Coleman v. General Elec. Co.

• Decision Date: 23 June 1986
• Docket Number: Civ. No. 1-84-534.
• Citation: 643 F. Supp. 1229
• Parties: George COLEMAN and Juanita Bruce, on behalf of themselves and all others similarly situated, Plaintiffs, v. GENERAL ELECTRIC COMPANY, Minnesota Mining and Manufacturing Company and General Electric Ceramics, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

643 F. Supp. 1229

George COLEMAN and Juanita Bruce, on behalf of themselves and all others similarly situated, Plaintiffs, v. GENERAL ELECTRIC COMPANY, Minnesota Mining and Manufacturing Company and General Electric Ceramics, Inc., Defendants.

Civ. No. 1-84-534.

United States District Court, E.D. Tennessee, S.D.

June 5, 1986.^*

Corrected June 23, 1986.

COPYRIGHT MATERIAL OMITTED

W. Neil Thomas, III, Thomas, Mann & Gossett, P.C., Chattanooga, Tenn., for plaintiffs.

Hugh J. Moore, Jr., Witt, Gaither & Whitaker, Chattanooga, Tenn., for defendants GE & GEC.

Gary D. Lander, Donna L. Pierce, Chambliss, Bahner, Crutchfield, Gaston & Irvine, Chattanooga, Tenn., for defendant 3M.

MEMORANDUM

EDGAR, District Judge.

This matter is before the Court on defendants' various motions for summary judgment pursuant to Federal Rule of Civil Procedure 56. Jurisdiction of this Court arises under the Employment Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, and the Sherman and Clayton Anti-trust Acts, 15 U.S.C. §§ 1 and 15. The Court previously dismissed plaintiffs' common law claims on January 27, 1986 (Court File Nos. 119 and 120), on the finding that these claims were preempted by federal law. The Court has also denied plaintiffs' request for a designation of this suit as a class action (Court File No. 71). Defendants now seek summary judgment on plaintiffs' federal claims on the basis that no genuine issue of material fact exists and that they are entitled to a judgment as a matter of law. All parties have extensively briefed the issues presented. Also before the Court are a number of constitutional claims contingent on the Court's resolution of the above matters.

I. Facts

This case really begins with the recognition that American companies have had difficulty competing in the world market in a variety of areas and product lines. Minnesota Mining and Manufacturing Company ("3M") owned plants in Chattanooga, Tennessee, and Laurens, South Carolina, which manufactured industrial ceramic tiles. 3M found the business unprofitable and in 1983 negotiated the sale of its Technical Ceramics Division to General Electric Company, specifically, to a division of the company called General Electric Ceramics, Inc. (hereinafter collectively called "GE"). At the time of the sale, plaintiff Coleman was employed at the Laurens plant and plaintiff Bruce was employed at the Chattanooga plant. Both individuals are still employed at their respective plants though they now work for GE. At the time of the sale from 3M to GE, plaintiffs were terminated by 3M and were hired by GE. Plaintiffs signed statements that they would not seek employment with 3M for a period of two years if they took employment with GE, and 3M agreed not to rehire the plaintiffs for this period of time if the plaintiffs accepted employment with GE.

Plaintiffs were enrolled in various pension and employee welfare benefit plans while employed at 3M. Among the 3M welfare benefit plans is a program for paying severance pay under certain specified conditions which are in dispute in this proceeding. GE also has benefit plans for their employees and the plaintiffs are currently participants in these plans.

Presentations were made to 3M employees at the time of the sale concerning the status of these employees vis-a-vis 3M and detailing their opportunity to be employed by GE. Presentations on the companies' benefit plans were made but there is a dispute as to the nature and content of these presentations. Plaintiffs claim that the employees were promised that their benefits at GE would be "equal to or better than the benefits" provided by 3M. Plaintiffs also allege that defendants omitted to inform plaintiffs that some of the benefits at GE were inferior to those benefits provided at 3M or that employees would have to pay for many benefits which were provided free by 3M. Plaintiffs detail a number of differences between the plans involving items such as eligibility for early retirement, medical insurance packages, dental insurance availability, and retiree benefits. Plaintiffs make no claim that they lost any vested rights.

Plaintiffs' make a number of claims under ERISA and other laws. First, the plaintiffs contend that they were denied their rights to severance pay from 3M by transferring to employment with GE. Second, plaintiffs assert that the defendants misrepresented the nature and quality of the benefits provided by GE in contrast to those then provided by 3M. Third, the plaintiffs argue that there has been a breach of fiduciary duties on the part of GE and that 3M is also liable for their acquiescence and participation in the representations made by GE. Plaintiffs also ascribe an independent fiduciary duty to 3M. Fourth, plaintiffs assert a breach, by both defendants, of a contract based on ERISA. Fifth, defendants claim that the rehire agreement between GE and 3M violated the antitrust laws of the United States. Finally, defendants make two contingent constitutional challenges relating to preemption of common law claims and the right to a jury trial.

Five summary judgment motions are presently pending before the Court. Three motions have been filed by GE which address the plaintiffs' antitrust claim (Court File Nos. 131 and 132), ERISA claims (Court File Nos. 150 and 151), and plaintiffs' ERISA breach of contract claim and constitutional claim (Court File Nos. 177 and 178). 3M has filed two motions which address plaintiffs' ERISA claim (Court File Nos. 139, 140 and 141) and plaintiffs' ERISA contract and constitutional claims (Court File Nos. 162 and 163). 3M joins in GE's brief on the antitrust issue. Both sides have filed a number of responsive briefs.

The posture of 3M as a seller and GE as a buyer clearly affects this Court's determination concerning the ERISA claims. The Court will analyze these issues with respect to the individual defendants. After very careful consideration, though, the Court must note its concurrence in this case with the conclusion of The Honorable Seybourn H. Lynne, Senior United States District Judge for the Northern Division of Alabama, who decided a very similar case and declared: "The plaintiffs' attempts to convert a routine business transaction into a series of state and federal wrongs are based upon severely strained interpretations of law to which this Court cannot accede." Phillips v. Amoco Oil Co., 614 F.Supp. 694, 726 (1985).

II. ERISA

ERISA provides a comprehensive framework governing the administration of private employee pension and benefit plans. Alessi v. Raybestos-Manhatten, Inc., 451 U.S. 504, 525, 101 S.Ct. 1895, 1907, 68 L.Ed.2d 402 (1981); Dependahl v. Falstaff Brewing Corp., 653 F.2d 1208, 1215 (8th Cir.), cert. denied, 454 U.S. 968 and 1084, 102 S.Ct. 512 and 641, 70 L.Ed.2d 384 and 619 (1981). To bolster the federal regulation of these plans, Congress provided a broad exemption clause negating almost all common law causes of action. 29 U.S.C. § 1144(a); Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-97, 103 S.Ct. 2890, 2899-2900, 77 L.Ed.2d 490 (1983). Courts have found this broad preemption because ERISA provides a "full range of legal and equitable remedies cite omitted." Authier v. Ginsberg, 757 F.2d 796, 802 (6th Cir.), cert. denied, ___ U.S. ___, 106 S.Ct. 108, 88 L.Ed.2d 177 (1985); see also Justice v. Bankers Trust Co., Inc., 607 F.Supp. 527, 531 (N.D.Ala.1985). Only where a state statute does not impact on "the structure, the administration, or the type of benefits provided by an ERISA plan" will the state statute not be invalidated. Gilbert v. Burlington Industries, Inc., 765 F.2d 320, 327 (2nd Cir.), appeal pending, ___ U.S. ___, 106 S.Ct. 378, 88 L.Ed.2d 332 (1985). Plaintiffs make claims both under ERISA and under common law.

The most difficult task facing this Court is defining causes of action which are not clearly established by the terms of the statute. For example, defendant 3M makes much of the fact that no specific misrepresentation clause exists in ERISA. The Court has no argument with this claim, as far as it goes. But, the Court feels compelled, by virtue of its finding of a broad preemption clause, to make an extensive inquiry in the interstices of the statute in order to insure that Congress' intent is not misconstrued to wholly eliminate all possible causes of action by virtue of a broad reading of the preemption section coupled with a narrow reading of the statute. Given the remedial nature of the statute, the statute is to be read in its broadest terms covering most aspects of pension and employee welfare benefit plans. Petrella v. NL Industries, Inc., 529 F.Supp. 1357, 1361 (D.N.J.1982).

ERISA by its terms covers pension and welfare benefit plans and mandates common reporting and disclosure requirements, 29 U.S.C. §§ 1021-31, as well as standards of fiduciary conduct. 29 U.S.C. §§ 1101-14. A major distinction exists between these benefits, though, in that ERISA establishes minimum substantive content provisions for pension plans but not for welfare benefit plans. Adcock v. Firestone Tire & Rubber Company, 616 F.Supp. 409, 414 (M.D.Tenn.1985). An employee can accrue a vested interest in a pension plan upon meeting eligibility requirements for participation but can never vest in a welfare benefit plan. Id.

Absent statutory provisions concerning employees' rights under welfare benefit plans, the Court must examine protections available from the general body of federal law. See Menhorn v. Firestone Tire & Rubber Company, 738 F.2d 1496 (9th Cir.1984). The Court is required to fashion a body of law to govern the administration and application of ERISA in order to insure that the broad preemption clause of ERISA does not undercut the desire of the framers of ERISA to protect pension and employee welfare benefit plans. See Scott v. Gulf Oil Corp., 754 F.2d 1499, 1501-02 (9th Cir.1985). The Courts must thus create a federal common law concerning ERISA where a state law is...