Connecticut Independent Utility Workers Local 12924 et al v. Connecticut Natural Gas Inc et al

Filing 76

ORDER: Plaintiff's Motion 60 for Reconsideration is GRANTED with respect to Counts One and Two, and DENIED with respect to Counts Three through Six. Counts One and Two are hereby reinstated to the extent that those counts allege breach of contract for failure to negotiate in violation of the LMRA. Signed by Judge Janet Bond Arterton on 03/11/2014. (Bonneau, J)

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT
CONNECTICUT INDEPENDENT UTILITY
WORKERS LOCAL 12924, et al.,
Civil No. 3:12cv961 (JBA)
Plaintiffs,
v.
CONNETICUT NATURAL GAS CORPORATION, March 11, 2014
UIL HOLDINGS CORPORATION, et al.,
Defendants.
RULING ON MOTION FOR RECONSIDERATION
On November 21, 2012, Plaintiffs Connecticut Utility Workers Local 12924,
Robert Eubanks, Emmerich Fellinger, Mark Whelden, and Martin Ritter (collectively,
“the Union”), and Ronald Holmes, Rollin Cowels, Roosevelt Bright, Francis Csekovsky,
Robert Messenger, Peter Moschetto, Joan Polzun, and Carl Schaeffer (collectively, “the
Plaintiff Retirees”) filed a Second Amended Verified Complaint [Doc. # 35] against
Defendants Connecticut Natural Gas Corporation (“CNG”), UIL Holdings Corporation
(“UIL”), UIL Benefits Administration Committee, Angel Bruno, Steven Favuzza, William
Manniel, Diane Pivirotto, Joseph Thomas, Patricia Cosgel, Christopher Malone, Richard
Nasman, and John Prete (collectively “the Benefits Administration Committee”), UIL
Holdings Corporation Retiree Health Plan for Selected Employees, UIL Holdings
Corporation Cafeteria Plan for Selected Employees—Plan No. 531, and UIL Holdings
Corporation Employee Health Plan—Plan No. 532, alleging violations of the Labor–
Management Relations Act, 29 U.S.C. § 185 (“LMRA”) and the Employee Retirement
Income Security Act of 1974, 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3) (“ERISA”).

On

December 20, 2012, Defendants moved [Doc. # 37] to dismiss all of Plaintiffs’ claims.
After holding oral argument, the Court granted in part and denied in part the motion to

dismiss, dismissing Counts One, Two, Three, Four, Five, Six, Nine, and Ten. (See Mot. to
Dismiss Ruling [Doc. # 52].) Plaintiffs now move for reconsideration of the Court’s
decision to dismiss Counts One Through Six. For the following reasons, Plaintiffs’
motion will be granted in part and denied in part.
I.

Background
In 1991, CNG and the Union entered into a Collective Bargaining Agreement

(“CBA”), which set the maximum payments CNG would make toward retiree major
medical insurance premiums. (2d Am. Ver. Compl. [Doc. # 35] ¶ 46.) In 1994, CNG and
the Union renewed this agreement via a letter (the “Contract”) memorializing the parties’
understanding regarding the maximum premium payments:
In 1991, [CNG] and the Union negotiated a reduction of the lifetime
maximum from $1,000,000 to $250,000 on major medical, and also set
[CNG] maximum premium payments for retirees. [CNG] made the
following commitment; which we renew by this letter: If any employee’s
balance in his/her major medical maximum reaches a balance of $250,000,
and the premiums for medical insurance reach a level of $375 for single or
$750 for family coverage, the Company will hold discussions with the
Union for the purposes of reviewing both the lifetime maximum and the
premium sharing.
(Contract, Ex. 1-A to 2d Am. Ver. Compl.; 2d Am. Ver. Compl. ¶ 47.) At first, CNG,
UIL, and the Benefits Administration Committee made the premium calculations as
agreed to by the parties, but at some point in time after the Contract was signed, CNG,
UIL, and the Benefits Administration Committee unilaterally changed the method of
calculating the maximum premium payments for retiree medical insurance policies, by
reducing the maximum premium payments or the ‘cap’ applied to various medical
insurance policies by varying percentages, such that the maximum premium payments
made by CNG are reduced and the amount of the premium that retirees must pay is

2

increased. (2d Am. Compl. ¶¶ 49–50, 52.) Defendants also unilaterally blended the
dependent caps for retiree health benefit plans (id. ¶ 69), though Plaintiffs were not
notified of this change until April 1, 2012 (id. ¶ 53).
CNG, UIL, and the Benefits Administration Committee formerly calculated
premium payments for retired and active employees separately, but at some point in time,
Defendants began pooling the two groups of employees together for the purpose of
calculating premium payments. (Id. ¶ 76.) Plaintiffs first learned of this change in
practice on April 1, 2012. (Id.) Since that time, Defendants have separated retired and
active employees into two pools, but continue to charge both groups the single pooled
rate, thereby increasing the premiums of active employees and capturing any cost savings
for Defendants. (Id. ¶¶ 77–78.) As a result of the changes, on May 4, 2012, June 7, 2012,
and August 3, 2012, Plaintiffs submitted ERISA document disclosure requests to the CNG
Benefits Administrator, seeking the most recent and previous summary plan descriptions,
prior bargaining agreements, and other instruments under which the benefits plans are
operated. (Id. ¶ 83.) Defendants replied to these requests by letter on June 1, 2012, and
June 20, 2012, but have not provided full responses to each of Plaintiffs’ requests for
documents and clarification. (Id. ¶ 84.)
In moving to dismiss Defendants argued, inter alia, (1) that Plaintiffs lacked
standing to bring Counts One and Two, which alleged breach of contract pursuant to
§ 301 of the LMRA, because they did not retire while the CBA was in force; (2) that
Plaintiffs’ LRMA claims were untimely because the CBA had expired more than six years
before this action was initiated; (3) that Counts One through Four, which alleged breach
of contract pursuant to § 301 of the LMRA and violation of the Retiree Health Benefit
Plan pursuant to § 502 of ERISA, should be dismissed because Plaintiffs could not
3

establish a vested right in the set premium caps; and (5) that Counts Five and Six, which
alleged breach of fiduciary duty in violation of ERISA, should be dismissed because
without vested benefits, the modification of an ERISA welfare benefits plan is not a
fiduciary act. Ultimately, the Court ruled that Plaintiffs had alleged sufficient facts to
show that the Contract was unexpired at the time they retired and that thus the
allegations did not show whether the LMRA claims were untimely. (See Mot. to Dismiss
Ruling at 5–9.) However, the Court determined that there was no language in the
Contract or the plan documents that could be reasonably interpreted as creating vested
benefits and dismissed Counts One through Four. (See id. at 11–13.) For this same
reason, the Court concluded that Defendants’ actions in changing the method of
calculating the premium contribution did not implicate their fiduciary duties under
ERISA and dismissed Counts Five and Six. (See id. at 14–15.)
II.

Legal Standard
Motions for reconsideration require the movant to set “forth concisely the matters

or controlling decisions which [the movant] believes the Court overlooked in the initial
decision or order.” D. Conn. L. Civ. R. 7(c)1. The Second Circuit has explained that
“[t]he major grounds justifying reconsideration are ‘an intervening change of controlling
law, the availability of new evidence, or the need to correct a clear error or prevent
manifest injustice.’” Virgin Atl. Airways, Ltd. v. Nat’l Mediation Bd., 956 F.2d 1245, 1255
(2d Cir. 1992) (quoting 18B C. Wright, A. Miller, & E. Cooper, Federal Practice &
Procedure § 4478). This standard is “strict,” however, and reconsideration should be
granted only if “the moving party can point to controlling decisions or data that the court
overlooked—matters, in other words, that might reasonably be expected to alter the
conclusion reached by the court.” Shrader v. CSX Transp., Inc., 70 F.3d 255, 257 (2d Cir.
4

1995). If “the moving party seeks solely to relitigate an issue already decided,” the court
should deny the motion for reconsideration and adhere to its prior decision absent clear
error. Id.
III.

Discussion
Plaintiffs move for reconsideration of the Court’s ruling dismissing Counts One

through Six, arguing that:

(1) Counts One and Two should be reinstated because

Plaintiffs have alleged sufficient facts to show that Defendants breached the Contract by
failing to hold discussions with the Union; (2) Counts One through Four should be
reinstated because Plaintiffs have alleged sufficient facts to show that they had vested
benefits for the life of the Contract; and (3) Counts Five and Six should be reinstated
because Plaintiffs have alleged sufficient facts to show that they had vested benefits for the
life of the Contract. Defendants counter that Plaintiffs failed to include any reference to
failure to negotiate as the basis for their claims in Counts One and Two of the Second
Amended Verified Complaint and that the Court therefore should not consider Plaintiffs’
arguments regarding that claim in the context of this motion. Defendants further assert
that the Court has previously decided that Plaintiffs did not have vested benefits for the
life of the Contract and that therefore the dismissal of Counts One through Six was
proper.
A.

Counts One and Two

Plaintiffs argue that the Court failed to consider one of its alleged breaches of the
Contract with respect to Counts One and Two when it dismissed those claims. In its
Ruling, the Court explained that Plaintiffs’ counsel had relied on the following four
alleged breaches of the Contract at oral argument: “(1) Defendants imposed under-thecap contributions, (2) Defendants increased Plaintiffs’ premiums, (3) Defendants blended
5

dependent caps, and (4) Defendants pooled active and retired employees without passing
the savings along to plan members.” (Mot. to Dismiss Ruling at 9 n.3; see also Hr’g Tr.
[Doc. # 61] at 58–60 (describing the four breaches that Plaintiffs’ focused on in the
Second Amended Ver. Complaint).) However, the Court also noted that “[a]t oral
argument, Plaintiffs’ counsel did not immediately identify the failure to hold discussions
as one of the breaches alleged in the Second Amended Verified Complaint. However,
when pressed, he stated that Defendants breached the Contract by failing to negotiate.”
(Id. at 13 n.4; see also Hr’g Tr. at 62 (“We do allege the breach for not negotiating.”).) At
oral argument, the Court had the following colloquy with Plaintiffs’ counsel:
The Court:

Mr. Gagne:
The Court:
Mr. Gagne:

The Court:
Mr. Gagne:

So, Mr. Peikes believes that the analysis of whether the
counts that aren’t related to the disclosure are plausible
under the Iqbal standard, are analyzed the same way for an
ERISA claim as for a LMRA claim, are you disagreeing with
that and saying that the failure to bargain or discuss the
changes is the LMRA claim as differentiated from an ERISA
claim?
No, I don’t think there’s a difference.
So you [are] both in agreement that they are [the] same, the
same analysis.
If you have a contract, you have a contract. The contract is
enforceable under ERISA or under the LMRA. It’s not
going to be enforceable under one and not be enforceable
under the other.
So those counts rise and fall on the same tide.
Yes.

(Hr’g Tr. at 33–34.) Based on this colloquy, the Court dismissed Counts One and Two, in
conjunction with Counts Three and Four on the grounds there was no vesting language
in the Contract. However, the Court did not address whether Plaintiffs had alleged
sufficient facts to support their LMRA claims based on the theory that Defendants
violated the Contract by failing to negotiate with the Union.

6

Defendants argue that the Court need not consider Plaintiffs’ claims regarding
failure to negotiate because they were not raised in the Second Amended Verified
Complaint and thus Plaintiffs are barred from raising them in the context of this motion
for reconsideration. See Mahadeo v. New York City Campaign Finance Bd., 514 F. App’x
53, 55 (2d Cir. 2013) (“A party may not use a motion for reconsideration to advance new
issues or theories of relief that were not previously presented to the court. Here, the
District Court did not abuse its discretion in denying Mahadeo’s reconsideration motion,
because he sought in that motion to raise an entirely new theory of relief . . . that was not
contained in his original complaint.”). In the introduction of the Second Amended
Verified Complaint, Plaintiffs describe their LMRA claims as follows:
3. This action is brought pursuant to § 301 of [the] LMRA, 29 U.S.C. § 185,
seeking a declaration that the retiree benefits in the Contract vested for
life, and that Defendants cannot unilaterally change the method of
calculating maximum premium payments that CNG makes for Plaintiff
retirees provided for under the Contract, and a Preliminary and
Permanent injunction prohibiting such changes, and reimbursement for
any increased payment of premiums made by Plaintiff retirees due to
Defendants’ unilateral changes.
(2d Am. Ver. Compl. ¶ 3.) Thus, Plaintiffs did not immediately identify a failure to
negotiate as the foundation for their LMRA breach of contract claims.
Furthermore, in Count One, the alleged breaches on which the count is based are
described as follows:
88. Defendant CNG’s action of unilaterally changing the method of
calculating the maximum premium payments CNG is obligated to pay
under the Contract is a breach of the Contract between Defendant CNG
and Plaintiff Union, and is actionable pursuant to § 301 of the LMRA.
89. Defendant CNG’s action of unilaterally blending dependent caps to
create a new dependent cap, is a breach of the Contract between

7

Defendant CNG and Plaintiff Union, and is actionable pursuant to § 301
of the LMRA.
(Id. ¶¶ 88–89.) Similarly, in Count Two, the alleged breaches on which the count is based
are described as follows:
97. Defendant CNG has breached the Contract and its obligation
thereunder between CNG and Plaintiff Union by unilaterally changing the
calculations used to determine the premium sharing between the parties.
98. Defendant CNG has breached the Contract and its obligation
thereunder between CNG and Plaintiff Union by unilaterally blending
dependent caps to create a new dependent cap.
(Id. ¶¶ 97–98.) Neither Count One nor Count Two lists failure to negotiate as one of the
complained of contractual breaches. As is clear from this language, the heart of Plaintiffs’
claims is that they were entitled to vested benefits as a result of the Contract and that
Defendants breached the Contract by altering the promised benefits.
However, Plaintiffs dispute that the failure to negotiate claim was not raised in the
Second Amended Verified Complaint, pointing to paragraph 50, which states:

“In

violation of the Contract and Retiree Health Plan, CNG failed to hold discussions with the
Union, and instead CNG, UIL, and the Benefits Administration Committee changed the
method of calculating the maximum premium payments or the ‘cap’ applied to various
retiree medical insurance policies by varying percentages.” (2d Am. Ver. Compl. ¶ 50
(emphasis added).) Plaintiffs incorporated this paragraph by reference in both Counts
One and Two.

Thus, Plaintiffs argue, the reference to Defendants’ failure to hold

discussions with the Union earlier in the Second Amended Verified Complaint makes it
clear that subsequent use of the term “unilateral” in Counts One and Two includes
Defendants’ failure to negotiate within the claimed breaches in support of those counts.
While the Court is not convinced that the mere use of the term “unilateral” conveys that
8

Plaintiffs’ claims included Defendants’ failure to negotiate, paragraph 50 does allege that
Defendants’ failure to hold discussions with the Union was a violation of the Contract,
and this paragraph was incorporated by reference in both Counts One and Two.
Furthermore, Plaintiffs’ counsel did raise the issue of failure to negotiate, albeit belatedly,
at oral argument. (See Hr’g Tr. at 62 (“We do allege the breach for not negotiating.”).)
Therefore, Plaintiffs’ motion for reconsideration with respect to Counts One and Two
does not seek to advance a new theory not previously raised with the Court, and the
Court will thus consider the merits of Plaintiffs’ argument that Defendants’ failure to
negotiate is sufficient to allege a violation of the LMRA for breach of contract.
Defendants argue that Plaintiffs cannot assert a breach of contract claim for
failure to negotiate because the Contract contains only a promise to negotiate, which is
merely an “agreement to agree” and as such it is not legally binding. Plaintiffs counter
that the Contract’s requirement that the parties negotiate if the premium caps are ever
met is not “an agreement to agree,” but rather is an enforceable contractual obligation
and that they have alleged sufficient facts to show that Defendants breached that
obligation. Courts interpreting collective bargaining agreements should apply traditional
rules of contract interpretation “as long as they are consistent with federal labor policies.”
United Steel, Paper and Forestry, Rubber Mfg., Energy, Allied Industrial and Service
Workers International Union, ALF-CIO/CLC v. Cookson America, Inc., 710F.3d 470, 473
(2d Cir. 2013). To be enforceable, “[a]n agreement must be definite and certain as to its
terms and requirements. So long as any essential matters are left open for further
consideration, the contract is not complete.” Geary v. Wentworth Labs., Inc., 60 Conn,
App. 622, 627 (2000) (internal citations and quotation marks omitted). Thus, “[t]he
general rule is that an agreement to agree is too indefinite to be legally binding when it
9

requires a superseding contract the terms of which must be negotiated.” Kulick v. City of
Hartford, CV065002597, 2007 WL 4707809, at *2 (Conn. Super. Ct. Dec. 10, 2007).
Defendants cite numerous cases announcing the proposition that an “agreement
to agree” is not an enforceable contract in support of their argument that Plaintiffs lack a
viable claim for relief. For example, in Levion v. Société-Générale, 822 F. Supp. 2d 390
(S.D.N.Y. 2011), the district court held that “[a]t most, Plaintiff had an agreement with
SG management to further discuss compensation issues regarding the NDF transactions.
Such an agreement to further negotiate will not support Plaintiff’s breach of contract
claim.” Id. at 402–03. However, unlike this case, the Levion plaintiff’s breach of contract
claim was based on his employer’s alleged failure to properly calculate his bonus, not on
his employer’s alleged failure to negotiate with him regarding the calculation of his bonus.
“Agreements to negotiate in good faith can be binding.” 1-4 Corbin on Contracts § 4.1.
Thus, another court in the same district held that an agreement between two parties to
use their best efforts to negotiate was not unenforceable as an “agreement to agree”
because it did not require that any agreement actually be achieved. Pinnacle Books, Inc. v.
Harlequin Enters., 519 F. Supp. 118, 121 (S.D.N.Y. 1981).
The Ninth Circuit has addressed the distinction between “an agreement to agree”
and an agreement to negotiate in good faith in the context of a labor contract. In Local 37, International Wood Workers of America v. Daw Forest Products Co., 789 F.2d 789 (9th
Cir. 1987), the employer and the union had entered into a memorandum of agreement
whereby the union was required to submit a proposal for a new working agreement. If
the employer determined the union proposal had merit then further discussions would be
conducted. If the employer determined that the proposal was without merit, it would
gradually phase out all of the bargaining unit’s work. The district court held that the
10

contract was unenforceable because it constituted a “contract to make a contract” and the
standards for determining whether the union’s proposal was meritorious were too vague
for the court to enforce. The court also held that it could not fashion a remedy for the
alleged breach because forcing the parties back to the bargaining table would be futile as
the employer no longer performed any of the bargaining unit’s work. However, the
Ninth Circuit overruled the district court’s decision explaining that:
A contract to make a contract is unenforceable because essential terms are
left to future agreement. The Memorandum here however, is not a
contract to make a contract. No essential terms of a future working
agreement are left undefined as the Memorandum does not require that a
working agreement actually be concluded. Instead, the Memorandum
outlines the agreed upon procedure governing discussion and consideration
of proposals for a new working agreement. As such, the Memorandum to
consider and discuss is akin to a contract to negotiate. This type of
agreement may be enforceable, particularly in the context of labor
relations.
Id. at 793 (internal citations and quotation marks omitted) (emphasis added). The court
went on to conclude that although the agreement did not define the term “meritorious” a
court could determine whether the contract had been breached based on principles of
federal labor law regarding breach of the duty to bargain in good faith. Id. at 794. (“A
party’s subjective ‘good faith’ in bargaining may be ascertained from an examination of
the totality of the circumstances indicative of mental state.”).
Similar to the agreement at issue in Daw Forest Products, the Contract here is not
an agreement to agree because it does not require the parties to reach an ultimate
agreement as to the appropriate level of premiums and benefits under the benefits plan.
Rather, it requires that the parties negotiate in good faith regarding the premiums if the
premium cap is ever reached. As such, the Contract is enforceable as an agreement to
negotiate in good faith in the context of labor relations. Such an interpretation is
11

consistent with the contract principle that courts “should avoid destruction of contracts
because of uncertainty and construe them to effectuate the reasonable intentions of the
parties if possible.” Id. at 793. The Contract makes clear that the Union agreed to a
reduced lifetime maximum in exchange for a commitment from Defendants to hold
discussions with the Union regarding benefits if the premium caps were ever surpassed.
Plaintiffs have alleged that the caps were exceeded and that Defendants never negotiated.
The Court has the power to remedy this alleged breach by ordering specific performance
of the Contract and sending the parties to the bargaining table. Thus, Plaintiffs have
alleged sufficient facts in support of the breach of contract claim for failure to negotiate in
violation of the LMRA and the Court therefore reinstates Counts One and Two of the
Second Amended Verified Complaint.
B.

Counts One Through Four

Plaintiffs also urge this Court to reconsider its ruling dismissing Counts One
through Four on the grounds that there were no vested benefits, arguing that the
Contract did provide for vested benefits for the life of the Contract. In support of this
argument, Plaintiffs cite Conn Indep. Utility Workers, Local 12924 v. Conn. Natural Gas.,
05CV1553 (MRK), 2006 WL 1600673 (D. Conn. June 7, 2006).

In that case, the

defendants argued that a reservation of rights in the plan documents similar to the
reservation of rights used in the plan documents in this case demonstrated that benefits
had not vested. The plaintiffs countered that the language of the CBA rendered the
defendants’ right to change benefits unilaterally ambiguous. The court noted that “it is
appropriate for a court to look at a CBA when determining a plan-provider’s obligations
under ERISA,” id. at *1, and, without addressing the merits of the parties’ arguments,
permitted the plaintiffs to amend the complaint so that the court could decide the issue
12

with a more fully developed record, id. at *2. Here, however, the Court did look at the
terms of the Contract in its ruling on the Motion to Dismiss, and held that “it does not
appear that there is any language [in the Contract] that could reasonably be interpreted as
creating vested benefits.” (Mot. to Dismiss Ruling at 13.) Plaintiffs argue that the Court
arrived at this conclusion by relying on cases that do not deal directly with the issues in
the present case. Plaintiffs admit that their arguments “present novel issues of law” and
that this is “a matter of first impression,” but urge the Court to find for the first time that
benefits may vest for the life of a contract such that any modifications of those benefits
during the life of the contract gives rise to an ERISA claim. Such arguments are not
typically proper grounds for reconsideration of a prior ruling. The Court has evaluated
the terms of the Contract and determined that it contains no language creating vested
benefits. Rather, the Contract merely requires the parties to hold negotiations if a certain
threshold is ever met. Such an agreement would not limit Defendants’ ability to amend
the plan, as the outcome of negotiations would be purely speculative.

Therefore,

Plaintiffs’ motion for reconsideration of Counts One through Four on the basis that
benefits had vested for the life of the Contract is denied.
C.

Counts Five and Six

Finally, Plaintiffs’ move for reconsideration of the Court’s ruling dismissing
Counts Five and Six, arguing that because the Contract provides for vested benefits for
the life of the agreement, the amendments to the plan constituted a fiduciary act giving
rise to claims for breach of fiduciary duty in violation of ERISA. However, because the
Court has declined to reconsider its ruling that there were no vested benefits under the
Contract, Plaintiffs’ argument as to Counts Five and Six necessarily fail. Therefore,
Plaintiffs’ motion for reconsideration of Counts Five and Six is denied.
13

IV.

Conclusion
For the foregoing reasons, Plaintiffs’ Motion [Doc. # 60] for Reconsideration is

GRANTED with respect to Counts One and Two, and DENIED with respect to Counts
Three through Six.

Counts One and Two are hereby reinstated to the extent that those

counts allege breach of contract for failure to negotiate in violation of the LMRA.
IT IS SO ORDERED.
/s/
Janet Bond Arterton, U.S.D.J.

Dated at New Haven, Connecticut this 11th day of March, 2014.

14