Source: https://law.justia.com/cases/federal/appellate-courts/F2/877/598/270200/
Timestamp: 2020-02-28 19:53:16
Document Index: 445275192

Matched Legal Cases: ['§ 1001', '§ 185', '§ 1002', '§ 1132', '§ 185', '§ 1051', '§ 1102', '§ 1132', '§ 1002']

John Ryan, et al., on Behalf of Himself and a Class Ofothers Similarly Situated, Plaintiffs-appellants, v. Chromalloy American Corporation, Defendant-appellee, 877 F.2d 598 (7th Cir. 1989) :: Justia
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John Ryan, et al., on Behalf of Himself and a Class Ofothers Similarly Situated, Plaintiffs-appellants, v. Chromalloy American Corporation, Defendant-appellee, 877 F.2d 598 (7th Cir. 1989)
US Court of Appeals for the Seventh Circuit - 877 F.2d 598 (7th Cir. 1989) Argued April 7, 1988. Decided June 20, 1989
Plaintiffs, retired hourly employees of Chromalloy American Corporation ("Chromalloy"), appeal from the district court's order granting summary judgment for the defendants in this class action involving claims under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq., and Section 301(a) of the Labor Management Relations Act of 1947, 29 U.S.C. § 185(a). The plaintiffs seek reinstatement of their retiree welfare benefits, which were terminated by Chromalloy after it sold its Kewanee Division where plaintiffs were employed. For the reasons outlined below, we affirm.
All former hourly employees of the Kewanee Machinery Division of Chromalloy American Corporation including its Kewanee, Illinois, Evansville, Indiana and Kirksville, Missouri plants, eligible for pension benefits under the Kewanee Division hourly pension plan on or before October 7, 1983, and their dependents, all of whom would be eligible for benefits under the Chromalloy American Corporation Group Benefit Trust, Program, and Plan (together constituting an "employee welfare benefit plan" as defined in 29 U.S.C. § 1002(1), (3)), but for its termination on October 7, 1983.
Plaintiffs' third amended complaint consisted of one count under Section 502 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1132,2 and a second count under Section 301(a) of the Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a).3 Plaintiffs allege that their retirement benefits, which constituted a welfare benefit plan under ERISA, vested upon their retirement. Defendant moved for summary judgment, arguing that no genuine issues of material fact existed since plaintiffs' benefits did not vest under the applicable provisions of ERISA, the governing plan documents, or the collective bargaining agreements between Chromalloy and the respective unions representing the hourly employees at each of the three plants within the Division. The plaintiffs filed their own motion for summary judgment, and the district court, after reviewing the submissions of the parties, concluded in a thorough opinion that the governing plan documents unambiguously provided for the right to terminate the plan. Accordingly, the court rejected the plaintiffs' motion for summary judgment and granted the defendant's. On appeal, the plaintiffs-appellants contend that the district court erred because certain extrinsic evidence and inferences to be drawn from the record preclude the grant of summary judgment. Appellants also argue that they are entitled to summary judgment on their claim under the LMRA since the welfare benefits vested under the terms of the collective bargaining agreements.
This court has recognized that summary judgment is particularly appropriate in cases involving the interpretation of contractual documents. Metalex Corp. v. Uniden Corp. of America, 863 F.2d 1331, 1333 (7th Cir. 1988). In that context, summary judgment should be entered only if the pertinent provisions of the contractual documents are unambiguous; it is the lack of ambiguity within the express terms of the contract that forecloses any genuine issues of material fact. Id. If a district court determines that the pertinent provisions of the contract are unambiguous, it need not consider extrinsic evidence. At that point, the district court should proceed to declare the meaning of those provisions, an interpretation which this court reviews de novo as a question of law. Id. See also Bower v. Bunker Hill Co., 725 F.2d 1221, 1223 (9th Cir. 1984).
On appeal, appellants concede that it was appropriate to grant summary judgment on their claim that their retiree welfare benefits automatically vested under the provisions of ERISA. Appellants now recognize that their claims concern the termination of "employee welfare benefits"4 and that Congress explicitly exempted such welfare benefits from the statute's accrual, vesting, and funding requirements. Massachusetts v. Morash, --- U.S. ----, 109 S. Ct. 1668, 1675, 104 L. Ed. 2d 98 (1989) (citing 29 U.S.C. §§ 1051(1), and 1081(a)). Therefore, the efficacy of appellants' claim under ERISA turns solely upon the terms of the written instruments governing the plan.
ERISA requires that " [e]very employee benefit plan ... be established and maintained pursuant to a written instrument." 29 U.S.C. § 1102(a) (1). Through those instruments, the parties are free to subject such welfare benefits to vesting requirements not provided by ERISA, or they may reserve the power to terminate such plans. As the Sixth Circuit has stated in Hansen v. White Farm Equipment Co., 788 F.2d 1186 (6th Cir. 1986), "the parties may themselves set out by agreement or by private design, as set out in plan documents, whether retiree welfare benefits vest, or whether they may be terminated." Id. at 1193. See also Musto v. American General Corp., 861 F.2d 897, 907 (6th Cir. 1988), cert. denied, --- U.S. ----, 109 S. Ct. 1745, 104 L. Ed. 2d 182 (1989). The district court in the present case relied on the Sixth Circuit's decision in White Farm and reviewed the governing plan documents to determine their scope. We agree with the district court's decision, which reflects a careful examination of the documents, that they unambiguously provided for the right to terminate the plan.
The Trust document provided that the Trust would be terminated if "all or substantially all" of the assets of an employer were sold, the very contingency at issue here. On this point, Chromalloy submitted the affidavit of Richard Mueller, who served as the director of the company's employee benefits program as well as one of the plan trustees. Mueller stated that as of October 7, 1983, Chromalloy sold all or substantially all of the assets of its Kewanee Machinery Division to Allied. The appellants suggest on appeal that it is not clear whether "all or substantially all" of the Kewanee assets were sold, thus giving rise to a genuine issue of material fact rendering the entry of summary judgment improper. The district court did not address this issue, and with good reason. As far as we can tell from the record, the appellants failed to adequately raise this claim before the district court. Appellants' failure may well be attributable to the fact that they filed a cross-motion for summary judgment, thereby agreeing that no genuine issues of material fact existed. Nonetheless, the appellants' position before the district court did not relieve them of their burden as the nonmovants relative to the defendant's motion for summary judgment. Accordingly, the appellants were required to set forth specific facts showing why summary judgment on behalf of the defendants was not appropriate. Fed. R. Civ. P. 56(c). In light of their failure to do so, appellants have waived this issue under the long-standing rule that "a party opposing a summary judgment motion must inform the trial court of the reasons, legal or factual, why summary judgment should not be entered. If it does not do so, and loses the motion, it cannot raise such issues on appeal." McNeil v. Springfield Park District, 851 F.2d 937, 946 (7th Cir. 1988) (quoting Liberles v. County of Cook, 709 F.2d 1122, 1126 (7th Cir. 1983)). We are unable to reach the merits of this issue.
With reference to the remaining plan documents, both the Program and Plan documents specifically provided that the plan could be terminated at any time. Finally, the Summary Plan Descriptions distributed to the employees of each of the plants within the Division all emphasized that the beneficiaries' "rights and benefits are determined in accordance with the provisions of the Plan," and that individual coverage would terminate with "the date of termination of the Plan." The appellants argue that this reading of the Summary Plan Description is erroneous because the termination language falls under the heading INDIVIDUAL TERMINATION OF COVERAGE rather than the specific heading for RETIREE BENEFITS. We find this argument unavailing based on our own reading of the Summary Plan Description as an integrated whole so that all of the provisions, if possible, will be given effect. Musto v. American General, 861 F.2d at 906 (citing International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America v. Yard-Man, Inc., 716 F.2d 1476, 1479 (6th Cir. 1983)). To begin with, the section on retiree benefits merely explained the extent of the benefits provided under the plan. It makes no reference to the retiree's vested right to the benefits. Furthermore, we are persuaded that the coverage of retirees was fully embraced in the provisions referring to "any Covered Person under the Plan." For example, the preceding section dealing with the nature of coverage for various types of employees noted that coverage for retirees is available to those who are eligible for pension benefits--that is, "any Covered Person under the Plan." We can not accept appellants' attempt to read the parts of the Summary Plan Description in isolation. In sum, the district court's order of summary judgment on the appellants' count under ERISA was appropriate.
In pertinent part, Sec. 1132 empowers a plan participant or beneficiary to bring a civil action "to recover benefits due him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a) (1) (B)
ERISA's extensive regulations extend to "employee benefit plans" which, in turn, are divided into two categories. Congress distinguished "employee pension benefit plans" from "employee welfare benefit plans," compare 29 U.S.C. § 1002(2) (A) with Sec. 1002(1), and explicitly exempted the latter from the full breadth of the statute's requirements. Welfare benefit plans are defined as: