Moore v. Menasha Corp.

• Decision Date: 22 August 2012
• Docket Number: 10–2173.,Nos. 10–2171,s. 10–2171
• Citation: 690 F.3d 444
• Parties: Robert MOORE; Eleanor Rhodes; Gustave Peppel; Victor Adams; Marjorie Moore; Lorraine Peppel; Naomi Adams; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL–CIO–CLC, Plaintiffs–Appellants/Cross–Appellees, v. MENASHA CORPORATION, Defendant–Appellee/Cross–Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

690 F.3d 444

Robert MOORE; Eleanor Rhodes; Gustave Peppel; Victor Adams; Marjorie Moore; Lorraine Peppel; Naomi Adams; United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union AFL–CIO–CLC, Plaintiffs–Appellants/Cross–Appellees,

v.MENASHA CORPORATION, Defendant–Appellee/Cross–Appellant.

Nos. 10–2171, 10–2173.

United States Court of Appeals, Sixth Circuit.

Argued: March 7, 2012.

Decided and Filed: Aug. 22, 2012.

ARGUED:Stuart M. Israel, Legghio & Israel, P.C., Royal Oak, Michigan, for Appellants/Cross–Appellees.

Brian M. Schwartz, Miller Canfield, Paddock and Stone, P.L.C., Kalamazoo, Michigan, for Appellee/Cross–Appellant. ON BRIEF:Stuart M. Israel, Legghio & Israel, P.C., Royal Oak, Michigan, William H. Schmelling, United Steelworkers, Bridgeview, Illinois, for Appellants/Cross–Appellees. Brian M. Schwartz, Pamela C. Enslen, Charles S. Mishkind, Miller Canfield, Paddock and Stone, P.L.C., Kalamazoo, Michigan, for Appellee/Cross–Appellant.

Before: CLAY and KETHLEDGE, Circuit Judges; DOW, District Judge. ^*

OPINION

CLAY, Circuit Judge.

In this civil action, Plaintiffs are a group of retired employees, their spouses, and their union, who allege that their former employer, Defendant Menasha Corporation (“Menasha”), violated the terms of two collective bargaining agreements (“CBA”s) by denying the employees and their spouses lifetime vested healthcare coverage following the employees' retirement. Plaintiffs allege that by reneging on the terms of the CBAs, Defendant violated § 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185, and § 502(a)(1)(B) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1132. On cross-motions for summary judgment, the district court issued a split decision that ruled in Plaintiffs' favor as to employee coverage and in Defendant's favor as to spousal coverage. For the reasons that follow, we REVERSE and REMAND for entry of judgment in favor of Plaintiffs, in accordance with this opinion.

BACKGROUND

Defendant is a “privately held, family-owned company [ ] engaged in the business-to-business service of niche-based packaging, marketing, and logistics.” Although Defendant is headquartered in Wisconsin, it also operates a small plant out of Coloma, Michigan. Plaintiffs Robert Moore, Eleanor Rhodes, Gustave Peppel, and Victor Adams are retired employees of Defendant's Coloma facility and members of the Union.¹ Their spouses are the other named plaintiffs: Marjorie Moore, Lorraine Peppel, and Naomi Adams. Between 1994 and 2002, the Union and Defendant negotiated two CBAs, one in effect from June 16, 1994 to June 16, 1997 (the “1994 CBA”), and one in effect from June 16, 1997 to June 16, 2002 (the “1997 CBA”). The CBAs contained several provisions addressing healthcare benefits available to Menasha employees. As covered in more detail below, the parties contest whether certain of these provisions guaranteed the employees and their spouses lifetime vested healthcare benefits after retirement.

Moore, Rhodes, and Peppel each retired from Menasha at age 62, during the term of the 1994 CBA. Adams also retired from Menasha at age 62, but during the term of the 1997 CBA. Prior to retiring, Rhodes and Adams claim they spoke with Menasha human resources representatives who assured them that the company would be funding lifetime healthcare insurance for them and their spouses.

After retiring, the employees and spouses did in fact continue to receive healthcare insurance from Defendant through a plan issued by Blue Cross Blue Shield of Michigan (the “BCBS Plan”). Between ages 62 to 65, Defendant paid 80% of the employees' and spouses' healthcare insurance premium costs. When the retirees turned 65, Defendant assumed 100% of their premium costs. Over the ensuing years, Defendant sent various communications to Plaintiffs detailing their healthcare benefits, including letters, benefit booklets, and summary plan descriptions. Defendant paid the healthcare insurance premiums without interruption through October of 2006.

However, in mid-October of 2006, Defendant informed Plaintiffs that the company was instituting a new healthcare plan to “replace the offerings in place currently for all [its] Coloma retirees,” to take effect on January 1, 2007. Defendant announced that it would no longer cover 100% of the healthcare insurance premiums, but instead, that the company's contribution would decrease in accordance with the following schedule: from January 1, 2007 to April 30, 2008, each retiree would pay $60 per month towards his or her healthcare insurance premium, with Defendant paying the remainder; from May 1, 2008 to April 30, 2009, each retiree would pay $120 per month; and finally, from April 30, 2009 forward, Defendant would only pay $100 per month, with the retiree assuming the remainder.

Plaintiffs responded by filing a two-count lawsuit, alleging violations of LMRA § 301 and ERISA § 502(a)(1)(B). Defendant moved to dismiss the case pursuant to Rules 12(b)(7) and 19 of the Federal Rules of Civil Procedure, or to transfer the case to an alternate forum, pursuant to 28 U.S.C. § 1404(a). Defendant argued that the case ought to be dismissed for failure to join a necessary and indispensable party to the action, namely, the healthcare benefit plan. The district court denied the motions, and Defendant does not appeal that decision. See Moore v. Menasha, 634 F.Supp.2d 865 (W.D.Mich.2009) (“ Moore I ”). The parties then filed cross-motions for summary judgment, and the district court heard argument on June 29, 2010. On July 15, 2010, the district court issued an opinion, order, and judgment granting in part and denying in part the cross-motions, finding in favor of Plaintiffs as to employee coverage and in favor of Defendant as to spousal coverage. Moore v. Menasha, 724 F.Supp.2d 795 (W.D.Mich.2010) (“ Moore II ”). Plaintiffs moved for reconsideration of the spousal coverage issue, which was denied. Moore v. Menasha, No. 1:08–CV–1167, 2010 WL 3210760 (W.D.Mich. Aug. 10, 2010) (“ Moore III ”).

The parties filed timely notices of appeal on September 8, 2010. Original jurisdiction exists pursuant to 28 U.S.C. § 1331. This Court takes jurisdiction under 28 U.S.C. § 1291.

DISCUSSION

I. Standard of Review

This Court reviews a district court's summary judgment decision de novo. Schreiber v. Philips Display Components Co., 580 F.3d 355, 363 (6th Cir.2009). “Interpretation of a collective bargaining agreement is a question of law, also subject to de novo review.” Id.

Summary judgment is appropriate “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)); Fed.R.Civ.P. 56. In reviewing a summary judgment decision, this Court must view the facts and all inferences to be drawn from the facts in the light most favorable to the party against whom summary judgment was entered. Bell v. United States, 355 F.3d 387, 392 (6th Cir.2004). A genuine issue of material fact exists where there is sufficient evidence for a jury to return a verdict in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

II. Legal Framework

Section 301 of the LMRA provides a federal right of action for “violation[s] of contracts between an employer and a labor organization representing employees.” See29 U.S.C. § 185(a). In this instance, the LMRA claim also creates a derivative ERISA claim, because the disputed healthcare benefits were agreed upon pursuant to a union-negotiated contract. Schreiber, 580 F.3d at 363 (citing Maurer v. Joy Techs., Inc., 212 F.3d 907, 914 (6th Cir.2000)). To that end, we “assess promises to pay retirement benefits differently depending on the type of obligation involved.” Reese v. CNH Am. LLC, 574 F.3d 315, 321 (6th Cir.2009). Although pension benefits are considered to be a form of deferred compensation that is heavily regulated under ERISA, a promise to provide healthcare coverage does not face the same level of scrutiny. Id. Rather, healthcare coverage is considered a “purely contractual” “welfare benefit” that an employer typically may alter or even terminate at its will. See id.;Curtiss–Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995).

Nevertheless, an employer is free to limit its ability to alter or rescind healthcare coverage by contract. An employer that contractually obligates itself to provide vested healthcare benefits renders that promise “forever unalterable.” Sprague v. GMC, 133 F.3d 388, 400 (6th Cir.1998). Thus, negotiations involving vested benefits for retirees are of particular importance, in part because retired employees lack the full protection and representation of their union after they stop working. See UAW v. Yard–Man, Inc., 716 F.2d 1476, 1484 (6th Cir.1983) (“[E]mployers are under no obligation to bargain with unions over benefits for already retired workers .... [and] [s]imilarly, the union has no duty to represent retirees with the employer, although it may choose to do so.”). However, because vesting is inferred solely by contract and is not required by law, an employer's commitment to vest benefits “is not [ ] inferred lightly.” Sprague, 133 F.3d at 400.

In deciding whether an employer offered vested healthcare benefits, this Court applies a different standard depending upon whether the promise was negotiated via collective bargaining. Reese, 574 F.3d at 321. When a healthcare plan is not the product of collective bargaining, “the intent to vest must be found in the plan documents and must be stated in clear and express language.” Id. (quoting Sprague, 133 F.3d at 400). By contrast, if the healthcare plan was the product of collective...