Jury to decide if employer could change benefits plan

Where there was disputed evidence on whether the employer reserved its right to amend life insurance coverage under its benefits plan, summary judgment was improvidently granted to the employer in a putative class action initiated by retirees and beneficiaries, alleging their benefits were improperly terminated.

Background

This putative class action was initiated by eight plaintiffs — each a retiree of PPG Industries Inc. or the surviving spouse of such a retiree — following the termination of the plaintiffs’ retiree life insurance coverage under the PPG Employee Life and Other Benefits Plan. The district court awarded summary judgment to the PPG defendants on all claims.

Analysis

An employer “is generally free under ERISA, for any reason at any time, to adopt, modify, or terminate its welfare plan” — “unless [the] employer contractually cedes its freedom.” Here, the district court’s analysis of the vesting claim was premised on the fact that the benefits plan contained a reservation of rights clause as of 1984. That clause, per the court, “is ‘plainly inconsistent with any alleged intent to vest [the retiree life insurance] benefits.’”

What the court failed to appreciate was that — if, as the plaintiffs assert, the removal of the prior reservation of rights clause in 1969 vested the retiree life insurance coverage for plan participants working between 1969 and 1984 — the new reservation of rights clause allowed PPG to modify or terminate the retiree life insurance coverage for only those plan participants hired after the clause’s adoption in 1984. Put differently, if the retiree life insurance coverage constituted a vested benefit between 1969 and 1984, it could not subsequently be taken away from the eligible plan participants who worked during that 15-year period.

For proof of vesting, plaintiffs principally rely on PPG’s purposeful removal in 1969 of the then-existing reservation of rights clause according PPG discretion to modify the benefits plan and its retiree life insurance coverage. The plaintiffs additionally rely on the PPG Employee Benefits Committee minutes, explaining in 1984 that PPG had removed the reservation of rights clause in 1969 because that provision had “caused doubt in the minds of retirees and the sense of security that retirees look for was absent.” The plaintiffs’ evidence also includes the 1981 summary plan description, which included a reservation of rights clause for other plan benefits, but not for retiree life insurance coverage.

The PPG defendants thereby suggest that the deletion of the reservation of rights clause was not for the purpose of vesting, but for the purpose of removing a provision of dubious legality in the pre-ERISA era. In so doing, however, the PPG defendants simply confirm that — as the plaintiffs insisted to the district court — vesting is a disputed issue of material fact. There being such a factual dispute, the district court erred in awarding summary judgment to the PPG defendants on the Count One vesting claim. Accordingly, although the court otherwise affirms, it vacates the court’s judgment with respect to the vesting claim and remand for further consideration thereof, which may include related discovery, spoliation issues and class certification.

Affirmed in part, vacated in part and remanded.

Concurring/dissenting opinion

Rushing, J., concurring in part and dissenting in part:

Like my colleagues in the majority, I would affirm the district court’s award of summary judgment to the PPG defendants on Counts Seven and Eight and the Count One transfer argument. But I would also affirm the award of summary judgment on the Count One vesting claim in its entirety because, interpreting the plan documents according to binding precedent, the retiree life insurance benefit did not vest.

Bellon v. The PPG Employee Life and Other Benefits Plan, Case No. 21-1812, July 15, 2022. 4th Cir. (King), from NDWVA at Wheeling (Groh). Maureen Davidson-Welling for Appellants. Joseph J. Torres for Appellees. VLW 022-2-170. 29 pp.