Marin v. Dave & Buster's, Inc.
159 F. Supp. 3d 460, 2016 U.S. Dist. LEXIS 18086, 2016 WL 526542 (2016)
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Rule of Law:
An employer violates ERISA Section 510 if it takes an adverse employment action with the specific intent to interfere with an employee's existing or future rights to benefits under an employee welfare benefit plan.
Facts:
- Maria De Lourdes Parra Marin worked full-time (30-45 hours per week) at the Dave & Busters Times Square location from 2006 to 2013 and received health insurance under its employee welfare benefit plan.
- In March 2010, the Affordable Care Act (ACA) was enacted, with an effective date of January 1, 2015.
- In June 2013, Dave & Busters Times Square store managers informed employees that complying with the ACA after its effective date would cost the company approximately two million dollars and that they planned to reduce full-time employees from over 100 to about 40 to avoid these costs.
- After June 1, 2013, Dave & Busters reduced Maria De Lourdes Parra Marin's hours to approximately 10-25 hours per week, averaging 17.43 hours.
- On March 10, 2014, Maria De Lourdes Parra Marin received a letter from Dave & Busters informing her that she now had part-time status and her full-time health insurance coverage would terminate on March 31, 2014.
- The reduction in Maria De Lourdes Parra Marin's hours caused her to lose her full-time status, resulted in a decrease in pay from $450-$600 per week to $150-$375 per week, and eliminated her eligibility for medical and vision benefits.
- Dave & Busters executives made statements, including to the Dallas Morning News and in an SEC filing, acknowledging their adaptation to healthcare reform and potential increases in expenses due to providing health insurance.
Procedural Posture:
- Maria De Lourdes Parra Marin filed a complaint against her former employer, Dave & Busters, in the United States District Court for the Southern District of New York, alleging discrimination in violation of ERISA Section 510.
- Defendants Dave & Busters filed a motion to dismiss the complaint, arguing that Maria De Lourdes Parra Marin's theory of liability failed as a matter of law.
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Issue:
Does an employee state a legally sufficient claim under ERISA Section 510 when they allege that their employer reduced their hours and terminated their health insurance coverage with the specific intent to avoid future costs associated with healthcare reform?
Opinions:
Majority - Alvin K. Hellerstein
Yes, an employee states a legally sufficient claim under ERISA Section 510 when they allege that their employer reduced their hours and terminated their health insurance coverage with the specific intent to avoid future costs associated with healthcare reform. The court denied Dave & Busters' motion to dismiss, finding that Maria De Lourdes Parra Marin had sufficiently alleged a plausible claim that the employer acted with specific intent to interfere with her rights to health insurance benefits. The complaint contained factual allegations, including statements made by Dave & Busters managers regarding their plan to reduce full-time employees to avoid ACA costs, which demonstrated an unlawful purpose. The court emphasized that ERISA Section 510 prohibits discrimination for the purpose of interfering with the attainment of any right to which a participant 'may become entitled,' encompassing both current and future benefits. The critical element is proving the employer's specific intent to interfere with benefits, which Maria De Lourdes Parra Marin plausibly pled. The court clarified that precedents cited by defendants, which were summary judgment opinions, were not relevant at the motion to dismiss stage where factual allegations are assumed to be true.
Analysis:
This case clarifies that an employer's actions, even if prospective in nature (e.g., to avoid future costs), can violate ERISA Section 510 if undertaken with the specific intent to interfere with an employee's benefits. It reinforces that both existing benefits and the attainment of future benefits are protected under the statute, provided the employer's 'unlawful purpose' can be plausibly alleged. The decision underscores the importance of specific intent in ERISA discrimination claims and sets a precedent that employers cannot easily restructure employee classifications to circumvent healthcare reform costs if such actions are directly linked to benefit interference.
