Thonen v. McNeil-Akron, Inc.

661 F. Supp. 1276, 1987 U.S. Dist. LEXIS 14031
CourtDistrict Court, N.D. Ohio
DecidedApril 17, 1987
DocketCiv. A. No. C85-1066A
StatusPublished
Cited by1 cases

This text of 661 F. Supp. 1276 (Thonen v. McNeil-Akron, Inc.) is published on Counsel Stack Legal Research, covering District Court, N.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Thonen v. McNeil-Akron, Inc., 661 F. Supp. 1276, 1987 U.S. Dist. LEXIS 14031 (N.D. Ohio 1987).

Opinion

MEMORANDUM AND ORDER

ANN ALDRICH, District Judge.

The parties to this action have jointly moved this Court for approval of their settlement agreement. Because a class of plaintiffs has been certified in this action, such approval of the compromise is required by Fed.R.Civ.P. 23(e). For the reasons set forth below, this Court approves the settlement agreement and enters judgment as requested by the parties.

I.

This action was brought by Cliff Thonen, Ralph Hannaman, Clarence W. Archer, and Joseph Maxim to resolve a dispute over health insurance benefits negotiated for inclusion in two collective bargaining agreements. They sought to compel defendants McNeil Corporation, Equipement Méchaniques Specialisés (“EMS”), and McNeil-Akron, Inc. (“McNeil-Akron”) (together, “the company”) to resume providing for company bargaining unit employees who retired between May 7,1979 and December 31, 1983 the type of health insurance benefits established for retirees in the relevant 1979 and 1982 collective bargaining agreements. The complaint indicated that the company’s liability was premised upon the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001-1461 (1982 & Supp. Ill 1985), and upon breach of the labor contracts, stating a claim under § 301 of the Labor Management Relations Act, 1947, 29 U.S.C. § 185 (1982).

The parties filed cross-motions for summary judgment on the issue of liability. The plaintiffs contended that the company had breached the collective bargaining agreements by altering the retiree health benefit plan, because the plans negotiated in conjunction with the 1979 and 1982 contracts provided for lifetime benefits. They also argued that the company’s conduct with respect to the retiree health benefits violated fiduciary duties placed upon it by ERISA. The company denied that the collective bargaining agreements created lifetime health benefits of a certain type for retirees. It further argued that if contractual rights to lifetime benefits did exist, [1278]*1278they were waived by all retirees except Thonen and Hannaman, because all except those two had executed accord and satisfaction agreements. By a memorandum and order of July 24, 1986, this Court held that the company had breached plaintiffs’ contractual rights to lifetime retiree health benefits, and it enjoined the company to provide plaintiffs with the contractually required health benefit plan. It granted the company’s motion for summary judgment on the issue of ERISA liability, except that plaintiffs Hannaman and Thonen were granted summary judgment in their favor on that issue.

While the complaint averred that plaintiffs wished to represent a class of persons who retired from the company between May 7, 1979 and December 31, 1983, plaintiffs did not move to certify the proposed class before the summary judgment motions were determined. On August 4,1986, plaintiffs filed a pending motion to maintain class action and for certification of class under Fed.R.Civ.P. 23(b)(3) (“Rule 23(b)(3)”). By a memorandum and order of August 28, 1986, this Court certified a class consisting of all former bargaining unit employees of defendants who retired between May 7, 1979 and December 31, 1983, excluding Thonen and Hannaman. It held that Archer and Maxim were proper representatives of this class.

II.

At a hearing in open court on April 9, 1987, the parties described their proposed settlement and the steps leading to the hearing. They indicated that serious settlement negotiations began after the class had been certified, resulting in an offer by the defendants. This offer was discussed by plaintiffs’ counsel at a meeting of the McNeil-Akron Retirees Club, a group consisting of bargaining unit employees who retired before May 7, 1979, and management retirees, as well as class members. The consensus of that large group was that those present would be willing to pay small premiums for their health insurance if: (1) the benefits were guaranteed for their lives; (2) surviving spouse coverage were continued; and (3) the terms of the settlement would include the same coverage for the pre-May 7, 1979 bargaining unit retirees and the management retirees. Only Thonen and Hannaman objected to that proposal.

The company agreed to this counter-offer of the plaintiffs. As a result, notices were mailed to all class members on February 17, 1987. No class member elected to opt out of the settlement, and only one plaintiff objected. Eugene Labut indicated that he believed that the retirees should not be required to pay any premiums for their health care coverage, but he did not opt out of the class. No class member attended the hearing in order to object to the settlement proposal.

The settlement proposal provides that McNeil-Akron and EMS will provide health insurance coverage established by Article XVI, § 4 of the 1979 and 1982 collective bargaining agreements for Thonen and Hannaman for the remainder of their lives. All former bargaining unit and management employees who retired on or before December 31, 1983, will receive insurance coverage under the current health insurance program for the remainder of their lives and, if the former employee dies, coverage will be provided for his or her spouse for the remainder of the spouse’s life.

At the hearing, plaintiffs’ counsel indicated that he believes that the relief obtained in the settlement is at least equivalent to the maximum recovery which plaintiffs could expect. He stated that this Court’s ruling on the ERISA claims, granting summary judgment to defendants against all plaintiffs except Thonen and Hannaman, probably precludes punitive damages. As a result, only contractual damages remained to be compensated (in addition to the restoration of health benefits for life), and the contractual damages were not substantial.

Plaintiffs’ counsel indicated that the payments to Thonen and Hannaman were to compensate them for pain and suffering and for reimbursement of medical expenses they had incurred. Defendants’ counsel [1279]*1279added that these plaintiffs had stated that they sometimes had failed to receive desirable medical care because they were uninsured, and that the settlement payment was meant by the company to compensate them for this situation.

Finally, plaintiffs’ counsel explained that McNeil Corporation was excused from the settlement because its status as a defendant was questionable. EMS had apparently assumed responsibility for such liability of McNeil Corporation by agreement as part of a sale of assets, and the union may have waived its right to relief from McNeil Corporation when it acceded to the sale of assets. A small percentage of the class members had retired while McNeil Corporation owned the assets of the McNeil-Akron Division.

III.

In this circuit, a three-step procedure for approval or disapproval of a class action settlement has been adopted. The settlement shall first be preliminarily approved by the court. Then notice must be given to interested persons. Finally, the court must decide whether the settlement agreement is reasonable after having held a hearing. Williams v. Vukovich,

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Bluebook (online)
661 F. Supp. 1276, 1987 U.S. Dist. LEXIS 14031, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thonen-v-mcneil-akron-inc-ohnd-1987.