Merrill et al v. Briggs & Stratton Corporation et al
Filing
173
DECISION AND ORDER signed by Judge Lynn Adelman on 9/2/15 denying 115 Plaintiffs' Motion for Summary Judgment; denying 120 Motion to Seal Document; denying 121 Defendants' Motion for Summary Judgment; denying 142 Motion to Strike/Motion to Exclude; denying 145 Motion in Limine; denying 157 Motion in Limine. (cc: all counsel) (dm) Modified on 9/3/2015 (dm).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
_____________________________________________________________________
MICHAEL MERRILL et al.,
Plaintiffs,
v.
Case No. 10-cv-700
BRIGGS & STRATTON CORP. et al.,
Defendants.
_____________________________________________________________________
DECISION AND ORDER
Plaintiffs Michael Merrill, Gregory Weber and Jeffrey Carpenter, retired employees
of defendant Briggs & Stratton Corporation (“Briggs”), and plaintiffs’ union, brought this
class action suit against Briggs and its Group Insurance Plan under § 301 of the Labor
Management Relations Act (“LMRA”) and § 502(a) of the Employee Retirement Income
Security Act (“ERISA”) alleging that defendants violated the parties’ collective bargaining
agreement (“CBA”) by reducing health benefits of employees who retired before August
1, 2006. Before me now are cross-motions for summary judgment as well as several
motions related to the parties’ expert witnesses.
I. Background
Since at least 1983, Briggs has negotiated with the union representing employees
at its Milwaukee manufacturing facilities. Briggs and the union agreed that Briggs would
provide health benefits to retirees, and these agreements have been memorialized in a
series of CBAs. The parties have a long and complex bargaining history, but generally
speaking, before August 1, 2006, CBAs provided certain retirees with fully-paid health
benefits for a certain duration of time.1 In 2005, however, when the parties were negotiating
a renewed CBA to take effect in 2006, Briggs proposed language changing all retiree
coverage to be “the same coverage(s) offered active employees.” App. Part 3 of 5 at 81
(ECF No. 125-3). The parties negotiated, and the final language agreed on was: “for
employees who retired on or after 8-1-06, coverages . . . shall be the same coverage(s)
offered active employees and are subject to change.” Eisenberg Decl. Ex. Q at 107 (ECF
No. 119-17).
Then, in 2010, Briggs notified all retirees that it had made unilateral changes to their
health benefits, including the introduction of a $12,000 cap on company contributions for
individual coverage and a $24,000 cap for family coverage, the elimination of some retiree
plans, and switching employees exclusively to PPO plans.2 Subsequent changes in 2011,
2012, and 2013 have allegedly further reduced the number of plan options, increased
deductibles, and increased out-of-pocket maximums. Plaintiffs argue that these changes
violated the parties’ CBAs’ promise of long-term benefits.
Pursuant to the stipulation of the parties, I previously certified two classes of
plaintiffs in this litigation. Class 1 members, including plaintiffs Merrill and Weber, retired
from a Milwaukee area facility between August 1, 2000 and August 1, 2006 with 30 years
of service, had hire dates prior to 1980, and had not reached age 65 as of August 1, 2010.
These class members retired under the 1998 and 2002 CBAs, which state the following
1
The precise language of the CBAs will be discussed in detail below.
2
The majority of retirees were enrolled in an EPO plan prior to 2010, which
generally provides less expensive coverage but within an exclusive network of
providers, while PPO plans generally provide more expensive coverage but with more
flexibility in provider options.
2
with respect to their retiree benefits: “the premium cost for [medical, dental and vision]
coverage will be fully-paid by the Company for up to 10 years, but not beyond age 65.”
Eisenberg Decl. Ex. Q at 75 (ECF No. 119-17); id. at 93. Class 2 members, including
plaintiff Carpenter, retired from a Milwaukee area facility on disability before August 1, 2006
with between 10 and 30 years of services and had not reached age 65 as of August 1,
2010. All class 2 members retired under the 1998 and 2002 CBAs, which state that they
“are eligible for Company paid medical benefits until age 65.” Eisenberg Decl. Ex. Q at 75
(ECF No. 119-17); id. at 93.
II. Discussion
A. Statute of Limitations
First, I briefly address defendants’ argument that plaintiffs’ claims are barred by the
statute of limitations. The LMRA and ERISA do not provide a statute of limitations for the
types of claims plaintiffs bring, so I apply the most analogous state statute of limitations.
United Indep. Flight Officers, Inc. v. United Air Lines, Inc., 756 F.2d 1262, 1271–72 (7th
Cir. 1985). Because this is a breach of contract claim, I apply Wisconsin’s 6-year statute
of limitations to this case. See Wis. Stat. § 893.43 (imposing a 6-year statute of limitations
for breach of contract claims); Ruppert v. Alliant Energy Cash Balance Pension Plan, 726
F.3d 936, 941 (7th Cir. 2013) (concluding that Wisconsin’s 6-year statute of limitations for
breach of contract claims is the most analogous for § 502 ERISA claims). However, I apply
federal law in determining when a claim accrued. Daill v. Sheet Metal Workers’ Local 73
Pension Fund, 100 F.3d 62, 65 (7th Cir. 1996) (“Even when relying on an analogous state
statute of limitations . . . we look to federal common law for purposes of determining the
3
accrual date of a cause of action under a federal statute such as ERISA.”).
Plaintiffs filed their complaint in August 2010; thus, their claims must have accrued
prior to August 2004 to be within the statute of limitations. “[T]he general federal common
law rule is that an ERISA claim accrues when the plaintiff knows or should know of conduct
that interferes with the plaintiff’s ERISA rights.” Thompson v. Ret. Plan for Emps. Of S.C.
Johnson & Son, Inc., 651 F.3d 600, 604 (7th Cir. 2011) (internal quotations and citation
omitted). This requires “a clear and unequivocal repudiation of rights under the . . . plan
which has been made known to the beneficiary.” Id. Defendants argue that plaintiffs’ claims
accrued when the company first informed retirees of unilateral changes to their allegedly
unalterable benefits and when the parties began bargaining for changes to retiree benefits,
which was well before August 2004. As examples, defendants point to collectively
bargained changes to retiree benefits in 1983, Briggs’ unilateral termination of a health
plan in 2001, Briggs’ unilateral changes to prescription drug providers in 2001, and
reservation of rights language included in enrollment materials as early as December 2003.
I reject this argument for several reasons. First, it is not these earlier actions plaintiffs
challenge as a violation of the CBAs; plaintiffs challenge 2010 and later changes to retiree
benefits, which fall within the 6-year limitation period. Second, it is not clear from the record
whether the unilateral changes Briggs points to resulted in a material change to the level
of benefits retirees received, and thus it is not clear that these changes were “a clear and
unequivocal repudiation of rights.” Third, it is unclear from the record whether the materials
containing reservation of rights materials were actually sent to all class members. Thus,
I conclude that plaintiffs’ claims challenging the 2010 changes to retiree benefits is not
barred by the statute of limitations.
4
B. Expert Witness Challenges
1. Motion to strike
The parties have filed several motions regarding expert witnesses. First, defendants
ask me to strike the second rebuttal report by plaintiffs’ expert Howard Atkinson, Jr.,
arguing that it was not authorized by my scheduling order or contemplated by the parties.
Near the end of discovery, there was some confusion as to whether plaintiffs’ complaint
challenged only defendants’ initial changes to retiree benefits in 2010, or whether it also
challenged subsequent changes in 2011, 2012, and 2013. I allowed plaintiffs to amend
their complaint to clarify that subsequent changes were included, and I permitted
defendants’ expert to file a reply report addressing the subsequent changes. Defendants’
expert did so on June 27, 2014, and two months later, plaintiffs’ expert submitted a second
rebuttal report (it had already issued a first rebuttal report as part of the original expert
discovery schedule). Defendants argue that the second rebuttal report was improper.
Plaintiffs counter that in his June 27 reply report, defendants’ expert, Adam Reese,
changed some of his calculations related to the 2010 changes (as well as addressing the
subsequent changes) and thus the second rebuttal report was necessary to rebut these
new opinions. Specifically, in comparing the pre-2010 retiree plan and post-2010 retiree
plan, Reese adjusted his calculations of the actuarial value of both plans to account for a
10% out-of-network utlization,3 a figure defendants assert was the same utilization estimate
Atkinson used in his calculations of both plans. Thus, defendants argue, the reply did not
use new methodology or calculations but simply adjusted its old methodology in response
3
This is an estimate that approximately 10% of claims under a plan are for outof-network providers, resulting in a higher out-of-pocket expense to the retiree.
5
to plaintiffs’ expert’s opinion, and because no new methodology was used, plaintiffs’ expert
should not have the benefit of responding.
I will not strike the second rebuttal report on these technical grounds. See Torres
v. Oakland Scavenger Co., 487 U.S. 312, 316 (1988) (“[T]he requirements of the rules of
procedure should be liberally construed and . . . ‘mere technicalities’ should not stand in
the way of consideration of a case on its merits.”). Although plaintiffs’ should have sought
permission from the court to produce a second rebuttal report before doing so, defendants’
expert opened the door to a rebuttal by changing his calculations for the 2010 plan
changes when the purpose of the additional reply report was to address the 2011, 2012,
and 2013 claims. Plaintiffs make a strong case that defendants’ expert incorrectly applied
the 10% utilization figure to one of the plans at issue, illustrating the necessity of the
second rebuttal report. Although defendants state that they will be prejudiced by use of this
report and will need an opportunity for additional discovery and to file supplemental expert
reports, they point to no information in the second rebuttal report which is new or a
surprise.4 Banister v. Burton, 636 F.3d 828, 833 (7th Cir. 2011) (concluding that the failure
to timely file expert report was “clearly harmless” in the absence of a surprise). Thus, I see
no prejudice to defendants and will allow the second rebuttal report.
2. Daubert motions
Both parties have also filed motions in limine to exclude each other’s expert
4
To the extent that defendants argue that Atkinson’s explanation in his second
rebuttal report that he did not apply the 10% out-of-network utilization figure to all plans
is new or surprising to them, I reject this argument. As plaintiffs point out, Atkinson’s
initial report shows that he did not apply the 10% figure to the Plan D, the most popular
pre-2010 plan, but did to Plan B, the most popular post-2010 plan. See Pls.’ Reply at
5-6 (ECF No. 172).
6
testimony based on Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993). These
motions boil down to a dispute over the proper methodology for calculating and comparing
the actual costs of health care plans; each side’s actuary used a different methodology for
comparing Briggs’ pre- and post-2010 retiree plans and for determining whether, in their
expert opinion, the changes were “material,” in other words whether the post-2010 benefits
were reasonably commensurate with the pre-2010 benefits.5
When reviewing a summary judgment motion, I may only consider evidence that
would be admissible at trial. Hardrick v. City of Bolingbrook, 522 F.3d 758, 761 (7th Cir.
2008). Federal Rule of Evidence 702 governs expert witness testimony and states that
expert witness testimony is admissible if (1) the witness is qualified by knowledge, skill,
experience, training, or education; (2) the witness’s specialized knowledge will help the jury
understand evidence or determine a fact issue; (3) the testimony is based on sufficient
facts or data; and (4) the expert has reliably applied principles and methods to the facts of
the case. See also Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999); Daubert, 509
U.S. 579. The court functions as a “gatekeeper” to exclude unreliable expert testimony.
Kumho Tire, 526 U.S. at 148. The key inquiry is “the validity of the methodology employed
by an expert, not the quality of data used in applying the methodology or the conclusions
produced.” Manpower, Inc. v. Ins. Co. of Pa., 732 F.3d 796, 806 (7th Cir. 2013).
The biggest difference in the experts’ methodology is that plaintiffs’ expert, Atkinson,
calculated the “relative value” of the plans while defendants’ expert, Reese, calculated the
“actuarial value” of the plans. The parties agree that the actuarial value reflects the
5
I discuss the “reasonably commensurate” standard in detail below.
7
percentage of medical costs borne by the retiree while the relative value reflects the total
cost of a plan to the employer. Atkinson used a proprietary software tool called Apex to
calculate the relative value, while Reese used the minimum value (“MV”) calculator
developed by the Department of Health and Human Services to calculate the actuarial
value. Both sides challenge the others’ use of these differing methods and tools.
I will reject this argument as to both experts. Although the parties challenge each
others’ experts’ use of the differing tools and methodologies in this specific case, both
parties concede that the tools and methodologies used by both experts are generally
accepted tools in the actuary field; plaintiffs concede that the MV calculator is a commonlyused actuarial tool and the calculation of the actuarial value is a commonly-used
methodology, and defendants concede that their expert has used software tools similar to
Atkinson’s to calculate relative value in the past. Thus, it appears that the methodology
used by both experts is reliable and commonly used in the actuary field, thus I will not
exclude either expert on these grounds. “The soundness of the factual underpinnings of
the expert’s analysis and the correctness of the expert’s conclusions based on that
analysis are factual matters.” Smith v. Ford Motor Co., 215 F.3d 713, 718 (7th Cir. 2000).6
The parties also challenge each others’ experts on the materiality of the changes,
arguing that their methods are not reliable. I also reject this argument as to both experts.
6
Plaintiffs also challenge defendants’ expert Reese on the grounds that (a) his
use of the 10% out-of-network utilization figure was unfounded, (b) his opinions
criticizing relative value calculations are unfounded and contradict his prior work, and ©
his conclusions are unreliable because he failed to account for the fact that participants
use richer benefit plans more often. These are challenges not to the methodology but to
either facts and assumptions used in applying a methodology or to the credibility of an
expert, both issues for the jury.
8
Plaintiffs’ expert Stuart Wohl used his knowledge and experience and considered several
different benchmarks, some of which defendants’ expert also appears to have used, in
forming his opinion. Defendant’s expert Reese used his knowledge and experience but
based his conclusion on different benchmarks. Whether the benchmarks and assumptions
the experts used in their analyses are reliable is a jury question. Manpower, Inc., 732 F.3d
at 808. (“The reliability of data and assumptions used in applying a methodology is tested
by the adversarial process and determined by the jury; the court’s role is generally limited
to assessing the reliability of the methodology . . . of the expert’s analysis.”).7
C. Scope of the Claims
In conjunction with their Daubert motions the parties raised one additional issue,
namely whether or not this case is about solely the changes defendants made to retiree
medical plans or whether it also includes changes to retiree dental and vision plans.
Defendants argue that plaintiffs’ complaint only pleads that Briggs’ changes to the medical
benefits, and not changes to dental and vision benefits, violated the LMRA and ERISA.
Because of this understanding, defendants’ expert did not analyze changes to the dental
and vision benefits, while plaintiffs’ experts did.
The operative complaint is plaintiffs’ supplemental and corrected complaint (ECF
No. 101). Plaintiffs describe the insurance coverage at issue in this case by directly quoting
7
Defendants also argue that plaintiffs’ expert Wohl’s testimony should be
excluded because it is based on the relative value calculations of Atkinson. Because I
am allowing Atkinson’s testimony, I will not exclude Wohl’s for this reason. Defendants
also challenge Wohl’s testimony because he is not an actuary. I reject this argument.
Wohl has over 25 years of experience evaluating retiree health programs, and the fact
that he is not an actuary is not a problem because he did not do actuarial work; he used
Atkinson’s actuarial calculations in forming his opinion.
9
the CBAs at issue, which provide for company-paid coverage for “medical, dental, and
vision benefits.” See, e.g., Supp. Compl. at ¶¶ 3, 20, 21, 23. Plaintiffs then describe
changes made in 2010 and after, including changes to dental and vision plans. Id. at ¶ 34.
In subsequent paragraphs, plaintiffs refer generally to “insurance coverage.” See, e.g., id.
at ¶ 32 (“Briggs & Stratton has now announced drastic reductions in the retiree insurance
coverage of Class Members.”); id. at 16 (requesting declaratory, injunctive, and monetary
relief with respect to changes to “retiree insurance coverage” and “retiree insurance
benefits”). The most reasonable interpretation of the term “insurance coverage” is that it
embodies the medical, dental, and vision coverage described previously in the complaint,
and not that it is limited to medical coverage. Thus, I conclude that the complaint does
adequately plead that changes to retiree dental and vision benefits violated the LMRA and
ERISA.8 See id. at ¶ 52 (alleging in regards to their LMRA claim that “[a]s detailed above,
the CBAs conferred upon all Class Members a right to certain retiree insurance coverage
. . . . By unilaterally reducing and terminating this coverage, Briggs & Stratton breached
these contracts.”); id. at ¶ 55 (alleging in regards to their ERISA claim that “[a]s detailed
above, the CBAs conferred upon all Class Members rights to certain retiree insurance
coverage . . . . Defendants violated to terms of these CBAs by unilaterally terminating or
reducing this coverage.”).
E. Summary Judgment
I now address the substantive issues raised in the cross-motions for summary
judgment. I may grant summary judgment where there is no genuine issue of material fact
8
Accordingly, I will not strike portions of plaintiffs’ experts’ reports which discuss
changes to dental and vision benefits.
10
and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In
determining whether summary judgment is appropriate, I consider all evidence submitted
by the parties, and I draw all inferences in favor of the non-moving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
Plaintiffs allege that defendants’ unilateral changes to retiree benefits violated the
terms of their CBAs in violation of the LMRA, 29 U.S.C. § 185(a), which authorizes “suits
for violation of contracts between an employer and a labor organization.” Plaintiffs further
allege that defendants’ changes to retiree benefits violated the ERISA, 29 U.S.C. §
1132(a)(1)(B) and (a)(3), which authorizes participants to bring suit “to recover benefits due
. . . under the terms of the plan” or “to enjoin any act or practice which violates . . . the
terms of the plan.” Their key argument is that retiree medical, dental, and vision benefits
are vested under the CBAs, and thus defendants cannot unilaterally change them.
Defendants argue that the CBAs limited retirees’ right to benefits to the term of the CBA
and that unilateral changes after the CBA expired is not a violation.
The parties agree that the benefits at issue in this case are “welfare” benefits which
do not automatically vest. See Diehl v. Twin Disc, Inc., 102 F.3d 301, 305 (7th Cir. 1996).
Thus, whether or not plaintiffs’ benefits vested is a question of contract interpretation, and
I apply federal principles of contract construction when interpreting the CBA. Id. I give
terms their ordinary and popular meaning. Id. There is a presumption that when a CBA is
silent on whether health benefits vest, they do not, Bidlack v. Wheelabrator Corp., 993 F.2d
603, 606–07 (7th Cir. 1993), but this presumption drops off when there is some language
to suggest vesting, Rossetto v. Pabst Brewing Co., Inc., 217 F.3d 539, 544 (7th Cir. 2000).
11
I may consider extrinsic evidence with respect to the parties’ intent only if the language of
the CBA is ambiguous, meaning that it is susceptible to more than one interpretation and
that the ambiguity is not clarified elsewhere. Bland v. Fiatallis N. Am., Inc., 401 F.3d 779,
784 (7th Cir. 2005). The CBA may contain a patent ambiguity, when the language of the
CBA is unclear, or a latent ambiguity, when the language is clear but a party presents
objective, extrinsic evidence which creates unclarity. Rossetto, 217 F.3d at 543; Int’l Union
v. ZF Boge Elastmetall LLC, 649 F.3d 641, 649 (7th Cir. 2011) (defining latent ambiguity
as “an ambiguity that becomes apparent only in consideration of the surrounding
circumstances”). When determining whether a latent ambiguity exists, I may only consider
objective evidence which does “not require determining the credibility of a party’s selfserving testimony.” Rossetto, 217 F.3d at 543–44.
Where the language is unambiguous, a contract’s meaning is a matter of law and
may appropriately be decided on summary judgment. Diehl, 102 F.3d at 305. Where a
contract is either patently or latently ambiguous, I must consider extrinsic evidence to
determine the parties’ intent, and I may consider all evidence, not just objective evidence,
in doing so. Rossetto, 217 F.3d at 547. The analysis of extrinsic evidence may lead to fact
issues and preclude summary judgment. Diehl, 102 F.3d at 305.9
9
The Seventh Circuit states that the law falls into three categories:
1. If a collective bargaining agreement is completely silent on the
duration of health benefits, the entitlement to them expires with the
agreement as a matter of law (that is, without going beyond the
pleadings), unless the plaintiff can show by objective evidence that the
agreement is latently ambiguous, that is, that anyone knowledgeable
about the real-world context of the agreement would realize that it might
not mean what it says. . . .
2. If the agreement makes clear that the entitlement expires with the
12
When considering plaintiffs’ rights to benefits under the CBA, I must answer two
questions. First, I must determine whether plaintiffs have a vested right to benefits, that
is whether the CBA entitles them to continued benefits after its expiration. Diehl, 102 F.3d
at 305–06. If so, I must determine the scope of benefits to which they are entitled. Id. Both
parties agree that because plaintiffs all retired under the 1998 and 2002 CBAs, the relevant
provisions of these contracts, which are identical, govern.
1. Whether benefits vested
Two sections of the 1998 and 2002 CBAs regarding the duration of benefits are
relevant. Article XIII, Section 6(a) states that the:
Company will, to the extent later provided [in] this agreement, pay the premium
cost of the Group Life, Health and Accident Insurance Plans covering employees
and their dependents as designated in the Plans. The benefits provided for in the
existing Group Insurance Plans, plus those added in connection with this
agreement, will be maintained during the term of this agreement.
Eisenberg Decl. Ex. Q at 69 (ECF No. 119-17); id. at 82. Section 8 of the “Group Insurance
Plan” provision states:
agreement, as by including such a phrase as “during the term of this
agreement,” then, once again, the plaintiff loses as a matter of law unless
he can show a latent ambiguity by means of objective evidence. . . .
3. If there is language in the agreement to suggest a grant of lifetime
benefits, and the suggestion is not negated by the agreement read as a
whole, the plaintiff is entitled to a trial. Of course, if the agreement
expressly grants such benefits, the plaintiff is entitled, not to a trial, but to
a judgment in his favor. We are speaking of a case in which merely
suggestive language creates a patent ambiguity.
Rossetto, 217 F.3d at 547.
13
INSURANCE FOR RETIREES
(a) For employees who retire after 30 years of service, Company paid medical,
dental and vision benefits will continue until age 65. For employees so retiring after
1-1-92, the premium cost for the coverage will be fully-paid by the Company for up
to 10 years, but not beyond age 65. For any balance of time between the 10 year
maximum and age 65, Company contributions will be limited to the extent as
provided for non-retirees in Section 6(b) and (c).
Employees with more than 10 but less than 30 years of service, who retire by
reason of permanent and total disability, are eligible for Company paid medical
benefits until age 65.
Eisenberg Decl. Ex. Q at 75 (ECF No. 119-17); id. at 93.
The language of Section 8 is sufficient to defeat the presumption against vesting of
health benefits because the contract is not silent on the question. Rossetto, 217 F.3d at
544; see also Temme v. Bemis Co., 622 F.3d 730, 736 (7th Cir. 2010) (stating that “we
have previously rejected the position that ‘magic words’ or unequivocal contract language
must state that lifetime benefits have been created”). All that is required is “clear and
express language” providing “some positive indication of ambiguity, something to make you
scratch your head.” Rossetto, 217 F.3d at 544. Here, the CBAs are not silent on the
duration of benefits; they promise that “Company paid” coverage “will continue” and that
employees “are eligible” for benefits for a period of time that far outlives the 4-year term
of the CBAs, strongly suggesting that the duration of retiree benefits outlasts the CBA. See
Temme, 622 F.3d at 736–37 (stating that words like “eligible” do not undermine what
otherwise appears to be a commitment to provide benefits). Thus, this case is not in
Rossetto’s first category.
However, when read as a whole, the CBA limits Section 8's grant of long-term
14
benefits. Section 6(a) states that benefits will only be “maintained during the term of the
agreement,” and this language “makes clear that the entitlement expires with the
agreement.” Rossetto, 217 F.3d at 547. “It is well established that ‘lifetime’ benefits can be
limited to the duration of a contract.” Cherry v. Auburn Gear, Inc., 441 F.3d 476, 483 (7th
Cir. 2006), and in situations similar to this, where CBAs include language that on the one
hand purports to extend benefits that outlive the term of the CBA and on the other hand
to limit the provision of health benefits to the term of the CBA, the Seventh Circuit has held
that phrases such as “for the term of the agreement” or “during the term of the agreement”
effectively limit entitlement to benefits to the term of the agreement. See id. (concluding
that “lifetime” benefits can be limited to the duration of a contract when the contract
includes overriding preamble language limiting maintenance of benefits to the period of the
agreement); Pabst Brewing Co., Inc. v. Corrao, 161 F.3d 434 (7th Cir. 1998) (concluding
that language limiting employer’s obligation to provide benefits for the term of the
agreement unambiguously does not vest health benefits).
The fact that the phrase “during the term of this agreement” appears in a separate
section of the CBA or that the section is titled “General” does not limit its application to
active employees. See Cherry, 441 F.3d at 483 (concluding that a general preamble
including reservation of rights language “acts as an overriding preamble for both active and
retired employees”).10 Thus, on its face, the CBAs appear to unambiguously limit the
10
Plaintiffs argue that the “during the agreement” language of Section 6(a) is
limited to active employees because the preceding sentence relates to active
employees only. However, despite not mentioning retirees, Section 6(a) states that
“[t]he benefits provided for in the existing Group Insurance Plans . . . will be maintained
during the term of the agreement,” Eisenberg Decl. Ex. Q at 69; id. at 81–82, and
retirees’ health insurance benefits are part of the Group Insurance Plans–in fact, the
15
duration of retiree benefits to the term of the CBA, fitting into Rossetto’s second category.
Rossetto, 217 F.3d at 547. In order to survive summary judgment, plaintiffs must show a
latent ambiguity by means of objective evidence.
In determining whether a latent ambiguity exists, I will not consider any of plaintiffs’
declarations, affidavits, or deposition testimony, as they do not constitute objective
evidence and in considering them, I run the risk of relying on self-serving testimony. See
id. at 543. However, I will consider Section 8(e) of the 2006-2010 CBA, which states that
“[f]or employees who retire on or after 8-1-06, coverage . . . shall be the same coverage(s)
offered active employees and are subject to change if different insurance plans are
negotiated for active employees.” Eisenberg Decl. Ex. Q at 107 (ECF No. 119-17). The
2006 CBA went into effect August 1, 2006, and this section distinguishes between retirees
who retired before the 2006 CBA went into effect (including plaintiff class members, who
retired under the 1998 and 2002 CBAs) and those who retired after it went into effect. Such
a provision, which did not exist in previous CBAs, provides that retiree benefits for those
retiring under the 2006 CBA are subject to change and thus not vested, implying that at
least some retiree benefits under previous CBAs were vested. In light of this subsequent
provision, it is reasonable to conclude that the parties intended pre-2006 retiree benefits
to vest despite the seemingly clear language of the 1998 and 2002 CBA language, creating
a latent ambiguity in the 1998 and 2002 CBAs. See Cherry, 441 F.3d at 484 (stating that
durational language of Section 8 is listed under the general category of “Group
Insurance Plans.” Thus, the “during the term of the agreement” language applies to
both employee and retiree benefits. See Cherry, 441 F.3d at 483 (concluding that
similar language applies to employee and retiree benefits where the contract provision
“makes no attempt to indicate that it is exclusive to active employees”).
16
“a change in the language of a contract can sometimes indicate a change in meaning”
sufficient to create a latent ambiguity).
Defendants’ argument that it’s inclusion of reservation of rights language in several
documents sent to retirees does not defeat the conclusion that the CBA is latently
ambiguous as to vesting. While reservation of rights language can abrogate a promise of
lifetime benefits when it appears in the same contract that promises benefits, Vallone v.
CNA Fin. Corp., 375 F.3d 623, 634–35 (7th Cir. 2004), a document issued unilaterally by
an employer cannot override a bargained-for contract. See Alday v. Raytheon Co., 693
F.3d 772, 790 (9th Cir. 2012) (concluding that an employer’s reservation-of-rights
provisions in plan documents do not “allow[] the employer unilaterally to override express
terms in the bilateral CBA”); Temme, 622 F.3d at 738 (concluding that the intent of the
bargained agreement, not insurance documents, governs). Defendants point to
reservation-of-rights language in both a “wrap” plan document created unilaterally by
Briggs and to insurance documents created by Aetna, a plan provider. There is no
evidence that the wrap plan document created by Briggs was incorporated into the CBA,
and the policy documents created by Aetna simply state that “this plan,” meaning the Aetna
plan, may be changed at any time, not that the general right to company-paid medical
benefits arguably granted by the CBAs could be changed or terminated. Supp. App. Part
2 of 3 at 11 (ECF No. 135-2).
Because I have found ambiguity in whether or not plaintiffs’ health benefits vested
under the 1998 and 2002 CBAs, I must consider extrinsic evidence to help resolve the
ambiguity and determine the parties’ intent. Both parties have submitted extrinsic evidence
17
which they argue conclusively proves their interpretation of the CBAs. Much of this
evidence revolves around the past bargaining history and changes to retiree benefits. For
example, plaintiffs provide evidence that Briggs’ employees considered retiree benefits
vested and communicated this to retirees. See, e.g., Eisenberg Decl. Ex. A at 37 (ECF No.
119-1) (Briggs internal presentation script on retirement benefits stating that “[c]overage
is also keyed to the time of retirement”); Eisenberg Decl. Ex. B at 49–59 (ECF No. 119-2)
(group enrollment letters sent to retirees with differing information going to retirees under
different CBAs); Eisenberg Decl. Ex. I at 10–11 (ECF No. 119-9) (plaintiff Merrill’s
deposition transcript, which states that Briggs’ representative Barbara Ehlers told retirees
at a CBA ratification meeting that “the question was . . . Do you keep the same benefit level
for the ten years? And she said yes, just that the providers could change”). Defendants
dispute plaintiffs’ evidence and point to several changes to retiree benefits it instituted
previously and that plaintiffs did not object to. See, e.g., Pls.’ Proposed Findings of Fact
at 4 (admitting that they “negotiated a change in retiree benefits”). Each side also provides
sworn statements from their respective collective bargaining representatives regarding their
understanding of the nature of retiree benefits before 2006, which unsurprisingly do not
match. Compare, e.g., Eisenberg Decl. Ex. F at 8–9 (ECF No. 119-6 (deposition transcript
of union negotiator Ernie Dex), with Supplemental Appendix Part 3 of 3 at 93 (ECF No.
155-3) (Declaration of Briggs’ representative Craig Reynolds). Sorting through these types
of factual disputes is a job for the fact finder, precluding summary judgment. Thus, plaintiffs
are entitled to a trial on the question of whether or not their benefits vested under the
CBAs.
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2. Level of benefits vested
If plaintiffs’ benefits are vested under the 1998 and 2002 CBAs, I must also
determine the level of benefits to which they are entitled. Defendants did not terminate
plaintiffs’ medical benefits; they merely modified them. Thus, it is possible to conclude that
the modifications did not violate plaintiffs’ rights even if those rights are vested. Diehl, 102
F.3d at 309. Here, the 1998 and 2002 CBAs are vague as to exactly what benefits are
vested. Plaintiffs argue that the contract entitles them to, with limited exceptions, “no bills,
claims forms, or out-of-pocket expenses to the employee beyond certain per service
deductibles.” Eisenberg Decl. Ex. Q at 72; id. at 85. While this language clearly does not
authorize defendants to “‘modify’ coverage until it [becomes] all but nominal,” it also does
not appear to require defendants “to provide for the life of its retirees the precise benefits
described in insurance booklets” draft in 1998 and 2002. Diehl, 102 F.3d at 309. Rather,
if benefits are vested, the answer is somewhere in the middle. Id. (“We are faced . . . with
a continuum of options that lies between these two intuitively implausible results.”).
In situations such as this, the Seventh Circuit asks whether the level of coverage
retirees receive after the changes is “reasonably commensurate” with coverage they
received before the changes. Id. at 311; see also Zielinski v. Pabst Brewing Co., Inc., 463
F.3d 615 (7th Cir. 2006) (adopting a “reasonably commensurate” test in order to “steer[]
between implausible extremes”). To show that the modified benefits are not reasonably
commensurate, plaintiffs must do more than merely “demonstrate that the changes have
increased payments for some retirees.” Diehl, 102 F.3d at 311. They must show that the
changes “have significantly reduced” the “general level of benefits” to the entire class. Id.
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Both parties offer evidence relating to whether or not the current benefits are
“reasonably commensurate” with the benefits they received before the 2010 changes, and
most of this evidence is in the form of expert opinion. Because I have denied both sides’
motions to exclude the other’s expert witnesses, I must consider what both sides’ experts
have opined, and each side’s experts hold different opinions as to the value of the plans
and whether or not the changes are material. Compare Eisenberg Decl. Ex. P at 4 (ECF
No. 119-16) (plaintiffs’ expert report opining that the post-2010 Plan B is 7.68% less
valuable than the pre-2010 Plan D) and Eisenberg Decl. Ex. O at 5 (ECF No. 119-15)
(plaintiffs’ expert report opining that the 2010 plan changes were material), with Glenn
Decl. Ex. A at 16–17 (ECF No. 147-1) (defendants’ expert report opining that the post-2010
Plan B is 3.5% less valuable than the pre-2010 Plan D and that this change is not
material). Thus, summary judgment is not appropriate, and plaintiffs are entitled to a trial
on the issue of whether the 2010 and subsequent changes are reasonably commensurate
with the pre-2006 benefits. I note, however, that plaintiffs will first need to succeed in
proving that the parties intended for the benefits to vest, using extrinsic evidence, before
it is entitled to reasonably commensurate benefits.
E. Motion to Seal
Plaintiffs have also filed a motion to seal documents that defendants marked as
confidential under the protective order. Defendants have indicated that there is no need
to maintain these documents under seal, therefore the motion to seal will be denied.
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III. Conclusion
THEREFORE, IT IS ORDERED that plaintiffs’ motion for summary judgment (ECF
No. 115) is DENIED.
IT IS FURTHER ORDERED that defendants’ motion for summary judgment (ECF
No. 121) is DENIED.
IT IS FURTHER ORDERED that plaintiffs’ interim motion to seal (ECF No. 120) is
DENIED.
IT IS FURTHER ORDERED that defendants’ motion to strike/motion to exclude the
second rebuttal reports (ECF No. 142) is DENIED.
IT IS FURTHER ORDERED that defendants’ motion in limine to exclude Atkinson
and Wohl (ECF No. 145) is DENIED.
IT IS FURTHER ORDERED that plaintiffs’ motion in limine to exclude Reese (ECF
No. 157) is DENIED.
Dated at Milwaukee, Wisconsin, this 2nd day of September, 2015.
s/ Lynn Adelman
__________________________
LYNN ADELMAN
District Judge
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