United Steel, Paper & Forestry, Rubber, Manufacturing Energy, Allied Industrial & Service Workers International Union, AFL-CIO-DC v. Kelsey-Hayes Co.

750 F.3d 546, 57 Employee Benefits Cas. (BNA) 2745, 2014 WL 1585794, 199 L.R.R.M. (BNA) 3146, 2014 U.S. App. LEXIS 7501
CourtCourt of Appeals for the Sixth Circuit
DecidedApril 22, 2014
Docket13-1717
StatusPublished
Cited by19 cases

This text of 750 F.3d 546 (United Steel, Paper & Forestry, Rubber, Manufacturing Energy, Allied Industrial & Service Workers International Union, AFL-CIO-DC v. Kelsey-Hayes Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Steel, Paper & Forestry, Rubber, Manufacturing Energy, Allied Industrial & Service Workers International Union, AFL-CIO-DC v. Kelsey-Hayes Co., 750 F.3d 546, 57 Employee Benefits Cas. (BNA) 2745, 2014 WL 1585794, 199 L.R.R.M. (BNA) 3146, 2014 U.S. App. LEXIS 7501 (6th Cir. 2014).

Opinions

GRIFFIN, J., delivered the opinion of the court, in which MERRITT, J., joined, and SUTTON, J., joined in part.

MERRITT, J. (pp. 560-61), delivered a separate concurring opinion. SUTTON, J. (pp. 561-63), delivered a separate opinion concurring in part and dissenting in part.

OPINION

GRIFFIN, Circuit Judge.

This is an action under the Labor-Management Relations Act (LMRA), 29 U.S.C. § 185 et seq., and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. Defendants are Kelsey-Hayes Company and its parent com[549]*549pany, TRW Automotive. Plaintiffs are a class of 400 retired union workers from the now-closed Kelsey-Hayes automobile-manufacturing plant in Jackson, Michigan. Defendants appeal the district court’s grant of summary judgment, injunctive relief, and attorney fees in favor of plaintiffs. We affirm.

I.

Plaintiffs worked at the Jackson plant until July 2006, when it shut down. All plaintiffs retired under one of three CBAs that were negotiated in 1995, 1999, and 2003; each of those CBAs contained identical language -with regard to the' issues pertinent to this appeal. Specifically, the CBAs provided, in a supplement, that Kelsey-Hayes would establish a health insurance plan, “either through a self-insured plan or under a group insurance policy or policies issued by an insurance company....” Article III, Section 1 outlined specific types of health care services to which employees were entitled. Article I, Sections 3(b)(7) and 3(b)(8) provided:

[Section 3(b) ](7) For Retired Employees and Certain Former Employees
The Company shall contribute the full premium or subscription ■ charge for health care coverages continued in accordance with Article III, Section 5, for:
(i) A retired employee and his eligible dependents, if any, provided such retired employee is eligible for benefits under Article II of the Kelsey-Hayes Hourly-Rate Employees Pension Plan and;
(ii) An employee and his eligible dependents, if any, terminating at age 65 or older for any reason other than a discharge for cause with insufficient credited service to entitle him to a benefit under Article II of the Kelsey-Hayes Hourly-Rate Employees ■ Pension Plan.
[Section 3(b) ](8) For Surviving Spouses
(i) The Company shall contribute the full premium or subscription charge for health care coverages continued in accordance with Article III, Section 6(b) on behalf of a surviving spouse ... and the eligible dependents of any such spouse....

In turn, Article III, Section 5 provided, in relevant part:

The health care coverages an employee has under this Article at the time of retirement or termination of employment at age 65 or older for any reason other than a discharge for cause ... shall be continued thereafter provided that suitable arrangements for such continuation[ ] can be made with the carrier(s). Contributions for such coverages so continued shall be in accordance with Article I, Section 3(b)(7).

Finally, Article I, Section I contained what the parties have termed a “mutual agreement clause.” That clause provided:

In the event the initiation of any benefit or benefits described in Article III of the Program does not prove practicable or is not permitted by the plans under which coverages are now provided on the dates stipulated in such Article III, the Company in agreement with the Union will provide new benefits and/or coverages as closely related as possible and of equivalent value to those not provided.

Consistent with the commitments set forth in the CBAs, Kelsey-Hayes provided health care for plaintiffs and their families both before and after the Jackson plant closed. This health care took the form of group insurance plans provided by private insurance companies, occasionally supplemented by available government benefits, such as Medicare Parts A and B. For example, after 2003, plaintiffs were initially [550]*550enrolled in group coverage from Blue Cross Blue Shield of Michigan. The group coverages were changed twice after 2003— Blue Cross Blue Shield of Michigan was replaced with Meritan, and later Meritan was replaced with Humana.

In late 2011, however, things changed. In September 2011, TRW (which had purchased Kelsey-Hayes) sent a letter to plaintiffs indicating that it would be discontinuing group health care coverages beginning in 2012. Instead of group coverages, defendants would be providing plaintiffs with “Health Reimbursement Accounts” (HRAs). The HRAs were designed to function, essentially, as a health care voucher system; according to the letter, TRW would make a “one-time contribution [into the HRAs] of $15,000 for each eligible retiree and his or her eligible spouse” in 2012, and “beginning in 2013, TRW [would] provide a $4,800 credit [into the HRAs] ... for each eligible retiree and eligible spouse.” The notion was that plaintiffs would then use these funds to purchase their own insurance from among a variety of providers.

The HRAs differed from the prior group coverages in that they shifted risk — and potentially costs — off of defendants and on to plaintiffs. At the deposition of TRW Benefit Director Shelly Iacobelli, it was established that, under the HRAs, plaintiffs “bear[ ] the risk of expenses that exceed the company contribution!.]” For example, as Iacobelli confirmed, if a retiree spent $20,000 in 2012, the retiree would be responsible for the $5,000 spent in excess of the $15,000 in his or her HRA. Iacobelli admitted that in this way, the HRAs “shifted [the risk of excess costs] to the retiree[s,]” as “that risk used to be borne by the insurance company” under the prior group coverages. Similarly, TRW’s Vice-President of Compensation and Benefits, Steve Kiwicz, at his deposition agreed that, under the HRAs, it was “the retirees who bear the risk of excessive costs” beyond the level that the HRAs were funded; therefore, Kiwicz testified, the company had “limited its expenses” to the amount it had agreed to place into each HRA.

Although TRW pledged to fund each HRA with $15,000 in 2012 and $4,800 in 2013, TRW and Kelsey-Hayes failed to commit to any funding of the HRAs beyond 2013. In this regard, Kiwicz testified that no commitments had been made past 2013, and Iacobelli testified that she did not know “what the plans are for 2014 and beyond” as to retiree health care. In fact, TRW claimed the right to unilaterally terminate the HRAs entirely' — in the September 2011 letter, TRW indicated that it “retain[ed] the right to amend or terminate the HRA[s]” altogether. In a pamphlet sent to plaintiffs explaining the HRAs, TRW asserted that it had the right to “at any time, increase, decrease, or eliminate the amount that is allocated to [the HRAs] each year,” and that, in TRW’s view, plaintiffs were “neither vested in [their] retiree healthcare benefits, nor [does] TRW intend to vest [plaintiffs] in retiree healthcare benefits.... TRW Automotive reserve[s] the right to amend, modify, suspend, replace or terminate any of its plans, policies or programs (including the HRA [s])....”

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Bluebook (online)
750 F.3d 546, 57 Employee Benefits Cas. (BNA) 2745, 2014 WL 1585794, 199 L.R.R.M. (BNA) 3146, 2014 U.S. App. LEXIS 7501, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-steel-paper-forestry-rubber-manufacturing-energy-allied-ca6-2014.