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Fitzwater v. Consol Energy, Inc.

United States District Court, S.D. West Virginia, Charleston

October 15, 2019

BENNY FITZWATER and CLARENCE BRIGHT, and TERRY PRATER, and EMMET CASEY, JR., and CONNIE Z. GILBERT, and ALLAN H. JACK, SR., and ROBERT H. LONG, on behalf of themselves and others similarly situated, Plaintiffs,
v.
CONSOL ENERGY, INC., and CONSOLIDATION COAL CO., and FOLA COAL CO., LLC, and CONSOL OF KENTUCKY, INC., and CONSOL BUCHANAN MINING CO., LLC, and CONSOL PENNSYLVANIA COAL CO., LLC, and KURT SALVATORI, Defendants.

          MEMORANDUM OPINION AND ORDER

          John T. Copenhaver, Jr., Judge

         Pending is the plaintiffs' supplemental motion for class certification, filed August 17, 2018.

         I. Background

         On April 24, 2017, plaintiffs Benny Fitzwater (“Fitzwater”), Clarence Bright (“Bright”), and Terry Prater (“Prater”), on behalf of themselves and others similarly situated, filed their amended complaint against CONSOL Energy, Inc., Consolidation Coal Co., Fola Coal Co., LLC, CONSOL of Kentucky, Inc., and Kurt Salvatori (CONSOL Energy, Inc.'s Vice President of Human Resources from 2011-2016 and fiduciary of the plaintiffs' employee welfare benefit plans) in this court. First Am. Compl., ECF No. 36 (“ECF No. 36”). This case was consolidated on December 22, 2017 with Casey v. CONSOL Energy, Inc. et al., brought by Emmett Casey, Jr. (“Casey”), Connie Z. Gilbert (“Gilbert”), Allan Jack Sr. (“Jack”), and Robert H. Long (“Long”). ECF No. 90.

         Plaintiffs Casey, Gilbert, Jack, and Long filed an amended complaint on March 1, 2018.[1] Second Am. Compl., ECF No. 103 (“ECF No. 103”). After Fitzwater, Bright, and Prater's original motion to certify class, filed July 13, 2017, was denied as moot by the court's February 6, 2018 order, see ECF No. 100, all seven named plaintiffs jointly filed a supplemental motion for class certification against CONSOL Energy, Inc., Consolidation Coal Co., [2] Fola Coal Co., LLC, CONSOL of Kentucky, Inc., CONSOL Pennsylvania Coal Co., LLC (collectively, “CONSOL”), [3] and Mr. Salvatori on August 17, 2018. Pls.' Suppl. Mot. Class Cert., ECF No. 155 (“ECF No. 155”).[4]

         The named plaintiffs are retired miners who worked at CONSOL mine sites consisting of the CONSOL of Kentucky mines, the Buchanan Mine located in Virginia and the Enlow Fork Mine located in Pennsylvania, or at the Fola mine sites located in West Virginia. Pls.' Mem. Supp. Suppl. Mot. Class Cert. 4-5, ECF No. 156 (“ECF No. 156”); ECF No. 103 ¶¶ 23, 58; ECF No. 36 ¶¶ 30-31. They seek to represent some 4, 000 miners who worked at numerous CONSOL mine sites in four different states over the course of approximately forty years. ECF No. 156 at 1; Pls.' Reply Suppl. Mot. Class Cert. 1, ECF No. 162 (“ECF No. 162”). The plaintiffs allege wrongful and discriminatory termination of retiree health benefits pursuant to the Employee Retirement Income Security Act of 1975 (“ERISA”), 29 U.S.C. § 1001, et seq. ECF Nos. 36, 103.

         In the early 1980s, CONSOL began holding orientation sessions for new, non-union employees at each of its mine sites, during which CONSOL representatives allegedly made oral and written promises of lifetime medical benefit coverage to miners and their beneficiaries as part of their “major initiative to begin opening non-union coal mines.” ECF No. 156 at 4.

         Therein, representations were allegedly “made in written form on slide shows - which Defendants projected on the wall for the putative class members to read - or in hand-outs distributed to class members by Consol.” Id. at 4-5. The materials allegedly “explained the CONSOL retiree benefits and stated that those benefits would remain competitive with the lifetime, Congressionally-backed benefits available to miners through the UMWA, ” referring to the United Mine Workers of America. Id. at 5. The plaintiffs believed these lifetime retiree benefits included medical, prescription drug, dental, vision, and life insurance coverage. ECF No. 103 ¶ 63.

         The plaintiffs refer to these benefits as the “Lifetime Plan” for which there was no uniform formal statement and no Summary Plan Document (“SPD”). Formal plans with SPDs did exist, consisting of varying degrees of coverage for medical, prescription drug, short- and long-term disability, dental, vision, and life insurance benefits, in addition to pension payments under a separate retirement plan. See, e.g., August 31, 2018 Declaration of Deborah Lackovic (Consol's Director - Benefits) (“Second Lackovic Decl.”), Exs. A-P, ECF Nos. 160-19 to 160-24. The defendants provided the court with SPDs from 1992, 1998, 2003, 2005, 2006, 2011, 2014 that were distributed to CONSOL's retired and active employees. Id.

         For instance, the 1992 SPDs benefits binder given to production and maintenance employees at “Enlow Fork Mining Company, ” “Consol of Pennsylvania Coal Company, ” and “Consolidation Coal Company of Kentucky” summarized the (a) life insurance, (b) medical, (c) salary continuance/disability, (d) dental, and (e) retirement benefit plans, and provided a separate SPD for each of them. Second Lackovic Decl., Ex. K, ECF No. 160-23. The SPDs the defendants provided up until the mid-2000s covered both active and retired employees within the same plans. See, e.g., Id. Ex. J, ECF No. 160-22 at 28, CONSOL022576;[5] Id. Ex. M, ECF No. 160-24 at 12, CONSOL022088.[6]

         In 2006, CONSOL began providing two separate sets of SPDs, one for retirees and one for active employees. Second Lackovic Decl. ¶¶ 7-8, ECF No. 160-19. Retirees and active employees also both received a separate SPD for each type of benefit they received: medical, prescription drug, dental, vision, disability, and life insurance, though the SPDs for retired and active employees were all contained in a common welfare plan designated Plan Number 581. Id. Exs. B-F, (SPDs for retirees), Exs. G-H (SPDs for active employees), ECF Nos. 160-19 to 160-20; ECF No. 103 ¶ 89.

         In January 2011, CONSOL issued a separate benefit plan for retired employees called the CONSOL Energy Inc. Retiree Health and Welfare Plan (“Retiree Benefits Plan”). See Second Lackovic Decl., Ex. A, ECF No. 160-19. Active employees remained participants in what was known as the CONSOL Energy Inc. Health and Welfare Plan (“Active Employee Benefits Plan.”), which the parties at times refer to as the CONSOL Energy, Inc. Flexible Benefits Program Comprehensive Medical Expense Benefits Plan. See July 27, 2017 Declaration of Deborah Lackovic (“First Lackovic Decl.”) ¶ 9, ECF No. 67-5; Second Lackovic Decl. ¶ 8, ECF No. 160-19; ECF No. 36 ¶ 50. Unlike earlier plans that covered dental and disability, the Retiree Benefits Plan only covered medical, prescription drug, vision, and life insurance benefits. See First Lackovic Decl. ¶ 8, ECF No. 67-5; Second Lackovic Decl., Ex. A, ECF No. 160-19. The Active Employee Benefits Plan continued to carry medical, prescription drug, vision, dental, disability, and life insurance benefits. Second Lackovic Decl. ¶ 8, ECF No. 160-19; Id. Ex. G, ECF No. 160-20.

         In or around 2010, the defendants allegedly “became aware of a union organizing drive, ” and in order to “halt” organizational efforts, the defendants “repeatedly represented to their employees, ” including Bright, Fitzwater, and Fola miner Harold Scott, that the “lifetime benefits plan . . . was altogether more valuable than benefits offered by the UMWA.” ECF No. 36 ¶¶ 36-37. During the union organizing drive, the defendants allegedly “repeated their previous statements regarding the Lifetime Plan, specifically providing written statements to the plaintiffs that: ‘This is a better deal than the UMWA negotiated in the national contract. AND REMEMBER, IT DIDN'T COST YOU A PENNY IN DUES OR ASSESSMENTS.'” Id. ¶ 38.

         Despite these assurances, the plaintiffs soon learned that they were not in fact assured lifetime benefits under a single, unified plan. Indeed, dating back to 1992, the SPDs for the various benefit plans each contained a reservation of rights clause that stated that CONSOL reserves the right to amend or terminate the plans at any time for active employees and current or future retirees. See, e.g., Second Lackovic Decl. ¶¶ 9-10, ECF No. 160-19.[7] In accordance with the reservation of rights clauses, CONSOL announced in late 2014 that it was terminating retiree health and welfare benefits for all active employees on October 1, 2014. ECF No. 155-14. Retirement-eligible employees could continue to receive health and welfare benefits under the Retiree Benefits Plan if they retired as of September 30, 2014, although the Retiree Benefits Plan would terminate on January 1, 2020. Id. Alternatively, active employees could continue working and receive a one-time, lump sum transition payment (to be paid on or around October 22, 2014), based on their years of service, to support their healthcare coverage upon retirement. Id.[8] Employees who had retired prior to this Fall 2014 announcement never had the option of receiving a transition payment. Id.

         A year later, CONSOL informed retired employees by letter that their retiree benefits under the Retiree Benefits Plan would terminate on December 31, 2015. ECF No. 155-16. For retirees, such as named plaintiff Prater, who had previously elected to retire after the Fall 2014 announcement, CONSOL provided a pro-rated portion of the previously rejected transition payment to reflect the receipt of an additional year of benefits under the Retiree Benefits Plan. First Lackovic Decl. ¶ 15, ECF No. 67-5; Prater Dep. 125:2-127:5, ECF No. 67-7; Samons Dep. 65:2-6, ECF No. 67-9.

         The plaintiffs now contend that the defendants violated ERISA by representing, orally and in writing, the existence of a single, unified retiree welfare benefits plan, which they coin the “Lifetime Plan, ” consisting of lifetime medical, prescription drug, dental, vision, and life insurance coverage. ECF No. 156 at 1-3. They claim that the oral representations along with the orientation and training materials created a Lifetime Plan enforceable under ERISA conditioned on the plaintiffs retiring at age fifty-five and attaining ten years of credited service. ECF No. 103 ¶ 2; ECF No. 36 ¶ 21.

         There is no SPD for a “Lifetime” Plan. The plaintiffs assert that “Consol created the Lifetime Plan through its slideshows and explanations that retiree welfare benefits would vest” in retirement after working the requisite number of years. ECF No. 162 at 13. The plaintiffs also allege that the defendants withheld or inconsistently distributed the separate SPDs for retirees, which also failed to mention obligations under the Lifetime Plan. The plaintiffs say that some employees never received the SPD for the Retiree Benefits Plan and others only received the SPD when they became eligible for retirement, which was the first time they learned that there were any differences in the welfare benefits of retirees versus active employees. ECF No. 103 ¶¶ 76-83, 138; ECF No. 36 ¶¶ 65-75; ECF No. 156 at 10, 22.

         II. Class Action Allegations

         The consolidated plaintiffs move for class certification on all seven counts listed in the March 1, 2018 amended complaint:[9] (I) Breach of fiduciary duties as to the Lifetime Plan under 29 U.S.C. § 1104(a)(1)(a)(i); (II) Enforcement of the Lifetime Plan as an ERISA plan under 29 U.S.C. § 1132(a)(1-3); (III) Discrimination against individual participants based on health-status related factors under 29 U.S.C. § 1182; (IV) Failure to meet the duty of disclosure by providing the plaintiffs with incomplete SPDs that did not mention the Lifetime Plan's benefits and obligations or with no SPDs at all under 29 U.S.C. § 1021(a)(1); (V) Failure to provide accurate and comprehensive SPDs regarding the Lifetime Plan under 29 U.S.C. § 1022(a); (VI) Failure to accurately state the Lifetime Plan's requirements with respect to eligibility under 29 U.S.C. § 1022(b); and (VII) Failure to provide an adequate SPD regarding the Lifetime Plan in a timely manner under 29 U.S.C. § 1024(b)(1). ECF No. 156 at 18-19.

         The plaintiffs originally proposed the following class definition which would establish a class for retirees only:

All individuals who in 2014 or 2015 were participants in or beneficiaries of a welfare benefits plan (medical, prescription drug, dental, vision, and/or life insurance) administered by CONSOL Energy (“Consol”), whose receipt of such benefits was predicated on being a retiree from Consol or the dependent of a retiree from Consol, and whose receipt of such benefits terminated in the years of 2014 and 2015.

ECF No. 156 at 3. In their response to the plaintiffs' supplemental motion for class certification, the defendants argued that the class definition was too indefinite because it ranged anywhere from 12, 000 to 16, 000 individuals based on the allegations in the complaint. Defs.' Resp. Suppl. Mot. Class Cert. 1-2, ECF No. 160 at 1-2 (“ECF No. 160”). The definition was also overbroad in that it “would include individuals who were not impacted by CONSOL's 2014 and 2015 decisions to terminate retiree medical benefits” because their retiree medical liabilities had already been transferred to a separate entity, Murray Energy Corporation. Id. at 8-9. Thus, the actual size of the putative class was only around 4, 000 individuals. ECF No. 162 at 3.

         For the first time in their reply, the plaintiffs now seek to certify the following two classes of CONSOL employees from mine sites located in West Virginia, Kentucky, Virginia, Pennsylvania, and “neighboring states:”

Class A: All individual plan participants, and their dependents, who had qualified to enroll in a retiree welfare benefits plan administered by CONSOL Energy (“CONSOL”), but who had not yet enrolled in such plan when CONSOL terminated their plan participation in the years of 2014 and 2015.
Class B: All individual plan participants, and their dependents, who had enrolled in a retiree welfare benefits plan administered by CONSOL prior to CONSOL terminating their plan participation in the years of 2014 and 2015.

ECF No. 162 at 3-4; ECF No. 156 at 12. Class A covers the six “Lifetime Plan” Counts of I-II and IV-VII, and Class B applies only to remaining Count III (Discrimination based on Health Status-Related Factors). ECF No. 162 at 4.

         The Declaration of CONSOL's Director - Benefits Deborah Lackovic (“Lackovic”) that is included in the defendants' response notified the plaintiffs that “[n]otwithstanding any differences in coverage between the groups, ” Plan Number 583 encompassed all CONSOL retirees, including UMWA retirees. Second Lackovic Decl. ¶¶ 4-5, 12, ECF No. 160-19. The plaintiffs contend in their reply that they proposed this two-part class definition “to account for excluding the UMWA members” that Lackovic explained were still covered under the Retiree Benefits Plan, designated Plan Number 583. ECF No. 162 at 3. The defendants insist in their surreply that the plaintiffs lack a proper justification for belatedly expanding this class definition to include retirement-eligible individuals in addition to retirees. Defs.' Surreply, ECF No. 173 at 8-12 (“ECF No. 173”). They point out that nothing in their argument regarding Murray Energy Corporation raised any issues related to retirement-eligible individuals the plaintiffs now seek to include in Class A. Id. at 10.

         “The ordinary rule in federal courts is that an argument raised for the first time in a reply brief or memorandum will not be considered.” See Clawson v. FedEx Ground Package Sys., Inc., 451 F.Supp.2d 731, 734 (D. Md. 2006) (citing United States v. Williams, 445 F.3d 724, 736 n.6 (4th Cir. 2006)). However, district courts have discretion to consider these issues, such as when the opposing party files a surreply. Id. at 734-35 (citing Curry v. City of Syracuse, 316 F.3d 324, 330 (2d Cir. 2003)). Inasmuch as the court held an additional hearing addressing the revised class definition and granted the defendants leave to file a surreply, the plaintiffs' newly proposed class definition will be evaluated.

         III. Applicable Law

         The parties vigorously dispute the proof relied upon by the plaintiffs in attempting to meet their certification burden under Rule 23 of the Federal Rules of Civil Procedure. The court thus undertakes the “rigorous” analysis required under United States Supreme Court precedent, see Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350-51 (2011), nevertheless mindful of our court of appeals' admonition that Rule 23 should be accorded a liberal construction “which will in the particular case ‘best serve the ends of justice for the affected parties and . . . promote judicial efficiency.'” Gunnells v. Healthplan Services, Inc., 348 F.3d 417, 424 (4th Cir. 2003) (quoting In re A.H. Robins, 880 F.2d 709, 740 (4th Cir. 1989)).

         A party seeking class certification must satisfy the requirements found in Rule 23(a) of the Federal Rules of Civil Procedure and demonstrate satisfaction of at least one of the subdivisions of Rule 23(b). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614 (1997). The material provisions of Rule 23(a) provide as follows:

(a) Prerequisites. One or more members of a class may sue or be sued as representative parties on behalf of all members only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests of the class.

Fed. R. Civ. P. 23(a); see generally Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311 (4th Cir. 2006).

         First, the numerosity requirement does not mandate a specific number of plaintiffs to maintain a class action. Brady v. Thurston Motor Lines, 726 F.2d 136, 145 (4th Cir. 1984). Rather, the “[p]racticability of joinder depends on many factors, including, for example, the size of the class, ease of identifying its numbers and determining their addresses, facility of making service on them if joined and their geographic dispersion.” Baltimore v. Laborers' Int'l Union of N. Am., 67 F.3d 293 (4th Cir. 1995) (quoting Kilgo v. Bowman Transp., Inc., 789 F.2d 859, 878 (11th Cir. 1986)).

         The commonality and typicality requirements “both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.” Soutter v. Equifax Info. Servs., LLC,498 Fed.Appx. 260, 264 (4th Cir. 2012) (internal quotation marks omitted). These requirements “tend[] to merge” with the adequacy of representation requirement, see Amchem Prods., Inc., 521 U.S. at 626 n. 20, which precludes class certification unless the class representative ‚Äúpossess[es] the same interest ...


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