Wood v. Detroit Diesel Corp. ( 2007 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 07a0045n.06
Filed: January 17, 2007
No. 06-1157
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
DANIEL WOOD, RONALD GOINS, and )
PRISCILLA SUE STREET, on behalf of )
themselves and a similarly situated class, )
)
Plaintiffs-Appellees, Counter-Defendants, )
)
v. )
)
DETROIT DIESEL CORPORATION, )
) ON APPEAL FROM THE
Defendant-Appellant, Counter-Plaintiff, ) UNITED STATES DISTRICT
Third Party Plaintiff, ) COURT FOR THE EASTERN
) DISTRICT OF MICHIGAN
v. )
) OPINION
INTERNATI ONAL UNION, UNITED )
AUTOMOBILE, AEROSPACE, AND )
AGRICULTURAL IMPLEMENT WORKERS OF )
AMERICA and its LOCAL 163, )
)
Third Party Defendant-Appellee. )
BEFORE: COLE and McKEAGUE, Circuit Judges; and BREEN, District Judge.*
McKEAGUE, Circuit Judge. This is an appeal from a preliminary injunction restraining
efforts by Detroit Diesel Corporation to require retired employees to make premium contributions
in order to maintain their current health care coverage. Although the district court’s
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* The Honorable J. Daniel Breen, United States District Judge for the Western District of
Tennessee, sitting by designation.
reasoning is flawed, the award of preliminary injunctive relief has not been shown to be an abuse of
discretion. For the reasons that follow, the preliminary injunction is affirmed.
I. FACTUAL AND PROCEDURAL BACKGROUND
Employees who retired from employment with Detroit Diesel Corporation between 1993 and
2004 received continuing health care benefits pursuant to various collective bargaining agreements
and related documents. The agreements were reached by Detroit Diesel with the employees’
collective bargaining unit, International Union, United Automobile, Aerospace, and Agricultural
Implement Workers of America, Local 163 (“UAW”). Pursuant to these agreements, Detroit Diesel
continued to provide health care coverage to the retirees, but its annual premium contributions were,
during the period 1993 to 2004, limited by so-called “Cap Agreements” to specific dollar amounts.
Any “above-cap” costs of continuing coverage were to be paid in accordance with negotiated
agreements between Detroit Diesel and the UAW. In furtherance of this purpose, from 1993 to
2004, Detroit Diesel and the UAW established a Voluntary Employee Benefit Association
(“VEBA”) Trust. The VEBA Trust was jointly funded by the parties and jointly administered by
representatives of both parties. Changes in the manner of funding the VEBA Trust were to be
resolved in collective bargaining.
In 2004, the VEBA Trust funds were exhausted and no substitute method of paying above-
cap costs was agreed to by Detroit Diesel and the UAW. In August 2005, Detroit Diesel informed
the retirees that, effective January 1, 2006, they would have to pay premium contributions in order
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to cover the above-cap costs if they wanted to maintain their existing health care coverage.
Depending on the coverage elected, this would entail individual monthly contributions of varying
amounts, potentially as much as $834.
Plaintiffs Daniel Wood, Ronald Goins and Priscilla Sue Street, suing on behalf of themselves
and a putative class of some 1126 similarly situated retirees and survivors, contend Detroit Diesel
has no right to unilaterally modify or reduce their health care coverage by requiring them to make
premium contribution payments. They filed suit in the Eastern District of Michigan, contending
Detroit Diesel’s actions: (1) are in violation of their rights under several collective bargaining
agreements, actionable under the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185;
and (2) represent the wrongful denial of employee welfare benefits, actionable under the Employees
Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132. They allege their health benefits are
vested for life at no cost to them.
Plaintiffs asked the district court to preliminarily enjoin Detroit Diesel’s wrongful
requirement that they make premium contributions as a condition of continued coverage. Finding
that plaintiffs had demonstrated a likelihood of success on the merits and that they would suffer
irreparable harm if an injunction did not issue, the district court issued a preliminary injunction.
Detroit Diesel appeals from this ruling, contending the district court abused its discretion. We have
jurisdiction to hear the appeal from the interlocutory injunctive order under 28 U.S.C. § 1292(a)(1).
II. ANALYSIS
A. Standard of Review
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The governing standards of review were recently summarized in Yolton v. El Paso Tennessee
Pipeline Co., 435 F.3d 571, 577-78 (6th Cir. 2006), as follows:
This Court reviews a district court's grant of a preliminary injunction for an
abuse of discretion. Tucker v. City of Fairfield, 398 F.3d 457, 461 (6th Cir. 2005).
“A district court abuses its discretion when it relies on clearly erroneous findings of
fact, improperly applies the law, or uses an erroneous legal standard.” Id. This Court
reviews the district court's conclusions of law de novo and its findings of fact for
clear error. Golden v. Kelsey-Hayes Co., 73 F.3d 648, 653 (6th Cir. 1996).
“Questions of contract interpretation are generally considered questions of law
subject to de novo review.” Id.
To determine whether to grant a preliminary injunction, a district court must
consider: “(1) the plaintiff's likelihood of success on the merits; (2) whether the
plaintiff may suffer irreparable harm absent the injunction; (3) whether granting the
injunction will cause substantial harm to others; and (4) the impact of an injunction
upon the public interest.” Deja Vu of Nashville, Inc. v. Metro. Gov't of Nashville &
Davidson County, 274 F.3d 377, 400 (6th Cir. 2001). “None of these factors,
standing alone, is a prerequisite to relief; rather, the court should balance them.”
Golden, 73 F.3d at 653.
B. Likelihood of Success on the Merits
In order to succeed on the merits of their claims, plaintiffs must make the threshold showing
that their asserted right to fully-funded lifetime health care benefits vested at some time prior to the
attempted modification by Detroit Diesel. Again, Yolton provides a useful summary of the legal
context for plaintiffs’ claims:
A retiree health care insurance benefit plan is a welfare benefit plan under
ERISA. . . . . Unlike pension plans, “[t]here is no statutory right to lifetime health
benefits.” . . . . If lifetime health care benefits exist for the plaintiffs, it is because
[the union] and [employer] agreed to vest a welfare benefit plan. . . . . If a welfare
benefit plan has not vested, “after a CBA [collective bargaining agreement] expires,
an employer generally is free to modify or terminate any retiree medical benefits that
the employer provided pursuant to the CBA.” . . . . If a welfare benefit plan has
vested, the employer’s unilateral modification or reduction of those benefits
constitutes a LMRA violation.
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Id. at 578 (footnote and citations omitted). Thus, to show that their right to health care benefits
vested, plaintiffs must show that the UAW and Detroit Diesel reached an agreement to that effect.
In this regard, Yolton further instructs:
Whether the benefits vest depends on the intent of the parties. . . . . “Courts
can find that rights have vested under a CBA even if the intent to vest has not been
explicitly set out in the agreement.” . . . . [I]n determining the intent of the parties to
a CBA, “basic rules of contract interpretation apply.” . . . . [C]ourts “should first
look to the explicit language of the collective bargaining agreement for clear
manifestation of intent.” . . . . Moreover, “courts should also interpret each provision
in question as part of the integrated whole. If possible, each provision should be
construed consistently with the entire document and the relative positions and
purposes of the parties.” . . . . When ambiguities exist, courts may look to other
provisions of the document and other extrinsic evidence.
Id. (citations omitted). It follows that the first step in discerning the intent of the parties to the CBA
requires examination of the language of the pertinent documents.
The district court examined the language of the pertinent documents. The court did not hold
that the language evidenced an agreed intent to vest health care benefits. In fact, the court’s opinion
hardly even mentions the concept of vesting. The court concluded simply that because none of the
CBA documents provided that retirees “would be required” to pay premium contributions, the
requirement is facially improper. In its motion for reconsideration, Detroit Diesel pointed to
language explicitly providing that retirees “may be required to make monthly contributions” and
argued this language put employees on notice that their right to continuing health care benefits had
not vested. Again, without even commenting on the threshold issue of vesting, the district court
simply found this permissive language insufficient to support imposition of a requirement to pay
premium contributions.
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The district court’s reasoning is faulty. The court implicitly applied a presumption that the
retirees’ right to health care benefits was vested and then required Detroit Diesel to rebut the
presumption by identifying contractual language specifically authorizing the modification it tried to
implement. Detroit Diesel correctly argues that such a presumption is improper, as the burden of
proving intent to vest rests on plaintiffs. Yolton, 435 F.3d at 579-80. The district court failed to find
that plaintiffs had demonstrated a likelihood that they will be able to carry this burden. The district
court’s analysis is therefore flawed as a matter of law. Nonetheless, its issuance of preliminary
injunctive relief is not necessarily an abuse of discretion.
The matter of contract interpretation is a question of law which we review de novo. Plaintiffs
insist they had a vested right to fully-funded health care coverage, but they do not identify CBA
language that explicitly supports the argument. They point to language to the effect that “the health
care coverages an employee has at the time of retirement . . . . shall be continued,” and “the
Corporation shall make contributions . . . . for health care coverages continued.” These provisions
support plaintiffs’ claim, but fall short of evidencing an agreed intent to vest fully-funded lifetime
health care coverage.
Plaintiffs contend the pertinent language is “UAW pattern contract language” which the Sixth
Circuit has previously deemed sufficient to substantiate vesting – at least at the preliminary
injunction stage. See McCoy v. Meridian Auto. Sys., Inc., 390 F.3d 417, 422 (6th Cir. 2004); Golden
v. Kelsey-Hayes Co., 73 F.3d 648, 656 (6th Cir. 1996). Indeed, the determinations in both Golden
and Meridian that the plaintiffs had made a sufficient showing of vesting to warrant preliminary
injunctive relief were based in part on similar CBA language. In those cases, as here, the CBAs were
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devoid of explicit vesting language, but contained provisions possibly supporting an inference of
intent to vest. In each case, because the CBA language was inconclusive, the court was forced to
look further, to summary plan descriptions (not available in this case) and other extrinsic evidence,
to discern the parties’ intent. Plaintiffs’ assertion that Golden and Meridian confer a sort of judicial
imprimatur on “UAW pattern contract language” is therefore too simplistic.
Detroit Diesel maintains there was no explicit agreement that retiree health care benefits
vested. In fact, Detroit Diesel insists the provisions pertinent to retirees who retired from 1993 to
2004, set forth in Supplemental Agreements, expressly advised enrollees in the health care program
that rates of payment, coverages, and terms and conditions of the program were all subject to change
by Detroit Diesel at any time on reasonable notice. Further, enrollees were advised that they “may
be required to make monthly contributions.” These provisions are clear and unambiguous, Detroit
Diesel contends, and demonstrate, without resort to any extrinsic evidence, that it retained the right
to modify the terms of coverage and that there was no agreement on vesting.
In January 1993, moreover, Detroit Diesel contends that a critical element of its agreement
with the UAW was memorialized in the Memorandum of Understanding on Retiree Health Care
Benefits (“Cap Agreement”). Under the Cap Agreement, Detroit Diesel’s obligation to pay
premiums was limited to a sum certain per year for each eligible retiree. The Cap Agreement
provided for establishment of the VEBA Trust, through which any above-cap premium costs would
be paid. In consideration of the UAW’s agreement to limit Detroit Diesel’s liability for health care
costs, Detroit Diesel affirmatively promised in writing, through Senior Vice President Paul F.
Walters, that its capped responsibility for retiree health care coverage was a lifetime commitment:
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DDC fully recognizes, acknowledges and hereby confirms that retiree health care
benefits for DDC/UAW employees have been and will continue to be life-time
benefits and that the establishment of “contribution limits” in no way modifies or
negates this commitment.
Walters letter Jan. 4, 1993, JA 308-09.
This written promise, Detroit Diesel concedes, supports a finding that plaintiffs’ right to
lifetime health care coverage was vested. However, Detroit Diesel insists plaintiffs’ vested right
must be deemed subject to the agreed-to contribution limits, which represented the quid pro quo for
the express, enforceable lifetime commitment. Moreover, Detroit Diesel maintains that it retained
the prerogative, pursuant to the Supplemental Agreements, to require retiree contributions for above-
cap costs in the event the VEBA Trust failed or proved insufficient to cover the costs. In other
words, although Detroit Diesel recognizes that plaintiffs have a vested right to lifetime health care
coverage, it maintains they do not have a vested right to fully-funded health care coverage. Detroit
Diesel thus argues that it is within its rights to require premium contributions from retirees and the
preliminary injunction should be vacated.
In a case such as this, where the language of the pertinent documents is inconclusive,
extrinsic evidence is an appropriate and important aid in construing the parties’ contractual
agreement. However, the available extrinsic evidence, like the Walters letter itself, cuts both ways.
The first Cap Agreement, entered into in January 1993, covered employees who retired in
1993 and 1994 and established Detroit Diesel’s contribution limits for those retirees. The
contribution limit for 1993 retirees was 110% of the1992 average cost, or $6,710. The contribution
limit for 1994 retirees was 110% of the 1993 average cost, or $7,381. Memorandum of
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Understanding Jan. 7, 1993, JA 306-07. The Cap Agreement also set forth the manner of funding
the VEBA Trust, requiring, for 1993, that Detroit Diesel contribute $200,000, and that the
DDC/UAW Joint Training Fund contribute $100,000. Id. For 1994, Detroit Diesel and the Joint
Training Fund each contributed $100,000.
In connection with the initial Cap Agreement, plaintiffs present several declarations attesting
to the parties’ understanding. James Brown and Robert King participated on behalf of the UAW in
the negotiations that culminated in the initial Cap Agreement. In their declarations, they attest to
having sought and obtained express assurances from company representatives that, despite the
agreed-to contribution limits, Detroit Diesel would remain liable to provide lifetime health coverage
and that retirees would never have to pay out-of-pocket for the benefits. Indeed, these assurances
are confirmed in part by the Walters letter of January 4, 1993. The Walters letter stops short,
however, of promising that retirees would never have to make premium contributions.
The Walters letter is consistent, though, with plaintiffs’ position that it had been and would
continue to be Detroit Diesel’s responsibility to pay the health care costs. The letter not only
acknowledges this pre-existing commitment, but also confirms that the Cap Agreement was not
intended to modify or negate the pre-existing commitment in any way. The motivating purpose of
the Cap Agreement was not to shift or share responsibility for health care coverage premiums
between Detroit Diesel and the retirees. As the Walters letter makes clear, the purpose was to alter
Detroit Diesel’s method of funding health care coverage in order to meet the new accounting
requirements of “Financial Accounting Standard 106" while simultaneously minimizing any negative
impact of such accounting disclosures on its ability to attract investors. Furthermore, the Walters
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letter acknowledges the mutual interest of Detroit Diesel and the UAW in controlling health care
costs and the need for joint efforts to serve this mutual interest on an ongoing basis: “It is
understood that both parties will begin work immediately to jointly develop innovative approaches
to control the cost impact of health care on the corporation.” Walters letter Jan. 4, 1993, JA 308-09.
Hence, this much is clear, based on the written assurances of Detroit Diesel’s own Senior
Vice President: (1) that Detroit Diesel had assumed exclusive responsibility for funding health care
costs for pre-1993 retirees; (2) that Detroit Diesel had promised the UAW that the Cap Agreement
would in no way modify this pre-existing commitment; (3) that the commitment to provide fully-
funded lifetime benefits would continue; and (4) that Detroit Diesel and the UAW would cooperate
in continuing efforts to control health care costs so as to minimize the burden on Detroit Diesel.
A second Cap Agreement was entered into in conjunction with the Detroit Diesel/UAW
collective bargaining agreement covering the period 1995-1998. Memorandum of Understanding
Aug. 26, 1994, JA 429. The 1994 contribution limit of $7,381 was continued for the ensuing four-
year period. The method of funding the VEBA Trust was altered, however, requiring contributions
totaling $1 million per year: $80,000 from Detroit Diesel; $420,000 from the Gross Profit Sharing
Pool (with Detroit Diesel to cover any deficit); and $500,000 from the UAW Joint Training Fund.
Id.
During negotiations of this agreement, plaintiffs contend Detroit Diesel made oral assurances
that it would pay any shortfall if the VEBA Trust funds were insufficient to cover above-cap costs.
These assurances are said to be substantiated by letter of Detroit Diesel Chairman and CEO Roger
Penske dated August 26, 1994. The letter states:
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As discussed during the week of August 15, 1994 if the VEBA Trust asset level
became insufficient to cover costs over the retiree premium level contribution
amount, Detroit Diesel would make necessary adjustments to their contribution level
to correct this situation so that there are no out of pocket costs for retirees.
Penske letter Aug. 26, 1994, JA 428. The letter is unsigned, however, and Penske denies ever
signing such a letter or making any such assurances, written or oral. Penske dec. ¶ 9, JA 203-04.
Plaintiffs have been unable to produce a signed copy of the letter, but they maintain its
contents are corroborated by the minutes of the parties’ negotiations. The minutes do not
substantiate the existence of a signed letter from Penske. Nor do they directly evidence oral
promises, although they corroborate plaintiffs’ argument that oral assurances were made.
Significantly, though, the minutes do evidence ongoing collaborative exploration of different
methods of funding continuing health care costs with an eye toward avoiding any need for retiree
contributions.
A third Cap Agreement was reached in 1999 covering the period 1999-2004. This agreement
is memorialized in a terse memorandum dated March 3, 1999. It provides simply that Detroit
Diesel’s existing contribution limit of $7,381 would continue until 2004 and that the VEBA Trust
would be funded through annual $500,000 contributions from the Joint Training Fund.
By the time Detroit Diesel and the UAW entered into collective bargaining negotiations for
the 2005-2010 period, Detroit Diesel had new ownership and management. Viewed from the
perspective of the 1993-2004 retirees, the negotiations did not go well. Detroit Diesel and the UAW
negotiated a CBA for active employees and post-2004 retirees, but no agreement was reached in
relation to continuing health care benefits for the 1993-2004 retirees. According to Joseph Street,
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UAW spokesperson in these talks, the UAW (1) rejected the company’s proposal for substantial
reductions in health care benefits for retirees; (2) failed to reach agreement on continuing the
contribution limit; and (3) failed to reach agreement as to funding of the VEBA Trust. Street dec.
¶¶ 4-5, JA 112.
Thus, either Detroit Diesel or the UAW, or both, abandoned their ongoing contractual
commitment to work together in maintaining continued health care coverage for the retirees while
minimizing Detroit Diesel’s health care costs. Absent the UAW’s participation, something had to
give. Either (a) Detroit Diesel’s contribution limit had to be exceeded, or (b) health care costs had
to be reduced, or (c) retirees had to be required to make premium contributions. Understandably,
Detroit Diesel prefers one or a combination of the latter two solutions. Whether it is within its rights
to unilaterally impose its preference on the retirees, however, is questionable.
In response to plaintiffs’ extrinsic evidence, Detroit Diesel offers little in the way of factual
rebuttal. Detroit Diesel correctly maintains that extrinsic evidence is ineffective to vary the clear and
unambiguous terms of the Supplemental Agreements. The terms in the Supplemental Agreements,
reserving to Detroit Diesel the right to change terms and conditions and even require monthly
contribution payments, are said to be so clear and antithetical to vesting as to necessarily defeat any
contrary inference that might arguably be drawn from extrinsic evidence of “understandings” and
oral assurances.
But for the Walters letter of January 4, 1993, this argument might be more persuasive. The
Walters letter contains representations which Detroit Diesel affirmatively asserts and stands on. By
virtue of the letter, Detroit Diesel acknowledges that plaintiffs’ right to lifetime benefits may well
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have vested – but they are funded by Detroit Diesel only up to the capped contribution limit. The
Walters letter is thus viewed even by Detroit Diesel as implicitly superseding the language of the
Supplemental Agreements. If the right to lifetime benefits, derived from the letter, is to be enforced,
Detroit Diesel contends, so must be its quid pro quo counterpart, the contribution cap. And if the
cap is enforced, then, since the VEBA Trust was exhausted and the UAW did not agree to any other
method of funding above-cap costs beyond 2004, Detroit Diesel contends it had no alternative but
to (1) advise enrollees that its capped premium contributions alone will not sustain their existing
health care coverage, and (2) give them the option of paying the shortfall or choosing reduced
coverage.
As indicated above, however, the Walters letter says more. It also observes that Detroit
Diesel’s commitment to provide lifetime benefits to retirees pre-existed the first Cap Agreement.
This concession, from the pen of Detroit Diesel’s Senior Vice President, hints at a notion of vesting
that pre-existed the first Cap Agreement. That is, the Walters letter also supports plaintiffs’
argument that their right to lifetime health care benefits vested apart from any quid pro quo
consideration for the UAW’s agreement to the contribution cap. If their right vested independent
of the Cap Agreements, then Detroit Diesel’s argument for enforcement of the contribution cap
beyond the durational terms of the Cap Agreements is undermined.
Moreover, and no less importantly, the Walters letter acknowledges that the Cap Agreement
“fix” was temporary and conditioned upon the agreement of Detroit Diesel and the UAW to continue
working toward other solutions to the quandary posed by ever-rising health care costs. That is, for
the dual sake of providing quality continuing health care coverage to retirees and controlling the
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impact of health care costs on Detroit Diesel, the company and the union were to continue to co-
operate in jointly developing innovative approaches, including management of the funding needs of
the VEBA Trust, through collective bargaining. Detroit Diesel’s unilateral decision to cover the
above-cap costs through retirees’ premium contributions is not the product of cooperation. Its
unilateral actions thus appear to be in breach of the condition upon which the contribution limit was
premised.
Granted, it takes two to cooperate. Apart from the Street declaration, the record does not
disclose the nature or specific cause of the breakdown in negotiations between Detroit Diesel and
the UAW on behalf of the 1993-2004 retirees.1 As a consequence of the breakdown and ensuing
withdrawal of the UAW, however, the retirees—the third-party beneficiaries of the cooperative
scheme that ushered in both the company’s contribution limit and the company’s explicit lifetime
coverage commitment—were left vulnerable.
Detroit Diesel’s unilateral actions to protect its interests take advantage of this vulnerability.
The actions may ultimately be held legally justified. Still, viewing the record as a whole, including
particularly the Walters letter, we conclude there are unresolved questions of fact going to the matter
of vesting. These unresolved questions demonstrate that plaintiffs have “some likelihood” of success
on the merits. It may not be a “strong” likelihood. Plaintiffs may have difficulty ultimately
prevailing on the merits of their claims. Yet, considering the import of the Walters letter, as well
1
We note that federal law does not impose a duty on the union to continue representing
retirees. UAW v. Yard-Man, Inc., 716 F.2d 1476, 1484 (6th Cir. 1984). Arguably, though, such a
duty arose contractually in this case, by virtue of the cooperative scheme established in the Cap
Agreements.
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as Detroit Diesel’s part in the breakdown in cooperation which resulted in dissolution of the status
quo, plaintiffs’ likelihood of success is sufficient, when balanced in equity with the other relevant
considerations, to warrant preliminary injunctive relief.
C. Irreparable Harm/Balance of Harms
Detroit Diesel also challenges the district court’s conclusion that plaintiffs would suffer
irreparable harm if preliminary injunctive relief were denied. Citing Golden v. Kelsey-Hayes Co.,
845 F. Supp. 410, 415 (E.D. Mich. 1994), aff’d 73 F.3d 648 (6th Cir. 1996), the district court
concluded that “reduction of benefits and imposition of additional insurance costs on retirees
constitutes irreparable harm because of the financial hardship on retirees on fixed incomes,
emotional distress and possible deprivation of life’s necessities by reallocating scant resources to pay
for much needed health care.” Dist. ct. op. pp. 10-11, JA 26-27. Detroit Diesel contends the factual
record relied on by the district court is too thin to justify class-wide preliminary injunctive relief.
Indeed, none of the three named plaintiffs has presented a factual showing of his or her own
imminent irreparable harm. They have relied instead on declarations of five putative class members.
Detroit Diesel also points out that even before the January 1, 2006 effective date of its attempted
modification, some 100 of the putative class members had already elected the “cash-out” option,
suggesting the modification may not be harmful to them at all.
Viewed in the traditional sense, the record evidence does not justify class-wide injunctive
relief. Yet, a detailed showing of irreparable harm is not necessarily prerequisite to preliminary
injunctive relief. Golden, 73 F.3d at 657. The possibility and severity of irreparable harm are among
the factors which the court balances in assessing the appropriateness of injunctive relief. Id.
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Moreover, evidence not unlike that presented in this case has been found sufficient by this Court to
sustain preliminary injunctive relief in other similar situations. See Yolton, 435 F.3d at 584; Golden,
73 F.3d at 657. Indeed, the hardship, financial and emotional, that a new monthly expense of $260
to $834 would pose for most working class retirees hardly requires substantiation. In Yolton, this
Court upheld the determination that a monthly premium contribution of $501 posed a sufficiently
severe and irreparable hardship. The court quoted the district court’s reasoning with approval:
[T]he Court can surmise that the putative class members overall cannot afford to
contribute such an amount until the case is resolved. Unable to afford the $501
premium, Plaintiffs will lose their health insurance, will not be able to pay for
necessary prescription medications, and will not receive all of the medical care that
they need. Reimbursing Plaintiffs for their contributions at the end of the case,
therefore, will not afford them relief.
435 F.3d at 584. This reasoning is equally compelling in this case.
The impact of injunctive relief on Detroit Diesel is not insignificant. Detroit Diesel contends
the injunctive relief costs it $600,000 per month. While this figure appears not to be substantiated
in the present record, it can hardly be denied that the injunctive relief is expensive. Still, in view of
Detroit Diesel’s admitted historical commitment to paying the costs of retirees’ health care benefits,
as well as Detroit Diesel’s partial responsibility for the failure to reach agreement on funding of
above-cap costs through the VEBA Trust or otherwise, we conclude the district court’s award of
preliminary injunctive relief is not an abuse of discretion. See Yolton, 435 F.3d at 584; Golden, 73
F.3d at 657.
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D. Sufficiency of Bond Amount
Finally, Detroit Diesel contends the district court abused its discretion by requiring a security
bond of only $1500 to support the preliminary injunction. It is well established in this Circuit that
it is within the district court’s discretion to require the posting of security or not. Moltan Co. v.
Eagle-Picher Indus., Inc., 55 F.3d 1171, 1176 (6th Cir. 1995). If the district court would have been
within its discretion to require no bond at all, the requirement of a $1500 bond can hardly be held
to constitute an abuse of discretion.
III. CONCLUSION
Although the district court’s opinion and preliminary injunction order are not well-reasoned,
we nonetheless conclude, on de novo review of the legal issues presented, that plaintiffs have
demonstrated some likelihood of success on the merits of their claims and that they are threatened
with irreparable harm if preliminary injunctive relief is not granted. We therefore remain
unpersuaded that issuance of the preliminary injunction was an abuse of discretion. Accordingly,
the preliminary injunction is AFFIRMED.
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