The Sixth Circuit has been a hotbed of class action litigation involving retiree healthcare under collectively bargained plans. Retirees seeking benefits have prevailed in many such cases based on the 1983 Sixth Circuit case of UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983). But what if an employer has only threatened to reduce benefits, but has not actually done so? A federal court in Michigan recently held that an employer’s rescinded plan to eliminate health care benefits for retirees did not constitute an actual injury to the retirees sufficient for the court to assert jurisdiction.
In Hawkins v. Howden Buffalo Inc., E.D. Mich., No. 2:05-cv-74437 (March 30, 2012), a group of retirees from defendant Howden Buffalo, Inc. brought an action for damages and declaratory relief under the LMRA and ERISA for alleged violations of collective bargaining agreements. The crux of the plaintiffs’ allegations was that Howden was required to provide them with lifetime retiree health care under various collective bargaining agreements, and that Howden had informed them that their health care benefits would be terminated effective January 1, 2006. However, on February 9, 2006, Howden sent out a retraction letter stating that it would not be terminating their health care coverage and that it had no present intention to terminate benefits in the future.
In 2006, Howden filed a motion to dismiss on the grounds that the court lacked subject matter jurisdiction over the matter. Howden argued that the plaintiffs lacked standing to pursue their claims because they had not suffered an actual injury and were essentially asking the court to provide an impermissible “advisory opinion.” The court agreed.
The court noted that in order for it to have jurisdiction, there must be “a real and substantial controversy” and that “[a]llegations of possible future injury do not satisfy the requirements of Art. III.” The court also noted that while section 512(a)(1) of ERISA allows plan participants to assert an action to clarify future benefits, it does not abrogate the requirement that there must be an injury in fact in order for the court to assert jurisdiction over the matter. Likewise, while declaratory relief is available under section 301 of the LMRA, the court found that it must have jurisdiction over an action before it can determine whether declaratory relief is appropriate.
The court then held that the plaintiffs had not suffered an actual injury and that any claimed injury was merely speculative in nature. The court found it determinative that while Howden announced it would terminate benefits, it rescinded its intention to terminate benefits before taking any action. The court also found it significant that Howden announced that it had no intention to revise benefits in the future. The court found the plaintiffs’ cited case law distinguishable because it dealt with actual changes in benefits such as increasing co-payments and deductibles. In contrast, the court found that the plaintiffs were receiving the exact same benefits as they were receiving prior Howden’s letter advising that benefits would be terminated. Because there was only a possible threat of future change in health care, the court concluded that it “cannot make a declaration based on hypotheticals.”
The Bottom Line: An employer’s rescinded intention to eliminate health care benefits, standing alone, does not provide retirees with standing to bring a federal lawsuit to prevent the employer from again changing its mind at a later date.