Riddle v. PepsiCo, Inc.
- Vincent Briccetti
- 7:19-cv-03634
- U.S. District Court · Southern District of New York
- 9
Riddle v. PepsiCo, Judge Briccetti denied PepsiCo’s motion to dismiss claims alleging defective COBRA notices.
Kevin and Valerie Riddle, the proposed class members, and PepsiCo, Inc. The opinion addressed whether the Riddles’ COBRA notice claims could proceed, not whether those claims were ultimately proven.
What happened
In Riddle v. PepsiCo, Kevin and Valerie Riddle alleged that PepsiCo sent inadequate notices about their right under federal law to continue their health insurance after Kevin’s employment ended. They said the notices omitted important information and that they lost coverage and incurred medical bills.
PepsiCo argued that its notices met the legal requirements and that the Riddles had not stated a valid claim. The court disagreed, finding that the allegations about multiple letters, missing administrator information, the lack of an enrollment form, and payment-address information were sufficient at this stage.
Judge Briccetti denied PepsiCo’s motion to dismiss. The court also found PepsiCo’s good-faith argument unpersuasive at this early stage and ordered PepsiCo to file an answer by March 9, 2020.
The detailed version
- Riddle v. PepsiCo, Inc. · No. 7:19-cv-03634
- Vincent Briccetti
- Feb. 24, 2020
Background
Kevin and Valerie Riddle brought a proposed class action against PepsiCo under the Employee Retirement Income Security Act and its continuation-coverage provisions, commonly called COBRA. The case concerned notices PepsiCo mailed in February 2018 after PepsiCo terminated Kevin Riddle’s employment on January 30, 2018. The opinion states that Kevin and Valerie had participated in PepsiCo’s health care plan and that the termination was an event allowing continued health coverage under COBRA.
The Riddles alleged that PepsiCo’s two notices did not satisfy the federal notice requirements. They claimed PepsiCo should have sent one notice rather than multiple notices; failed to identify the plan administrator, PepsiCo Administration Committee, and the COBRA claims administrator, Alight Solutions, LLC; failed to explain how to enroll or provide an election form; and provided the payment address in only one of the notices. They alleged that these deficiencies prevented an informed decision about coverage, caused them to lose health insurance, and led to medical bills related to Valerie Riddle’s medical care. They sought legal remedies and statutory damages for themselves and the proposed class.
Motion to Dismiss Standard
PepsiCo moved to dismiss the second amended complaint under Rule 12(b)(6), which asks whether the complaint states a legally sufficient claim. At this stage, the court accepted well-pleaded factual allegations as true and drew reasonable inferences in the Riddles’ favor. The court did not decide whether the allegations would ultimately be proven.
Notice Requirements and Analysis
The court explained that COBRA requires continuation of employer health coverage after certain qualifying events and requires notices to qualified beneficiaries. The applicable Department of Labor regulation requires a notice to be written so that an average plan participant can understand it and to include information such as the responsible administrator’s contact information, the procedures and deadline for electing coverage, and the address for payments.
The court held that the Riddles had alleged enough to proceed. It identified four areas that could support a notice violation:
- Multiple notices: The regulation refers to “a notice meeting the requirements,” so PepsiCo’s use of multiple notices could be noncompliant.
- Administrator information: Accepting the allegations as true, the court could not conclude at this stage that the notices were adequate because they allegedly omitted the relevant administrator information.
- Enrollment form and instructions: The notices allegedly did not include a physical COBRA enrollment form and instead directed the Riddles to a website and telephone number. The court noted that the Department of Labor’s model notice includes a physical election form.
- Payment address: The Riddles plausibly alleged that PepsiCo failed to satisfy the requirement concerning the address for payments.
The court also rejected PepsiCo’s argument that its notices were not defective because the regulation was vague or because PepsiCo had made a good-faith effort to comply. The court stated that there was no clear authority on whether a good-faith defense was available under the regulation, but found PepsiCo’s defense unpersuasive at this early stage.
Disposition
Judge Briccetti denied PepsiCo’s motion to dismiss. The court directed PepsiCo to file an answer by March 9, 2020, and directed the clerk to terminate the motion. The denial allowed the Riddles’ claims to proceed past the pleading stage; it did not finally decide whether PepsiCo violated COBRA or whether the proposed class would recover damages.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.