UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF MICHIGAN 

SOUTHERN DIVISION 

WILLARD L. SLOAN, EUGENE J. 

WINNINGHAM, and JAMES L. KELLEY,

 Plaintiffs, 

 v. 

BORGWARNER INC., BORGWARNER 

DIVERSIFIED TRANSMISSION 

PRODUCTS INC., and BORGWARNER 

FLEXIBLE BENEFITS PLANS, 

 Defendants. 

Case 2:09-cv-10918-PDB-MKM 

U.S. District Judge Paul D. Borman 

U.S. Magistrate Judge Mona K. Majzoub 

BORGWARNER’S REPLY BRIEF IN SUPPORT 

OF ITS MOTION FOR SUMMARY JUDGMENT 

Elisa Angeli Palizzi (P52088) 

(angeli@millercanfield.com) 

Miller, Canfield, Paddock and Stone, P.L.C. 

150 West Jefferson, Suite 2500 

Detroit, Michigan 48226 

313.496.7635 

313.963.6420 fax 

Bobby R. Burchfield 

(bburchfield@mwe.com) 

Joshua David Rogaczewski 

(jrogaczewski@mwe.com) 

McDermott Will & Emery LLP 

600 13th Street, Northwest 

Washington, D.C. 20005 

202.756.8000 

202.756.8087 fax 

Attorneys for BorgWarner Inc., BorgWarner Diversified Transmission Products Inc., and 

BorgWarner Flexible Benefits Plans

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TABLE OF CONTENTS 

TABLE OF AUTHORITIES ......................................................................... iii 

INDEX OF EXHIBITS ................................................................................ iv 

I. THE PARTIES DID NOT AGREE TO VESTED BENEFITS. .................... 1 

II. THE CHANGES IMPLEMENTED BY BORGWARNER SATISFY 

THE STANDARDS IN REESE.............................................................. 3 

III. WAL-MART PRECLUDES PLAINTIFFS’ DAMAGES CLAIM. ................ 4 

 ii 

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TABLE OF AUTHORITIES 

Cases 

Allison v. Citgo Petroleum Corp., 151 F.3d 402 (5th Cir. 1998) .....................................................5 

Bauer v. Kraft Foods Global, Inc., 277 F.R.D. 558 (W.D. Wis. 2012)............................................5 

Bender v. Newell Window Furnishings, Inc., 681 F.3d 253 (6th Cir. 2012).....................................1 

Cole v. ArvinMeritor, Inc., 549 F.3d 1064 (6th Cir. 2008)...............................................................1 

Harnden v. Jayco, Inc., 496 F.3d 579 (6th Cir. 2007)......................................................................3 

Int’l Union, UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983) ...............................................2 

Linville v. Teamsters Misc. Workers Union, Local 284, 206 F.3d 648 (6th Cir. 2000) ................1, 2 

Nationwide Life Ins. Co. v. Haddock, 460 F. App’x 26 (2d Cir. 2012)............................................5 

Reese v. CNH Am. LLC, 574 F.3d 315 (6th Cir. 2009).................................................................1, 3 

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) ..............................................................1, 5 

Statutes and Rules 

Fed. R. Civ. P. 56..............................................................................................................................3 

Fed. R. Evid. 703 .............................................................................................................................3 

Fed. R. Evid. 1006 ...........................................................................................................................4 

Other Authorities 

10B Charles Alan Wright et al., Federal Practice and Procedure § 2738 (3d ed. 1998 & 

Supp. 2012)..........................................................................................................................3 

 iii 

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 iv 

INDEX OF EXHIBITS 

BorgWarner has attached to this reply excerpts of exhibits or authorities already part of 

the summary judgment record. The excerpts reflect updated highlighting by BorgWarner to 

comply with the Court’s practice guidelines. 

Exhibit Description 

L Int’l Union, UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983) (revised 

pages 1480 and 1482 of R. 101 Ex. 10) (replaces R. 108 Ex. L) 

N Bender v. Newell Window Furnishings, Inc., 681 F.3d 253 (6th Cir. 2012) (revised 

R. 111 Ex. 21) 

O Cole v. ArvinMeritor, Inc., 549 F.3d 1064 (6th Cir. 2008) (revised page 1075 of 

R. 101 Ex. 5) 

P Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) (revised page 2560 of R. 101 

Ex. 16) 

Q Federal Rule of Civil Procedure 56 (revised page 583 of R. 101 Ex. 18) 

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Only weeks ago, the Sixth Circuit reiterated that “vesting of retiree welfare benefits is a 

matter of contractual agreement.” Bender v. Newell Window Furnishings, Inc., 681 F.3d 253, 261 

(6th Cir. 2012).1 For this reason, the parties’ undisputed “agreement to disagree” entered at the 

beginning of the class period, and confirmed at the end, is fatal to Plaintiffs’ claim of an 

agreement to vest, as is the specific durational clause. Even if they could overcome those 

hurdles, however, their claim to inalterable benefits fails as a matter of law, Reese, 574 F.3d 

at 326, and their claim for damages is precluded by Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 

2541, 2557 (2011). 

I. THE PARTIES DID NOT AGREE TO VESTED BENEFITS. 

As shown (R. 95, Defs.’ Mot. 3), in a contract addendum signed in 1990, BorgWarner 

explicitly refused to agree that retiree health benefits are vested, and reiterated this position in the 

Plant Shutdown Agreement in 2009. Although the parties agreed to many provisions in the 

CBAs, the undisputed record shows they never agreed on vesting, and thus as a matter of law the 

retiree health benefits did not vest. In their effort to negate this determinative “agreement to 

disagree” provision, Plaintiffs assert that it is an “after-the-fact self-serving” provision, and could 

have no effect on current retirees. (R. 112, Pls.’ Opp’n 4.) But the provision was executed by the 

employer and both unions in 1990, even before execution of the 1989 HIA in 1992. For all or 

virtually all of this class of 1989 through 2009 retirees, the provision served as a written 

forewarning of BorgWarner’s refusal to agree to vesting.2

 1 See also Reese v. CNH Am. LLC, 574 F.3d 315, 321 (6th Cir. 2009) (vested retiree 

health benefits are “purely a matter of contract”); Linville v. Teamsters Misc. Workers Union, 

Local 284, 206 F.3d 648, 651 (6th Cir. 2000) (“The Yard-Man inference . . . cannot be used to 

contradict the express text of the agreement or plan documents.”). 

2

 Unlike the employer in Cole v. ArvinMeritor, Inc., 549 F.3d 1064, 1075 (6th Cir. 2008), 

here BorgWarner wrote its disagreement with vesting into the contract. 

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Plaintiffs contend that the Court should rely on an earlier, unsigned version of the 

addendum. It is basic that the signed version supersedes earlier drafts. Moreover, the testimony 

cited by Plaintiffs (R. 112, Pls.’ Opp’n 3) does not prove that BorgWarner ever agreed to the 

earlier version. 

Plaintiffs’ primary argument is that certain tools of contractual interpretation, such as the 

“tying” of eligibility for health benefits to eligibility for pension benefits, lead to an inference of 

vesting. (Id. at 1.) The Sixth Circuit has made clear, however, that such tools for inferring intent 

are allowed only if the contract is ambiguous on the issue of vesting. Linville, 206 F.3d at 651; 

Int’l Union, UAW v. Yard-Man, Inc., 716 F.2d 1476, 1479, 1480 (6th Cir. 1983) (“the court 

should first look to the explicit language of the [CBA] for clear manifestations of intent,” and 

only “ambiguity requires that we look to other provisions”); (see also R. 108, Defs.’ Opp’n 8–9). 

If, as here, one party made clear its opposition to vesting, inferring vesting would frustrate rather 

than fulfill the contractual intent. 

Next, Plaintiffs argue that, if the benefits were not vested, BorgWarner could have 

changed them at any time from 1989 to 2009. That is incorrect. The CBAs, and the related HIAs, 

were in effect continuously during the class period. Only in 2009 did the final HIA expire 

without replacement, at which time BorgWarner made the benefit modifications at issue here. 

Plaintiffs’ other arguments are equally meritless. Although “general durational 

provisions” will not preclude vesting (R. 112, Pls.’ Opp’n 6–7), BorgWarner demonstrated that 

the durational provision here relates specifically to retiree health benefits (R. 95, Defs.’ Mot. 14–

15). Likewise, summary plan descriptions that conflict with the CBA are not binding (R. 112, 

Pls.’ Opp’n 7–8), but BorgWarner relies on language in the mutually executed HIA itself giving it 

the right to “modify, amend, suspend, or terminate the Plan” upon expiration (R. 95, Defs.’ 

 2 

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Mot. 15). And finally, Plaintiffs cannot deny that the increased copays for prescription drug 

benefits in 1998, and the extension of the annual escalator for the deductible in 2000, were 

imposed on persons who had already retired, thus undermining the suggestion that benefits were 

lifetime inalterable. (Id. SUMF ¶¶ 7, 8.) Even if, as Plaintiffs claim, benefits were also improved 

in certain ways, the fact of those changes further undermines their claims of inalterability. 

At bottom, Plaintiffs cannot overcome the clear wording of the “agree to disagree” and 

duration provisions. Summary judgment rejecting vesting is appropriate. 

II. THE CHANGES IMPLEMENTED BY BORGWARNER SATISFY THE 

STANDARDS IN REESE. 

Plaintiffs misunderstand Reese. Reese allows reasonable, unilateral changes by an 

employer to retiree health benefits “unless [the CBA] says otherwise,” a conclusion that “makes 

sense not only in the narrow circumstances of this case but also within the broader context of 

ERISA.” 574 F.3d at 326 (emphasis added); see id. at 327 (“CNH, in short, cannot terminate all 

health-care benefits for retirees, but it [i.e., CNH] may reasonably alter them.”) The scope of 

allowable changes is determined by three criteria. Reese, 574 F.3d at 326. Undisputed evidence 

submitted by BorgWarner, including a declaration by retiree health benefits expert Scott Macey, 

demonstrates that the changes at issue satisfy each criterion. (R. 95, Defs.’ Mot. 16–19.)3

 3

 BorgWarner properly designated Mr. Macey as an expert on retiree health benefits, 

served his expert report, and made him available for deposition. Plaintiffs complain about his 

expert declaration, but have not moved to strike it. See 10B Charles Alan Wright et al., Federal 

Practice and Procedure § 2738, at 372 (3d ed. 1998) (“A party must move to strike an affidavit 

that violates Rule 56[(c)(4)].”). Mr. Macey’s declaration demonstrates his qualification to 

provide an expert opinion in this case. (See R. 98 Ex. 17, Macey Decl. ¶ 1.) And contrary to 

Plaintiffs’ assertion (R. 112, Pls.’ Opp’n 16), as an expert Mr. Macey can rely on hearsay. See

Fed. R. Evid. 703; Harnden v. Jayco, Inc., 496 F.3d 579, 583 (6th Cir. 2007). Finally, Plaintiffs 

have submitted no evidence to rebut his conclusions. See Fed. R. Civ. P. 56(e)(2). 

 3 

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In an effort to show the changes are unreasonable, Plaintiffs greatly exaggerate their 

effects. They assert that BorgWarner “completely eliminated health care coverage for Medicareeligible retirees” (R. 112, Pls.’ Opp’n 13), but these retirees are by definition eligible for 

Medicare, relied on by the overwhelming majority of senior Americans; BorgWarner also

provided each Medicare-eligible class member and spouse a Retiree Reimbursement Account 

payment of $169.58 per month and a pension supplement of approximately $90 per month 

(R. 95, Defs.’ Mot. SUMF ¶¶ 16, 17). From May 2009 to November 2011 (thirty months), they 

contend, Willard Sloan paid $6,755.50 out of pocket for health care, or $225.18 per month. 

(Eugene Winningham and James Kelley paid less.) The undisputed record shows that those 

amounts are reasonable standing alone (id. ¶¶ 19–22), but Plaintiffs also appear to ignore the 

almost $340 these retirees and their spouses received together each month into their companyfunded reimbursement accounts (id. ¶ 16).4

Further, Plaintiffs complain that the $104.25 per month each pre-Medicare retiree must 

pay is “devastating” (R. 112, Pls.’ Opp’n 14), but this is just rhetoric. The average premium for a 

pre-Medicare retired union member nationwide is between $168 and $229 (R. 98 Ex. 17, Macey 

Decl. ¶ 31(c)), and Plaintiffs’ payments are certainly within the range of reasonableness. 

III. WAL-MART PRECLUDES PLAINTIFFS’ DAMAGES CLAIM. 

As shown (R. 95, Defs.’ Mot. 19–20), the Supreme Court in Wal-Mart unanimously ruled 

that Rule 23(b)(1) and (b)(2) are inappropriate vehicles for awarding individualized damages on 

a class-wide basis. It is true that the Court left open the prospect that Rule 23(b)(1) and (b)(2) 

 4

 The chart purporting to show Plaintiffs’ drug costs (R. 112 Ex. 10) is inadmissible 

because Plaintiffs have failed to provide the underlying data. Fed. R. Evid. 1006. Also, it is 

unclear what point Plaintiffs are trying to make in attacking Michelle DuFour’s declaration 

(R. 112, Pls.’ Opp’n 14 n.14) since the differences between her estimates and the Plaintiffs’ 

numbers are insubstantial. 

 4 

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 5 

plaintiffs may obtain “monetary relief [that is] incidental to the injunctive or declaratory relief,” 

131 S. Ct. at 2557, but that is not this case.5 To recover damages here, each class member would 

need to come forward with individual medical bills and prove that his or her out of pocket 

spending was above the amounts that he or she would have spent without the plan changes. Trial 

on those issues would not be “incidental” to injunctive relief; it would “predominate” over the 

injunctive relief. Rule 23(b)(1) and (b)(2) do “not authorize class certification when each class 

member would be entitled to an individualized award of monetary damages.” Wal-Mart, 131 

S. Ct. at 2557; see also id. at 2559 (“In the context of a class action predominantly for money 

damages we have held that absence of notice and opt-out violates due process.”).6

Dated: July 12, 2012 

Elisa Angeli Palizzi (P52088) 

(angeli@millercanfield.com) 

Miller, Canfield, Paddock and Stone, P.L.C. 

150 West Jefferson, Suite 2500 

Detroit, Michigan 48226 

313.496.7635 

313.963.6420 fax 

Respectfully submitted, 

s/Bobby R. Burchfield

Bobby R. Burchfield 

(bburchfield@mwe.com) 

Joshua David Rogaczewski 

(jrogaczewski@mwe.com) 

McDermott Will & Emery LLP 

600 13th Street, Northwest 

Washington, D.C. 20005 

202.756.8000 

202.756.8087 fax 

Attorneys for BorgWarner Inc., BorgWarner Diversified Transmission Products Inc., and 

BorgWarner Flexible Benefits Plans

 5

 The Court did not address the correctness of Allison v. Citgo Petroleum Corp., 151 F.3d 

402 (5th Cir. 1998), but construed it as allowing “damages that flow directly from liability to the 

class as a whole” and as not requiring “additional hearings to resolve the disparate merits of each 

individual’s case.” 131 S. Ct. at 2560. That possible exception to Wal-Mart does not apply here. 

6 See Nationwide Life Ins. Co. v. Haddock, 460 F. App’x 26, 29 (2d Cir. 2012) (individual 

damages requires non-incidental, individualized proceedings rejected by Wal-Mart); Bauer v. 

Kraft Foods Global, Inc., 277 F.R.D. 558, 562–64 (W.D. Wis. 2012) (denying Rule 23(b)(2) 

certification where plaintiffs sought damages for health care costs). 

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CERTIFICATE OF SERVICE 

I hereby certify that on July 12, 2012, I electronically filed the foregoing BorgWarner’s 

Reply Brief in Support of Its Motion for Summary Judgment with the Clerk of the Court 

using the ECF system which will send notification of such filing to all ECF participants. 

s/Bobby R. Burchfield

Bobby R. Burchfield 

(bburchfield@mwe.com) 

McDermott Will & Emery LLP 

600 13th Street, Northwest 

Washington, D.C. 20005 

202.756.8000 

202.756.8087 fax 

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