Pacheco v. Honeywell, Int'l Inc.
Opinion
SUSAN RICHARD NELSON, United States District Judge
Plaintiffs Augustine Pacheco and Vicki Hansen filed this suit on November 7, 2017, on their own behalf and on behalf of similarly-situated retirees, under the Employment Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). They assert claims against their former employer Honeywell International, Inc. ("Honeywell") for breaches of certain collective bargaining agreements ("CBAs") that they allege contain collectively-bargained promises of Honeywell-sponsored healthcare benefits until age 65 for employees who took early retirement under the Honeywell-sponsored benefits plan. (See Compl. ¶¶ 103-39 [Doc. No. 1].)
Shortly after filing this suit, Plaintiffs moved for injunctive relief, seeking an order prohibiting Honeywell from terminating their healthcare coverage, and their families' coverage, which was set to expire January 1, 2018, during the pendency of this litigation. (See Pls.' Mot. for Prelim. Inj. at 1 [Doc. No. 18].) Following an expedited briefing schedule and a December 21, 2017 motion hearing, the Court issued *1014a provisional ruling on December 29, 2017, granting Plaintiffs' request for a preliminary injunction through January 31, 2018. (See Dec. 29, 2017 Order [Doc. No. 39].) The ruling was provisional because the Court had only four business days between Christmas and New Years in which to issue the order. The Court stated that it would thoroughly review the record and the pertinent authorities and issue an amended order no later than January 31, 2018. (See id. at 32.)
Now, having had the opportunity to conduct its thorough review, the Court issues this Amended Order. For the reasons set forth in the December 29, 2017 Order, incorporated herein, and below, Plaintiffs' Motion for a Preliminary Injunction is granted, pending an adjudication on the merits of Plaintiffs' claims or further order of this Court after notice and hearing.
I. BACKGROUND
Plaintiffs Pacheco and Hansen are former members of the production and maintenance collective bargaining unit at Honeywell's Minnesota facilities and were represented by the International Brotherhood of Teamsters Local 1145 ("the Union"). (See Compl. ¶ 5.) Defendant Honeywell is a Fortune 100 company, with operations in approximately 1,250 cities throughout the world, with sales of approximately $38 billion. (Id. ¶ 10.)
A. Factual History
In 2007 and 2010, Honeywell entered into CBAs with the Union, which included pension and welfare provisions for employees who elected to take: (1) "normal retirement" at age 65 or later; or (2) "early retirement," for employees with at least 15 years of credited service, who were at least 55 years old, but younger than 65, at the time of retirement. (Id. ¶ 14; Ex. 3 to Pls.' Mot., Art. 24, § 7 (2007 CBA), Ex. 5 to Pls.' Mot., Art. 24, § 7 (2010 CBA).)1 Employees who took early retirement received a reduced pension for the rest of their lives, based on a formula that accounted for the employees' age and years of service. (See Compl. ¶¶ 15-16.) At issue here are the healthcare benefits available to the employees who took early retirement during the periods of the 2007 and 2010 CBAs.
1. Pre-2007 CBA
Plaintiffs allege that for more than 30 years prior to the 2007 CBA, Honeywell sponsored and provided healthcare benefits for eligible early retirees, starting from the date of retirement and continuing after the expiration of the CBA in effect when retirement began, until the retiree reached age 65. (Id. ¶ 20.) These benefits, Plaintiffs allege, also extended to the retiree's spouse or surviving spouse until age 65, and to the retiree's dependent children until age 26. (Id. )
In support of these allegations, Plaintiffs point to a 2005-2006 document entitled "Frequently Asked Questions and Answers Regarding Retirement." (See id. ¶ 21.) Among the information in the FAQ documents, Honeywell provided the following:
Q: When I reach age 65 my medical coverage ceases for myself. I have a spouse and dependents, what medical coverage will they have?
A: Medical coverage that you had selected for your spouse and eligible dependents continues until your spouse reaches age 65.
(Ex. 1 to Pls.' Mot. (FAQ at 7).)
Plaintiffs also identify a 2001 agreement between Honeywell and the Union concerning severance in the event of restructuring or relocating which also incorporated retiree healthcare benefits. A section entitled "Insurance Continuation" provides that terminated employees who are eligible *1015to retire "will be eligible for retiree medical in accordance with the terms of the applicable plan." (Ex. 2 to Pls.' Mot. (2001 Agmt. at 68).) In addition, in a section labeled "Pension Benefits," it states: "Employees shall receive Pension benefits in accordance with the provisions of the Pension Plan, including retiree medical." (Id. ) Plaintiffs contend that this agreement remains in effect. (See Compl. ¶ 22.)
2. The 2007 CBA
The healthcare benefits provisions in the 2007 CBA are found in Article 24. In Section 7 of Article 24, entitled "Retiree Health Care (Pre 65 only)" Honeywell promised that it "will provide" certain contributions to the healthcare expenses for its pre-65 retirees, their dependents, and surviving spouses. (See Ex. 3 to Pls.' Mot., Art. 24, § 7.) It further stated, "The Company does not provide healthcare benefits for Local 1145 retirees after age 65." (Id. )
The first sentence of Section 1 of Article 24 stated that these insurance and benefit plans would be implemented and maintained "as specified by the time periods outlined below for the duration of this Agreement." (Id., Art. 24, § 1.) The 2007 CBA also contained a general durational clause, stating, "This Agreement shall become effective February 1, 2007 and shall remain in force and effect up to midnight January 31, 2010." (Id., Art. 35, § 1.)
Subsequent to the 2007 CBA, Honeywell appears to have provided its employees with "answers" to questions about the 2007 CBA retiree healthcare coverage, including the following:
Q: What healthcare coverage is provided to retirees?
A: Local 1145 retirees are eligible for healthcare coverage through Honeywell until age 65. After age 65[,] they are eligible for Medicare with no subsidy from Honeywell.
(Ex. 4 to Pls.' Mot. (Answers to Question at 2).) In the same document, Honeywell informed its employees that limits on its annual contributions to retiree healthcare benefits were not expected to "hit until 2018," eight years after the 2010 expiration of the 2007 CBA. (Id. )
3. The 2010 CBA
The nearly identical healthcare provisions for pre-65 retirees in the 2010 CBA are likewise found in Article 24 of that agreement.
Free access — add to your briefcase to read the full text and ask questions with AI
SUSAN RICHARD NELSON, United States District Judge
Plaintiffs Augustine Pacheco and Vicki Hansen filed this suit on November 7, 2017, on their own behalf and on behalf of similarly-situated retirees, under the Employment Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). They assert claims against their former employer Honeywell International, Inc. ("Honeywell") for breaches of certain collective bargaining agreements ("CBAs") that they allege contain collectively-bargained promises of Honeywell-sponsored healthcare benefits until age 65 for employees who took early retirement under the Honeywell-sponsored benefits plan. (See Compl. ¶¶ 103-39 [Doc. No. 1].)
Shortly after filing this suit, Plaintiffs moved for injunctive relief, seeking an order prohibiting Honeywell from terminating their healthcare coverage, and their families' coverage, which was set to expire January 1, 2018, during the pendency of this litigation. (See Pls.' Mot. for Prelim. Inj. at 1 [Doc. No. 18].) Following an expedited briefing schedule and a December 21, 2017 motion hearing, the Court issued *1014a provisional ruling on December 29, 2017, granting Plaintiffs' request for a preliminary injunction through January 31, 2018. (See Dec. 29, 2017 Order [Doc. No. 39].) The ruling was provisional because the Court had only four business days between Christmas and New Years in which to issue the order. The Court stated that it would thoroughly review the record and the pertinent authorities and issue an amended order no later than January 31, 2018. (See id. at 32.)
Now, having had the opportunity to conduct its thorough review, the Court issues this Amended Order. For the reasons set forth in the December 29, 2017 Order, incorporated herein, and below, Plaintiffs' Motion for a Preliminary Injunction is granted, pending an adjudication on the merits of Plaintiffs' claims or further order of this Court after notice and hearing.
I. BACKGROUND
Plaintiffs Pacheco and Hansen are former members of the production and maintenance collective bargaining unit at Honeywell's Minnesota facilities and were represented by the International Brotherhood of Teamsters Local 1145 ("the Union"). (See Compl. ¶ 5.) Defendant Honeywell is a Fortune 100 company, with operations in approximately 1,250 cities throughout the world, with sales of approximately $38 billion. (Id. ¶ 10.)
A. Factual History
In 2007 and 2010, Honeywell entered into CBAs with the Union, which included pension and welfare provisions for employees who elected to take: (1) "normal retirement" at age 65 or later; or (2) "early retirement," for employees with at least 15 years of credited service, who were at least 55 years old, but younger than 65, at the time of retirement. (Id. ¶ 14; Ex. 3 to Pls.' Mot., Art. 24, § 7 (2007 CBA), Ex. 5 to Pls.' Mot., Art. 24, § 7 (2010 CBA).)1 Employees who took early retirement received a reduced pension for the rest of their lives, based on a formula that accounted for the employees' age and years of service. (See Compl. ¶¶ 15-16.) At issue here are the healthcare benefits available to the employees who took early retirement during the periods of the 2007 and 2010 CBAs.
1. Pre-2007 CBA
Plaintiffs allege that for more than 30 years prior to the 2007 CBA, Honeywell sponsored and provided healthcare benefits for eligible early retirees, starting from the date of retirement and continuing after the expiration of the CBA in effect when retirement began, until the retiree reached age 65. (Id. ¶ 20.) These benefits, Plaintiffs allege, also extended to the retiree's spouse or surviving spouse until age 65, and to the retiree's dependent children until age 26. (Id. )
In support of these allegations, Plaintiffs point to a 2005-2006 document entitled "Frequently Asked Questions and Answers Regarding Retirement." (See id. ¶ 21.) Among the information in the FAQ documents, Honeywell provided the following:
Q: When I reach age 65 my medical coverage ceases for myself. I have a spouse and dependents, what medical coverage will they have?
A: Medical coverage that you had selected for your spouse and eligible dependents continues until your spouse reaches age 65.
(Ex. 1 to Pls.' Mot. (FAQ at 7).)
Plaintiffs also identify a 2001 agreement between Honeywell and the Union concerning severance in the event of restructuring or relocating which also incorporated retiree healthcare benefits. A section entitled "Insurance Continuation" provides that terminated employees who are eligible *1015to retire "will be eligible for retiree medical in accordance with the terms of the applicable plan." (Ex. 2 to Pls.' Mot. (2001 Agmt. at 68).) In addition, in a section labeled "Pension Benefits," it states: "Employees shall receive Pension benefits in accordance with the provisions of the Pension Plan, including retiree medical." (Id. ) Plaintiffs contend that this agreement remains in effect. (See Compl. ¶ 22.)
2. The 2007 CBA
The healthcare benefits provisions in the 2007 CBA are found in Article 24. In Section 7 of Article 24, entitled "Retiree Health Care (Pre 65 only)" Honeywell promised that it "will provide" certain contributions to the healthcare expenses for its pre-65 retirees, their dependents, and surviving spouses. (See Ex. 3 to Pls.' Mot., Art. 24, § 7.) It further stated, "The Company does not provide healthcare benefits for Local 1145 retirees after age 65." (Id. )
The first sentence of Section 1 of Article 24 stated that these insurance and benefit plans would be implemented and maintained "as specified by the time periods outlined below for the duration of this Agreement." (Id., Art. 24, § 1.) The 2007 CBA also contained a general durational clause, stating, "This Agreement shall become effective February 1, 2007 and shall remain in force and effect up to midnight January 31, 2010." (Id., Art. 35, § 1.)
Subsequent to the 2007 CBA, Honeywell appears to have provided its employees with "answers" to questions about the 2007 CBA retiree healthcare coverage, including the following:
Q: What healthcare coverage is provided to retirees?
A: Local 1145 retirees are eligible for healthcare coverage through Honeywell until age 65. After age 65[,] they are eligible for Medicare with no subsidy from Honeywell.
(Ex. 4 to Pls.' Mot. (Answers to Question at 2).) In the same document, Honeywell informed its employees that limits on its annual contributions to retiree healthcare benefits were not expected to "hit until 2018," eight years after the 2010 expiration of the 2007 CBA. (Id. )
3. The 2010 CBA
The nearly identical healthcare provisions for pre-65 retirees in the 2010 CBA are likewise found in Article 24 of that agreement. Again, in Section 7 of Article 24, also entitled "Retiree Health Care (Pre 65 only)," Honeywell promised that it "will provide" certain contributions to the healthcare expenses for the pre-65 retirees, their dependents, and surviving spouses. (See Ex. 5 to Pls.' Mot., Art. 24, § 7.) As with the 2007 CBA, Honeywell stated, "The Company does not provide healthcare benefits for Local 1145 retirees after age 65." (Id. )
In Section 1 of Article 24, the 2010 CBA also stated that the healthcare provisions were to be implemented and maintained "as specified by the time periods outlined below for the duration of this Agreement. (The plans list a time period 1/1/13-12/31/13, it is understood that the Agreement expires 1/31/2013.)" (Id., Art. 24, § 1.) And, as with the 2007 CBA, the 2010 CBA contained a general durational clause, stating, "This Agreement shall become effective February 1, 2010 and shall remain in force and effect up to midnight January 31, 2013." (Id., Art. 31, § 1.)
The new, different language in the 2010 CBA, pertinent here, outlined certain procedures for a "Special Retirement Program." (Id., Art. 24, § 7.) The procedures applied to employees who retired on or after February 1, 2010, for whom Honeywell would not contribute any amount toward the retirees' medical premiums, except as follows:
Employees who provide the Company with at least four (4) months advance *1016written notice of his or her irrevocable decision to retire on a date certain between August 1, 2010 and February 1, 2013 and are not terminated for cause will be eligible for retiree medical coverage under the 1145 retiree medical plan with respect to which Honeywell will contribute towards the annual retiree medical premium.
(Id. )
Honeywell provided its employees a document entitled "Pension and Medical Question[s]" regarding the Special Retirement Program. (See Ex. 7 to Pls.' Mot. (Pension & Medical Document).) In the document, Honeywell stated that the Special Retirement Program represented a limited window of opportunity during which eligible employees could take early retirement and still receive medical benefits:
Q: If I retire after 2/1/2013 will I have Retiree Medical?
[A:] No-2010 CBA-Effective February 1, 2011, for each employee who terminates and retires on or after February 1, 2010[,] Honeywell will not contribute any amount toward the annual retiree medical [premium] except under the "[S]pecial Retirement Program" provision. Page 38, 1/31/2010 CBA.
* * *
Q: If I retire does my medical insurance end at age 65 when I'm eligible for [M]edicare?
[A:] Yes-A Co[b]ra type policy is available for your [dependents], but you pay the whole premium cost per month.
(Id. at 2.)
In addition to the Q & A document, Honeywell provided information in various other forms concerning the pre-65 retirement program. It offered "[v]oluntary, off-shift informational sessions on making the decision to retire," at which one of the covered topics was "[r]etiree medical." (Ex. 8 to Pls.' Mot. (Honeywell Retirement Planning Sessions).) Gregory Harrer, a former Honeywell employee who retired at age 57 in October 2012, attended at least one such session when he was still employed. (Ex. 19 to Pls.' Mot. (Harrer Decl. ¶ 5).) Harrer attests that Honeywell Human Resources and management officials informed the attendees "that as long as we retired under the 'special' procedures we were guaranteed healthcare to age 65." (Id. ) Honeywell officials indicated that after turning 65, the retirees "would go on Medicare and [their] Honeywell healthcare would end." (Id. ) Another former Honeywell employee, Named Plaintiff Vicki Hansen, retired in January 2013 based on the 2010 CBA's window of opportunity to retire with healthcare benefits. (Ex. 18 to Pls.' Mot. (Hansen Decl. ¶¶ 4-6).) In the fall of 2010, she and a coworker met with the Honeywell Labor Relations Manager Chuck Bengtson and Honeywell Human Resources Director Dave Hanson to discuss retiree healthcare options. (Id. ¶ 5.) Bengtson allegedly assured the employees that if they followed the special retirement process, healthcare benefits until age 65 were guaranteed, and Honeywell could not end the benefits any earlier. (Id. ) Moreover, Bengtson noted that the 2010 CBA offered the "last chance to retire with healthcare." (Id. )
Also, Honeywell provided information on the Special Retirement Program application process, and warned, "Effective with the February 1, 2010 [CBA], ... Honeywell will no longer subsidize retiree medical benefits for employees who are not already retired or who do not retire under the Special Retirement Program." (Ex. 9 to Pls.' Mot. (Special Retirement Process).) Further, Honeywell provided "enrollment worksheets," identifying the costs of different pre-65 retiree medical coverage categories, and confirming employees' personal *1017and dependent information on file, including birth dates. (See Ex. 11 to Pls.' Mot. (Enrollment Worksheet).)
4. Summary Plan Descriptions
Both the 2007 and the 2010 CBAs included references to separate "Summary Plan Documents" or "SPDs" for additional details. (See, e.g., Ex. 1 to Jacobs Decl. (2007 CBA at 25-29); Ex. 2 to Jacobs Decl. (2010 CBA at 34-36).)2 For example, the 2007 CBA referred to the SPD concerning network basic benefits and the terms and conditions of the dental and vision benefits under the plan. (See Ex. 1 to Jacobs Decl. (2007 CBA at 25-27).)
The SPDs issued during the period of the 2007 and 2010 CBAs, which are insurer-specific, contain two provisions regarding termination of coverage. Section 7 of the respective SPDs provides that coverage will cease on the date that the plan is terminated or canceled, and Section 14 states that Honeywell reserves the right to terminate the plan, or any portion of it, at any time and for any reason, except as prohibited by law, "or the provisions of a written collective bargaining agent [sic] of an employee or employees entitled to benefits under this Plan." (See, e.g., Ex. 3 to Jacobs Decl. (2007 BCBS PPO SPD at 97, 115); Ex. 4 to Jacobs Decl. (2007 United Healthcare Choice Plus PPO SPD at 103, 121); Ex. 5 to Jacobs Decl. (2011-2013 BCBS PPO SPD at 123, 141); Ex. 6 to Jacobs Decl. (United Healthcare Choice Plus PPO SPD at 128, 147).) Similar reservation-of-rights language also appears elsewhere in the SPDs. (See, e.g., id., Ex. 3 at 2, 6; Ex. at 3; Ex. 5 at 4, 10, 20, 28, 32; Ex. 6 at 4, 10, 20, 28, 32, 147.)
5. Honeywell's Announcement
In late March 2017, Honeywell informed approximately 320 Minnesota early retirees of its intent to terminate their medical and prescription drug coverage, and their dependents' coverage, effective after December 31, 2017, i.e., on January 1, 2018. (See Ex. 12 to Pls.' Mot. (Mar. 27, 2017 Letter); Ex. 13 to Pls.' Mot. (List of Retirees Receiving Letter).)
A month earlier, Honeywell and the Union had signed a "Memorandum of Agreement" stating that "[t]he parties agree that the Company will terminate retiree healthcare benefits for current retirees no sooner than December 31, 2017 with at least 6 months notice to retirees prior to termination." (Ex. 7 to Jacobs Decl. (Feb. 1, 2017 Mem. of Agmt.) On February 4, 2017, a new CBA went into effect that contains no provisions for retiree healthcare benefits. (See Ex. 17 to Jacobs Decl. (2017 CBA at 40).)
B. Procedural History
In this lawsuit, Plaintiffs, who assert breaches of the applicable CBAs and violations of federal law, seek class certification, injunctive relief, reimbursement, damages, and attorneys' fees. (See Compl. at 34-35.) They contend that they would not have taken early retirement and given up their jobs had Honeywell informed them of its purported belief that it could terminate their pre-65 medical coverage regardless of their age or the ages of their spouses or dependents at termination. (See id. ¶ 137.) On December 12, 2017, they filed the instant motion, seeking an order prohibiting Honeywell from ending, on January 1, 2018, their pre-65 healthcare coverage, and their families' coverage, while this case is litigated. (See Pls.' Mot. at 1.)
Plaintiffs argue that they have met the four factors of the Dataphase test necessary for preliminary injunctive relief. (Pls.'
*1018Mem. in Supp. Mot. for Prelim. Inj. at 6-7 [Doc. No. 20].) First, they contend that they are likely to succeed on the merits of their claims because the 2007 and 2010 CBAs unambiguously promised healthcare benefits beginning upon their pre-65 retirement and ending upon turning 65 years old. (Id. at 9-13.) Accordingly, they argue, their rights to pre-65 healthcare benefits vested. (Id. ) This specific language, Plaintiffs assert, trumps the general durational language in the CBAs, which calls for the expiration of the agreements at stated times. (Id. at 9-10; 14-15.) Moreover, Plaintiffs assert that their reading of the CBAs is consistent with the contracting parties' intentions, noting Honeywell's many assurances regarding the continuation of healthcare benefits until age 65. (Id. at 11.) Second, as to irreparable harm, Plaintiffs contend that the threat of termination of their medical benefits constitutes irreparable injury, and, given the higher cost of replacement coverage, they suffer from anxiety and stress due to the prospect of having to choose between medical care and other necessities of life, often on fixed incomes. (Id. at 15-16.) Finally, Plaintiffs assert that the two final factors for awarding injunctive relief-the balance of harms and the public interest-favor them, given the significant impact of the loss of healthcare to them versus the monetary cost to Honeywell of providing the benefits, and the strong public interest in preserving retiree healthcare benefits. (Id. at 16.)
In opposition, Honeywell argues Plaintiffs satisfy none of the factors necessary for injunctive relief. First, it contends, Plaintiffs have not shown a likelihood of success on the merits. (Defs.' Opp'n Mem. at 10-11 [Doc. No. 32].) Like Plaintiffs, Honeywell asserts that the 2007 and 2010 CBAs are unambiguous. (See id. at 14.) However, it reads them as unambiguous in its favor, arguing that the agreements did not permanently vest pre-65 healthcare benefits. (Id. ) Rather, Honeywell contends, not only did the CBAs lack explicit vesting language, any promises for pre-65 retirees' healthcare benefits were subject to the general durational language in the agreements and Honeywell's reservation of rights in the SPDs to terminate or alter the plans at any time. (Id. at 11-19.) Because it finds the contract language unambiguous, it asserts that any reliance on extrinsic evidence is improper. (Id. at 29-30.) Second, Honeywell asserts that Plaintiffs cannot demonstrate irreparable harm because nine months prior to the filing of the instant motion, the Union-then representing Plaintiffs-agreed that Honeywell would not extend healthcare benefits beyond December 31, 2017. (Id. at 32.) Moreover, the delay in time between Honeywell's March 2017 notice of termination and the filing of the instant motion, Honeywell argues, negates Plaintiffs' claim of irreparable harm and constitutes sufficient reason to deny the motion. (Id. at 33-35.) It contends that the delay undercuts any claimed urgency and, considering the balance of harms, renders a preliminary injunction inequitable as "Honeywell would be burdened by an injunction forcing it to continue paying benefits while this litigation proceeds." (Id. at 35.) It estimates that monthly coverage for Plaintiffs costs Honeywell at least $368,000 per month. (Id. ) Finally, Honeywell argues that the public interest weighs in favor of denying Plaintiffs' motion, as Honeywell should not be "forc[ed] ... to pay for insurance benefits that it never contractually agreed to provide and never understood to be vested." (Id. at 36.)
Following the issuance of the December 29, 2017 Order granting injunctive relief through January 31, 2018, Honeywell filed an appeal with the Eighth Circuit Court of Appeals and moved for an expedited hearing. See Pacheco v. Honeywell, 18-1006, (8th Cir.), Def.'s Mot. to Expedite. The *1019Eighth Circuit denied Honeywell's motion for an expedited briefing schedule and hearing. Id., Jan. 26, 2018 Order. The appeal remains pending and briefing has not yet been filed.
II. DISCUSSION
This Court must consider four factors to determine whether preliminary injunctive relief is warranted: (1) the movant's likelihood of success on the merits; (2) the threat of irreparable harm to the movant in the absence of relief; (3) the balance between that harm and the harm injunctive relief would cause to the other litigants; and (4) the public interest. Dataphase Sys., Inc. v. CL Sys., Inc.,
A. Irreparable harm
"The basis of injunctive relief in the federal courts has always been irreparable harm and the inadequacy of legal remedies." Bandag, Inc. v. Jack's Tire & Oil, Inc.,
The Court finds that Plaintiffs have demonstrated irreparable harm, absent the issuance of injunctive relief. Plaintiff Vicki Hansen attests that she gave up her job at Honeywell and took early retirement in January 2013 in reliance on Honeywell's promise of pre-65 healthcare benefits. (Ex. 18 to Pls.' Mot. (Hansen Decl. ¶ 6).) She contends that replacement medical coverage for her and her husband would cost approximately $2,171 per month, with a $900 per person deductible, and an out-of-pocket maximum of $6,500 per person. (Id. ¶ 7.) In contrast, under the pre-65 Honeywell plan, Hansen currently has a $200 per person deductible, with an out-of-pocket maximum of $2,000 per person. (Id. ) With her monthly Honeywell pension check of $2,926, she contends that if she were required to obtain replacement healthcare coverage, she would have approximately $400, after taxes, with which to pay deductibles, living expenses, and other necessities. (Id. ¶ 8.) In addition to this financial harm, Hansen maintains that absent injunctive relief, the quality of life that she and her husband enjoy would deteriorate. (Id. ¶ 9.) Not only is the stress caused by the direct loss of healthcare benefits and its attendant financial consequences a source of worry and anxiety, equally concerning is the prospect of having to choose between healthcare and other necessities of life. (Id. ) Fellow pre-65 retiree Gregory Harrer similarly asserts that comparable *1020replacement insurance would cost about $1,129 per month. (Ex. 19 to Pls.' Mot. (Harrer Decl. ¶ 7).) Even if he qualified for a state subsidy, assuming it remains available, he would be required to spend much of his Honeywell pension on replacement healthcare coverage. (Id. ) He notes that if his healthcare benefits are terminated, he will have to "limit [his] medical treatment and choose between healthcare and other necessities," seriously impacting his quality of life. (Id. ¶ 8.) Based on his conversations with other Minnesota retirees, he understands that they share similar concerns. (Id. )
This Court has observed that "the mere threat of termination of medical benefits" constitutes irreparable injury, Teamsters Local No. 120 v. Marathon Petroleum Co. LLC, No. 06-cv-3431 (PAM/JSM),
Justice Breyer, when a member of the First Circuit Court of Appeals succinctly pointed out that certain general facts are commonly believed or have been held to constitute irreparable harm concerning retirees and reductions in medical benefits, such as: '(1) most retired union members are not rich; (2) most live on fixed incomes; (3) many will get sick and need medical care; (4) medical care is expensive; (5) medical insurance, is therefore, a necessity; (6) some retired workers find it difficult on their own while others pay for it only out of money that they need for other necessities of life....' It is easy to understand that emotional distress is likely to follow termination of retiree medical insurance benefits.
No. 03-cv-6248T,
Honeywell contends that Plaintiffs' own delay in filing suit undercuts their claims of irreparable harm. (See Def.'s Opp'n Mem. at 32-33.) The Court disagrees. True, courts have found that under some circumstances, delay in seeking injunctive relief may justify its denial. See, e.g., Hubbard Feeds,
*1021Aviva Sports, Inc. v. Fingerhut Direct Mktg., Inc., No. 09-cv-1091 (JNE/JSM),
For all of the foregoing reasons, the Court finds that Plaintiffs have satisfactorily shown a threat of irreparable harm absent a preliminary injunction.
B. Likelihood of Success
In order to obtain a preliminary injunction, Plaintiffs must show that they have a "fair chance of prevailing" on their claims. Planned Parenthood Minn., N.D., S.D. v. Rounds,
Central to the Court's analysis here is the U.S. Supreme Court's decision in M & G Polymers USA, LLC v. Hobert Freel Tackett, --- U.S. ----,
The Supreme Court disagreed. Writing for the majority, Justice Thomas stated that contractual provisions in CBAs are to be enforced as written and interpreted *1022in accordance with "ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy." Id. at 933. As with any contract, "the parties' intentions control." Id. (citing Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp.,
When faced with ambiguous language, Justice Thomas advised that courts "should not construe ambiguous writings to create lifetime promises." Id. at 936 (citing 3 A. Corbin, Corbin on Contracts § 533, p. 216 (1960) ). Rather, courts should be guided by the "traditional principle that 'contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.' " Id. at 937 (quoting Litton Fin. Printing Div., Litton Bus. Sys., Inc. v. NLRB,
In her concurring opinion, Justice Ginsburg expounded upon Justice Thomas's adherence to fundamental principles of contract law, stating that when the parties' intent is unambiguously expressed in the contract, that intent controls, and the court's analysis should go no further. Id. at 938 (Ginsburg, J., concurring) (citing 11 R. Lord, Williston on Contracts § 30:2, p. 98-104) (4th ed. 2012) (Williston) ). However, when faced with ambiguity, courts may consider extrinsic evidence to determine the parties' intentions. Id. (citing 11 Williston § 30:7, at 116-24 ). Justice Ginsburg further observed that there is no rule requiring "clear and express" language in order to demonstrate that the parties intended healthcare benefits to vest. Id. Rather, " '[C]onstraints upon the employer after the expiration date of a collective-bargaining agreement,' we have observed, may be derived from the agreement's "explicit terms," but they 'may arise as well from ... implied terms of the expired agreement.' " Id. (alterations in original) (quoting Litton,
Applying these fundamental contractual precepts in Tackett, the Supreme Court remanded the matter to the Sixth Circuit with instructions to apply ordinary principles of contract law. Id. at 937.
It appears that post- Tackett , Honeywell has proposed the termination of healthcare benefits to retirees in other parts of the country, and the parties here have referred to these other decisions. As the court in one such case recognized, the agreements in other cases invariably differ from those in the case at hand, as each local union bargained with Honeywell to achieve different results. See Kelly v. Honeywell Int'l, Inc.,
In Fletcher v. Honeywell,
To shed light on the parties' intentions behind the CBAs at issue, the court also considered evidence of subsequent bargaining-namely, evidence of a one-year window of opportunity to retire, prior to Honeywell's elimination of healthcare benefits for all retirees who retired after June 1, 2012.
The parties' understanding that the retirees had lifetime healthcare benefits formed the premise behind the creation of this window of opportunity. It is inconceivable that nearly half of the union employees at the Greenville plant would agree to voluntarily retire based solely on a promise that they would continue to receive healthcare benefits only until May 22, 2014, when the CBA expired. Accordingly, evidence of what transpired during and after the 2011 negotiations provides additional support for a finding that the parties intended that Honeywell would provide lifetime retiree healthcare benefits.
In another recent Honeywell case, the court in Cooper v. Honeywell International, Inc., No. 1:16-cv-4712017,
In Kelly, which involved lifetime benefits, the court found that the CBAs contained a general durational clause, but no reservation of rights clause, distinguishing them from the CBAs in Abbruscato v. Empire Blue Cross & Blue Shield,
Thus far, the Sixth Circuit is the only appellate court to have ruled in a Honeywell retiree benefits suit, post- Tackett , in *1024Watkins v. Honeywell International, Inc.,
Other recent, post- Tackett decisions are also instructive. In Matthews v. Chicago Transit Authority,
The Fourth Circuit found that retiree health care benefits did not vest for life in Barton v. Constellium Rolled Prods.-Ravenswood, LLC,
Two recent Sixth Circuit decisions involving retiree healthcare benefits, which the plaintiffs argued vested for life, found the CBAs in question unambiguous and not so sufficiently specific as to override the general durational clauses found in the respective CBAs. See Cole v. Meritor, Inc.,
Following Tackett and the guidance of these subsequent decisions, the Court examines the four corners of the applicable CBAs here to determine whether the language in question unambiguously expresses the contracting parties' intentions. See Tackett,
The 2007 agreement makes clear that the provision in question applies to "Retiree Health Care (Pre 65 only)," and that Honeywell "does not provide healthcare *1025benefits for Local 1145 retirees after age 65." (See Ex. 3 to Pls.' Mot., Art. 24, § 7.) The pre-65 benefits provision then describes Honeywell's levels of contribution for post-retirement health benefits depending on whether the employees retired before May 1, 2007 or after April 30, 2007. (Id. ) Honeywell contends that any right to benefits expired upon the stated expiration of the CBA on January 31, 2010, citing the CBA's general durational clause in Article 35, Section 1. But the language of Section 7 contemplates extension of the pre-65 benefits beyond the term of the CBA. Section 7 states:
The maximum annual dollar amount contributed by Honeywell for post April 30, 2007 retirees, their dependents, and surviving spouses will be limited to $20,304 for single coverage and $40,608 for family coverage.
The above limit on Company retiree health care contributions will not apply to any year prior to calendar year 2011.
(Id. at 27-28) (emphasis added).
The Court finds that the age limit (pre-65) in Section 7 is sufficiently specific in duration. Moreover, in this very section of the CBA, Honeywell agreed that its future annual contribution limits for post-April 30, 2007 retirees would not go into effect until 2011-in a contract with a general duration clause ending on January 31, 2010.
The language in the 2010 CBA is similarly unambiguous. Again, the healthcare benefits are of specific duration, available to pre-65 retirees only. (See Ex. 5 to Pls.' Mot., Art. 24, § 7.) As with the 2007 CBA, Honeywell stated, "The Company does not provide healthcare benefits for Local 1145 retirees after age 65." (Id. )
Moreover, in the additional language for the "Special Retirement Program," Honeywell stated that it would make no contributions to pre-65 retirees' medical premiums, except for:
Employees who provide the Company with at least four (4) months advance written notice of his or her irrevocable decision to retire on a date certain between August 1, 2010 and February 1, 2013 and are not terminated for cause will be eligible for retiree medical coverage under the 1145 retiree medical plan with respect to which Honeywell will contribute towards the annual retiree medical premium.
* * *
The Company does not provide healthcare benefits for Local 1145 retirees after age 65.
(Id. at 38) (emphasis added). This constituted an express promise of specific duration. Consistent with this promise, Honeywell agreed to provide healthcare benefits to eligible employees who complied with the notice and termination requirements and retired between August 1, 2010 and February 1, 2013. For example, under this language, for an employee who retired on January 31, 2013-technically, the last day of the term of the agreement, per the general durational clause (id., Art. 31, § 1)-Honeywell agreed to pay that retiree's premiums and healthcare benefits after the expiration of the agreement, until the retiree reached age 65. This express promise makes clear that even though the durational clause generally terminated the 2010 CBA on January 31, 2013, (see
While a durational clause may show an intent to limit healthcare benefits to the duration of the agreement, as Defendant argues, Justice Thomas observed in Tackett that "we have already recognized that a collective bargaining agreement [may] provid[e] in explicit terms that certain benefits continue after the agreement's expiration."
*1026
Consistent with Justice Thomas's directive in Tackett, the plainly expressed intent of the parties must control. See
In Honeywell's motion to the Eighth Circuit for an expedited hearing on its appeal of this Court's December 29, 2017 ruling, it addressed the merits, arguing that the pre-65 CBA language merely limited eligibility for benefits, but did not define the duration of those benefits. See Pacheco, 18-1006 (8th Cir.), Appellant's Mot. to Expedite at 11-12. The Court disagrees. While being under 65 years old is a component of eligibility for the healthcare benefits-and is one of several eligibility requirements in the 2010 CBA, which also calls for advance written notice of early retirement and no termination for cause-it primarily concerns the temporal limit of coverage. Both the 2007 and 2010 CBAs state, "[Honeywell] does not provide healthcare benefits for Local 1145 retirees after age 65." (Ex. 3 to Pls.' Mot., Art. 24, § 7; Ex. 5 to Pls.' Mot., Art. 24, § 7) (emphasis added).
In its motion to the Eighth Circuit, Honeywell also argued that "the district court erred by relying on extrinsic evidence to 'support[ ] [its] finding that the contracting parties intended for the pre-65 retirees' benefits to vest.' " See Pacheco, 18-1006 (8th Cir.), Appellant's Mot. to Expedite at 14) ) (citing Dec. 29, 2017 Order at 29). Honeywell misstated the clear bases for this Court's provisional ruling. In the provisional ruling, as here, the Court found that the language in the 2007 and 2010 CBAs unambiguously vested healthcare benefits of specific duration to pre-65 retirees and their families (See Dec. 12 Order at 27.) And, this Court ruled, clearly in the alternative, that extrinsic evidence supported a finding that the parties intended the vesting of the pre-65 retirees' healthcare benefits, stating, "even if the language were ambiguous, the current record evidence, while limited, given the early posture of this case, sufficiently supports the finding that the contracting parties intended for the pre-65 retirees' benefits to vest from retirement until they reached age 65." (Id. at 29) (emphasis added). The Court did not improperly consider extrinsic evidence. Honeywell's representations *1027to the contrary contradict the plain language of this Court's ruling.
Again, the Court finds-in the alternative-that even if the CBA language were ambiguous, Plaintiffs have submitted evidence reflecting the intent to vest with respect to the 2007 CBA through Honeywell Q & A documents, (see Ex. 4 to Pls.' Mot. (Answers to Question at 2) ), and the 2010 CBA through similar Honeywell Q & A documents, (see Ex. 7 to Pls.' Mot. (Pension & Medical Document) ), Honeywell-sponsored presentations, (see Ex. 8 to Pls.' Mot. (Honeywell Retirement Planning Sessions); Ex. 19 to Pls.' Mot. (Harrer Decl. ¶ 5) ), personal discussions between prospective retirees and Honeywell's Human Resources staff, (see Ex. 18 to Pls.' Mot. (Hansen Decl. ¶¶ 4-6) ), and Honeywell's informational handouts on the application and enrollment process in the Special Retirement Program. (See Ex. 9 to Pls.' Mot. (Special Retirement Process); Ex. 11 to Pls.' Mot. (Enrollment Worksheet).) In addition, Ms. Hansen and Mr. Harrer contend that they would not have relinquished their employment if Honeywell had informed them that it would terminate their healthcare coverage before age 65. (See Hansen Decl. ¶ 6; Harrer Decl. ¶ 6.) Instead, both gave up their jobs based on Honeywell's representations to provide healthcare benefits up to age 65. (Id. )
In contrast to Plaintiffs' evidence concerning Honeywell's representations of guaranteed healthcare coverage, in Stearns, the Eighth Circuit noted that the employer's representatives in that case had advised prospective plan participants at seminars and through broadcasts that the retirement healthcare benefits were subject to modification. See 297 F.3d at 709. No such evidence has been presented to the Court in this case. Discovery here may ultimately yield similar evidence, but at this stage of the litigation, the Court finds that Plaintiffs have sufficiently shown the parties' intent to vest the limited pre-65 health care benefits, if the CBA language is considered ambiguous. This evidence supports the Court's alternative basis for finding that Plaintiffs have shown a fair chance of prevailing on the merits.
As Justice Thomas noted, courts may also consider certain known customs or industry usages to construe a contract, if the parties provide sufficient evidentiary support in the record. Tackett,
Honeywell further argues that the reservation-of-rights language in the SPDs "confirm[s] that benefits were not permanently vested." (Def.'s Opp'n Mem. at 19.) This language included the reservation to terminate the plans at any time. (See, e.g., Ex. 3 to Jacobs Decl. (2007 BCBS PPO SPD at 97, 115); Ex. 4 to Jacobs Decl. (2007 United Healthcare Choice Plus PPO SPD at 103, 121); Ex. 5 to Jacobs Decl. (2011-2013 BCBS PPO SPD at 123, 141); Ex. 6 to Jacobs Decl. (United Healthcare Choice Plus PPO SPD at 128, 147).) As *1028Honeywell notes, the Eighth Circuit has held that "an unambiguous reservation-of-rights provision is sufficient without more to defeat a claim that retirement welfare plan benefits are vested," and that "there must be an affirmative indication of vesting in the plan documents to overcome an unambiguous reservation of rights." (Def.'s Opp'n Mem. at 20) (citing Maytag Corp. v. Int'l Union, United Auto., Aerospace & Agric. Implement Workers of Am.,
Unlike the benefits in the cases on which Honeywell relies, the benefits here are not open-ended "lifetime" benefits. In John Morrell,
As noted earlier, to demonstrate a likelihood of success on the merits, a party seeking injunctive relief is only required to demonstrate that its claims provide "fair ground for litigation." Watkins,
C. Remaining Dataphase Factors
The balance between the threat of irreparable harm to Plaintiffs absent injunctive relief and the injury to Honeywell if injunctive relief is granted weighs in favor of Plaintiffs. In its motion to the Eighth Circuit, Honeywell emphasized the ensuing financial risk that this Court's injunction imposes, albeit as a basis for seeking an expedited hearing. See Pacheco, 19-1006 (8th Cir.), Appellant's Mot. to Expedite at 9. Moreover, Honeywell stressed *1029that "because the majority of the class members are quickly approaching 65, a great part of Honeywell's costs will be incurred within the next year or so...."
As to the final Dataphase factor of the public interest, the Court finds that the public interest is served by promoting the contracting parties' intentions, particularly in matters as critical as healthcare coverage.
In conclusion, because the application of the Dataphase factors weighs in Plaintiffs' favor, their request for a preliminary injunction is granted, pending an adjudication on the merits of Plaintiffs' claims or further order of this Court after notice and hearing.
THEREFORE, IT IS HEREBY ORDERED THAT:
1. Plaintiffs' Motion for a Preliminary Injunction [Doc. No. 18] is GRANTED ;
2. Defendant Honeywell International, Inc. is preliminarily enjoined from terminating the healthcare benefits of the Minnesota retirees under age 65, and their families and surviving spouses, pending an adjudication on the merits of Plaintiffs' claims or further order of this Court after notice and hearing; and
3. The posting of a security bond is not required.
289 F. Supp. 3d 1011 (Pacheco v. Honeywell, Int'l Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.