LACY THORNBURG, District Judge
THIS MATTER is before the Court on the Defendants' collective motion for summary judgment as to the post-1995 retired employees which compose Subclass B of this class action. In addition, the Plaintiffs moved for leave to supplement the record with an additional exhibit, a motion which is granted.
I. DEFENSE COUNSELS' REPRESENTATIONS AS TO "THE LAW OF THE CASE"
The Court first addresses the Defendants' recent claim that a ruling made by the undersigned in connection with the class certification issue constitutes "the law of the case." In the decision entered May 2, 2003, certifying this as a class action, the Court wrote:
The undersigned does not find the lack of commonality argued for by the Defendants.
For the purposes of this motion, what may or may not have been said during contract negotiations is of no moment because the language of the agreements is clear and unambiguous.
Memorandum of Opinion, filed May 2, 2003, at 12-13 (emphasis added). Defendants now claim that "this Court has already concluded that the underlying insurance agreements are `clear and unambiguous.' Given this finding by the Court, which is the law of the case, the Court cannot even consider extrinsic evidence for purposes of deciding the motion."
Defendants' Supplemental Reply Brief in Support of Motion for Summary Judgment as to Pre-1995 Retirees (Subclass A), filed March 26, 2004, at 1. In a footnote, however, the Defendants then admit that they have, indeed, relied on extrinsic evidence in support of their motion.
Id., at n. 1.
The Court finds that the omission of the language "for the purposes of this motion" is sanctionable conduct on the part of defense counsel. The meaning of the language in the May 2003 Opinion is beyond question. To delete the patent qualifying phrase in an argument addressed to the very Court which used it assumes that Court is capable of being misled as to the meaning of its own decisions.
Later in the same brief, defense counsel acknowledge that the qualifying language appeared in the earlier decision. Nonetheless, counsel argued that "[i]f the agreements were `clear and unambiguous' on May 2, 2003, . . . the agreements must be `clear and unambiguous' today[.]" Id., at 3 n. 2. This argument is equally disrespectful of the Court. The language used in the May 2003 Opinion related only to the motion for class certification, which was filed prior to discovery, and was based solely on the language used in the complaint.
The Court is aware that defense counsel do not normally practice in the Western District of North Carolina and, for that reason alone, will not, at this time, impose sanctions on counsel. They stand warned, however, against future such conduct before this Court.
II. SUMMARY JUDGMENT STANDARD OF REVIEW
Under the Federal Rules of Civil Procedure, summary judgment shall be awarded "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, . . . show there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." As the Supreme Court has observed, "this standard provides that the mere existence of
some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no
genuine issue of
material fact."
Bouchat v. Baltimore Ravens Football Club, Inc., 346 F.3d 514, 519 (4th Cir. 2003) (quoting Fed.R.Civ.P. 56(e) and Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986)). A genuine issue exists if a reasonable jury considering the evidence could return a verdict for the nonmoving party.
Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir. 1994) (citing Anderson, supra ).
A party opposing a properly supported motion for summary judgment "may not rest upon the mere allegations or denial of [his] pleadings," but rather must "set forth specific facts showing that there is a genuine issue for trial." Furthermore, neither "[u]nsupported speculation," nor evidence that is "merely colorable" or "not significantly probative," will suffice to defeat a motion for summary judgment; rather, if the adverse party fails to bring forth facts showing that "reasonable minds could differ" on a material point, then, regardless of "[a]ny proof or evidentiary requirements imposed by the substantive law," "summary judgment, if appropriate, shall be entered."
Bouchat, at 522 (quoting Fed.R.Civ.P. 56(e) and Felty v. Graves-Humphreys Co., 818 F.3d 1126, 1128 (4th Cir. 1987)) (other internal citations omitted). Moreover, in considering the facts for the purposes of this motion, the Court will view the pleadings and material presented in the light most favorable to the nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
III. FINDINGS OF FACT
On May 28, 2004, the undersigned denied the Defendants' motion for summary judgment as to Subclass A, the pre-1995 retirees. The Court hereby incorporates the findings of fact contained within that opinion and repeats only those findings essential to the ruling herein.
Subclass B includes class members (i) who retired between July 2, 1992, and July 30, 1995, and who did not elect to be treated as pre-addendum retirees; (ii) who retired after July 30, 1995; or (iii) who are the surviving spouses of these retirees. The representatives of Subclass B are Plaintiffs Johnson, Rogers and Riggs.
The May 1, 1995, Agreement was captioned "Group Benefits Program" and contained the following provisions:
COVERAGE WHEN YOU RETIRE
When you retire from active service with the Company, your benefits are administered as follows:
. . .
If you meet the eligibility for early, normal, or disability retirement under the Company's qualified pension plan and retire from active service,
you may continue your coverage as a retiree under the Medical Plan. . . . Provided that the cost of coverage under the Plan does not exceed $3,500 for pre-Medicare retirees or $1,900 for Medicare-eligible retirees, there will be no cost to you for coverage under the Medical Plan as a retiree. When you retire, you may also
maintain coverage for your eligible dependents, provided they were eligible dependents at the time of your retirement.
. . .
The surviving spouse of a deceased employee who has retired on or after April 29, 1974 and was eligible for a pension . . . shall be entitled to continue to receive the benefits of this medical plan until death or remarriage to the extent that such surviving spouse was entitled to such benefits as a dependent. . . .
. . .
The Agreement as it relates to Employee Benefits shall remain in force through May 1, 2000,. . . .
. . .
The Company and the Union agree to the following:
Any agreed to language in this agreement which might have been inadvertently omitted or changed from the 1990 SPD [summary plan description] because of a change in format, and
which can be mutually verified by both parties by reference to the Tentative Agreement signed on March 28, 1995, will be considered as agreed to and applicable language for this existing agreement.
Exhibit 9, attached to Plaintiffs' Response to Defendants' Motions for Summary Judgment, filed February 20, 2004, at MIV000067, 69-70, 74-75, 86, 99.
The Tentative Agreement referenced in the 1995 Agreement contained language that would "[d]elete the provision requiring future retirees (retiring after May 2, 1995) to pay $30 per month of medical premium." Exhibit 4, included in Appendix to Brief in Support of Defendants' Motion for Summary Judgment as to Post-1995 Retirees (Subclass B) ["Defendants' Appendix II"], filed January 30, 2004, at MIV000483. It also contained the following:
4. "FSAB"
Effective May 1, 1995 those employees
retiring during the term of this agreement shall be subject to a post retirement medical annual cost cap of $3500/pre-65 and $1900/post-65. Those employees selecting to retire within 90 days of May 1, 1995 shall be subject, if they so choose, to the pre-addendum agreement dated July 2, 1992.
. . .
18. Future Hires After May 1, 1995
. . .
E. Future hires will not be eligible for retiree medical.
Id., at MIV000485-86 (emphasis added). The pre-addendum agreement dated July 2, 1992, and referenced in the 1995 Tentative Agreement was in fact a "Memorandum of Agreement" entered into between the Union and the company which forestalled the closing of the Waynesville plant.
Exhibit 26, Deposition of James Carver, included in Defendants' Appendix to Motion for Summary Judgment as to Pre-1995 Retirees (Subclass A) ["Defendants' Appendix I"], filed January 30, 2004, at 63. Carver, the Union representative at the time, testified that, in essence, the Union "bought" their jobs by entering into the agreement.
Id. "I want[ed] it in writing to show [the Union] membership this will insure you that you have a job, because these caps will be null and void if they close the plant."
Id. The Agreement provided as follows:
The Company and Union Negotiating Committee agree to adopt an addendum to the existing contract, which shall incorporate the following:
1. A $2,800 annual cap for eligible individuals who retire and are under age 65.
2. A $1,300 annual cap for eligible individuals who retire and are 65 years of age or older.
3. A guarantee that no individual will be affected by the cap prior to July 2, 1995.
4.
A guarantee that this memorandum does not apply if the plant is closed.
5. An option for employees eligible to retire under the existing labor agreement to retire any time during this contract, or within the first 90 days of the effective date of the next contract, and to elect that their benefits be treated identically to the pre-addendum retirees.
6. Recognition that the establishment of caps for
future retirees is a proper subject for collective bargaining.
Exhibit 13, included in Defendants' Appendix I, at MIV000101 (emphasis added).
The 1995 Pension Plan contained the following provision:
It is anticipated that the Master [Pension] Plan will remain in effect indefinitely. However, as is customary with retirement plans of this type,
the right to amend, modify or terminate the Master Plan in full or in part at any time must be reserved by the Company and Mark IV provided that no amendment may reduce or eliminate benefits already accrued. If the Master Plan is ever terminated, the assets held by the trustee must be used on behalf of the participants as described in the Plan.
Exhibit 9, included in Defendants' Appendix I, at MIV005864. No such provision was contained within the employee benefits plan.
On January 14, 1997, the company and the Union entered into an "Effects Bargaining Agreement" in view the imminent closing of the Waynesville Dayco plant. Exhibit 22, included in Defendants' Appendix I, at MIV000247.
By ratifying the Effects Bargaining Agreement and accepting its provisions herein all employees do hereby agree to waive all claims against the company, present and future, as a result of
the March 31, 1998 termination of the Collective Bargaining Agreement, Effects Bargaining Agreement, Pension Agreement, Benefits Agreement, SUB Agreement, FASB and
etc. It is further agreed to by the parties that there will be no potential litigation as the result of this provision.
The only exception to this provision shall be the company's failure to honor any and all terms of the Effects Bargaining Agreement or any applicable benefit plan that continues past the contract termination. The parties expressly agree that nothing in this agreement is intended to waive, modify or limit any retiree's right to a pension or medical insurance, nor is it intended to waive, modify or limit such rights for any employee who is eligible to retire pursuant to the terms of the amended agreement.
. . .
Any employee previously retired from Dayco who was eligible for retiree medical coverage at the time of retirement, and who is presently covered as the spouse of an active Dayco employee shall be given a one time opportunity at the beginning of the employee's stay payment period to enroll in Dayco's present retiree medical program and election of appropriate coverage.
. . .
The established FASB retiree medical caps negotiated and agreed to during the 1995 collective bargaining negotiation
are not altered by this Effects Bargaining Agreement.
Id., at MIV000247-48, 252-53, 255 (emphasis added).
Peter Kohler, who worked in the human resources department at Dayco, testified that the company consistently reassured the Union that "FASB was an accounting issue and not a negative impact out of pocket chase of your monies." Deposition of Peter B. Kohler, attached to Plaintiffs' Response, at 93.
Yeah, it goes back to I guess what I've been saying is the theme of this whole thing is that FASB 106 was an accounting issue. And we explained to the union that we had to put contractual language in place that would address, I think we would refer to it as the Wall Street issue side of it, that the liabilities would be capped in such a way that it would not adversely impact Mark IV's stock, ability to borrow money, those type of things that we said in the speeches. And the union would say that they understand that and that they were — I remember them saying over and over they were willing to do anything they could to help the company because that union understood without the company, they did not exist. Ergo, it was not a confrontational type relationship. They just wanted to make sure that there was not a trap door in what they were agreeing to in order to help the company accomplish their goal.
Id., at 102. Kohler understood, as the negotiator for the company during the 1995 negotiations, that employees who retired under the 1995 agreement would not be required to pay premiums of costs exceeding the cap.
Id., at 108. Both the Union and the negotiating team had a mutual understanding to that effect.
Id. Kohler testified that the company and the Union both agreed that the cost caps for health insurance premiums were "imaginary, and they were more of an accounting issue than they were of a real issue that could be imposed."
Id., at 227. This was done by the company in order "to get the Union to agree to the Memorandum of Understanding."
Id. Kohler also knew why this was not specifically placed in writing in the Memorandum of Understanding.
It goes back to what I said earlier about just the general way that Waynesville company and union conducted business. They did not write a lot of specifics, but
more just the general theme. It was always two things: One, everyone relied more on the understanding and the intent of a contract, more-so than they did on the written word. And, two, it was a practice there, as in many unions, that if you put too much detail into an agreement, it often stops ratification from the nay-sayers in the union.
Id., at 227-28.
After the negotiation of the 1995 collective bargaining agreement, Dayco prepared a sheet captioned "Highlights of Tentative Agreement 1995" which was distributed to the Union membership for ratification purposes. Exhibit 3, included in Defendants' Appendix II. Included in the highlights was the phrase, "FASB Caps for Future Retirees will increase by 5% each year of the agreement." Id., at JT00286. This was done so that the amount of premium to be paid by Dayco would continue to increase with inflation thus insuring that the retirees would never have to contribute to those costs.
Jen Williamson worked as a research analyst for the Union in October 1999 and investigated complaints by Union members that Dayco had begun to charge retirees for health insurance benefits. Exhibit 17, Declaration of Jennifer Williamson Stolz, included in Defendants' Appendix II, at 00058. She reported in a memorandum that the
charges have been executed because of "cost caps" that were negotiated in a memorandum of agreement in 1992, which was added to the 1990 agreement[.] The company stated that these cost caps were implemented due to FASB 106, and the cost caps were guaranteed to not have any affect prior to July 2, 1995.
The memorandum of agreement also said it would no longer apply if the plant is closed. The idea, I am told, was that the cost caps could continue to be renegotiated,
and if the plant closed, then the retirees would not be stuck at a certain benefit level for the rest of their lives.
Id. (emphasis added).
IV. DISCUSSION
In the previously issued opinion denying summary judgment as to Subclass A, the undersigned concluded that the collective bargaining agreements clearly distinguished between active employees and retirees. Memorandum and Order, filed May 28, 2004, at 24. The Court also concluded that "the 1992 addendum clearly provided that caps would be eliminated if the plant were closed, which is exactly what occurred, albeit not during the life of the 1990 Agreement." Id., at 25. The undersigned also found that, as to the issue of duration of benefits for retirees, the various agreements were not clear and unambiguous. As a result, extrinsic evidence was properly considered and summary judgment was precluded. See, e.g., Devlin v. Empire Blue Cross Blue Shield, 274 F.3d 76, 85 (2d Cir. 2001), cert. denied, 537 U.S. 1170 (2003) ("Because of the ambiguity of the language, the ultimate determination of whether Empire promised lifetime benefits should be left to a trier of fact, likely assisted by extrinsic evidence to clarify the meaning of this ambiguous language."); Int'l Union, United Auto., Aerospace Agr. Implement Workers of America v. BVR Liquidating, Inc., 190 F.3d 768 (6th Cir. 1999) (Whether language is ambiguous is a question of law; however, if it is ambiguous, then extrinsic evidence may be considered.); Volkman v. United Transp. Fund, 73 F.3d 1047 (10th Cir. 1996); Clark v. Ryan, 818 F.2d 1102, 1105 (4th Cir. 1987) ("Because the disputed language is neither ambiguous nor uncertain, the district court's decision to admit parol evidence was error.").
The same conclusion applies to the issue of whether the caps under the 1995 Agreement were to be increased by five percent per year during the life of the collective bargaining agreement. For example, the 1992 addendum contained provisions that such caps would not be implemented until a later date, would not be implemented at all if the plant closed, and that "the establishment of caps for future retirees is a proper subject for collective bargaining." This language implies that caps were never intended to be enforced as to employees who retired under that agreement but that the issue could be revisited as to future retirees. Such language would have been unnecessary if the caps applied to all retirees. Indeed, the agreements allowed employees to elect to retire under the 1992 addendum, which had no caps, instead of the 1995 agreement. And, the 1995 agreement applied the caps only as to employees retiring during the term of the agreement.
The agreements are ambiguous as to when the caps would be applied and the 1992 addendum is ambiguous as to whether the caps would ever be applied in the event of plant closure. Moreover, the ratification sheet distributed to Union members who were voting for the 1995 collective bargaining agreement advised that the caps would be increased each year during the five year term of the agreement. Whether that increase was five percent each year or five percent during the life of the agreement is unclear from the language of the agreement itself, which is silent as to the issue, and from the language of the ratification "highlights." "Any ambiguity in a plan `is construed against the drafter of the plan, and it is construed in accordance with the reasonable expectations of the insured.'" Gallagher v. Reliance Standard Life Ins. Co., 305 F.3d 264, 268 (4th Cir. 2002) (quoting Bynum v. Cigna Healthcare, Inc., 287 F.3d 305, 313-14 (4th Cir. 2002)). The issue of whether caps were to be applied at all after plant closure and whether such caps would increase is far from clear and the Defendants are not entitled to summary judgment.
The only remaining issue is whether, under the terms of the 1995 plan, the co-payments made by retirees towards prescription drug costs were to be applied toward the out-of-pocket maximum to be paid in any given year by those retirees. The plan itself provides in pertinent part:
For more details on the benefits offered through United Healthcare of North Carolina, consult the separate literature provided by United Healthcare of North Carolina,
which should be considered incorporated into this description by reference.
. . .
As a participant in the Medical Plan, you receive benefits for eligible expenses which you incur for the care and treatment of you or your covered dependents. To understand: How benefits are paid, . . . and Coverage limitations or exclusions, be sure to consult the United Healthcare of North Carolina membership contract information provided to you upon enrollment in the Medical Plan.
. . .
This description is a simplified summary of your coverage, and it incorporates, by reference, the official insurance contracts and plan descriptions issued by the insurer, PHP. If you need to know more about your coverage, consult the literature provided by PHP when you enroll in the Plan, or see your local Human Resources representative.
Exhibit 9, attached to Plaintiffs' Response, at MIV000029-30, 37, 40-41. The Defendants do not dispute that there was an out-of-pocket maximum to be paid by each retiree on a yearly basis. They do dispute that any co-payments made by retirees for prescription drug expenses would be applied toward that maximum. The Plan itself is silent on the issue but clearly refers to the actual medical insurance agreement with PHP, which agreement is incorporated into the Plan. And, the Plaintiffs have presented evidence in the form of a memorandum sent in October 1995 to retirees which clearly and unambiguously provides that prescription co-payments are to be applied to the out-of-pocket maximum.
Exhibit 10, attached to Plaintiffs' Response, at JT00609. Indeed, in that memorandum, retirees are alerted to the fact that "A letter has been
sent to the physicians in Haywood and Jackson counties. The letter explains that they need to refund any copays to Dayco employees who have met their out-of-pocket maximum."
Id. The Court, therefore, finds that summary judgment as to this issue is also unwarranted.
V. ORDER
IT IS, THEREFORE, ORDERED that the Plaintiffs' motion to supplement the record is hereby GRANTED; and
IT IS FURTHER ORDERED that the Defendants' motion for summary judgment as to the post-1995 retirees, Subclass B, is hereby DENIED.