Winnett v. Caterpillar, Inc.

Decision Date16 May 2007
Docket NumberNo. 3:06-CV-00235.,3:06-CV-00235.
Citation496 F.Supp.2d 904
PartiesGary T. WINNETT, Freda Jackson-Chittum, Casper R. Harris, William H. Dailey, Calvin E. Grogan, Kenneth C. Hammer, and Charles A. Waterfield, on behalf of themselves and others similarly situated, Plaintiffs, v. CATERPILLAR, INC., Defendant.
CourtU.S. District Court — Middle District of Tennessee

Elizabeth A. Alexander, Lieff, Cabraser, Heimann & Bernstein, LLP, Nashville, TN, Kathryn E. Barnett, Lieff, Cabraser, Heimann & Bernstein, LLP, Nashville, TN, Mark P. Chalos, Lieff, Cabraser, Heimann & Bernstein, LLP, Nashville, TN, Kathleen C. Chavez, The Chavez Law Firm, P.C., Geneva, IL, Alexandra Coulter Cross, Harwell, Howard, Hyne, Gabbert & Manner, Nashville, TN, Robert M. Foote, Foote, Meyers, Mielke & Flowers, LLC, Geneva, IL, Jamie S. Franklin, Meites, Mulder, Mollica & Glink, Chicago, IL, Craig Vernon Gabbert, Jr., Harwell, Howard, Hyne, Gabbert & Manner, Nashville, TN, Shona B. Glink, Meites, Mulder, Mollica & Glink, Chicago, IL, Michael M. Mulder, Meites, Mulder, Mollica & Glink, Chicago, IL, David P. Neuman, Foote, Meyers, Mielke & Flowers, LLC, Geneva, IL, Karen Sheley, Meites, Mulder, Mollica & Glink, Chicago, IL, Jay E. Sushelsky, Washington, DC, for Plaintiffs.

Derek Grady Barella, Winston & Strawn LLP, Chicago, IL, Lawrence Slade Eastwood, Jr., Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Nashville, TN, Columbus R. Gangemi, Jr., Winston &amp Strawn LLP, Chicago, IL, Joseph J. Torres, Winston & Strawn, Chicago, IL, for Defendant.

MEMORANDUM

TRAUGER, District Judge.

Currently pending before the court is a motion to dismiss by the defendant (Docket No. 74), the plaintiffs' response thereto (Docket No. 80), and the defendant's reply to that response (Docket No. 90). For the reasons explained herein, the defendant's motion will be DENIED.

I. Introduction

This is an action for retiree health insurance benefits brought by eight former employees of the defendant Caterpillar, Inc. ("Caterpillar") and one surviving spouse. On March 28, 2006, Plaintiffs Winnett, Jackson-Chittum, and Harris filed this action in this court. Caterpillar then filed a motion to transfer the case to the Central District of Illinois, which the court denied by order entered June 20, 2006. On September 5, 2006, the plaintiffs filed a First Amended Complaint in which they added named Plaintiffs Dailey, Hammer, Grogan, and Waterfield. On September 5, 2006, the court consolidated this case with Finn v. Caterpillar Inc., Civil No. 3:06-0802.1 The plaintiffs seek relief under § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and under § 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, from the defendant Caterpillar for breach of a collective bargaining agreement ("CBA") and a welfare benefit plan. The plaintiffs are retired hourly wage employees of the defendant, or their surviving spouses.

The defendant provided health care benefits for the plaintiffs pursuant to successive CBAs with the United Auto Workers ("UAW"). According to the plaintiffs, their rights to these benefits vested because they or their spouses worked for decades under the contracts, and these rights were repeated in ERISA-mandated Summary Plan Descriptions2 ("SPDs") promulgated by Caterpillar. The plaintiffs claim that the defendant breached its promise to pay lifetime retiree health benefits at no cost when, in 2004, without the retirees' consent, Caterpillar began charging retirees and their surviving spouses for a portion of their medical care. The plaintiffs also complain they were charged increased co-payments for prescription drugs and other out-of-pocket expenses.

The plaintiffs seek an order declaring that they are vested in lifetime medical benefits under the 1998 labor contracts at no cost to themselves, an injunction requiring Caterpillar to maintain retiree medical benefits at December 2005 levels, compensatory and punitive damages, attorneys' fees, and costs. The plaintiffs also seek to represent a putative class of retirees and surviving spouses under Federal Rule of Civil Procedure 23(1) who are or were participants or beneficiaries in Caterpillar's plan that provided for retiree medical insurance benefits; (2) for whom the UAW had been the employees' collective bargaining representative at the time of their retirement from Caterpillar, Inc.; and (3) who began working for Caterpillar prior to the expiration of the 1988 labor agreement and who retired on or after January 1, 1992, and before March 16, 1998, and became eligible for the immediate commencement of a monthly pension (with at least five years of credited service) under the Non-Contributory Pension Plan upon retirement; and, in the case of beneficiaries of such retirees, who is a surviving participant spouse whose employee spouse fulfilled the conditions above leaving a spouse with a survivor pension. (Am. Comp. ¶ 35, Docket No. 61; Docket No. 103). The plaintiffs also move to certify three subclasses, whose circumstances allegedly give rise to additional grounds. (Id.)

On September 25, 2006, Caterpillar filed a motion to dismiss (Docket No. 74), contending that the court lacks subject matter jurisdiction over this suit. Alternatively, the defendant contends that the Amended Complaint fails to state claims upon which relief can be granted and/or the claims asserted have been time-barred for years.3 Therefore, Caterpillar concludes, this case should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(1) or dismissed with prejudice under Rule 12(b)(6). In response, the plaintiffs assert that the co-art has subject matter jurisdiction over this suit; the plaintiffs' rights and the rights of the proposed class members vested under the 1988 CLA and previous contracts; retirees were not required to allege breach of the duty of fair representation against UAW; the action is timely brought, under either the applicable six- or ten-year statute of limitation; and the allegations based on the SPDs state a claim. (Docket No. 80).

II. Facts

The facts are taken from the parties' briefs filed in connection with Caterpillar's motion to dismiss as well as those briefs submitted in connection with the plaintiffs' motion for class certification, the evidence submitted in support of those briefs, and the Amended Complaint. Where facts are disputed, the court so notes.

A. The Caterpillar-UAW Collective Bargaining Relationship

The Caterpillar-UAW bargaining relationship began with the UAW's 1948 certification as the union for Caterpillar employees in East Peoria, Illinois. (Aff. of David W. Stevens, ¶ 8, Docket No. 76). Over time, Caterpillar's UAW bargaining relationship expanded to include employees at multiple facilities, primarily in Illinois. (Id., ¶¶ 9-10). Eventually, Caterpillar and the UAW agreed to engage in multi-plant bargaining for most Caterpillar UAW-represented employees. (Id. ¶ 9). This came to be known as "Central Bargaining," and the resulting labor contracts included a Central Labor Agreement ("CLA"), and related local agreements and benefits agreements. (Id.)

B. Pre-1988 CLAs and SPDs

The plaintiffs began working under CLA's negotiated with Caterpillar by the UAW as early as plaintiff Grogan's employment on October 4, 1951. Retiree medical benefits were not set forth in the CLA's themselves, but in a separate Insurance Plan Agreement ("IPA") and an attached Group Insurance Plan ("GIP"). Retiree benefits were also described in the SPD's. (1979 IPA, Ex 1. to Declaration of Michael Mulder, Docket No. 105).

Caterpillar began offering no-cost retiree medical benefits as early as 1970 in that year's SPD, which stated:

Medical Benefits After Retirement If you retire and are eligible for the immediate receipt of a pension under the Non-Contributory Pension Plan, you will be eligible for the Retired Medical Benefit Plan, continued at no cost.

(1970 SPD at 19, Ex. 2 to Decl. of Mulder, Docket No. 105.) The same plan also provides that: "For the surviving spouse of a retired employee, coverage will be continued for his or her lifetime at no cost." (Id.) The same promises in the same or similar language were repeated in agreements including:

• The "1979 Benefit Plans and Agreements, UAW and Local 974 Insurance Program, Retirement Plan and Supplemental Unemployment Benefit Plan." (1979 IPA) (Ex. 1);4

• The 1983 "Benefit Plans for Caterpillar employees represented by the United Auto Workers" (1983 SPD) (Ex. 3);5 and

• The 1986 "Benefit Plans for Caterpillar employees represented by the United Auto Workers" (1986 SPD) (Ex. 4).6

The 1979 IPA contained language expressly stating that "Termination of this Agreement shall not have the effect of automatically terminating the Plan." (1979 IPA at 14, Docket No. 105, Ex. 1 to Decl. of Michael Mulder).

C. The 1988-91 Insurance Benefits
1. The 1988 IPA and GIP

The 1988 CLA, like the preceding CLA's, did not contain any language substantively providing or incorporating by reference any health insurance benefits, including retiree health care. (Aff. of David W. Stevens, ¶ 12). Rather, such benefits were set forth in the 1988 IPA between Caterpillar and the UAW, along with the appended 1988 GIP. (Id., ¶ 12, Exs. 1-2).

The 1988 IPA was effective by its terms until October 1, 1991. (Id., ¶ 12, Ex. 1, § 9.) Pursuant to Section 2 of the 1988 IPA, Caterpillar agreed to "continue to maintain for eligible Employees the Group Insurance Plan which was in effect on the day preceding the date..." of the 1988 IPA, subject to the amendments outlined in the 1988 IPA. (Id., ¶ 12, Ex. 1, § 2.) The 1988 IPA further provided that the "provisions of the Group Insurance Plan as in effect on September 30, 1988, shall continue in effect until amended pursuant to the foregoing and thereafter to the extent not amended pursuant to the foregoing." (Id., ¶ 12, Ex. 1, § 3.) It further provided: "Termination...

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