Ensley v. Ford Motor Co.
| Decision Date | 10 July 2007 |
| Docket Number | Case No. 06-12845. |
| Parties | Mark ENSLEY, et al., Plaintiff(s), v. FORD MOTOR COMPANY, et al., Defendant(s). |
| Court | U.S. District Court — Eastern District of Michigan |
Cary S. McGehee, Michael L. Pitt, Peggy G. Pitt, Pitt, McGehee, Robert W. Palmer, Pitt, Dowty, Royal Oak, MI, for Plaintiffs.
Francis R. Ortiz, K. Scott Hamilton, Dickinson Wright, Jennifer L. Neumann, John F. Birmingham, Jr., Foley & Lardner, Detroit, MI, for Defendants.
This matter is before the Court on Defendant Ford Motor Company's Motion to Dismiss and Defendant Visteon Corporation's Motion to Dismiss. The matter has been fully briefed. Oral argument was heard on January 10, 2007. For the reasons stated below, Defendants' motions are GRANTED IN PART and DENIED IN PART.
Plaintiffs are salaried employees of Defendant Ford Motor Company ("Ford").1 They filed this class action on behalf of themselves and similarly situated employees. They allege that Ford and one of its former subsidiaries, Defendant Visteon Corporation ("Visteon"), engaged in multiple violations of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1101, et seq., which resulted in a loss of certain retirement benefits.
Ford is an automotive manufacturer. Visteon manufactures automotive parts and, prior to June 28, 2000, was a wholly-owned subsidiary of Ford. On June 28, 2000, Ford distributed its entire interest in Visteon to Ford shareholders (hereinafter "the spin-off"). Ford did not retain equity in Visteon; Visteon became an independent, publicly traded corporation.
Certain salaried Ford employees, including Plaintiffs, were transferred to Visteon as a result of the spin-off and became Visteon employees. The transfer was involuntary and mandatory. The affected employees' Ford employment was terminated as of the transfer date—June 28, 2000. However, per Plaintiffs, many employees continued to work at the same plants and perform the same jobs after the spin-off.
Prior to the spin-off, Plaintiffs participated in Ford's Group Retirement Plan ("GRP"). The GRP is a defined benefit pension plan that pays fixed monthly or lump sum retirement pension amounts to eligible Ford employees. The GRP provides a variety of pension benefits, including regular and early retirement pensions and certain supplemental pension allowances. During oral argument, counsel for Plaintiffs clarified that their Complaint only pertains to the "30 and Out" pension supplement. Under the "30 and Out" provision, employees with at least 30 years of credited service who take early retirement are eligible for an additional monthly pension payment until the age of 62.
Two months prior to the spin-off, in April 2000, Ford and Visteon executed an Employee Transition Agreement ("ETA"), which governed the transfer of Ford salaried employees to Visteon. One stated purpose of the ETA was to facilitate the "orderly transition of benefit plans." ETA attached to Complaint as Exh. 1 at ¶ 5.
The ETA categorized Ford salaried employees into three groups—Groups I, II and III. Plaintiffs fell into Group II, which included employees whose combined age and years of continuous Ford service equaled 60 or more as of June 1, 2000, and who would be eligible for normal or early retirement within a certain time after the spin-off. Under the ETA, Ford retained liability for pension benefits which accrued for Group II employees prior to the transfer, but Visteon was required to establish a "substantially comparable" retirement plan—the Visteon Mirror Group Retirement Plan ("VMGRP")—for employee service after the date of the transfer. And, Ford agreed to amend the GRP so that the transferred employees' combined years of service with Ford and Visteon would be used to determine the transferred employees' eligibility for retirement benefits under the GRP; years of service were not to be combined to determine benefit amount. ETA at ¶ 3.01(c)(ii). The benefit amount would be based, in part, on the salary earned at Visteon. Id. Ford and Visteon also agreed to pay a pro-rata share of any early retirement supplement (under the "30 and Out" provision), based on the employee's respective years of service. ETA at ¶ 3.01(d)(i). Ford amended the GRP in accordance with the terms of the ETA in August 2000.
Over three years after the spin-off, in November 2003, Ford says that it amended the GRP again. However, Plaintiffs argue that the amendment was only proposed and never adopted. This amendment provided that any employee hired or re-hired by Ford after January 1, 2004 would be excluded from participating in the GRP. New hires or re-hires would instead participate in a defined contribution pension plan called the Ford Retirement Plan ("FRP").
Two years later in late 2005, Ford agreed to re-acquire 24 of Visteon's North American plants, including the Sterling Heights and Rawsonville plants where Plaintiffs worked. Salaried employees at the affected Visteon plants were forced to accept the transfer of employment; they were terminated by Visteon and hired (or, in the case of Plaintiffs, re-hired) by Ford. Nevertheless, Plaintiffs say that many of the transferees continued to work under the same conditions as before the transfer.
Ford and Visteon entered into another agreement to facilitate the transfer of employees to Ford after the re-acquisition— the Visteon Salaried Employee Transition Agreement ("VSETA"). The VSETA provides that pension benefits which accrue after the employees' transfer to Ford will be provided under the FRP, rather than the GRP. See VSETA attached to Complaint as Exh. 2 at ¶ 3.01(a). Pursuant to the 2003 GRP amendment, the Visteon transferees were effectively treated as new hires or re-hires with regard to the pension plan that would apply to calculate their post-Visteon benefits. Also, like the ETA, the VSETA provides that Group II employees' combined years of service with Ford and Visteon will be used to determine their eligibility for retirement benefits under the FRP and GRP, but not the benefit amount. Id. at 3.01(a)-(b).
In January 2006, Visteon announced that it would no longer pay an early retirement supplement after June 30, 2006. Per Plaintiffs, Visteon's share of the "30 and Out" supplemental pension is not available to salaried employees who retire after July 21, 2006 (although Ford will continue to pay its pro-rata share and will count Visteon service to determine eligibility).
Plaintiffs assert that the spin-off and amendments to the GRP were merely a corporate scheme by Ford and Visteon to allow Ford to avoid paying full retirement benefits to salaried workers. Plaintiffs assert that Visteon was never really independent of Ford; they contend the spin-off was a sham to facilitate Defendants' scheme.
At the time of the 2000 spin-off, Plaintiffs had between 23 and 32 years of service with Ford. The specific benefits Plaintiffs complain were lost because of the spin-off, re-acquisition and 2003 GRP amendment include: 1) their ability to accrue pension benefits under the GRP and VMGRP; 2) Visteon's share of the "30 and Out" supplement, which has an estimated value of over $100,000 for some employees; and 3) their ability to combine Ford and Visteon years of service to calculate the benefit amount.2 Plaintiffs assert they will not receive the same or comparable benefits as similarly situated Ford employees who never transferred to Visteon or who were allowed to retire from Visteon.
Prior to the 2000 spin-off, Plaintiffs claim that Ford made multiple written promises that they would receive the same level of retirement benefits if Visteon became an independent company. However, Plaintiffs do not indicate exactly when the promises were made or by whom.
Plaintiffs also contend that Ford and Visteon concealed the ETA from them (a claim Ford denies) and that they misrepresented the status of Plaintiffs' future retirement benefits. Plaintiffs say that concealment of the ETA shows that Ford and Visteon knew that the promises they made might not be true.
In their Complaint, Plaintiffs request a declaratory judgment and assert multiple claims under ERISA: 1) Count I—declaratory judgment establishing Visteon as a business unit (i.e., alter ego) of Ford; 2) Count II—breach of duty to provide notice; 3) Count III—breach of fiduciary duty to avoid conflicts of interest; 4) Count IV—breach of fiduciary duty not to provide misleading information regarding ERISA rights and benefits; 5) Count V— breach of fiduciary duty to refrain from concealing material information; and 6) Count VI—interference with ERISA rights.
Defendants contend each Count must be dismissed for failure to state a claim. Plaintiffs concede they failed to state claims in Counts IV and V, but oppose dismissal of the other claims.
When reviewing a Rule 12(b)(6) Motion, the trial court "must construe the complaint liberally in the plaintiff's favor and accept as true all factual allegations and permissible inferences therein." Gazette v. City of Pontiac, 41 F.3d 1061, 1064 (6th Cir.1994); see also Miller v. Currie, 50 F.3d 373, 377 (6th Cir.1995). Because a Rule 12(b)(6) motion rests upon the pleadings rather than the evidence, "[i]t is not the function of the court [in ruling on such a motion] to weigh evidence or evaluate the credibility of the witnesses." Miller, 50 F.3d at 377. The court should deny a Rule 12(b)(6) motion "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). See also Gazette, 41 F.3d at 1064; Miller, 50 F.3d at 377. "While this standard is decidedly liberal, it requires more than the bare assertion of legal conclusions." In re DeLorean Motor Co., 991 F.2d 1236, 1240 (...
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