Opinion ID: 750104
Heading Depth: 3
Heading Rank: 1

Heading: General Retirees

Text: 143 General Motors repeatedly promised its retirees health care at GM's expense and constantly touted improvements in its health plan, yet it contends that it did not create a vested right to health care. The en banc majority agreed, finding that most of the summary plan descriptions unambiguously reserved General Motors's right to amend the benefits. Under the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461, health insurance is considered a welfare benefit as opposed to a pension benefit. 29 U.S.C. § 1002(1) & (2)(A). It is true under ERISA that employees do not automatically have a vested right to welfare benefits, In re White Farm Equip. Co., 788 F.2d 1186, 1192-93 (6th Cir.1986), but it is equally true that a company can create vested rights to such benefits. Id. at 1193. A vested right is created by agreement or by private design. Id. 144 General Motors has created a vested right to health care through its written promises. I, like the en banc majority, find no ambiguity in much of the written material, but I do so in favor of the retirees. The steps to that conclusion are easily taken. The first question is whether the Your GM Benefits and General Motors Insurance booklets were summary plan descriptions as defined by 29 U.S.C. § 1022. If so, the focus shifts to determining what should govern when the summary plan description differs from the plan documents. 145 The en banc majority acknowledges that General Motors's summary booklets were summary plan descriptions. See supra at 400-01. The en banc majority also argues that summary plan descriptions, as a creation of ERISA, were not required until 1977. See supra at 400-01. It therefore considers only the post-1977 booklets to be summary plan descriptions. See supra at 400-01. The en banc majority's interpretation conflicts with General Motors's characterization of the booklets. Beach Hall, General Motors's director of health care plans, stated in a sworn declaration: Although General Motors determined that it was not required to meet ERISA's formal requirements for SPDs until November 1977, it replaced the previous summary booklets with 'Highlights of Your GM Benefits' in 1974, ... Such booklets have served as the summary plan description. In light of the way General Motors seemed to treat the 1974 booklet as a summary plan description, the district court should determine the ERISA status of the 1974 book on remand. I will base my analysis on the assumption that the post-1974 summary booklets are summary plan descriptions. 146 General Motors's summary plan descriptions suffer from either the internal inconsistency of contradictory terms or the external inconsistency of conflict with underlying formal plan documents. In some of the summary plan descriptions there is no internal ambiguity--the plan guarantees lifetime health care with no disclaimer. This is true of the 1974, 1977, and 1980 Your GM Benefits brochures. These summary plan descriptions, however, are at odds with the underlying plan documents, which do include a reservation of rights. In Edwards v. State Farm Mut. Auto. Ins. Co., 851 F.2d 134 (6th Cir.1988), this Court enunciated a principle for dealing with such discrepancies: This Circuit has decided that statements in a summary plan are binding and if such statements conflict with those in the plan itself, the summary shall govern. Id. at 136. The Edwards principle governs pension plans and welfare plans. 147 From 1974 to 1985 the summary plan descriptions contained no reservation of rights and did carry a guarantee of lifetime health care. The en banc majority notes that Edwards does not apply to silence, and argues that the summaries were silent on General Motors's right to change the plan. Supra at 401. This ignores, however, the plain import of statements such as at GM's expense for your lifetime. Just because the summary does not speak to General Motors's rights in the same language used in the plan does not mean the summaries are silent on the issue. Noting that benefits are for your lifetime is tantamount to saying that General Motors cannot change the plan. In addition, the en banc majority contends that [n]either the GM plan itself nor any of the various summaries of the plan states or even implies that the plaintiffs' benefits were vested. Supra at 402. Again, lifetime rights are vested rights. 148 It is true that from 1977 to 1985 Your Benefits in Retirement did include reservations of rights clauses. It bears noting, though, that these clauses were the rather tepid statement that benefits have been changed from time to time through the years and are subject to change in the future. This clause is particularly problematic because General Motors always trumpeted its changes as improvements. The court in Sprague II quoted a member of General Motors's legal department telling General Motors staff: GM is not in sound position to win the probable lawsuit filed by retirees. Program booklets and previous pre-retirement interviews have not stressed the possibility of 'negative' program changes. 843 F.Supp. at 305. Regardless of whether the disclaimers in the Your Benefits in Retirement brochures act as an effective reservation of rights, the effects of such putative disclaimers are nugatory. Benefits given in documents distributed prior to, and for the duration of, retirement, cannot be rescinded in post-retirement documents. See Wulf v. Quantum Chem. Corp., 26 F.3d 1368, 1378 (6th Cir.1994) (stating that once employee is entitled to benefit, it would be illusory to divest benefit retroactively) (internal quotation marks omitted); Gentile v. Youngstown Steel Door Co., 1986 WL 17464 at  5 (6th Cir. Aug.25, 1986) (stating that court must focus on the plan documents which were distributed to the retirees while they were active employees). 149 In sum, the district court should have had an opportunity on remand to determine whether the 1974 Your GM Benefits booklet was a summary plan document and whether the Your Benefits in Retirement, in particular the 1980 edition, were distributed only to retirees. If those questions were answered affirmatively, there would be an eleven-year window from 1974 to 1985 in which the summary plan documents, which govern under Edwards, contained an unambiguous promise of lifetime health care. For general retirees who retired while these summary plan descriptions were in effect, this uncontradicted promise would be sufficient to vest their rights to lifetime health care. They deserved a chance to prove that in the district court.