Fitzwater et al v. CONSOL Energy, Inc. et al
Filing
262
MEMORANDUM OPINION AND ORDER The 231 Motion for Summary Judgment is granted as to Counts II, III, IV, V, and VI of the Casey complaint, and Counts II, III, IV, V, VI, and VII of the Fitzwater complaint; defendants' motion is granted as to Coun t I of both the Fitzwater and Casey complaints with respect to Salvatori, and otherwise denied as to Count I; defendants' motion is denied as to Count VII of the Casey complaint and Count VIII of the Fitzwater complaint. Signed by Senior Judge John T. Copenhaver, Jr. on 10/22/2020. (cc: counsel of record; any unrepresented party) (kew)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
BENNY FITZWATER, CLARENCE
BRIGHT, TERRY PRATER,
EMMET CASEY, JR., CONNIE Z.
GILBERT, 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.,
CONSOLIDATION COAL CO.,
FOLA COAL CO., LLC,
CONSOL OF KENTUCKY, INC.,
CONSOL PENNSYLVANIA COAL CO.,
LLC, and KURT SALVATORI,
Consolidated with:
Civil Action No. 1:17-cv-03861
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is defendants’ motion for summary judgment,
filed May 29, 2020.
ECF No. 231.
I.
Background
As this case has progressed, plaintiffs’ claims have
distilled down to two key issues: (1) whether plaintiffs were
misled by fiduciaries of an ERISA plan regarding the nature and
duration of their welfare benefits; and (2) whether defendants
discriminated against plaintiffs based on health status-related
factors in violation of ERISA.
The seven named plaintiffs include Benny Fitzwater,
Clarence Bright and Terry Prater (“Fitzwater Plaintiffs”), and
Emmett Casey, Jr., Connie Z. Gilbert, Allan Jack Sr. and Robert
H. Long
(“Casey Plaintiffs”).1
Plaintiffs worked at four
current or former subsidiaries of CONSOL Energy, Inc.: (a) Fola
Coal Company, L.L.C. (“Fola”); (b) CONSOL of Kentucky Inc.
(“CKI”); (c) CONSOL Pennsylvania Coal Co., LLC (“CONSOL
Pennsylvania”), and (d) Consolidation Coal Company
(“Consolidation”) (collectively, “CONSOL”).
In addition to
these corporate defendants, plaintiffs also bring the same
claims against Kurt Salvatori, CONSOL Energy, Inc.’s Vice
President of Human Resources from 2011-2016.
To briefly summarize the work history of the Fitzwater
Plaintiffs, Fitzwater worked at a Fola site in West Virginia
since 1995, shifting to CONSOL when it acquired Fola in 2007.
He was laid off in February 2013 and had his retiree benefits
terminated in September 2014.2
Bright was also a Fola employee
1
On December 22, 2017, Civil Action No. 2:16-cv-09849 was
consolidated with Casey v. CONSOL Energy, Inc., No. 1:17-cv03861 (S.D.W. Va. filed Aug. 23, 2017).
2
Defs.’ Ex. 6 (“Fitzwater Dep.”) 13:7–14:6, 40:1 13, 145:10–
148:12; Answer to Am. Fitzwater Compl. (“ECF No. 44”) ¶¶ 29-30,
2
since 1995 and joined CONSOL after its acquisition.
off in June 2013 and retired in May 2014.3
He was laid
Prater started
working for CONSOL in November 2000 and retired on September 30,
2014.4
As to the Casey Plaintiffs, Casey started working for
Consolidation in the 1970s, began working as a salaried employee
at the Buchanan Mine in November 1992, and retired on February
1, 2013.5
Although Gilbert worked at Consolidation in a union
hourly position from 1994 to 1997, she only started working at
CONSOL’s Buchanan Mine located in Virginia in 2005, where she
held a non-union hourly position until she retired on September
30, 2014.6
In 1991, Jack started working at the Enlow Fork Mine
located in Pennsylvania as a non-union hourly miner for CONSOL
Pennsylvania, retiring in 2009.7
Long started working for
Consolidation as a union miner in 1967, moved to a salaried
position at the Enlow Fork Mine in 1991, and continued to work
32. All of defendants’ exhibits in support of their motion for
summary judgment are referred to as “Defs.’ Ex.”
3
Defs.’ Ex. 5 (“Bright Dep.”) 11:7-19, 65:15–66:5, 67:1-12; ECF
No. 44 ¶ 31.
4
Defs.’ Ex. 8 (“Prater Dep.”) 11:18-20, 14:11-15:12.
5
Defs.’ Ex. 10 (“Casey Dep.”) 13:15-17, Answer to Am. Casey
Compl. (“ECF No. 108”) ¶¶ 49, 54.
6
Defs.’ Ex. 11 (“Gilbert Dep.”) 14:18 15:11; ECF No. 108 ¶¶ 2829, 37.
7
Defs.’ Ex. 7 (“Jack Dep.”) 21:22-23, ECF No. 108 ¶ 60.
3
for Consolidation until retiring in 2003.8
Defendants offer the
following graph summarizing these events:
Plaintiffs maintain that during their employment at
CONSOL, defendants made oral and written promises of lifetime
medical benefits coverage to non-union miners and their
beneficiaries, all of which comprised a “Lifetime Plan,”
consisting of lifetime medical, prescription drug, dental,
vision, and life insurance coverage.
any such Lifetime Plan existed.
Defendants dispute that
In opposition to summary
judgment, plaintiffs largely rely on the same written materials
evaluated by the court’s October 2019 decision denying
plaintiffs’ supplemental motion for class certification.
See
ECF No. 203.
First, plaintiffs furnish new-hire orientation scripts
used at CONSOL’s Enlow Fork and Bailey Mines in Pennsylvania
around 1990, which state that “[t]his wage and benefit package
is clearly superior to any . . . wage and benefit package
8
Defs.’ Ex. 12 (“Long Dep.”) 27:18 28:8, 34:1-19; ECF No. 108
¶ 55.
4
negotiated by the UMWA [(United Mine Workers of America)] for
anybody anywhere.”
ECF No. 66-1 at 7-9.
(“Salvatori Decl.”) ¶¶ 4-6, 13.
ECF No. 67-2
Second, plaintiffs cite a “Know
the Facts” handbill distributed by CONSOL and its subsidiaries
to miners at the Fola operations around 2010.
ECF No. 66-5.
It
states that “[y]ou are eligible for Retiree Health Care . . .
once you have 10 years of service and reach age 55.”
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.”
See ECF No. 66-5.
It does not state
that such benefits were “vested” for life.
Plaintiffs also support their claims with testimony
that CONSOL representatives made oral representations of
guaranteed lifetime benefits.
Jack testifies that the
orientation attendees interpreted the reference to UMWA in the
CONSOL scripts to mean that they “were promised to have exactly
the same benefits” as UMWA, with the knowledge that “UMWA
represented coal miners -- would never ever go without health
care in retirement.”
Jack Dep. 96:15-97:11 (testifying that
CONSOL’s Human Resources representative, Luke Gianato, told him
during new hire employer orientation “that some day, when you
retire, you and your wife will be covered for life.”).
5
Prater testifies that during his orientation when he
joined CONSOL in 2000, the films shown to new employees stated
that once employees obtained ten years of service and reached
age 55 and retired, “we get medical[,] insurance and
prescription the rest of our life until we turned 65 years of
age.
Then CONSOL’s insurance would drop down to a supplement to
our Medicare.”
Prater Dep. 28:23-29:23; see also ECF No. 66-2
(Prater Dep.) 37:10-38:4.
Prater explains that he received the
same message in documents and oral statements given during the
orientation, all of which gave employees the impression that
they would have these benefits guaranteed for life “because it
was told to us all the time” during presentations.
(Prater Dep.) 37:10-38:20.
ECF No. 66-2
(“[It] would be safe to say every
employee that CONSOL had up to January the 30th, 2014, that
meeting, I[t]'d be safe to say every employee in their heart
thought they would have medical insurance and prescription
insurance the rest of their life.”).
Although not directly referenced in opposition to the
motion for summary judgment, testimony of Fitzwater, Bright,
Casey, Gilbert, and Long in the record also assert that CONSOL
representatives told employees that their benefits would vest
for life after obtaining ten years of service and age 55.
For
instance, Fitzwater describes how CONSOL’s Manager of Human
6
Resources, Gerald Kowzan, offered him and other employees “that
they could have medical coverage and retirement, if they met the
requirements, for life.”
90:18.
See Fitzwater Dep. 42:11-43:23, 89:24-
Bright testifies, “I remember when they explained that
we was going to have insurance and retirement after 10 years of
service at age 55,” though he acknowledges that such
representations were only made orally.
id. at 105:2-19.
Bright Dep. 15:15-17;
Casey states that he was told that once you
met the minimum threshold, “you was vested into the retirement
health benefit plan” as well as other benefits including vision,
life, and dental insurance.
ECF No. 155-10 (Casey Dep.) 344-
345.
Long describes how Luke Gianato told him at his Enlow
Fork orientation, and numerous other times, that benefits were
“vested” “for life” if you met the age and service requirements,
and that he believes such statements were included in
presentation materials.
(Long Dep.) 40-42.
Long Dep. 49:9-53:17; ECF No. 155-12
Gilbert also remembers that the documents
she received at orientation said that retiree health benefits
would “vest” and that CONSOL’s benefits would be the same, if
not better, than union benefits.
30, 33-35.
ECF No. 155-9 (Gilbert Dep.)
As a former union employee, she “knew our union
benefits were for our lifetime.”
Id. at 34:20-35:5.
7
Plaintiffs also cite testimony that CONSOL used an
“equated date” for calculating employees’ eligibility to retire
and told employees that their benefits would vest after an
“equated service date.”
Plaintiffs assert that the equated
service date represents the company’s policy that once attaining
ten years of service and reaching the age of fifty-five, their
medical benefits would vest for life.9
By contrast, Salvatori
testifies that an employee’s “equated date” simply refers to his
or her years of service with CONSOL, taking into account any
service breaks.
ECF No. 155-5 (Salvatori Dep.) 54:5-11.
According to Salvatori, the company used the equated date to
calculate the transition payment owed to employees as of
September 30, 2014.
Id. at 53:12-54:14.
Finally, plaintiffs again rely on Dean Michael Hymes,
a former Regional Manager of Human Resources for CONSOL who
oversaw employee orientations, workers’ compensation, union
relations, and employee development and training.
9
ECF No. 155-4
See Gilbert Dep. 29; Casey Dep. 343-44; Jack Dep. 56:129-57:4,
60:16-61:3; Long Dep. 176-177, 219-220; Prater Dep. 28:23-29:23,
37:10-38:4. Plaintiffs also furnish an affidavit of non-party
Green Samons Jr., a former CONSOL miner who began working for
CKI in 1993. Samons attests that CONSOL HR’s representatives,
including Craig Campbell, told him during his orientation
session that his “retirement coverage would vest once [he]
reached ten years of service with CONSOL and reached the age of
fifty-five” and that these benefits included “lifetime
retirement medical and prescription drug benefit coverage.” ECF
No. 63-4 (Sammons Aff.) ¶¶ 4-5.
8
(“Hymes Decl.”) ¶ 5.
Hymes described orientations at Buchanan,
CKI, and Jones Fork mines until his departure from CONSOL in
January 1993.
He testified that the objective of the
orientation scripts “was to make everyone understand that they
would not lose their benefits” and that non-union, CONSOL
retiree benefits “were equal to, or better than the mine
workers.”
ECF No. 175-1 (“Hymes Dep.”) 137:24-139:11.
Although
he was “intimately involved in preparing the union-free
orientation materials” during his tenure, his testimony provides
no evidence as to CONSOL’s “state of affairs” after his 1993
departure.
Id. at 117:8-13; Hymes Decl. ¶ 6.
This led the
court to conclude in its October 2019 decision denying class
certification that Hymes could not testify as to what was shown
to any of the seven named plaintiffs, other than potentially
Casey, inasmuch as 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 v. CONSOL Energy, Inc., No. 1:17-CV-
03861, 2019 WL 5191245, at *11 (S.D. W. Va. Oct. 15, 2019).
Plaintiffs assert that these oral and written
representations evidence the existence of a unified Lifetime
Plan.
Indeed, prior to 2011, both active and retired CONSOL
employees were covered under a single health-benefit plan,
9
though CONSOL issued separate Summary Plan Descriptions (“SPDs”)
for each operating entity.
Decl.”) ¶ 10.
ECF No. 67-5 (“First Lackovic
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. One such clause from a 1992 SPD reads as follows:
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.”
ECF No. 160 (“Second Lackovic Decl.”), Ex. K, at 67,
CONSOL019250.
Plaintiffs concede that the reservation of rights
was also noted in written documents that they received or saw,
including SPDs, enrollment guides, summaries of material
modifications, employee handbooks, healthcare “highlights”
documents, and the benefits information sheets provided to
individuals before retirement.10
10
See Defs.’ Mem. Supp. Mot. Summ. J. 7 (citing Fitzwater Dep.
84:14–109:9, 130:17–131:13, 141:10–142:1; Prater Dep. 18:15–
31:10, 59:12–61:18, 96:24–102:11, 108:1–114:5; Casey Dep.
171:20–172:13, 208:24–213:13, 231:7-23; Gilbert Dep. 89:10-19,
125:23–129:12, 135:2–136:13; 153:22–158:19, 163:7 169:19,
175:12 179:24; Jack Dep. 78:11-18, 94:22–95:12, 190:14 193:22,
277:11–278:3; Long Dep. 46:4-13; 54:10–56:2, 137:2-24, 188:3
196:1). See also Defs.’ Ex. 5, Bright Dep Ex. 3. and Defs.’ Ex.
10
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
The reservation of
rights clause in the Retiree Benefits Plan was provided in
clause 6.3 titled, “Amendment and Termination,” stating:
This Plan has been established with the intent of
being maintained for an indefinite period of time.
Nonetheless, the Company may amend or terminate all or
any part of this Plan at any time for any reason by
action of its board of directors. The Company, by
action of its board of directors, may delegate the
authority to amend or terminate the Plan to a
committee or individuals.
Defs’ Ex. 15A, at 14.11
6, Fitzwater Dep. Ex. 14 (Benefits Information Sheets of Bright
and Fitzwater).
11
Plaintiffs refer to the “primary reservation of rights” by
quoting “Ex. 9,” but the court is unable to locate which exhibit
this refers to or where the quoted provision is located.
Regardless, the language quoted by plaintiffs conveys the same
message:
The Board of Directors of CONSOL can amend, modify,
suspend, or terminate all or part of the Plan at any
time, By way of example, CONSOL may change the level
of benefits provided under the Plan at any time or
discontinue the Plan at any time. If a change is
made, benefits for claims incurred after the date the
change takes effect will be paid according to the
revised plan provisions. In other words, once a
change is made, there are no rights to benefits based
on earlier plan provisions. Certain officers of CONSOL
11
In ruling on the plaintiffs' renewed motion for class
certification, the court recently explained the ensuing events
that instigated the present suit:
[O]n September 30, 2014 [CONSOL] announced that it was
terminating retiree health and welfare benefits for
all active employees on October 1, 2014. Under the
announcement, retirement-eligible employees could
continue to receive health and welfare benefits under
the benefit plan for retired employees (the “Retiree
Benefits Plan”) if they retired as of September 30,
2014, although the Retiree Benefits Plan would
terminate entirely on January 1, 2020. Alternatively,
active employees could continue working and receive a
one-time, lump sum transition payment, based on their
years of service, to support their healthcare coverage
upon retirement. Unlike active employees at the time,
individuals who retired prior to the September 2014
announcement did not receive the option to receive a
one-time transition payment as compensation for the
termination of their retiree health and welfare
benefits. In any event, CONSOL informed retired
employees a year later by letter that their retiree
benefits under the Retiree Benefits Plan would
terminate instead on December 31, 2015.
Fitzwater v. CONSOL Energy, Inc., No. 1:17-CV-03861, 2020 WL
3620078, at *1 (S.D.W. Va. July 2, 2020).
For retirees who had
previously elected to retire after the Fall 2014 announcement,
such as Prater and Gilbert, “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
are authorized to amend, modify, suspend, or terminate
the Plan as well.
See Pls.’ Opp. 11.
12
Benefits Plan.”
Fitzwater, 2019 WL 5191245, at *4.
This pro-
rated benefit was offered only to approximately 50 new retirees
(plus nine surviving spouses) and paid out from December 2015
through January 2016.
Fitzwater, 2020 WL 3620078, at *2.
Both the Fitzwater plaintiffs and the Casey plaintiffs
now allege the same seven causes of action. The Fitzwater
plaintiffs had also raised a claim of coercive interference in
Count IV of their complaint, which the Casey plaintiffs did not.
See ECF Nos. 36, 103.
After defendants asserted that this claim
fails because 29 U.S.C. § 1141 does not provide a private right
of action, plaintiffs state that they no longer seek to pursue
this claim and voluntarily dismiss it.12
Pls.’ Opp. 2.
Thus,
while Counts I, II, and III are the same in both complaints,
Counts V, VI, VII, and VIII in Fitzwater correspond to Counts
IV, V, VI, and VII in Casey, respectively.
For the purposes of
this order, the court utilizes the Casey numbering when
referring to the last four counts of both complaints, unless
otherwise noted.
Defendants move for summary judgment on all seven
causes of action raised by plaintiffs: Count I, Breach of
fiduciary duties as to promises of lifetime benefits under 29
12
Accordingly, defendants are entitled to summary judgment on
the coercive interference claim.
13
U.S.C. § 1104(a)(1)(a)(i); Count II, Enforcement of the Lifetime
Plan as an ERISA plan under 29 U.S.C. § 1132(a)(1)-(3); Count
III, Discrimination against individual participants based on
health-status related factors under 29 U.S.C. § 1182; Count 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); Count V, Failure to provide
accurate and comprehensive SPDs regarding the Lifetime Plan
under 29 U.S.C. § 1022(a); Count VI, Failure to accurately state
the Lifetime Plan’s requirements with respect to eligibility
under 29 U.S.C. § 1022(b); and Count VII, Failure to provide an
adequate SPD regarding the Lifetime Plan in a timely manner
under 29 U.S.C. § 1024(b)(1).
II.
Legal Standard
Summary judgment is appropriate only “if the movant
shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
“Material” facts are those necessary to
establish the elements of a party’s cause of action.
Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see also News
& Observer Publ’g Co. v. Raleigh-Durham Airport Auth., 597 F.3d
570, 576 (4th Cir. 2010).
A “genuine” dispute of material fact
14
exists if, in viewing the record and all reasonable inferences
drawn therefrom in a light most favorable to the non-moving
party, a reasonable fact-finder could return a verdict for the
non-moving party.
Anderson, 477 U.S. at 248.
Inferences that are “drawn from the underlying facts
. . . must be viewed in the light most favorable to the party
opposing the motion.”
654, 655 (1962).
United States v. Diebold, Inc., 369 U.S.
A party is entitled to summary judgment if the
record, as a whole, could not lead a rational trier of fact to
find for the non-moving party.
820, 823 (4th Cir. 1991).
Williams v. Griffin, 952 F.2d
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.
Anderson, 477 U.S. at 248.
III. Discussion
First, defendants argue that Counts I and II cannot
survive summary judgment because the unambiguous terms of
CONSOL’s Retiree Benefits Plan contains a reservation of rights
clause and no independent Lifetime Plan ever existed.
15
A. Count II: Enforcement of the “Lifetime Plan”
Under Count II, plaintiffs seek equitable enforcement
of the Lifetime Plan under ERISA.
Section 502(a)(1)(b) provides
that an ERISA plan participant or beneficiary may bring suit “to
recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify
his rights to future benefits under the terms of the plan.”
U.S.C. § 1132(a)(1)(B).
29
Defendants argue that the oral
representations comprising the Lifetime Plan cannot override the
written plans, which expressly reserved the right to terminate
plaintiffs’ welfare benefits at any time.
ERISA requires that welfare benefit plans “shall be
established and maintained pursuant to a written instrument.”
29 U.S.C. § 1102(a)(1).
This provision, along with ERISA’s
formal procedures for amending or modifying an employee benefit
plan, see id. § 1102(b)(3), are “designed to give both the
plan’s participants and administrators a clear understanding of
their rights and obligations, and they do not authorize oral or
implied modifications to a written plan.”
Singer v. Black &
Decker Corp., 964 F.2d 1449, 1453–54 (4th Cir. 1992) (Wilkinson,
J., concurring) (citations omitted) (internal quotation marks
omitted); Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 58–
59 (4th Cir. 1992) (“[A]ny modification to a plan must be
16
implemented in conformity with the formal amendment procedures
and must be in writing.”).
This statutory scheme also means that “[o]ral or
informal written modifications to a plan . . . are of no
effect.”
Coleman, 969 F.2d at 59; see also 29 U.S.C. §
1102(b)(3); Gable v. Sweetheart Cup Co., 35 F.3d 851, 857 (4th
Cir. 1994); Biggers v. Wittek Indus., Inc., 4 F.3d 291, 295 (4th
Cir. 1993) (“Oral or informal written amendments are inadequate
to alter the written terms of a plan, as this practice would
undermine certainty.”).
An informal writing that merely
suggests or implies a change to an ERISA plan does not suffice;
the evidence must show “a clear intent to amend or modify the
plan.”
Bilheimer v. Fed. Exp. Corp. Long Term Disability Plan,
605 F. App'x 172, 180 (4th Cir. 2015) (“Specific language
regarding amendment or modification and specific references to
amended or modified sections of a plan, for example, evidence a
clear intent to amend or modify a plan.”).
Unlike ERISA’s vesting requirements for pension plans,
see 29 U.S.C. § 1053, ERISA does not require that welfare plans
offer vested benefits for life.
See Wise v. El Paso Nat. Gas
Co., 986 F.2d 929, 937 (5th Cir. 1993); Boyer v. Douglas
Components Corp., 986 F.2d 999, 1004-05 (6th Cir. 1993).
It
follows that “[e]mployers or other plan sponsors are generally
17
free under ERISA, for any reason at any time, to adopt, modify,
or terminate welfare plans.”
Curtiss–Wright Corp. v.
Schoonejongen, 514 U.S. 73, 78 (1995).
The preference for enforcing clear, written ERISA
plans means that “any participant’s right to a fixed level of
lifetime benefits must be ‘found in the plan documents and must
be stated in clear and express language.’”
Gable, 35 F.3d at
855 (4th Cir. 1994) (quoting Wise, 986 F.2d at 937)).
Plaintiffs bear the burden of proving that the ERISA plan
contains a promise of lifetime benefit.
Gable, 35 F.3d at 855
(citing Howe v. Varity Corp., 896 F.2d 1107, 1109 (8th Cir.
1990)).
The enforcement of ERISA plans as written is the
“linchpin” of the ERISA system, and the United States Supreme
Court has emphasized “the particular importance of enforcing
plan terms as written in § 502(a)(1)(B) claims.”
Heimeshoff v.
Hartford Life & Acc. Ins. Co., 571 U.S. 99, 108 (2013); see also
M & G Polymers USA, LLC v. Tackett, 574 U.S. 427, 435 (2015).
Insofar as plaintiffs argue that the cited written materials and
oral representations regarding lifetime benefits amended the
Retiree Benefits plan, “references to lifetime benefits
contained in nonplan documents cannot override an explicit
reservation of the right to modify contained in the plan
18
documents themselves.”
Gable, 35 F.3d at 854, 857 (finding that
unambiguous reservation of rights clause prevailed even though a
separate, informal document informed retirees that the company
would “continue this Coverage for you during the remainder of
your lifetime at company expense”).
Courts have generally
“recogniz[ed] that an employer can qualify the provision of
‘lifetime’ benefits by reserving the right to terminate the plan
under which those benefits are provided.”
In re Unisys Corp.
Retiree Med. Ben. ERISA Litig., 58 F.3d 896, 904 (3d Cir. 1995)
(collecting cases).
Plaintiffs’ response makes no attempt to claim that
the Retiree Benefits Plan or the pre-2011 unified CONSOL Plan
contained a lifetime guarantee of benefits.
Instead, plaintiffs
portray the Lifetime Plan as an independent, “informal” ERISA
welfare plan.
ERISA defines an “employee welfare benefit plan” and
“welfare plan” to “mean any plan, fund, or program which was
heretofore or is hereafter established or maintained by an
employer or by an employee organization, or by both, to the
extent that such plan, fund, or program was established or is
maintained for the purpose of providing for its participants or
their beneficiaries, through the purchase of insurance or
otherwise, (A) medical, surgical, or hospital care or
19
benefits . . . .”
29 U.S.C. § 1002(1).
Section 1002(1) means
that “for ERISA to apply, there must be (1) a plan, fund or
program, (2) established or maintained (3) by an employer,
employee organization, or both, (4) for the purpose of providing
a benefit, (5) to employees or their beneficiaries.”
Custer v.
Pan Am. Life Ins. Co., 12 F.3d 410, 417 (4th Cir. 1993).
An ERISA “plan” refers to the scheme decided in
advance “compris[ing] a set of rules that define the rights of a
beneficiary and provide for their enforcement.”
Pegram v.
Herdrich, 530 U.S. 211, 223 (2000) (“Rules governing collection
of premiums, definition of benefits, submission of claims, and
resolution of disagreements over entitlement to services are the
sorts of provisions that constitute a plan.”).
The plan need
not be written.
The Fourth Circuit allows that “[a]n informal plan may
exist independent of, and in addition to, a formal plan as long
as the informal plan meets all of the elements outlined in
Donovan.”
1994).
Elmore v. Cone Mills Corp, 23 F.3d 855, 861 (4th Cir.
In Donovan v. Dillingham, the Eleventh Circuit held that
an ERISA plan “is established if from the surrounding
circumstances, a reasonable person can ascertain the intended
benefits, a class of beneficiaries, the source of financing, and
procedures for receiving benefits.”
20
688 F.2d 1367, 1372 (11th
Cir. 1982).
Applying Donovan, plaintiffs maintain that they
have proffered evidence from which a reasonable person could
ascertain (1) the intended lifetime retirement benefits; (2) the
plaintiffs as among a class of beneficiaries of the informal
Lifetime Plan; (3) premiums and employer contributions as a
source of funding; and (4) the equated service formula as the
procedure for receiving the benefits.
Plaintiffs support their assertion that an informal
ERISA plan guaranteed lifetime benefits by citing Gable v.
Sweetheart Cup Co., where the Fourth Circuit stated that “[a]n
employer may “waive[] its statutory right to modify or terminate
benefits,’” if it “voluntarily undertak[es] an obligation to
provide vested, unalterable benefits.
35 F.3d 851, 855 (4th
Cir. 1994) (first and third alterations added); Pls.’ Opp. 9.
As the court found in October 2019, none of the
written materials contain a promise of lifetime benefits.
The
scripts comparing the UMWA Plan do not “mention lifetime retiree
medical benefits or retiree medical benefits.” 2019 WL 5191245,
at *11.
Neither does the ‘KNOW THE FACTS” handbill.
Id.
Plaintiffs do not offer any additional written evidence
supporting the existence of the Lifetime Plan.
The court must
reiterate its October 2019 conclusion that “[v]iewed in total,
the written evidence presented by the plaintiffs does not
21
contain a promise of lifetime benefits.”
Fitzwater, 2019 WL
5191245, at *11.
Plaintiffs maintain that this does not defeat their
claims because a reasonable factfinder could infer that the
promise to provide benefits more generous than the UMWA Plan
necessarily means defendants were offering vested lifetime
benefits.
Pls.’ Opp. 9.
Based on these scripts, plaintiffs
contend that a reasonable person would understand these
representations to mean that the UMWA Plan included lifetime
benefits.
Id.
In addition to the written materials, plaintiffs
rely on their own testimony as to the oral representations they
received as well as statements from Congress and federal courts
regarding UMWA’s guarantee of lifetime benefits. Id. at 9-10;
see Dist. 17, United Mine Workers of Am. v. Brunty Trucking Co.,
269 F. Supp. 2d 702, 709 (S.D.W. Va. 2003) (noting that UMWA’s
National Bituminous Coal Wage Agreement of 1993 “is clear that
the employers' obligation to provide health benefits continued
for the life of the employer, not simply for the life of the
collective bargaining agreement”).
Additionally, plaintiffs
assert that CONSOL’s conduct suggests that the parties
understood that the benefits had vested.
Id. at 10-11.
In
plaintiffs’ view, CONSOL offered transition benefits after
22
terminating the retiree welfare benefit plan, even though they
were not contractually obligated to do so.
Id.
Insofar as any ambiguity exists as to what the
references to the UMWA Plan were intended to convey, “when a
contract is silent as to the duration of retiree benefits, a
court may not infer that the parties intended those benefits to
vest for life.”
M & G Polymers USA, LLC v. Tackett, 574 U.S.
427, 442 (2015).
Moreover, offering transition payments to
certain retirees as a one-time, lump sum payment does not
establish a separate ERISA plan.
See Howe, 896 F.2d at 1110
(“[T]he mere fact that employee welfare benefits continue in
retirement does not indicate that the benefits become vested for
life at the moment of retirement.”); Fort Halifax Packing Co. v.
Coyne, 482 U.S. 1, 12 (1987) (“To do little more than write a
check hardly constitutes the operation of a benefit plan.”).
Nor does the oral testimony itself show the existence
of a separate Lifetime Plan. As Donovan explained:
A decision to extend benefits is not the establishment
of a plan or program. Acts or events that record,
exemplify or implement the decision will be direct or
circumstantial evidence that the decision has become
reality-e.g., financing or arranging to finance or
fund the intended benefits, establishing a procedure
for disbursing benefits, assuring employees that the
plan or program exists-but it is the reality of a
plan, fund or program and not the decision to extend
certain benefits that is determinative.
23
688 F.2d at 1373; see also Smith v. Hartford Ins. Grp., 6 F.3d
131, 135-36 (3d Cir. 1993) (finding that hospital’s oral
representations that plaintiff would receive exactly the same
benefits under new self-funded insurance plan coupled with
document summarizing effects of plan changes did not “establish”
an informal plan when the document referred to another preexisting plan).
Elmore v. Cone Mills Corp, 23 F.3d 855 (4th Cir. 1994)
offers an illustrative example.
The Fourth Circuit addressed
whether an informal plan arose from letters sent by the
company’s Chairman and CEO to employees guaranteeing that
benefits under the existing pension plan would remain unchanged.
Id. at 862.
Despite these assurances, the company did not
incorporate them into the formal plan documents when it
ultimately adopted the pension plan, leading the employees to
bring suit to enforce the benefits promised in the letter.
The court found that “[a]lthough the first three Donovan
elements (the intended class of beneficiaries, the intended
benefits, and the source of the funding) arguably may be
ascertainable from the . . . letters, these letters do not
satisfy the fourth element (the procedure for receiving
benefits).”
Id. at 861–62.
24
Id.
Regarding the fourth element, Elmore reasoned that
“[t]he only way an employee could ascertain the procedures for
obtaining benefits would be to refer to the [later adopted]
formal plan document,” indicating that the letters did not
constitute a separate, de facto plan.
Id. at 862.
Rather, the
letters were intended to keep “employees apprised of the
proposed developments in their pension plans” and “specifically
informed their employees that these plans were subject to
change,” and therefor were “merely preliminary statements of its
intentions regarding the plan and do not constitute an
enforceable plan.”
Id.; see also Siemon v. AT&T Corp., 117 F.3d
1173, 1179 (10th Cir. 1997) (finding that “the potential
benefits” of purported informal plan were “too ephemeral and
contingent for [the court] to ascertain what, if anything, AT&T
intends an employee to receive”); Stiltner v. Beretta U.S.A.
Corp., 74 F.3d 1473, 1480 n.7 (4th Cir. 1996) (finding that
employment offer letter fails to meet requirements of informal
ERISA plan because “it does not show the source of the funding
for the benefits described, and it does not indicate the
procedure by which an employee can apply for and receive
benefits”); see also Carver v. Westinghouse Hanford Co., 951
F.2d 1083 (9th Cir. 1991).
25
Plaintiffs rely on the equated service formula as the
procedure for receiving benefits.
The court previously
addressed in its October 2019 order the references to an
“Equated Date Policy” in three PowerPoint slides that were each
part of new-hire orientation presentations — created in 2003,
2008, and 2010, respectively — given at Buchanan Mine.
Fitzwater, 2019 WL 5191245, at *10.
The court concluded that
insofar as one of the slides referenced “Vesting only in
retirement plan,” it referred to CONSOL’s separate pension plan,
not its welfare benefits plan.
Id.
Based on these slides and
Salvatori’s testimony, the court found that “equated date”
“simply refers to [an employee’s] years of service with CONSOL,
taking into account any service breaks.”
Id.13
Plaintiffs no longer rely on the PowerPoint slides to
support their equated date argument, instead pointing only to
their own testimony and Salvatori’s testimony that CONSOL’s
equated date referred to date of employment, taking into account
service breaks.
Salvatori Dep. 53:10-54:11.
This testimony
does not show the existence of a separate plan, particularly
when the equated date was used in documents describing CONSOL’s
13
Indeed, CONSOL’s decision to specifically use the term
“vesting” in the context of pension benefits, but not in
materials related to welfare benefits, strengthens the inference
that the latter was not guaranteed for life. See Skinner Engine
Co., 188 F.3d 130, 144 (3d Cir. 1999)
26
formal welfare benefits plan.
The Lifetime Plan cannot
constitute a separate, informal plan when the procedures for
receiving benefits under the Lifetime Plan rely on the same
formal plan documents as the Retiree Benefits Plans and the
single, unified plan that preceded it.
See Elmore, 23 F.3d at
861-62.
Plaintiffs have not shown that a reasonable person
could ascertain the procedures for a Lifetime Plan separate and
distinct from the formal CONSOL welfare plan.
Both the
Fitzwater and Casey amended complaints allege that the Lifetime
Plan was a separate plan, but at the same time was “either part
of or related to” CONSOL’s written plans, including the Retiree
Benefits Plan.
ECF No. 103 ¶ 3; ECF No. 36 ¶ 5.
The Fitzwater
complaint alleges that the Lifetime Plan provided that
“Plaintiffs would continue to receive the same or similar
benefits that they received, and paid in to support, as active
workers,” i.e., under CONSOL’s written plans.
ECF No. 36 ¶ 22.
According to plaintiffs, “CONSOL Energy Inc. has been the Plan
Sponsor of the Lifetime Plan . . . because it has been so
designated in the governing plan instruments.”
Id. ¶¶ 94.
Likewise, they assert that Salvatori was the Plan Administrator
of the Lifetime Plan “because he has been so designated in the
governing plan instruments.”
Id. ¶ 95.
27
The Casey complaint
explains that CONSOL’s “use of the same Plan Number, Plan
Administrator, and effective start date in both the Employee SPD
and the Retirement SPD further indicated that the Defendants
were not truly presenting their workers with those two distinct
plans, but rather a single Lifetime Plan.”
ECF No. 103 ¶ 90.
Viewed in total, no reasonable factfinder could
conclude that CONSOL “established or maintained” a separate,
independent Lifetime Plan.
In the absence of a separate,
informal Lifetime Plan, the reservation of rights clause must
govern.
Plaintiffs nonetheless contend that the reservation of
rights clause was ambiguous as to what “Plan” CONSOL may
terminate.
Plus, plaintiffs believe that because the SPDs
stated that “the plan controls” if there is any conflict between
the SPDs and the “Plan document,” the Lifetime Plan prevails
over the reservation of rights clause.
Pls.’ Opp. 11-12.
A reservation of rights clause “is effective only
against contractual obligations explicitly covered by the
reservation.” Alday v. Raytheon Co., 693 F.3d 772, 791 (9th Cir.
2012).
Yet, plaintiffs’ argument presupposes the existence of a
separate Lifetime Plan.
Inasmuch as any promise of lifetime
benefits was part and parcel with CONSOL’s formal welfare
benefits for retirees, the reservation of rights clause still
28
applies.
Accordingly, defendants are entitled to summary
judgment as to Count II.
B. Count I: Breach of Fiduciary Duties
Under Count I, plaintiffs bring a claim for breach of
fiduciary duty pursuant 29 U.S.C. § 1104(a)(1)(A)(i) based on
defendants’ misrepresentations that plaintiffs’ retiree benefits
would vest for life once they reached the equated service date.
Plaintiffs allege that defendants fraudulently induced
plaintiffs into continuing their employment to their detriment
by misrepresenting the nature of their retiree benefits.
Section 404(a)(1)(A)(i) provides that “a fiduciary
shall discharge his duties with respect to a plan solely in the
interest of the participants and beneficiaries and— (A) for the
exclusive purpose of: (i) providing benefits to participants and
their beneficiaries.”
29 U.S.C. § 1104(a)(1)(A)(i).
This
section falls within ERISA’s fiduciary responsibility
provisions.
See Faircloth v. Lundy Packing Co., 91 F.3d 648,
656 (4th Cir. 1996) (citing 29 U.S.C. §§ 1101–14); Varity Corp.
v. Howe, 516 U.S. 489, 506 (1996) (“To participate knowingly and
significantly in deceiving a plan’s beneficiaries in order to
save the employer money at the beneficiaries' expense is not to
act ‘solely in the interest of the participants and
beneficiaries.’”); DiFelice v. U.S. Airways, Inc., 497 F.3d 410,
29
418 (4th Cir. 2007).
ERISA obligates fiduciaries not only to
avoid making any material misrepresentations to beneficiaries,
but also “incomplete, inconsistent, or contradictory disclosures
that misinform beneficiaries.”
George v. Duke Energy Ret. Cash
Balance Plan, 560 F. Supp. 2d 444, 474 (D.S.C. 2008) (citing
Griggs v. E.I. DuPont de Nemours & Co., 237 F.3d 371, 380 (4th
Cir. 2001)).
In order to establish a claim for breach of fiduciary
duty based on alleged misrepresentations regarding coverage
under an employee welfare plan, a plaintiff must prove “(1) the
defendant's status as an ERISA fiduciary acting as a fiduciary;
(2) a misrepresentation on the part of the defendant; (3) the
materiality of that misrepresentation; and (4) detrimental
reliance by the plaintiff on the misrepresentation.”
Burstein
v. Ret. Account Plan For Employees of Allegheny Health Educ. &
Research Found., 334 F.3d 365, 384 (3d Cir. 2003) (quoting
Daniels v. Thomas & Betts Corp., 263 F.3d 66, 73 (3d Cir.2001));
see also Adams v. Freedom Forge Corp., 204 F.3d 475, 492 (3d
Cir. 2000) (“An employee may recover for a breach of fiduciary
duty if he or she proves that an employer, acting as a
fiduciary, made a material misrepresentation that would confuse
a reasonable beneficiary about his or her benefits, and the
beneficiary acted thereupon to his or her detriment.”); James v.
30
Pirelli Armstrong Tire Corp., 305 F.3d 439, 449 (6th Cir. 2002);
Wiseman v. First Citizens Bank & Tr. Co., 215 F.R.D. 507, 510
(W.D.N.C. 2003); Tootle v. ARINC, Inc., 222 F.R.D. 88, 94 (D.
Md. 2004).
The four element outlined above will each be
considered in turn.
i. ERISA Fiduciaries
As a threshold issue, plaintiffs must demonstrate that
the party charged meets the statutory definition of “fiduciary.”
See Coleman v. Nationwide Life Ins. Co., 969 F.2d 54, 60–61 (4th
Cir. 1992); accord Moon v. BWX Techs., Inc., 577 F. App'x 224,
229 (4th Cir. 2014).
fiduciaries.”
“ERISA contemplates two general types of
Dawson-Murdock v. Nat'l Counseling Grp., Inc.,
931 F.3d 269, 275 (4th Cir. 2019).
First, ERISA requires that
every plan instrument list a “named fiduciary” who has
“authority to control and manage the operation and
administration of the plan.”
29 U.S.C.§ 1102(a).
ERISA also
allows for a “functional fiduciary,” based on a person or
entity’s de facto control and authority over a plan.
See
Dawson-Murdock, 931 F.3d at 276; see also In re Unisys Corp.
Retiree Med. Benefits ERISA Litig., 579 F.3d 220, 228 (3d Cir.
2009) (citing Mertens v. Hewitt Associates, 508 U.S. 248, 262
(1993)).
The latter types of fiduciaries are defined, insofar
as pertinent here, as “a fiduciary with respect to a plan to the
31
extent (i) he exercises any discretionary authority or
discretionary control respecting management of such plan or
exercises any authority or control respecting management or
disposition of its assets . . . or (iii) he has any
discretionary authority or discretionary responsibility in the
administration of such plan.”
29 U.S.C. § 1002(21)(A).
The phrase “to the extent” has been interpreted to
mean that “a court must ask whether a person is a fiduciary with
respect to the particular activity at issue.”
at 61.
Coleman, 969 F.2d
The court must “examine the relevant documents to
determine whether the conduct at issue was within the formal
allocation of responsibilities under the plan documents and, if
not, ascertain whether, in fact, a party voluntarily assumed
such responsibility for the conduct at issue.”
Phelps v. C.T.
Enterprises, Inc., 394 F.3d 213, 219 (4th Cir. 2005) (citing
Coleman, 969 F.2d at 61); accord Adams v. Brink's Co., 261 F.
App’x 583, 590 (4th Cir. 2008).
A person who holds the position of plan
administrator,14 “must, [by] the very nature of his position,
have discretionary authority or discretionary responsibility in
14
ERISA defines “administrator” to include “the person
specifically so designated by the terms of the instrument under
which the plan is operated.” 29 U.S.C. § 1002(16)(A)(i).
32
the administration of the plan.”
Dawson-Murdock, 931 F.3d at
276 ((quoting 29 C.F.R. § 2509.75-8 (D-3)). “[A} person or
entity that is not a plan administrator and performs only
ministerial functions in relation to a plan is not a functional
fiduciary.”
Id.
“[P]ersons who have no power to make any
decisions as to plan policy, interpretations, practices or
procedures, but who perform” administrative functions — such as
“Application of rules determining eligibility for participation
or benefits,” “Preparation of employee communications material,”
and “Orientation of new participants and advising participants
of their rights and options under the plan” — all “within a
framework of policies, interpretations, rules, practices and
procedures” do not act as fiduciaries with respect to the plan.
29 C.F.R. § 2509.75-8 (D–2).
ERISA also distinguishes between plan sponsors and
plan administrators for purposes of determining breaches of
fiduciary duty.
A plan sponsor is not generally subject to
ERISA’s fiduciary duty provisions.
SeeuTaylor, 49 F.3d at 984
n.1 (citing Fischer v. Philadelphia Elec. Co., 994 F.2d 130, 133
(3d Cir. 1993)).
An employer may serve “dual roles as plan
sponsor and plan administrator,” though its “fiduciary duties
under ERISA are implicated only when it acts in the latter
capacity.”
Beck v. PACE Int'l Union, 551 U.S. 96, 101 (2007);
33
see also Moon v. BWX Techs., Inc., 577 F. App'x 224, 229 (4th
Cir. 2014) (“Simply because an employer is an ERISA plan sponsor
does not automatically convert the employer into a plan
fiduciary.”).
Defendants argue that none of the individuals
identified by plaintiff as having made representations regarding
lifetime benefits meet the definition of a fiduciary.
In
addition, they assert that plaintiffs offer no evidence that the
employees who allegedly promised them lifetime benefits were
ever fiduciaries or exercised discretionary authority over
CONSOL plans.
Defendants further contend that there is no claim
breach under the Lifetime Plan because no reasonable factfinder
could conclude that CONSOL served as a fiduciary to the Lifetime
Plan when it was not an ERISA plan.
fiduciary to a nonexistent plan.
Nor could CONSOL serve as a
Moreover, “adherence to an
ERISA controlled plan is not a breach of fiduciary duty.”
Sedlack v. Braswell Servs. Grp., Inc., 134 F.3d 219, 225 (4th
Cir. 1998).
The defendants in turn claim that the decision to
terminate retiree benefits cannot constitute a breach of
fiduciary duty when it was consistent with the Retiree Benefits
Plan.
Turning to formal allocation of responsibility under
the plan documents, the Retiree Benefits Plan promulgated in
34
2011 states that the plan “Administrator” is the “Company,”
defined as CONSOL Energy Inc., “or such committee or individuals
to whom the Company has delegated its authority and
responsibility.”
at 2, 5-6.
Second Lackovic Decl., Ex. A, ECF No. 160-19
The record indicates that plan administration
functions were delegated to the Vice President–Human Resources,
Kurt Salvatori.
See Defs.’ Mem. Supp. Mot. Summ. J. 3;
Salvatori Dep. 8:12-11:13 (testifying that he was plan
administrator of CONSOL’s benefit plans as Vice President–Human
Resources); ECF Nos. 155-1 to 155-3 (2014, 2015, 2016 Form 5500
Report of Employee Benefit Plan submitted to Department of
Labor, listing Plan Administrator as VP HR); ECF No. 108 ¶ 20.
By contrast, the SPDs for CONSOL’s welfare benefit plans prior
to 2014 state that CONSOL Energy Inc. is only the plan sponsor
and that the “Plan Administrator” — and “named fiduciary of
the Plan within the meaning of ERISA section 402(a)” — is the
Vice President-Human Resources of CONSOL Energy Inc.
See,
e.g., Second Lackovic Decl. ¶¶ 7-8; id. Ex. B, ECF No. 160-19 at
66; id. at 111, 131.15
They also state that the “[t]he Plan
Administrator can allocate fiduciary responsibilities among
15
The other SPDs in the record also show that the Vice
President–Human Resources was the plan administrator. ECF No.
160-20 at 45, 90; ECF No. 160-21 at 5; Second Lackovic Decl.,
Ex. J, ECF No. 160-22 at 28; id. Ex. K, ECF No. 160-23 at 28.
35
fiduciaries, and can designate persons to carry out fiduciary
responsibilities under the Plan.”
Even though both CONSOL and Salvatori were listed as
plan administrators at various times, plaintiffs do not rely on
who specifically was a named fiduciary in the plan instruments.
Citing James v. Pirelli Armstrong Tire Corp., 305 F.3d 439 (6th
Cir. 2002) and In re Unisys Corp. Retiree Med. Benefits ERISA
Litig., 579 F.3d 220 (3d Cir. 2009), plaintiffs assert that
“[t]he representatives of CONSOL who spoke to or counseled
Plaintiffs about their benefits were fiduciaries.”
13.16
Pls.’ Opp.
They add that these unnamed representatives acted as
fiduciaries by representing that CONSOL’s plan was more valuable
than the UMWA Plan.
Plaintiffs also assert that CONSOL acted as
a fiduciary, particularly when it developed the new-hire
orientation scripts used at CONSOL’s Enlow Fork and Bailey
Mines, which labeled the reservation of rights as “lawyer talk.”
Pls.’ Opp. 13 (citing ECF No. 66-1).
In James, the plaintiffs identified specific
representatives of the defendant employer who “provided
inaccurate and misleading information to Plaintiffs about their
16
Plaintiffs also cite Poore v. Simpson Paper Co., 566 F.3d 922
9th Cir. 2009) and Estate of Becker v. Eastman Kodak Co., 120
F.3d 5 (2d Cir. 1997), but neither case addresses whether the
defendants were acting as fiduciaries.
36
retirement benefits during group meetings and exit interviews
conducted in connection with [the defendants’] effort to reduce
its salaried workforce.”
305 F.3d at 455.
The court concluded
that an employer breached its fiduciary duties when it “on its
own initiative provided, through its representatives . . .,
misleading or inaccurate information about the future benefits
of the plan.”
Id.
In re Unisys also affirmed that the
employer-defendant acted as fiduciary when its employees, acting
with “apparent, if not actual authority,” communicated with
plaintiffs about retiree medical benefits; HR representatives
advised them about the duration of benefits; and testimony
showed that the employer had delegated authority to do so.
579
F.3d at 230.
Both James and In re Unisys found that the defendant
employers were plan fiduciaries when they delegated
responsibility to their representatives to explain future
benefits.
Neither case held that the representatives themselves
were fiduciaries.
Without evidentiary support from plaintiffs
in the present case, the court will not speculate who these
unnamed “representatives of CONSOL” might include.
However, this does not address whether CONSOL, through
its representatives, undertook a fiduciary duty by affirmatively
explaining plan benefits to its employees.
37
Plaintiffs assert
that HR personnel, such as Chase Elswick, Gerald Kowzan, and/or
Craig Campbell, acted as non-fiduciary agents who had apparent
authority to speak on CONSOL’s behalf regarding benefits when
they made misrepresentations regarding lifetime benefits at
training sessions.
Pls.’ Opp. 14.17
In support of the latter
assertion, plaintiffs cite the cover letter enclosed with the
SPDs distributed to plaintiffs that explained “[y]our local HR
representative is available for any questions that you may have
regarding your benefits.”.
See Pls.’ Opp. 14 n.8 (citing Ex.
12, CONSOL 004541).18
Defendants point to Adams v. Brink's Co., which held
that “[m]inisterial administrative acts are not fiduciary acts”
and that “an employer/plan administrator does not exercise
discretionary authority or control over the administration of
the plan merely when employees tell each other about plan
benefits.”
261 F. App'x 583, 592 (4th Cir. 2008).
Adams,
however, emphasized that the “purpose of the meeting” in which a
company Vice President answered “nothing will change” in
response to an unprompted pension-related question “was not to
17
Fitzwater also testified that Kowzan and Elswick, along with
Gary Patterson, President of Fola, held themselves out as the
representatives to answer questions regarding plan benefits.
ECF No. 66-3 (Fitzwater Dep.) 293:6-24.
18
The court is unable to substantiate plaintiffs’ “Ex. 12” in
the record.
38
offer beneficiaries detailed plan information in order to help
them decide whether to remain with the plan.”
Id. at 591
(distinguishing Varity Corp. v. Howe, 516 U.S. 489, 502 (1996)).
The court also rejected arguments that local HR managers were
“functional” fiduciaries and had delegated authority to speak on
plan benefits because the plan administrators “clearly and
accurately communicated the plan benefits to [company] employees
in writing” and none of the statements deprived the employees of
“any benefits to which they were entitled under the terms of the
plan.
Id. at 592.
The “uncontradicted evidence” showed that
employees received multiple notices in writing as to how their
pension benefits would be calculated.
Id. at 594 n.3.
Every
witness, other than the plaintiffs themselves, testified that
they understood how service dates would be calculated for
retirement benefits.
Id.
Here, plaintiffs provide ample evidence that CONSOL,
through its employees, made assurances that employee welfare
benefits will remain unchanged through retirement and that
switching to another plan, namely UMWA’s, was not a superior
option.
The Fourth Circuit has recognized that “conveying
information about plan benefits to a beneficiary in order to
assist plan-related decisions can constitute fiduciary
activity.”
Dawson-Murdock, 931 F.3d at 280;
39
Varity Corp., 516
U.S. 502-04, 511 (1996) (“[A] plan administrator engages in a
fiduciary act when making a discretionary determination about
whether a claimant is entitled to benefits under the terms of
the plan documents.”); Aetna Health Inc. v. Davila, 542 U.S.
200, 219 (2004) (“[A] benefit determination is part and parcel
of the ordinary fiduciary responsibilities connected to the
administration of a plan.”).
“[A]n employer act[s] in a
fiduciary capacity when making misrepresentations to its
employees about their benefit plan.”
Sprague v. Gen. Motors
Corp., 133 F.3d 388, 405 (6th Cir. 1998) (citing Varity Corp.,
516 U.S. 502-04).
Plaintiffs point to Curcio v. John Hancock Mut. Life
Ins. Co., which concluded that the defendant — which was listed
as the plan administrator in the employee benefits booklet,
“announced the new plan to its employees through literature and
meetings,” and stated in materials that it could terminate the
plan at any time — “maintained sufficient discretionary
authority and responsibility in the administration of the plan
so as to satisfy the statutory definition of a fiduciary.”
33
F.3d 226, 233-34 (3d Cir. 1994).
Moreover, an ERISA plan administrator’s fiduciary duty
can extend to include statements made by its non-fiduciary
agents acting with apparent authority.
40
See Taylor v. Peoples
Nat. Gas Co., 49 F.3d 982, 984 (3d Cir. 1995) (holding that “a
plan administrator is liable for statements made by individuals
who have been selected as non-fiduciary agents by the plan
administrator to assist it in discharging its fiduciary
obligation to administer a plan, even though such individuals
are formally employees of the plan sponsor, who is not a
fiduciary”).
Insofar as the Vice President-Human Resources was
a plan fiduciary, assurances made by HR managers that the
welfare plan contained lifetime benefits may be extended to the
Vice President-Human Resources.
Based on the foregoing, the court concludes that
CONSOL, through its representatives, can be found on the
evidence presented, to have exercised discretionary authority or
control respecting plan management by repeatedly informing
employees that welfare benefits would continue for life.
ii. Material Misrepresentations and Detrimental Reliance
Even if CONSOL acted as a fiduciary through its
representatives, plaintiffs must identify any misrepresentations
regarding lifetime benefits.
First, plaintiffs cite the one-age Benefits
Information Sheets addressed in the court’s October 2019
opinion.
These sheets state, “Retirement Plan: Vested for early
41
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) . . . .”
added).
ECF No. 72-5 (emphasis
Plaintiffs do not address the court’s prior conclusion
that the “Retirement Plan” only refers to pension benefits, not
welfare benefits.
Fitzwater, 2019 WL 5191245, at *9.
The
bottom of each one-page sheet also notes that “[w]hether
benefits are 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 and 72-5.
Nonetheless, plaintiffs further assert that defendants
made the same misrepresentations at training sessions —
including those led by Elswick, Kowzan and/or Campbell — by
stating that welfare benefits were “vested” at retirement.
Pls.’ Opp. 14.
They cite Prater’s testimony that he was told at
his orientation session that once you obtained 10 years of
service and reached age 55, “you would have insurance, medical
insurance and prescription the rest of your life.”
37:18-38:17
Prater Dep.
66-2; see also Bright Dep. 46-47, ECF No. 72-6
(“[Q.] Going back to Mr. Patterson [President of Fola], you said
that you were led to believe that the benefits were vested.
42
And, again, I just want to make sure.
With respect to Mr.
Patterson, that’s because he used the word ‘vested.’ Is that
right?
[A.] Yes”).19
Finally, Hymes’ testimony offers
supplementary evidence that, as of his 1993 departure, CONSOL
developed orientation scripts with the intention “to make
everyone understand that they would not lose their benefits” and
that non-union, CONSOL retiree benefits “were equal to, or
better than the mine workers.”
Hymes Dep. 137:24-139:11.
“Under ERISA, a fiduciary has a duty to provide
beneficiaries with accurate information.”
at 595.
Adams, 261 F. App’x
While a reservation of rights clause may preclude the
existence of a Lifetime Plan, this does not mean that it
“necessarily insulates an employer from its fiduciary duty to
provide ‘complete and accurate information’ when that employer
on its own initiative provides inaccurate and misleading
information about the future benefits of a plan.’”
19
James v.
Plaintiffs also cite purported statements in the SPDs that
“Medical Expense will be continued for yourself and your
dependents if you retire after attaining age 55. These benefits
are provided free, and continue as a supplement to Medicare
after age 65.” Pls.’ Opp. 14. Plaintiffs refer the court to
“Ex. 10 (Consol of Kentucky SPD 1994 -CONSOL 007653); Ex. 11
(CONSOL of Kentucky SPD 1993 -CONSOL 007957, 008042).” As
defendants note, some of plaintiffs’ citations to exhibits are
ambiguous, making it difficult to confirm their source. Defs.’
Reply 10. Plaintiffs do not attach an Exhibit 10 or 11 to their
response, and the court in unable to confirm where these
documents are located in the record.
43
Pirelli Armstrong Tire Corp., 305 F.3d 439, 454–55 (6th Cir.
2002) (citing Sprague v. Gen. Motors Corp., 133 F.3d 388 (6th
Cir. 1998)).
In James, the company’s HR representative and plan
manager testified they told employees that medical benefits
would not and could not change in retirement, which was
inaccurate under the terms of the plan.
Id. at 443, 456.
The
court found that the breach of fiduciary duty claim was not
limited only to those plaintiffs who directly inquired about the
reservation of rights clause, after which they were incorrectly
told “not to worry about that provision.”
Id. at 451.
Although
the plan itself contained a reservation of rights clause, the
court concluded that the employer breached its fiduciary duty by
“on its own initiative, provid[ing] all Plaintiffs with
materially misleading or inaccurate information about the future
benefits of the plan.”
Id. at 456.
The Third Circuit in In re Unisys Corp. Retiree Med.
Ben. ERISA Litig. affirmed that the company breached its
fiduciary duty by promising its employees lifetime benefits even
though the benefits plan contained a reservation of rights
clause.
57 F.3d 1255, 1266-67 (3d Cir. 1995).
The plan
explicitly stated that “[c]overage continues for you for life”
and various informal oral and written communications reiterated
44
that medical benefits extended “for life” or for a retiree’s
“lifetime.”
Id. at 1259.
The evidence showed that the company
knew that the employees believed that a retiree’s benefits would
continue for life and were making important retirement decisions
based on this understanding.
Id. at 1266-67 (affirming the
district court’s decision that “findings that the company
actively misinformed its employees by affirmatively representing
to them that their medical benefits were guaranteed once they
retired, when in fact the company knew this was not true and
that employees were making important retirement decisions
relying upon this information, clearly support a claim for
breach of fiduciary duty under ERISA.”).
As these cases show, a fiduciary duty claim requires
evidence that the company “affirmatively made representations to
the effect that retiree benefits were vested and could never be
modified or terminated by the company.”
See Int’l Union, United
Auto., Aerospace & Agr. Implement Workers of Am., U.A.W. v.
Skinner Engine Co., 188 F.3d 130, 135, 150–51 (3d Cir. 1999)
(granting summary judgment to defendants even though CBAs stated
that coverage “will continue” and “shall remain” because the
phrases did not evince an intent to vest benefits for life and
the company was not otherwise “obligated under ERISA to inform
its employees that retiree benefits may at some point in the
45
future be modified or changed”); see also Sprague v. Gen. Motors
Corp., 133 F.3d 388, 405-06 (6th Cir. 1998) (affirming dismissal
of fiduciary duty claim because “GM never told the early
retirees that their health care benefits would be fully paid up
or vested upon retirement,” while noting that, “had GM on its
own initiative provided misleading information about the future
of the plan,” it may have committed a breach).
None of the written materials provided that
plaintiffs’ welfare benefits plan (as distinguished from
CONSOL’s separate pension plan) would “vest.”
does not defeat plaintiffs’ claims.
at 231 (finding that even though
Still, this alone
See In re Unisys, 579 F.3d
“the words ‘guaranteed’ or
‘vested’ were not used in describing the plaintiffs’ retiree
benefits
. . ., informing the plaintiffs that they would enjoy
‘free or low-cost medical benefits throughout retirement or for
life’ created the same impression and therefore was a
misrepresentation”).
The court finds that testimonial evidence
offered here, if believed, would show that CONSOL’s
representatives made affirmative misstatements that the company
would maintain retiree welfare benefits for life.
This would be
sufficient to satisfy the second element of plaintiffs’ claim
against CONSOL based on misrepresentations made by its
representatives.
46
With respect to Salvatori, plaintiffs assert that
Salvatori and unnamed “executive decisionmakers” acted as
fiduciaries or nonfiduciaries who knowingly participated in
discriminatory conduct by terminating retiree benefits while
offering more favorable transition payments to only some
retirees.
See Resp. 13 n.7.
They cite McDannold v. Star Bank,
N.A., which allowed that a plaintiff may bring a claim under
“ERISA § 502(a)(3) against a nonfiduciary party-in-interest who
knowingly participates in a prohibited transaction,” though such
claims remain limited to only “appropriate equitable relief”
pursuant to ERISA § 502(a)(3).20
261 F.3d 478, 486 (6th Cir.
2001) (citing 29 U.S.C. 1132(a)(3)).
Plaintiffs offer no
evidence that Salvatori ever made misrepresentations regarding
lifetime benefits, which remains the crux of the breach of
fiduciary duty here.
Moreover, the decision to terminate
benefits does not amount to a fiduciary act, and therefore
cannot sustain a claim under Count I.
As will be discussed
regarding Count III, the one-time transition payments do not
constitute an ERISA plan of which Salvatori or the “executive
decisionmakers” could act in breach.
20
Section 502(a)(3) allows ERISA beneficiaries “to obtain other
appropriate equitable relief” to remedy ERISA violations, but
only to such “equitable relief as will enforce the terms of the
ERISA plan at issue or ERISA itself.” Moon v. BWX Techs., Inc.,
577 F. App'x 224, 228 (4th Cir. 2014).
47
iii. Materiality and Detrimental Reliance
Turning to materiality and detrimental reliance, being
the third and fourth factor, defendants argue that plaintiffs
offer no evidence to satisfy these elements.
In the ERISA context, “a misrepresentation is material
if there is a substantial likelihood that it would mislead a
reasonable employee in making an adequately informed decision in
pursuing . . . benefits to which she may be entitled.”
James,
305 F.3d at 439; DiFelice v. U.S. Airways, Inc., 397 F. Supp. 2d
758, 770 n.12 (E.D. Va. 2005).
The court finds that the
misrepresentations in this case, if believed, would have been
material inasmuch as, for example, they would have been a
critical factor for plaintiffs in their decision to continue
working for CONSOL’s non-union mines.
Finally, “detrimental reliance is not limited to the
retirement decision alone; rather it may encompass decisions to
decline other employment opportunities, to forego the
opportunity to purchase supplemental health insurance, or other
important financial decisions pertaining to retirement.”
Unisys Corp., 579 F.3d at 229.
In re
Plaintiffs contend that they
detrimentally relied on the misrepresentations “by paying
premiums and working for Defendants for at least ten years--thus foregoing other job opportunities, retiring earlier than
48
they otherwise might have, and/or foregoing union
representations.”
ECF No. 103 ¶¶ 119-20; ECF No. 36 ¶ 111
(alleging detrimental reliance to include “foregoing
representations”).
union
Plaintiffs appear to have satisfied this
element in their assertion that they detrimentally relied on
defendants’ misrepresentations when they achieved their equated
service date and had their benefits terminated.
Accordingly, the court finds that plaintiffs have
created a genuine issue of material fact based on the evidence
to support their fiduciary duty claim against the corporate
defendants.
However, Salvatori is entitled to summary judgment
on this claim.
C. Count III
On September 30, 2014, CONSOL announced that it was
terminating retiree health and welfare benefits for all active
employees, effective October 1, 2014.
5191245, at *3.
Fitzwater, 2019 WL
Under that announcement, active employees could
still receive health and welfare benefits under the benefit plan
for retired employees (the “Retiree Benefit Plan”) if they were
eligible to retire as of September 30, 2014, and did retire
before the plan terminated, but with the plan then being set to
terminate entirely on January 1, 2020 for them and for all
retirees.
Id.
Active employees who continued working received
49
a one-time, lump sum transition payment (the “cash transition
payment”), based on years of service and whether the employee
was engaged in production or was staff, to support their
healthcare coverage upon retirement.21
Id.
Individuals who had
retired prior to the September 2014 announcement were not
eligible to receive the cash transition payment as compensation
for the termination of their retiree health and welfare benefits
as of December 31, 2019.
Id.
Approximately 50 then-active workers who had reached
age 55 and attained ten years of service by September 30, 2014,
declined the cash transition payment, and instead elected to
retire after September 30, 2014 and enroll in the Retiree
Benefit Plan for the remaining five years ending December 31,
2019.
See ECF No. 226 at 2–3; see also First Lackovic Decl. ¶
15, ECF No. 67-5.
When CONSOL then made its June 2015
announcement, terminating the Retiree Benefit Plan effective
December 30, 2015, it offered the 50 new retirees, plus nine
surviving spouses of workers, “a pro-rated portion of the
21
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. Id.
50
previously rejected [cash] transition payment.”
WL 5191245, at *4; First Lackovic Decl. ¶ 15.
Fitzwater, 2019
This pro-rated
payment reflected the amount that the employees would have
received under the previously rejected cash transition payment,
pro-rated to reflect the fact that the employees had already
received near one year of benefits under the Retiree Benefit
Plan since October 1, 2014.
First Lackovic Decl. ¶ 15 at 3.
The pro-rated benefit was paid out from December 2015 through
January 2016. See ECF No. 238 at 2.
The court’s October 2019 decision denying class
certification concluded that “[t]he mere fact that retirees and
active employees were treated differently does not support the
assertion that they were discriminated against based on their
health status under §1182,” in relation to plaintiffs’ claim
that all earlier retired employees were discriminated against
when CONSOL provided the one-time transition payment only to
active employees who continued in service.
5191245, at *17.
Fitzwater, 2019 WL
Plaintiffs have since dropped this allegation.
See Pls.’ Opp. 17.
Plaintiffs instead refashion their claim under 29
U.S.C. § 1182 to focus on CONSOL’s decision in June 2015 to
offer the pro-rated transition payments, to, but only to, the 50
new retirees (and the 9 surviving spouses), who retired after
51
September 30, 2014 and expected to be covered under the Retiree
Benefits Plan until January 1, 2020.
Plaintiffs argue that the
pro-rated transition payment, which they label the “Retiree
Transition Benefit,” limited eligibility to plan participants
with the least claims experience.
Pls.’ Opp. 17.22
The
distinction plaintiffs draw under this theory is between the 50
newly retired employees given the benefit of the pro-rated
payment, and the earlier retirees already in the Retiree
Benefits Plan who were not.
Plaintiffs allege that CONSOL
knowingly drew this distinction and granted benefits to the
retirees who had the least claims experience.
This allegedly violated 29 U.S.C. § 1182(a)(1), which
prohibits a group health plan from “establish[ing] rules for
eligibility . . . to enroll under the terms of the plan based
on” health-status related factors, including “claims
experience.”
§ 1182(a)(1)(C).
Plaintiffs also raise
§ 1182(b)(1), which bars requirements that force individuals “to
pay a premium or contribution which is greater than such premium
or contribution for a similarly situated individual enrolled in
22
Plaintiffs concede that this claim no longer applies to
Gilbert and Prater who received a transition payment from CONSOL
before retiring in 2014. Id.
52
the plan on the basis of any health status-related factor.”
29
U.S.C. §§ 1182(a)(1), 1182(b)(1).
ERISA Section 702(a)(2) clarifies that § 702(a)(1)
does not “require a group health plan, or group health insurance
coverage, to provide particular benefits other than those
provided under the terms of such plan or coverage.”
§ 1182(a)(2)(A).
29 U.S.C.
It further adds that (a)(1) does not
“prevent
. . . 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.”
29 U.S.C. § 1182(a)(2)(B).
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).
Thus, an insurer may use “claims experience” to set
the price for the insurance plan as a whole, but administrators
may not discriminate regarding eligibility for benefits within a
group of otherwise similarly situated participants based on an
individual’s claims experience (or any other health statusrelated factors).
See 29 C.F.R. § 2590.702(c) (Example 1);
Nondiscrimination and Wellness Programs in Health Coverage in
the Group Market, 71 Fed. Reg. 75038, 75,041 (Dec. 13, 2006).
53
The Department of Labor regulations provide that ERISA
plans “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,” such as “full-time versus
part-time status, different geographic location, membership in a
collective bargaining unit, date of hire, length of service,
current employee versus former employee status, and different
occupations.”
29 C.F.R. § 2590.702(d)(1).
These regulations
also explain that “rules for eligibility include rules relating
to “Eligibility for benefit packages (including rules for
individuals to change their selection among benefit packages),”
“Continued eligibility,” and “Terminating coverage (including
disenrollment) of any individual under the plan.”
29 C.F.R.
§ 2590.702(b)(1)(ii).
Defendants’ principal argument is that even if the
transition payments fall within the scope of the statute,
plaintiffs offer no evidence that the individual plaintiffs were
subjected to discrimination based on claims experience.
Defendants insist that plaintiffs have not shown CONSOL
discriminated based on a prohibited health status-related factor
when it offered the Retiree Transition Cash Benefit.
54
Plaintiffs contend that CONSOL’s actions need only
demonstrate disparate impact or treatment to show a violation of
ERISA § 702.
See Warren Pearl Const. Corp. v. Guardian Life
Ins. Co. of Am., 639 F. Supp. 2d 371, 379 (S.D.N.Y. 2009)
(“Th[e] legislative history suggests that Congress was concerned
with the disparate treatment of individuals.”).
Therefore,
plaintiffs conclude, they do not need to show that CONSOL acted
with specific discriminatory intent to sustain Count III.
There remains a longstanding distinction between
“disparate impact” and “disparate treatment” standards.
Hazen Paper Co. v. Biggins, 507 U.S. 604, 609 (1993).
See
In claims
requiring disparate treatment, “[p]roof of discriminatory motive
is critical, although it can in some situations be inferred from
the mere fact of differences in treatment.”
Id. (quoting
Teamsters v. United States, 431 U.S. 324, 335–336, n. 15
(1977)).
By contrast, proof of discriminatory motive is not
necessary to sustain a claim of disparate impact.
Id.; Karlo v.
Pittsburgh Glass Works, LLC, 849 F.3d 61, 69 (3d Cir. 2017)
(“Unlike claims of disparate treatment, disparate-impact claims
do not require proof of discriminatory intent.”); see generally
Morrison v. Garraghty, 239 F.3d 648, 654 (4th Cir. 2001) (“To
succeed on an equal protection claim, a plaintiff must first
demonstrate that he has been treated differently from others
55
with whom he is similarly situated and that the unequal
treatment was the result of intentional or purposeful
discrimination.”).
As ERISA § 702 seeks to prevent “disparate treatment,”
plaintiffs still need to meet the traditional showing “‘that the
unequal treatment was the result of intentional or purposeful
discrimination.’”
Adams v. Trustees of the Univ. of N.C.-
Wilmington, 640 F.3d 550, 566 (4th Cir. 2011) (quoting Williams
v. Hansen, 326 F.3d 569, 576 (4th Cir. 2003)).
In Warren Pearl Const. Corp. v. Guardian Life Ins. Co.
of Am., for example, deposition testimony showed that the
defendant had initiated a deliberate strategy “to eliminate
[insurance] products or groups of products with high claims
experience.”
639 F. Supp. 2d 371, 374 (S.D.N.Y. 2009).
The
effort to determine which health insurance policies to
discontinue “involved a state-by-state examination of premiums,
claims, and loss ratios,” defined as the ratio of incurred
claims to earned premiums, of the company’s older medical
policies.
Id. at 374-75.
The company’s subsequent analysis
“examined specific plans and groups by claims experience” and
“identified incurred claims and loss ratios on a policy-bypolicy basis.”
Id.
The company ultimately discontinued older
medical policies in certain states “because policyholders in
56
those states were generating the highest claims.”
Id.
The
letter alerting the state insurance department regarding the
change specifically identified “the very high loss ratios we've
experienced over the last two years” as a basis for the
discontinuation.
Id.
Here, the only evidence that CONSOL analyzed claims
experience comes from plaintiffs’ expert witnesses.
Plaintiffs’
ERISA expert, Harley Bjelland, defines “claims experience” to
mean “the doctor bills, hospital bills, pharmaceutical expenses
and surgeries that a specific group has actually incurred over a
year or, even better, a number of years.”
ECF No. 226-3 at 8
(Report of Harley Bjelland dated February 3, 2020) (“Bjelland
Rpt.”).
Bjelland asserts that the “primary difference” between
those that were offered the Retiree Transition Benefit and the
other retirees “was that the claims experience for the Fifty
Retirees were better than the claims experience for the
[approximately 2,900 earlier retirees who] had many years of
claims experience with CONSOL.”
Bjelland Rpt. 21 (asserting
that the retirees not offered the transition payment were “the
most vulnerable groups and their claims experience made them the
most expensive group”).
Bjelland bases his assertions on his
interpretation of documents produced in discovery and his own
57
experience as an ERISA attorney and welfare benefits plan
administrator for several non-parties.
Bjelland has no direct knowledge of whether CONSOL
ever analyzed claims experience data before offering the
transition payment.
He admitted that his testimony only
provides general background information that is not necessarily
specific to this case.
17.
ECF No. 233-1 (“Bjelland Dep.”) 255:7-
His conclusions regarding CONSOL were based on assumptions
rather than direct evidence, and he admitted that he lacks
direct knowledge regarding why CONSOL offered transition
payments.
Id. at 70:4 71:24.
He testified that he did not know
whether the retirees who did not receive the Retiree Transition
Benefit were less healthy.
Id. at 262:11 263:15.
His report
acknowledges that whether a group of 50 individuals has a higher
or lower claims experience may vary considerably.23
Although defendants refer to another of plaintiffs’
experts, Daniel L. Selby, in their briefing, plaintiffs do not
rely on Selby’s testimony in their opposition to summary
judgment.
His report, even if considered, does not save Count
23
Bjelland’s report states, “Where an insurer is considering
covering a smaller group (less than 50 participants), the claims
and expenses ultimately incurred by the group is less
predictable (for example, an expensive medical procedure, like a
cancer or a premature birth, can skew the group as a high
spending group).” Bjelland Rpt. at 4.
58
III.
Selby’s report attempts to determine whether “retirees
generate greater claims experience than active employees” and
whether “there is reasonable assurance that the denial of health
benefits to retirees is a function of claims experience.”
No. 231-25 at 8, 41-42 (“Selby Rpt.”).
analyses.
ECF
Selby performs three
First, using CONSOL’s data, Selby’s analysis found
that pre-Medicare age retirees had higher average healthcare
costs than active employees.
Id. at 9.
Second, using publicly
available data from the Center for Disease Control website,
Selby found that individuals aged 18-64 had higher incidents of
certain health issues, deemed “functional limitations,” than
those aged 65 or older.
Id. at 9-10.
Using functional
limitations as a proxy for healthcare costs, he infers that
CONSOL retirees over 65 probably had greater claims experience
than CONSOL’s active employees.
Id.
Finally, in a supplemental
report, Selby analyzed publicly available data from the U.S.
government’s Medical Expenditure Panel Survey, finding that
individuals aged 65 or older experience higher healthcare costs
than younger cohorts, especially those aged 18 to 44.
40-42.
Id. at
From this he again infers that CONSOL retirees, who are
disproportionately in the 65 or older cohort, would have higher
costs than active employees.
Id. at 42.
59
Selby’s report only draws comparisons between retired
and active employees, rather than between the two groups of
retired employees, as plaintiffs otherwise attempt to do.
He
does not form any conclusions regarding the difference in claims
experience between newly retired employees and the already
retired employees.
Even if Selby had shown a difference in
claims experience between these two cohorts, his testimony
revealed that he could only speculate as to whether CONSOL had
actually considered claims experience, and that he did not “know
what [CONSOL’s] mindset was when they were deciding who to cover
and who not to cover.”
ECF No. 241-1 (“Selby Dep.”) 38-39.
There is no direct evidence that CONSOL ever analyzed
claims experience when determining whether to offer the Retiree
Transition Cash Benefit.
Plaintiffs “cannot create a genuine
issue of material fact through mere speculation or the building
of one inference upon another.”
214 (4th Cir. 1985).
Beale v. Hardy, 769 F.2d 213,
Nor may plaintiffs rely on unsupported
assumptions by expert witnesses to prove a specific intent to
discriminate.
See Warren Pearl, 639 F. Supp. 2d at 379; see
also In re C. R. Bard, Inc., Pelvic Repair Sys. Prod. Liab.
Litig., No. MDL 2187, 2018 WL 4220678, at *4 (S.D.W. Va. Sept.
5, 2018) (“Experts may not testify about what other parties did
60
or did not know, or their supposed intent behind their
actions”).
Without evidence that CONSOL ever considered claims
experience data, the court has no basis to question CONSOL’s
decision-making.
As Salvatori explained in his testimony on why
CONSOL decided to offer the Retiree Transition Cash Benefit:
[T]he reason we made that decision [to provide the
Retiree Transition Cash Benefit] is when we announced
that we were – these would have been active employees
at the time of the announcement of the one-time
payment versus the transition for five years for the
retirees. These – this particular group of employees
were employees at the time and came to us and asked if
they could retire before the effective date of the
change and therefore receive the five years, okay,
happened – I don’t know how many people – you know.
We’re talking several handfuls, I think. Ultimately,
we then, because of business conditions, had to adjust
the termination date of the plan from 1/1/20 to
December 31st, 2015. And in our opinion, we had made
the representation to these people that it would
continue for five years. So we went back because of
that and restored to them the pro-rata portion of the
transition payment that they would have otherwise
received.
Salvatori Dep. 116:11–117:5; ECF No. 233-3.24
Salvatori further
explained that CONSOL had “labor” or “credibility reasons” for
24
Salvatori provided the following explanation for the original
decision to offer transition payments in Fall 2014:
For the retirees that existed at the time, the thinking
was, if we go five years [before the retiree benefit is
terminated] most of . . . them will have hit . . . Medicare
age. Once they hit [M]edicare age, we only function as the
supplemental [coverage] . . . So you think of the two
groups. . . . Group one would get to Medicare, current
61
offering the transition payments to active employees to “provide
a concrete benefit and that was not necessary for our
retire[es]”.
Id. at 186:10–187:21; 188:13–190:6.
In the letter explaining CONSOL’s decision to offer
the pro-rated Retiree Transition Cash Benefit to the same 50 new
retirees, dated June 26, 2015, it states that “[a]s an active
employee at the time of [the September 30, 2014] announcement
you were offered a one-time transition payment based on years of
service and job classification however you elected to retire and
to forgo receipt of this payment.”
Ex. V.
See Third Lackovic Decl.,
After notifying the recipient that health coverage under
the Retiree Benefits Plan would terminate on December 31, 2015,
it adds that “CONSOL is aware of the special circumstances as to
why you currently have coverage.
CONSOL Energy has decided to
provide you with a payment of $XXXX [sic] representing a prorated portion of the one-time transition payment that you
previously elected to reject.”
Id. (highlighting removed).
As the court has previously found and plaintiffs now
concede, distinguishing between retired and active employees
does not violate 29 U.S.C. § 1182 either.
The Retiree
retirees. They’re good. Group two, actives, we provided
payment to but in exchange for that, we get a definite end
date to the plan. So there were just different needs.
Salvatori Dep. 189:16-190:6.
62
Transition Cash Benefit maintained the distinction between
active and retired employees as of September 30, 2014.
It
follows that if the initial one-time transition payment did not
violate § 1182, offering a pro-rated portion of that offer based
on the exact same distinction does not violate the statute
either.
The record indicates that CONSOL made a bona fide
classification based on the distinction between active and
retired employees, and then offered a pro-rated version of the
same benefit only to those retirees to whom they had previously
made the offer.
See 29 C.F.R. § 2590.702(d)(1).
Speculation by
plaintiffs or their experts that this decision was really based
on claims experience does not create a genuine issue of material
fact.
Accordingly, defendants are entitled to summary judgment
as to Count III.25
D. Counts IV, V, VI, and VII
Defendants argue that plaintiffs’ ERISA claims
regarding SPDs (Fitzwater Counts V-VIII, treated as Casey Counts
25
The defendants also argue that CONSOL did not make the
transition payments as a fiduciary pursuant to an ERISAqualified plan, but instead in a “settlor capacity.” The court
does not need to, and declines to, reach this argument.
63
IV-VII) fail because ERISA does not provide substantive remedies
for violations of these statutory provisions.
The applicable statute, 29 U.S.C § 1021, creates a
duty in the plan administrator to distribute a summary plan
description to participants and beneficiaries of an ERISA plan.
Section 1022 provides that such SPDs must “be written in a
manner calculated to be understood by the average plan
participant, and . . . sufficiently accurate and comprehensive
to reasonably apprise such participants and beneficiaries of
their rights and obligations under the plan” and must contain,
among other requirements, “circumstances which may result in
disqualification, ineligibility, or denial or loss of benefits.”
§ 1022(a)-(b).
As defendants point out, Counts IV, V, and VI are all
necessarily premised on the existence of a Lifetime Plan.
Count
IV alleges violation of § 1021(a)(1) because any SPDs furnished
by defendants were insufficient for lack of accurate and
comprehensive information about the benefits and obligations
under the alleged Lifetime Plan.
ECF No. 103 ¶¶ 135-142.
Count
V, citing § 1022(a), largely incorporates the allegations of
Count IV, adding that the failure to distribute accurate and
comprehensive SPDs was knowing and willful, and that
information, such as Plan Number and benefits information,
64
contained in distributed SPDs was rendered inaccurate by the
omission of the alleged Lifetime Plan.
Id. ¶¶ 143-45.
Count VI
alleges that any disclosed SPDs were rendered inaccurate or
incomplete for lack of information regarding eligibility
requirements for the alleged Lifetime Plan.
Id. ¶¶ 146-152; see
29 U.S.C. § 1022(b).
Naturally, plaintiffs cannot maintain a claim for
failure to distribute SPDs for the Lifetime Plan or to include
the terms of the Lifetime Plan in SPDs when there was no
Lifetime Plan.
Plaintiffs do not attempt to do so, but they do
assert generally that Counts IV, V, and VI, as well as Count
VII, provide support for the materiality of defendants’
misrepresentations and the reasonableness of plaintiffs’
reliance on CONSOL’s written and oral representations “in the
absence of timely production of SPDs.”
Pls.’ Opp. 19.
Taken as
true, this does not support Counts IV, V, and VI surviving
summary judgment as independent causes of action.
Without the
existence of a Lifetime Plan, defendants are entitled to summary
judgment on Counts IV, V, and VI.
With respect to Count VII, plaintiffs argue that
CONSOL did not provide SPDs for the Retiree Benefits Plan within
90 days after CONSOL created Plan No. 583 (the Retiree Benefits
Plan) in 2011, but only provided them to plaintiffs when they
65
attended a benefits seminar upon reaching retirement age.
Opp. 18; Pls.’ Amend. Compl., ECF No. 108 ¶¶ 33, 34.
Pls.’
Unlike
Counts IV, V, and VI, Count VII does not rely on the existence
of a Lifetime Plan alone.
Rather, the failure to timely provide
SPDs in relation to the Retiree Benefits Plan would violate 29
U.S.C. § 1024(b)(1), which provides that “[t]he administrator
shall furnish to each participant, and each beneficiary
receiving benefits under the plan, a copy of the summary plan
description . . . within 90 days after he becomes a
participant.”
29 U.S.C. § 1024(b)(1).
Plaintiffs argue that, under § 1132(a)(3), they are
entitled to equitable relief for violations of ERISA
requirements related to the untimely distribution of SPDs.
Pls.’ Opp. 18; see 29 U.S.C. § 1132 (creating a cause of action
for a “participant ... to obtain other appropriate equitable
relief (i) to redress such violations or (ii) to enforce any
provisions of this subchapter...”).
In CIGNA Corp. v. Amara,
the United States Supreme Court held that plaintiffs may seek
equitable remedies for ERISA violations under § 1132, which
“invokes the equitable powers of the District Court” and allows
for “other appropriate equitable relief.”
563 U.S. 421 (2011);
see Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162, 1165
(9th Cir. 2012) (citing Amara, 563 U.S. 438-41); 29 U.S.C.
66
§ 1132.
Thus, to survive summary judgment on Count VII,
plaintiffs must raise a genuine issue of material fact in
support of their demand for “appropriate equitable relief.”
See
Osberg v. Foot Locker, Inc., 555 F. App'x 77, 80 (2d Cir. 2014).
The Court in Amara indicated, in dicta, that there are
three possible equitable remedies enabled by § 1132(a)(3):
estoppel, reformation, and surcharge.
Skinner 673 U.S. at 1165.
563 U.S. at 439-441;
Of these remedies, plaintiffs have
only pled surcharge specifically, though general reference is
made to “such other equitable or remedial relief as may be
appropriate.”
ECF Nos. 36 & 103, Prayer for Relief.
Defendants’ motion for summary judgment does not
identify a lack of evidence for the equitable remedies enabled
by § 1132(a)(3).
Instead, they argue that plaintiffs’ claim
fails “as a matter of law because ‘ERISA does not provide a
substantive remedy for the violation’ of ‘ERISA-imposed
disclosure requirements.’”
Defs.’ Mot. Summ. J. at 15 (citing
Briggs v. Nat’l Union Fire Ins. Co. of Pittsburgh, 774 F.App’x
943, 949 50 (6th Cir. 2019) (citations omitted); Howard v.
HCAThe Health Care Co., 2003 WL 342333 at *1 (5th Cir. Jan. 31,
2003)).
Neither case cited by defendants limited the
availability of appropriate equitable relief for failure to
67
comply with disclosure requirements, as enumerated by the
Supreme Court, and as sought by plaintiffs.
The Sixth Circuit
in Briggs clarified that the phrase “substantive remedy” in the
above quote refers specifically to “an award of benefits” to the
plaintiff26, 774 F.App’x at 949, and the Fifth Circuit in Howard
only limited the availability of what it referred to as a
“substantive damage remedy,” for SPD disclosure violations.
2003 WL 342333 at *1.
Nor is the court free to interpret Briggs or Howard to
limit the availability of equitable relief for ERISA disclosure
violations, given the Supreme Court precedent.
The plaintiffs
in Amara, like the plaintiffs here, claimed harm from improper
disclosure of SPDs under 29 U.S.C. § 1024(b).
25.
563 U.S. at 424-
The Court held that ERISA allowed plan participants or
26
The phrase “substantive remedy” does not appear in the statute
and whether the phrase “an award of benefits” in Briggs refers
to a legal or equitable remedy is not apparent. However, the
precedents cited in Briggs only use the phrase in reference to
legal remedies, i.e., damages. See Lewandowski v. Occidental
Chem. Corp., 986 F.2d 1006, 1009 (6th Cir. 1993) (per curiam)
(using phrase to mean damages); Del Rio v. Toledo Edison Co.,
130 F. App'x 746, 751 (6th Cir. 2005) (using phrase to mean
damages);
Sears v. Union. Cent. Life Ins. Co., 222 F. App'x
474, 479 (6th Cir. 2007) (using phrase to mean damages).
Moreover, interpreting “substantive remedy” to mean “legal
remedy” would bring these precedents in line with the Supreme
Court’s opinion in Amara, which found that ERISA authorizes
equitable remedies but not legal remedies for SPD disclosure
violations. 563 U.S. at 439; see also Mertens v. Hewitt
Associates, 508 U.S. 248, 256 (1993)(no damages authorized under
§ 1132(a)(3)).
68
beneficiaries suing fiduciaries to pursue traditional equitable
remedies in cases like this.
Id.
at 439-440.
Plaintiffs argue that equitable relief is available to
plan participants who suffered harm from misrepresentations or
untimely production of SPDs.
Pls.’ Opp. 18, ECF No. 234.
While
plaintiffs appear to concede in their opposition brief that
equitable estoppel does not apply here, and make no reference to
contract reformation, plaintiffs do specifically seek surcharge
in the Casey complaint and make a general prayer for equitable
relief in both complaints.
ECF Nos. 36 & 103, Prayer for
Relief.
Defendants do not point to an absence of evidence that
CONSOL in fact breached its duty under the statute to timely
provide SPDs for the Retirement Benefit Plan and the prospect of
equitable relief cannot be foreclosed as a matter of law.
Defendants offer no other argument in favor of summary judgment
on Count VII.
Inasmuch as defendants have failed to show that
plaintiffs are not entitled to equitable relief for the alleged
untimely distribution of SPDs for the Retiree Benefit Plan, they
are not entitled to summary judgment on Count VII in Casey and
Count VIII in Fitzwater.
69
IV.
Conclusion
Based on the foregoing, it is ORDERED that defendants’
motion for summary judgment be, and it hereby is, granted as to
Counts II, III, IV, V, and VI of the Casey complaint, and Counts
II, III, IV, V, VI, and VII of the Fitzwater complaint.
It is
further ORDERED that defendants’ motion is granted as to Count I
of both the Fitzwater and Casey complaints with respect to
Salvatori, and otherwise denied as to Count I.
It is further
ORDERED that defendants’ motion is denied as to Count VII of the
Casey complaint and Count VIII of the Fitzwater complaint.
The Clerk is requested to forward copies of this order
to all counsel of record and to any unrepresented parties.
ENTER: October 22, 2020
70
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?