Faren v. Zenimax Online Studios, LLC

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LEONA FAREN, Plaintiff, v. ZENIMAX ONLINE STUDIOS, LLC, et al., Defendants.

Civil Action No. EA-23-1270

United States District Court, D. Maryland

March 29, 2024

MEMORANDUM OPINION

ERIN ASLAN UNITED STATES MAGISTRATE JUDGE

Plaintiff Leona Faren initiated the above-captioned action on May 14, 2023, asserting violations of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq., based on the alleged failure of Defendants ZeniMax Online Studios, LLC (ZOS) and AP Benefit Advisors LLC (AP) to provide her healthcare continuation coverage, and seeking damages, injunctive relief, equitable remedies, and attorney's fees and costs. ECF No. 1.

Pending before the Court is ZOS's Motion to Dismiss and to Strike. ECF No. 34. ZOS seeks to dismiss the Amended Complaint (ECF No. 31-1) in its entirety and, in the alternative, to strike Ms. Faren's demand for a jury trial. ECF No. 34 at 1.^[1] The issues are fully briefed (ECF Nos. 34, 37, and 40), and no hearing is necessary. Local Rule 105.6 (D. Md. 2023). For the reasons set forth below ZOS's motion (ECF No. 34) is granted in part and denied in part as moot.

I. Background^[2]

In 2018, Ms. Faren started working at ZOS as a media artist. ECF No. 31-1 ¶ 9. While Ms. Faren was employed at ZOS, CareFirst Blue Cross Blue Shield (BCBS) provided her medical benefits. Id. at ¶ 20. AP served as the third-party administrator for the group healthcare plan that ZOS's parent company, ZeniMax Media Inc. (ZMI), sponsors to provide health benefits to its and ZOS's employees. Id. at ¶¶ 5 and 19.

After being outed as transgender by her supervisor, Ms. Faren was forced to come out in January 2021. Id. at ¶ 11. In April 2021, following approximately four months of daily harassment by her supervisor and certain employees based on Ms. Faren's gender identity and expression, Ms. Faren reported the issue to human resources. Id. at ¶¶ 12-13.

In January 2022, ZOS offered Ms. Faren a severance agreement (ECF No. 35-1), advising that the agreement was a one-time offer.^[3] Id. at ¶¶ 14-15. The severance agreement was offered on the condition that Ms. Faren would not bring a lawsuit. Id. at ¶ 16. The severance agreement provided Ms. Faren with 18 months of continuation coverage of medical, dental, and vision benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA), starting on June 1, 2022, and ending on November 30, 2023. Id. at ¶¶ 17-18. The agreement also provided that ZMI would pay the employee portion of Ms. Faren's COBRA premium for four months, starting on June 1, 2022, and ending on September 30, 2022. Id. at ¶¶ 18-19. Ms. Faren signed the severance agreement on May 13, 2022, thereby terminating her employment at ZOS. Id. at ¶¶ 17 and 21.

On May 27, 2022, AP sent Ms. Faren a notice summarizing her COBRA rights, terms of the group healthcare plan, and information regarding how to elect continuation coverage. Id. at ¶¶ 19 and 22. Ms. Faren elected to continue coverage on May 31, 2022, and she paid her first month's premium to AP. Id. at ¶ 23. Thereafter, the medical clinic through which Ms. Faren planned to undergo certain surgeries alerted her that the pre-authorizations had been canceled due to a lack of insurance coverage. Id. at ¶ 24. The medical clinic further advised Ms. Faren that it needed active insurance information to restart the authorization process, which could take weeks. Id. BCBS and AP told Ms. Faren that her insurance had been canceled and directed her to contact her former employer's Human Resources Department. Id. at ¶ 25.

On June 2, 2022, Ms. Faren emailed ZMI's Human Resources Director for assistance with her insurance, who in turn added ZMI's Benefits Director to the conversation. Id. at ¶ 26. ZMI's Benefits Director sent an “urgent message” to BCBS to identify when its system would be updated. Id. at ¶ 27. ZMI's Benefits Director was told that the problem stemmed from the timing associated with sending the file from AP to BCBS. Id. ZMI's Benefits Director informed Ms. Faren that they were working to set up her insurance by the close of business; that coverage would be retroactive to June 1, 2022; and that BCBS had represented it would try to reactivate any prior authorizations. Id. at ¶¶ 28-29. Although Ms. Faren's medical clinic attempted to resubmit authorizations, its system would not permit the submission while her insurance was inactive. Id. at ¶ 30.

On June 3, 2022, Ms. Faren again emailed ZMI's Human Resources Director for assistance because she was unable to refill a prescription because her insurance was not up to date. Id. at ¶ 32. The Human Resources Director replied:

I am truly sorry to hear that you are experiencing these difficulties, but please understand that like you, [ZOS] has done all that it was supposed to so that your benefits could be continued through COBRA and this issue is outside of the Company's control.

ECF No. 34-6 at 2; see also ECF No. 31-1 ¶ 32.

The Human Resources Director further wrote that BCBS was “working diligently” to set up Ms. Faren's COBRA coverage; that the enrollment process was being “expedited” at the Company's request; and that the insurance benefits would be retroactive to June 1, 2022. ECF No. 34-6 at 2. The Human Resources Director noted:

We have repeatedly responded to your concerns and attempted to help you, and will continue to try to do so. To that end, please find an attached letter that we have drafted to confirm your COBRA coverage, in the hopes that this will assist you. If there is anything further that we can do, please let me know.

Id.

A letter confirming Ms. Faren's COBRA coverage was attached to the reply email. Id. at 3; ECF No. 31-1 ¶ 32.

In mid-June 2022, Ms. Faren confirmed her coverage under ZMI's group plan with BCBS and scheduled her surgeries for July 2022. Id. at ¶ 35. After her surgeries, Ms. Faren received medical bills stating that she was not, in fact, covered because the “[e]xpenses [were] incurred after coverage terminated.” Id. at ¶ 37. Ms. Faren's coverage under the group healthcare plan was no longer effective after June 1, 2022. Id. at ¶ 41. Ms. Faren did not receive a benefit denial letter “when BCBS reversed the previously approved charges,” nor did she receive any notice beyond her medical bills that her health coverage had been retroactively terminated. Id. at ¶ 38-39. Ms. Faren remained without health insurance until September 25, 2022, when she started a new job. Id. at ¶ 40.

Neither Defendant sought to remedy the situation after June 3, 2022, until Ms. Faren initiated this action. Id. at ¶ 42. As a result, Ms. Faren was forced to pay for medically necessary expenses, including prescription drugs, out-of-pocket. Id. at ¶¶ 34 and 44.

II. Standard of Review

Defendant ZOS moves to dismiss the Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and, alternatively, to strike Ms. Faren's jury demand pursuant to Rule 12(b)(f). Rule 12(b)(6) provides that a defendant may move to dismiss a complaint on the grounds that it “fail[s] to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). Under Rule 12(f), the Court “may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter” sua sponte or on the motion of any party. Fed.R.Civ.P. 12(f).

It is fundamental that the “purpose of a Rule 12(b)(6) motion is to test the sufficiency of a complaint.” Edwards v. City of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999). Federal Rule of Civil Procedure 8(a)(2) requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” This pleading standard is designed to “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (alteration in original) (internal quotation marks and citation omitted). When evaluating a Rule 12(b)(6) motion to dismiss, the Court must accept all factual allegations in the complaint as true and draw all reasonable inferences from the facts in favor of the plaintiff to determine if the plaintiff is entitled to the legal remedy sought. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); E.I. du Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 440 (4th Cir. 2011). The same does not hold true for legal conclusions. Iqbal, 556 U.S. at 678; Twombly, 550 U.S. at 556. To determine whether the Rule 8(a)(2) pleading standard is met, the court separates the complaint's legal conclusions from the factual allegations. A Society Without a Name v. Virginia, 655 F.3d 342, 346 (4th. Cir. 2011).

A complaint does not need to contain “detailed factual allegations” to satisfy the Rule 8(a)(2) pleading standard, but it must have “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555. To survive a motion to dismiss, a complaint must have “enough facts to state a claim to relief that is plausible on its face.” Id. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 662. The plausibility standard falls somewhere in between “probability,” which is not required, and “sheer possibility,” which is insufficient. Id.; Twombly, 550 U.S. at 555 (“Factual allegations must be enough to raise a right to relief above the speculative level.”). The determination of whether a complaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.

Ordinarily a court may not consider...