As Representative Of A Class Of Persons Similarly Situated v. Bemis Co. Inc.

• Decision Date: 13 September 2010
• Docket Number: No. 09-3374.,09-3374.
• Citation: 622 F.3d 730
• Parties: Thomas TEMME, individually and as representative of a class of persons similarly situated, et al., Plaintiffs-Appellants, v. BEMIS COMPANY, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

622 F.3d 730

Thomas TEMME, individually and as representative of a class of persons similarly situated, et al., Plaintiffs-Appellants,

v.BEMIS COMPANY, INC., Defendant-Appellee.

No. 09-3374.

United States Court of Appeals,Seventh Circuit.

Argued Feb. 22, 2010.

Decided Sept. 13, 2010.

George F. Graf, Attorney, Gillick, Wicht, Gillick & Graf, Milwaukee, WI, for Plaintiffs-Appellants.

Kevin J. Kinney, Attorney, Krukowski & Costello, Milwaukee, WI, for Defendant-Appellee.

Before KANNE and WILLIAMS, Circuit Judges, and SPRINGMANN, District Judge. ^*

WILLIAMS, Circuit Judge.

For over twenty years, a small group of 62 retirees, former plant maintenance workers and their spouses, have been receiving their health care coverage through Hayssen Manufacturing Company (“Hayssen”) and its successor, Bemis Company, Inc. (“Bemis”) as a result of a 1985 Plant Closing Agreement. In 2005, Bemis changed the insurance provider of its medical plan and made changes to deductible and co-pay amounts related to medical care and prescription drugs. In 2007, Bemis also informed the retirees that it would no longer provide a prescription drug benefit. The retirees then sued under the Labor-Management Relations Act, 29 U.S.C. § 185(a), and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132, alleging that the 2005 and 2007 changes breached the agreement negotiated by an employer and a labor organization. The district court held that the Plant Closing Agreement included no promise of lifetime benefits to the retirees and granted summary judgment to Bemis. However, we find that the parties' agreement was to provide lifetime benefits to retirees and remand the case to the district court for further proceedings on the question of whether Bemis breached its agreement by making the changes to the retirees' medical benefits.

I. BACKGROUND

Since Bemis prevailed on summary judgment, we recount the facts in the light most favorable to the class represented by Thomas Temme, the party against whom the motion under consideration was decided. Bassiouni v. F.B.I., 436 F.3d 712, 721 (7th Cir.2006). Hayssen and the United Automobile Aerospace and Agricultural Implement Workers of America and its Local No. 1423 Union (“the Union”) were parties to a series of collective bargaining agreements covering the production and maintenance workers at the Hayssen facility in Sheboygan, Wisconsin. The last collective bargaining agreement negotiated between the parties was an agreement covering the period from 1982 to 1985. When this 1985 Collective Bargaining Agreement (“CBA”) expired on June 30, 1985, a strike ensued. The strike continued through the summer, and Hayssen eventually decided to close its Sheboygan plant and relocate its manufacturing operations.

In connection with this plant relocation, the parties negotiated a Plant Closing Agreement (“Closing Agreement”) with the goal of “embodying the full and complete terms and conditions regarding the effects of the termination of [Hayssen]'s manufacturing operations and the termination of employment for all employees represented by the Union.” The first three paragraphs of the Closing Agreement terminated the employment relationship between union employees who retained seniority under the CBA and Hayssen, terminated the strike, and terminated the bargaining relationship between Hayssen and the union. Paragraph 4 concerned the termination of benefits. Paragraph 4(a) modified the pension plan and provided for a “vested” termination of the plan. Paragraph 4(b) referred to the CBA and listed the fully satisfied obligations and claims under the CBA. Paragraph 4(c) explained the calculation of severance pay and the necessity of executing a release as a condition for receiving the severance pay. Paragraph 5 contained a general statement releasing the company from claims arising under the CBA and an agreement that no requests would be made to Hayssen for any benefits beyond that provided by the Closing Agreement. Finally, Paragraph 6 stated that the Closing Agreement is the full and complete agreement between the parties, superseding and voiding any prior agreements such as the CBA “except and only to the extent that reference to the same may be necessary to effectuate the provisions of this agreement.”

One provision in Paragraph 4 concerned medical benefits. Because its meaning is the focus of the litigation between the parties, we recite the language of paragraph 4(d) in full:

(d) Health/Medical Benefits-Employees terminated under the provisions of this agreement with the exception of those eligible employees who apply for retirement benefits by 12/31/85, will be allowed to continue their present Blue Cross/ Blue Shield Medical coverage by paying the full monthly premium for a period of 12 months (1/1/86 to 1/1/87) or until they become covered by another medical insurance plan, whichever is sooner. If such an employee is covered as a dependent under another medical insurance plan, the Blue Cross/Blue Shield plan would be the secondary payer. If an individual becomes covered under another plan within the 12 month period, his/her eligibility under the Blue Cross/Blue Shield plan will cease immediately and there will be no coordination of benefits.

The premium rates for such coverage are currently $72.50 per month for single coverage and $178.14 per month for family coverage. These premium rates have been historically reevaluated by Blue Cross/Blue Shield on July 1 of each year. Employees who elect to continue their Blue Cross/Blue Shield coverage will also be subject to paying whatever the full monthly premiums are on 7/1/86. Employees electing to continue medical coverage as described above must submit by mail to the Company post marked by the 10th of each month, a check or money order-no cash-for the full monthly premium in effect. If an employee fails to follow any part of the procedure in the above paragraph without exception, i.e., meeting the 10th deadline, submitting by mail or submitting a check or money order, such employee's eligibility to continue medical coverage will cease immediately.

Retired Employee Medical Benefit

Individuals who attain age 60 and have at least six years of continuous service by 12-31-85, and who elect to commence their retirement benefits by 12-31-85, will be eligible for the retired employee medical benefit. Individuals who attain age 58 or 59 by 12-31-85 and who indicate by 12-31-85, their intent to commence retirement benefits by age 60 will be eligible for the retired employee medical benefit. If an employee becomes eligible for medical insurance coverage under another plan, the Blue Cross/Blue Shield plan will become the secondary payer. If an individual is covered as a dependent under another medical insurance plan, then the Blue Cross/Blue Shield plan would be the secondary payer.

The retirement benefit that the Closing Agreement makes retirees eligible for is not delineated in the Closing Agreement itself. In the CBA, however, two provisions define the health insurance coverage. Section 9.01 of the CBA continues the “Hospital, Surgical and Medical Insurance” to which employees are entitled from the previous CBA, and adds some additional benefits. These additional benefits, effective July 1, 1982, include “two (2) fifty dollar ($50.00) deductibles per family per year” and “[o]ne hundred percent (100%) coverage for physicians' home and office calls and prescription drugs after the deductibles are met.” In full, the next section of the CBA provides:

9.02. Retired Employee Medical Benefit. The medical benefit provided retirees, their spouses and dependents shall be the same as defined in Section 9.01, except that benefits are provided under the “Medicare Carve-Out” program, subject to the terms of the master insurance contract.

In the event of the death of the retired employee, their dependent spouse will retain coverage until such time as they remarry or qualify for other primary coverage.

The following conditions and terms apply to eligibility for the Retired Employee Medical Benefit:

a. The employee must be “retired” and must meet the conditions of a Retired Employee as defined in the Hayssen Retirement Plan and/or Pension Agreement, whichever applies.

b. Must enroll in Medicare Plans A and B when the employee becomes eligible.

Following the closing of its Sheboygan plant, Hayssen provided its retirees, both those who retired before the plant closing and those who were added to the retiree pool by the Closing Agreement, with medical benefits at the levels defined by the CBA. Bemis acquired Hayssen in 1996, and continued to provide retirees with these medical benefits. In the fall of 2004, Bemis notified the retirees that effective January 1, 2005, the plan would be offered under CIGNA (instead of Blue Cross/Blue Shield) and that the deductibles would be raised to $250 from the $50 listed in § 9.01 of the CBA. In the fall of 2006, Bemis notified the retirees that effective January 1, 2007, the medical plan would eliminate all prescription drug coverage.

Thomas Temme, representing the class of retirees who received the retiree medical benefit through the Closing Agreement, brought this class action suit alleging that Bemis breached its agreement to provide retirees with vested welfare benefits. The district court certified the class, and designated Thomas Temme and his wife, Shirley Temme, as class representatives. Both parties moved for summary judgment, and the district court granted summary judgment to Bemis. The plaintiffs appeal.

II. ANALYSIS

A. A lifetime retiree medical benefit was the parties' intent.

We review the district court's grant of summary judgment de novo, with the familiar standard that summary judgment should be granted if there is no genuine issue of material fact and the record shows that the law entitles the moving party to judgment. Chaklos v. Stevens, 560 F.3d 705, 710 (7th Cir.2009).

The parties dispute whether ...