Gregg v. Transportation Workers of America Intern.
| Decision Date | 11 September 2003 |
| Docket Number | No. 01-4159.,01-4159. |
| Citation | 343 F.3d 833 |
| Parties | Lester GREGG, Michael Humeston, Frank Jaeger, Alfred Klinger, Emilio Procelli, Robert Richards, Thomas Sack, Paul Winkler and Shirley Winkler, Plaintiffs-Appellants, v. TRANSPORTATION WORKERS OF AMERICA INTERNATIONAL, Sonny Hall and John Orlando, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Michael F. Dadisman, Independence, Ohio, for Plaintiffs-Appellants.
Randy D. Rinicella (argued and briefed), Roetzel & Andress, Cleveland, Ohio, for Defendants-Appellees.
ON BRIEF:
Michael F. Dadisman, Independence, Ohio, for Appellants.
Randy D. Rinicella, ROETZEL & ANDRESS, for Appellees.
Before: KEITH, BATCHELDER, and CLAY, Circuit Judges.
CLAY, J., delivered the opinion of the court, in which KEITH, J., joined. BATCHELDER, J. (pp. 848-849), delivered a separate opinion concurring in the result only.
Plaintiffs Lester Gregg, Michael Humeston, Frank Jaeger, Alfred Klinger, Emilio Procelli, Thomas Sack, Robert Richards, Paul Winkler and Shirley Winkler appeal an October 2, 2001 order granting Defendants Transportation Workers of America International, Sonny Hall, and John Orlando summary judgment in Plaintiffs' action alleging breach of fiduciary duty brought pursuant to the Employee Retirement Income Securities Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) and (e)(1). For the reasons set forth below, we REVERSE the district court.
With the exception of Shirley Winkler, Paul Winkler's wife, Plaintiffs are or were members of the Defendant Transportation Workers Union of America ("TWU"), Air Transport Division. Plaintiff Sack lives in North Carolina while the others reside in Ohio. Each obtained group term life insurance under a master policy issued by Transamerica Assurance Company.1 Their policies became effective January 1, 1996.
TWU is an international union with approximately 100,000 members, including, inter alia, employees of American Airlines. Defendant Hall is the President of TWU and held that post at all times relevant to this action. Defendant Orlando is the Vice President of TWU's Air Transport Division and also held this post at all times relevant to this action. Both Hall and Orlando participated in acquiring the policies on the behalf of TWU's members.
In 1995, American Airlines announced that it would replace the prior life insurance policy it provided for its employees, including members of TWU's Air Transport Division, with an age-rated group term life insurance policy. The new plan would cause premiums to significantly increase, particularly for older workers. As a result, union members began contacting their local presidents to express concern about the high cost of American Airlines' new insurance plan. Responding to these concerns, TWU's Air Transport Division began to investigate alternative insurance options.
Hall asked TWU's insurance broker, Future Planning Associates ("FPA") to meet with the Union's local presidents to determine if more affordable insurance alternatives existed. FPA received compensation from insurance companies for facilitating the sale of policies. FPA interviewed at least two companies. Additionally, TWU retained an independent actuary, Lawrence Silkes, to review and evaluate the various insurance proposals. TWU also purports to have retained Christian Wozny, an insurance expert holding a Chartered Life Underwriters ("CLU") designation, to review different plans.2 FPA and the actuary determined that the Plan offered by Transamerica Assurance Corporation represented the best option. Along with TWU's local presidents, FPA and Silkes negotiated the Plan's precise terms with Transamerica.
After reaching an agreement with Transamerica, FPA worked with TWU's local presidents to disseminate the Plan's details to the union membership. This effort included posting information at airports and mailing material to individual members. As one of these bulletins made clear, in large print, the policy offered "[a] flat-rate premium that will not increase with age." (J.A. at 516.) Another contained the exuberant headline, "NO INCREASES DUE TO AGE." (J.A. at 517.) The union documents also included a question-and-answer form and other correspondence explaining the plan's features. The question-and-answer sheet contained the following information:
. . . .
. . . .
(J.A. at 521-23) (emphasis in original).
Defendants also made in-person presentations to union members, including Plaintiffs. At one of these information sessions, several Plaintiffs asked questions about possible rate increases and the ability to keep their coverage when retired. TWU's representatives and FPA members told the audience that the current premium would not increase for three years and that any eventual increase would be minimal. As Plaintiff Paul Winkler testified in his deposition, the union claimed that "if the cost went up at all, it would only be a penny or two, and that wouldn't be for at least three years." (J.A. at 533.) Plaintiff Gregg gave similar testimony:
. . . .
(J.A. at 433.) The presenters also informed Plaintiffs that coverage would not decrease nor would rates increase due to the age of the policyholder, and that coverage would continue into retirement.
TWU and FPA made policy applications available at these meetings. Members enrolled using a standard enrollment form. Every union member who chose to enroll received a document titled "Group Term Life Insurance Certificate." The Certificate described the insured's right to review the Group Master Policy, although Transamerica retained its copy in New York City and TWU kept the union's copy at its Dallas offices. Defendants claim that each Certificate "expressly described... the conditions under which the Plan could be terminated." (Defendants' Brief at 6.) Defendants, however, do not cite to a specific page in the record. (See id.) Under the heading "WHEN INSURANCE STOPS," the Certificate explains:
Your insurance stops at the earliest of: (1) the date of your death; (2) 31 days after a premium due date, if the premiums for your insurance have not been paid; (3) the date your membership with the Organization ends; (4) the date the Group Master Policy is amended so that your insurance stops; (5) the date the Group Master Policy stops; or (6) the date you ask, in writing, for it to stop.
(J.A. at 359) (emphasis added). The Certificate does not explain the circumstances that could cause TWU and Transamerica to amend the Group Master Policy, nor does the Certificate describe when (or how) the Group Master Policy could stop. Following their union's advice, Plaintiffs enrolled.
Actually, Transamerica could terminate the policy or modify its terms after a three-year period. What Defendants Hall and Orlando knew is unclear. In his deposition, Orlando generally denied any inconsistency between the Group Master Policy's terms and what TWU informed its membership. Hall evidently never read the Group Master Policy:
(J.A. at 590.) Defendant Hall also did not know that Transamerica could unilaterally terminate the policy on sixty days notice after January 1, 1999, or that Transamerica could unilaterally terminate the Master Policy if it covered fewer than fifty insureds:
COUNSEL: None of these four documents [distributed to the membership] mention the fact that there has to be at least fifty people in this plan?
. . . .
. . . .
(J.A. at 587-88.) Defendant Hall distributed information to union members based on what FPA broker John Pescitelli told him. He did not verify the information Pescitelli provided with...
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