ERIC F. MELGREN, District Judge.
I. Contractual Vesting Claims Under ERISA......................................1098
A. The Parties .............................................................1098
1. Named Plaintiffs......................................................1098
a. Carolina Telephone & Telegraph Company.............................1098
b. United Telephone Companies ........................................1098
c. Sprint.............................................................1098
2. Defendants............................................................1099
3. Class Members.........................................................1099
B. Factual Background.......................................................1099
C. Defendants' Motions for Summary Judgment on Plaintiffs' Contractual
Vesting Claims (Docs.323, 332).........................................1100
1. Summary Judgment Legal Standard.......................................1100
2. ERISA Contractual Vesting Law.........................................1101
3. Evidentiary Issues....................................................1102 a. Magistrate Judge O'Hara's Sanction Order...........................1102 b. Course of Performance Evidence.....................................1102 c. Defendants' Motion to Exclude the Report and Testimony of Prof. Gail Stygall (Doc. 321)....................................1102 4. The SPDs..............................................................1103 a. The First Group of SPDs (1 through 6, 18 and 24 through 32)........1103 1. Language in the SPDs............................................1104 (a) Language in SPDs 1 through 4................................1104 (b) Language in SPD 18..........................................1104 (c) Language in SPDs 5 and 6....................................1104 (d) Language in SPDs 24 through 27 and 29 through 31............1105 (e) Language in SPDs 28 and 32..................................1105 2. Discussion of the SPDs..........................................1105 b. The Second Group of SPDs (7 through 9).............................1109 1. Language in these SPDs..........................................1109 2. Discussion of SPDs 7, 8, and 9..................................1110 (a) The SPDs do not contain affirmative, lifetime language......1110 (b) The SPDs contain termination provisions.....................1112 3. Discussion of Named Plaintiff Britt's Claim (SPD 7 and the 1984 CBA).....................................................1113 c. The Third Group of SPDs (10 through 12 and 19) ....................1113 1. Language in these SPDs..........................................1114 2. Discussion of these SPDs .......................................1114 (a) The SPDs do not contain affirmative, lifetime language......1115 (b) The SPDs contain a ROR clause and termination provisions................................................1116 d. The Fourth Group of SPDs (13 through 15 and 20 through 23).........1117 1. Language in these SPDs..........................................1117 2. Discussion of these SPDs .......................................1118 (a) The SPDs do not contain affirmative, lifetime language......1118 (b) The SPDs contain a ROR clause and termination provisions ...............................................1119 e. Named Plaintiff Clark's Claim (SPDs 16 and 17 and the 1974 CBA) ............................................................1119 1. Language in these SPDs and language in the CBA..................1119 2. Discussion .....................................................1120 f. Conclusion.........................................................1120 D. Defendants' Motion to Decertify the Class Action (Doc. 285)..............1120 II. Breach of Fiduciary Duty Claim Under ERISA..................................1121 A. Factual Background.......................................................1121 B. Defendants' Motion for Summary Judgment on Breach of Fiduciary Duty Claim (Doc. 338)..................................................1122 1. ERISA Fiduciary Law...................................................1123 2. Discussion............................................................1123 III. Age Discrimination Claims ..................................................1127 A. The Parties .............................................................1127 1. Plaintiffs and the Collective Class...................................1127 2. Defendants............................................................1128 B. Factual Background.......................................................1128 C. Defendants' Motion for Summary Judgment on Plaintiffs' Age Discrimination Claims (Doc. 329).......................................1129 1. Plaintiffs Cannot Establish a Prima Facie Case........................1129 2. Defendants Demonstrate That They Made Their Decision on Reasonable Factors Other Than Age...................................1131
D. Defendants' Motion to Decertify Action (Doc. 287), Defendants' Motions to Exclude Terry Long and David Crawford Testimony (Docs.325, 327), Plaintiffs' Motion for Advisory Jury (Doc. 333) .................1134 E. Plaintiffs' Request for Oral Argument on Defendants' Motions for Summary Judgment (Doc. 392) ...........................................1134
Plaintiffs, on behalf of themselves, a certified class, and a certified collective class, bring suit alleging that Defendants' modification and elimination of retirees' medical, prescription drug, and life insurance benefits, violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., and Ohio, Oregon, and Tennessee's anti-discrimination statutes.
In Plaintiffs' first claim, pursuant to ERISA section 502(a)(1)(B),
In Plaintiffs' second claim, pursuant to ERISA section 502(a)(3),
In Plaintiffs' fourth claim, the seventeen named Plaintiffs, an additional 750 named individuals,
There are eleven pending motions before this Court. The Court will address these motions in three different sections and will set forth the applicable parties, facts, and law in each respective section.
In the third part of the Order, the Court will address Plaintiffs' age discrimination claims. This section includes: Defendants' Motion for Summary Judgment on Plaintiffs' Age Discrimination Claims (Doc. 329), Defendants' Motion to Decertify Collective Action (Doc. 287), Defendants' Motion to Exclude the Report and Testimony of Terry Long (Doc. 325), Defendants' Motion to Exclude the Report and Testimony of David L. Crawford (Doc. 327), Plaintiffs' Motion for Advisory Jury (Doc. 333), and Plaintiffs' Motion for Hearing on Defendants' Motions for Summary Judgment (Doc. 392).
In Plaintiffs' first and third claims (the contractual vesting claims), they allege that Defendants' reduction or elimination of their prescription drug, medical, and life insurance benefits violated ERISA because those benefits were vested. Plaintiffs seek a declaration that these benefits are vested under section 502(a)(1)(B) of ERISA and a restoration of those benefits.
There are seventeen named Plaintiffs who are retired, long-term management and unionized employees of several regional and local telephone operating companies. All of these companies eventually became wholly-owned subsidiaries of Defendant Embarq Corporation upon its spin-off from Defendant Sprint Nextel Corporation in May 2006. As retired employees, Plaintiffs and their eligible spouses and dependents were participants in various ERISA-governed plans.
Eleven named Plaintiffs retired from CT & T. Plaintiff Donald Clark retired from CT & T in August 1976. Plaintiffs James Britt and Laudie McLaurin retired from CT & T in approximately June 1985 and December 1988. Plaintiffs Willie Dorman and Calvin Joyner retired from CT & T in March 1994. Plaintiffs William Fulghum and William Daniel retired from CT & T in September 1996 and June 1999, respectively. Plaintiffs John Hollingsworth, Betsy Bullock, and William Games retired from CT & T in December 2001. Plaintiff Sue Barnes retired from CT & T in March 2003.
Five named Plaintiffs retired from United telephone companies. Plaintiff Robert King retired from United Telephone Company of Florida ("UTC-Florida") in September 1993. Plaintiffs Betty and Kenneth Carpenter retired from United Telephone Company of Ohio ("UTC-Ohio") in November 1997 and January 1998. Plaintiff Carl Somdahl retired from United Telephone Company of the Northwest ("UTC-NW") in January 1999. Plaintiff Wanda Shipley retired from United InterMountain Telephone Company ("Inter-Mountain") in June 1999.
One Plaintiff, Timothy Dillon, retired from Sprint North Supply Company in approximately December 2002.
There are several companies that are named as Defendants. These include Defendant Sprint, formerly known as United Telecommunications, Inc. and Sprint Corporation; Defendant Embarq Corporation ("Embarq"); Defendant Embarq Mid-Atlantic Management Services Company, formerly known as Sprint Mid-Atlantic Telecom, Inc.; and Defendant CT & T, formerly a wholly-owned subsidiary of Sprint.
Numerous welfare benefit plans are named as Defendants. These include: Embarq Retiree Medical Plan, Sprint Retiree Medical Plan, Group Health Plan for Certain Retirees and Employees of Sprint Corporation, Sprint Welfare Benefit Plant for Retirees and Non-Flexcare Participants, Sprint Group and Long Term Disability Plans, Group Life Accidental Death and Dismemberment and Dependent Life Plan for Employees of Carolina Telephone and Telegraph Company, and Carolina Telephone and Telegraph Company Voluntary Employees' Beneficiary Association Sickness Death Benefit Plan ("VEBA") (collectively, "the Plans").
There are two additional defendants. Defendant Employee Benefits Committee of Embarq Corporation ("the Committee") is the administrator of the Plans sponsored by Embarq and CT & T. Defendant Randall T. Parker served as Embarq's Director of Benefits between August 2005 and March 2010 and as Sprint's Director — Benefits Strategy and Sprint Benefits Brand Management between 1995 and August 2005.
In early 2011, the Court certified a class with respect to the two contractual vesting claims. The class definition as set forth in the class notice is as follows:
There is also sub-class which includes individuals who were participants in CT & T's Voluntary Employee Benefits Association ("VEBA") plan. This sub-class is known as the "VEBA sub-class." There are approximately 15,000 ERISA class members.
In November 2005, Sprint announced that the prescription drug benefits for participants and beneficiaries who were eligible for Medicare Part D coverage would be modified such that each participant and beneficiary would receive $41.67 a month, or $500 a year, effective January 1, 2006.
On July 26, 2007, Embarq announced that (1) company-sponsored medical coverage and the prescription drug subsidy provided to Medicare-eligible retirees and Medicare-eligible dependents of retirees would be eliminated effective January 1, 2008; (2) basic life insurance coverage would be eliminated for retirees who were participants in the CT & T VEBA effective September 1, 2007; and (3) basic life insurance coverage would be capped at $10,000 for all other retirees effective January 1, 2008.
In this case, the summary plan descriptions ("SPDs") explain Plaintiffs' and class members' medical and life insurance benefits. Some of the SPDs address medical benefits,
Defendants bring two summary judgment motions on Plaintiffs' and class members' contractual vesting claims. Defendants' first motion addresses the seventeen named Plaintiffs. There are seventeen SPDs at issue with respect to these Plaintiffs' contractual vesting claims. These include SPDs 1 through 17. Defendants' second summary judgment motion addresses certain class members that either fall under the same SPDs as the named Plaintiffs or fall under SPDs that contain similar language. There are fifteen SPDs at issue in Defendants' Motion for Summary Judgment on selected class members' contractual vesting claims. These include SPDs 18 through 32. Defendants group these thirty-two SPDs into five different groups based on the similarity of language contained within those SPDs. The Court will address each group of SPDs.
Summary judgment is appropriate if the moving party demonstrates that "there is no genuine dispute as to any material fact" and that it is "entitled to judgment as a matter of law."
If the moving party carries its initial burden, the party opposing summary judgment cannot rest on the pleadings but must bring forth "specific facts showing a genuine issue for trial."
There are two types of employment benefits under ERISA: welfare benefits and pension benefits.
Plaintiffs bear the burden of showing an agreement or other demonstration of employer intent to vest welfare benefits.
Title 29 U.S.C., section 1022(b) requires that an SPD contain information about "circumstances which may result in disqualification, ineligibility, or denial or loss of benefits." Section 1022(a) requires that the SPD be "written in a manner calculated to be understood by the average plan participant," and it must be "sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan."
In this case, to determine the dispositive issue of whether Defendants intended to confer vested medical and life insurance benefits upon Plaintiffs, the Court must analyze provisions of the SPDs. In analyzing these provisions, the Court must first determine whether they are ambiguous.
Before discussing the language of these SPDs, the Court must address several evidentiary issues.
In this case, the parties engaged in lengthy discovery, and there were numerous discovery disputes over the SPDs, collective bargaining agreements, and plan documents. One of the issues involved which party had the responsibility of identifying the SPDs applicable to each class member. On February 24, 2012, Magistrate Judge O'Hara found that Plaintiffs had failed to comply with a previous order requiring Plaintiffs to identify by group the retirees to which Plaintiffs' alleged plan documents applied. Because of Plaintiffs' failure to comply with his previous order, Judge O'Hara imposed a sanction precluding Plaintiffs from taking a position in the litigation inconsistent with Defendants' document-to-class-member mapping.
Plaintiffs argue that "course of performance" evidence — consisting of alleged oral statements from company representatives to Plaintiffs, internal company documents, and written checklists and letters provided to Plaintiffs — demonstrates Defendants' intent to provide lifetime benefits. All of this "course of performance" evidence is extrinsic evidence. Only if the plan language is ambiguous does the Court need to consider this evidence.
Plaintiffs also attempt to rely upon expert testimony from Gail Stygall, Ph.D., a professor of English and Linguistics, in which she opines, in part, that due to the language of the SPDs, they are
In this case, because the Court must determine whether the contractual language is ambiguous as a matter of law, Professor Stygall's opinion is irrelevant and unnecessary to the Court's determination, and the Court will not consider her opinion. Accordingly, the Court grants Defendants' Motion to Exclude the Report and Testimony.
As noted above, Defendants group thirty-two SPDs into five different groups based on the similarity of language contained within those SPDs. The first group of SPDs contains at least one reservation of rights ("ROR") clause providing that the company may amend or terminate the plan at any time. This first group of SPDs also contains a provision that coverage will end upon death. The second group of SPDs does not contain an express ROR. Nor does it contain such provisions that coverage will end upon death. The third and fourth groups of SPDs contain no express language indicating that benefits are vested and contain a reservation of rights clause premised on business necessity. The final group contains only two SPDs, and they are only applicable to named Plaintiff Clark. The Court will address each group of SPDs in turn.
This first group of sixteen SPDs are substantially similar in that they contain at least one ROR stating that the company reserves the right to amend or terminate the plan at any time. They also contain the statement that the retirees' benefit coverage ends upon the retirees' death. These SPDs include 1 through 6, 18, and 24 through 32.
Thirteen named Plaintiffs base their claims for medical benefits on SPDs 1 through 6.
SPDs 1 through 4 are medical SPDs. They all include sections entitled "When Coverage Ends." Under the "Retirees" section, it provides:
In a section entitled "Answering Your Needs," these plans provide that "[b]y participating in the United Telecom Retiree Medical Plan, you can feel secure that your family's health and well-being will be protected after you stop working." SPDs 1 through 4 also includes ROR provisions. On the first page of each of these SPDs, there is language explaining that the document is a summary plan description of the medical plan which states:
Other language in the Plans, at various places, indicate that coverage could change in the future. For example, in a section entitled "What the Plan Covers," it states that "[j]ust as medical coverage can change in the future for active employees, so can the coverage that is available to retirees."
SPDs 1, 2, and 4 include a "Legal Information" section.
SPD 18 is also a medical SPD and similar to SPDs 1 through 4. SPD 18, however, only contains one ROR clause. It is located at the end of the Table of Contents. It provides: "Embarq intends to continue the Retiree Medical Plan. However, the Company reserves the right to change or discontinue any or all benefits under these options, or any statement in this summary plan description, at any time."
SPDs 5 and 6 are similar to SPDs 1 through 4. The main distinction between them is that SPDs 5 and 6 cover both medical and life insurance benefits, while SPDs 1 through 4 only cover medical benefits.
SPDs 5 and 6 include sections in the medical portion of the Plan entitled "When Coverage Ends." Under the Retiree section, it provides:
SPDs 5 and 6 also include several ROR provisions. On the first page of both of these SPDs, there is language explaining that the document is a summary plan description of retiree benefits which states:
Other language throughout the SPDs indicates that coverage could change in the future and that the company may change or terminate coverage.
SPD 5 has a "Legal Information" section. In the "the Plans' Future" section, it provides that the company intends to continue providing benefits, but "it reserves the right to amend any of the plans, to change the method of providing benefits, or to terminate any or all of the plans. You'll be notified of any changes." SPD 6 does not have this "Legal Information" section.
SPDs 24 through 27 and 29 through 31 are substantially identical to SPDs 5 and 6.
SPD 28 and SPD 32 are also similar to SPDs 5 and 6.
Defendants contend that the named Plaintiffs and selected class members relying on these SPDs cannot demonstrate that Defendants intended to provide vested medical and life insurance benefits because: (1) although these SPDs state that coverage ends "when you die," that language is insufficient to demonstrate vested lifetime benefits; and (2) even if the language could be construed as a promise of lifetime benefits, the same SPDs state that the company reserves the right to change or terminate benefits at any time. Plaintiffs disagree and state: (1) the "when you die" provisions in the SPDs demonstrate that they are entitled to lifetime benefits, and (2) even if the "when you die" language does not establish benefits for life, that language is in conflict with the ROR clause, rendering the SPDs ambiguous. Plaintiffs then contend that if the SPDs are ambiguous, the Court must consider extrinsic evidence to determine whether Defendants intended to provide vested benefits.
Plaintiffs nevertheless argue that the language in the SPDs stating that their benefits will end only "when [they] die" is sufficient to indicate an intent on the part of Defendants to provide lifetime benefits.
Although the Tenth Circuit found in Deboard that the plaintiffs' rights were vested under the plan, the facts in this case are distinguishable. In Deboard, the new benefit plan promising benefits until death did not include a reservation of rights clause. Nor did the new benefit plan contain any language indicating that the employer could terminate or change the plan at any time. In addition, the Tenth Circuit determined that even if they read the letter to incorporate a reservation of rights clause from the employer's other plan documents, the reservation of rights provision was ambiguous as to whether the employer had the right to terminate or make changes to the plan.
The language in Plaintiffs' SPDs is more akin to language that other circuits have found non-indicative of vested lifetime benefits.
Plaintiffs complain that the reservation of rights clause is not cross-referenced in any section, does not appear with a heading or a warning, and is not listed in the Table of Contents. Thus, Plaintiffs assert that allowing Defendants to change or terminate the plan adds language to the "When Coverage Ends" section. The Court disagrees. In all of the SPDs at issue in this section of the Court's order, the ROR clause, even if there is only one, appears either next to the Table of Contents or on the first page of the SPD. In the SPDs in which only one reservation of rights clause appears, it is in bold on the Table of Contents page. The placement of these RORs does not render them obscure, and the Court must read the SPDs as a whole.
Plaintiffs also argue that the statement in SPDs 1 through 4 that retirees who participate in the plan "can feel secure that your family's health and well-being will be protected after you stop working" is an express assurance of life-long retirement security. The Court disagrees that this statement can be read as an intent to provide unalterable lifetime benefits. The statement simply explains that retirees can participate in the plan once they are retired. It must be read in conjunction with the reservation of rights clause allowing Defendants to amend or terminate the plan at any time.
In sum, the same document that purports to promise lifetime benefits also contains an unambiguous reservation of rights clause which clearly sets forth that Defendants could amend or terminate benefits at any time. Accordingly, the Court grants summary judgment to Defendants with respect to the contractual vesting claims of the Named Plaintiffs and Selected Class Members covered by SPDs 1 through 6, 18, and 24 through 32.
The second group of three SPDs are life insurance SPDs. The language in each of the three SPDs is substantially similar. Unlike the SPDs discussed above, these life insurance SPDs do not contain an express reservation of rights provision. Nor do they contain any express statement that coverage ends upon death.
Named Plaintiff Britt contends that his life insurance benefits vested under SPD 7.
The pertinent provisions in these life insurance SPDs are as follows. A section entitled "Benefits for You" states:
A section entitled "When Your Insurance Ends" states:
Another section, "Life Insurance For You" states: "If your death occurs while you are insured under the Group Policy, [insurer
Finally, three pages at the end of these SPDs set forth additional information about ERISA. One of the provisions states: "The requirements for being covered under this plan, the provision concerning termination of coverage, a description of the plan benefits (including any limitations and exclusion which may result in reduction or loss of benefits) are shown on the preceding pages of this booklet."
SPD 9 also states: "The Group Policy is a contract between the Policyholder and Pilot Life which alone constitutes the agreement under which payments are made. It may be changed or terminated only by those parties."
Defendants argue that they are entitled to summary judgment with respect to these SPDs because the named Plaintiffs and selected class members cannot demonstrate an intent to provide vested benefits because (1) the aforementioned SPDs do not state that retirees' life insurance benefits are forever unalterable, and (2) the SPDs contain an express provision allowing for termination of the policy. Plaintiffs contend that (1) because these SPDs do not contain reservation of rights provisions, Defendants do not have the power to make changes; (2) the SPDs contain promises that indicate vested benefits; and (3) the language that the group policy can be terminated is ambiguous.
Plaintiffs contend that because these SPDs lack express ROR provisions, Defendants intended to provide vested lifetime benefits. The Tenth Circuit, however, requires that contractual vesting be stated in express language.
Plaintiffs also argue that the following language indicates an intent to provide vested, lifetime benefits:
Plaintiffs, relying upon Devlin v. Empire Blue Cross & Blue Shield
In Plaintiffs' case, there is no similar language offering lifetime benefits upon completion of performance. The language states that if an employee retires on pension on or after a certain date, "the amount of [his or her] life insurance ... will be an amount equal to the amount of your Life Insurance on the day preceding [his or her] retirement." The "will be" refers to the "amount" that the retiree may receive, rather than the term for which the retiree will receive it.
Furthermore, the SPD at issue in Devlin contained the additional statement that benefits "will remain at [the annual salary level] for the remainder of their lives."
The Court must read the SPDs as a whole, and there are several termination provisions in SPDs 7, 8, and 9. All of these SPDs contain provisions which provide that "[y]our insurance under the Group Policy will end on ... the date the Group Policy terminates." SPD 9 contains an additional, express termination provision that states, "The Group Policy is a contract between the Policyholder and Pilot Life which alone constitutes the agreement under which payments are made. It may be changed or terminated only by those parties." CT & T is designated as the Policyholder.
Plaintiffs nevertheless argue that Defendants cannot terminate or amend the plan because language in the SPDs specifically distinguishes the plan from the group policy. At the end of the group policy, it states that the plan is "the Group Life, Accidental Death and Dismemberment and Life Insurance on Dependents Plan," and the plan sponsor is CT & T. The SPD also provides that benefits under the plan are provided by the group policy. Because of this distinction between the plan and the policy and the fact that the termination provisions reference the group policy, and not the plan, Plaintiffs contend that Defendants only have the right to terminate the policy — not the plan itself. In the alternative, Plaintiffs contend that the language is ambiguous, which precludes Defendants from amending or terminating the benefits.
In Gable v. Sweetheart Cup Co., the Fourth Circuit discussed a similar argument.
In this case, the last pages of the SPDs provide that "all benefits of this plan are provided by [the group policy]." They also state that "[t]he requirements for being covered under this plan ... are shown on the preceding pages of this booklet." Indeed, Plaintiffs do not identify any other written document establishing plan benefits, and they rely on the language in the SPD in an attempt to establish their vested benefits. Thus, there does not appear to be a distinction between the policy and the plan.
None of these SPDs contain clear and express language providing for vested, lifetime benefits. In addition, all three SPDs contain provisions indicating that benefits
Named Plaintiff Britt retired in 1985. When he retired, CT & T and the Communications Workers of America ("CWA") were parties to a collective bargaining agreement effective November 30, 1984, through November 29, 1987 ("1984 CBA"). Britt contends that SPD 7 and the 1984 CBA are relevant to his claim of vested medical and life insurance benefits. Thus, the Court must consider the 1984 CBA in conjunction with SPD 7 with respect to named Plaintiff Britt.
The 1984 CBA provides that "[t]he Company will maintain a medical insurance plan and pay 100% of the plan premium during the term of the agreement." It also provides that "[o]ther insurance programs of the Company, including group life insurance ..., shall remain in force during the term of the agreement." Article 36, Section 1 of the 1984 CBA, "Duration of Agreement," provides that "[t]his agreement becomes effective on November 30, 1984 and shall remain in full force and effect until 12:00 midnight on November 29, 1987." Section 2 states:
Defendants do not specifically address how this CBA relates to named Plaintiff Britt's claim of vested benefits. Plaintiffs also do not address how this CBA specifically relates to Britt's claim, but they do address some of the language contained in the CBA. Plaintiffs contend that because the CBA expressly states that it will continue past the expiration date of November 29, 1987, unless the union and the employer agree to a revision, the CBA providing for the retiree benefits does not expire. Because Defendants do not address whether the CBA remains in effect, they cannot demonstrate the absence of a genuine issue of material fact. Accordingly, the Court denies Defendants' motion for summary judgment as to named Plaintiff Britt.
These four SPDs are medical SPDs. The language in these four SPDs is substantially similar. Language in these SPDs indicate that benefits will continue after retirement. There is also an express reservation of rights clause allowing Defendants to terminate or amend the plan for reasons of business necessity and several termination provisions throughout the policy.
Named Plaintiff McLaurin contends that his medical benefits vested under the terms of SPD 10.
SPDs 10 through 12 and 19 include the following provisions. The section entitled "When You Retire" provides that "[a]ll benefits currently offered to active employees will continue after retirement by CT & T." The "When Your Insurance Begins" section includes a sub-heading of "When You Retire." Under this sub-section, it provides:
The "When Insurance Ends" section provides:
A "Cessation of Benefits (Group Health Insurance)" section provides:
Finally, there are several pages at the end of these SPDs setting forth additional information about ERISA rights. One of the provisions states: "The requirements for being covered by this plan, the provision concerning termination of coverage, a description of the plan benefits (including any limitations and exclusion which may result in reduction or loss of benefits) are shown on the preceding pages of this booklet." Under "Future Plan Benefits," it provides that "[t]he Company expects to continue the Plan for the foreseeable future. However, the Company reserves the right to amend, discontinue or terminate the Plan, for reasons of business necessity or financial hardship."
SPD 10 also states, "The Group Policy is a contract between the Policyholder and Pilot Life. They are the only parties to the contract. The contract alone is the agreement by which payments are made. It may be changed or terminated only by one of these parties."
Defendants argue that they are entitled to summary judgment with respect to these SPDs because the named Plaintiffs and selected class members cannot demonstrate an intent to provide vested
Plaintiffs assert that the following provisions in the SPDs are unqualified promises of vested, lifetime benefits for retirees: (1) "[a]ll benefits currently offered to active employees will continue after retirement," and (2) "you will be insured for the same benefits currently offered to regular employees." The Court will first address the "will continue" language.
The Tenth Circuit, and several other circuits, have addressed similar language and have determined that the language is not indicative of vested benefits. In Deboard, the Tenth Circuit considered language in a plan providing that employees "would be allowed to continue participation in the Group Dental Plan at company expense" and that employees "would also be covered for $10,000 life insurance on [themselves] and $5,000 on [their spouse(s)] with Security Connecticut, with the premiums for these coverages also paid by the Company.
In Sengpiel v. B.F. Goodrich Co., the Sixth Circuit considered a SPD which stated that "if you retire and are eligible for a pension you shall continue to have the same health coverage."
In sum, the language Plaintiffs identify as unqualified promises of lifetime benefits do no such thing. The language does not establish an intent to provide lifetime, unalterable benefits. Nor is the language ambiguous as to whether the company intended to provide vested benefits.
Furthermore, SPDs 10 through 12 and 19 contain an express ROR provision. It provides that the company expects to continue the plan for the foreseeable future, but it reserves the right to amend, discontinue, or terminate the plan, for reasons of business necessity or financial hardship. Both parties rely upon the Tenth Circuit's opinion in Chiles v. Ceridian Corporation when interpreting the meaning of this ROR clause. Defendants contend that the ROR clause is similar to the ROR clause in Chiles, and it gives Defendant almost unlimited authority to terminate or amend the plan. Plaintiffs contend that the ROR language contains a more rigorous standard for amending or terminating the plan than the one the Tenth Circuit considered in Chiles.
In Chiles, the ROR clause provided that the company intended to continue the plan indefinitely, but it reserved the right to change or discontinue it if it became necessary.
In this case, the ROR clause does appear to impose a higher standard than the "if necessary" standard in Chiles because it is premised on "business necessity" or "financial hardship." But the "business necessity" standard is only slightly more stringent because Defendants could amend the plan for business necessity.
The fourth group of SPDs relate to life insurance benefits. Language in these seven SPDs is substantially similar. Named Plaintiffs Betty and Kenneth Carpenter contend that their life insurance benefits vested under SPD 13.
All of these SPDs contain charts showing the amount of contributory life insurance depending on the employee's annual compensation. In the "Notes" section of all of these SPDs, except SPD 15, it provides:
SPD 15 includes the following provision:
All of these SPDs include the following language:
On the last pages of these SPDs, entitled the Certificate of Insurance, additional information about ERISA rights are set forth. The last provision on "Future Plan Benefits" provides that "[t]he Company expect to continue the plan for the foreseeable future. However, the company reserves the right to amend, discontinue or terminate the plan, for reasons of business necessity or financial hardship."
Defendants and Plaintiffs assert the same argument that they asserted with respect to SPDs 10 through 12. That is, Defendants argue that they are entitled to summary judgment because the named Plaintiffs and selected class members cannot demonstrate an intent to provide vested benefits because: (1) these SPDs do not state that retirees' life insurance benefits are forever unalterable, and (2) these SPDs contain express provisions allowing for termination of the policy. Plaintiffs again contend that unqualified promissory language indicates an intent to provide vested benefits, and the reservation of rights language only allows Defendants to terminate or amend the plan for business necessity or financial hardship which Defendants fail to demonstrate.
Plaintiffs identify the following language in SPDs 13, 14, and 20 through 23, as unqualified, promissory language of lifetime benefits: "If you have at least five years of service with United Telephone System on the date you retire, your Basic Contributory Life Benefits will be reduced by 50 percent." With respect to SPD 15, Plaintiff Somdahl contends that the following language is indicative of lifetime benefits:
Plaintiffs contend that the "will be reduced" language demonstrates Defendants' intent to provide vested benefits. This language does not promise lifetime benefits nor state the duration of life insurance benefits. Instead, the language merely sets forth the amount of life insurance benefits and how it will be reduced. Furthermore, there is no other language in these SPDs indicating the duration of these benefits.
In addition, these SPDs contain (1) a ROR provision identical to the ROR provision contained in SPDs 10 through 12; and (2) a section entitled "When Your Insurance Ends" similar to the "When Your Insurance Ends" section in SPDs 10 through 12. With respect to the ROR provision and termination provisions in SPDs 13 through 15 and 20 through 23, the Court adopts the reasoning set forth above in Section I(C)(4)(b)(2)(b) of this Order.
When considering these SPDs in their entirety, there is no express language indicating an intent to provide vested, lifetime benefits nor language indicating an ambiguity as to whether Defendants intended to provide lifetime benefits. Thus, there are no questions of fact, and the Court grants Defendants' motion for summary judgment with respect to those named Plaintiffs and selected class members covered by SPDs 13 through 15 and SPDs 20 through 23.
The final two SPDs, 16 and 17, are only applicable to named Plaintiff Clark.
SPD 16 relates to medical benefits and provides that "[i]nsurance coverage for you and your dependents can be continued after retirement." SPD 17 addresses life insurance benefits. It provides under the "Eligibility" section that "[r]egular life insurance, but not Accidental Death and Dismemberment, is continued for employees after retirement." It also provides under the section of "Limitation of Benefits:"
Both SPD 16 and 17 contain the following provisions:
When Clark retired in 1976, CT & T and the CWA were parties to a CBA effective June 29, 1974. Clark testified that as an hourly employee, he was covered by this CBA. This 1974 CBA provides:
Article 36, Section 1 of the 1974 CBA, "Duration of Agreement," provides that "[t]his agreement becomes effective at 12:00 noon on June 29, 1974 and shall remain in full force and effect until 12:00 noon on June 29, 1977...." Section 3 provides:
Defendants provide no evidence that this CBA expired and do not address whether the CBA remains in effect. Thus, Defendants cannot demonstrate the absence of a genuine issue of material fact. Accordingly, the Court denies Defendants' Motion for Summary Judgment as to named Plaintiff Clark.
In sum, the Court grants in part Defendants' Motion for Summary Judgment on Named Plaintiffs' Contractual Vesting Claims. The Court grants it with respect to all named Plaintiffs except Plaintiffs Britt and Clark. With respect to these two named Plaintiffs, the Court denies the motion. The Court grants Defendants' Motion for Summary Judgment on Selected Class Members Contractual Vesting Claims in full.
Defendants also bring a Motion to Decertify Class Action. In this motion, they argue that individual questions predominate over common questions of fact. Since Defendants filed the motion, multiple events have occurred. First, as noted above, Judge O'Hara entered a sanction order precluding class members from taking a position in the litigation inconsistent with Defendants' document-to-class-member mapping. Thus, the remaining class members cannot identify additional CBAs or documents relevant to their claim of contractual vesting and are bound to the documents Defendants identified. Accordingly, there may not be the voluminous amount of documents for the Court to consider.
Next, only two named Plaintiffs remain with respect to the contractual vesting claims because the Court granted in part Defendants' Motion for Summary Judgment.
The Court notes that Defendants only brought summary judgment on some of the SPDs and the class members covered by those SPDs. The Court is unclear as to how many SPDs and class members remain in the case. Because of these factors, the Court cannot determine whether other class members are similarly situated or whether the remaining SPDs contain similar language applicable to numerous class members. Accordingly, the Court
Plaintiffs' second claim is a breach of fiduciary duty claim under 29 U.S.C. § 1132(a)(3). This statute provides that "a civil action may be brought by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violation or (ii) to enforce any provisions of this subchapter or the terms of the plan." Plaintiffs assert that Defendants breached their fiduciary duty by misrepresenting the terms of the plans by affirmatively telling Plaintiffs that their medical and life insurance benefits were lifetime benefits. Plaintiffs also contend that Defendants failed to inform them that their benefits could change.
The seventeen named Plaintiffs bring this claim.
Benefits Supervisor Gayle Phillips worked for the company for thirty years in the benefits arena. Phillips counseled thousands of retirees and managers, face to face and in group meetings, and did not tell them that the company was reserving its right to terminate the benefits. Phillips had her staff create checklists to be distributed to retirement-eligible employees, and she expected employees to rely upon these checklists.
An example of a portion of a checklist is as follows. It states:
In addition, the checklist has language regarding medical insurance. One version of the checklist states: "If the retiree is participating
In late 2001, E.J. Holland, Jr., CT & T's Vice-President in charge of Compensation, Benefits, and Labor Relations, sent a letter to several of the named Plaintiffs describing a new benefit program, Sprint Healthcare Annual Retiree Election ("SHARE"), to be implemented in 2002. This letter briefly summarized how benefits would work if an employee retired in 2001 or if an employee retired in 2002 or later. One individual testified that human resources representatives told employees concerned about the new SHARE program that they had to retire by the end of 2001 to retain their grandfathered life insurance and FlexCare medical insurance for the remainder of their lives. Several employees were forced to waive vacation time to keep this lifetime coverage.
In November 2005, Sprint announced that the prescription drug benefits for participants and beneficiaries who were eligible for Medicare Part D coverage would be modified such that each participant and beneficiary would receive $41.67 a month, or $500 a year, effective January 1, 2006.
In July 2007, prior to Embarq's announcement of the medical care and life insurance benefit changes, the human resources staff created a question and answer memorandum to assist representatives in answering questions about the changes. One of the questions stated: "I have a letter that states I will receive medical and life insurance benefits for life." The answer to be provided: "Please send us a copy of that letter to the following address: ... We will research our records and you will be provided with a written response within 60 days."
On July 26, 2007, Embarq announced that (1) company-sponsored medical coverage and the prescription drug subsidy provided to Medicare-eligible retirees and Medicare-eligible dependents of retirees would be eliminated effective January 1, 2008; (2) basic life insurance coverage would be eliminated for retirees who were participants in the CT & T VEBA effective September 1, 2007; and (3) basic life insurance coverage would be capped at $10,000 for all other retirees effective January 1, 2008.
Plaintiffs contend that Defendants breached their fiduciary duty to them by making misrepresentations in SPDs, other written documents, and in oral statements that they were entitled to lifetime medical and life insurance benefits when, in fact, they were not. Defendants argue that the Court should grant summary judgment because (1) the SPDs contain no misrepresentations or omissions, (2) the other written documents do not contain actionable misrepresentations or omissions, (3) the oral statements fail as a matter of law and cannot override the written language in the SPDs, (4) some of the oral statements were not made on behalf of the fiduciary, (5) Plaintiffs' reliance on the alleged misrepresentations or omissions was not reasonable,
A fiduciary has a duty to act "solely in the interest of the participants and beneficiaries."
The Court will first address Defendants' statute of repose argument because it is dispositive of most of Plaintiffs' breach of fiduciary duty claims.
"As a statute of repose, § 413 serves as an absolute barrier to an untimely suit."
All Plaintiffs contend that Defendants breached their fiduciary duty by making misrepresentations that they were
Plaintiffs disagree and first argue that their claims are tolled by the statute's "fraud or concealment" provision because their breach of fiduciary duty claim is based on misrepresentations. Thus, Plaintiffs contend that the statute does not begin to run until Plaintiffs discovers the wrong.
Although the Tenth Circuit has not addressed this specific issue, other circuits have done so. For the fraud or concealment provision to be applicable, the Third Circuit stated
In a later case, the Third Circuit noted that
In this case, the fraud or concealment provision is inapplicable because there is no evidence that Defendants actively concealed their alleged breach of fiduciary duty. Indeed, Plaintiffs do not assert this proposition. Instead, they contend that Defendants' underlying misrepresentations were the "fraudulent" acts. Because the Court concludes that there is no evidence of affirmative steps of fraud or concealment, the six year limitation period for the discovery of fraud or concealment is inapplicable.
Furthermore, the termination of the plan is a non-fiduciary act.
In addition, even if Plaintiffs are correct that harm is the final element of their breach of fiduciary duty claim, some circuits have determined that it is unnecessary for actual harm to occur before the statute of limitations can begin to run. In Ziegler v. Connecticut General Life Insurance Co., the Court of Appeals for the Ninth Circuit stated that when considering ERISA's statute of limitations, it was necessary to isolate the underlying violation
In this case, the Court finds that the relevant inquiry under § 413 as to the "last action which constituted a part of the breach or violation" is the date the alleged misrepresentations were made. As noted by the Third Circuit, "ERISA's general six-year statute of limitations is triggered by a fiduciary's action, not a beneficiary's discovery of the breach."
As noted above, Defendants contend that the relevant date for the "date of the last action which constituted a breach" is the date of detrimental reliance — the date that Plaintiffs decided to retire. And the Court is cognizant that the Third Circuit, in Unisys III, found the retirement date to be the relevant date because that was the last date the plaintiffs detrimentally relied upon the defendant's alleged misrepresentations.
These Plaintiffs, however, argue that their action remains timely because although they retired prior to December 28, 2001, they each identify an action (or forbearance to act) that he or she took during the six years preceding suit.
Accordingly, the Court grants in part Defendants' Motion for Summary Judgment on Plaintiffs' Breach of Fiduciary Duty Claim with respect to fifteen of the seventeen named Plaintiffs, and denies it with respect to Plaintiff Barnes and Dillon.
Plaintiffs originally set forth disparate treatment and disparate impact claims under the ADEA; however, Plaintiffs only proceed on their disparate impact theory. Plaintiffs claim that Defendants discriminated against Plaintiffs "on the basis of age when it reduced or terminated retiree life insurance benefits ... because that action had a discriminatory adverse impact based on age."
The ADEA claims are brought by seventeen named Plaintiffs, as well as by approximately 750 retirees referred to in Plaintiffs' Third Amended Complaint as the "Individual Age Discrimination Plaintiffs." More than 8,000 individuals have opted in and agreed to have their ADEA claims tried in this collective action. The ADEA class is defined as: "All persons, including all plan participants and all eligible spouse and dependent plan beneficiaries, whose rights to retiree life insurance benefits have been adversely affected by the terminations, reductions and changes in retiree life insurance benefits which were announced by Defendant Embarq Corporation on July 26, 2007."
The defendants with respect to Plaintiffs' ADEA claim are Embarq Corporation, CT & T, and Embarq Mid-Atlantic Management Service Company (collectively, "Embarq"). The sole defendant with respect to Plaintiffs' state age discrimination claims is Embarq Corporation.
Employees who retired from Defendants prior to 2004 received company-subsidized basic life insurance benefits. The amount of those benefits varied depending upon the time, and the company from which, an employee retired. The benefits ranged from a maximum of two times a retiree's last annual pay rate to less than $5,000, with the most frequent amounts being between $10,000 and $25,000.
CT & T non-bargaining unit employees and bargaining unit employees represented by certain local unions participated in the CT & T VEBA plan. This plan provided for a retirement death benefit equal to one times the retiree's last annual pay. Retiree participants in the VEBA plan also received basic life insurance coverage in addition to the VEBA retirement death benefit.
Embarq spun off from Sprint effective May 17, 2006. Randall Parker, Director of Benefits for Embarq,
At a meeting on June 27, 2007, financial projections provided to Embarq's Employee Benefits Committee ("EBC") showed that: (a) eliminating CT & T VEBA retirees' basic life insurance benefits would result in annual cash savings of $1.6 million, annual expense reductions of $4 million, and a reduction in accrued balance sheet liabilities of $31 million; (b) capping non-VEBA retiree life insurance benefits at $10,000 would result in annual cash savings of $2.5 million, annual expense reductions of $5.4 million, and a reduction in accrued balance sheet liabilities of $41.4 million; and (c) taking both of these steps would result in annual cash savings of $4.1 million, annual expense reductions of $9.4 million, and a reduction in accrued balance sheet liabilities of $72.4 million. Embarq changed retiree life insurance benefits in 2007 in part to achieve these projected cost savings.
At this meeting on June 27, EBC voted to eliminate company-sponsored basic life insurance for retirees who were participants in the CT & T VEBA plan effective September 1, 2007. Although company-sponsored basic life insurance benefits for VEBA retirees were eliminated, those retirees still receive a company-provided death benefit, an amount that equals the retiree's final annual salary, or one year of wages. EBC also voted to reduce the maximum amount of basic life insurance coverage to $10,000 for non-VEBA participating retirees effective January 1, 2008. Embarq made the announcement on July 26, 2007.
The market for purchasing life insurance is inherently more costly for older persons than younger persons because life expectancy is a function of age. None of the approximate 8,000 ADEA Plaintiffs have purchased insurance to replace the life insurance that Embarq reduced or eliminated.
Plaintiffs allege that Defendants discriminated against them when they reduced or eliminated retiree life insurance benefits because that action disparately impacted older retirees more harshly than younger retirees. Plaintiffs contend that the amount that they will have to pay in premiums to replace the reduced or terminated life insurance benefits are significantly greater than it is for those who are ten years younger.
Defendants argue that they are entitled to summary judgment on Plaintiffs' ADEA and state law age discrimination claims for four reasons: (1) Plaintiffs' disparate impact claim is not cognizable; (2) even if Plaintiffs' claim is cognizable, it fails because Plaintiffs cannot establish a prima facie case of disparate impact; (3) even if Plaintiffs could establish that Defendants' action disparately impacted class members, Defendants took the action based on "reasonable factors other than age"; and (4) the ADEA's equal cost/equal benefit safe harbor applies to Defendants' decision. Although Defendants present numerous arguments as to why they are entitled to summary judgment, the Court will only address those arguments that the Court finds most meritorious.
Disparate impact claims are cognizable under the ADEA.
Plaintiffs fail to establish a prima facie case because they do not present any relevant statistical evidence. "Statistical evidence is an acceptable, and common, means of proving disparate impact. The statistics must, however, relate to the proper population. For example, when the claim is disparate impact in hiring, the statistics should be based on data with respect to persons qualified for the job."
In this case, Plaintiffs attempt to demonstrate a disparate impact by comparing the impact on persons within the protected group (i.e., age 40 and above) to the impact on hypothetical persons who are also within the protected group (i.e., age 40 and above). Specifically, Plaintiffs compare their actual selves with younger versions of themselves.
Furthermore, as noted above, the disparate impact must fall more harshly on the protected group.
Even if Plaintiffs could establish a prima facie case of disparate impact age discrimination, the evidence demonstrates that Defendants' decision to reduce retiree benefits was based on a reasonable factor other than age ("the RFOA defense"). 29 U.S.C. § 623(f)(1) provides that "[i]t shall not be unlawful for an employer... to take any action otherwise prohibited under subsection[](a) ... where the differentiation is based on reasonable factors other than age...." The RFOA defense is an affirmative one, and Defendants bear the burden of both production and persuasion in showing that the action taken was based on reasonable factors.
Defendants state that their reason to reduce or eliminate retiree's life insurance benefits was to (1) reduce costs, and (2) align its retiree benefits more closely with those benefits provided by other companies. Plaintiffs assert three arguments against Defendants' RFOA defense, all of which fail. First, Plaintiffs argue that Defendants waived this affirmative defense because they failed to plead it with particularity and failed to include it in the Pretrial Order. Plaintiffs cite to no authority that Defendants must plead the RFOA defense with particularity.
Next, Plaintiffs argue that Defendants' decision to reduce or eliminate life insurance benefits is not based on a reasonable factor other than age because Defendants do not produce evidence that its decision was based on "significant cost considerations." Plaintiffs rely on 29 C.F.R. § 1625.10(a)(1) for support, which provides,
Third, Plaintiffs contend that Defendants fail to meet the standards of 29 C.F.R. § 1625.7. This regulation includes specific considerations that are relevant when determining whether an employer's practice is based on a reasonable factor other than age. Plaintiffs argue that Defendants did not consider any of the factors set forth. Plaintiffs' reliance on this regulation is also in error. Although this regulation relates to the RFOA defense, it only became effective on April 30, 2012. Defendants made the decision to reduce life insurance benefits in June 2007 — approximately five years prior to the enactment of the regulation. "[A]dministrative rules will not be construed to have retroactive effect unless their language requires this result."
Here, Defendants put forth evidence that they needed to reduce costs to remain competitive and maintain profitability. They sought to reduce costs in ways that would not affect their customer service. Defendants projected that the reduction of retiree life insurance costs would result in annual cash savings of approximately $4 million, annual expense reductions of $9.4 million, and a reduction in accrued balance sheet liabilities of $72.4 million. Defendants also put forth evidence that they wanted to align themselves more closely to other companies' retiree life insurance benefit options. Plaintiffs fail to controvert this evidence. The Court finds that Defendants' decision to reduce costs and align their benefits more closely to other companies' benefits is a reasonable factor other than age. Accordingly, the Court finds that Defendants are entitled to summary judgment on the ADEA claim.
The Court's resolution of Defendants' summary judgment motion disposes of Plaintiffs' age discrimination claims. Thus, it renders Defendants' Motion to Decertify moot. It also renders Defendants' Motions to Exclude Expert Testimony on the ADEA claims as moot. Finally, because Plaintiffs no longer have their age discrimination claims, the Court denies Plaintiffs' Motion for Advisory Jury as moot.
The parties thoroughly briefed the issues with respect to their positions on Plaintiffs' ERISA and ADEA claims. Accordingly, the Court finds it unnecessary to hear oral argument and denies Plaintiffs' Request for Oral Argument.
Plaintiffs, on behalf of themselves, a certified class, and a certified collective class, brought suit alleging that Defendants' modification and elimination of retirees' medical, prescription drug, and life insurance benefits, violated the Employee Retirement Income Security Act of 1974
Now, there are ten additional pending motions, including four motions for reconsideration. The Court will address nine of these motions below.
The Court will only briefly set forth the pertinent procedural background here. Plaintiffs brought suit in 2007 as a putative class action and brought seven claims against several Defendants. The Court subsequently certified a class, and a sub-class, with respect to several of Plaintiffs' ERISA claims, and it certified a collective class for Plaintiffs' ADEA claim. In Plaintiffs' first claim, pursuant to ERISA section 502(a)(1)(B),
In Plaintiffs' second claim, pursuant to ERISA section 502(a)(3),
In Plaintiffs fourth claim, they contend that Defendants violated the ADEA when Defendants reduced or eliminated their life, medical, and prescription drug benefits.
In sum, as of February 14, 2013, (1) all of Plaintiffs' federal and state age discrimination claims were dismissed or had been previously dismissed; (2) fifteen of the seventeen named Plaintiffs' and approximately 11,000 class members' ERISA contractual vesting claims were dismissed, leaving only two of the seventeen named Plaintiffs' and approximately 4,500 class members' contractual vesting claims; and (3) fifteen of the seventeen named Plaintiffs' breach of fiduciary duty claims were dismissed leaving only two named Plaintiffs' breach of fiduciary duty claims.
Over the past several months, the parties have filed additional motions.
There are four pending motions for reconsideration — two by Plaintiffs and two by Defendants. Plaintiffs bring their motions pursuant to D. Kan. Rule 7.3(b), or in the alternative Fed.R.Civ.P. 59(e) and 60(a). Defendants bring their motions pursuant to Fed.R.Civ.P. 59(e).
The Court will first address Defendants' motions for reconsideration. As noted above, Defendants bring their motion pursuant to Rule 59(e). Not surprisingly, the
In this case, the Court's February 14, 2013 Order was not dispositive.
With respect to Plaintiffs' motions, under D. Kan. Rule 7.3(b), a party may seek reconsideration of a non-dispositive order based on (1) an intervening change in controlling law, (2) the availability of new evidence, or (3) the need to correct clear error or prevent manifest injustice.
Plaintiffs move for an entry of partial final judgment
Pursuant to Rule 54(b), when multiple claims or parties are involved in an action, "the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay."
To be final, an order "must be final in the sense that it is an ultimate disposition of an individual claim entered in the course of a multiple claims action."
With the above principles in mind, the Court finds that both the December 2, 2008 and February 14, 2013 Orders are final orders with respect to the age discrimination claims for purposes of Rule 54(b). The December 2, 2008 Order eliminated a portion of Plaintiffs' age discrimination claims. The February 14, 2013 Order eliminated the remaining portion of Plaintiffs' age discrimination claims. Thus, the federal and state law age discrimination claims have been dismissed for all named Plaintiffs and class members in the collective action as to all types of benefits in dispute. No named Plaintiff or class member can pursue these claims any longer. The age discrimination claims are separate and distinct from the other remaining claims and turn on different legal issues. Accordingly, the Court concludes that the December 2, 2008 and February 14, 2013 Orders satisfy the finality requirement with respect to the age discrimination claims.
With respect to Plaintiffs' ERISA contractual vesting claims, the Court also
In addition, the Court ruled in the February 14, 2013 Order that Plaintiffs' designated expert, Gail Stygall, could not provide testimony as to whether the SPDs at issue were ambiguous because the Court concluded that an expert was unnecessary to make this determination. Thus, the Court excluded her report and testimony and did not rely upon it. The Court's ruling on this issue presents a legal question as to whether an expert is necessary when interpreting SPDs, and the Court's ruling precludes Ms. Stygall's expert testimony as to the ambiguity of SPDs in this case. Accordingly, the Court concludes that its ruling excluding Gail Stygall's expert testimony is also final for Rule 54(b) purposes.
With respect to Plaintiffs' breach of fiduciary duty claims, the Court ruled in the February 14, 2013 Order that fifteen of the seventeen named Plaintiffs' claims were barred by the statute of limitations. These fifteen Plaintiffs can no longer pursue their claims, and the Court's ruling on the statute of limitations issue is a separate and distinct ruling from the remaining two Plaintiffs' breach of fiduciary duty claim. The Court concludes that its ruling with respect to these fifteen Plaintiffs' breach of fiduciary duty claim satisfies the finality requirement of Rule 54(b).
In deciding whether the second requirement for Rule 54(b) certification is satisfied, the Court "must take into account judicial administrative interests as well as the equities involved."
In sum, the Court concludes that the December 2, 2008 Order on Plaintiffs' age discrimination claims and the February 14, 2013 Order on Plaintiffs' age discrimination claims, ERISA contractual vesting claims (and related ruling precluding Plaintiffs' expert testimony), and Plaintiffs' breach of fiduciary duty claim satisfies both of the requirements for Rule 54(b) certification. The Court accordingly grants Plaintiffs' Motion for Rule 54(b) Certification (Doc. 415).
Defendants first request that the Count amend the current class definition to reflect that the Court granted summary judgment in Defendants' favor. The Court finds Defendants' proposal unnecessary because the Court's February 14, 2013 Order makes clear that the Court granted summary judgment against certain Plaintiffs and class members.
Defendants then request that the Court decertify the class, as it is redefined. Defendants refer to the redefined class as the "Remaining Classes."
This case has been proceeding for almost six years, and the Court recently granted summary judgment against approximately 11,000 class members. The Court was able to do so because numerous individuals' claims fell under the same or similar language in the SPDs. It would appear that the remaining class members' claims could be determined in a similar manner. However, as previously noted in the Court's February 14, 2013 Order, it was unclear to the Court how many class members and SPDs remained in the case. Accordingly, the Court denied Defendants' request for decertification based on the changing factual circumstances.
The parties still have not narrowed the issues for the Court. Defendants make the sweeping assertion that class adjudication is impossible due to numerous individualized issues. They assert that there are approximately 78 remaining SPDs and 4,500 class members.
Defendants filed a Motion to Extend Mediation Deadline. This motion is largely moot because Defendants seek an extension of six weeks from the date this Court rules upon the parties' pending motions for reconsideration, Plaintiffs' motion for partial final judgment, and Defendants' motion to decertify. The Court makes its ruling on those motions in this Order. Thus, because the Court did not rule upon the extension request until it considered the above motions, the mediation deadline has already effectively been extended. Accordingly, the Court grants Defendants' Motion to Extend Mediation Deadline and sets the mediation deadline for August 28, 2013.
The Court has the "inherent power to impose a variety of sanctions to regulate its docket, promote judicial efficiency and deter frivolous filings."
As of the date of this Order, the parties are not allowed to file briefs in excess of 30 pages (including factual contentions), absent leave of Court. The Court will only grant an extension to this 30-page limit for good cause, which will not be freely given. Furthermore, a motion for reconsideration of this Order is not encouraged. Should such a motion be filed, it shall be limited to ten pages. The response to that motion also should not exceed ten pages. No reply will be permitted.
Named Plaintiff Daniel contends that his medical benefits vested under SPD 2. An additional 613 class members retired while SPD 2 was in effect.
Named Plaintiff Somdahl contends that SPDs 3 and 4 were in effect when he retired, and his medical benefits vested under the terms of these SPDs. An additional 1,030 class members retired while SPD 4 was in effect.
Named Plaintiffs Hollingsworth, Bullock, Games, and Dillon contend that their medical benefits vested under SPD 5. Plaintiff Dillon relies on SPD 5 for his claim of vested life insurance benefits as well. An additional 984 class members retired while SPD 5 was in effect.
Named Plaintiffs Hollingsworth, Bullock, and Games contend that their life insurance benefits vested under the terms of both SPD 5 and SPD 9.
Named Plaintiff Shipley contends that his medical and life benefits vested under the terms of SPD 6.
The Tenth Circuit's opinion in Aguilar is distinguishable and not applicable to the facts of this case. First, the collective bargaining agreement was based on National Bituminous Coal Wage Agreements, the subject of numerous court cases with respect to whether the agreements guaranteed lifetime health benefits to retired coal miners. Id. at 875 and n. 4. Furthermore, there is only one reference in the SPD that benefits may continue until death, in contrast to the numerous references of lifetime benefits in the collective bargaining agreement in Aguilar. Finally, the collective bargaining agreement in Aguilar did not contain a reservation of rights clause, while the SPDs here include reservation of rights provisions allowing the company to amend or terminate benefits at any time.
Although Defendants contend that the statute of repose argument is applicable to named Plaintiff Dillon, the Court cannot so conclude. It is unclear as to when Dillon retired as both parties assert different dates. Defendants assert both that Dillon retired in December 2002 and that he retired prior to December 28, 2001. Plaintiffs assert that Dillon was told that he would receive lifetime benefits if he retired prior to 2002 but that he effectuated his retirement in 2003. Thus, there is a question of fact as to Plaintiff Dillon's retirement date and whether the alleged misrepresentations he received in 2002 and 2003 were prior to or after his retirement date.
The Court also notes that Plaintiffs obtained, in this Order, a Rule 54(b) certification with respect to the Court's previous ruling on the meaning of the language of the SPDs. The Court, therefore, questions the wisdom of applying the previous ruling to the remaining SPDs while this ruling is on appellate review. It also appears to be a waste of the parties' and the Court's time and resources.
