934 F. Supp. 874 | N.D. Ohio | 1996
MEMORANDUM OPINION
This matter is before the Court on cross motions for summary judgment. For the following reasons, Plaintiffs’ and Third-Party Defendants’ motion for summary judgment will be denied. Defendant’s motion for summary judgment will be granted.
This is an action for retiree health insurance benefits brought by twenty-six former employees of Defendant Dura Mechanical Components, Inc. (“Dura”). Plaintiffs contend that Defendant’s termination of the benefits violated the Collective Bargaining Agreement between Defendant and the union to which Plaintiffs belonged, and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1001 et seq. Defendant contends that none of the Plaintiffs qualify for the benefits at issue.
Dura has filed a third-party complaint against the International Union of United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW” or “the Union”), which complaint is based on the UAWs financial sponsorship of the instant litigation. Dura contends that the Union’s sponsorship of this case is a violation of the Plant Closing Agreement between Dura and UAW. UAW contends that the claims brought in this lawsuit are outside the scope of the Plant Closing Agreement.
I. Background
On November 30, 1990, Defendant Dura Mechanical Components, Inc. purchased the Toledo, Ohio manufacturing facility operated by the Dura Automotive Hardware Division of Wickes Manufacturing Company (“Wickes”). Under the terms of the sales agreement between Wickes and Dura, Wickes retained all financial obligations for retirement pension payments, and Dura assumed liability for retiree health insurance plans.
At the time of the purchase, Wickes and the UAW were parties to a Collective Bargaining Agreement (“CBA”), which contained the two retirement benefit provisions at issue in this case. Article IV of the CBA provides, in pertinent part:
8. Special Age 65 Benefit
... [A] retired Employee sixty-five (65) or older who is receiving a monthly benefit ... shall receive a monthly Special Age 65 Benefit equal to the amount of the premium for Medicare Part “B” (in addition to the amount of monthly pension otherwise provided)____
9. Section 9 Benefit
Any Employee who has retired and who received in any month a ... retirement benefit and who ... is an “Insured Individual” shall be entitled to a “Section 9 Benefit” ... under the plan. An “Insured Individual” is one who is enrolled for hospitalization and medical coverage ... under the Company’s Insurance Plan---- A “Section 9 Benefit” shall be an amount ... equal to fifty (50) percent of the monthly premium payable to retain such Employee’s covered status under such Plan____
(Joint Stip. of Facts at 4.) Article XII of the CBA, which addresses retirement benefits,
By letter dated February 13, 1991, Dura notified its employees that all retiree health insurance benefits would be terminated, effective February 28, 1991. On February 26, 1991, two of Defendant’s retired employees filed suit in the District Court, on behalf of themselves and all others similarly situated, to compel Defendant to pay those insurance benefits. Chinni v. Dura Mechanical Components, Inc., Case No. 3:91 CV 7107. On March 22, 1991, the Court granted a preliminary injunction in Chinni, ordering Dura to continue to pay its retirees the Special Age 65 and Section 9 Benefits pending disposition of the suit.
Thereafter, difficulties in the automotive industry resulted in the closing of the Toledo plant. Dura announced the phased shutdown of the plant on May 2,1991. Dura and UAW thereafter entered into negotiations for a Plant Closing Agreement. The Plant Closing Agreement, which was meant to be a comprehensive resolution of all issues between the parties, was executed and ratified on December 17,1991.
Several portions of the Plant Closing Agreement addressed the issues of retiree insurance benefits, settlement of claims, and the then-pending Chinni litigation. The salient portions are reproduced below:
Article V — Vested Benefits
Employees shall continue to accrue the benefits and benefit eligibility set forth in this Article during all periods prior to the individual permanent layoff. Employees shall receive fringe benefit payments covered by this Article in accordance with the expired collective bargaining agreement unless the employee, his union and the employer agree to a different payment period. Only those benefits specifically enumerated below are considered vested benefits which must be paid. Any benefit not explicitly provided in this Article ends. For purposes of this section benefits include the following: [vacation pay; holiday pay; life insurance for active employees; hospitalization insurance for active employees; prescription drug coverage; bereavement pay; jury duty pay]----
The Company shall have no obligation to provide Retirement Income Plan coverage or benefits. Accrual of such benefits ended with acquisition of the Toledo plant effective November 30,1990.
Article VI — Settlement
C. The Union represents that in the “retiree health insurance” — Case No. 3:91 CV 7107, the parties have agreed in principle to the major issues of the settlement. The minor issues which remain are close to resolution and should not impede full settlement. After class notification and approval, said action will be dismissed against the Company and Wickes.
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G. The Union, on behalf of itself and its members, and the Company waive all legal claims against each other including claims for breach of collective bargaining agreement, ERISA, wrongful discharge, employment discrimination, the WARN Act, National Labor Relations Act or any other statute or theory of law. It is the intent of the parties to resolve all potential claims by this plant closing agreement.
While the Plant Closing Agreement was being negotiated, negotiations continued in the Chinni litigation. On March 2, 1992, roughly twelve weeks after the Plant Closing Agreement was ratified, the Chinni plaintiffs filed a motion for provisional class certification pending settlement of that action. In that motion, the plaintiffs sought to include in the settlement class three categories of plaintiffs in addition to the group of Dura’s former employees who had retired prior to January 31, 1991. Specifically, the plaintiffs sought to add: (1) active employees of Dura who retired after January 31, 1991 and were
On October 18, 1983, certain members of the three groups that the Court declined to add to the Chinni class brought the instant litigation in this Court, raising the same claims that were previously raised by the Chinni litigants.
Plaintiffs claim that the Special Age 65 Benefit and the Section 9 Benefit are vested lifetime rights, and that Defendant’s elimination of the Benefits violates the CBA and ERISA. Plaintiffs further claim that by eliminating the retirement insurance benefits, Defendant breached its fiduciary duty to discharge its duties with respect to the plans solely in the interest of its participants.
Defendant has filed a third-party claim against UAW, based on UAWs financing of this litigation. Defendant alleges that UAW breached the Plant Closing Agreement by subsidizing the instant litigation.
Both sides have moved for summary judgment on all claims. Plaintiffs argue that their retirement insurance benefits vested prior to expiration of the CBA because Plaintiffs were eligible to retire at that time, although they did not actually take retirement until after January 31, 1991. They claim that they did not waive those vested rights in the Plant Closing Agreement because the retirement insurance benefits were outside the scope of the issues resolved by the Plant Closing Agreement. They argue further that the Court’s entry of judgment in Chinni precludes Defendant from relitigating the issue of whether the retirement insurance benefits were vested, unforfeitable rights. Therefore, Plaintiffs claim, Dura violated the CBA and ERISA by terminating the Special Age 65 and Section 9 benefits.
Defendants argue that Plaintiffs’ rights to the retirement insurance benefits never vested because Plaintiffs did not retire until after January 31,1991. Furthermore, they argue, Plaintiffs waived whatever claims they otherwise might have had when they ratified the Plant Closing Agreement. They argue that the judgment in Chinni does not control this action because the Court in Chinni expressly declined to include individuals who retired after January 31,1991 in the class of individuals to whom the Special Age 65 and Section 9 Benefits must be paid.
The Court discusses the parties’ contentions below.
II. Discussion
A Summary Judgment Standard
As an initial matter, the Court sets forth the relative burdens of the parties once a motion for summary judgment is made. Summary judgment must be entered “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on
Once the burden of production has so shifted, the party opposing summary judgment cannot rest on its pleadings or merely reassert its previous allegations. It is not sufficient “simply [to] show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Rather, Rule 56(e) “requires the nonmoving party to go beyond the [unverified] pleadings” and present some type of evidentiary material in support of its position. Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. Summary judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is 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).
B. The Collective Bargaining Agreement
1. Vesting of Retiree Insurance Benefits Generally
The first issue the Court must decide is whether the parties intended by the language of the Collective Bargaining Agreement to create a vested right in retirement insurance benefits. If no such right was intended, the Court’s inquiry ends, and summary judgment in Defendant’s favor must be granted. If the parties did intend to created a vested right, the Court must then ask whether the contract gives Plaintiffs, who retired after expiration of the CBA, vested rights, and, if so, whether Plaintiffs waived those rights in the Plant Closing Agreement.
ERISA divides employee benefit plans into two types: pension plans and welfare benefit plans. 29 U.S.C. § 1002(1), (2)(A). Pension plans are subject to mandatory participation, vesting and funding requirements. 29 U.S.C. §§ 1051, 1081. Welfare benefit plans are not. Id. A retiree health insurance benefits plan is a welfare benefit plan, 29 U.S.C. § 1002(1), and, therefore, not subject to statutory vesting requirements. The parties to an employment agreement can, however, agree by contract to vest the benefits pursuant to such a plan. Golden v. Kelsey-Hayes Co., 73 F.3d 648, 653 (6th Cir.1996) petition for cert. filed, 64 U.S.L.W. 3727 (U.S. Apr. 17, 1996) (No. 95-1884); Wulf v. Quantum Chemical Corp., 26 F.3d 1368, 1377 (6th Cir.1994), cert. denied — U.S. -, 115 S.Ct. 667, 130 L.Ed.2d 601 (1994); Boyer v. Douglas Components Corp., 986 F.2d 999, 1005 (6th Cir.1993).
The Sixth Circuit has set forth a set of principles to guide the Court in determining whether retiree insurance benefits continue beyond the expiration of a collective bargaining agreement in International Union, United Auto. Workers, v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir.1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984).
*880 [T]he court should first look to the explicit language of the collective bargaining agreement for clear manifestations of intent. The intended meaning of even the most explicit language can, of course, only be understood in light of the context which gave rise to its inclusion. The court should also interpret each provision in question as part of the integrated whole. If possible, each provision should be construed consistently with the entire document and the relative positions and purposes of the parties. As in all contracts, the collective bargaining agreement’s terms must be construed so as to render none nugatory and avoid illusory promises. Where ambiguities exist, the court may look to other words and phrases in the collective bargaining agreement for guidance____ Finally, the court should review the interpretation ultimately derived from its examination of the language, context and other indicia of intent for consistency with federal labor policy.
Id. at 1479-80 (citations omitted).
Accordingly, the Court first looks to the explicit language of the CBA for evidence of whether the parties intended the Special Age 65 and Section 9 Benefits to survive the expiration of the CBA. No durational limit is given in Article IV of the CBA, which describes the benefits.
Defendant argues that the language in Article XII supports its position that the benefits were not intended to be vested. That Article provides that retirement insurance benefits “will continue for the duration of this Agreement only provided that the Company shall be free of its obligation during the period that any such retired employee is employed by any other employer who provides its employees with medical insurance.” Defendant urges the Court to construe the foregoing clause as if there were a comma after the word “only”. Le.: “The retirement insurance benefits will continue for the duration of this Agreement only — and then stop. Additionally, the Company shall be free of its obligation during the period that any such retired employee is employed by any other employer who provides its employees with medical insurance.”
The Court finds that Article XII is ambiguous. An equally reasonable interpretation can be achieved by construing the sentence as if the separation appeared before the word “only”. I.e.: “The retirement insurance benefits will continue for the duration of this Agreement. The one exception to continued benefits is that the Company shall be free of its obligation during the period that any such retired employee is employed by any other employer who provides its employees with medical insurance.” So construed, the clause merely means that retiree health insurance benefits are suspended if a retiree goes back to work for an employer who provides equivalent coverage.
Since the only arguably durational clause of the CBA is ambiguous, the Court takes the next step in the Yard-Man' analysis by looking to the larger context in which the agreement exists. The Court may also use extrinsic evidence to aid in its determination of whether the parties intended the retirement insurance benefits to survive expiration of the CBA. Wulf 26 F.3d at 1376; Boyer, 986 F.2d at 1005.
The Yard-Man Court began its analysis by looking at other provisions of the entire CBA for evidence of intent and an interpretation of the specific provisions relating to retirement insurance benefits that would be harmonious with the entire document. For instance, the Court pointed to the fact that termination of insurance benefits for active employees was explicitly set out, while termination of insurance benefits was retirees was not, as evidence that no termination was intended for retirees. Similarly, the Court found that the inclusion of specific durational limitations in other provisions of the CBA, but not the retirement benefit provisions, indicated that the retiree benefits were intended to survive the expiration of the CBA. Yard-Man, 716 F.2d at 1480-82.
Unfortunately, the parties to the instant action have not provided the Court with a complete copy of the CBA between Wickes and UAW; the record contains only a set of excerpts pertaining specifically to retiree insurance benefits. The excerpts before the Court, and the available extrinsic evidence,
The Court finds, therefore, that the language of the Collective Bargaining Agreement creates a vesting right in retirement insurance benefits, which right survives the expiration of the Collective Bargaining Agreement.
2. Time at Which Retirement Benefits Vest
Having determined that the CBA creates a vesting right in the benefits at issue, the Court must next address the issue of when that right vests. Plaintiffs argue that the right vests as soon as the employee is eligible for retirement, whether the employee actually takes retirement at that time, or delays retirement. Defendants argue that the right does not vest until the employee actually takes retirement. Since the Plaintiffs to this action did not retire until after expiration of the CBA, argues Defendant, the CBA expired without Plaintiffs’ rights ever vesting, and they are not eligible for the retirement insurance benefits.
The same issue was presented in UAW v. Park-Ohio Indus., Inc., 661 F.Supp. 1281 (N.D.Ohio 1987), rev’d in part mem. 876 F.2d 894 (6th Cir.1989). In that ease, the Court found that if the right did not vest until the employee actually took retirement, “longtime employees entitled to contractually vested health benefits would lose them merely because they chose to not retire at an early date____ [T]he dissipation of benefits otherwise vested would render them ‘illusory.’” Id at 1293. Accordingly, the Court held that it was not necessary for a beneficiary actually to be retired to have vested benefits that will be payable when retirement status is taken, although such benefits are not payable when the beneficiary is not retired. Id
The Sixth Circuit adopted the same reasoning in Armistead v. Vemitron Corp., 944 F.2d 1287 (6th Cir.1991). On similar facts, that Court affirmed a District Court holding that retirement insurance benefits vested at the time the employee became eligible for retirement, rather than the time the employee actually retired. They held that if an employer had the right to terminate a retiree benefits program unilaterally, its promise to provide retirement insurance benefits under the CBA would be illusory. “Because [retirement insurance] benefits are deferred compensation, it is unreasonable to suppose that the parties to the CBA intended to permit [the employer] to terminate the retirement insurance program unilaterally.” Id at 1297.
Defendant attempts to distinguish Park-Ohio on the ground that the contract at issue in Park-Ohio covered “present and future retired employees,” while the CBA at issue in the instant case does not expressly
The Court holds, therefore, that the retirement insurance benefits at issue vested when the employees became eligible for retirement. The language of the CBA gave Plaintiffs a vested right in retirement insurance benefits at the time of Plaintiffs’ retirement.
C. The Plant Closing Agreement
The. next question the Court must address is whether Plaintiffs waived their rights to the Special Age 65 and Section 9 benefits when they ratified the Plant Closing Agreement. A valid Plant Closing agreement supersedes a prior Collective Bargaining Agreement. Adcox v. Teledyne, Inc., 21 F.3d 1381, 1388 (6th Cir.) (citing Heussner v. National Gypsum Co., 887 F.2d 672, 677 (6th Cir.1989)), cert. denied — U.S. -, 115 S.Ct. 193, 130 L.Ed.2d 126 (1994). The parties to the Plant Closing Agreement here at issue expressly “waive® all legal claims against each other including claims for breach of collective bargaining agreement [and] ERISA ...” as part of that agreement. Defendant argues that the plain language of the Plant Closing Agreement waives any claim Plaintiffs might otherwise have had to the retiree health insurance benefits.
Plaintiffs respond that the Plant Closing Agreement was not intended to waive claims for retiree health insurance benefits. They point to a separate clause in the Plant Closing Agreement, which clause states in regard to the Chinni litigation that “the parties have agreed in principle to the major issues of the settlement. The minor issues which remain are close to resolution and should not impede full settlement. After class notification and approval, said action will be dismissed against the Company and Wickes.” Plaintiffs claim that they ratified the Plant Closing Agreement in reliance on the belief that they would be included in the Chinni settlement class.
The Court agrees with Defendant that the plain language of the Plant Closing Agreement waives any claims Plaintiffs might otherwise have had against Defendant. The clause allegedly excluding retiree health insurance benefits from the terms of the Plant Closing Agreement refers only to the Chinni settlement class, a class that does not include Plaintiffs. It makes no reference to disputes raised by other parties regarding retirement benefits. By the plain language of the Plant Closing Agreement, the exclusion does not include the Plaintiffs to this action. The question then becomes whether Plaintiffs have adequately raised any defense to enforcement of the Plant Closing Agreement against them with regard to the retiree insurance benefits.
Plaintiffs’ claim that the waiver contained in the Plant Closing Agreement should not be enforced against them as to the retiree insurance benefits is, at bottom, a claim of mistake. Plaintiffs claim that they ratified the Plant Closing Agreement in the belief that they would be included in the Chinni settlement class for the purpose of establishing their rights to retiree health insurance benefits. That belief was mistaken.
The Court holds, therefore, that Plaintiffs waived their claim to retiree health insurance benefits when they contractually waived all legal claims against Defendant, including claims for breach of the Collective Bargaining Agreement and ERISA
D. UAW’s Financing of the Instant Litigation
Defendant has moved for summary judgment that UAW’s is liable for breaching the Plant Closing Agreement by financing this action. The parties agree that the Plant Closing Agreement contains a covenant not to sue, and that such covenants are enforceable, Forester v. Scott, 38 Ohio App.2d 15, 311 N.E.2d 27 (1973). Plaintiff responds that it is not in violation of the Plant Closing Agreement because the parties contemplated that the claims raised by Plaintiffs would be excluded from the Plant Closing Agreement.
The Court’s determination, supra, that the Plant Closing Agreement covers the claims raised by Plaintiffs controls its determination of this issue as well. Since the Plant Closing Agreement covers the claims raised by Plaintiffs, UAWs financing of the instant litigation is a violation of the Plant Closing Agreement.
The Court finds, therefore, that UAW is liable to Defendant for damages caused as a result of its violation of the Plant Closing Agreement.
III. Conclusion
For the above reasons, Plaintiffs’ and Third-Party Defendants’ motion for summary judgment is denied. Defendant’s motion for summary judgment is granted.
IT IS SO ORDERED.
. Under Wickes' 85-point plan, an employee whose age plus years of service equals or exceeds eighty-five is eligible for retirement.
. There were thirty-seven Plaintiffs to the instant litigation when it was originally filed. On July 31, 1995, Plaintiffs filed an amended complaint, in which twenty-six Plaintiffs remained as parties. The Court addresses only the claims of the twenty-six remaining Plaintiffs.
. Defendant has argued that Yard-Man’s continued validity is doubtful in the wake of the Supreme Court’s decision in Curtiss-Wright Corp., v. Schoonejongen, - U.S. - , 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995). The Court need not address that argument. In an opinion issued shortly after Defendant submitted its motion for summary judgment, the Sixth Circuit made it clear that Yard-Man remains the law of this Circuit. Golden v. Kelsey-Hayes Co., 73 F.3d 648, 654-66 (6th Cir.1996).
. Defendant has attempted to buttress its arguments by citing to an unreported opinion from another jurisdiction, Plis v. MGD Graphics Systems, Inc., No. 79-C-4787 (N.D.Ill. Nov. 30, 1981), aff'd mem., 714 F.2d 146 (7th Cir.1983), which Defendant inexplicably has failed to attach to its motion. Nor is the opinion available on Westlaw. An unreported opinion from another jurisdiction is worth only what it weighs in reason. Since neither the facts underlying that Court’s holding that the retirement benefits at issue did not vest until actual retirement, nor the reasoning used by that Court, is available to this Court, Plis is of little persuasive value in the instant case.
