133 F.3d 388 (6th Cir. 1998), 94-1896, Sprague v. General Motors Corp.

Docket Nº94-1896, 94-1897, 94-1898 and 94-1937.
Citation133 F.3d 388
Party NameRobert D. SPRAGUE, et al., Plaintiffs-Appellees/Cross-Appellants, v. GENERAL MOTORS CORPORATION, Defendant-Appellant/Cross-Appellee.
Case DateJanuary 07, 1998
CourtUnited States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 388

133 F.3d 388 (6th Cir. 1998)

Robert D. SPRAGUE, et al., Plaintiffs-Appellees/Cross-Appellants,

v.

GENERAL MOTORS CORPORATION, Defendant-Appellant/Cross-Appellee.

Nos. 94-1896, 94-1897, 94-1898 and 94-1937.

United States Court of Appeals, Sixth Circuit

January 7, 1998

Argued April 23, 1997.

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Christopher G. Mackaronis (briefed), Raymond C. Fay (argued and briefed), Hillary L. Pettegrew, Bell, Boyd & Lloyd, Washington, DC, J. Douglas Peters, Charfoos & Christensen, Detroit, MI for Plaintiff-Appellee in Nos. 94-1896, 94-1897 and 94-1898.

Christopher G. Mackaronis (briefed), Raymond C. Fay (argued and briefed), Hillary L. Pettegrew, Bell, Boyd & Lloyd, Washington, DC, for Plaintiff-Appellee in No. 94-1937.

Stephen M. Shapiro (argued and briefed), Mayer, Brown & Platt, Chicago, IL, Kenneth S. Geller (briefed), Mayer, Brown & Platt, Washington, DC, Robert F. Walker (briefed), Elliot K. Gordon, Paul, Hastings, Janofsky & Walker, Santa Monica, CA, for General Motors Corp.

Susan M. Green, Karen L. Handorf (argued and briefed), U.S. Department of Labor, Office of the Solicitor, Washington, DC, Nancy E. Monarch, U.S. Department of Labor, Office of the Solicitor, Washington, DC, for Amicus Curiae Secretary of Labor.

Mary Ellen Signorille, American Association of Retired Persons, Washington, DC, for Amicus Curiae American Association of Retired Persons.

David M. Heilbron (briefed), Leslie Landau (briefed), Page B. Barnes (briefed), McCutchen, Doyle, Brown & Enersen, San Francisco, CA, for Amicus Curiae Chamber of Commerce of the United States, Michigan Manufacturers Association, ERISA Industry Committee.

Before: MARTIN, Chief Judge; LIVELY, MERRITT, NELSON, RYAN, BOGGS, NORRIS, SUHRHEINRICH, SILER, BATCHELDER, DAUGHTREY, MOORE, and COLE, Circuit Judges.

NELSON, J., delivered the opinion of the court, in which RYAN, BOGGS, NORRIS, SUHRHEINRICH, SILER, BATCHELDER, and DAUGHTREY, JJ., joined. LIVELY, (pp. 406-08) and MERRITT, JJ. (p. 408), delivered separate opinions concurring in part and dissenting in part. MARTIN, C.J. (pp. 408-16), delivered a separate dissenting opinion, in which MOORE and COLE, JJ., joined.

OPINION

DAVID A. NELSON, Circuit Judge.

This is a purported class action in which the plaintiffs--retired employees of the defendant, General Motors Corporation--allege that GM violated the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"), by denying them fully "paid-up" lifetime health care benefits. The district court certified a class of some

Page 393

50,000 employees who had taken early retirement, but the court declined to grant class status to about 34,000 "general retirees" who had retired in accordance with the company's normal criteria. As to the general retiree plaintiffs, the court held that the benefits in question did not vest under the pertinent plan documents. As to the early retirees, however, the district court held that each of the 50,000 members of the class had entered into a separate contract that called for the benefits in question to be furnished for life at no cost to the recipient. In the alternative, the court ruled that GM was estopped to rely on the terms of the plan documents to defeat the claims of any early retiree.

We shall affirm the judgment of the district court as to the general retirees, but reverse the court's certification of the class of early retirees. Insofar as the merits of the claims asserted by the named plaintiffs are concerned, we conclude that the claims fail as a matter of law.

I

A

In 1961 General Motors began paying part of the cost of health insurance for its salaried retirees 1 and their surviving spouses. Three years later GM assumed the full cost of basic health insurance for its salaried retirees, and in 1968 it extended this benefit to surviving spouses as well. (In the interest of simplicity, further reference to surviving spouses will generally be omitted.)

In addition to basic health insurance, GM offered its salaried retirees supplemental coverage under what was called the Comprehensive Medical Expense Insurance Program. Participants in this optional program were required to pay a share of the premiums, and co-payment was required for certain medical services. There were also annual deductibles.

Prior to 1985 the health care benefits were provided through arrangements with private insurers. The insurers issued each covered person a certificate of insurance describing the terms and conditions of the underlying policy.

GM became fully self-insured in 1985. At that time the company prepared a document, entitled "The General Motors Health Care Insurance Program for Salaried Employees," that set forth the terms and conditions of GM's self-insured health care program. The district court found that this document, together with subsequent documents announcing changes in coverage, comprised GM's health care benefits plan from and after 1985. 2 The new plan gave participants a choice between traditional fee-for-service coverage and enrollment in a managed care organization. GM continued its supplemental coverage program, shortening the name to the Comprehensive Medical Expense Program.

GM has long made it a practice to inform its salaried employees and retirees of their health care coverage by providing them booklets containing summaries of the company's health insurance policies and programs. Prior to 1974 GM put out a booklet entitled "The GM Insurance Program for Salaried Employees." After ERISA took effect in 1974 the booklet became "Highlights of Your GM Benefits." Beginning in 1977 GM also issued a booklet called "Your Benefits in Retirement." Each of these publications went through a series of different editions.

A number of the booklets contained language informing plan participants that the health care plan called for GM to pay health insurance costs during retirement:

ú "If you retire ... and are eligible to receive retirement benefits under the provisions of the GM Retirement Program for Salaried Employees, you may keep your basic hospital, surgical and

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medical expense coverages in effect.... GM will pay the full monthly premium or subscription charge for such coverages." The General Motors Insurance Program for Salaried Employees (1968). The 1971 version was nearly identical.

ú "Hospital-Medical Coverages: Your basic coverages will be provided at Corporation expense for your lifetime...." Highlights of Your GM Benefits (1974).

ú "Your basic health care coverages will be provided at GM's expense for your lifetime...." Your Benefits in Retirement (1977).

ú "General Motors pays the full cost of any basic health care coverages that are continued for most retired employees and for eligible surviving spouses and children of deceased retirees." Your Benefits in Retirement (1977).

However, most of the booklets also put plan participants on notice of GM's right to change or terminate the health care plan at any time:

ú "General Motors believes wholeheartedly in this Insurance Program for GM men and women, and expects to continue the Program indefinitely. However, GM reserves the right to modify, revoke, suspend, terminate, or change the Program, in whole or in part, at any time...." The General Motors Insurance Program for Salaried Employees (1965, 1968, and 1971).

ú "General Motors Corporation reserves the right to amend, change or terminate the Plans and Programs described in this booklet." Your GM Benefits (1985).

ú "The Corporation reserves the right to amend, modify, suspend, or terminate its benefit Plans or Programs by action of its Board of Directors." Your Benefits in Retirement (1985).

B

For more than two decades GM has engaged in systematic reductions in the size of its salaried workforce. In this connection the company has launched special early retirement programs designed to induce salaried workers to retire before reaching normal retirement age. The inducements have included, among other things, offers to provide pension benefits to early retirees at levels not reduced to reflect the longer periods over which such benefits can be expected to accrue. Some of the early retirement programs were company-wide initiatives, while others applied to a particular plant, division, or group of plants or divisions.

Salaried employees who accepted early retirement were often asked to sign documents evincing their acceptance of the terms of the particular program under which they were retiring. From 1974 until 1984 GM utilized a so-called "short form" statement of acceptance. This document typically included language along the following lines:

"Management has discussed with me the possibility of retiring under the Special Early Retirement provisions of the General Motors Retirement Program for Salaried Employees. I have evaluated the benefits applicable to me under the provisions of the Program and am agreeable to accepting Special Early Retirement...."

In 1984 GM adopted the "long form" statement of acceptance. It typically read, in part, something like this:

"Management has discussed with me the option of continuing my employment with General Motors or accepting an immediate special retirement under the Special Retirement provisions of the General Motors Retirement Program for Salaried Employees. I have evaluated the benefits applicable to me under the provisions of the General Motors Corporate Wide Special Separation Program and have decided to accept them.

....

I am satisfied with the terms of the special retirement offer and accept this offer voluntarily with full knowledge of its significance, including the fact that by accepting it I waive any claim in any way connected with my separation from employment with General Motors. I acknowledge that no prior representations, promises or...

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989 practice notes
  • 186 F.R.D. 535 (W.D.Wis. 1998), 97-C-0347-C, Insolia v. Philip Morris Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Western District of Wisconsin
    • 16 December 1998
    ...or fact is not " common" unless its resolution " will advance the litigation." See Sprague v. General Motors Corp., 133 F.3d 388, 397 (6th Cir.1998). For example, a proposed class of former beauty school students satisfied the commonality requirement by raising the commo......
  • 188 F.R.D. 483 (S.D.Ill. 1999), 97-CV-4167-JPG, Clay v. The American Tobacco Co.
    • United States
    • Federal Cases United States District Courts 7th Circuit Southern District of Illinois
    • 9 July 1999
    ...or fact is not " common" unless its resolution " will advance the litigation." See Sprague v. General Motors Corp., 133 F.3d 388, 397 (6th The plaintiffs argue that each potential class member's claim arises out of the same core of operative facts, " namely the defe......
  • 197 F.R.D. 310 (W.D.Mich. 2000), 4:99-CV-86, Krieger v. Gast
    • United States
    • Federal Cases United States District Courts 6th Circuit Western District of Michigan
    • 22 August 2000
    ...1015 (W.D.Mich.1987). However, resolution of the common issue must actually advance the litigation. See Sprague v. General Motors Corp., 133 F.3d 388, 397 (6th Although a separate inquiry, the Court finds it appropriate to address the Rule 23(b)(3) predominance requirement at this point alo......
  • 197 F.R.D. 404 (C.D.Cal. 2000), CV 97-1554 ABC RCX, O'Connor v. Boeing North American, Inc.
    • United States
    • Federal Cases United States District Courts 9th Circuit Central District of California
    • 10 October 2000
    ...is simply stated: as goes the claim of the named plaintiff, so go the claims of the class." Sprague v. General Motors Corp., 133 F.3d 388, 399 (6th Cir.1998) (en banc). Where the premise does not hold true, class treatment is inappropriate. Id.; Broussard, 155 F.3d at 340. The adequacy......
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967 cases
  • 186 F.R.D. 535 (W.D.Wis. 1998), 97-C-0347-C, Insolia v. Philip Morris Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Western District of Wisconsin
    • 16 December 1998
    ...or fact is not " common" unless its resolution " will advance the litigation." See Sprague v. General Motors Corp., 133 F.3d 388, 397 (6th Cir.1998). For example, a proposed class of former beauty school students satisfied the commonality requirement by raising the commo......
  • 188 F.R.D. 483 (S.D.Ill. 1999), 97-CV-4167-JPG, Clay v. The American Tobacco Co.
    • United States
    • Federal Cases United States District Courts 7th Circuit Southern District of Illinois
    • 9 July 1999
    ...or fact is not " common" unless its resolution " will advance the litigation." See Sprague v. General Motors Corp., 133 F.3d 388, 397 (6th The plaintiffs argue that each potential class member's claim arises out of the same core of operative facts, " namely the defe......
  • 197 F.R.D. 310 (W.D.Mich. 2000), 4:99-CV-86, Krieger v. Gast
    • United States
    • Federal Cases United States District Courts 6th Circuit Western District of Michigan
    • 22 August 2000
    ...1015 (W.D.Mich.1987). However, resolution of the common issue must actually advance the litigation. See Sprague v. General Motors Corp., 133 F.3d 388, 397 (6th Although a separate inquiry, the Court finds it appropriate to address the Rule 23(b)(3) predominance requirement at this point alo......
  • 197 F.R.D. 404 (C.D.Cal. 2000), CV 97-1554 ABC RCX, O'Connor v. Boeing North American, Inc.
    • United States
    • Federal Cases United States District Courts 9th Circuit Central District of California
    • 10 October 2000
    ...is simply stated: as goes the claim of the named plaintiff, so go the claims of the class." Sprague v. General Motors Corp., 133 F.3d 388, 399 (6th Cir.1998) (en banc). Where the premise does not hold true, class treatment is inappropriate. Id.; Broussard, 155 F.3d at 340. The adequacy......
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17 firm's commentaries
  • Who Killed Yard-Man?
    • United States
    • Mondaq United States
    • 24 April 2007
    ...inferred; the intent to vest "must be found in plan documents and must be stated in clear and express language." Sprague, 133 F.3d at 400. Thus, under ERISA, the Sixth Circuit held that it is the plaintiff's burden to prove an employer's intent to vest retiree medical benefits. Th......
  • On Second Thought: Modifying Retiree Health Plans - No Good Deed Goes Unpunished
    • United States
    • Mondaq United States
    • 13 April 2004
    ...of health and welfare plans, and seek more concrete proof of a promise to vest benefits. For example, in Sprague v. General Motors Corp., 133 F.3d 388, 400 (6 th Cir. 1998), the Sixth Circuit, after observing that ERISA does not require vesting of welfare plans, stated that "an employe......
  • Class Action Summer Camp – Typicality
    • United States
    • LexBlog United States
    • 10 July 2012
    ...Corp., 436 F.3d 461, 466–67 (4th Cir. 2006). Beck v. Maximus, Inc.,457 F.3d 291, 296 (3d Cir. 2006). Sprague v. Gen. Motors Corp., 133 F.3d 388, 399 (6th Cir.1998). Peviani v. Natural Balance Inc., 2011 WL 1648952 (S.D. Cal. May 2, 2011). Noel v. Hudd Distribution Services,...
  • Declaration of Independence: Preserving the Role of the Independent Fiduciary Post-Dudenhoeffer
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    • JD Supra United States
    • 10 July 2015
    ...21. Id. at 2473. 22. 29 U.S.C. §§ 1021 to 1031; 29 C.F.R. §§ 2520.101-1 to 2520.107-1. 23. See, e.g., Sprague v. Gen. Motors Corp., 133 F.3d 388, 405 (6th Cir. 1998) (en banc) (“[W]hen Congress and the Department of Labor have carefully prescribed a detailed list of matters that must be dis......
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4 books & journal articles
  • Legal ignorance and information-forcing rules.
    • United States
    • William and Mary Law Review Vol. 56 Nbr. 3, February - February 2015
    • 1 February 2015
    ...(104.) See, e.g., Rossetto v. Pabst Brewing Co., 217 F.3d 539, 543-44 (7th Cir. 2000). (105.) See, e.g., Sprague v. Gen. Motors Corp., 133 F.3d 388 (6th Cir. 1998) (en banc) (enforcing plan sponsor's express right to modify contained in the formal plan despite seemingly contradictory langua......
  • Applying equitable estoppel to ERISA pension benefit claims.
    • United States
    • William and Mary Law Review Vol. 54 Nbr. 2, November 2012
    • 1 November 2012
    ...(123.) See, e.g., Smiljanich v. Gen. Motors Corp., 302 F. App'x 443, 448 (6th Cir. 2008). (124.) See, e.g., Sprague v. Gen. Motors Corp., 133 F.3d 388, 404 (6th Cir. 1998) ("[E]stoppel can only be invoked in the context of ambiguous plan provisions."). (125.) See 4 SAMUEL WILLISTO......
  • Lexis nexus complexus: comparative contract law and international accounting collide in the IASB-FASB revenue recognition exposure draft.
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    • Vanderbilt Journal of Transnational Law Vol. 46 Nbr. 2, March 2013
    • 1 March 2013
    ...Mich. 1994) (explaining that "contractual intent is concerned with objective manifestations of intent"), aff'd in relevant part, 133 F.3d 388 (6th Cir. 1998); Siegel v. Spinney, 357 N.W.2d 860, 862-63 (Mich. Ct. App. 1985) (explaining that the existence of a meeting of the minds i......
  • Equitable estoppel as a remedy under ERISA.
    • United States
    • South Dakota Law Review Vol. 56 Nbr. 3, September 2011
    • 22 September 2011
    ...274 F.3d 76, 85-86 (2d Cir. 2001); Bowerman v. Wal-Mart Stores, Inc., 226 F.3d 574, 586 (7th Cir. 2000); Sprague v. Gen. Motors Corp., 133 F.3d 388, 403 & n.13 (6th Cir. 1998) (en banc); Greany v. W. Farm Bureau Life Ins. Co., 973 F.2d 812, 821 (9th Cir. 1992); Kane v. Aetna Life Ins., ......
1 provisions
  • Employee Retirement Income Security Act: Summary plan description regulations,
    • United States
    • Federal Register September 09, 1998
    • 28 August 1998
    ...of ERISA plans to disclose in their SPDs that the plans are subject to amendment or termination. See Sprague v. General Motors Corp., 133 F.3d 388 (6th Cir. 1997), cert. denied, 66 U.S.L.W. 3779 Specifically, the Department proposes to add to the end of paragraph (l) the requirement that pl......