Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-01124-JLK-MEH

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO
Judge John L. Kane

Civil Action No. 04-cv-1124-JLK-MEH

LINDA FORGACS, MONICA JONES, DANIEL LINK, GRACE MORENO, and PAM ROGGE, Plaintiffs v. EYE CARE CENTER OF NORTHERN COLORADO; WILLIAM L. BENEDICT, M.D.; JOEL S. MEYERS, M.D.; MORRIS TILDEN, M.D.; IRENE OLIJYNK, M.D. and JAY R. HOLMS, Defendants.

RESPONSE TO THE MOTION FOR SANCTIONS

Plaintiff and her counsel respond to the Motion for Sanctions filed by the Defendants in this matter. In this case, the Plaintiffs brought actions against the Defendants as follows: 1. First Claim. ERISA claims against the Eye Care Center and the Plan Administrator alleging failure to provide COBRA notice to Plaintiffs concerning the Section 125 Flex-Spend Plan, failure to provide 401K rollover paperwork, failure to make timely deposits into each Plaintiff's 401K account and for an accounting of the 401K accounts of Plaintiffs.

2. Second Claim. Wage claims by the Plaintiffs against the Eye Care Center.

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3. Third Claim. Defamation claims against Defendants by Plaintiffs Forgacs, Jones and Link. 4. Fourth Claim. Overtime claim by Plaintiff Rogge against Defendants. 5. Fifth Claim. Claim by Rogge against Defendants for retaliation under the Fair Labor Standards Act. 6. Sixth Claim. Claim by Rogge for public policy wrongful discharge. 7. Seventh Claim. Claim by Forgacs for breach of contract for unpaid bonus.

ARGUMENT 1. Procedural Deficiencies. It should be noted that Rule 11(c)(1)(A) of the Federal Rules of Civil Procedure requires that the motion be served on counsel 21 days before it is filed with the Court. That was not done. Counsel acknowledges that a draft was served in December 2005, but not what was actually filed with the Court.

2. Settlements were made with four Plaintiffs. In May of 2006, four of the five Plaintiffs settled their claims with the Defendants. In each circumstance, the Defendants paid to the settling Plaintiffs money to settle the claims. Counsel for Plaintiffs was paid attorney's fees that involved the settlement of the Moreno claims. The settlement agreements entered into between the parties made no mention of or contained any language indicating that any party would retain any rights against anyone involved in the litigation. No mention was made by the Magistrate Judge at any settlement conference that any claims for sanctions or attorney's fees were being retained against anyone.

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Additionally, when the settlement agreements that were drafted by the Defendants' counsel were sent to counsel for the Plaintiffs containing the sanctions and attorney's fees language, counsel for the Plaintiff objected. Defendants' counsel removed the language and sent new agreements to Plaintiff for signatures. At the time of the settlement conferences held in May of 2006, there were no motions pending for Sanctions. Defendants' position, stated at paragraph 20 of the motion (page 11) that counsel and his clients failed to appear for a settlement conference is absolutely incorrect. All Plaintiffs attended the conference with the exception of Ms. Rogge. Ms. Rogge was unable to attend the conference because of a dental emergency. She provided a doctor's note and appeared several days later at which time a settlement was reached with her. Additionally, as to the Forgacs claims, a settlement conference was held in May of 2006 involving and including Ms. Forgacs. Plaintiff, her counsel and the Magistrate Judge worked hard at resolving the case, but negotiations were not successful. Another settlement conference was scheduled for November 6, 2006 with Magistrate Judge Hegarty. Counsel for the Defendants informed Plaintiff's counsel that his "clients would prefer to wait for a ruling on the Motion for Sanctions before discussing settlement with Ms. Forgacs."

3. Background leading up to filing suit and follow up investigations. In 2003, the Plaintiffs approached undersigned counsel and reported that they had each been terminated from their employment with Defendant Eye Care Center. No one disputed the legality of the terminations with the exception of Pam Rogge. The complaints made related to

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the failure of the company to follow certain legal requirements, and because defamatory comments were made about certain Plaintiffs. There was evidence that to this day is undisputed, that the company and any Plan Administrator had failed to provide COBRA notice concerning the Section 125 Flex-Spend Plan. Plaintiffs also alleged that the company and the Plan Administrator had failed to provide requested 401K rollover paperwork to the Plaintiffs. Plaintiffs provided documentary information evidencing their attempts to secure the paperwork, which indicated that the requests went unanswered. Additionally, there was evidence that there had been a failure to make timely deposits into the Plaintiffs', as well as a number of other individuals, 401K accounts. The fact of the late payments was admitted by the Defendants. As a result of what might be diplomatically called sloppy business practices on the part of the company, the Plaintiffs indicated that they wished to have an accounting done of their 401K accounts. In addition to the ERISA problems raised, Plaintiffs expressed concern over wages that they vehemently argued were owed to them. Again, counsel reviewed documents submitted to both the employer and the Colorado Department of Labor seeking unpaid wages. Plaintiffs Forgacs, Link, and Jones complained about the fact that a number of months following their layoffs, Mr. Holms, told a gathering of staff members that they had stolen money from the company. These Plaintiffs all indicated that the allegations were not true, they were not terminated for that reason and that they had received a letter or other documentation indicating that their terminations were not a reflection on their performance and promising severance benefits. Additionally, these individuals were ultimately offered or provided, albeit late, COBRA medical benefits which would not have been offered if they had been terminated for gross misconduct. Ms. Forgacs was provided a severance package with a leave of absence

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and three months of continued pay and benefits which would not have been offered had she stolen from the company. It was clear that there was sufficient evidence to indicate that the statements made by Mr. Holms and some of the doctors were actionable. Counsel was also provided evidence that it was clear that the doctors at the meeting demonstrated that they supported Mr. Holms' statements. Ms. Rogge was adamant in her assertions that she was not paid overtime compensation owed to her for working to help the clinic catch up on overdue insurance claims. She was also adamant that she had not falsified her timesheets and had worked all of the time she had reported. At the time of her termination, she was told that she was being terminated because of alleged falsification of her claim for overtime hours. Ms. Forgacs indicated that she believed that she had not been properly paid under the profit sharing arrangement she had with the company. At the time of filing suit that issue remained unresolved. Prior to filing suit, Plaintiffs counsel contacted Defendants and attempted to resolve the problems. Meetings were set with counsel with the assurance that Mr. Holms would appear and would provide information to help resolve the issues. On two occasions, Mr. Holms was a no-show and the meetings were postponed. A third meeting was set and again Mr. Holms did not show. Counsel met and discussed the case, but little was presented to deal with the issues. Nothing in this case was filed or presented for an improper purpose. The parties were adamant in their assertions of the violations and there was paperwork and evidence that clearly appeared to support the claims.

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Nothing was presented by counsel or to this counsel's knowledge to harass, cause unnecessary delay or to increase the cost of litigation. Claims were warranted by existing law or attempts to establish law. Based on the above, it was clear at the time of filing that the claims had evidentiary support or, at a minimum, it appeared that the claims had evidentiary support. The facts were reasonably investigated and available documentation was reviewed. Additionally, prior to filing suit, attempts were made to resolve issues and factual circumstances by meeting with the opposition. It should be further noted that Plaintiffs' and counsel's review of the facts did not end at the filing of the suit. Other employees of the Eye Care Center came forward after the suit was filed to indicate that they too had concerns about the funding of their 401K accounts. Plaintiffs received evidence Mr. Holms made attempts to back date or modify documents. Evidence was received that at least one employee was told that Ms. Rogge was terminated not because of anything related to overtime, but because she has lupus and Mr. Holms did not like the way she was dressed at the office. Evidence was also provided that corroborated statements that Mr. Holms and certain doctors had made the statement about Forgacs, Jones and Link stealing money from the clinic. Finally, Plaintiffs and counsel received a number of complaints and statements from individuals concerning allegations of sex and national origin discrimination concerning Mr. Holms. In addition, the fact that untrue statements were made about other employees and that actions could have been taken to sabotage employees work played a role in this case.

4. The Section 125 Flex-Spend COBRA notice issue.

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Defendants assert that Sanctions should be invoked against Forgacs and counsel based upon the assertions in the complaint about the Section 125 Flex-Spend Plan. While it is true that Plaintiffs made an unsuccessful argument about actual termination dates based upon the claim that a oneyear statute of limitations applied, Plaintiffs made an additional argument that the failure to provide the notice constituted a continuing violation. This theory, it is urged, is not frivolous. This was raised as a possible theory in Lopez ex rel. Gutierrez v. Premium Auto Acceptance Corporation, 389 F.3d 504 (5th Cir. 2004), although it was not argued by the parties. This issue was not addressed in the Court's order (Document 53). Additionally, it should be noted that in Cytrynbaum v. Employee Retirement Plan of Amoco Corp. and Participating Companies, 338 F. Supp. 2d 1187 (D. Colo. 2004), this court dealt with a matter that was filed well after the one year statute of limitations had passed. Merely being unsuccessful does not make the claim frivolous. The fact also remains that the company never did provide the COBRA notice on the Section 125 plan to Plaintiffs. Finally, Rogge's claim was never considered untimely.

5. Forgacs claims for bonus compensation. Defendants assert that Forgacs and counsel should be sanctioned for failure to drop the second and seventh claims that related to Forgacs wage and breach of contract claims. Plaintiff conceded the claims in her response to the motion for summary judgment. Defendants also argue that the severance/settlement agreement she made with her employer somehow makes this claim improper. This issue arose after she executed this agreement on March 7, 2003. Under paragraph 2(b), Ms. Forgacs did not waive rights or claims that arose after March 7, 2003. All claims asserted on behalf of Ms. Forgacs arose after the date

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she executed the agreement. The Motion for Sanctions incorrectly states March 14, 2003 as the operative date. (p. 17 lines 11, 13, 14). Work was done on the Plaintiff's side to calculate and deal with these issues. As a result of that work, the issues were conceded. Additionally, prior to the filing of the complaint, work was done to determine, to the extent possible, the validity of the claims.

6. The defamation claims. Defendants argue that Plaintiff and counsel should be sanctioned for bringing and persisting with the Plaintiffs' defamation claims. Plaintiffs Link, Jones, and Forgacs were unsuccessful in their assertions concerning some of the Defendants. Plaintiff Forgacs has filed a request for reconsideration of the defamation filing as to some of the Defendants. Link and Jones have settled their claims. Plaintiffs urged that the actions of the Defendants in nodding their heads in agreement with defamatory statements made by Defendant Holms were actionable. See Sack on Defamation, Libel Slander and Related Problems, (Third Edition), Section 2.4.10. Additionally, Plaintiffs presented evidence that Drs. Meyers and Benedict made statements to third parties. Michelle Hebert stated in her affidavit which was attached to Document 82 as Exhibit 1, that she heard comments made by these doctors.

7. The late 401K-deposit issue. Defendants urge that sanctions should enter based upon Plaintiff's claim for breach of fiduciary duty for making late 401K deposits. The issue appears to be alive in the case as it relates to Ms. Forgacs case. As for all Plaintiffs, there is no dispute that 401K deposits were not

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made in a timely manner and the issue continued to exist concerning whether the Plaintiffs were properly compensated.

8. Rogge's claims for compensation. Defendants urge that Plaintiffs' counsel should be sanctioned for matters related to Plaintiff Rogge's claims for payment of compensation (wages and overtime). Defendants settled all of Ms. Rogge's claims with her waiving fees and costs that might have been statutorily mandated. Counsel worked hard to effectuate a settlement of these claims and was ultimately successful with the help of the Magistrate Judge. Plaintiff Rogge conceded these issues in the summary judgment response.

9. The wage claims of Plaintiffs Defendants argue that attorney's fees should be paid because the Plaintiffs brought wage claims that were ultimately conceded. The four settling Plaintiffs settled their cases with Defendants and fees and costs were waived as to them. Defendant company paid attorney's fees to Plaintiffs' counsel for the Moreno wage claim. The Plaintiffs were adamant in their assertions that wages were owed when they first met with counsel. Documentation was provided which evidenced that attempts were made to secure the funds through the Department of Labor and Employment.

10. The 401K-rollover paperwork. To the extent that Defendants are seeking sanctions related to the Defendants failure to provide timely rollover paperwork, the issue appears to remain as an issue for the Forgacs case

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and remained an issue for the four settling Plaintiffs. Defendant did concede that penalties could be sought for the failure to provide rollover paperwork. Sanctions are not proper.

11. Finalizing Settlements. Defendants argue that Plaintiff's counsel should be sanctioned for failure to finalize settlements in this matter. Settlements have been finalized for those Plaintiffs that settled. The settlements were delayed because initially the Defendants provided agreements with language that was not acceptable. Counsel communicated with the Magistrate Judge about the problems. Any delays that might have been occasioned by Plaintiffs' counsel and the lingering issues were not done for any improper motive or to expand the proceedings, and did not expand the proceedings to anymore than a minimal extent.

CONCLUSION
The Motions for Sanctions should be denied.

s/George C. Price George C. Price Attorney for Plaintiff 900 Logan Street Denver, CO 80203 Telephone:(303)861-5500 Facsimile: (303) 863-0180 [email protected]

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CERTIFICATE OF SERVICE (CM/ECF) I hereby certify that on November 8, 2006, I electronically filed the foregoing with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail address: John R. Paddock, Jr. Pryor Johnson Carney Karr Nixon, P.C. 5619 DTC Parkway, Suite 1200 Greenwood Village, CO 80111-3061 [email protected]

s/George C. Price George C. Price Attorney for Plaintiff 900 Logan Street Denver, CO 80203 Telephone:(303)861-5500 Facsimile: (303) 484-2421 [email protected]

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