was entitled to notice of his COBRA rights. The only issue before us is whether Stanton or Fowler Trucking, the plan's administrator has the burden of proving that the second COBRA notice was given.

The district court held that 29 U.S.C. Sec. 1059 (1985) shifted the burden of proof to Fowler Trucking when a fact issue concerning Stanton's rights to benefits arose. Section 1059 requires employers to maintain records "sufficient to determine the benefits due or which may become due to [its] employees." Stanton's COBRA right to continue his health care coverage and notice thereof are benefits due him. Accordingly, in its role as employer, Fowler Trucking has a statutory duty to maintain records to determine if notice was given pursuant to Sec. 1166. However, Stanton's claim is based upon Fowler Trucking's actions in its role as an administrator of the plan: Under Sec. 1166(a)(4), the administrator, not the employer, has a duty to provide COBRA notice to the employee. Section 1059 ² only requires the employer, not the administrator, to keep records. However, 29 U.S.C. Sec. 1027 (1988) ³ imposes a recordkeeping requirement on administrators. Accordingly, as an administrator, Fowler Trucking is required under Sec. 1027 to maintain records evidencing the notice given pursuant to Sec. 1166(a)(4). ⁴

In a related context, the Sixth, Ninth and Eleventh Circuits hold that an employer's failure to comply with its statutory duty to maintain adequate records shifts the burden to the employer to prove the number of hours worked. Michigan Laborers' Health Care Fund v. Grimaldi Concrete, Inc., 30 F.3d 692, 696 (6th Cir.1994); Brick Masons Pension Trust v. Industrial Fence & Supply, Inc., 839 F.2d 1333, 1338-39 (9th Cir.1988); Combs v. King, 764 F.2d 818, 827 (11th Cir.1985). The issue in these cases was whether the employers made sufficient contributions to pension or welfare benefit plans governed by ERISA; the contributions were dependant upon hours worked on specific jobs or by specific employees (e.g., union members). These...