The action comes nearly a decade after class action certification was granted in an ERISA suit brought on behalf of 32,000 retirees of Unisys Corp. who said they were falsely promised lifetime medical benefits, according to a report in the Legal Intelligencer.   In his 16-page opinion in In Re: Unisys Corporation Retiree Medical Benefits Litigation, US District Judge Bruce W. Kauffman found that the plaintiffs who weren’t included in one of three settlements previously approved by the court must now clear legal hurdles that will require individualized proof.

As a result, Kauffman concluded that the class is no longer “cohesive” and fails to satisfy the requirements of Rule 23 of the Federal Rules of Civil Procedure.

According to the report, lead plaintiffs’ attorney Alan M. Sandals of Sandals & Langer has not yet decided whether to file an immediate appeal of Kauffman’s ruling or instead to file new lawsuits that list each of the remaining plaintiffs who wish to go forward.

Case History

In late 1992, Unisys announced that, as a money-saving measure, it would start phasing in a requirement that retirees pay the full cost of their retiree medical insurance coverage. The company, based in Blue Bell, Pennsylvania, said the phase-in would begin in January 1993 and that Unisys would stop contributing to retirees’ premiums entirely in January 1996.  

In its decade of litigation, the Unisys case has resulted in settlements worth nearly $130 million.

Plaintiffs in the case fell into one of three groups named for the companies that had joined to form Unisys in 1986, specifically:

• the “Sperry” plaintiffs, those who had originally worked for Sperry Corp. and retired before 1989, the year that employee benefits of the merged company were unified.
• the “Burroughs” plaintiffs, who originally worked for Burroughs and retired before 1989
• the Unisys plaintiffs, which comprised those who retired in 1989 or later

To date those in the Sperry group have fared best, with a 1994 settlement where Unisys agreed to pay $111 million to a group of 7,500 Sperry retirees who said they were duped into taking early retirement with the false promise that they would be entitled to lifetime medical benefits (see  Cutting current retirees’ benefits can result in lawsuits ).   Additionally, another 1,000 Sperry retirees who did not opt for early retirement received a $12.5 million in 1998.

Earlier this year, Kauffman approved a $6 million settlement in which 6,000 Sperry plaintiffs, many of whose claims suffered from possible statute-of-limitations problems (see  Lose Some ).

Time “Out”

However, many of the Burroughs and Unisys plaintiffs, who retired more than six years prior to the filing of the complaint, were dealt a major setback in 1997 when then-Chief US District Judge Edward N. Cahn of the Eastern District of Pennsylvania granted summary judgment in favor of Unisys, ruling that the retiree claims were barred by the statute of limitations.   Cahn also dismissed the claims of plaintiffs who left the company involuntarily, finding they had failed to establish detrimental reliance.

Those rulings were reversed in 2001 when the 3rd US Circuit Court of Appeals ruled that some of the class members may have relied to their detriment on the alleged material misrepresentations in reaching important life decisions made after their retirements, and thus might have timely claims, depending upon the date and nature of their reliance (see  Lose Some ).   The appellate decision also recussitated the claims of retirees who left the firm involuntarily, finding that there may be decisions other than choosing to retire that could support a breach of fiduciary duty claim.

Subsequently US Magistrate Judge Jacob P. Hart was able to settle the claims of the remaining Sperry plaintiffs.   However, soon after those talks ended, counsel for Unisys filed a motion seeking to decertify the class, arguing that the 3rd Circuit's decision had dramatically changed the case.   By reviving claims on the grounds that individual plaintiffs might be able to meet the test for defeating a statute-of-limitations defense and for showing detrimental reliance, Unisys argued that the plaintiffs no longer represented a unified class.

While the plaintiffs' lawyers agreed that factual differences exist among the class members, they countered that the differences did not affect the cohesiveness of their claims since the employer had engaged in a "systematic and pervasive common course of conduct" in misrepresenting to employees that they would have lifetime retiree medical benefits, according to the Intelligencer report.

Plaintiff's attorneys said that the entire class' claims actually revolve around a common course of conduct directed at class members, all of whom:

• received the same messages,
• were led to the same erroneous understanding about the durability of their benefits,
• made the same kinds of personal decisions and
• suffered the same kinds of harm.

But Judge Kauffman ruled in favor of Unisys since the case will now require individual evidence from each of the plaintiffs.   "A large number of plaintiffs base their claims on representations made by their co-workers or supervisors. In order for those individuals to qualify as fiduciaries, they must have had actual or apparent authority to advise the company's employees of their rights under the plan," Kauffman wrote, according to the Intelligencer.

Individual Circumstances

As a result, Kauffman said, the court "will have to examine the circumstances surrounding each communication (i.e., the timing, content and context) in order to determine whether a particular communication rises to the level of a material misrepresentation."   Such an analysis, Kauffman said, "necessarily will entail individualized evidence, including the retiree's own testimony as to what he or she heard or read."

Similarly, Kauffman found that the court "will have to examine the specific decisions allegedly made by the individual retirees in order to determine whether each one is sufficient to establish detrimental reliance."   He also held that that statute-of-limitations issues will require "a myriad of individual determinations."

"For example, in each case the evidence may vary as to when a Unisys representative last told the employee falsely that his or her retirement health benefit was secure and when and how he or she ultimately learned that retiree medical benefits were no longer free," Kauffman wrote.

"Indeed, there may be cases in which the employee learned the truth only when the bill came in the mail. Each of these individualized determinations could affect when the statute of limitations began to run for a given class member."

The case is In Re: Unisys Corporation Retiree Medical Benefits Litigation.