Opinion ID: 768735
Heading Depth: 3
Heading Rank: 1

Heading: Employees who retire on or after August 31, 1974

Text: 26 Section 14. MEDICARE SUPPLEMENT. . . . (2) On and after the date on which an employee or dependent becomes eligible for benefits under Medicare, he shall not be eligible or insured under this Policy for any coverage providing benefits for Hospital, Surgical, Laboratory and X-Ray Expenses or Major Medical Expense Insurance. . . . The following benefits serve as a Medicare Supplement . . . [at a monthly cost to the employee of $5.00]. 27 Termination. 1. This Agreement, and the Group Insurance Plan established hereunder shall remain in effect without change until midnight, August 31, 1977. 1978 28 The 1978 CBA and Insurance Certificate were essentially the same as those of 1974. The 1978 Memorandum of Agreement did not refer to any changes in retiree health insurance benefits. 1980 29 The 1980 CBA contained the same Termination and Previous Agreements clauses. The following Pensions, Group Insurance and Supplemental Unemployment Benefits clause was also contained in the CBA: 30 For pensioners and spouses, age 65 and over, who are now covered by the Group Insurance Program, the Company will make available and pay for a Medicare Supplemental Insurance Program. 31 For pensioners and spouses under age 65, the retiree Group Insurance Programs in effect on September 1, 1975, as outlined in the Certificate of Insurance, will remain in effect. 32 The 1980 Memorandum of Agreement stated that Joy would pay the full MedicareSupplement cost for all then-current retirees and those retiring under the 1980 CBA. 1983 33 The 1983 CBA contained relevant language identical to the 1980 CBA. In 1983, however, an Insurance Certificate was not prepared. 1986 34 The 1986 CBA was identical in all relevant respects to those of 1980 and 1983. The 1986 Memorandum of Agreement indicates that there would be a change in the Medicare Supplement deductible for those retiring after September 1, 1986. Also in 1986, an Employee Benefits Plan booklet (formerly the Insurance Certificate) was issued with the following provision: 35 Termination of the Plan. Joy Manufacturing Company reserves the right to terminate, suspend, withdraw, amend or modify the Group Health Care Benefits Plan in whole or in part at any time. 36 The booklet contained a clause stating that [b]enefits provided during retirement are described in a separate booklet. Plaintiff presented evidence suggesting that the booklet was not distributed to retirees and that no separate booklet describing retirement benefits was created. 1989 37 In 1989 the CBA was the same in relevant respects as those of the previous three agreements. In addition, a handbook was prepared entitled Your Benefits Handbook -- Hourly and Salaried Bargaining Employees. Plaintiffs presented evidence that this handbook was not distributed to retirees until August 1991. It contained the following provision: 38 Amendments. Joy reserves the right to amend or terminate any of the plans. The right to amend includes the right to curtail or eliminate coverage for any treatment, procedure, or service regardless of whether you are receiving treatment for an injury, illness, or disease contracted prior to the effective date of the amendment. 39 A supplement entitled Health Care Coverage After Retirement, sent with a letter dated August 19, 1991, contained the following language: 40 Plan Changes. This insert summarizes your current retiree health care coverage. However, since no one can predict the future, Joy reserves the right to make changes or terminate these Plans. 41 In March 1993, Joy sent letters to plaintiff retirees (who had retired under the 1974 through the 1989 CBAs), announcing a new cost-sharing plan to replace their insurance programs. In response to the changes, plaintiffs filed this suit alleging violations of § 301 of the LMRA, 29 U.S.C. § 185, § 502 of ERISA, 29 U.S.C. § 1132, and of the doctrine of promissory estoppel. The suit was filed as a class action, with plaintiffs purporting to sue on behalf of themselves, their spouses, dependent children, and other persons similarly situated. Plaintiffs claimed that their retirement benefits had vested under the prior CBAs, and that Joy's unilateral alteration of their benefits therefore breached the CBAs in violation of the LMRA and ERISA. They also claimed that Joy had made representations to them that the benefits were to last for their lifetimes, and that Joy was now estopped from altering the benefits. 42 In a January 17, 1997, opinion, the district court found that retirement benefits had vested for those retiring under the 1974, 1978, 1980, and 1983 CBAs. The court found that, beginning in the 1986 agreement, Joy included a reservation of rights clause and that, consequently, those who retired under the 1986 CBA and thereafter did not hold vested benefits. 43 On October 7, 1997, the district court amended its opinion on plaintiffs' motion. The court found that the reservation of rights clauses were ineffective as to those who retired between 1986 and August 19, 1991, and held that those plaintiffs retiring prior to August 19, 1991, had vested retireebenefits. The court noted that the 1986 booklets contained reservation of rights language, but were apparently only applicable to active employees since the booklets indicated that [b]enefits provided during retirement are described in a separate booklet. Further, the court pointed to evidence that the booklets were not distributed to active employees until 1988 and were never distributed to retirees. No separate booklet dealing with retirement benefits was ever published during the 1986 CBA term. A letter containing an insert for a benefits handbook and expressly directed to retirees was distributed in 1991 (dated August 19, 1991). This insert, the court found, contained reservation of rights language applicable to retirees. For these reasons, the court held that benefits were vested for those who retired prior to August 19, 1991, but not after. 44 Also in its October 7, 1997, opinion, the district court granted Joy's motion for summary judgment on the promissory estoppel claims for plaintiffs who retired after August 19, 1991. The court held that any reliance by plaintiffs on Joy's representations concerning the vesting of retirement benefits was not reasonable in the face of a clear reservation of rights clause after August 19, 1991. 45 On March 17, 1998, Joy filed a motion to amend the judgment based on Sprague v. General Motors Corp., 133 F.3d 388 (6th Cir. 1998) (en banc), which the district court denied. Finally, on July 31, 1998, the district court awarded plaintiffs prejudgment interest, but denied attorneys' fees and costs. 46 Joy appeals the district court's determination that retiree benefits vested for those retiring prior to August 19, 1991, and the resulting judgment against it under the LMRA and ERISA. Plaintiffs cross-appeal the district court's determination that retiree benefits did not vest for those retiring after August 19, 1991, and the denial of attorneys' fees.