Cole v. Arvinmeritor, Inc.
| Decision Date | 13 September 2006 |
| Docket Number | No. 03-73872.,03-73872. |
| Citation | 515 F.Supp.2d 791 |
| Parties | Robert COLE, et al., Plaintiffs, v. ARVINMERITOR, INC., et al., Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
Carlos F. Bermudez, Daniel W. Sherrick, UAW International Union Legal Department, Michael F. Saggau, International Union, UAW, Detroit, MI, Stuart M. Israel, Martens, Ice, Royal Oak, MI, for Plaintiffs.
Charles S. Mishkind, Miller, Canfield, Grand Rapids, MI, Leonard D. Givens, Michael A. Alaimo, Richard W. Warren, Miller, Canfield, Detroit, MI, for Defendants.
This litigation is brought by Plaintiffs, six retirees and one surviving spouse (collectively, the "Retiree Plaintiffs") and United Automobile, Aerospace, and Agricultural Implement Workers of America ("UAW"), against the Retiree Plaintiffs' former employers and current benefits administrator, Rockwell Automation, Inc. and Rockwell International Corporation (collectively "Rockwell") and ArvinMeritor, Inc. It addresses the duration of retiree health benefits under a series of collective bargaining agreements ("CBAs") that span five decades. Defendants planned to eliminate health benefits on January 1, 2006 for all retirees, dependents, and surviving spouses age 65 and over. It had already reduced and cancelled some health benefits in 2003 and 2005, triggering these consolidated actions.
Plaintiffs challenged Defendants' actions in an earlier motion for preliminary injunction. This Court granted the Retiree Plaintiffs' motion on December 22, 2005, concluding that Plaintiffs had demonstrated a likelihood of success on the merits of, their claim that the CBAs governing their retirement unambiguously promise lifetime health care benefits. Cole v. ArvinMeritor, Inc., ___ F.Supp.2d ___, ___, 2005 WL 3502182, *18 (E.D.Mich.2005). The Court's December 22, 2005 Order directed Defendants to "reinstate and resume paying the full cost of health benefits" and enjoined Defendants from canceling or changing the reinstated health benefits. Id. at ___, 2005 WL 3502182, *28.
This matter is now before the Court on the parties' cross-motions for summary judgment.1 The issue to be decided here is the same as in Plaintiffs' motion for preliminary injunction: Whether the language of the parties' CBAs promised lifetime retiree health benefits or terminated those benefits at the end of each three-year CBA term. Applying general principles of contract interpretation and construing each provision as a part of the integrated whole, this Court concludes that the CBAs unambiguously promise lifetime retiree health benefits. Accord, Yolton v. El Paso Tennessee Pipeline Co., 435 F.3d 571 (6th Cir.2006); McCoy v. Meridian Auto. Sys., Inc., 390 F.3d 417 (6th Cir.2004); Golden v. Kelsey-Hayes Co., 73 F.3d 648 (6th Cir.1996). This Court DENIES Defendants' motion for summary judgment and GRANTS Plaintiffs' motion for summary judgment and permanent injunction as to liability but RESERVES issues concerning remedies; i.e., implementation of the permanent injunction and damages.
In their complaint, the Retiree Plaintiffs allege that: (1) Defendants breached labor agreements in violation of Section 301 of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185, and (2) breached fiduciary duties under the labor agreements which constitute employee welfare plans within the meaning of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq., in violation of Section 502(a) of ERISA, 28 U.S.C. § 1132(a).
Retiree Plaintiffs bring this suit on their behalf and on behalf of a proposed class of approximately 2,900 retirees, their eligible dependents and surviving spouses. Retiree Plaintiffs and the proposed class of retirees retired from 12 plants owned by Rockwell or, later, by Rockwell successors Meritor Automotive, Inc. and ArvinMeritor, Inc. The plants were in Michigan, Ohio, Wisconsin, Indiana, Illinois, and Kentucky. All retirees were represented by UAW at those plants and, since retirement, have received retiree health benefits from Defendants. The retirees' dependents and surviving spouses have also received health benefits from Defendants due to their relationships to the retirees.
Rockwell International Corporation ("Rockwell") was formed in 1973 in a merger between North American Rockwell and Rockwell Manufacturing. Rockwell was a conglomerate of multiple divisions which owned and operated industrial plants throughout the United States, including plants supplying the automotive industry. ). In 2003, Rockwell International changed its name to Rockwell Automation, Inc.
In October 1997, Rockwell "spun-off" its automotive division, which became Meritor Automotive, Inc.
In July 2000, Meritor merged with Arvin Industries to form ArvinMeritor, Inc. ArvinMeritor describes itself as an "$8 billion supplier to the motor vehicle industry" with "approximately 31,000 employees in 25 countries," including 10,000 in the United States. (Ex. 180).
Rockwell owned various plants at which UAW was the collective bargaining representative of hourly employees. ). Among these are the 12 plants at issue, located in Allegan, Chelsea, and Detroit, Michigan; Ashtabula (2 plants) and Marysville, Ohio; Oshkosh, Wisconsin; Knox, Indiana; Chicago (2 plants) and Centralia, Illinois; and Winchester, Kentucky. (Ex. 102).
Rockwell, Meritor, or ArvinMeritor closed or sold each of the 12 plants over time, between the early 1970s and 2003. (Ex. 104-105).
In 1991, Rockwell added a mandatory mail and generic drug program for all retirees. These changes were made to cut down on the substantial costs of brand name drugs and to take advantage of bulk purchasing through mail-order pharmacies.
In 2000; Defendants announced that all Faust/UAW retirees who retired before January 1, 2001 would realize an increase in drug co-pays from $3 to $5 for generic drugs and $3 to $7 for brand name drugs. This represents an increase of 100%.
In 2001, ArvinMeritor froze reimbursements for Medicare Part B premiums at the 1999 level (i.e., $45.50) for age 65/older UAW retirees from closed plants. This change substantially increased out-of-pocket costs for all age 65/older retirees. At Medicare's 2005 monthly premium rate of $78.20, Cole/UAW retirees currently pay approximately $392.40 more per year as a result of ArvinMeritor's 2001 decision to freeze the Medicare Part B premium reimbursement at 845.50.
In 2003 and 2005, ArvinMeritor, the administrator of the retiree health benefits, changed some of these benefits. ArvinMeritor cancelled the dental, hearing aid, and vision coverages. ArvinMeritor also increased co-pays, deductibles and out-of-pocket maximums, and altered Medicare Part B reimbursements, resulting in increased costs to retirees, dependents, and surviving spouses.
In 2005, ArvinMeritor announced plans to eliminate remaining health benefits on January 1, 2006 for all retirees, dependents, and surviving spouses "age 65 or over."
The Cole action was filed on September 29, 2003, Case No. 03-73872. The Faust action was filed on September 20, 2004, Case No. 04-73656. The Court subsequently consolidated these actions in Case No. 03-73872.
The health benefits that are the subject of this lawsuit are governed by a series of UAW-negotiated agreements binding Defendants. For simplicity, the Court will use the 1991-1994 Rockwell-UAW agreement as a typical example of language which remained essentially unchanged over the five decades in question. (See Ex. 106-117, 157).
In the period between 1962 and 2003, UAW and Rockwell, Meritor, or ArvinMeritor were parties to a series of "national" collective bargaining agreements (CBAs) governing the plants and UAW-represented employees. (Ex. 102, 106-117, 157, 195, 196). These agreements addressed pensions and retiree health benefits. Company-paid retiree health benefits were established in 1962, with Rockwell paying one-half. (Ex. 187). In the 1965-1967 agreement, Rockwell became responsible for paying in full the cost of health benefits for retirees, eligible dependents, and surviving spouses. (Ex. 186, 187, 196). The 1968-1971 agreement established the core language regarding retiree health benefits that continued in the 1971-1974, 1974-1977, 1977-1980, 1980-1983, 1982-1985, 1985-1988, 1988-1991, 1991-1994, 1994-1997, 1997-2000, and 2000-2003 national agreements. (Ex. 106-117, 157). Over those years, retiree health benefits required by the agreements improved in various ways — e.g., prescription drug, dental, hearing aid, and vision coverages were added — but the core contract language providing for company-paid health benefits for retirees, their eligible dependents, and their surviving spouses remained essentially unchanged. (Ex. 101, 106-117, 157).
The contractual framework, begun in 1965, includes: (1) a "supplemental agreement" governing health benefits for active employees, retirees, and dependents "made part of" the national agreement, designated Exhibit "B," and (2) incorporated into Exhibit "B," a detailed program of health benefits "made part of" the supplemental agreement, designated Exhibit "1." (See Ex. 106 and 157).
Thus, this "insurance program" consists of Exhibit "B" (hereinafter "Insurance Agreement") and "B-1" (hereinafter "Insurance Program") to the main agreements (CBAs). The main agreements also typically include a "Pension Plan" as Exhibits "A" and "A-1" and a "Supplemental Unemployment Benefit Program" (SUB) as Exhibits "C" and "C-1." In the 199...
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