Savela v. City of Duluth

• Decision Date: 23 November 2011
• Docket Number: No. A09–2093.,A09–2093.
• Citation: 806 N.W.2d 793
• Parties: Paula SAVELA, Appellant, v. CITY OF DULUTH, Respondent.
• Court: Minnesota Supreme Court

806 N.W.2d 793

Paula SAVELA, Appellant,

v.CITY OF DULUTH, Respondent.

No. A09–2093.

Supreme Court of Minnesota.

Nov. 23, 2011.

Syllabus by the Court

The plain language of the collective bargaining agreements between the City and its employees guarantees to retirees the same health insurance benefits that the City provides to current employees.

Shelly M. Marquardt, Don L. Bye, Duluth, MN, for appellant.

John M. LeFevre, Jr., Mary D. Tietjen, and Peter G. Mikhail, Kennedy & Graven, Chartered, Minneapolis, MN, for respondent.

OPINION

STRAS, Justice.

At issue in this case is the interpretation of approximately 60 collective bargaining agreements (CBAs) between the City of Duluth and its employees. Subject to certain conditions and exceptions, the CBAs guarantee retired City employees health insurance benefits “to the same extent as active employees.” The dispute centers on the meaning of that phrase—specifically whether the phrase guarantees health insurance benefits to retirees to the same extent as employees who were active at the time of a retiree's departure, or to the same extent as current City employees. Because we conclude that retirees are entitled to health insurance benefits to the same extent as current City employees, we affirm.

I.

Between 1983 and 2006, the City of Duluth and its employees operated under approximately 60 CBAs covering five bargaining units: Duluth Police Local; Confidential Employees; City of Duluth Supervisory Association; Local 66 of American Federation of State, County and Municipal Employees (AFSCME) for Basic Unit Employees; and Local 101 International Association of Fire Fighters. Among other things, the CBAs provide for certain health benefits for employees who retired from employment with the City. Each of the CBAs include the following, or materially identical, language regarding retirement benefits, which we will refer to as the “active-employees clause”:

Any employee who retires from employment with the City on or after January 1, 1983, after having been employed by the City for such total time so as to be qualified by such employment to receive retirement benefits from the Public Employees Retirement Association, the Duluth Firemen's Relief Association, or the Duluth Police Pension Association, and who is currently receiving a retirement or disability pension from any such fund, shall receive hospital-medical insurance coverage to the same extent as active employees, subject to the following conditions and exceptions: ....

(Emphasis added.) Immediately following the active-employees clause, each of the CBAs contain separately numbered or lettered paragraphs listing the various conditions or exceptions to the active-employees clause. Although the specific conditions and exceptions vary among the CBAs, many include the following, or substantially similar, provisions:

(a) The City will provide any eligible retired employee without claimed dependents the approved fee-for-service coverage or plan 2 coverage, whichever is designated by the employee at the time of retirement, provided active employees, without cost to the retiree.

...

(d) Such coverage shall be for the life of the retiree....

On May 12, 2008, three retired City employees, including appellant Paula Savela, filed a lawsuit in St. Louis County District Court alleging that the City had wrongfully changed or threatened to change their health insurance benefits. In affidavits, the plaintiffs claimed that the City had consistently interpreted the CBAs as freezing health insurance benefits for retirees to the benefits received at the time of retirement. Moreover, according to the affidavits, the City told Savela and others that their health insurance benefits would remain unchanged for the rest of their lives. The court issued a temporary restraining order prohibiting the City from changing the health insurance benefits for retirees until further order by the court.

The parties later stipulated to converting the lawsuit into a class action with Savela as the class representative. The court defined the class in its order as “all Duluth retirees who are former bargaining unit members and who retired from January 1, 1983 through December 31, 2006, and their spouses/dependents who are presently entitled to the retiree health care benefits [under the relevant CBAs].” The stipulation also stated in relevant part:

There is a live controversy between the City and the Class as to the meaning of the CBA language (“to the same extent as active employees”) on the following issue:

As a matter of contract, are the Class members' health benefits fixed and governed by the plan in place on the date of their retirement or may the City modify the benefits whenever and however benefits for current employees are modified?

The stipulation therefore narrowed the issue in the case to one of contract interpretation, with the class stipulating that it would not pursue other individualized claims, such as promissory estoppel.

Savela and the City filed competing motions for summary judgment, each arguing that there were no material facts in dispute. The district court granted summary judgment to the City, and denied Savela's motion. The court concluded that the active-employees clause unambiguously granted retirees the same health benefits as current City employees, not the same benefits as employees active on the date of a retiree's departure. The court therefore held that the City was able to “modify the Plaintiffs' benefits whenever and however benefits for active employees are modified.” The court also granted summary judgment to the City under a promissory estoppel theory, even though the parties stipulated that the class would not seek relief under that theory.

The court of appeals reversed in part and affirmed in part. Savela v. City of Duluth, No. A09–2093, 2010 WL 3632313, at *1 (Minn.App. Sept. 21, 2010). The court reversed the district court's dismissal of the class's putative promissory estoppel claim on the ground that “the issue of promissory estoppel was not before the district court.” Id. at *4. The court affirmed the district court's interpretation of the active-employees clause, concluding that the term “active employees” referred to current City employees, not employees who were active at the time of a retiree's departure. Id. at *3. Resort to extrinsic evidence of intent and past practice was unnecessary, the court held, because the term “active employees” in the CBAs was clear and unambiguous. Id. We granted Savela's petition for review, and now affirm.

II.

We review de novo the district court's grant of summary judgment to the City. See Riverview Muir Doran, LLC v. JADT Dev. Grp., LLC, 790 N.W.2d 167, 170 (Minn.2010). In reviewing the district court's grant of summary judgment, our task is to determine whether genuine issues of material fact exist, and whether the district court correctly applied the law. Id. Because CBAs are contracts, see Hous. & Redev. Auth. of Chisholm v. Norman, 696 N.W.2d 329, 337 (Minn.2005), proper interpretation of them is a question of law that is subject to de novo review, see Halla Nursery, Inc. v. City of Chanhassen, 781 N.W.2d 880, 884 (Minn.2010).

The issue in this case is narrow, and the material facts are not in dispute. Although there are approximately 60 different CBAs covering five different bargaining groups, each of the CBAs contains an active-employees clause. The parties, in stipulating to the class action, identified the active-employees clause as the “live controversy” for judicial resolution. In addressing the limited breach of contract claim asserted by the class, we take no position on whether the City promised certain retirees that their health benefits would remain unchanged for the rest of their lives, nor do we address the wisdom of the City's plan to move all employees and retirees into a single health insurance plan.

A.

When interpreting a contract, we look to its language to determine the parties' intent. Dykes v. Sukup Mfg. Co., 781 N.W.2d 578, 582 (Minn.2010). In other words, “[w]here there is a written instrument, the intent of the parties is determined from the plain language of the instrument itself.” Travertine Corp. v. Lexington–Silverwood, 683 N.W.2d 267, 271 (Minn.2004). Accordingly, we assign unambiguous contract language its plain meaning. Metro. Airports Comm'n v. Noble, 763 N.W.2d 639, 645 (Minn.2009).

As argued and framed by the parties, the resolution of this case turns on the active-employees clause, which states in relevant part: “Any employee who retires from employment with the City ... shall receive hospital-medical insurance coverage to the same extent as active employees, subject to the following conditions and exceptions.” To narrow the question further, this case effectively turns on the meaning of the phrase “active employees.” Savela argues that “active employees” refers to employees who were active at the time of a retiree's departure. In contrast, the City claims that “active employees” refers to current City employees. We agree with the City.

During the entire 24–year period in which the various CBAs have governed the relationship of the parties, the term “active” has been synonymous with the term “current.” The American Heritage Dictionary of the English Language 17 (4th ed. 2009) (“Currently in use or effect”); see also Black's Law Dictionary 32 (6th ed. 1990) (“That is in action; that demands action; actually subsisting; the opposite of passive.”); Black's Law Dictionary 31 (5th ed.1979) (same). In other words, “active” employees are those employees that are currently “engaged” or “participating” in employment with the City. The American Heritage Dictionary of the English Language 18 (3rd ed. 1992) (“Engaged in activity; participating: an active member of a club.”); Webster's Third New International Dictionary 22 (2002) (“[E]ngaged in an action or activity: PARTICIPATING [active] club member>”); Webster's Third New...