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Sprague v. GMC

Sprague v. GMC

United States Court of Appeals for the Sixth Circuit

April 23, 1997, Argued ; January 7, 1998, Decided ; January 7, 1998, Filed

Nos. 94-1896/94-1897/94-1898/94-1937

Opinion

 [***2]  [*392]   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 Retirement Income Security Act of  [***3]  1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"), by denying them fully "paid-up" lifetime health care benefits. The district court certified a class of some  [*393]  50,000 employees who had taken early retirement, but the court declined to grant class status to about 34,000 "general retirees" who had retired in accordance [**3]  with the company's normal criteria. As to the general 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 question 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.

In 1961 General Motors began paying part of the cost of health insurance for its salaried retirees 1 and their surviving 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 [**4]  will generally be omitted.)

 [***4]  In addition to basic health insurance, GM offered its salaried retirees supplemental coverage under what was called the Comprehensive Medical Expense Insurance Program. Participants in this optional program were required to pay a share of the premiums, and co-payment was required for certain medical services. There were also annual deductibles.

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133 F.3d 388 *; 1998 U.S. App. LEXIS 84 **; 1998 FED App. 0004P (6th Cir.) ***; 21 Employee Benefits Cas. (BNA) 2267; 39 Fed. R. Serv. 3d (Callaghan) 788

ROBERT D. SPRAGUE, et al., Plaintiffs-Appellees/Cross-Appellants, v. GENERAL MOTORS CORPORATION, Defendant-Appellant/Cross-Appellee.

Subsequent History:  [**1]  As Corrected January 7, 1998. As Corrected April 13, 1998. Certiorari Denied June 8, 1998, Reported at: 1998 U.S. LEXIS 3840.

Prior History: Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 90-70010. John Feikens, District Judge.

Disposition: Certification of the class of early retirees REVERSED, and the injunction VACATED. As it applies to any unnamed member of the plaintiff class, the final judgment of the district court VACATED. As it applies to the named plaintiffs, the final judgment is AFFIRMED IN PART and REVERSED IN PART.

CORE TERMS

retirees, benefits, retirement, district court, documents, lifetime, healthcare, employees, vested, en banc, booklets, promised, coverage, terminate, early retirement, descriptions, reserved, terms, healthcare benefits, representations, estoppel, welfare plan, amend, named plaintiff, salaried employee, plaintiffs', fiduciary, bilateral contract, vested right, programs

Civil Procedure, Responses, Defenses, Demurrers & Objections, General Overview, Parties, Joinder of Parties, Class Actions, Prerequisites for Class Action, Numerosity, Special Proceedings, Certification of Classes, Judicial Discretion, Commonality, Business & Corporate Compliance, Contract Formation, Consideration, Detrimental Reliance, Class Members, Named Members, Typicality, ERISA Pension Plan Qualification Requirements, Participation & Vesting, Coverage Requirements, Pensions & Benefits Law, ERISA, Plan Amendments, Participation & Vesting, Vesting Requirements, Pensions & Benefits Law, Plan Establishment, Disclosure, Notice & Reporting, Disclosure, Notice & Reporting, Employee Benefit Plans, Promissory Estoppel, Contracts Law, Enforcement of Promises, Fiduciary Responsibilities, Prohibited Transactions, Civil Litigation, Causes of Action, Equitable Estoppel, Fiduciaries, Prohibited Transactions, Duty of Loyalty, Governments, Fiduciaries, Legislation, Interpretation, Types of Statutes