ACA Class Action Survives Motion to Dismiss

Clifford Geiger
Clifford Geiger

The Affordable Acre Act (ACA) generally requires large employers to provide ACA-compliant health insurance to full-time employees and their dependents or pay financial penalties. For purposes of the ACA, a full-time employee is someone who works 30 or more hours a week. A class action lawsuit filed against Dave & Buster’s, Inc. (D&B) demonstrates the potential trouble for employers who reduce employee hours to avoid the ACA’s requirements. Marin v. Dave & Buster’s, Inc., S.D.N.Y., No. 1:15-cv-03608, 2/9/16.

In May 2015, D&B’s employees alleged that the company had reduced their hours, changing their status from full-time to part-time. This change in status resulted in a loss of health insurance benefits. More specifically, according to the named plaintiff, in June 2013, in response to the enactment of the ACA, managers at the D&B Times Square store told employees that compliance with the ACA would cost as much as two million dollars when the law went into effect on January 1, 2015. The managers told employees that, to avoid those costs, the number of full-time employees at the Times Square location would be reduced by more than fifty percent.

The plaintiff alleged that after June 1, 2013, her hours were reduced to between 10 and 25 per week. She then was informed that she was considered a part-time employee, and her health insurance benefits, which are available only to full-time employees, would end.

The plaintiff filed a lawsuit alleging that D&B’s actions violated Section 510 of the Employee Retirement and Income Security Act (ERISA). That statute provides, in part:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for exercising any right to which he is entitled under the provisions of an employee benefit plan …, or for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, this subchapter, or the Welfare and Pension Plans Disclosure Act.

Essentially, the plaintiff contended that by reducing her hours, D&B discriminated against her “for the purpose of interfering with the attainment” of a right to which she “may become entitled” under the D&B health plan.

D&B sought dismissal of the complaint, but its motion to dismiss was denied on February 9, 2016. The Court flatly rejected D&B’s argument that Plaintiff could not have a claim for benefits that had not yet accrued or for a lost opportunity to accrue additional benefits. The arguments appear to be based on the fact that Plaintiff was no longer a participant in the health plan.

The Court found that a fair reading of the complaint alleged that D&B intentionally interfered with Plaintiff’s healthcare coverage, and the company was motivated by concerns about the future costs of complying with the ACA. The Court also ruled that Plaintiff’s factual allegations were sufficient to support her claim that D&B had the specific intent to interfere with her health insurance benefits, which was critical to her claim. These allegations related not only to the statements made store managers to employees, but statements made in SEC filings and the media, including addressing a question about its reduced workforce by explaining, “D&B is in the process of adapting to upcoming changes associated with health care reform.”


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