Sprague v. General Motors Corp., 90-CV-70010.

• Citation: 857 F. Supp. 1182
• Decision Date: 18 July 1994
• Docket Number: No. 90-CV-70010.,90-CV-70010.
• Parties: Robert D. SPRAGUE, et al., Plaintiffs, v. GENERAL MOTORS CORPORATION, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

857 F. Supp. 1182

Robert D. SPRAGUE, et al., Plaintiffs, v. GENERAL MOTORS CORPORATION, Defendant.

No. 90-CV-70010.

United States District Court, E.D. Michigan, Southern Division.

July 18, 1994.

Raymond C. Fay, Christopher G. MacKaronis, Hillary L. Pettegrew, Bell, Boyd & Lloyd, Washington, DC, J. Douglas Peters, David R. Parker, Charfoos & Christensen, Detroit, MI, for plaintiffs.

Robert F. Walker, Ethan Lipsig, Elliot K. Gordon, Paul, Hastings, Janofsky & Walker, Santa Monica, CA, David M. Davis, Daniel G. Galant, Gen. Motors Corp., Detroit, MI, and Terence V. Page, Birmingham, MI, for defendant.

OPINION AND ORDER

FEIKENS, District Judge.

Before me are several matters intended to bring long-awaited closure to this prolonged litigation. The first two matters concern Count V of the Complaint, plaintiffs' equitable or promissory estoppel claims. The named plaintiffs, purporting to represent a class of approximately 84,000 General Motors Corporation ("GM") salaried retirees and their surviving spouses, assert that GM should be estopped from eliminating certain health care coverages and shifting health care costs. Mirroring past arguments, GM moves for partial summary judgment or to dismiss Count V, maintaining that it cannot be held liable because it expressly retained the right to modify health care coverage as it sees fit.

I held a bench trial on Counts II and IV of the Complaint for two subclasses of "early retirees." Because the evidence presented at that trial also pertains to the early retirees' Count V claims, and because the parties have agreed¹ that no further trial is required on the early retirees' Count V claim, I may proceed to judgment pursuant to the procedures set out in Fed.R.Civ.P. 52. For the reasons stated below, I find in favor of the class of early retirees on Count V; that is, I hold GM liable under the doctrines of equitable and promissory estoppel for reducing or eliminating certain health care coverage for GM early retirees in 1988. I also rule that the "general retirees" cannot prevail on their Count V claims. I accordingly grant defendant's summary judgment motion as it pertains to that group of plaintiffs.

The final matter before me is plaintiffs' motion for an injunction to prevent GM from imposing program-wide deductibles and co-payments or otherwise shifting health care benefits costs to the group of early retirees. In essence, plaintiffs ask that I order GM to comply with the terms of the contract found in Sprague II. Plaintiffs' motion for injunctive relief is granted in part. GM's motion to stay that injunction pending appeal is denied.

I. Background

The history of this case is well documented elsewhere and need not be repeated in its entirety. See, e.g., Sprague v. General Motors Corp., 768 F.Supp. 605, 607-09 (E.D.Mich.1991) ("Sprague I") (addressing Counts II, III, and IV); Sprague v. General Motors Corp., 843 F.Supp. 266, 269 (E.D.Mich.1994) ("Sprague II") (addressing Counts II and IV). For present purposes, it suffices to note that plaintiff Robert D. Sprague, together with 113 other named plaintiffs, originally brought this action in August 1989 claiming to represent a class of approximately 84,000 GM salaried retirees and their surviving spouses (collectively, the "retirees"). The essence of their complaint is that GM had promised them lifetime health care benefits, at no cost to them, and that GM in 1988 improperly reduced or eliminated aspects of these benefits. They claimed in Counts I, II, III, VI, and VII, that these reductions in health care benefits violated various provisions of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001-1461. Count IV alleged that GM was liable under the federal common law of contracts and Count V alleged that GM was liable under the doctrines of promissory or equitable estoppel.

The original group of plaintiffs ultimately was split in two for the purposes of this litigation. The "general retirees" are former GM employees who retired voluntarily pursuant to the terms of the "General Motors Retirement Program for Salaried Employes." Under this program, salaried employees were allowed to retire without GM's consent as early as age 55 if they had worked ten years with GM and earlier if they had worked for GM for thirty years or more. Former GM employees who were involuntarily retired at GM's insistence and former salaried employees who were eligible for retirement due to total and permanent disability also belong to the group of general retirees. Members of this group received actuarially reduced or delayed pension benefits upon retirement.

The "early retirees" consist of former GM salaried employees who accepted one of the numerous early retirement offers GM extended to many of its employees between 1974 and 1988. These retirements required the consent of both GM and the employee.

Many of the original Counts are now resolved. In 1990, both parties filed motions for summary judgment and GM moved to dismiss various Counts of the Complaint. I granted GM's motion to dismiss Counts II and IV as to the general retirees but denied that motion with respect to the early retirees. Sprague I, 768 F.Supp. at 612. I also dismissed Count III in its entirety. Id. In November 1991, I certified a class of all the salaried employees who took early retirement, or who agreed to take early retirement, prior to March 1, 1988, and their surviving spouses. This class consists of four subclasses: early retirees (1) who signed "long-form" statements of acceptance of early retirement; (2) those who signed "short-form" statements of acceptance; (3) those who signed "statements of intent to retire"; and (4) those who signed neither a statement of acceptance nor a statement of intent to retire. After a bench trial, I found for subclasses (1) and (2) of early retirees on Counts II and IV. Sprague II, 843 F.Supp. at 319.

After I issued Sprague II in February 1994, counsel for both parties met with me and entered into several stipulations. The first pertained to the task of calculating the damages for the prevailing plaintiffs. The parties agreed that this task is straightforward and uncontroversial or "ministerial" in nature and that final judgment therefore is appropriate.² See Woosley v. Avco Corp., 944 F.2d 313, 317 (6th Cir.1991) (finding that final judgment is appropriate when the remaining task of calculating damages is "mechanical," "uncontroversial," or "ministerial"). The parties also entered into several stipulations relating to the remaining subclasses of early retirees and the remaining Counts of the Complaint. The parties stipulated that I would dismiss Count I. They also stipulated that subclass 4 early retirees who took the same forms of retirement as the members of subclasses 1 or 2 are to be included in subclasses 1 or 2. Finally, plaintiffs agreed to dismiss Counts VI and VII of the Complaint.

II. Count V: Promissory and Equitable Estoppel

GM moves either for summary judgment or to dismiss Count V, plaintiffs' estoppel claims. Its first argument is that claims for promissory or equitable estoppel are not permitted under ERISA. I disagree.

It long has been established that GM's health care program is an "employee welfare benefit plan" as defined by ERISA. 29 U.S.C. § 1002(1), (3). It is also clear that ERISA's broad preemption provision means that plaintiffs' claims are governed exclusively by federal law. 29 U.S.C. § 1144; see, e.g., Cromwell v. Equicor-Equitable HCA Corp., 944 F.2d 1272, 1276, 1276 (6th Cir. 1991), cert. dismissed, ___ U.S. ___, 113 S.Ct. 2, 120 L.Ed.2d 931 (1992). As a result, I must decide whether estoppel is an appropriate remedy under ERISA — including the common law of ERISA.

As an initial matter, I note that the U.S. Court of Appeals for the Sixth Circuit already has answered that question. That court consistently has recognized that estoppel is incorporated into the federal common law of contracts for purposes of ERISA. See, e.g., Armistead v. Vernitron Corp., 944 F.2d 1287, 1299-1300 (6th Cir.1991) (adopting estoppel principles for ERISA cases involving welfare plans); Tregoning v. American Community Mut. Ins. Co., 12 F.3d 79, 83-84 (6th Cir.1993) (rejecting plaintiffs' estoppel claim on the facts but recognizing that estoppel remains a viable theory under ERISA); Gill v. Moco Thermal Indus., Inc., 981 F.2d 858, 860 (6th Cir.1992) (estoppel not allowed on the facts of that case); Sutter v. BASF Corp., 964 F.2d 556, 563 (6th Cir.1992) (rejecting plaintiffs' promissory estoppel claim, but only because there was no evidence that the alleged misrepresentation was intentional). GM acknowledges that Armistead and its progeny recognize estoppel in ERISA cases but nevertheless maintains that these holdings conflict with the U.S. Supreme Court's holding in Mertens v. Hewitt Assocs., ___ U.S. ___, 113 S.Ct. 2063, 124 L.Ed.2d 161 (1993). In short, GM argues that after Mertens, Armistead no longer is good law.

Plan participants seeking relief under ERISA must identify one of "the six carefully integrated civil enforcement provisions found in § 502(a) 29 U.S.C. § 1132(a)." Massachusetts Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 146, 105 S.Ct. 3085, 3092, 87 L.Ed.2d 96 (1985); see also Mertens, ___ U.S. at ___, 113 S.Ct. at 2067 (stating that Congress did not intend to authorize remedies not expressly authorized by statute). Section 502(a)(3), which among other things, permits ERISA plan participants, beneficiaries, or fiduciaries to obtain "appropriate equitable relief" to redress ERISA violations or violations of the terms of an ERISA plan, is a natural candidate on which to base estoppel claims. See Tregoning, 12 F.3d at 83. Mertens is important to my analysis because it addressed the scope of relief available under § 502(a).

In Mertens, the Court held that a plan participant could not bring a cause of action under § 502(a)(3) against a non-fiduciary of an ERISA plan for knowingly...