Kepner v. Weyerhaeuser Company
6:16-cv-01040
D. Or.Oct 10, 2016Background
- Plaintiffs are retired salaried employees of Weyerhaeuser (all "Plan II" retirees) who allege the company promised contractually vested lifetime retiree healthcare benefits in a 1979 Summary Plan Description (SPD).
- The 1979 SPD described an option to continue coverage and listed current retiree contribution amounts but did not expressly reserve or waive the employer’s right to amend or terminate benefits, nor did it state duration of benefits.
- Subsequent SPDs were issued; the 1990 SPD for the first time contained an explicit reservation clause allowing modification, amendment, or termination of the retiree plan and split employees into Plan I and Plan II groups.
- Weyerhaeuser made plan changes over the years (cost-sharing changes, new plans in 2009 and 2011, and an HRA), and on January 1, 2015 it stopped contributing to HRA accounts for all Plan II retirees.
- Plaintiffs sued under ERISA § 1132(a)(1)(B) for benefits allegedly vested by the 1979 SPD and under § 1132(a)(3) for promissory estoppel; defendant moved to dismiss under Rule 12(b)(6).
- The district court dismissed both claims, finding the 1979 SPD lacked the clear-and-express language required to create contractually vested lifetime welfare benefits and that no clear, unambiguous promise supported promissory estoppel.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the 1979 SPD created contractually vested lifetime healthcare benefits | 1979 SPD’s statements (option to continue coverage; spouse continuation) and lack of an explicit termination reservation reasonably imply a lifetime, irrevocable promise | 1979 SPD lacks clear, express vesting language and later SPDs (1990) superseded or clarified rights; employer retained ability to amend/terminate | Court: No. 1979 SPD did not clearly and expressly vest lifetime benefits; claim dismissed |
| Applicable standard for vesting of welfare benefits | Clear-and-express rule conflicts with ordinary contract interpretation; ambiguity should be construed for plaintiffs | Ninth Circuit requires "clear and express" language to find contractual vesting of welfare benefits | Court: Applies Ninth Circuit’s clear-and-express rule as consistent with M&G Polymers; rule controls |
| Whether ambiguity in 1979 SPD can be resolved by extrinsic evidence | Plaintiffs: ambiguity plus absence of reservation permits inference of vesting | Defendant: language is not reasonably susceptible to a vesting promise; plan terms (e.g., Termination of Coverage) show no intent to vest | Court: Even under ordinary contract principles, the SPD’s language is insufficient to create vesting; no reasonable inference of lifetime vesting |
| Promissory estoppel claim under ERISA § 1132(a)(3) | Plaintiffs: equitable relief warranted because they relied on employer promises about retiree healthcare | Defendant: no clear, unambiguous promise was made to induce reasonable reliance | Court: Dismissed — promise was not clear and unambiguous; promissory estoppel fails |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading standard: plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard and evaluating factual allegations)
- M & G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (welfare benefits do not vest by operation of ERISA; courts must apply ordinary contract principles and not infer lifetime vesting absent clear manifestation)
- Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (plan sponsors generally free to adopt, modify, or terminate welfare plans)
- Cinelli v. Sec. Pac. Corp., 61 F.3d 1437 (Ninth Circuit recognizes clear-and-express requirement for contractual vesting of welfare benefits)
- Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154 (discussing contractual vesting standard in Ninth Circuit)
- Wise v. El Paso Natural Gas Co., 986 F.2d 929 (Fifth Circuit articulation of clear-and-express rule)