Appendix — Sprague v. General Motors Corp.
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No.
OFECE OF THE vLeNK
IN THE
Supreme Court of the United States
OCTOBER TERM, 1997
ROBERT D. SPRAGUE, ef al.,
Petitioners,
Vv.
GENERAL MoTorRS CORPORATION,
Respondent.
Petition for a Writ of Certiorari to the
United States Court of Appeals
for the Sixth Circuit
APPENDIX TO
PETITION FOR WRIT OF CERTIORARI
RAYMOND C. FAY
Counsel of Record
CHRISTOPHER G. MACKARONIS
BELL, BoyD & LLOYD
1615 L Street, N.W., Suite 1200
Washington, D.C. 20036
(202) 466-6300
April 1998 Counsel for Petitioners
WILSON - Eres PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001
TABLE OF CONTENTS
APPENDIX A:
Opinion, U.S. Court of Appeals, Sixth Circuit,
Sprague v. General Motors Corp., 133 F.3d 388
(January 7, 1998) ‘en banc) ....................................
APPENDIX B:
Opinion, U.S. Court of Appeals, Sixth Circuit,
Sprague v. General Motors Corp., 92 F.3d 1425
(August 14, 1996)
APPENDIX C:
Final Judgment, U.S. District Court, Eastern Dis-
trict of Michigan, Southern Division, Sprague v.
General Motors Corp. (August 4, 1994)
APPENDIX D:
Opinion and Order, U.S. District Court, Eastern
District of Michigan, Southern Division. Spraque
v. General Motors Corp., 857 F. Supp. 1182 (July
18, 1994) seam alte reset |
APPENDIX E:
Opinion and Order, U.S. District Court, Eastern
District of Michigan, Southern Division, Spraque
v. General Motors Corp., 843 F. Supp. 266 (Feb-
ruary 2, 1994) ............. sesitdidedaeulcdedediaeat
APPENDIX F:
Order, U.S. District Court, Eastern District of
Michigan, Southern Division, Sprague v. General
Motors Corp. (April 9, 1992) ..................
APPENDIX G:
Order, U.S. District Court, Eastern District of
Michigan, Southern Division, Sprague v. General
Motors Corp. (November 4, 1991)
Page
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TABLE OF CONTENTS—Continued
APPENDIX H:
Opinion and Order, U.S. District Court, Eastern
District of Michigan, Southern Division, Sprugue
v. General Motors Corp., 768 F. Supp. 605 (July
et Remo PEER ae |
APPENDIX I:
Order, U.S. Court of Appeals, Sixth Circuit,
Sprague v. General Motors Corp., 102 F.3d 204
(November 7, 1996) ............... faceitetadiaicalpanabaaa cite
APPENDIX J:
Statutes and Regulations Involved: Employee Re-
tirement Income Security Act of 1974 (“ERISA”),
29 U.S.C. §§ 1002, 1022, 1102, 1132; Code of Fed-
eral Regulations, 29 C.F.R. §§ 2520.102 et seq.
Page
224a
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_APPENDIX A
UNITED STATES COURT OF APPEALS
SIXTH CIRCUIT
Nos. 94-1896, 94-1897, 94-1898, 94-1937
RoBERT D. SPRAGUE, et al.,
Plaintiffs-A ppellees /
Cross-A ppellants,
Vv.
GENERAL Motors CorPorRATION,
Defendant-A ppellant
Cross-Appellee.
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit
No. 90-70010—John Feikens, District Judge
Argued April 23, 1997
Decided Jan. 7, 1998
Before: MARTIN, Chief Judge: LIVELY. MERRITT,
NELSON, RYAN, BOGGS, NORRIS. SUHRHEINRICH,
SILER, BATCHELDER, DAUGHTREY. MOORE, and
COLE, Circuit Judges.
NELSON, J., delivered the opinion of the court. in
which RYAN, BOGGS, NORRIS. SUHRHEINRICH.
SILER, BATCHELDER. and DAUGHTREY, JJ.. joined.
2a
LIVELY, (pp. 406-08) and MERRITT, JJ. (p. 408),
delivered separate opinions concurring in part and dis-
senting in part. MARTIN, C.J. (pp. 408-16), delivered
a separate dissenting opinion, in which MOORE and
COLE, JJ., joined.
OPINION
DAVID A. NELSON, Circuit Judge.
This is a purported class action in which the plaintiffs
—retired employees of the defendant, General Motors
Corporation—allege that GM violated the Employee Re-
tirement Income Security Act of 1974, 29 U.S.C. $§ 1001
et seq. (“ERISA”), by denying them fully “paid-up” life-
time health care benefits. The district court certified a
class of some 50,000 employees who had taken early re-
tirement. but the court declined to grant class status to
about 34,000 “general retirees” who had retired in accord-
ance with the company’s normal criteria. As to the gen-
eral retiree plaintiffs, the court held that the benefits in
question did not vest under the pertinent plan documents.
As to the early retirees, however, the district court held
that each of the 50,000 members of the class had entered
into a separate contract that called for the benefits in ques-
tion to be furnished for life at no cost to the recipient.
In the alternative, the court ruled that GM was estopped
to rely on the terms of the plan documents to defeat the
claims of any early retiree.
We shall affirm the judgment of the district court as to
the general retirees, but reverse the court’s certification of
the class of early retirees. Insofar as the merits of the
claims asserted by the named plaintiffs are concerned, we
conclude that the claims fail as a matter of law.
3a
I
A
In 1961 General Motors began paying part of the cost
of health insurance for its salaried retirees ' and their sur-
viving spouses. Three years later GM assumed the full
cost of basic health insurance for its salaried retirees, and
in 1968 it extended this benefit to surviving spouses as
well. (In the interest of simplicity, further reference to
surviving spouses will generally be omitted. )
In addition to basic health insurance, GM offered its
salaried retirees supplemental coverage under what was
called the Comprehensive Medical Expense Insurance Pro-
gram. Participants in this optional program were required
to pay a share of the premiums, and co-payment was re-
quired for certain medical services. There were also annual
deductibles.
Prior to 1985 the health care benefits were provided
through arrangements with private insurers. The insurers
issued each covered person a certificate of insurance de-
scribing the terms and conditions of the underlying policy.
GM became fully self-insured in 1985. At that time
the company prepared a document, entitled “The General
Motors Health Care Insurance Program for Salaried Em-
ployees,” that set forth the terms and conditions of GM’s
self-insured health care program. The district court found
that this document, together with subsequent documents
announcing changes in coverage, comprised GM’s health
care benefits plan from and after 1985.* The new plan gave
1As used here, the term “salaried retirees” signifies non-union
GM employees who had been recciving salaries, rather than hourly
wages, at the time they retired, All of the plaintiffs are either
salaried retirees or the surviving spouses of salaried retirees.
* Although the content of the plan was not static, this fact has no
relevance here; the district court found, and we arcree, that al!
versions clearly reserved to GM the right of amendment or termina-
4a
participants a choice between traditional fee-for-service
coverage and enrollment in a managed care organization.
GM continued its supplemental coverage program, short-
ening the name to the Comprehensive Medical Expense
Program.
GM has long made it a practice to inform its salaried
employees and retirees of their health care coverage by
providing them booklets containing summaries of the com-
pany’s health insurance policies and programs. Prior to
1974 GM put out a booklet entitled “The GM Insurance
Program for Salaried Employees.” After ERISA took effect
in 1974 the booklet became “Highlights of Your GM Ben-
efits.” Beginning in 1977 GM also issued a_ booklet
called “Your Benefits in Retirement.” Each of these pub-
lications went through a series of different editions.
A number of the booklets contained language inform-
ing plan participants that the health care plan called for
GM to pay health insurance costs during retirement:
* “If you retire .. . and are eligible to receive retire-
ment benefits under the provisions of the GM Retire-
ment Program for Salaried Employees, you may keep
your basic hospital, surgical and medical expense
coverages in effect. ... GM will pay the full monthly
premium or subscription charge for such coverages.”
The General Motors Insurance Program for Salaried
Employees (1968). The 1971 version was nearly
identical.
* “Hospital-Medical Coverages: Your basic cover-
ages will be provided at Corporation expense for your
lifetime. . . .” Highlights of Your GM Benefits
(1974).
tion. We shall therefore refer to a single GM “plan,” recognizing
that this is something of a simplification.
Sa
* “Your basic health care coverages will be pro-
vided at GM’s expense for your lifetime. . . .” Your
Benefits in Retirement (1977).
* “General Motors pays the full cost of any basic
health care coverages that are continued for most
retired employees and for eligible surviving spouses
and children of deceased retirees.” Your Benefits in
Retirement (1977).
However, most of the booklets also put plan partici-
pants on notice of GM’s right to change or terminate the
health care plan at any time:
* “General Motors believes wholeheartedly in this
Insurance Program for GM men and women, and
expects to continue the Program indefinitely. How-
ever, GM reserves the right to modify, revoke, sus-
pend, terminate, or change the Program, in whole or
in part, at any time. . . .”. The General Motors In-
surance Program for Salaried Employees (1965,
1968, and 1971).
* “General Motors Corporation reserves the right to
amend, change or terminate the Plans and Programs
described in this booklet.” Your GM Benefits (1985).
@ «
The Corporation reserves the right to amend, mod-
ify, suspend, or terminate its benefit Plans or Pro-
grams by action of its Board of Directors.” Your
Benefits in Retirement (1985).
B
For more than two decades GM has engaged in sys-
tematic reductions in the size of its salaried workforce.
In this connection the company has launched special early
retirement programs designed to induce salaried workers
to retire before reaching normal retirement age. The in-
ducements have included, among other things, offers to
provide pension benefits to early retirees at levels not
reduced to reflect the longer periods over which such
6a
benefits can be expected to accrue. Some of the early
retirement programs were company-wide initiatives, while
others applied to a particular plant, division, or group of
plants or divisions.
Salaried employees who accepted early retirement were
often asked to sign documents evincing their acceptance
of the terms of the particular program under which they
were retiring. From 1974 until 1984 GM utilized a so-
called “short form” statement of acceptance. This docu-
ment typically included language along the following lines:
“Management has discussed with me the possibility
of retiring under the Special Early Retirement provi-
sions of the General Motors Retirement Program for
Salaried Employees. I have evaluated the benefits
applicable to me under the provisions of the Program
and am agreeable to accepting Special Early Retire-
ment..."
In 1984 GM adopted the “long form” statement of
acceptance. It typically read, in part, something like this:
“Management has discussed with me the option of
continuing my employment with General Motors or
accepting an immediate special retirement under the
Special Retirement provisions of the General Motors
Retirement Program for Salaried Employees. I have
evaluated the benefits applicable to me under the pro-
visions of the General Motors Corporate Wide Special
Separation Program and have decided to accept
them.
I am satisfied with the terms of the special retirement
offer and accept this offer voluntarily with full knowl-
edge of its significance, including the fact that by
accepting it I waive any claim in any way connected
with my separation from employment with General
Motors. I acknowledge that no prior representations,
7a
promises or agreements relating to my employment
and retirement have been made by General Motors
which are contrary to this agreement and that the
special retirement offer and my acceptance of the spe-
cial retirement offer constitute the entire and only
agreement between me and General Motors. I un-
derstand that I shall not be eligible for recall to work
and shall have no further right to employment with
General Motors Corporation or any of its subsid-
laries.”
Both forms had numerous variants, but all stated in
essence that the early retiree had “reviewed the benefits
applicable” and “acceptf{ed] them.” In return for such
benefits, the early retirees agreed to waive certain causes
of action they might have had against GM.
Not all early retirees signed a statement of acceptance.
Some merely signed a “statement of intent” to retire, while
others apparently signed nothing.
In the course of explaining its special early retirement
programs, GM made numerous oral and written repre-
sentations about the health care beenfits available to early
retirees. Most of the early retirees participated in exit
interviews where a particular early retirement program
was described. These interviews were conducted by plant
supervisors, members of the benefits staff, and others.
Many of the early retirees also received documents sum-
marizing applicable retirement benefits. These summaries
often informed retirees that their health insurance would
be paid by GM for life. Again, however, such documents
sometimes put the retirees on notice of GM’s right to
change benefits. Certain summaries advised. for example,
that “General Motors Corp. reserves the right to amend,
change or terminate the Programs described.”
Some early retirees received individualized letters about
early retirement programs. And a small number of early
retirees explicitly asked GM representatives about future
8a
changes to health care benefits. The answers given, it
seems, were accurate—benefits could be changed in the
future.
C
Late in 1987 GM announced that early in the following
year significant changes would become effective in health
care coverage for both salaried employees and retirees.
In the case of plan participants who elected traditional
fee-for-service coverage, the changes included an annual
deductible of $200 for individuals and $250 for families.
Fee-for-service participants were required to make 20%
co-payments on medical services, up to an annual maxi-
mum co-payment of $500. By reason of these two changes,
fee-for-service plan participants could find themselves re-
sponsible for paying as much as $700 a year (with indi-
vidual coverage) or $750 (with family coverage) that
would previously have been paid by GM.
These were not the only changes made to the health
care plan for salaried employees and retirees. Vision and
hearing aid coverages were eliminated, for example, while
there were cost-sharing increases for participants in the
Comprehensive Medical Insurance Program. At the same
time, however, some benefits and coverages were im-
proved.
D
The present lawsuit was commenced in August of 1989
by 114 salaried retirees who challenged the legality of the
changes to the health care plan that took effect in 1988.
The main thrust of the plaintiffs’ complaint was that GM
had bound itself to provide salaried retirees and their
spouses basic health coverage for life, entirely at GM’s
expense. The right to such coverage vested upon retire-
ment, according to the plaintiffs, so the coverage could
never be changed or revoked.
Seven separate causes of action were pleaded: (1) fail-
ure to maintain the written plan documentation required
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by ERISA; (2) violation of the health care plan; (3)
breach of fiduciary duty; (4) breach of contract; (5)
equitable or promissory estoppel; (6) failure to supply
requested information; and (7) failure to comply with the
requirements for summary plan descriptions. The named
plaintiffs purported to represent a class of some 84,000
similarly-situated individuals, about 50,000 of whom were
early retirees and 34,000 of whom were general retirees.*
The district court entered partial summary judgment in
favor of GM after making the following rulings:
* the plaintiffs’ benefits did not vest under the terms
of the welfare plan, Sprague v. General Motors
Corp., 768 F.Supp. 605, 610-11 (E.D. Mich. 1991)
(“Sprague I”);
* the summary plan descriptions generally put the
plaintiffs on notice of GM’s right to amend or termi-
nate the plan, id.; and
* the plaintiffs had no claim for breach of fiduciary
duty, GM not having acted in a fiduciary capacity
when amending the plan, id. at 612.
After Sprague I, the district court allowed the early
retirees to proceed on a bilateral contract theory and al-
lowed everyone to proceed on an estoppel theory. The
procedural course of the litigation was further shaped by
the following pretrial rulings:
* the plaintiffs were not entitled to a jury trial,
Sprague v. General Motors Corp., 804 F.Supp. 931
(E.D. Mich. 1992);
3 The term “early retirees” refers to salaried, non-union employees
who agreed to retire between 1974 and 1988 under one of GM’s
special early retirement programs. The term “general retirees”
refers to salaried, non-union employees who “voluntarily retired,
either at age 65 or before, and were able to do so without GM’s
consent, pursuant to the terms of the General Motors Retirement
Program for Salaried Employees.” Sprague v. General Motors Corp.,
843 F.Supp. 266, 269 (E.D. Mich. 1994).
10a
* the general retirees could not proceed as a class;
and
* the early retirees could proceed as a class pursuant
to Rule 23(b)(2), Fed. R. Civ. P.
Following a lengthy bench trial, the district court made
these rulings on the merits:
* GM was found to have made a bilateral contract
with each early retiree to vest health care benefits
at retirement, Sprague v. General Motors Corp., 843
F.Supp. 266, 299 (E.D. Mich. 1994) (“Sprague
Il’);
* these bilateral contracts were held to be enforce-
able as ERISA plans or as modifications to the gen-
eral plan, id.*;
* GM was held not to be estopped from changing
the health care benefits of the general retirees, to
whom it made no promises to vest benefits, Sprague
v. General Motors Corp., 857 F.Supp. 1182, 1188-
89 (E.D. Mich. 1994) (“Sprague IIT’);
* GM was held to be estopped from changing the
health care benefits of the early retirees based on the
oral and written representations it made to them, id.
at 1190-92; and
* GM was enjoined during this appeal from making
further adverse changes to the health care benefits
of the prevailing plaintiffs, id. at 1192-93.
In August of 1994 the district court entered a final
judgment embodying all of its previous rulings. The plain-
tiffs and GM perfected timely appeals, and each of the
* After Sprague /I, the plaintiffs voluntarily dismissed their claims
for failure to supply requested information and failure to comply
with the requirements for summary plan descriptions. Pursuant
to stipulation, the claim arising from the alleged failure to maintain
a written plan instrument was dismissed with prejudice.
lla
aforementioned rulings was challenged by one side or the
other. The appeals were consolidated, and a three-judge
panel of this court affirmed the rulings in favor of the early
retirees and remanded the case for reconsideration of the
issues (except the plaintiffs’ jury demand) on which the
district court had held for GM. See Sprague v. General
Motors Corp., 92 F.3d 1425 (6th Cir. 1996). A majority
of the active judges of this court subsequently voted to
rehear the case en banc and the panel decision was
thereby vacated. 102 F.3d 204 (6th Cir. 1996). Supple-
mental briefs having been filed, and the case having been
argued before the full court, we are ready to issue our
final decision.
II
In certifying a class of 50,000 early retirees, the district
court concluded that the class satisfied the four prerequi-
sites Of Rule 23(a), Fed. R. Civ. P. (numerosity, com-
monality, typicality, and adequacy of representation )° and
that the action could be maintained under Rule 23(b)(2).°
The class was then divided into four subclasses, as per-
5 Rule 23(a) reads as follows:
“Prerequisites to a Class Action. One or more members of a class
may sue or be sued as representative parties on behalf of all only
if (1) the class is so numerous that joinder of all members is
impracticable, (2) there are questions of law or fact common to the
class, (3) the claims or defenses of the representative parties are
typical of the claims or defenses of the class, and (4) the repre-
sentative parties will fairly and adequately protect the interests
of the class.” Rule 23(a), Fed. R. Civ. P.
*“Class Actions Maintainable. An action may be maintained as
a class action if the prerequisites of subdivision (a) are satisfied,
and in addition:
(2) the party opposing the class has acted or refused to act
on grounds generally applicable to the class, thereby making
appropriate final injunctive relief, or corresponding declaratory
relief with respect to the class as a whole. . . +” Rule 23(b) (2),
Fed. R. Civ. P.
12a
mitted by Rule 23(c)(4). The subclasses consisted of
(1) early retirees who signed “long form” statements of
acceptance of early retirement, (2) those who had signed
“short form” statements of acceptance, (3) those who had
signed only “statements of intent” to retire early, and (4)
those for whom no relevant documents could be found.
(As we have said, the court refused to certify the general
retirees as a class.) GM appeals the certification of the
class of early retirees, while the plaintiffs appeal the dis-
trict court’s refusal to certify a class of general retirees.
Although we will reverse a class certification decision
only if the district court abused its discretion, Schachner
v. Blue Cross & Blue Shield of Ohio, 77 F.3d 889, 895
(6th Cir.), cert. denied, US. 297 BAX.. 373,
136 L.Ed.2d 114 (1996), a district court may not certify
any class without “rigorous analysis” of the requirements
of Rule 23. General Tel. Co. v. Falcon, 457 U.S. 147,
161, 102 S.Ct. 2364, 2372, 72 L.Ed.2d 740 (1982). No
class that fails to satisfy all four of the prerequisites of
Rule 23(a) may be certified, and each class meeting those
prerequisites must also pass at least one of the tests set
forth in Rule 23(b). In re American Med. Sys., Inc., 75
F.3d 1069, 1079 (6th Cir. 1996).
We conclude that the district court’s refusal to certify
a class or sub-class of general retirees was unexceptionable
as far as the plaintiffs are concerned. Ironically, perhaps,
the general retirees may have been better-suited for class
treatment than the early retirees. The general retirees, not
having received individualized inducements to retire, base
their claims on the plan itself and the summary plan de-
scription booklets—documents common to all salaried
retirees. But by the time it made a certification decision,
the district court had rejected the primary claim of the
named general retiree plaintiffs. For reasons we shall
explain presently, we believe that the court acted correctly
in doing so. The plaintiffs have no basis for complaining
of a refusal to certify a proposed class where the repre-
OO
ORES | Se REM EE gt ee ee ent eS Te Ae Se Ek ee Ne ee eT a ee ee
l3a
sentatives of the class cannot prevail on the merits, and
the defendant, GM, is not contesting the decision not to
certify a class of general retirees.
A
We turn now to the class that was certified—the early
retirees. With regard to Rule 23(a), we shall confine our
analysis to the commonality and typicality requirements.
The commonality requirement deals with shared ques-
tions of law or fact. Although Rule 23(a) (2) speaks of
“questions” in the plural, we have said that there need
only be one question common to the class. American
Med. Sys., 75 F.3d at 1080. It is not every common
question that will suffice, however: at a sufficiently ab-
stract level of generalization, almost any set of claims can
be said to display commonality. What we are looking for
is a common issue the resolution of which will advance
the litigation.
When this case began, the claims of all members of the
purported class, both general retirees and early retirees,
did share certain common issues. All salaried retirees’
health care benefits were governed by the same welfare
plan, and the proper interpretation of the plan was at
issue. Similarly, GM issued a common set of summary
plan descriptions the significance of which was at issue as
well. By the time the district court took up the certifica-
tion question, however, these common questions had al-
ready been decided. The district court did not certify the
class until after its decision in Sprague I, where the court
ruled (a) that the plan unambiguously reserved GM’s
right to amend or terminate the plan, and (b) that the
summaries did not change the reservation of this right.
The issues that remained after Sprague I were anything
but common. Sprague I, as we have said, permitted the
early retirees to proceed on a bilateral contract theory and
l4a
an estoppel theory.’ Neither theory was susceptible to
Class-wide treatment. The premise of the bilateral contract
theory was that GM had made an individual “side deal”
with each early retiree. Each putative side deal involved
any pertinent document the retiree might have signed—
and the statements of acceptance, as we have seen, said
nothing more about health insurance than that the early
retiree accepted the “applicable” benefits—as well as any
pertinent representations GM might have made to the
retiree, whether orally, in writing, or both. A retiree
might have signed a “long form” statement of acceptance,
or a “short form,” or a “statement of intent” to retire, or
nothing at all. He might have heard GM officials speak
about the special early retirement program at a group
meeting, or might have seen a program summary compiled
by GM, or might have had a one-on-one meeting with his
supervisor or with a GM benefits person. He might have
retired from a particular plant in a particular division and
been given a particular set of representations, or he might
have retired from a different plant in a different division
and been given a completely different set of representa-
tions. Proof that GM had contracted to confer vested
benefits on one early retiree would not necessarily prove
that GM had made such a contract with a different early
retiree.
The plaintiffs’ estoppel theory was even less susceptible
to class-wide treatment. An estoppel claim requires proof
of what statements were made to a particular person, how
the person interpreted those statements, and whether the
person justifiably relied on the statements to his detriment.
See Part IV, infra; Armistead v. Vernitron Corp., 944
F.2d 1287, 1298 (6th Cir. 1991). Because of their focus
7 After Sprague I, the plaintiffs’ claims for failure to maintain
a written plan, failure to provide requested information, and failure
to comply with summary plan decription requirements remained
temporarily intact. Although these counts might have raised poten-
tially common questions, they were eventually dismissed. See note
4, supra.
;
:
i aanceeieeiciitliiiiiaiiiiaiiiaiidl
15a
on individualized proof, estoppel claims are typically in-
appropriate for class treatment. See Jensen v. SIPCO,
Inc., 38 F.3d 945, 953 (8th Cir. 1994) (estoppel “must
be applied with factual precision and therefore is not a
Suitable basis for class-wide relief”), cert. denied, 514
U.S. 1050, 115 S.Ct. 1428, 131 L.Ed.2d 310 (1995).
GM’s statements to the early retirees were not uniform.
Among other things, the Statements varied (1) based on
the person making the representation, (2) based on the
particular special early retirement program that applied,
(3) from facility to facility, and (4) from time to time.
Given the wide variety of representations made, there
must have been variations in the early retirees’ subjective
understandings of the representations and in their reliance
on them. Some retirees might have interpreted GM’s
statements to mean that their benefits were vested. Others
might have understood that their benefits were subject to
change. Some early retirees might have relied on GM’s
statements about health care benefits, while for others the
statements might have made no difference at all in the
decision to retire early.
Given these myriad variations, it seems to us that the
plaintiffs’ claims clearly lacked commonality. See Ameri-
can Med. Sys., 75 F.3d at 1081 ( granting mandamus to
reverse a class certification where each claim turned on
issues of reliance, causation, and damages that were
peculiar to each class member). Because each plaintiff's
claim depended upon facts and circumstances peculiar to
that plaintiff, class-wide relief was not appropriate.®
8 The majority opinion in Bittinger y. Tecumsch Products Co., 123
F.3d 877 (6th Cir. 1997) (a case decided after the instant opinion
was circulated to the en banc court) does not purport to limit the
holding of American Med. Sys. Unlike American Med. Sys., the
Bittinger case did involve a question of law or fact common to the
class: relying on the same collective bargaining agreement, each
class member in Bittinger claimed that the agreement contained a
guaranty of lifetime, fully-funded benefits. Bittinger, 128 F.3d at
884. No such common question was before the district court when
class certification was granted in the case at bar. Even if all of the
l6a
B
The class of early retirees fails the typicality test of
Rule 23(a) as well. This test “limit[s] the class claims to
those farily encompassed by the named plaintiffs’ claims.”
American Med. Sys., 75 F.3d at 1082 (citation and
quotation omitted).
“Typicality determines whether a sufficient relation-
ship exists between the injury to the named plaintiff
and the conduct affecting the class, so that the court
may properly attribute a collective nature to the
challenged conduct. ... A necessary consequence
of the typicality requirement is that the representa-
tive’s interests will be aligned with those of the repre-
sented group, and in pursuing his own claims, the
named plaintiff will also advance the interests of the
class members.” /d. (citing 1 Herbert B. Newberg
and Alba Conte, 1 Newberg on Class Actions, § 3-
13, at 3-75, 76 (3d ed. 1992) (internal quotations
omitted) ).
In pursuing their own claims, the named plaintiffs could
not advance the interests of the entire early retiree class.
Each claim, after all, depended on each individual’s par-
ticular interactions with GM—and these, as we have said,
varied from person to person. A named plaintiff who
proved his own claim would not necessarily have proved
anybody else’s claim. See Retired Chicago Police Ass’n
v. City of Chicago, 7 F.3d 584, 597 (7th Cir. 1993)
(typicality requirement was not satisfied where different
groups of class members received different representa-
tions), cert. denied, US. , 117 S.Ct. 305, 136
L.Ed.2d 222 (1996). The premise of the typicality re-
quirement is simply stated: as goes the claim of the
named plaintiff, so go the claims of the class. That prem-
ise is not valid here.
other requirements of Rule 23 had been met here, the absence of
commonality would have necessitated a denial of class certification.
ee
Soe Re eC REMDR ES UA, ele, Cap eee! eM CERF ON Cane. oa gc TB Te eo eee
17a
The course of this litigation in the district court amply
demonstrates, we think, that typicality was lacking. The
district court took testimony from more than three hun-
dred class members in an effort to obtain a purportedly
representative sample of the representations and commu-
nications made by GM. That it was necessary to do so
Strongly suggests to us that class-wide reliew was im-
proper.
We conclude that the district court abused its discre-
tion in certifying the class of early retirees. Some class
members may have signed the same form, some may have
received the same documents, or some may have attended
the same meetings about the early retirement program,
but taken as a whole the class claims were based on
widely divergent facts. Class-wide relief was awarded here
without any hecessary connection to the merits of each
individual claim. Rule 23 does not permit that result.®
The claims of the 114 named plaintiffs are still before
the court, however, regardless of whether these individ-
uals represent the purported class. We see no reason not
to address the merits of the named plaintiffs’ claims.
Il
A
The plaintiffs’ first theory of recovery is that GM com-
mitted a breach of the terms of the plan documents when
it implemented the changes in 1988. Under the plan doc-
uments, according to the plaintiffs, their health care bene-
fits were vested—and having vested, the benefits could not
be altered without the plaintiffs’ consent.
The district court rejected this theory, holding that the
plan documents, including the summary plan descriptions,
effectively reserved a right on GM’s part to amend or
terminate the plan. The court’s holding, in our view, was
* The district court’s use of subclasses did not solve the problem.
Subclasses are not a substitute for compliance with Rule 23.
18a
manifestly correct; we shall affirm the summary judgment
that was entered in favor of GM on this issue.
ERISA distinguishes between pension plans and welfare
plans. A pension plan “provides retirement income to
employees” or “results in a deferral of income by em-
ployees for periods extending to the termination of . . .
employment or beyond. .. .” 29 U.S.C. § 1002(2). Wel-
fare plans, in contrast, include plans “established or. . .
maintained for the purpose of providing . . . medical,
surgical, or hospital care or benefits... .” Id. § 1002(1).
Because the plan in question here provided health insur-
ance to its participants, it was a welfare plan. See Musto
v. American Gen. Corp., 861 F.2d 897, 901 n. 2 (6th
Cir. 1988) (a medical insurance plan is a welfare plan),
cert. denied, 490 U.S. 1020, 109 S.Ct. 1745, 104 L.Ed.2d
182 (1989).
Welfare plans are specifically exempted from vesting
requirements to which pension plans are subject. 29
U.S.C. § 1051(1). Therefore, employers “are generally
_ free under ERISA, for any reason at any time, to adopt,
modify, or terminate welfare plans.” Curtiss-Wright Corp.
v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 1228,
131 L.Ed.2d 94 (1995) (citing Adams v. Avondale
Indus., Inc., 905 F.2d 943, 947 (6th Cir.), cert. denied,
498 U.S. 984, 111 S.Ct. 517, 112 L.Ed.2d 529 (1990)).
Employers may vest welfare benefits if they choose to do
so, however. See /nter-Modal Rail Employees Ass'n v.
Atchison, Topeka & Santa Fe Ry. Co., US. ’
, 117 S.Ct. 1513, 1516, 137 L.Ed.2d 763 (1997)
(an employer may “contractually cede[ ] its freedom” not
to vest benefits). See also In re White Farm Equip. Co.,
788 F.2d 1186, 1193 (6th Cir. 1986), where we held
that “the parties may themselves set out by agreement or
by private design, as set out in plan documents, whether
retiree welfare benefits vest, or whether they may be
terminated.” To the same effect see Boyer v. Douglas
Components Corp., 986 F.2d 999, 1005 (6th Cir. 1993).
rremeerenr-seeeemmmniiiiaciasinaiaiatiaiiaiiaaitaiiiiiiil
19a
To vest benefits is to render them forever unalterable.
Because vesting of welfare plan benefits is not required
by law, an employer’s commitment to vest such benefits
is not to be inferred lightly; the intent to vest “must be
found in the plan documents and must be stated in clear
and express language.” Wise v. El Paso Natural Gas Co.,
986 F.2d 929, 937 (5th Cir.), cert. denied, 510 U.S. 870,
114 S.Ct. 196, 126 L.Ed.2d 154 (1993); see also In re
Unisys Corp. Retiree Med. Benefits ERISA Litig., 58
F.3d 896, 902 (3d Cir. 1995) (same); Gable v. Sweet-
heart Cup Co., Inc., 35 F.3d 851, 855 (4th Cir. 1994)
(same), cert. denied, 514 U.S. 1057, 115 S.Ct. 1442,
131 L.Ed.2d 321 (1995). It is the plaintiffs’ burden to
prove GM’s intent to vest. Jd.
The plaintiffs have not seriously disputed that the plan
itself permitted GM to amend or terminate benefits.’ In-
Stead the plaintiffs focus on the plan summaries, which
must “be written in a manner calculated to be understood
by the average plan participant, and shall be sufficiently
accurate and comprehensive to reasonably apprise such
participants and beneficiaries of their rights and obliga-
tions under the plan.” 29 U.S.C. § 1022(a)(1).
In Edwards v. State Farm Mut. Auto Ins. Co., 851 F.2d
134, 136 (6th Cir. 1988), we held that “statements in a
summary plan are binding and if such statements conflict
with those in the plan itself, the summary shall govern.”
Application of the Edwards principle, the plaintiffs say,
compels a judgment in their favor. We disagree.
The principle announced in Edwards was based on
ERISA’s directive that plan administrators furnish sum-
mary plan descriptions to participants and beneficiaries.
This requirement did not become generally effective until
1977. See Musto, 861 F.2d at 904. We could not hold
GM liable for violations of a statutory requirement based
1° The 1985 plan expressly stated that “fa Iny rate of payment by
the enrollee and any other terms and conditions of the Program ma,
20a
on actions taken prior to the effective date of that require-
ment. If the plaintiffs have any cause of action based on
GM’s pre-1977 summaries, it is probably not one based on
ERISA. It appears likely that only the booklets issued in
1977 and thereafter are relevant to the inquiry." We shall
assume that all of the booklets issued in 1977 or later
were intended to serve as summary plan descriptions.
Most of the summary plan descriptions unambiguously
reserved GM’s right to amend or terminate the plan. For
example:
* “General Motors Corporation reserves the right to
amend, change or terminate the Plans and Programs
described in this booklet.” Your GM Benefits (1984).
* “The Corporation reserves the right to amend,
modify, suspend, or terminate its benefit Plans or
Programs by action of its Board of Directors.” Your
Benefits in Retirement (1985).
The plaintiffs counter by pointing out that these sum-
maries also told them that their health coverage would be
paid “at no cost to” them and “for [their] lifetime[s].”
Such language, they argue, created an ambiguity within
the summaries that must be resolved by extrinsic evidence.
We have rejected this argument in the past, and we
reject it again now. We see no ambiguity in a summary
plan description that tells participants both that the terms
of the current plan entitle them to health insurance at no
cost throughout retirement and that the terms of the cur-
rent plan are subject to change.
11 The plaintiffs argue that the summary plan description require-
ment was phased in beginning in 1974, and that only employers who
sought some sort of temporary exemption were excused from immc-
diate compliance. GM, they contend, never proved that it had such
an exemption. The plaintiffs may be correct that we should look at
the summaries issued in 1974 and thereafter, not just those issued
in 1977 and thereafter. Either way, the result would be the same:
for the reasons developed in the text, the plan summaries did not
deprive GM of the right to amend or terminate the plan.
21a
“To read this summary as saying that the plan can
never be changed in such a way as to mandate retiree
contributions for continued medical coverage is to
read into the summary something its authors did not
put there (a promise to provide lifetime ‘paid up’
medical insurance), while reading out of the sum-
mary something that clearly was put there (an ex-
press reservation of right to change the plan).”
Musto, 861 F.2d at 906.
As the Third Circuit explained in a similar case, “the
Promise made to retirees was a qualified one: the promise
was that retiree medical benefits were for life provided the
company chose not to terminate the plans, pursuant to
Clauses that preserved the company’s right to terminate the
plan under which those benefits are provided.” Unisys
Corp., 58 F.3d at 904 n. 12; see also Wise, 986 F.2d at
934.
Not all of the summaries clearly stated that GM could
amend or terminate the plan. But the failure to allude to
this power in some of the booklets did not prejudice GM’s
right, clearly stated in the plan itself, to change the plan’s
terms.
In the first place, the Principle announced in Edwards
does not apply to silence. C f. Foltice v. Guardsman Prods.,
98 F.3d 933, 938 (6th Cir. 1996), cert. denied, USS.
——, 117 S.Ct. 1312, 137 L-Bd.2d 475 (1997); Edwards,
851 F.2d at 136 (“if such statements conflict with those
in the plan itself, the summary shall govern”) (emphasis
added). An omission from the summary plan description
does not, by negative implication, alter the terms of the
plan itself. Jensen, 38 F.3d at 952; Wise, 986 F.2d at
938. The reason is obvious: by definition, a summary will
not include every detail of the thing it summarizes. GM’s
failure to include in some summaries a notice of its right
to change the plan does not trump the clearly-stated right
to do so in the plan itself.
22a
In the second place, GM was not required to disclose
in the summary plan descriptions that the plaintiffs’ bene-
fits were not vested. See Jensen, 38 F.3d at 952 (“a wel-
fare plan SPD [summary plan description] is not required
to disclose that plan benefits are not vested”); Gable, 35
F.3d at 858 (“ERISA does not require SPDs to specifi-
cally address the possibility that those terms might later
be changed, as ERISA undeniably permits”) (quotation
and citation omitted); Wise, 986 F.2d at 936 (“ERISA
does not mandate the inclusion within SPDs of amendment
rights or procedures” ).
ERISA specifies in detail the information that every
summary plan description “shall contain.” See 29 U.S.C.
§ 1022(b). Among the items a summary must include is
“a description of the provisions providing for nonforfeit-
able pension benefits.” /d. Despite having required that
summaries inform plan participants about the vesting of
benefits under pension plans, Congress did not require
such information for welfare plans; neither did the Depart-
ment of Labor in its ERISA reporting and disclosure
regulations. See 29 C.F.R. § 2520.102-3(n) (summary
plan descriptions shall contain, “[i]Jn the case of an em-
ployee pension benefit plan, a description and explanation
of the plan provisions for . . . vesting”) (emphasis added).
The absence of a similar requirement for welfare plans
was no mistake. See Jensen, 38 F.3d at 952 (the “failure
to require SPDs to disclose non-vesting cannot be an in-
advertent omission”). ERISA, after all, is a “compre-
hensive and reticulated statute,” Nachman Corp. v. Pension
Benefit Guar. Corp., 446 U.S. 359, 361, 100 S.Ct. 1723,
64 L.Ed.2d 354 (1980), and the reporting and disclosure
requirements are themselves “comprehensive.” Curtiss-
Wright, 514 U.S. at 83, 115 S.Ct. at 1230. We decline
to apply the judge-made rule of Edwards in such a way as
to augment the detailed disclosure provisions of the
Statute.
Neither the GM plan itself nor any of the various sum-
maries of the plan states or even implies that the plaintiffs’
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23a
benefits were vested. Accordingly, we conclude that the
district court acted correctly in granting summary judg-
ment to GM on the plaintiffs’ claim that the company
violated the terms of its plan.
We turn next to the theory that GM bilaterally con-
tracted with each early retiree to vest benefits. All of the
early retirees took retirement under one of the special
early retirement programs offered by GM between 1974
and 1988. The early retirees argue that, as the district court
held, the statements, promises, and representations GM
made to them in connection with these programs, and the
documents that they signed, created binding bilateral con-
tracts. The alleged contracts, which supposedly provided
for vesting of the early retirees’ health care benefits, are
said to be enforceable either as modifications to the general
plan, or as ERISA plans themselves, or as a matter of
federal common law.
ERISA “has an elaborate scheme in place for benefi-
ciaries to learn their rights and obligations at any time,
a scheme that is built around reliance on the face of writ-
ten plan documents.” Curtiss-Wright, 514 U.S. at 83, 115
S.Ct. at 1230. To implement this scheme, ERISA requires
that every plan “shall be established and maintained pur-
suant to a written instrument.” 29 U.S.C. § 1102(a)(1).
ERISA also requires, as we have said, a written summary
plan description that will “reasonably apprise . . . par-
ticipants and beneficiaries of their rights and obligations
under the plan.” 29 U.S.C. § 1022(a).
The writing requirement ensures that “every employee
may, on examining the plan documents, determine exactly
what his rights and obligations are under the plan.”
Curtiss-Wright, 514 U.S. at 83, 115 S.Ct. at 1230 (quot-
ing H. Rep. No. 1280, 93d Cong., 2d Sess. 297, reprinted
in 1974 U.S. Code Cong. & Admin. News 5038, 5077-
78). And the requirement lends predictability and cer-
tainty to employee benefit plans. Gable, 35 F.3d at 857.
24a
This serves the interests of both employers and employees.
See Gordon v. Barnes Pumps, Inc., 999 F.2d 133, 136
(6th Cir. 1993); Adams, 905 F.2d at 947; Gable, 35 F.3d
at 857; Moore v. Metropolitan Life Ins. Co., 856 F.2d
488, 492 (2d Cir. 1988).
“Congress intended that plan documents and SPDs
exclusively govern an employer’s obligations under ERISA
plans.” Moore, 856 F.2d at 492. We recognize that
“(t}his may not be a foolproof informational scheme,
although it is quite thorough. Either way, it is the scheme
that Congress devised.” Curtiss-Wright, 514 U.S. at 84,
115 S.Ct. at 1231.
Our court has consistently refused to recognize oral
modifications to written plan documents. “[WlJe are quite
certain,” we have explained, “that Congress, in passing
ERISA, did not intend that participants in employee bene-
fit plans should be left to the uncertainties of oral com-
munications in finding out precisely what rights they were
given under their plan.” Musto, 861 F.2d at 909-10.
Therefore, the “clear terms of a written employee benefit
plan may not be modified or superseded by oral under-
takings on the part of the employer.” /d. at 910; see also
Gordon, 999 F.2d at 137 (same); Boyer, 986 F.2d at
1005 (same). The plaintiffs may not invoke oral state-
ments by GM personnel in order to modify the terms of
the written plan.
Neither can we accept the argument that the plan was
modified or superseded either by the written “statements
of acceptance” signed by some of the named plaintiffs or
by the written representations received by some from GM.
“That [the defendant’s] statements were made in writing
is irrelevant as they do not profess to be plan amend-
ments.” Borst v. Chevron Corp., 36 F.3d 1308, 1323
(Sth Cir. 1994), cert. denied, 514 U.S. 1066, 115 S.Ct.
1699, 131 L.Ed.2d 561 (1995). None of GM’s repre-
sentations suggested that the plan was being modified.
The statements of acceptance, moreover, merely said that
the employee “ha[d] reviewed the benefits applicable to
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25a
[him]” and “accept{ed] them.” Far from modifying the
terms of the welfare plan, it seems to us, this language
incorporated the plan’s terms.”
The statements of acceptance were not ERISA plans
themselves. Every ERISA plan must specify a funding
mechanism, must allocate operational and administrative
responsibilities, and must state how payments are made to
and from the plan. 29 U.S.C. § 1102(b)(1)-(2), (4).
See Gable, 35 F.3d at 857 n.2 (documents that do not
satisfy ERISA’s requirements for plan documents do not
qualify as ERISA plan documents). While it is at least
conceivable that an enforceable ERISA plan might not
meet all of these requirements, the alleged bilateral con-
tracts at issue here met none of them. The “statements of
acceptance” simply did not purport to be ERISA plans,
and we decline to treat them as such.
For us to sanction informal “plans” or plan “amend-
ments”—whether oral or written—would leave the law of
employee benefits in a state of uncertainty and would
create disincentives for employers to offer benefits in the
first place. Such a result is not in the interests of em-
ployees generally, and it is certainly not compatible with
the goals of ERISA. Cf. Moore, 856 F.2d at 489: “Alter-
ing a welfare plan on the basis of non-plan documents and
communications, absent a particularized showing of con-
duct tantamount to fraud, would undermine ERISA.”
IV
The plaintaiffs argue that GM is estopped from enforc-
ing the terms of the written plan against them. After the
bench trial, the district court found that GM made no
2 For present purposes, we accept the early retirees’ assertion
that the phrase “benefits applicable to [the early retirees]” referred
to pension and welfare benefits. If, as GM plausibly argues and as
the context suggests, the phrase referred only to pension benefits,
then the “statements of acceptance” have nothing whatever to say
about the health care plan.
26a
misleading representations to the general retirees. Sprague
111, 857 F.Supp. at 1188-89. That finding appears un-
assailable. As to the early retirees, however, the district
court ruled that GM was estopped from enforcing the plan
because it misrepresented the plan’s terms. /d. at 1189-92.
In this, we believe, the court erred as a matter of law.
We have held that equitable estoppel may be a viable
theory in ERISA cases, at least in regard to welfare plans.
Armistead, 944 F.2d at 1298. The elements of an equita-
ble estoppel claim, as announced by the Armistead panel,
are as follows: (1) there must be conduct or language
amounting to a representation of material fact; (2) the
party to be estopped must be aware of the true facts;
(3) the party to be estopped must intend that the repre-
sentation be acted on, or the party asserting the estoppel
must reasonably believe that the party to be estopped so
intends; (4) the party asserting the estoppel must be un-
aware of the true facts; and (5) the party asserting the
estoppel must reasonably or justifiably rely on the repre-
sentation to his detriment. Jd. at 1298.**
Principles of estoppel, however, cannot be applied to
vary the terms of unambiguous plan documents; estoppel
can only be invoked in the context of ambiguous plan
provisions. See Fink v. Union Central Life Ins. Co., 94
F.3d 489, 492 (8th Cir. 1996); Hudson v. Delta Air
Lines, Inc., 90 F.3d 451, 458 n. 12 (11th Cir. 1966),
cert. denied, US. , 117 S.Ct. 1082, 137 L.Ed.2d
217 (1997). There are at least two reasons for this. First,
as we have seen, estoppel requires reasonable or justifiable
reliance by the party asserting the estoppel. That party’s
reliance can seldom, if ever, be reasonable or justifiable
if it is inconsistent with the clear and unambiguous terms
13 Although we have never explicitly held that promissory estop-
pel claims are cognizable under ERISA, we see no reason to treat
the two forms of estoppel differently. Cf. Flacche v. Sun Life
Assurance Co. of Canada, 958 F.2d 730, 737 (6th Cir. 1992) (holding
that the facts did not support a promissory estoppel theory).
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27a
of plan documents available to or furnished to the party.
Second, to allow estoppel to override the clear terms of
plan documents would be to enforce something other than
the plan documents themselves. That would not be con-
sistent with ERISA.
In the case at bar, we conclude that the plaintiffs’ estop-
pel claims fail as a matter of law. As we have said, GM’s
plan and most of the summary plan descriptions issued to
the plaintiffs over the years unambiguously reserved to
GM the right to amend or terminate the plan. In the face
of GM’s clearly-stated right to amend—a right contained
in the plan to which the plaintiffs had access and in many
of the summaries they were given—reliance on statements
allegedly suggesting the contrary was not, and could not
be, reasonable or justifiable, especially when GM _ never
told the plaintiffs that their benefits were vested or fully
paid-up. See Musto, 861 F.2d at 907.
Vv
The last theory of recovery, applicable only to the early
retirees, is that GM was in breach of the fiduciary duty it
owed such retirees as administrator of their welfare plan.
The district court dismissed this claim in its entirety, hold-
ing that an employer is not a fiduciary when it amends or
terminates a plan. Sprague I, 768 F.Supp. at 612.
The court’s holding was correct as far as it went. GM
did not act as a fiduciary in deciding to change its health
insurance polices. Lockheed Corp. v. Spink, 517 U.S.
882, 116 S.Ct. 1783, 1789, 135 L.Ed.2d 153 (1996);
Musto, 861 F.2d at 912. The plaintiffs argue, however,
that the district court misconstrued the breadth of their
fiduciary duty claim. The claim, they say, encompassed
all of GM’s oral and written representations to them in
connection with the special early retirement programs.
We agree with this interpretation of the complaint.
28a
ERISA defines a fiduciary in functional terms:
“[A] person is a fiduciary with respect to a plan to
the extent (i) he exercises any discretionary authority —
or discretionary control respecting management of
such plan or exercises any authority or control re-
specting management or disposition of its assets, .. .
or (iii) he has any discretionary authority or discre-
tionary responsibility in the administration of such
plan.” 29 U.S.C. § 1002(21)(A).
Thus “[fliduciary duties under ERISA attach not just
to particular persons, but to particular persons performing
particular functions.” Hozier v. Midwest Fasteners, Inc.,
908 F.2d 1155, 1158 (3d Cir. 1990). ERISA also pre-
scribes the responsibilities of a fiduciary, which include
acting “solely in the interest of the participants and bene-
ficiaries” and “for the exclusive purpose” of “providing
benefits to participants and their beneficiaries... .” 29
U.S.C. § 1104(a)(1).
In Varity Corp. v. Howe, 516 U.S. 489, -
116 S.Ct. 1065, 1071-73, 134 L.Ed.2d 130 (1996), the
Supreme Court held that an employer acted in a fiduciary
capacity when making misrepresentations to its employees
about their benefit plan. The employer in that case created
a new subsidiary to enable the parent to shed some of its
debt, knowing that the subsidiary might well fail. Jd. at
, 116 S.Ct. at 1068. The employer induced employ-
ees to transfer to the new subsidiary with deliberately mis-
leading assurances that the new subsidiary would be finan-
cially successful and that employee benefits plan would
be financially sound and would not change. /d. at
116 S.Ct. at 1069.
The Court held that the employer, in making these
misrepresentations about the status of the plan, was exer-
cising “discretionary authority” in connection with the
plan’s “management” or “administration,” as those terms
are used in § 1002(21)(A). 7d. at , 116 S.Ct. at
1073. Applying the law of trusts, which it said would
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29a
inform the fiduciary inquiry, id. at , 116 S.Ct. at
1070, the Court stated that “conveying information about
the likely future of plan benefits” was a discretionary act
of plan administration. /d. at , 116 S.Ct. at 1073.
The employer therefore acted in a fiduciary capacity when
it misled its employees, and its misrepresentations amounted
to a breach of fiduciary duty.
Varity Corp. teaches that GM may have acted in a
fiduciary capacity when it explained its retirement pro-
gram to the early retirees.** As a matter of law, however,
we do not believe that GM committed a breach of any
applicable fiduciary duty. In the first place, GM never
told the early retirees that their health care benefits would
be fully paid up or vested upon retirement. What GM told
many of them, rather, was that their coverage was to be
paid by GM for their lifetimes. This was undeniably true
under the terms of GM’s then-existing plan.
Explanations of benefits
“tend to sound promissory by their very nature.
While these explanations may state a company’s cur-
rent intentions with respect to the plan, they cannot
be expected to foreclose the possibility that changing
financial conditions will require a company to modify
welfare benefit plan provisions at some point in the
future.” Gable, 35 F.3d at 857.
GM’s failure, if it may properly be called such, amounted
to this: the company did not tell the early retirees at every
possible opportunity that which it had told them many
times before—namely, that the terms of the plan were
subject to change. There is, in our view, a world of differ-
ence between the employer’s deliberate misleading of
employees in Varity Corp. and GM’s failure to begin every
communication to plan participants with a caveat.
1 Other than the plan documents, GM made no representations
to the general retirees. We do not see how a breach of fiduciary
duty could arise from GM’s representations in the plan documents
themselves.
30a
In the second place, as we have said, GM was not
required to disclose in its summary plan descriptions that
the plan was subject to amendment or termination. See
29 U.S.C. § 1022(b); 29 C.F.R. § 2520.102-3. It would
be strange indeed if ERISA’s fiduciary standards could be
used to imply a duty to disclose information that ERISA’s
detailed disclosure provisions do not require to be dis-
closed. See Curtiss-Wright, 514 U.S. at 84, 115 S.Ct. at
1231 (Congress did not intend the informational scheme
it devised “to be supplemented by a far-away provision in
another part of the statute”); Jensen, 38 F.3d at 952;
see also Part III.A., supra.” As a matter of statutory
construction, a specific statutory provision governs a gen-
eral one—and here the “comprehensive” disclosure pro-
visions control the broad fiduciary duty standard. The
Fourth Circuit agrees:
“To accept the argument . . . we would have to hold
that ERISA’s general fiduciary duty provision . . .
requires plan fiduciaries to furnish documents to
participants and beneficiaries in addition to the docu-
ments that ERISA’s specific disclosure provision . . .
requires the plan administrator to furnish. Such a
holding would conflict with the principle that specific
statutes govern general statutes.” Faircloth v. Lundy
Packing Co., 91 F.3d 648, 657 (4th Cir. 1996),
cert. denied, ——— U.S. ——, 117 S.Ct. 738, 136
L.Ed.2d 677 (1997).
We are not aware of any court of appeals decision im-
posing fiduciary liability for a failure to disclose informa-
tion that is not required to be disclosed. At least three
circuits have held that there is no fiduciary duty to dis-
15 We are mindful that the Supreme Court has cautioned that the
fiduciary duty must not be confined to “activities already controlled
by other specific legal duties... .” Varity Corp., 516 U.S. at ——-,
116 S.Ct. at 1074. But when Congress and the Department of
Labor have carefully prescribed a detailed list of matters that must
be disclosed to plan participants and beneficiaries, it ill-behooves
federal judges to add to that list.
abet eet ine ots eit er:
3la
close planned changes in benefits or even the termination
of the plan before those actions become official. Pocchia
v. NYNEX Corp., 81 F.3d 275, 278 (2d Cir.), cert.
denied, U.S. ——, 117 S.Ct. 302, 136 L.Ed.2d 220
(1996); Payonk v. HMW Indus., Inc., 883 F.2d 221, 229
(3d Cir. 1989); Stanton v. Gulf Oil Corp., 792 F.2d 432,
435 (4th Cir. 1986). A fortiori, there can be no fiduciary
duty to disclose the possibility of a future change in bene-
fits. See Restatement (Second) of Trusts § 173, Comment
d (1959) (“Ordinarily the trustee is not under a duty to
the beneficiary to furnish information to him in the absence
of a request for such information”).
Had an early retiree asked about the possibility of the
plan changing, and had he received a misleading answer,
or had GM on its own initiative provided misleading in-
formation about the future of the plan, or had GM been
required by ERISA or its implementing regulations to
forecast the future, a different case would have been pre-
sented. But we do not think that GM’s accurate repre-
sentations of its current program can reasonably be deemed
misleading. GM having given out no inaccurate informa-
tion, there was no breach of fiduciary duty.
VI
Although the plaintiffs sought a jury trial on their
ERISA claims, our circuit precedent teaches that they
were not entitled to one. Daniel v. Eaton Corp., 839 F.2d
263, 268 (6th Cir.), cert. denied, 488 U.S. 826, 109 S.Ct.
76, 102 L.Ed.2d 52 (1988); see also Bair v. General
Motors Corp., 895 F.2d 1094 (6th Cir. 1990) (same).
The plaintiffs argue that subsequent Supreme Court deci-
sions cast doubt on these precedents, see, e.g., Chauffeurs,
Teamsters, and Helpers, Local No. 391 v. Terry, 494 US.
558, 110 S.Ct. 1339, 108 L.Ed.2d 519 (1990), but we
need not address that question; because we reject the
plaintiffs’ claims as a matter of law, there was nothing for
a jury to decide.
32a
Vu
Finally, the early retirees argue that the district court
erred in issuing a limited injunction pending appeal. They
contend that the court should have issued an injunction
coextensive with the scope of GM’s liability as determined
by the court. None of their claims having merit, however,
the early retirees obviously are not entitled to an injunc-
tion of any sort. The injunction will be vacated.
Vill
The certification of the class of early retirees is RE-
VERSED, and the injunction is VACATED. Insofar as
it applies to any unnamed member of the plaintiff class,
the final judgment of the district court is VACATED.
Insofar as it applies to the named plaintiffs, the final
judgment is AFFIRMED IN PART and REVERSED IN
PART. The parties shall bear their own costs.
i ht atc Ne i Kat ss
Pay
oe a
|
33a
LIVELY, Circuit Judge, concurring in part and dissent-
ing in part.
As a member of the original panel that heard this ap-
peal I voted to remand both the issues raised by the gen-
eral retirees and those raised by the early retirees. Fur-
ther study in light of Judge Nelson’s opinion convinces
me that the majority is correct in holding that the claims
of the general retirees should be dismissed. Accordingly,
I concur in the majority opinion to the extent it affirms
summary judgment for General Motors on the claims of
the general retirees.
I agree with Judge Martin’s dissent, however, in its
conclusion that the district court correctly certified a class
action for the claims of the early retirees and that the
early retirees had vested health care benefits for the rest
of their lives.
There is a fundamental difference between the claims
of the two sets of retirees. The general retirees based
their claims solely on plan documents, which reserved the
right to change terms of the plan. The early retirees, on
the other hand, claimed a new agreement with GM, sup-
ported by a new consideration—their agreement to leave
their employment early, and as a consequence to save GM
significant future costs. I believe the district court cor-
rectly found that GM entered into bilateral contracts with
the early retirees. Further, I believe that the district
court’s findings of fact and conclusions of law following
the bench trial are entitled to deference by this court, and
should be affirmed.
With respect to the class action issue, the district court
did not abuse its discretion in certifying a class consisting
of the early retirees. The claims of the early retirees were
all based on a common contention: that GM created a
new condition for them with respect to future health care
benefits by entering into new agreements that accorded
34a
them vested rights never given to general retirees. Thus,
the “commonality” requirement of Rule 23(a) was satis-
fied.
I believe, further, the “typicality” requirement was met
by the district court’s creation of four subclasses, defined
by the evidence upon which the early retirees relied (long
form statement of acceptance, short form statement of
acceptance, statement of intent to retire, and oral repre-
sentations at time of entering into agreement for early
retirement). The majority states that typicality is lack-
ing because “[a] named plaintiff who proved his own
claim would not necessarily have proved anybody else’s
claim.” Supra, at 399. This statement appears to rely
on a statement in Jn re American Med. Sys., Inc., 75
F.3d 1069 (6th Cir. 1996). Yet, what American Med.
Sys. actually says is that “in pursuing his own claims, the
named plaintiffs will also advance the interests of class
members.” Id. at 1082. (emphasis added). I believe the
interests of class members in establishing the underlying
contention that all were accorded vested rights by the new
bilateral agreements would be advanced by each named
plaintiff or class member pursuing his own claim. Ameri-
can Med. Sys. does not require that a named plaintiff
prove anybody else’s claim by proving his own. American
Med. Sys. also quotes with approval the following lan-
guage from Senter v. General Motors Corp., 532 F.2d
511, 525 n. 31 (6th Cir.), cert. denied, 429 U.S. 870,
97 S.Ct. 182, 50 L.Ed.2d 150 (1976): “[t]o be typical
a representative’s claim need not always involve the same
facts or law, provided there is a common element of fact
or law.” 75 F.3d at 1078.
The majority concedes that while welfare plan benefits
are not vested by the terms of ERISA, an employer can
give up its freedom not to vest such benefits. I believe
this is a case where the employer did just that. The dis-
trict court found that “early retirement was presented. . .
as a special package deal that included health care, sepa-
rate and distinct from the regular GM retirement pro-
35a
gram.” Sprague v. General Motors Corp., 843 F.Supp.
266, 271 (E.D. Mich. 1994) (Sprague 11). This finding
is not clearly erroneous; to the contrary, it is supported
by substantial evidence. Unlike the general retirees, the
early retirees were sought out by GM and offered induce-
ments to leave their employment before reaching the
normal retirement age. The general retirees necessarily
had to rely only on plan documents that unilaterally cre-
ated health care benefits. The early retirees, on the other
hand, relied on new agreements that modified the welfare
benefit plan. Rather than having only the employer’s
unilateral “gift” of health care coverage, they bargained
with the employer for their coverage. I believe under the
circumstances of this case the district court properly con-
sidered the evidence of the early retirees that went beyond
plan documents. The district court’s findings, based on
this evidence, supported its conclusion that GM was es-
topped to deny the early retirees lifetime health benefits.
I also believe the majority is in error in concluding that
GM did not act in a fiduciary capacity in its dealings with
the early retirees. While I agree that an employer does
not ordinarily act as a fiduciary in administering a wel-
fare plan, it seems to me that the manner in which GM
reached early retirement agreements with these employees
necessarily involved a fiduciary relationship. The majority
stresses that GM was not required to state, along with its
explanation to the retirees that health care coverage was
to be provided for their lifetimes at GM’s expense, that it
also retained the right to change this commitment. I dis-
agree. Given that GM was seeking a new agreement
from those employees that changed their previous expec-
tations about the time of their retirement, GM could not
in equity remain silent if it intended to reserve a right to
change or eliminate this important benefit in the future.
It was misleading to tell these employees they would have
company-provided health care throughout their lives while
at the same time failing to advise them that it was claim-
ing to reserve the right to withdraw the benefit after the
36a
employees accepted early retirement. Given the setting in
which GM was presenting these employees with a new set
of conditions relating to their retirement, GM had a fidu-
ciary obligation to be completely open, with no undis-
closed conditions.
It seems to me that the majority reads Varity Corp. v.
Howe, 516 U.S. 489, 116 S.Ct. 1065, 134 L.Ed.2d 130
(1996), much too narrowly. In Varity, the Supreme
Court emphasized the applicability of trust principles
and the fundamental requirement of ERISA that a fidu-
ciary “discharge his duties with respect the plan solely
in the interest of the participants and beneficiaries.”
(quoting ERISA § 404(a)). Varity, 516 U.S. at ——.,
116 S.Ct. at 1074. Viewed in light of trust principles and
this ERISA requirement, GM owed a duty to be com-
pletely open and forthcoming with the employees that it
wanted to retire early. It was unfair, at this juncture in
their relationship, to rely on a reservation that was neither
discussed nor referred to. This w2s a situation where
silence was misleading. The reservations in the plan and
descriptive materials all related to normal retirement.
When, at GM’s instigation, some employees were induced
to retire early, they should have been told that these res-
ervations applied to the new relationship created by early
retirement if that was GM’s intent. There was a fiduciary
duty to inform them, and GM breached that duty.
I respectfully dissent from the majority’s denial of all
relief to early retirees, both named plaintiffs and putative
class members.
eee
37a
MERRITT, Circuit Judge, concurring in part and dis-
senting in part.
I agree with two conclusions found in Judge Nelson’s
opinion for the en banc court: (1) that District Judge
Feikens was correct in declining to certify the 34,000
general retirees as a class because they were on notice that
General Motors could always modify their health benefits,
even after retirement; and (2) that there are too many
differences in the various contractual arrangements and
representations made to individual early retirees to merit
class certification and unified treatment. I do not agree,
however, that the actions of the named plaintiffs who were
early retirees should be dismissed. I agree with that por-
tion of Chief Judge Martin’s dissenting opinion that calls
for a remand of this portion of the case to the District
Court for consideration of the individual cases of the
named plaintiffs on the merits. It appears that at least
some of the early retirees had vested lifetime benefits at
the time of retirement unencumbered by any reservation
by GM that it retained the right to modify. These named
plaintiffs should not be summarily thrown out of court
merely because the class actions fail.
38a
BOYCE F. MARTIN, JR., Chief Judge, with whom
Judges MOORE and COLE join, dissenting.
The question before this Court is whether General
Motors has created a lifetime right to basic health care
for its retirees. The en banc majority found that former
General Motors salaried employees do not have any vested
right in free lifetime health care, which they were
promised at their retirement. This decision not only makes
it more difficult for tens of thousands of retired General
Motors employees to receive the health care they thought
they deserved, but it also flouts the law. Basically, the
en banc majority finds no claim. It ignores ambiguities
and conflates arguments. I believe that a finer caliber of
analsyis is necessary. I write to highlight my differences
with the en banc majority and to point out shortcomings
in its analysis.
The en banc majority found in General Motors’s favor
on every issue and claim. The en banc majority denied
class certification because it found that one group of
retirees had no chance of winning on the merits and that
the other group of retirees lacked the requisite typicality
and commonality. It further found that the claims of the
114 named plaintiffs were without merit. According to
the en banc majority, the retirees did not have a vested
right to health care because General Motors effectively
reserved its right to amend the plan in all cases. It also
found that the retirees did not have a bilateral contract
with General Motors for lifetime benefits, and that plain-
tiffs’ estoppel claims failed because General Motors un-
ambiguously reserved the right to change benefits. Fi-
nally, the en banc majority determined that General
Motors did not breach its fiduciary duty to retirees be-
Cause it gave out no imaccurate information. I disagree
with the conclusions the en banc majority reached.
The facts have been stated repeatedly elsewhere, but
they bear a brief recap because they weigh heavily in
39a
favor of the plaintiffs. The case involves General Motors’s
right to change the health care plans of 84,000 retirees.
The case involves roughly 34,000 salaried employees who
retired in the due course of their General Motors careers.
They are the so-called “general retirees.” From 1974 to
1988, General Motors offered early retirement incentive
packages, and roughly 50,000 employees took early retire-
ment at the inducement of General Motors. They are the
so-called “early retirees.” Both types of retirees received
a variety of information from General Motors regarding
employee health insurance.
A quick discussion of the particulars of the written
materials General Motors distributed is a necessary predi-
cate for the analysis that follows. The factual recitation
will show that General Motors repeatedly promised re-
tirees lifetime health care, in a variety of written mate-
rials, and only occasionally included a reservation of its
right to change retiree benefits. Among the primary
sources of information were booklets entitled “Highlights
of Your GM Benefits” (“Your GM Benefits”) and “The
General Motors Insurance Program for Salaried Employ-
ees” (“General Motors Insurance”). All eight of the
“Your GM Benefits” and “General Motors Insurance”
booklets promised lifetime health benefits at the company’s
expense for salaried General Motors employees and their
spouses, and only four contained any reservation of Gen-
eral Motors’s rights to amend the agreement. According
to Beach Hall, General Motors’s director of health care
plans, “Your GM Benefits” booklets were distributed to
active salaried employees and published in 1966, 1974,
1977, 1980, and 1985. “General Motors Insurance”
booklets also were distributed to active salaried employees
and published in 1965, 1968, and 1971. “General Motors
Insurance” booklets included a promise that “GM will
pay” the health insurance costs of retirees but also noted
that “GM reserves the right to modify, revoke, suspend,
terminate, or change the Program.” “Your GM Benefits”
promised health care “at GM’s expense for your lifetime”
40a
but only the 1985 edition carried any disclaimer or reser-
vation of rights. Therefore, from 1974 to 1985 General
Mctors distributed employee booklets that promised free
lifetime heaith care and contained no reservation of
rights.
General Motors also published “Your Benefits in Re-
tirement” brochures. New versions were issued in 1977,
1980, and 1985. “Your Benefits in Retirement” promised
that “[yJour basic health care coverages will be provided
at GM’s expense for your lifetime,” but also noted that
“GM health care coverages . . . are subject to change in
the future.” In a sworn declaration, Hall wrote that the
1977 and 1985 booklets were given to salaried retirees.
He did not indicate to whom the 1980 books were dis-
tributed. There was some indication that “Your Benefits
in Retirement” went to active employees, but the record
provides no definitive answer. This would have remained
a question for the district court to answer on remand. If
General Motors’s Hall is correct in saying that the book-
lets were given to employees after they retired, though,
the booklets could not have entered the calculus of the
employees’ decision to retire.
General Motors contracted with Metropolitan Life and
Blue Cross and Blue Shield to provide insurance. During
the period from 1964 to 1985 when General Motors con-
tracted with outside insurance companies, employees re-
ceived certificates of insurance from the insurers. It is not
clear from the record before us whether the Metropolitan
Life group insurance certificates provided lifetime health
care at no cost with no reservation of rights, as plaintiffs
claim. Another source of information regarding health
care coverage were personal benefit summaries. These
summaries came out between the late 1970s and 1985
and promised health care benefits “for your lifetime.”
In 1985, General Motors became self insured. At that
time, General Motors created the “General Motors Health
Care Insurance Program for Salaried Employees,” the
4la
“Draft Plan.” According to the “Draft Plan,” “[t}he Cor-
poration shall contribute the full premium or subscription
charge for health care coverages . . . .” if “suitable ar-
rangements for such continuation can be made with the
carrier(s).” It is not clear from the record before us
whether the “Draft Plan” was distributed to employees or
retirees. In Sprague 1' the district court referred to the
“Draft Plan” as an “underlying plan document{ },”
Sprague v. General Motors, 768 F.Supp. 605, 610 (E.D.
Mich. 1991), but General Motors’s Hall, in apparent
reference to the “Draft Plan,” said in a deposition that
employees had not received it or been informed of its
existence. The question of the status of the “Draft Plan”
should have been clarified on remand.
Finally, many early retirees signed “statements of ac-
ceptance” in which they acknowledged that they had re-
viewed the benefits available to them in accepting the
offer of early retirement. The statements of acceptance
that the early retirees signed generally came in either
short or long forms, and the district court delineated sub-
classes among the early retiree class accordingly. The
four subclasses were: “(1) those who signed ‘long form’
Statements of acceptance; (2) those who signed ‘short
form’ statements of acceptance; (3) those who signed
‘statements of intent’ to retire; and (4) those for whom
no such documents can be found.” Sprague v. General
Motors Corp., 804 F.Supp. 931, 933 (E.D. Mich. 1992).
In addition, the early retirees received other written and
oral representations from General Motors personnel. In
Sprague II, the district court summarized these communi-
cations nicely. Sprague v. General Motors Corp., 843
1 For the sake of convenience, I have adopted the same numbering
system as that used by the en banc majority for the various lower-
court Sprague opinions: Sprague v. General Motors Corp., 768
F.Supp. 605 (E.D. Mich. 1991) (“Sprague I”); Sprague v. Genera’
Motors Corp., 843 F.Supp. 266 (E.D. Mich. 1994) (“Sprague II’):
Sprague v. General Motors Corp., 857 F.Supp. 1182 (E.D. Mich.
1994) (“Sprague III’).
42a
F.Supp. 266, 308-17 (E.D. Mich. 1994). The written
formulations of General Motors’s various promises to the
early retirees contained the following descriptions of life-
time health care: “Fully Paid by GM,” “paid for by the
Corporation for life,” “continued at the corporation’s ex-
pense,” “a Corporation paid basis,” “Corporation con-
tinues to pay full contribution for the retiree, spouse and
eligible dependents,” “GM paying the full cost,” and “at
no cost to retiree.”
There are several issues in this case—vested rights, es-
toppel, class certification, fiduciary duty—but the under-
lying question is clear: Do the retirees have a right to
the lifetime free health care General Motors promised
them or can General Motors renege on its promise? In
finding for General Motors, the en banc majority deter-
mined that General Motors was not legally bound by its
promise. General Motors has profited from distributing a
welter of contradictory materials on its health coverage.
In light of General Motors’s obscurantism, though, it
seems paradoxical that General Motors would have some
claims dismissed and win others at the summary judgment
stage. At the very least, plaintiffs should have the benefit
of a trial on some issues to unravel the web of misinfor-
mation General Motors has woven. Instead, General
Motors profits from having a salaried workforce that op-
erated under the assumption it would receive lifetime
health care. When the bill came due, though, General
Motors was allowed to walk away.
To follow the en banc majority’s decision, it is heads,
General Motors wins; tails, the employees lose. I disagree
with this outcome, and believe the district court’s final
judgment should be affirmed in part and reversed and
remanded in part. As I will show, a district court could
find that general retirees who retired between 1974 and
1985 did have a vested right to benefits based on the
unambiguous representations of General Motors. The dis-
trict court correctly found that early retirees did make a
binding, bilateral contract, enforceable under federal com-
43a
mon law, for lifetime health care when they retired from
General Motors. The district court could find that all the
General Motors retirees did justifiably rely on the com-
pany’s promises and therefore have an estoppel-based ac-
tion. The district court properly granted class certification
to the early retirees and should have had the opportunity
to take a fresh look at class cetrification for the general
retirees.* Finally, the district court incorrectly found that
General Motors had no fiduciary duty and should have
reconsidered that decision on remand.
I. Vested Rights
A. General Retirees
General Motors repeatedly promised its retirees health
care “at GM’s expense” and constantly touted “improve-
ments” in its health plan, yet it contends that it did not
create a vested right to health care. The en banc majority
agreed, finding that most of the summary plan descriptions
unambiguously reserved General Motors’s right to amend
the benefits. Under the Employment Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461,
health insurance is considered a “welfare” benefit as op-
posed to a “pension” benefit. 29 U.S.C. § 1002(1) &
(2)(A). It is true under ERISA that employees do not
automatically have a vested right to welfare benefits, /n
re White Farm Equip. Co., 788 F.2d 1186, 1192-93 (6th
Cir. 1986), but it is equally true that a company can
create vested rights to such benefits. Jd. at 1193. A vested
right is created by “agreement or by private design.” /d.
2 For the reasons enumerated above, I would find in favor of the
named plaintiffs if class certification were denied. Judge Merritt,
in concurring in part and dissenting in part, calls for a remand for
reconsideration of the claims of the early retiree named plaintiffs.
See supra at 408. I believe the general retirees deserve their day in
court as well. It is inconceivable to me that none of the 114 named
plaintiffs have stated a claim worthy of surviving dismissal.
44a
General Motors has created a vested right to health
care through its written promises. I, like the en banc ma-
jority, find no ambiguity in much of the written material,
but I do so in favor of the retirees. The steps to that con-
clusion are easily taken. The first question is whether the
“Your GM Benefits” and “General Motors Insurance”
booklets were summary plan descriptions as defined by 29
U.S.C. § 1022. If so, the focus shifts to determining what
should govern when the summary plan description differs
from the plan documents.
The en banc majority acknowledges that General Mo-
tors’s summary booklets were summary plan descriptions.
See supra at 400-01. The en banc majority also argues
that summary plan descriptions, as a creation of ERISA,
were not required until 1977. See supra at 400-01. It
therefore considers only the post-1977 booklets to be sum-
mary plan descriptions. See supra at 400-01. The en banc
majority’s interpretation conflicts with General Motors’s
characterization of the booklets. Beach Hall, General
Motors’s director of health care plans, stated in a sworn
declaration: “Although General Motors determined that
it was not required to meet ERISA’s formal requirements
for SPDs until November 1977, it replaced the previous
summary booklets with ‘Highlights of Your GM Benefits’
in 1974, . . . Such booklets have served as the summary
plan description.” In light of the way General Motors
seemed to treat the 1974 booklet as a summary plan
description, the district court should determine the ERISA
status of the 1974 book on remand. I will base my analy-
sis on the assumption that the post-1974 summary book-
lets are summary plan descriptions.
General Motors’s summary plan descriptions suffer from-
either the internal inconsistency of contradictory terms or
the external inconsistency of conflict with underlying
formal plan documents. In some of the summary plan
descriptions there is no internal ambiguity—the plan guar-
antees lifetime health care with no disclaimer. This is true
45a
of the 1974, 1977, and 1980 “Your GM Benefits” bro-
chures. These summary plan descriptions, however, are
at odds with the underlying plan documents, which do in-
clude a reservation of rights. In Edwards v. State Farm
Mut. Auto. Ins. Co., 851 F.2d 134 (6th Cir. 1988),
this Court enunciated a principle for dealing with such
discrepancies: “This Circuit has decided that statements
in a summary plan are binding and if such statements
conflict with those in the plan itself, the summary shall
govern.” Id. at 136. The Edwards principle governs pen-
sion plans and welfare plans.
From 1974 to 1985 the summary plan descriptions
contained no reservation of rights and did carry a guarantee
of lifetime health care. The en banc majority notes that
“Edwards does not apply to silence,” and argues that the
summaries were silent on General Motors’s right to change
the plan. Supra at 401. This ignores, however, the plain
import of statements such as “at GM’s expense for your
lifetime.” Just because the summary does not speak to
General Motors’s rights in the same language used in the
plan does not mean the summaries are silent on the issue.
Noting that benefits are “for your lifetime” is tantamount
to saying that General Motors cannot change the plan. In
addition, the en banc majority contends that “[nJeither the
GM plan itself nor any of the various summaries of the
plan states or even implies that the plaintiffs’ benefits were
vested.” Supra at 402. Again, lifetime rights are vested
rights.
It is true that from 1977 to 1985 “Your Benefits in
Retirement” did include reservations of rights clauses.
It bears noting, though, that these clauses were the rather
tepid statement that benefits “have been changed from
time to time through the years and are subject to change
in the future.” This clause is particularly problematic be-
cause General Motors always trumpeted its changes as
improvements. The court in Sprague I] quoted a member
46a
of General Motors’s legal department telling General
Motors staff: “GM is not in sound position to win the
Plobable lawsuit filed by retirees. Program booklets and
Plevious pre-retirement interviews have not stressed the
Possibility of ‘negative’ program changes.” 843 F.Supp.
at 305. Regardless of whether the disclaimers in the
“Your Benefits in Retirement” brochures act as an effec-
tive reservation of rights, the effects of such putative dis-
Chimers are nugatory. Benefits given in documents dis-
trbuted prior to, and for the duration of, retirement, can-
not be rescinded in post-retirement documents. See Wulf
v. Quantum Chem, Corp., 26 F.3d 1368, 1378 (6th Cir.
1994) (stating that once employee is entitled to benefit,
it would be “illusory” to divest benefit retroactively)
(nternal quotation marks omitted); Gentile v. Youngs-
tcwn Steel Door Co., 1986 WL 17464 at *5 (6th Cir.
Aug. 25, 1986) (stating that court “must focus on the
Pan documents which were distributed to the retirees
While they were active employees”).
In sum, the district court should have had an oppor-
tinity on remand to determine whether the 1974 “Your
CM Benefits” booklet was a summary plan document and
Whether the “Your Benefits in Retirement,” in particular
tle 1980 edition, were distributed only to retirees. If
tlose questions were answered affirmatively, there would
b an eleven-year window from 1974 to 1985 in which
tle summary plan documents, which govern under Ed-
vards, contained an unambiguous promise of lifetime
Iralth care. For general retirees who retired while these
Simmary plan descriptions were in effect, this uncontra-
dcted promise would be sufficient to vest their rights to
lfetime health care. They deserved a chance to prove that
i! the district court.
EF. Early Retirees
The early retirees base their claims for vested rights to
Izalth care on the bilateral contracts they signed with
47a
General Motors. The en banc majority determined that
such extra-plan documents carried no weight under ERISA.
This Court, however, had left the question of the validity
of extra-plan documents open in Musto v. American Gen.
Corp., 861 F.2d 897 (6th Cir. 1988). In Musto this
Court noted: “Whether, under ERISA, employees can
ever obtain vested rights in welfare plan benefits on the
strength of written representations outside the official plan
document is a question we need not decide.” Jd. at 907.
I believe the answer should be in the affirmative in this
case.
The early retirees’ claims are founded on the early re-
tirement agreements they signed and other representations
General Motors made to them at retirement. These agree-
ments, they argue, constitute binding, bilateral contracts
with General Motors for lifetime health care—a_bar-
gained-for agreement. The early retirees not only gave up
their jobs, but some also surrendered the right to bring
causes of action, including civil rights and age discrimina-
tion claims, against the company. They argue that this
mutual consideration ‘entitles them to bring a breach of
bilateral contract claim. Typically a breach of contract
claim falls under state law, and ERISA preempts state
law. 29 U.S.C. § 1144(a). Preemption need not sound
the death knell for a contract-based claim, though. As the
district court recognized, plaintiffs can make claims be-
yond state law.
The district court in Sprague II found the early retire-
ment agreements for early retiree subclasses (1) and (2)
“enforceable under ERISA as independent bilateral con-
tracts, or as modifications of GM’s health care benefit
plan.” 843 F.Supp. at 299. In Sprague I], the district
court also quoted Justice Brennan: “ ‘The legislative his-
tory demonstrates that Congress intended federal courts
to develop federal common law in fashioning’ relief under
ERISA.” Massachusetts Mutual Life Insurance Co. v.
Russell, 473 U.S. 134, 156, 105 S.Ct. 3085, 3097, 87
48a
L.Ed.2d 96 (1985) (Brennan, J., concurring), quoted in
843 F.Supp. at 301. These contracts are best enforced
under federal common law.
Given that the contracts are enforceable under federal
common law, the focus then turns to divining the con-
tracts’ terms. The district court in Sprague II argued that
the agreements were not fully integrated, which opens the
door to extrinsic evidence. 843 F.Supp. at 301. This ex-
trinsic evidence, as discussed above, includes written ma-
terials showing that General Motors personnel used almost
virtually every possible permutation of the words “free life-
time health care” when presenting future benefits to em-
ployees. The district court in Sprague II found enforce-
able contracts for the subclass (1) and (2) early retirees,
843 F.Supp. at 299, and the district court noted in its
Final Judgment that the subclass (4) early retirees also
had enforceable contracts. That judgment should have
been affirmed.
Il. Estoppel
The General Motors retirees are prime candidates for
bringing an estoppel claim. General Motors clearly wanted
employees, potential employees, retirees, and potential
retirees to rely on its boastful presentations of its benefit
programs. The 1966 “Your GM Benefits” booklets pro-
vides an example of the sort of representations General
Motors was making: “Today’s General Motors benefits
are an important factor in making your life more enjoy-
able and your future more secure.” The brochures in
question here undoubtedly were helpful in the recruitment
and retention of personnel. and, when the time came, the
inducement of certain employees to take early retirement.
Yet, when retirees claim that they relied on these renre-
sentatio s, General Motors calls such reliance unjustifiable.
The en banc majority acknowledges that estoppel can
be a viable theory in ERISA cases but makes a misstep in
dismissing the early retirees’ estoppel claim because there
a
49a
was no reasonable reliance. See supra at 400-01. The dis-
trict court in Sprague III held that the early retirees should
prevail on their promissory and equitable estoppel claims.
Sprague v. General Motors Corp., 857 F.Supp. 1182, 1192
(E.D. Mich. 1994). The court noted: “I also find that
this reliance was reasonable and justifiable. GM led the
early retirees to reasonably believe that they were receiv-
ing a special deal: notwithstanding language in the plan
documents to the contrary, the early retirees would receive
lifetime health care benefits at no cost to them.” Id. at
1191. Reliance on repeated assurances of free lifetime
health care, sometimes couched with timid caveats, from
one of the largest corporations in the world was not justi-
fiable in the en banc majority’s view. The en banc ma-
jority erred in this determination, and the district court
should have been affirmed in finding an estoppel cause of
action for the early retirees.
In Sprague III, the district court held that any reliance
on the part of the genera! retirees “was inherently unrea-
sonable and unjustified.” 857 F.Supp. at 1189. The en
banc majority, finding the district court’s determination
that there were no misleading representations to general
retirees “unassailable,” does not even deal with the general
retirees’ estoppel claims. Why could the general retirees
not reasonably rely on materials that repeatedly promised
them lifetime health care and only occasionally included a
reservation of rights? As I have shown, General Motors
failed to reserve its rights in the “Your GM Benefits” bro-
chures in effect from 1974 to 1985. In addition, when
General Motors did reserve its rights, this reservation was
less than clear, particularly when considered in lisht of
General Motor’s incessant touting of “improvements” to
the plan and General Motors’s boasting about “one of the
finest and most comprehensive employe (sic) benefit pack-
ages in the industry.” The issue of the reasonableness of
the seneral retirees’ reliance should have been remanded
to the district court. The reliance of those who retired
a i aia ne ean
50a
from 1974 to 1985 appears eminently justifiable. For
other general retirees, there were sufficient representa-
tions on the part of General Motors to create a question
of material fact as to whether a person justifiably could
rely on them.
Ill. Class Certification
Strangely, although the en bane majority is willing to
paper over differences among plaintiffs in other contexts,
it suddenly finds that the plaintiff group is riven with fis-
sures when it comes to class certification. The certifica-
tion of two classes, the early retirees and general retirees,
is at issue.
The en banc majority denies class certification to the
general retirees on the grounds that they cannot prevail
on the merits. As I have shown above, the general retirees
could win on the merits, which begs a fresh inspection of
their class certification. The en banc majority acknowl-
edges that the general retirees “may have been better-
suited for class treatment than the early retirees,” and
“base their claims on . . . documents common to all sal-
aried employees.” Supra at 397. The generals fulfill the
numerosity, commonality, typicality, and adequacy of rep-
resentation requirements of Fed.R.Civ.P. 23(a). In ad-
dition, the general retirees meet the requirements of
Fed.R.Civ.P. 23(b)(3) because common questions of
law and fact predominate and a class action is superior to
individual actions. The question of class certification for
the general retirees should be remanded to the district
court.
Regarding the early retirees, the en banc majority found
that the district court abused its discretion in certifying a
class with four subclasses. It found that, in light of their
claims of bilateral contract and estoppel, the early retirees
lacked the commonality and typicality requisite for class
certification. I disagree with the conclusion that the dis-
trict court abused its discretion when it certified a class in
5la
which all the members were seeking exactly the same
remedy and doing so under the same legal theories.
This Court’s recent decision in Bittinger v. Tecumseh
Prods. Co., 123 F.3d 877 (6th Cir. 1997) supports the
district court’s decision to certify a class of early retirees.
Bittinger dealt with a class of 1,200 retired employees
whose lifetime insurance benefits were terminated when
the collective bargaining agreement expired. /d. at 879.
They were offered partially funded life and health insur-
ance coverage if they agreed to sign releases of claims
against the company. Id. Some, but not all, of the class
members signed releases. Jd. The retirees subsequently
brought a class action under ERISA claiming that their
“original collective bargaining agreement guaranteed them
lifetime, fully-funded benefits.” Jd. at 884. The court
found that “[t]his common question is all that is required
by the rule.” /d. The eariy retirees share the common
question of what GM pomised them in order to induce
them to retire. To the extent there are differences, the
district court could have created subclasses, as it had
attempted to do. As to typicality, the Bittinger class
shared many characteristics with the Sprague early re-
tirees. With the Bittinger class, there were numerous
dates of retirement, various oral representations to mem-
bers, and some members who had signed releases. /d.
Nonetheless, the court found “[t]hat the evidence varies
from plaintiff to plaintiff would not affect this basic claim.”
Id. The same is true of the Sprague class of early retirees.
To the extent there were differences in the early retiree
class, the district court accounted for the variations by
creating four Sprague subclasses. There was no abuse of
discretion in doing so. No class that includes thousands of
plaintiffs will be perfectly homogeneous, and, as the Fifth
Circuit noted in Forbush v. J.C. Penney Co., 994 F.2d
1101, 1106 (Sth Cir. 1993): “The test for typicality,
like commonality, is not demanding.” The district court
did not abuse its discretion in certifying the early retirees
and should have been affirmed.
52a
IV. Fiduciary Duty
The en banc majority limits its discussion of fiduciary
duty to the early retirees, and acknowledges that “GM
may have acted in a fiduciary capacity when it explained
its retirement program to the early retirees.” Supra at 405.
The en banc majority then finds, however, that General
Motors did not breach this duty. “In the first place, GM
never told the early retirees that their health care benefits
would be fully paid or vested upon retirement. What GM
told many of them, rather, was that their coverage was to
be paid by GM for their lifetimes.” Supra at 405. In
essence, the en banc majority argues that even though
General Motors promised free lifetime health care and
later forced retirees to pay part of the bill, the initial prom-
ise was not misleading. 2
I disagree, and plaintiffs, both general and early retirees,
should have a chance to argue their breach of fiduciary
duty claims. It is true that “a company does not act in
a fiduciary capacity when deciding to amend or terminate
a welfare benefits plan.” Adams v. Avondale Indus., Inc.,
905 F.2d 943, 947 (6th Cir. 1990). It is also true, how-
ever, that “a fiduciary may not materially mislead those
to whom the duties of loyalty and prudence described in
29 U.S.C. § 1104 are owed.” Berlin v. Michigan Beil Te!.
Co., 858 F.2d 1154, 1163 (6th Cir. 1988). Had General
Motors never created a right to free lifetime health care,
it would be free to amend or even terminate the insurance
for retirees. When an employer establishes a right to life-
time health care benefits through vesting, as General
Motors has done, the employer loses the unfettered free-
dom to amend or terminate the plan. Gene-al Motors has
violated its fiduciary duty, and the district court in Sprague
I erred in dismissing plaintiffs’ fiduciary duty claim.
Conclusion
This is a classic case of corporate shortsightedness.
When General Motors was flush with cash and health care
sa shila alicia Saha tabs rors
PR eT eT Oe pe we eS ae
‘ ee, ere?
Ue 2 eer ee
53a
costs were low, it was easy to promise employees and
retirees lifetime health care. Later, when General Mo-
tors was trying to sweeten the pot for early retirees, health
care was another incentive to get employees off General
Motors’s groaning payroll. Of course, many of the execu-
tives who promised lifetime health care to early and gen-
eral retirees are probably long since gone themselves.
Rather than pay off those perhaps ill-considered promises,
it is easier for the current regime to say those promises
never were made. There is the tricky little matter of the
paper trail of written assurances of lifetime health care,
but General Motors, with the en banc majority’s assist-
ance, has managed to escape the ramifications of its now-
regretted largesse.
The plaintiff class’s claims for lifetime health care
lie in shambles despite General Motors’s repeated assur-
ances of just coverage. As I survey the wreckage of these
claims, I am reminded that ERISA’s underlying purpose
is “to protect . . . the interests of Participants in em-
ployee benefit plans and their beneficiaries.” 29 U.S.C.
§ 1001(b). ERISA is not a cure-all for disputes between
companies and employees over welfare and pension plans,
but this case provides a role for ERISA. The en banc
majority opinion validates General Motors’s decision to
institute premiums and raise deductibles on retirees’ health
insurance, but the decision bestows upon General Motors
the freedom to eliminate health care coverage completely.
Seemingly, any reservation of rights, no matter how weakly
worded or unconnected to the grant of rights, will inure
a company from having to live up to its obligations in the
future. Ultimately, the en banc majority puts a new twist
on an old aphorism, and what is good for General Motors
is not good for the country but rather is bad for its re-
tirees. I therefore respectfully dissent.
54a
APPENDIX B
UNITED STATES COURT OF APPEALS
SIXTH CIRCUIT
Nos. 94-1896 to 94-1898 and 94-1937
RoBERT D. SPRAGUE, et al.,
Plaintiffs-A ppellees,
Cross-A ppellants,
v.
GENERAL Motors CORPORATION,
Defendant-A ppellant,
~ Cross-Appellee.
Argued Aug. 3, 1996
Decided Aug. 14, 1996
Before LIVELY, MARTIN and DAUGHTREY, Cir-
cuit Judges.
BOYCE F. MARTIN, Jr., Circuit Judge.
A putative plaintiff class of more than 84,000 non-union
retirees’ of the General Motors Corporation filed suit
under the Employee Retirement Income Security Act of
1 The putative class included approximately 34,000 general retirees
and approximately 50,000 early retirees. General retirees are indi-
viduals who were entitled to retire without General Motors’ consent
either at age sixty-five or after thirty years’ service with the com-
pany. Early retirees are individuals who participated in one of the
early retirement programs offered by General Motors between 1974
and 1988 which required that both the company and the employee
consent to the retirement.
55a
1974, 29 U.S.C. §§ 1001, ef seq., seeking a judgment
requiring General Motors to furnish them with basic health
care coverage at no cost for their lifetimes and the life-
times of their surviving spouses. In their complaint, the
plaintiffs alleged that General Motors violated the terms
of its health care plan and the Employee Retirement In-
come Security Act by reducing or eliminating certain
health care coverages beginning in 1988. The plaintiffs
also claimed that the changes constituted a breach of
General Motors’ fiduciary duties under the Employee Re-
tirement Income Security Act. The plaintiffs asserted
separate causes of action arising from the same changes
based on breach of contract and equitable or promissory
estoppel. In addition, the plaintiffs alleged that General
Motors violated the requirements of the Employee Retire-
ment Income Security Act by failing to maintain its health
care plan pursuant to a written instrument: refusing or
failing to supply requested information; and failing to
comply with requirements for summary plan descriptions.
In a series of opinions and orders, the district court:
(1) held that General Motors unambiguously reserved to
itself the right to modify health care coverages, and thus
did not agree in the general plan documents to provide
salaried retirees with vested health care benefits; (2) dis-
missed plaintiffs’ claim that the 1988 changes constituted
a breach of General Motors’ fiduciary duties under the
Employee Retirement Income Security Act; (3) certified
a Class of early retirees; (4) held that the class of early
retirees was not entitled to a jury trial: (5) held that Gen-
eral Motors bilaterally contracted to provide vested health
care benefits to the early retirees: (6) held that General
Motors was estopped from modifying health benefits as to
the early retirees but not as to the general retirees; and
(7) granted limited injunctive relief prohibiting General
Motors from implementing some of the contested modifi-
cations during the pendency of this appeal.
Final judgment in the case was rendered on August 4,
1994, and the parties filed timely notices of appeal. For
56a
the reasons set forth below, we AFFIRM the district
court’s rulings in part, REVERSE the district court’s rul-
ings in part, and REMAND for further proceedings con-
sistent with this opinion.
I.
The background of this case is complex, and has been
set forth in Sprague v. General Motors Corp., 768 F.Supp.
605 (E.D. Mich. 1991) (Sprague 1), Sprague v. General
Motors Corp., 804 F.Supp. 931 (B.D. Mich. 1992)
(Sprague Il), Sprague v. General Motors Corp., 823 F.
Supp. 442 (E.D. Mich. 1993) (Sprague III), Sprague v.
General Motors Corp., 843 F.Supp. 266 (E.D. Mich.
1994) (Sprague IV), and Sprague v. General Motors
Corp., 857 F.Supp. 1182 (E.D. Mich. 1994) (Sprague
V). We repeat the district court’s recitation of those facts
necessary to an understanding of this appeal.
In 1964, General Motors began to pay the full cost of
basic hospital, medical, and surgical insurance for salaried
retirees. This benefit was extended to most surviving
spouses in 1968. General Motors also offered salaried
retirees and surviving spouses an additional layer of cover-
age under its Comprehensive Medical Expense Insurance
Program.” General Motors provided these coverages
through arrangements with various private insurance com-
panies. Some of the arrangements were memorialized in
written contracts of insurance between the insurance car-
rier and General Motors, while others were not. All car-
riers provided participants with certificates of insurance
detailing the terms of coverage.*
2When General Motors became self-insured in 1985, this pro-
gram became the Comprehensive Medical Expense Program. At all
times, participants were required to pay co-payments, deductibles,
and a portion of the insurance premiums.
3 Until 1985, General Motors’ formal plan was set forth in insur-
ance policies and certificates of insurance issued by the Metropolitan
Life Insurance Company and Blue Cross and Blue Shield. Those
documents made statements to the effect that benefits would auto-
matically cease upon discontinuance of the policy, and that General
eR See i pe en ee ay ee, oe ee ee FP ee een
57a
In 1985, General Motors became self-insured and the
use of insurance certificates was discontinued. Instead,
General Motors drafted a document entitled “The General
Motors Health Care Insurance Program for Salaried Em-
ployees.” This document, together with subsequent writ-
ings announcing coverage changes, described General
Motors’ health care coverage plan post-1985,
Over the years, General Motors communicated its health
care coverage plan to employees and retirees by means of
summary booklets. Prior to 1974, General Motors peri-
odically published a booklet entitled “The GM Insurance
Program For Salaried Employees.” With the enactment of
the Employee Retirement Income Security Act in 1974,
the method of supplying participants with plan summaries
changed. Thereafter, General Motors published a plan
summary entitled “Highlights of Your GM Benefits.” In
addition, when the Employee Retirement Income Security
Act began requiring summary plan descriptions in 1977,
General Motors began to publish a booklet entitled “Your
Benefits in Retirement.” This booklet apparently served
as and continues to serve as the summary plan description
for benefits provided to salaried employees.
Several summary booklets distributed to General Mo-
tors’ salaried employees and retirees contained statements
informing participants that General Motors would pay
the full cost of basic health care coverage during their
retirement.* Most booklets also contained statements,
Motors could discontinue the policy by failing to pay the premium
or by giving written notice.
* The 1968 and 1971 booklets both stated: “If you retire... and
are cligible to receive retirement benefits under the provisions of
the GM Retirement Program for Salaried Employees, you may keep
your basic hospital, surgical and medical expense coverages in
effect... . GM will pay the full monthly premium or subscription
charge for such coverage.” A 1974 booklet stated: “Hospital-
Medical Coverages: Your basic coverages will be provided at Cor-
poration expense for your lifetime (except for voluntary retirement
between ages 55 and 60 when combined years of age and credited
58a
however, warning participants that their benefits were
subject to change. With the exeception of the 1966 and
1974 summary booklets, and the 1977 and 1980 versions
of “Your GM Benefits,” each summary contained a pro-
vision arguably reserving General Motors’ right to modify
or terminate its health insurance program.® In addition to
these booklets, General Motors distributed various docu-
ments to individuals who retired early under various spe-
cial early retirement programs offered by the company
beginning in 1974.
In 1974, General Motors instituted a program of Spe-
cial Early Retirement with enhanced benefits for pension-
eligible employees as an inducement for their departure
from the company. The company also offered other types
of early retirement packages over the years. Many early
retirees signed statements of acceptance evidencing their
agreement to accept General Motors’ offer of early retire-
service total less than 85). Dental coverages cannot be continued.”
The 1977 version of “Your Benefits in Retirement” stated: “Are
My Health Care Coverages Continued While I Am Retired? Your
basic health care coverages will be provided at GM’s expense for
your lifetime. . . . General Motors pays the full cost of any basic
health care coverages that are continued for most retired employees
and for eligible surviving spouses and children of deceased re-
tirees.”” The district court found that similar or identical state-
ments were contained in many other booklets distributed by General
Motors or its insurance carriers over the years. See Sprague J,
768 F.Supp. at 608.
5 The booklets contained a provision similar to one of the
following:
GM reserves the right to modify, revoke, suspend, terminate,
or change the Program, in whole or in part, at any time.
GM health care coverayes have been changed from time to tim»?
through the years and are subject to change in the future.
The Corporation reserves the right to amend, modify, suspend,
or terminate its employee benefit plans or programs by action ;
of its Board of Directors.
GM reserves the right to amend, change or terminate the plans
and programs described in this booklet.
EE ee te ee ee ee er a ee 1 ie
PE OTe Ee EE eee
59a
ment. In some of these statements, the early retirees
affirmed that they had reviewed the applicable benefits and
accepted them. In exchange, the retirees gave up their
jobs and many promised to release General Motors from
liability for certain causes of action potentially connected
with their early departures. Prior to signing these forms,
many early retirees were given benefit summaries describ-
ing the health care benefits they would receive during
retirement.
In 1987, General Motors announced modifications in its
health care program, to become effective in 1988 for
salaried employees, retirees and surviving spouses. Under
the modified program, participants who opt for traditional
fee-for-service coverage are required to pay an annual
$200 individual or $250 family deductible for basic cover-
age. After the annual deductible is met, participants are
responsible for a 20% co-payment for most basic services,
until the annual out-of-pocket expense equals a maximum
of $500. Combined, the deductibles and co-payments
require participants to pay an annual maximum of $750
in medical bills that were previously paid by General
Motors. In addition, several other changes were made to
General Motors’ health care program at the same time.
For example, vision and hearing aid coverages were elimi-
nated and then later made available subject to co-pay-
ments and deductibles. In addition, Comprehensive Medi-
cal Expense Program deductibles were increased, and
General Motors increased the monthly contribution re-
quired of Comprehensive Medical Expense Program par-
ticipants. General Motors also instituted several benefit
increases. These changes are the basis of the plaintiffs’
suit.
II.
Turning to the merits of this appeal, we first address the
parties’ claims that the district court erred in its class
certification decisions. In Sprague I, the district court
held that General Motors’ plan documents unambiguously
60a
set forth the company’s right to modify health care cover-
ages, and did not vest in the employees the right to any
particular level of health care benefits upon retirement.
The court left open the possibility, however, that General
Motors may have contracted bilaterally to provide vested
benefits to early retirees, and subsequently certified the
50,000 early retirees as a class for a bench trial on that
issue.° Having concluded that the 34,000 general retirees
had no claim to vested health care benefits, the district
court never addressed their motion for class certification.
On appeal, the plaintiffs contend that the class should
have included not only the early retirees, but the general
retirees and their surviving spouses as well. The plaintiffs
claim that: the general retirees are covered by the same
class-wide allegations as the early retirees; all but one of
the claims were raised on behalf of both general and early
retirees; the conduct complained of is the same; and the
relief sought is identical. Therefore, the plaintiffs claim
that the general retirees, no less than the early retirees,
satisfied the requirements of Fed. R. Civ. P. 23. General
Motors, in turn, contests the district court’s certification
of the early retirees on the ground that Rule 23’s com-
monality and typicality requirements were not met. Gen-
eral Motors claims that there was no single written or oral
source of information common to all class members be-
cause there were tens of thousands of retirees who worked
in dozens of different locations and retired over a fourteen-
year period. Moreover, General Motors argues that the
class members had different amounts of information, dif-
ferent sources of information, and different individual
understandings about the meaning of those communica-
*On November 4, 1991, the district court issued a class certifica-
tion order establishing four subclasses of early retirees: (1) those
who signed “long form” statements of acceptance; (2) those who
siened “short form” statements of acceptance; (3) those who
signed “statements of intent” to retire: and (4) those for whom no
such documents could be found. See Sprague I], 804 F.Supp. at
923.
6la
tions. Because the communications varied according to
the time of an individual’s retirement, his or her plant
location, and the division involved, General Motors claims
that the plaintiffs are not able to demonstrate common-
ality or typicality.
A district court’s decision with regard to class certifica-
tion is reviewed for an abuse of discretion. Mayer vy.
Mylod, 988 F.2d 635, 640 (6th Cir. 1993). District
courts have broad discretion over class certification con-
troversies, but must “conduct a ‘rigorous analysis’ into
whether the prerequisites of Rule 23 are met before certi-
fying a class.” In re American Medical Systems, Inc.,
75 F.3d 1069, 1078-79 (6th Cir. 1996). Under Fed. R.
Civ. P. 23(a), four conditions must be met to file a class
action suit: (1) the joinder of members must be imprac-
ticable; (2) questions of law or fact must be common to
the class; (3) the representatives of the class must be
typical members of the class: and (4) the representatives
must fairly represent the interests of the class. Under
Rule 23(b), one of three conditions must be met to main-
tain a suit as a class action: (1) there must be a risk of
either incompatible standards of conduct or a risk that
interests of prospective class members would be impaired
by an adjudication of others’ claims; (2) the party oppos-
ing the class has acted toward the members in a uniform
way; or (3) issues common to the class predominate over
issues which are not common to the class and the best
method of trying the suit is as a class action. See Mayer,
988 F.2d at 640.
A recent Fifth Circuit case expressly evaluated the pro-
priety of class certification in the context of an Employee
Retirement Income Security Act action. In Forbush y.
J.C. Penney Co., 994 F.2d 1101 (Sth Cir. 1993), the
court reversed a district court’s refusal to certify a class
where the potential class was covered by four different
pension plans. The court stated that the commonality
threshold for class certification is not high, and identified
62a
an issue common to the class: whether Penney’s alleged
overestimation of social security benefits violated the Em-
ployee Retirement Income Security Act’s nonforfeiture
provisions, /d. at 1106. The court stated:
Framed in this manner, Forbush has met the com-
monality requirement, despite the fact that four
different pension plans are involved. The interests
and claims of the various plaintiffs need not be iden-
tical. Rather, the commonality test is met when
there is “at least one issue whose resolution will affect
all or a significant number of the putative class mem-
bers.” For this reason, “[t]he threshold of ‘common-
ality’ is not high.” Although the subsequent determi-
nations of individual awards are likely to be far less
mechanical than Forbush suggests, the necessity for
for even somewhat complex individual calculations
does not supply a basis for concluding that Forbush
has not met the commonality requirement.
Id. (internal citations omitted).
While this Court recently stressed the importance of
the commonality inquiry, we emphasized at the same time
that the inquiry “is qualitative rather than quantitative,
that is, there need be only a single issue common to all
members of the class.” In re American Medical Sys., Inc.,
75 F.3d at 1080 (citation omitted). Where there is such
a common issue, we have routinely permitted class action
suits in the Employee Retirement Income Security Act
context. See e.g., In re White Farm Equipment Co., 788
F.2d 1186 (6th Cir. 1986) (involving claims by a group
of retirees for recovery and reinstatement of allegedly
nonterminable welfare benefits where the retirees were
recipients of various descriptive brochures); Boyer v.
Douglas Components Corp., 986 F.2d 999 (6th Cir.
1993) (action by group of retired employees protesting
attempted termination of health insurance benefits involv-
ing different plan booklets, handbooks, outlines, revised
plan booklets, insurance certificates, and verbal assur-
ee |
63a
ances). In this case, the early retirees have several issues
in common, including the predominant one of whether
General Motors offered certain benefits to induce them to
retire early. In addition to asserting the same rights as-
serted by the general retirees founded upon the basic plan;
the early retirees contend that the early retirement offer
and their acceptance of it formed a separate binding con-
tract. We find that the early retirees satisfy the common-
ality requirement of Rule 23(a) (2).
General Motors also attacks the district court’s certifi-
cation of the early retirees as a class on the ground that
the plaintiffs’ claims do not satisfy Rule 23(a)(3). The
test for typicality is whether a “sufficient relationship exists
between the injury to the named plaintiff and the conduct
affecting the class, so that the court may properly attribute
a collective nature to the challenged conduct.” Jn re
American Medical Sys., Inc., 75 F.3d at 1082 (citations
omitted). In Forbush, the Fifth Circuit noted that “[t]he
test for typicality, like commonality, is not demanding.”
994 F.2d at 1106. The court stated:
It is true that much of the putative class is covered
by plans other than the one applicable to Forbush,
but Forbush has framed her challenge in terms of
Penney’s general practice of overestimating social
security benefits. Her claim is therefore typical and
thus provides no basis for suspecting that she will not
adequately represent the interests of the class.
ld,
General Motors cites Retired Chicago Police Ass'n y,
City of Chicago, 7 F.3d 584, 597 (7th Cir. 1993), in an
effort to show that the different groups of retirees who
received different representations should not be grouped
together:
Appellants have not provided any evidence other
than speculatior that any alleged communications
by the City or the Funds to the fire, laborer, or mu-
nicipal annuitants were the same as those made to
64a
the police. Even among the police, the record indi-
cates that some annuitants heard these communica-
tions at retirement seminars, some read a booklet,
some heard through word of mouth, and many sim-
ply had a general impression of the benefits to which
they were allegedly entitled. Some were ignorant of
any alleged promises.
Id. General Motors omits the immediately following por-
tion of the opinion, however:
Because the RCPA does not include individuals
from all of the fund groups and there is no indication
that each of these groups was treated identically by
the City or by its respective fund, its claims cannot
be deemed typical of the entire proposed class. The
RCPA is composed only of retired police officers,
and it simply cannot be assumed, especially because
these communications were for the most part verbal,
that the claims of these police officers “have the same
essential characteristics as the claims of the class at
large”... . [T]he putative class has not demonstrated
that the police annuitants’ claims have the same essen-
tial characteristics as the claims of the class at large.
. . Moreover, the asserted estoppel claims depend
on the particular nature of the communications alleg-
edly made in a particular instance and on each
annuitant’s reliance on that particular communication.
Id. (internal citations omitted). The Seventh Circuit thus
found typicality lacking because the police retirees were
not representative of retirees from other government
branches and seemed not to fully represent the possible
claims within even the police retiree group. By contrast,
the class representatives in this case appear to embody the
spectrum of information received by the class as a whole.
This case is more analogous to Forbush, where the court
concluded that, although much of the putative class was
covered by plans other than the one applicable to the class
representative, the representative framed her challenge in
65a
terms of the defendant’s “general practice of overestimat-
ing social security benefits,” thereby satisfying the typicality
requirement of Rule 23(a)(3). Forbush, 994 F.2d at
1106. Although the early retirees in the class certified by
the district court retired at various times and received
different information, they attack a system-wide modifica-
tion by General Motors of their right to benefits and
therefore satisfy Rule 23(a) (3).
We hold that the district court did not abuse its discre-
tion in granting class certification to the group of early
retirees in this case. The district court will be required,
however, to address the general retirees’ request for class
certification when the case is remanded for the reasons
set forth below.
Il.
The parties’ central arguments on appeal stem from the
district court’s grant of summary judgment against the
general retirees on their claim for vested health care bene-
fits, and its denial of summary judgment against the early
retirees. In Sprague I, the district court found that Gen-
eral Motors’ salaried health care plan contained an un-
ambiguous reservation of the company’s right to amend
or terminate the plan, 768 F.Supp. at 610, and conse-
quently granted summary judgment against the general
retirees on their claim for vested health care benefits. The
court denied summary judgment, however, as to the early
retirees on this issue, and reserved the question of whether
General Motors “bilaterally contracted to provide vested
benefits to early retirees” for a later bench trial. 768 F.
Supp. at 612. After the bench trial, the court ruled in
Sprague IV in favor of the early retiree class, holding that
the company entered into contracts with its early retirees,
assuring them and their surviving spouses that they would
receive the same level of health care benefits for their life-
times at no cost. 843 F.Supp. at 299. The court con-
cluded that the early retirees had a vested right to lifetime
health care benefits based on “statements of acceptance”
66a
that they signed and on various written and oral com-
munications provided by Genera! Motors. Although the
court recognized that General Motors’ benefits descriptions
had varied, and that some of the descriptions reserved a
right to amend the plan, it concluded that General Motors
had promised to provide medical coverage to early retirees
for life at no cost. Id. at 299, 317.
On appeal, the plaintiffs argue that the district court
should have found that the general retirees also had vested
rights to lifetime health care benefits. General Motors,
by contrast, maintains that its plan documents unambigu-
ously reserved General Motors’ right to alter its health
care plan, and contends that the district court erred in
holding that the early retirees had a vested right to un-
changed lifetime health benefits based on statements of
acceptance signed by the early retirees and informal com-
munications provided by General Motors.
We review a district court’s grant of summary judgment
de novo. Pope v. Central States Southeast & Southwest
Areas Health and Welfare Fund, 27 F.3d 211, 212-13
(6th Cir. 1994). As to a district court’s decision follow-
ing a bench trial, we can only reverse the court’s findings |
of fact if they are clearly erroneous. Boyer, 986 F.2d at
1003. However, contract interpretation is a question of
law subject to de novo review. Id. A district court’s dis-
missal of claims is also reviewed de novo. In re DeLorean
Motor Co., 991 F.2d 1236, 1239-40 (6th Cir. 1993).
The Employee Retirement Income Security Act “does :
not create any substantive entitlement to employer-provided
health benefits or any other kind of welfare benefits.
Employers or other plan sponsors are generally free under
[the Act], for any reason at any time, to adopt, modify,
or terminate welfare plans.” Curtiss-Wright Corp. v.
Schoonejongen, USS. , , 115 SC. 1223, :
1228, 131 L.Ed.2d 94 (1995). The Act also does not
establish “minimum participation, vesting, or funding re-
quirements for welfare plans as it does for pension plans.”
67a
Id. The absence of a statutory vesting requirement, how-
ever, does not mean that a welfare plan will never vest.
International Resources, Inc. y. New York Life Ins. Co.,
950 F.2d 294, 30] (6th Cir. 1991), cert. denied, 504
U.S. 973, 112 S.Ct. 2941, 119 L.Ed.2d 565 (1992).
Although we have declined to construe the Employee
Retirement 1 ome Security Act as providing a manda-
tory point for the vesting of welfare benefits, “it is settled
law that an employer and an employee may contract for
post-employment welfare benefits.” In re White Farm
Equip. Co., 788 F.2d at 1191,
In determining whether the parties have contracted for
such benefits, a court “must look to the intent of the
Parties and apply federal common law of contracts to
determine whether welfare plan benefits have vested.”
Gill v. Moco Thermal Indus., Inc., 981 F.2d 858, 860
(6th Cir. 1992). Under the Employee Retirement Income
Security Act, an employee benefit plan must be established
and maintained pursuant to a “written instrument.” 29
U.S.C. § 1102(a)(1). With regard to medical insurance
benefits, insurance policies themselves are the “written
instruments” required by law. Musto v. American Gen.
Corp., 861 F.2d 897, 901 (6th Cir. 1988), cert. denied,
490 U.S. 1020, 109 S.Ct. 1745, 104 L.E..2d 182 (1989).
In ascertaining Parties’ contractual intent, a court there-
fore first looks to the “written instrement” which forms
the agreement for clear manifestations of intent. See
Policy v. Powell Pressed Steel Co., 770 F.2d 609, 614
(6th Cir. 1985), cert. denied, 475 U.S. 1017, 106 S.Ct.
1202, 89 L.Ed.2d 315 (1985).
1. The General Retirees
The plaintiffs in this case have never claimed that the
underlying plan documents contained an agreement by
General Motors to provide plan Participants with vested
health care benefits. Instead, they have argued that lan-
guage included in summary plan descriptions and other
68a
summary documents distributed by General Motors or its
insurance carriers over the years constituted an agreement
by General Motors to provide salaried retirees and eligible
surviving spouses with free health care coverage for life.
The district court disagreed with the plaintiffs’ contention,
and found in Sprague I that, although the summary book-
lets “uniformly contained provisions similar to the follow-
ing: “Your basic health care coverages will be provided at
GM’s expense for your lifetime,” 768 F.Supp. at 610,
“(virtually all” of the booklets contained provisions un-
ambiguously reserving General Motors’ right to amend
the plan. /d. at 610-11. The court concluded that only
one summary booklet, issued in 1974, did not contain a
provision reserving General Motors’ right to change the
plan, and held that, in light of the fact that “GM em-
ployees were generally put on notice of GM’s right to
modify its health care plan,” its failure to reiterate such
notice in one booklet was not entitled to great weight.
Id, at 611, n. 7.
We conclude now that the district court’s approach in
Sprague I was mistaken in several respects. Most im-
portantly, the district court disposed of the general retirees’
claims without distinguishing among or thoroughly exam-
ining the different policies and summary booklets applica-
ble to the various plaintiffs. The district court must dis-
tinguish clearly between informal summary communica-
tions and official summary ple. descriptions before it can
proceed to resolve any conflicting language in the plan
documents or to ascertain the parties’ intent in the event
that plan language is found to be ambiguous.
In Edwards v. State Farm Mut. Auto. Ins. Co., 851
F.2d 134 (6th Cir. 1988), this Court held that, where a
summary plan description exists and contains language
which conflicts with statements in the underlying plan
document, the summary plan description must \govern.
The Employee Retirement Income Security Act “requires,
in no uncertain terms, that the summary plan description
be ‘accurate’ and ‘sufficiently comprehensive to reasonably
69a
apprise’ plan participants of their rights and obligations
under the plan.” Hansen v. Continental Ins. Co., 940 F.2d
971, 981 (Sth Cir. 1991); 29 U.S.C. § 1022(a) (1).
Consequently, we reasoned in Edwards that “{iJt is of no
effect to publish and distribute a plan summary booklet
designed to simplify and explain a voluminous and com-
plex document and then proclaim that any inconsistencies
will be governed by the plan. Unfairness will flow to the
employee for reasonably relying on the summary booklet.”
851 F.2d at 136 (citations omitted); see also Aiken vy.
Policy Management Sys. Corp., 13 F.3d 138, 140 (4th
Cir. 1993) ( holding that “representations in a SPD con-
trol over inconsistent provisions in an official plan docu-
ment”); Hansen, 940 F.2d at 982 (stating that, like the
Sixth and Eleventh Circuits, the Fifth Circuit holds that
where there is a conflict between a summary plan descrip-
tion and the terms of a master policy, the summary plan
description governs). In this case, the district court failed
to recognize and take the Edwards Principle into account
in reaching its decision in Sprague I. We believe that the
principle enunciated in Edwards, a pension plan case,
applies equally to welfare plan cases, and therefore extend
the Edwards rule to the welfare plan context.
Twelve summary booklets were issued between 1965
and 1988. Most, but not all. of the booklets contained a
provision to the following effect: “Your basic health care
coverages will be provided at GM’s expense for your life-
time,” and more than one summary booklet failed to con-
tain an express reservation of right provision. Our review
of the relevant provisions indicates that not only was such
a provision absent in the 1974 version of “Your GM
Benefits,” but two additional booklets (“Your GM Bene-
fits” published in October of 1977 and August of 1980)
contained lifetime language without an express reserva-
tion of right.”. Thus, three of the “Your GM Benefits”
*The “Your Benefits in Retirement” booklets distributed in
November of 1977 and August of 1980 did contain language stating
70a
booklets distributed to employees between 1974 and 1988,
as well as the 1966 “Your GM Benefits” booklet con-
tained no reservation of right language. By contrast, three
pre-Employee Retirement Income Security Act booklets
(1965, 1968, and 1971) and the 1985 and 1988 sum-
maries contained language to the effect that GM “reserves
the right to amend, change or terminate the Plans and
Programs described in this booklet.”
The district court also failed to distinguish clearly be-
tween the effect of the “Your GM Benefits” booklets and
the “Your Benefits in Retirement” booklets. Although
the district court stated in Sprague I that the “Your Bene-
fits in Retirement” booklets published in 1977 and 1980
qualified as summary plan descriptions, 768 F.Supp. at
608, it did not state definitively whether the “Your GM
Benefits” booklets published in 1977 and 1980, or the
other summary booklets for that matter, qualified as offi-
cial summary plan descriptions. General Motors admits,
however, that “the booklets issued since 1977 have quali-
fied as summary plan descriptions,” (Brief for General
Motors at 3), and we will proceed on that assumption.
Just as importantly, the district court’s factual findings
are inconsistent with regard to when certain summary
plan descriptions were distributed, and the parties disagree
as to whether the “Your Benefits in Retirement” booklets
were distributed to employees prior to or after their re-
tirement. General Motors claims that the “Your Benefits
in Retirement” booklets were “generally” and “routinely”
distributed to active employees prior to their retirement.
(Brief for General Motors at 4, 28). The plaintiffs, by
contrast, contend that it was not a routine practice to
distribute the booklets before retirement, and argue that,
on the summary judgment record in Sprague I, it was
undisputed that the “Your Benefits in Retirement” book-
lets were distributed to retirees rather than active employ-
that “GM health care coverages have been changed from time to
time through the years and are subject to change in the future.”
T7la
ees. In Sprague IV, the district court concluded that the
“Your GM Benefits” booklet was “designed for distribu-
tion to active employees” and was “not associated with
any early retirement offer,” and that many early retirees
did not receive a copy of the “Your Benefits in Retire-
ment” booklet “until after they retired, or just before they
walked out the door.” 843 F.Supp. at 303. It is vital
that the district court clearly resolve the issue of whether
the “Your Benefits in Retirement” booklet was generally
distributed to employees before or after retirement so that
it can in turn decide whether individuals retiring under
the 1977 and 1980 summary plan descriptions are entitled
to vested health care benefits (see discussion below).
The district court also failed to distinguish between the
effect of official statutory summary plan descriptions and
other general summary booklets distributed over the years.
Although the Employee Retirement Income Security Act
was passed in 1974, it did not require companies to prou-
vide summary plan descriptions until 1977.8 Therefore,
the 1974 “Your GM Benefits” booklet was actually a pre-
Employee Retirement Income Security Act summary book-
let. However, both the district court and the parties seem
to have treated this summary booklet as having the status
of an official summary plan description. See Brief for
Sprague at 7, n. 11 (stating that, “[t]hough the 1974
booklet pre-dated ERISA’s SPD requirement, GM’s de-
clarant stated that GM prepared this booklet as if the
SPD requirement were already in effect”); Amicus Brief
for Secretary of Labor at 22 (stating that the 1974 sum-
mary “although issued prior to 1977 and not formally an
SPD, apparertly was distributed by GM to employees
before they retired with the intention of summarizing the
*A summary plan description is a publication explaining the
benefits of a particular welfare benefits plan. Pursuant to 29 U.S.C.
§$ 1022 (1988), the Employee Retirement Income Security Act re-
quires employers to distribute summary plan descriptions to their
employees, A summary must meet the criteria set out in 29 U.S.C.
§§ 1022(a) and (b) to qualify as a summary plan description.
72a
benefits offered under the plan in an easily comprehen-
sible manner. GM acknowledged that this booklet served
as the summary plan description mandated by ERISA for
active employees, although the company was aware that
it was not required to meet ERISA’s formal requirements
for SPDs until 1977.” CR 78 at 18-19). On remand,
the district court must determine whether the 1974 sum-
mary booklet meets the statutory criteria of a summary
plan description and was intended to serve as such.
If the district court determines on remand that the 1974
booklet is to be treated as an official summary plan de-
scription, Edwards will apply to those individuals who
retired while the 1974 “Highlights of Your GM Benefits”
booklet was in effect because that booklet would have
been given the status of an official summary plan descrip-
tion, and contains lifetime language with no express reser-
vation of right. Similarly, if the district court determines
on remand that the 1977 and 1980 “Your GM Benefits”
booklets were summary plan descriptions generally dis-
tributed to employees before retirement, while the 1977
and 1980 “Your Benefits in Retirement” were distributed
to individuals who had already retired, individuals re-
tiring while those summary plan descriptions were in effect
would be entitled to vested health care benefits under
Edwards. Genera! Motors must provide coverage to those
employees who retired while summary plan descriptions
were in effect that promised lifetime benefits at the com-
pany’s expense and did not include an effective reservation
of right provision. Where this situation exists, the sum-
mary plan description is unambiguous and trumps any
policy language to the contrary. Judgment would be en-
tered in favor of those individuals retiring under the 1977
and 1980 “Your GM Benefits” booklets because they
would not have received summary plan descriptions con-
taining limiting language until after retirement, at which
time their rights to vested health care benefits would
already have been established. In other words, if em-
eT nae
73a
ployees retired while the 1977 or 1980 “Your GM Bene-
fits” were in effect and did not reecive the 1977 or 1980
summary booklets containing arguable reservation lan-
guage (i.e., “changed from time to time”) until after their
retirement, they are entitled to vested benefits because
the plan documents distributed to them while they were
active employees included a summary plan description
purporting to grant lifetime benefits with no effective
reservation of right. See Gentile y. Youngstown Steel
Door Co., 1986 WL 17464 at *5 (6th Cir. Aug. 25,
1986) (stating that a court “must focus on the plan docu-
ments which were distributed to the retirees while they
were active employees to determine the terms of their
contract with the company”): Wulf v. Quantum Chem.
Corp., 26 F.3d 1368, 1378 (6th Cir.), cert. denied,
US. » 115 S.Ct. 667, 130 L.Ed.2a 601 (1994)
(stating that once an employee is entitled to a benefit,
it would be “illusory” to divest the benefit retroactively ).
This principle holds true even where General Motors may
have included language at the end of a summary plan
description stating that the Summary does not include
all terms and conditions of the master policy and that all
rights and benefits are governed by the master Policy.
See Hansen, 940 F.2d at 982 (stating that company
may not “avoid the binding effect of its Statements in the
summary plan description on the basis of language in-
cluded at the tail end of the booklet” and that a necessary
corollary to holding that Statements in a summary plan
description are binding is that drafters of a summary may
not disclaim its binding nature).
The Edwards principle is inapplicable where an under-
lying plan document is specific and a summary plan de-
Scription is silent on a particular matter. Although “clear
and unambiguous statements in the summary plan descrip-
tion are binding, the same is not true of silence.” Jensen
v. SIPCO, Inc., 38 F.3d. 945, 952 (8th Cir. 1994), cert.
U.S. ——, 115 S.Ct. 1428, 131 L.Ed.2d
denied,
74a
310 (1995) (quoting Wise v. El Paso Natural Gas Co.,
986 F.2d 929, 938 (Sth Cir.), cert. denied, 510 US.
870, 114 S.Ct. 196, 126 L.Ed.2d 154 (1993)). Where
neither a summary nor an underlying policy contains a
promise of lifetime benefits, individuals retiring while such
documents were in effect are not entitled to vested bene-
fits. By contrast, where a summary contains no promise
of lifetime benefits, but the policy itself promises such
benefits and contains no reservation of right, individuals
retiring while such documents were in effect are entitled
to vested health care benefits. These principles apply in
the context of those employees who retired prior to the
effective date of the Employee Retirement Income Secu-
rity Act. Benefit summaries distributed to those individ-
uals do not have the same effect as official summary plan
descriptions and the terms of the underlying policy, if
unambiguous, control.
Where a summary plan description contains both a res-
ervation of right provision and a promise of lifetime bene-
fits, the general rule in this Circuit is that the plan
unambiguously retains the company’s right to amend the
plan and that provision must govern. Jn re White Farm
Equip. Co., 788 F.2d at 1193 (stating that where docu-
mentary evidence is unambiguous, it is not subject to in-
terpretation to ascertain its meaning and intent). In
Musto, we held that extrinsic evidence may not be con-
sidered where a welfare benefit plan unambiguously re-
serves the plan administrator’s right to amend or terminate
the plan.” 861 F.2d at 902; see also Schachner v. Blue
®In Musto, the insurance policy stated that “{t]he company re-
serves the right to determine new premium contributions from
time to time and at any time.” 861 F.2d at 901-02. The court found
this sentence to be unambiguous, and also found that nothing in
the insurance certificates suggested that the company would he
foreclosed forever from imposing new charges or increasing charges
in the medical coverage provided to retired employees. /d. at 902.
The court found that this unambigous statement was not counter-
acted by a brief statement in annual personal benefits statements
75a
Cross & Blue Shield of Ohio, 77 i‘ 3d 889, 894 (6th
Cir. 1996) (stating that extrinsic evi tence is admissible
to aid in the interpretation of a contract only where an
ambiguity is “patent” and “apparent on the face of the
contract”); Moore v. Metropolitan Life Ins. Co., 856
F.2d 488, 492 (2d Cir. 1988) (stating that, even where
a company describes benefits as being for an employee’s
“lifetime” and “at no cost,” where the company includes
an unambiguous reservation of its right to change or dis-
continue medical expense plans, the plan’s unambiguous
reservation of right provision must govern).
stating that “[y]ou are not required to contribute for these benefits
after your retirement.” Jd. at 903. Instead, the court held that that
statement was “perfectly accurate at the time,” and did not say
anything “one way or the other about the possibility of future
amendments regarding insurance benefits.” Jd. The court stated:
“[tlo read this Summary as saying that the plan can never be
changed in such a way as to mandate retiree contributions for con-
tinued medical coverage is to read into the summary something its
authors did not put there (a promise to provide lifetime “paid up”
medical insurance), while reading out of the summary something
that clearly was put there (an express reservation of the right to
change the plan). Such a reading violates the basic principle that
each provision of a contract should be interpreted as part of an
integrated whole, to the end that all of the provisions may be given
effect if possible.” Jd. at 906.
‘©The court in Moore declined to accept the plaintiffs’ argument
that, despite Metropolitan’s clear reservation in the plan documents
and summary plan descriptions of its right to amend or terminate
plans, the contract between the company and employees consisted
instead of the “totality of the representations made to the employees
by the Company, and the actions of the employees in accepting those
representations by remaining with the Company.” 856 F.2d at
491-92. The court concluded that the “[p]laintiffs’ argument, if
accepted, would undermine ERISA’s framework which ensures that
plans be governed by written documents filed under ERISA’s report-
ing requirements and that SPDs, drafted in understandable lan-
guage, be the primary means of informing participants and bene-
ficiaries.” Jd. at 492. The court concluded that, “absent a showing
tantamount to proof of fraud, an ERISA welfare plan is not sub-
ject to amendment as a result of informal] communications between
an employer and plan beneficiaries.” Id.
76a
In the case before us, we hold that, with two exceptions,
if the district court finds that a summary plan description
contains both an express reservation of right provision
and a promise of lifetime benefits, judgment should be
granted for General Motors with regard to individuals re-
tiring while such plans were in effect on the ground that
the company reserved to itself the right to amend its plan
at any time. The two exceptions we refer to are the 1977
and 1980 sets of summary plan descriptions. In the event
that the district court determines that both the “Your GM
Benefits” and “Your Benefits in Retirement” were dis-
tributed generally to employees prior to retirement, we
believe the “changed from time to time” language in the
“Your Benefits in Retirement” booklets should be viewed
as giving rise to an ambiguity in the plan language rather
than as an unambigous reservation of General Motors’
right to amend the plan. See Wulf, 26 F.3d at 1376 (stat-
ing that plan language is ambiguous “if it is subject to
two reasonable interpretations”). We believe this is the
best approach, and distinguish this case from Musto and
Boyer, for two reasons. The first and more important
reason is that, in 1977 and 1980, General Motors distrib-
uted two booklets within approximately two months’ time
which inherently contradicted each other. Both contained
promises of lifetime benefits while one contained no res-
ervation of right and the other contained arguable dis-
claimer language (i.e. “changed from time to time” lan-
guage). Because these contradictory statements relating
to the plaintiffs’ health care coverage were contained in
separate summary plan descriptions, if employees received
both booklets prior to retirement, we do not believe the
summary plan descriptions should be viewed as unambigu-
ous. Although it may be determined on remand that the
“changed from time to time” language did in fact reserve
General Motors’ right to amend the plan, an automatic
deprivation of vested rights is not warranted because of
the context in which General Motors distributed the in-
herently contradictory summary booklets within such a
77a
short span of time. The district court, therefore, should
examine extrinsic evidence to determine whether plaintiffs
who retired under those summary plan descriptions are
entitled to vested benefits.
We also distinguish this case from Musto and similar
cases based on the type of language at issue. In Musto,
the purported promise of lifetime benefits at the company’s
expense was weaker (i.e. the company stated that cov-
erage would “continue” for retirees), whereas in the 1977
and 1980 summary plan descriptions, General Motors
made explicit promises of “lifetime” benefits. At the same
time, there was a controlling document in Musto which
specifically reserved to the company the right to discon-
tinue coverage and the “right to determine new premium
contributions from time to time and at any time.” Boyer
is distinguishable on the same grounds: the assurances
in that case were weaker than the lifetime promises made
by General Motors in this case, and the company included
an explicit reservation of right in the summary plan
description.
In the event the district court must resolve an ambigu-
ity created by the 1977 and 1980 summary plan descrip-
tions, it may, under federal common law, use traditional
principles of contract interpretation to resolve the am-
biguity, including drawing inferences and presumptions
and introducing extrinsic evidence. Boyer, 986 F.2d at
1005; In re White Farm, 788 F.2d at 1193. In resolving
plan ambiguities, “ERISA plans, like contracts, are to be
construed as a whole.” Alexander v. Primerica Holdings,
Inc., 967 F.2d 90, 93 (3d Cir. 1992) (stating also that,
“[i]n interpreting an ambiguous ERISA plan, a court may
consider the intent of the plan’s sponsor, the reason-
able understanding of the beneficiaries. and past practice,
among other things”).
Finally, the district court erred in granting summary
judgment against the general retirees who retired after
78a
General Motors became fully self-insured in 1985. A
genuine issue of material fact exists as to whether the
1985 “Draft Plan” constituted the governing plan docu-
ment for the salaried retirees, and whether it contained
the essential elements of the Employee Retirement Income
Security Act’s “written instrument” requirements. 29
U.S.C. §§ 1102(a) and (b). In addition, the district
court made no findings as to whether or when the “Draft
Plan” was amended, a finding essential to determining
the rights of those individuals who retired during the self-
insured period. On remand, the district court must deter-
mine whether the 1985 “Draft Plan” constituted a plan
document, whether it was validly amended, and the effect
of the 1985 and 1988 summary plan descriptions.”
2. The Early Retirees
In Sprague IV, the district court held that General
Motors contracted away its right to alter health care bene-
fits for early retirees through early retirement agreements
and various other communications made to the early re-
tirees by the company. The court concluded that both the
long-form and short-form statements of acceptance of early
retirement signed by the early retirees “evidence a binding
bilateral contract between GM and its early retirees,” 843
F.Supp. at 301, and are enforceable under the Employee
Retirement Income Security Act as independent bilateral
contracts or as modifications of General Motors’ health
care benefit plan. The court stated:
The statements are framed in clear contract lan-
guage of offer, acceptance and agreement. By sign-
ing them, the salaried retirees in subclasses (1) and
(2) agreed to retire and accept the applicable bene-
The 1985 editions of “Your GM Benefits” and “Your Benefits
in Retirement” both contained promises of lifetime benefits and
express reservations of right. The 1988 version of “Your GM Bene-
fits” contained no lifetime language, but did contain an explicit
reservation of General Motors’ right to amend the plan.
|
79a
fits. In exchange they gave up future employment
(and re-employment) with GM, the opportunity to
earn future salary, benefits and pension accruals, and
waived some of their legal rights to state claims
against GM.
Id.
Having concluded that General Motors contracted with
the early retirees, the district court sought to determine the
terms of the contracts by looking to basic contract law.
Because the district court found that the statements of
acceptance were not completely integrated contracts,” it
considered extrinsic evidence concerning the meaning of
the contractual terms and the parties’ intent. In doing so,
the court noted that, although the interpretation of an
employee benefit plan generally begins with the official
“written instrument” and/or the summary plan descrip-
tion, “members of the plaintiff class were offered a special
deal, the terms of which go beyond the general retirement
plan.” Jd. The district court thus did not rely on the
formal plan and summary plan descriptions, but rather
based its decision on the information given to the early
retirees as they decided whether to leave their jobs. The
information included both the terms of the special early
retirement agreements and other extrinsic evidence, in-
cluding oral statements. 7d.
The parties’ arguments on appeal raise two questions
with regard to the status of the early retirees’ health bene-
fits. The first is whether employees can obtain vested
rights to welfare plan benefits based on representations
outside the official plan documents. The second is whether,
if such agreements are enforceable, the district court in
this case properly construed the terms of the contracts at
issue.
“The court found that the statements of acceptance did not
contain all of the contract’s terms because “Crjeference is made
to the ‘Special Early Retirement provisions of the General Motors
Retirement Program’ and the ‘benefits applicable . . . under the
provisions of the Programs.’” /d.
80a
We find on the facts of this case that General Motors
entered into contractual agreements with its early retirees
whereby the company vested certain health care benefits
in the retirees and their spouses in exchange for the early
retirees’ acceptance of early retirement and, in some cases,
their release of General Motors from any claims of un-
lawful termination. As the district court found, “early
retirement was presented . . . as a special package deal
that included health care, separate and distinct from the
regular GM retirement program.” Sprague IV, 843 F.
Supp. at 271. The district court made extensive and de-
tailed factual findings with regard to the benefit summaries
given and oral statements made to carly retirees shortly
before they decided to retire. We agree with the district
court that the information on health care supplied to early
retirees formed the basis of an agreement apart from the
company’s regular health care plan to provide early re-
tirees with vested health care benefits in exchange for
defined consideration, Sprague IV, 843 F.Supp. at 299,
and affirm the district court’s judgment in favor of the
early retirees on this issue.
IV.
The parties also contest the district court’s rulings on
their estoppel claims. I
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