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Kauffman v. General Electric Co.

United States District Court, E.D. Wisconsin

June 15, 2017

EVELYN KAUFFMAN and DENNIS ROCHELEAU, Plaintiffs,
v.
GENERAL ELECTRIC COMPANY, Defendant.

          DECISION AND ORDER

          Lynn Adelman District Judge

         Evelyn Kauffman and Dennis Rocheleau bring this putative class action under the Employee Retirement Income Security Act (ERISA) against their former employer, General Electric Company (GE), based on its amendment and termination of Medicare supplement insurance plans that it once provided to eligible retirees. Plaintiffs initially brought two claims. First, they alleged that language in summary plan descriptions (SPDs) of the plans obliged GE to try to continue providing benefits under the plans absent a compelling reason to reduce or terminate them and that it breached that obligation when it amended and then terminated the plans. I dismissed this claim at the pleading stage because the terms of an SPD are not enforceable as the terms of a plan itself and plaintiffs did not allege that GE violated any plan terms. See Decision & Order, ECF No. 49, at 3 (citing Cigna Corp. v. Amara, 563 U.S. 421, 436 (2011)). Second, plaintiffs alleged that GE breached its fiduciary duties under ERISA with respect to the plans by misrepresenting its intent to continue the plans indefinitely absent a compelling reason to substantially amend or terminate them. Plaintiffs move for class certification on this claim, and both parties move for summary judgment.

         I. BACKGROUND

         Before January 1, 2015, GE provided health insurance and prescription drug benefit plans to eligible retirees and their beneficiaries, which supplemented Medicare. Between 1992 and 2012, GE issued SPDs of these plans containing language like the following from § 5.4 of the July 2012 SPD:

GE expects and intends to continue the GE Medicare Benefit Plans described in this handbook indefinitely, but reserves the right to terminate, amend or replace the programs or plans, in whole or in part (subject to applicable contractual requirements), at any time and for any reason, by action of the Board of Directors of General Electric Company or such persons as it may designate.
A decision to terminate, amend or replace a plan may be due to changes in federal law or state laws governing qualified retirement or welfare benefits, the requirements of the Internal Revenue Service, ERISA or any other reason.

         ECF No. 88-2, at 60. The first page of that SPD reads in relevant part as follows:

While every attempt has been made to make this handbook as accurate as possible, full details of all provisions of each program or plan may not be included. Full details of each program or plan are contained in the official plan documents, which are available to you as described in Section 5.0, “Administrative Information, ” . . . . If a provision described in this handbook differs from the provisions of an applicable plan document, the plan document prevails.

Id. at 3. The SPD states that copies of official plan documents are available in person at GE's human resources offices, by phone, and by mail. Id. at 54. In relevant part, the official plan documents for each plan say, “This Plan may be amended, suspended, or terminated by the Board of Directors, in whole or in part, at any time without limitation . . . .” ECF No. 31-1, at 169; ECF No. 31-2, at 6; ECF No. 31-3, at 9.

         In September 2012, the GE Board of Directors voted to amend the plans to eliminate future eligibility for individuals like plaintiff Evelyn Kauffman who would not be 65 years old, retired, and enrolled in the plans by January 1, 2015. Later that month, GE provided written notice of the change to those affected. Two years later, in September 2014, the Board voted to terminate the plans effective January 1, 2015, and instead offer eligible retirees access to coverage on a private exchange, subsidize the purchase of plans on the exchange, and reimburse participants for some prescription drug costs. This change affected individuals like plaintiff Dennis Rocheleau who were already retired and enrolled in the plans before January 1, 2015. Within days, GE provided written notice of the change to those affected.

         II. DISCUSSION

         ERISA requires plan administrators like GE to provide participants with “accurate and comprehensive” SPDs “written in a manner calculated to be understood by the average plan participant.” ERISA § 102(a), 29 U.S.C. § 1022(a). Further, when a company acts as a plan administrator, as it does when issuing an SPD, it acts as a fiduciary, Amara, 563 U.S. at 437, and must act “solely in the interest of participants and beneficiaries” and “with the care, skill, prudence, and diligence . . . of a prudent man acting in a like capacity and familiar with such matters, ” ERISA § 404(a)(1)(A)-(B), 29 U.S.C. § 1104(a)(1)(A)-(B).

         Plaintiffs argue that GE breached its fiduciary duties under ERISA with respect to the plans by issuing SPDs misrepresenting that it “expected and intended” to continue the plans indefinitely and that it would only amend or terminate them for a compelling reason like a change in federal or state law. “Lying is inconsistent with the duty of loyalty owed by all fiduciaries and codified in section 404(a)(1) of ERISA.” Peoria Union Stock Yards Co. Ret. Plan v. Penn Mut. Life Ins. Co., 698 F.2d 320, 326 (7th Cir. 1983) (citation omitted) (citing § 1104(a)(1)), quoted in Varity Corp. v. Howe, 516 U.S. 489, 506 (1996). Further, plaintiffs argue that, even if GE didn't lie, it breached its duty of care when it failed to take reasonable steps to ensure that the SPDs did not contain false or misleading information.[1]

         GE argues that it did not intend to mislead or deceive anyone. It says that the SPDs clearly stated that its Board could amend or terminate the plans at any time for any reason and that, even if the SPDs were somehow ambiguous or confusing, they clearly stated that they were subordinate to the official plan documents, which were clear. Finally, according to GE, plaintiffs have not shown that its fiduciary conduct caused them redressable harm, so they lack ...


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