United Steelworkers of America, AFL-CIO-CLC v. Kelsey-Hayes Company et al

Filing 58

OPINION AND ORDER GRANTING PLAINTIFFS'MOTION FOR CLASS CERTIFICATION 31 . Signed by District Judge Gershwin A. Drain. (Bankston, T)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
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,

Hon. Gershwin A. Drain
Case No. 11-cv-15497

Plaintiffs,
v.
KELSEY-HAYES COMPANY; TRW AUTOMOTIVE,
INC.; and TRW AUTOMOTIVE HOLDINGS CORP.
Defendants.
___________________________________________/
OPINION AND ORDER GRANTING PLAINTIFFS’ MOTION FOR CLASS
CERTIFICATION [#31]
I.

INTRODUCTION
On December 15, 2011, Plaintiffs, United Steel, Paper and Forestry, Rubber, Manufacturing,

Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC (“USW”), and
Plaintiffs Ronald Strait and Danny O. Stevens filed the instant action against Defendants, KelseyHayes Company, TRW Automotive, Inc., and TRW Automotive Holdings Corporation (collectively
“Defendants”) asserting that Defendants breached their obligations under collective bargaining
agreements (“CBAs”) to provide Plaintiffs with lifetime retiree healthcare benefits. Presently before
the Court is Plaintiffs’ Motion for Class Certification. This matter is fully briefed and a hearing was
held on March 12, 2013. For the reasons that follow, the Court grant Plaintiffs’ Motion for Class
Certification.
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II.

FACTUAL BACKGROUND
Plaintiffs, the proposed class and Defendants entered into a series of CBAs governing the

now closed Jackson, Michigan, Kelsey-Hayes automobile parts manufacturing plant. The CBAs
promised eligible retirees and former Union-represented Jackson plant employees lifetime
Company-paid retirement healthcare at the levels and terms in effect during the effective dates of
those CBAs and at the time of the closing of the Jackson plant. The February 10, 2003 CBA was
in effect at the time the Jackson plant closed in 2006 and it states that the healthcare that retiring
employees had “at the time of retirement . . . shall be continued thereafter” and that Defendants
“shall contribute the full premium” for retirees, their eligible family members, and surviving
spouses.
On September 14, 2011, Defendants wrote a letter to retirees announcing a “change in our
retiree healthcare program effective January 1, 2012.” The change discontinues group healthcare
plans and puts into effect an individual Health Reimbursement Account (“HRA”) in place of the
group healthcare plans for each retiree, spouse, and other eligible family member. The planned
HRA program is funded by Defendants and is to be used “to pay premiums and other eligible
healthcare expenses incurred in the future” to “offset” healthcare costs incurred by the retiree,
including, if the retiree chooses, for the “purchase” by the retiree of “one of several individual
Medicare policies” and “prescription drug coverage” and “dental and vision benefits.” However,
Defendants indicated that their contribution to the HRA will be reviewed annually and is subject to
change” and that Defendants “retain[] the right to amend or terminate the HRA.”
Plaintiffs filed the instant action on December 15, 2011 pursuant to Section 301 of the LaborManagement Relations Act (“LMRA”), 29 U.S.C. § 185 and under Sections 502(a)(1)(B), (a)(3),

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(e)and (f) of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §1132(a)(1)(B)
et seq. Plaintiffs, on behalf of themselves and a class of persons similarly situated, seek a
declaratory judgment that Defendants violated the governing CBAs. Plaintiffs also seek damages
and injunctive relief. Plaintiffs seek to certify a class consisting of approximately 400 retirees, their
surviving spouses, and other eligible dependents who retired under the 1995, 1999, and 2003 CBAs
governing the now closed Jackson, Michigan, Kelsey Hayes plant. Further, Plaintiffs request that
the Court appoint Plaintiffs Danny O. Stevens and Ronald Strait as class representatives, as well as
appoint Plaintiffs’ counsel, Stuart M. Israel and his firm, Legghio & Israel, P.C. as class counsel.
Specifically, Plaintiffs define the proposed class as:
All persons who retired or terminated from the union-represented collectivebargaining unit at the Kelsey-Hayes plant in Jackson, Michigan under the 1995,
1999, and 2003 collective bargaining agreements and the retirees’ and terminating
employees’ surviving spouses and other dependents eligible for company-paid
retirement healthcare, including all (1) pension-eligible retired employees; (2)
pension-ineligible employees “terminating at age 65 or older” not discharged “for
cause”; (3) the surviving spouses of the retired and “terminating” employees; and (4)
the “eligible dependents” of the retirees, “terminating” employees, and surviving
spouses.
III.

LAW & ANALYSIS
A.

Standard of Review

Federal Rule of Civil Procedure 23 governs class certification. See Fed. R. Civ. P. 23.
“While [a] district court has broad discretion in certifying class actions, it must exercise that
discretion within the framework of Rule 23.” Coleman v. GMAC, 296 F.3d 443, 446 (6th Cir. 2002).
“The party seeking the class certification bears the burden of proof.” In re Am. Med. Sys., Inc., 75
F. 3d 1069, 1079 (6th Cir. 1996). “[B]oth the Supreme Court and this Circuit require that a district
court conduct a ‘rigorous analysis’ of the Rule 23(a) requirements before certifying a class.”
Pipefitters Local 636 Ins. Fund v. Blue Cross Blue Shield, 654 F. 3d 618, 629 (6th Cir. 2011). Rule
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23(a) contains four prerequisites-numerosity, commonality, typicality and adequacy of
representation- that must be met before a class can be certified. See Fed. R. Civ. P. 23(a)(1)-(4).
Once the party satisfies all of the conditions of Rule 23(a), he or she must also demonstrate that the
class fits under one of the three subdivisions of Rule 23(b). Here, plaintiff argues that class
certification is appropriate under Rule 23(b)(1) and (b)(2).
(b) Types of Class Actions. A class action may be maintained if Rule 23(a) is
satisfied and if:
(1) prosecuting separate actions by or against individual class members
would create a risk of:
(A) inconsistent or varying adjudications with respect to individual class
members that would establish incompatible standards of conduct for the party
opposing the class;
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(2) the party opposing the class has acted or refused to act on grounds that
apply generally to the class, so that final injunctive relief or corresponding
declaratory relief is appropriate respecting the class as a whole[.]
Fed. R. Civ. P. 23(b)(2).
Upon consideration of Rule 23, the parties’ briefing and arguments during the March 12,
2013 hearing, the Court concludes that Plaintiffs have met their burden demonstrating that class
certification is appropriate under Rule 23(b)(1) and (b)(2). This Court’s conclusion is supported by
the various cases from this Circuit relied on by Plaintiffs, wherein the court certified retiree class
actions under Rule 23(b)(1) and (b)(2). See Fox v. Massey-Ferguson, Inc., 172 F.R.D. 653 (E.D.
Mich. 1995); Reese v. CNH America LLC, 227 F.R.D. 483 (E.D. Mich. 2005); Sloan v. BorgWarner,
Inc., 263 F.R.D. 470 (E.D. Mich. 2009); Bittinger v. Tecumseh Prods. Co., 915 F.Supp. 885 (E.D.
Mich. 1996).
B.

Rule 23(a) Requirements

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1.

Numerosity

The numerosity factor requires examination of the specific facts of each case and imposes
no absolute limitations. See Senter v. General Motors Corp., 532 F.2d 511, 523 n.24 (6th Cir.
1976), cert. denied 429 U.S. 870 (1976). The modern trend for meeting the numerosity factor is to
require at a minimum “between 21 and 40" class members. See Rodriguez v. Berrybrook Farms,
Inc., 672 F.Supp. 1009, 1013 (W.D. Mich. 1987); see also Roman v. Korson, 152 F.R.D. 101, 10506 (W.D. Mich. 1993). Here, there are approximately 400 proposed class members. Thus, the
numerosity requirement has been satisfied.
2.

Commonality

The commonality requirement “simply requires a common question of law or fact.” Reese
v. CNH America LLC, 227 F.R.D. 483, 487 (E.D. Mich. 2005) (emphasis in original). “The interests
and claims of the various plaintiffs need not be identical. Rather, the commonality test is met when
there is at least one issue whose resolution will affect all or a significant number of the putative class
members.” Fallick v. Nationwide Mut. Ins. Co., 162 F.3d 410, 422 (6th Cir. 1998). In Bittinger v.
Tecumseh Prods. Co., 123 F.3d 877, 884 (6th Cir. 1997), the Sixth Circuit Court of Appeals
concluded that the commonality requirement had been met where each member of the proposed class
was subject to a collective bargaining agreement guaranteeing lifetime, fully-funded benefits. Id.
Here, Plaintiffs Stevens and Strait and the proposed class members are all retirees subject to a
collective bargaining agreement guaranteeing lifetime company-paid retirement healthcare benefits.
Thus, as in Bittinger, “[t]his common question is all that is required under the Rule.” Id.; see also
Reese, 227 F.R.D. at 487-88 (“the test for commonality . . . is not demanding” where defendant
altered retirees’ healthcare benefits, the test is met despite the presence of individual “factual and
legal variations”); Fox v. Massey-Ferguson, Inc., 172 F.R.D. 653, 661-62 (E.D. Mich. 1995)
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(commonality test met where plaintiffs, although asserting claims under various agreements for
“varying amounts of damages,” all challenged the decision to alter retirement healthcare benefits.)
3.

Typicality

A plaintiff’s claim is typical if “it arises from the same event or practice or course of conduct
that gives rise to the claims of other class members, and if his or her claims are based on the same
legal theory.” In re American Medical Sys., 75 F.3d at 1078. “Like the test for commonality, the
test for typicality is not demanding and the interests and claims of the various plaintiffs need not be
identical.” Reese, 227 F.R.D. at 487. Further, a class representative’s claim is typical even though
“the evidence relevant to his or her claim varies from other class members, some class members
would be subject to different defenses, and the members may have suffered varying levels of injury.”
Id. at 487-88 (citing Bittinger, 123 F.3d at 884-85).
In Reese, the court found both commonality and typicality where, like here, the class
representatives and proposed class members all claimed that their former employer wrongfully
threatened to reduce retiree healthcare benefits contrary to various agreements. Id. at 488-89; see
also Fox, 172 F.R.D. at 661-62 (concluding that typicality test met where the proposed class
members assert rights to health care benefits and rejecting the defendant’s argument that typicality
is absent where “damages may vary between the claimants . . . .”)

Here, Plaintiffs Strait and

Stevens and the proposed class members claim that Defendants have wrongfully altered their
collectively-bargained lifetime healthcare benefits, as well as threatened to reduce, suspend or
eliminate this promised healthcare in the future. Thus, this claim is based on the same course of
conduct and same legal theory and the typicality requirement is met.
4.

Adequacy of Representation

In order to meet the adequacy test, Plaintiffs Stevens and Strait “must have common interests
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with unnamed members of the class” and “it must appear that the representatives will vigorously
prosecute the interests of the class through qualified counsel.” Senter, 532 F.2d at 525. Here, the
individual Plaintiffs Strait and Stevens included their declarations evidencing their commitment to
pursue the common interests of the class members to enforce their collectively bargained for retiree
healthcare benefits. See Mot. to Certify, Exs. 1 and 2. Both Strait and Stevens are former union
officials who participated in collective bargaining. Id. They have joined the USW, which is likewise
committed to prosecuting this action. Id.
Further, the individual Plaintiffs are represented by qualified counsel, Stuart M. Israel, who
has been practicing law since 1972 and focuses his practice on labor and employment law. Id., Ex.
3. Mr. Israel has extensive experience handling other ERISA/LMRA retirement healthcare
litigation, including an action pending in this court with virtually identical CBA terms, as well as
challenges the company’s 2012 shift from group retirement coverage to the same HRA program
involved herein. Mr. Israel has also published numerous articles addressing ERISA/LMRA
retirement healthcare litigation, was elected to two terms on the State Bar of Michigan Labor and
Employment Law Section Council, as well as was elected as a Fellow of The College of Labor and
Employment Lawyers in 2007. Accordingly, the Court finds that Mr. Israel and his firm, Legghio
& Israel, P.C., are qualified to serve as class counsel pursuant to Rule 23(a)(4) and Rule 23(g).
C.

Rule 23(b) Requirements

As to Rule 23(b), Plaintiffs argue that certification is appropriate under both Rule 23(b)(1)
and 23(b)(2). The Court agrees with Plaintiffs. Certification is proper under Rule 23(b)(1) where
a substantial risk of “inconsistent or varying adjudications” will result in “incompatible standards”
governing Defendants’ obligations with respect to the retirees’ healthcare benefits. In Reese, the
district court concluded that certification pursuant to Rule 23(b)(1) was appropriate because “there
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is a risk of inconsistent results if the 1450 retirees and surviving spouses of retirees file individual
lawsuits to challenge [the former employer]’s threatened modification of their health insurance
benefits.” Reese, 227 F.R.D. at 489.
Thus, as in Reese, Defendants “could be subject to incompatible standards of conduct–paying
the full-costs of benefits for some plaintiffs but not others.” Id.; see also Fox, 172 F.R.D. at 665
(finding that the plaintiffs satisfied their burden for class certification under 23(b)(1) because “the
prosecution of separate actions” will inevitably lead to different results wherein the defendant “could
prevail in some cases and lose in others which, in turn, would lead to inconsistent and, perhaps,
inequitable results.”); Sloan, 263 F.R.D. at 477 (“As to class certification under Rule 23(b)(1), the
Court finds that it too is not defeated by Plaintiff’s request for ‘back benefit’ damages. Separate
adjudications of Plaintiffs’ claims for injunctive or declaratory relief clearly presents a risk of
incompatible standards being applied to different members of the Class.”).
The Court rejects Defendants contention that certification is improper under Rule 23(b)(1).
Defendants cite to an old district court case from the United States District Court for the District of
Montana in support of their argument. See Chmieleski v. City Prods. Corp., 71 F.R.D. 118 (D. Mo.
1976). The Court declines to follow this non-binding authority, which contravenes the many district
court cases from this Circuit concluding that class certification in retiree actions concerning
collectively bargained for health care benefits is appropriate under Rule 23(b)(1). See Reese, 227
F.R.D. at 489; see also Fox, 172 F.R.D. at 665; Sloan, 263 F.R.D. at 477.
In addition to class certification under Rule 23(b)(1), the Court finds that certification
pursuant to Rule 23(b)(2) is appropriate because Defendants have acted “on grounds that apply
generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate
respecting the class as a whole . . . .” Fed. R. Civ. P. 23(b)(2). See Fox, 172 F.R.D. at 665 (“[I]t is
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abundantly clear that the administrative decision by [the former employer] with regard to the thenexisting health care benefits affected the entire proposed class, thus making the issue of a permanent
injunction and corresponding declaratory relief facially appropriate.”); see also UAW v. ACME
Precision Prods., Inc., 515 F.Supp. 537, 540 (E.D. Mich. 1981) (actions “seeking to compel the
defendant to continue to pay the cost of health insurance benefits for retirees, would be . . . a (b)(2)
class” action); Sloan, 263 F.R.D. at 477 (finding class certification to be appropriate under both Rule
23(b)(1) and (b)(2)).
In response to Plaintiffs’ Motion for Certification, Defendants concede that class certification
under Rule 23(b)(2) is appropriate. However, Defendants argue that if class certification proceeds
beyond resolution of whether the CBAs prohibit the changes made to Plaintiffs’ healthcare benefits,
certification will become problematic because some of the retirees may prefer the HRAs rather than
restoration of CBA-promised healthcare coverage. Thus, Defendants suggest that the Court proceed
with certification in a liability/remedy “staged approach.” Defendants provide no legal authority
wherein retiree healthcare class actions have separated merits and remedy certification or included
an “opt-out” remedy approach. The Court declines to proceed in this manner without any legal
authority for such an approach.
Further, this suggested approach is inconsistent with the many district court cases certifying
class actions under Rule 23(b)(2). See Fox, 172 F.R.D. at 665; see also UAW, 515 F.Supp. at 540;
Sloan, 263 F.R.D. at 477. The policy behind Rule 23 to promote efficiency, economy, and
consistency would be frustrated with such an approach. Absent the economies, efficiencies and
collective features of a class action, the proposed class members may be vulnerable to a “self
interested employer” who seeks to save “a good deal of money” by “illegally withholding” promised
benefits. See UAW v. Loral Corp., Nos. 95-3710, 95-3711, 1997 WL 49077 (6th Cir. Feb. 3, 1997).
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Further, if Plaintiffs succeed in their action, all class members will have the right to group
coverage. Any individual who prefers to forego that right for HRA participation is free to enter into
an agreement with Defendants. There is no barrier to direct retiree-employer settlements should an
individual retiree choose HRA participation in lieu of the CBA-promised group health coverage.
Thus, the Court finds that the complexity and delay that would occur with Defendants’ suggested
“staged approach” is not warranted under the circumstances.
IV.

CONCLUSION
Accordingly, for the foregoing reasons, IT IS ORDERED that Plaintiffs’ Motion for Class

Certification [#11] is GRANTED.
IT IS FURTHER ORDERED that the Court certifies a Class, pursuant to Rule 23(b)(1) and
(b)(2), consisting of the following:
All persons who retired or terminated from the union-represented collectivebargaining unit at the Kelsey-Hayes plant in Jackson, Michigan under the 1995,
1999, and 2003 collective bargaining agreements and the retirees’ and terminating
employees’ surviving spouses and other dependents eligible for company-paid
retirement healthcare, including all (1) pension-eligible retired employees; (2)
pension-ineligible employees “terminating at age 65 or older” not discharged “for
cause”; (3) the surviving spouses of the retired and “terminating” employees; and (4)
the “eligible dependents” of the retirees, “terminating” employees, and surviving
spouses.

IT IS FURTHER ORDERED that Plaintiffs Ronald Strait and Danny O. Stevens are
appointed as class representatives.
IT IS FURTHER ORDERED that Stuart M. Israel and Legghio & Israel, P.C. are appointed
as class counsel pursuant to Rule 23(g) of the Federal Rules of Civil Procedure.

Dated: March 18, 2013

/s/Gershwhin A Drain
UNITED STATES DISTRICT JUDGE
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