Fitzwater et al v. CONSOL Energy, Inc. et al
Filing
203
MEMORANDUM OPINION AND ORDER The 155 Supplemental Motion by Clarence Bright, Emmett Casey, Jr., Benny Fitzwater, Connie Z. Gilbert, Allan H. Jack, Sr., Robert H. Long, Terry Prater to Certify Class is denied, as more fully set forth herein. Signed by Judge John T. Copenhaver, Jr. on 10/15/2019. (cc: counsel of record; any unrepresented parties) (ts)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
BENNY FITZWATER and CLARENCE
BRIGHT, and TERRY PRATER, and
EMMET CASEY, JR., and CONNIE Z.
GILBERT, and ALLAN H. JACK, SR.,
and ROBERT H. LONG, on behalf of
themselves and others similarly
situated,
Plaintiffs,
v.
Civil Action No. 2:16-cv-09849
CONSOL ENERGY, INC., and
Consolidated with:
CONSOLIDATION COAL CO., and
Civil Action No. 1:17-cv-03861
FOLA COAL CO., LLC, and
CONSOL OF KENTUCKY, INC., and
CONSOL BUCHANAN MINING CO., LLC,
and CONSOL PENNSYLVANIA COAL CO.,
LLC, and KURT SALVATORI,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is the plaintiffs’ supplemental motion for
class certification, filed August 17, 2018.
I. Background
On April 24, 2017, plaintiffs Benny Fitzwater
(“Fitzwater”), Clarence Bright (“Bright”), and Terry Prater
(“Prater”), on behalf of themselves and others similarly
situated, filed their amended complaint against CONSOL Energy,
Inc., Consolidation Coal Co., Fola Coal Co., LLC, CONSOL of
Kentucky, Inc., and Kurt Salvatori (CONSOL Energy, Inc.’s Vice
President of Human Resources from 2011-2016 and fiduciary of the
plaintiffs’ employee welfare benefit plans) in this court.
First Am. Compl., ECF No. 36 (“ECF No. 36”).
This case was
consolidated on December 22, 2017 with Casey v. CONSOL Energy,
Inc. et al., brought by Emmett Casey, Jr. (“Casey”), Connie Z.
Gilbert (“Gilbert”), Allan Jack Sr. (“Jack”), and Robert H. Long
(“Long”).
ECF No. 90.
Plaintiffs Casey, Gilbert, Jack, and Long filed an
amended complaint on March 1, 2018.1
103 (“ECF No. 103”).
Second Am. Compl., ECF No.
After Fitzwater, Bright, and Prater’s
original motion to certify class, filed July 13, 2017, was
denied as moot by the court’s February 6, 2018 order, see ECF
No. 100, all seven named plaintiffs jointly filed a supplemental
motion for class certification against CONSOL Energy, Inc.,
Consolidation Coal Co.,2 Fola Coal Co., LLC, CONSOL of Kentucky,
Inc., CONSOL Pennsylvania Coal Co., LLC (collectively,
1
The March 1, 2018 amended complaint listed the same defendants,
except it replaced Fola Coal Co., LLC and CONSOL of Kentucky,
Inc. with CONSOL Pennsylvania Coal Co., LLC.
2 In 2014 and 2015, “Consolidation Coal did business as Consol
Buchanan Mining Company, LLC in reference to the Buchanan Mine.”
ECF No. 103 ¶ 18.
2
“CONSOL”),3 and Mr. Salvatori on August 17, 2018.
Pls.’ Suppl.
Mot. Class Cert., ECF No. 155 (“ECF No. 155”).4
The named plaintiffs are retired miners who worked at
CONSOL mine sites consisting of the CONSOL of Kentucky mines,
the Buchanan Mine located in Virginia and the Enlow Fork Mine
located in Pennsylvania, or at the Fola mine sites located in
West Virginia.
Pls.’ Mem. Supp. Suppl. Mot. Class Cert. 4-5,
ECF No. 156 (“ECF No. 156”); ECF No. 103 ¶¶ 23, 58; ECF No. 36
¶¶ 30-31.
They seek to represent some 4,000 miners who worked
at numerous CONSOL mine sites in four different states over the
course of approximately forty years.
ECF No. 156 at 1; Pls.’
Reply Suppl. Mot. Class Cert. 1, ECF No. 162 (“ECF No. 162”).
The plaintiffs allege wrongful and discriminatory termination of
retiree health benefits pursuant to the Employee Retirement
Income Security Act of 1975 (“ERISA”), 29 U.S.C. § 1001, et seq.
ECF Nos. 36, 103.
In the early 1980s, CONSOL began holding orientation
sessions for new, non-union employees at each of its mine sites,
3
Consolidation Coal Co., CONSOL of Kentucky, Inc., CONSOL
Pennsylvania Coal Co., LLC, and Fola Coal Co., LLC are all
wholly owned subsidiaries of CONSOL Energy, Inc. ECF No. 103
¶ 21; ECF No. 36 ¶ 93.
4
The plaintiffs’ supplemental motion incorporated the grounds
set forth “in the original Motion to Certify Class, Memorandum
in Support, and Reply (ECF 63, 64, 71).” ECF No. 155 at 3.
3
during which CONSOL representatives allegedly made oral and
written promises of lifetime medical benefit coverage to miners
and their beneficiaries as part of their “major initiative to
begin opening non-union coal mines.”
ECF No. 156 at 4.
Therein, representations were allegedly “made in written form on
slide shows – which Defendants projected on the wall for the
putative class members to read – or in hand-outs distributed to
class members by Consol.”
Id. at 4-5.
The materials allegedly
“explained the CONSOL retiree benefits and stated that those
benefits would remain competitive with the lifetime,
Congressionally-backed benefits available to miners through the
UMWA,” referring to the United Mine Workers of America.
5.
Id. at
The plaintiffs believed these lifetime retiree benefits
included medical, prescription drug, dental, vision, and life
insurance coverage.
ECF No. 103 ¶ 63.
The plaintiffs refer to these benefits as the
“Lifetime Plan” for which there was no uniform formal statement
and no Summary Plan Document (“SPD”).
Formal plans with SPDs
did exist, consisting of varying degrees of coverage for
medical, prescription drug, short- and long-term disability,
dental, vision, and life insurance benefits, in addition to
pension payments under a separate retirement plan.
See, e.g.,
August 31, 2018 Declaration of Deborah Lackovic (Consol’s
4
Director – Benefits) (“Second Lackovic Decl.”), Exs. A-P, ECF
Nos. 160-19 to 160-24.
The defendants provided the court with
SPDs from 1992, 1998, 2003, 2005, 2006, 2011, 2014 that were
distributed to CONSOL’s retired and active employees.
Id.
For instance, the 1992 SPDs benefits binder given to
production and maintenance employees at “Enlow Fork Mining
Company,” “Consol of Pennsylvania Coal Company,” and
“Consolidation Coal Company of Kentucky” summarized the (a) life
insurance, (b) medical, (c) salary continuance/disability, (d)
dental, and (e) retirement benefit plans, and provided a
separate SPD for each of them.
ECF No. 160-23.
Second Lackovic Decl., Ex. K,
The SPDs the defendants provided up until the
mid-2000s covered both active and retired employees within the
same plans.
See, e.g., Id. Ex. J, ECF No. 160-22 at 28,
CONSOL022576;5 Id. Ex. M, ECF No. 160-24 at 12, CONSOL022088.6
In 2006, CONSOL began providing two separate sets of
SPDs, one for retirees and one for active employees.
5
Second
The “CONSOL Inc. Comprehensive Medical Expense Benefits Plan
for Salaried Employees” issued in 2003 was described as “a group
health plan which provides payment for certain medical care to
eligible employees, retirees, and dependents.”
6 The “Comprehensive Medical Expense Benefits Plan for Production
and Maintenance Employees of Buchanan Mine” issued in 2005 was
described as “a group medical plan which provides payment for
certain health and vision care to eligible employees, retirees,
and dependents.”
5
Lackovic Decl. ¶¶ 7-8, ECF No. 160-19.
Retirees and active
employees also both received a separate SPD for each type of
benefit they received: medical, prescription drug, dental,
vision, disability, and life insurance, though the SPDs for
retired and active employees were all contained in a common
welfare plan designated Plan Number 581.
Id. Exs. B-F, (SPDs
for retirees), Exs. G-H (SPDs for active employees), ECF Nos.
160-19 to 160-20; ECF No. 103 ¶ 89.
In January 2011, CONSOL issued a separate benefit plan
for retired employees called the CONSOL Energy Inc. Retiree
Health and Welfare Plan (“Retiree Benefits Plan”).
Lackovic Decl., Ex. A, ECF No. 160-19.
See Second
Active employees
remained participants in what was known as the CONSOL Energy
Inc. Health and Welfare Plan (“Active Employee Benefits Plan.”),
which the parties at times refer to as the CONSOL Energy, Inc.
Flexible Benefits Program Comprehensive Medical Expense Benefits
Plan.
See July 27, 2017 Declaration of Deborah Lackovic (“First
Lackovic Decl.”) ¶ 9, ECF No. 67-5; Second Lackovic Decl. ¶ 8,
ECF No. 160-19; ECF No. 36 ¶ 50.
Unlike earlier plans that
covered dental and disability, the Retiree Benefits Plan only
covered medical, prescription drug, vision, and life insurance
benefits.
See First Lackovic Decl. ¶ 8, ECF No. 67-5; Second
Lackovic Decl., Ex. A, ECF No. 160-19.
6
The Active Employee
Benefits Plan continued to carry medical, prescription drug,
vision, dental, disability, and life insurance benefits.
Second
Lackovic Decl. ¶ 8, ECF No. 160-19; Id. Ex. G, ECF No. 160-20.
In or around 2010, the defendants allegedly “became
aware of a union organizing drive,” and in order to “halt”
organizational efforts, the defendants “repeatedly represented
to their employees,” including Bright, Fitzwater, and Fola miner
Harold Scott, that the “lifetime benefits plan . . . was
altogether more valuable than benefits offered by the UMWA.”
ECF No. 36 ¶¶ 36-37.
During the union organizing drive, the
defendants allegedly “repeated their previous statements
regarding the Lifetime Plan, specifically providing written
statements to the plaintiffs that: ‘This is a better deal than
the UMWA negotiated in the national contract.
AND REMEMBER, IT
DIDN’T COST YOU A PENNY IN DUES OR ASSESSMENTS.’”
Id. ¶ 38.
Despite these assurances, the plaintiffs soon learned
that they were not in fact assured lifetime benefits under a
single, unified plan.
Indeed, dating back to 1992, the SPDs for
the various benefit plans each contained a reservation of rights
clause that stated that CONSOL reserves the right to amend or
terminate the plans at any time for active employees and current
or future retirees.
See, e.g., Second Lackovic Decl. ¶¶ 9-10,
7
ECF No. 160-19.7
In accordance with the reservation of rights
clauses, CONSOL announced in late 2014 that it was terminating
retiree health and welfare benefits for all active employees on
October 1, 2014.
ECF No. 155-14.
Retirement-eligible employees
could continue to receive health and welfare benefits under the
Retiree Benefits Plan if they retired as of September 30, 2014,
although the Retiree Benefits Plan would terminate on January 1,
2020.
Id.
Alternatively, active employees could continue
working and receive a one-time, lump sum transition payment (to
be paid on or around October 22, 2014), based on their years of
service, to support their healthcare coverage upon retirement.
Id.8
Employees who had retired prior to this Fall 2014
announcement never had the option of receiving a transition
payment.
Id.
7
For instance, a 1992 SPD states, “The Company reserves the
right to terminate, suspend, withdraw, amend or modify the Plan
at any time. Any such change or termination in benefits
(a) will be based solely on the decision of the Company and (b)
may apply to active Employees, future retirees and current
retirees or other covered persons as either separate groups or
as one group.” Second Lackovic Decl., Ex. K, ECF No. 160-23 at
67, CONSOL019250.
8 The transition payments escalated in five-year increments
according to employees’ years of “credited service.” For
example, production employees received $2,500 for 0-4.99 years
of credited service, $10,000 for 10-14.99 years of credited
service, and $100,000 for 30 years of credited service. “Staff
Employees (Over age 50 as of 12/31/2013)” with those same years
of credited service received $2,500, $5,000, and $10,000,
respectively. ECF No. 155-14 at 2, CONSOL003849.
8
A year later, CONSOL informed retired employees by
letter that their retiree benefits under the Retiree Benefits
Plan would terminate on December 31, 2015.
ECF No. 155-16.
For
retirees, such as named plaintiff Prater, who had previously
elected to retire after the Fall 2014 announcement, CONSOL
provided a pro-rated portion of the previously rejected
transition payment to reflect the receipt of an additional year
of benefits under the Retiree Benefits Plan.
First Lackovic
Decl. ¶ 15, ECF No. 67-5; Prater Dep. 125:2-127:5, ECF No. 67-7;
Samons Dep. 65:2-6, ECF No. 67-9.
The plaintiffs now contend that the defendants
violated ERISA by representing, orally and in writing, the
existence of a single, unified retiree welfare benefits plan,
which they coin the “Lifetime Plan,” consisting of lifetime
medical, prescription drug, dental, vision, and life insurance
coverage.
ECF No. 156 at 1-3.
They claim that the oral
representations along with the orientation and training
materials created a Lifetime Plan enforceable under ERISA
conditioned on the plaintiffs retiring at age fifty-five and
attaining ten years of credited service.
ECF No. 103 ¶ 2; ECF
No. 36 ¶ 21.
There is no SPD for a “Lifetime” Plan.
The plaintiffs
assert that “Consol created the Lifetime Plan through its
9
slideshows and explanations that retiree welfare benefits would
vest” in retirement after working the requisite number of years.
ECF No. 162 at 13.
The plaintiffs also allege that the
defendants withheld or inconsistently distributed the separate
SPDs for retirees, which also failed to mention obligations
under the Lifetime Plan.
The plaintiffs say that some employees
never received the SPD for the Retiree Benefits Plan and others
only received the SPD when they became eligible for retirement,
which was the first time they learned that there were any
differences in the welfare benefits of retirees versus active
employees.
ECF No. 103 ¶¶ 76-83, 138; ECF No. 36 ¶¶ 65-75; ECF
No. 156 at 10, 22.
II. Class Action Allegations
The consolidated plaintiffs move for class
certification on all seven counts listed in the March 1, 2018
amended complaint:9 (I) Breach of fiduciary duties as to the
Lifetime Plan under 29 U.S.C. § 1104(a)(1)(a)(i);
(II) Enforcement of the Lifetime Plan as an ERISA plan under
9
The plaintiffs’ do not seek certification of the coercive
inference claim, 29 U.S.C. § 1141, that was included in
plaintiffs Fitzwater, Bright and Prater’s first amended
complaint, filed April 24, 2017. ECF No. 156 at 19; Pls. Mem.
Supp. Mot. Cert. Class 13, ECF No. 64; ECF No. 103 ¶¶ 109-156.
10
29 U.S.C. § 1132(a)(1-3); (III) Discrimination against
individual participants based on health-status related factors
under 29 U.S.C. § 1182; (IV) Failure to meet the duty of
disclosure by providing the plaintiffs with incomplete SPDs that
did not mention the Lifetime Plan’s benefits and obligations or
with no SPDs at all under 29 U.S.C. § 1021(a)(1); (V) Failure to
provide accurate and comprehensive SPDs regarding the Lifetime
Plan under 29 U.S.C. § 1022(a); (VI) Failure to accurately state
the Lifetime Plan’s requirements with respect to eligibility
under 29 U.S.C. § 1022(b); and (VII) Failure to provide an
adequate SPD regarding the Lifetime Plan in a timely manner
under 29 U.S.C. § 1024(b)(1).
ECF No. 156 at 18-19.
The plaintiffs originally proposed the following class
definition which would establish a class for retirees only:
All individuals who in 2014 or 2015 were participants
in or beneficiaries of a welfare benefits plan
(medical, prescription drug, dental, vision, and/or
life insurance) administered by CONSOL Energy
(“Consol”), whose receipt of such benefits was
predicated on being a retiree from Consol or the
dependent of a retiree from Consol, and whose receipt
of such benefits terminated in the years of 2014 and
2015.
ECF No. 156 at 3.
In their response to the plaintiffs’
supplemental motion for class certification, the defendants
argued that the class definition was too indefinite because it
ranged anywhere from 12,000 to 16,000 individuals based on the
11
allegations in the complaint.
Defs.’ Resp. Suppl. Mot. Class
Cert. 1-2, ECF No. 160 at 1-2 (“ECF No. 160”).
The definition
was also overbroad in that it “would include individuals who
were not impacted by CONSOL’s 2014 and 2015 decisions to
terminate retiree medical benefits” because their retiree
medical liabilities had already been transferred to a separate
entity, Murray Energy Corporation.
Id. at 8-9.
Thus, the
actual size of the putative class was only around 4,000
individuals.
ECF No. 162 at 3.
For the first time in their reply, the plaintiffs now
seek to certify the following two classes of CONSOL employees
from mine sites located in West Virginia, Kentucky, Virginia,
Pennsylvania, and “neighboring states:”
Class A: All individual plan participants, and their
dependents, who had qualified to enroll in a retiree
welfare benefits plan administered by CONSOL Energy
(“CONSOL”), but who had not yet enrolled in such plan
when CONSOL terminated their plan participation in the
years of 2014 and 2015.
Class B: All individual plan participants, and their
dependents, who had enrolled in a retiree welfare
benefits plan administered by CONSOL prior to CONSOL
terminating their plan participation in the years of
2014 and 2015.
ECF No. 162 at 3-4; ECF No. 156 at 12.
Class A covers the six
“Lifetime Plan” Counts of I-II and IV-VII, and Class B applies
only to remaining Count III (Discrimination based on Health
Status-Related Factors).
ECF No. 162 at 4.
12
The Declaration of CONSOL’s Director - Benefits
Deborah Lackovic (“Lackovic”) that is included in the
defendants’ response notified the plaintiffs that
“[n]otwithstanding any differences in coverage between the
groups,” Plan Number 583 encompassed all CONSOL retirees,
including UMWA retirees.
No. 160-19.
Second Lackovic Decl. ¶¶ 4-5, 12, ECF
The plaintiffs contend in their reply that they
proposed this two-part class definition “to account for
excluding the UMWA members” that Lackovic explained were still
covered under the Retiree Benefits Plan, designated Plan Number
583.
ECF No. 162 at 3.
The defendants insist in their surreply
that the plaintiffs lack a proper justification for belatedly
expanding this class definition to include retirement-eligible
individuals in addition to retirees.
173 at 8-12 (“ECF No. 173”).
Defs.’ Surreply, ECF No.
They point out that nothing in
their argument regarding Murray Energy Corporation raised any
issues related to retirement-eligible individuals the plaintiffs
now seek to include in Class A.
Id. at 10.
“The ordinary rule in federal courts is that an
argument raised for the first time in a reply brief or
memorandum will not be considered.” See Clawson v. FedEx Ground
Package Sys., Inc., 451 F. Supp. 2d 731, 734 (D. Md. 2006)
(citing United States v. Williams, 445 F.3d 724, 736 n.6 (4th
13
Cir. 2006)).
However, district courts have discretion to
consider these issues, such as when the opposing party files a
surreply.
Id. at 734-35 (citing Curry v. City of Syracuse, 316
F.3d 324, 330 (2d Cir. 2003)).
Inasmuch as the court held an
additional hearing addressing the revised class definition and
granted the defendants leave to file a surreply, the plaintiffs’
newly proposed class definition will be evaluated.
III. Applicable Law
The parties vigorously dispute the proof relied upon
by the plaintiffs in attempting to meet their certification
burden under Rule 23 of the Federal Rules of Civil Procedure.
The court thus undertakes the “rigorous” analysis required under
United States Supreme Court precedent, see Wal–Mart Stores, Inc.
v. Dukes, 564 U.S. 338, 350-51 (2011), nevertheless mindful of
our court of appeals’ admonition that Rule 23 should be accorded
a liberal construction “which will in the particular case ‘best
serve the ends of justice for the affected parties and . . .
promote judicial efficiency.’”
Gunnells v. Healthplan Services,
Inc., 348 F.3d 417, 424 (4th Cir. 2003) (quoting In re A.H.
Robins, 880 F.2d 709, 740 (4th Cir. 1989)).
A party seeking class certification must satisfy the
requirements found in Rule 23(a) of the Federal Rules of Civil
14
Procedure and demonstrate satisfaction of at least one of the
subdivisions of Rule 23(b).
U.S. 591, 614 (1997).
Amchem Prods., Inc. v. Windsor, 521
The material provisions of Rule 23(a)
provide as follows:
(a) Prerequisites. One or more members of a class may
sue or be sued as representative parties on behalf of
all members only if:
(1) the class is so numerous that joinder of all
members is impracticable;
(2) there are questions of law or fact common to
the class;
(3) the claims or defenses of the representative
parties are typical of the claims or defenses of
the class; and
(4) the representative parties will fairly and
adequately protect the interests of the class.
Fed. R. Civ. P. 23(a); see generally Thorn v. Jefferson–Pilot
Life Ins. Co., 445 F.3d 311 (4th Cir. 2006).
First, the numerosity requirement does not mandate a
specific number of plaintiffs to maintain a class action.
Brady
v. Thurston Motor Lines, 726 F.2d 136, 145 (4th Cir. 1984).
Rather, the “[p]racticability of joinder depends on many
factors, including, for example, the size of the class, ease of
identifying its numbers and determining their addresses,
facility of making service on them if joined and their
geographic dispersion.”
Baltimore v. Laborers’ Int’l Union of
15
N. Am., 67 F.3d 293 (4th Cir. 1995) (quoting Kilgo v. Bowman
Transp., Inc., 789 F.2d 859, 878 (11th Cir. 1986)).
The commonality and typicality requirements “both
serve as guideposts for determining whether under the particular
circumstances maintenance of a class action is economical and
whether the named plaintiff’s claim and the class claims are so
interrelated that the interests of the class members will be
fairly and adequately protected in their absence.”
Soutter v.
Equifax Info. Servs., LLC, 498 F. App’x 260, 264 (4th Cir. 2012)
(internal quotation marks omitted).
These requirements “tend[]
to merge” with the adequacy of representation requirement, see
Amchem Prods., Inc., 521 U.S. at 626 n. 20, which precludes
class certification unless the class representative “possess[es]
the same interest and suffer[s] the same injury as the class
members.”
Broussard v. Meineke Disc. Muffler Shops, Inc., 155
F.3d 331, 337-38 (4th Cir. 1998) (citations and internal
quotation marks omitted).
As noted by our court of appeals, “[a] plaintiff bears
the burden of proving the[] requirements” of Rule 23(a).
Monroe
v. City of Charlottesville, 579 F.3d 380, 384 (4th Cir. 2009).
“A party seeking class certification must do more than plead
compliance” with Rule 23 Requirements.
EQT Prod. Co. v. Adair,
764 F.3d 347, 357 (4th Cir. 2014) (citing Wal-Mart, 564 U.S. at
16
350).
Instead, the “party must present evidence that the
putative class complies” with Rule 23(a), as “actual, not
presumed, conformance” must be shown.
Id.; Gen. Tel. Co. of SW
v. Falcon, 457 U.S. 147, 160 (1982).
Finally, Rule 23(b) states:
(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;
or
(B) adjudications with respect to individual
class members that, as a practical matter,
would be dispositive of the interests of the
other members not parties to the individual
adjudications or would substantially impair
or impede their ability to protect their
interests;
(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; or
(3) the court finds that the questions of law or
fact common to class members predominate over any
questions affecting only individual members, and
that a class action is superior to other
available methods for fairly and efficiently
adjudicating the controversy . . . .
Fed. R. Civ. P. 23(b).
17
IV. Analysis
Respecting numerosity, plaintiffs contend that at
least 4,000 putative class members were affected by the
defendants’ “uniform action to terminate retirement welfare
benefits for the putative class of non-union Consol retirees,”
ECF No. 162 at 1, thereby readily satisfying the first
requirement of Rule 23(a).
Respecting commonality, the plaintiffs identify the
following putative questions of law and fact:
(1) Whether the class members are or have been
participants or beneficiaries in the applicable plan
or plans;
(2) Whether the defendants acted as fiduciaries of the
applicable plan or plans, directly or indirectly, to
convey misrepresentations to the plaintiff class
within the meaning of ERISA[;]
(3) Whether defendants have breached the duties,
responsibilities, and obligations imposed upon them by
ERISA, including in this case the duty not to
discriminate pursuant to 29 U.S.C. 1182 (Count III of
the Amended Complaint)[; and]
(4) Whether, pursuant to ERISA, defendants are liable
for the actions of non-fiduciaries who participated in
defendants’ breaches of fiduciary duties.
ECF No. 156 at 13-14.
Regarding typicality, the plaintiffs assert that all
members suffered an improper termination of their “lifetime”
healthcare benefits and, with respect to Class B, were
18
discriminated against by the defendants.
Id. at 17.
The
plaintiffs also claim to fairly protect the interests of the
putative class and that they are represented by counsel who are
experienced with class action litigation, thus satisfying the
fourth and final requirement of Rule 23(a).
The plaintiffs seek certification under Rule 23(b)(1),
(b)(2), and (b)(3).
In short, plaintiffs assert that litigating
their claims separately would present a risk of inconsistent
standards of conduct (23(b)(1)), that defendants’ actions
affected the putative class in a “generally-applicable fashion”
(23(b)(2)), and that common questions of law and fact
predominate over any questions affecting individual class
members (23(b)(3)).
ECF No. 156 at 18-24.
The plaintiffs contend that the putative class members
“share identical facts of law” inasmuch as they were “subject to
the same course of conduct” by CONSOL – “universal written
representations that miners benefits would vest if they met the
service requirements,” and further, “accepted the offer of
lifetime benefits and fully performed pursuant to that
agreement,” “suffered the same loss of the retirement welfare
benefits,” and “seek the same relief.”
ECF No. 156 at 11.
And
so, they claim that Counts I through VII are suitable for class
treatment.
19
The defendants principally argue that Counts I-II and
IV-VII rest on mischaracterized facts and individualized factual
inquiries that fail to meet Rule 23(a)’s commonality and
typicality requirements.
ECF No. 160.
They argue that the
plaintiffs fail to show that they detrimentally relied on
CONSOL’s allegedly uniform promises of lifetime benefits.
No. 160 at 9-17.
ECF
As to Count III, the defendants argue that the
plaintiffs lack evidence to show discriminatory motive to
support their health status discrimination claim.
Id. at 18.
Under the typicality analysis, the court begins by
reviewing “[1] the elements of plaintiffs' prima facie case;
[2] the facts on which the plaintiffs would necessarily rely to
prove those elements[]; and [3] . . . determin[ing] to what
extent those facts would also prove the claims of the absent
class members.”
Ealy v. Pinkerton Gov’t Servs., Inc., 514 F.
App’x 299, 305 (4th Cir. 2013) (citations and internal quotation
marks omitted).
“The premise of the typicality requirement is
simply stated: as goes the claim of the named plaintiff, so go
the claims of the class.”
Broussard, 155 F.3d at 340 (quoting
Sprague v. Gen. Motors Corp., 133 F.3d 388, 399 (6th Cir.
1998)).
20
A.
Counts I-II and IV-VII
Counts I-II and IV-VII all relate to the existence of
the Lifetime Plan, and each count suffers similar flaws for
purposes of class certification.
Under Count I, the plaintiffs claim that the
defendants violated 29 U.S.C. § 1104(a)(1) by “misrepresenting
the benefits to the plan beneficiaries” and “fraudulently
induc[ing] the Plaintiffs into accepting the Lifetime Plan.”
ECF No. 103 ¶¶ 115, 117.
“In order to establish a claim for
breach of fiduciary duty based on alleged misrepresentations, a
plaintiff must show: 1) that a defendant was a fiduciary of the
ERISA plan, 2) that a defendant breached its fiduciary
responsibilities under the plan, and 3) that the participant is
in need of injunctive or other appropriate equitable relief to
remedy the violation or enforce the plan.”
Adams v. Brink’s
Co., 261 F. App’x 583, 589–90 (4th Cir. 2008).
“To prove the
‘breach’ element of this claim, a plaintiff must show that the
defendant was acting in a fiduciary capacity when it made the
representations, the information misrepresented was material,
and the misrepresentation was relied upon to plaintiff’s
detriment.”
Damiano v. Inst. for In Vitro Scis., No. CV PX 16-
0920, 2016 WL 7474535, at *4 (D. Md. Dec. 29, 2016) (citing
21
James v. Pirelli Armstrong Tire Corp., 305 F.3d 439, 449 (6th
Cir. 2002)).
Counts II, IV-VII require similar showings of reliance
in connection with the Lifetime Plan.
Under Count II — which
seeks equitable enforcement of the Lifetime Plan under
§ 1132(a)(1-3) — the plaintiffs again allege that they
“detrimentally relied” on the defendants’ “written
representations, and consistent oral representations . . . by
paying premiums and working for Defendants for at least ten
years---thus foregoing other job opportunities, retiring earlier
than they otherwise might have, and/or foregoing union
representations.”
ECF No. 103 ¶¶ 119-20.
As to Counts IV-VII,
for the plaintiffs to “state a claim that a faulty plan
description (including non-receipt of a proper SPD) prohibits a
company from exercising its right to modify a plan,” they again
“must show some significant reliance upon, or possible prejudice
flowing from, the lack of notice of an accurate description of
the terms of the plan.”
Gable v. Sweetheart Cup Co., 35 F.3d
851, 858 (4th Cir. 1994) (internal quotation marks omitted)
(denying certification where plaintiffs could not “verify that
[they] did not receive the SPD”).
Central to those Counts is
the plaintiffs’ claim that SPDs for the Lifetime Plan were not
provided or were inaccurate or were not timely furnished.
22
Insofar as all of these claims hinge on the existence
of the Lifetime Plan, the court turns first to the bits and
pieces of written orientation materials that plaintiffs claim
support the terms of the Lifetime Plan.
These include (1)
several one-page Benefits Information Sheets from the years of
2012 and 2013 distributed to named plaintiffs Bright, Fitzwater,
and other Fola retirees (ECF Nos. 72-4, 72-5; ECF No. 162 at 5),
(2) several slides excerpted from PowerPoint presentations
created in various years (2003, 2008, and 2010) and conducted at
new-hire orientations at CONSOL’s Buchanan Mine (ECF No. 156 at
4; Declaration of Erica Fisher (“Fisher Decl.”) ¶¶ 7-9, ECF No.
160-4; ECF Nos. 155-6 to 155-8), (3) excerpts of new-hire
orientation scripts delivered around 1990 at CONSOL’s Enlow Fork
and Bailey Mines in Pennsylvania (ECF No. 66-1; Declaration of
Kurt Salvatori (“Salvatori Decl.”) ¶¶ 4-6, 13, ECF No. 67-2),
and (4) a “Know the Facts” handbill distributed by CONSOL and
its subsidiaries to miners at the Fola operations around 2010
(ECF No. 66-5; see also Pls.’ Mem. Supp. Mot. Cert. Class 5-6,
ECF No. 64).
First, the plaintiffs point to the CONSOL one-page
Benefits Information Sheet from each of the years 2012 and 2013.
ECF Nos. 72-4, 72-5.
Each contains separate paragraphs
describing certain benefits, including “Medical,” “Prescription
23
Drug,” “Dental Plan,” “Vision Plan,” “Life Insurance,”
“Investment Plan,” and “Retirement Plan.”
Id.
In particular,
the “Retirement Plan” paragraph states,
Retirement Plan: Vested for early retirement with
Medical. (To be eligible to receive pension payment
on 10/1/2013, complete and return benefit application
to HR no later than 8/1/2013). Retirement Plan may
partially offset unemployment benefits (if eligible).
Check with local Job Service center.
See ECF No. 72-5 (emphasis in original).
The discussion of
pension payments suggests that the “Retirement Plan” refers to
CONSOL pension benefits.
For decades, CONSOL has provided
pension benefits through the CONSOL Energy Inc. Employee
Retirement Plan (“Retirement Plan”), which had its own SPD that
changed from time to time and is entirely separate from the
Retiree Benefits Plan and the Active Employee Benefits Plan, let
alone the alleged Lifetime Plan.
Second Lackovic Decl. ¶ 11,
ECF No. 160-19; Id. Ex. K, ECF No. 160-23 at 205, CONSOL019388
(1992 Retirement Plan SPD).
The January 1, 2014 version of the
Retirement Plan, for instance, describes the annual pension
payments and mentions “ancillary benefits not directly related
to retirement benefits (such as . . . post-retirement medical
benefits).”
Id.
Ex. P, ECF No. ECF No. 160-24 at 232,
CONSOL023362.
Focusing on the Benefits Information Sheets, the
bottom of each one-page sheet notes that “[w]hether benefits are
24
payable and the amount of benefits will depend on the actual
terms and conditions of the applicable plan documents” and
includes an identical reservation of rights clause, stating,
“All plans are subject to change or termination by CONSOL at any
time.”
ECF Nos. 72-4, 72-5 (emphasis added).
Second, the plaintiffs provide three sets of undated,
excerpted PowerPoint slides.
CONSOL’s Director of Human
Resources, Erica Fisher, attested in her declaration that these
slides were each part of larger new-hire orientation
presentations — created in 2003, 2008, and 2010, respectively —
given at Buchanan Mine.
ECF No. 160 at 11.
Fisher Decl. ¶¶ 2, 7-9, ECF No. 160-4;
The plaintiffs assert that the “Equated Date
Policy” referred to in all three presentations represents the
company’s policy that once attaining ten years of service and
reaching the age of fifty-five, their medical benefits would
vest.
ECF No. 156 at 4; ECF Nos. 155-6, 155-7, 155-8.
However,
the slides themselves and Salvatori’s deposition shows that an
employee’s “equated date” simply refers to his or her years of
service with CONSOL, taking into account any service breaks.
Salvatori Dep. 54:5-11, ECF No. 155-5.
The “Equated Date Policy” slide cited by the
plaintiffs contains identical language in all three
presentations:
“Equated date will include only time
25
employed[;]” “Equated date will not include lay-off time[; and]”
“Equated date will be used only for:” (1) “Vacation
eligibility[,]” (2) “Service awards[,]” and (3) “Vesting only in
retirement plan,” i.e., the Retirement Plan for pension
payments.
ECF Nos. 155-6 to 155-8; Second Lackovic Decl. ¶ 11,
ECF No. 160-19; Fisher Decl., Ex. C, ECF No. 160-9 at 49,
CONSOL025652.
The plaintiffs only provide one full, sequential
presentation — the 2003 new-hire orientation PowerPoint.10
The
introductory slide to the 2003 presentation titled “Pay and
Benefits” indicates it covers the following topics: “Wages,”
Work Schedule,” “Overtime,” “Holidays,” “Vacations,” “Salary
Continuance,” “Life Insurance,” “Dental Insurance,” “Medical
Insurance,” “Retirement Plan,” and “Investment Plan.”
155-6 at 1, CONSOL025906.
ECF No.
As with the other presentations, the
“Equated Date Policy” slide does not mention medical benefits;
neither does a “Retirement Plan” slide later in the orientation
presentation.
ECF No. 155-6 at 41.
A separate section of the
2003 presentation regarding “Medical Insurance” begins with a
slide titled, “Group Medical Plan,” followed by several slides
comparing UMWA to CONSOL in terms of “Deductibles,”
10
The 2008 and 2010 PowerPoint excerpts only contain two, nonsequential slides: the “Equated Date Policy” slide and an
identical introductory slide.
26
“Prescription Drugs,” “Inpatient Physician Visit,” “Inpatient
Hospital,” and “Out of Pocket” expenses.
Id. at 27-33.
There
is no indication anywhere in the 2003 slide presentation that
CONSOL’s medical benefits included a lifetime guarantee.
Id. at
1-2, 27-40; ECF No. 156 at 4-5.
Third, the orientation scripts used at the Enlow Fork
and Bailey mines around 1990 state, in pertinent part, that,
“[t]his wage and benefit package is clearly superior to any wage
and benefit package in the 1988 Wage Agreement,” and is “clearly
superior to any wage and benefit package negotiated by the UMWA
for anybody anywhere.”
ECF No. 66-1 at 7-9.
The plaintiffs
infer that because UMWA retirement benefits “included a
Congressionally-backed guarantee of lifetime duration,” CONSOL’s
retirees would receive lifetime benefits as well.
¶ 32; ECF No. 156 at 2, 5.
ECF No. 103
Not only does Salvatori’s sworn
statement indicate that these scripts were not used after the
early 1990s, CONSOL’s orientation presentations were specific to
each mine site and varied in substance over the years.
Salvatori Decl. ¶¶ 10-13, ECF No. 67-2.
See
Further, neither of the
scripts furnished mention lifetime retiree medical benefits or
retiree medical benefits.
Finally, the “Know the Facts” handbill distributed by
CONSOL and its subsidiaries to Fola miners in 2010, states,
27
inter alia, that “[y]ou are eligible for Retiree Health Care . .
. once you have 10 years of service and reach age 55.”
66-5.
ECF No.
It further concludes, “This is a better deal than the
UMWA negotiated in the national contract.
AND REMEMBER, IT
DIDN’T COST YOU A PENNY IN DUES OR ASSESSMENTS.”
Id.
Again,
this does not state that such benefits were “vested” or for
life.
Viewed in total, the written evidence presented by the
plaintiffs does not contain a promise of lifetime benefits.
Moreover, the plaintiffs admit that, in comparison to other
CONSOL employees, they may have seen or heard different things
regarding their benefits.
And, none of the plaintiffs could
even confirm that the orientation materials contained a written
offer of “lifetime” benefits.
For example, when Plaintiff Jack
was asked if he had any “idea what was told in other
orientations that [he] didn’t attend,” he answered: “I guess,
maybe, we were the only ones that ever heard the same thing.”
Jack Dep. 97:12-19, ECF No. 155-11.
The plaintiffs counter that the Benefits Information
Sheets and other written materials contain ambiguous terms, and
therefore, the “extrinsic and anecdotal evidence regarding the
parties’ intentions” is “directly relevant to the question of
28
whether the ambiguous terms gave rise to a vested benefit under
ERISA.”
ECF No. 162 at 8.
Besides the testimony of named and putative
plaintiffs, the plaintiffs present the Declaration of Dean
Michael Hymes (“Hymes”), a former Regional Manager of Human
Resources for CONSOL who was in charge of employee orientations,
workers’ compensation, union relations, and employee development
and training.
in the gaps.
Hymes Decl. ¶ 5, ECF No. 155-4.
It fails to fill
As the defendants correctly point out, Hymes only
worked for CONSOL until January 1993, and his testimony provides
no evidence as to CONSOL’s “state of affairs” after this date.
Id. ¶ 6; ECF No. 160 at 12.
Hymes described orientations at
Buchanan, CONSOL of Kentucky, and Jones Fork mines until his
departure from CONSOL in 1993.
Other than potentially Casey,11
Hymes could not testify as to what was shown to the remaining
six named plaintiffs: Fitzwater, Bright, and Prater all started
at CONSOL after 1993, Gilbert attended her orientation in 2005,
and Jack and Long attended their new-hire orientations at Enlow
Fork in 1991.
See Fitzwater Dep. 13:7-15, ECF No. 173-2; Prater
Dep. 11:21-23, ECF No. 173-3; ECF No. 36 ¶ 31; Gilbert Dep.
19:2-23, ECF No. 173-4; Hymes Dep. 173:3-25, ECF No. 173-1;
11
Casey attended annual orientations since he began working at
CONSOL in 1976, including orientations at the Buchanan Mine
after transferring there in 1991. ECF No. 103 ¶¶ 47-50.
29
Hymes Decl. ¶¶ 5-6, ECF No. 155-4; Jack Dep. 17:18-23; 18:3-10,
95:24-100:22, ECF Nos. 155-11 and 173-5; Long Dep. 40:4-18, ECF
No. 173-6; ECF No. 156 at 5-6.
Additionally, the defendants correctly point out that
in his declaration, Hymes does not claim to have presented to
any other employees the materials he helped prepare, and also
provides no detail as to what the orientation scripts stated
with respect to retiree medical benefits.
Similar to the
plaintiffs, once he was deposed, Hymes (1) could only testify to
being “pretty sure” that retiree medical benefits were expressly
mentioned in orientation scripts, Hymes Dep. 133:13-19, ECF No.
173-1; (2) could not recall exactly what was said in the
orientation scripts regarding UMWA retiree medical benefits, Id.
133:20-25; (3) did not know whether there was any comparison at
all during the orientations between the UMWA and CONSOL retiree
medical benefits, Id. 139:2-7; and (4) had no recollection as to
what the orientation slides specifically stated.
Id. 142:20-24,
212:24-213:7.
Instead, Hymes acknowledged that the reservation of
rights clause was “in the front of the employee handbook,” Hymes
Dep. 203:10-20, ECF No. 173-1, and that the handbooks were in
fact distributed to employees at orientations.
145:1, 203:10-16, 229:13-20.
Id. 144:23-
He admitted that the orientation
30
scripts he helped create “instructed the presenter to
specifically address the Company’s right in this regard” and
that presenters reviewed the employee handbook sections that
reserved CONSOL’s right to terminate the benefit plans.
144:23-145:4, 225:22-226:14, 229:3-230:25.
Id.
He also testified
that SPDs during his tenure were distributed at the orientations
and that they contained the language that reserved CONSOL’s
right to terminate benefits.
Id. 142:25-144:22, 314:3-18,
322:24-323:16.
The plaintiffs also allege that “the promise of
lifetime welfare benefits created the Lifetime Plan based on the
oral representations made by Defendants.”
ECF No. 103 ¶ 124.
It bears mentioning that the SPDs are “the statutorily
established means of informing participants of the terms of the
plan and its benefits,” and the “employee’s primary source of
information regarding employment benefits.”
Aiken v. Policy
Mgmt. Sys. Corp., 13 F.3d 138, 140 (4th Cir. 1993) (quoting
Pierce v. Sec. Tr. Life Ins. Co., 979 F.2d 23, 27 (4th Cir.
1992)).
Moreover, “in recognition of ERISA’s requirement that
employee benefit plans be governed by written plan documents
filed with the Secretary of Labor, any participant’s right to a
fixed level of lifetime benefits must be found in the plan
31
documents and must be stated in clear and express language.”
Gable, 35 F.3d at 855 (internal citations and quotation marks
omitted).
As such, “ERISA prohibits informal written or oral
amendments of employee benefit plans, and references to lifetime
benefits contained in nonplan documents cannot override an
explicit reservation of the right to modify contained in the
plan documents themselves.”
Id. at 857 (internal citations
omitted).
Employers provide sufficient notice that they reserve
the right to modify plans by “distributing an SPD containing a
modification clause at any time before the modification or
termination occurs.”
Id. at 858.
Here, the plaintiffs admit
that the SPDs they received reserved the defendants’ right to
terminate or alter the plans at any time.
See, e.g., Bright
Dep. 22:22-24, 18:15-19:21, ECF No. 67-6; Hymes Dep. 314:22328:22, ECF. No. 173-1.
As to the oral representations more generally,
“[s]everal courts have concluded that ERISA fiduciary claims
based on oral representations are not suitable for class
certification precisely because they require . . .
individualized proof, and thus fail the commonality and
typicality requirements.”
Tootle v. ARINC, Inc., 222 F.R.D. 88,
96 (D. Md. 2004) (citing Gesell v. Commonwealth Edison Co., 216
32
F.R.D. 616, 623–25 (C.D. Ill. 2003)); Mick v. Ravenswood
Aluminum Corp., 178 F.R.D. 90, 92–94 (S.D.W. Va. 1998); Sprague,
133 F.3d at 398 (finding commonality lacking because “there must
have been variations in the early retirees’ subjective
understandings of the [oral] representations and in their
reliance on them”).
In Tootle v. ARINC, Inc., the defendants argued that
the information disseminated to employees regarding a cash
balance pension plan “included oral, non-uniform communications
made in group and one-on-one meetings.”
222 F.R.D. at 96.
The
plaintiff countered that though these meetings occurred, its
claims “relie[d] exclusively on various written communications
that apparently were distributed uniformly to ARINC employees.”
Id. at 96 n.16.
Tootle nonetheless denied class certification
inasmuch as it would “need to evaluate any oral representations
made to class members attending these meetings – which could
vary significantly among the class members – to determine if
these representations are sufficient to overcome” the misleading
effect of “any alleged omissions in the written materials on
which Tootle relies.”
Id. at 96.
Here, the plaintiffs expressly rely on scattered oral
representations of “lifetime benefits” as evidence of a Lifetime
Plan.
See, e.g., ECF No. 103 ¶¶ 2, 87, 124-25; ECF No. 156 at
33
4-8; ECF No. 162 at 1-2, 5-6.
While some of the plaintiffs may
very well have received such a promise, the evidence does not
support their contention that this was a uniform message across
the different mine sites over the decades.
The plaintiffs rely on allegations that around 2010,
Gary Patterson, President of Operations of Fola, allegedly told
Fitzwater and “other CONSOL employees that they would have their
then-current insurance as long as they lived.”
ECF No. 36 ¶ 39.
The complaint alleges that Chase Elswick, a human resources
supervisor, “came to the Fola control room where Plaintiff
Fitzwater worked, and told [him] that the current healthcare
benefits would vest upon retirement and continue throughout Mr.
Fitzwater’s lifetime.”
Id. ¶ 40.
It further alleges that
Elswick told the “same thing” to Fola miner Ted Stephenson and
his wife, “among other miners and their dependent
beneficiaries.”
Id. ¶ 40.
The plaintiffs also allege that
CONSOL’s Manager of Human Resources, Gerald Kowzan, told
Fitzwater and other miners at Fola around this same time: “Don’t
worry, you’ll have this insurance for life” and “offered them a
package” he claimed to be “better than the union” and that they
could “have this insurance until [they] die.”
42.
ECF No. 36 ¶¶ 41-
This court, too, would need to evaluate these types of oral
representations made to individual class members, or groups of
34
class members, to determine if they offset the representations
in the SPDs and other written materials.
Tootle, 222 F.R.D. at
96.
Accordingly, without written materials showing the
existence of a Lifetime Plan, the court cannot find that the
plaintiffs satisfy the requirements of commonality and
typicality necessary for class certification.
The various oral
assurances of lifetime benefits, requiring proof of the
individual statements made to each retiree, are insufficient to
support class certification on their own.
Moreover, the defendants provided declarations of
several CONSOL human resources personnel who deny ever making
oral promises of lifetime or vested medical benefits or using
written materials in orientation trainings that contain such
promises.
See ECF No. 160 at 14.
Those declarations state that
a comparison of pay and employee benefits between that of UMWA
employees and that of non-union CONSOL employees was made, and
that the only reference to retiree benefits during the
comparison was related to pensions and the cost of retiree
medical coverage at that time.
See, e.g., Declaration of Craig
Campbell ¶ 8, ECF No. 160-10.
They further state that employees
at orientations received benefit binders containing the SPDs in
addition to employee handbooks that summarized the benefits more
35
generally.
Id. ¶¶ 9, 12.
The human resources personnel
reviewed each page of the handbooks and particularly discussed
the language that reserved CONSOL’s right to modify, suspend, or
terminate the benefit plans.
Id.
Indeed, several of the named
plaintiffs admit themselves that they received SPDs and were
aware of the reservation of rights clause before their plans
were modified or terminated.
See, e.g., Casey Dep. 171:13-
172:11, 232:10-24, ECF No. 160-16; Long Dep. 45:9-16; 97:7-99:6,
ECF No. 160-2.
Finally, although the topics presented at
Buchanan, Fola, and the CONSOL of Kentucky mines were generally
similar, each mine location presentation had its own written
materials, including the presenters’ own speaker notes he or she
would use alongside the PowerPoint slides.
“This is because
there were differences in the orientation that were specific to
the particular operation.”
Declaration of Gerald Kowzan ¶¶ 12-
14, ECF No. 160-14.
While it is to be acknowledged that courts may not
“‘engage in free-ranging merits inquiries at the certification
stage,’ a court should consider merits questions to the extent
‘that they are relevant to determining whether the Rule 23
prerequisites for class certification are satisfied.’”
EQT
Prod. Co., 764 F.3d at 358 (quoting Amgen Inc. v. Conn. Ret.
Plans & Trust Funds, 568 U.S. 455, 466 (2013); Hudson v. Delta
36
Air Lines, Inc., 90 F.3d 451, 457 (11th Cir. 1996) (“[E]vidence
relevant to the commonality requirement is often intertwined
with the merits.”).
In Hudson v. Delta Air Lines, Inc., for instance, the
Eleventh Circuit “probe[d] behind the pleadings before coming to
rest on the certification question” regarding ERISA claims
somewhat similar to this case.
90 F.3d 451, 457 (11th Cir.
1996) (quoting General Tel. Co. of SW, 457 U.S. at 160.
In
Hudson, former Delta employees sought to certify claims that the
company violated ERISA by allegedly assuring retirees that they
were entitled to the same level of medical benefits coverage
throughout the course of their retirement.
Id. at 453.
The
retiree plaintiffs also alleged that Delta fraudulently induced
them into retiring earlier and unlawfully discriminated against
retirees by extending a preferred retirement package (“Special
Retirement Plan”) to then-active employees.
Id.
In affirming
the denial of class certification for lack of commonality,
Hudson found that the claim that an enforceable ERISA plan
existed would “require proof of written plan documents which
notified the putative class that the terms of their medical
benefits plan would remain constant throughout their
retirement,” which the plaintiffs failed to provide.
(emphasis in original).
The same is true here.
37
Id. at 457
Even if the plaintiffs could show a promise of
lifetime benefits, they would still need to show the extent to
which each retiree relied on the alleged representations in
making his or her retirement decision.
Courts have denied class
certification on ERISA fiduciary claims based on alleged
misrepresentations because establishing the detrimental reliance
element requires a showing of individualized proof.
348 F.3d at 434.
In Hudson, the court found
Gunnells,
that “[e]ven if
the plaintiffs are able to prove that Delta disseminated a false
and uniform message to all potential retirees . . . , they would
also have to show that all members of the class would have
deferred their retirement in the hope that they would be
eligible for the Special Retirement Plan to be offered in the
future.”
90 F.3d at 457.
As is the case here, “[t]his sort of
decision would necessarily have been highly individualized for
each potential retiree.”
Id.
In this case, evaluating the element of detrimental
reliance will require individualized inquiries into the basis
for class members’ decisions to “work the required service time
for Defendants.”
ECF No. 156 at 2.
The plaintiffs note that
“Jack testified that the Defendants’ representations of lifetime
benefits were uniform and significant and caused himself and
other CONSOL Employees to plan their working lives based on
38
those representations – such as time of retirement and whether
to seek other lower paying jobs that offered better retiree
welfare benefits, such as the UMWA benefits.”
(citing Jack Dep. 170-173, ECF No. 155-11).
ECF No. 156 at 5
Yet, named
plaintiff Long testified that he was not similarly affected:
Q: And did you retire earlier than you otherwise would
have because of any promises that were made to you
regarding retiree medical benefits?
. . .
A: No.
Q: And did you ever reject a more lucrative job
opportunity because of any promises you were made
regarding retiree medical benefits?
. . .
A: No.
Long Dep. 185:9-20, ECF No. 160-2.
In sum, the lifetime claims lack the support of
written materials demonstrating a uniform Lifetime Plan, the
oral representations are spotty and divergent, and both will
require individualized proof, including proof of reliance.
Consequently, Counts I-II and IV-VII fail to meet the
commonality and typicality requirements under Rule 23(a).
B.
Count III
As noted previously, unlike active employees at the
time, individuals who retired prior to the 2014 announcement did
not receive the option to receive a one-time transition payment
as compensation for the termination of their retiree health and
39
welfare benefits.
Under Count III, the defendants allegedly
violated 29 U.S.C. § 1182(a)(1)12 of ERISA by unlawfully
establishing rules for eligibility for the transition payment
based on health-status related factors and violated § 1182(b)13
by offering the transition payment to active employees while
requiring retired employees to continue paying premiums after
the 2014 announcement.
ECF No. 103 ¶¶ 126-134.
In other words,
the defendants purportedly discriminated against individuals who
had retired as of September 30, 2014 by terminating their
welfare benefits without providing them the same cash transition
payment given to active employees.
ECF No. 156 at 23.
12
Section 1182(a)(1) provides, “Subject to paragraph (2), a
group health plan . . . may not establish rules for eligibility
(including continued eligibility) of any individual to enroll
under the terms of the plan based on any of the following health
status-related factors in relation to the individual or a
dependent of the individual: (A) Health status. (B) Medical
condition (including both physical and mental illnesses). (C)
Claims experience. (D) Receipt of health care. (E) Medical
history. (F) Genetic information. (G) Evidence of insurability
(including conditions arising out of acts of domestic violence).
(H) Disability.” 29 U.S.C. § 1182(a)(1).
Section 1182(b) provides, ”A group health plan . . . may not
require any individual (as a condition of enrollment or
continued enrollment under the plan) to pay a premium or
contribution which is greater than such premium or contribution
for a similarly situated individual enrolled in the plan on the
basis of any health status-related factor in relation to the
individual or to an individual enrolled under the plan as a
dependent of the individual.” 29 U.S.C. § 1182(b).
13
40
As with the other claims, the plaintiffs have failed
to meet their burden under Rule 23.
EQT Prod., 764 F.3d at 357.
As explained supra, the plaintiffs must “present evidence that
the putative class” demonstrates “actual, not presumed,
conformance with Rule 23(a).”
EQT Prod. Co., 764 F.3d at 357,
361-62 (“To even demonstrate commonality, the plaintiffs must
prevail on their reading of the case.
That is, they must
establish that the common question[s] . . . will be answered in
their favor.”).
Denying class certification is appropriate
where the named plaintiffs fail to state a claim upon which
relief can be granted and therefore “all other similarly
situated plaintiffs would likewise fail to state a claim.”
Boulware v. Crossland Mortgage Corp., 291 F.3d 261, 268 n.4 (4th
Cir. 2002); see also Smith v. Pennington, 352 F.3d 884, 896 (4th
Cir. 2003) (affirming denial of class certification where named
plaintiff “d[id] not himself state a claim” because his
“position would not then be typical of anyone . . . who did
state a claim”).
To bring a claim under 29 U.S.C. §§ 1182(a)-(b), the
plaintiffs must first show that the defendants discriminated
based on prohibited “health status-related factors,” including
health status, medical condition (including both physical and
mental illnesses), claims experience, receipt of health care,
41
medical history, or disability.14
Section 1182(a)(2)(B) notes
that nothing in the statute “prevent[s] . . . a plan or coverage
from establishing limitations or restrictions on the amount,
level, extent, or nature of the benefits or coverage for
similarly situated individuals enrolled in the plan or
coverage.”
That is, plan provisions are not impermissibly
discriminatory if they apply uniformly to similarly situated
plan members.
See Zurich Am. Ins. Co. v. O'Hara, 604 F.3d 1232,
1238 (11th Cir. 2010); 29 C.F.R. § 2590.702(b)(2)(i)(B) (stating
that “benefits provided under a plan ... must be uniformly
available to all similarly situated individuals”).
First, the plaintiffs contend that retirementeligible, though not retired, employees “were part of the same
similarly-situated group of plan participants who had already
retired insofar as they participated in the same plan.”
14
ECF No.
The regulations governing 29 U.S.C. § 1182 provide examples of
potential discrimination under this section. For “claims
experience,” it provides the following hypothetical: “An
employer sponsors a group health plan and purchases coverage
from a health insurance issuer. In order to determine the
premium rate for the upcoming plan year, the issuer reviews the
claims experience of individuals covered under the plan. The
issuer finds that Individual F had significantly higher claims
experience than similarly situated individuals in the plan. The
issuer quotes the plan a higher per-participant rate because of
F’s claims experience.” The regulations conclude that this is
not unlawful “because the issuer blends the rate so that the
employer is not quoted a higher rate for F than for a similarly
situated individual based on F’s claims experience.” 29 C.F.R.
§ 2590.702(c) (Example 1).
42
162 at 13.
To the extent Count III asserts that the defendants
discriminated against participants within the alleged Lifetime
Plan, and thereby requires evidence of a Lifetime Plan in the
first place, it is inappropriate for class certification, as
found with respect to the other Counts.
Even assuming the retirement-eligible and retired
employees participated in the same plan, the plaintiffs fail to
show how distinguishing between current and former employees is
unlawful under ERISA.
According to the Department of Labor
(“DOL”) regulations governing § 1182, “a plan or issuer may
treat participants as two or more distinct groups of similarly
situated individuals if the distinction between or among the
groups of participants is based on a bona fide employment-based
classification consistent with the employer’s usual business
practice.”
29 C.F.R. § 2590.702(d)(1).
Examples of a “bona
fine employment-based classification” include “full-time versus
part-time status, . . . date of hire, length of service, [and]
current employee versus former employee status.”
Id.
The
plaintiffs allege that the rules for the transition payment
“were based on health status because they distinguished between
those who were entitled to receive the payout and those who were
not based on the retirement status of those individuals,” see
ECF No. 103 ¶ 132, but the DOL regulations explicitly allow
43
employment-based classifications between active and retired
employees.15
The plaintiffs rely on the assumption that the
retirees necessarily “had a lengthier claims experience . . .
and also tended to be less healthy due to their advanced age
relative to the active workers.”
ECF No. 103 ¶ 130.
The
defendants correctly point out that there “is no evidence that
any Defendant took any action based on the actual or perceived
health status of any individual group.”
ECF No. 160 at 18.
Some of the plaintiffs themselves also admit that they had “no
idea” whether CONSOL decided to offer transition benefits based
on who was healthier or more active.
Prater Dep. 130:8-131:23,
ECF No. 66-7; Bright Dep. 77:10-19, ECF No. 67-6.
The
plaintiffs only point to Kirby Hall, a 51-year-old absent class
member, to demonstrate that the retirees are either disabled or
older than some active employees.
ECF No. 156 at 2 n.1.
The
plaintiffs fail to provide any other evidence to support the
claim that “[a] substantial portion of the retiree welfare plan
participants were necessarily in poorer health than the active
workers.”
15
Id.
The mere fact that retirees and active employees
“[T]he rules of this section
issuer from treating one group
differently from another (such
packages to current and former
§ 2590.702(h).
would not prohibit a plan or
of similarly situated individuals
as providing different benefit
employees) . . . .” 29 C.F.R.
44
were treated differently does not support the assertion that
they were discriminated against based on their health status
under § 1182.16
Inasmuch as the plaintiffs fail to provide basic
evidence to support their claim, Count III fails to conform to
Rule 23(a)’s requirements and class certification must be denied
on this count.
V. Conclusion
Because the plaintiffs’ claims fail to comply with
Rule 23(a)’s requirements, it is ORDERED that the plaintiffs’
supplemental motion for class certification be, and it hereby
is, denied.
The Clerk is directed to transmit copies of this order
to all counsel of record and any unrepresented parties.
ENTER: October 15, 2019
16
A CONSOL PowerPoint presentation dated October 1, 2014
explains that CONSOL decided to terminate retiree health and
welfare benefits to remain competitive with other companies. It
notes that “the number of large companies offering retiree
medical benefits has dropped significantly. The major reason
for this is that healthcare costs have increased 600% since
1978.” ECF No. 155-14 at 7, CONSOL003854.
45
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