Jensen v. Sipco, Inc.

Decision Date06 August 1993
Docket NumberNo. C 89-4068.,C 89-4068.
Citation867 F. Supp. 1384
CourtU.S. District Court — Northern District of West Virginia
PartiesFred G. JENSEN, James J. Monahan, Walter C. Clark, and Richard F. Kriegler, on behalf of themselves and all others similarly situated, Plaintiffs, v. SIPCO, INC. and Monfort, Inc., Defendants.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

James C. Hanks, Steven C. Kohl and Percy L. Nymann, Sioux City, IA, for plaintiff.

Richard J. Barry, Spencer, IA, William H. Bruckner, Houston, TX, Roger J. Miller and Randal M. Limbeck, Omaha, NE, for defendant.

FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER

DONALD E. O'BRIEN, Senior District Judge.

This matter comes before the court following a trial to the bench. Four retirees filed a class action under the Employee Retirement Income Security Act of 1974 as amended, 29 U.S.C. § 1001, et seq. (ERISA), against two corporate defendants. The four plaintiffs, retirees, seek unchanged lifetime medical benefits they claim the class was promised.

This case revolves around a single issue: Does ERISA permit an employer to revise summary plan descriptions for welfare plans by adding reservation-of-rights language so as to conform summary plan description language with plan document language? After considering relevant case law, the briefs of the parties, the witnesses' testimony, and other relevant evidence, the court finds that an employer is permitted to do so under ERISA; however, an employer may not change benefits to those class members who have already retired, relying on the language found in their Summary Plan Description at the time of their retirement.

FINDINGS OF FACT1

1. This action was filed on July 21, 1989, under the ERISA, 29 U.S.C. § 1132(a)(1)(B), to recover benefits due, to enforce rights, and to clarify rights to present and future benefits under the terms of an employee welfare benefit plan.

2. This court has jurisdiction pursuant to 29 U.S.C. § 1132(e).

3. Venue for this action is proper in the Northern District of Iowa.

4. A copy of the complaint herein has been served on the Secretary of Labor and the Secretary of the Treasury pursuant to 29 U.S.C. § 1132(b).

5. Pursuant to this court's Order of December 11, 1989, this action is certified as a class action under Federal Rule of Civil Procedure 23(b)(2).

6. Pursuant to this court's class certification order, the class represented by named plaintiffs Fred G. Jensen, James J. Monahan, Walter C. Clark, and Richard F. Kriegler is certified as consisting of all retired salaried employees of SIPCO, Inc., formerly known as Swift Independent Packing Company, who retired on or before March 1, 1989 and their eligible dependents.

7. The class contains approximately 800 people.

8. Named plaintiffs are retirees who worked as salaried employees at several of defendant SIPCO, Inc.'s plants, offices, and other locations.

9. SIPCO is also known as Swift Independent Packing Company. A reference to one name is a reference to the other name.

10. Plaintiff Fred G. Jensen is a resident of Weld County, Colorado. Mr. Jensen was employed by defendant SIPCO, Inc. for approximately 39 years until his July 1, 1987 retirement. Jensen was controller of the Glenwood, Iowa plant at the time of its August 1, 1985 closing, and worked at several other SIPCO plants, including the Sioux City, Iowa plant.

11. Plaintiff James J. Monahan is a resident of Marshall County, Iowa. Mr. Monahan was employed by SIPCO and its predecessors for over 36 years. At the time of his retirement in early 1989, he was controller of SIPCO's Marshalltown, Iowa plant.

12. Plaintiff Walter Clark is a resident of Polk County, Iowa. Mr. Clark was employed by SIPCO and its predecessors for 40 years. Just prior to the time of his retirement, Mr. Clark was controller of SIPCO's Des Moines, Iowa plant.

13. Plaintiff Richard F. Kriegler is a resident of Sioux City, Woodbury County, Iowa. Mr. Kriegler was employed by SIPCO for 33 years until his retirement in September of 1985. At the time of his retirement, he was employed as the plant superintendent at SIPCO's Sioux City, Iowa plant. Mr. Kriegler resides within the Northern District of Iowa.

14. At all times relevant to this action, defendants have done business within the state of Iowa. The United States District Court for the Northern District of Iowa has jurisdiction of the subject matter and the parties.

15. Prior to the filing of the Complaint herein, defendant SIPCO established the Swift Independent Packing Company (now known as SIPCO) Medical Plan for Salaried Pensioners. Currently such benefits are provided through three plans:

1) "SIPCO, Inc. Medical Plan — Plan 1006" — for salaried pensioners retiring on or after January 1, 1979 (Plan 1006).
2) "SIPCO, Inc. Medical Plan — Plan 1017" — for salaried pensioners retiring on or after January 1, 1987 (Plan 1017).
3. "SIPCO, Inc. Medical Plan — Plan 1018" — for salaried pensioners retiring on or after January 1, 1989 (Plan 1018).

16. Defendant SIPCO has created and currently maintains a trust, the Swift Independent Packing Company Medical Benefit for Pensioners Trust, to fund medical benefit plans for both non-salaried and salaried retirees.

17. Class members are persons presently receiving pension and other retirement benefits, including health insurance benefits under either Plan 1016, Plan 1017, or Plan 1018 (the Plans). As such, plaintiff class members are "participants" and "beneficiaries" under the Plans within the meaning of 29 U.S.C. §§ 1002(7) and 1002(8). The health insurance benefits which are the subject of this lawsuit and provided for in Plans 1006, 1017, and 1018 are provided pursuant to an "Employee Benefit Plan" within the meaning of ERISA, 29 U.S.C. §§ 1002(1) and 1002(3).

18. Defendant SIPCO, Inc. (SIPCO) is an employer within the meaning of 29 U.S.C. § 1002(5) of ERISA and operated a meat-packing plant within the Northern District of Iowa at pertinent times involved herein.

19. Defendant Monfort, Inc. (Monfort) is an employer within the meaning of 29 U.S.C. § 1002(5) of ERISA and operated a meat-packing plant within the Northern District of Iowa at pertinent times involved herein.

20. Defendant SIPCO is a "sponsor" and "administrator" and "fiduciary" of the three plans at issue pursuant to 29 U.S.C. §§ 1002(16) and 1002(21)(A).

21. Defendant Monfort is a "sponsor" and "administrator" and "fiduciary" of the three plans at issue pursuant to 29 U.S.C. §§ 1002(16) and 1002(21)(A).

22. In an August 10, 1988 letter, Ken Monfort, an employee and representative of both defendants, announced that the SIPCO retiree health care plan would be abolished for those salaried employees who did not retire prior to February 27, 1989. This date was later changed to March 1, 1989 in a November 21, 1988 memorandum. See Stipulated Facts, Pretrial Order ¶ I.T.

23. Prior to January of 1989, none of the Summary Plan Descriptions ("SPD") for the three plans at issue contained any reservation of any right to terminate, discontinue, alter, modify, or change the plans.

24. Prior to January of 1989, the SPDs contained the following language dealing with termination of coverage:

TERMINATION OF COVERAGE
Children Who Marry or Reach Age 19 —
All coverage for children ceases on date of marriage or age 19, whichever occurs first.
Divorce of a Spouse —
All coverage for the spouse ceases on the date of the divorce.
Death of a Pensioner —
Coverage for dependents continues for a period of 90 days following date of death and then ceases.

No other language regarding the right to terminate, discontinue, alter, modify, or change the Plans appeared in those SPDs.

25. Around January 1989, plaintiff class members who were receiving health care benefits pursuant to Plans 1006 and 1017 received new SPDs for both plans. Among other changes, for the first time the following language appeared on page 1 of the new SPDs for both plans:

SIPCO, Inc. reserves the right to terminate, discontinue, alter, modify, or change this Plan or any provision of this Plan at any time.

26. The new SPDs for Plans 1006 and 1017 also added language stating that when provisions of the SPD conflict with those of the Plan and Trust documents, the Plan and Trust documents are controlling.

27. Along with a letter dated April 21, 1989, plaintiff class members who had retired on or after January 1, 1989 and their eligible dependents received a new SPD concerning an entirely new plan entitled "SIPCO, Inc. Medical Plan — Plan 1018" (Plan 1018). This new SPD also contained the "right to terminate or modify" and "plan controls" language first appearing in the new 1989 versions of the SPDs issued for Plans 1006 and 1017.

28. The SPD Plan 1017 also contained benefit changes when compared with the SPD for Plan 1017 in effect prior to January 1, 1989.

29. Prior to May 11, 1990, SIPCO had advised those persons who became surviving spouses of retirees that they had health benefits for their lifetime or until their remarriage. During that week, the fact that such letters were being sent out came to the attention of defendants' counsel. Thereafter, the sending of such letters was terminated, and new letters were sent to approximately 50 surviving spouses. These new letters did not advise the surviving spouse that the previous letters they had received were in error with regard to the continuation or duration of their health benefits.2

30. In April 1981, Swift Independent Corporation, also known as SIPCO, Inc., was spun off from Esmark, Inc. when approximately 65% of SIPCO's shares were sold to the public.

31. After SIPCO, Inc. was formed, it established Plan 1006 for its salaried retirees. Plan 1006 was the same plan that Esmark had in effect for salaried retirees of Swift & Company. On April 1, 1981, the date of the spin-off of SIPCO from Esmark, Esmark established a trust to fund salaried pensioners accrued health care liabilities under Plan 1006. On August 12, 1981, SIPCO established...

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