Anderson v. Alpha Portland Industries, Inc.

Decision Date14 March 1988
Docket NumberNo. 86-2483,86-2483
Citation836 F.2d 1512
Parties108 Lab.Cas. P 10,271, 9 Employee Benefits Ca 1569 Robert ANDERSON, Jr., et al., Appellants, v. ALPHA PORTLAND INDUSTRIES, INC., formerly known as Alpha Portland Cement Company, Insurance and Health Plan for Hourly Employees, The Equitable Life Assurance Society of the United States, Appellees, v. INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, CEMENT, LIME, GYPSUM & ALLIED WORKERS DIVISION OF INTERNATIONAL BOILERMAKERS, Charles F. Fuch, Charles C. Huntbach, (Third Party Defendants Below), United States of America, (Intervenor Below).
CourtU.S. Court of Appeals — Eighth Circuit

Sheldon Weinhaus, St. Louis, Mo., for appellants.

Michael Biggers, New York City, for appellees.

Before McMILLIAN, Circuit Judge, FLOYD R. GIBSON, Senior Circuit Judge, and BEAM *, Circuit Judge.

FLOYD R. GIBSON, Senior Circuit Judge.

Plaintiffs appeal from the judgment of the district court 1 in favor of Alpha Portland Industries, Inc. (Alpha) and The Equitable Life Assurance Society of the United States (Equitable) in this case involving the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). Plaintiffs are a class of former, now retired, hourly employees of Alpha's cement division. This suit developed from Alpha's decision to terminate all retiree health and life insurance benefits on May 1, 1982 when the existing collective bargaining agreement (CBA) expired. Plaintiffs alleged that the welfare benefits were vested lifetime benefits which could not be terminated. After a four day bench trial the district court found that the benefits were terminable because the parties to the CBA intended that the benefits only last for the duration of the CBA. 647 F.Supp. 1109 (E.D.Mo.1986). For the reasons stated below we affirm.

I. BACKGROUND

In 1946 Alpha unilaterally created a group insurance plan for active hourly employees. In 1948 it extended limited coverage to future retirees. From 1946 through 1955 there were no formal plan documents but there were booklets describing the benefits. The 1948 booklet stated that the plan was to take effect on November 1, 1948 and that Alpha hoped "to continue the Plan indefinitely but reserves the right to change, modify, or discontinue it if future conditions make such action necessary or if reduction of Company earnings make it impossible to continue." In 1950 and 1952 the plan was revised, but each new plan contained the continuation statement found in the 1948 version.

Beginning in 1955, the terms of the plan became subject to bargaining between Alpha and the International Cement, Lime, Gypsum, and Allied Workers Union. The 1955 CBA stated that the "Group Insurance Program currently in effect shall continue in effect for the period" of the agreement. The CBA also stated that it was subject to renewal each year unless either party gave notice sixty days prior to its expiration date. The 1956, 1957, and 1958 CBAs each provided that benefits were limited to the duration of the agreement. Further, the 1956 plan booklet stated that Alpha reserved "the right to change, modify, or discontinue" the plan.

The 1959 through 1963 CBAs contained provisions stating that "the Group Insurance Plan currently in effect shall be amended" as provided. The amendments did not affect retirement benefits and contained no language relating to their duration. However, the duration of the entire agreement was limited to one year. In 1959 a booklet was issued describing the benefits of the major medical insurance plan. The booklet stated that the group insurance contract between Alpha and The Equitable Life Assurance Society of the United States "may be altered or discontinued." The CBAs covering the period from 1963 to mid-1965 were substantially similar to those covering the previous four year period.

During negotiations over the 1965 CBA, union representatives submitted a proposal that retiree benefits be paid to the spouse and dependents of the retiree after the death of the retiree, but Alpha rejected it. Thereafter an agreement was entered into which stated that the plan currently in effect would remain in effect until the effective date of the amendments. One of the amendments stated: "Future retirees' life insurance, increased from $2,000 to $2,500. For future retirees, Company will pay full costs of all group insurance for them and their dependents until death of retiree." (Emphasis added). Union negotiators believed that this clause guaranteed insurance benefits for the life of the retiree, but Alpha's negotiators understood the phrase to mean that benefits would not be paid to dependents after the retiree's death.

Beginning in 1967 the CBA existed in the form of a Basic Agreement and was supplemented by Local Agreements. The 1967 Basic Agreement became effective May 1, 1967 and continued until May 1, 1969. On the expiration date the agreement would renew itself for one year unless sixty days written notice was given by either party. The 1967 agreement provided that the plan currently in effect would remain in effect until May 1, 1968, at which time the attached amendments would take effect. The 1969 and 1971 agreements were substantially similar to the 1967 agreement.

Beginning in 1973 the CBAs contained, as an appendix, a separate Insurance and Health Agreement (I & H Agreement) that contained the terms of the plan. Each I & H Agreement was prepared by the Personnel Manager of Alpha's cement division, Robert J. Bonstein, and sent to the Union for approval. The 1973, 1975, and 1978 CBAs each provided that the plan in effect at the expiration date of the previous agreement was to be amended as provided in the I & H Agreement. The 1973 I & H Agreement expressly stated:

This Insurance Agreement shall become effective May 1, 1973, and shall continue in effect until May 1, 1975, during which period neither the Company nor the Union may demand any change in its provisions.

After May 1, 1975, the Insurance Agreement shall be automatically renewed for successive one-year periods unless either party to the Agreement has given written notice to the other at least sixty (60) days prior to May 1, 1975 (or any subsequent anniversary of the Effective Date of the Collective Bargaining Agreement) of its desire to amend or modify this Agreement.

Both the 1975 and 1978 I & H Agreements contained duration clauses identical to the 1973 clause, except that the dates were different--the 1975 agreement was effective until May 1, 1978 and the 1978 agreement was effective until May 1, 1981.

Article I of the 1973, 1975, and 1978 I & H Agreements stated that retiree insurance benefits could be altered:

Insurance coverages under the Prior Programs not hereinafter provided shall be continued to the extent applicable to Retirees and their Dependents in accordance with the provisions of the Prior Programs as if fully set out herein and as the same may now or hereinafter be amended, modified or supplemented in collective bargaining between the parties.

Also, each agreement provided for coordination of benefits whereby the benefits Alpha paid were reduced by amounts retirees received from other sources such as Medicare.

In 1978 hourly employees were provided a summary plan description (SPD) for the plan. The SPD provided, in part, that "[i]f you retire with 10 or more years of service on or after May 1, 1976, you will continue to receive the Hospital/Surgical and Major Medical portion of plan coverage. Coverage will continue for the remainder of your life." (Emphasis added). The SPD also provided that retirees with 10 or more years service "will continue to receive $4,000 in Company-sponsored life insurance."

On April 31, 1981 the 1978 CBA with the attached I & H Agreement was due to expire, but the parties agreed to extend the existing terms for an additional year. During this period Alpha was experiencing increasing financial difficulties. Alpha's cement division had an operating loss of almost $17 million in 1980 and 1981. Total losses, including plant closings, exceeded $60 million. In 1981 Alpha closed four of its cement plants and by the end of 1982 all of its cement plants were closed.

On March 29, 1982 Alpha sent letters to all of its retired hourly employees stating that it was cancelling their insurance coverage as of May 1, 1982, following the expiration of the current CBA and I & H Agreement. On May 1 Alpha ceased providing insurance benefits for retirees.

Plaintiffs brought suit in the United States District Court for the Eastern District of Missouri alleging violations of ERISA and the LMRA. The district court dismissed the case, holding that plaintiff's claims are subject to arbitration, 558 F.Supp. 913 (E.D.Mo.1982). A panel of this court reversed, 727 F.2d 177 (8th Cir.1984), and upon rehearing en banc the district court again was reversed and the case remanded for trial. Anderson v. Alpha Portland Industries, Inc., 752 F.2d 1293 (8th Cir.) (Anderson I ), cert. denied, 471 U.S. 1102, 105 S.Ct. 2329, 85 L.Ed.2d 846 (1985).

During the four day bench trial, the district court heard conflicting testimony about whether retiree benefits were vested for the lifetime of the retiree. Aside from the language in the plan documents, summarized above, the district court also heard other evidence on the issue of intent. For example, union members, including those involved in negotiating the 1975 and 1978 agreements, testified that they had been told by a now deceased Alpha representative that their retirement benefits lasted for life. Plaintiffs introduced into evidence letters drafted by Bonstein and sent to new retirees which stated that "[y]our life insurance will be continued in the amount of ----. * * * Alpha group hospital and surgical insurances for you and your eligible dependents will be continued. * * * Major medical expense...

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