Tackett v. M&G Polymers USA, LLC

• Decision Date: 21 February 2012
• Docket Number: Case No. 2:07–cv–126.
• Court: U.S. District Court — Southern District of Ohio
• Parties: Hobert Freel TACKETT, et al., Plaintiffs, v. M & G POLYMERS USA, LLC, et al., Defendants.

853 F.Supp.2d 697

52 Employee Benefits Cas. 1935

Hobert Freel TACKETT, et al., Plaintiffs,

v.M & G POLYMERS USA, LLC, et al., Defendants.

Case No. 2:07–cv–126.

United States District Court,

S.D. Ohio,

Eastern Division.

Feb. 21, 2012.

David Marvin Cook, Claire W. Bushorn, Jennie Gayle Arnold, Cook Portune & Logothetis LLC, Cincinnati, OH, for Plaintiffs.

Mark A. Knueve, Thomas Howard Fusonie, Columbus, OH, Andrew Lylburn Scroggins, Deborah S. Davidson, John R. Richards, Morgan Lewis & Bockius, Philip A. Miscimarra, Chicago, IL, Christopher A. Weals, Simon J. Torres, Washington, DC, for Defendants.

OPINION AND ORDER

GREGORY L. FROST, District Judge.

This is a class action ERISA case involving the contractual right to lifetime contribution-free health care benefits for retirees who worked for M & G Polymers USA, LLC and its predecessors. The matter came on for a bench trial in May 2011 on the issue of liability. The Court found in favor of those plaintiffs in Subclasses One through Four and against Defendants, but in favor of Defendants and against those plaintiffs in Subclass Five. The Subclass One through Four Plaintiffs then filed a motion for a permanent injunction, seeking the reinstatement of lifetime contribution-free health care benefits for the plaintiff retirees and their surviving spouses or dependents. (ECF No. 196.) For the reasons that follow, this Court GRANTS the motion.

I.

A. Background

The class (retirees, their spouses, and surviving spouses or other dependents of individuals who worked for the named defendant company) assert that although they have a right to lifetime retiree health care benefits, the company is requiring them to pay for those benefits in violation of various collective bargaining agreement (“CBA”) provisions.¹ Plaintiffs Hobert Freel Tackett, Woodrow K. Pyles, and Harland B. Conley are all Ohio residents and retirees from the Point Pleasant Polyester Plant in Apple Grove, West Virginia. They and similarly situated retirees belong to a labor union, Plaintiff United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL–CIO–CLC (“USW”), which represented (or at least one of its predecessor unions represented) them as employees of Defendant M & G Polymers USA, LLC (“M & G”) (which bought the plant in 2000), or one of its predecessor companies, such as the Shell Chemical Company (which owned the plant from 1992 to 2000) and The Goodyear Tire & Rubber Company (which owned the plant until 1992). Plaintiffs' theory of the case is that the CBA provides vested retiree health care benefits as a result of the following language, which appears in various agreements:

Employees who retire on or after January 1, 1996 and who are eligible for and receiving a monthly pension under the 1993 Pension Plan ... whose full years of attained age and full years of attained continuous service ... at the time of retirement equals 95 or more points will receive a full Company contribution towards the cost of [health-care] benefits .... Employees who have less than 95 points at the time of retirement will receive a reduced Company contribution. The Company contribution will be reduced by 2% for every point less than 95. Employees will be required to pay the balance of the health care contribution, as estimated by the Company annually in advance, for the [health care] benefits .... Failure to pay the required medical contribution will result in cancellation of coverage.

In addition to a series of main agreements, a number of side letters are involved in this litigation. The Sixth Circuit previously explained these documents as follows, before remanding the action to this Court for additional factual development:

A series of collective bargaining agreements has been in force at the Plant, with each typically lasting around three years before renegotiation. The first letter agreement, signed contemporaneously with the 1991–1994 collective bargaining agreement, was adopted “for purposes of conforming with the new Financial Accounting Standard Board (FASB) accounting requirement” that required accrual accounting of healthcare benefits. This new requirement hurt a company's balance sheet performance if the company had no cap on its health-care costs. While signed in 1991, the caps were not to take effect until July 1, 1997. Concurrent with the 1994–1997 collective bargaining agreement, another cap letter postponed the effective date of the caps to 2004.

Tackett v. M & G Polymers, USA, LLC, 561 F.3d 478, 483 n. 1 (6th Cir.2009).

Plaintiffs claim that on or about January 1, 2007, Defendant M & G acted contrary to the agreements by unilaterally modifying the health care benefits by shifting a large part of the health care costs onto the class members. The other named defendants are M & G-sponsored health plans through which the class members receive health care benefits: the M & G Comprehensive Medical Benefits Program for Employees and Their Dependents (“Comprehensive Plan”), the M & G Catastrophic Medical Plan, the M & G Medical Necessity Benefits Program of Hospital, Surgical, Medical, and Prescription Drug Benefits for Employees and Their Dependents (“Medical Necessity Plan”), and the M & G Major Medical Benefits Plan (“Major Medical Plan”).

Plaintiffs filed the instant action on behalf of the named retirees and their surviving spouses or dependents, as well as other similarly situated retirees and their surviving spouses or dependents, on February 9, 2007. (ECF No. 1.) Via their amended complaint, Plaintiffs originally asserted three claims: violation of labor agreements, actionable under Section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185(a) (Count I); violation of employee welfare benefit plan, actionable under Sections 502(a)(1)(B) and (a)(3) of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3) (Count II); and breach of fiduciary duty under Section 502(a)(3) of ERISA, 29 U.S.C. § 1132(a)(3) (Count III). (ECF No. 14 ¶¶ 26–31.).

Defendants then filed a motion to dismiss the amended complaint (ECF No. 19), and this Court granted that motion (ECF No. 63). On appeal, the Sixth Circuit Court of Appeals affirmed the dismissal of the § 502(a)(3) claim constituting Count III, but reversed and remanded the remaining Count I § 301 claim and Count II § 502(a)(1)(B) and (a)(3) claim (ECF No. 68). Defendants unsuccessfully sought summary judgment on Counts I and II, and the matter progressed to a bench trial held from May 9, 2011, to May 16, 2011. This Court filed an August 5, 2011 Opinion and Order, 2011 WL 3438489, in which the Court found in favor of Plaintiffs in Subclasses One through Four and against Defendants on the issue of liability as described herein on Plaintiffs' Count I and II claims. (ECF No. 177.) The Court also found in favor of Defendants and against Plaintiffs in Subclass Five on those claims. This left for resolution the issue of damages, which the Court had previously bifurcated from the liability issue and upon which the parties are currently working. (ECF No. 207.)

Also in need of disposition is the remaining plaintiffs' pursuit of the reinstatement of their lifetime contribution-free health care benefits. That issue is before the Court by way of Plaintiffs' motion for a permanent injunction (ECF No. 196), Defendants' memorandum in opposition (ECF No. 205), and Plaintiffs' reply memorandum (ECF No. 206). The motion came on for an in-court hearing on February 13, 2012, and the Court took the injunctive relief issue under advisement at the conclusion of that proceeding.

B. Agreed Facts

The Final Pretrial Order set forth the parties' agreed facts, providing:

The following facts are established by admissions in the pleadings or by stipulation of counsel:

1. M & G Polymers USA, LLC (“M & G”) is a producer of polymer and related chemical products with a facility located in Apple Grove, West Virginia (“the Apple Grove facility,” also known as the “Point Pleasant Plant”).

2. The Goodyear Tire & Rubber Company (“Goodyear”) owned the Apple Grove facility until November 20, 1992, when Shell Chemical Company, an affiliate of Shell Oil Company (“Shell”), purchased it.

3. Production, laboratory, and maintenance employees at the Apple Grove facility are represented by the United Steel, Paper & Forestry, Rubber, Manufacturing, Energy, Allied Industrial & Service Workers International Union, AFL–CIO (“USW”) and its Local 644L.

4. Prior to 1995, production, laboratory, and maintenance employees at the Apple Grove facility were represented by the United Rubber Workers (“URW”). The URW merged with the USW in 1995.

5. Retiree Plaintiff Class Representatives H. Freel Tackett, Woodrow Pyles, and Harlan Conley (together with the Class members, the “Retiree Plaintiffs”) were employed at the Apple Grove facility and were members of the collective bargaining unit represented by the Union.

6. Mr. Tackett retired on or about March 1, 1996. Mr. Pyles retired on or about January 1, 1996. Mr. Conley retired on or about August 1, 1998.

7. On November 6, 1991, Goodyear and Local 644 of the URW entered into a collective bargaining agreement (“CBA”) effective November 6, 1991 to November 6, 1994.

8. On May 15, 1991, Goodyear and the URW and certain URW locals entered into a collectively bargained Pension, Insurance and Service Award Agreement effective May 15, 1991 to May 15, 1994 (“1991 Master P & I Agreement”).

9. The 1991 Master P & I Agreement between Goodyear and the URW and certain URW locals included a side letter, “Letter G,” dated May 15, 1991, dealing with retiree medical benefits (“1991 Letter G”).

10. Goodyear created a Summary Plan Description (“SPD”) that described the employee benefit programs applicable to hourly rated employees at the Apple Grove facility as of May 15, 1991.

11. Goodyear and Shell entered into an agreement dated December 18, 1992, pertaining...