LOCAL 56, UNITED FOOD v. Campbell Soup Co.

• Decision Date: 31 August 1995
• Docket Number: Master Docket Civ. No. 93-MC-276 (SSB).
• Citation: 898 F. Supp. 1118
• Parties: LOCAL 56, UNITED FOOD AND COMMERCIAL WORKERS UNION, et al., Plaintiffs, v. CAMPBELL SOUP COMPANY, et al., Defendants.
• Court: U.S. District Court — District of New Jersey

898 F. Supp. 1118

LOCAL 56, UNITED FOOD AND COMMERCIAL WORKERS UNION, et al., Plaintiffs, v. CAMPBELL SOUP COMPANY, et al., Defendants.

Master Docket Civ. No. 93-MC-276 (SSB).

United States District Court, D. New Jersey.

August 31, 1995.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Theodore M. Lieverman, Robert F. O'Brien, Tomar, Simonoff, Adourian & O'Brien, Haddonfield, NJ, Alan Sandals, Berger & Montague, Philadelphia, PA, Ted Iorio, Brenda Meyer, Kalniz, Iorio & Feldstein, Toledo, OH, Joseph D. Shein, Philadelphia, PA, Sujeet K. Mohanty, Joseph D. Shein, P.C., Haddonfield, NJ, Renee L. Bowser, UFCW International Union, AFL-CIO & CLC, Washington, DC, for plaintiffs.

George G. O'Brien, Dechert Price & Rhoads, Princeton Pike Corporate Center, Princeton, NJ, Mary A. McLaughlin, Dechert, Price & Rhoads, Philadelphia, PA, for defendants.

BROTMAN, District Judge:

This class action arises out of Defendant Campbell Soup Company's ("Defendant Company")¹ unilateral reduction of health insurance benefits provided to retirees under the Company's medical plan. The court has jurisdiction pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 1132(e). Presently before the Court is Defendant Company's partial motion for summary judgment. For the reasons set forth below, the Court will grant the motion in part and deny it in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Benefit Plan: 1965—1985

Defendant Company first determined it would provide retirees with medical benefits in 1964. Historically, retirees received health insurance coverage at no cost and could purchase additional coverage at a modest cost for retirees' spouses and dependents. To provide such a retiree medical benefit package, the Company purchased a series of insurance policies from Provident Life and Accident Insurance Company ("Provident"). These policies, reflecting the terms of the retiree health benefit program, were in effect from approximately 1965 to August 1975.

Different Provident policies governed different Company locations since local unions would negotiate separate collective bargaining agreements with the Company on behalf of local union members. While different Provident policies may have been in effect, both parties agree that the substance of the medical insurance benefit was the same. Similarly, the parties concur that the Company has consistently presented unions with the option to participate in the single nationwide benefit program. Def.'s Brf. at 10, n. 7. Consequently, the terms of the benefits provided through the Provident policies did not alter according to location or a retiree's former employee class (i.e. salaried, non-union hourly or union hourly).

The Provident insurance policies outlined the terms of the retirees' benefit plans and included language suggesting when such coverage might terminate. At least three of these Provident Group Policy documents contained the following clause:

The insurance with respect to all Employees insured under this policy shall automatically terminate when the policy is terminated by the Group Policyholder or the Insurance Co. as provided under the `Termination of Group Policy' in Section V.

See Provident Group Policy No. 6376-1, 1970-1984, Ex. 1 to Mather Aff.; Provident Group Policy No. 6376-28, 1971-85, Ex. 2 to Mather Aff.; Provident Group Policy No. 6724-2, 1972-85, Ex. 3 to Mather Aff.

In 1970, the Company distributed the first summary plan document ("SPD") to its retired employees, entitled "Campbell's Group Insurance Program for Retired Employees." The booklet contained a question and answer section including the following statements:

Question When does my insurance terminate?

Answer Your insurance under the Plan will terminate immediately if the group policies are cancelled.

Mather Aff., Ex. 7. The SPD also contained what is commonly referred to as a reservation of rights clause as follows:

NOTE

This booklet is intended as an outline of employee benefits for eligible retired employees of Campbell Soup Company and its domestic subsidiaries who, at the time of approved retirement, were covered by employee benefit plans as salaried employees or non-union hourly employees and who continue in good standing with the Company. This booklet should not be interpreted as a contract or a complete statement of the plans. The complete details of the plans are contained in contracts between Campbell Soup Company and hospital plans and insurance companies. Although it is hoped that their employee benefit plans will be permanent, the Company necessarily reserves the right to change, modify or discontinue them at any time without notice.

Id. By its terms, the SPD provided notice to retirees that the SPD was a summary and not a full exposition of the terms of the plan. Further, and more importantly, the SPD included explicit reservation of rights language within the Note reproduced above. While the Company issued the SPD referenced above to non-union employees, the Company avers that every SPD issued to union or non-union employees prior to 1974 as well as SPDs issued to union employees at the Napoleon, Ohio plant (covering the period 6/76 to 8/81), at the Paris, Texas plant (covering the period 10/76 to 8/81), at three Nebraska plants (covering the period 10/78 to 8/81), and at the Worthington, Minnesota plant (covering the period 10/78 to 8/81) contained a similar explicit reservation of right to "change, modify or discontinue" the plan "at any time without notice." Def.'s Reply Brf. at 9.

Plaintiffs have not pointed to any language contained in the Provident Policies or the 1971 SPD that speaks of either a "vested" or "lifetime" benefit. Pls.' Opp.Brf. at 41. Having reviewed all of the early pre-1985 documents referenced in counsels' submission, the Court similarly has not found any such terms. Plaintiffs appear to rely solely on a provision whereby a spouse or dependent may continue his or her coverage after a retiree's death to support its assertion that the early plan documents provided for vested lifetime benefits.

In 1981, the Company distributed a new SPD to salaried, non-union hourly and union hourly employees. The Company avers that this SPD was in effect from 1981 until 1991. The 1981 SPD included the same termination language ("Your insurance under the Plan will terminate immediately if the group policies are cancelled") as the 1970 SPD and the same Note language as the 1970 SPD, quoted above, with one exception. The last line of the Note reproduced above from the 1970 SPD, the express reservation of right language, is missing in the 1981 SPD. The 1981 SPD also contains language detailing what coverage is available after a retiree's death: "If a retired employee dies while insured under this program, the spouse may continue the dependent coverage by paying the monthly cost while in a widowed status." Mather Aff., Ex. 7. Relying on this language, Plaintiffs assert the SPD represented that lifetime benefits would be available to retirees.

B. The Benefit Plan: 1985-1987

In August, 1985, the Company switched to a self-funded plan, cancelling its insurance policies with Provident. Pls.' Opp.Brf. at 6. With the Company funding the program, it retained Provident to administer the medical benefits plan. Following this change from the Provident group insurance coverage to the self-funded plan, the parties concur that the retiree medical benefit program did not terminate and, apparently, the scope of available benefits was not altered. Plaintiffs assert, and Defendant Company does not dispute, that it did not notify retirees that the Provident insurance policies had been terminated or that a new administrative agreement had been entered into by the Company and Provident. Pls.' Opp.Brf. at 7.

Defendant contends that the significant plan document during this period was the "Administrative Services Agreement" ("ASA") existing between the Company and Provident, whereby the scope of Provident's responsibility was outlined. Def.'s Rply.Brf. at 35. The ASA provided that Provident's administrative fee could be increased to reflect higher administrative expenses.² Id. at 8. While the ASA characterized the relationship between the Company and Provident as plan administrator and provided that it could be terminated upon written notice, the document did not further describe the rights of the Company or Provident vis-a-vis the program beneficiaries namely retirees. In fact, under the ASA, the Company was responsible for providing a "detailed description of the Benefit Program" which actually stated the terms of available plan benefits absent from the rather brief ASA. Mather Aff., Ex. 4. The 1981 SPD was attached to the ASA as Exhibit A, describing the retiree medical benefits provided under the plan.³ Def.'s Brf. at 8. The SPD's provisions, as outlined supra, remained in force until 1991.

C. The Benefits Plan: 1987-1991

In 1987, the Company reconstructed the manner in which it organized and funded the retirees medical benefits plan. Whereas it had formerly used Provident to administer the plan, the Company established a trust fund to finance the payment of medical benefits. A document entitled the Voluntary Employee Benefit Plan Trust Agreement created the trust and an association, the Voluntary Employee Benefit Association, to govern the fund.

The formal contours of the medical benefits program itself were set forth in a separate plan document known as the Campbell Soup Company Voluntary Employee Benefit Plan (the "Plan"). The VEBA plan document expressly incorporated the existing terms of the retirees medical plan, stating

Whereas, Campbell Soup Company ... presently maintains a welfare plan known as Campbell's Group Insurance Program for Retired Employees, ... and whereas, the Company now desires to provide such medical benefits for eligible retirees and dependents under the Campbell Soup Company Voluntary Employee Benefit Plan (the "Plan") ... and

...