Winnett v. Caterpillar Inc
| Decision Date | 26 March 2010 |
| Docket Number | 3:06-1113.,Case No. 3:06-0235 |
| Citation | 703 F.Supp.2d 745 |
| Parties | Gary T. WINNETT, et al., Plaintiffs,v.CATERPILLAR INC., Defendant/Third-Party Plaintiff,v.International Union, UAW, et al., Third-Party Defendants.Judith K. Kerns, et al., Plaintiffs,v.Caterpillar Inc., Defendant/Third-Party Plaintiff,v.International Union, UAW, et al., Third-Party Defendants. |
| Court | U.S. District Court — Middle District of Tennessee |
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Elizabeth A. Alexander, Kathryn E. Barnett, Mark P. Chalos, Lieff, Cabraser, Heimann & Bernstein, LLP, Nashville, TN, Hina Sodha, Jamie S. Franklin, Michael M. Mulder, Shona B. Glink, Meites, Mulder, Mollica & Glink, Chicago, IL, for Plaintiffs.
Columbus R. Gangemi, Jr., Derek Grady Barella, Joseph J. Torres, Winston & Strawn LLP, Chicago, IL, Lawrence Slade Eastwood, Jr., Baker, Donelson, Bearman, Caldwell & Berkowitz, Pc, Nashville, TN, Lisa M. Smith, Klimist, McKnight, Sale, McClow & Canzano, P.C., Southfield, MI, Samuel Morris, Godwin, Morris, Laurenzi & Bloomfield, Pc, Memphis, TN, for Defendants.
Edmund L. Carey, Jr., Gerald E. Martin, David W. Garrison, Barrett, Johnston & Parsley, Nashville, TN, Joshua B. Shiffrin, Julia Penny Clark, W. Gary Kohlman, Matthew Clash-Drexler, Bredhoff & Kaiser, PLLC, Washington, DC, for Third Party Defendants.
These are two related, but not consolidated, cases. As can be seen herein, the overlap in the relevant facts dictates that it is in the interest of judicial economy to address the pending motions in these two cases in one opinion. In each case, pending before the court are Motions for Summary Judgment filed by the remaining third-party defendant, the International Union, UAW (“UAW”), the plaintiffs, and the defendant Caterpillar. ( Winnett Docket Nos. 398, 404 and 410, respectively; Kerns Docket Nos. 207, 213, and 214, respectively.) 1 In both cases, the UAW's motion will be granted, and Caterpillar's Third-Party Complaint against the UAW will be dismissed. Also, in both cases, the plaintiffs' and Caterpillar's motions will be granted in part and denied in part.
As has been discussed in several previous opinions, the plaintiffs in these cases seek health insurance benefits from defendant Caterpillar, and these cases center around the meaning of certain language in various labor agreements entered into by the UAW and Caterpillar.2 The Winnett case is pursued by individuals who either worked for Caterpillar or who had a spouse who did (Gary Winnett, Freda Jackson-Chittum, Casper Harris, William Dailey, Calvin Grogan, Kenneth Hammer, Charles Waterfield, and Michael Finn), and they pursue this litigation on behalf of themselves and their class. The Kerns litigation is pursued by three named plaintiffs, each of whom is the “surviving spouse” of an individual who worked at Caterpillar (Judith Kerns, Marcia Nalley, and Sandra Stewart), and they pursue this litigation on behalf of themselves and their class.
The Caterpillar-UAW bargaining relationship began in the late 1940s and, over time, the relationship expanded to include employees at various Caterpillar facilities, primarily in Illinois. For the relevant time period, the UAW was the exclusive bargaining representative for these employees, and, under federal law, Caterpillar was obligated to negotiate with the UAW before making any changes to the terms and conditions of employment.
During the course of their bargaining relationship, Caterpillar and the UAW agreed to engage in multi-plant bargaining for most represented employees. This practice, known as “Central Bargaining,” resulted in a labor contract, which included a Central Labor Agreement (“CLA”) along with various related local agreements and benefits agreements. Beginning in 1952, Caterpillar retirees began to be eligible for limited medical coverage at defined monthly contribution levels. By the time of the 1988 Agreement, provisions for health insurance benefits, including retiree health care, were set forth in an Insurance Plan Agreement (“IPA”) between Caterpillar and the UAW, along with a Group Insurance Plan (“GIP”) and a Summary Plan Description (“SPD”), which was designed to clearly summarize the important provisions of the benefits agreement.
As discussed in detail in previous opinions, Section 5 of the 1988 GIP set forth provisions regarding active employee and retiree health care. Section 5.1 provided that Caterpillar would provide coverage to employees “without cost.” Section 5.15 provided that Caterpillar would also provide coverage for otherwise eligible retirees “without cost to any such retired Employee.” The 1988 GIP also provided that, following the death of a retired employee, coverage for the surviving spouse “will be continued ... for the remainder of [the] surviving spouse's life without cost.” ( Kerns, Docket No. 243 at 7.) The 1988 IPA also stated that “Termination of this Agreement shall not have the effect of automatically terminating the Plan,” referring to the GIP. ( Winnett, Docket No. 436 at 19.)
The 1988 SPD summarized the benefits of the 1988 labor agreement. As to retirees, the 1988 SPD stated that, “[i]f you retire and are eligible for the immediate receipt of a pension (with at least 5 years of credited service) under the Non-Contributory Pension Plan, you will be eligible for the Retired Medical Benefit Plan, continued at no cost to you.” ( Winnett, Docket No. 431 at 14.) The 1988 SPD went on to say that, “[i]f an active employee dies when eligible to retire or if a retired employee dies, the surviving spouse will have coverage for his or her lifetime at no cost to the survivor.” ( Id.) The 1988 SPD also contained a provision that allowed Caterpillar, “subject to the applicable collective bargaining agreements,” to terminate the employee benefit plans. ( Id.)
With the 1988 CLA set to expire later in the year, in July 1991, both Caterpillar and the UAW gave notice that they intended to terminate the 1988 CLA and negotiate modifications to the various labor agreements. In the Fall of 1991, Caterpillar and the UAW commenced negotiations concerning a successor labor agreement, with a labor dispute quickly developing as to acceptable terms. One area of particular dispute centered around changes to medical benefits for existing and future retirees that was proposed by Caterpillar. After a series of extensions, the UAW terminated the 1988 labor contract on November 3, 1991 and commenced a selective strike at certain Caterpillar facilities.
On March 5, 1992, Caterpillar advised the UAW that it believed that the parties' negotiations were at a legal impasse. Thereafter, by letters dated March 31, 1992, Caterpillar announced (via notice to the UAW and Caterpillar's employees) that it would unilaterally implement portions of its final contract offer, including a health care coverage NetWork (which could result in certain out-of-pocket costs for plan participants who elected not to use NetWork physicians) and certain changes to retiree benefit coverage that would result in increased medical costs for the retiree. These changes were implemented on April 6, 1992, and, that summer, Caterpillar sent letters to the UAW and to all affected employees, retirees, dependents and surviving spouses, notifying them of the institution of the NetWork effective July 1, 1992..
As continued negotiations failed to produce an agreement, on November 20, 1992, Caterpillar advised the UAW that, effective December 1, 1992, it would implement additional provisions from its final offer, including caps on the amount that Caterpillar would pay for future retiree health coverage. That is beginning in the year 2000, individuals who retired on or after January 1, 1992 would be responsible for an undetermined amount of “above the cap” health care costs.3 The December 1992 unilateral implementation, however, continued to provide that coverage for surviving spouses would be “continued following the death of a retired Employee ... without cost” for the “remainder of [the] surviving spouse's life.” ( Kerns, Docket No. 243 at 10.) The approximately 744 individuals who retired between January 1, 1992 and December 1, 1992, were, according to Caterpillar, subject to the unilaterally implemented terms.
It is not disputed that employees who retired prior to January 1, 1992 are not subject to the retiree medical cost caps Caterpillar implemented in December 1992, although even pre-1992 retirees and their surviving spouses have always incurred some costs in the form of co-pays and/or limits on coverages. Indeed, despite the fact that the 1988 GIP states that retiree health benefits are provided at “no cost,” the testimony from the preliminary injunction hearing in Winnett indicated that retirees who retired under a “no cost” scheme have always been responsible for the costs of office visits (including visits to specialists) and prescription drug copayments. ( Winnett, Docket No. 298 at 256, 274, 365; Docket No. 299 at 549.)
Caterpillar Logistics Services, Inc. (CLS) was formed in 1987 as a Caterpillar subsidiary, the purpose of which was to market Caterpillar's global warehousing and product distribution expertise to third-party customers. As further discussed below, the Winnett class contains a CLS subclass, which consists of all hourly CLS employees (and their spouses) who were represented by the UAW during their employment and who retired between January 1, 1992 and March 16, 1998. In May 1988, Caterpillar and the UAW entered into the “CLS Agreement,” which guaranteed that certain services provided to third parties would not be interrupted in the event of a strike, and, in the event of a strike, the 1988 CLA ()...
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