Opinion ID: 615296
Heading Depth: 2
Heading Rank: 1

Heading: The Corporate Acquisition

Text: In 1994, American Cyanamid Corporation (Cyanamid) spun off its fibers business unit into three separate companies: Cytec Acrylic Fibers, Inc., Cytec Technology Corp., and Cytec Industries, Inc. (collectively, Cytec). In 1996, Cytec sold the assets of its acrylic fibers business to Sterling Fibers, Inc. (Sterling Fibers), a newly-formed company created to accomplish the acquisition and a wholly-owned subsidiary of Sterling Chemicals, Inc. (Sterling Chemicals). Sterling Chemicals is itself a wholly-owned subsidiary of Sterling Chemicals Holdings, Inc. (collectively with Sterling Fibers and Sterling Chemicals, Sterling). The acquisition was consummated pursuant to an Asset Purchase Agreement dated December 23, 1996 (the APA). The APA was authorized by the boards of directors of the six respective companies and was signed by the chairman of the three Sterling companies and representatives of the three Cytec companies. In connection with the acquisition, Sterling offered employment to certain Cytec employees. The APA designated those Cytec employees who accepted employment with Sterling as Acquired Employees. The APA also included a provision devoted to continued medical benefits for Acquired Employees when they retired. Pursuant to Section 5.05(f), Sterling guaranteed its Acquired Employee retirees a certain level of benefits and a certain level of premiums, which benefits could only be reduced and which premiums could only be increased if Cytec provided prior written consent. For its part, Cytec guaranteed that it would notify Sterling and provide Sterling with prior written consent if Cytec reduced its own retiree benefits or raised its own retiree premiums. Section 5.05(f) of the APA provided in relevant part: [Sterling] shall continue to provide postretirement medical and life insurance benefits for such [qualifying] Acquired Employee that are no less favorable to such Acquired Employee than those benefits provided by [Cytec] under the [Cytec benefit plans] as in effect on the date hereof, and [Sterling] shall not reduce the level of such benefits without the prior written consent of [Cytec]; provided, that such consent shall not be withheld to the extent that [Cytec] or Cyanamid has similarly reduced the level of such benefits. For purposes of this Agreement, an increase in premiums required to be paid for postretirement benefits shall be considered a reduction in such benefits. [Cytec] shall notify [Sterling] in writing to the extent that [Cytec] becomes aware of a reduction in postretirement medical and life insurance benefits under the [Cytec benefit] plans. (emphasis in original). Following the acquisition, Plaintiffs (a group of approximately one hundred Acquired Employees) became employees of Sterling Fibers and participants in Sterling's various employee benefits plans, each of which were sponsored and operated by Sterling Chemicals. When Plaintiffs retired, they became participants in Sterling's retiree medical and prescription drug benefits plans (collectively, the Sterling Plan). As retirees and participants in the Sterling Plan, they continued to pay the same level of premiums and receive the same level of benefits as were agreed upon in Section 5.05(f). From December 1996 until April 2003, Plaintiffs' premiums were lower than those premiums paid by participants in the Sterling Plan who were not Acquired Employee retirees. Sterling immediately included Plaintiffs in the Sterling Plan, collecting premiums and providing benefits, but it did not write any new provisions into the formal documents that made up the Sterling Plan. Each of the formal plan documents contained reservation-of-rights provisions permitting amendment or modification of the Sterling Plan at any time and from time to time by action of Sterling's Employee Benefits Plans Committee (the Committee). Additionally, multiple summary plan descriptions (SPDs), which provide communication with beneficiaries about the plan, but ... do not themselves constitute the terms of the plan, CIGNA Corp. v. Amara, ___ U.S. ___, 131 S.Ct. 1866, 1878, 179 L.Ed.2d 843 (2011), also provided that the Sterling Plan may be amended at any time by [the Committee] or the Board of Directors. The first SPD issued after the acquisition, dated February 1997, included a provision expressly permitting Acquired Employee retirees to participate in the Sterling Plan. It also noted that premium rates could be obtained from Sterling's human resources department. At least one SPD also included language indicating that certain plan participants had special rights related to premiums. However, none of the formal Sterling Plan documents or the various SPDs describing the Sterling Plan ever expressly referenced Section 5.05(f) of the APA.