International Union v. Kelsey-Hayes Co.

130 F. Supp. 3d 1111, 204 L.R.R.M. (BNA) 3320, 2015 U.S. Dist. LEXIS 124411, 2015 WL 5460631
CourtDistrict Court, E.D. Michigan
DecidedSeptember 17, 2015
DocketCase No. 11-CV-14434
StatusPublished
Cited by1 cases

This text of 130 F. Supp. 3d 1111 (International Union v. Kelsey-Hayes Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
International Union v. Kelsey-Hayes Co., 130 F. Supp. 3d 1111, 204 L.R.R.M. (BNA) 3320, 2015 U.S. Dist. LEXIS 124411, 2015 WL 5460631 (E.D. Mich. 2015).

Opinion

ORDER■ DENYING DEFENDANTS’ ■ MOTION FOR SUMMARY JUDGMENT [DOC 85], AND GRANTING IN PART PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND PERMANENT INJUNCTION [DOC. 86] ' '•

GEORGE CARAM STEEH, UNITED STATES DISTRICT JUDGE

This is a class action ease brought by plaintiff retirees alleging breach of collective bargaining agreement (“CBA”) under Section 301 of the Labor-Management Relations Act (“LMRA”), 29 U.S.C. § 18S, and for breach of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., and breach of fiduciary duty in violation of ERISA Plaintiff International Union, United Automobile, Aerospace, and Agricultural Implement Workers of. America (“UAW’ or “Union”) sues for breach of the CBA under LMRA Section 301. The plaintiff class was previously certified by the court. [Doc.- 92],

In 1998 defendant Kelsey-Hayes entered into a -CBA -with the UAW which represented the employees of its Detroit manufacturing plant. The 1998 CBA provided comprehensive healthcare coverage to its retirees and them surviving spouses. In 2001, Kelsey-Hayes closed its Detroit manufacturing plant and negotiated the Plant Closing Agreement with the Union. The Plant Closing Agreement addressed benefits provided to retirees, the effect of the Plant Closing Agreement on previous CBAs, and a method for resolving disputes arising out of the agreement. The named plaintiffs before the court today each retired prior to the Detroit plant’s closure on April 17, 2001.

Kelsey-Hayes continued to provide healthcare benefits under the terms of the 1998 CBA for ten years after the plant closed. In September 2011, Kelsey-Hayes announced plans to terminate retiree participation in- the retiree healthcare plan and required retirees to purchase individual plans for Medicare'supplemental insurance paid for out of company funded Health Reimbursement Accounts (“HRA”).

In October 2011, the retirees filed this súit alleging' breach of the CBAs under Section 301 of the LMRA and violation of an ERISA benefit plan against Kelsey-Hayes and TRW Automotive Holdings Corp. (“TRW’), and breach of fiduciary duty under ERISA against TRW. The complaint also alleges that Northrop Grumman is liable for damages as the successor to TRW, Inc. if TRW or Kelsey-Hayes terminate the plan.or otherwise reduce retiree benefits.

Kelsey-Hayes and TRW moved for an order ‘to compel arbitration relying on the Plant Closing Agreement’s general arbitration clause. Defendant Northrop Grumman filed a separate motion to compel arbitration. , The district court (J. Cook) initially granted the motions to compel arbitration in their entirety. Upon reconsideration, the district court reversed [1113]*1113itself in part, finding that a subset of plaintiffs — those who had retired prior to the plant closing in 2001 — could not be bound by the terms of the Plant Closing Agreement because their rights had already vested under the 1998 CBA. The ,1998 CBA provides that any healthcare-related disputes are exempt from otherwise applicable provisions requiring disputes to be resolved through arbitration.

Kelsey-Hayes appealed, and the Sixth Circuit (Rogers, Griffin, Donald) affirmed, holding that the employees who retired prior to the 2001 Plant Closing Agreement did not consent to the terms of the Plant Closing Agreement and could not be compelled to arbitrate under provisions contained in that agreement. UAW v. Kelsey-Hayes, 557 Fed.Appx. 532 (6th Cir.2014).

Defendants moved to stay this litigation pending the Supreme Court’s ruling in M & G Polymers USA, LLC v. Tackett. In that case, the Supreme Court took up the issue of how to interpret silence concerning the duration of retiree health-care benefits when construing collective bargaining agreements. This court agreed to stay this litigation, and the Supreme Court issued its opinion- on January 26, 2015. Tackett, — U.S.-, 135 S.Ct. 926, 190 L.Ed.2d 809 (2015). The parties re-filed their motions for summary judgment, and re-briefed their arguments to incorporate the Supreme Court’s decision.

FACTS

The plaintiffs are medicare-eligible retirees who worked at a* Detroit automotive plant owned by Kelsey-Hayes from 1992 until 2000. The plaintiffs were production and maintenance employees, and were represented for collective bargaining purposes by the UAW. The last of a series of CBAs was negotiated in 1998, which incorporated two separate documents covering insurance benefits, referred to as Supplement H and Supplement H-l. .

There are many entities involved in the history of the Detroit facility. KelseyHáyes owned and operated the facility from 1992 until 2000. The UAW represented the production and maintenance workers at the Detroit facility prior to its closure in 2001. Lucas Varity was the parent corporation of Kelsey-Hayes from 1996 to 1999. Lucas Varity sold its assets to TRW, Inc., a competitor, who was the parent corporation of Kelsey-Hayes from 1999 until 2002. ■ Kelsey-Hayes remained the owner of the plant until American Commercial Industries (ACI) purchased the Detroit facility from TRW, Inc. in 2000 and owned it until 2001. ACI assumed the UAW CBA existing at the time of the acquisition. - Kelsey-Hayes retained the right to re-assume operation of the facility if ACI became insolvent, which it did. Kelsey-Hayes took financial responsibility for the Detroit operation in October 2000, while ACI retained ownership of the facility and- the CBA with the UAW. The plant closed in 2001.

In connection with the closing of the Detroit facility, the UAW negotiated a Plant Closing Agreement with ACI. TRW Inc. was a party to the agreement as Kelsey-Hayes’ parent. The UAW waived all claims against these entities on behalf of its members. The only qualification to ,the waiver was that the closing agreement did not extinguish pension or retiree health care obligations owed by ACI or TRW, Inc., to the extent that either entity had any such obligations “under applicable law and benefit plans (including those provisions contained in collective bargaining agreements).” (Release, para.5).

In 2002, Northrop Grumman acquired TRW, Inc. Northrop Grumman sold a portion of the former TRW, Inc.’s automotive assets to a private equity firm. These [1114]*1114assets were then conveyed to a- new business known as TRW Automotive Holdings Corp. (TRW). TRW went public in 2004 and is the present parent entity of Kelsey-Hayes. The name TRW is an asset purchased from Northrop Grumman; there is no historical relationship with or continuity from the prior TRW Inc. entity. The defendants in this case are Kelsey-Hayes, TRW and Northrop Grumman.

Since the Detroit plant closed and, the 1998 CBA expired, retirees have experienced a number of changes in their health insurance coverage. In 2007, Kelsey-Hayes changed insurance carriers from Blue Cross Blue Shield of Michigan to Meritain, and in 2009 from Meritain to Humana. No individual or entity objected to these changes.

Changes in Medicare benefits and regulations over the years led to private companies offering “Medigap” plans, which cover costs not covered by Parts A, B and D (prescription drugs). Tax-free Health Reimbursement Accounts (HRA) also became available to pay the cost of so-called gap coverage.

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130 F. Supp. 3d 1111, 204 L.R.R.M. (BNA) 3320, 2015 U.S. Dist. LEXIS 124411, 2015 WL 5460631, Counsel Stack Legal Research, https://law.counselstack.com/opinion/international-union-v-kelsey-hayes-co-mied-2015.