Mamula v. Satralloy, Inc.

Decision Date18 January 1984
Docket NumberNo. C-2-83-0258,C-2-83-0259.,C-2-83-0258
Citation578 F. Supp. 563
PartiesPeter MAMULA, et al., Plaintiffs, v. SATRALLOY, INC., Defendant. George STARLIPER, et al., Plaintiffs, v. SATRALLOY, INC., Defendant.
CourtU.S. District Court — Southern District of Ohio

COPYRIGHT MATERIAL OMITTED

Patrick S. Cassidy and Timothy F. Cogan, Wheeling, W.Va., William T. Payne and Daniel P. McIntyre, Pittsburgh, Pa., for plaintiffs, Peter Mamula, et al.

Mark Stern, New York City, Thomas E. Palmer and R. Dean Jollay, Jr., Columbus, Ohio, for defendant, Satrolloy, Inc.

MEMORANDUM AND ORDER

HOLSCHUH, District Judge.

This case is before the Court on the plaintiffs' motions for a preliminary injunction and to certify a class and defendant's motion to dismiss or, in the alternative, for summary judgment.

On February 9, 1983, the plaintiffs filed the present action against the defendant and moved the Court for a temporary restraining order and preliminary injunction. On February 23, 1983, the defendant responded to the plaintiffs' request for a temporary restraining order by filing a motion to dismiss or, in the alternative, for summary judgment. This Court denied the plaintiffs' request for a temporary restraining order on February 28, 1983, and scheduled this action for a trial on the merits on March 22, 1983. The Court did not address the defendant's motion to dismiss or, in the alternative, for summary judgment at the time it ruled on the plaintiffs' request for a temporary restraining order.

Subsequent to this Court's order of February 28, 1983, a dispute arose about whether this action should be certified as a class action. This Court concluded that in light of the parties' inability to agree to a certification of a class the trial on the merits of this case should be deferred until the certification issue could be resolved. Accordingly, this Court notified the parties that a trial on the merits would be set for a later date and that the hearing set for March 22, 1983, would deal with the three motions before the Court. At the March 22, 1983, hearing this Court formally rescinded the portion of the order entered in this case on February 28, 1983, that had consolidated the trial on the merits with the hearing on the plaintiffs' request for a preliminary injunction.

The Court has decided the three pending motions on the basis of the evidence presented at the full evidentiary hearing on March 22, 1983, the pleadings, and the affidavits and exhibits submitted by the parties.

In accord with Rule 65 of the Fed.R. Civ.P., the Court makes the following findings of fact and conclusions of law.

I. FINDINGS OF FACT

Plaintiff George Starliper is an employee of defendant with twenty-three years of service who is currently on sick leave. Plaintiffs Sherley Mayle and Howard Walters have been employed by defendant for twenty-four years and were laid off effective December 31, 1982. Plaintiff Peter Mamula is sixty-three years of age and retired from defendant's employ on August 1, 1981. Plaintiff Joseph Swinsinski is sixty-four years old and retired on September 1, 1981.

Defendant Satralloy, Inc., a subsidiary of Satra Corporation, is a corporation doing business in the State of Ohio. It owns and has operated a ferro-alloy plant in Steubenville, Ohio. Defendant is engaged in an industry affecting commerce within the meaning of sections 3(5), (11), (12), and (14) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(5), (11), (12), and (14) and the Labor Management Relations Act of 1947, 29 U.S.C. § 141 et seq. The parent corporation, Satra, is not a party to this action.

The Group Insurance Plan established and maintained by Satralloy is an "employee welfare benefit plan," "employee benefit plan," and a "plan" within the meaning of sections 3(1), (3) and 502 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1002(1), (3) and 1132.

Plaintiffs George Starliper, Sherley Mayle, and Howard Walters are designated beneficiaries of the employee benefit plan and as such are beneficiaries of the plan within the meaning of sections 3(8) and 502 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1002(8) and 1132. Plaintiffs Peter Mamula and Joseph Swinsinski are designated beneficiaries of the employee benefit plan and as such are beneficiaries of the plan within the meaning of sections 3(8) and 502 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1002(8) and 1132.

Satralloy, the defendant, established and maintained, as a single employer, the employee benefit plan and as such is the administrator and plan sponsor within the meaning of section 3(16)(A) and (B) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002(16)(A) and (B). The plan was instituted pursuant to collectively bargained agreements between Satralloy and the United Steelworkers of America (hereinafter "the union") on behalf of the production and maintenance (hereinafter "P & M") and clerical and laboratory (hereinafter "C & L") employees.

Under the terms of the plan eligible laid-off employees, retirees, employees on leaves, surviving spouses and dependents are entitled to certain insurance coverage, which varies according to the length of service and the type of benefit.

Satralloy made the premium payments for the group health insurance coverage under the plan until December of 1982. Satralloy's group insurance coverage with Blue Cross was terminated effective December 1, 1982, and with Prudential effective January 1, 1983, as a result of the company's failure to make premium payments. No further payments have been made to date. Satralloy's employees and retirees were given the opportunity to convert, at their own expense, their group coverage to individual insurance policies with no lapse in coverage. The defendant does not contest its obligation to make the premium payments, costing approximately $32,000 per month, to maintain coverage under the group insurance plan with Blue Cross and Prudential. The company's only stated reason for its failure to make the premium payments is its alleged financial inability resulting from the recession in the ferrochrome industry.

Satralloy closed the Steubenville facility on December 31, 1982, and to the Court's knowledge it has not been reopened, although defendant asserts it has plans to resume operation in the near future.

Some of the participants did exercise the opportunity to convert their group coverage to an individual policy. In several respects, however, the individual policies might afford less comprehensive coverage than under the group insurance plan. Furthermore, those participants who converted did so at their own expense, that is, they now pay the premiums for their individual policies. Other participants were unable to take advantage of the opportunity to convert because of the prohibitive expense of the individual policies.

II. CONCLUSIONS OF LAW

Jurisdiction exists in this Court under section 502 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132. Jurisdiction further exists under section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185.

The plaintiffs, beneficiaries in the employee welfare benefit plan, are not required to exhaust any grievance procedure because, under the facts of this case, resort to the grievance procedure would be futile in light of defendant's admission of its obligation to make the group insurance premium payments.

The union is not a necessary party to this action between the beneficiaries-participants of the employee benefit plan and the plan administrator-sponsor.

The requirements of Fed.R.Civ.P. 23(a) and 23(b)(2) have been satisfied and, therefore, this action is properly certified as a class action.

The anti-injunction provisions of the Norris-LaGuardia Act (sections 1, 4 and 7, 29 U.S.C. §§ 101, 104, 107) do not prohibit this Court from exercising its power to grant injunctive relief under section 502 of ERISA, 29 U.S.C. § 1132.

The defendant's admission of its obligation to make the premium payments creates a substantial likelihood that plaintiffs will prevail on the merits.

Irreparable harm to the plaintiffs exists in this case by virtue of the type of injury involved coupled with the defendant's precarious financial condition. If the plaintiffs were to prevail on the merits, their remedy at law would be inadequate.

As a result of the irreparable injury that the plaintiffs would suffer in the absence of injunctive relief and the inadequacy of any remedy at law, a denial of their motion for a preliminary injunction will cause far greater harm to the plaintiffs than the harm that would be suffered by the defendant upon the granting of a preliminary injunction.

In light of the plaintiffs' status as beneficiaries of an employee benefit plan that was established to provide them with health care protection and defendant's obligation to maintain that plan, the public interest is better served by the issuance of the preliminary injunction than by its denial.

III. DISCUSSION
A. DEFENDANT'S MOTION TO DISMISS OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT

The defendant, Satralloy, makes two arguments to support its motion to dismiss or, in the alternative, for summary judgment. First, it argues that the group insurance plan payments arise from the collective bargaining agreements and that plaintiffs' claims concerning defendant's failure to make those payments is subject to the contractually specified grievance procedure, one that culminates in arbitration. Unquestionably the plaintiffs have chosen not to process their claim through the grievance procedure. Defendant insists that plaintiffs' failure to exhaust the steps available in the grievance procedure causes their claim to fail. Vaca v. Sipes, 386 U.S. 171, 184-87, 87 S.Ct. 903, 913-15, 17 L.Ed.2d 842 (1967) (exhaustion requirement in § 301 LMRA cases);...

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