Opinion
No. 99 C 50022.
February 7, 2001
MEMORANDUM OPINION AND ORDER
On January 13, 1999, plaintiff Erika Stange ("Stange") filed a two-count complaint against Plaza Excavating, Inc. ("Plaza") In Count I, Stange alleges she was sexually harassed during her employment at Plaza, in violation of Title VII of the Civil Rights Act of 1964, as amended ("Title VII"), 42 U.S.C. § 2000e et seq. In Count II, Stange alleges Plaza failed to notify her of her right to continued health insurance coverage, in violation of the Consolidated Omnibus Budget Reconciliation Act ("COBRA"), 29 U.S.C. § 1161 et seq., which amended and is part of the Employee Retirement Income Security Act of 1974 ("ERISA"). Plaza has filed a motion for summary judgment pursuant to Fed.R.Civ.P. 56 as to both counts. This court has jurisdiction pursuant to 28 U.S.C. § 1331, 1343. Venue is proper in this district and division. (LR56.1(a) ¶ 4; Compl. ¶ 2).
Analysis
Summary judgment shall be rendered it the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show there is no genuine issue of material fact and that the moving party is entitled to judgement as a matter of law. Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986); Bekker v. Humana Health Plan, Inc., 229 F.3d 662, 669 (7th Cir. 2000). The court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence. Reeves v. Sanderson Plumbing Prod., Inc., 530 U.S. 133, 120 S.Ct. 2097, 2110 (2000} EEOC v. Sears, Roebuck Co., 233 F.3d 432, 436 (7th Cir. 2000)
A. Title VII
Stange worked in accounts receivable at plaza (and performed other office-related duties as well) from June 28, 1993, until her termination on December 7, 1998. (LR56.1(a) ¶¶ 10, 14) Plaza is a partnership; Bruno Preski and his son, Ken, are partners. Bruno's daughter is an inactive partner, although her husband, John Conrad, is actively involved in the business. Bruno, Ken and John Conrad jointly ran Plaza's operations during the relevant time period. (Id. ¶ 6) Stange alleges Bruno and Ken Preski, and Conrad created a sexually hostile environment, beginning about ten months after she started working at Plaza and progressing "very much so" during her last two years of employment. (Id. ¶ 18)
Stange's termination is not at issue in this lawsuit.
Specifically, the following statements were made during Stange's employment:
• Ken and Bruno Preski told Stange the reason she was always sick was because she slept naked. Bruno repeated this comment to her more than once, most recently during her last year of employment. (Id. ¶ 22)
• On two or three occasions, Conrad told Stange that ii she kept eating the way she was, she was going to "look like a house." (Id. ¶ 25).
• On one or two occasions, Conrad told Stange her "curves" were driving him "nuts." (Id. ¶ 26)
• In February 1997, Conrad told her, "If you don't do what I tell you, I'm going to cut your tits off." During that same month he also said, "Come into my office for four or five seconds, just as long as it will take for an orgasm." (Id. ¶¶ 32-33).
• On one occasion on or after February 1997, Ken Preski entered Stange's office, sat on the arm of her chair, leaned over her as she was sitting in front of her new computer, and placed his hand on the middle of her thigh. She moved over and his hand naturally fell off her leg. He did not put his hand back on her leg or otherwise touch her. (Id. ¶ 37)
• In preparation for the July 4, 1998 holiday, Ken Preski allowed the office workers (all of whom were women) to leave work early and said, "I'll let you girls leave early, but you girls owe me — what are you going to do for me?" Stange interpreted his statement as having a sexual innuendo. (Id. ¶ 38)
• From February 1997 until the end of her employment, Bruno Preski made the following comments: Stange should not stand so close to him because she made him "hot and bothered;" Stange was "living in sin with her boyfriend and asked if they were "having sex yet;" "you should have more sex;" and, "you girls drive me nuts." (Id. ¶¶ 23, 41-44)
In addition to the above statements, Stange's supervisors provided and/or allowed lewd, sex-based drawings, cartoons, and magazines to be in plain view in the workplace. (LR56.1(b) ¶¶ 17, 34, 35) For example, Conrad presented Stange with one or more sexually explicit cartoons. (Id. ¶ 12) Stange also found a sexually explicit cartoon on her desk; the cartoon depicted a couple about to have intercourse, and showed their private parts. (Id. ¶ 16)
Plaza argues some of the conduct about which Stange complains is time-barred. The court agrees with Stange that the continuing violation theory applies here. When the series of statements and sex-based documents are viewed in their entirety, a reasonable person would not have perceived any cumulative effect until the latter stages of Stange's employment. See Wilson v. Chrysler Corp., 172 F.3d 500, 510 (7th Cir. 1999)
Some of the conduct about which Stange complains has nothing to do with her gender and is not sexual harassment within the meaning of Title VII.See Oncale v. Sundowner Offshore Serv., Inc., 523 U.S. 75, 78, 80 (1998). For example, Stange makes much of the alleged affair between Ken Preski and a female employee, but such conduct does not support a sexual harassment claim. See Hennessy v. Penril Datacomm. Networks, Inc., 69 F.3d 1344, 1353-54 (7th Cir. 1995) (preferential treatment based on a consensual romantic relationship may be unfair, but it does not discriminate against women or men in violation of Title VII, since both are disadvantaged).
When all the events are viewed in their entirety, this is a close case. Drawing the dividing line between a hostile work environment and one which is not can be difficult. Gentry v. Export Packaging Co., No. 00-2367, ___ F.3d ___, 2001 WL 59432, at *6 (7th Cir. Jan. 25, 2001). On the one side lie sexual assaults, other physical contact, uninvited sexual solicitations, intimidating words or acts, obscene language or gestures, pornographic pictures. Id. On the other side lies the occasional vulgar banter with sexual innuendo. Id. Nevertheless, the court finds Stange has alleged sufficient conduct so as to survive Plaza's motion. See id.; Wilson, 172 F.3d at 510-11.
B. COBRA
It is undisputed that when Plaza terminated Stange's employment, she was not offered the opportunity to continue her health care coverage under COBRA. Under COBRA, the "plan sponsor of each group health plan" must offer continuation coverage to each qualified beneficiary who loses coverage because of a qualifying event. 29 U.S.C. § 1161(a). Plaza argues Stange had an individual health insurance policy and was not part of a "group health plan." As a result, according to Plaza, it had no obligation to offer her continuation coverage under COBRA.
It is true courts have found individual policies to fall outside of ERISA's ambit. See New England Mut. Life Ins. Co., Inc. v. Baig, 166 E.3d 1 (1st Cir. 1999) (individual disability insurance policy not subject to ERISA). However, this is not a per se rule. Compare with Madonia v. Blue Cross Blue Shield, 11 F.3d 444 (4th Cir. 1993) (individual health insurance policies subject to ERISA), cert. denied, 511 U.S. 1019 (1994); Burrill v. Leco Corp., No. 5:97-CV-21, 1998 U.S. Dist. Lexis 8178, at *9 (W.D. Mich. May 11, 1998) (same); Collins v. Stretegic Health Care Mgmt. Serv., Inc., No. 91 C 7469, 1992 U.S. Dist. Lexis 6075, at *6 (N.D. Ill. Apr. 28, 1992) (same). Rather, in determining whether a plan exists under ERISA, a court examines the surrounding circumstances to determine whether a reasonable person could ascertain the intended benefits, beneficiaries, source of financing, and procedures for receiving benefits. Diak v. Dwyer, Costello Knox, 33 F.3d 809, 811-12 (7th Cir. 1994).
COBRA defines the term "group health plan" to mean an employee welfare benefit plan providing medical care . . . to participants or beneficiaries directly or through insurance, reimbursement, or otherwise." 29 U.S.C. § 1167(1). ERISA defines an "employee welfare benefit plan" to mean, "any plan, fund, or program . . . established or maintained by an employer . . . to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, (A) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment." 29 U.S.C. § 1002(1).
The Seventh Circuit addressed the meaning of "employee welfare benefit plan" in Brundage-Peterson v. Compcare Health Serv. Ins. Corp., 877 F.2d 509 (7th Cir. 1989). There, the plaintiff sued her insurance carrier for breach of contract in refusing to reimburse her for medical expenses. The Seventh Circuit addressed the issue of whether the plan in which the plaintiff was enrolled was an employee welfare benefit plan, rendering her claim an ERISA claim, removable under federal law. The Seventh Circuit stated,
If an employer offers no welfare benefit plan to its employees but leaves each employee free to shop around for his or her own health (accident, disability, life, etc.) insurance, ERISA does not apply. And we may assume, in accordance with the Department of Labor's regulation attempting to clarify the statutory definition of an employee welfare benefit plan, 29 C.F.R. § 2510.3-1(j), that the employer could take a few steps beyond this and still remain outside the scope of the Act such steps as distributing advertising brochures from insurance providers, or answering questions of its employees concerning insurance, or even deducting the insurance premiums from its employees' paychecks and remitting them to the insurers.Brundage-Peterson, 877 F.2d at 510.
The Department of Labor has created a "safe harbor" for certain group or group-type insurance programs which, if they meet four requirements, are not considered employee welfare benefit plans under ERISA. See 29 C.F.R. § 2510(j)(1)-(4) Under a strict reading of the regulation, Plaza would not qualify because it paid Stange's premiums, thus failing the first requirement. Its failure to satisfy the "safe harbor" provision does not necessarily end the analysis, however. See Burrill, 1998 U.S. Dist. Lexis 8178, at *9.
The Seventh Circuit determined the plan at issue was "an intermediate case." The plan had three components: the employer contracted with two insurance companies whereby the latter agreed to offer health insurance to the former's employees; only employees who had been with the company for more than thirty days were eligible; and the employer paid for the worker's share of the insurance premiums. Id. The Seventh Circuit held this "barebones plan" was an ERISA plan. Id. at 511. In so holding, the court found it important, although not dispositive, that the employer paid the insurance premiums. See also Postma v. Paul Revere Life Ins. Co., 223 F.3d 533, 537 (7th Cir. 2000) (relying on Brundage-Peterson, court noted employer's help in paying for employee's insurance made it. "even clearer" plan fell within ERISA)
Here, Plaza paid Stange's health insurance premiums. This, however, is not dispositive. See Baig, 166 F.3d at 4 (employer's mere purchase of insurance insufficient to establish a plan under ERISA); Collins, 1992 U.S. Dist. Lexis 6075, at *6. It is clear from the Seventh Circuit's analysis that the key factor is the employer's involvement in the creation and/or administration of the plan. See also Thompson v. American Home Assurance Co., 95 F.3d 429, 436 (6th Cir. 1996) (employer neutrality is key, and evidence of substantial employer involvement, such as negotiating the terms of the policy and the benefits provided thereunder and deciding which employees are eligible, shows the existence of an ERISA plan); Johnson v. Watts Regulator Co., 63 F.3d 1129, 1134 (1st Cir. 1995) (employer neutrality is the key to the rationale for not treating a program as an employee benefit plan). That the employer offered a choice of plans was irrelevant, according to the Seventh Circuit in Brundage-Peterson, 877 F.2d at 511, because the choice offered was, nevertheless, a distinctly finite one. When an employer leaves the procuring of insurance entirely to the employee, the plan is truly an individual plan and falls outside ERISA. Id.
Here, questions of fact preclude the court from determining at this time whether Stange was entirely free to procure her own insurance. Stange testified she worked with the office manager, Hoyer, in choosing a health insurance provider, and they ultimately chose Blue Cross Blue Shield ("BCBS"). (LR56.1(a) ¶ 59) However, she did not elucidate how much say she had in the decision. A fellow office worker, Jennifer DiDomenico, also obtained health insurance through BCBS, and the record is unclear as to whether she had any choice as to the insurance carrier. DiDomenico also stated the company determined the amount of coverage and the cost. (LR56.1(b) ¶¶ 44-45; Pl. Exh. B, DiDomenico dep., p. 54) There is also evidence the employees had to seek permission from the company before making changes to their health insurance coverage, and on at least one occasion DiDomenico was denied the opportunity to add additional coverage. (LR56.1(b) ¶ 48; 21. Exh. B, DiDomenico dep., pp. 55-56) Plaza denies that this is true, yet Ken Preski's testimony shows the company may have had control over the terms of each policy:
Q: And how about if the employee wanted family coverage? Would the company pay that as well?
A: I'm not sure on how that would work. I believe the policy would probably be reviewed by Betty [Hoyer], and probably at her recommendation the policy would be accepted or may be questioned.
(Pl. Exh. I, Preski dep., p. 78)
Other courts have also found the crucial factor in determining whether a "plan" has been established is whether the purchase of the insurance policy constituted an expressed intention by the employer to provide benefits on a regular and long-term basis. Baig, 166 F.3d at 4. Stange testified that part of the agreement when she was hired at Plaza was that the company would provide her with medical insurance. (LR56.1(b) ¶ 43) This lends support to the notion that Plaza was intending to provide her health insurance benefits on a regular and long-term basis.
Plaza also argues Stange's termination was not a "qualifying event, " thereby triggering COBRA notification requirements, because she had only to continue paying the premiums herself. The court rejects this argument. Stange's termination required her to take action to maintain coverage; thus, her termination was a qualifying event. See Fenner v. Favorite Brand Int'l, Inc., 25 F. Supp.2d 870, 874 (N.D. Ill. 1998);Mansfield v. Chicago Park Dist. Grp. Plan, 997 F. Supp. 1053, 1057 (N.D. Ill. 1998).
Thus, Plaza's motion is denied with respect to Stange's COBRA claim.
Conclusion
For the reasons set forth above, Plaza's motion for summary judgment is denied.
ENTER:
PHILLIP G. REINHARD, JUDGS UNITED STATES DISTRICT COURT
DATED: February 7, 2001.