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Kerns v. Caterpillar Inc.

United States District Court, M.D. Tennessee, Nashville Division

August 20, 2014

JUDITH K. KERNS, et al., Plaintiffs,
CATERPILLAR INC., Defendant/Third-Party Plaintiff, INTERNATIONAL UNION, UAW, et al Third-Party Defendants


ALETA TRAUGER, District Judge.

This matter is before the court on Caterpillar's Motion for Summary Judgment on Damages Issues. (Docket Nos. 387-38). This motion has three sections. The first section seeks judgment for any claims raised by surviving spouses who are themselves Caterpillar employees. This section is moot, as plaintiffs' class counsel have conceded these individuals are not Kerns class members and have withdrawn claims for damages or other relief sought on their behalf. The court construes the second section as a motion to strike plaintiffs' claim for damages for replacement insurance and out-of-pocket medical expenses. This portion of the motion will be denied. The third section is a motion for summary judgment on the claims raised by twelve individuals that Caterpillar argues have not produced sufficient evidence to withstand summary judgment. This portion of the motion will be granted as to four plaintiffs. As to the eight remaining plaintiffs, the court will hold defendant's motion in abeyance and invite plaintiffs to file a cross motion for summary judgment for those individuals.


All that remains of this litigation is to determine plaintiffs' damages. Because the court has recounted the factual and procedural history of this case numerous times, familiarity with the facts will be assumed. This case and Winnett v. Caterpillar (Case No. 3:06-0235) are related but not consolidated cases. By prior order dated March 26, 2010, this court granted the UAW's motions to dismiss Caterpillar's Third-Party Complaint against it in both Kerns and Winnett . (Docket No. 263.) Subsequently, through a series of decisions from this court and the Sixth Circuit, the court dismissed the Winnett plaintiffs' claims and closed that case. (Docket No. 326-27.)

The Kerns plaintiffs are surviving spouses of former employees of Caterpillar who retired on or after March 16, 1998, and before January 10, 2005. The court has already entered judgment as a matter of law for the Kerns plaintiffs, finding Caterpillar liable for violations of Section 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185, and Section 502(a)(1)(B) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) for improperly charging premiums to the class of individuals whose spouses died after the ratification of the 2004 Labor Agreement.[1] (Docket No. 262-63.) The court found that the 1992 unilateral implementation had explicitly "provided surviving spouses with vested no cost medical benefits." (Docket No. 262.) The court found that other costs Caterpillar had imposed on these plaintiffs, such as new deductibles, co-insurance, and increased out-of-pocket costs were permissible under Reese v. CNH America LLC, 574 F.3d 315 (6th Cir. 2009).


The plaintiffs' claims are brought under § 301 of the LMRA and § 502(a)(1)(B) of ERISA. Section 301 of the LMRA states: "[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter... may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." 29 U.S.C. § 185(a). Section 502(a)(1)(B) of ERISA states that a "civil action may be brought by a participant or beneficiary to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132(a)(1)(B).

Summary judgment standard

Federal Rule of Civil Procedure 56(c) requires the court to grant a motion for summary judgment if "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." If a moving defendant shows that there is no genuine issue of material fact as to at least one essential element of the plaintiff's claim, the burden shifts to the plaintiff to provide evidence beyond the pleadings, "set[ting] forth specific facts showing that there is a genuine issue for trial." Moldowan v. City of Warren, 578 F.3d 351, 374 (6th Cir. 2009); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). "In evaluating the evidence, the court must draw all inferences in the light most favorable to the [plaintiff]." Moldowan, 578 F.3d at 374.

"[T]he judge's function is not... to weigh the evidence and determine the truth of the matter, but to determine whether there is a genuine issue for trial." Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986)). But "the mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient, " and the plaintiff's proof must be more than "merely colorable." Anderson, 477 U.S. at 249, 252. An issue of fact is "genuine" only if a reasonable jury could find for the plaintiff. Moldowan, 578 F.3d at 374 (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp ., 475 U.S. 574, 587 (1986)).

I. Motion for Summary Judgment as to Surviving Spouses Who Are Themselves Caterpillar Employees

Caterpillar's current motion for summary judgment on damages first seeks judgment on the claims of individuals who fall within the class definition in this action, but who the Company maintains are not entitled to damages because, although they are surviving spouses of Caterpillar retirees, they are also themselves Caterpillar employees entitled to their own "employee coverage" under the Company's health insurance plan. (Docket No. 387-1.) In plaintiff's response, class counsel assert that they had asked Caterpillar for information about this class of employees, but only obtained the requested details through reading Caterpillar's motion. Having now reviewed the information supplied by the motion, class counsel concede that these individuals are not entitled to relief on the basis of being a surviving spouse of a Caterpillar retiree. Accordingly, class counsel withdraw the claim that these individuals are Kerns class members and all claims for damages or other relief sought on their behalf. (Id.)[2] Any issue related to these individuals is moot.

II. Motion to Strike Damages for Replacement Insurance and Out-of-Pocket Medical Expenses

A. Damages Available Under ERISA

Second, although Caterpillar concedes that individuals who paid premiums to maintain their Caterpillar health insurance are entitled to be reimbursed for costs of those premiums, Caterpillar now seeks summary judgment on the claims of twelve class members who cancelled their Caterpillar insurance because of the imposition of premiums and now seek damages for the cost of obtaining substitute coverage and reimbursement for out-of-pocket healthcare costs that would have been covered if Caterpillar had honored its agreement. Caterpillar characterizes these damages as extra-contractual consequential damages and asks this court to find that these damages cannot be recovered under the LMRA or ERISA. See Simpson v. Ernst & Young, 879 F.Supp. 802, 825 (S.D. Ohio 1994) ("In the context of ERISA, compensatory and punitive damages are often referred to as extra-contractual damages, not being available under the terms of a benefit plan.").

Caterpillar quotes Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985), in which the Supreme Court stated that

the statutory provision explicitly authorizing a beneficiary to bring an action to enforce his rights under the plan- §502(a)(1)(B)... says nothing about the recovery of extra-contractual damages, or about the possible consequences of delay in the plan administrators' processing of a disputed claim. Thus, there really is nothing at all in the statutory text to support the conclusion that such a delay gives rise to a private right of action for compensatory or punitive relief.

Id. at 144. Although the language Caterpillar quotes from Russell discusses the types of damages available under §502(a)(1)(B), the Court's holding in Russell actually related to a different section of ERISA, § 1109(a). The Russell Court only discussed § 502(a)(1)(B) for the purpose of demonstrating that its conclusion about the scope of damages available under § 1109(a) was "buttressed by the absence of any provision for the recovery of extra-contractual damages in § [502(a)(1)(B)][3]...." Int'l. Union UAW Local 91 v. Park-Ohio Indus., Inc., 876 F.2d 894, 1989 WL 63871 at *6 (6th Cir. 1989) (unpublished). The Sixth Circuit explained in its unpublished Park Ohio decision:

Although the Supreme Court expressly limited its opinion to consideration of § 1109(a) and § [502(a)(2)], several circuits have extended the reasoning of Russell to preclude extra-contractual damages in cases brought under other subsections of § [502(a)].... [W]e find Russell controlling and join the other circuits which have held that the language and structure, as well as the legislative history, of § [502] prohibit the allowance of such damages.... Accordingly, we affirm the district court's ...

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