Temme et al v. Bemis Company Inc

Filing 94

DECISION AND ORDER signed by Magistrate Judge Patricia J Gorence on 4/18/2011. The plaintiffs' 78 motion for preliminary injunction be and hereby is granted. (cc: all counsel) (mlm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
THOMAS TEMME and SHIRLEY
TEMME, individually and as a class of
persons similarly situated,
Plaintiffs,
v.

Case No. 08-C-90

BEMIS COMPANY, INC.,
a Missouri corporation,
Defendant.

DECISION AND ORDER
NATURE OF CASE
On January 28, 2008, the plaintiffs, Thomas and Shirley Temme, filed this class action
law suit against defendant Bemis Company, Inc. (Bemis) asserting claims under § 301 of the
Labor Management Relations Act (LMRA) and § 502 of the Employee Retirement Income
Security Act (ERISA). The plaintiffs represent a class of former production workers and their
spouses who have been receiving their health care coverage through Hayssen Manufacturing
Company (Hayssen) and its successor, defendant Bemis, as a result of a 1985 Plant Closing
Agreement. In the original complaint, the plaintiffs alleged that the defendant breached the
plant closing agreement when it changed deductibles and eliminated prescription drug
coverage in 2005 and 2007.
In an August 26, 2009, Order, United States District Judge J.P. Stadtmueller concluded
that the plant closing agreement did not guarantee the plaintiffs lifetime benefits and,
therefore, the defendant did not breach the agreement with its changes in 2005 and 2007.
Judge Stadtmueller granted summary judgment to the defendant and dismissed the case. The
plaintiffs appealed the order. On October 1, 2009, the defendant completely eliminated all

medical benefits being provided to the plaintiffs. On appeal, the Court of Appeals for the
Seventh Circuit reversed the grant of summary judgment to the defendant and remanded the
case for further proceedings consistent with its opinion. Subsequent to the remand, the
parties consented to United States Magistrate Judge jurisdiction pursuant to 28 U.S.C. §
636(c) and General Local Rule 73.1 (E.D. Wis.) and the case was assigned to this court.
On February 25, 2011, with leave of the court, the plaintiffs filed an amended complaint.
The amended complaint adds allegations that the defendant breached the 1985 Plant Closing
Agreement when it eliminated all retiree benefits for the Hayssen retirees.
MOTION FOR A PRELIMINARY INJUNCTION
“An equitable, interlocutory form of relief, 'a preliminary injunction is an exercise of a
very far-reaching power, never to be indulged in except in a case clearly demanding it.'" Girl
Scouts of Manitou Council, Inc. v. Girl Scouts of the United States of America, Inc., 549 F.3d
1079, 1085 (7th Cir. 2008) (quoting Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d 380,
389 [7th Cir. 1984]). In determining whether to issue a preliminary injunction, “a district court
engages in an analysis that proceeds in two distinct phases: a threshold phase and a
balancing phase.” Girl Scouts of Manitou Council, Inc., 549 F.3d at 1085-86.
To survive the threshold phase, a party seeking a preliminary injunction must
demonstrate that 1) absent a preliminary injunction, it will suffer irreparable harm in the interim
period prior to a final resolution of its claims; 2) traditional legal remedies would be inadequate;
and 3) its claim has some likelihood of success on the merits. Id. at 1086; see also, Promatek
Industries, Ltd. v. Equitrac Corp., 300 F.3d 808, 812 (7th Cir. 2002). If the moving party fails
to demonstrate any one of these three threshold requirements, the court must deny the
injunction. Girl Scouts of Manitou Council, Inc., 549 F.3d at 1086 (citing Abbott Labs. v. Mead
Johnson & Co., 971 F.2d 6, 11 [7th Cir. 1992]). If, however, the moving party can satisfy these
-2-

conditions, the court then proceeds to the balancing phase of the analysis. Girl Scouts of
Manitou Council, Inc., 549 F.3d at 1086.
In this balancing phase, “the court weighs the irreparable harm that the moving party
would endure without the protection of the preliminary injunction against any irreparable harm
the nonmoving party would suffer if the court were to grant the requested relief.” Id. “In so
doing, the court employs a sliding scale approach: ‘[t]he more likely the plaintiff is to win, the
less heavily need the balance of harms weigh in his favor; the less likely he is to win, the more
need it weigh in his favor.’” Id. (quoting Roland Mach. Co. v. Dresser Indus., Inc., 749 F.2d
380, 387 [7th Cir. 1984]). The court’s balancing process also considers any effects that
granting or denying the preliminary injunction would have on the public interest. Girl Scouts
of Manitou Council, Inc., 549 F.3d at 1086.
BACKGROUND FACTS
In 1985, Hayssen Manufacturing (Hayssen), the predecessor of the defendant, closed
its Sheboygan plant. At the time the production employees were represented by the United
Auto Workers and its Local 1423. Hayssen and the United Auto Workers (UAW) entered into
a closing agreement covering the production employees, the 1985 Plant Closing Agreement.
Hayssen provided for a fully-paid health plan (covering whatever Medicare did not) with
prescription drug coverage and with the only co-pays being two $50 deductibles per family per
year. Hayssen and then the defendant continued to provide this coverage at these levels
through 2004.
In 2005, the defendant reduced these benefits, raising the deductible from $50 to $250
and required substantial co-pays for prescription drugs that varied based on whether the drug
was generic, formulary or brand. In 2007, the defendant eliminated all prescription drug
coverage.
-3-

On May 28, 2009, Judge Stadtmueller issued an order certifying a class under Fed. R.
Civ. P. 23(b)(1) and (b)(2). The plaintiffs, Thomas and Shirley Temme, were certified as class
representatives. On August 26, 2009, on cross-motions for summary judgment, Judge
Stadtmueller granted the defendant’s motion for summary judgment and dismissed the case.
Judge Stadtmueller concluded that the defendant did not breach the Closing Agreement,
holding that "[b]ecause the Plant Closing Agreement does not promise to provide the retirees
with lifetime benefits, altering their specific levels of coverage cannot constitute a breach of
the Agreement." (Order of August 26, 2009, at 13). The court determined that, "the
Agreement does not guarantee the plaintiffs lifetime benefits because the Agreement does not
explicitly promise to provide health benefits for life." Id. at 15.
As noted, the plaintiffs appealed Judge Stadtmueller’s order and the Seventh Circuit
Court of Appeals reversed and remanded for further proceedings. The court of appeals
determined that the closing agreement and the last collective bargaining agreement (CBA)
between the parties had to be read together. The court stated that “[o]nly by reading the CBA
can meaning be given to the ‘retired employee medical benefit’ for which retirees are eligible.”
Temme v. Bemis Company, Inc., 622 F.3d 730, 736 (7th Cir. 2010). The court held “that the
parties intended to grant retirees a lifetime entitlement to medical benefits.” Id. at 737.
ANALYSIS
The plaintiffs seek an order requiring the defendant to restore the benefits it eliminated
in 2009, plus provide a basic Medicare Part D prescription drug benefit. The plaintiffs assert
that a preliminary injunction is proper because they are likely to succeed on the merits, they
will suffer irreparable harm without an injunction, there is no adequate remedy at law, and the
balance of harms weighs in favor of granting the injunction.

-4-

In response, the defendant maintains that the plaintiffs have no likelihood of success
on the merits. The defendant asserts that the reservation of rights clause in the master
insurance contract gave it the right to modify and even terminate the plan. The defendant
further asserts that even if there is no reservation of rights clause permitting termination of the
retired employee medical benefit, the scope of retired employee benefits is much smaller than
the benefit claimed by the plaintiffs. Specifically, the defendant maintains that the Court of
Appeals for the Seventh Circuit held that it had no obligation to pay premiums and that it has
no obligation to provide the same benefits that existed in 1985. The defendant further asserts
that the plaintiffs will not experience irreparable harm without the requested preliminary
injunction as it is not obligated to pay premiums. Finally, the defendant asserts that the
plaintiffs do not lack an adequate remedy at law and that the balancing of the hardships favor
it.
With respect to the defendant’s assertion that the reservation of rights clause in the
master insurance contract gave it the right to terminate the retirees’ lifetime benefit, the
appellate court explained:
If the master insurance contract contained an express reservation of rights, it is
possible that Hayssen could have drastically modified the level of benefits
provided to its employees while the CBA controlled the terms of the relationship
between Hayssen and its employees. But, the fact that a final closing agreement
incorporated or relied on language in a previous collective bargaining agreement
does not mean it adopted, unmodified, any language in any underlying
insurance contract. Cf. Diehl, 102 F.3d at 306-07 ("[T]he Shutdown Agreement
itself was an independent contract, supported by separate consideration and
capable of modifying or supplanting prior contractual arrangements."). If the
parties intended lifetime medical benefits for retirees, then that promise could
have abrogated any right Bemis may have had to terminate coverage under its
master insurance contract. Moreover, as proof that this reservation of rights
clause existed, Bemis points to a 1990 insurance contract and "deduces" that
the relevant 1984 master contract included the same reservation of rights.
Haberman Aff. PP 4-6. The 1984 contract itself however, is not the record.
Temme disputes the existence of any such clause in the relevant contract. Pl.'s
Br. in Resp. to Def.'s Motion for Summ. J. at 12-13. Whether the 1984 master
-5-

insurance contract included a reservation-of-rights clause and whether the
parties intended the clause--if any exists--to be abrogated or modified by the
vested nature of the medical benefits are issues to be decided by a factfinder.
Temme v. Bemis Co., 622 F.3d 730, 738 (7th Cir. 2010). In making the same argument in
its brief in response to the plaintiff’s motion for preliminary injunction, the defendant cites to
the same evidence the court of appeals questioned could establish the presence of a
reservation-of rights clause in the 1984 master insurance contract. Additionally, the court
stated that [i]f the parties intended lifetime medical benefits for retirees, then that promise
could have abrogated any right [the defendant] may have had to terminate coverage under its
master insurance contract.” Id.
Moreover, contrary to the defendant’s assertion, the Court of Appeals for the Seventh
Circuit did not hold that it had no obligation to pay premiums. The court stated:
Bemis also argues that the plaintiffs have signed releases waiving all claims
arising under the CBA. Upon each employee's termination, a document was
signed releasing all claims under the previous CBA, and Bemis argues this
includes any rights secured by § 9.02. A better understanding of the general
release is that it relinquished any claim under the CBA that was not separately
secured by the Closing Agreement; that the Closing Agreement secured the
right to a lifetime benefit, but that the CBA defined the scope of the right. The
release specifically lists an amount of payment received by each signee. The
payment is the "total pay due" for payments such as severance, unused
vacation pay and holidays. It also specifically lists "premium payments for
continued medical coverage either as a terminated employee or a future retiree."
A thorough reading of the release undercuts Bemis's argument. The release
acknowledges that terminated employees and retirees will continue to receive
medical coverage, but releases Bemis from making any more premium
payments for that coverage.
Temme v. Bemis Co., 622 F.3d at 737. The Closing Agreement allowed for terminated
employees and future retirees to continue their present medical coverage by paying the full
monthly premium for a period of twelve months or until they became covered under another
plan. Specifically, the Agreement provided:

-6-

Employees terminated under the provisions of this agreement with the exception
of those eligible employees who apply for retirement benefits by 12/31/85, will
be allowed to continue their present Blue Cross/ Blue Shield Medical coverage
by paying the full monthly premium for a period of 12 months (1/1/86 to 1/1/87)
or until they become covered by another medical insurance plan, whichever is
sooner.
(Answer, Exh. 1 at 4). The release acknowledged that the employer would no longer pay the
premium payments for either the terminated employee or the future retiree. The release
waived all claims arising under the CBA that “was not separately secured by the Closing
Agreement.” Temme v. Bemis Co., 622 F.3d at 737. The Closing Agreement secured the
retirees’ entitlement to lifetime medical benefits and, therefore, the release did not waive such
claims. Id. “The language contained in the Closing Agreement clearly entitles retirees to an
eligibility for a specific medical benefit.” Id. Thus, the plaintiffs are likely to succeed on the
merits of their amended complaint.
In addition to showing a likelihood of success on the merits, the plaintiffs also must
establish that they will suffer irreparable harm if the preliminary injunction is not granted and
that they lack an adequate remedy at law. The plaintiffs assert that they do and will continue
to suffer irreparable harm because the defendant has stopped paying their medical insurance
premiums.
The retirees, having been retired for more than 25 years, are old. The plaintiff, Tom
Temme, at 83, is one of the youngest. Approximately one-quarter of the class has died since
this case started. In addition to being old, the retirees have minimal financial resources. They
have little or no pensions. The plaintiffs have adequately established that the elimination of
all health benefits has had a severe impact on the retirees, both economic and psychological.1

1

W hen the defendant elim inated their m edical supplem ent plan in October 2009, Tom and Shirley Tem m e
could not afford the $400 a m onth required to purchase one. Their sole m edical coverage is Medicare A & B
which provides basic coverage, but exposes them to large co-pays and deductibles in the event they require
extensive m edical care or hospitalization. In addition, their large expenses for m edical and prescription drug

-7-

The economic and psychological impact constitutes irreparable harm. The plaintiffs also lack
an adequate remedy at law as the they are old and lack medical insurance. Moreover, it is
likely that some retirees will pass away prior to a final judgment is entered.
The next phase of the preliminary injunction analysis is the balancing of harms phase.
The plaintiffs’ age and lack of medical insurance and the inherent risk in that weigh heavily in
their favor. Furthermore, “‘[t]he more likely the plaintiff is to win, the less heavily need the
balance of harms weigh in his favor; the less likely he is to win, the more need it weigh in his
favor.’” Girl Scouts of Manitou Council, Inc., 549 F.3d at 1086. Additionally, the public interest
lies in favor of the plaintiffs. Public policy favors enforcing contractual agreements.
In sum, the plaintiffs have demonstrated a likelihood of success on the merits with
respect to the allegations of the amended complaint. They further have demonstrated that
they will suffer irreparable harm if the preliminary injunction is not granted and that there is no
adequate remedy at law. Furthermore, the balance of harms weighs in the plaintiffs’ favor.
Accordingly, this court will grant the plaintiff’s motion for a preliminary injunction, requiring the
defendant to restore the benefits it eliminated in 2009 plus provide a basic Medicare Part D
prescription drug benefit.
RULE 65(c) BOND
Rule 65(c) of the Federal Rules of Civil Procedure provides that: “The court may issue
a preliminary injunction . . . only if the movant gives security in an amount that the court
considers proper to pay the costs and damages sustained by any party found to have been
wrongfully enjoined or restrained.” Although the language of the rule is mandatory, “the case
law has somewhat weakened the force of the ‘no order shall issue’ language of the rule.”

coverage have been devastating to them as they both suffer from m edical conditions requiring continuing m edical
care – Mr. Tem m e has had a stroke and Mrs. Tem m e has Alzheim er's and com plications from glaucom a.

-8-

Reinders Bros., Inc. v. Rain Bird Eastern Sales Corp., 627 F.2d 44, 54 (7th Cir.1980) (quoting
Wayne Chemical, Inc. v. Columbus Agency Serv. Corp., 567 F.2d 692, 701 [7th Cir. 1977]).
Thus, “[u]nder appropriate circumstances bond may be excused, notwithstanding the literal
language of Rule 65(c).” Wayne Chem., Inc., 567 F.2d at 701; Habitat Education Center v.
United States Forest Service, 607 F.3d 453, 458 (7th Cir. 2010).
The "purpose of an injunction bond is to compensate the defendant, in the event he
prevails on the merits, for the harm that an injunction entered before the final decision caused
him." Ty, Inc. v. Publ'ns, Inc., 292 F.3d 512, 517 (7th Cir. 2002). Based on the court of
appeals’ decision and the defendant’s continued reliance on the same evidence, the court
finds that there is little risk that the defendant will be wrongfully enjoined by the injunction.
Additionally, given the financial condition of the plaintiffs and their inability to pay a substantial
bond, no security is required.
CONCLUSION
NOW, THEREFORE, IT IS ORDERED that the plaintiffs’ motion for preliminary
injunction be and hereby is granted. (Docket # 78).
Dated at Milwaukee, Wisconsin this 18th day of April, 2011.
BY THE COURT:

s/ Patricia J. Gorence
PATRICIA J. GORENCE
United States Magistrate Judge

O:\CIV\Temme_preliminary inj.wpd

-9-

April 19, 2011