137 F.3d 955 (7th Cir. 1998), 97-1912, Frahm v. Equitable Life Assur. Soc. of United States

Docket Nº:97-1912.
Citation:137 F.3d 955
Party Name:Dolores FRAHM, et al., Plaintiffs-Appellants, v. The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES, Defendant-Appellee.
Case Date:February 27, 1998
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 955

137 F.3d 955 (7th Cir. 1998)

Dolores FRAHM, et al., Plaintiffs-Appellants,

v.

The EQUITABLE LIFE ASSURANCE SOCIETY OF the UNITED STATES,

Defendant-Appellee.

No. 97-1912.

United States Court of Appeals, Seventh Circuit

February 27, 1998

Argued Nov. 3, 1997.

Page 956

Lionel I. Brazen, Chicago, IL, Mark D. DeBofsky (argued), DeBofsky & DeBofsky, Chicago, IL, for Plaintiffs-Appellants.

Wilber H. Boies (argued), McDermott, Will & Emery, Chicago, IL, for Defendant-Appellee.

Before CUDAHY, EASTERBROOK, and EVANS, Circuit Judges.

EASTERBROOK, Circuit Judge.

Insurance agents affiliated with the Equitable Life Assurance Society receive medical benefits, as do retired agents. In 1988 the Equitable instituted a copayment program for all active and some retired agents; its right to do this was secure under both the medical care plan and the summary plan descriptions, which reserved the right to change the plan's terms (or end the plan altogether) at any time. See Murphy v. Keystone Steel & Wire Co., 61 F.3d 560, 565 (7th Cir.1995); Senn v. United Dominion Industries, Inc., 951 F.2d 806, 814-16 (7th Cir.1992). In 1991 the Equitable made additional changes for active agents, giving them a choice of plans but also (the district judge found) establishing "significantly higher payment obligations on its participants and beneficiaries with respect to premiums, deductibles, co-payments, and maximum out-of-pocket limitations. It also imposed certain cost-sharing obligations, even on those who had been exempted from earlier cost-sharing measures." In 1993 the Equitable extended the active agents' medical benefits program to all retired agents under the age of 65. Six affected retirees filed this suit under ERISA. The district judge conducted a bench trial and entered judgment for the Equitable after concluding that none of plaintiffs' theories justified stripping the employer of its reserved power to change the health plan at any time--a power it was free to use without having to show that the changes were beneficial to the active or retired agents. See Lockheed Corp. v. Spink, 517 U.S. 882, 116 S.Ct. 1783, 135 L.Ed.2d 153 (1996); Johnson v. Georgia-Pacific Corp., 19 F.3d 1184 (7th Cir.1994).

Plaintiffs sought to represent a class of all retired agents who preferred the

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old plan to the new. The district court certified the case as a class action to the extent it presents the question whether retirement causes health benefits to vest at whatever level was in place on each agent's retirement date and granted summary judgment for the Equitable, finding the reservation-of-rights clauses in the plan (and summary plan descriptions) too clear to admit of argument. Plaintiffs have not appealed from this aspect of the judgment. What led to the trial was not ambiguity in the plan or associated documents, as in Bidlack v. Wheelabrator Corp., 993 F.2d 603 (7th Cir.1993) (en banc), but conflicting evidence about representations made to the plaintiffs personally. They contended that the Equitable had made individual contracts with them establishing rights on top of those created by the health benefits plan; they also argued that oral statements and letters during discussions about their retirements violated the employer's fiduciary duty under ERISA or estopped it to enforce the plan according to its terms. On these issues the district court declined to certify a class--and sensibly so. Plaintiffs relied on Fed.R.Civ.P. 23(b)(3), and a judge may certify a class under that subdivision only if "the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and ... a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Common questions predominated with respect to the vested-benefits claim; for all other claims everything depends on what was said or sent to each agent personally, and different benefits advisers said or wrote different things to different agents. Individual rather than class litigation is the best way to resolve person-specific contentions when the stakes are large enough to justify individual suits. Sprague v. General Motors Corp., 133 F.3d 388, 397-99 (6th Cir.1998) (en banc); In re Rhone-Poulenc Rorer Inc., 51 F.3d 1293 (7th Cir.1995). What is more, plaintiffs' request that we direct the district judge to certify the case as a class action across the board calls into question their adequacy as class representatives. See Fed.R.Civ.P. 23(a)(4). They litigated and lost; do they want to take all other retirees down in flames with them? "[A] class representative who has lost on the merits may have a duty to the class to oppose class certification, to avoid the preclusive effect of the judgment". Bieneman v. Chicago, 838 F.2d 962, 964 (7th Cir.1988) (emphasis added). Plaintiffs' request to extend the class certification is not contingent on prevailing on the merits, and anyway Rule 23's criteria do not depend on who wins in the end. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 176-78, 94 S.Ct. 2140, 2151-53, 40 L.Ed.2d 732 (1974). But because the district judge did not abuse his discretion in concluding that the case fails to satisfy Rule 23(b)(3), we need not decide whether plaintiffs also fall short as representatives of other retirees' interests.

Let us begin with the plaintiffs' argument that the Equitable made with each of them a bilateral contract whose terms differ from those of the firm-wide health care plan. Each plaintiff claims a right, for life, to the health care benefits in force on his or her date of retirement. The Equitable denies that a personal agreement is possible, but we see no reason in principle why not. A pension plan must be established as a trust, and for that reason it is hard to create single-employee pension contracts--although employers can make promises that work very much like pensions, provided they fall outside of ERISA. Compare Nagy v. Riblet Products Corp., 79 F.3d 572 (7th Cir.1996), with Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073 (7th Cir.1992). Welfare benefit plans, a category that...

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