United States District Court, E.D. Tennessee
A. VARLAN CHIEF UNITED STATES DISTRICT JUDGE.
the Court is defendant's motion for summary judgment
[Doc. 27]. Plaintiffs responded in opposition to the motion
[Doc. 32], and defendant replied [Doc. 33]. For the reasons
explained below, defendant's motion will be granted and
this case will be dismissed.
are individuals who were employed at various times by
contractors for the Y-12 National Security Complex in Oak
Ridge, Tennessee (“Y-12”). These contractors
include Union Carbide, Martin Marietta, Lockheed Martin,
BWXT, Babcock & Wilcox, LLC, and Consolidated Nuclear
Security, LLC, among others (collectively
“contractors”). Defendant Consolidated Nuclear
Security, LLC (“CNS”) is the current contractor
operating and administering the healthcare plans for retirees
of the predecessor contractors.
contend that employees were attracted to positions with the
contractors, in part, because of the retirement program. They
assert that many employees accepted lower levels of
compensation, in comparison to employment they could have
obtained elsewhere, based on an understanding derived from
representations made by the contractors that they were
earning a valuable package of retiree benefits-including
healthcare benefits-which would provide security and
stability during retirement.
contractors entered into a series of agreements with
plaintiffs providing for terms and conditions of employment.
The agreements provide healthcare benefits, which include
medical, prescription, dental, vision, Medicare subsidy, life
insurance, and other related benefits. The agreements also
covered spouses and surviving spouses of retired employees,
as well as certain defined dependents. Generally, retirees,
their spouses, and their defined dependents that are entitled
to a pension under the pension plan are eligible for
healthcare benefits upon retirement.
the years, several different individual contracts were
executed that defined the healthcare benefits the employees
would receive. As each new contractor took over the previous
one, it adopted the provisions of these agreements. At no
time prior to January 1, 2015, were any of the terms of the
previous employment agreements, and specifically the
provisions of retiree healthcare benefits, ever rejected by
an incoming contractor.
the prior contractors adopted an early retirement program.
Plaintiffs contend the contractors represented to employees
that accepting early retirement would enable them to retain
their healthcare benefits and avoid application of any future
changes to the benefits. According to plaintiffs, this was a
powerful motivator for those eligible employees to accept
allege that during retirement seminars and exit interviews,
and more generally throughout their years of employment at
Y-12, employees were misinformed about the level of
healthcare benefits and out-of-pocket costs they would be
subjected to at the time they ended their employment. In
their complaint, plaintiffs detail a number of
representations made to them regarding the retirement
healthcare benefits. Those representations include, but are
not limited to, the following: (1) retirees “would be
able to keep the exact policy” they had as employees;
(2) “healthcare benefits would continue [after
retirement] at the levels they had been while” actively
employed; (3) “premium amount might increase
slightly”; (4) retirees “would have comparable
health care benefits through retirement”; (5)
“those under age 65 could continue in their retirement
plan after retirement”; (6) “[n]o changes were
expected”; (7) “group coverage managed by the
company would continue until . . . death”; (8)
“healthcare benefits could not be terminated”;
(9) the plan was “guarantee[d]”; (10) employees
“were told often and regularly that [they] would
continue to receive the same benefits for life” [Doc. 1
¶ 32; see, e.g., Doc. 32-1 pp. 22, 26, 45-46].
Plaintiffs contend that statements such as these induced
employees to believe that they would continue to receive
company-subsidized medical and prescription-drug benefits for
their lifetimes at the levels that were in place at the time
they retired. Plaintiff Charlene Edwards retired in 2006, and
plaintiff Betty Hatmaker retired in 2010.
1, 2014, CNS became the contractor responsible for operating
Y-12. On January 1, 2015, defendant made several changes to
the healthcare and welfare benefits of plaintiffs which
significantly altered the cost, coverage, and value of the
benefits. The change in benefits had the following effects on
plaintiffs: (1) increased premiums for medical and drug
prescription benefits; (2) significant reductions in the
level of coverage for medical services and prescription drug
benefits; (3) the inability to obtain or maintain alternative
medical and/or prescription drug coverage at a reasonable
cost due to their now advanced ages and impaired health
acknowledge that the contractors retained the ability to
reduce or terminate the retiree healthcare benefits at any
time. Plaintiffs, however, assert that employees and agents
of the previous contractors, acting in a fiduciary capacity,
made numerous misrepresentations regarding lifetime rights to
post-retirement healthcare benefits that would remain
unchanged from the levels they had as active employees.
Plaintiffs do not allege that CNS made misrepresentations
regarding their retirement benefits.
bring this action on behalf of Y-12 retirees and other
beneficiaries of the plans seeking to either restore their
healthcare benefits to the levels that existed prior to
January 1, 2015, or to be reimbursed for the value of the
increased out-of-pocket costs and the reduction in the level
of benefits as a result of the changes. Plaintiffs allege
that CNS breached its fiduciary duty arising under the
Employment Retirement Income Security Act
(“ERISA”), 29 U.S.C. § 1001, et
filed a motion to dismiss [Doc. 6], which the Court granted
with regard to each of plaintiffs' claims except for a
misrepresentation claim brought pursuant to 29 U.S.C. §
1132(a)(3) [Doc. 19]. Defendant now moves for summary
judgment on the remaining misrepresentation claim [Doc. 27].
Plaintiffs responded in opposition to the motion [Doc. 32],
and defendant replied [Doc. 33].