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Kelly v. Honeywell International, Inc.

United States District Court, D. Connecticut

February 8, 2017

DAVID KELLY, RICHARD NORKO, ANNETTE DOBBS, PETER DELLOLIO, Plaintiffs,
v.
HONEYWELL INTERNATIONAL, INC. Defendant

          MEMORANDUM OF DECISION ON THE PARTIES' CROSS-MOTIONS FOR SUMMARY JUDGMENT [DKTS. 44, 45]

          Hon. Vanessa L. Bryant United States District Judge

         I. INTRODUCTION

         This case is about the decision of Defendant Honeywell International, Inc. (“Honeywell”) to terminate Plaintiffs retirees' full medical coverage benefits. Plaintiffs David Kelly, Richard Norko, Annette Dobbs, and Peter Dellolio (collectively, “Plaintiffs”) are retired union workers and a surviving spouse who allege that the termination of such benefits constitutes an anticipatory breach of the collective-bargaining agreement; a violation of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1002(1), 1132; and a breach of Honeywell's fiduciary duty under ERISA, 29 U.S.C. § 1104(a). [Dkt. 1 (Pls.' Complaint)]. Before the Court are cross-motions for summary judgment. At issue is whether and under what circumstances the provisions of the CBA and the incorporated documents create a vested right for retirees to obtain lifetime medical coverage benefits.

         II. STATEMENT OF FACTS

         A. The Parties

         Plaintiffs David Kelly, Richard Norko, and Peter Dellolio are union members who worked at a plant in Stratford, Connecticut (“Plant”) that produced a variety of aerospace products and gas turbine engines for Army helicopters and tanks. [Dkt. 45-2 (Def.'s Local Rule 56(a)(1) Statement), ¶ 1; Dkt. 54 (Pls.' Local Rule 56(a)(2) Statement), ¶ 1; see Dkt. 44-2 (Pls.' Local Rule 56(a)(1) Statement), ¶ 5; Dkt. 55-1 (Def.'s Local Rule 56(a)(2) Statement), ¶ 5]. They retired with a pension and medical coverage benefits between June 1997 and October 1998. [See Dkt. 44-2, ¶¶ 1-3; Dkt. 55-1, ¶¶ 1-3]. Plaintiff Annette Dobbs is the surviving spouse of a deceased union retiree who retired with a pension and medical benefits in July 1999. [Dkt. 44-2, ¶ 4; Dkt. 55-1, ¶ 4]. The Court certified a class consisting of all Honeywell retirees who retired since October 28, 1994, whose medical insurance benefits Honeywell announced it intends to terminate. [See Dkt. 51 (Order Mot. Certify Class)]. Class members are retired Plant maintenance and production workers represented by the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”) Local 1010 and office clerical and technical workers represented by UAW Local 376 (collectively, the “Union”).

         On September 30, 1998, the Plant, which was owned by Honeywell, closed. [Dkt. 45-2, ¶ 42; Dkt. 54, ¶ 42]. Textron Corporation (“Textron”) owned the Plant from 1984 until AlliedSignal, Inc. (“AlliedSignal”) purchased the Plant on or about October 28, 1994. [Dkt. 45-2, ¶¶ 5-7; Dkt. 54, ¶¶ 5-7]. Honeywell subsequently acquired AlliedSignal, which operated the Plant until it closed. [Dkt. 44-2, ¶ 7; Dkt. 55-1, ¶ 7].

         Honeywell currently provides the named Plaintiffs and putative class members their medical coverage benefits and has done so throughout their retirement. [See Dkt. 45-2, ¶ 8; 54, ¶ 8]. In December 2015 Honeywell announced that it would terminate such benefits on December 31, 2016, but pursuant to an agreement stemming from this litigation the benefits are currently scheduled to terminate on February 28, 2017. [See Dkt. 53 (Pls.' Opp'n to Def.'s Mot. Summ. J.), at 1 n. 2].

         B. The Agreements

         The Plaintiffs' rights to retiree health benefits are governed by three agreements: the Collective Bargaining Agreement (“CBA”), the Supplemental Agreement (“SA”), and the Effects Bargaining Agreement (“EBA”) (collectively, “the Agreements”), the pertinent provisions of which are set forth below. Textron and the Union negotiated and entered into the CBA, effective May 30, 1994.[1] [See Dkt. 45-2, ¶ 9; Dkt. 54, ¶ 9; Dkt. 45-5 (Def.'s Mot. Summ. J. Ex. 3, Local 376/Textron CBA), at 4]. By this time, AlliedSignal was in discussions with Textron to purchase the Plant, and the sale was contingent upon a CBA negotiation acceptable to AlliedSignal. [See Dkt. 45-2, ¶ 14; Dkt. 54, ¶ 14]. AlliedSignal representatives did not directly participate in the process as they communicated only with Textron representatives, but they ultimately approved the CBA and acquired Textron. [See Dkt. 45-2, ¶¶ 16-17; Dkt. 54, ¶¶ 16-17]. The relevant CBA provisions are as follows:

Article XI, Group Insurance, Section 2: “The details and levels of the Group Insurance benefits hereinabove specified are more fully described and incorporated in the Supplemental Agreement covering Insurance.” [Dkt. 45-5, at 46].
Article XVIII, Effects Bargaining Agreement: “The Company and the Union have agreed to certain terms, conditions and benefits which shall be applicable in the event that the Company should sell the assets to a third-party purchaser. These commitments will be incorporated into an Effects Bargaining Agreement which shall be a part hereof as a supplement.” [Id. at 70].
Article XIX, Duration, Section 1: “The Union agrees that during the term of the Agreement it will not make any demands, representation or requests to the Company or to any governing body to enter into collective bargaining negotiations with respect to employee pensions and other retirement programs, salaries, merit or promotional increases or any health welfare plan, inasmuch as these matters have been subject to the collective bargaining procedure in accordance with the law and duly settled by this Agreement and not subject for further negotiations during its term or any addition, thereto.” [Id. at 71].
Article XIX, Duration, Section 3: “Except as otherwise provided herein, this Agreement shall become effective May 30, 1994, and shall remain in effect, up to and including June 6, 1997, and shall automatically renew itself from year to year thereafter unless written notice to terminate or amend the Agreement is given by either party to the other party at least sixty (60) days prior to its expiration or any annual renewal thereof.” [Id. at 72].
Article XIX, Duration, Section 3(b): “In the event that negotiations for an amended Agreement shall continue beyond the expiration of the term of this Agreement, this Agreement shall continue in full force and effect, provided, however, that either party may then terminate this Agreement upon ten (10) days written notice to the other party.” [Id. at 73].

         As referenced in the CBA, Textron and the Union negotiated the SA conferring specific Group Insurance benefits, which included medical health care benefits offered to employees and retirees. [See Dkt. 45-2, ¶¶ 28, 33; Dkt. 54, ¶ 28, 33]. AlliedSignal agreed to assume the provisions of the SA. [Dkt. 45-2, ¶ 37; Dkt. 54, ¶ 37]. The relevant SA provisions are as follows:

Article XX, General Provisions, Section 17(d): “If the Collective Bargaining Agreement is cancelled in whole or in part benefits hereunder will immediately cease.” [Dkt. 45-7 (Def.'s Mot. Summ. J. Ex. 5, Local 376/Textron SA), at 78].
Article XX, General Provisions, Section 23(b): “This Agreement shall be effective as of May 30, 1994, and shall remain in full force and effect without change, to and including June 6, 1997 and shall automatically renew itself from year to year thereafter unless written notice to terminate or amend this Agreement shall be given by either party to the other at least sixty (60) days prior to the renewal thereof. . . . [I]n the event that such negotiations shall continue beyond the expiration of the term of this Agreement, this Agreement shall continue in full force and effect, provided, however, that either party may terminate this Agreement upon ten (10) days written notice to the other party.” [Id. at 83].

         Textron and the Union also entered into the EBA, which delineated the benefits to which the Union's members would be entitled upon and after AlliedSignal's acquisition of Textron. [Dkt. 45-2, ¶ 19; Dkt. 54, ¶ 19; Dkt. 45-9 (Def.'s Mot. Summ. J. Ex. 7, Local 376/Textron EBA), at 1]. AlliedSignal agreed to assume the provisions of the EBA. [Dkt. 45-2, ¶ 37; Dkt. 54, ¶ 37]. The relevant EBA provisions are as follows:

INSURANCE, 1(b): “The coverage to be furnished shall include the Group Medical Plan for the bargaining unit which is to be effective under the 1994 labor agreement, as well as the life insurance and AD&D coverage likewise so effective. Dependent coverage shall continue for employees having such coverage when laid off.” [Dkt. 45-9, at 1-2].
PENSIONS, 2: “(a) All current retirees shall continue to receive monthly pension benefits as provided for under the Pension Plan. (b) All past and future retired employees and surviving spouses shall continue to receive their full monthly pension, including supplements if any, and full medical coverage as provided in the Pension Plan and Group Insurance Agreement, as now in effect or as hereafter modified by the parties for the life of the retiree or surviving spouse.” [Id. at 2 (emphasis added)].
DURATION (19): “This Effects Bargaining Agreement shall be effective as of May 30, 1994, and shall remain in effect until midnight on June 6, 1997, but not thereafter unless renewed or extended in writing by the parties. It is understood that expiration of this Agreement shall not foreclose . . . the post-expiration presentation in a timely fashion of claims regarding matters arising out of the application of its terms prior to the expiration date.” [Id. at 16].

         The Agreements represent the last collectively-bargained agreements to govern the Plant workers' benefits. [Dkt. 45-2, ¶ 25; Dkt. 54, ¶ 25]. They became effective May 30, 1994, and expired on June 6, 1997.[2] [Dkt. 45-2, ¶¶ 25, 40; Dkt. 54, ¶¶ 25, 40].

         III. LEGAL STANDARD

         Summary judgment should be granted if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party bears the burden of proving that no genuine factual disputes exist. See Vivenzio v. City of Syracuse,611 F.3d 98, 106 (2d Cir. 2010). “In determining whether that burden has been met, the court is required to resolve all ambiguities and credit all factual inferences that could be drawn in favor of the party against whom summary judgment is sought.” Id. (citing Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 255 (1986); Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,475 U.S. 574, 587 (1986)). If there is any evidence in the record that could reasonably support a jury's verdict for the nonmoving party, summary judgment must be denied.” Am. Home Assurance Co. v. Hapag Lloyd Container Linie, GmbH,446 F.3d 313, 315-16 (2d Cir. 2006) (internal quotation marks and citation omitted). In addition, ...


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