Bryant v. Walgreen Co.

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KARIMA BRYANT, JOSHUA FLANARY, DIEUNIPHERE DELCY, and TELISA WHALEY, individually and on behalf of all others similarly situated, Plaintiffs, v. WALGREEN CO., Defendant.

No. 23 CV 1294

United States District Court, N.D. Illinois, Eastern Division

August 29, 2023

MEMORANDUM OPINION AND ORDER

MANISH S. SHAH, JUDGE

Plaintiffs Karima Bryant, Joshua Flanary, Dieuniphere Delcy,^[1]and Telisa Whaley bring this putative class action pursuant to the Employee Retirement income security Act of 1974, as amended by the Consolidated omnibus Reconciliation Act of 1985 (CoBRA), against defendant Walgreen Co. Walgreens moves to dismiss plaintiffs' amended complaint. [23].^[2]For the reasons set forth below, the motion is denied in part and granted in part.

I. Background

CoBRA requires sponsors of group health plans to permit “each qualified beneficiary who would lose coverage under the plan as a result of a qualifying event ... to elect, within the election period, continuation coverage.” 29 U.S.C. § 1161(a). The plan administrator must provide notice to qualified beneficiaries of their continuation of coverage rights upon the occurrence of a qualifying event. 29 U.S.C. § 1166(a)(4).

The Department of Labor issued regulations with notice content requirements. 29 C.F.R. § 2950.606-4(b)(4). The Department also provides a non-mandatory Model COBRA Continuation Coverage Election Notice, and “[u]se of the model notice, appropriately modified and supplemented will be deemed to satisfy the notice content requirements.” 29 C.F.R. § 2590.606-4(g).

When a plan administrator fails to meet the notice requirements, ERISA permits beneficiaries to sue the administrator for up to $110 a day from the date of such failure. 29 U.S.C. § 1132(c)(1); 29 C.F.R. § 2575.502c-1. Under 29 U.S.C. § 1132(a)(1)(B), a beneficiary can also bring a civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”

This case involves alleged deficiencies in the two COBRA notices Walgreens sent to plaintiffs after termination from their employment, titled: first, “COBRA Enrollment Notice,” and second, “Important Information About Your COBRA Continuation Coverage.” [7] ¶¶ 6-8, 54-56, 69-71, 99-101. Plaintiffs allege that Walgreens failed to meet the regulatory requirements by sending two notices, instead of a single notice or using the model notice. [7] ¶¶ 4-7, 48, 128. Further, plaintiffs allege deficiencies in the notices Walgreens sent. In its first notice, Walgreens failed to (1) provide the address to which payments should be sent; (2) identify the plan administrator; (3) explain how to enroll in COBRA and include a physical election form; (4) provide the correct election date; and (5) provide a notice written in a manner calculated to be understood by the average plan participant. [7] ¶ 47. Walgreens' second notice had the same deficiencies, other than including the payment address. [7] ¶¶ 7, 128. Plaintiffs allege that Walgreens' attempt to cure the deficiencies of its first notice with a second notice confused them. [7] ¶¶ 6-8, 53.

Without the required information and two notices, plaintiffs could not make an informed decision about health insurance and lost health coverage. [7] ¶ 53. Plaintiffs allege that the notice deficiencies caused them informational injuries and tangible economic injuries when they lost health insurance coverage and prescription benefits, incurred out of pocket medical expenses, lost control over their own medical treatment, and experienced stress and anxiety. [7] ¶¶ 60-67, 75-82, 105-112.

Plaintiffs bring two claims against Walgreens. First, plaintiffs claim that Walgreens' notices violated 29 U.S.C. § 1166(a) and 29 C.F.R. § 2590.606-4, entitling them to statutory penalties under 29 U.S.C. § 1132(c)(1) and 29 C.F.R. § 2575.502c-1 in the amount of $110 per day from the date of Walgreens' violation. [7] ¶¶ 150-60; [7] at 35. In the alternative, plaintiffs bring a claim under 29 U.S.C. § 1132(a)(1)(B) to recover benefits due to them under the Walgreens Health Plan and a declaration of rights clarifying these benefits. [7] ¶¶ 161-65.

II. Standing

Walgreens first challenges plaintiffs' claims by arguing that plaintiffs lack Article III standing. The “irreducible constitutional minimum” to establish Article III standing requires three elements. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). “The plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016) (citing Lujan, 504 U.S. at 560-61; Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000)). Walgreens argues that plaintiffs' alleged informational injuries are not injuries in fact, plaintiffs' alleged economic injuries are conclusory, and that any deficiencies in Walgreens' notices are not fairly traceable to plaintiffs' alleged injuries. [23] at 10-16.

A. Injury in Fact

“To establish injury in fact, a plaintiff must show that they suffered an ‘invasion of a legally protected interest' that is ‘concrete and particularized' and ‘actual or imminent, not conjectural or hypothetical.'” Spokeo, 578 U.S. at 339 (quoting Lujan, 504 U.S. at 560). For an injury to be “concrete,” it must be “real, and not abstract[;]” however, it need not be tangible. Id. at 340 (quotation omitted).

When the concreteness of an alleged injury is difficult to recognize, courts look to “history and the judgment of Congress” for guidance. Id. But an act of Congress that creates a statutory right and a private right of action to sue does not automatically create standing. Id. at 341. “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. “[T]he requirement of injury in fact is a hard floor of Article III jurisdiction that cannot be removed by statute.” Summers v. Earth Island Inst., 555 U.S. 488, 497 (2009).

Walgreens does not contest that plaintiffs' alleged injuries of being unable to enroll in COBRA, losing health insurance, and incurring uncovered medical expenses are injuries in fact. [28] at 10. Instead, Walgreens argues that plaintiffs' alleged informational and economic injuries are insufficient or conclusory. [23] at 10-12; [28] at 10.

Informational injury that causes no adverse effects does not satisfy Article III. TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2214 (2021). There must be “downstream consequences from failing to receive the required information.” Id. (quotation omitted). Plaintiffs plead those downstream consequences: the deficient notices prevented plaintiffs from enrolling in continued coverage and resulted in uncovered medical expenses. [7] ¶¶ 60-67, 75-82, 105-112. These are not legal conclusions nor the “formulaic recitation of the elements of a cause of action” as Walgreens asserts. [23] at 11-12 (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). These allegations are facts that I accept as true at this stage. See Lujan, 504 U.S. at 561. A plaintiff is not required to plead the details of lost coverage or expenses, it is enough to plead that the harm occurred. See id. (“At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we ‘presum[e] that general allegations embrace those specific facts that are necessary to support the claim.'” (quoting Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 889 (1990))). And these harms are more than just allegations of the statutory violation of deficient notice. [7] ¶¶ 60-67, 75-82, 105-112.

B. Traceability

Plaintiffs' alleged harms are fairly traceable to the deficient COBRA notices. Walgreens argues that “Article III requires that Plaintiffs establish they would have enrolled in continuation coverage had Walgreens provided a COBRA notice in the form they contend was required.” [28] at 11. The Article III traceability requirement does not set such a high bar.

To establish Article III standing, plaintiffs must allege facts showing a “causal connection between the injury and the conduct complained of.” Lujan, 504 U.S. at 560. The injury must “be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court.” Id. at 560-61 (quotation omitted). However, “[s]tanding is not always lost when the causal connection is weak, and a defendant's actions need not be ‘the very last step in the chain of causation.'” Doe v. Holcomb, 883 F.3d 971, 978 (7th Cir. 2018) (citing Banks v. Sec'y of Ind. Family & Soc. Servs. Admin., 997 F.2d 231, 239 (7th Cir. 1993)) (quoting Bennett v. Spear, 520 U.S. 154, 168-69 (1997)); see also Cordoba v. DIRECTV, LLC, 942 F.3d 1259, 1271 (11th Cir. 2019) (“[T]he traceability requirement is less stringent than proximate cause.”). Plaintiffs need “to allege only a causal connection between [their] injury and [defendant's] conduct, not that [defendant's] action is the only cause.” Chuluunbat v. Weltman, Weinberg & Reis Co., LPA, No. 21-1584, 2022 WL 1599325, at *4 (7th Cir. May 20, 2022) (emphasis in original) (citing J.B. v. Woodard, 997 F.3d 714, 720 (7th Cir. 2021)).

Plaintiffs carry this low burden. Plaintiffs allege that they “originally wanted to elect COBRA but due, at least in part, to the missing information ... were unable to do so.” [7] ¶¶ 18, 50, 66, 81, 111, 129. Plaintiffs' inability to enroll in COBRA due to the deficient notices resulted in the loss of insurance coverage and medical bills, which are tangible injuries. [7] ¶...