Dewhurst et al v. Century Aluminum Company et al
Filing
197
MEMORANDUM OPINION AND ORDER granting Century's 172 MOTION for Summary Judgment; and directing that this action is dismissed and stricken from the docket. Signed by Judge John T. Copenhaver, Jr. on 9/9/2015. (cc: counsel of record; any unrepresented parties) (taq)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
HAROLD DEWHURST and DAVID BRYAN,
on behalf of themselves
and all other persons
similarly situated, and
UNITED STEEL, PAPER AND FORESTRY,
RUBBER, MANUFACTURING, ENERGY,
ALLIED INDUSTRIAL AND SERVICE
WORKERS INTERNATIONAL UNION,
Plaintiffs
v.
Civil Action No. 2:09-1546
CENTURY ALUMINUM COMPANY,
CENTURY ALUMINUM OF
WEST VIRGINIA, INC.,
CENTURY ALUMINUM MASTER WELFARE BENEFIT PLAN,
DOES 1 THROUGH 20,
Defendants
MEMORANDUM OPINION AND ORDER
Pending is defendants’ (collectively “Century”) motion
for summary judgment, filed February 26, 2014.
The extensions
of time and additional briefing submitted by the parties
culminated in the February 26, 2015, filing of plaintiffs’
response to defendants’ supplemental brief.
I.
A.
Procedural Posture
On November 13, 2009, the individual plaintiffs, who
are retired employees from a facility operated by one or more of
the defendants, instituted this action in the United States
District Court for the Southern District of Ohio.
They were
joined by the United Steel, Paper and Forestry, Rubber,
Manufacturing, Energy, Allied Industrial and Service Workers
International Union, AFL-CIO/CLC (“Union”).
The plaintiffs are
also members of a local union (“local union”).
2009, the action was transferred here.
On December 23,
The court certified a
class consisting of approximately 437 retirees, along with the
benefit-eligible spouses and dependents of deceased retirees.
The two-count class action complaint alleged that
Century=s actions contravened the applicable collective
bargaining agreements (“CBA”) in violation of section 301 of the
Labor Management Relations Act, 29 U.S.C. ' 185, and violated
sections 502(a)(1)(B) and (a)(3) of the Employee Retirement
Income Security Act, 29 U.S.C. ' 1132(a)(1)(B) and (a)(3).
The third amended complaint filed June 26, 2012, which
is the operative pleading, changed the class definition to all
2
current or former employees of Century, along with their
spouses, dependents and surviving spouses who either:
(1) retired (other than with a deferred vested
pension) from RAC or CAWV after February 6, 1989 and
prior to November 1, 2010 and who are not currently
receiving medical benefits from CAWV, (2) retired or
retire (other than with a deferred vested pension)
from CAWV on or after November 1, 2010 and prior to
the effective date of a New CBA and who may be
currently receiving medical benefits from CAWV, or (3)
retired or retire from CAWV after the layoff at the
Ravenswood Plant in February 2009 and prior to the
effective date of a New CBA after losing their active
medical coverage while on layoff and as to whom CAWV
has denied or asserted that it will deny retiree
medical coverage due to their not being enrolled in
the active medical plan at the time of their
retirement.
(Third Am. Compl. ¶ 32).
The operative pleading still contains
the aforementioned claims.
On June 24, 2010, the court denied plaintiffs’ motion
for a preliminary injunction.
See Dewhurst v. Century Aluminum
Co., 731 F. Supp.2d 506 (S.D. W. Va. 2010).
On June 30, 2010,
plaintiffs noticed their appeal of that ruling.
2011, the court of appeals affirmed.
On August 24,
See Dewhurst v. Century
Aluminum Co., 649 F.3d 287 (4th Cir. 2011).
Following motion
practice and discovery, including a lengthy stay for purposes of
permitting the parties to continue their attempts to settle the
case, the court now addresses the instant dispositive motion.
3
B.
Factual Background
Century operated an aluminum plant in Ravenswood, West
Virginia (Afacility@).
In 1989, Ravenswood Aluminum Corporation,
in an asset sale, purchased the primary aluminum smelting and
related operations of the facility from Kaiser Aluminum
Corporation (AKaiser@).
Up to that point, Kaiser and the Union
had a 30-year bargaining history touching on the matters now in
controversy.
Ravenswood Aluminum Corporation assumed the thencurrent CBA between the Union and Kaiser, which had been
executed on April 4, 1988.1
In 1997, the facility was renamed
1The
court is aware of Century=s position that, in 1989 when
it purchased the facility, it assumed only the then-current CBA
and not any earlier CBAs or the retiree healthcare benefits
agreed upon in those earlier CBAs. Nevertheless, the bargaining
history at the facility provides a helpful historical context
that may possibly aid the interpretive process. See Keffer v.
H.K. Porter Co., Inc., 872 F.2d 60, 62 (4th Cir. 1989)(stating
that A>[i]n order to interpret . . . [a CBA] it is necessary to
consider the scope of other related collective bargaining
agreements, as well as the practice, usage and custom pertaining
to all such agreements.=@) (quoting Trans.-Comm. Empl’ees Union
v. Union Pac. R.R. Co., 385 U.S. 157, 161 (1966)).
It is also noted that plaintiffs offer one vesting argument
that hinges upon interconnecting two agreements, one between the
Union and a Century predecessor and the other between the Union
and Kaiser, in an effort to show a post-termination event
supporting vesting. It does not appear proper to use a related
agreement between Kaiser and the Union as evidence of a posttermination event tending to show Century’s obligations to its
retirees. That is especially so inasmuch as Century was not a
signatory to the Union/Kaiser agreement.
4
Century Aluminum of West Virginia, Inc.
In 1999, Pechiney
Services of America (“Pechiney”) purchased the fabrication side
of the Ravenswood plant from CAWV.
Pechiney assumed the retiree
medical liability for any current or future retirees of the
fabrication side of the plant.
The retirees were represented by the Union during
their employment by Century and its predecessors.
The Union
negotiated a series of successive CBAs with Century and its
predecessors governing the terms and conditions of hourly
employment.
One component of these successive CBAs was the
provision of retiree healthcare benefits, which appear to have
been contemplated in the successive CBAs agreed upon since 1959.
The retirees at issue herein fall into one of two
categories.
The first category consists of those who retired
while a CBA for one of the following periods was in effect: (1)
an April 4, 1988, CBA between Kaiser and the USW (“1988 CBA”),
(2) a June 12, 1992, CBA between Ravenswood Aluminum Corporation
and the USW (“1992 CBA”), (3) a November 30, 1994, CBA between
Ravenswood Aluminum Corporation and the USW (“1994 CBA”), (4) a
June 1, 1999, CBA between Century and the USW (“1999 CBA”), or
(5) a June 1, 2006, CBA between Century and the USW (“2006
CBA”).
The second category consists of employees retiring after
the 2006 CBA expired on August 31, 2010.
5
The individual plaintiffs also retired while covered
by one of the following summary plan descriptions (“SPDs”),
which were generally issued in accordance with each operative
CBA: (1) a June 12, 1992, SPD for the Retired Employees’ Group
Benefits Plan (“1992 SPD”), (2) a January 1, 1995, SPD for the
Retired Employees’ Group Benefits Plan (“1995 SPD”), (3) a June
1, 1999, SPD for the Retired Employees’ Group Benefits Plan
(“1999 SPD”), or (4) a January 1, 2008, SPD for the Retired
Employees’ Group Benefits Plan (“2008 SPD”).
C.
The Termination of Retiree Healthcare Benefits
Century asserts that it dealt with a number of
financial challenges beginning in 2007 based upon the volatility
in aluminum prices.
It states that rising healthcare costs,
Century=s inability to sell aluminum at profitable prices, and
other factors, contributed to cash operating losses of
$34,000,000 in 2007 and $9,000,000 in 2008.
After curtailing
all operations at the facility, Century suggests that it
continued to suffer negative cash flow.
One component was
approximately $14,250,000 in healthcare benefits provided to
active, laid-off, and retired employees.
Century projected that
the healthcare benefits for retirees would total $3.5 million
for 2009.
6
All of the governing CBAs and SPDs provide that
Century pays retiree health benefits for the term of each labor
agreement.
The CBAs from 1988, 1992, 1994, 1999, and 2006 all
state as follows:
The Group Insurance Benefits shall be set forth . . .
in booklets entitled Employees’ Group Insurance
Program and Retired Employees’ Group Insurance
Program, and such booklets are incorporated herein and
made a part of this . . . Labor Agreement by such
reference. . . . It is understood that this Agreement
with respect to insurance benefits is an agreement on
the basis of benefits and that the benefits shall
become effective on [the various CBAs’ effective
dates], except as otherwise provided in the applicable
booklet, and further that such benefits shall remain
in effect for the term of this . . . Labor Agreement.
1988 CBA at 116 (see same language found in 1992 CBA at
177; 1994 CBA at 182; 1999 CBA at 193; 2006 CBA at 95
(emphasis added as to all).
The underscored language is
referred to hereinafter as the “durational clause.”
Similarly, the 1992, 1995, 1999 and 2008 SPDs all
contain the following clause, which is nearly identical to the
durational clause, specifically providing that the retiree
medical benefits shall remain in effect for the term of the
labor agreement:
It is understood that this agreement with respect to
benefits is an agreement on the basis of benefits and
that the revised benefits shall become effective on
[the effective date of the Retired Employees’ Group
Insurance Program], except as otherwise provided
herein, and further that such benefits shall remain in
effect for the term of the Labor Agreement.
7
1992 SPD at 80; 1995 SPD at 92; 1999 SPD at 79; 2008 SPD at 40
(emphasis added as to all).
As the court noted generally in its
decision denying the preliminary injunction, “[A]ll of the CBAs,
and the SPDs incorporated therein, that have governed the
Century/Union relationship following the sale from Kaiser
specify that retiree healthcare benefits are effective only
during the lifetime of the particular CBA in effect at the
time.”
Dewhurst, 731 F. Supp.2d at 512–13 (quoted in Dewhurst
v. Century Aluminum Co., 649 F.3d 287, 290-91 (4th Cir. 2011)).
On October 19, 2009, Century announced that it would
unilaterally modify or cancel the retiree medical benefits that
it provides to retirees, spouses, surviving spouses, and
dependents of retirees.
Effective January 1, 2010, Century
retirees under the age of 65 were required to pay an annual
deductible of $700 per family for in-network coverage, monthly
contributions of $55 per month for retiree only and $110 per
month for retiree plus one dependent coverage, and $175 per
month for family coverage.
As to retirees over 65 years of age,
Century terminated benefits entirely.
The letter containing the
announcement asserted that Century possessed an unqualified
right to unilaterally change or terminate health coverages at
any time.
8
This action by Century has visited an exceptional
burden upon the retirees and their families.
They assert that
the healthcare benefits they historically received from Century
are vested, last a lifetime, and are not subject to termination
or modification.
D.
Collective Bargaining History
From 1959 through the present day, successive CBAs
covering the facility have contained, or incorporated by
reference, language obligating Century or its predecessors to
provide some form of healthcare benefits at no cost to the
retirees.
The 1959, 1962, 1963, and 1965 CBAs include the
healthcare benefits negotiated for active and retired employees.
The CBAs entered into thereafter reference other sources, such
as Group Insurance Plan booklets and Summary Plan Descriptions
(collectively ASPDs@) incorporated into the CBAs by reference.
The court summarizes the contents of the CBAs and SPDs from 1959
through 1985.
Article 15 of the 1959 CBA provides retiree healthcare
benefits up to a stated annual maximum.
The spouse was subject
to termination of benefits upon a retiree=s death or reaching the
same monetary maximum, whichever first occurred.
Article 21 of
the 1959 CBA, which expired July 31, 1962, provided additionally
9
as follows: A[T]he terms and conditions of this Agreement, and
each of them, shall continue in effect until July 31, 1962 . . .
.@
(1959 CBA at 75).
Essentially similar provisions are found
in the 1962, 1963 and 1965 CBAs, together with a 1968 extension,
that cover the years down to June 1, 1971.
In 1971, the parties began using the combination of a
CBA and SPD during the bargaining cycle.
that it is part of the 1971 CBA.
The 1971 SPD states
Upon the death of the retiree,
his surviving spouse and dependent children continued to have
coverage for six months.
The 1971 SPD specifically provided
that its benefits Aremain[ed] in effect for the term of the 1971
. . . [CBA].@ (1971 SPD at 33).
The 1981 SPD contained a similar provision2, as did the
1985 SPD which continued to provide retiree healthcare benefits,
with the same proviso concerning the time limit of the coverage:
Asuch benefits shall remain in effect for the term of the 1985
Labor Agreement.@ (1985 SPD at 68).
E.
Extrinsic and Other Evidence Beyond the CBAs and SPDs
Plaintiffs offer various pieces of evidence they
believe supports their view of vesting.
2The
The court notes the
parties furnish nothing further respecting the period
from the 1971 CBA to the 1981 CBA.
10
evidence below, followed immediately in each by Century’s
response thereto.
1. The 1990 Labor Dispute
First, in 1990 a labor dispute developed between
Ravenswood Aluminum Corporation and the Union.
Following
expiration of the 1988 CBA on October 31, 1990, the parties
attempted to negotiate a new CBA without success.
The 1,700
employees were locked out on October 31, 1990, and the facility
was operated with managers and replacement workers.
A 16-month
impasse followed, along with an additional, unexplained interval
of three-and-one-half months, after which the 1992 CBA was
executed.
During the 1990-92 Lockout, while no CBA was in
effect, Century (then Ravenswood) no longer provided healthcare
benefits to active employees.
It continued, however, to provide
those benefits to retired former employees.3
3
Plaintiffs cite Mid-Atlantic Regional Council of
Carpenters v. Shamblin Const., Inc., 2012 WL 2026044 (S.D. W.
Va. Jun. 5, 2012), as supporting their view that the payment of
benefit contributions following the lapse of the agreement
imposing the obligation warrants a denial of summary judgment in
this context. The circumstances in Shamblin were quite
different. For example, the parties differed concerning whether
the applicable CBA had indeed expired. Further, the voluntary
pay-in of employer contributions spanned 19 years. The decision
does not aid the plaintiffs.
11
Century notes that, at the time of the lockout, it had
only a handful of retirees on the books given the recent
acquisition from Kaiser.
Additionally, the Union and Ravenswood
Aluminum Corporation never discussed the issue of continuation
of retiree medical benefits during the strike.
The matter also
was not discussed within Century.
2. The “2007 Master Plan SPD”
In contrast to its historical approach, Century
published a “2007 Master Plan SPD” without first consulting the
Union.
The 2007 Master Plan SPD never became effective and is
not an operative plan document.
Following some controversy on
the point, set forth more fully infra, the Union and Century
developed a jointly prepared SPD instead, which was published in
January 2008.
The Union suggests that the circumstances following
Century’s unilateral publication of the 2007 Master Plan SPD
indicates Century’s view that retiree healthcare benefits are
vested.
The 2007 Master Plan SPD included language reserving to
Century the right to modify the “Plan Document and this SPD . .
. .”
(Pls.’ Ex. 19 at 4).
That provision, however, was
withdrawn by Century after the Union objected.
12
In response, Century details the origin of the 2007
Master Plan SPD.
During continuing negotiations in 2007
respecting the contents of the as-yet undrafted SPD, the
Department of Labor informed Century that it had received a
complaint that Century had not issued updated medical SPDs.
The
Department of Labor mandated that Century issue updated SPDs for
both active and retired employees on an unstated, short time
frame.
In response, Century retained a third-party consultant
to quickly draft the document.
The consultant used its own
template to do so, resulting in the modification and other
language that was not a bargaining subject between Century and
the Union.
This resulted in many objections by the Union
concerning the content of the hastily prepared SPD.
As noted,
Century withdrew the modification language, inasmuch as it was
never a bargaining subject.
Century also explained to the Union
the difficulty with the Department of Labor.
The document was
eventually scrapped in its entirety.
Century also notes that, over an unspecified number of
years, the retirees received medical enrollment forms asking
their acknowledgment that Century had the right to modify or
terminate the retiree healthcare coverage.
Neither the retirees
nor the local union ever took exception to these requested
acknowledgements.
13
3. Representations by Century Agents
The retirees assert that Century agents have
repeatedly represented to bargaining unit members that retiree
healthcare benefits last for a lifetime.
Benefits Manager
Rosita Bauer, who worked for Century from 2000 to 2008,
testified that several Century representatives, including its
Human Resource Director, advised her that retiree medical
benefits were to endure for the retirees’ lifetimes.
She
produced some of her own notes to support that view.
When a Century employee was preparing to retire, it
was Ms. Bauer who prepared the necessary papers, met with the
employee, and answered any questions.
She recollected that
during her nine-year tenure she told nearly all retirees during
their exit interviews that that they had lifetime medical
coverage.
Also, Ms. Bauer worked for Jeff Tutalo, Century’s
Human Resources Director.
Ms. Bauer stated that Mr. Tutalo
trained her as follows:
[A]nyone who was an hourly retiree, the retiree and
spouse had lifetime coverage from their retirement,
and they had medical only. They did not have dental or
vision as part of the medical package. If the retiree
died, the spouse would be covered for her lifetime.
(Bauer Dep. at 17).4
4
She states she was similarly advised by Al
Respecting Mr. Tutalo’s views on the matter, Century
asserts as follows:
14
Toothman, the former Century Manager of Administrative Services,
and three fellow, lower-level employees.
She further noted that
certain insurers with whom Century contracted were all aware
that the retirees had lifetime medical coverage.
Century responds that Ms. Bauer occupies a “low level”
position. (Reply Br. at 14)5.
is a Century retiree.
It notes as well that her husband
Additionally, Century points out several
contradictory statements by Ms. Bauer supporting its view on the
subject of vesting:
She testified that she reviewed documents stating that
Century had the right to terminate or modify the
retiree medical plan at the time that the documents
were distributed to retirees and testified that the
documents accurately reflected the terms of the
applicable plan.
She testified that she reviewed and sent out to
retirees company prepared enrollment forms that stated
that the retirement medical plan could be terminated
at any time –- and then testified that she believed
these forms accurately reflected the terms of the
plan.
[Mr.] Tutalo testified that he never told retirees or
their surviving spouses that their medical benefits
were guaranteed for life –- nor did he instruct anyone
reporting to him to do so. Moreover, he affirmatively
told over half of the retirees he met with that their
medical benefits were not guaranteed.
(Reply Br. at 14 n.5 (citations omitted)).
5
Century downplays Ms. Bauer’s role, stating that she
“was not a ‘Manager’ in any sense -- she had no one reporting to
her, only had a high school degree, and testified that she was
primarily trained by Barbara Casto, whose title was Personnel
Clerk.” (Reply Br. at 14 n.6).
15
She testified that medical benefits could be decreased
for current retirees after a given contract expired,
provided these changes were also made for active
employees.
She testified that she told retirees upon retirement
that they may have to pay a premium towards their
retiree medical benefits in the future.
It is also undisputed that all managers responsible
for administering retiree benefits testified uniformly they
never told retires that their medical coverage could not be
modified.
4.
Statements of Gordon Hopper
Plaintiffs next focus on one particular Century agent
who does appear to be a trusted, senior employee.
Gordon
Hopper, an individual whom they term the current Century plant
manager, served on the company side during collective bargaining
negotiations beginning in 1992.
Mr. Hopper testified that an
employee was able to lock in certain benefits by retiring under
the contract that provided for those benefits.
Century notes Mr. Hopper’s testimony that he was not a
trained labor relations specialist.
He also admitted that it
was beyond his job responsibilities to discuss benefit matters
with employees.
Importantly, in all his years as a manager, he
never talked to employees about the duration of their retiree
medical benefits.
16
Additionally, Century points out that events
transpiring during the 2006 collective bargaining negotiations
are in contrast to what plaintiffs, and perhaps Mr. Hopper,
would paint as Century’s understanding concerning retiree
medical coverage.
When considering a medical coverage proposal
for active and retired employees the Union’s lead spokesperson
asked whether, if the Union agreed to the proposal, Century
would guarantee lifetime medical coverage to retirees under the
new CBA.
Century rejected the request and declined to make any
such guarantee.
5.
Retiree Evidence
There is also evidence from retirees concerning
promises made to them regarding health benefits.
Nine retirees
testified to promises they received concerning the lifetime
nature of their healthcare benefits.
For example, Lesley
Shockey testified that he and his wife met with Ms. Bauer for
his exit interview in 2006.
She advised his wife, and
supervisor Larry Weese advised Mr. Shockey, that the healthcare
benefits were, essentially, for life.
Century responds that the class representatives, David
Bryan and Harold Dewhurst, both testified they could point to no
language in the governing documents providing lifetime medical
17
coverage and they were never advised as such by any Century
employee or extrinsic documents.
Indeed, Mr. Dewhurst testified
to his understanding that retiree medical coverage could be
decreased if the same occurred for active employees.
Plaintiffs further contend that surviving spouses were
also told that healthcare benefits would last a lifetime.
The
following Century informational handout was disseminated by Ms.
Bauer to all retirees from 2000 through 2009:
Q.
IS MY SPOUSE COVERED BY THE SAME HEALTH PLAN AND CAN
HE/SHE CONTINUE THIS COVERAGE AFTER MY DEATH?
A.
Your spouse is covered by the same plan as you,
provided he or she was your spouse at the time of your
Retirement. If you predecease your spouse, he or she
may continue coverage under the plan for his/her
Lifetime.
(Shockey Dep. at Ex. 4)(emphasis supplied)).
Century attacks the Q&A document.
For example, it
notes that Ms. Bauer located a similar document in some of Mr.
Tutalo’s old files after he left Century.
The Q&A document had
been sent to Mr. Tutalo by an employee at Pechiney’s corporate
headquarters at the time of the sale of the fabrication side of
the plant.
Mr. Tutalo never provided the document to employees
when he met with them upon retirement.
Further, Ms. Bauer
admitted that it was not in the set of documents that Mr. Tutalo
directed Ms. Bauer to use when training her on what to provide
to retiring employees.
As Ms. Bauer testified, she drafted the
18
Q&A without consulting Mr. Tutalo or any of her superiors.
None
of her superiors approved of, or even knew, that she was
distributing the document.
II.
A.
Governing Law
1. The Summary Judgment Standard
A party is entitled to summary judgment “if the
pleadings, the discovery and disclosure materials on file, and
any affidavits show that there is no genuine issue as to any
material fact and that the movant is entitled to judgment as a
matter of law.”
Fed. R. Civ. P. 56(c).
Material facts are
those necessary to establish the party’s claim.
Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
A genuine issue of material fact exists if, in viewing
the record and all reasonable inferences drawn therefrom in a
light most favorable to the non-moving party, a reasonable factfinder could return a verdict for the non-movant. Id.
The
moving party has the burden of showing -- “that is, pointing out
to the district court -- that there is an absence of evidence to
support the nonmoving party’s case.”
19
Celotex Corp. v. Catrett,
477 U.S. 317, 325 (1986).
If the movant satisfies this burden,
then the non-movant must set forth specific facts as would be
admissible in evidence that demonstrate the existence of a
genuine issue of fact for trial.
322-23.
Fed. R. Civ. P. 56(c); id. at
A party is entitled to summary judgment if the record
as a whole could not lead a rational trier of fact to find in
favor of the non-movant.
Williams v. Griffin, 952 F.2d 820, 823
(4th Cir. 1991).
Conversely, summary judgment is inappropriate if the
evidence is sufficient for a reasonable fact-finder to return a
verdict in favor of the non-moving party.
248.
Anderson, 477 U.S. at
Even if there is no dispute as to the evidentiary facts,
summary judgment is also not appropriate where the ultimate
factual conclusions to be drawn are in dispute.
Overstreet v.
Ky. Cent. Life Ins. Co., 950 F.2d 931, 937 (4th Cir. 1991).
A court must neither resolve disputed facts nor weigh
the evidence, Russell v. Microdyne Corp., 65 F.3d 1229, 1239
(4th Cir. 1995), nor make determinations of credibility.
Sosebee v. Murphy, 797 F.2d 179, 182 (4th Cir. 1986).
Rather,
the party opposing the motion is entitled to have his or her
version of the facts accepted as true and, moreover, to have all
internal conflicts resolved in his or her favor.
Charbonnages
de France v. Smith, 597 F.2d 406, 414 (4th Cir. 1979).
20
Inferences that are “drawn from the underlying facts . . . must
be viewed in the light most favorable to the party opposing the
motion.”
United States v. Diebold, Inc., 369 U.S. 654, 655
(1962).
2. Applicable Substantive Law
Much of the governing law applicable herein was set
forth in the court’s earlier decision denying the plaintiffs’
motion for a preliminary injunction.
The court of appeals’
decision in Keffer v. H.K. Porter Company, Inc., 872 F.2d 60, 64
(4th Cir. 1989), remains central to the analysis.
That decision
involved whether certain welfare benefits continued beyond the
expiration of a collective bargaining agreement.
The following
standard applied:
In determining whether an employer's obligation to
provide benefits to its retirees or their surviving
spouses continues beyond the expiration of the
collective bargaining agreement, we look to the
parties' intent as expressed in their agreement. While
the question therefore is primarily one of contract
interpretation, collective bargaining agreements are
not interpreted under traditional rules of contract
but under a federal common law of labor policy.
Therefore, “[i]n order to interpret such an agreement
it is necessary to consider the scope of other related
collective bargaining agreements, as well as the
practice, usage and custom pertaining to all such
agreements.” Of course, as with any contract
interpretation, we begin by looking at the language of
the agreement for any clear manifestation of the
parties' intent. “The intended meaning of even the
most explicit language can, of course, only be
21
understood in light of the context which gave rise to
its inclusion.”
Id. at 62 (citations omitted); see also District 29, United Mine
Workers of America v. Royal Coal Co., 768 F.2d 588, 590 (4th
Cir. 1985) (“Whether an employer's obligation to provide
benefits to its retirees continues beyond the expiration of the
underlying collective bargaining agreement depends upon the
intent of the parties.
Moreover, whether the parties intended
such an employer's obligation to continue beyond the expiration
of the collective bargaining agreement is primarily a question
of contract interpretation.”) (citations omitted).
While the contract construction rules in the
collective bargaining context may be slightly more relaxed than
those governing other contracts, the polar star remains the
language chosen by the parties.
As this court noted in its
earlier Dewhurst decision,
Courts will bar extrinsic evidence that is
inconsistent with an unambiguous writing. See, e.g.,
Pace v. Honolulu Disposal Serv., Inc., 227 F.3d 1150,
1157–58 (9th Cir. 2000); Brown–Graves Co. v. Cent.
States, Southeast & Southwest Areas Pension Fund, 206
F.3d 680, 683 (6th Cir. 2000) (refusing, where
collective bargaining agreement was unambiguous, to
consider extrinsic evidence of “informal arrangement”
between employer and union); see also Bonnell/
Tredegar Industries, Inc. v. N.L.R.B., 46 F.3d 339,
345 (4th Cir. 1995) (“We, too, conclude that it is
clear from the language of the Agreement itself that
the parties intended to retain the existing Christmas
bonus plan; no extrinsic evidence as to the parties'
intent in that respect is necessary.”).
22
Additionally, the explicit and unambiguous
language found in a series of labor agreements might
be deemed the best indicator of the parties'
longstanding expectations of one another. See, e.g.,
20 Richard A. Lord, Williston on Contracts § 55:23
(4th ed. 2010)(“While there is thus some debate
concerning how and the extent to which the parol
evidence rule applies to collective bargaining
agreements, there seems to be general agreement among
most courts that parol evidence of the parties'
bargaining history may be used to explain or
supplement the terms of the collective bargaining
agreement, but may not be admitted to prove an
agreement at variance with the normal or customary
meaning of the words chosen by the parties to express
their agreement.”); 12 Employment Coordinator—Labor
Relations § 47:17 (Elec. ed. 2010) (“While there is
broad latitude in the admissibility of bargaining
history to construe a collective bargaining agreement,
where the meaning of the clause in question is clear,
no interpretation is necessary, and evidence of
bargaining history is not admissible to explain its
meaning.”).
Dewhurst, 731 F. Supp.2d at 515-16.
In addition to these principles, the Supreme Court has
had occasion this year to address a situation similar to the
circumstances in the instant case.
In M & G Polymers USA, LLC
v. Tackett, 135 S. Ct. 926 (2015), certain retirees and others
instituted a class action against an employer, asserting claims
under the LMRA and ERISA.
Those claims alleged the employer
breached the governing collective bargaining agreements
putatively granting the retirees lifetime, contribution-free
health care benefits.
A durational clause in the CBA provided
for the CBA’s renegotiation every three years.
In addition to
observing essentially the same quoted principles from Dewhurst
23
above, the Supreme Court, in concluding no lifetime-benefits
promise existed, stated as follows:
The Court of Appeals also failed even to consider
the traditional principle that courts should not
construe ambiguous writings to create lifetime
promises. . . .
Similarly, the Court of Appeals failed to
consider the traditional principle that “contractual
obligations will cease, in the ordinary course, upon
termination of the bargaining agreement.” . . . [W]hen
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 936-937.
In addition to this now-settled law, as noted, the
precise language and circumstances in this action have earlier
been the subject of a published opinion by our court of appeals.
In the Dewhurst decision reviewing this court’s denial of
plaintiffs’ motion for a preliminary injunction, it was stated
as follows respecting the durational clauses:
In the case at bar, the CBA language on the duration
of the benefits at issue appears direct and plain
“that such benefits shall remain in effect for the
term of this [year] Labor Agreement.” J.A. at 182. As
the district court noted, “all of the CBAs and SPDs
from 1988 through the present contain language of this
type.” Dewhurst, 731 F. Supp.2d at 520. This contract
limit on the duration of benefits is similar to that
in Royal Coal.
In Royal Coal, the applicable CBA language stated that
benefits “shall be guaranteed during the term of this
Agreement.” 768 F.2d at 590 (emphasis omitted). Based
on this language showing “the intent of the parties,”
id., we determined the benefits did “not extend beyond
the expiration of” the CBA:
24
Employer obligations and employee rights, under
a collective bargaining agreement, do not
survive the expiration of the agreement absent a
clear intention of the parties.
Id. at 592 (quotation omitted).
In the face of the durational language in the CBAs,
our clear precedent in Keffer and Royal Coal does not
support a finding that the Retirees have made a
showing, much less a clear showing, of a likelihood of
success on the merits . . . .
Dewhurst, 649 F.3d at 292.
B.
Analysis
As noted, the relevant CBAs provide materially as
follows:
The Group Insurance Benefits shall be set forth . . .
in booklets entitled Employees’ Group Insurance
Program and Retired Employees’ Group Insurance
Program, and such booklets are incorporated herein and
made a part of this . . . Labor Agreement by such
reference. . . . It is understood that this Agreement
with respect to insurance benefits is an agreement on
the basis of benefits and that the benefits shall
become effective on [the various CBAs’ effective
dates], except as otherwise provided in the applicable
booklet, and further that such benefits shall remain
in effect for the term of this . . . Labor Agreement.
The language is clear and unambiguous.
The retirees’ healthcare
benefits remained in effect for the term of the applicable CBA.
There is no basis in light of this language to conclude those
benefits vested beyond the term of each CBA.
The collective
bargaining history supports this reading inasmuch as the
25
language, or its slight variant in the historical CBAs, has been
used by the parties in multiple CBAs for decades.
The plaintiffs understandably attempt to overcome the
clarity of the durational clause.
First, they rely upon
Quesenberry v. Volvo Trucks North America Retiree Healthcare
Benefit Plan, 651 F.3d 437 (4th Cir. 2011).
They contend the
decision stands for the broad proposition that “linking
eligibility” for retiree healthcare benefits to “an event that
would almost certainly occur after the expiration of the
agreement signal[s] the parties’ intent[ion] to continue
retirement health benefits notwithstanding expiration” of the
current CBA.
Quesenberry, 651 F.3d at 441.
In Quesenberry, Volvo and the United Auto Workers
(“UAW”) restructured a longstanding employee benefit scheme.
The parties executed a three-year CBA to commence in 2005 (the
“2005 CBA”).
The 2005 CBA set forth health insurance coverage
terms for retirees in two paragraphs, a “Coverage paragraph” and
a “Cost paragraph.”
Plaintiffs in this action rely heavily upon
the fact that the Coverage paragraph included a durational
clause much like that in the CBAs here, namely, that Volvo would
continue coverage under the applicable benefit program “for the
duration of this Agreement.”
Id. at 440.
26
Plaintiffs neglect to note, however, the import of the
“Cost paragraph.”
The Cost paragraph was designed to flesh out
some of the particulars, including the limits on Volvo’s
financial obligations under the Coverage paragraph.
The Cost
paragraph can be summarized as follows:
It imposed caps on Volvo’s liability for retiree
medical costs.
It dealt with costs in excess of these caps, by
creating a Voluntary Employee’s Beneficiary
Association (“VEBA”) trust, and requiring that Volvo
make on the day the 2005 CBA expired a balloon payment
equal to forty percent of a roughly $4 million total
contribution to the VEBA trust.
The Cost paragraph then provided that, in the event
the VEBA trust should be exhausted in the future, the
parties could negotiate how to reduce costs and, if
those negotiations proved unsuccessful, that Volvo
could charge retirees premiums to cover costs over the
cap using an agreed upon formula.
It originally contained a durational clause, like the
Coverage paragraph, which was deleted at the UAW’s
request.
Id.
Volvo refused to extend the healthcare benefits in the
successor CBA.
It unilaterally modified the benefits, claiming
the Coverage paragraph durational clause as its authority for
doing so.
The court of appeals focused on the Cost paragraph.
Indeed, it observed that, “Were the Cost paragraph not in the
agreement, Volvo would have a compelling point.”
Quesenberry,
651 F.3d at 440 (citing Royal Coal, 768 F.2d at 592).
27
In
harmonizing the Coverage and Cost paragraphs, the court of
appeals charted a different course than Volvo for several
reasons.
For example, it observed as follows:
It is almost inconceivable . . . that . . . [the
parties’ negotiation] mechanism would be triggered
during the scope of the 2005 CBA. First of all, Volvo
itself projected that the trust would not be exhausted
until 2014, some nine years after an agreement that
was contracted to last only three. More importantly,
Volvo was required to make a $1.585 million
contribution to the VEBA on the very last day of the
2005 CBA's term. It would be almost impossible to
project the VEBA to run out during the 2005 CBA when
roughly 40% of the trust's corpus was to be deposited
on that final day, and Volvo does not contend that
either party contemplated that unlikely scenario. To
contend that the VEBA and its negotiated mechanism
were good only until the expiration of the 2005 CBA
thus requires an overactive imagination.
Quesenberry, 651 F.3d at 440-41.
Plaintiffs place much stock in the panel drawing an
analogy between the CBA’s Cost paragraph and the CBA in Keffer.
The latter linked retiree health benefits not to termination of
the CBA but rather to the retiree becoming eligible for
Medicare.
The court of appeals in Keffer held it was that
linkage, namely, tying the eligibility for benefits to an event
that would almost certainly occur after the expiration of the
agreement, that signaled an intention to continue benefits
beyond CBA expiration.
But that argument is conclusively unavailable to the
plaintiffs in this action.
The panel that heard the argument
28
and authored the opinion in this action seeking reversal of this
court’s refusal of a preliminary injunction stated as follows:
Applying ordinary principles of contract
interpretation, we note that the collective bargaining
agreement in Keffer differed materially from that
before us here. In Keffer, retiree health benefits
were explicitly linked not to termination of the
agreement, but to a post-termination event, namely the
date of the retiree's eligibility for Medicare. As the
district court noted, “there is no comparable language
. . . in any of the CBAs or the SPDs in this action.
The agreements in Keffer are simply different from
those at issue here.” Dewhurst, 731 F.Supp.2d at 519.
Dewhurst, 649 F.3d at 292.
The observation is quite powerful
inasmuch as the same three-judge panel, on the same day, heard
both the appeal in Quesenberry and in this action.
Second, plaintiffs assert another significant post-CBA
termination event is the SPD language providing a dependent’s
medical coverage ends upon the retiree’s death.
observation adds little to the analysis.
This
In view of the
durational clause, this language simply relates to those
retirees who died during the life of a particular CBA.
It does
not mean the parties to a particular CBA intended to provide
lifetime healthcare benefits contrary to the durational clause.
Third, plaintiffs rely upon the Medicare reimbursement
provision.
They contend that since some employees will arrive
at the reimbursement age long after the CBA might expire, the
parties to the string of CBAs in this case must have meant for
29
medical coverage to vest.
This provision might just as easily
be explained as providing reimbursement in the event that
benefits are still offered at the time the Medicare premiums
come due.
It is too much, especially in light of the durational
clause, to suggest that this premium reimbursement provision
intended the retirees to have lifetime medical coverage.
Fourth, plaintiffs assert that the various companyagent admissions and retirees’ honestly held beliefs, recounted
supra, coalesce with such certainty that Century must have
intended for retiree medical coverage to vest.
As the court has
observed, practice, usage and custom pertaining to the CBAs may
have relevance.
As illustrated by Century’s explanation of the
extrinsic and other evidence, however, the testimony on these
points, having now been fully developed, is too evanescent a
basis upon which to base a vesting decision running contrary to
the clear-cut terms of the durational clause.
Having considered each of the plaintiffs’ contentions,
and inasmuch as the clarity of the durational clause trumps all
collateral considerations offered, Century is entitled to
judgment as a matter of law.
The court notes that it has withheld its decision
herein for a time in contemplation that Century may choose to
30
reopen the facility and perhaps reconsider its benefits
decision.
Regrettably, an amicable resolution by the parties no
longer appears attainable.
And so, the court must render its
decision.
It is, accordingly, ORDERED that Century’s motion for
summary judgment be, and hereby is, granted.
III.
Based upon the foregoing discussion, it is ORDERED as
follows:
1.
That Century’s motion for summary judgment be, and hereby
is, granted; and
2.
That this action be, and hereby is, dismissed and
stricken from the docket.
The Clerk is directed to forward copies of this
written opinion and order to all counsel of record and any
unrepresented parties.
DATED: September 9, 2015
John T. Copenhaver, Jr.
United States District Judge
31
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