Schreiber v. Philips Display Components Co.

• Decision Date: 02 September 2009
• Docket Number: No. 07-2440.,07-2440.
• Citation: 580 F.3d 355
• Parties: Kenneth C. SCHREIBER, et al., Plaintiffs-Appellants, v. PHILIPS DISPLAY COMPONENTS COMPANY, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

580 F.3d 355

Kenneth C. SCHREIBER, et al., Plaintiffs-Appellants, v. PHILIPS DISPLAY COMPONENTS COMPANY, et al., Defendants-Appellees.

No. 07-2440.

United States Court of Appeals, Sixth Circuit.

Argued: October 23, 2008.

Decided and Filed: September 2, 2009.

ARGUED: David W. Zoll, Zoll, Kranz & Borgess, LLC, Toledo, Ohio, for Appellants. Gregory V. Mersol, Baker & Hostetler LLP, Cleveland, Ohio, for Appellees. ON BRIEF: David W. Zoll, Zoll, Kranz & Borgess, LLC, Toledo, Ohio, Lisa M. Smith, Klimist, McKnight, Sale, McClow & Canzano, P.C., Southfield, Michigan, for Appellants. Gregory V. Mersol, Todd A. Dawson, Baker & Hostetler LLP, Cleveland, Ohio, for Appellees.

Before: MOORE and WHITE, Circuit Judges; VINSON, District Judge.^*

WHITE, J., delivered the opinion of the court, in which MOORE, J., joined. VINSON, D.J. (pp. 372-73), delivered a separate dissenting opinion.

OPINION

WHITE, Circuit Judge.

Plaintiffs-Appellants Kenneth C. Schreiber, Mary Jane Lambert, and George Vantine appeal the district court's grant of summary judgment to their former employer, Philips Display Components Company (Philips Display or PDC), and related corporations (collectively defendants or Philips), dismissing plaintiffs' claims that Philips breached its collective bargaining agreement (CBA) with, and violated fiduciary duties owed to, plaintiffs when it refused to provide plaintiffs with retiree health benefits.

Plaintiffs raise two arguments on appeal. First, plaintiffs representing hourly employees argue that the district court both misinterpreted the CBA and failed to properly consider extrinsic evidence in reaching its decision that the parties did not intend retiree health benefits to vest upon retirement. Second, both hourly and salaried plaintiffs argue that the district court erred in granting summary judgment on plaintiffs' breach of fiduciary duty claim because Philips never properly amended relevant health plans to exclude plaintiffs.

We REVERSE and REMAND for further proceedings consistent with this opinion.

I. BACKGROUND

A. Parties

Defendant Philips Electronics North America Corp. (PENAC) manufactures consumer electronics and other products. Throughout the 1980s and 90s, PENAC owned a facility in Ottawa, Ohio. Philips Display, a division of PENAC, operated the Ottawa facility, producing cathode ray tubes (CRTs) for television sets.¹

Plaintiffs are two putative classes or subclasses of Philips Display employees: 1) hourly, union employees who worked at the Ottawa facility and retired on or after July 1, 2001, and 2) salaried, non-union employees who primarily worked at Philips Display's headquarters in Ann Arbor and retired after July 1, 2001. Members of both putative classes contain surviving spouses and/or dependents of hourly and salaried workers.

B. Hourly Employees: Collective Bargaining Agreement and Plan Documents

Local 1654 of the International Brotherhood of Electrical Workers (IBEW) represented the Ottawa facility's hourly employees in their contract negotiations with Philips Display. The last CBA between Philips Display and the union, signed in 2000, covered the period from October 2, 2000 to September 28, 2003 (the 2000 CBA).

During negotiations for the 2000 CBA, Philips Display announced that it intended to transfer CRT production from its Ottawa facility to a facility in Mexico. Because the company planned to lay off the majority of its Ottawa-based employees, the 2000 CBA became a plant-closing agreement, guaranteeing 800 jobs at Philips Display for the duration of the contract.

The "Medical Plans" section of the 2000 CBA outlined eligibility criteria for retiree health coverage, stating:

Employees who retire on or after January 1, 1998, who are at least age fifty-five (55) and who meet the terms of the existing plan are entitled to purchase health insurance coverage on the same terms and at the same employee contribution levels as in effect for active employees.

(Joint Appendix (J.A.) at 343.) Schedule C of the same CBA also provided information regarding "Employee Group Insurance and Benefit Plans":

(A) The group insurance in force upon the signature date of this Collective Bargaining Agreement shall remain in full force and effect until September 28, 2003.

(B) The Company will maintain during the remaining term of this Agreement employee group insurance of the following types: life insurance, non-occupational disability insurance, non-occupational basic medical insurance, non-occupational major medical insurance, and a contributory dental assistance plan as described in the Summary Plan Descriptions distributed to the Union Negotiating Committee on August 3, 1982, as amended. . . .

* * *

(D) During the term of this Agreement, the Company shall have the right to amend in any way, the Plans referenced in this Schedule C, except that no such amendment shall diminish the rights prescribed in the Plans as amended by this Agreement, unless it is necessary to avoid the violation of any law or governmental regulation or to meet requirements which the government may impose, so as to obtain the necessary governmental approvals to place these amendments in effect and to continue them in effect.

(Id. at 346.) Subsection (G) of Schedule C stated that "[n]o matter concerning the Employee Group Insurance Plan or the Pension Plan for Hourly employees or any difference or claim arising thereunder shall be subject to the grievance or arbitration procedure but rather shall be governed by the terms and conditions of such plans." (Id. at 347.)

Philips also issued summary plan descriptions (SPDs) that provided extensive information about retiree health benefits.² The SPDs for Philips Display's 2001 Basic/Major Medical Plan and 2001 Comprehensive Medical Plan stated that PENAC was the plan administrator and sponsor and that Philips Personal Access Center for Employees (PACE or Philips PACE) provided "Administrative Services." (J.A. at 384, 404.). The SPDs outlined requirements for early retirees between ages 55 and 65. In addition to a requirement that Philips Display have hired such retirees before October 1, 1994, the SPDs dictated that:

To be eligible for this coverage [under the Comprehensive or Basic/Major Medical Plan], you must:

• Have 15 years of eligibility service, as defined in the company's pension plan

• Be receiving pension benefits or have received a lump sum distribution of the entire pension

• Be eligible for a company sponsored medical plan immediately prior to retirement

(Id. at 381 (Basic Major Medical Plan SPD); see also id. at 401 (Comprehensive Medical Plan).)

The same plan descriptions provided that:

Retirees who retire on or after January 2, 1992 will be required to contribute towards the cost of their own and their dependants' medical coverage. If a retiree or surviving spouse is receiving a monthly pension check sufficient to cover the cost of retiree medical coverage, payment will be automatically deducted from the monthly check. If the monthly pension check is not large enough to cover the retiree medical cost, the retiree (or surviving dependent) will be direct billed by Benefit One of America [the COBRA Administrator].

If the required contributions for retiree and/or dependent coverage are not made, retiree and/or dependant medical coverage will terminate. Once coverage terminates it will not be available again.

(Id. at 381, 401.)

Both SPDs also contained the following clause regarding the "Future Of The Plan": "[t]he Company reserves the right to charge for coverage or to end or amend medical coverage for you or your dependents at any time subject to the provisions of the applicable collective bargaining agreement." (J.A. at 383, 403.)

C. Salaried Employees: Plan Documents

At the time each of the salaried retirees named in this suit retired, one of two medical plans governed: the 1999 Philips Retiree Medical Plan (the 1999 Plan) or the 2003 Philips Retiree Medical Program (the 2003 Program). The 1999 Plan took effect on January 1, 1999; the 2003 Program controlled from January 1, 2003. The SPDs for both plans stated that PENAC was the plan sponsor and administrator and that Philips PACE provided "Administrative Services."³ (J.A. at 509-10, 526.)

According to the SPDs, to be eligible for healthcare coverage in retirement, salaried employees had to: 1) retire after their 55th birthday and have at least 15 years of eligible service; 2) begin receiving Philips pension benefits immediately after termination of service (or receive a lump sum); 3) be eligible for a company-sponsored medical plan immediately prior to retirement; 4) be in a group covered by the Philips Retiree Medical Program at the time they left the company. (J.A. at 501, 516.) The plans also required salaried retirees to pay contributions in order to maintain their coverage. (See, e.g., id. at 515, 516, 518.)

The SPDs explained various situations in which coverage would end, such as when a beneficiary "become[s] ineligible" or "the group plan terminates." (J.A. at 523.) Further, the 1999 Plan contained the following reservation of rights clause:

Although the company presently intends to continue the plan indefinitely, Philips Electronics North America reserves the right to alter any of its provisions, to change the amount of contributions or to terminate all or any part of it, as the company in its sole discretion deems necessary, without prior notice to any covered person.

Any amendment to the plan, change in the amount of employee or dependent contributions or termination of part or all of the plan shall be effected by a written document executed on behalf of the company.

Termination of coverage under the plan will not prejudice any claim originating before the date of such termination.

(J.A. at 508.)⁴

D. The Creation of LG Philips Displays USA, Inc.

In 2001, PENAC's parent company, the Netherlands-based Kobinklijke Philips Electronics N.V. (KPENV), in a transaction with...