Source: https://casetext.com/case/anderson-v-alpha-portland-industries-inc-4
Timestamp: 2020-07-16 13:25:42
Document Index: 680855379

Matched Legal Cases: ['§ 1002', '§ 1001', '§ 1001', '§ 1002', '§ 1002', '§ 1053', '§ 1051', '§ 1022', '§ 301', '§ 185']

Anderson v. Alpha Portland Industries, Inc., 836 F.2d 1512 | Casetext Search + Citator
Rexam Inc. v. United Steel Workers of America, Afl-Cio-CLC
29 U.S.C. § 1002(1). Under ERISA, welfare benefit plans, unlike pension benefit plans, are not subject to…
John Morrell Co. v. United Food Workers
The Union has the burden of proof on this issue. See Anderson v. Alpha Portland Indus., Inc., 836 F.2d 1512,…
Full title:ROBERT ANDERSON, JR., ET AL., APPELLANTS, v. ALPHA PORTLAND INDUSTRIES…
836 F.2d 1512 (8th Cir. 1988)
holding that employer's promise to provide welfare benefits "until death of retiree" did not create vested rights because employer had expressly reserved the right to terminate or amend the plan
Summary of this case from Utility Workers v. Nstar Electric Gas Corporation
Decided January 13, 1988. Rehearings and Rehearings En Banc Denied March 14, 1988.
The Honorable C. Arlen Beam, United States Chief District Judge for the District of Nebraska at the time this case was submitted, has since been confirmed as a Circuit Judge of this court.
Plaintiffs appeal from the judgment of the district court in favor of Alpha Portland Industries, Inc. (Alpha) and The Equitable Life Assurance Society of the United States (Equitable) in this case involving the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). Plaintiffs are a class of former, now retired, hourly employees of Alpha's cement division. This suit developed from Alpha's decision to terminate all retiree health and life insurance benefits on May 1, 1982 when the existing collective bargaining agreement (CBA) expired. Plaintiffs alleged that the welfare benefits were vested lifetime benefits which could not be terminated. After a four day bench trial the district court found that the benefits were terminable because the parties to the CBA intended that the benefits only last for the duration of the CBA. 647 F. Supp. 1109 (E.D.Mo. 1986). For the reasons stated below we affirm.
The Honorable William C. Hungate, United States District Judge for the Eastern District of Missouri.
Beginning in 1973 the CBAs contained, as an appendix, a separate Insurance and Health Agreement (I H Agreement) that contained the terms of the plan. Each I H Agreement was prepared by the Personnel Manager of Alpha's cement division, Robert J. Bonstein, and sent to the Union for approval. The 1973, 1975, and 1978 CBAs each provided that the plan in effect at the expiration date of the previous agreement was to be amended as provided in the I H Agreement. The 1973 I H Agreement expressly stated:
Both the 1975 and 1978 I H Agreements contained duration clauses identical to the 1973 clause, except that the dates were different — the 1975 agreement was effective until May 1, 1978 and the 1978 agreement was effective until May 1, 1981.
Article I of the 1973, 1975, and 1978 I H Agreements stated that retiree insurance benefits could be altered:
On April 31, 1981 the 1978 CBA with the attached I H Agreement was due to expire, but the parties agreed to extend the existing terms for an additional year. During this period Alpha was experiencing increasing financial difficulties. Alpha's cement division had an operating loss of almost $17 million in 1980 and 1981. Total losses, including plant closings, exceeded $60 million. In 1981 Alpha closed four of its cement plants and by the end of 1982 all of its cement plants were closed.
On March 29, 1982 Alpha sent letters to all of its retired hourly employees stating that it was cancelling their insurance coverage as of May 1, 1982, following the expiration of the current CBA and I H Agreement. On May 1 Alpha ceased providing insurance benefits for retirees.
Plaintiffs brought suit in the United States District Court for the Eastern District of Missouri alleging violations of ERISA and the LMRA. The district court dismissed the case, holding that plaintiff's claims are subject to arbitration, 558 F. Supp. 913 (E.D.Mo. 1982). A panel of this court reversed, 727 F.2d 177 (8th Cir. 1984), and upon rehearing en banc the district court again was reversed and the case remanded for trial. Anderson v. Alpha Portland Industries, Inc., 752 F.2d 1293 (8th Cir.) ( Anderson I), cert. denied, 471 U.S. 1102, 105 S.Ct. 2329, 85 L.Ed.2d 846 (1985).
During the four day bench trial, the district court heard conflicting testimony about whether retiree benefits were vested for the lifetime of the retiree. Aside from the language in the plan documents, summarized above, the district court also heard other evidence on the issue of intent. For example, union members, including those involved in negotiating the 1975 and 1978 agreements, testified that they had been told by a now deceased Alpha representative that their retirement benefits lasted for life. Plaintiffs introduced into evidence letters drafted by Bonstein and sent to new retirees which stated that "[y]our life insurance will be continued in the amount of ___. * * * Alpha group hospital and surgical insurances for you and your eligible dependents will be continued. * * * Major medical expense benefits will be provided up to a lifetime maximum of ___."
In 1974 the Employee Retirement Income Security Act, 29 U.S.C. § 1001 et seq. (1982), was enacted to "protect interstate commerce and the interests of participants in employee benefit plans" by establishing disclosure and reporting requirements, standards of conduct for plan fiduciaries, and access to federal courts. 29 U.S.C. § 1001(b). "Employee benefit plans" are divided into two distinct categories: welfare plans and pension plans. In general, welfare plans are maintained to provide "medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment * * * *" 29 U.S.C. § 1002(1). Pension plans, however, "(i) provide retirement income to employees, or (ii) result in a deferral of income by employees for periods extending to the termination of covered employment or beyond * * * *" 29 U.S.C. § 1002(2)(A).
Aside from the difference in their purposes, welfare and pension plans also differ in another critical way. While pension plans are subject to ERISA's stringent vesting requirements, 29 U.S.C. § 1053 ("[e]ach pension plan shall provide that an employee's right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age"), welfare plans are specifically exempt from such requirements. 29 U.S.C. § 1051. See generally Anderson v. John Morrell Co., 830 F.2d 872, 876 (8th Cir. 1987).
Since welfare benefits do not automatically vest as a matter of law, see, e.g., Molnar v. Wibbelt, 789 F.2d 244, 250 (3rd Cir. 1986), we must determine whether "the parties intended [that] retirees' benefits would be vested and not tied to the agreement which created them." UFCW Local 105-A v. Dubuque Packing Co., 756 F.2d 66, 70 (8th Cir. 1985). The exemption from ERISA's vesting requirements does not prohibit an employer from extending benefits beyond the expiration of the collective bargaining agreement. Rather, the exemption allows the parties to determine the duration of the welfare benefits. Thus, the issue is "simply one of contract interpretation." Id.
Plaintiffs argue that once they showed that retirees were given welfare benefits, Alpha had the burden of showing that the benefits were for a limited duration. Plaintiffs principally rely on the decision of the Sixth Circuit in International Union, United Auto., Aero., and Agric. Implement Workers of America v. YardMan, Inc., 716 F.2d 1476 (6th Cir. 1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984). In Yard-Man the court stated that:
retiree [welfare] benefits are in a sense `status' benefits which, as such, carry with them an inference that they continue so long as the prerequisite status is maintained. Thus, when the parties contract for benefits which accrue upon achievement of retiree status, there is an inference that the parties likely intended those benefits to continue as long as the beneficiary remains a retiree. This is not to say that retiree insurance benefits are necessarily interminable by their nature. Nor does any federal labor policy identified to this Court presumptively favor the finding of interminable rights to retiree insurance benefits when the collective bargaining agreement is silent. Rather, as part of the context from which the collective bargaining agreement arose, the nature of such benefits simply provides another inference of intent. Standing alone, this factor would be insufficient to find an intent to create interminable benefits. In the present case, however, this contextual factor buttresses the already sufficient evidence of such intent in the language of this agreement itself.
We disagree with the plaintiffs for several reasons. First, assuming we recognize an inference in favor of vesting, the burden of proof still remains on the plaintiffs. Shortly after Yard-Man was decided the Sixth Circuit stated that "there is no legal presumption based on the status of retired employees." International Union, United Auto., Aero. and Agric. Implement Workers of America v. Cadillac Malleable Iron Co., 728 F.2d 807, 808 (6th Cir. 1984). Inferences do not shift the burden of proof.
Prior to 1973, retiree welfare benefits were provided for by the CBA although the actual terms were contained in group insurance policies. Plaintiffs focus on the language in the 1965 CBA which stated that "[f]or future retirees, Company will pay full costs of all group insurance for them and their dependents until death of retiree." Viewed in a vacuum this language is highly probative of intent to vest benefits, but when viewed in the context of the events surrounding its adoption it is less significant. At trial Alpha produced evidence showing that the phrase reflected Alpha's rejection of a union proposal that retirees' dependents' benefits would be continued beyond the death of the retiree. Further evidence showed that during the term of the 1965 CBA five Alpha local unions agreed to coordination of benefits with Medicare. The agreement applied to persons already retired and thus was inconsistent with plaintiffs' theories of vesting.
This construction is not inconsistent with Policy v. Powell Pressed Steel Co., 770 F.2d 609 (6th Cir. 1985), cert. denied, 475 U.S. 1017, 106 S.Ct. 1202, 89 L.Ed.2d 315 (1986), wherein a district court's interpretation of similar language was overturned on appeal. In Policy the agreement provided for the continuation of benefits "for the pensioner and his spouse, if any, during the life of the pensioner at no cost to the pensioner." Id. at 616. The district court interpreted the phrase to cut off dependent coverage at the pensioner's death rather than guarantee lifetime benefits to the pensioner. The Sixth Circuit disagreed because the district court's interpretation would have lead to the anomalous result that the spouse would receive benefits at no cost while the pensioner would have to pay. Id. The result reached in the present case, however, presents no such problems.
Aside from the phrase "until death" in the 1965 CBA, no credible evidence of intent to vest exists in the pre-1973 period. From 1946 through 1955 Alpha "reserve[d] the right to change, modify, or discontinue [the group insurance plan] if future conditions make such action necessary or if reduction of Company earnings make it impossible to continue." The 1956, 1957, and 1958 CBAs limited benefits to the duration of the agreement and the 1956 Plan Booklet stated that Alpha reserved the right to discontinue the plan. The 1959 through 1963 CBAs each had a one year duration and a booklet issued in 1959 stated that the group insurance plan "may be altered or discontinued." The 1967, 1969, and 1971 Basic Agreements also were of limited duration. In short, nothing prior to the adoption of the I H Agreements proves that vesting was intended.
Plaintiffs note that during two strikes Alpha continued to pay retiree welfare benefits. While payment of benefits during a strike may show that benefits were thought to be vested, Bower v. Bunker Hill, Co., 725 F.2d 1221, 1225 (9th Cir. 1984), the facts in this case do not support such a conclusion. During the 1957 strike, benefits were continued for retirees as well as for all striking employees. Similarly, in 1965 some of the striking employees were also provided benefits during the strike. The fact that Alpha treated retirees and striking employees equally negates any inference of intent to vest retiree benefits.
Beginning in 1973 retiree welfare benefits were embodied in I H Agreements which were appended to the CBA. The relevant portions of these agreements are set forth in the factual statement. The district court held that the agreements reflect an intent to limit benefits to the duration of the then effective agreement because each agreement: 1) states that benefits previously provided would be continued; 2) provides that its terms are subject to amendment, modification, or supplementation at later bargaining sessions; 3) has an explicit duration clause limiting its duration; and 4) contains a coordination of benefits clause which is inconsistent with a theory of vesting. 647 F. Supp. at 1126-27. We agree with each of the district court's conclusions.
First, we agree that Dubuque Packing is distinguishable. In Dubuque Packing the 1973 and 1976 agreements reaffirmed and continued the retiree benefits established in the previous agreements. However, although the 1979 agreement did not contain reaffirmation and continuation language, the company continued paying the benefits of pre-1979 retirees. This court found that the continuation of benefits was evidence that the benefits were vested. In the present case, however, each I H Agreement provided for continuation of benefits from the previous plan. Were there an intent to vest, continuation language would not be necessary. See International Union (UAW) v. Roblin Industries, 561 F. Supp. 288, 298 (W.D.Mich. 1983).
Plaintiffs erroneously cite Upholsterers' Int'l Union v. American Pad Textile Co., 372 F.2d 427 (6th Cir. 1967), for the proposition that language providing for continuation of prior programs indicates an intent to vest. The case merely states that the word "continue" as used therein was ambiguous and needed to be supplemented by extrinsic evidence.
Second, the provision of the I H Agreement allowing amendment, modification, or supplementation is inconsistent with plaintiffs' argument that benefits were vested for life. See Struble v. New Jersey Brewery Employees' Welfare Trust Fund, 732 F.2d 325, 330 (3rd Cir. 1984).
Third, the specific durational clauses in the I H Agreements show an intent to limit benefits to the duration of the agreement. It would render the durational clauses nugatory to hold that benefits continue for life even though the agreement which provides the benefits expires on a certain date. Plaintiffs argue that benefits are non-terminable because the word "terminate" does not appear. However, they cite nothing to support this argument. The question before us is not whether any specific words appear, but whether the parties intended benefits to vest. Intent, or lack thereof, may be proved in more ways than one, and the absence of the word "terminate", while relevant to our inquiry, certainly is not dispositive. See Struble, 732 F.2d at 330-31 (benefits expired at end of agreement even though the word "terminate" did not appear in agreement).
Plaintiffs contend that this court in Dubuque Packing demanded that the phrase "terminate retirement benefits" explicitly appear in an agreement before the benefits will be construed as terminable. However, nowhere in the opinion does the phrase "terminate retirement benefits" appear. The closest language — "[t]here is no evidence that the parties agreed to terminate retirees' benefits" — falls far short of establishing the bright line test plaintiffs would have us apply in this case. Dubuque Packing, 756 F.2d at 69 (emphasis added).
Fourth, coordination of benefits is inconsistent with vesting. When interpreting a contract we must not interpret one provision inconsistently with another. YardMan, 716 F.2d at 1479-80. The coordination of benefits provision in the I H Agreements reduces benefits to be paid to all retirees. We agree with the district court that "the Plan cannot be interpreted to provide vested rights for prior retirees in one provision and to take such rights away in another." 647 F. Supp. at 1127.
Plaintiffs also rely on the statement in the 1978 SPD that "[c]overage will continue for the remainder of your life." The district court held that based on the clarity of later I H Agreements and the conduct of the parties, very little weight would be given to the statement. 647 F. Supp. at 1127. Because the district court's interpretation was based largely on the credibility of the witnesses presented by both parties, and because plaintiffs have not convinced us that the district court erred, we believe that the court correctly held that the 1978 SPD statement is not controlling in light of substantial contra evidence showing no intent to vest benefits.
Plaintiffs further argue that they are entitled to recover under the 1978 SPD alone, independent of the CBAs and I H Agreements. They base their claim on 29 U.S.C. § 1022 which provides, in pertinent part:
This court has stated that "[t]o secure relief on the basis of a faulty summary plan description, the claimant must show some significant reliance on, or possible prejudice flowing from the summary." Lee v. Union Electric Co., 789 F.2d 1303, 1308 (8th Cir. 1986), cert. denied, ___ U.S. ___, 107 S.Ct. 460, 93 L.Ed.2d 406 (1986). See also Govoni v. Bricklayers, Masons Plasterers, 732 F.2d 250, 252 (1st Cir. 1984). Plaintiffs argue that these cases are inapposite because the SPD in the present case is not "faulty." We disagree, because to the extent plaintiffs argue that the SPD provides lifetime benefits, and therefore is inconsistent with the I H Agreements, it necessarily must be faulty. ERISA states that the SPD must "apprise [the] participants and beneficiaries of their rights and obligations under the plan * * * *" If, as plaintiffs argue, the SPD fails to do this, it is faulty.
Plaintiffs further argue that they need not show detrimental reliance to recover under the SPD, citing Monson v. Century Mfg. Co., 739 F.2d 1293 (8th Cir. 1984). In Monson, this court stated that "[l]ogically, evidence of detrimental reliance must show that plaintiffs took action, resulting in some detriment, that they would not [otherwise] have taken." Id. at 1302. The court further stated that reliance could "be inferred from the defendants' countless representations that the profit sharing program provided a strong incentive for the employees to do extra work and to stay with the company." Id. Plaintiffs argue that reliance may also be inferred in the present case. We have reviewed the arguments and briefs of the parties and the record before us and conclude that reliance should not be inferred in this case. Plaintiffs direct us to nothing from which reliance may be inferred. We believe that Monson is not controlling in the present case because the facts in Monson readily supported an inference of reliance. The plaintiffs in Monson were repeatedly told that fifty per cent of the company's profits were to be contributed to the employee profit sharing program and that they could directly increase the contributions by working harder. In the present case, however absent some evidence of reliance, it would be improper to infer that any of the plaintiffs relied to their detriment on the SPD.
Finally, contrary to plaintiffs' assertions this case does not involve breach of fiduciary duties, unauthorized amendments, or unilateral termination of a benefit plan. It merely involves a decision by Alpha not to renew retiree welfare benefits which by their own terms have expired. The benefits have neither been terminated nor amended; they simply have expired.
The district court held that plaintiffs did not plead breach of fiduciary duty, 647 F.2d at 1128, and we agree. Further, it would be ludicrous to hold that Alpha breached its fiduciary duties when it discontinued benefits which were no longer required under the applicable agreements. Phillips v. Amoco Oil Co., 799 F.2d 1464, 1471 (11th Cir. 1986) ("ERISA simply does not prohibit a company from eliminating previously offered benefits that are neither vested nor accrued"), cert. denied, ___ U.S. ___, 107 S.Ct. 1893, 95 L.Ed.2d 500 (1987).
Plaintiffs next argue that pursuant to § 301 of the National Labor Relations Act, 29 U.S.C. § 185, they were entitled to trial before a jury and that under ERISA they are entitled to a jury trial on the separate breach of contract issue. Alpha contends that plaintiffs have no right to a jury trial because their claim is equitable in nature. We need not resolve this dispute because we believe plaintiffs waived any right to a jury trial on the issue of liability. Only if the court found for plaintiffs on the issue of liability would a jury have been required to assess damages. Plaintiffs agreed to a bifurcated trial and that is what they received. Consider the following conversation between the court and plaintiffs' counsel:
THE COURT: Well, the way the court would see it, the court tries the case. If there should be no liability, we all go home. If there is liability, then the court would fashion a remedy as to the part that is equitable and the part that is damages. If he's right in his position, that it's 301 related and it is damages and that there are cases would require — that and that only, on that portion of it, would go to the jury.
For example, plaintiffs argue that the court erred in denying their July 3, 1985 motion to amend their complaint. The decision whether to allow amendment of a complaint is left to the sound discretion of the district court and will be reversed only if that discretion is abused. Niagara of Wisconsin Paper Corp. v. Paper Industry, 800 F.2d 742, 749 (8th Cir. 1986). In the present case plaintiffs' motion was filed more than three years after suit was initially filed, ten days before the then effective discovery cut off date, and two months prior to the projected trial date. Under these circumstances, the district court did not abuse its discretion.
Further, plaintiffs argue that the district court erred in failing to recuse himself. We have reviewed the allegations made by the plaintiffs and have found nothing indicating that the district court was less than impartial.
Plaintiffs other allegations of error have been considered and have been found to be without merit. Also, our disposition of this case makes it unnecessary for us to decide whether the district court correctly dismissed the Equitable Life Assurance Society of the United States.
holding it would be improper to infer that plaintiffs relied to their detriment on SPD, absent any evidence of reliance
Summary of this case from Emamian v. Electronic Data Sys. Corp.
rejecting any general inference of intent to vest retirees' benefits
Summary of this case from Stewart v. KHD Deutz of America, Corp.
Summary of this case from Groover v. Michelin North America, Inc.
requiring a showing of detrimental reliance
Summary of this case from Greeley v. Fairview Health Ser
In Anderson v. Alpha Portland both the union and the company testified that retiree health benefits were not guaranteed beyond the life of the current collective bargaining agreement.
Summary of this case from John Morrell Co. v. United Food Workers
examining extrinsic evidence where contract does not provide for vesting
Summary of this case from Senn v. United Dominion Industries, Inc.
In Anderson we held that this burden was not met by the employer's promise to provide welfare benefits "until death of retiree" where the employer had expressly reserved the right to terminate or amend the plan.
Summary of this case from Howe v. Varity Corp.
In Anderson, the operative CBA stated, "[f]or future retirees, Company will pay full costs of all group insurance for them and their dependents until death of retiree."
Summary of this case from Angotti v. Rexam Inc.
construing in larger context a phrase providing continuing health insurance "until death of retiree" to limit the company's obligation to provide benefits until death, but noting that phrase itself was "highly probative of intent to vest benefits"
Summary of this case from Angotti v. Rexam, Inc.
disagreeing with Yard-Man to the extent that it recognizes an inference of an intent to vest
vesting requires a specific expression of the employer's intent to be bound
Summary of this case from Hughes v. 3M Retiree Medical Plan
In Anderson v. Alpha Portland Industries, Inc., 836 F.2d 1512 (8th Cir. 1988), the plaintiffs argued that they were entitled to a jury trial, under ERISA, on their "breach of contract" claim.
Summary of this case from Baker v. Universal Die Casting, Inc.
disagreeing with Yard–Man to the extent that it recognizes an inference of an intent to vest
Summary of this case from AMR Corp. v. Committee of Retired Employees (In re AMR Corp.)