Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
6-28-1995
In Re: Unisys Corp (Mem Op)
Precedential or Non-Precedential:
Docket 94-1912
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"In Re: Unisys Corp (Mem Op)" (1995). 1995 Decisions. Paper 177.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/177
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NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 94-1912
___________
IN RE: UNISYS CORP. RETIREE MEDICAL BENEFIT
"ERISA" LITIGATION
*Robert T. Dreegar; Ronald R. Bennett; Kenyon Bement;
Donald Wagner; Lucius Browne; Donald Fabry; Thomas
Durkin; Bernard Hart; Herman Hein; Donald L. Thompson;
Jim M. Eaves, individually and on behalf of all members
of the Burroughs Class and Unisys Class previously
certified by the Court who were not participants in
special early retirement incentive programs and their
eligible spouses and dependents (referred to by the
Court as "Burroughs and Unisys non-VERIP plaintiffs"),
Appellants
*(Pursuant to F.R.A.P. Rule 12(a))
___________
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. MDL 969)
District Judge: Honorable Edward N. Cahn
___________
Argued
May 4, 1995
Before: Mansmann, Scirica and McKee, Circuit Judges.
(Filed: June 28, 1995)
___________
MEMORANDUM OPINION OF THE COURT
__________
MANSMANN, Circuit Judge.
This appeal, like its companion appeals in Nos.
94-1800, 94-1801 and 94-1875, arises out of Unisys' decision to
terminate the retiree medical benefit plans under which it had
previously provided coverage, and to replace those plans with a
new plan under which Unisys would eventually shift the entire
cost of providing medical benefit coverage to the plan's
participants, the retirees. The appellants here, former Unisys
or Burroughs employees (and their eligible spouses and
dependents) who were receiving retiree medical benefits from the
Burroughs Plans or Unisys Plan at the time of the company's
action to terminate these plans, have appealed the district
court's grant of summary judgment, in Unisys' favor, on the
retirees' claims that Unisys had denied them vested benefits in
violation of ERISA. On appeal to us, these retirees allege that
the district court erred, as a matter of law, in holding that the
Burroughs and Unisys Plans were unambiguous and erred in holding
that the retirees could not establish their claim for medical
benefits on equitable estoppel grounds.1
Because the historical facts, which are not in dispute,
have already been recited extensively, both in the district
court's opinion granting summary judgment, see In re Unisys, 837
F. Supp. 670 (E.D. Pa. 1993), and in our own opinions in the
appeals docketed at Nos. 94-1800 and 94-1875, we do not reiterate
1
. The retirees have also appealed from the district
court's May 26, 1993 order striking their demand for a jury
trial. We need not address this issue given our disposition of
the ambiguity issue.
these facts here. Rather, we turn to the issues raised on appeal
and discuss the facts insofar as they relate and pertain to our
analysis of these issues.2
I.
In this case, as in all of the other consolidated
appeals, Unisys maintained that it had an inherent right to
terminate the retirees' medical benefit plans based on
unambiguous reservation of rights language in the official plan
documents. The 1988 summary plan description for the Unisys
Post-Retirement and Extended Disability Medical Plan, which
applied to all class members who retired after April 1, 1989,
contained the following provision:
Unisys expects to continue the plans
described in this booklet, but necessarily
reserves the right to change or end them at
any time. The Company's decision to change
or end the plans may be due to changes in
federal or state laws governing welfare
benefits, the requirements of the Internal
Revenue Code or ERISA, the provisions of a
contract or a policy involving an insurance
company or any other reason.
(Emphasis added) (A 360).3 Similarly, the SPD for the 1985
version of the Burroughs' retiree medical benefit plan contained
the following reservation of rights clause:
2
. The district court had jurisdiction pursuant to 28
U.S.C. § 1331 and 29 U.S.C. § 1132(f). We have jurisdiction
pursuant to 28 U.S.C. § 1291. We exercise plenary review over
the district court's grant of summary judgment. Anderson v.
Liberty Lobby, 477 U.S. 242, 248 (1986); Bixler v. Central Penna.
Teamsters Health and Welfare Fund, 12 F.3d 1292, 1297-8 (3d Cir.
1993).
While Burroughs does not presently plan to do
so, it necessarily reserves the right to
terminate or modify the plan at any time,
which will result in the termination or
modification of your coverage.
(Emphasis added) (A 758).4
(..continued)
3
. The retirees make a belated attempt to raise a factual
question as to what constituted the Unisys SPD. The retirees
assert that the district court refused to consider evidence as to
whether the documents in which the Unisys reservation clauses
appeared even applied to retirees. They argue that the court,
"without comment accepted a clause appearing in a 1988 booklet
describing a variety of benefit plans for active employees as
applicable to the medical plan for retired employees which was
not created until 1989."
The district court's decision did not acknowledge the
existence of a factual question regarding whether this SPD
applied to the retiree plan. In re Unisys, 837 F. Supp. at 675-
76. Nonetheless, we find that there is no genuine issue of
material fact as to what constituted the applicable Unisys SPD,
as the Summary of Plan Provisions of the Unisys Post-Retirement
and Extended Disability Medical Plan expressly incorporated the
1988 Unisys SPD set forth above.
4
. On June 30, 1993, while discovery was ongoing, Unisys
filed a motion for summary judgment seeking entry of judgment
against all the Sperry, Burroughs and Unisys retirees other than
those who retired pursuant to special incentive early retirement
offerings. In this motion, Unisys argued that summary plan
description booklets, on their face, established that the company
had unambiguously reserved a right to amend or terminate the
medical plans during a participant's retirement. The retirees
argued that the reservation clauses did not apply to already-
retired employees and on July 8, 1993, counter-moved pursuant to
Rule 56(f) for an order refusing or continuing Unisys' motion
pending the completion of further discovery. The retirees' Rule
56(f) motion was supported by the affidavit of plaintiffs'
counsel, attesting to the incomplete state of discovery and the
type of evidence likely to emerge from that discovery. (A 1142).
On October 13, 1993, the district court rendered its
decision on Unisys' motion for summary judgment. With respect to
the Burroughs and Unisys regular retirees, the court held that
there were no genuine disputes as to any material fact, and that
the reservation of rights clauses in the documents presented by
Unisys, on their face, were unambiguous and not susceptible to
We find that these reservation of rights clauses are
not ambiguous and cannot be read, as the retirees suggest, to
apply only to active employees. Although the retirees submitted
affidavits from class members stating that, based on past
practice and course of conduct, they understood there to be a
"lock-in" policy under which changes in medical benefit coverage
could only affect active employees and not employees who had
already retired, resort to this extrinsic evidence was not
warranted5 because the clauses are not ambiguous, and on their
(..continued)
any alternate interpretation. Because the district court found
that it was not possible to interpret the clauses relied upon by
Unisys in any manner other than that alleged by the company, the
court declined to consider any extrinsic evidence to contradict
the written terms of the summary plan description. The court
denied plaintiffs' Rule 56(f) request to continue the summary
judgment motion pending the completion of discovery, concluding
that further discovery was unnecessary because "none of this
material . . . would change the court's analysis of the threshold
legal question." 837 F. Supp. at 673.
The Burroughs and Unisys retirees' assertion that the
district court erred in denying their motion under Rule 56(f) is
without merit. Due to the fact that all of the SPDs upon which
Unisys relied in seeking summary judgment had been produced in
the course of discovery prior to the district court's decision on
summary judgment and because additional discovery would not have
precluded summary judgment, we find that the district court did
not abuse its discretion in denying the retirees' motion pursuant
to Fed. R. Civ. P. 56(f). See, e.g., Lunderstadt v. Colafella,
885 F.2d 66 (3d Cir. 1989); United States v. 225 Cartons More or
Less of an Article or Drug, 871 F.2d 409, 420 (3d Cir. 1989)
(holding Rule 56(f) motion had been properly denied where
discovery was immaterial as a matter of law).
5
. The district court held that if the retirees'
interpretations of the reservation of rights clauses were
plausible, the court would be obliged to consider this evidence.
In addressing the legal question of whether the Burroughs and
Unisys SPDs were ambiguous, the district court concluded that the
alternative interpretations of the summary plan descriptions
suggested by the regular retirees -- that the reservation of
face do not distinguish between active employees and retirees.
Moreover, since the Unisys and Burroughs SPDs contained a
reservation of rights clause with no apparently conflicting
promise of lifetime benefits, we hold that the district court did
not err in finding that the alternative interpretation of the
retirees was not sufficiently plausible to allow extrinsic
evidence to alter the clear meaning of the text of the plans.6
ERISA requires that "[e]very employee benefit plan
shall be established and maintained pursuant to a written
instrument." 29 U.S.C. § 1102(a)(1); Hozier v. Midwest
Fasteners, Inc., 908 F.2d 1155, 1163 (3d Cir. 1990). ERISA's
framework ensures that employee benefit plans be governed by
(..continued)
rights in the summary plan descriptions only applied to active
employees or permitted only those changes required by law -- were
unreasonable. In re Unisys, 837 F. Supp. at 675-77.
6
. The regular retirees also complained that the district
court "ruled that it would not consider other language appearing
in the documents relied upon by Unisys because the word
`lifetime' did not appear elsewhere in the documents, as it did
in the SPDs applicable to the Sperry retirees." (Appellants'
Brief at 36). See 837 F. Supp. at 674-75 and n.5. This
assertion is without merit. The district court did not refuse to
consider other plan language in the SPDs; it refused to analyze
evidence of the "corporate culture" of Unisys, Burroughs and
Sperry as reflected in evidence extrinsic to the SPDs. Id. at
675 n.5. The district court, in focusing its discussion of the
Burroughs and Unisys SPDs on the reservation of rights clauses,
observed, that in contrast to the Sperry regular retirees, the
Burroughs and Unisys regular retirees "failed to point to any
other language in the SPDs that would have even arguably created
an ambiguity." The court, confining its analysis to the written
documents, observed that the Burroughs and Unisys retirees could
not avail themselves of the alternative argument advanced by
Sperry retirees that the presence of lifetime language in the
Sperry SPDs rendered the plans internally inconsistent, because
the Unisys and Burroughs plan documents did not discuss lifetime
benefits. 837 F. Supp. at 675 n.5.
written documents and summary plan descriptions which are the
statutorily established means of informing participants and
beneficiaries of the terms of their plans and its benefits. 29
U.S.C. §§ 1022(a) and 1102. Because Congress intended that plan
documents and SPDs exclusively govern an employee's obligations
with respect to an ERISA plan, we have established a policy
disfavoring informal plan amendments. See Hozier, supra; Confer
v. Custom Engineering Co., 952 F.2d 41, 43 (3d Cir. 1991);
Schoonejongen v. Curtiss-Wright Corp., 18 F.3d 1034, 1040 (3d
Cir. 1994), rev'd and remand on other grounds, ___ U.S. ___, 115
S. Ct. 1223 (1995). Thus, while the retirees proffered extrinsic
evidence of informal communications (human resource bulletins,
newsletters and internal memoranda), this evidence cannot be
relied upon to alter or contradict the unambiguous reservation of
rights clauses in the Unisys and Burroughs SPDs. Accordingly,
the district court did not err in refusing to analyze the
retirees' extrinsic evidence in support of their interpretation
of the reservation of rights clauses which contradicted the
clauses' broad and unequivocal terms.
II.
The district court also granted summary judgment in
favor of Unisys on the estoppel claims of all of the regular
retirees. In re Unisys, 837 F. Supp at 680-81. The Unisys and
Burroughs retirees contend that the district court erred in
holding that these estoppel claims failed as a matter of law.7
We have held that to recover benefits under an
equitable estoppel theory an ERISA beneficiary must demonstrate a
material misrepresentation, reasonable and detrimental reliance
upon the misrepresentation and extraordinary circumstances.
Curcio v. John Hancock Life Insurance Co., 33 F.3d 226 (3d Cir.
1994); Smith v. Hartford Insurance Group, 6 F.3d 131 (3d Cir.
1993).8 Since we have concluded that the plans unambiguously
7
. On July 26, 1994, following the district court's post-
trial decision on the contract claims of the Sperry retirees, the
Sperry regular retirees moved for reconsideration of the district
court's summary judgment ruling on their estoppel claim and on
their claim for breach of fiduciary duty. The district court
granted this motion with respect to the Sperry retirees' claims
for breach of fiduciary duty in light of our decision in Bixler
v. Central Penna. Teamsters Health and Welfare Fund, 12 F.3d 1292
(3d Cir. 1993). The district court ruled that it would hold the
Unisys and Burroughs retirees' motion for reconsideration of
their breach of fiduciary claim in abeyance pending our decision
on interlocutory appeal on the related claim of the Sperry
retirees in No. 94-1875.
8
. The district court concluded that the estoppel claims
of the regular retirees failed as a matter of law because given
the unambiguous SPDs, the regular retirees could not demonstrate
plan ambiguity, reasonable detrimental reliance or extraordinary
circumstances. The district court found that "there are no
substantiated allegations of fraud or bad faith on Unisys' part."
However, in our recent decisions in Curcio v. John Hancock Mutual
Life Insurance Co., 33 F.3d 226 (3d Cir. 1994) and Smith v.
Hartford Insurance Group, 6 F.3d 131 (3d Cir. 1993), of which the
district court did not have the benefit, we did not require fraud
or bad faith as an element of an estoppel claim.
The district court also found, "Furthermore, estoppel
claims are available only when plan documents are adjudged
ambiguous." (citing Alday v. Container Corp. of America, 906
F.2d at 666, (11th Cir. 1990). While in Curcio, supra, and
Smith, supra, we did not require an express finding of plan
reserved the company's right to terminate its retiree medical
benefit plans, the retirees cannot establish "reasonable"
detrimental reliance based on an interpretation that the summary
plan descriptions promised vested benefits. The retirees'
interpretation of the plans as providing benefits which were
vested upon retirement cannot be reconciled with the unqualified
reservation of rights clause in the plans. Thus, the district
court did not err in concluding on summary judgment, as a matter
of law, that the estoppel claims of the Unisys and Burroughs
retirees could not be established.
III.
Accordingly, we will affirm the judgment of the
district court.
(..continued)
ambiguity as an element for establishing an estoppel claim, we
have required that detrimental reliance be "reasonable." Because
we also require that any detrimental reliance on plan language
must be "reasonable," the court's finding that the reservation of
rights clauses were unambiguous undercuts the reasonableness of
any detrimental reliance by the retirees here.