Employee Benefits-Ninth Circuit Holds That If The Defendant Had Fired The Plaintiff For Discriminatory Reasons, And Not Gross Misconduct, The Plaintiff Could Be Entitled To COBRA Benefits

In Mayes v. Winco Holdings, Inc., No. 14-35396 (9th Cir. 2017), plaintiff Katie Mayes (“Mayes”), among other matters, was seeking COBRA benefits from defendant Winco Holdings, Inc. (“Winco”).  The district court granted summary judgment against Mayes, denying the benefits.  However, upon reviewing the case, a panel of the Ninth Circuit Court of Appeals (the “Panel”) found that there was a genuine dispute of fact regarding the true reason for the Mayes’ termination by Winco.  The Panel held that the district court therefore erred in granting summary judgment, because if Winco had fired the Mayes for discriminatory reasons, rather than gross misconduct, then Mayes could be entitled to COBRA benefits.

In this case, Mayes had worked at Winco, an Idaho Falls grocery store, for twelve years.  During her final years at Winco, Mayes supervised employees on the night-shift freight crew.  On July 8, 2011, Mayes was fired for taking a stale cake from the store bakery to the break room to share with fellow employees and telling a loss prevention investigator that management had given her permission to do so.  Winco deemed these actions theft and dishonesty.  It also determined that Mayes’ behavior rose to the level of gross misconduct under the store’s personnel policies.  Winco denied Mayes and her minor children benefits under COBRA and this suit was filed.

In deciding the case, the Panel noted that generally, COBRA entitles an employee with employer provided health insurance to elect continued coverage for a defined period of time after the end of employment. See 29 U.S.C. § 1161(a).  An employee is not entitled to this benefit if she is terminated for “gross misconduct,” but the statute does not define “gross misconduct.”See 29 U.S.C. § 1163(2).  In this case, said the Panel, Mayes presented both direct and indirect evidence that the reasons stated for her termination were pretextual, and the Panel concluded there is a genuine dispute of material fact regarding the true reason for her termination.  It said that, if Winco fired Mayes for discriminatory reasons, Mayes may be entitled to COBRA benefits, and concluded that the district court therefore erred in dismissing Mayes’ COBRA claim at summary judgment.  The Panel remanded the case back to the district court.