GE wins Sixth Circuit appeal defeating class action surrounding retiree benefits
Clients General Electric Company
Jones Day obtained a victory on behalf of General Electric Company ("GE") in the Sixth Circuit Court of Appeals, which affirmed a complete dismissal of a nationwide putative class action concerning GE's changes to post-retirement medical benefits for union retirees. The lawsuit was brought by nine unions and 28 named plaintiffs on behalf of a class alleged to consist of approximately 55,000 union retirees. The plaintiffs alleged that the changes at issue would save GE $3.3 billion. Through these changes, which took effect on January 1, 2016, GE replaced its retiree medical benefit plans with a system by which retirees could purchase individualized insurance plans from a private marketplace, and GE provided many retirees with a reimbursement account for eligible expenses. These modifications made providing retiree health benefits more financially manageable for GE, and afforded many retirees the opportunity to obtain more cost-effective coverage.
The plaintiffs challenged these changes as violations of the Employee Retirement Income Security Act and the Labor Management Relations Act, alleging that their retiree medical benefits were vested for life and unalterable, and sought damages and an injunction to enjoin the changes. GE moved to dismiss for failure to state a claim on the basis that the applicable benefit plans and collective bargaining agreements ("CBAs") did not commit GE to provide the benefits at issue for life, but rather reserved GE's right to alter the benefits, subject only to a commitment to provide the benefits while the CBAs remained in effect – a period of time limited by the CBAs' general durational clauses. The court agreed, and granted GE's motion and dismissed the case in its entirety. On August 16, 2018, the Sixth Circuit upheld the lower court’s decision.
IUE-CWA v. General Electric Co., Case No. 4:15-cv-02301 (N.D. Ohio); IUE-CWA, et al. v. GE, No. 17-03885 (6th Cir.)