[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 06-14626 SEPT 30, 2008
________________________ THOMAS K. KAHN
CLERK
D. C. Docket No. 05-81014-CV-DMM
ROBERT FRULLA,
on behalf of himself and as Representative of
a Class of persons similarly situated,
Plaintiff-Appellant,
versus
CRA HOLDINGS INC.,
f.k.a. International Controls Corp.,
CRA HOLDING INC. EMPLOYEE WELFARE BENEFIT PLAN,
f.k.a. International Controls Corp. Group Health
Insurance Plan,
JOHN DOE 1-10,
as Plan Administrators and/or Fiduciaries of the CRA
Holding Inc. Employee Welfare Benefit Plan, Lake
Resources, Inc.,
LAKE RESOURCES, INC.,
Defendants-Appellees.
______________________
Appeal from the United States District Court
for the Southern District of Florida
_________________________
(September 30, 2008)
Before BIRCH and FAY, Circuit Judges, and DUFFEY,* District Judge.
BIRCH, Circuit Judge:
In this case we must decide whether a consent decree (“the Agreed
Judgment”) obligating the Appellee CRA Holdings, Inc. (“CRA”) to provide to the
retirees of a predecessor corporation lifetime health care coverage under an
insurance plan precludes the imposition of a contribution requirement. The district
court denied Appellant Frulla’s request for a declaratory judgment that the
contribution requirement violates the Agreed Judgment. We REVERSE.
I. BACKGROUND
A. The Original Action
Robert Frulla, a retired employee of the original corporation, Transway
International Corporation (“Transway”), received benefits under the Transway
International Corporation Group Insurance Plan for Non-Union Employees of
Transway and Subsidiaries (“Transway Plan”). In December of 1985, Transway
merged into International Controls Corp. (“ICC”). Pursuant to the Merger
Agreement, ICC undertook to provide the Transway retirees with benefits
“comparable to, and in no event less than, the benefits provided by the [Transway
Plan].” One year later, however, ICC informed the Transway retirees that it
*
Honorable William S. Duffey, Jr., United States District Judge for the Northern District
of Georgia, sitting by designation.
2
intended to provide them with a new plan, effective 1 January 1987, which, among
other things, increased the deductible amount on claims for individuals from $50 to
$200. The plan also reserved the ICC’s right to modify or terminate benefits and
“to amend, modify, or terminate the Plan, including the right to require or increase
Employee contributions under the Plan at any time. . . without regard to business or
financial necessity.”
In March of 1988, four retired Transway employees who were participants
in the original Transway Plan filed a class action lawsuit (the “Original Action”)
against ICC, Transway, and the new International Controls Corp. Group Health
Insurance Plan (“ICC Plan”) challenging the amendment to the ICC Plan. In their
complaint, the plaintiffs alleged that the new deductible provision effected an
unauthorized diminution of benefits available under the Transway Plan as adopted
by ICC and sought to permanently enjoin ICC from enforcing any reduction in
benefits that were available under the Transway Plan before 1 January 1987, or
from altering, amending, terminating, or in any way modifying the benefits of the
Transway Plan. The defendants answered and denied that there was any agreement
to immunize plaintiffs or members of the class from periodic modifications of
either the Transway or ICC Plans, both of which reserved, in their summary plan
descriptions, the right to make such modifications.
3
In October of 1992, the parties to the Original Action entered into a
proposed Settlement Agreement and Release (“Settlement Agreement”), in which
ICC agreed to provide to the plaintiffs and other Class members “. . . the same
health insurance benefits ICC is providing members of the Class today under the
policy issued by Travelers Insurance Company; these benefits will be provided by
ICC for the lives of the Class members.” After finding that the Settlement
Agreement was fair and reasonable, the district court entered an Agreed Judgment
in January of 1993 resolving the litigation. The Agreed Judgment, which
incorporated the Settlement Agreement, provides that “. . . ICC shall provide the
members of the Class . . . in accordance with the terms of the fully executed
Settlement Agreement, the same health insurance benefits ICC is providing
members of the Class today under the policy issued by Travelers Insurance
Company; these benefits will be provided by ICC for the lives of the Class
members.” The Agreed Judgment binds the parties to the Original Action and any
successors or assigns and contains an integration clause providing that it “resolves
all issues between the Defendants and the Class relating to the provision of health
and life insurance by the Defendants which are raised or could have been raised by
the pleadings filed in this lawsuit.”
B. Modification of the ICC Plan
4
On or about 20 December 1996, ICC changed its name to Great Dane
Holdings Inc. and the ICC Plan became the Great Dane Holdings Inc. Employee
Welfare Benefit Plan (the “Great Dane Plan”). In January of 1997, Great Dane
Holdings Inc. changed its name to CRA Holdings Inc. (“CRA”) and the Great
Dane Plan became the CRA Holdings Inc. Employee Welfare Benefit Plan (“CRA
Plan”). The parties agree that CRA and the CRA Plan were, under the names
International Controls Corp. and International Controls Corp. Group Health
Insurance Plan, respectively, defendants in the Original Action and thus subject to
the terms of the Agreed Judgment.
In May of 2005, after consultation with actuaries and analysis of the
financial viability of the CRA Plan, CRA determined that the CRA Plan was
actuarily unsound and, consequently, amended the CRA Plan to require a $50 per
month contribution from Transway retirees participating in the CRA Plan and a
$100 per month contribution from retirees who also had coverage for their eligible
dependents. Under the new amendment, retired employees of Transway, including
class members in the Original Action, who failed to make the required monthly
contribution would forfeit their right to all future participation in the CRA Plan.
Payment of these contributions has been a condition of continued coverage under
the CRA Plan for Transway retirees since the amendment became effective on 1
5
June 2005. At all times prior to the amendment, including the date of the 1992
Settlement Agreement and the 1993 Agreed Judgment, neither the CRA Plan nor
its predecessors required participant contributions. Although as of 1 April 2005
the trust from which benefits under the CRA Plan are paid had assets of
$2,857,539, the parties stipulated that CRA is no longer actively engaged in
business and does not have the ability to make any contributions to the CRA Plan.
C. Current Litigation
On 10 November 2005, Frulla filed a complaint in district court seeking a
declaratory judgment that the Agreed Judgment in the Original Action obligates
CRA to provide health care benefits to the class of retirees for life, without
monthly contributions or other payment.1 Frulla also sought injunctive relief
prohibiting CRA from enforcing its contribution requirement and an order
requiring CRA to return any monthly contributions already made. Frulla stipulated
that in the event he were to prevail, he would not seek to void the amendment to
the CRA Plan, nor to enjoin further amendments to the CRA Plan, “all without
prejudice to [him] seeking such relief and recovery in any subsequent litigation
brought by [Frulla].”
Following a bench trial, the district court found that the Agreed Judgment
1
Although Frulla purported to proceed as a class representative, no class was certified in
this action.
6
did not preclude CRA from requiring contributions because the parties did not
intend for “the same health insurance benefits” to include the contribution policy.
The district court denied Frulla’s request for declaratory relief accordingly, and
Frulla appeals.
II. DISCUSSION
At the outset, we note that although neither party challenges our jurisdiction,
we are obligated to address jurisdictional questions sua sponte. See AT&T
Mobility, LLC v. National Ass’n for Stock Car Auto Racing, Inc., 494 F.3d 1356,
1359 (11th Cir. 2007) (internal quotations and citation omitted) (“Standing . . . is a
threshold jurisdictional question which must be addressed prior to and independent
of the merits of a party’s claims.”); Florida Ass’n of Rehab. Facilities, 225 F.3d
1208, 1227 n.14 (11th Cir. 2000) (“[M]ootness is a jurisdictional issue that must be
resolved at the threshold.”). Following oral argument, we asked the parties to brief
the issue of whether, given that CRA no longer is actively engaged in business and
is unable to contribute to the CRA Plan, this appeal presents a justiciable case or
controversy for purposes of standing. We conclude that it does.
Under Article III of the Constitution, federal courts may only hear “cases or
controversies.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-60, 112 S. Ct.
2130, 2135-36 (1992). The doctrine of mootness, which evolved directly from
7
Article III’s case-or-controversy limitation, provides that “the requisite personal
interest that must exist at the commencement of the litigation (standing) must
continue throughout its existence (mootness).” Tanner Adver. Group, L.L.C. v.
Fayette County, Ga., 451 F.3d 777, 785 (11th Cir. 2006) (en banc) (citation
omitted). “A case is moot when it no longer presents a live controversy with
respect to which the court can give meaningful relief.” Ethredge v. Hail, 996 F.2d
1173, 1175 (11th Cir. 1993). On the other hand, a case or controversy justifying
declaratory relief exists where “the challenged [ ] activity . . . is not contingent, has
not evaporated or disappeared, and, by its continuing and brooding presence, casts
what may well be a substantial adverse effect on the interests of the petitioning
parties.” See Super Tire Eng’g Co. v. McCorkle, 416 U.S. 115, 122, 94 S. Ct.
1694, 1698 (1974). Where declaratory relief is sought, “the question. . . is whether
the facts alleged, under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory judgment.”
Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S. Ct. 510,
512 (1941); see also Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S.
227, 240-41, 57 S. Ct. 461, 464 (1937) (holding that a live controversy “admit[s]
of specific relief through a decree of a conclusive character, as distinguished from
8
an opinion advising what the law would be upon a hypothetical state of facts”).
So long as CRA continues to require contributions as a precondition to
receiving lifetime health care benefits, the parties’ dispute over whether employee
contributions violate the Agreed Judgment remains a live controversy that “calls,
not for an advisory opinion upon a hypothetical basis, but for an adjudication of
present right upon established facts.” Haworth, 300 U.S. at 242, 57 S. Ct. at 465;
see Super Tire Eng’g Co., 416 U.S. at 122, 94 S. Ct. at 1698. That the CRA Plan
apparently has no active source of funding other than the challenged employee
contributions, and may not remain financially viable in their absence, does not alter
this result. While both parties acknowledge in their supplemental briefs that CRA
is unable to make contributions, and that, as a result, the CRA Plan will run out of
money sooner, rather than later, if required contributions from the Transway
retirees are deemed impermissible under the Agreed Judgment, there is no
evidence, nor has CRA alleged, that the CRA Plan currently is insolvent or unable
to provide benefits to Frulla if the contribution requirement is rescinded as a result
of this litigation.
Having determined that this appeal presents a live controversy with respect
to which we may give meaningful relief, we turn to the merits. We review the
denial of declaratory relief for an abuse of discretion. See Ameritas Variable Life
9
Ins. Co. v. Roach, 411 F.3d 1328, 1330 (11th Cir. 2005). Under this standard, “we
will leave undisturbed a district court’s ruling unless we find that the district court
has made a clear error of judgment, or has applied the wrong legal standard.” Id.
On appeal, Frulla contends that the Agreed Judgment clearly and
unambiguously prohibits the imposition of a contribution requirement because the
obligation to “provide” benefits necessarily includes an obligation to pay for those
benefits. He argues additionally that, insofar as the Agreed Judgment obligates
CRA to provide lifetime benefits, it unambiguously prohibits CRA from
terminating those benefits upon the failure of the retirees to pay the monthly
contributions. Finally, Frulla contends that the term “benefits” refers to the total
economic value of the plan, and therefore, the contribution requirement effects a
reduction in benefits in violation of the Agreed Judgment.
CRA counters that its right to require contributions is not precluded or
otherwise limited by the Agreed Judgment because the absence of a contribution
requirement is not a “benefit.” It concedes that the Agreed Judgment limits its
right to reduce the value of the benefits or to terminate the plan, but contends that
imposing a contribution requirement is a funding decision that does not modify or
reduce benefits and, therefore, is unaffected by the Agreed Judgment.
The district judge concluded first that the Agreed Judgment did not clearly
10
delineate the parties’ rights and obligations because the provision requiring CRA to
“provide. . . the same health insurance benefits” was ambiguous and did not fit
either party’s interpretation as an intrinsic matter. After considering the ICC Plan
as evidence of the parties’ intent, he found that “benefits” are limited to the
amounts payable by the plan for designated medical services. Because the
contribution requirement is paid into the plan by the retirees, and not out of the
plan to healthcare providers, and applies uniformly to all retirees irrespective of the
medical services they receive, the district court concluded that the presence or
absence of a contribution requirement is not a “benefit,” and therefore, imposing a
contribution requirement does not violate the Agreed Judgment.
We interpret a consent decree as we would a contract, applying principles of
Florida’s general contract law. See Schwartz v. Florida Bd. of Regents, 807 F.2d
901, 905 (11th Cir. 1987); Paradise v. Prescott, 767 F.2d 1514, 1525 (11th Cir.
1985). Under Florida law, we must construe a contract to give effect to the parties’
intent. See Barakat v. Broward County Housing Auth., 771 So. 2d 1193, 1194
(Fla. Dist. Ct. App. 2000). Where the contractual terms are unambiguous, we must
determine the parties’ intent from within the four corners of the contract. Id.
We review de novo the threshold question of whether a contract is
ambiguous. See Reynolds v. Roberts, 202 F.3d 1303, 1313 (11th Cir. 2000). A
11
contract is ambiguous where it “is susceptible to two different interpretations, each
one of which is reasonably inferred from the terms of the contract.” Commercial
Capital Res., LLC v. Giovannetti, 955 So. 2d 1151, 1153 (Fla. Dist. Ct. App.
2007); see also Continental Ins. Co. v. Roberts, 410 F.3d 1331, 1333 (11th Cir.
2005) (applying Florida law). If the interpretation urged by one party is
unreasonable in light of the contract’s plain language, the contract is not
ambiguous, and the court may not use extrinsic evidence to vary the terms of the
contract. See Orkin Exterminating Co., Inc. v. F.T.C., 849 F.2d 1354, 1362 (11th
Cir. 1988). In determining whether a contract is ambiguous, we must first look at
the words on the face of the contract. See Rose v. M/V “Gulf Stream Falcon,” 186
F.3d 1345, 1350 (11th Cir. 1999).
The Agreed Judgment provides that CRA, as ICC’s successor, “shall provide
the members of the Class. . . in accordance with the fully executed Settlement
Agreement, the same health insurance benefits ICC is providing members of the
Class today under the policy issued by Travelers Insurance Company; these
benefits will be provided by ICC for the lives of the Class members.” (emphasis
added).2 The parties agree that this language prohibits CRA from amending the
2
Although the ICC Plan expressly reserves ICC’s right to impose employee contributions,
neither the ICC Plan nor the reservation-of-rights passage contained therein was incorporated
into the Agreed Judgment. Rather, the Agreed Judgment refers only to ICC’s obligation to
provide lifetime “benefits” to the retirees. Had ICC wanted to ensure that its right to modify the
12
CRA Plan in a way that reduces or modifies the benefits the Transway retirees
were receiving under the ICC Plan, but disagree over whether the challenged
contributions have the effect of reducing or modifying those benefits. We find that
they do. It is axiomatic that a plan without a contribution requirement is more
advantageous to the participant than a plan with a contribution requirement. This is
because the overall total economic value of the benefits received under a plan
decreases as the cost of those benefit increases. Because the level or existence of
an employee contribution thus directly affects the value of the benefits received,
we hold that not having to pay a contribution is a benefit of a health care plan. See
Magliulo v. Metropolitan Life Ins. Co., 208 F.R.D. 55, 57 (S.D.N.Y. 2002)
(finding that a higher monthly premium charge effects a reduction in benefits
received under an insurance plan because “the benefit due from [an] insurance plan
is to receive health coverage for a certain price”).
The conclusion we reach today is in accord with both the ordinary meaning
of a “benefit”3 and our decision in Heffner v. Blue Cross & Blue Shield of Ala.,
Plan’s funding structure would not be limited by the Agreed Judgment, it could have reserved
that right explicitly in the Settlement Agreement. It did not, and we decline to read into the plain
language of the Agreed Judgment a condition on ICC’s otherwise unqualified obligation to
provide lifetime benefits to the retirees that is not explicitly stated. See Schwartz, 807 F.2d at
906.
3
Black’s Law Dictionary defines a “benefit” as an “advantage” or a “privilege,” such as
“the benefit of owning a car.” Black’s Law Dictionary 166 (8th ed. 2004). Elsewhere, a
“benefit” is defined as “1. something that is advantageous or good; an advantage: He explained
13
Inc., 443 F.3d 1330 (11th Cir. 2006). In Heffner, we stated, albeit in dicta, that
“not having to pay a deductible is a benefit of [an insurance plan]” because a
deductible decreases, “in real economic terms,” the value of the benefits offered
under the plan. Id. at 1338. As we have discussed, the employee contributions at
issue in this case likewise decrease, in real economic terms, the value of the
benefits received under the CRA Plan to the extent that they increase the cost of
those benefits. See id. (noting that the value of benefits offered under a plan
“varies inversely with the amount of the deductible”).4 In light of the foregoing,
we conclude that the Agreed Judgment precludes CRA from requiring employee
contributions as a precondition to continued eligibility for coverage under the CRA
Plan and is not reasonably or fairly susceptible to any other interpretation.
III. CONCLUSION
Because we hold that the absence of a contribution requirement is a
the benefits of public ownership of the postal system. 2. a payment or gift, as one made to help
someone or given by a benefit society, insurance company, or public agency.” Random House
Dictionary of the English Language 194 (2d ed. 1987). See Robin v. Sun Oil Co., 548 F.2d 554,
557 (5th Cir. 1977) (“We must accord to the words [in a contract] their plain, literal meaning.”);
Thompson v. C.H.B., Inc., 454 So. 2d 55, 57 (Fla. App. 1984) (holding that an undefined
contractual term “should be given [its] natural meaning”).
4
The district court attempted to find ambiguity in the Agreed Judgment by distinguishing
deductibles from contributions on the basis that, unlike contributions, which are paid uniformly
by all participants into the plan, deductibles reduce the amount the plan will pay for a particular
medical service and thus are directly related to the value of a plan’s benefits. We find this
reasoning unpersuasive, however, because it presupposes that “benefits” under a healthcare plan
include only amounts paid out by the plan for designated medical services.
14
“benefit” of a health insurance plan, we find that the district court abused its
discretion in denying Frulla’s request for a declaratory judgment that he is entitled
under the Agreed Judgment to receive healthcare benefits without having to make
monthly contributions. Accordingly, the judgment of the district court is
REVERSED.
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