Dewhurst v. Century Aluminum Co.

• Citation: 731 F.Supp.2d 506
• Decision Date: 24 June 2010
• Docket Number: Civil Action No. 2:09-1546
• Parties: Harold DEWHURST and David Bryan, on behalf of themselves and all other persons similarly situated, and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Plaintiffs v. CENTURY ALUMINUM COMPANY, Century Aluminum Of West Virginia, Inc., Century Aluminum Master Welfare Benefit Plan, Does 1 Through 20, Defendants.
• Court: U.S. District Court — Southern District of West Virginia

731 F.Supp.2d 506

Harold DEWHURST and David Bryan, on behalf of themselves and all other persons similarly situated, and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Plaintiffs

v.CENTURY ALUMINUM COMPANY, Century Aluminum Of West Virginia, Inc., Century Aluminum Master Welfare Benefit Plan, Does 1 Through 20, Defendants.

Civil Action No. 2:09-1546.

United States District Court, S.D. West Virginia.

June 24, 2010.

Bradley J. Pyles, Pyles Haviland Turner & Smith, Logan, WV, William T. Payne, John Stember, Pamina G. Ewing, Stephen M. Pincus, Stember Feinstein Doyle Payne & Cordes, Joseph P. Stuligross, United Steel Workers of America, Pittsburgh, PA, Ricklin Brown, Bowles Rice McDavid Graff & Love, Charleston, WV, Sarah B. McClure, Jones Day, Washington, DC, Stanley Weiner, Jones Day, Cleveland, OH, for Plaintiffs.

Ricklin Brown, Bowles Rice McDavid Graff & Love, Stanley Weiner, Jones Day, Cleveland, OH, Sarah B. McClure, Jones Day, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

JOHN T. COPENHAVER, JR., District Judge.

Pending is plaintiffs' motion for preliminary injunction seeking a continuation of retiree healthcare benefits with respect to retirees who retired prior to the current June 1, 2006, collective bargaining agreement ("CBA"). On February 18, 2010, the court conducted the preliminary injunction hearing.

I.

A. Introduction

On November 13, 2009, plaintiffs, who are retired employees from a facility operated by one or more of the defendants, instituted this action in the United States District Court for the Southern District of Ohio. On December 23, 2009, the action was transferred here. The court has certified a class today, which consists of approximately 437 retirees, along with the benefit-eligible spouses and dependents of deceased retirees. The two-count class action complaint alleges that Century's actions contravene the applicable CBAs in violation of section 301 of the Labor Management Relations Act, 29 U.S.C. § 185, and violate sections 502(a)(1)(B) and (a)(3) of the Employee Retirement Income Security Act, 29 U.S.C. § 1132(a)(1)(B) and (a)(3).

Century operates aluminum plants in Ravenswood, West Virginia ("facility"), Hawesville, Kentucky, Mt. Holly, South Carolina, and Iceland. In 1989, Ravenswood Aluminum Corporation, in an asset sale, purchased the primary aluminum smelting and related operations of the facility from Kaiser Aluminum Corporation ("Kaiser"). Up to that point, Kaiser and the Union had a 30-year bargaining history touching on the matters now in controversy.

Ravenswood Aluminum Corporation assumed the then-current CBA between the Union and Kaiser, which had been executed on April 4, 1988.¹ In 1997, the Ravenswood plant was renamed Century Aluminum of West Virginia, Inc.

The retirees were represented by the Union during their employment by Century and its predecessors. The Union negotiated a series of successive CBAs with Century and its predecessors governing the terms and conditions of hourly employment. One component of these successive CBAs was the provision of retiree healthcare benefits, which appear to have been contemplated in the successive CBAs agreed upon since 1959. The primary question for resolution is whether the current 2006 CBA, which became effective June 1, 2006, and has been extended to August 31, 2010, provides customary healthcare benefits to approximately 437 retirees who retired prior to June 1, 2006, as well as their spouses and other dependents. They apparently received such benefits until January 1, 2010.

B. The Termination of Retiree Healthcare Benefits

In its response brief, Century details the financial challenges it faced beginning in 2007 based upon the volatility in aluminum prices. Rising healthcare costs, Century's inability to sell aluminum at profitable prices, and other factors, contributed to cash operating losses of $34,000,000 in 2007 and $9,000,000 in 2008. After curtailing all operations at the facility, Century continued to suffer negative cash flow. One component was approximately $14,250,000 in healthcare benefits provided to active, laid-off, and retired employees. Century projected that the healthcare benefits for retirees would total $3.5 million for 2009.

On October 19, 2009, Century sent letters to those retirees who left Century prior to the effective date of the 2006 CBA, stating its intention to modify or terminate their healthcare benefits effective January 1, 2010. Century's decision affected those former employees who retired after February 6, 1989, and before June 1, 2006.² The letter provided that allretiree healthcare benefits would terminate for those 65 or older with a retirement date in the aforementioned time range. For those retirees in that same time range who had not yet reached 65 years of age, a system of monthly premiums, deductibles, and increased co-payments was instituted. The letter also claimed that Century possessed an unqualified right to unilaterally change or terminate health coverages at any time. Plaintiffs set forth in their briefing at great length the significant, negative impact this newly imposed financial burden will visit upon them.

In sum, plaintiffs assert that the healthcare benefits the retirees are receiving are vested, last a lifetime, and are not subject to termination or modification by Century. Plaintiffs seek a preliminary injunction during the pendency of this action directing Century to fully reinstate the modified and/or terminated retiree healthcare benefits.

C. Relevant Provisions of the CBAs

From 1959 through the present day, successive CBAs covering the facility have contained, or incorporated by reference, language obligating Century or its predecessors to provide some form of healthcare benefits at no cost to the retirees. The 1959, 1962, 1963, and 1965 CBAs include the healthcare benefits negotiated for active and retired employees.³ The CBAs entered into thereafter reference other sources, such as Group Insurance Plan booklets and Summary Plan Descriptions (collectively "SPDs") incorporated into the CBAs by reference.⁴ The court summarizes the contents of the CBAs and SPDs from 1959 through 1985.

Article 15 of the 1959 CBA provides for retiree healthcare benefits up to a stated annual maximum. The retiree's spouse was subject to termination of benefits upon the retiree's death or upon reaching the same monetary maximum, whichever first occurred. Notably, Article 21 of the 1959 CBA, which expired July 31, 1962, provided additionally as follows: "[T]he terms and conditions of this Agreement, and each of them, shall continue in effect until July 31, 1962...." (1959 CBA at 75). Essentially similar provisions are found in the 1962, 1963 and 1965 CBAs, together with a 1968 extension, that cover the years down to June 1, 1971.

In 1971, the parties began using the combination of a CBA and SPD during this bargaining cycle. The 1971 SPD states that it is part of the 1971 CBA. Upon the death of the retiree, his surviving spouse and dependent children continued to have coverage for six months. The 1971 SPD specifically provided that its benefits "remain[ed] in effect for the term of the 1971 ... [CBA]." (1971 SPD at 33).

The 1981 SPD contained a similar provision ⁵, as did the 1985 SPD which continuedto provide retiree healthcare benefits, with the same proviso concerning the time limit of the coverage: "such benefits shall remain in effect for the term of the 1985 Labor Agreement." (1985 SPD at 68).

Though the parties have been unable to locate the 1988 SPD, the 1988 CBA provides at Article 15.A.1 as follows:

The Group Insurance Benefits shall be set forth for each plant in booklets entitled Employees' Group Insurance Program and Retired Employees' Group Insurance Program, and such booklets are incorporated herein and made a part of this 1988 Labor Agreement by such reference.

(1988 CBA at 116). A specific termination provision is found at Article 15.A.2:

It is understood that this Agreement with respect to insurance benefits is an agreement on the basis of benefits and that the benefits shall become effective on May 25, 1988, except as otherwise provided in the applicable booklet, and further that such benefits shall remain in effect for the term of this 1988 Labor Agreement.

( Id. at 116).

As noted, Ravenswood Aluminum Corporation assumed the 1988 CBA between the Union and Kaiser, which was set to expire on October 31, 1990. On February 2, 1989, Ravenswood Aluminum Corporation and the Union entered into the "RAC-USWA AGREEMENT," which included the following terms:

RAC shall assume any and all current labor agreements, both written and oral, including pension assets and related liabilities, and current local agreements, which currently exist between Kaiser and USWA....

....

RAC agrees to pay retiree medical and life insurance benefits for all eligible employees (including Employed Hourly Retirees) who retire from the employment rolls of RAC.

( Id. ¶ 4).

Ravenswood Aluminum Corporation and the Union thereafter negotiated a new CBA, which became effective on June 12, 1992.⁶ Articles 15.A.1 and 15.A.2 are materially identical to those quoted above from the 1988 CBA, except for the dates used, which reflect that the 1992 CBA terminates no earlier than May 31, 1995. The 1992 SPD, referenced in and incorporated into the 1992 CBA, continues to limit retirees to the specific benefit plans under which they retire.

This booklet describes a Plan of Life Insurance for retired employees and Health Care Plans and Mail Service Prescription Drug Benefits for retired employees and their dependents and pensioned surviving spouses of employees. The Plan is applicable to retirees and surviving spouses who retired or commenced receiving a surviving spouse pension from the Ravenswood Aluminum Corporation Hourly Employees' Pension Plan on or after June 12, 1992. Employees who retired prior to June 12, 1992, are covered by

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