Opinion ID: 615296
Heading Depth: 4
Heading Rank: 1

Heading: Factual Background in Halliburton

Text: Whether Section 5.05(f) of the APA constituted a valid amendment to the Sterling Plan turns on whether this court's analysis in Halliburton is controlling. In Halliburton, a merger agreement between Halliburton and Dresser Industries included a provision whereby Halliburton agreed to maintain Dresser's retiree plans, except to the extent that any modifications were consistent with changes in Halliburton's medical plans for its own similarly situated active employees. 463 F.3d at 362. The merger agreement provided in relevant part: [Halliburton] shall and shall cause the Surviving Corporation and each Subsidiary of the Surviving Corporation to take all corporate action necessary to: (i) maintain with respect to eligible participants (as of [September 29, 1998]) the [Dresser] retiree medical plan, except to the extent that any modifications thereto are consistent with changes in the medical plans provided by [Halliburton] and its subsidiaries for similarly situated active employees .... Id. at 365 (alterations in original). The merger agreement also provided that its provisions were solely for the benefit of Halliburton and Dresser and that it did not confer any right, benefit, or remedy to any other person except for members of Halliburton's board of directors, who were permitted to enforce the provisions for three years. Id. The stated reason Halliburton and Dresser included the retiree benefits provision in the merger agreement was to permit Dresser retirees to keep their benefits while also giving Halliburton the flexibility to change the Dresser retiree plans as long as it made similar changes for active Halliburton employees. Id. at 366. The merger agreement was executed on February 25, 1998, and became effective on September 29, 1998. Id. at 364. The respective boards of directors of Halliburton and Dresser approved the merger. Id. On July 16, 1999, Halliburton entered into a separate agreement to assume the sponsorship of, adopt, and continue the Dresser retiree plans. Id. at 366-67. The agreement expressly vested Halliburton's benefits committee with the power to administer the Dresser retiree plans, and vested the Halliburton chief executive officer with the power to amend or terminate the Dresser retiree plans. Id. at 367. Halliburton could have adopted and sponsored the Dresser retiree plans pursuant to the merger agreement, but instead elected to do so pursuant to the subsequent agreement. Id. at 367 n. 5. At the end of 2002, Halliburton combined all of the Halliburton and Dresser plans, including the Dresser retiree plans, and shortly thereafter made the Dresser retiree plans subparts of the combined plan. Id. at 367. At all times following the merger in 1998, the Dresser retiree plans and the Halliburton active employee plans remained unchanged. Id. In November 2003, over five years after the merger, Halliburton modified the Dresser retiree plans so that the Dresser retirees' benefits would be more closely aligned with the Halliburton retirees' benefits. Id. It did so by freezing Halliburton's contribution costs, thereby making Dresser retirees responsible for any future increase in premiums. Id. Halliburton did not make similar modifications to the combined plan for its own similarly situated active employees. Id. at 362, 367. One of the Dresser retirees complained, and the Halliburton benefits committee denied the retiree's request to withdraw the November 2003 amendments. Id. at 367-68. The committee concluded that the amendments were consistent with Halliburton's obligations under the merger agreement and that nothing in the merger agreement limited its right to modify the Dresser retirees' benefits. Id. Thereafter, Halliburton initiated a declaratory action in district court, and the Dresser retirees filed counter-claims and third-party claims. Id. at 368. The district court found that the retiree benefits-related provision in the merger agreement constituted a valid plan amendment, and held that Halliburton must maintain the [Dresser retiree plans] for eligible participants and may adjust benefits in that program only if it makes identical changes to benefits for similarly situated active employees. Id. at 369.