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WEBB v. GAF CORP.

January 24, 1996

JACK WEBB, EUGENE STERNER, FRED RYAN, ALEX KOULIKAS, FRANCES KURAU and WILLIAM COLLIER, as individuals, and on behalf of a class of individuals similarly situated, Plaintiffs,
v.
GAF CORPORATION; GAF EMPLOYEE BENEFIT PROGRAM FOR INTERNATIONAL ASSOCIATION OF MACHINISTS AND AEROSPACE WORKERS, JOHNSON CITY LODGE # 1807; and GAF EMPLOYEE BENEFIT PROGRAM FOR INTERNATIONAL CHEMICAL WORKERS, LOCAL # 306, Defendants.



The opinion of the court was delivered by: MUNSON

 Presently before the court are cross-motions for post-trial relief from a special jury verdict rendered September 25, 1992 in a partial class action concerning retiree medical benefits. Oral argument was heard in Syracuse on December 4, 1992. In a bench decision the court decided defendant's motions to dismiss absent class members who had either failed to respond to interrogatories or indicated their desire to opt out. Transcript of Bench Decision, Dec. 4, 1992, Document ("Doc.") 208, at 3-4, 5, 8. In a subsequent order the court preliminarily enjoined defendants from raising the medical plan premiums charged to the class represented by plaintiffs Webb, Sterner, & Ryan, in accordance with the special verdict of the jury. Jan. 3, 1995 Order, Doc. 216. Defendants thereafter moved to stay the injunction pending appeal. That motion was denied. March 8, 1995 Order, Doc. 221.

 The court has painstakingly considered the multiple submissions of the parties and is now prepared to dispose of the remaining post-trial motions. The following constitutes the Memorandum-Decision and Order of the court.

 I. BACKGROUND

 The two plaintiff classes consist of early retirees from defendant GAF Corporation who were members of two labor unions: the International Association of Machinists and Aerospace Workers, Johnson City Lodge # 1807 ("IAM class") and the International Chemical Workers Union, Local # 306 ("Chemical Workers class"). The classes were certified only as to claims arising under section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(a)(1)(B), and section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185, also known as the Taft-Hartley Act. See Order Granting Class Certification, Doc. 56; Corrected Order Granting Class Certification, Doc. 59.

 In early 1973 the IAM union and GAF commenced negotiating a new collective bargaining agreement ("CBA") to replace the one due to expire in June of that year. One of the matters discussed was health insurance for early retirees. The process resulted in the inclusion of the following provision in section 73 of the 1973-75 CBA:

 
Employees electing early retirement on or after 7/1/73 who are members of the active employee medical plan may continue to carry the active employee medical plan until eligible for Medicare at which time they will be covered by the existing Retiree Medical Plan. The cost to the early retiree of the active plan will be $ 3/month for the employee and $ 3/month for the spouse and/or family.

 Exhibit ("Exh.") A attached to Affidavit ("Aff.") of Francis W. Gaube, Doc. 132, at 28.

 The CBA expired on July 1, 1975. The provision in section 73 was repeated in the agreements covering the periods 1975-77, 1977-79, 1979-81, and 1981-83, with certain eligibility changes not relevant here. For terms of the medical plans, including deductibles and benefit levels, union members were referred to certain brochures known as summary plan descriptions in ERISA terminology.

 The Chemical Workers union bargained for similar early retiree medical benefits in 1974. The discussions on this point were reduced to a Memorandum of Understanding ("MOU"). Item Six of the MOU contained language identical to that portion of the IAM CBA quoted above, except the date set for the commencement of the benefits was April 4, 1974. Exh. A attached to Chemical Workers Class Notice of Motion, Doc. 191. This provision of the MOU was not incorporated into the Chemical Workers' 1974-76 CBA, nor into any subsequent two-year agreement.

 GAF started instituting premium increases for early retirees in 1984. The IAM class claims that the benefits prescribed in the section 73 early retiree provisions in the five CBAs from 1973 to 1983 were intended to vest on the date of retirement, precluding any subsequent increase in premium or deductible, or decrease in benefit level. The Chemical Workers class claims the 1974 MOU manifested the same intention that medical benefits vest for the life of the retiree. After a two week trial in September of 1992, the jury found the following in its answers to interrogatories in a special verdict form: *fn1"

 1. The premiums specified in section 73 of the five IAM CBAs in question for early retirees under 65 who wished to continue their coverage under the regular employee medical plan were intended by the parties to the labor negotiations to remain fixed, vesting at the date of retirement. Jury Verdict Form, Court Exh. 3, at 1.

 2. The terms of medical coverage (including deductibles) for the IAM class early retirees under 65 who elected to continue the regular medical plan were not intended to remain fixed. Id. at 2.

 3. IAM class early retirees reaching age 65 were entitled to no-cost coverage under the retiree medical plan in existence at the date of retirement (including a lifetime Medicare supplement of $ 5,000). Id.

 4. The terms, including deductibles, of the retiree medical plans insuring IAM class early retirees who had attained the age of 65 were not fixed. Id. at 3.

 5. Item six of the 1974 MOU between the Chemical Workers and GAF was not intended to continue through the three Chemical Workers CBAs between 1976 and 1982. Id.

  In accordance with the findings in questions 1 and 3, GAF has been preliminarily enjoined from charging IAM class members greater premiums for early retiree medical benefits than those allowed in section 73 of the five IAM CBAs. *fn2" Jan. 3, 1995 Order, Doc. 216. The Chemical Workers class has received no relief. Pending in the cross-motions sub judice are: the IAM class' motions for judgment as a matter of law regarding questions 2 and 4 of the special jury verdict, for referral of the matter to a magistrate judge or special master for the calculation of damages, for discontinuance without prejudice of all nonclasswide claims of the IAM name plaintiffs, and for a permanent injunction against GAF; the Chemical Workers class' motion for judgment as a matter of law, or alternatively, for a new trial; and GAF's motion for judgment as a matter of law upon questions 1 and 3 of the special verdict, or in the alternative, for a new trial limited to those questions. Analysis commences below, beginning with the Chemical Workers' request for post-trial relief.

 II. DISCUSSION

 A. Chemical Workers

 The Chemical Workers class move pursuant to Rules 50(b) and 59 of the Federal Rules of Civil Procedure for judgment as a matter of law or a new trial on the issues decided against them at trial. The burdens the movants bear for the two motions differ. Addressing the j.n.o.v. motion first, a party bearing the burden of proof at trial who seeks judgment as a matter of law must show that "the evidence in favor of the movant is so overwhelming that the jury could rationally reach no other result." Granite Computer Leasing v. Travelers Indemnity Co., 894 F.2d 547, 551 (2d Cir. 1990). *fn3"

 The "overwhelming" evidence cited by plaintiff Chemical Workers is the testimony of William Bellnier and Robert Silvanic. Chemical Workers Memorandum ("Mem.") of Law, Doc. 192, at 3. This "uncontradicted" evidence, it is said, conclusively proved that the benefits described in the 1974 MOU were intended by the negotiators to continue. Id. at 4. The jury though was not obligated to accept even uncontradicted testimony. E.g., Broadcast Music Inc. v. Havana Madrid Restaurant Corp., 175 F.2d 77, 79-80 (2d Cir. 1949). Moreover, the jury could rationally have credited this evidence tending to show the early retiree benefits for the Chemical Workers were not intended to continue into perpetuity: the 1974 MOU explicitly expired on June 30, 1976; item six of the MOU was not incorporated into any CBA between GAF and the Chemical Workers; and the witness Bellnier testified on cross-examination that he did not recall any discussion between GAF and the Chemical Workers about the duration of the early retiree medical benefits described in the MOU. Testimony of William A. Bellnier, Exh. B, Doc. 197, at 223-24. The inferences the jury could reasonably draw from these observations alone negates any contention that the evidence in favor of the Chemical Workers was "overwhelming."

 In their second argument the Chemical Workers claim that a new trial is required since the jury's partial special verdict in favor of the IAM class is inconsistent with their denial of all claims of the Chemical Workers. It is true that "when a jury returns a verdict by means of answers to special interrogatories, the findings must be consistent with one another," else a new trial must be ordered. E.g., Crockett v. Long Island R.R., 65 F.3d 274, 278 (2d Cir. 1995). But there is no necessity for a new trial when the jury returns seemingly inconsistent verdicts with respect to separate claims. See Malm v. United States Lines Co., 269 F. Supp. 731, 731-32 (S.D.N.Y.), aff'd, 378 F.2d 941 (2d Cir. 1967) (per curiam). The rule is no different when facially inconsistent findings are returned for different parties. See Will v. Comprehensive Accounting Corp., 776 F.2d 665, 677-78 (7th Cir. 1985), cert. denied, 475 U.S. 1129, 90 L. Ed. 2d 201, 106 S. Ct. 1659 (1986).

 But it is not even clear that an inconsistency exists. Different facts distinguished the status of the Chemical Workers and IAM classes -- that is why they were certified as two separate plaintiff classes in the first place. See Oct. 14, 1988 Memorandum-Decision and Order ("MDO"), Doc. 44, at 12. The early retiree medical benefits for the Chemical Workers only appeared in the 1974 MOU, while the provisions for the IAM class were included in five consecutive CBAs. The jury could have reasonably inferred that different intents as to the duration of the benefits were manifested by these different facts. Thus, the asserted inconsistency can be easily reconciled based on the factually distinct positions of the parties. The court is obligated to adopt a reconciliation that harmonizes facially inconsistent answers to special interrogatories, and it does so here. Auwood v. Harry Brandt Booking Office, Inc., 850 F.2d 884, 890 (2d Cir. 1988); Machleder v. Diaz, 801 F.2d 46, 57 (2d Cir. 1986), cert. denied, 479 U.S. 1088, 94 L. Ed. 2d 150, 107 S. Ct. 1294 (1987).

 A new trial will also be ordered when the court is "convinced that the jury has reached a seriously erroneous result or the verdict is a miscarriage of justice." Katara v. D.E. Jones Commodities, Inc., 835 F.2d 966, 970 (2d Cir. 1987); accord Sorlucco v. New York City Police Dep't, 971 F.2d 864, 875 (2d Cir. 1992). No miscarriage or serious error is apparent in the jury's findings against the Chemical Workers, for many of the same reasons the court has rejected their other arguments. In addition to the inferences the jury could have drawn from the fact the 1974 MOU early retiree benefits were not incorporated into any CBA, the jury could have rationally believed the testimony of Ronald Seitz, GAF's one-time Director of Employee Benefits over that of the plaintiffs' witnesses. See, e.g., Testimony of Ronald J. Seitz, Doc. 230, at 11-13.

 Because the evidence was by no means overwhelmingly in favor of the Chemical Workers class, judgment as a matter of law is not appropriate. Since there is no inconsistency in the jury's answers to the special interrogatories that cannot either be reconciled, or is of the kind requiring a new trial, that motion is also denied. Nor has a miscarriage or error of sufficient magnitude transpired so as to mandate a new trial. The jury's special verdict findings against the Chemical Workers class were supported by evidence sufficient enough that the court will not disturb them.

 B. GAF

 The court turns now to the post-trial motions of the defendants GAF Corporation and GAF Employee Benefits Programs, referred to collectively as "GAF." Defendants have moved for judgment non obstante veridicto upon questions 1 and 3 of the special verdict rendered in favor of plaintiff IAM class, or alternatively, for a new trial. Judgment as a matter of law for the party without the burden at trial is generally appropriate when, viewing the evidence in a light most favorable to the nonmovant and without weighing the credibility of witnesses, the court concludes that no reasonable juror could find otherwise. See, e.g., Gibeau v. Nellis, 18 F.3d 107, 109-10 (2d Cir. 1994). Whether or not to grant a new trial is a decision vested in the discretion of the trial court, and is available upon various grounds provided the error was prejudicial to and not waived by the movant. See generally 6A James Wm. Moore, Moore's Federal Practice P 59.08[1] (2d ed. 1995).

 In support of these post-trial motions, GAF avers that the relevant language of the IAM CBAs cannot be reconciled with the findings of the jury, that three of the court's jury charges were erroneous, and that the IAM class presented insufficient evidence to carry its burden as a matter of law. These allegations are dealt with seriatim.

 1. CBA Language

 The principal debate continues to be whether or not the IAM CBA retiree benefit provisions were ambiguous on the issue of vesting, thus allowing recourse to extrinsic evidence to help determine the intent of the parties. GAF adheres to its position that "extrinsic evidence need not be considered when the collective bargaining agreement is silent on the vesting of benefits." Letter-Brief from Francis X. Dees, May 17, 1993, Doc. 210, at 3. Since the CBAs have explicit expiration dates, GAF argues the parties must expressly say if they intend certain benefits to last beyond the term of the contract. Id. at 3. The IAM class contends that the interplay of the CBA and the summary plan descriptions creates ambiguity on the issue of vesting. Mem. on Behalf of the IAM Plaintiff Class In Opposition to Def.'s Post-Trial Motions, Doc. 203, at 4-6.

 The controversy can be reduced to the question of whether the rationale of Yard-Man, championed by the IAM class, or Senn, whose approach is advocated by GAF, should be followed. Compare generally UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983), cert. denied, 465 U.S. 1007 (1984) with Senn v. United Dominion Indus., Inc., 951 F.2d 806 (7th Cir. 1992), cert. denied, 509 U.S. 903, 125 L. Ed. 2d 687, 113 S. Ct. 2992 (1993). Yard-Man emphasized the intent of the parties in determining whether or not a CBA provided for vestment of retiree welfare benefits. See 716 F.2d at 1479. The explicit language of the provision is the foremost consideration, but it must be read in the context of the negotiations that created it. Id. The document should be viewed as an integrated whole, and interpretations which render promises nugatory or illusory are eschewed. Id. at 1479-80. Yard-Man is also notable for its observation that retiree benefits are not likely to be left to the contingencies of future negotiations since the bargaining unions are not obligated to represent retirees; rather, they are "status" benefits that "carry with them an inference that they continue so long as the prerequisite status is maintained." Id. at 1482. In light of these rules of construction and inferences, the Sixth Circuit determined that the evidence of an intent to vest overrode the general durational clause of the CBA in question. Id. at 1482-83. In contradistinction, the Seventh Circuit in Senn held that "the mere silence of Collective Bargaining Agreements and plan documents concerning the vestment of welfare benefits fails to give rise to an ambiguity." 951 F.2d at 816.

 Senn has not enjoyed much influence outside the Seventh Circuit. Moreover, its holding has been softened by the subsequent decision in Wheelabrator Corp. v. Bidlack, 993 F.2d 603 (7th Cir.), cert. denied, 510 U.S. 909, 126 L. Ed. 2d 240, 114 S. Ct. 291 (1993). The Seventh Circuit in that case, sitting en banc, reexamined Senn and rejected the "extreme position[]" that a "contract must either use the word 'vest' or must state unequivocally that it is creating rights that will not expire when the contract expires." 993 F.2d at 607. More significantly perhaps, the Wheelabrator court condoned the consideration of extrinsic evidence if a provision for retiree benefits was found to be ambiguous on the issue of duration. See id. at 609.

 The majority unconvincingly distinguished Senn by characterizing that case as "silent" on duration while the language in the Wheelabrator CBA was merely "vague." See id. at 608. Specifically, the Wheelabrator CBA provided for the company to pay for retiree health coverage after the retiree reached age 65. Arndt v. Wheelabrator Corp., 763 F. Supp. 396, 398 (N.D. Ind. 1991), rev'd sub nom. Wheelabrator Corp. v. Bidlack, 993 F.2d 603 (7th Cir.), cert. denied, 510 U.S. 909, 126 L. Ed. 2d 240, 114 S. Ct. 291 (1993). The CBAs also provided for health benefits for the spouses of deceased retirees. 993 F.2d at 608. By contrast, the Senn CBA only stated that "the Company will continue for retired employees[] the . . . premium contribution of $ 3.90 per month and $ 4.00 Medicare 'B' refund." 951 F.2d at 808. The Seventh Circuit reasoned that the reference in the Wheelabrator CBA to the death of the retiree in the provision for widow or widower benefits created ambiguity on whether the benefits could be terminated prior to the retiree's death. See 993 F.2d at 608. Even if this court accepts the position that Senn's validity is unaffected by Wheelabrator (an interpretation rejected by the concurrence, id. at 610), the CBA language in the case at bar is more akin to the provision in Wheelabrator than that in Senn. The IAM CBAs provide that coverage for early retirees will continue until they are eligible for Medicare. Exh. A attached to Aff. of Francis W. Gaube, Doc. 132, at 28. Like the agreement in Wheelabrator, the IAM CBA has a reference to an event in the future (eligibility for Medicare instead of the death of the retiree) which raises the question whether coverage can be altered or terminated prior to that event. This was sufficient to create an ambiguity in Wheelabrator and it is enough here.

 It is also revealing that the only court in the Second Circuit to evaluate the dialectic of the rules in Senn and Yard-Man expressly adopted the approach of the latter case. In Joyce v. Curtiss-Wright Corp. Judge Curtin decided that the Senn approach "unduly restricts courts in determining intent." 810 F. Supp. 67, 72 (W.D.N.Y. 1992). As the district court in Joyce observed, Yard-Man has been more persuasive than Senn. See, e.g., Keffer v. H.K. Porter Co., 872 F.2d 60, 62 & 64 (4th Cir. 1989); United Steelworkers of America v. Connors Steel Co., 855 F.2d 1499, 1504-05 (11th Cir. 1988), cert. denied sub nom. H.K. Porter Co. v. United Steelworkers of America, 489 U.S. 1096, 103 L. Ed. 2d 935, 109 S. Ct. 1568 (1989); United Steelworkers of America v. Textron, Inc., 836 F.2d 6, 9 (1st Cir. 1987); H.C. Lawton, Jr., Inc. v. Truck Drivers, Chauffeurs, 755 F.2d 324, 328 (3d Cir. 1985). It is also evident that the retiree health provisions in Joyce, like ...


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