United Steel v. Kelsey-Hayes Co.

• Citation: 943 F.Supp.2d 747
• Decision Date: 24 April 2013
• Docket Number: Case No. 11–15497.
• Parties: UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION, AFL–CIO–CLC; Ronald strait, and Danny O. Stevens, for themselves and others similarly situated, Plaintiffs, v. KELSEY–HAYES COMPANY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

943 F.Supp.2d 747

UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION, AFL–CIO–CLC; Ronald strait, and Danny O. Stevens, for themselves and others similarly situated, Plaintiffs,

v.KELSEY–HAYES COMPANY, et al., Defendants.

Case No. 11–15497.

United States District Court,

E.D. Michigan,

Southern Division.

April 24, 2013.

John G. Adam, Stuart M. Israel, Legghio & Israel, P.C., Royal Oak, MI, for Plaintiffs.

Gregory V. Mersol, Baker & Hostetler, Cleveland, OH, Robert M. Vercruysse, Vercruysse, Murray, Bingham Farms, MI, for Defendants.

OPINION AND ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [# 37], GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT [# 47], DIRECTING DEFENDANTS TO REINSTATE THE PLAINTIFFS' RETIREE HEALTHCARE COVERAGE IN EFFECT UNTIL 2012, FINDING DEFENDANTS' MOTION TO STRIKE [# 59] MOOT AND CANCELLING APRIL 25, 2013 HEARING

GERSHWIN A. DRAIN, District Judge.

I. INTRODUCTION

On December 15, 2011, Plaintiffs, Ronald Strait and Danny O. Stevens, for themselves and a class of approximately 400 retirees,¹ along with their Union, United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International, AFL–CIOCLC (“USW”), filed the instant action pursuant to Section 301 of the Labor–Management Relations Act (“LMRA”), 29 U.S.C. § 185, and the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. Plaintiffs, a class of retirees who worked for Defendant, Kelsey–Hayes, challenge Defendants' unilateral modification of their collectively-bargained lifetime retirement health insurance benefits in January of 2012 and Defendants' assertion of their right to unilaterally reduce, suspend or terminate the promised retirement healthcare benefits in the future. Kelsey–Hayes is a subsidiary of Defendant TRW Automotive Inc., which is a subsidiary of Defendant, TRW Automotive Holdings Corporation.

Presently before the Court is Defendants' Motion for Summary Judgment, filed on January 27, 2013. Also before the Court is Plaintiffs' Motion for Summary Judgment, filed on January 29, 2013 and Defendants' Motion to Strike Plaintiffs' Witness Statements and Declarations Filed in Support of Plaintiffs' Summary Judgment Reply Brief, filed on March 25, 2013. These matters are fully briefed and the Court concludes that oral argument will not aid in their resolution. Accordingly, pursuant to E.D. Mich. L.R. 7.1(f)(2), these matters will be resolved on the briefs.

II. FACTUAL BACKGROUND

Plaintiffs Strait and Stevens represent a class of retirees who worked at the now closed Kelsey–Hayes automobile parts manufacturing plant in Jackson, Michigan. They were members of USW predecessor labor organizations, which were parties to the 1995, 1999, and 2003 collective bargaining agreements (“CBAs”). Kelsey–Hayes, owned and operated the Jackson plant, and was a party to the relevant CBAs. The 1995, 1999 and 2003 CBAs promise the “Insurance Program” described in Supplements “C” and “C–1” and “made part of” the CBAs “as if set out in full.” See 1995 CBA, Art. XVII at 100.² Specifically, the 1995 Supplement C states in relevant part:

The Company will establish an amended insurance program, hereinafter referred to as the “Program,” a copy of which is attached hereto as Supplement C–1 and made part of this Agreement ..., however ... [i]n the event any conflict between the provisions of the Program and the provisions of this Agreement, the provisions of this Agreement will supersede the provisions of the Program to the extent necessary to eliminate such conflict.

See 1995 Supp. C at 1. Supplement C–1 states that “Kelsey–Hayes Company will establish an Insurance Program either through a self-insured plan or under a group insurance policy or policies issued by an insurance company or insurance companies ... as set forth in Articles II and III. See 1995 Supp. C–1 at 1. Specifically, Supplement C–1 provides:

(7) For Retired Employees and Certain Former Employees

The Company shall contribute the full premium or subscription charge for health care coverages continued in accordance with Article III, Section 5, for:

(i) A retired employee and his eligible dependents, if any, provided such retired employee is eligible for benefits under Article II of the Kelsey–Hayes Hourly–Rate Employees Pension Plan, and;

(ii) An employee and his eligible dependents, if any, terminating at age 65 or older for any reason other than a discharge for cause with insufficient credited services to entitle him to a benefit under Article II of the Kelsey–Hayes Hourly–Rate Employees Pension Plan.

(8) For Surviving Spouses

(i) The Company shall contribute the full premium or subscription charge for health care coverages continued in accordance with Article III, Section 6(b) on behalf of a surviving spouse as defined in Article III, Section 6(b), (1), (2), (3) and (4) and in Article III, Section 6(c) ... and the eligible dependents of any such spouse[.]

See 1995 Supplement C–1, Art. I, Sec. 3(b)(7)-(8). Supplement C–1 further states in relevant part:

Section 5. Continuance of Health Care Coverages Upon Retirement or Termination of Employment at Age 65 or Older

(a) The health care coverages an employee has under this Article at the time of retirement or termination of employment at age 65 or older for any reason other than a discharge for cause ... shall be continued thereafter provided that suitable arrangements for such continuation, can be made with the carrier(s).

Id., Art. III, Sec. 5(a). Changes to the Insurance Program may be made only if both Kelsey–Hayes and the Union agree to such changes.

In the event the initiation of any benefit ... does not prove practicable or is not permitted by the plans ..., the Company in agreement with the Union will provide new benefits and/or coverages as closely related as possible and of equivalent value to those not provided.

See 1995 Supp. C. at 1.

Before and after the closing of the Jackson plant in 2006, Defendants paid for all retirees' healthcare insurance coverage costs. In fact, this Court has previously noted the continuous company-paid, group insurance provided to Kelsey–Hayes union-represented retirees. See Hinckley v. Kelsey–Hayes, 866 F.Supp. 1034, 1043–44 (E.D.Mich.1994) (preliminary injunction granted); Golden v. Kelsey–Hayes, 73 F.3d 648, 651 (6th Cir.1996) (“Since the 1960s, as required by collective bargaining agreements (CBAs) in effect at each plant, Kelsey–Hayes has provided health insurance benefits ... to retirees, and to surviving spouses of deceased retirees.”)

On September 14, 2011, TRW Automotive wrote to the Jackson plant retirees announcing a “change in our retiree healthcare program effective January 1, 2012.” TRW Automotive further advised that group healthcare plans for retirees would be replaced with an individual Health Reimbursement Account (“HRA”) funded by the company and providing “funds” for which retirees can use to “purchase one of several individual Medicare policies” and for other “eligible health care expenses.” Lastly, the September 14, 2011 letter advised the retirees that “TRW's contribution to the HRA will be reviewed annually and is subject to change” and “TRW retains the right to amend or terminate the HRA.”

The Company also sent a booklet, entitled “2012 New Coverage New Choices” addressing the change from existing healthcare coverage commencing on January 1. The booklet states in relevant part:

You are neither vested in your retiree healthcare benefits nor does TRW Automotive intend to vest you in retiree healthcare benefits. To the fullest extentpermitted by law, TRW Automotive reserves the right to amend, modify, suspend, replace or terminate any of its plans, policies or programs (including the HRA), in whole or in part, at any time and for any reason, by appropriate Company action. For example, TRW Automotive may, at any time, increase, decrease or eliminate the amount that is allocated to your HRA account each year.

On January 1, 2012, Defendants discontinued group coverage insurance for those age 65 and older and replaced it with the HRA funding structure. Defendants credited a “one-time contribution of $15,000” for each retiree and spouse for 2012 and provided a $4,800.00 credit for each retiree and spouse on January 1, 2013. As to 2014 and beyond, Defendants will purportedly consider health care costs, legislative changes and other factors in using their discretion concerning whether to make contributions to the retirees' HRAs in the future.

Under the HRA system, Plaintiffs must use Extend Health ³ to buy their individual health insurance policies from selected carriers. Plaintiffs also pay their HRA premiums directly to the insurance provider and then submit claims to Extend Health for reimbursement. If sufficient support is provided, Extend Health reimburses Plaintiffs from the HRA account. Plaintiffs maintain that the 2012 changes to their healthcare insurance coverage shifted administrative and financial risks and responsibilities to them subjecting them to time-consuming and frustrating administrative burdens, anxiety and uncertainty. Plaintiffs assert that Defendants breached the 1995, 1999 and 2003 CBAs by unilaterally modifying their healthcare benefits in violation of federal labor policy and the ERISA.

III. LAW & ANALYSISA. Standard of Review

Federal Rule of Civil Procedure 56(a) empowers the court to render summary judgment “if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” See Redding v. St. Eward, 241 F.3d 530, 532 (6th Cir.2001). The Supreme Court has affirmed the court's use of summary judgment as an integral part of the fair and efficient administration of justice. The procedure is not a disfavored procedural shortcut....