Kenneth Schreiber v. Philips Display Components Co. ( 2009 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 09a0321p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiffs-Appellants, -
KENNETH C. SCHREIBER, et al.,
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No. 07-2440
v.
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PHILIPS DISPLAY COMPONENTS COMPANY,
Defendants-Appellees. -
et al.,
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Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 07-10246—Patrick J. Duggan, District Judge.
Argued: October 23, 2008
Decided and Filed: September 2, 2009
*
Before: MOORE and WHITE, Circuit Judges; VINSON, District Judge.
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COUNSEL
ARGUED: David W. Zoll, ZOLL, KRANZ & BORGESS, LLC, Toledo, Ohio, for
Appellants. Gregory V. Mersol, BAKER & HOSTETLER LLP, Cleveland, Ohio, for
Appellees. ON BRIEF: David W. Zoll, ZOLL, KRANZ & BORGESS, LLC, Toledo,
Ohio, Lisa M. Smith, KLIMIST, McKNIGHT, SALE, McCLOW & CANZANO, P.C.,
Southfield, Michigan, for Appellants. Gregory V. Mersol, Todd A. Dawson, BAKER
& HOSTETLER LLP, Cleveland, Ohio, for Appellees.
WHITE, J., delivered the opinion of the court, in which MOORE, J., joined.
VINSON, D. J. (pp. 25-26), delivered a separate dissenting opinion.
*
The Honorable C. Roger Vinson, United States District Judge for the Northern District of
Florida, sitting by designation.
1
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_________________
OPINION
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WHITE, Circuit Judge. Plaintiffs-Appellants Kenneth C. Schreiber, Mary Jane
Lambert, and George Vantine appeal the district court’s grant of summary judgment to
their former employer, Philips Display Components Company (Philips Display or PDC),
and related corporations (collectively defendants or Philips), dismissing plaintiffs’
claims that Philips breached its collective bargaining agreement (CBA) with, and
violated fiduciary duties owed to, plaintiffs when it refused to provide plaintiffs with
retiree health benefits.
Plaintiffs raise two arguments on appeal. First, plaintiffs representing hourly
employees argue that the district court both misinterpreted the CBA and failed to
properly consider extrinsic evidence in reaching its decision that the parties did not
intend retiree health benefits to vest upon retirement. Second, both hourly and salaried
plaintiffs argue that the district court erred in granting summary judgment on plaintiffs’
breach of fiduciary duty claim because Philips never properly amended relevant health
plans to exclude plaintiffs.
We REVERSE and REMAND for further proceedings consistent with this
opinion.
I. BACKGROUND
A. Parties
Defendant Philips Electronics North America Corp. (PENAC) manufactures
consumer electronics and other products. Throughout the 1980s and 90s, PENAC
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owned a facility in Ottawa, Ohio. Philips Display, a division of PENAC, operated the
Ottawa facility, producing cathode ray tubes (CRTs) for television sets.1
Plaintiffs are two putative classes or subclasses of Philips Display employees:
1) hourly, union employees who worked at the Ottawa facility and retired on or after
July 1, 2001, and 2) salaried, non-union employees who primarily worked at Philips
Display’s headquarters in Ann Arbor and retired after July 1, 2001. Members of both
putative classes contain surviving spouses and/or dependents of hourly and salaried
workers.
B. Hourly Employees: Collective Bargaining Agreement and Plan Documents
Local 1654 of the International Brotherhood of Electrical Workers (IBEW)
represented the Ottawa facility’s hourly employees in their contract negotiations with
Philips Display. The last CBA between Philips Display and the union, signed in 2000,
covered the period from October 2, 2000 to September 28, 2003 (the 2000 CBA).
During negotiations for the 2000 CBA, Philips Display announced that it
intended to transfer CRT production from its Ottawa facility to a facility in Mexico.
Because the company planned to lay off the majority of its Ottawa-based employees, the
2000 CBA became a plant-closing agreement, guaranteeing 800 jobs at Philips Display
for the duration of the contract.
The “Medical Plans” section of the 2000 CBA outlined eligibility criteria for
retiree health coverage, stating:
Employees who retire on or after January 1, 1998, who are at least age
fifty-five (55) and who meet the terms of the existing plan are entitled to
purchase health insurance coverage on the same terms and at the same
employee contribution levels as in effect for active employees.
(Joint Appendix (J.A.) at 343.) Schedule C of the same CBA also provided information
regarding “Employee Group Insurance and Benefit Plans”:
1
Philips Display took over the facility in 1981. However, other entities apparently manufactured
CRTs at the facility before that date.
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(A) The group insurance in force upon the signature date of this
Collective Bargaining Agreement shall remain in full force and effect
until September 28, 2003.
(B) The Company will maintain during the remaining term of this
Agreement employee group insurance of the following types: life
insurance, non-occupational disability insurance, non-occupational basic
medical insurance, non-occupational major medical insurance, and a
contributory dental assistance plan as described in the Summary Plan
Descriptions distributed to the Union Negotiating Committee on
August 3, 1982, as amended . . . .
***
(D) During the term of this Agreement, the Company shall have the right
to amend in any way, the Plans referenced in this Schedule C, except that
no such amendment shall diminish the rights prescribed in the Plans as
amended by this Agreement, unless it is necessary to avoid the violation
of any law or governmental regulation or to meet requirements which the
government may impose, so as to obtain the necessary governmental
approvals to place these amendments in effect and to continue them in
effect.
(Id. at 346.) Subsection (G) of Schedule C stated that “[n]o matter concerning the
Employee Group Insurance Plan or the Pension Plan for Hourly employees or any
difference or claim arising thereunder shall be subject to the grievance or arbitration
procedure but rather shall be governed by the terms and conditions of such plans.” (Id.
at 347.)
Philips also issued summary plan descriptions (SPDs) that provided extensive
information about retiree health benefits.2 The SPDs for Philips Display’s 2001
Basic/Major Medical Plan and 2001 Comprehensive Medical Plan stated that PENAC
was the plan administrator and sponsor and that Philips Personal Access Center for
Employees (PACE or Philips PACE) provided “Administrative Services.” (J.A. at 384,
404.). The SPDs outlined requirements for early retirees between ages 55 and 65. In
addition to a requirement that Philips Display have hired such retirees before October
1, 1994, the SPDs dictated that:
2
Despite their name, for all intents and purposes the “summary plan descriptions” are the plan
documents in this case.
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To be eligible for this coverage [under the Comprehensive or
Basic/Major Medical Plan], you must:
• Have 15 years of eligibility service, as defined in the
company's pension plan
• Be receiving pension benefits or have received a lump
sum distribution of the entire pension
• Be eligible for a company sponsored medical plan
immediately prior to retirement
(Id. at 381 (Basic Major Medical Plan SPD); see also id. at 401 (Comprehensive Medical
Plan).)
The same plan descriptions provided that:
Retirees who retire on or after January 2, 1992 will be required
to contribute towards the cost of their own and their dependants’ medical
coverage. If a retiree or surviving spouse is receiving a monthly pension
check sufficient to cover the cost of retiree medical coverage, payment
will be automatically deducted from the monthly check. If the monthly
pension check is not large enough to cover the retiree medical cost, the
retiree (or surviving dependent) will be direct billed by Benefit One of
America [the COBRA Administrator].
If the required contributions for retiree and/or dependent coverage
are not made, retiree and/or dependant medical coverage will terminate.
Once coverage terminates it will not be available again.
(Id. at 381, 401.)
Both SPDs also contained the following clause regarding the “Future Of The
Plan”: “[t]he Company reserves the right to charge for coverage or to end or amend
medical coverage for you or your dependents at any time subject to the provisions of the
applicable collective bargaining agreement.” (J.A. at 383, 403.)
C. Salaried Employees: Plan Documents
At the time each of the salaried retirees named in this suit retired, one of two
medical plans governed: the 1999 Philips Retiree Medical Plan (the 1999 Plan) or the
2003 Philips Retiree Medical Program (the 2003 Program). The 1999 Plan took effect
on January 1, 1999; the 2003 Program controlled from January 1, 2003. The SPDs for
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both plans stated that PENAC was the plan sponsor and administrator and that Philips
PACE provided “Administrative Services.”3 (J.A. at 509-10, 526.)
According to the SPDs, to be eligible for healthcare coverage in retirement,
salaried employees had to: 1) retire after their 55th birthday and have at least 15 years
of eligible service; 2) begin receiving Philips pension benefits immediately after
termination of service (or receive a lump sum); 3) be eligible for a company-sponsored
medical plan immediately prior to retirement; 4) be in a group covered by the Philips
Retiree Medical Program at the time they left the company. (J.A. at 501, 516.) The
plans also required salaried retirees to pay contributions in order to maintain their
coverage. (See, e.g., id. at 515, 516, 518.)
The SPDs explained various situations in which coverage would end, such as
when a beneficiary “become[s] ineligible” or “the group plan terminates.” (J.A. at 523.)
Further, the 1999 Plan contained the following reservation of rights clause:
Although the company presently intends to continue the plan indefinitely,
Philips Electronics North America reserves the right to alter any of its
provisions, to change the amount of contributions or to terminate all or
any part of it, as the company in its sole discretion deems necessary,
without prior notice to any covered person.
Any amendment to the plan, change in the amount of employee or
dependent contributions or termination of part or all of the plan shall be
effected by a written document executed on behalf of the company.
Termination of coverage under the plan will not prejudice any claim
originating before the date of such termination.
(J.A. at 508.)4
3
These administrators and sponsors are named despite the fact that, effective July 1, 2001, a new
company (LG Philips Displays USA, Inc. (LGP)) took over Philips Display’s Ottawa and Ann Arbor
facilities. See infra Section I.D.
4
A slightly shorter clause in the 2003 Program provided:
Although the company presently intends to continue the plan indefinitely, Philips
Electronics North America reserves the right to alter any of its provisions, to change the
amount of contributions or to terminate all or any part of it, as the company in its sole
discretion deems necessary, without prior notice to any covered person. Termination
of coverage under the plan will not prejudice any claim originating before the date of
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D. The Creation of LG Philips Displays USA, Inc.
In 2001, PENAC’s parent company, the Netherlands-based Kobinklijke Philips
Electronics N.V. (KPENV), in a transaction with Korea-based LG Electronics (LG),
formed LG Philips Displays USA, Inc. (LGP). As part of the transaction, PENAC
conveyed Philips Display’s Ottawa facility, along with other assets and liabilities, to
LGP, effective July 1, 2001. This conveyance included employee-related contract
obligations and liabilities.
According to defendants, as a result of KPENV’s and LG’s creation of LGP,
“Philips Display employees (including plaintiffs) who worked in Ottawa and Ann Arbor
on the effective date of the sale immediately became employees of LGP.” (Final Br. of
Defs.-Appellees at 9-10.) LGP continued to operate the Ottawa facility, through the Ann
Arbor office, with the same employees, CBA, and benefits plans. Defendants assert,
however, that LGP employees “left the PENAC-sponsored health insurance programs(s)
that had applied to them during their employment with Philips Display, and were advised
of that fact in writing both before and after the transaction.” (Id. at 10.)
In all relevant aspects, the “new” health insurance plans resembled the Philips
Display Plans. The plan documents stated that PENAC sponsored and administered the
plan, though Warren T. Oates, Jr., Senior Assistant Secretary for PENAC, asserted that
Philips PACE, an unincorporated office within PENAC, “provided administrative
services, for a fee, to LGP,” and, under a Local Services Agreement, certain PENAC
employees provided record-keeping services to LGP. (Oates Decl., J.A. at 150; Oates
Supp. Decl., J.A. at 180 (“These services included some record keeping, including
enrollment forms in connection with retiree medical benefits provided by LGP.”); see
such termination.
(Id. at 513, 525.)
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also, e.g., Grissmore Dep., J.A. at 647 (“[W]hen we went into the joint venture July 1st,
2001, even though we used the same documents, we had our own separate plans.”).)5
E. LGP’s Demise and Plaintiffs’ Retirements
After LGP took over Philips Display’s operations, the CRT market collapsed and
LGP announced that it would be closing the Ottawa facility.6 In preparation for this
event, LGP and the IBEW created a document entitled “Implementation of Contract
Language – Per Ottawa LG Philips Plant Closing” (the Implementation Agreement) for
distribution to relevant union employees and human resources personnel.7 (See J.A. at
360-62.) LGP and union representatives signed the Implementation Agreement, which
sought to clarify any ambiguities regarding the date on which employees would need to
retire in order to continue to receive pension and healthcare benefits in their retirement.
Under this agreement, employees retiring after the expiration of the CBA, but before the
exhaustion of COBRA coverage, were determined to be eligible to receive healthcare
coverage under the plans. The Ottawa plant closed on December 31, 2002.
All plaintiffs submitted retirement applications on or after July 1, 2001 and, at
the time of retirement, elected to receive retiree healthcare benefits under one of the
plans described above. The retirees submitted these applications on forms with PENAC
headers. (See J.A. 348-59; 542-604.) Some of the applications also contained an
acknowledgment that the retiree understood “that the company necessarily reserves the
right to end or amend retiree medical coverage for me or my dependants at any time.”
(See, e.g., id. at 356; 359; 542-46, 549, 551-58).)
5
LGP issued new SPDs in 2005. These documents indicated LGP was the plan sponsor and
administrator and that Philips PACE provided administrative services.
6
The parties’ presentations of facts appear to conflict regarding whether this closure was the
completion of PDC’s previously announced closure or a new development. (Compare Final Br. of Pls.-
Appellants at 13, with Final Br. of Defs.-Appellees at 10.)
7
Depositions indicate that LGP and the union worked together to create the document – which
the parties executed on October 18, 2002 – and that Philips PACE distributed it. (See J.A. 687-88
(distribution); 711-12 (“[S]o the union sat with us [LGP representatives] and we looked at trying to
simplify and clarify the language and any changes that were reflected in the latest contract . . .”).)
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On May 10, 2006, LGP sent plaintiffs and class members letters informing them
that LGP would be terminating retiree medical plans. Five days later, LGP declared
bankruptcy. On May 31, 2006, the company terminated retirees’ health benefits.
F. Procedural Background
In January 2007, plaintiff retirees Schreiber, Lambert, and Vantine brought suit
against Philips Display, PENAC, and PACE on behalf of themselves and similarly
situated retirees. Schreiber and Lambert purport to represent a class of hourly unionized
employees who worked at PDC’s manufacturing facility in Ottawa, Ohio. Vantine
claims to represent salaried, non-union workers PDC employed at its headquarters in
Ann Arbor, Michigan.
Plaintiff hourly retirees sued under the Labor Management Relations Act
(LMRA) and the Employee Retirement Income Security Act (ERISA), alleging that their
CBA with Philips Display required defendants to continue to provide retiree healthcare
benefits. As a result, plaintiffs argued, the termination of benefits breached the parties’
CBA. In a separate claim, both hourly and salaried plaintiffs alleged that Philips
violated its fiduciary duty to plaintiffs by improperly excluding them from the relevant
health benefit plans. Defendants rebutted these arguments, asserting that the documents
referenced by Plaintiffs did not provide for vested retiree healthcare benefits, that the
decision to transfer retiree health liabilities to LGP did not implicate any fiduciary
duties, and that plaintiffs failed to exhaust their administrative remedies. Schreiber v.
Phillips Display Components Co., 2007 WL 3036743, at *6 (E.D. Mich. Oct. 16, 2007).8
After discovery, both parties filed motions for summary judgment.
The district court denied defendants’ motion regarding plaintiffs’ failure to
exhaust administrative remedies, holding that any such exhaustion “would be futile
under the circumstances,” but granted summary judgment to defendants on the remaining
8
The district court incorrectly captioned the case “Phillips” instead of “Philips.”
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claims. Id. at *8, *15. The court held the CBA unambiguous in its failure to vest retiree
healthcare benefits and, therefore, refrained from considering evidence extrinsic to the
agreement, including the SPDs that it regarded as extrinsic. The court also found that
because defendants’ transfer of liabilities for retiree healthcare benefits to LGP was a
business decision, plaintiffs’ later loss of benefits did not implicate Philips’ fiduciary
duties under ERISA. Plaintiffs timely appealed.
II. ANALYSIS
A. Standard of Review
This action has been brought under section 301(a) of the Labor Management
Relations Act, 29 U.S.C. § 185(a),9 and sections 502(a)(1)(B), 502(a)(3), 502(e)(1), and
502(f) of the Employee Retirement Income Security Act (ERISA), 29 U.S.C.
§ 1132(a)(1)(B), (a)(3), (e)(1), and (f).10 This court has jurisdiction under 28 U.S.C.
§ 1291. We review a district court’s order of summary judgment de novo. Interpretation
of a collective bargaining agreement is a question of law, also subject to de novo review.
See, e.g., Maurer v. Joy Tech., Inc., 212 F.3d 907, 914 (6th Cir. 2000).
Rule 56 of the Federal Rules of Civil Procedure states that summary judgment
is appropriate “if the pleadings, the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any material fact and that the movant
is entitled to judgment as a matter of law.” The moving party must inform the district
court “of the basis for its motion, and identifying those portions of ‘the pleadings,
9
Section 301(a) provides:
Suits for violation of contracts between an employer and a labor organization
representing employees in an industry affecting commerce as defined in this chapter, or
between any such labor organizations, may be brought in any district court of the United
States having jurisdiction of the parties, without respect to the amount in controversy
or without regard to the citizenship of the parties.
29 U.S.C. § 185(a).
10
The relevant section of 29 U.S.C. § 1132(a) provides that a plan participant or beneficiary may
bring a civil action “to recover benefits due to him under the terms of his plan, to enforce his rights under
the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”
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depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any’ which it believes demonstrate the absence of a genuine issue of
material fact.” Celotex Corp. v. Cartrett, 477 U.S. 317, 323 (1986) (quoting Fed. R. Civ.
P. 56(c)). “In considering a motion for summary judgment, the district court must
construe all reasonable inferences in favor of the nonmoving party.” Vill. of Oakwood
v. State Bank and Trust Co., 539 F.3d 373, 377 (6th Cir. 2008).
B. Hourly Plaintiffs’ LMRA and ERISA Claims
Hourly plaintiffs claim their CBA with Philips Display vested employee health
benefits and, accordingly, the subsequent termination of retirees’ health insurance
violated a contract “between an employer and a labor organization representing
employees in an industry affecting commerce” under the LMRA. 29 U.S.C. § 185(a).
Thus, the LMRA claim – essentially a breach of contract allegation – determines the
outcome of the ERISA claim because “[i]f the parties intended to vest benefits and the
agreement establishing this is breached, there is an ERISA violation as well as a LMRA
violation.” Maurer, 212 F.3d at 914; see also Armistead v. Vernitron Corp., 944 F.2d
1287, 1298 (6th Cir. 1991).
A retiree health insurance plan “is a welfare benefit plan under ERISA.” Yolton
v. El Paso Tenn. Pipeline Co., 435 F.3d 571, 578 (6th Cir. 2006). In contrast to pension
benefits, “[t]here is no statutory right to lifetime health benefits.” Golden v.
Kelsey-Hayes Co., 73 F.3d 648, 653 (6th Cir. 1996).11 Therefore, courts often look to
collective bargaining agreements between unions and employers to see if the parties
agreed to vest health benefits. See, e.g., Yolton, 435 F.3d at 578; Boyer v. Douglas
Components Corp., 986 F.2d 999, 1005 (6th Cir. 1993); see also Sprague v. General
11
As Judge Martin explained in Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571, 578 n.4 (6th
Cir. 2006):
ERISA provides for two types of employee benefit plans: pension plans and welfare
benefit plans. 29 U.S.C. § 1002(1), (2)(A). Pension plans are subject to mandatory
participation, vesting, and funding requirements. 29 U.S.C. § 1051. Welfare benefits are
not subject to these requirements. Id. Retiree health insurance benefit plans are
classified as welfare benefit plans under ERISA. 29 U.S.C. § 1002(1).
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Motors Corp., 133 F.3d 388, 400 (6th Cir. 1998 (“To vest benefits is to render them
forever unalterable.”). If the parties vested health benefits, an “employer’s unilateral
modification or reduction of those benefits constitutes an LMRA violation.” Yolton, 435
F.3d at 578.
This court has previously held that while the “enforcement and interpretation of
collective bargaining agreements under § 301 is governed by substantive federal law . . .
traditional rules for contractual interpretation are applied as long as their application is
consistent with federal labor policies.” UAW v. Yard-Man, Inc., 716 F.2d 1476, 1479
(6th Cir. 1983); see also Yolton, 435 F.3d at 578-79. In the benefits context, such an
interpretation should focus on the intent of the parties, looking to the “explicit language
of the collective bargaining agreement for clear manifestations of intent” and
interpreting “each provision in question as part of the integrated whole.” Yard-Man,
Inc., 716 F.2d at 1479. “When ambiguities exist,” courts may also look to other
provisions of the CBA and extrinsic evidence for guidance. Yolton, 435 F.3d at 579
(citing Yard-Man, Inc., 716 F.2d at 1480); see also Golden, 73 F.3d 648 (“The aim in
such cases is to settle on an interpretation which is harmonious with the entire
agreement.”). The CBA, however, need not contain an “explicit intent to vest,” in order
for courts to find that rights have vested. Maurer, 212 F.3d at 915.
A recent Sixth Circuit opinion aptly summarizes the continuing impact of
International Union, United Automobile, Aerospace & Agricultural Implement Workers
of America v. Yard-Man, 716 F.2d 1476 (6th Cir. 1983), this court’s leading case “for
determining whether the parties to a CBA intended benefits to vest.” Cole v.
ArvinMeritor, Inc., 549 F.3d 1064 (6th Cir. 2008). According to Cole, Yard-Man
explained that “retiree benefits are in a sense ‘status’ benefits which, as
such, carry with them an inference . . . that the parties likely intended
those benefits to continue as long as the beneficiary remains a retiree.”
Id. at 1482. With regard to the so-called “Yard-Man inference,” later
decisions of this court have stated that Yard-Man does not create a legal
presumption that retiree benefits are vested for life. Yolton v. El Paso
Tenn. Pipeline Co., 435 F.3d 571, 579 (6th Cir. 2006). Yard-Man is
instead “properly understood as creating such an inference only if the
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context and other available evidence indicate an intent to vest.” Noe, 520
F.3d at 552.
Id. at 1069.
Plaintiffs argue that the district court erred in not considering the plan documents
in its analysis. The district court held that reference to the SPDs “would be appropriate
only if the 2000 CBA was ambiguous as to whether retiree health insurance vested.”
Schreiber, 2007 WL 3036743 at *14 (citing UAW v. BVR Liquidating Inc., 190 F.3d 768
(6th Cir. 1999)); see also BVR Liquidating, Inc., 190 F.3d at 774 (“When a contractual
provision is ambiguous, the court may turn to extrinsic evidence to discern the intent of
the parties.”); Smith v. ABS Indus., Inc., 890 F.2d 841, 846 n.1 (6th Cir. 1989)
(considering testimony of retirees – despite it being extrinsic evidence – in order to
“resolve the ambiguity” in the contract); UAW v. Park-Ohio Industries, Inc., 1989 WL
63871 (6th Cir. June 15, 1989) (unpublished disposition) (“That both parties have
offered plausible interpretations of the agreement drawn from the contractual language
itself demonstrates that the provision is ambiguous. Neither of the two proffered
interpretations is frivolous nor unreasonable on its face, and inquiry should be permitted
into extrinsic circumstances.”). Because the district court concluded that “the 2000 CBA
contains express, durational language, unambiguously providing retiree medical
insurance for its duration,” and not beyond, the court refused to consider the SPDs,
which it regarded as extrinsic, or any other extrinsic evidence. Schreiber, 2007 WL
3036743 at *14. Therefore, as an initial matter, we must examine the district court’s
decision that the CBA is unambiguous.12
12
Plaintiffs also argue that intervening case law limits the meaning of “extrinsic evidence” to
“parole evidence of the parties’ original understanding of the terms.” (Final Br. of Pls.-Appellants at 26
(citing Prater v. Ohio Educ. Ass’n, 505 F.3d 437 (6th Cir. 2007); Yolton, 435 F.3d 571).) Defined in this
manner, extrinsic evidence would not include plan documents, leading the court to review the SPDs
alongside the CBA regardless of the latter’s ambiguity.
We need not explore this issue. The district court’s dispositive holding was that the CBA is unambiguous
in its failure to vest retiree health benefits. Because that conclusion was erroneous, the district court should
have looked at the SPDs regardless of whether plan documents are properly regarded as extrinsic evidence.
Plaintiffs further assert that the CBA “incorporates” the content of the SPDs via its “specific references
to the Plan Documents.” (See Final Br. of Pls.-Appellants at 27 (listing the CBA’s numerous references
to the plan documents).) For example, the CBA lists the medical plans available to employees and states
that retired employees “who are at least age fifty-five (55) and who meet the terms of the existing plan are
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The hourly retirees look to the relevant portions of the CBA to argue that the
document is subject to “differing, though reasonable, interpretations.” (Final Br. of Pls.-
Appellants at 33.) Notably, these are the same portions of the agreement on which the
district court relied in finding the document unambiguously did not vest retiree health
benefits.
First, the retirees point to the CBA’s maintenance and amendment requirements
as set forth in Schedule C. The requirements explain, inter alia, that “[t]he Company
will maintain during the remaining terms of this Agreement employee group insurance
of the following types: . . . non-occupational basic medical insurance, non-occupational
major medical insurance . . . .” (J.A. at 346.) Plaintiffs assert that the language created
a general durational limitation that required the company to maintain the insurance for
the period specified, but that it did not address or limit the vesting of those benefits upon
retirement. In other words, plaintiffs argue that the clause provides that the insurance
benefits must be maintained throughout the life of the CBA; it does not, however,
provide that a worker who retires during the life of the CBA will lose those benefits
when the CBA expires. In contrast, Philips interprets the clause as a specific durational
entitled to purchase health insurance coverage on the same terms and at the same employee contribution
levels as in effect for active employees.” (CBA, “Medical Plans,” “Retired Employees,” J.A. at 342-43.)
It also discusses the company’s obligations to maintain benefits “as described in the Summary Plan
Descriptions,” and the procedures for amending and updating the plans. (CBA, Schedule C (B), (D)-(E),
J.A. at 346-47.)
These references to the plan documents may be enough to incorporate by reference portions of the SPDs
into the CBA. Courts generally cite contract language that is more explicit in its action, though in some
cases they have found mere references to SPDs and plan booklets “sufficient to incorporate by reference.”
Int’l Ass’n of Machinist and Aerospace Workers v. ISP Chems., Inc., 261 F. App’x 841, 847-48 (6th Cir.
2008) (unpublished disposition); see also 11 Williston on Contracts § 30:25 (4th ed.) (“Interpretation of
several connected writings”). Compare Yolton, 435 F.3d at 580 (looking to a durational clause in the CBA
stating “the insurance plan ‘will run concurrently with [the CBA] and is hereby made part of this
Agreement’” (quoting the CBA)), and Int’l Union, UAW v. Aluminum Co. of Am., 932 F. Supp. 997, 1001
(N.D. Ohio 1996) (“Separate booklets describing these benefits are incorporated herein and made a part
of this Agreement.”), with Bailey v. AK Steel Corp., 2006 WL 2727732 at *1 (S.D. Ohio Sept. 22, 2006)
(unpublished disposition) (“Each CBA incorporates by reference the health benefit plan . . .”).
Thus, the district court would have been on solid ground had it interpreted the SPDs alongside the CBA
before reaching the ambiguity issue. Since it did not do so, however, we reverse the district court’s
decision that the provisions within the four corners of the CBA unambiguously did not vest retiree health
benefits.
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limitation on the benefits themselves, even after retirement. (Final Br. of Defs.-
Appellees at 17.)13
Both parties cite Gilbert v. Doehler-Jarvis, Inc., 87 F. Supp. 2d 788, 791 (N.D.
Ohio 2000). The Gilbert court held that the clause in question – which provided that
“[t]his Insurance Program shall continue in effect until termination of the collective
bargaining agreement of which this is a part” – “referr[ed] to the duration of the
agreement, as opposed to the duration of the benefits described in that agreement.” Id.
(emphasis in original). While we do not know the full context of the Gilbert “Insurance
Program,” other case law explains that “[a]bsent specific durational language referring
to retiree benefits themselves, courts have held that the general durational language says
nothing about those retiree benefits.” Yolton, 435 F.3d 581 (emphasis added); see also
Cole, 549 F.3d at 1074 (“Yolton requires that a durational limitation must include a
specific mention of retiree benefits in order to apply to such benefits.”); Noe v. Polyone
Corp., 520 F.3d 548, 554 (6th Cir. 2008).
The clause at issue here can be understood either to relate to the duration of the
listed benefits, or to the agreement itself. See Gilbert, 87 F. Supp. 2d at 791.
Nonetheless, like the agreements in Yolton and Noe, there is no language in the CBA that
specifically states retiree benefits expire upon the termination of the agreement, and
therefore the durational provision alone does not manifest a lack of intent to vest
healthcare benefits upon retirement. Yolton, 435 F.3d at 581; see also Noe, 520 F.3d at
554 (noting that the contract language does not state that retiree benefits expire but,
rather, “speaks generically of all benefits for all employees”). We conclude that the
district court erred under our precedent in construing the CBA as including a specific
durational clause limiting retiree healthcare benefits to the duration of the CBA.14 Noe,
13
Philips also claims an arbitrator has already decided this issue in their favor. See infra.
14
Furthermore, as plaintiffs point out, the CBA uses similar language when discussing pension
benefits, which do vest, and does apply specific durational limitations to disability retirees. (J.A. at 343,
346.) See Noe v. Polyone Corp. , 520 F.3d 548, 562-63 (6th Cir. 2008) (“The presence of specific
durational language in other provisions and its absence in the retiree health benefits provisions suggests
an intent to vest under our case law.”); Yolton, 435 F.3d 571, 581 (noting plaintiffs’ argument that
“because pension plans are vested benefits and because the CBA uses the same durational language for
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520 F.3d at 554; see also Maurer, 212 F.3d at 919 (holding a reservation of rights clause
was effective against vesting because the language “clearly included retirees and was
distributed to them”).
The district court also relied on the “Medical Plans” section of the CBA – which
refers to retirees “who meet the terms of the existing plan” and are, therefore, “entitled
to purchase health insurance coverage on the same terms and at the same employee
contribution levels as in effect for active employees” – in accepting Philips’ argument
that the CBA only guaranteed retiree benefits for the duration of the agreement.
According to defendants, this language “recognized that retirees would not receive any
set level of benefits but, instead, would only be entitled to those benefits” of active
employees at the Ottawa facility. (Final Br. of Defs.-Appellees at 24.) Plaintiffs,
however, argue that this clause was a “shorthand way to describe the varying rates of
contribution” available to retirees. (Final Br. of Pls.-Appellants at 34.)
The “Medical Plans” section is not a model of clarity with regard to whether
retiree health benefits vest. While the court could interpret the language only to provide
benefits available to active employees at any moment in time, this is not the most
obvious interpretation, and the provision does not provide a “clear manifestation of
intent” that the benefits should or should not vest. Yard-Man, 716 F.2d at 1479-82.
Analyzing a similar provision, this court held that “[t]he language ‘will provide
insurance benefits equal to the active group’ could reasonably be construed, if read in
isolation, as either solely a reference to the nature of retiree benefits or as an
incorporation of some durational limitation as well.” Id. at 1480. Because Schedule C
is silent regarding retiree benefits and the “Medical Plans” section is ambiguous, the
district court erred in concluding that the CBA unambiguously states that Philips only
“agreed to provide retirees ‘basic’ and ‘major’ medical insurance for the duration of the
2000 CBA.” Schreiber, 2007 WL 3036743 at *14.
pension plans that it uses for the health care benefits, the health care benefits also must be vested
benefits”).
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Philips also argues that a prior arbitration opinion collaterally estops plaintiffs
from asserting that the CBA is ambiguous on the relevant issue. In an arbitration
proceeding between the IBEW and Philips Display, the arbitrator held that Philips had
no obligation to provide life insurance benefits to retirees who retired after the expiration
of the CBA. According to Philips, plaintiffs’ claims here amount to a collateral attack
on the arbitrator’s decision. Cf. Hitchens v. County of Montgomery, 98 F. App’x 106,
114 (3d Cir. 2004) (unpublished disposition) (“[D]ecisions against a union can bind
members in a subsequent action”).
There is significant precedent holding that an arbitrator’s decision has preclusive
effect in federal court. See, e.g., Cent. Transp., Inc. v. Four Phase Sys., Inc., 936 F.2d
256, 257 (6th Cir. 1991) (upholding a district court’s grant of summary judgment
because “plaintiffs’ remaining claims were based on facts already determined in favor
of the defendants by the arbitration panel”). Defendants, however, do not address the
four elements of collateral estoppel. Cent. Transp., Inc., 936 F.2d at 260. Defendants
merely state that the arbitrator considered this court’s Yard-Man decision and still
rejected the union’s argument that “LGP was required to provide insurance benefits to
retirees after the expiration of the Ottawa contract.” (Final Br. of Defs.-Appellees at 19.)
Yet the elements of collateral estoppel require that:
(1) the precise issue raised in the present case must have been raised and
actually litigated in the prior proceeding; (2) determination of the issue
must have been necessary to the outcome of the prior proceeding; (3) the
prior proceeding must have resulted in a final judgment on the merits;
and (4) the party against whom estoppel is sought must have had a full
and fair opportunity to litigate the issue in the prior proceeding.
Hamilton’s Bogarts, Inc. v. Michigan, 501 F.3d 644, 650 (6th Cir. 2007); see Bull v.
United States, 63 Fed. Cl. 580, 590 (Fed. Cl. 2005) (rejecting the argument “that because
‘the individual plaintiffs enjoyed the opportunity, through their union, to argue the
question as to what statute authorizes the payment of overtime,’ collateral estoppel is
appropriate,” as the issues in both cases “must be identical to merit preclusive effect”
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(quoting Shell Petroleum, Inc. v. United States, 319 F.3d 1334, 1338 (Fed. Cir. 2003))
(internal citations omitted)).
The arbitrator’s decision addressed Philips’ obligation to provide life insurance
to employees who retired after the expiration of the contract. (See J.A. at 230-33.)
Significantly, the putative hourly class here is not limited to those who retired after the
expiration of the contract but, rather, to those who retired after June 30, 2001. Further,
although the durational clause is the same, the CBA contains separate and distinct
clauses addressing health insurance coverage for retirees and life insurance coverage for
retirees. Also, the arbitrator’s decision was based on testimony as well as the CBA.15
While the district court may conclude on remand that portions of plaintiffs’ claims are
barred by collateral estoppel, Philips has not established that the court’s decision should
be upheld on this alternative ground.16 It does not appear that the arbitrator ever decided
whether the durational provisions were general or specific, nor did he decide whether
benefits vested for retirees who retired before the expiration of the CBA. He merely
held that since there were no provisions in the contract extending the company’s
obligation to provide life insurance to retirees who retired after the expiration of the
contract, the durational provisions terminated that obligation on September 28, 2003.
(J.A. at 234.)
The district court erred in concluding that the relevant provisions of the CBA are
unambiguous and failing to consider the SPDs and extrinsic evidence. Thus, we reverse
and remand the hourly plaintiff’s LMRA and ERISA claims.17
15
Interestingly, in the arbitration proceedings Philips relied, inter alia, on the Implementation
Agreement’s failure to reference retiree life insurance benefits. (See Arbitration Award at 25-26,
Schreiber, No. 07-10246 (Docket #40-5), 2007 WL 3036743.) That agreement is one of the pieces of
extrinsic evidence plaintiffs tried to present to the district court.
16
The district court did not address this issue in its opinion granting summary judgment.
17
In their briefs and at oral argument, the Philips companies assert that they are not the proper
defendants because LGP assumed PENAC’s assets and liabilities before plaintiff retirees retired. See
supra Section I.D. When defendants raised this argument below, however, plaintiffs responded by alleging
that Philips et al. is LGP’s alter ego.
The district court did not reach this issue, deciding the case based on the CBA alone. We also limit our
analysis to the CBA, allowing both parties’ arguments to remain viable on remand.
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C. Salaried and Hourly Plaintiff Retirees’ ERISA Breach of Fiduciary Duty Claim
Hourly and salaried plaintiffs allege Philips failed to properly exclude plaintiffs
from its retiree health benefit plans and that, as a result, defendants’ subsequent refusal
to provide plaintiffs with retiree health benefits is a breach of fiduciary duty.
Because a retiree health benefits plan “is a welfare benefit plan under ERISA,”
numerous federal statutes regulate such plans. Yolton, 435 F.3d at 578. These statutes,
among other things, establish: 1) the requisite features of a welfare benefit plan (29
U.S.C. § 1102); 2) the responsibilities and duties of a welfare plan fiduciary (29 U.S.C.
§ 1104 (a)); and 3) the responsibilities of a welfare plan administrator with regard to
providing and amending summary plan descriptions (29 U.S.C. § 1022; 29 U.S.C.
§ 1024(b)(1)).
According to ERISA, specific fiduciary duties include an obligation to
“discharge . . . duties with respect to a plan solely in the interest of the participants and
beneficiaries.” 29 U.S.C. § 1104. Further, the fiduciary must undertake these duties for
the exclusive purpose of “providing benefits to participants and their beneficiaries . . .
with the care, skill, prudence, and diligence under the circumstances then prevailing that
a prudent man acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims.” Id.; see also 29 U.S.C.
§ 1002 (21) (defining a plan fiduciary).
Despite this broad language, however, “a corporation’s fiduciary duties under
ERISA do not encompass all of its activities.” United Steelworkers of Am. v. Cyclops
Corp., 860 F.2d 189, 198 (6th Cir. 1988). This is because “[a]n employer that also acts
as a plan administrator is said to wear ‘two hats’” and “[o]nly when the employer acts
in its fiduciary capacity must it comply with ERISA’s fiduciary duties.” Sengpiel v. B.F.
Goodrich Co., 156 F.3d 660, 665 (6th Cir. 1998). As this court explained in Sengpiel
v. B.F. Goodrich Co.,
. . . courts have typically distinguished between employer actions that
constitute “managing” or “administering” a plan and those that are said
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to constitute merely “business decisions” that have an effect on an
ERISA plan; the former are deemed “fiduciary acts” while the latter are
not. It is firmly established, for example, that “a company does not act
in a fiduciary capacity when deciding to amend or terminate a welfare
benefits plan.” Sutter v. BASF Corp., 964 F.2d 556, 562 (6th Cir.1992)
(quoting Adams v. Avondale Indus., Inc., 905 F.2d 943, 947 (6th
Cir.1990)); see also Curtiss-Wright Corp. v. Schoonejongen, 514 U.S.
73, 78, 115 S. Ct. 1223, 131 L. Ed. 2d 94 (1995) (“Employers or other plan
sponsors are generally free under ERISA for any reason at any time, to
adopt, modify, or terminate welfare plans.”).
Id. Based on this analysis, Sengpiel held that an employer’s “transfer of the retirees’
welfare benefits is more analogous to amending, modifying, or terminating the
then-existing welfare plans than to administering or managing them.” Id. As a result,
defendant-employer’s transfer of benefits to another entity, and that entity’s later
termination of benefits, could not amount to a breach of fiduciary duty. Id.
Plaintiffs concede that Philips would not act in a fiduciary capacity if it amended,
transferred, or terminated the retiree health benefits plans. Adam v. Avondale Indus.,
Inc., 905 F.2d 943, 947 (6th Cir. 1990); see also Curtiss-Wright Corp. v.
Schoonejongen, 514 U.S. 73, 78 (1995) (“Employers or other plan sponsors are generally
free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare
benefit plans.”). Further, plaintiffs do not dispute that the reservation of rights clauses
in all four relevant plans set forth an appropriate “procedure for amending such
plan[s].”18 29 U.S.C. § 1102(b)(3); Schoonejongen, 514 U.S. at 77-79 (1995) (holding
that a clause reserving the company’s right “at any time to amend the plan” meets the
requirements of 29 U.S.C. § 1102(b)(3)).
18
Of course, as to the hourly employee-plaintiffs, this concession is relevant only to the procedure
for amending the plan because the substantive right to amend the plan is made explicitly subject to the
provisions of the CBA. Also, in contrast to the 2001 Basic/Major and Comprehensive Plans for hourly
employees and the 2003 Program for salaried employees, the 1999 Plan for salaried employees did not
merely reserve the right to “end or amend” coverage. (See J.A. at 383, 403, 525). It also stated that any
amendment “shall be effected by a written document executed on behalf of the company.” (J.A. at 508.)
Therefore, with regard to the 1999 Plan, plaintiffs also allege that Philips failed to discharge its duties “in
accordance with the documents and instruments governing the plan.” 29 U.S.C. § 1104(a)(1)(D).
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The retirees argue that: 1) because non-party retirees who retired before July 1,
2001 still receive benefits, the plans are not terminated;19 2) this means Philips had to
amend or modify the plans to exclude plaintiff retirees; 3) defendants failed to comply
with the ERISA procedures for amending or modifying the plans; 4) defendants failed
to comply with their own procedures for amending the 1999 Plan for salaried employees;
and 5) defendants’ failure to properly exclude plaintiffs from its plans before refusing
to provide health benefits makes its refusal a breach of fiduciary duty. See 29 U.S.C.
§ 1022 (“Summary plan description); 29 U.S.C. § 1024 (“Filing and furnishing of
information”); 29 U.S.C. § 1104 (“Fiduciary duties”).20 In this manner, plaintiffs do not
19
There appears to be a factual dispute on this issue. Plaintiffs assert that the plans must still exist
since non-party retirees who retired before July 1, 2001 still receive benefits. Defendants, however, point
to the Supplemental Declaration of PENAC Senior Assistant Secretary Warren T. Oates (the Oates Supp.
Decl.) stating “[n]o programs providing such [retiree medical] benefits before July 1, 2001 are still in
existence. Currently, the only PENAC-sponsored program providing such benefits is the Philips Retiree
Preferred Provider Organization Medical Program.” (J.A. at 179.)
Nevertheless, as the district court pointed out,
To the extent that Defendants argue that Plaintiffs’ first theory of liability must fail
because they are not eligible for any of the plans they claim are still in existence, this
Court believes that Defendants misconstrue Plaintiffs’ arguments. Plaintiffs are arguing
that Defendants are still providing benefits to former employees of Phillips who retired
on or before June 30, 2001 under the same or substantially similar plans as those in
existence at the time of Plaintiffs’ retirements. Thus, according to Plaintiffs, Defendants
are obligated to provide Plaintiffs, individuals who retired after June 30, 2001 those
same benefits. Defendants’ failure to do so, Plaintiffs’ claim, resulted in a breach of
their fiduciary duties under ERISA.
Schreiber, 2007 WL 3036743 at *9.
20
29 U.S.C. § 1022 provides, in part:
(a) A summary of any material modification in the terms of the plan and any change in
the information required under subsection (b) of this section shall be written in a manner
calculated to be understood by the average plan participant and shall be furnished in
accordance with section 1024(b)(1) of this title. . . .
(b) The summary plan description shall contain the following information: . . . the
plan’s requirements respecting eligibility for participation and benefits; a description of
the provisions providing for nonforfeitable pension benefits; circumstances which may
result in disqualification, ineligibility, or denial or loss of benefits; the source of
financing of the plan and the identity of any organization through which benefits are
provided; the date of the end of the plan year and whether the records of the plan are
kept on a calendar, policy, or fiscal year basis . . .
29 U.S.C. § 1024(b) provides, in part:
Notwithstanding the foregoing, the administrator shall furnish to each participant, and
to each beneficiary receiving benefits under the plan, the summary plan description
described in section 1022 of this title every tenth year after the plan becomes subject to
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attack the non-fiduciary decision to transfer or terminate benefits; rather, plaintiffs base
their claims on Philips’ failure to properly amend the plan according to its own stated
procedures and “furnish to each participant, and each beneficiary receiving benefits
under the plan, a copy of the summary plan description, and all modifications and
changes.” 29 U.S.C. § 1024(b); see also 29 U.S.C. § 1022(a) (“A summary of any
material modification in the terms of the plan and any change in the information required
under subsection (b) of this section shall be written in a manner calculated to be
understood by the average plan participant and shall be furnished in accordance with
section 1024(b)(1) of this title.”).21
this part. If there is a modification or change described in section 1022(a) of this title
(other than a material reduction in covered services or benefits provided in the case of
a group health plan (as defined in section 1191b(a)(1) of this title)), a summary
description of such modification or change shall be furnished not later than 210 days
after the end of the plan year in which the change is adopted to each participant, and to
each beneficiary who is receiving benefits under the plan. If there is a modification or
change described in section 1022(a) of this title that is a material reduction in covered
services or benefits provided under a group health plan (as defined in section
1191b(a)(1) of this title), a summary description of such modification or change shall
be furnished to participants and beneficiaries not later than 60 days after the date of the
adoption of the modification or change.
21
While plaintiff retirees admit that LGP eventually issued new SPDs in 2005, they claim that
defendants, as administrators and fiduciaries under the prior plan, were still responsible for amending or
modifying the Philips SPDs to exclude plaintiffs. See 29 U.S.C. § 1104(a)(1) (“[A] fiduciary shall
discharge his duties with respect to a plan . . . in accordance with the documents and instruments governing
the plan.”). In Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 79 (1995), the Supreme Court
analyzed an amendment procedure similar to the reservations of rights clauses used in the Philips SPDs
(e.g., a clause reserving the right of “the company” to make any future changes), and held that “[t]o say
that one must look always to ‘[t]he Company’ is to say that one must look only to ‘[t]he Company’ and
not to any other person – that is, not to any union, not to any third-party trustee, and not to any of the other
kinds of outside parties that, in many other plans, exercise amendment authority.” Plaintiffs use this
holding to argue that the LGP issuance is irrelevant because “[o]nly Philips, by a document in writing,
could modify its Plan so as to eliminate coverage for its plan participants.” (Final Br. of Pls.-Appellants
at 56.)
Philips claims that when it transacted with LG Electronics to pass control of the Ottawa facility to LGP,
plaintiff “employees left the PENAC-sponsored health insurance program(s) that had applied to them
during their employment with Philips Display, and were advised of that fact in writing, both before and
after the transaction.” (Final Br. of Defs.-Appellees at 10; see also J.A. at 190 (“Following the change in
operational control of the Ottawa Facility, the health insurance benefits were unilaterally transferred and
provided through LGPD Welfare Plans” (Aff. of John Benjamin)).) Defendants’ support for this statement
is a paragraph in the Oates affidavit that merely declares:
10) Philips display had no employees after that time [LGP’s purchase of the
Ottawa facility], and ceased to employ any of the individuals at either its
Ottawa, Ohio or Ann Arbor, Michigan sites. As of July 1, 2001, none of the
former employees of Philips Display who became LGP employees were
participants in any PENAC-sponsored health insurance plan. Rather, those
individuals became covered by plans offered by LGP. No former PDC
employee who retired after June 30, 2001 elected retiree health coverage under
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Defendants respond to this allegation by pointing out that: 1) Philips no longer
employed plaintiffs when they elected to receive benefits and 2) immediately prior to
retirement, plaintiffs were not covered by a PENAC-sponsored plan as required in the
Philips SPDs’ eligibility sections. Rather, plaintiffs were covered by an LGP plan, and
LGP, not PENAC, failed in its obligation to timely publish an updated SPD. (Final Br.
of Defs.-Appellees at 39.) Further, even if LGP’s continued use of PENAC and PDC
documents misled plaintiffs, LGP’s eventual issuance of new SPDs – identifying itself
as plan administrator and sponsor – should have eliminated any confusion.22
The district court disposed of this claim by noting that “any breach of fiduciary
duty by Defendants must come from the decision, by Defendants’ parent company, to
transfer the assets and liabilities of PDC to LGP.” Schreiber, 2007 WL 3036743, at *10.
Because this act was “part of a business decision implemented by their parent company,”
the district court held that “Defendants did not breach an ERISA fiduciary duty when
Plaintiffs [sic] retiree health care benefits were terminated.” Id. However, the fact that
Philips’ decision to transfer assets was not a fiduciary one under ERISA does not mean
that it did not trigger ERISA obligations. While it “is firmly established . . . that ‘a
company does not act in a fiduciary capacity when deciding to amend or terminate a
welfare benefits plan,’” ERISA still provides instructions as to how an employer should
properly amend or terminate a plan. 29 U.S.C. § § 1022, 1024(b); see Sengpiel, 156 F.3d
at 665-66; Schoonejongen, 514 U.S. at 84 (“[W]e do not mean to imply that there is
anything wrong with plan beneficiaries trying to prove that unfavorable plan
any PENAC-sponsored plan. No former PDC employee who retired after June
30, 2001 elected health coverage for his or her dependants under any PENAC-
sponsored retiree medical plan.
(J.A. at 150.) Plaintiffs, however, point out that there is “simply no document in the record that purports
to be a modification, amendment or termination of the Retiree Plan under which the Retirees retired and
initially received benefits.” (Final Br. of Pls.-Appellants at 57.)
22
LGP issued these SPDs in 2005. Yet between LGP’s takeover in 2001 and LGP’s issuance of
the SPDs in 2005, plaintiffs did not receive updated SPDs and received health insurance-related documents
identifying PDC and PENAC as the parties administering benefits. Defendants admit “that PACE, for a
fee, provided administrative services to LGP for a period of time after the sale of the Ottawa plant.” (Final
Br. of Defs.-Appellees at 40). Yet they claim that the continued use of Philips documents was due to
“technical violations by LGP,” not Philips. (Id. at 39-40.)
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amendments were not properly adopted and are thus invalid. This is exactly what
respondents are trying to do here, and nothing in ERISA is designed to obstruct such
efforts.”)
Thus, even if Philips’ transfer of assets in this case was not a “fiduciary act,” it
must still comply with ERISA procedures. Because the district court did not address the
issue below and the facts are insufficiently clear to permit us to do so here, we remand
for further proceedings.
III. CONCLUSION
For the aforementioned reasons we REVERSE the district court’s order
granting summary judgment and REMAND for proceedings consistent with this
opinion.
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__________________
DISSENT
__________________
VINSON, District Judge, dissenting. I believe the record fully supports summary
judgment for the defendants, and I would affirm on the basis of the district court’s well-
reasoned decision.
First, with respect to the hourly employees, there is nothing in the CBA which
vests medical coverage. In fact, the durational language indicates the opposite, and I
agree with the district court that there is no ambiguity in the CBA.1 But, even if we were
to look at the SPDs alongside the plan itself (just as part of the plan documents, and not
as extrinsic documents to resolve the purported ambiguity), that would not change the
result. If anything, it seems to me that the SPDs actually strengthen the defendants’ case.
The SPDs make it very clear, for example, that coverage may end or be changed “at any
time,” subject only to the CBA.
The salaried employees’ claim is even more attenuated. These plaintiffs do not
contend that they are entitled to lifetime health benefits, and under Sprague v. General
Motors Corp., 133 F.3d 388 (6th Cir. 1998) (en banc), it is clear that they are not. Id. at
400 (explaining that because vested benefits are “forever unalterable” and not required
by law, an employer’s commitment to vest welfare benefits “is not to be inferred lightly;
the intent to vest ‘must be found in the plan documents and must be stated in clear and
express language”) (citations omitted).
In an effort to get around these legal barriers, the plaintiffs contend (and the
majority apparently agrees) that there is a genuine issue of material fact on the record
as developed that the defendants breached its fiduciary duty under ERISA. However, I
believe Sengpiel v. B.F. Goodrich Co., 156 F.3d 660 (6th Cir. 1998) forecloses this
claim. To the extent the plaintiffs claim that liability should attach because Philips did
1
The arbitration decision between IBEW and Philips Display (which addressed the same
durational clause) provides further support for this conclusion.
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not amend its plan to specifically exclude them, the argument is equally without legal
or factual merit. After the transfer of ownership, LGP immediately started administering
the plans and eventually issued its own SPDs. The defendants rightly point out:
PENAC was not acting in a fiduciary capacity in transferring its retiree
health liability to LGP, a fact that plaintiffs expressly do not dispute (see
Pls. Br.) See Sengpiel, 15[6] F.3d at 666. Nor did it become liable for the
obligations incurred afterwards by LGP’s new managers. Id.; Darnel v.
East, 573 F.2d 534, 538-39 (8th Cir. 1978). Once that liability was
transferred, PENAC had no need to amend its retiree health program to
exclude plaintiffs, since it was no longer liable for their retiree health
care.
The district court thus held: “In this case, any breach of fiduciary duty by Defendants
must come from the decision, by Defendants’ parent company, to transfer the assets and
liabilities of PDC to LGP. By being part of a business decision implemented by their
parent company, Defendants did not breach an ERISA fiduciary duty when Plaintiffs
retiree health care benefits were [later] terminated.”
In sum, Philips ceased to be the plaintiffs’ employer after June 30, 2001. The
plaintiffs subsequently retired from LGP, and it was five years later --- after LGP’s
Chapter 7 bankruptcy proceeding resulted in a termination of its retiree health benefits
--- that the plaintiffs sought to turn back the clock and seek lifetime health benefits from
Philips. There are no genuine issues of material fact and, in my opinion, Philips is
entitled to judgment as a matter of law. Therefore, I respectfully dissent.