Laforest v. Former Clean Air Holding Co. , 376 F.3d 48 ( 2004 )

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
__________________
August Term, 2003
(Argued: June 2, 2004 Decided: July 15, 2004
Errata Filed: August 9, 2004)
Docket Nos. 03-9007(L), 03-9043(CON), 03-9045(CON),
03-9313(CON), 03-9357(CON), 04-0104-cv(CON)
__________________
JAMES LAFOREST, HENRIETTA LAFRINERE, ROBERT LINTZ,
RALPH MINER, LAVERNE SPENCER, and IRENE WESOLOWSKI,
individually and as a class of persons similarly situated,
Plaintiffs-Appellees,
- v. -
FORMER CLEAN AIR HOLDING COMPANY, INCORPORATED,
Cross-Defendant,
HONEYWELL INTERNATIONAL, INC.,
Defendant-Appellant-Cross-Appellee,
MOTOR COMPONENTS, L.L.C., BAM ENTERPRISES, INC.,
MARK IV INDUSTRIES, INC., ARVINMERITOR, INC.,
and PUROLATOR PRODUCTS CO.,
Third-Party-Defendants-Appellees-Cross-Appellants.
__________________
B e f o r e:
1
CALABRESI and WESLEY, Circuit Judges, and SCULLIN , District Judge.*
__________________
Appeal from the judgment of the United States District Court for the Western District of
New York (Telesca, J.), entered on September 19, 2003, granting a preliminary injunction
ordering defendant-appellant Honeywell International, Inc. to comply with an agreement
regarding the provision of retirement benefits to plaintiffs-appellees; and from the prior judgment
of the same court, entered on August 7, 2003, granting summary judgment to plaintiffs-appellees
on the issue of liability under the agreement.
Affirmed and remanded for clarification and modification of injunctive relief.1
1 __________________
2
3
4 WILLIAM A. WERTHEIMER, JR., Special Counsel for Litigation, International
5 Union, UAW (Daniel W. Sherrick, General Counsel, Catherine J. Trafton,
6 Associate General Counsel, Niraj R. Ganatra, Associate General Counsel,
7 on the brief), Detroit, MI, for Plaintiffs-Appellees.
8
9 JOSEPH A. COSTELLO, Morgan, Lewis & Bockius LLP, Philadelphia, PA
10 (Richard D. Bernstein, Sidley Austin Brown & Wood LLP, Washington,
11 D.C., on the brief), for Defendant-Appellant-Cross-Appellee.
12
13 HUGH C. CARLIN, Gross, Shuman, Brizdle & Gilfillan, P.C., Buffalo, NY, for
14 Third-Party-Defendants-Appellees-Cross-Appellants Motor Components,
*
The Honorable Frederick J. Scullin, Jr., Chief Judge of the United States District Court
for the Northern District of New York, sitting by designation.
1
On June 7, 2004, we issued our decision in this case as an unpublished Summary Order.
We did so in order to ensure that the parties and the district court had the decision in hand prior
to a pending hearing in that court. However, due to the substantial issues involved in the case,
we now publish the disposition. Needless to say, while some details have been elaborated upon,
the substance of our ruling has not changed.
2
1 L.L.C. and BAM Enterprises, Inc.
2
3 JOHN W. ALLEN, Varnum Riddering Schmidt & Howlett LLP (Joseph J. Vogan,
4 Anthony R. Comden, on the brief), Grand Rapids, MI, for Third-Party-
5 Defendants-Appellees-Cross-Appellants Mark IV Industries, Inc.,
6 Arvinmeritor, Inc., and Purolator Products Co.
7
8 __________________
9
10
11 WESLEY, Circuit Judge:
12 In this appeal, we are called upon to assess a district court’s issuance of injunctive relief
13 to a putative class of plaintiffs alleging that they are in imminent danger of suffering irreparable
14 harm. Plaintiffs are all retirees, or surviving spouses of retirees, of Bendix Corporation. They
15 average 83 years of age, and, due to the actions of one of the third-party defendants-appellants,
16 recently suffered a drastic reduction in their level and quality of health care benefits. Plaintiffs
17 contend that defendant-appellant Honeywell International, Inc. – a successor of Bendix – is
18 obligated to remedy this reduction under the terms of an agreement that Bendix entered into in
19 1976. For the reasons that follow, we hold that the district court correctly ruled that Honeywell
20 is liable under the agreement, and properly issued an injunction ordering Honeywell to comply
21 with that agreement. We remand, however, for the district court to clarify and modify its
22 injunctive relief in two material respects.
23 I. Facts & Procedural Posture
24 In 1974, pursuant to a consent order entered by the Federal Trade Commission (“FTC”),
25 Bendix Corporation (“Bendix”) made plans to divest itself of three unionized manufacturing
3
1 facilities by selling them to the newly created Facet Enterprises, Inc. (“Facet”).2 In its
2 negotiations with the International Union, United Automobile, Aerospace & Agricultural
3 Implement Workers of America (“UAW”), Bendix entered into an agreement entitled a
4 “Guaranty,” by which it promised, in essence, that certain retirees, vested employees, and
5 surviving spouses would retain – for life – the level of health benefits in place at Bendix on April
6 1, 1976. In September 2002, third-party defendant-appellant Motor Components, L.L.C. (“Motor
7 Components”) – a successor of Facet – reduced retiree benefit levels below the level in place in
8 1976. Plaintiffs-appellees James LaForest et al. (“plaintiffs”) initially brought a putative class
9 action in the United States District Court for the Eastern District of Michigan, asserting claims
10 against defendant-appellant Honeywell International, Inc. (“Honeywell”) – a successor of Bendix
11 – under, inter alia, the Labor Management Relations Act (“LMRA”) § 301, 29 U.S.C. § 185.
12 Plaintiffs sought to hold Honeywell to the terms of the Guaranty.
13 In May 2003, the case was transferred to the United States District Court for the Western
14 District of New York, pursuant to 28 U.S.C. § 1404(a). In August 2003, the district court granted
15 summary judgment to plaintiffs on the issue of liability, holding that the Guaranty
16 unambiguously obligated Honeywell to provide for the level of health benefits available in 1976,
17 given the triggering fact that Motor Components reduced benefits below that threshold. See
18 LaForest v. Honeywell Int’l, Inc., No. 03-CV-6248T, 2003 WL 22103474 (W.D.N.Y. Aug. 7,
19 2003) (“LaForest I”). Subsequently, in September 2003, the district court issued a preliminary
20 injunction ordering Honeywell to comply with the Guaranty, see LaForest v. Honeywell Int’l,
2
One of these facilities was located in Elmira, New York, and two were located in
Michigan.
4
1 Inc., No. 03-CV-6248T, 2003 WL 23180220 (W.D.N.Y. Sept. 19, 2003) (“LaForest II”), and, in
2 November 2003, the court issued an unreported decision in which it clarified the terms of that
3 injunction. More recently, in March 2004, the district court certified the plaintiff class.
4 Honeywell and third-party defendants-appellants (collectively “defendants”) appeal the district
5 court’s September 2003 issuance of the preliminary injunction ordering Honeywell to honor the
6 Guaranty, as well as the court’s August 2003 grant of summary judgment to plaintiffs.
7 II. Discussion
8 At the outset, we are presented with a jurisdictional question. This Court has jurisdiction
9 to hear the appeal of the district court’s September 2003 issuance of the preliminary injunction
10 under 28 U.S.C. § 1292(a)(1). Although the August 2003 judgment is not a final order, “where
11 an issue is ‘inextricably intertwined’ with a question that is the proper subject of an immediate
12 appeal, or . . . where review of a jurisdictionally insufficient issue is ‘necessary to ensure
13 meaningful review’ of a jurisdictionally sufficient one, an appellate court may exercise pendent
14 jurisdiction.” Rein v. Socialist People’s Libyan Arab Jamahiriya, 162 F.3d 748, 757-58 (2d Cir.
15 1998) (quoting Swint v. Chambers County Comm’n, 514 U.S. 35, 51 (1995)). Thus, since the
16 issuance of the preliminary injunction was premised in part on the grant of summary judgment,
17 we assert pendent jurisdiction over the latter. And for the reasons that follow, we affirm the
18 district court’s grant of summary judgment and issuance of the preliminary injunction, but
19 remand for clarification and modification of that injunction.
20 A. The District Court’s Grant of Summary Judgment
21 Defendants challenge the district court’s grant of summary judgment on several grounds.
22 First, defendants note that under the terms of the Guaranty, Honeywell’s obligation to provide for
5
1 the maintenance of benefit levels may be “reduced in an amount equal to the reduction, if any, in
2 the insurance coverage . . . below that provided for in the Insurance Agreement as of [April 1,
3 1976], pursuant to any agreement between Facet and the Union.” Defendants argue that the
4 UAW “tacitly” agreed to Motor Components’ reduction of benefit levels insofar as it did not
5 “vigorously” contest that reduction – and therefore that Honeywell is not liable to provide for
6 benefit levels above those resulting from this “agreement.”
7 The record is to the contrary. In April 2002, Motor Components informed UAW
8 representative Scott Montani that it could no longer afford to pay benefits at then-current rates.
9 Montani responded by explaining that the UAW would “fight” any reduction in benefits. In July
10 2002, Motor Components announced that it would be reducing benefits. In an e-mail, Montani
11 explained, inter alia, that “[t]he UAW does not cease to represent our retirees! That is our
12 heritage.” In an August 2002 letter to the retirees, Montani assured them that “[t]he Union is on
13 the verge of taking action, if appropriate, on your behalf.” While this conduct is squarely in
14 accordance with the UAW’s history of resisting benefit reductions, defendants claim that
15 subsequent conduct was to the contrary.
16 During Motor Components’ negotiations with the UAW over their 2002 collective
17 bargaining agreement, Motor Components reiterated its position that it could no longer afford
18 then-current levels of benefits, and proposed discontinuing them. The UAW then filed suit
19 against Honeywell, seeking to hold it to the Guaranty. Motor Components and the UAW
20 continued to negotiate regarding then-current employees, but ceased negotiations over retiree
21 benefits. Defendants argue that this course of conduct raises a genuine issue as to whether the
22 UAW “acquiesced” in the benefit reduction sufficient to permit the conclusion that it had an
6
1 “agreement” with Motor Components that the latter could reduce retiree benefits.
2 The district court found this argument to be without merit because the Guaranty does not
3 purport to place an affirmative obligation on the UAW to “vigorously” challenge benefit
4 reductions. LaForest I, 2003 WL 22103474, at *5. The court further noted that “the UAW had
5 little motivation to do so when the full payment of those benefits had been ensured by the
6 Guaranty, and where the UAW knew that the proposed change could not be properly effected
7 absent its consent.” Id. Defendants attempt to turn this reasoning on its head, suggesting that
8 because the UAW believed it could maintain benefit levels by pursuing Honeywell, it had every
9 reason simply to acquiesce in reductions and then file suit on the Guaranty. This argument
10 makes little sense.
11 The UAW knew that any agreement between it and Motor Components would preclude
12 recovery against Honeywell. The very act of filing suit against Honeywell, then, indicates that
13 the UAW believed it had a viable action, i.e. that it had not made an agreement with Motor
14 Components to reduce benefits. In more basic terms, even if defendants could persuade this
15 Court that Motor Components made an “offer” to the UAW regarding the reduction of benefits,
16 the UAW’s conduct – both in its initial reactions to Motor Components and in its filing suit
17 against Honeywell – is clearly inconsistent with the suggestion that it “accepted” that offer.
18 Thus, we agree with the district court that there is no genuine issue of material fact as to whether
19 the UAW agreed to Motor Components’ September 2002 benefit reduction. It did not.
20 Defendants also challenge the district court’s grant of summary judgment on the grounds
21 that (1) a “guaranty” is a secondary obligation which requires a showing that the primary obligor
22 defaulted before liability will attach, and no such showing was made here; (2) the Guaranty fails
7
1 on the ground that it is “illegal,” specifically, that it contravenes the FTC’s directive that Bendix
2 not guaranty any obligations of Facet; (3) the Guaranty fails for lack of consideration; and (4) the
3 Guaranty is unenforceable because plaintiffs cannot demonstrate with “reasonable certainty” the
4 amount for which Honeywell is putatively liable under its terms.
5 The agreement into which Bendix entered in 1976 reads in relevant part:
6 Bendix will pay, or cause to be paid, on behalf of each Protected Person . . ., an
7 insurance premium to provide . . . insurance coverage equal to the excess, if any,
8 of:
9
10 (i) insurance coverage such Protected Person is eligible to receive, or
11 would have become eligible to receive, pursuant to the provisions of the
12 Insurance Agreement in effect on [April 1, 1976] . . .; over
13
14 (ii) any insurance coverage provided by the payment of premiums by Facet
15 on behalf of such Protected Person.
16
17 Defendants’ first and second arguments fail for the simple reason that the Guaranty is not a
18 “guaranty.” It does not create a secondary obligation to provide benefits if and only if Facet’s
19 successors breach a contractual obligation to do so. Cf. Weissman v. Sinorm Deli, Inc., 88
20 N.Y.2d 437, 446 (1996). Rather, Honeywell is under a clear contractual obligation to provide for
21 the maintenance of benefit levels if and only if a successor of Facet at some point permits those
22 benefits to fall below the guaranteed level. Once that triggering event occurs, regardless of the
23 cause of that event, Honeywell becomes liable.
24 The district court recognized that “the Guaranty neither creates nor alludes to any promise
25 by Facet to provide Bendix retirees with any particular level of insurance coverage.” LaForest I,
26 2003 WL 22103474, at *4. Further, the court explained that “[e]ven if such a promise had been
27 made by a separate agreement between Facet and Bendix, or between Facet and the UAW or
8
1 retirees, Honeywell fails to demonstrate how that agreement could take precedence over the
2 Guaranty and create a ‘hierarchy of obligors,’ something which the Guaranty does not
3 contemplate.” Id. As evidence of the fact that the Guaranty does not create a “hierarchy of
4 obligors,” the district court quoted a May 1976 letter sent to employees potentially covered by the
5 Guaranty, which stated that “certain pension benefits and payment of certain insurance premiums
6 are guaranteed by Bendix for life . . . . In the case of insurance, Bendix will make up any
7 difference in insurance premiums necessary to provide coverage.” Id. at *5. Indeed, as the
8 district court reasoned:
9 Bendix did not condition its promise upon the failure of its retirees to obtain relief
10 from Facet or any of its successors: it simply promised to “make up any difference
11 in insurance premiums necessary to provide coverage” to those employees willing
12 to remain in the employ of an enterprise that was embarking on a risky new
13 venture. As those employees weathered the company’s transition from Bendix to
14 Facet, that letter described, and in fact embodied, a covenant between them and
15 Bendix, assuring them that their benefits would always be covered by the
16 protective umbrella of the parent corporation. It was Bendix’s promise to
17 employees – not Facet’s. Facet was not a party to that compact then, and
18 therefore, Facet’s successor cannot be said to have undertaken obligations as a
19 primary obligor under the Guaranty now.
20
21 Id. Thus, the district court took the view that the Guaranty constituted a contract between Bendix
22 (and its successors) and those covered by the Guaranty. The plain language of the Guaranty and
23 the explanatory letter sent to prospective retirees support such a view.
24 Thus, we agree that Honeywell’s obligation under the 1976 agreement arises not by
25 operation of a guaranty, but rather out of an ordinary contractual promise. The Guaranty may
26 have been loosely titled as such, but it would appear that the parties to it intended the more
27 common understanding, “guarantee,” i.e. they intended that Bendix “guarantee” that benefit
28 levels would remain stable – not that it “guaranty” the obligation of Facet. Therefore, we reject
9
1 the argument that Honeywell’s liability can be established only on a showing of a “default” by
2 Motor Components. Similarly, although it is true that the FTC consent order prohibited Bendix
3 from guarantying the obligations of Facet, this agreement does not violate that prohibition.3
4 Defendants’ third argument is belied by the record. Plaintiffs assert, and the district court
5 found, that Bendix entered into the Guaranty in order to forestall the early retirement of
6 employees wary of joining the newly formed Facet. See LaForest I, 2003 WL 22103474, at *1.
7 Defendants note that no retiree has testified that, but for the Guaranty, he or she would have
8 retired early. But such evidence is not necessary to demonstrate consideration. Rather, the
9 record reveals that a UAW bargainer expressed the early-retirement concern to Bendix during
10 bargaining; that the UAW commented on the concern to the FTC; that a summary of the 1976
11 tentative divestiture agreement between the UAW and Bendix suggests that the Guaranty was
12 entered into in exchange for, among other things, the UAW agreeing to the spin-off of Facet; and
13 that a Bendix official involved in the negotiation of the Guaranty considered it to have been
14 entered into in exchange for the UAW executing a spin-off “enabling agreement.” Thus, the
15 record supports the conclusion that the Guaranty was supported by consideration.
16 Finally, defendants suggest that the Guaranty is unenforceable because plaintiffs cannot
3
For the same reasons, the district court did not err in holding that plaintiffs are not
obligated to “exhaust their remedies” against the third-party defendants before pursuing
Honeywell. See LaForest I, 2003 WL 22103474, at *4. That argument rests on the premise that
the Guaranty was a “guaranty of collection” as opposed to a “guaranty of payment.” As
discussed above, this Guaranty does not, however, appear to be a guaranty at all. But even if it
were, the district court found that, as it contained no language purporting to limit or condition the
obligation contained therein, it was a guaranty of payment, for which a plaintiff need not seek
redress against the primary obligor. Id. Defendants’ only response to this is to assert that the
Guaranty is “filled with ‘limitations.’” In fact, the Guaranty does not condition liability on
anyone first pursuing Facet or its successors.
10
1 prove with “reasonable certainty” the amount for which Honeywell is liable. While we disagree
2 that the “amount due” is unascertainable, we do find, as discussed infra, that the district court has
3 a bit of work to do in this regard. Nevertheless, we hold that the district court did not err in
4 granting summary judgment to plaintiffs on the issue of Honeywell’s liability under the
5 Guaranty.
6 B. The District Court’s Issuance of the Preliminary Injunction
7 The district court correctly stated that “[i]n this Circuit, to obtain a preliminary injunction
8 the requesting party must demonstrate: (1) irreparable harm; and (2) either (a) likelihood of
9 success on the merits or (b) sufficiently serious questions going to the merits of the case to make
10 them a fair ground for litigation and a balance of hardships tipping decidedly toward the party
11 requesting preliminary relief.” LaForest II, 2003 WL 23180220, at *1 (citing Jackson Dairy, Inc.
12 v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979)). Given that the district court did not
13 err in granting summary judgment on the issue of Honeywell’s liability under the Guaranty, it
14 also did not err in concluding that plaintiffs demonstrated a likelihood of success on the merits.
15 Primarily at issue, then, is whether plaintiffs adequately demonstrated irreparable harm.
16 Additionally, defendants raise concerns regarding whether plaintiffs engaged in undue delay in
17 seeking the injunction, whether the injunction was overbroad as to whom and what it covers,
18 whether it was sufficiently specific, and whether the district court erred in waiving the
19 requirement of a bond. This Court reviews the granting of a preliminary injunction for abuse of
20 discretion. New York Magazine v. Metro. Transport. Auth., 136 F.3d 123, 126 (2d Cir. 1998).
21 For the reasons that follow, we hold that the district court did not abuse its discretion in issuing
22 the preliminary injunction, but we remand for clarification and modification of that injunction as
11
1 to the issues of who and what are covered by the Guaranty.
2 1. Whether Plaintiffs Suffered Irreparable Harm
3 The district court held that plaintiffs had demonstrated irreparable harm by showing that,
4 absent an injunction ordering Honeywell to provide premiums sufficient to secure guaranteed
5 levels of benefits, “the reductions in medical coverage will cause: (1) substantial risk to
6 plaintiffs’ health; (2) severe financial hardship; (3) the inability to purchase life’s necessities; and
7 (4) anxiety associated with uncertainty.” LaForest II, 2003 WL 23180220, at *1. Indeed, if
8 substantiated by the evidence, the district court’s holding comports with this Court’s
9 understanding of irreparable harm as “harm shown to be non-compensable in terms of money
10 damages.” Wisdom Import Sales Co., L.L.C. v. Labatt Brewing Co., Ltd., 339 F.3d 101, 113-14
11 (2d Cir. 2003).
12 In concluding that plaintiffs demonstrated irreparable harm, the court relied on this
13 Court’s holdings in Whelan v. Colgan, 602 F.2d 1060 (2d Cir. 1979), and Communications
14 Workers of America, Dist. One, AFL-CIO v. NYNEX Corp., 898 F.2d 887 (2d Cir. 1990), that
15 the termination of medical benefits will ground a claim of irreparable harm. The court also relied
16 on United Steelworkers of America v. Textron, Inc., 836 F.2d 6 (1st Cir. 1987), an opinion
17 written by Justice Breyer while still on the First Circuit.
18 In Whelan, this Court affirmed the granting of a preliminary injunction ordering the
19 defendant to continue providing medical benefits to striking workers. In doing so, it stated that
20 “the threatened termination of benefits such as medical coverage for workers and their families
21 obviously raised the spectre of irreparable injury.” Whelan, 602 F.2d at 1062. And in NYNEX,
22 the defendant informed its employees that it intended to terminate medical benefits, but also
12
1 informed them that they were eligible for replacement benefits under the Consolidated Omnibus
2 Budget Reconciliation Act of 1985, 29 U.S.C. §§ 1161-68 (“COBRA”). Nevertheless, because
3 the defendant then frustrated the employees’ efforts to receive COBRA benefits, the Court
4 treated the defendant’s conduct as, effectively, a threatened termination of benefits. Citing
5 Whelan, the Court affirmed the district court’s grant of a preliminary injunction ordering the
6 defendant to facilitate COBRA benefits. NYNEX, 898 F.2d at 891-92.
7 In Textron, the defendant ceased paying medical insurance premiums for retired former
8 employees, in circumstances somewhat analogous to the present case. In affirming the district
9 court’s grant of a preliminary injunction ordering the defendant to resume payment of premiums,
10 the court considered:
11 general facts that either are commonly believed or which courts have specifically
12 held sufficient to show irreparable harm; such general facts as (1) most retired
13 union members are not rich, (2) most live on fixed incomes, (3) many will get sick
14 and need medical care, (4) medical care is expensive, (5) medical insurance is,
15 therefore, a necessity, and (6) some retired workers may find it difficult to obtain
16 medical insurance on their own while others can pay for it only out of money that
17 they need for other necessities of life.
18
19 Textron, 836 F.2d at 8 (citing, inter alia, Whelan). The Court then explained that it was
20 accepting as proof of the actual existence of these “general facts” a single affidavit of a union
21 official stating that three of the retirees had actually suffered a reduction in medical care as a
22 result of the termination of benefits. Id.23 After considering these authorities, the district court turned to plaintiffs’ evidence. It
24 noted that “plaintiffs provided affidavits of six people entitled to benefits under the Bendix
25 Guaranty. Each undoubtedly demonstrates that they will suffer much more than monetary harm.”
26 LaForest II, 2003 WL 23180220, at *2. On this basis, the district court held that plaintiffs
13
1 sufficiently demonstrated that Honeywell’s refusal to pay the shortfall in premiums needed to
2 restore benefits to the guaranteed level caused irreparable harm to the putative class.
3 Defendants contest the district court’s conclusion by noting, first, that in the cases on
4 which the district court relied, plaintiffs suffered the threat of termination, or the actual
5 termination, of their medical benefits – whereas here plaintiffs suffered a reduction in benefits (or
6 increased costs of maintaining benefit levels). Defendants argue that approximately ninety
7 percent of the putative class is eligible for Medicare, and thus is able to secure alternative
8 coverage, and that every member of the class was given the opportunity to participate in an
9 alternative prescription drug program. However, it is not clear that this difference is dispositive.
10 So long as plaintiffs demonstrated injury “non-compensable in terms of money damages,”
11 Wisdom Import Sales, 339 F.3d at 113-14, they have demonstrated irreparable injury.
12 The district court found that plaintiffs demonstrated more than mere monetary harm, and
13 the record supports this finding. Most significantly, rather than the prescription drug program
14 with no deductibles, no maximum, and a $3 co-pay for non-generic drugs that plaintiffs
15 previously enjoyed, the alternative plan provided by Motor Components imposes a $100 per year
16 deductible, a $3000 annual maximum, and $15/40/60 co-pays for generic, preferred name-brand,
17 and non-preferred name-brand prescriptions. Plaintiffs provided individualized evidence of the
18 impact of these changes on the retirees, including an imminent threat that they would have to
19 forego needed prescriptions. In addition, plaintiffs note that the approximately ten percent of the
20 class that is ineligible for Medicare received a replacement stipend of only $125 per month from
21 Motor Components, and presented evidence that this amount was seriously inadequate for their
22 needs. We hold that the district court did not abuse its discretion in relying on this evidence in
14
1 concluding that the then-putative class suffered irreparable harm warranting a preliminary
2 injunction.4
3 Our conclusion is not affected by defendants’ attack on the evidence on which the district
4 court relied. Defendants note that the district court granted relief on the basis of affidavits
5 submitted by persons who were not named plaintiffs, and, moreover, that the court relied on only
6 six affidavits in a case involving nearly six hundred putative class members. The procedural
7 posture of this case is relevant in this regard. The district court first properly granted summary
8 judgment to plaintiffs on the issue of liability, and then issued a preliminary injunction ordering
9 relief for the putative class. But before reaching this Court, the putative class became a certified
10 class. That the six affidavits relied upon by the district court were submitted by unnamed
11 plaintiffs gives us little pause, given that these persons are now members of the certified class.
12 Regarding the adequacy of the six affidavits, defendants urge this Court to adopt the
13 evidentiary standard set forth in Adams v. Freedom Forge Corp., 204 F.3d 475 (3d Cir. 2000),
14 and assert that Adams requires a more exacting level of proof to support injunctive relief in a
15 case such as this. The facts of Adams are analogous to the present case insofar as, in each, the
4
Defendants also argue that “plaintiffs’ six month delay in seeking a preliminary
injunction weighs against a finding of irreparable harm,” noting that although Motor Components
informed plaintiffs that the benefit reduction would take effect in September 2002, plaintiffs did
not move for a preliminary injunction until February 2003. Plaintiffs respond that (1) they
brought their initial action for declaratory judgment, and moved for an expedited hearing, before
September 2002; (2) they moved for summary judgment in October 2002; and (3) they sought a
preliminary injunction at the end of discovery in February 2003. After the case was then
transferred from Michigan to New York, plaintiffs (1) sought expedited oral argument on their
motions for summary judgment and preliminary injunction, and (2) renewed their motion for
preliminary injunction one month after winning summary judgment on the issue of liability.
Given plaintiffs’ demonstrated requests for speedy procedure, we hold that any “delay” was
insufficient to undermine a finding of irreparable harm.
15
1 dispute is over the increased cost of medical benefits. There, 136 retirees (and surviving
2 spouses) brought suit to enjoin the defendant from altering the health care benefits it had been
3 providing them since they retired. Adams, 204 F.3d at 479. The proposed modifications to the
4 plaintiffs’ benefits included a shift from a no-premium plan to one in which the retirees could
5 choose between plans, all of which provided substantially similar coverage as the original plan –
6 but also required the retirees to pay monthly premiums. Id. at 480. The district court granted the
7 plaintiffs a preliminary injunction, precluding the defendant from instituting the changes. On
8 appeal, the Third Circuit reversed in part. The court first noted that only 11 of the 136 plaintiffs
9 testified as to the effect the changes would have. Id. at 481. It then found that only three of these
10 plaintiffs provided testimony sufficient to demonstrate irreparable harm, as opposed to mere
11 monetary harm, id. at 483-84, and that only two of these plaintiffs had demonstrated a likelihood
12 of success on the merits, id. at 494. The court thus reversed the district court’s grant of a
13 preliminary injunction for all but two of the plaintiffs.
14 In severely trimming the scope of the injunction, the Adams court criticized then-Judge
15 Breyer’s reliance in Textron on “general facts” and “common sense,” regarding the sort of harm
16 suffered by retirees whose health benefits are terminated, as an insufficient foundation on which
17 to conclude that individuals had suffered irreparable injury. See Adams, 204 F.3d at 485-87.
18 The Adams court asserted that “[t]he law does not take judicial notice of matters of ‘common
19 sense,’ and common sense is no substitute for evidence.” Id. at 487. The court thus articulated a
20 standard by which the plaintiffs must present individualized proof of irreparable harm.
21 Notably, the Adams court recognized that its standard could be met in a representative
22 fashion (as in a class action), and explained that “so long as the plaintiffs lay an adequate
16
1 foundation from which one could draw inferences that the testifying plaintiffs are similarly
2 situated – in terms of irreparable harm – to all the other plaintiffs,” a court could permissibly
3 engage in inductive reasoning to reach the conclusion that every plaintiff suffered the threat of
4 irreparable harm. Id. Because the plaintiffs in that case did not lay such a foundation, the court
5 held that they presented insufficient evidence to justify a preliminary injunction protecting all of
6 the plaintiffs. Id. at 488.5 See also Cooper v. TWA Airlines, LLC, 274 F. Supp. 2d 231, 242
7 (E.D.N.Y. 2003) (denying class-wide injunctive relief in the absence of, among other things,
8 some indication that individuals suffering irreparable harm were representative of the class).
9 In urging this Court to adopt the standard set forth in Adams, defendants suggest that the
10 district court’s citation to Textron indicates that it relied heavily on the “general facts” noted by
11 Justice Breyer. However, the district court explicitly relied on the affidavits of six persons
12 covered by the Guaranty, each of whom alleged circumstances amounting to irreparable injury.
13 As Adams concedes, plaintiffs should be allowed to adduce evidence of harm representatively, so
14 long as they lay a foundation that the representative plaintiffs are similarly situated with regard to
15 the issue of irreparable harm.6 Adams, 204 F.3d at 487.
16 Determining whether plaintiffs have laid such a foundation is a case-sensitive inquiry
5
It should be noted that the court in Adams otherwise provided latitude in the method of
providing individualized evidence. It explained that the plaintiffs could do so through “[s]imple
affidavits,” and that it would likely often be the case that defendants would have difficulty
explaining how their conduct would have different effects on different plaintiffs. See Adams,
204 F.3d at 489. What is somewhat unclear from this explanation is how the Adams court
perceived the burden of proof, given its suggestion that it would be the defendant’s responsibility
to differentiate plaintiff harm.
6
Being sufficiently similarly situated to justify class certification, while relevant in this
regard, need not be determinative.
17
1 subject to review for abuse of discretion. As such, under Adams the question in the present case
2 would be whether the district court abused its discretion in finding that plaintiffs provided a
3 sufficient foundation that the six affidavits on which the district court relied are representative of
4 the class. On that issue, it is worth noting that every member of the class was either an employee
5 of the same firm or is a surviving spouse of such an employee, and defendants do not contest the
6 fact that the average age of the approximately 600 retirees at issue is 83 years old. Were we to
7 adopt Adams – and we do not do so now, thereby leaving open whether, in this Circuit, Textron,
8 Adams, or something in between is the governing approach – we would conclude that the district
9 court did not abuse its discretion in inferring from the evidence presented that irreparable harm
10 was class-wide.7 Cf. Golden v. Kelsey-Hayes Co., 73 F.3d 648 (6th Cir. 1996).
11 2. Whether the Injunction is Overbroad
12 Defendants argue that, even if the district court was within its discretion to grant the
13 preliminary injunction, the terms of that injunction sweep too broadly. They argue that the
14 injunction orders Honeywell to provide a different level of coverage than is stipulated in the
15 Guaranty, and that this court-ordered coverage extends to too many people. On both matters, the
16 issue revolves around difficulties of proof. And on both, we remand and ask the district court to
17 clarify and modify its order.
18 The Guaranty obligates Honeywell to provide for insurance coverage equal to that which
19 would have been available as of April 1, 1976.8 It further provides that this coverage shall
7
While it is possible that class members will suffer varying degrees of harm, such is the
nature of induction. It does not produce certainty; it produces probability.
8
The Guaranty also provides that Bendix’s obligation can be altered only by reductions in
the level of coverage effected by an agreement between Facet (or its successors) and the UAW.
18
1 extend to a limited class of persons: (1) those who retired prior to divestiture, (2) those with at
2 least ten years of service prior to divestiture, and (3) surviving spouses of the first two groups. In
3 its September 2003 order granting the preliminary injunction, the district court specifically
4 ordered that:
5 Defendant Honeywell International shall provide or cause to be provided . . . the
6 health insurance benefits and prescription drug program in place on August 31,
7 2002, as outlined in the “1999 Purolator Products Company Medical Plan for
8 Certain Hourly Retirees formerly Employed by the Bendix Corporation” for each
9 individual listed as a “Bendix Retiree” in the March 2002 Mark IV/BAM
10 purchase agreement.
11 LaForest II, 2003 WL 23180220, at *3.
12 On the issue of whether the district court ordered an incorrect level of coverage,
13 defendants note the facial disparity between the Guaranty’s stipulation of 1976-level coverage
14 and the injunction’s stipulation of 2002-level coverage. Plaintiffs concede that the Guaranty
15 stipulates coverage equivalent to that provided as of April 1976. The Guaranty expressly states
16 that the guaranteed level of benefits is “that provided for in the Insurance Agreement” entered
17 into in 1974 – an agreement still in effect in April 1976. The Insurance Agreement, in turn,
18 explains that “[t]he scope and level of benefits shall be those outlined in the Bendix Corporation
19 Hourly Segment Benefit Manual under the National Account Program as of August 1, 1974, for
20 all employees as developed by the Indiana Blue Cross-Blue Shield plan.” Neither party has been
21 able to locate the Benefit Manual or the National Account Program referenced in the Insurance
22 Agreement.
The UAW and Purolator Products Co. (“Purolator”), another successor of Facet, agreed to a
limited reduction in 1995; that reduction is thus incorporated into the obligation imposed by the
Guaranty.
19
1 In lieu of this missing evidence, plaintiffs provided the district court with affidavits from
2 eleven covered retirees, each explaining that his or her benefit levels had remained unmodified
3 over the years. Plaintiffs also presented to the court a 1999 plan under which Purolator, a
4 successor of Facet, provided benefits to the retirees in question – a plan expressly limited to
5 persons covered by the Guaranty. Finally, plaintiffs provided the district court with a copy of the
6 Summary Plan Description in place in 1980 (under Facet’s watch), permitting the court to
7 compare the level of benefits in 1999 to the level in 1980. After reviewing this evidence, the
8 court determined that the level of benefits provided as of April 1, 1976 was equivalent to the
9 level provided in the 1999 Purolator plan, which was the plan in place in 2002. Defendants do
10 little to rebut this evidence, other than suggest that four of the eleven affidavits mentioned above
11 suffer from defects, including the fact that two of the affiants retired after 1976 and admittedly
12 suffer from memory loss. Nevertheless, because of the facial disparity between the Guaranty and
13 the district court’s injunction, we remand this case to the district court to modify the injunction
14 such that it accurately reflects that the guaranteed level of benefits is the level in place on April 1,
15 1976.
16 In this regard, the district court may wish to engage in further fact-finding as to the 1976
17 level of benefits. We note that it is not implausible that the 1976 benefit level will comport with
18 the 1999 Purolator plan. Indeed, that there is evidence that they had equivalent cost-sharing
19 mechanisms is highly persuasive. We also find defendants’ suggestion that plaintiffs are not
20 entitled to coverage for particular prescriptions or medical advances that did not exist in 1976 to
21 be a strained reading of the Guaranty. The inquiry into the level of benefits to which plaintiffs
22 are entitled surely has a more general answer; if “full prescription” coverage was available in
20
1 1976, then “full prescription” coverage is the level to which plaintiffs are entitled today.
2 On the issue of whether the district court ordered coverage for too many people,
3 defendants take issue with the court’s use of the “Bendix Retiree” list in the “March 2002 Mark
4 IV/BAM purchase agreement.”9 Defendants contend that there has been no showing that the
5 Bendix Retiree list coincides with the categories of persons specifically covered by the Guaranty.
6 Indeed, defendants claim that preliminary investigation reveals that a number of persons on the
7 list are definitely not covered by the Guaranty. According to defendants, these persons include
8 those who have died, voluntarily opted-out of coverage, been deemed “ineligible” under the
9 Guaranty, and received lump-sum pension benefits. Plaintiffs do not contest that some persons
10 on the list are not eligible for benefits under the Guaranty. Indeed, plaintiffs suggest that they
11 “remain open to working with Honeywell and Motor Components to resolve any legitimate
12 eligibility issues.” Thus, although we affirm the issuance of the preliminary injunction, we
13 remand so that the district court may make findings of fact as to who is legitimately due the
14 protections of the Guaranty – and modify the injunctive relief accordingly.
15 3. Remaining Issues
16 Contrary to defendant’s suggestion, the district court’s injunction does not fail for lack of
17 specificity. Although it is true that “fairness requires that the litigants receive explicit notice of
18 precisely what conduct is” required, Lau v. Meddaugh, 229 F.3d 121, 123 (2d Cir. 2000) (per
9
In 1994, Mark IV Industries, Inc. (“Mark IV”) acquired Purolator. Mark IV
subsequently administered the Purolator health plan designed exclusively for retirees covered by
the Guaranty. Between February 1999 and March 2002, Mark IV divided Purolator into three
business groups. In March 2002, Mark IV sold one of those groups, Motor Components, to
BAM Enterprises, Inc. Attached to the purchase order was a list of approximately 600 Bendix
retirees and surviving spouses.
21
1 curiam) (finding error in a district court’s failure to memorialize an injunction in writing),
2 fairness does not require a district court to resolve every possible inquiry or contingency that an
3 injunction might raise. Honeywell received notice of what it was to do, what standard would
4 guide its conduct, and the time frame in which to do it. On remand, the district court will clarify
5 and modify its order as to who and what is covered by the Guaranty, but it need not specify any
6 more precisely than it already has the mechanism by which Honeywell is to comply.
7 Further, the district court did not err in foregoing the requirement of a bond. Given that
8 the court correctly granted summary judgment to plaintiffs on the issue of liability, it is
9 undisputed that Honeywell is under a legal obligation to honor the Guaranty. Complying with
10 this obligation cannot constitute “harm” to Honeywell, much less the sort of harm that would
11 require the protective measure of a bond. See Doctor’s Assocs., Inc. v. Stuart, 85 F.3d 975, 985
12 (2d Cir. 1996). Therefore, because the district court did not err in granting summary judgment to
13 plaintiffs, and because the court did not abuse its discretion in granting a preliminary injunction
14 ordering Honeywell to comply with the Guaranty, we affirm both judgments – but remand for
15 clarification and modification of the injunctive relief with respect to who and what is covered by
16 that relief.
17 III. Conclusion
18 For the reasons set forth above, the judgments of the District Court are hereby
19 AFFIRMED, but the case REMANDED for clarification and modification of the preliminary
20 injunction.
22