Opinion ID: 786985
Heading Depth: 2
Heading Rank: 2

Heading: The District Court's Issuance of the Preliminary Injunction

Text: 29 The district court correctly stated that [i]n this Circuit, to obtain a preliminary injunction the requesting party must demonstrate: (1) irreparable harm; and (2) either (a) likelihood of success on the merits or (b) sufficiently serious questions going to the merits of the case to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting preliminary relief. Laforest II, 2003 WL 23180220, at  (citing Jackson Dairy, Inc. v. H.P. Hood & Sons, Inc., 596 F.2d 70, 72 (2d Cir.1979)). Given that the district court did not err in granting summary judgment on the issue of Honeywell's liability under the Guaranty, it also did not err in concluding that plaintiffs demonstrated a likelihood of success on the merits. 30 Primarily at issue, then, is whether plaintiffs adequately demonstrated irreparable harm. Additionally, defendants raise concerns regarding whether plaintiffs engaged in undue delay in seeking the injunction, whether the injunction was overbroad as to whom and what it covers, whether it was sufficiently specific, and whether the district court erred in waiving the requirement of a bond. This Court reviews the granting of a preliminary injunction for abuse of discretion. New York Magazine v. Metro. Transport. Auth., 136 F.3d 123, 126 (2d Cir.1998). For the reasons that follow, we hold that the district court did not abuse its discretion in issuing the preliminary injunction, but we remand for clarification and modification of that injunction as to the issues of who and what are covered by the Guaranty. 31
32 The district court held that plaintiffs had demonstrated irreparable harm by showing that, absent an injunction ordering Honeywell to provide premiums sufficient to secure guaranteed levels of benefits, the reductions in medical coverage will cause: (1) substantial risk to plaintiffs' health; (2) severe financial hardship; (3) the inability to purchase life's necessities; and (4) anxiety associated with uncertainty. Laforest II, 2003 WL 23180220, at . Indeed, if substantiated by the evidence, the district court's holding comports with this Court's understanding of irreparable harm as harm shown to be non-compensable in terms of money damages. Wisdom Import Sales Co., L.L.C. v. Labatt Brewing Co., Ltd., 339 F.3d 101, 113-14 (2d Cir.2003). 33 In concluding that plaintiffs demonstrated irreparable harm, the court relied on this Court's holdings in Whelan v. Colgan, 602 F.2d 1060 (2d Cir.1979), and Communications Workers of America, Dist. One, AFL-CIO v. NYNEX Corp., 898 F.2d 887 (2d Cir.1990), that the termination of medical benefits will ground a claim of irreparable harm. The court also relied on United Steelworkers of America v. Textron, Inc., 836 F.2d 6 (1st Cir.1987), an opinion written by Justice Breyer while still on the First Circuit. 34 In Whelan, this Court affirmed the granting of a preliminary injunction ordering the defendant to continue providing medical benefits to striking workers. In doing so, it stated that the threatened termination of benefits such as medical coverage for workers and their families obviously raised the spectre of irreparable injury. Whelan, 602 F.2d at 1062. And in NYNEX, the defendant informed its employees that it intended to terminate medical benefits, but also informed them that they were eligible for replacement benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, 29 U.S.C. §§ 1161-68 (COBRA). Nevertheless, because the defendant then frustrated the employees' efforts to receive COBRA benefits, the Court treated the defendant's conduct as, effectively, a threatened termination of benefits. Citing Whelan, the Court affirmed the district court's grant of a preliminary injunction ordering the defendant to facilitate COBRA benefits. NYNEX, 898 F.2d at 891-92. 35 In Textron, the defendant ceased paying medical insurance premiums for retired former employees, in circumstances somewhat analogous to the present case. In affirming the district court's grant of a preliminary injunction ordering the defendant to resume payment of premiums, the court considered: 36 general facts that either are commonly believed or which courts have specifically held sufficient to show irreparable harm; such general facts as (1) most retired union members are not rich, (2) most live on fixed incomes, (3) many will get sick and need medical care, (4) medical care is expensive, (5) medical insurance is, therefore, a necessity, and (6) some retired workers may find it difficult to obtain medical insurance on their own while others can pay for it only out of money that they need for other necessities of life. 37 Textron, 836 F.2d at 8 (citing, inter alia, Whelan ). The Court then explained that it was accepting as proof of the actual existence of these general facts a single affidavit of a union official stating that three of the retirees had actually suffered a reduction in medical care as a result of the termination of benefits. Id. 38 After considering these authorities, the district court turned to plaintiffs' evidence. It noted that plaintiffs provided affidavits of six people entitled to benefits under the Bendix Guaranty. Each undoubtedly demonstrates that they will suffer much more than monetary harm. Laforest II, 2003 WL 23180220, at . On this basis, the district court held that plaintiffs sufficiently demonstrated that Honeywell's refusal to pay the shortfall in premiums needed to restore benefits to the guaranteed level caused irreparable harm to the putative class. 39 Defendants contest the district court's conclusion by noting, first, that in the cases on which the district court relied, plaintiffs suffered the threat of termination, or the actual termination, of their medical benefits — whereas here plaintiffs suffered a reduction in benefits (or increased costs of maintaining benefit levels). Defendants argue that approximately ninety percent of the putative class is eligible for Medicare, and thus is able to secure alternative coverage, and that every member of the class was given the opportunity to participate in an alternative prescription drug program. However, it is not clear that this difference is dispositive. So long as plaintiffs demonstrated injury non-compensable in terms of money damages, Wisdom Import Sales, 339 F.3d at 113-14, they have demonstrated irreparable injury. 40 The district court found that plaintiffs demonstrated more than mere monetary harm, and the record supports this finding. Most significantly, rather than the prescription drug program with no deductibles, no maximum, and a $3 co-pay for non-generic drugs that plaintiffs previously enjoyed, the alternative plan provided by Motor Components imposes a $100 per year deductible, a $3000 annual maximum, and $15/40/60 co-pays for generic, preferred name-brand, and non-preferred name-brand prescriptions. Plaintiffs provided individualized evidence of the impact of these changes on the retirees, including an imminent threat that they would have to forego needed prescriptions. In addition, plaintiffs note that the approximately ten percent of the class that is ineligible for Medicare received a replacement stipend of only $125 per month from Motor Components, and presented evidence that this amount was seriously inadequate for their needs. We hold that the district court did not abuse its discretion in relying on this evidence in concluding that the then-putative class suffered irreparable harm warranting a preliminary injunction. 4 41 Our conclusion is not affected by defendants' attack on the evidence on which the district court relied. Defendants note that the district court granted relief on the basis of affidavits submitted by persons who were not named plaintiffs, and, moreover, that the court relied on only six affidavits in a case involving nearly six hundred putative class members. The procedural posture of this case is relevant in this regard. The district court first properly granted summary judgment to plaintiffs on the issue of liability, and then issued a preliminary injunction ordering relief for the putative class. But before reaching this Court, the putative class became a certified class. That the six affidavits relied upon by the district court were submitted by unnamed plaintiffs gives us little pause, given that these persons are now members of the certified class. 42 Regarding the adequacy of the six affidavits, defendants urge this Court to adopt the evidentiary standard set forth in Adams v. Freedom Forge Corp., 204 F.3d 475 (3d Cir.2000), and assert that Adams requires a more exacting level of proof to support injunctive relief in a case such as this. The facts of Adams are analogous to the present case insofar as, in each, the dispute is over the increased cost of medical benefits. There, 136 retirees (and surviving spouses) brought suit to enjoin the defendant from altering the health care benefits it had been providing them since they retired. Adams, 204 F.3d at 479. The proposed modifications to the plaintiffs' benefits included a shift from a no-premium plan to one in which the retirees could choose between plans, all of which provided substantially similar coverage as the original plan — but also required the retirees to pay monthly premiums. Id. at 480. The district court granted the plaintiffs a preliminary injunction, precluding the defendant from instituting the changes. On appeal, the Third Circuit reversed in part. The court first noted that only 11 of the 136 plaintiffs testified as to the effect the changes would have. Id. at 481. It then found that only three of these plaintiffs provided testimony sufficient to demonstrate irreparable harm, as opposed to mere monetary harm, id. at 483-84, and that only two of these plaintiffs had demonstrated a likelihood of success on the merits, id. at 494. The court thus reversed the district court's grant of a preliminary injunction for all but two of the plaintiffs. 43 In severely trimming the scope of the injunction, the Adams court criticized then-Judge Breyer's reliance in Textron on general facts and common sense, regarding the sort of harm suffered by retirees whose health benefits are terminated, as an insufficient foundation on which to conclude that individuals had suffered irreparable injury. See Adams, 204 F.3d at 485-87. The Adams court asserted that [t]he law does not take judicial notice of matters of `common sense,' and common sense is no substitute for evidence. Id. at 487. The court thus articulated a standard by which the plaintiffs must present individualized proof of irreparable harm. 44 Notably, the Adams court recognized that its standard could be met in a representative fashion (as in a class action), and explained that so long as the plaintiffs lay an adequate foundation from which one could draw inferences that the testifying plaintiffs are similarly situated — in terms of irreparable harm — to all the other plaintiffs, a court could permissibly engage in inductive reasoning to reach the conclusion that every plaintiff suffered the threat of irreparable harm. Id. Because the plaintiffs in that case did not lay such a foundation, the court held that they presented insufficient evidence to justify a preliminary injunction protecting all of the plaintiffs. Id. at 488. 5 See also Cooper v. TWA Airlines, LLC, 274 F.Supp.2d 231, 242 (E.D.N.Y.2003) (denying class-wide injunctive relief in the absence of, among other things, some indication that individuals suffering irreparable harm were representative of the class). 45 In urging this Court to adopt the standard set forth in Adams, defendants suggest that the district court's citation to Textron indicates that it relied heavily on the general facts noted by Justice Breyer. However, the district court explicitly relied on the affidavits of six persons covered by the Guaranty, each of whom alleged circumstances amounting to irreparable injury. As Adams concedes, plaintiffs should be allowed to adduce evidence of harm representatively, so long as they lay a foundation that the representative plaintiffs are similarly situated with regard to the issue of irreparable harm. 6 Adams, 204 F.3d at 487. 46 Determining whether plaintiffs have laid such a foundation is a case-sensitive inquiry subject to review for abuse of discretion. As such, under Adams the question in the present case would be whether the district court abused its discretion in finding that plaintiffs provided a sufficient foundation that the six affidavits on which the district court relied are representative of the class. On that issue, it is worth noting that every member of the class was either an employee of the same firm or is a surviving spouse of such an employee, and defendants do not contest the fact that the average age of the approximately 600 retirees at issue is 83 years old. Were we to adopt Adams — and we do not do so now, thereby leaving open whether, in this Circuit, Textron, Adams , or something in between is the governing approach — we would conclude that the district court did not abuse its discretion in inferring from the evidence presented that irreparable harm was class-wide. 7 Cf. Golden v. Kelsey-Hayes Co., 73 F.3d 648 (6th Cir.1996).
47 Defendants argue that, even if the district court was within its discretion to grant the preliminary injunction, the terms of that injunction sweep too broadly. They argue that the injunction orders Honeywell to provide a different level of coverage than is stipulated in the Guaranty, and that this court-ordered coverage extends to too many people. On both matters, the issue revolves around difficulties of proof. And on both, we remand and ask the district court to clarify and modify its order. 48 The Guaranty obligates Honeywell to provide for insurance coverage equal to that which would have been available as of April 1, 1976. 8 It further provides that this coverage shall extend to a limited class of persons: (1) those who retired prior to divestiture, (2) those with at least ten years of service prior to divestiture, and (3) surviving spouses of the first two groups. In its September 2003 order granting the preliminary injunction, the district court specifically ordered that: 49 Defendant Honeywell International shall provide or cause to be provided ... the health insurance benefits and prescription drug program in place on August 31, 2002, as outlined in the 1999 Purolator Products Company Medical Plan for Certain Hourly Retirees formerly Employed by the Bendix Corporation for each individual listed as a Bendix Retiree in the March 2002 Mark IV/BAM purchase agreement. 50 Laforest II, 2003 WL 23180220, at . 51 On the issue of whether the district court ordered an incorrect level of coverage, defendants note the facial disparity between the Guaranty's stipulation of 1976-level coverage and the injunction's stipulation of 2002-level coverage. Plaintiffs concede that the Guaranty stipulates coverage equivalent to that provided as of April 1976. The Guaranty expressly states that the guaranteed level of benefits is that provided for in the Insurance Agreement entered into in 1974 — an agreement still in effect in April 1976. The Insurance Agreement, in turn, explains that [t]he scope and level of benefits shall be those outlined in the Bendix Corporation Hourly Segment Benefit Manual under the National Account Program as of August 1, 1974, for all employees as developed by the Indiana Blue Cross-Blue Shield plan. Neither party has been able to locate the Benefit Manual or the National Account Program referenced in the Insurance Agreement. 52 In lieu of this missing evidence, plaintiffs provided the district court with affidavits from eleven covered retirees, each explaining that his or her benefit levels had remained unmodified over the years. Plaintiffs also presented to the court a 1999 plan under which Purolator, a successor of Facet, provided benefits to the retirees in question — a plan expressly limited to persons covered by the Guaranty. Finally, plaintiffs provided the district court with a copy of the Summary Plan Description in place in 1980 (under Facet's watch), permitting the court to compare the level of benefits in 1999 to the level in 1980. After reviewing this evidence, the court determined that the level of benefits provided as of April 1, 1976 was equivalent to the level provided in the 1999 Purolator plan, which was the plan in place in 2002. Defendants do little to rebut this evidence, other than suggest that four of the eleven affidavits mentioned above suffer from defects, including the fact that two of the affiants retired after 1976 and admittedly suffer from memory loss. Nevertheless, because of the facial disparity between the Guaranty and the district court's injunction, we remand this case to the district court to modify the injunction such that it accurately reflects that the guaranteed level of benefits is the level in place on April 1, 1976. 53 In this regard, the district court may wish to engage in further fact-finding as to the 1976 level of benefits. We note that it is not implausible that the 1976 benefit level will comport with the 1999 Purolator plan. Indeed, that there is evidence that they had equivalent cost-sharing mechanisms is highly persuasive. We also find defendants' suggestion that plaintiffs are not entitled to coverage for particular prescriptions or medical advances that did not exist in 1976 to be a strained reading of the Guaranty. The inquiry into the level of benefits to which plaintiffs are entitled surely has a more general answer; if full prescription coverage was available in 1976, then full prescription coverage is the level to which plaintiffs are entitled today. 54 On the issue of whether the district court ordered coverage for too many people, defendants take issue with the court's use of the Bendix Retiree list in the March 2002 Mark IV/BAM purchase agreement. 9 Defendants contend that there has been no showing that the Bendix Retiree list coincides with the categories of persons specifically covered by the Guaranty. Indeed, defendants claim that preliminary investigation reveals that a number of persons on the list are definitely not covered by the Guaranty. According to defendants, these persons include those who have died, voluntarily opted-out of coverage, been deemed ineligible under the Guaranty, and received lump-sum pension benefits. Plaintiffs do not contest that some persons on the list are not eligible for benefits under the Guaranty. Indeed, plaintiffs suggest that they remain open to working with Honeywell and Motor Components to resolve any legitimate eligibility issues. Thus, although we affirm the issuance of the preliminary injunction, we remand so that the district court may make findings of fact as to who is legitimately due the protections of the Guaranty — and modify the injunctive relief accordingly.
55 Contrary to defendant's suggestion, the district court's injunction does not fail for lack of specificity. Although it is true that fairness requires that the litigants receive explicit notice of precisely what conduct is required, Lau v. Meddaugh, 229 F.3d 121, 123 (2d Cir.2000) (per curiam) (finding error in a district court's failure to memorialize an injunction in writing), fairness does not require a district court to resolve every possible inquiry or contingency that an injunction might raise. Honeywell received notice of what it was to do, what standard would guide its conduct, and the time frame in which to do it. On remand, the district court will clarify and modify its order as to who and what is covered by the Guaranty, but it need not specify any more precisely than it already has the mechanism by which Honeywell is to comply. 56 Further, the district court did not err in foregoing the requirement of a bond. Given that the court correctly granted summary judgment to plaintiffs on the issue of liability, it is undisputed that Honeywell is under a legal obligation to honor the Guaranty. Complying with this obligation cannot constitute harm to Honeywell, much less the sort of harm that would require the protective measure of a bond. See Doctor's Assocs., Inc. v. Stuart, 85 F.3d 975, 985 (2d Cir.1996). Therefore, because the district court did not err in granting summary judgment to plaintiffs, and because the court did not abuse its discretion in granting a preliminary injunction ordering Honeywell to comply with the Guaranty, we affirm both judgments — but remand for clarification and modification of the injunctive relief with respect to who and what is covered by that relief.