Barker v. Ceridian Corp.

• Decision Date: 26 August 1997
• Docket Number: No. 96-2429,96-2429
• Citation: 122 F.3d 628
• Parties: 21 Employee Benefits Cas. 2456 Kent P. BARKER; Carla J. McAndrews; Martin J. Timmons, on behalf of themselves and all others similarly situated, Plaintiffs--Appellants, v. CERIDIAN CORPORATION, a Delaware corporation, individually and as successor in interest to Control Data Corporation, Defendant--Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 628

122 F.3d 628

21 Employee Benefits Cas. 2456

Kent P. BARKER; Carla J. McAndrews; Martin J. Timmons, on

behalf of themselves and all others similarly

situated, Plaintiffs--Appellants, v. CERIDIAN CORPORATION, a Delaware corporation, individually and as successor in interest to Control Data

Corporation, Defendant--Appellee.

No. 96-2429.

United States Court of Appeals,

Eighth Circuit.

Submitted Feb. 13, 1997.

Decided Aug. 26, 1997.

John Murray, Minneapolis, MN, argued, Matthew B. Newman, Edina, MN (Terrence M. Fruth, Paul M. Floyd, on the brief), for Plaintiffs-Appellants.

Richard A. Kaplan, Minneapolis, MN, argued (Madge S. Thorsen, Thomas W. Pahl, Minneapolis, MN, on the brief), for Defendant-Appellee.

Before McMILLIAN, JOHN R. GIBSON, and FAGG, Circuit Judges.

JOHN R. GIBSON, Circuit Judge.

Appellants, a certified class of disabled employees who receive disability benefits under a long-term disability plan, appeal the district court's grant of summary judgment for their employer, Ceridian Corporation, that allowed Ceridian to stop paying the employees' health, dental, and life insurance premiums. The employees bring their claim under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001-1461 (1994). They argue that the district court's grant of summary judgment was erroneous because Ceridian provided vested disability benefits and did not unambiguously reserve the right to retroactively change the level of disability benefits that employees would receive in the future. They further argue that the extrinsic evidence they submitted created a genuine issue of material fact concerning Ceridian's right to change disability benefits retroactively. Because the long-term disability plan does not unambiguously reserve to Ceridian the right to change the disability benefits retroactively, a genuine issue of material fact exists. Accordingly, we reverse the district court's judgment and remand for additional discovery and a trial.

Appellants Kent P. Barker, Carla J. McAndrews, and Martin J. Timmons represent a class of disabled employees of Ceridian Corporation. The class includes all employees of Ceridian, formerly known as Control Data Corporation, ¹ who were disabled before January 1, 1991 for whom Ceridian paid health, life, and dental insurance premiums on or before December 31, 1993. ² Until December 31, 1993, Ceridian paid each class member's premiums for the life, health, and dental insurance in which they were enrolled at the time they became disabled. Ceridian also paid the disabled employees 60% of their pre-disability wage. Beginning January 1, 1994, Ceridian stopped paying the premiums and required the employees to pay their own premiums to continue their insurance coverage.

Appellants brought this action alleging that Ceridian's refusal to continue paying their insurance premiums violates ERISA. The parties' arguments revolve around the ERISA plans offered by Ceridian. Years ago, Ceridian adopted several benefit plans for its employees, including a health care plan, dental assistance plan, life insurance plan, and disability plan. Formal plan documents described each plan. In addition, as required by ERISA, 29 U.S.C. § 1022 (1994), Ceridian provided its employees with a summary plan description for each plan that described the various benefits offered by the plans and claim procedures. For several years the company issued summary plan descriptions to employees in separate booklets for each type of benefit, but starting in 1989 Ceridian combined the summary plan descriptions for all of the various plans into a single benefits manual.

Before 1989 the Disability Income Protection summary plan descriptions summarized three disability plans: sick leave, short-term disability, and long-term disability. Under the long-term disability plans, disabled employees were eligible for long-term disability status beginning after their fifth consecutive month of disability. Employees who qualified under this plan were entitled to up to 60% of their pre-disability salary. The summary plan descriptions also provided: "While on Long-Term Disability Status the company will pay the premiums for all the company-sponsored benefits (medical, life, and dental) for which you and your dependents were enrolled before your disability began. The company will continue paying all premiums until you and your dependents are no longer eligible for the plans." ³ A chart in the summary plan descriptions reiterated Ceridian's promise to pay the disabled employees' insurance premiums. The formal document for the long-term disability plan, however, did not contain any reference to the terms, conditions, or descriptions of health, dental, or life insurance benefits. During the period before 1989 the individual plan documents for the dental, life, and health insurance plans also stated that Ceridian would pay the insurance premiums during the employee's disability.

The plans in effect before 1989 also contained provisions discussing plan amendment and termination. The Disability Income Protection summary plan descriptions provided: "Control Data expects to continue the Long-Term Disability Plan indefinitely, but must reserve the right to change or discontinue it if it becomes necessary. This would be done only after careful consideration." The amendment and termination language in the formal plan document differed slightly from the language in the summary plan descriptions. The formal plan allowed plan amendments if deemed advisable by Ceridian and reserved Ceridian's right to terminate the plan at any time.

The Long-Term Disability Plan's reservation of rights provision included additional language relevant to this action. Before 1989 the disability summary plan descriptions expressly provided: "If the group Long-Term Disability Plan terminates, and if on the date of such termination you are totally disabled, your Long-Term Disability benefits and your claim for such benefits will continue as long as you remain totally disabled as defined by the plan." The formal long-term disability plan made the same promise. This language was not found in the documents for the dental, health, or life insurance benefit plans. Instead, the termination provision in the 1984 summary plan description of the dental and life insurance plan, and the 1983 summary plan description of the health care plan provided: "If, while you or your dependents are covered under this plan, the plan terminates or the class of employees of which you are a member has its coverage terminated, then no benefits (including extended benefits) will be payable to you for any charges, fees, or expenses incurred on or after that date of termination of the policy or termination of the class." The 1984 life insurance summary plan description included the same provision.

Effective January 1, 1989, Ceridian issued an employee benefits manual that combined the summary plan descriptions for its employee benefit plans. The disability section of the 1989 Benefits Manual repeated Ceridian's agreement to pay the health, life, and dental insurance premiums of disabled employees. However, the 1989 Benefits Manual contained a different reservation of rights provision: "While [Ceridian] plans to continue these plans and programs, it reserves the right to change or cancel them at any time." The manual made no mention of Ceridian's promise to continue paying disability benefits if Ceridian terminated the plan, as promised in previous Long-Term Disability summary plan descriptions. The formal Long-Term Disability Plan in effect at that time, however, continued to contain this agreement: "Notwithstanding termination of the Plan, a Participant who is Totally Disabled on the effective date of the Plan termination and is otherwise entitled to benefits hereunder, shall continue to receive benefits in accordance with the terms of the Plan."

In 1991, Ceridian issued a new employee benefits manual that stated that Ceridian would no longer pay the health, dental, and life insurance premiums for employees who became disabled on or after January 1, 1991. Ceridian told Barker, a class representative, that this change only applied to employees who became disabled on or after January 1, 1991. This change did not affect the benefits Ceridian paid to the class members, which included 60% of their pre-disability wage and 100% of their life, health, and dental insurance premiums.

In 1992, Ceridian changed its long-term disability plan again. Effective January 1, 1992, Ceridian allowed active, non-disabled employees to choose to pay a higher disability premium in return for an increase in their long-term disability income benefit to 70% of their pre-disability earnings. Ceridian again explained to Barker that this change only applied prospectively.

In the fall of 1993, Ceridian notified the disabled employees that it would stop paying 100% of their health, life, and dental insurance premiums beginning January 1, 1994. The disabled employees then brought this action. The district court held that the employees had no vested interest in company-paid premiums because the plan documents showed that Ceridian had no specific intent to be unconditionally bound in the future. Further, the district court concluded that the termination and amendment clauses included in the plan documents defeated the employees' claim for vested insurance premium benefits. Even if the language in the plans was ambiguous and could be interpreted as expression of an intent to provide vested company-paid premiums to disabled employees, the district court concluded that the only extrinsic evidence in the record reflected Ceridian's intent to reserve its right to change all aspects of the plan. Accordingly, the district court granted summary judgment for Ceridian.

On appeal, the disabled employees argue that the district court's grant of summary judgment was erroneous because Ceridian provided vested disability...