Deboard v. Sunshine Mining & Refining Co., Nos. 97-6226
| Decision Date | 05 April 2000 |
| Docket Number | 97-6249,98-6020,Nos. 97-6226 |
| Citation | 208 F.3d 1228 |
| Parties | (10th Cir. 2000) R. CHARLES DEBOARD; LILLIAN J. DEBOARD; WILLIAM T. WOOD; MARY E. WOOD; LUCILLE M. K ISTLER; KNOX VAN HOY; MARTHA VAN HOY, Plaintiffs-Appellees and Cross-Appellants v. SUNSHINE MINING AND REFINING COMPANY; SUNSHINE PRECIOUS METALS INC.; WOODS RESEARCH AND DEVELOPMENT CORPORATION, Defendants-Appellants and Cross-Appellees. R. CHARLES DEBOARD; LILLIAN J. DEBOARD; WILLIAM T. WOOD; MARY E. WOOD; LUCILLE M. KISTLER; KNOX VAN HOY; MARTHA VAN HOY, Plaintiffs-Appellants v. SUNSHINE MINING AND REFINING COMPANY; SUNSHINE PRECIOUS METALS INC.; WOODS RESEARCH AND DEVELOPMENT CORPORATION, Defendants-Appellees |
| Court | U.S. Court of Appeals — Tenth Circuit |
APPEAL FROM UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA D.C. No. CIV-95-1117-A)
[Copyrighted Material Omitted]
[Copyrighted Material Omitted] Gayla C. Crain, of Epstein, Becker & Green, P.C., Dallas, Texas (Michael P. Butler, of Epstein, Becker & Green, P.C., Dallas, Texas; and Bruce C. Jones, of Evans, Keane, Boise, Idaho, with her on the brief), for the appellants.
Kirk D. Fredrickson (Jean A. McDonald with him on the brief), of McDonald & Fredrickson, P.C., Oklahoma City, Oklahoma, for the appellees.
Before TACHA, BRISCOE, and MURPHY, Circuit Judges.
Plaintiffs, former employees of a corporate subsidiary of defendant Sunshine Mining & Refining Company, filed this action under the Employment Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., seeking to enforce promises of life-time insurance benefits made to them by their former employer as inducements to early retirements. Defendants appeal from the district court's entry of partial summary judgment and its subsequent entry of judgment in favor of plaintiffs. Defendants also appeal the district court's award of fees and costs to plaintiffs. Plaintiffs have filed two cross-appeals challenging various aspects of the district court's judgment, the amount of the fee award, and the district court's refusal to grant plaintiffs' post-trial motion to enforce judgment. We exercise jurisdiction pursuant to 28 U.S.C. 1291. As regards defendants' appeal, we affirm. As regards plaintiffs' cross-appeals we affirm in all respects except for (1) the health insurance coverage issue, which we reverse and remand for entry of judgment consistent with this opinion, and (2) the fee award, which we reverse and remand to the district court for further consideration.
Plaintiffs Charles Deboard, William Wood, Lucille Kistler, and Knox Van Hoy are former employees of Woods Petroleum Corporation (Woods), a corporation formerly based in Oklahoma City, Oklahoma. On July 31, 1985, Woods merged with, and became a wholly owned subsidiary of, Sunshine Mining & Refining Company (Sunshine). As part of the merger (which was described in the record as more akin to a hostile takeover), Sunshine agreed not to terminate or modify any existing Woods' employee welfare benefit plans for a period of ten years.
On August 22, 1985, Woods distributed a memorandum to its employees explaining that, due to a "cyclical downturn" in the oil and gas industry, cost-cutting measures would be required by all four of Sunshine's oil and gas subsidiaries, including Woods. The memorandum further explained that a task force had been formed to consider and evaluate various options to restructure Sunshine's oil and gas group. App. at 143. On September 11, 1985, Woods distributed a follow-up memorandum to its employees informing them, in pertinent part, of a "voluntary early retirement subsidy" intended by management to help reduce costs. Id. at 110. The memorandum indicated that "[e]ligible Woods' personnel [could] elect to retire early with additional vesting rights only during a 'window period' beginning September 18, 1985 and ending October 31, 1985." Id. The memorandum further indicated management was "working on and w[ould] finalize the details of a program which w[ould] provide an incentive to a wider group of people who m[ight] voluntarily elect to retire early with higher vesting rights," and "[t]he details w[ould] be announced" the following week. Id.
Within a week, Woods issued at least two memoranda outlining the details of the voluntary early retirement subsidy. Under what Woods termed a "Rule of 70" qualification, any employee whose age and years of service plus five years equaled 70 or greater was eligible to take advantage of the subsidy.1 Eligible employees expressed reluctance to participate in the voluntary early retirement subsidy because of concern about the handling of post-retirement insurance benefits.
On October 3, 1985, Woods sent letters to all employees eligible for the proposed Rule of 70 early retirement subsidy, including plaintiffs.2 The letters stated:
For informational purposes only, this letter serves to advise you and your spouse of insurance entitlements which you would be eligible to receive should you voluntarily elect to retire during the window period under the Rule of 70 plan (the "Plan").
First, the Plan provides that you and your eligible dependents would be entitled to receive health care under our current group hospitalization plan with Massachusetts Mutual, fully paid for at Woods Petroleum Corporation's expense until the time of your death. At that time, the hospitalization insurance would continue in full force for one year from the anniversary date of the retiree's death for the retiree's spouse at no cost to your spouse. However, within the year period from the date of the retiree's death, should the spouse remarry, all coverage would cease immediately. After the year passes, the spouse may elect to convert to a private plan with Massachusetts Mutual with the cost being borne 100% by the spouse. During your lifetime, you would simply submit your claims for reimbursement to the Company (via the Personnel Department) as you do now. Once converted to a private plan, your premiums and claims would be handled direct with the insurance carrier instead of Woods Petroleum Corporation.
Secondly, you would be allowed to continue participation in the Group Dental Plan at company expense with the same procedure for claim reimbursement as indicated above. Once you are deceased, however, there would be no further benefits or automatic rights of conversion to a private plan for your dependents in the Dental Plan.
Third, as a part of our Group Plan coverage, you would also be covered for $10,000 life insurance on you and $5,000 on your spouse with Security Connecticut, with the premiums for these coverages also paid by the Company.
Something that you do need to keep in mind, once you become age 65, you would need to submit your claims first to Medicare, as it would then become the primary carrier. You would then submit any amounts not paid by Medicare to Massachusetts Mutual as the secondary carrier. (Be sure that you apply for Medicare upon turning age 65.)
If there is anything else that we can do to assist you with your pre-retirement planning, do not hesitate to call upon us.
Id. at 116-17. Based upon the representations in the October 3 letters, plaintiffs Deboard, Wood, and Kistler voluntarily retired from the company effective October 31, 1985. These plaintiffs and their spouses subsequently received medical, dental, and life insurance benefits, at company expense, through July 1995.
On July 14, 1986, Woods distributed a memo to employees and retirees outlining various modifications to the health, life, and dental insurance programs. Id. at 1326. In particular, the memo stated employees would "be required to contribute to the premium payments for dependent coverage only, at a rate of $20.00 per month beginning August 1, 1986." Id. On July 18, 1986, Woods distributed a memo to all retirees stating, in pertinent part, as follows:
The correspondence you received last week describing the changes to our group health, life, and dental plans was for informational purposes to keep you appraised (sic) of the changes that will be impacting on you as well as our active employees.
The item . . . which described the requirement for employees to begin contributing $20 per month for family coverage is not applicable to our current retirees; but, may affect future retirees.
In the fall of 1986, Woods offered a second voluntary retirement subsidy to those employees who satisfied the "Rule of 70." The second subsidy differed slightly in that no spousal life insurance was offered, and eligible retirees had to pay $20 per month for dependent health care coverage (consistent with the August 1, 1986 changes to the health insurance plan for employees). Plaintiff Van Hoy inquired about the second subsidy and was informed by Woods' personnel director that, with the exception of the two noted differences, the terms and conditions of the subsidy were identical to those described in the October 3, 1985, letters. Plaintiff Van Hoy chose to participate in the second subsidy and retired effective December 31, 1986. Van Hoy and his spouse subsequently received benefits, at company expense (save for the $20 monthly co-pay on Mrs. Van Hoy's medical insurance premiums), through July 1995.
Woods was the plan sponsor until July 31, 1986. Effective August 1, 1986, Sunshine adopted and consolidated medical coverage for itself and its subsidiaries, including Woods, into group policies issued by Massachusetts Mutual Life Insurance Company (which had previously issued group policies to Woods for its Welfare Plan). Thereafter, Sunshine effectively acted as the administrator for all of the plans at issue.
On April 26, 1995, Woods (which had since been renamed Woods Research & Development Corporation), sent letters to plaintiffs and their spouses stating:
This letter is to inform you of...
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