Temme et al v. Bemis Company Inc

Filing 51

ORDER signed by Judge J P Stadtmueller on 8/26/09: denying 14 plaintiffs' Motion for Summary Judgment and a Permanent Injunction; granting 18 defendant's Motion for Summary Judgment; and dismissing this action on its merits. See Order. (cc: all counsel) (nm)

Download PDF
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN ____________________________________________ T H O M A S TEMME and SHIRLEY TEMME, individually and as a class of persons similarly situated Plaintiffs, v. B E M IS COMPANY, INC., Defendant. ____________________________________________ C a s e No. 08-CV-090 ORDER P la in tiffs Thomas Temme and Shirley Temme bring this class action lawsuit a g a in s t defendant Bemis Company, Inc. ("Bemis"), asserting claims under 301 of th e Labor Management Relations Act (LMRA) and 502 of the Employee R e tire m e n t Income Security Act (ERISA). The claims arise from Bemis's alleged fa ilu re to provide life-time retiree health benefit coverage at the levels promised in a 1985 Plant Closing Agreement ("the Agreement"). The parties now file c ro s s -m o t io n s for summary judgment. The plaintiffs ask the court to enter summary ju d g m e n t against Bemis as to liability and to enter a permanent injunction. Bemis a s k s the court to enter summary judgment in its favor and dismiss the case with p re ju d ic e . Based on the reasoning set forth below, the court will grant Bemis's m o tio n for summary judgment and deny the plaintiffs' motion. B AC K G R O U N D The plaintiff class members in this suit are former employees of the Hayssen M a n u fa c tu rin g Company ("Hayssen") plant in Sheboygan, W is c o n s in , and their s p o u s e s , surviving spouses and dependents (hereinafter, collectively referred to as "th e plaintiffs" or "the retirees"). Defendant Bemis acquired Hayssen prior to the S h e b o y g a n plant's closing in 1985. (Plaintiff's Proposed Findings of Fact 1, h e re in a fte r "PFOF," Defendant's Proposed Findings of Fact 1, hereinafter "D F O F " ). The bargaining unit employees of the Hayssen plant were represented by th e United Automobile, Aerospace and Agricultural Implement W o r k e r s of America (U A W ), and its Local 1423 ("the Union"). (PFOF 2). In June 1985, the existing la b o r agreement between Hayssen and the Union expired and the parties failed to re a c h a successor agreement. (DFOF 3). The Union then commenced a strike a g a in s t the company. (DFOF 4). Instead of negotiating a new labor agreement, H a ys s e n decided to close its facility. (DFOF 5). Hayssen and the Union conducted b a rg a in in g on the matter and entered into a Plant Closing Agreement ("Plant Closing A g re e m e n t" or "the Agreement"), which was executed on November 5, 1985. (PFOF 3, DFOF 5-7). The Plant Closing Agreement terminated the employment of u n io n employees, terminated the strike, and terminated the bargaining relationship b e t w e e n the Union and the company. (DFOF 9-11). Among other items, the A g r e e m e n t provided that certain qualifying individuals would be eligible for a retired e m p lo ye e medical benefit. (DFOF 13-14). -2- T h e retirees have received continuous health insurance coverage from Bemis fo r more than 25 years, despite Bemis's sale of Hayssen in 1997. (PFOF 10, D.'s R e s p . PFOF 10). However, effective January 1, 2005, Bemis transferred the H a ys s e n retirees' health coverage from a Blue Cross/Blue Shield health plan to a C IG N A health plan. (DFOF 21). The change in plans resulted in increased d e d u c tib le s and new prescription drug co-pays. (PFOF 23). Bemis instituted a d d itio n a l modifications to the retirees' coverage effective January 1, 2007, when it e lim in a te d prescription drug coverage. (PFOF 25). When Bemis informed the re tire e s of this change, it also notified them that they could purchase AARP drug p ro g ra m s at their own expense as an alternative. (PFOF 26). The plaintiffs assert th a t the changes Bemis instituted to their coverage breach the Plant Closing A g re e m e n t and violate ERISA and the LMRA. LEGAL STANDARD S u m m a ry judgment is appropriate where the moving party establishes that th e re is no genuine issue of material fact and that the party is entitled to judgment a s a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1 9 8 6 ). "Material facts" are those facts which "might affect the outcome of the suit," a n d a dispute about a material fact is "genuine" if a reasonable finder of fact could fin d in favor of the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 2 4 2 , 248 (1986). Summary judgment is appropriate where a party has failed to m a k e "a showing sufficient to establish the existence of an element essential to that -3- p a rty's case and on which the party will bear the burden of proof at trial." Celotex, 4 7 7 U.S. at 322-23. A party opposing summary judgment may not rest upon the m e re allegations or denials of the adverse party's pleading, but must set forth s p e c ific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e). A n y doubt as to the existence of a material fact is to be resolved against the moving p a rty. Anderson, 477 U.S. at 255. In considering cross-motions for summary ju d g m e n t, the court is obliged to view all facts and draw all reasonable inferences in a light most favorable to the party against whom the motion under consideration is made. Bassiouni v. F.B.I., 436 F.3d 712, 721 (7th Cir. 2006). AN AL Y S IS T h e plaintiffs ask the court to enter summary judgment against Bemis as to lia b ility and to enter a permanent injunction requiring Bemis to provide class m e m b e rs with coverage at the levels agreed upon in 1985. The plaintiffs claim that th e Plant Closing Agreement promises the retirees $50.00 deductibles and full p r e s c r ip tio n drug coverage, though the Agreement itself does not mention these c o ve ra g e levels. Instead, the plaintiffs assert that they are entitled to the level of c o ve ra g e provided for in the 1982 Collective Bargaining Agreement (CBA) between th e company and the Union; a CBA which expired four months prior to the signing o f the Plant Closing Agreement. The Plant Closing Agreement does not explicitly promise continued retiree m e d ic a l benefits, nor does it specify precise levels of any health coverage. -4- N o n e th e le s s , the plaintiffs read a promise for lifetime, unalterable benefits into the A g r e e m e n t based on suggestive phrases and omissions in the contract's language. T h e y point to language ensuring "eligibility" for a retired employee health benefit, o m is s io n of the "Retired Employee Medical Benefit" section of the previous CBA fro m the Agreement's list of obligations that had been "fully satisfied"; and the a b s e n c e of a duration clause or termination clause in the Agreement. As further s u p p o rt for their claims of irreducible medical benefits for life, the plaintiffs note that B e m is provided health coverage to the retirees at an unchanged level for twenty ye a rs - from 1985 until Bemis instituted the first coverage changes in 2005. In contrast, Bemis argues that the court should enter summary judgment in its fa vo r because the Plant Closing Agreement made no explicit guarantees of lifetime re tire e health coverage, nor did it promise unchanged coverage or endorse a s p e c ific plan design. Bemis denies that the level of coverage it provided in the past s h o w s that it promised lifetime benefits or obligates the company to continue p ro vid in g the same level of coverage into the future. Thus, the court must first determine whether the Plant Closing Agreement p ro m is e d lifetime medical benefits for the retirees and, second, determine whether a promise of lifetime benefits requires Bemis to continue providing $50.00 d e d u c tib le s and full prescription drug coverage under that Agreement. These are iss u e s of contract interpretation. See Diehl v. Twin Disc, Inc., 102 F.3d 301, 305 (7th -5- C ir. 1996). Thus, they are particularly appropriate for resolution through summary ju d g m e n t. The court initially addresses the question of whether the Plant Closing A g r e e m e n t promises lifetime benefits to the retirees. Medical benefits, like those at iss u e in this case, are classified as "welfare" benefits under ERISA. Bland v. Fiatallis N o rth America, Inc., 401 F.3d 779, 783 (7th Cir. 2005). Unlike pension benefits, w e lfa re benefits do not automatically vest. Cherry v. Auburn Gear, Inc., 441 F.3d 4 7 6 , 481 (7th Cir. 2006). Instead, health benefits only vest if an agreement or c o n tra c t provides for lifetime entitlement. Id. Because vested benefits are not legally re q u ire d , and because they become forever unalterable, a contract must express an in ten t to vest in "clear and express language." Bland, 401 F.3d at 784. W h e n in te rp re tin g collective bargaining agreements, courts apply a presumption that retiree h e a lth benefits do not vest under the CBA unless it contains explicit contractual la n g u a g e to this effect. Cherry, 441 F.3d at 481. If the CBA does not include such e xp re s s language, courts presume that health benefits terminate when the collective b a rg a in in g agreement ends. Id. The case law requiring express language in order to vest lifetime health b e n e fits involves claims under collective bargaining agreements, not claims under p la n t closing agreements. However, these statements of law inform the court's a n a lys is. The court finds that the requirement for an explicit statement of intent to -6- p r o v id e lifetime benefits applies to the instant case, though the plaintiffs' claims arise fro m a plant closing agreement.1 T h e Seventh Circuit has distinguished between CBA cases and plant closing a g re e m e n t cases when applying the presumption against vesting. However, the c o u rt has relied upon express contract language even in cases arising from closing a g re e m e n ts , suggesting that explicit guarantees of lifetime benefits are required u n d e r both types of contract. In Zielinski v. Pabst Brewing Company, a case in vo lv in g retiree claims under a closing agreement, the Seventh Circuit found that th e agreement created a contractual obligation to provide benefits for life to the p la in tiffs . 463 F.3d 615, 617 (7th Cir. 2006). The court briefly addressed the p re s u m p tio n against vesting health benefits, but stated that the presumption "has re fere n c e mainly to suits to enforce collective bargaining agreements." Id. at 617. T h e court acknowledged that it previously applied the presumption against vesting in another case involving retiree claims under a plant closing agreement, Diehl v. T w in Disc, Inc., 102 F.3d 301 (7th Cir. 1996). Id. at 617. However, the court d is tin g u is h e d the earlier plant closing agreement case and its application of the p r e s u m p tio n by explaining that the earlier case involved a short-term agreement, The plaintiffs assert in their brief that Seventh Circuit law relating to vesting presum p tio n s is in a p p lic a b le to the instant case because it involves a plant closing agreem e n t and not a contract of set d u r a tio n . (Pls.' Br. Mot. Sum m . J. 5). However, the cases the plaintiffs cite do not stand for this precise p r o p o s itio n . The cases discuss the vesting presum p tio n in the context of CBA's or state that the presum p tio n is applicable to contracts of set duration. See Murphy v. Keystone Steel & W ir e Co., 61 F.3d 560, 565 (7th C ir . 1995); Senn v. United Dominion Indus., 951 F.2d 806, 816 (7th Cir. 1992); Bidlack v. W h e e la b r a to r , 993 F . 2 d 603, 607 (7th Cir. 1993)(en banc). However, none of the cited authority discusses plant closing a g r e e m e n t s or states that the vesting presum p t io n is inapplicable when interpreting these agreem e n t s . See id . 1 -7 - m a k in g the plant closing agreement similar to a collective bargaining agreement. Id. a t 617-18. The court reasoned that a presumption against vesting applies mainly to c o lle c tive bargaining agreements because they are short-term agreements p r e s u m e d not to create rights or duties continuing beyond the agreement's te rm in a tio n date. Id. The court stated that plant shutdown agreements, in contrast, h a ve no end date and rights originating in these agreements carry forward in d e fin ite ly as a result. Id. Despite these statements, Zielinski does not eliminate the need for "clear and e xp re s s " language to create a contractual obligation for lifetime benefits under a p la n t closing agreement. The court did state that the presumption "mainly" refers to s u its enforcing collective bargaining agreements, but did not declare that it only re fe rs to suits enforcing collective bargaining agreements. The court conspicuously d e c lin e d to state that the requirement for explicit language does not apply to vesting h e a lth benefits under a closing agreement. Instead, the court's analysis suggests that explicit language is necessary b e fo re the court can find a guarantee of lifetime benefits. In Zielinski, the Seventh C irc u it relied upon the presence of clear language in the closing agreement stating tha t the defendant company "shall continue to provide the health and welfare b e n e fits for retirees" in finding that the plant closing agreement created an explicit c o n tra c tu a l obligation for continuous benefits. 463 F.3d at 616-17. ("It is hard to re a d `shall continue' otherwise than as creating a contractual obligation that indeed -8- c o n tin u e s until six months after the last retiree dies."). Based on the plant closing a g re e m e n t's clear promise, the Seventh Circuit reasoned that the benefits were p ro vid e d for life because the closing agreement did not include a termination date. Id . at 617-18. Zielinski does not repudiate the need for clear language indicating an in te n t to vest benefits for life. To the contrary, it seems to confirm the importance of s u c h language. T h e need for express language is problematic for the plaintiffs here because th e Plant Closing Agreement executed by Hayssen and the Union makes no clear p ro m is e to continue providing health benefits. Instead, the plaintiffs rely on o m is s io n s from the Agreement and an indirect reference to a health benefit for re ti r e e s . The plaintiffs cite a section of the Plant Closing Agreement referring to "e lig ib ility" for health benefits to support their argument for irreducible, lifetime b e n e fits . The eligibility section is the only provision of the Agreement to mention h e a lth benefits for retirees. The section reads in relevant part: R e tire d Employee Medical Benefit In d iv id u a ls who attain age 60 and have at least six years of continuous s e rv ic e by 12-31-85, and who elect to commence their retirement b e n e fits by 12-31-85, will be eligible for the retired employee medical b e n e fit. Individuals who attain age 58 or 59 by 12-31-85 and who in d ic a te by 12-31-85, their intent to commence retirement benefits at a g e 60 will be eligible for the retired employee medical benefit. (P la n t Closing Agreement, Docket #16, Attachment 2, p. 5). However, this section d o e s not expressly state that Bemis promises to continue providing a retiree health b e n e fit. Indeed, a guarantee of eligibility for retiree medical benefits does not -9- c o n s titu te explicit language vesting the health benefits themselves. See Ryan v. C h ro m a llo y American Corp., 877 F.2d 598, 604 (7th Cir. 1989) (concluding that re tire e health benefits did not vest under provisions of a collective bargaining a g re e m e n t and rejecting plaintiffs' reliance upon a provision that referred to a re tire e 's eligibility for benefits). The language merely guarantees that particular q u a lifyin g individuals will be eligible for the retiree employee benefit while it is o ffe re d . It does not promise that such a benefit will always be offered. T h e court acknowledges that the "eligibility" provision lacks a definition for, or e xp la n a tio n of, the retired employee medical benefit it references. The plaintiffs a rg u e that this absence requires incorporation of a "Retired Employee Medical B e n e fit" provision from a separate document. They suggest that the Plant Closing A g re e m e n t incorporates portions of the expired CBA, including Section 9.02, entitled R e tire d Employee Medical Benefit, and Section 9.01, entitled Hospital, Surgical and M e d ic a l Insurance. Section 9.01 is the source of the plaintiffs' claims for an u n a lte ra b le level of coverage because the provision specifies that the benefits plan in c lu d e s full prescription drug coverage and $50.00 deductibles. The plaintiffs s u p p o rt their argument for incorporation by citing the following language from the P la n t Closing Agreement: T h is agreement shall supersede and void all prior written and oral a g re e m e n ts between the parties, including without limitation the labor C o n tra c t, pension and insurance agreements, except and only to the e xte n t that reference to the same may be necessary to effectuate the p ro vis io n s of this agreement. -10- (P la n t Closing Agreement, Docket #16, Attachment 2, p. 6). The plaintiffs argue that th e Agreement must incorporate retired employee medical benefit provisions of the e xp ire d CBA in order for the "eligibility" language in the Plant Closing Agreement to b e effectuated. Thus, the promise of continued health benefits for retirees must be in c o rp o ra te d along with the CBA's promise of $50.00 deductibles and full p re s c rip tio n drug coverage. However, the fact remains that the phrase "will be eligible for the retired e m p lo ye e medical benefit" does not explicitly promise to continue benefits. The la n g u a g e promises eligibility for a benefit that may or may not continue to be offered. T h e fact that Bemis provided a particular level of benefits for twenty years does not v e s t lifetime benefits. See Barnett v. Ameren Corp., 436 F.3d 830, 835 (7th Cir. 2 0 0 6 ). The plant closing agreement itself must clearly make this promise. T h e inadequacy of the "eligibility" language to create a contractual obligation is clear when the language is compared to plant closing agreement language that d id vest retiree health benefits. As previously mentioned, the Seventh Circuit c o n s id e re d the issue of vesting health benefits under plant closing agreements in D ie h l and Zielinski. Like the instant case, Diehl and Zielinski each involved a class a c tio n lawsuit brought by retirees and arose from changes to their health benefits m a d e by the respective defendants. Diehl, 102 F.3d at 302-03; Zielinski, 463 F.3d a t 616-17. In Diehl, the Seventh Circuit found that the plaintiffs had a vested right to medical benefits for their lifetimes under the agreement based on an "explicit and -11- s e e m in g ly unambiguous provision" in the shutdown agreement stating that the re tire d employees "shall, notwithstanding any provision of the Insurance A g r e e m e n t..., be entitled for the lifetime of the pensioner... to the life insurance and h o s p ita liz a tio n , medical and surgical expense benefit coverages as provided under th e Extension of Coverages and Integration of Benefits provisions of Sections 5 and 6 of the Insurance Agreement." 102 F.3d at 306. There is no question that the plant c lo s in g agreement in Diehl promised lifetime benefits based on this express la n g u a g e . Similarly, in Zielinski the court found that the plant closing agreement la n g u a g e vested the plaintiffs' medical benefits, entitling them to benefits for life. 4 6 3 F.3d at 617-18. The court based its conclusion on language in the closing a g re e m e n t stating that the defendant company "shall continue to provide the health a n d welfare benefits for retirees [and their spouses and dependents] described in" th e prescription drug provision of the collective bargaining agreements. 463 F.3d at 6 1 6 , 618. Though not as explicit as the "for the lifetime of the pensioner" language in Diehl, the shutdown agreement in Zielinski clearly stated that the company g u a ra n te e d continuing health benefits. In contrast, the Plant Closing Agreement at iss u e here contains no such explicit statement guaranteeing continued benefits. Further, even if the Plant Closing Agreement incorporates the portions of the e xp ire d CBA defining a retired employee health benefit, the Agreement still does not in c lu d e a promise for lifetime benefits. Collective bargaining agreements are, by -12- th e ir nature, intended to be limited term agreements. See Zielinski, 463 F.3d at 618 (n o tin g that CBA's are "short-term agreement"). The presumption that CBA's do not in te n d to vest lifetime health benefits is based on this idea. In the absence of la n g u a g e to the contrary, CBA's create only limited-term obligations because they a re limited term agreements. Therefore, the Plant Closing Agreement cannot in c o rp o ra te language meant to apply for a limited duration and then convert this s a m e language into a promise of lifetime benefits. The Agreement does not provide a n explicit guarantee of benefits for life, thus, the court cannot find that such a p r o m is e exists. B e c a u s e the Plant Closing Agreement does not promise to provide the re tire e s with lifetime benefits, altering their specific levels of coverage cannot c o n s titu te a breach of the Agreement. Nonetheless, the court will briefly address the s e c o n d issue in the suit, whether increasing deductibles and eliminating full p re s c rip tio n drug coverage breaches the Plant Closing Agreement. A n explicit promise to provide benefits for life would not insulate the plaintiffs fro m all modifications to their coverage. The Seventh Circuit has not found an irre d u c ib le level of health benefits even when explicit vesting language creates a c o n tra c tu a l obligation for lifetime benefits. In Zielinski, the court found that the p la in tiffs were entitled to the prescription drug coverage vested by and incorporated in to the shutdown agreement. 463 F.3d at 618-19. However, the court also found th a t the plant closing agreement language was not intended to create an "inflexible -13- o b lig a tio n ." Id. at 618. The court concluded that the shutdown agreement entitled th e plaintiffs to lifetime prescription drug benefits, but at a level adjusted for changes to which the parties "would have agreed" if they had considered the duration of the c o m m itm e n t. Id. at 621. The court then remanded the case to the district court for a determination of benefits "reasonably commensurate" with those provided in the 1 9 7 1 health plan. Id. Similarly, in Diehl, the Seventh Circuit found that the plaintiff re tire e s were entitled to medical benefits under a plant shutdown agreement, but re m a n d e d the issue to the district court to determine whether the modified retiree h e a lth benefits were "reasonably commensurate" with previously promised coverage. 1 0 2 F.3d at 311. Thus, the court did not preclude the respective defendants from c h a n g in g the specific coverage promised to the plaintiff retirees. As a result, even if the Plant Closing Agreement at issue in the instant case provided for lifetime h e a lth benefits, this does not necessarily preclude Bemis from making the m o d ific a tio n s to coverage that it instituted in 2005 and 2007. M o re o ve r, as previously noted, CBA's are intended and understood to be s h o rt-te rm agreements. The parties did not negotiate the 1982 CBA and its specific le ve ls of coverage with the intent that those levels would be irreducible into the in d e fin ite future. To the contrary, at the time the Agreement was negotiated, the $ 5 0 .0 0 deductibles and full drug coverage appearing within Section 9.01 of the CBA w e re applicable only for the limited term of the contract. Thus, requiring Bemis to p ro vid e lifetime, irreducible coverage does not reflect the intent of the parties at the -14- tim e they negotiated the CBA's coverage levels. An intent to provide unalterable b e n e fits is not reflected in the Plant Closing Agreement either, because the A g re e m e n t does not mention lifetime coverage, much less specify exact deductible a m o u n ts . Indeed, the court is skeptical that Bemis (or rather, Hayssen) would n e g o tia te for precise coverage levels and deductible amounts binding the company fo r the lifetime of the longest-lived retiree a period that has already spanned 24 ye a rs . Finally, the court notes that requiring Bemis to provide unalterable benefits a t the generous level of $50.00 yearly deductibles per family and full prescription d ru g coverage seems imprudent given the economic realities of skyrocketing health c a re costs. CONCLUSION T h e court concludes that the Plant Closing Agreement does not guarantee the p la in tiffs lifetime benefits because the Agreement does not explicitly promise to p ro vid e health benefits for life.2 Further, even if the Agreement did make such a p r o m is e , the contract does not necessarily require Bemis to provide the precise le ve l of benefits appearing in the expired CBA. The court is sympathetic to the d iffic u ltie s faced by the plaintiffs in paying an increased portion of their healthcare 2 The court notes that this conclusion is inconsistent with a finding the court m a d e for the purposes o f class certification. In its class certification order, the court assum e d that the Plant Closing Agreem e n t in c o r p o r a t e d the Retired Em p l o ye e Health Benefit from the 1982 CBA and guaranteed the benefit. See T e m m e v. Bemis Company, Inc., No. 08-CV-090, 2009 W L 1505120, at *2-3 (E.D. W is . May 28, 2009). Based o n this determ in a tio n , the court concluded that any prom is e of benefits for those retiring after the execution o f the Plant Closing Agreem e n t applied equally to those individuals retiring prior to the signing of the A g r e e m e n t , im p a c t in g the court's analysis of num e r o s it y, com m o n a lit y, and typicality. Id. at *3-4. However, a f te r considering the parties' briefs and conducting its sum m a r y judgm e n t analysis, the court concludes that th e Plant Closing Agreem e n t does not prom is e lifetim e health benefits to the retirees because the Agreem e n t d o e s not explicitly m a k e this prom is e . -15- c o s ts while on a fixed income. However, the court cannot read a promise for life tim e , unalterable health benefits into a Plant Closing Agreement whose language m a k e s no clear and express promise of such. Accordingly, IT IS ORDERED that the plaintiffs' motion for summary judgment and a p e rm a n e n t injunction (Docket #14) be and the same is hereby DENIED; IT IS FURTHER ORDERED that the defendant's motion for summary ju d g m e n t (Docket #18) be and the same is hereby GRANTED; IT IS FURTHER ORDERED that this action be and the same is hereby D IS M IS S E D on its merits. T h e Clerk is directed to enter judgment accordingly. D a te d at Milwaukee, W is c o n s in , this 26th day of August, 2009. BY THE COURT: J .P . Stadtmueller U .S . District Judge -16-

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?