JOHN T. COPENHAVER, JR., Senior District Judge.
Pending is the plaintiffs' supplemental motion for class certification, filed August 17, 2018.
On April 24, 2017, plaintiffs Benny Fitzwater ("Fitzwater"), Clarence Bright ("Bright"), and Terry Prater ("Prater"), on behalf of themselves and others similarly situated, filed their amended complaint against CONSOL Energy, Inc., Consolidation Coal Co., Fola Coal Co., LLC, CONSOL of Kentucky, Inc., and Kurt Salvatori (CONSOL Energy, Inc.'s Vice President of Human Resources from 2011-2016 and fiduciary of the plaintiffs' employee welfare benefit plans) in this court. First Am. Compl., ECF No. 36 ("ECF No. 36"). This case was consolidated on December 22, 2017 with
Plaintiffs Casey, Gilbert, Jack, and Long filed an amended complaint on March 1, 2018.
The named plaintiffs are retired miners who worked at CONSOL mine sites consisting of the CONSOL of Kentucky mines, the Buchanan Mine located in Virginia and the Enlow Fork Mine located in Pennsylvania, or at the Fola mine sites located in West Virginia. Pls.' Mem. Supp. Suppl. Mot. Class Cert. 4-5, ECF No. 156 ("ECF No. 156"); ECF No. 103 ¶¶ 23, 58; ECF No. 36 ¶¶ 30-31. They seek to represent some 4,000 miners who worked at numerous CONSOL mine sites in four different states over the course of approximately forty years. ECF No. 156 at 1; Pls.' Reply Suppl. Mot. Class Cert. 1, ECF No. 162 ("ECF No. 162"). The plaintiffs allege wrongful and discriminatory termination of retiree health benefits pursuant to the Employee Retirement Income Security Act of 1975 ("ERISA"), 29 U.S.C. § 1001,
In the early 1980s, CONSOL began holding orientation sessions for new, non-union employees at each of its mine sites, during which CONSOL representatives allegedly made oral and written promises of lifetime medical benefit coverage to miners and their beneficiaries as part of their "major initiative to begin opening non-union coal mines." ECF No. 156 at 4. Therein, representations were allegedly "made in written form on slide shows — which Defendants projected on the wall for the putative class members to read — or in hand-outs distributed to class members by Consol."
The plaintiffs refer to these benefits as the "Lifetime Plan" for which there was no uniform formal statement and no Summary Plan Document ("SPD"). Formal plans with SPDs did exist, consisting of varying degrees of coverage for medical, prescription drug, short- and long-term disability, dental, vision, and life insurance benefits, in addition to pension payments under a separate retirement plan.
For instance, the 1992 SPDs benefits binder given to production and maintenance employees at "Enlow Fork Mining Company," "Consol of Pennsylvania Coal Company," and "Consolidation Coal Company of Kentucky" summarized the (a) life insurance, (b) medical, (c) salary continuance/disability, (d) dental, and (e) retirement benefit plans, and provided a separate SPD for each of them. Second Lackovic Decl., Ex. K, ECF No. 160-23. The SPDs the defendants provided up until the mid-2000s covered both active and retired employees within the same plans.
In 2006, CONSOL began providing two separate sets of SPDs, one for retirees and one for active employees. Second Lackovic Decl. ¶¶ 7-8, ECF No. 160-19. Retirees and active employees also both received a separate SPD for each type of benefit they received: medical, prescription drug, dental, vision, disability, and life insurance, though the SPDs for retired and active employees were all contained in a common welfare plan designated Plan Number 581.
In January 2011, CONSOL issued a separate benefit plan for retired employees called the CONSOL Energy Inc. Retiree Health and Welfare Plan ("Retiree Benefits Plan").
In or around 2010, the defendants allegedly "became aware of a union organizing drive," and in order to "halt" organizational efforts, the defendants "repeatedly represented to their employees," including Bright, Fitzwater, and Fola miner Harold Scott, that the "lifetime benefits plan . . . was altogether more valuable than benefits offered by the UMWA." ECF No. 36 ¶¶ 36-37. During the union organizing drive, the defendants allegedly "repeated their previous statements regarding the Lifetime Plan, specifically providing written statements to the plaintiffs that: `This is a better deal than the UMWA negotiated in the national contract. AND REMEMBER, IT DIDN'T COST YOU A PENNY IN DUES OR ASSESSMENTS.'"
Despite these assurances, the plaintiffs soon learned that they were not in fact assured lifetime benefits under a single, unified plan. Indeed, dating back to 1992, the SPDs for the various benefit plans each contained a reservation of rights clause that stated that CONSOL reserves the right to amend or terminate the plans at any time for active employees and current or future retirees.
A year later, CONSOL informed retired employees by letter that their retiree benefits under the Retiree Benefits Plan would terminate on December 31, 2015. ECF No. 155-16. For retirees, such as named plaintiff Prater, who had previously elected to retire after the Fall 2014 announcement, CONSOL provided a pro-rated portion of the previously rejected transition payment to reflect the receipt of an additional year of benefits under the Retiree Benefits Plan. First Lackovic Decl. ¶ 15, ECF No. 67-5; Prater Dep. 125:2-127:5, ECF No. 67-7; Samons Dep. 65:2-6, ECF No. 67-9.
The plaintiffs now contend that the defendants violated ERISA by representing, orally and in writing, the existence of a single, unified retiree welfare benefits plan, which they coin the "Lifetime Plan," consisting of lifetime medical, prescription drug, dental, vision, and life insurance coverage. ECF No. 156 at 1-3. They claim that the oral representations along with the orientation and training materials created a Lifetime Plan enforceable under ERISA conditioned on the plaintiffs retiring at age fifty-five and attaining ten years of credited service. ECF No. 103 ¶ 2; ECF No. 36 ¶ 21.
There is no SPD for a "Lifetime" Plan. The plaintiffs assert that "Consol created the Lifetime Plan through its slideshows and explanations that retiree welfare benefits would vest" in retirement after working the requisite number of years. ECF No. 162 at 13. The plaintiffs also allege that the defendants withheld or inconsistently distributed the separate SPDs for retirees, which also failed to mention obligations under the Lifetime Plan. The plaintiffs say that some employees never received the SPD for the Retiree Benefits Plan and others only received the SPD when they became eligible for retirement, which was the first time they learned that there were any differences in the welfare benefits of retirees versus active employees. ECF No. 103 ¶¶ 76-83, 138; ECF No. 36 ¶¶ 65-75; ECF No. 156 at 10, 22.
The consolidated plaintiffs move for class certification on all seven counts listed in the March 1, 2018 amended complaint:
The plaintiffs originally proposed the following class definition which would establish a class for retirees only:
ECF No. 156 at 3. In their response to the plaintiffs' supplemental motion for class certification, the defendants argued that the class definition was too indefinite because it ranged anywhere from 12,000 to 16,000 individuals based on the allegations in the complaint. Defs.' Resp. Suppl. Mot. Class Cert. 1-2, ECF No. 160 at 1-2 ("ECF No. 160"). The definition was also overbroad in that it "would include individuals who were not impacted by CONSOL's 2014 and 2015 decisions to terminate retiree medical benefits" because their retiree medical liabilities had already been transferred to a separate entity, Murray Energy Corporation.
For the first time in their reply, the plaintiffs now seek to certify the following two classes of CONSOL employees from mine sites located in West Virginia, Kentucky, Virginia, Pennsylvania, and "neighboring states:"
ECF No. 162 at 3-4; ECF No. 156 at 12. Class A covers the six "Lifetime Plan" Counts of I-II and IV-VII, and Class B applies only to remaining Count III (Discrimination based on Health Status-Related Factors). ECF No. 162 at 4.
The Declaration of CONSOL's Director — Benefits Deborah Lackovic ("Lackovic") that is included in the defendants' response notified the plaintiffs that "[n]otwithstanding any differences in coverage between the groups," Plan Number 583 encompassed
"The ordinary rule in federal courts is that an argument raised for the first time in a reply brief or memorandum will not be considered."
The parties vigorously dispute the proof relied upon by the plaintiffs in attempting to meet their certification burden under Rule 23 of the Federal Rules of Civil Procedure. The court thus undertakes the "rigorous" analysis required under United States Supreme Court precedent,
A party seeking class certification must satisfy the requirements found in Rule 23(a) of the Federal Rules of Civil Procedure and demonstrate satisfaction of at least one of the subdivisions of Rule 23(b).
Fed. R. Civ. P. 23(a);
First, the numerosity requirement does not mandate a specific number of plaintiffs to maintain a class action.
The commonality and typicality requirements "both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence."
As noted by our court of appeals, "[a] plaintiff bears the burden of proving the[] requirements" of Rule 23(a).
Finally, Rule 23(b) states:
Fed. R. Civ. P. 23(b).
Respecting numerosity, plaintiffs contend that at least 4,000 putative class members were affected by the defendants' "uniform action to terminate retirement welfare benefits for the putative class of non-union Consol retirees," ECF No. 162 at 1, thereby readily satisfying the first requirement of Rule 23(a).
Respecting commonality, the plaintiffs identify the following putative questions of law and fact:
ECF No. 156 at 13-14.
Regarding typicality, the plaintiffs assert that all members suffered an improper termination of their "lifetime" healthcare benefits and, with respect to Class B, were discriminated against by the defendants.
The plaintiffs seek certification under Rule 23(b)(1), (b)(2), and (b)(3). In short, plaintiffs assert that litigating their claims separately would present a risk of inconsistent standards of conduct (23(b)(1)), that defendants' actions affected the putative class in a "generally-applicable fashion" (23(b)(2)), and that common questions of law and fact predominate over any questions affecting individual class members (23(b)(3)). ECF No. 156 at 18-24.
The plaintiffs contend that the putative class members "share identical facts of law" inasmuch as they were "subject to the same course of conduct" by CONSOL — "universal written representations that miners benefits would vest if they met the service requirements," and further, "accepted the offer of lifetime benefits and fully performed pursuant to that agreement," "suffered the same loss of the retirement welfare benefits," and "seek the same relief." ECF No. 156 at 11. And so, they claim that Counts I through VII are suitable for class treatment.
The defendants principally argue that Counts I-II and IV-VII rest on mischaracterized facts and individualized factual inquiries that fail to meet Rule 23(a)'s commonality and typicality requirements. ECF No. 160. They argue that the plaintiffs fail to show that they detrimentally relied on CONSOL's allegedly uniform promises of lifetime benefits. ECF No. 160 at 9-17. As to Count III, the defendants argue that the plaintiffs lack evidence to show discriminatory motive to support their health status discrimination claim.
Under the typicality analysis, the court begins by reviewing "[1] the elements of plaintiffs'
Counts I-II and IV-VII all relate to the existence of the Lifetime Plan, and each count suffers similar flaws for purposes of class certification.
Under Count I, the plaintiffs claim that the defendants violated 29 U.S.C. § 1104(a)(1) by "misrepresenting the benefits to the plan beneficiaries" and "fraudulently induc[ing] the Plaintiffs into accepting the Lifetime Plan." ECF No. 103 ¶¶ 115, 117. "In order to establish a claim for breach of fiduciary duty based on alleged misrepresentations, a plaintiff must show: 1) that a defendant was a fiduciary of the ERISA plan, 2) that a defendant breached its fiduciary responsibilities under the plan, and 3) that the participant is in need of injunctive or other appropriate equitable relief to remedy the violation or enforce the plan."
Counts II, IV-VII require similar showings of reliance in connection with the Lifetime Plan. Under Count II — which seeks equitable enforcement of the Lifetime Plan under § 1132(a)(1-3) — the plaintiffs again allege that they "detrimentally relied" on the defendants' "written representations, and consistent oral representations . . . by paying premiums and working for Defendants for at least ten years—thus foregoing other job opportunities, retiring earlier than they otherwise might have, and/or foregoing union representations." ECF No. 103 ¶¶ 119-20. As to Counts IV-VII, for the plaintiffs to "state a claim that a faulty plan description (including non-receipt of a proper SPD) prohibits a company from exercising its right to modify a plan," they again "must show some significant reliance upon, or possible prejudice flowing from, the lack of notice of an accurate description of the terms of the plan."
Insofar as all of these claims hinge on the existence of the Lifetime Plan, the court turns first to the bits and pieces of written orientation materials that plaintiffs claim support the terms of the Lifetime Plan. These include (1) several one-page Benefits Information Sheets from the years of 2012 and 2013 distributed to named plaintiffs Bright, Fitzwater, and other Fola retirees (ECF Nos. 72-4, 72-5; ECF No. 162 at 5), (2) several slides excerpted from PowerPoint presentations created in various years (2003, 2008, and 2010) and conducted at new-hire orientations at CONSOL's Buchanan Mine (ECF No. 156 at 4; Declaration of Erica Fisher ("Fisher Decl.") ¶¶ 7-9, ECF No. 160-4; ECF Nos. 155-6 to 155-8), (3) excerpts of new-hire orientation scripts delivered around 1990 at CONSOL's Enlow Fork and Bailey Mines in Pennsylvania (ECF No. 66-1; Declaration of Kurt Salvatori ("Salvatori Decl.") ¶¶ 4-6, 13, ECF No. 67-2), and (4) a "Know the Facts" handbill distributed by CONSOL and its subsidiaries to miners at the Fola operations around 2010 (ECF No. 66-5;
First, the plaintiffs point to the CONSOL one-page Benefits Information Sheet from each of the years 2012 and 2013. ECF Nos. 72-4, 72-5. Each contains separate paragraphs describing certain benefits, including "Medical," "Prescription Drug," "Dental Plan," "Vision Plan," "Life Insurance," "Investment Plan," and "Retirement Plan."
Focusing on the Benefits Information Sheets, the bottom of each one-page sheet notes that "[w]hether benefits are payable and the amount of benefits will depend on the actual terms and conditions of the
Second, the plaintiffs provide three sets of undated, excerpted PowerPoint slides. CONSOL's Director of Human Resources, Erica Fisher, attested in her declaration that these slides were each part of larger new-hire orientation presentations — created in 2003, 2008, and 2010, respectively — given at Buchanan Mine. Fisher Decl. ¶¶ 2, 7-9, ECF No. 160-4; ECF No. 160 at 11. The plaintiffs assert that the "Equated Date Policy" referred to in all three presentations represents the company's policy that once attaining ten years of service and reaching the age of fifty-five, their medical benefits would vest. ECF No. 156 at 4; ECF Nos. 155-6, 155-7, 155-8. However, the slides themselves and Salvatori's deposition shows that an employee's "equated date" simply refers to his or her years of service with CONSOL, taking into account any service breaks. Salvatori Dep. 54:5-11, ECF No. 155-5.
The "Equated Date Policy" slide cited by the plaintiffs contains identical language in all three presentations: "Equated date will include only time employed[;]" "Equated date will not include lay-off time[; and]" "Equated date will be used only for:" (1) "Vacation eligibility[,]" (2) "Service awards[,]" and (3) "Vesting only in retirement plan," i.e., the Retirement Plan for pension payments. ECF Nos. 155-6 to 155-8; Second Lackovic Decl. ¶ 11, ECF No. 160-19; Fisher Decl., Ex. C, ECF No. 160-9 at 49, CONSOL025652.
The plaintiffs only provide one full, sequential presentation — the 2003 new-hire orientation PowerPoint.
Third, the orientation scripts used at the Enlow Fork and Bailey mines around 1990 state, in pertinent part, that, "[t]his wage and benefit package is clearly superior to any wage and benefit package in the 1988 Wage Agreement," and is "clearly superior to any wage and benefit package negotiated by the UMWA for anybody anywhere." ECF No. 66-1 at 7-9. The plaintiffs infer that because UMWA retirement benefits "included a Congressionally-backed guarantee of lifetime duration," CONSOL's retirees would receive lifetime benefits as well. ECF No. 103 ¶ 32; ECF No. 156 at 2, 5. Not only does Salvatori's sworn statement indicate that these scripts were not used after the early 1990s, CONSOL's orientation presentations were specific to each mine site and varied in substance over the years.
Finally, the "Know the Facts" handbill distributed by CONSOL and its subsidiaries to Fola miners in 2010, states,
Viewed in total, the written evidence presented by the plaintiffs does not contain a promise of lifetime benefits. Moreover, the plaintiffs admit that, in comparison to other CONSOL employees, they may have seen or heard different things regarding their benefits. And, none of the plaintiffs could even confirm that the orientation materials contained a written offer of "lifetime" benefits. For example, when Plaintiff Jack was asked if he had any "idea what was told in other orientations that [he] didn't attend," he answered: "I guess, maybe, we were the only ones that ever heard the same thing." Jack Dep. 97:12-19, ECF No. 155-11.
The plaintiffs counter that the Benefits Information Sheets and other written materials contain ambiguous terms, and therefore, the "extrinsic and anecdotal evidence regarding the parties' intentions" is "directly relevant to the question of whether the ambiguous terms gave rise to a vested benefit under ERISA." ECF No. 162 at 8.
Besides the testimony of named and putative plaintiffs, the plaintiffs present the Declaration of Dean Michael Hymes ("Hymes"), a former Regional Manager of Human Resources for CONSOL who was in charge of employee orientations, workers' compensation, union relations, and employee development and training. Hymes Decl. ¶ 5, ECF No. 155-4. It fails to fill in the gaps. As the defendants correctly point out, Hymes only worked for CONSOL until January 1993, and his testimony provides no evidence as to CONSOL's "state of affairs" after this date.
Additionally, the defendants correctly point out that in his declaration, Hymes does not claim to have presented to any other employees the materials he helped prepare, and also provides no detail as to what the orientation scripts stated with respect to retiree medical benefits. Similar to the plaintiffs, once he was deposed, Hymes (1) could only testify to being "pretty sure" that retiree medical benefits were expressly mentioned in orientation scripts, Hymes Dep. 133:13-19, ECF No. 173-1; (2) could not recall exactly what was said in the orientation scripts regarding UMWA retiree medical benefits,
Instead, Hymes acknowledged that the reservation of rights clause was "in the front of the employee handbook," Hymes Dep. 203:10-20, ECF No. 173-1, and that the handbooks were in fact distributed to employees at orientations.
The plaintiffs also allege that "the promise of lifetime welfare benefits created the Lifetime Plan based on the oral representations made by Defendants." ECF No. 103 ¶ 124. It bears mentioning that the SPDs are "the statutorily established means of informing participants of the terms of the plan and its benefits," and the "employee's primary source of information regarding employment benefits."
Moreover, "in recognition of ERISA's requirement that employee benefit plans be governed by written plan documents filed with the Secretary of Labor, any participant's right to a fixed level of lifetime benefits must be found in the plan documents and must be stated in clear and express language."
Employers provide sufficient notice that they reserve the right to modify plans by "distributing an SPD containing a modification clause at any time before the modification or termination occurs."
As to the oral representations more generally, "[s]everal courts have concluded that ERISA fiduciary claims based on oral representations are not suitable for class certification precisely because they require . . . individualized proof, and thus fail the commonality and typicality requirements."
In
Here, the plaintiffs expressly rely on scattered oral representations of "lifetime benefits" as evidence of a Lifetime Plan.
The plaintiffs rely on allegations that around 2010, Gary Patterson, President of Operations of Fola, allegedly told Fitzwater and "other CONSOL employees that they would have their then-current insurance as long as they lived." ECF No. 36 ¶ 39. The complaint alleges that Chase Elswick, a human resources supervisor, "came to the Fola control room where Plaintiff Fitzwater worked, and told [him] that the current healthcare benefits would vest upon retirement and continue throughout Mr. Fitzwater's lifetime."
Accordingly, without written materials showing the existence of a Lifetime Plan, the court cannot find that the plaintiffs satisfy the requirements of commonality and typicality necessary for class certification. The various oral assurances of lifetime benefits, requiring proof of the individual statements made to each retiree, are insufficient to support class certification on their own.
Moreover, the defendants provided declarations of several CONSOL human resources personnel who deny ever making oral promises of lifetime or vested medical benefits or using written materials in orientation trainings that contain such promises.
While it is to be acknowledged that courts may not "`engage in free-ranging merits inquiries at the certification stage,' a court should consider merits questions to the extent `that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied.'"
In
Even if the plaintiffs could show a promise of lifetime benefits, they would still need to show the extent to which each retiree relied on the alleged representations in making his or her retirement decision. Courts have denied class certification on ERISA fiduciary claims based on alleged misrepresentations because establishing the detrimental reliance element requires a showing of individualized proof.
In this case, evaluating the element of detrimental reliance will require individualized inquiries into the basis for class members' decisions to "work the required service time for Defendants." ECF No. 156 at 2. The plaintiffs note that "Jack testified that the Defendants' representations of lifetime benefits were uniform and significant and caused himself and other CONSOL Employees to plan their working lives based on those representations — such as time of retirement and whether to seek other lower paying jobs that offered better retiree welfare benefits, such as the UMWA benefits." ECF No. 156 at 5 (citing Jack Dep. 170-173, ECF No. 155-11). Yet, named plaintiff Long testified that he was not similarly affected:
Long Dep. 185:9-20, ECF No. 160-2.
In sum, the lifetime claims lack the support of written materials demonstrating a uniform Lifetime Plan, the oral representations are spotty and divergent, and both will require individualized proof, including proof of reliance. Consequently, Counts I-II and IV-VII fail to meet the commonality and typicality requirements under Rule 23(a).
As noted previously, unlike active employees at the time, individuals who retired prior to the 2014 announcement did not receive the option to receive a one-time transition payment as compensation for the termination of their retiree health and welfare benefits. Under Count III, the defendants allegedly violated 29 U.S.C. § 1182(a)(1)
As with the other claims, the plaintiffs have failed to meet their burden under Rule 23.
To bring a claim under 29 U.S.C. §§ 1182(a)-(b), the plaintiffs must first show that the defendants discriminated based on prohibited "health status-related factors," including health status, medical condition (including both physical and mental illnesses), claims experience, receipt of health care, medical history, or disability.
First, the plaintiffs contend that retirementeligible, though not retired, employees "were part of the same similarly-situated group of plan participants who had already retired insofar as they participated in the same plan." ECF No. 162 at 13. To the extent Count III asserts that the defendants discriminated against participants within the alleged Lifetime Plan, and thereby requires evidence of a Lifetime Plan in the first place, it is inappropriate for class certification, as found with respect to the other Counts.
Even assuming the retirement-eligible and retired employees participated in the same plan, the plaintiffs fail to show how distinguishing between current and former employees is unlawful under ERISA. According to the Department of Labor ("DOL") regulations governing § 1182, "a plan or issuer may treat participants as two or more distinct groups of similarly situated individuals if the distinction between or among the groups of participants is based on a bona fide employment-based classification consistent with the employer's usual business practice." 29 C.F.R. § 2590.702(d)(1). Examples of a "bona fine employment-based classification" include "full-time versus part-time status, . . . date of hire, length of service, [and] current employee versus former employee status."
The plaintiffs rely on the assumption that the retirees necessarily "had a lengthier claims experience . . . and also tended to be less healthy due to their advanced age relative to the active workers." ECF No. 103 ¶ 130. The defendants correctly point out that there "is no evidence that any Defendant took any action based on the actual or perceived health status of any individual group." ECF No. 160 at 18. Some of the plaintiffs themselves also admit that they had "no idea" whether CONSOL decided to offer transition benefits based on who was healthier or more active. Prater Dep. 130:8-131:23, ECF No. 66-7; Bright Dep. 77:10-19, ECF No. 67-6. The plaintiffs only point to Kirby Hall, a 51-year-old absent class member, to demonstrate that the retirees are either disabled or older than some active employees. ECF No. 156 at 2 n.1. The plaintiffs fail to provide any other evidence to support the claim that "[a] substantial portion of the retiree welfare plan participants were necessarily in poorer health than the active workers."
Inasmuch as the plaintiffs fail to provide basic evidence to support their claim, Count III fails to conform to Rule 23(a)'s requirements and class certification must be denied on this count.
Because the plaintiffs' claims fail to comply with Rule 23(a)'s requirements, it is ORDERED that the plaintiffs' supplemental motion for class certification be, and it hereby is, denied.
The Clerk is directed to transmit copies of this order to all counsel of record and any unrepresented parties.
