Sullivan v. CUNA MUTUAL INSURANCE SOCIETY

• Decision Date: 12 February 2010
• Docket Number: No. 09-cv-455-vis.,09-cv-455-vis.
• Citation: 683 F. Supp.2d 918
• Parties: John F. SULLIVAN, William E. Phillips, Karen N. Withee, Paul J. Specht and Thomas O. Olson, on behalf of themselves and all others similarly situated, Plaintiffs, v. CUNA MUTUAL INSURANCE SOCIETY and CUNA Mutual Group Medical Care Plan for Retirees, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

683 F.Supp.2d 918

John F. SULLIVAN, William E. Phillips, Karen N. Withee, Paul J. Specht and Thomas O. Olson, on behalf of themselves and all others similarly situated, Plaintiffs, v. CUNA MUTUAL INSURANCE SOCIETY and CUNA Mutual Group Medical Care Plan for Retirees, Defendants.

No. 09-cv-455-vis.¹

United States District Court, W.D. Wisconsin.

February 12, 2010.

Dixon R. Gahnz, Heather Curnutt, James Olson, Bauer & Bach, Madison, WI, Mark Debofsky, Mark D. Debofsky, Daley, Debofsky & Bryant, Chicago, IL, for Plaintiffs.

Devon R. Baumbach, Melli, Walker, Pease & Ruhly, S.C., Madison, WI, Jonathan M. Kozak, Michael David Jacobster, Monique Warren, Jackson Lewis LLP, White Plains, NY, for Defendants.

OPINION AND ORDER

BARBARA B. CRABB, District Judge.

This is a civil action in which plaintiffs John F. Sullivan, William E. Phillips, Karen N. Withee, Paul J. Specht and Thomas O. Olson contend that defendants Cuna Mutual Insurance Society and Cuna Mutual Group Medical Care Plan for Retirees have violated the provisions of the Employee Retirement Income Security Act of 1974 and Wisconsin common law by eliminating the payment of a percentage of retirees' health premiums through employer contributions and sick leave accounts. Defendants filed a motion to dismiss plaintiffs' claims under Fed.R.Civ.P. 12(b)(6). Dkt. # 14.

Plaintiffs believe that they were guaranteed a lifetime benefit by defendant CUNA Mutual Insurance Society, but the facts of the case and the applicable law do not support their belief. Their rights never vested and defendant never made an irrevocable promise to them that it would maintain the healthcare benefits at their initial level. Instead, it always reserved its right to make changes in the benefits. Nothing in ERISA or state law makes that reservation of rights improper or invalid.

It is clear that the allegations in plaintiffs' complaint and in the documents attached to the complaint do not state a claim for relief under ERISA, no matter how favorably to plaintiffs they are construed, and that the state law claims are preempted by ERISA. Therefore, defendants' motion to dismiss will be granted.

Before discussing the pertinent facts, a word about the source of those facts is in order. Generally, in deciding a motion to dismiss, a court should consider only the allegations in the complaint. Centers v. Centennial Mortgage, Inc., 398 F.3d 930, 933 (7th Cir.2005). However, a court may also consider written instruments attached to the complaint. Fed.R.Civ.P. 10(c) ("A copy of a written instrument that is an exhibit to a pleading is part of the pleading for all purposes."); Tierney v. Vahle, 304 F.3d 734, 738 (7th Cir.2002) (court may consider attachments to complaint without converting motion to dismiss into motion for summary judgment).

Although the court accepts as true well-pleaded, that is, non-conclusory, allegations, Riley v. Vilsack, 665 F.Supp.2d 994, 1002-03 (W.D.Wis.2009), "where an exhibit and the complaint conflict, the exhibit typically controls." Forrest v. Universal Savings Bank, F.A., 507 F.3d 540, 542 (7th Cir.2007). In other words, "a court is not bound by the party's characterization of an exhibit and may independently examine and form its own opinions about the document." Forrest, 507 F.3d at 542 (citing McCready v. eBay, Inc., 453 F.3d 882, 891 (7th Cir.2006) (citation omitted)). "Thus, a plaintiff `may plead himself out of court by attaching documents to the complaint that indicate that he or she is not entitled to judgment.'" Massey v. Merrill Lynch & Co., Inc., 464 F.3d 642, 645 (7th Cir.2006) (quoting Centers, 398 F.3d at 933).

Plaintiffs attached 62 pages of exhibits to their complaint. Those exhibits include succeeding versions of defendants' postretirement health benefit plan, amendments to the plan, plan election forms, company memorandums and portions of defendants' consolidated financial statements. All those attached exhibits will be considered in deciding defendants' motion, along with a page of defendants' financial statement, which they attached to their motion. Dkt. # 16, exh. 2. Wright v. Associated Insurance Companies Inc., 29 F.3d 1244, 1248 (7th Cir.1994) ("documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim"); see also 188 LLC v. Trinity Industries, Inc., 300 F.3d 730, 735 (7th Cir. 2002) (quoting Wright).

I find that the following facts are fairly alleged in the complaint and attached exhibits.

ALLEGATIONS OF FACT

A. Parties

Defendant CUNA Mutual Insurance Society is a mutual insurance company that was organized and existed under the laws of Wisconsin until 2007 when it reorganized under the laws of Iowa. Defendant CUNA Mutual is the employer and plan sponsor of defendant CUNA Mutual Group Medical Care Plan for Retirees, which is an employee welfare benefit plan under section 3(1) of ERISA, 29 U.S.C. § 1002(1). (All further references to CUNA Mutual will be to the insurance society, as employer and plan sponsor.) Plaintiffs John F. Sullivan, William E. Phillips, Paul J. Specht and Thomas O. Olson are retired employees of defendant CUNA Mutual who elected to participate in the CUNA Plan upon retirement and were not subject to any collective bargaining agreement. Sullivan retired in 1996, Phillips in 1993, Specht in 2008 and Olson in 2001. Plaintiff Karen N. Withee is a retired employee of defendant CUNA Mutual who chose to participate in the CUNA Plan and, as a union member, was subject to a collective bargaining agreement.

B. The CUNA Plan and 1982 Memorandums

In 1976, defendant CUNA Mutual issued a written instrument to evidence its employee welfare benefit plan. A portion of the plan states that

12. The Employer may amend, modify, suspend, withdraw or terminate the Plan at any time, including any Exhibit A, and, by agreement with the insurer or insurers involved, any Policy.

Exh. to Cpt., dkt. #2, at PL-COMP 000002.

Beginning in 1982, CUNA Mutual created personal sick leave accounts for management employees. On July 9, 1982, it issued a memorandum to management employees, explaining

Your CUNA Mutual Insurance Group employer has modified its Policy on premium contributions for a Qualified Management Retiree's coverage under the group contract providing insurance for the CUNA Mutual Group Health Plan. This Memorandum is to inform you about the new Policy on premium contributions....

This Policy applies only to Qualified Management Retirees who retire on or after January 1, 1982 and while this Policy continues in effect.

While this Policy continues in effect, a CUNA Mutual Insurance Group former employer will make the following contribution toward payment of the premium for coverage of Qualified Management Retiree under the Group Health Contract:

first, payment of the percentage of the premium shown for the Qualified Management Retiree's status in the table under (2) above, except the percentage shall be 60% if the Qualified Management Retiree is eligible under (1) above; and

second, payment of the balance of the premium to the extent of any then available sick leave credit as determined by multiplying the Qualified Management Retiree's earned and unused sick leave hours at retirement by 70% of the retiree's hourly salary rate just prior to retirement and thereafter reducing the resulting dollar credit by each amount the former employer pays under this sick leave credit.

Id., dkt. # 2, at PL-COMP 000052. Creating the sick leave accounts was a successful policy. By the time of retirement, many employees had obtained sick leave credit levels that could pay in excess of $100,000 toward premium payments, which would have been enough to pay the full amount of anticipated expenses for retiree health benefits for a retiree and his or her beneficiaries.

In 1983, union employees were given two options with respect to their sick leave accounts. Upon retirement, they could either (1) convert their accumulated, unused sick days into a non-cash account that would be used to pay the premiums on their insurance provided for under the retirement health benefits plan or (2) take a cash payout. Non-union employees did not have the second option. To keep track of an employee's accumulated, unused sick days, CUNA Mutual maintained ledger entries. The non-cash accounts could be used only to pay annual health insurance premiums for retirees participating in the CUNA Plan.

C. Plan Election Forms

Retiring CUNA Mutual employees were provided a group health election form allowing them to choose whether to participate in defendant CUNA Mutual's group health coverage, known as the CUNA Plan. The election forms provided the percentage of the monthly premiums for which CUNA Mutual was responsible and the percentage for which the retired employee was responsible. For example, the form signed by plaintiff Sullivan stated in relevant part:

I elect to continue the CUNA Mutual Group Health coverage family (employee & spouse) plan by paying 60% of the monthly premium. (CUNA Mutual pays 40%.)

Id., dkt. # 2, at PL-COMP 000055. The form signed by plaintiff Specht stated in relevant part:

I elect the CUNA Mutual Group Health coverage by paying 44% of the monthly premium. (CUNA Mutual pays 56%).

Id., dkt. # 2, at PL-COMP 000057.

The forms also gave enrollees information about their non-cash sick leave accounts. For example, Sullivan's form stated:

Effective July 1, 1996, the premium will be paid from the sick-leave dollar value calculated at retirement in accordance with the administrative ruling dated July 9, 1982.

Id., dkt. #2, at PL-COMP 000055; Olson's stated:

My 60% monthly contribution will be deducted from my estimated sick leave dollar balance, $145,443.08 until it is exhausted. After that time, my premiums will be deducted from my monthly Pension check if I wish to continue coverage.

Id., dkt. #2, at PL-COMP 000056; and Specht's stated:

My

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