Kepner et al v. Weyerhaeuser Company
Opinion & Order. Plaintiffs fail to state a plausible claim for either contractually vested welfare benefits or promissory estoppel. Defendant's motion to dismiss 9 is granted and this case is dismissed. Ordered by Judge Ann L. Aiken. (cw)
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
JAMES KEPNER, et al.,
Case No. 6:16-cv-01040-AA
OPINION AND ORDER
WEYERHAEUSER COMPANY, a
AIKEN, District Judge:
Plaintiffs, retired salaried employees of Weyerhaeuser Company (Weyerhaeuser),
brought this putative class action alleging violations of the Employee Retirement Income
Security Act of 1974, 29 U.S.C. §§ 1001-1461 (2012) (ERISA). Defendant filed a motion to
dismiss for failure to state a claim upon which relief could be granted. Fed. R. Civ. P. 12(b)(6).
For the reasons discussed below, the motion is granted.
The following facts are taken from Plaintiffs' Complaint. For the purposes of this motion,
the court "accept[ s] all factual allegations in the complaint as true and constru[ es] them in the
light most favorable to the nonmoving party." Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d
1005, 1014 (9th Cir. 2012).
This case centers on Defendant's retiree healthcare plan, which has undergone many
1 - OPINION AND ORDER
changes over the last several decades. In 1979, in accordance with ERISA, Defendant released
its first Summary Plan Description (SPD), 1 which consisted of eleven booklets describing the
different categories of benefits then available to salaried employees. (Compl. 7:iJ 21). One of
those booklets, entitled "Health Care Plan for Salaried Employees," described the healthcare plan
then available to retirees and included the following language:
"If at the date of retirement you are eligible to receive benefits under the
Weyerhaeuser Company Retirement Plan, you have the option of paying for
continued coverage . . . . The current costs of this coverage are [between $9-14
per person per month]. In the event the retiree dies, his or her spouse and eligible
children may continue coverage if such coverage was in force at the time the
(Compl. 7-8:iJ 23). The 1979 SPD contained no language expressly reserving Defendant's right
to unilaterally amend or terminate retiree healthcare benefits.
From 1979 through 1989, Defendant issued subsequent SPDs, none of which contained a
clause expressly reserving the right to terminate benefits at will. (Compl. 8-9:iJiJ 26, 27).
In 1990, Defendant issued a SPD that, for the first time, contained a reservation of rights
clause stating that Defendant reserved the right to "modify or amend [the Plan], require or
change retiree contributions to [the Plan], or terminate and substitute another retiree plan in the
future." (Compl. 9:iJ 29). The 1990 SPD also separated salaried employees into two groups;
"Plan I" and "Plan II" employees. (Compl. lO:iJ 33). Employees who became eligible for vested
retirement benefits on or before December 31, 1989 were "Plan I" employees and those who
became eligible after that date were "Plan II" employees. (Compl. lO:iJ 33). The representative
plaintiffs and putative class members are all Plan II employees. (Compl. lO:iJ 33).
In 2003, Defendant modified its healthcare plan to increase cost sharing from both active
and retired employees. (Compl. 11 :iJ 36). Defendant made additional minor changes to its
29 U.S.C. § 1022 describes SPDs and sets out what they must contain in detail.
2 - OPINION AND ORDER
healthcare plan over the next several years. (Compl. 11 :~ 37).
In 2009, Defendant informed retirees that it would be switching to a Premera Medical
Plus Plan, which required lower monthly contributions from retirees but also had higher
In 2011, Defendant replaced the Premera Plan with the Weyerhaeuser Health
Reimbursement Arrangement Plan (HRA). Under the HRA, Defendant credited retiree HRA
accounts to reimburse and offset retirees' healthcare costs. (Compl.
Finally, on January 1, 2015, Defendant unilaterally terminated its contributions to the
HRA accounts of all Plan II retirees. (Compl. 13 :~ 41 ). Plaintiffs then filed suit and alleged
claims for unlawful termination of contractually vested healthcare benefits and promissory
To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient
factual matter that "state[s] a claim to relief that is plausible on its face." Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when the factual allegations
allow the court to reasonably infer the defendant's liability based on the alleged conduct.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The factual allegations must present more than "the
mere possibility of misconduct." Id at 678. "Dismissal is proper where there is either a lack of a
cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal claim."
Hinds Invs., L.P. v. Angioli, 654 F.3d 846, 850 (9th Cir. 2011).
A. Claim for Contractually Vested Healthcare Benefits
Plaintiffs allege that they are entitled to contractually vested lifetime healthcare benefits
under the terms of the 1979 SPD and seek to recover those benefits pursuant to 29 U.S.C. §
3 - OPINION AND ORDER
1132(a)(l)(B). 2 In response, Defendant argues that the 1990 SPD superseded 1979 SPD and
rendered it null, and that even if the 1979 SPD is not null, its language does not meet the
standard for contractual vesting. Regardless of whether the 1990 SPD superseded the 1979 SPD,
I agree that the language of the 1979 SPD fails to meet the standard for contractual vesting.
Plaintiffs failed to identify clear and express language in the 1979 SPD promising lifetime
healthcare benefits. Therefore, I find that Plaintiffs fail to state a claim for contractually vested
When an employer establishes an employee pension plan or an employee welfare benefit
plan, the employer must comply with the rules and standards set out in ERISA. Id § 1003(a).
Under ERISA, a healthcare benefit plan, like the one at issue here, is classified as an "employee
welfare benefit plan." Id. § 1002(1) (defining employee welfare benefit plans). ERISA explicitly
exempts employee welfare benefit plans from the "elaborate minimum funding and vesting
standards" that it imposes on pension plans. M & G Polymers USA, LLC v. Tackett, l 35 S. Ct.
926, 933 (2015). Accordingly, "[e]mployers or other plan sponsors are generally free under
ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans." Curtiss-Wright
Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995). Thus, because welfare benefits do not vest
under ERISA, the only way for welfare benefits to vest is by contract, and "[a] contractual
agreement for vesting of benefits must be found in the plan documents." Cinelli v. Sec. Pac.
Corp., 61 F.3d 1437, 1441 (9th Cir. 1995).
To determine whether benefits are vested by contract, courts apply ordinary principles of
contract interpretation to ERISA plan documents, including SPDs. US Airways, Inc. v.
Section 1132(a)(l(B) provides: "A civil action may be brought (1) by a participant or
beneficiary (B) to recover benefits due to him under the terms of his plan, to enforce his rights
under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan."
4 - OPINION AND ORDER
McCutchen, 133 S. Ct. 1537, 1548-49 (2013). Where the terms of plan documents are clear,
courts must enforce the agreement as written. M & G Polymers, 135 S. Ct. at 933 ("In this
endeavor, as with any other contract, the parties' intentions control.") (quoting Stolt-Nielsen S.A.
v. AnimalFeeds Int'! Corp., 559 U.S. 662, 682 (2010)). In this case, ifthe 1979 SPD contained a
promise for vested healthcare benefits, Defendant was not free to revoke those benefits in the
1990 SPD. See Poore v. Simpson Paper Co., 566 F.3d 922, 927 (9th Cir. 2009) ("[W]here the
parties' dispute concerns a 'right that accrued or vested under the agreement ... the disputed
contractual right survives expiration of the remainder of the agreement.'") (quoting Litton Fin.
Printing Div. v. NLRB, 501 U.S. 190, 206 (1991)). To hold otherwise would be to render the
doctrine of contractual vesting effectively meaningless. The issue is whether the 1979 SPD
contained a promise for vested lifetime healthcare benefits.
The parties dispute what standard applies to contractual vesting in the Ninth Circuit.
Following the reasoning of the Fifth Circuit, several circuits hold that plaintiffs must point to
"clear and express language" in plan documents to state a claim for contractually vested welfare
benefits. See, e.g., Wise v. El Paso Nat. Gas Co., 986 F.2d 929, 937 (5th Cir. 1993); see also
Sprague v. Gen. Motors Corp., 133 F.3d 388, 400 (6th Cir. 1998); In re Unisys Corp. Retiree
Med. Benefit ERISA Litig., 58 F.3d 896, 902 (3d Cir. 1995); Gable v. Sweetheart Cup Co., 35
F.3d 851, 855 (4th Cir. 1994). Others, like the Second Circuit, for example, explicitly reject Wise
and hold that ambiguous language, which is "capable of reasonably being interpreted as creating
a promise," is enough to survive a motion for summary judgment. Devlin v. Empire Blue Cross
& Blue Shield, 274 F.3d 76, 84-85 (2d Cir. 2001) (quoting Am. Fed'n of Grain Millers, AFL-CIO
v. Int'! Multifoods Corp., 116 F.3d 976, 980 (2d Cr. 1997)); see also Temme v. Bemis Co., 622
F .3d 730, 736 (7th Cir. 2010) ("[T]he lack of an explicit vesting term is not determinative.");
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Balestracci v. NSTAR Elec. & Gas, Co., 449 F.3d 224, 231 (1st Cir. 2006) ("We reject the
analysis apparently used by the district court ... that there can never be vesting of retirement
welfare benefits unless there is a clear and express statement of such vesting.").
The Ninth Circuit first recognized the clear and express rule in Cinelli and later adopted
the rule outright. See Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1160 (9th Cir.
2001) ("Contractual vesting of a welfare benefit, moreover, 'is an extra-ERISA commitment that
must be stated in clear and express language."') (quoting Wise, 986 F.2d at 937); Cinelli, 61 F.3d
at 1441 (recognizing rule).
Nonetheless, Plaintiffs argue that the clear and express rule creates a presumption against
vesting and is irreconcilable with "ordinary principles of contract interpretation," and the
Supreme Court's reasoning in M & G Polymers. 135 S. Ct. at 933 ("We interpret collectivebargaining agreements, including those establishing ERISA plans, according to ordinary
principles of contract law .... "). 3 Essentially, Plaintiffs argue that the clear and express rule is
incompatible with, or contrary to, the ordinary principles of contract law that ambiguous
language may give rise to contractual obligations and that extrinsic evidence may be used to
construe ambiguous terms to determine the parties' intent. Accordingly, Plaintiffs argue, the
ambiguity of the 1979 SPD, coupled with the absence of an express reservation of the right to
terminate benefits, is enough to survive a motion to dismiss.
Plaintiffs also rely on the Supreme Court decision in US Airways, Inc. v. Mccutchen, 133 S. Ct.
1537 (2013). There, the Court held that courts may, in certain circumstances, look outside of
plan documents to assist in properly construing ERIS A agreements. Id. at 1549. In that case, the
Court construed an ERISA plan provision that was silent regarding the proper allocation of
certain costs. Id. The Court explained that where a plan provision's silence leaves a gap, "a court
properly takes account of background legal rules-the doctrines that typically or traditionally
have governed a given situation when no agreement states otherwise." Id. Here, Plaintiffs do not
argue that the 1979 SPD is silent; rather, they argue that it is ambiguous. Therefore, I find the
reasoning of US Airways to be inapposite in this case.
6 - OPINION AND ORDER
However, I am not persuaded that the clear and express rule is incompatible with
ordinary principles of contract interpretation as set forth in M & G Polymers such that it has no
application to claims of contractual vesting.
In M & G Polymers, the Supreme Court abrogated the decision of the Sixth Circuit, Int 'l
Union, United Auto., Aerospace, & Agr. Implement Workers ofAm. (UAW) v. Yard-Man, Inc.,
716 F.2d 1476 (1983), holding that it improperly established a presumption in favor of vested
lifetime welfare benefits. M & G Polymers, 135 S. Ct. at 937. In Yard-Man, the Sixth Circuit
found a plan provision discussing retiree welfare benefits to be ambiguous and purported to
apply "basic principles of contractual interpretation," to resolve the ambiguity. Yard-Man, 716
F.2d at 1479-80. The court looked at the whole agreement, noting the absence of a provision
specifically addressing duration of retiree benefits as well as the context of the negotiations,
before concluding that "it [was] unlikely that such benefits would be left to the contingencies of
future negotiations." Id. at 1480-82. Based on those observations the court inferred an intent to
vest welfare benefits for life. Id. at 1482-83. That inference, the Court held, was "inconsistent
with ordinary principles of contract law," and "distort[ ed] the attempt 'to ascertain the intention
of the parties,"' because it "plac[ed] a thumb on the scale in favor of vested retiree benefits." M
& G Polymers, 135 S. Ct. at 935, 937 (emphasis in original). The Court explained that under
ordinary principles of contract law courts should not confer a benefit or obligation absent a clear
manifestation of intent. Id. at 936-37. Further, courts should not construe ambiguous writings to
create lifetime promises. Id. at 937. Finally, when a contract is silent as to the duration ofretiree
benefits, a court may not infer that the parties intended those benefits to vest for life. Id. The
Court then remanded the case with instructions to apply ordinary principles of contract law to
determine whether the employer intended to promise vested lifetime healthcare benefits. Id.
7 - OPINION AND ORDER
The clear and express rule, on the other hand, does not create an inference in favor of
vested welfare benefits. Rather, the rule simply requires a clear manifestation of the parties'
intent to vest benefits for life, a requirement consistent with the ordinary principles of contract
law recounted in M & G Polymers. See id. at 936-37 ("[C]ourts should not construe ambiguous
writings to create lifetime promises."). Absent a clear abrogation of the rule, this Court is bound
by Ninth Circuit precedent to apply the rule to the facts of this case.
In this case, the 1979 SPD does not include clear and express language vesting lifetime
healthcare benefits. The 1979 SPD makes no mention of the duration ofretiree benefits and does
not promise that the potential benefits are irrevocable. The 1979 SPD merely states that eligible
salaried employees have "the option of paying for continued coverage" upon retirement and that
an eligible spouse "may continue coverage if such coverage was in force at the time the retiree
died." (Compl. 7-8:if 23) (emphasis added). The language that Plaintiffs' rely on cannot
reasonably be read as promising irrevocable lifetime benefits. Thus, while Defendant did not
explicitly reserve its right to amend or terminate the healthcare plan at will, neither did
Defendant clearly and expressly waive its right to do so by promising lifetime healthcare
Moreover, when the 1979 SPD is construed as a whole and the "Termination of
Coverage" section is taken into account, it becomes clearer that Defendant did not intend to
promise vested lifetime benefits. That section provides, "[y]our participation in this Plan shall be
terminated when you leave the employment of the Company, when you cease to be eligible, or
when the Plan terminates, whichever is earliest." Declaration of Kim Eckroth, Exhibit 1 at 6,
ECF No. 10 (emphasis added). 4 This language reflects that Defendant contemplated the
This document was "incorporated into the complaint by reference," and this Court can consider
8 - OPINION AND ORDER
unilateral termination of the plan and did not intend for welfare benefits to be irrevocable. In
sum, Plaintiffs fail to identify language in the 1979 SPD that clearly and expressly manifested
intent to vest healthcare benefits for life, and they have failed to state a claim for vested lifetime
I would find the same result even if Plaintiffs are correct and the clear and express
language rule does not apply. A clause giving employees the option to continue coverage for an
indefinite period cannot reasonably be construed to vest employees with irrevocable lifetime
benefits. In Devlin, the case relied on by Plaintiffs, the court found that two statements in a SPD
were "reasonably susceptible to interpretation as a promise." Devlin, 274 F.3d at 84-85 (quoting
Joyce v. Curtiss-Wright Corp., 171F.3d130, 134 (2d Cir. 1999)). The first statement provided
that "retired employees, after completion of twenty years of full-time permanent service and at
least age 55 will be insured." The second statement provided that "[benefits] will remain at [the
annual salary level]far the remainder of their lives." Id Unlike the statements in Devlin, which
include vesting and duration language, the language relied on by Plaintiffs does not refer to
vesting or duration, and "when a contract is silent as to the duration of retiree benefits, a court
may not infer that the parties intended those benefits to vest for life." M & G Polymers, 135 S.
Ct. at 937.
For the foregoing reasons, I find that Plaintiffs fail to state a claim for vested lifetime
healthcare benefits upon which relief can be granted.
B. Claim for Promissory Estoppel
Plaintiffs' also seek equitable relief under a theory of promissory estoppel pursuant to 29
it when ruling on this motion. Tellabs, Inc. v. Makar Issues & Rights, Ltd, 551 U.S. 308, 322
9 - OPINION AND ORDER
U.S.C. § 1132(a)(3). 5
A plaintiff is required to show five elements to state a claim for promissory estoppel.
Aguilar v. Int 'I Longshoremen 's Union Local No. 10, 966 F .2d 443, 445 (9th Cir. 1992).
"[Plaintiffs] must show ( 1) the existence of a promise, (2) which the promisor reasonably should
have expected to induce the promisee's reliance, (3) which actually induces such reliance, (4) that
such reliance is reasonable, and (5) that injustice can only be avoided by enforcement of the
promise." Id For a promise to be enforceable under a theory of promissory estoppel, "the
promise must be clear and unambiguous." Id. at 446 (internal quotation marks omitted).
Here, for the reasons explained above, Plaintiffs have failed to allege facts showing a
clear and unambiguous promise to vest employees with irrevocable lifetime healthcare benefits.
Accordingly, Plaintiffs have failed to state a claim for promissory estoppel.
Plaintiffs fail to state a plausible claim for either contractually vested welfare benefits or
promissory estoppel. Defendant's motion to dismiss (doc. 9) is GRANTED, and this case is
IT IS SO ORDERED.
United States District Judge
Section 1132(a)(3) provides: "A civil action may be brought (3) by a participant, beneficiary,
or fiduciary (A) to enjoin any act or practice which violates any provision of this subchapter or
the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such
violations or (ii) to enforce any provisions of this subchapter or the terms of the plan."
10 - OPINION AND ORDER
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