Opinion ID: 3011431
Heading Depth: 2
Heading Rank: 2

Heading: The Representations to the Plaintiffs

Text: To introduce the VJEPS, Freedom Forge held meetings describing the programs and their benefits. Gerald Sieber testified via deposition that it was his job to meet with prospective retirees and brief them on the retirement benefits to which they were entitled. Sieber, along with other members of the benefits administration team, also met informally with potential retirees and answered their questions. Sieber testified that he knew that health insurance was very important to people considering retirement, that it was always discussed and that I would get a lot of questions on it. I think it was a very major factor, especially if one was approaching early retirement, it was a major factor in determining whether they were going to take early retirement or not. Sieber testified that he told employees that they (and their surviving spouses) would be insured for their lifetimes. He acknowledged that he told people that the benefits would be free of monthly charge. Although he later testified that he did not use those words (free of any monthly charge), he explained: I would normally say, your program of health insurance benefits continues as it is, with the exception of dental coverage . . . and the fact that the retiree program contained some different allowances for certain parts of the program . . . I think all the retirees knew that--potential retirees knew that since they did not pay any monthly insurance premiums as active employees, they were not expected to pay any premiums as retirees. Sieber acknowledged that he never told employees that their plans would or could change. He provided potential retirees with booklets, including those listed infra, which he called summary plan descriptions (SPDs) (this is an ERISA term of art, referring to the document required by ERISA to inform beneficiaries about their rights under a plan, see 29 U.S.C. S 1022). These booklets outlined the structure of the retirement benefits plans and included no 7 explicit reservation of rights. Sieber testified that he thought that the summary plan descriptions for salaried employees did not apply to retirees. Robert Robinson testified that he believed that the company always had the right to change or terminate the programs in which the retirees were enrolled, but that he never told any retirees or potential retirees of that right during the relevant time period. He stated that he did not inform them of the termination right because the intention was to provide coverage for the rest of the beneficiaries' lives. The testifying retirees gave slightly different accounts of the content of Sieber's (and others') assurances, but they uniformly claimed that they were left with the impression that they would have lifelong insurance at the company's expense. For example, Stanley Treaster testified that he and his wife were told by Sieber that they would get full health benefits from the company until he turned 65, and that the company would then pay for a supplement so that, along with medicare benefits, they would be fully covered. Treaster represented that he was never told that he would have to pay premiums. Many of the plaintiffs testified that they relied on these assurances in making their decision to retire. For example, Albert Basom related that he took early retirement in 1982 after a man-to-man meeting with Jerry Sieber in his office. He testified that Sieber told him that he would have no-cost health coverage for life, for himself and his wife. He also said that he definitely was influenced by the promised health benefits, and that he would not have been able to retire without them.
As part of the VJEP project, Freedom Forge sent out letters in 1982 announcing the plans that stated that early retirees would have continuation of full Hospitalization, Surgical and Major Medical coverage under the `Program of Hospital and Physicians' Services and Major Medical Expense Benefits' for retirees to age 65. Thereafter, you and 8 your spouse are covered by the `Program of Hospital and Medical Benefits Supplementing Medicare.' There was no explicit reference, in either this letter or the programs referenced therein, to the fact that the company retained the right to amend or cancel the programs. The company sent out similar letters in 1991.3 Freedom Forge also issued two distinct kinds of documents detailing plan benefits. First, in 1981, 1986, and 1993, it distributed a booklet, which conformed with the ERISA SPD requirements, entitled Program of Insurance Benefits for Eligible Salaried Employees to all employees and retirees.4 Each booklet included a clear disclaimer informing all beneficiaries that Freedom Forge retained the right to amend or eliminate the Plan without the consent of the beneficiaries.5 These booklets each include a section discussing the medical coverage for Pensioners, Employees Receiving Long Term Disability Benefits and Surviving Spouses stating that pensioners (and the other named individuals) would be enrolled in the Company Paid Program or the Program Supplementing Medicare. Additionally, Freedom Forge issued booklets describing health benefit programs for retirees and their spouses with titles that, according to the retirees, suggested _________________________________________________________________ 3. These letters promised continued coverage under the Program of Health Care and the Program of Hospital and Medical Benefits Supplementing Medicare. It is unclear to what these programs refer, but at all events there was no indication in this letter that Freedom Forge retained the right to amend or cancel the benefit plans. 4. There was no evidence that any of the plaintiffs either had or had not read them. 5. This reservation accords with the actual terms of the Plan. According to Article 7 of the Plan, Freedom Forge reserves the right at any time and from time to time. . . to amend, suspend, or terminate the Plan or any Component Plan for any reason, in whole or in part, and to adopt any amendment or modification thereto, all without the consent of any Employee or other person. However, the Company shall not have the right to amend or terminate this Plan or any Component Plan or any Benefit with respect to Benefit claims already incurred at the time of amendment, suspension, or termination. 9 they were self-contained programs, and specifically intended for pensioners.6 Unlike the other booklets, these did not include explicit language reserving the company's right to unilaterally amend or eliminate the benefits.7 The plaintiffs assert that they believed that they were not salaried employees and therefore not controlled by the 1981, 1986, and 1993 booklets. Each booklet was self-titled a Program of Insurance Benefits for Eligible Salaried Employees (emphasis added). Instead, they relied solely on statements of company representatives, the letters describing the VJEPS, and those booklets directed at retirees for information about their benefit programs. Since none of the pensioner-directed booklets prior to 1994 stated that Freedom Forge retained the right to amend the Plan, and the plaintiffs claim to have been orally assured that they would be covered in the same way for life, they represent that they thought that the company could not unilaterally change or amend their benefits. Plaintiff Ross Smith, for example, testified that he understood that the special booklets about benefits for pensioners replaced those for active salaried employees. When asked whether there was a distinction conveyed to him between active and pensioned employee benefit programs, he answered,Oh yes. There always was. That's why there are separate booklets for the different categories of pensioners. He remembered that the benefits administrators specifically went over these things [the benefits] because they were kind of unbelievable to us, that they would make this offer. _________________________________________________________________ 6. These booklets included the: Program of . . . Benefits, Salaried Pensioners & Surviving Spouses Eligible for Medicare (1988); Program of . . . Benefits, Pensioners and Surviving Spouses--Retired Prior to December 31, 1986, Not Eligible for Medicare (1988); and the Comprehensive Major Medical Plan, Standard Steel Pensioners and Surviving Spouses--Retired After December 31, 1986 (1988). 7. Two 1988 programs for Salaried Pensioners & Surviving Spouses do include provisions about continuation after termination with the caveat, [t]his continuation provision does not apply if Standard Steel - Division of Titanium Metals Corporation of America replaces this Program with another program. In this event, all benefits will cease on the date this Program is terminated. There is no description of how, or under what circumstances, a replacement or termination would take place. 10 In 1994, Freedom Forge published booklets that were clearly applicable to retirees that contained the reservation of rights language. However, all of the testifying plaintiffs (except Snyder) had retired by that time.