Grove v. Johnson Controls, Inc.

176 F.Supp.3d 455

William Grove, Sr, Virginia B. Grove, Sandra Palmieri, Michael G. Fuhrman, William Winter, Preston Himes, and Edward Myers, on behalf of themselves; and Floyd Mitzel, Maurice Kefauver, III, Harold G. Luckenbaugh, Wilmer C. Barrett, Larry Lehman, Gerald A. Young, and John C. Douglass, on behalf of themselves and others similarly situated ; and International Union United Automobile, Aerospace and Agricultural Implement Workers of America, Plaintiffs

v.Johnson Controls, Inc, Johnson Controls, Inc. Union Retiree Welfare Plan (Plan 570), Johnson Controls, Inc. Union Welfare Plan (Plan 565), and Does 1 through 20, Defendants.

Civil No. 1:12-CV-02622

United States District Court, M.D. Pennsylvania.

Signed March 31, 2016

Tybe A. Brett, Joel R. Hurt, McKean J. Evans, Pamina G. Ewing, Stephen M. Pincus, Feinstein Doyle Payne & Kravec, LLC, Pittsburgh, PA, William T. Payne, Feinstein Doyle Payne & Kravec, LLC, Aspinwall, PA, for Plaintiffs.

Alan R. Boynton, Jr., Brian F. Jackson, McNees, Wallace & Nurick, Harrisburg, PA, Bernard J. Bobber, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Milwaukee, WI, John F. Birmingham, Foley & Lardner LLP, Detroit, MI, Larry S. Perlman, Foley & Lardner LLP, Miami, FL, for Defendants.

MEMORANDUM

Sylvia H. Rambo, United States District Judge

In this civil action brought pursuant to the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, and the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 141, Plaintiffs allege that Defendants violated their rights to retiree health benefits. Presently before the court are the parties' cross-motions for summary judgment (Docs. 95 & 97), as well as Plaintiffs' motion to strike Defendants' objections to certain paragraphs of Plaintiffs' statement of material facts (Doc. 105). Upon consideration of the motions and for the reasons discussed herein, the court will deny Plaintiffs' motion to strike and partial motion for summary judgment and will grant Defendants' motion for summary judgment in its entirety.

I. Background

Plaintiffs Floyd Mitzel, Maurice Kefauver III, Harold G. Luckenbaugh, Wilmer C. Barrett, Larry Lehman, Gerald A. Young, and John C. Douglass (“Class Representatives”) filed this action on be half of themselves and similarly-situated groups of retirees (“Retirees”), including the additional individually-named Plaintiffs, who were previously represented by Plaintiff International Union United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) and its Local Union No. 1872 (together with UAW, the “Union”). (Doc. 85, ¶ 1.) By order dated December 3, 2014, the court certified six subclasses of plaintiffs, denoted as Subclasses A, B, C, D, E and F, grouping retirees into these subclasses based on their respective dates of retirement. (Doc. 88, pp. 8-10 of 10.) In that order, the court appointed Plaintiff Douglass as Class Representative for Subclass A; Plaintiff Young as Class Representative for Subclass B; Plaintiff Kefauver as Class Representative for Subclass C; Plaintiffs Luckenbaugh and Barrett as Class Representatives for Subclass D; Plaintiff Mitzel as Class Representative for Subclass E; and Plain tiff Lehman as Class Representative for Subclass F. (Id. )

Defendant Johnson Controls, Inc. (“Johnson Controls” or, with its predecessors in interest, “the Company”), is a Wisconsin corporation engaged in the business of manufacturing products and offering services related to energy and operational efficiency of buildings, automotive batteries, electronics, and interior systems for automobiles. (Doc. 95-1, ¶ 9.) Since 2005, Johnson Controls has operated a manufacturing plant in York, Pennsylvania (the “York Plant”) after acquiring it from York International Corporation (“York International”) via a merger. (Id. ) Defendants Johnson Controls, Inc. Union Retiree Welfare Plan and Johnson Controls, Inc. Union Welfare Plan (collectively, the “Plan”) are employee benefit plans within the meaning of ERISA. (Id. at ¶ 12.)

Every few years since 1973, the Union has negotiated a collective-bargaining agreement (“CBA”) with Johns on Controls or its predecessors relating to, inter alia , active and retiree health insurance benefits for both employees and former employees of the York Plant. (Doc. 95-1, ¶ 17.) Each CBA incorporated by reference a separate booklet, the “Group Insurance Program” (“GIP”), that specifically addressed health and welfare benefits. Throughout the years, these health benefits remained fairly consistent from agreement to agreement. However, in 2009, Johnson Controls unilaterally reduced retiree health benefits by instituting a $50,000.00 lifetime cap on benefits payable for each participant sixty-five years of age and older. (Doc. 95-1, ¶ 15.) As a result of the cap, some subclass members are no longer eligible for retiree healthcare benefits because they have reached the $50,000 lifetime coverage limit. (Id. at ¶16.)

A. The Agreements

The relevant CBAs in effect at the time the members of each subclass retired are set forth in detail below.

1. Subclass A

The CBAs and GIPs in effect prior to November 1, 1984 govern Subclass A, the members of which retired prior to this date.

a. The 1973, 1975, and 1978 CBAs

Beginning in 1975, the CBAs negotiated between the Union and the Company provided for health and welfare benefits through an insurance program that was described in the corresponding GIP. Article 35 of each CBA incorporated the GIP by reference “subject to all provisions of this Agreement.” (See, e.g. , Doc. 97-9, p. 125 of 169.) One such provision was the durational clause appearing in Article 37, which set forth the plan effective date and termination date. For instance, the 1973's durational clause provided as follows:

This Agreement shall become effective as of November 1, 1973 and shall remain in full force and effect until midnight October 31, 1975 and shall continue from year to year thereafter, unless at least sixty (60) days prior to November 1, 1975 either party gives written notice to the other of their intention to modify or terminate same.

(Doc. 97-4, p. 100 of 129.) With each new CBA, the parties would publish a new GIP to correspond with the effective period of that particular CBA.

b. The 1981 CBA

Similar to earlier versions of the CBA, the durational clause of the 1981 CBA provided as follows:

This Agreement shall become effective as of November 1, 1981 and shall remain in full force and effect until midnight October 31, 1984, and shall continue from year to year thereafter, unless at least sixty (60) days prior to November 1, 1984, either party gives written notice to the other of their intention to modify or terminate same.

(Doc. 97-9, pp. 142-43 of 195.) The CBA incorporated the 1981 GIP by reference:

The parties have provided for a Group Insurance Program in a separate booklet which is part of this Agreement as if set out in full herein, subject to all provisions of this Agreement.

(Doc. 97-9, p. 142 of 195.) As to medical benefits, the 1981 GIP stated, in pertinent part:

Employees who retire under the Normal, Early, or Disability Retirement Provisions of York Pension Plan No. 4 and their eligible dependents shall have the following benefits (as described in this booklet) continued after retirement at no cost:

-Hospital Expense Benefits

-Surgical Expense Benefits

-Medical Expense Benefits

-Diagnostic X-Ray & Laboratory Benefits

-Prescription Drug Benefits

Benefits NOT Continued After Retirement

Upon retirement, employees will no longer be insured for Accidental Death and Dismemberment, Survivor Income, Accident and Sickness, Long Term Disability, Vision Care or Dental Benefits.

(Id. at p. 69 of 79 (emphasis added).)

2. Subclass B

The CBAs and GIPs in effect from November 1, 1984 to October 31, 1996 govern the members of Subclass B, who re tired between those dates. The relevant provisions of those documents are provided below.

a. The 1984 and 1987 CBAs

As with prior versions, the 1984 CBA was effective from November 1, 1984 until midnight October 31, 1987 (Doc. 97-11, p. 97 of 141), and incorporated a GIP in a separate booklet “as if set out in full” therein (id. ). The 1984 GIP contained provisions related to termination of health coverage as follows:

Termination of Insurance

Your health insurance is continued until your death —unless you request termination of insurance or you do not make the required contribution for this plan.

And your dependents' health insurance will be continued—while you are living—until the date they no longer qualify as your eligible dependent , or until you request termination of dependent coverage or do not make the required contributions.

Continuation of coverages for your survivors

If you die after retirement, health coverage may be continued for your spouse and children, provided the required contributions are paid....

Your spouse will remain eligible until the earlier of death or remarriage. Your children will remain eligible until your spouse is no longer eligible, or the children are no longer eligible (due to age, marriage, etc.), whichever is earlier.

Plan termination

In the event this group plan is terminated, coverage for you and your dependents will end immediately.

(Doc. 97-12, pp. 94-95 of 175 (emphasis added.) The 1984 GIP further stated that there was no overall limit on medical cove rage or a lifetime maximum under the Plan. (Id. at p. 88 of 175.) The 1984 GIP, however, did set a $15,000 lifetime limit “for combined mental and nervous conditions, psychiatric disorders, alcoholism and drug abuse expenses of each individual.” ( Id. ) In addition, retirees under the age of sixty-five were required to pay a $15.50 monthly contribution toward their health benefits, but the requirement was waived for retirees over sixty-five years of age. (Id. at p. 93 of 175.) The 1984 GIP also included a section entitled “Future of the Plans,” which reads:

Although the company expects and intends to continue the plan indefinitely, it reserves the right to modify,

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