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Cole v. Arvinmeritor

December 16, 2008

ROBERT COLE, JOHN ADAMS, AND RICHARD LANTER, ON BEHALF OF THEMSELVES AND A SIMILARLY SITUATED CLASS; AND INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, PLAINTIFFS-APPELLEES,
v.
ARVINMERITOR, INC., ROCKWELL AUTOMATION, INC., AND ROCKWELL INTERNATIONAL CORPORATION, DEFENDANTS - APPELLANTS.
BERNARD FAUST, LOIS LAST, DAVID REAMER, AND CHARLES SCHMIDT, ON BEHALF OF THEMSELVES AND A SIMILARLY SITUATED CLASS; AND INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, PLAINTIFFS-APPELLEES,
v.
ARVINMERITOR, INC., ROCKWELL AUTOMATION, INC., AND ROCKWELL INTERNATIONAL CORPORATION, DEFENDANTS - APPELLANTS.



Appeal from the United States District Court for the Eastern District of Michigan at Detroit. Nos. 03-73872; 04-73656-Nancy G. Edmunds, District Judge.

The opinion of the court was delivered by: Ronald Lee Gilman, Circuit Judge

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206

Argued: October 28, 2008

Before: MARTIN and GILMAN, Circuit Judges; DOWD, District Judge.*fn1

OPINION

This is an action by retired employees and their union against Rockwell International Corporation and its successor companies. The plaintiffs sued the defendants under § 301 of the Labor Management Relations Act (LMRA) and the Employee Retirement Income Security Act (ERISA) to enforce what they contend was a promise by the defendants in the applicable collective bargaining agreements (CBAs) to provided retirees and their surviving spouses with lifetime healthcare benefits. Finding that the CBAs contained such enforceable promises, the district court granted summary judgment to the plaintiffs. For the reasons set forth below, we AFFIRM the judgment of the district court.

I. BACKGROUND

A. Factual Background

Rockwell International Corporation, a diversified manufacturer that supplied parts to the automotive industry, owned industrial plants throughout the United States. In 1997, Rockwell spun off its automotive division, which became Meritor Automotive, Inc. Meritor merged with Arvin Industries, Inc. in 2000, forming ArvinMeritor, Inc. ArvinMeritor manufactures automotive integration systems, modules, and components for manufacturers of passenger vehicles, commercial trucks, trailers, and original equipment. Between the late 1970s and 2003, either Rockwell or ArvinMeritor closed the twelve plants at issue in this litigation, which were located in Illinois, Indiana, Kentucky, Michigan, Ohio, and Wisconsin.

All of the hourly employees at the closed plants were represented by the United Automobile, Aerospace, and Agricultural Implement Workers of America (the UAW). Rockwell/ArvinMeritor and the UAW have engaged in collective bargaining for decades, producing a succession of CBAs. The CBAs typically covered a three-year period and followed a consistent format, including a master agreement (the National Agreement) and several supplemental agreements addressing different topics that were expressly incorporated into the National Agreement. For example, the Supplemental Insurance Agreement (always Exhibit B) and its accompanying Insurance Program (always Exhibit B-1) addressed the health insurance coverage at issue in this case. Company-paid retiree healthcare benefits were established in 1962, with Rockwell paying half the cost. In the 1965 CBA, Rockwell agreed to pay the full cost of retiree healthcare benefits. The core benefits language at issue in this case first appeared in the 1968 CBA and continued in the 1971, 1974, 1977, 1980, 1982, 1985, 1988, 1991, 1994, 1997, and 2000 CBAs. Over those years, benefits improved in various ways, but the core language regarding retiree healthcare coverage remained essentially unchanged. See Cole v. ArvinMeritor, Inc., 515 F. Supp. 2d 791, 795 (E.D. Mich. 2006) (summary judgment order).

In 1991, Rockwell began to require that retirees participate in a mandatory mail-order and generic-drug program. But this change did not fundamentally alter benefits; it simply changed the mechanism for buying drugs and actually resulted in a savings to retirees. See Cole v. ArvinMeritor, Inc., 516 F. Supp. 2d 850, 873 (E.D. Mich. 2005) (preliminary injunction order).

The UAW agreed to a change in benefits in 2000 that adversely affected employees who retired from the Oshkosh plant before 2001. As a result, affected employees' copayments for generic drugs went from $3 to $5, while their copayment for brand-name drugs more than doubled-from $3 to $7.

In 2001, ArvinMeritor unilaterally froze Medicare Part B premium reimbursements at 1999 levels for closed-plant retirees age 65 or older. The practical impact of this change for retirees was an increase of hundreds of dollars per year in the net amount of their Medicare premiums. Later, in 2003, ArvinMeritor unilaterally eliminated dental, vision, and hearing-aid coverages for retirees. It also increased deductibles, copays, and out-of-pocket maximums. Finally, ArvinMeritor announced plans in 2005 to eliminate all healthcare benefits as of the next year for all retirees, dependents, and surviving spouses age 65 or older.

B. Procedural Background

In April 2003, the UAW brought suit against ArvinMeritor and Rockwell in the United States District Court for the Eastern District of Michigan. It asserted claims under § 301 of the LMRA, 29 U.S.C. § 185, and § 501(a)(1)(B) of ERISA, 29 U.S.C. § 1132(a)(1)(B). Later, the UAW amended its complaint to add Robert Cole, John Adams, and Richard Lanter, retirees from Rockwell plants in Ashtabula, Ohio, Detroit, Michigan, and Winchester, Kentucky respectively, as representatives for a class of similarly situated retirees (and surviving spouses) from eleven different plants. The lawsuit was based on ArvinMeritor's unilateral reduction of benefits and increase in outof-pocket expenses for retirees in 2003.

In September 2004, the UAW, along with class representatives Bernard Faust, Lois Last, David Reamer, and Charles Schmidt, filed a substantially identical lawsuit in the Eastern District of Michigan on behalf of retirees and surviving spouses from Rockwell's plant in Oshkosh, Wisconsin. That case was consolidated with the Cole case in October 2005. The district court eventually certified a class of approximately 2,900 UAW-represented retirees (along with spouses and eligible dependents) from the defendants' plants in Illinois, Indiana, Kentucky, Michigan, Ohio, and Wisconsin who currently or formerly received retiree healthcare benefits from the defendants.

While the lawsuit was proceeding, ArvinMeritor made the announcement in 2005 that it was eliminating all healthcare benefits for retirees age 65 or older. This caused the plaintiffs to file a motion for a preliminary injunction to force ArvinMeritor to continue providing those benefits. After an evidentiary hearing, the district court granted the preliminary injunction. Cole, 516 F. Supp. 2d at 880. The court found that "the contracting parties' intention to provide lifetime retiree health coverage" was expressed in the "explicit language" of the CBAs. Id. at 866, 876. According to the district court, this intention was confirmed by: (1) contractual context; (2) written "lifetime" assurances to employees, retirees, and surviving spouses by multiple company officials; (3) decades of booklets and summary plan descriptions (SPDs) promising that healthcare benefits "will be continued during retirement" for both retirees and eligible dependents; (4) numerous explicit oral assurances of "lifetime" coverage made by company officials in various plants over the decades; (5) the early expression of the intent for benefits to continue "for life" in the 1971 Rockwell benefits book; and (6) the retiree insurance cards issued in 1972, 1973, and 1982; and (7) the testimony and declarations of witnesses demonstrating that the negotiated security of lifetime pension and healthcare benefits was widely known, understood, and communicated for decades among union-represented employees, supervisory employees, and company and union officials who negotiated the CBAs and the plant-closing agreements. Id. at 866-67.

The district court also applied a series of precedents that it referred to as the Golden-Meridian decisions. These are Sixth Circuit and Eastern District of Michigan cases that the court characterized as "mirror images of the instant case," some addressing the actual UAW-Rockwell CBAs at issue, some addressing "virtually identical" CBA language, and some addressing "similar" language. All of the decisions enforced promises of lifetime retiree healthcare benefits. See Cole, 516 F. Supp. 2d at 865.

Following the entry of the preliminary injunction, each side moved for summary judgment, with the defendants essentially repeating the arguments they had made at the preliminary-injunction stage. The district court granted the plaintiffs' motion, denied the defendants' motion, and permanently enjoined the defendants from altering or canceling retiree healthcare benefits. Cole, 515 F. Supp. at 794. Quoting the language of the CBA, the court concluded:

This language, tying pension status to retiree health benefits-and providing that the health benefits "at the time of retirement . . . shall be continued thereafter" for retirees and "any eligible dependants"-constitutes an enforceable contractual promise of lifetime retiree health benefits to accompany lifetime pension benefits . . . . The Court thus interprets the relevant CBAs as unambiguously promising health benefits for each retiree's lifetime and for the lifetimes of each retiree's eligible dependents and surviving spouses.

Id. at 800-01.

The court found that the lifetime promises were confirmed ...


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