Williams v. Wellman Thermal Systems Corp.

• Decision Date: 14 April 1988
• Docket Number: No. IP 85-1709-C.,IP 85-1709-C.
• Parties: Donald L. WILLIAMS and Elsie D. Williams, Plaintiffs, v. WELLMAN THERMAL SYSTEMS CORPORATION, Wellman Health Care Program, Wellman Life Insurance Plan, John Doe and Richard Roe, Defendants.
• Court: U.S. District Court — Southern District of Indiana

684 F. Supp. 584

Donald L. WILLIAMS and Elsie D. Williams, Plaintiffs, v. WELLMAN THERMAL SYSTEMS CORPORATION, Wellman Health Care Program, Wellman Life Insurance Plan, John Doe and Richard Roe, Defendants.

No. IP 85-1709-C.

United States District Court, S.D. Indiana, Indianapolis Division.

April 14, 1988.

Carolyn A. Kaye, Williams, Taylor & Schmits, Indianapolis, Ind., for plaintiffs.

J. Lee McNeely, McNeely, Sanders & Stephenson, Shelbyville, Ind., for defendants.

ENTRY ON CROSS-MOTIONS FOR SUMMARY JUDGMENT

TINDER, District Judge.

This dispute has been pending for more than two years. By way of good news, the parties are interested in resolving this matter as soon as possible. To that end, exhaustively briefed cross-motions for summary judgment were filed. Counsel also presented helpful oral arguments. As a result, some of the matters in question can now be resolved. As you may suspect, the bad news is that some material questions remain to be decided, and a trial will be necessary. Thorough briefs don't always cause long opinions, but the facts presented here and the absence of controlling precedent require a detailed explication of my reasoning.

The plaintiffs are a retired employee and his spouse who are residents of Indiana. They seek the continuation of certain employee welfare benefits at previous levels of rates of coverage under the jurisdiction of the Employee Retirement Security Act of 1974 ("ERISA"), 29 United States Code, section 1001 et seq. The plaintiffs also assert state law claims by reason of the court's pendent jurisdiction.

The defendants in this action include Wellman Thermal Systems ("Wellman"), a Delaware corporation doing business in Indiana, Wellman Health Care Program ("Health Care Program"), Wellman Life Insurance Plan ("Life Insurance Plan"), John Doe and Richard Roe. John Doe is one or more individuals who, by reason of his or her position with or control of the Health Care Program is or was a fiduciary thereof, as defined by ERISA section 3(21)(A), 29 U.S.C. § 1002(21)(A), prior to, on, or after July 1, 1985. Richard Roe is one or more individuals who, by reason of his or her position with or control of the Life Insurance Plan is or was a fiduciary thereof, as defined by ERISA section 3(21)(A), 29 U.S.C. § 1002(21)(A), prior to, on, or after July 1, 1985.

The plaintiffs' complaint comprises five counts. Counts I and II allege breach of fiduciary duty under ERISA with regard to the Health Care Program and the Life Insurance Plan. The plaintiffs ask for an injunction with respect to the Health Care Program and for a declaratory judgment regarding the benefits of the Life Insurance Plan. Counts III and IV allege a breach of federal ERISA contract with regard to the Health Care Program and the Life Insurance Plan and ask for an injunction with respect to the Health Care Program and for a declaratory judgment regarding the benefits of the Life Insurance Plan. Court V alleges a failure to give notice of nonpayment under Indiana Code section 22-2-12-4. The plaintiffs also pray for exemplary damages due to the allegedly willful and oppressive nature of the defendants' conduct, attorney's fees, actuarial and accounting fees, prejudgment interest and costs.

The primary issue of this action is whether certain retiree benefits extend beyond the term of a collective bargaining agreement that was in force at the date of retirement. The other issues presented here are whether ERISA pre-empts the plaintiffs' state law claims and whether the retiree's wife, who is the beneficiary under the plans, has standing to sue. A review of the events and documents associated with this case is helpful to the understanding of the dispute.

Facts

Prior to August 13, 1979, the General Electric Company ("GE") owned and operated a manufacturing plant in Shelbyville, Indiana. The plaintiff, Donald L. Williams, began working at the Shelbyville plant in 1965. On July 10, 1979, GE contracted to sell the plant to the defendant, Wellman, pursuant to an Asset Purchase Agreement, effective August 13, 1979. After the sale, Donald Williams continued working for Wellman until either March 19, 1980, or February 1, 1981,¹ when he retired due to mental disability. (Plaintiffs' Complaint at 5.) During the time Williams worked for GE and Wellman he was a member of the United Automobile, Aerospace and Agricultural Implement Workers of America, U.A.W. Local 1793 (the "Union").

The Union and GE entered into a collective bargaining agreement ("CBA I") for the period from July 23, 1979 to July 18, 1982. (Beginning at A-221.²) Under CBA I, GE agreed to provide certain welfare benefits to GE employees who were Union members. Section 1 of Article XXIII, entitled "Benefit Plans," in CBA I, states that:

For the term of this Agreement, the Company will make available to employees in the bargaining unit the provisions of the Company's benefit plans, as amended, and as they are made available generally to other employees of the Company. These plans are entitled respectively as follows:

(1) General Electric Insurance Plan with Comprehensive Medical Expense Benefits

(2) General Electric Pension Plan

(3) General Electric Emergency Aid Plan

(4) General Electric Personal Accident Insurance Plan

(5) General Electric Income Extension Aid Plan (Article XXII)

(6) General Electric Savings and Security Program (7) General Electric Individual Development Program

(8) General Electric Employee Product Purchase Plan

(9) General Electric Suggestion Plan

(10) General Electric Long Term Disability Income Plan

(A-272.) The benefit plans referred to were not set forth specifically in CBA I; they were described in separate GE plan documents. (A-43 to A-88.) In those documents, the section entitled "Amendment or Termination" provided as follows:

This Plan may be amended, suspended, or terminated by the Board of Directors, in whole or in part, at any time without limitation, except as may be otherwise provided in collective bargaining agreements and except further that no such amendment, suspension, or termination shall adversely affect to a material degree any benefit payable with respect to any sickness, injury, or expense incurred prior to the effective date of such amendment, suspension, or termination, or affect the amount of life insurance and/or Trust Death Benefits for those employees who have retired, as described on page 3.

(GE Insurance Plan, as Amended July 1, 1979, at A-79, emphasis added.)³

At page 3 (A-70) the section entitled "Benefits after Retirement or Termination of Employment at Age 65 or Later" provides in part:

If you retire from the Company on pension prior to age 65, or if you leave the service of the Company after you are entitled to optional retirement under the Company's Pension Plan, or if you leave on a retirement allowance granted by the Company, your Life Insurance will be continued in full force up to age 65.

With regard to the GE Medical Care Plan the section entitled "Covered Medical Expense Benefits after Retirement or Attainment of Age 65" states in part (A-75):

If you retire from the Company on pension prior to age 65, or if you leave the service of the Company after you are entitled to optional retirement under the Company's Pension Plan, or if you leave on a retirement allowance granted by the Company, Comprehensive Medical Expense Insurance for yourself and for your covered dependents will be continued until the end of the month in which you reach age 65, provided you pay any required contributions.

The section entitled "Your Contribution For the Insurance Plan" states in part (A-76):

1. No contributions will be required for the full benefits of this Plan with respect to your employee coverage.

2. If you enroll for Comprehensive Medical Expense Insurance with respect to your dependents your contributions will be 2% of your normal straight-time annual earnings up to $5,000 of such earnings, a maximum contribution of $100 per year.

Only representatives of GE and the Union signed CBA I. In a letter dated June 6, 1979, to the president of the Union, however, Wellman expressed its intention to be bound by any agreements made between the Union and GE. (A-277.) And, in a Memorandum of Agreement, dated August 12, 1979, (A-279), representatives of GE, the Union, and Wellman signed a document, stating in part:

Subject to the "completion" of the "Asset Purchase Agreement" between the General Electric Company ("GE") and Wellman Incandescent, Inc. ("Wellman") with respect to GE's Industrial Heating Business Department ("IHB"), the parties hereto agree that the 1979-82 collective bargaining agreement between GE and Local 1793 of the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America—UAW ("Local 1793") shall be binding for its full term upon Wellman and Local 1793; provided that the benefit plans which would be available to the employees in the bargaining unit, to the extent that these employees would not then be covered by GE benefit plans, would be Wellman benefit plans comparable to the GE benefit plans referred to in the collective bargaining agreement between GE and Local 1793.

In contrast to CBA I (signed by GE and the Union), and the Memorandum of Agreement (signed by GE, the Union, and Wellman), the Asset Purchase Agreement for the Shelbyville plant was signed only by GE and Wellman.⁴ In the Asset Purchase Agreement, Exhibit E, entitled "Benefit Programs," states in part (at A-89):

This Exhibit E is an integral part of the Asset Purchase Agreement (the `Agreement'), dated as of July 10, 1979, between General Electric Company (`GE') and Wellman Incandescent, Inc. (`Wellman').

Wellman agrees, as provided in subparagraphs 7(a) and 7(b) of the Agreement, to offer employee benefit plans for Transferred Employees of GE that are comparable to those which were provided by GE on the Completion Date, such GE benefit plans being listed in paragraph 3 below.

Wellman

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