ALETA TRAUGER, UNITED STATES DISTRICT JUDGE.
Pending before the court is a Motion to Reconsider filed by Caterpillar, Inc. ("Caterpillar")
This is a class-action lawsuit brought on behalf of surviving spouses of former employees of Caterpillar who retired on or after March 16, 1998, and before January 10, 2005. Because the court has recounted the factual and procedural history of this case numerous times, familiarity with the facts will be assumed.
On June 27, 2007, the court denied Caterpillar's motion to dismiss, rejecting its arguments that the court lacked subject matter jurisdiction over the plaintiffs' LMRA and ERISA claims, that the plaintiffs could not maintain an action on behalf of a hypothetical group of "future" surviving spouses that could not be readily identified, and that the claims of current surviving spouses were moot. (Docket No. 77, at 3.) The court also found that, because the parties had presented plausible, but competing, interpretations of the contractual language of the retiree benefits plan with respect to the alleged intention to confer lifetime health benefits to surviving spouses, extrinsic evidence could be introduced to resolve the ambiguity. (Id., at 28.) However, because little discovery had been completed at that time, the court found that it was too early to determine whether, as a matter of law, the plaintiffs' benefits had vested and, if so, when they vested. (Id., at 28-29.)
On March 26, 2010, the court ruled on the plaintiffs' and Caterpillar's cross motions for summary judgment and granted and denied each in part. (Docket No. 262.) The portion of the collective bargaining agreement ("CBA") between Caterpillar and the UAW that addresses the retiree health benefits for the Kerns plaintiffs is the 1998 Group Insurance Plan ("GIP"). A subsection of the 1998 GIP is the Insurance Plan Agreement ("IPA"). (Docket No. 222-9 at 1-3.) Contrary to the finding at the motion to dismiss stage that the contract language was ambiguous, in the summary judgment memorandum opinion, the court found that the language in Section 5.15 of the 1998 GIP (Docket No. 222-9, at 61) that provided that health care benefits "will be continued following the death of a retired Employee for the remainder of the surviving spouse's life without cost" was "sufficient to unambiguously vest in the surviving spouse a right to lifetime `no cost' health benefits." (Id., at 35-36.) The court further found that, although it was not necessary to consider extrinsic evidence
Having concluded that lifetime benefits had vested for the surviving spouses and that Caterpillar had no viable affirmative defenses, the court turned to an analysis pursuant to Reese v. CNH Am. LLC, 574 F.3d 315 (6th Cir.2009), which "stands for the proposition that, even if the retiree has a vested right to lifetime health benefits from his employer, unless there is some exceptional language that dictates that benefits can `never vary,' that retiree is entitled to `lifetime benefits subject to reasonable changes.'" (Docket No. 262, at 27 (quoting Reese, 574 F.3d at 326).) The court concluded that, pursuant to Reese, the additional deductibles, co-insurance, and increased out-of-pocket costs were permissible, but held that Caterpillar's imposition of monthly premiums violated ERISA and the LMRA. (Id., at 39-41.) Accordingly, the court entered judgment for the plaintiffs on their claims related to Caterpillar's imposition of premiums. The summary judgment order resolved all liability issues between the plaintiffs and Caterpillar. (Id., at 47-48.) Still pending at the time of the court's March 26, 2010 summary judgment ruling was Caterpillar's October 16, 2008 appeal of the court's preliminary injunction order for a subclass of the Winnett plaintiffs. On June 22, 2010, the Sixth Circuit reversed this court's Winnett preliminary injunction order, finding that the claims of the subclass were barred by the statute of limitations. (Winnett Docket No. 470.)
After the Sixth Circuit issued its ruling, Caterpillar filed motions to reconsider in both Winnett and Kerns. (Winnett Docket No. 475; Kerns Docket No. 266.) In the Kerns motion, Caterpillar argued that, by the logic of the Sixth Circuit's decision in Winnett, the Kerns plaintiffs' claims were also barred by the statute of limitations. (Docket No. 280, at 15.) On January 12, 2011, this court rejected Caterpillar's argument, based on factual differences between the claims of the plaintiffs in Winnett and Kerns. In particular, the Winnett plaintiffs sought to maintain the level of benefits under the 1988 GIP, not the 1998 GIP, which led to a different determination of when the Kerns plaintiffs' claims accrued. (Id., at 16-17.)
The court also rejected Caterpillar's argument that the Sixth Circuit's intervening decision in Wood v. Detroit Diesel Corp., 607 F.3d 427, 428 (6th Cir.2010), justified a reconsideration of the court's ruling that the plaintiffs have a vested right to lifetime, premium-free health benefits under the 1998 GIP. (Docket No. 280, at 18 n.6.) The court concluded that, unlike in Wood — which found that, when various provisions of the agreements were read together, the only coherent interpretation was that plaintiffs are entitled to lifetime, capped health care benefits — this case has "no clearly conflicting language for the court to blend together, and, therefore, there is no basis for the court to reconsider its earlier ruling." Id. Accordingly, the court granted Caterpillar's motion to reconsider in Winnett based on the statute of limitations, but denied its motion in Kerns. (Docket No. 280.)
On August 20, 2014, the court ruled on Caterpillar's motion for summary judgment on damages issues, in which Caterpillar argued that it was not liable for the out-of-pocket expenses incurred by surviving spouses who canceled their Caterpillar insurance. (Docket No. 408.) The court denied the portion of Caterpillar's motion that the court construed as a motion to strike certain damages, holding that, under Section 301 of the LMRA, Caterpillar is liable for the cost of replacement insurance and out-of-pocket expenses incurred by
II. Legal Standard
While the Federal Rules of Civil Procedure fail to explicitly address motions to reconsider interlocutory orders, "[d]istrict courts have authority both under common law and Rule 54(b) to reconsider interlocutory orders and to reopen any part of a case before entry of final judgment." Rodriguez v. Tenn. Laborers Health & Welfare Fund, 89 Fed.Appx. 949, 959 (6th Cir.2004) (citing Mallory v. Eyrich, 922 F.2d 1273, 1282 (6th Cir.1991)); accord In re Life Investors Ins. Co. of Am., 589 F.3d 319, 326 n. 6 (6th Cir.2009). Thus, district courts may "afford such relief from interlocutory orders as justice requires." Rodriguez, 89 Fed.Appx. at 959 (internal quotations marks and brackets omitted). "Courts traditionally will find justification for reconsidering interlocutory orders when there is (1) an intervening change of controlling law; (2) new evidence available; or (3) a need to correct a clear error of law or prevent manifest injustice." Louisville/Jefferson Cnty., Metro. Gov't v. Hotels.com, L.P., 590 F.3d 381, 389 (6th Cir.2009) (citing Rodriguez, 89 Fed.Appx. at 959). This standard "vests significant discretion in district courts." Rodriguez, 89 Fed.Appx. at 959 n. 7.
III. Caterpillar's Motion to Reconsider
Caterpillar moves the court to reconsider its prior rulings on the basis that, in M & G Polymers USA, LLC v. Tackett, ___ U.S. ___, 135 S.Ct. 926, 190 L.Ed.2d 809 (2015), the Supreme Court abrogated Int'l Union, United Auto., Aerospace, & Agr. Implement Workers of Am. (UAW) v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983), upon which this court relied in its previous rulings. The plaintiffs counter that Tackett does not require a change in this court's previous rulings because this case involves express, unambiguous contract language that demonstrates the bargaining parties' intent to continue health care benefits for the lifetimes of the surviving spouses beyond the expiration of the 1998 GIP and that there is much extrinsic record evidence confirming that intent. They further argue that the court in this case did not apply the Yard-Man inferences that were overruled by Tackett.
A. The Supreme Court's
In Tackett, the Supreme Court held that "Yard-Man violates ordinary contract principles by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements," "distorts the attempt `to ascertain the intention of the parties,'" and "has no basis in ordinary principles of contract law." Tackett, 135 S.Ct. at 935 (quoting 11 R. Lord, Williston on Contracts § 30:2, 18 (4th ed. 2012)). Although the Supreme Court quoted with approval Yard-Man's statement
Id. at 937.
Justice Ginsburg's concurrence states as follows:
Id. at 937-38. The concurrence also clarifies that, although lower courts must not utilize Yard-Man's "thumb on the scale in favor of vested retiree benefits," contractual provisions such as the ones in the Tackett case — providing that retirees "will receive" health-care benefits if they are "receiving a monthly pension" or that a surviving spouse will "continue to receive [the retiree's health-care] benefits ... until death or remarriage" — are "relevant to this examination." Id. at 938 (citations omitted). Finally, the concurrence advises the following:
B. The Court's Ruling on Caterpillar's Motion to Dismiss
In ruling on Caterpillar's motion to dismiss, this court explained:
(Docket No. 77, at 24-25 (Motion to Dismiss Memorandum Opinion).)
Finding ambiguity in these provisions, the court concluded that extrinsic evidence of the parties' intentions could be introduced to resolve the ambiguity. (Id., at 25.) Although the court did discuss several Yard-Man inferences that pointed to an intent to vest — namely, language in the agreements that linked medical benefits to pension eligibility, the fact that retirement benefits are a form of delayed compensation, and the inference that retiree benefits continue as long as the requisite "status" of being a retiree is maintained — the court found that it was premature to consider extrinsic evidence because little discovery had been conducted at that point. (Id., at 25-29.) Accordingly, the court denied Caterpillar's motion to dismiss.
C. The Court's Ruling on Caterpillar's Motion for Summary Judgment
Although this court discussed the Yard-Man inferences in its motion to dismiss ruling, its summary judgment ruling does not rely on Yard-Man inferences or even cite the case. The court set forth its analytical framework as follows:
(Id., at 26 (quoting Reese, 574 F.3d at 321).)
For the sake of judicial economy, the court issued a single memorandum opinion on the cross motions for summary judgment in both Winnett and Kerns. In the portion of the court's summary judgment ruling that addressed the claims of the Winnett surviving spouse subclass (whose claims were governed by an earlier version of the GIP that had identical language in Section 5.15 as that contained in the 1998 GIP), the court concluded:
(Id., at 31-32.)
In the portion of the summary judgment ruling that addressed the Kerns plaintiffs' claims, the court similarly found that the identical language in Section 5.15 of the 1998 GIP — providing that health care benefits "will be continued following the death of a retired Employee for the remainder of the surviving spouse's life without cost" — was "sufficient to unambiguously vest in the surviving spouse a right to lifetime "no cost" health benefits." (Docket No. 262, at 36.) Responding to Caterpillar's argument that this language was accidentally left in the 1998 GIP and was not consistent with the agreement reached in the bargaining process, the court held as follows:
(Docket No. 262, at 36-17 n. 18.)
D. The Impact of
Tackett on the Court's Previous Rulings
The court's summary judgment ruling does not rely on, or even mention, the
Caterpillar argues that Tackett compels the court to reverse its finding that the surviving spouses have a vested right to lifetime, premium-free benefits because, "[v]iewed as a whole, the relevant 1998 labor contract language shows that at most, Plaintiffs' benefits `vested' for no more than the duration of the 1998 labor contract, and subject to the financial caps imposed in that contract for each `covered individual." (Docket No. 452, at 12.) To the contrary, numerous contractual provisions indicate the intention of the parties to vest benefits. For example, after a long list of specific amendments to the GIP, which the parties had negotiated, Section 3 of the 1998 IPA provided the following: "The provisions of the Group Insurance Plan as in effect on September 30, 1991 shall continue in effect until amended pursuant to the foregoing and thereafter to the extent not amended pursuant to the foregoing." (Docket No. 222-9, at 10 (emphasis added).) Section 9(a) of the 1998 GIP provides that "Termination of [the CBA] shall not have the effect of automatically terminating the Plan." (Docket No. 222-9, at 13.) Section 5.15 of the 1998 GIP provides: "Dependents' Coverage will be continued following the death of a retired Employee for the remainder of his surviving spouse's life without cost." (Docket No. 222-9, at 61.) Section 6.2(c) of the 1998 GIP provides: "Such Dependents' Coverage for any such surviving spouse ... will continue... for the remainder of her life without cost." (Docket No. 222-10, at 41.)
Thus, the court reiterates here its conclusion that the language in the 1998 GIP was "sufficient to unambiguously vest in the surviving spouse a right to lifetime "no cost" health benefits." (Docket No. 262, at 36.) Indeed, although Justice Ginsburg's concurrence in Tackett makes clear that "no rule requires `clear and express' language in order to show that parties intended health-care benefits to vest," Tackett, 135 S.Ct. at 938, the agreement between the parties in this case does, in fact, contain clear and express language of the parties' intention that this group of surviving spouses has vested health care benefits.
Furthermore, even if the contract language were ambiguous, the court has already concluded that the extrinsic evidence presented to the court "plainly supports the plaintiffs' position" that the benefits had vested. (Docket No. 262, at 36-17 n. 18.) The court has previously concluded that the letters Caterpillar undisputedly sent to the class members upon the death of their spouse, in which Caterpillar represented that health care coverage would continue at "no cost," supports a finding of vesting. (Id.; see
This previously cited extrinsic evidence also supports the court's rejection of Caterpillar's argument that the language regarding financial caps for each "covered individual" applied to surviving spouses, as opposed to retirees. (See Docket No. 280, at 11 n. 3 (reiterating the court's previous finding in favor of the surviving spouses subclass in Winnett on this issue).) Caterpillar's practice of not charging VEBA for surviving spouses' above-the-cap expenses is strong evidence that the parties intended the newly-imposed premium cap to apply to retirees, not to surviving spouses, and that the parties did, in fact, intend for surviving spouses to have lifetime, no cost coverage, as stated in the 1998 GIP.
Indeed, there is a plethora of additional extrinsic evidence in this case supporting a finding that the parties intended to vest in the surviving spouses a right to lifetime, no cost, health benefits, including inter alia:
In sum, the court reiterates its previous conclusion that the various provisions of the contracts at issue in this case, when read together, demonstrate unambiguously the parties' intention for the surviving spouses to have lifetime "no cost" health benefits. In the alternative, if the provisions cited by Caterpillar create ambiguity as to the parties' intentions, the extrinsic evidence before the court overwhelmingly supports the court's conclusion. Because the court finds nothing in the Supreme Court's Tackett decision that changes its previous rulings in this matter,
IV. The Plaintiffs' Motion to Reconsider
The plaintiffs argue that the court's conclusion in its March 26, 2010 summary judgment ruling that, although Caterpillar's imposition of monthly premiums violated ERISA and the LMRA, its imposition of additional deductibles, co-insurance, and increased out-of-pocket costs were lawful pursuant to Reese v. CNH Am. LLC, 574 F.3d 315 (6th Cir.2009) (Docket No. 262, at 39-41), should be reconsidered based on an intervening change of controlling law and to prevent a manifest injustice. In its summary judgment ruling, the court held that Reese "stands for the proposition that, even if the retiree has a vested right to lifetime health benefits from his employer, unless there is some exceptional language that dictates that benefits can `never vary,' that retiree is entitled to `lifetime benefits subject to reasonable changes.'" (Docket No. 262, at 27 (quoting Reese, 574 F.3d at 326).)
The plaintiffs argue that United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO-CLC v. Kelsey-Hayes Co., 750 F.3d 546, 554 (6th Cir.2014) reh'g granted and opinion vacated, 795 F.3d 525 (6th Cir.2015), "corrected some common
The first problem with the plaintiffs' motion is that the Sixth Circuit has vacated the Kelsey-Hayes opinion on the basis of Tackett and, thus, the case has no precedential value. The plaintiffs counter that Kelsey-Hayes was vacated on grounds independent of Reese, which leads to the second problem with the plaintiffs' motion — Kelsey-Hayes does not represent a change in controlling law. Kelsey-Hayes is not in conflict with Reese or this court's application of Reese. The "misapprehension" Kelsey-Hayes was correcting was that of the Kelsey-Hayes defendants, not Reese or courts applying Reese. In rejecting the argument of the Kelsey-Hayes defendants, the Sixth Circuit explained as follows:
Kelsey-Hayes, 750 F.3d at 554 (citations omitted).
The plaintiffs' real argument seems to be that the court misapplied Reese by interpreting it to mean that "all CBAs in the Sixth Circuit are always unilaterally alterable, regardless of a CBA's specific language," as the Kelsey-Hayes defendants interpreted it. Id. But this court did not assume that the 1998 GIP was unilaterally alterable as a matter of law. To the contrary, the court clearly considered the specific facts of the agreements between these particular parties:
(Docket No. 262, at 40.)
The court also rejects the plaintiffs' argument that Tackett is inconsistent with this court's conclusion that Caterpillar's imposition of costs (other than premiums) were lawful. (Docket No. 465 at 18-19.) The plaintiffs quote the following from Tackett: "Where the words of a contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance with its plainly expressed intent." Tackett, 135 S.Ct. at 933 (citation omitted). The plaintiffs argue that, because the "for the remainder of his surviving spouse's life without cost" language in the 1998 GIP is unambiguous, under Tackett, the court must interpret the meaning of the contract in accordance with those express terms. But as Justice Ginsberg's concurrence in Tackett reiterates, "[u]nder the cardinal principle of contract interpretation, the intention of the parties, to be gathered from the whole instrument, must prevail." Id. (internal quotation marks and citation omitted). The language the plaintiffs focus on in Section 5.15 of the 1998 GIP must be read together with the provisions in that same document that set forth out-of-pocket costs that the plaintiffs have repeatedly conceded were legitimately imposed costs. Reading the 1998 GIP as a whole, the additional charges are "reasonable" and ancillary under Reese.
Some disagree with the Sixth Circuit's position in Kelsey-Hayes that Reese does not represent a major change in Sixth Circuit retiree benefits case law. See, e.g., Reese v. CNH Indus. N.V., No. CV 04-CV-70592, 2015 WL 5679827 at n. 1 (E.D.Mich. Sept. 28, 2015) ("[T]he Reese panels appear to have changed the definition of `vested' inasmuch as they use that word to describe benefits that, while lasting for life, are subject to unilateral reduction.... Prior to those decisions, `vested' benefits referred to benefits that last forever at a fixed level.") (collecting Sixth Circuit cases stating that a unilateral reduction or modification of "vested" benefits would violate the LMRA). Indeed, the Supreme Court has held that, "[u]nder established contract principles, vested retirement rights may not be altered without the pensioner's consent. The retiree, moreover, would have a federal remedy under § 301 of the Labor Management Relations Act for breach of contract if his benefits were unilaterally changed." Allied Chem. & Alkali Workers of Am. v. Pittsburgh Plate Glass Co., 404 U.S. 157, 181 n. 20, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971). Nonetheless, although some might argue that Reese's "reasonable changes" analysis is inconsistent with prior Sixth Circuit and Supreme Court precedent, it is not necessarily inconsistent with Tackett. Unless the Supreme Court or the Sixth Circuit itself overrules Reese, this court is bound to follow it, as it has done in this case.
In conclusion, the court finds no basis for reconsideration of its conclusion that, pursuant to Reese, Caterpillar's imposition of additional deductibles, co-insurance, and increased out-of-pocket costs were "reasonable" charges and, as such, permissible under ERISA and the LMRA. Accordingly, the court will deny the plaintiffs' motion to reconsider.
For the foregoing reasons, the court will deny the motions to reconsider filed by Caterpillar (Docket No. 451) and Plaintiffs (Docket No. 464). All that remains of this