The opinion of the court was delivered by: LECHNER
This is a class action brought by plaintiffs Judd Alexander and Richard Edwards on behalf of themselves and persons similarly situated (collectively, the "Plaintiffs") against defendants Primerica Holdings, Inc. ("Primerica"), the Board of Directors of Primerica (the "Board of Directors"), James Dimon ("Dimon"), Irwin Ettinger ("Ettinger"), John Fowler ("Fowler") and ABC ("ABC") (collectively, the "Defendants").
Plaintiffs brought suit to declare and enforce their asserted rights to medical insurance benefits, life insurance benefits and survivor income benefits under a retirement welfare benefit plan (the "Plan") established by the American Can Company ("American Can"), a predecessor of Primerica. Plaintiffs claim Defendants have violated the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001 et seq., by modifying the Plan.
Jurisdiction is specifically alleged in the Amended Complaint under section 502 of ERISA, 29 U.S.C. §§ 1132(a)(1)(B), 1132(a)(2) and 1132(a)(3)(A) & (B). Amended Complaint, P 2. It is presumed jurisdiction is also alleged under 29 U.S.C. § 1132(e).
A. The Parties and the Plan
Primerica is a corporation organized under the laws of the State of Delaware; it maintains its principal place of business in the State of Connecticut. Amended Complaint, P 5. Dimon, Ettinger and Fowler are or were members of the Board of Directors of Primerica. Id., P 8. Primerica is the surviving entity of a merger between Primerica and Primerica Corporation ("Primerica Corporation") in December 1988. Id., P 6. Primerica Corporation was organized under the laws of the State of New Jersey and, until April 1987, was known as American Can.
Id. Plaintiffs are either retired salaried employees of American Can or their surviving spouses. Id., PP 3-4, 11.
Beginning in 1957, American Can maintained the Plan which is a retirement welfare benefits plan for qualified salaried employees who retired. Id., P 21. The terms of the Plan were set forth in a series of summary plan descriptions (the "SPDs") which, pursuant to ERISA, must be furnished to Plan beneficiaries. See 29 U.S.C. § 1022. The benefits under the Plan included a pension, life insurance and medical insurance. Amended Complaint, P 21. It is uncontroverted that Plaintiffs are former salaried employees or their surviving spouses eligible to receive retirement benefits under the Plan. It is also uncontroverted Plaintiffs received benefits under the Plan. Plaintiffs' allegations that "repeated representations were made to employees and retirees alike" that their retirement benefits would be provided by the company "for life," are, however, contested.
Id., P 22.
Plan beneficiaries are required to make mandatory monthly contributions to cover a portion of the cost of the Plan. Apparently, the amount of the monthly mandatory contributions which Plan beneficiaries are required to make was, until 1 February 1989, $ 5.00 per covered Plan participant.
Id., P 30. Plaintiffs allege Primerica's predecessor, American Can, had agreed the amount of those contributions would never increase. Plaintiffs allege American Can
promised the Plaintiffs by various means, including oral representations, publications, documents, brochures and a general course of dealing that it would provide Plaintiffs with the protection and security of the American Can Retirement Program, including lifetime pension, life insurance and lifetime medical insurance benefits upon retirement and that the lifetime medical insurance benefits would be so provided at a fixed, nominal cost to retirees.
Plaintiffs allege that American Can "at no time reserved to itself the right to unilaterally terminate" benefits under the Plan or to increase the cost of those benefits. Id., PP 26-27. The SPDs, for their part, neither expressly prohibit nor expressly provide for raising of the amounts of the mandatory contributions. All but one SPD, however, contain the following provision:
The Company expects to continue this Plan indefinitely, but necessarily reserves the right to amend, modify, or discontinue the Plan in the future in conformity with applicable legislation. . . .
Affidavit of Sal Giudice, dated 6 March 1991, Ex. A at 5.
In addition, it appears most employees of American Can signed one of two forms upon registering for coverage under the Plan. These forms indicate the contribution amount for retirees was understood to be subject to change. See Letter from Harry Kurzweil, dated 8 October 1992 (the "8 Oct. 1992 Letter"), at 2-3.
The first form ("Form A"), is a one page form entitled "Deduction Authorization -- Comprehensive Medical Plan Coverage For Retirees Receiving Benefits Under the American Can Company Plan For Salaried Employees." See id. Form A contains the following:
I understand that the monthly charge for this coverage is subject to change in the future. If the cost of this coverage is changed, I will be notified in advance and given the option of continuing my coverage at the new monthly cost or terminating my coverage.
I request and authorize you to direct Bankers Trust Company . . . to deduct from retirement payments I receive under the . . . Plan amounts equal to the coverage I have indicated above and to pay these amounts to American Can. . . . This authorization will continue to apply until canceled by me by written notice. . . . This authorization will not remain in effect if American Can discontinues extending medical coverage to me and/or to my eligible dependant.
The second form ("Form B") is a shorter version of Form A, entitled "Deduction Authorization Card for Retired Employees who are receiving benefits under the American Can Company Retirement Plan for Salaried Employees and who desire to obtain Major Medical Insurance Plan Coverage." Id. Form B contains the statement: "I want [the] Major Medical Insurance Plan coverage indicated by my check mark." Id. Form B then offers the retiree three options to choose from: (a) "Retiree with spouse ($ 7.10 $ 2.72 for each dependant child)," (b) "Retirees Only ($ 3.55 per month initially)" and (c) "Retiree with Spouse ($ 7.10 per month initially)." Id. (emphasis added). Form B also contains language similar to Form A:
I request and authorize you to direct Bankers Trust Company . . . to deduct from retirement payments I receive under the . . . Plan amounts equal to charges for such Major Medical Insurance Plan coverage and to pay over such amounts to American Can. . . . This request and authorization will continue to apply until canceled by me by written notice . . . notwithstanding any changes in benefits or charges or any cessation of my coverage not communicated to you.
On 14 December 1989, Plaintiffs filed their complaint (the "Complaint"). The Complaint contains six counts -- four counts under common law contract theories of recovery (the "Common Law Contract Counts") including promissory estoppel (Count One), breach of a unilateral contract (Count Two), alteration of contractually-guaranteed deferred compensation (Count Three) and unlawful alteration of vested contractual rights (Count Four), as well as two counts under ERISA for breach of fiduciary duty (Count Five) and failure to disclose reservation of rights (Count Six). See Complaint, PP 28-71. In the complaint, Plaintiffs demand a "trial by jury as to all issues so triable." Id. at 31.
On 31 August 1990, Plaintiffs moved for class certification. See Notice of Motion, filed 31 August 1990. Defendants opposed the motion for certification because, inter alia, they argued the Common Law Contract Counts could not be litigated on a class-wide basis. Moving Brief at 4. On 15 October 1990, the motion for certification was denied without prejudice for the purpose of permitting the parties to submit briefs on whether the Common Law Contract Counts were preempted by ERISA. See Order, filed 15 October 1990.
In lieu of briefs concerning the pre-emption question, Plaintiffs requested and were given leave to file the Amended Complaint. See Order of Magistrate Judge Ronald J. Hedges, filed 31 January 1991. The Amended Complaint deleted the four Common Law Contract Counts and, instead, asserted four counts under ERISA. See infra at pp.10-11. Thereafter, on 13 May 1991, Defendants stipulated to class certification. See Consent Order Regarding Certification (the "Consent Order"), filed 13 May 1991. Plaintiffs' class was certified as consisting of:
. . . All salaried retirees of American Can and their spouses, and the spouses of all deceased former employees of American Can, excluding those salaried retirees (and their spouses or surviving spouses) who were designated by American Can, as retirees of its "Packaging Sector" in connection with the sale of the packaging operations of American Can to Triangle Industries.
In Count One, entitled "Violation of Erisa Plan," Plaintiffs allege Defendants violated both ERISA and Federal common law and breached their contractual obligations under the Plan by unilaterally increasing the amounts of the mandatory contributions to the Plan. Amended Complaint, PP 32-38. Plaintiffs state:
Primerica . . . has breached its contractual obligations and duties to Plaintiffs under the . . . Plan by unilaterally increasing the mandatory contributions for their medical insurance benefits under such Plan and by their actions violated the provisions of ERISA and the Federal common law arising thereunder.
Id., P 36. Plaintiffs recognize the Plan is "governed by the provisions of ERISA and the controlling Federal common law thereunder." Id., P 33.
In Count Two, entitled "Breach of ERISA by Alteration of Vested Benefits," Plaintiffs allege Primerica's unilateral increase in the amount of mandatory Plan contributions was unlawful and constituted a breach of contract. Id., PP 30-44. Specifically, Plaintiffs allege the retirement benefits were vested and not subject to modification. Id.
In Count Four, entitled "No Reservation of Rights Under ERISA Plan," Plaintiffs allege American Can, Primerica Corporation and Primerica failed to reserve properly their rights to modify unilaterally the Plan. Id., PP 52-54. Moreover, Plaintiffs allege that, if such a right was properly reserved, Defendants "failed to adequately convey such reservation to Plaintiffs in clear and unambiguous terms . . . calculated to be understood by the average plan participant." Id., P 53.
Plaintiffs seek the following relief on each of the four counts of the Amended Complaint:
(i) A declaration that Primerica is obligated to continue to fund and maintain on behalf of each Plaintiff, and to make available to each such Plaintiff, the same level of welfare benefits including life insurance and medical insurance benefits, on the same terms which existed prior to 1 February 1989 and conditions that each such Plaintiff was subject to prior to February 1, 1989, for the remaining lifetime of each of the Plaintiffs.
(ii) A permanent injunction restraining Primerica . . . from reducing, altering, or terminating any such welfare benefits, including life insurance and medical insurance benefits and prohibiting it from raising the cost of mandatory retiree ...