906 F.2d 660 (11th Cir. 1990), 89-3476, Alday v. Container Corp. of America

Docket Nº:89-3476.
Citation:906 F.2d 660
Party Name:Robert N. ALDAY, Individually, and on behalf of all participants in the Container Corp. of America Salaried Retiree Health Insurance Program as of December 31, 1989, Plaintiffs-Appellants, v. CONTAINER CORPORATION OF AMERICA, The Jefferson Smurfit Corporation, Smurfit Pension and Insurance Co., Defendants-Appellees.
Case Date:July 24, 1990
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit

Page 660

906 F.2d 660 (11th Cir. 1990)

Robert N. ALDAY, Individually, and on behalf of all

participants in the Container Corp. of America

Salaried Retiree Health Insurance

Program as of December 31,

1989, Plaintiffs-Appellants,



Corporation, Smurfit Pension and Insurance Co.,


No. 89-3476.

United States Court of Appeals, Eleventh Circuit

July 24, 1990

Page 661

        John F. MacLennan, Jacksonville, Fla., Marvin J. Lewis, Collegeville, Pa., for plaintiffs-appellants.

        William S. Burns, Jr., Jacksonville, Fla., Columbus R. Ganegmi, Jr., William G. Miossi, Kathleen McCarthy Binning, Richard H. Winters, Chicago, Ill., for defendants-appellees.

        Appeal from the United States District Court for the Middle District of Florida.

        Before KRAVITCH, Circuit Judge, RONEY [*], and ALDISERT [**], Senior Circuit Judges.

        KRAVITCH, Circuit Judge:

        Plaintiff Robert N. Alday, individually and as the representative of a class of approximately one thousand participants in

Page 662

a retiree health insurance program, brought suit against the Container Corporation of America ("CCA"), the Jefferson Smurfit Corporation ("JSC"), and Smurfit Pension and Insurance Company ("SPI"). 1 Alday challenged CCA's decision, effective January 1, 1987, to modify the benefits and premiums of CCA's salaried retiree medical insurance plan on the grounds that such modifications were improper and should be set aside. The district court, after certifying only certain of Alday's claims for the class, granted summary judgment in favor of the defendants. Alday appeals the denial of class certification on one of his claims and the district court's grant of summary judgment.


        CCA has maintained a health insurance plan for retired employees since 1964. In 1976, that plan was changed significantly. The plan's benefits were increased and employees who elected to participate were required to pay for some of the plan's cost.

        In accordance with the requirements of the Employee Retirement Income Security Act, 29 U.S.C. Secs. 1001 et seq. ("ERISA"), the terms of the 1976 plan were described in a formal written document and were communicated to employees by means of a document called a "summary plan description ("SPD"). 2 A participating employee's monthly contributions to the plan began upon retirement. The plan documents did not specify a dollar amount for the employee's contributions, but stated instead in the Schedule of Benefits that contributions would be "as required by the plan." 3 In addition, the plan documents also expressly provided that plan administrators reserved the right to "terminate, suspend, withdraw, amend or modify the Plan in whole or part at any time."

        When the plan went into effect in 1976, employees were informed by a letter from the chief executive that participants were required to contribute $20 per month for each employee and spouse under the age of 65 and $8 per month for each employee and spouse age 65 and over. 4 The initial letter describing the program noted that these costs could increase at a future date, and that in the event of a cost increase, employees had the option of continuing at the new cost or cancelling their coverage.

        Subsequently, the plan was modified several times in minor ways. Each modification was described in a revised SPD, which also included the language pertaining to the right to modify or terminate quoted above. The SPD's were not generally distributed to employees prior to their retirement, 5 although both sides agree that SPD's were available upon request.

        Beginning in 1977, CCA distributed annually to employees a booklet entitled "Summary of Personal Benefits," which set forth the various employee benefit plans offered by CCA, and provided an individualized calculation of the pension and stock bonus plan accruals earned by the employee to date. Under the heading "Health and Dental Plans," the booklet stated that upon retirement "[h]ealth insurance [is] available

Page 663

to you and your dependents at a modest cost. Dental coverage ends." The booklet did not set forth any other details about the health benefit program, nor did it state that CCA retained the right to terminate or modify the health insurance available to the retiree. The booklet did note, however, that any discrepancy between its contents and those of the formal plan documents would be governed by the terms of the plan documents.

        When an employee neared retirement, pre-retirement planning seminars were held and a series of correspondence ensued between CCA and the employee. Included in this correspondence were form letters about the benefit options, enrollment cards, and a copy of the current SPD. One of the form letters stated the amount that retired employees were required to contribute for health insurance coverage. The form letters did not state that the health insurance benefits could be terminated or modified. The written materials accompanying the planning seminars also made no statements regarding CCA's right to terminate or modify coverage.

        On January 1, 1987, CCA modified the benefits and substantially raised the employee contributions of its retiree health insurance plan. 6 Beginning on that date, CCA salaried retirees under age 65 were required to contribute $56.21 for themselves and $92.45 for dependent coverage, while retirees age 65 and older were charged $54.81 for themselves and $54.81 for dependents. The maximum lifetime benefits available under the plan were also reduced at that time.

        Alday brought this action on behalf of himself and all similarly situated employees 7 against CCA, its parent company JSC, and its pension consultant SPI. Alday and the class alleged that the modification of the plan in 1987 violated ERISA and breached the defendants' fiduciary duty to the plaintiffs. Alday also alleged that the defendants were estopped from altering the terms of the plan because they had induced him into believing that the plan's terms would not change, and he relied upon that representation. The court refused to certify the promissory estoppel issue for the class, finding that it did not satisfy the requirements of Fed.R.Civ.P. 23(a). After the district court granted summary judgment for the defendants on all claims, this appeal ensued.


        Alday puts forth several arguments as to why the district court erred in granting summary judgment for the defendant on his claim that the January 1, 1987 modifications to the plan were not permissible under ERISA. One argument Alday cannot make is that, regardless of the plan's language, he had vested rights to the defendants' health insurance plan under ERISA. This argument is foreclosed by the fact that the retiree health insurance plan is a welfare benefit plan under 29 U.S.C. Sec. 1002(1) and not a pension plan under 29 U.S.C. Sec. 1002(2). Pension plans are strictly regulated by ERISA and are subject to ERISA's vesting, participation, and minimum funding requirements. Welfare benefit plans, which are benefits such as medical...

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