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INTERNATIONAL UNION OF ELEC. v. UNISYS CORP.

August 3, 1994

INTERNATIONAL UNION OF ELECTRONIC, ELECTRICAL, SALARIED, MACHINE, AND FURNITURE WORKERS, AFL-CIO, and its Affiliated Locals 165, 445, 450, 470 and 792 and WILLIAM POWELL, ELIZABETH BALZANO, EMIL PHIL MARTINO, PETER F. SZCZYBEK, JOHN T. McDANIEL, CHARLES ZALEWSKI, ROBERT KENNEDY and ALFRED ESCHWEGE, as individuals for and on behalf of those similarly situated, Plaintiffs,
v.
UNISYS CORPORATION and the UNISYS CORPORATION MEDICAL PLAN, Defendants. LOCAL UNIONS 3 AND 1667 OF THE INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO, and AGNES RAHUBA and STEPHEN J. ROTH, as individuals for and on behalf of those similarly situated, Plaintiffs, v. UNISYS CORPORATION and THE UNISYS CORPORATION MEDICAL PLAN, Defendants.



The opinion of the court was delivered by: JOANNA SEYBERT

 SEYBERT, District Judge:

 The parties in the instant consolidated class action petition the Court for approval of a proposed settlement pursuant to Rule 23(e) of the Federal Rules of Civil Procedure. For the reasons discussed herein, the settlement is approved.

 BACKGROUND

 A. Overview Of The Claims Asserted, Class Certification, And Orders Leading Up To The Fairness Hearing

 This is a consolidated action consisting of two separate class actions brought against defendants Unisys Corporation and The Unisys Corporation Medical Plan [hereinafter referred to jointly as "Unisys"] under the Labor Management Relations Act ("LMRA"), the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and the common law. The plaintiffs in these class actions assert claims on behalf of certain retirees of Unisys, and their surviving spouses and dependents who are eligible to receive retiree benefits [hereinafter referred to jointly as "the Conference Board retirees"]. The plaintiffs allege, inter alia, that Unisys breached certain collective bargaining agreements that it had entered into with the International Union of Electronic, Electrical, Salaried, Machine, and Furniture Workers, AFL-CIO ["IUE"] and the International Brotherhood of Electrical Workers, AFL-CIO ["IBEW"] by unilaterally changing the benefit coverage of the Conference Board retirees and their spouses and dependents, effective January 1, 1993. As a result of these unilateral changes, the plaintiffs would be required to make additional contributions to ensure their continued receipt of specified medical benefits.

 By Order dated March 11, 1994, the Court, pursuant to Rules 23(b)(1) and 23(b)(2) of the Federal Rules of Civil Procedure, conditionally certified the settlement class, defining it in terms of nine separate subclasses. By this same Order, the Court also conditionally certified the named plaintiffs as class representatives and their counsel as class counsel.

 On April 8, 1994 the Court issued two separate orders in connection with the parties' efforts to settle this consolidated class action. First, the Court preliminarily approved a Stipulation of Settlement and Dismissal ("Stipulation of Settlement") for the instant consolidated class action subject to the provisions of an accompanying preliminary order. *fn1"

 On this same date, the Court entered an "Order Regarding Proposed Settlement of Class Action and Notice to Class" (the "Preliminary Order.") The Preliminary Order contains several provisions. Among other things, the Preliminary Order (i) reaffirmed the appropriateness of the Settlement Class and the subclasses as set forth in the Court's earlier Order Conditionally Granting Class Certification dated March 11, 1994, (ii) preliminarily approved the terms and conditions of the Stipulation of Settlement entered into between the parties, (iii) determined that the proposed notices to class members submitted by the parties met the requirements of Fed. R. Civ. P. 23 and due process, (iv) scheduled a fairness hearing for June 3, 1994, (v) established procedures whereby any settlement class member could appear at the hearing or otherwise object to the settlement, and (vi) enjoined all members of the Settlement Class from prosecuting, either individually or in a representative capacity, any claim or cause of action against Unisys with respect to matters embraced within the scope of the complaints to the consolidated actions.

 The Preliminary Order also approved a "'Bar Notice' described in paragraphs 4 and 5 of the Stipulation [of Settlement], and attached to the Stipulation [of Settlement] as Exhibit C." Preliminary Order P 5. In addition, the Preliminary Order authorized the Settling Defendants, by April 15, 1994, to cause the Bar Notice to be mailed to such persons as mutually agreed upon by the parties. See id. P 6.

 The Bar Notice served three distinct purposes. First, it informed the persons receiving it of the proposed settlement with Unisys Corporation. Second, it informed such persons of the establishment, pursuant to the Stipulation of Settlement, of two settlement trust accounts for the members of subclasses 7, 8 and 9. Last, it informed persons, who are neither parties to the action nor members of a settlement class, of the parties' intention to obtain a judgment that would extinguish their claims with respect to the establishment of the settlement trust accounts and the methods used to fund them. Further to this point, the Bar Notice conferred standing upon persons who are not represented in this action, subject to certain procedures, to object to the proposed settlement by appearance before the Court.

 By Memorandum and Order dated May 17, 1994, the Court vacated its prior approval of the Bar Notice, finding that the same was part of an impermissible "greater design to obtain a binding final order and judgment that, as a matter of res judicata, would purport to extinguish the right of unrepresented persons to challenge the establishment of the settlement trust accounts and the methods used to fund them." *fn2" International Union of Electronic, Electrical, Salaried, Machine and Furniture Workers v. Unisys Corp., 92- CV-5719 (JS), 155 F.R.D. 41, 47 (E.D.N.Y. May 17, 1994) [hereinafter "Memorandum and Order"]. By the same Memorandum and Order, the Court denied an application by James Wasserman, Esq. of the law firm of Vladeck, Waldman, Elias, & Engelhard, P.C. to file a motion to permit certain current and prospective Local 444 retirees to intervene in the instant consolidated action for purposes of moving to vacate the Stipulation of Settlement. *fn3" Nevertheless, in view of his clients' adversity of interest to the settling parties which would heighten the Court's ability to monitor the scope of the forthcoming proposed final order and judgment, and permit a response to be filed to a then-pending motion by the defendants to certify additional subclasses of unrepresented persons without first joining them to the action by service of a complaint, *fn4" the Court conferred amicus curiae status upon Mr. Wasserman. The Court further instructed counsel for each of the parties to the instant consolidated action to serve a copy of all prospective correspondences to the Court upon Mr. Wasserman until such time that the Court directed otherwise. See Memorandum and Order, 155 F.R.D. at 49. Finally, the Court explicitly instructed counsel for each of the parties to this action that it would not approve any proposed final settlement that sought a final adjudication of rights with respect to persons who are unrepresented (i.e., non-class members) in the instant consolidated action. See id. at 48.

 B. The Proposed Settlement

 The proposed settlement accords different rights to each of subclasses in exchange for the release of their claims. This variance in rights is due to the subclasses' independent chronologies, as each Unisys facility and local union generally had its own unique collective bargaining history and contract language. The medical benefits provided to retirees by Unisys and its predecessor in interest ("Sperry") also varied from location to location and, in some instances, from contract to contract at the same location. It therefore became impracticable for the parties to fashion a settlement that applied the same terms to each retiree covered by the instant consolidated action.

 A summary of the proposed settlement's provisions with respect to each of the subclasses follows.

 Subclass No. 1 - Vickers-Jackson Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its corporate predecessor, (3) retired from Unisys' Jackson, Mississippi facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Local 792, which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Provided that they can establish insurability, individuals in this Subclass whose coverage has not expired as of the relevant implementation date (the "Implementation Date")--either as a result of attaining a specified age or reaching a coverage cap--may choose between two options with respect to their coverage and retiree contributions for that coverage. As a first option, each family group in this Subclass, whose coverage has not already expired, may make a one-time election, on or before the Implementation Date, to continue coverage for all eligible family members under the plan of benefits in effect for the family group on December 31, 1992. For those electing such coverage, said coverage will continue until its expiration and will require a participant contribution equal to 20% of the participant's allocated cost, computed actuarially by reference to the actual cost experience of the covered individuals within this Subclass.

 Unisys has agreed that it will not exercise any right to amend or otherwise change any such pre-1993 benefit plans in effect for this Subclass and waives any reservation of its right to do so.

 If at any time after the Implementation Date the coverage of a participant or an eligible spouse expires, such individual, upon the occurrence of the first of these events, will be afforded a one-time option (per family) to enroll all eligible family members in the then-current Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining unit participants, at the lower of (1) the applicable contribution schedule announced by Unisys in October 1992, and (2) the rate for the Unisys PRM Plan which might result from any final court order in a pending multidistrict litigation action in the United States District Court for the Eastern District of Pennsylvania [the "Multidistrict Litigation Action"].

 As a second option, individuals in this Subclass whose coverage has not expired will be afforded a one-time election (per family) to enroll all eligible family members in the current Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining-unit participants, at the lower of (1) the applicable contribution schedule announced by Unisys in October 1992, and (2) the rate for the Unisys PRM Plan which might result from any final court order in the Multidistrict Litigation Action.

 Subclass No. 2 - Vickers-Troy Subclass

 This Subclass is a class comprised of all retirees who (1) were eligible for retiree medical benefits, (2) were employed by Unisys or its predecessor, (3) retired from Unisys' Troy, Michigan facility, and (4) were covered at the time of their retirement by a collective bargaining agreement between Unisys (or its predecessor) and IUE and its Local 945 which provided medical benefits for retirees, and/or their spouses and dependents eligible to receive medical benefits.

 Provided that they can establish insurability, individuals in this Subclass whose coverage has not already expired as of the Implementation Date, through the realization of the coverage cap, may choose between two options with respect to their coverage and retiree contributions for that coverage. As a first option, each family group in this Subclass, whose coverage has not already expired, will be afforded a one-time election on or before the Implementation Date to continue to have all eligible family members covered by the plan of benefits which was in effect for the family group on December 31, 1992. For those electing such coverage, such coverage will continue until the expiration of that coverage through the realization of the coverage cap, and the electing persons will contribute 20% of the plan's cost in payment for such coverage. Such cost will be actuarially determined based upon the actual experience of the covered group.

 Unisys has agreed that it will not exercise any right to amend or otherwise change any pre-1993 benefit plans in effect for this Subclass and waives any reservation of its right to do so.

 If at any time after the Implementation Date the coverage of a participant or an eligible spouse expires, such individual, upon the occurrence of the first of these events, will be afforded a one-time election (per family) to enroll all eligible family members in the then-current Unisys PRM Plan at the same terms and conditions offered at that time and in the future to non-bargaining-unit participants. The applicable contribution schedule will be the lower of (1) the applicable contribution schedule announced by Unisys in October 1992, and (2) the rate for the Unisys PRM Plan which might result from any final court order in the Multidistrict Litigation Action.


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