United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT November 2, 2004
Charles R. Fulbruge III
Clerk
No. 03-11264
JUNE LOPEZ, As next friend of the
Estate of Gloria Gutierrez, Deceased,
Plaintiff-Appellant,
versus
PREMIUM AUTO ACCEPTANCE CORPORATION,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Texas
Before GARWOOD, JOLLY, and BARKSDALE, Circuit Judges.
GARWOOD, Circuit Judge:
Plaintiff-appellant June Lopez (Lopez), on behalf of the
estate of her deceased mother, Gloria Gutierrez (Gutierrez),
appeals the limitations based summary judgment in favor of
defendant-appellee Premium Auto Acceptance Corporation (Premium) on
her claims under the Employee Retirement Income Security Act
(ERISA) of 1974, 29 U.S.C. § 1001 et seq., and the Consolidated
Omnibus Budget Reconciliation Act (COBRA) of 1986. We affirm.
Facts and Proceedings Below
Gutierrez was an employee of Premium and participated in its
ERISA-qualifying employee benefit plan. Premium served as
administrator of the plan. On August 28, 1997, three days after
returning from surgery to treat her lung cancer, Premium
terminated her employment. Premium did not provide Gutierrez
with the statutorily required notice informing her that she had
the right to elect continued insurance coverage under the
employee benefit plan. Her insurance was canceled after thirty
days following her termination. Gutierrez died on October 25,
1998.1 According to the complaint, Gutierrez, between the
cancellation of her insurance and her death, incurred $33,000 in
medical bills that would have been covered by the employee
benefit plan insurance. In April 1999 Lopez, on behalf of
Gutierrez’s estate, requested Premium to reimburse the estate for
some of Gutierrez’s medical bills because Premium had failed to
notify Gutierrez of her right to elect to continue her insurance
coverage under the plan. After some exchange of correspondence,
Premium on March 20, 2000, notified Lopez that Gutierrez was not
entitled to COBRA benefits because Premium was within the COBRA
exception for employers with less than twenty employees.2
1
Gutierrez died intestate with Lopez her sole heir. No
administration was taken out on her estate. Before this court
neither party raises any question as to Lopez’s standing.
2
The district court determined that the number of employees
Premium had was disputed, a determination not challenged by
Premium in this court.
2
On August 2, 2002, Lopez filed the instant suit against
Premium, a two-count complaint alleging: (1) Premium, in
violation of 29 U.S.C. § 1140 (commonly referred to as section
510 of ERISA), terminated her mother to prevent her from
exercising her rights under Premium’s employee benefit plan; and
(2) Premium, in violation of 29 U.S.C. § 1166, failed to notify
her mother that she was entitled under 29 U.S.C. § 1161 to
continued insurance coverage under Premium’s employee benefit
plan. On August 27, 2003, Premium filed a motion to dismiss on
the ground (among others) that both claims were barred by the
statute of limitations. Because Premium supported its motion
with documents outside the pleadings, the district court
converted it to a motion for summary judgment. On October 31,
2003, the district court granted final summary judgment in favor
of Premium, ruling that the claims against it were barred by
limitations. Lopez now appeals.
Standard of Review
We review the grant of summary judgment de novo. Mowbray v.
Cameron County, Tex., 274 F.3d 269, 278 (5th Cir. 2001). Summary
judgment is appropriate when the record indicates “no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c).
Discussion
The relevant facts are not in dispute, and the sole issue
3
before us is whether Lopez’s claims are untimely. Neither
section 510 nor COBRA specify a limitations period. In the
absence of express statutory guidance, we borrow the statute of
limitations from the most closely analogous state law.3
DelCostello v. International Broth. of Teamsters, 462 U.S. 151,
158 (1983). The crux of this appeal is Lopez’s contention that
Texas’s four-year residual statute of limitations, codified at
TEX. CIV. PRAC. & REM. CODE § 16.051, applies to both her ERISA and
COBRA claims.4 Premium, on the other hand, argues that the
district court was correct in concluding that neither claim
sounds in contract. In granting summary judgment for Premium,
the district court ruled that the section 510 claim is subject to
the general two-year statute of limitations, TEX. CIV. PRAC. & REM.
CODE § 16.003, applicable to most torts and discrimination
claims, and that the COBRA claim is subject to the two-year
statute of limitations for unfair insurance practices, TEX. INS.
CODE ART. 21.21 §16(d).
1. Section 510 of ERISA
Lopez alleges in her complaint that her mother’s termination
a few days after her return from cancer surgery constitutes a
violation of section 510, which prohibits interference in rights
3
The parties do not dispute that the operative state law in this case
is the law of Texas.
4
In Texas, the residual four-year statute of limitations generally
governs contract actions. Texas Indus. v. City of Dallas, 1 S.W. 3d 792, 794
(Tex. App. 1999; pet. denied).
4
that have or will vest under an employee benefit plan. See 29
U.S.C. § 1140. She contends that this claim, though brought
nearly five years after her mother was terminated, is timely
because a cause of action under section 510 is analogous to a
contract claim.5
Lopez’s position is foreclosed by our decision in McClure
v. Zoecon, Inc., which squarely held that Texas’s two-year
statute of limitations for wrongful discharge and discrimination
applies to section 510. 936 F.2d 777, 778-779 (5th Cir. 1991)
(citing TEX. CIV. PRAC. & REM. CODE § 16.003).6 She argues in her
brief that McClure was wrongly decided, but, as she conceded at
oral argument, the merits of her disagreement with McClure are
irrelevant because this panel does not have the authority to
overrule a prior panel. Burge v. Parish of St. Tammany, 187 F.3d
452, 466 (5th Cir. 1999). Given that Gutierrez’s cause of action
under section 510 accrued when she was terminated on August 27,
1997, Lopez’s claim, filed nearly five years later, was untimely.
5
Lopez maintains, and Premium does not dispute, that she is also
entitled to avail herself of TEX. CIV. PRAC. & REM. CODE § 16.062 which provides
that on the death of one having a cause of action the running of limitations
is suspended for 12 months following the death or until an executor or
administrator is appointed, whichever is first. This will have no practical
effect on the case, however, because, even assuming that this one-year
extension applies, Lopez’s ERISA and COBRA claims will not be timely unless
the residual four-year statute of limitations also applies, as Lopez in effect
concedes.
6
See also, e.g., Drayden v. Needville Indep. Sch. Dist.,
642 F.2d 129, 132 (5th Cir. 1981); Dupree v. Hutchins Bros., 521
F.2d 236 (5th Cir. 1975).
5
2. COBRA
Congress amended ERISA in 1986 by enacting COBRA, 29 U.S.C.
§§ 1161-1169. The general purpose of the COBRA amendments is to
require an employer that sponsors an employee benefits plan to
offer a plan beneficiary, who is usually an employee or
dependant, the option of continued coverage under the plan for an
interval specified in 29 U.S.C. § 1162 when, because of a
“qualifying event” such as termination, a beneficiary would
otherwise be ineligible for coverage. As part of its obligations
under COBRA, the plan administrator, usually the employer, must
notify the beneficiary of her rights under COBRA after the
qualifying event occurs. 29 U.S.C. § 1166. In this case, Lopez
alleges, and Premium does not dispute, that Premium failed to
provide Gutierrez with this mandatory notice after she was fired.
As a preliminary matter, it is necessary to clarify the
nature of Lopez’s COBRA cause of action. Lopez frames her COBRA
claim in a single paragraph in her complaint entitled “COBRA
VIOLATION” and stating:
“The Defendant’s failure to notify Gutierrez of her
right to extend coverage after the qualifying event of
her termination violated 29 U.S.C. § 1161 and 1166. As
a result, Defendant is liable in an amount up to
$100.00 a day from the date of this failure under 29
U.S.C. § 1132(c).”
This paragraph, however, states an incorrect legal conclusion in
that Premium’s failure to notify her mother of her right to
continued coverage under 29 U.S.C. § 1161 does not, in and of
6
itself, constitute a violation of section 1161, and the remedy
she cites does not apply to section 1161. Rather, the duty to
notify is instead solely a creature of section 1166, and the
statutory damages available under 29 U.S.C. § 1132(c) apply to
section 1166 alone. Lopez’s reference to section 1161, in other
words, is a superfluity, and it is evident on the face of her
complaint that the basis of her COBRA cause of action is section
1166, not 1161. The salient question on appeal, therefore, is
not what statute of limitations applies to sections 1161 and
1166, but rather what statute of limitations applies to section
1166 alone.7
7
As will be discussed in greater detail below, the remedy
for a violation of § 1166 is a statutory penalty for each day of
violation. 29 U.S.C. § 1132(c)(1). This perhaps raises the
question of whether Premium has, since its duty under § 1166
first arose in September of 1997, violated the statute on each
and every day, continuing into the present, that it failed to
provide the required notice. Lopez, however, does not make, and
did not make below, any sort of argument that limitations were
either extended because of any continuing violation, or did not
apply to violations within two years of suit. Lopez, rather, has
consistently taken the position, here and below, that her COBRA §
1166 claim accrued September 29, 1997, when the 30-day period for
giving notice following Gutierrez’s termination expired without
Premium having given Gutierrez the § 1166 notice, and that the
applicable limitations period (four years according to Lopez)
thereafter continued to run without interruption or suspension,
except for the suspension under § 16.062 (see note 5, supra)
during the 12 months following Gutierrez’s death, so that Lopez’s
suit was timely because it was filed before September 30, 2002,
though it would have been barred if filed thereafter. Because
Lopez never raised it, we do not address any such continuing
violation argument. In any event, the October 25, 1998 death of
Gutierrez, the person to whom Premium owed the statutory duty,
terminated any obligation to notify.
7
Lopez argues that her COBRA claim should be characterized as
an action sounding in contract because it arises from an
employment relationship. She likens the statutory duty of notice
under section 1166 to the statutory duty to pay a minimum wage,
which in Texas would be subject to the residual four-year statute
of limitations that applies to basic contract actions. This
reasoning is unpersuasive, however, because the notice
requirement of section 1166 reaches beyond the employment
context. Under COBRA, for example, an employee’s spouse losing
her coverage following a divorce is a plan beneficiary entitled
under section 1166 to notice, even though there is no employer-
employee relationship between the employer and the spouse. 29
U.S.C. § 1167(3)(A)(i) (defining “qualified beneficiary” as,
inter alia, “the spouse of the covered employee[.]”); McDowell v.
Krawchison, 125 F.3d 954, 958-959 (6th Cir. 1997). Thus even if
the notice requirement can somehow be characterized as an implied
contractual term, it will have to be for reasons other than the
existence of an employer-employee relationship.
While the plain language of section 1166 itself offers
little insight into how the provision should be characterized for
statute of limitations purposes, the damages remedy does. 29
U.S.C. § 1132, which defines the remedies for ERISA violations,
expressly distinguishes between suits brought to penalize a
failure to comply with statutory disclosure requirements like
8
section 1166 and suits brought to enforce the specific terms of
an employee benefit plan. The only remedy available to redress a
violation of section 1166 is statutory damages of between zero
and one hundred dollars for each day in which notice is not
provided, and “other relief as [the court] deems proper.” See 29
U.S.C. § 1132(c)(1). Significantly, this subsection does not
refer to any underlying employee benefit plan, and the formula
for statutory damages cannot plausibly be characterized as an
effort to redress the breach of any contractual obligation
created by an employee benefit plan.8
By contrast, any other civil action not within the narrow
scope of 29 U.S.C. § 1132(c) may be brought by an employee
benefit plan participant or beneficiary:
“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[.]”
29 U.S.C. § 1132(a)(1)(B). Such causes of action are presumed by
the statute to relate to underlying contractual matters and the
remedy therefore is framed in terms of an employee benefit plan
itself. See Hogan v. Kraft Foods, 969 F.2d 142, 145 (5th Cir.
8
In addition, subsection 1132(c) groups § 1166 alongside provisions
requiring, for example, mandatory yearly disclosures to the Secretary of
Labor. See 29 U.S.C. § 1132(c)(2) (authorizing the Secretary of Labor to
assess a civil penalty of $1,000 per day for the failure on the part of a plan
administrator to file the annual report required under 29 U.S.C. § 1021). The
inclusion of § 1166 among what are plainly administrative regulations suggests
that § 1166 too is an administrative regulation and not, as Lopez contends, a
term of contract implied by operation of law.
9
1992) (concluding that a section 1132(a)(1)(B) suit to enforce
rights under an employee benefit plan is subject to Texas’s
residual four-year statute of limitations). Given that section
1132 expressly distinguishes a claim under section 1166 from
virtually every other form of ERISA action and, furthermore,
specifies that only statutory, rather than contract-like, damages
are available under section 1166, we conclude, for statute of
limitations purposes, that a claim under section 1166 does not
sound in contract.9
It remains for us to determine to what a claim under section
1166 is most closely analogous. The only published decision
within the Fifth Circuit to address this issue concluded that
section 1166 was subject to a two-year statute of limitations.
Myers v. King’s Daughters Clinic, 912 F. Supp. 233, 237 (W.D.
Tex. 1995), aff’d 96 F.3d 1445 (5th Cir. 1996). In Myers, the
district court analogized the failure to provide the statutory
notice required by section 1166 to an unfair insurance practice
because an employer’s duty under section 1166 is related to the
9
We note that the remedy for an ERISA § 510 action is also created by
29 U.S.C. § 1132. See 29 U.S.C. § 1140 (stating that interference by an
employer with an employee’s protected rights under an employee benefit plan
shall be enforced in accordance with 29 U.S.C. § 1132). Because a § 510
action, unlike § 1166, is not a reporting requirement enumerated in 29 U.S.C.
§ 1132(c), the measure of damages available to a prevailing § 510 litigant
includes retrospective and prospective relief under the employee benefit plan
at issue. Under McClure, a § 510 action, despite having a remedy defined in
terms of an employee benefit plan, is deemed for statute of limitations
purposes not to be a suit in contract. It then follows a fortiori that a §
1166 action, which does not relate back to any underlying benefit plan, is
also not a suit in contract.
10
provision of insurance coverage. Id. The court then applied the
two-year statute of limitations found in the unfair insurance
practices section of the Texas Insurance Code. TEX. INS. CODE
ART.21.21 § 16(d). Myers has been followed by other federal
courts considering this question. See Mattson v. Farrell
Distrib. Corp., 163 F. Supp. 2d 411, 418 (D. Vt. 2001) (rejecting
the proposition that a section 1166 claim is analogous to a
contract action); Harvey v. Mingo Logan Coal Co., 274 F. Supp. 2d
791, 795 (S.D. W. Va. 2003), aff’d 104 Fed. Appx. 838 (4th Cir.
2004) (analogizing a section 1166 claim to one for unfair
insurance practices, not contract); Carter v. GE, 5 Wage & Hour
Cas. (BNA) 2d 1884, *5 (N.D. Ill. 2000) (same). The Myers
approach is even more persuasive in light of the fact that an
aggrieved insured in Texas can bring a claim of unfair insurance
practices against an insurer that fails “to disclose any matter
required by law to be disclosed...” TEX. INS. CODE ART. 21.21 §
4(11)(e). We conclude that this provision, subject to a two-year
statute of limitations, TEX. INS. CODE. ART. 21-21 § 16(d),
provides the closest state law analog to Lopez’s federal cause of
action arising from Premium’s violation of section 1166. Lopez’s
section 1166 claim is, therefore, also untimely.
Conclusion
For the foregoing reasons, the judgment of the district
court is
11
AFFIRMED.
12