United States Court of Appeals,
Eleventh Circuit.
No. 95-8234.
Felton E. HUDSON; George Duncan; R. Tex Ritter; Russ King; Gary Roberts; Neil Rowe; John D. Wallace; Ella Mae Williams; Betty Hofele; Ed Miller; Charles Chambers; Frank Lynch; Joseph Carrabino; James S. Brown, Jr.; Jerry Lilly; George Bailey; Jim Peoples; W. Travis Whitaker; Carolyn Cassell; Joseph P. McDaniel; Gary Robinson; Ernie Pariseau, on behalf of themselves and all those similarly situated, Plaintiffs-Appellants,
v.
DELTA AIR LINES, INC.; R.H. Heil, in his official capacity as a member of the Delta Air Lines Administrative Committee; W.W. Hawkins, in his official capacity as a member of the Delta Air Lines Administrative Committee; J.W. Callison, in his official capacity as a member of the Delta Air Lines Administrative Committee; C.J. May, in his official capacity as a member of the Delta Air Lines Administrative Committee; R.A. McClelland, in his official capacity as a member of the Delta Air Lines Administrative Committee; T.J. Roeck, in his official capacity as a member of the Delta Air Lines Administrative Committee; C.A. Thompson, in his official capacity as a member of the Delta Air Lines Administrative Committee; Robert S. Harkey, in his official capacity as a member of the Delta Air Lines Administrative Committee; Maurice Worth, in his official capacity as a member of the Delta Air Lines Administrative Committee; H.D Greenberg, in his official capacity as a member of the Delta Air Lines Administrative Committee; R.W. Coggin, in his official capacity as a member of the Delta Air Lines Administrative Committee; W.R. Braham, in his official capacity as a member of the Delta Air Lines Administrative Committee, Defendants-Appellees.
Aug. 5, 1996.
Appeal from the United States District Court for the Northern District of Georgia. (No. 1:94-01296-CV), G. Ernest Tidwell, Chief Judge.
Before HATCHETT, Circuit Judge, HENDERSON, Senior Circuit Judge, and MILLS*, District Judge. PER CURIAM:
This is an interlocutory appeal from the order of the United
* Honorable Richard H. Mills, U.S. District Judge for the Central District of Illinois, sitting by designation. States District Court for the Northern District of Georgia denying
the plaintiffs' motion for class certification and dismissing a
pendent state law claim for lack of jurisdiction.1 We affirm.
I. BACKGROUND
The plaintiffs are former employees of Delta Air Lines, Inc.
("Delta"), who retired between July 23, 1992 and January 1, 1993.
On May 16, 1994, they commenced this action against Delta and
various Delta officials based upon alleged violations of the
Employment Retirement Income Security Act, 29 U.S.C. §§ 1001 et
seq. ("ERISA"), and also asserting a state law breach of contract
cause of action. On June 3, 1994, they filed an amended complaint
to add certain defendants. According to the allegations of the
complaint,2 the facts giving rise to the lawsuit are as follows.3
On July 23, 1992, Delta announced impending changes in the
medical insurance benefits plan provided by the company for its
employees and retirees.4 Employees were told that those who
1 This court granted the plaintiffs' petition for interlocutory review pursuant to 28 U.S.C. § 1292(b), which permits appeals to be taken in civil cases from decisions not otherwise appealable when the district court certifies that the "order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). 2 We refer to the amended complaint as the complaint. 3 At this preliminary stage of the case and for purposes of this appeal, we must treat the allegations of the complaint as true. 4 A notice issued to "All Members of the Delta Family" stated that, due to adverse economic forces and to avoid "downsizing," it was necessary for the airline to substantially and permanently reduce its costs, which, among other things, would require revision of the company-provided medical and dental benefits package. (R2-20, Exhibit I). retired after January 1, 1993 would receive reduced benefits and be
required to pay higher premiums than persons who retired prior to
that date. In subsequent weeks, the company disseminated further
information, both orally and in writing, which stated that
individuals who retired on or before January 1, 1993, would be
"grandfathered" with respect to their current medical benefits,
meaning, they would be entitled to the same level of coverage
throughout the course of their retirement and would not be affected
by any future changes in the medical insurance plan offered by the
airline. In addition, Delta assured its employees that it did not
intend at that time to offer any package of enhanced retirement
incentives in the future. The latter declarations were made orally
during retirement planning seminars conducted by the company and
"in numerous conversations with potential Delta retirees." (R1-3
at ¶ 45).
The complaint further alleged that the plaintiffs chose their
retirement dates in reliance on Delta's promises that their level
of medical coverage and premiums would remain constant throughout
their retirement and that no improved retirement package was in the
planning stage at the time they made their decision. After they
retired, however, the company reduced the level of their medical
benefits and required them to pay higher premiums for coverage.
Also, contrary to the statements made denying a plan to offer an
enhanced benefits package in the future, retirement terms more
favorable than those extended to the plaintiffs were contemplated
by the airline prior to January 1, 1993 and in fact were offered to
certain eligible employees on August 23, 1993 (hereinafter referred to as the "Special Retirement Plan").
These allegations formed the basis for the first four counts
of the complaint. Count I urged that, when the plaintiffs retired
on or before January 1, 1993, they entered into a bilateral
contract with Delta, enforceable under ERISA, which mandated that
the company continue to provide the same medical benefits package
to the plaintiffs throughout their retirement years. Count II
asserted that by making false assurances to the plaintiffs
regarding the continuation of the terms of their retirement
benefits and by denying the intention to offer the Special
Retirement Plan in the future, Delta breached its fiduciary duty to
the plaintiffs in violation of ERISA. Count III charged that Delta
fraudulently induced the plaintiffs to retire on or before January
1, 1993 for the purpose of preventing their participation in the
Special Retirement Plan. Count IV claimed that by falsely
informing the plaintiffs that no better retirement package would be
forthcoming after January 1, 1993, and then extending such a
package to subsequent retirees, Delta unlawfully discriminated
against certain benefits plan participants in favor of others,
contrary to ERISA.
In addition to the ERISA causes of action contained in Counts
I through IV, Count V of the complaint alleged a suit for breach of
contract under Georgia law. This claim was predicated upon
allegations that Delta made repeated promises to the plaintiffs
during their employment that retirees who were at least fifty-two
years' old and who had worked for the airline for at least ten
years would be entitled to certain flying privileges throughout their retirement. However, on October 26, 1993, the company
eliminated flight privileges for any retiree who had accepted
employment with another airline or affiliate.
On August 12, 1994, the plaintiffs moved for class
certification pursuant to Fed.R.Civ.P. 23. In a brief in support
of the motion, the plaintiffs identified the putative class as over
1,800 "former employees of Delta Air Lines, Inc., who retired from
employment at Delta Air Lines between the dates of July 23, 1992
and January 1, 1993, inclusive." (R1-11, Brief at 2). The
plaintiffs alleged that the causes of action set forth in Counts I
through V of the complaint could best be pursued in the form of a
class action because, inter alia, they involved common issues of
law and fact and the claims of the class representatives were
typical of those of the class as a whole.
Thereafter, the defendants moved to dismiss Count V of the
complaint for lack of subject matter jurisdiction on the ground
that it was unrelated to the federal ERISA claims asserted in
Counts I through IV and lacked the requisite diversity of
citizenship. The defendants also opposed class certification,
contending in part that the ERISA claims were not amenable to
class-wide proof because they turned on each retiree's individual
reliance on the alleged assurances made by Delta. Furthermore, the
defendants argued, the requirements of commonality and typicality
necessary for class certification were not met because the claims
depended, all or in part, upon a variety of alleged oral
representations, thereby necessitating proof of the particular statements made to each retiree.5 The defendants conceded that "if
Plaintiff's claims were based on uniform written documents received
and relied on by the entire class, commonality and typicality could
be present." (R2-16 at 36). They maintained, however, that the
plaintiffs failed to carry their burden of proof on this score
because they offered no evidence that Delta ever issued such
uniform written assurances.
The plaintiffs then filed a reply to the motion to dismiss
Count V and to the defendants' opposition to class certification.
In support of the latter issue, the plaintiffs submitted, inter
alia, copies of a newsletter disseminated by Delta to its employees
and several intracompany memorandums, all of which discussed the
changes in the medical benefits plan effective January 1, 1993.6
In an order dated November 4, 1994, the district court granted
the defendants' motion to dismiss Count V for lack of jurisdiction
and denied the plaintiffs' motion for class certification. With
respect to Count V, the court found that the requirements for
supplemental jurisdiction under 28 U.S.C. § 1367 were not present
because the state law claim alleged therein did not sufficiently
5 According to the allegations of the complaint, Count I was based upon oral and written representations. The claims involving the Special Retirement Plan resulted solely from alleged oral promises. 6 The evidence submitted by the plaintiffs included company memorandums dated both before and after January 1, 1993. (See generally R2-20, Exhibits). Only the newsletter, which was dated August 27, 1992, and those memorandums issued prior to January 1, 1993 could have affected the timing of the plaintiffs' retirement. An affidavit of one of the plaintiffs, Felton E. Hudson, was also proffered. It states that "[s]uch memos were posted on company bulletin boards." (Id. at Exhibit B, ¶ 6). No objections to the inclusion of this evidence in the record were made by Delta. We presume that it is properly before us. involve the same facts, occurrences, witnesses or evidence as the
federal ERISA claims and it was separately maintainable from the
ERISA counts. On the issue of class certification of the ERISA
causes of action, the court found that the plaintiffs failed to
furnish proof rising to the level imposed by federal law which
would demonstrate commonality and typicality. In particular, the
court stated that the plaintiffs
have not shown that the questions of fact in each affected retiree's case are common to any other retiree's case. According to the plaintiffs, Delta made the representations that are at issue in this case orally, during several retirement planning seminars, and in writing, in various mailouts and fliers posted on bulletin boards. Plaintiffs must show not only whether each retiree was aware of these representations, but more importantly, the extent to which each retiree relied on the alleged representations in making his or her retirement decision. These are factual issues that must be resolved independently for each retiree.
(R2-24 at 8).
On November 21, 1994, the plaintiffs moved for reconsideration
of the district court's order, or in the alternative, for the
certification necessary to seek an interlocutory appeal in
accordance with 28 U.S.C. § 1292(b). See supra note 2. The court
denied the request for reconsideration, but did issue the § 1292(b)
certification. This court subsequently permitted the appeal.7
II. STANDARD OF REVIEW
The district court's dismissal of Count V of the complaint
for lack of subject matter jurisdiction is a question of law which
7 When the district court certifies that interlocutory review of an order is warranted, the court of appeals may, in its discretion, permit an appeal to be taken if application is made to it within ten days after entry of the district court's certification. 28 U.S.C. § 1292(b); General Television Arts, Inc. v. Southern Ry. Co., 725 F.2d 1327, 1330 (11th Cir.1984). is reviewed de novo on appeal. McMillian v. FDIC, 81 F.3d 1041,
1045 (11th Cir.1996). We consider the court's denial of class
certification under an abuse of discretion standard. Washington v.
Brown & Williamson Tobacco Corp., 959 F.2d 1566, 1569 (11th
Cir.1992); Coon v. Georgia Pacific Corp., 829 F.2d 1563, 1566
(11th Cir.1987).
III. DISCUSSION
A. Dismissal of Count V.
We first address the district court's dismissal of Count V
for lack of subject matter jurisdiction. There is no question in
this case that diversity of citizenship does not exist, thus,
subject matter jurisdiction over the state law allegations in Count
V depends upon the existence of that aspect of supplemental
jurisdiction formerly known as pendent claim jurisdiction. See
Palmer v. Hospital Auth. of Randolph County, 22 F.3d 1559, 1566
(11th Cir.1994). The presence of supplemental jurisdiction is
governed by 28 U.S.C. § 1367. Subsection (a) of that statute
defines the power of the federal courts to hear supplemental
claims. Palmer, 22 F.3d at 1566. It provides in relevant part
that
in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.
28 U.S.C. § 1367(a). The district court had original jurisdiction
(in this case, federal question jurisdiction) over the ERISA
counts. The court's power to adjudicate Count V therefore turns on
whether the state law cause of action alleged therein is so related to an ERISA ground that they form part of the same case or
controversy. In deciding whether a state law claim is part of the
same case or controversy as a federal issue, we look to whether the
claims arise from the same facts, or involve similar occurrences,
witnesses or evidence. Palmer, 22 F.3d at 1566.
We agree with the district court that Count V of the
complaint does not arise from the same case or controversy as the
ERISA causes of action. The record shows that the flight
privileges at issue in Count V were not part of an ERISA benefits
plan and were administered by a different department of Delta.
Moreover, the alleged facts underlying Count V are completely
unrelated to the allegations in support of the ERISA claims. The
only factor they share in common is that the airline's decisions
with respect to ERISA benefits and flight benefits affected certain
retirees. This does not provide a sufficient nexus between the
federal and state causes to support supplemental jurisdiction. We
consequently affirm the dismissal of Count V. In so doing, we
necessarily find that the issue of class certification as to Count
V is moot.
B. Denial of Class Certification.
Next, we consider the district court's denial of class
treatment of Counts I, II, III and IV, the ERISA grounds. Class
certification is governed by Fed.R.Civ.P. 23. Rule 23 permits the
maintenance of a class action when (1) the class is so numerous
that joinder of all of its members is impracticable, (2) questions
of law or fact common to the class are present, (3) the claims or
defenses of the representative parties are typical of the claims or defenses of the class and (4) the representative parties will
sufficiently protect the interests of the class. Fed.R.Civ.P.
23(a).8 The burden of proving these prerequisites is on the
representative party or parties seeking class certification.
Gilchrist v. Bolger, 733 F.2d 1551, 1556 (11th Cir.1984); Nelson
v. United States Steel Corp., 709 F.2d 675, 678-79 (11th Cir.1983).
As stated earlier, the district court's decision to deny
class certification was based upon the absence of commonality and
typicality. These factors provide the necessary link between the
class representatives and the class members. Washington, 959 F.2d
at 1569 n. 8. Although the issues of commonality and typicality
are separate inquiries, proof of each also "tend[s] to merge." Id.
The plaintiffs contend that commonality and typicality are
present with respect to Count I because, although they and the
putative class members received the alleged assurances through
different media and from different sources, the airline issued a
8 If the requirements of Fed.R.Civ.P. 23(a) are met, the district court must go further and determine whether the facts before the court satisfy Fed.R.Civ.P. 23(b). That subsection provides that class actions are appropriate only when (1) the prosecution of separate actions would create a risk of inconsistent verdicts or where individual adjudications would, as a practical matter, be dispositive of the interests of class members who are nonparties; or (2) the party opposing the class has acted or refused to act on grounds generally applicable to the putative class such that declaratory or injunctive relief with respect to the class as a whole would be appropriate; or (3) questions of law or fact common to members of the class predominate over issues affecting individual members and class adjudication is preferable to other methods of litigation for purposes of a fair and efficient resolution of the controversy. Because the district court found that the Rule 23(a) prerequisites of commonality and typicality were not present, it did not reach the Rule 23(b) issue. Our review on appeal is therefore confined to the district court's subsection (a) determination. uniform message to all employees concerning the terms of their
future medical benefits plan, which depended on their retirement on
or before January 1, 1993. Likewise, they claim, Delta issued
identical information to all members of the putative class
concerning the Special Retirement Plan, that is, that no such plan
was contemplated for a later date.
In response, the defendants essentially argue that the ERISA
claims have no merit. They maintain that Delta reserved the right
to amend or discontinue the plaintiffs' medical benefits at any
time.9 Thus, the defendants insist that the plaintiffs cannot
prove, class-wide or otherwise, the formation of the purported
bilateral contract alleged in Count I. In addition, the defendants
reiterate that evidence of individual reliance on a variety of
purported oral representations is necessary with respect to all of
the ERISA counts and state that, consequently, each plaintiff's
claims must be determined on a case-by-case basis.
We stress initially that the merits of the plaintiffs' claims
are not before us. See Eisen v. Carlisle & Jacquelin, 417 U.S.
156, 178, 94 S.Ct. 2140, 2153, 40 L.Ed.2d 732, 749 (1974) (quoting
Miller v. Mackey Int'l, 452 F.2d 424, 427 (5th Cir.1971) (" "In
determining the propriety of a class action, the question is not
9 In support of this assertion the defendants refer to a statement contained in a supplement to Delta's benefits handbook, which described changes in post-retirement medical and dental benefits effective January 1, 1992. The supplement states, "[a]s always, Delta reserves the right to change, modify, amend or discontinue the benefits described in this supplement of the Benefits Handbook at any time." (Appendix of Appellees, Tab A, Exhibit 2; see also id. at Tab J, Exhibit 77). This evidence was not made a part of the record in the district court. Consequently, we do not consider it on appeal. whether the plaintiff or plaintiffs have stated a cause of action
or will prevail on the merits, but rather whether the requirements
of Rule 23 are met.' "). Nevertheless, "evidence relevant to the
commonality requirement is often intertwined with the merits."
Nelson, 709 F.2d at 679. Accordingly, it sometimes is necessary to
"to probe behind the pleadings before coming to rest on the
certification question." General Tel. Co. of the Southwest v.
Falcon, 457 U.S. 147, 160, 102 S.Ct. 2364, 2372, 72 L.Ed.2d 740,
752 (1982).
The issue of commonality with respect to the Count I contract
claim is fundamentally different than the commonality that must be
shown to support class certification of the Special Retirement Plan
allegations described in Counts II through IV. We find that the
claims relating to the Special Retirement Plan are not susceptible
to class-wide proof. Even if the plaintiffs are able to prove that
Delta disseminated a false and uniform message to all potential
retirees that no such plan was in the works at the time they made
their decision to retire, they would also have to show that all
members of the class would have deferred their retirement in the
hope that they would be eligible for the Special Retirement Plan to
be offered in the future.10 This sort of decision would necessarily
10 The evidence contained in the record regarding the Special Retirement Plan discloses that it was offered only to a select group of employees who were at least fifty-two years' old on November 1, 1993 and who worked in particular departments of the airline targeted for downsizing. Participation was also limited to a certain number of persons in those departments to fit the business needs of the airline. (R2-20, Exhibits E, F). There was no guarantee that persons eligible for the program would be allowed to enroll. If requests to retire under the plan exceeded availability, acceptance was based upon seniority. (Id. at Exhibit F). It is most unlikely that all members of the putative have been highly individualized for each potential retiree.
On the other hand, the merits of the Count I contract cause
depend simply on evidence of the formation of the bilateral
contract alleged therein. This will require proof of written plan
documents which notified the putative class that the terms of their
medical benefits plan would remain constant throughout their
retirement if they retired on or before January 1, 1993.
ERISA requires that welfare benefit plans be governed by written plan documents which are to be prepared and filed in compliance with ERISA's reporting and disclosure requirements.... Accordingly, any retiree's right to lifetime medical benefits at a particular cost can only be found if it is established by contract under the terms of the ERISA-governed benefit plan document.
Alday v. Container Corp. of America, 906 F.2d 660, 665 (11th
Cir.1990) (citations omitted), cert. denied, 498 U.S. 1026, 111
S.Ct. 675, 112 L.Ed.2d 668 (1991). This type of claim seems, on
the surface, to be amenable to class-wide proof. So far, however,
the plaintiffs have failed to demonstrate the existence of such
written plan documents.11 The plaintiffs' reliance on the alleged
uniform oral statements guaranteeing the same level of medical
benefits throughout their retirement is of no help because "there
[is] no federal common law right to promissory estoppel under ERISA
in cases involving oral amendments to or modifications of employee
class were eligible to participate in the program or would have delayed their retirement on the chance that they might be selected. In any event, the plaintiffs made no showing on this issue. 11 As noted earlier, the written documentation made a part of the record in support of the motion for class certification consists of a company newsletter and intracompany memorandums. plans governed by ERISA."12 Id. at 666.
In Alday, this court stated in dicta that ERISA fiduciaries
might not be insulated from liability on the basis of the formal
written plan documents where contradictory and fraudulent promises
are made in informal communications for the purpose of deceiving
employees with respect to their benefits. Id. at 666 n. 15. We
voice no opinion as to whether the plaintiffs could state a claim
under such circumstances. Even if they could, none of the evidence
of record to date, which consists solely of informal company
communications, supports the plaintiffs' allegations that they were
assured that the terms of their medical coverage would never
change.13 With this record as our only source of information, we
can find no abuse of discretion by the district court in denying
12 A federal common law claim of equitable estoppel may come into play based upon oral interpretations of ambiguous ERISA plan documents. Alday, 906 F.2d at 666; Kane v. Aetna Life Ins., 893 F.2d 1283, 1285-86 (11th Cir.), cert. denied, 498 U.S. 890, 111 S.Ct. 232, 112 L.Ed.2d 192 (1990). "However, estoppel is not available either for oral modifications (as opposed to interpretations) or when the written plan is unambiguous." Glass v. United of Omaha Life Ins. Co., 33 F.3d 1341, 1347 (11th Cir.1994). The plaintiffs do not allege in this case that the controlling ERISA plan documents were ambiguous. 13 The newsletter defined "grandfathered" persons as "includ[ing] those individuals who were Delta employees as of August 31, 1991 and were age 52 or older as of January 1, 1992." (R2-20, Exhibit H). It also stated that "[i]f you elect to retire early prior to age 62 on January 1, 1993, the early retirement medical and dental contribution will not apply. However, the service related contribution may apply if you were not part of the grandfathered group." Id. It is not clear from this language exactly what it meant to be "grandfathered." Moreover, although the evidence indicates that Delta told potential retirees that certain employee contributions would be waived for persons in the "grandfathered" group who retired on or before January 1, 1993, nothing in the record supports the plaintiffs' claims that they were also told that the particular type of medical benefits included in the ERISA plan would be provided in perpetuity. class certification as to Count I of the complaint.
Of course, if, through further proceedings, the plaintiffs are
able to clarify and better support the need for class
certification, the district court remains free to revisit the
issue.14 The determination of whether a class should be certified
should be made "[a]s soon as practicable after the commencement of
an action." Fed.R.Civ.P. 23(c)(1). Additional discovery on the
issue and a hearing may be helpful.15 See Washington, 959 F.2d at
1570-71. We leave any further development of the class treatment
issue with respect to Count I to the sound discretion of the
district court.16 We simply hold that, at this stage of the
14 For example, the plaintiffs may yet be able to produce written plan documents in support of Count I. We caution, however, that the documentation currently in the record indicates that Delta made certain differentiations among various groups of retirees depending upon an employee's age at retirement, years of service and whether some of that service was with another airline. Thus, even if class certification were appropriate, it might be necessary to define and provide for various subclasses. But, we also note that at this point the plaintiffs' case appears to be based solely upon a theory of promissory estoppel, which is not cognizable under ERISA. Alday, 906 F.2d at 666. If the plaintiffs are unable to state a claim for relief, any question as to class certification will be moot. See id. at 667. 15 Although a hearing is not required prior to granting or denying a motion for class certification, Grayson v. K Mart Corp., 79 F.3d 1086, 1099 (11th Cir.1996), such a procedure may, in an appropriate case, aid the court in deciding the issue. 16 Although the issue of class certification should be resolved in the early stages of a case if possible, prior discovery is often necessary to sufficiently define the proper scope of an alleged class or subclass. Here, the plaintiffs moved for class treatment prior to conducting any discovery, traveling solely on the broad allegations of the complaint. Such an approach may be acceptable in some cases, but this is not one of them. Because the entitlement to ERISA benefits is controlled by formal plan documents, the analysis of any claim arising from the alleged failure to comply with an ERISA plan must begin with an examination of those documents, which will also define the class or classes of persons governed thereby. The record in the proceedings, the district court did not abuse its discretion in
denying class certification on the record before us.
IV. CONCLUSION
In accordance with the foregoing, we AFFIRM the dismissal of
Count V for lack of subject matter jurisdiction, we AFFIRM the
denial of class certification with respect to Counts I, II, III and
IV and we REMAND the case to the district court for further
proceedings.
present case shows that discovery began on August 17, 1994 and continued until March 22, 1995, when it was stayed by the district court pending the resolution of this appeal. The plaintiffs failed to make the pertinent ERISA plan documents a part of the record during this time. By suggesting that the district court may, in its discretion, reopen the class certification issue after further development of the case, we do not mean to imply that the court should do so.