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Amos v. PPG Industries Inc.

United States District Court, S.D. Ohio, Eastern Division

August 16, 2019

Patricia L. Amos, et al., on behalf of themselves and others similarly situated, Plaintiffs,
v.
PPG Industries, Inc., et al., Defendants.

          Michael H. Watson Judge

          Chelsey Vascura Magistrate Judge

          REPORT AND RECOMMENDATION

          ELIZABETH A. PRESTON DEAVERS CHIEF UNITED STATES MAGISTRATE JUDGE

         Patricia L. Amos, Sally Jones, George Owens, Terry Taylor, John Foster, Alex Olszyk, John W. Zuzik, Arthur Ramos, Robert Ratleff, Richard Ross, Virginia Bakeman, William Brison, Mark B. Bryan, Shirley M. Bryan, Richard Fischer, Lindsay T. Granger, and John P. Detty (“Plaintiffs”) and PPG Industries, Inc., PPG Industries Ohio, Inc., PPG Retirement Plans, and Does 1 Through 20 (“PPG” or “Defendants”) have entered into a settlement agreement to resolve this class action lawsuit. This Court preliminarily approved the settlement on February 4, 2019. (ECF No. 413). Notice was thereafter given to the class. (ECF No. 416). On April 29, 2019, Plaintiffs filed an unopposed motion for attorneys' fees, costs, and expenses in the amount of $2, 350, 000.00. (ECF No. 415). On June 3, 2019, Plaintiffs filed their Motion for Final Approval of the Settlement Agreement (ECF No. 411-1) and Plan of Allocation (ECF No. 414-01). (ECF No. 418).[1] On May 31, 2019, PPG filed a brief in support of the settlement. (ECF No. 417). The Fairness Hearing held on June 11, 2019, was referred to the Undersigned to preside over and issue a Report and Recommendation.

         Based on Plaintiffs' motion for final approval, their motion for attorneys' fees, costs, and expenses, and the evidence presented at the fairness hearing, it is RECOMMENDED that the Court GRANT final approval of the Settlement Agreement and Plan of Allocation, award attorney's fees, costs, and expenses in the amount of $2, 350, 000.00, and enter final judgment in this case.

         I. BACKGROUND

         A. Plaintiffs Sued to Recover Vested Retiree Medical Benefits

         On January 21, 2005, Plaintiffs sued PPG under the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185(a), and the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132(a)(1)(B) and (a)(3). (ECF No. 1). Plaintiffs amended their complaint several times, primarily to include or omit named plaintiffs and defendants, and the operative version- the Supplemental Seventh Amended Complaint-was filed on April 19, 2017. (ECF No. 375).

         Plaintiffs bring claims on behalf of themselves and a class of retirees (and their spouses, surviving spouses, and dependents) from thirteen PPG facilities[2] who had been represented as employees by five labor unions[3] and who receive PPG medical benefits in retirement. Id. at ¶¶ 29-30. Plaintiffs allege that PPG unilaterally reduced and/or modified retiree medical benefits and shifted costs onto the retirees starting in 2001, and continued to further reduce benefits and impose higher premium costs since then. Id. at ¶¶ 35-37. Plaintiffs further allege that on January 1, 2017, PPG eliminated its ERISA governed health plan for Medicare-eligible retirees, replacing it with a Health Reimbursement Arrangement (“HRA”) through which it contributed $125 a month for retirees to use to purchase individual coverage. Id. at ¶¶ 38-39. In doing so, Plaintiffs claim, PPG violated a series of collective bargaining agreements (“CBAs”) that allegedly granted them vested medical benefits throughout retirement. Id. at ¶¶ 31-32, 40.

         PPG denies that the retirees' benefits vested and denies that it breached the CBAs by implementing the changes because the underlying CBAs had expired. See, e.g., (ECF No. 296). Moreover, PPG asserts that some of the underlying CBAs contained Reservation of Rights (“ROR”) provisions that expressly allowed PPG to modify, amend, or terminate benefits at any time. See, e.g., id. at 26.

         Soon after the initial filing in 2005, the Court stayed this case while three unions-the Chemical Workers, Steelworkers, and Machinists-pursued pre-existing lawsuits filed against PPG in federal court in Pennsylvania four years earlier, in 2001 (the “Pennsylvania Litigation”). Like Plaintiffs, these unions alleged that retiree benefits were vested and sought an order compelling PPG to arbitrate the dispute under the arbitration provisions of the CBAs. The district court in the Pennsylvania Litigation ruled for PPG, holding that the dispute was not arbitrable under the expired CBAs and that the retirees' benefits had not vested. The Third Circuit affirmed on May 17, 2007. International Chemical Workers v. PPG Industries, Inc., 236 Fed.Appx. 789 (3d Cir. 2007).

         Thereafter, on July 14, 2009, this Court granted summary judgment in favor of PPG, on the grounds Plaintiffs' claims were barred by collateral estoppel. (ECF No. 81). Plaintiffs appealed, and the Sixth Circuit reversed and remanded the case on November 1, 2012. Amos v. PPG Industries, Inc., 699 F.3d 448 (6th Cir. 2012). The case was then stayed pending the disposition of PPG's petition for certiorari to the Supreme Court, (ECF No. 117), and when it was denied, the stay was lifted on May 30, 2013. (ECF No. 125).

         On October 31, 2014, this Court bifurcated proceedings between liability and damages. (ECF No. 224). Fact discovery concluded on February 8, 2017. (ECF No. 360); Declaration of Joel R. Hurt in support of Plaintiffs' motion for preliminary approval of the settlement (ECF No. 411-8 at ¶ 3).

         B. The Court Certified the Case as a Class Action On Behalf of a “General Class” and “Delaware Subclass”

         On May 9, 2017, Plaintiffs moved for class certification. (ECF No. 378). Plaintiffs George Owens and Robert Ratleff, retirees from PPG's Delaware, Ohio facility, also filed a motion for certification of a subclass of retirees (the “Delaware Subclass”), based on the unique claim that, while the expired CBAs provided vested benefits, PPG was also in violation of the Delaware CBAs in effect from 2001 to the present, which also provided the subclass with a guarantee of benefits. (ECF No. 379). PPG opposed both motions. (ECF No. 383); (ECF No. 385).

         On January 5, 2018, the Court granted both class certification motions. (ECF No. 393). It certified a “General Class” of past, present, and future retirees (as well as their spouses, surviving spouses, and eligible dependents) from the thirteen PPG facilities, see (ECF No. 393 at 9-10), as well as a “Delaware Subclass.” (ECF No. 393 at 27).

         C. The Parties Moved For Summary Judgment As To Liability

         On March 6, 2018, Plaintiffs Owens and Ratleff filed a summary judgment motion on behalf of the Delaware Subclass under the claim unique to that group (ECF No. 398), PPG filed a motion for summary judgment as to the claims of all class members (ECF No. 399), and Plaintiffs, on behalf of the General Class, also moved for summary judgment. (ECF No. 401). The parties filed their respective responses on April 3, 2018. (ECF No. 403); (ECF No. 404); (ECF No. 405); (ECF No. 406).

         D. The Parties Settled While Summary Judgment Motions Were Pending

         Thereafter, pursuant to the Court's class certification order, (ECF No. 393 at 33-34), the parties mediated with Magistrate Judge Chelsey M. Vascura on April 18, 2018 in Columbus, Ohio. That mediation ultimately led to the settlement reached here.[4] Hurt Decl. ¶ 4 (ECF No. 411-8). With Magistrate Judge Vascura's assistance over the next two months, the parties reached a compromise and executed an agreement in principle on June 19, 2018. Id. See (ECF No. 407); (ECF No. 408). The parties spent the next several months working out the final Settlement Agreement. Hurt Decl. ¶ 4 (ECF No. 411-8).

         E. The Settlement Agreement [5]

         The key terms of the parties' agreement to settle this matter are summarized as follows.

         1. The Settlement Provides Benefits to General Class Members and Delaware Subclass Members

         The “General Class” is defined in the Settlement Agreement as follows:

All collectively bargained past, present, and future retirees of PPG (as well as the spouses, surviving spouses, and eligible dependents of these retirees) who:
(1) while employed by PPG, were represented by the [the Unions];
(2) were eligible for retiree medical coverage pursuant to the terms of collectively bargained agreements and provisions between any Union and PPG; and
(3) retired from, or before final judgment in this litigation will retire from, the following PPG facilities, on or after the dates indicated: Barberton (3/1/90); Circleville (10/1/86); Creighton (2/16/84); Crystal City (2/16/84); Cumberland (2/16/84); Delaware (2/16/86); Ford City (2/16/84); Fresno (5/16/84); Greensburg (3/25/84); Lake Charles (5/15/87); Mt. Zion (6/15/84); Natrium (3/1/87); and Springdale (11/1/84)
In addition, the General Class includes, when eligible for retiree health coverage pursuant to the terms of collectively bargained agreements and provisions between any Union and PPG, the surviving spouses of active employees who have died before final judgment in this litigation and who at the time of such employees' death worked at one of the listed facilities (on or after the dates indicated), and were represented by a Union.
Specifically excluded from the Class are employees who were hired after the dates that PPG and the Unions negotiated that persons hired at those facilities after those dates were not entitled to retiree health benefits under an ERISA governed plan (plus their spouses and beneficiaries) if they subsequently retired.

(ECF No. 411-1 at ¶ 1.14).

         “Delaware Subclass” means the following:

Members of the general class who are retirees, spouses, surviving spouses and eligible dependents of persons who were employed by PPG at its Delaware, Ohio facility and retired on or after February 16, 1986 but before February 3, 2014, who were represented by the UAW during their employment, and who are eligible for retiree health coverage under the terms of collectively bargained agreements and provisions between UAW and PPG. In addition, the Subclass includes, when eligible for retiree health coverage under the terms of collectively bargained agreements and provisions between UAW and PPG, the surviving spouses of active employees who have died before final judgment in this litigation and who at the time of their death worked at the Delaware facility on or after February 19, 1995, and were represented by the UAW.

Id. at ¶ 1.10.

         These definitions are slightly revised from those submitted to and approved by this Court in its January 5, 2018 order but were included in the Notice. Class Counsel informed the Court that the original definitions were overbroad in that they suggested, incorrectly, that all “surviving spouses of active employees [that were] eligible to retire” were “eligible for retiree medical coverage” and thus had the same claims as the rest of the class. The revised definitions make clear that such “surviving spouses of active employees” will be covered by the settlement only “when eligible for retiree medical coverage” “pursuant to” the CBAs. Hurt Decl. ¶ 5 (ECF No. 411-8); Compare (ECF No. 393 at 9, 27) with (ECF No. 411-1 at ¶ 1.14, ¶ 1.10). However, the definitions are the same in all other respects. Id.

         2. The Settlement Agreement Provides Continued Medical Benefits Through the End of 2025 to General Class Members Not Covered By the Settlement Agreement With Axiall Defendants

         PPG will provide future medical benefits through December 31, 2025 to members of the General Class (including the Delaware Subclass) who were not covered by the earlier settlement that Plaintiffs negotiated with Axiall Corporation and Georgia Gulf Corporation (“Axiall”), approved by this Court on August 13, 2015.[6] (ECF No. 411-1 at ¶¶ 11.1-11.3; 1.34). Those General Class members who were covered by the earlier settlement with Axiall will not receive the future benefits described in this section, but they will receive a share of the Lump Sum Payment (described below) along with all other members of the General Class. Id. Class Counsel have represented that while they are not identical, the future benefits provided by this settlement are similar to those provided in the settlement with Axiall and will remain in effect for the same period of time, placing all General Class members in a similar position with regard to their future retiree medical benefits. See Hurt Decl. ¶¶ 6-7 (ECF No. 411-8).

         a. General Class members who are eligible for Medicare

         If eligible for Medicare, PPG will continue to fund an HRA through December 31, 2025 for such General Class members to access for reimbursement of qualified medical expenses. (ECF No. 411-1 at ¶ 11.2). During this period, PPG will continue to provide a $125 monthly stipend and a “catastrophic prescription drug benefit” to a General Class member who is enrolled in a PPG HRA and who enters the “catastrophic” coverage phase of Medicare Part D. Id. at ¶ 11.2.b.[7] For such individuals, PPG will reimburse the 5% in prescription drug costs an individual would otherwise pay in the catastrophic coverage phase during the remainder of the year. See id.

         b. General Class members who are not eligible for Medicare

         If not eligible for Medicare, PPG will provide the same benefit plan that it provides to other non-Medicare-eligible PPG retirees through December 31, 2025. Id. at ¶ 11.3. During this period, PPG will retain the discretion to change plan features such as contributions, plan design, administrators/carriers, etc., so long as it provides such General Class members the same benefit plan it is providing to its other non-Medicare-eligible retirees. Id. at ¶ 11.3.a. If it terminates coverage altogether for the other non-Medicare-eligible retirees who are not in the General Class, PPG will provide a $400 monthly stipend through an HRA from the date it terminates such coverage through December 31, 2025. Id. at ¶ 11.3.c. If a General Class member becomes eligible for Medicare before December 31, 2025, he or she will get the benefit for Medicare-eligible General Class members (as described above) at that time. Id. at ¶ 11.3.d.[8]

         c. General Class members who continue to receive benefits under a current CBA

         For those covered by a health plan for active employees that is set forth in a CBA when the settlement is finally approved, PPG will continue to provide such coverage until the expiration date set forth in the CBA, or any mutually agreed upon extension of the expiration date. Id. at ¶ 11.4. At that time, such General Class members will get the benefits described in the sections above based on whether they are eligible for Medicare. Id.[9]

         3. The Settlement Agreement Provides a Lump Sum Payment Distributed According to the Proposed Plan of Allocation

         PPG will pay a lump sum of $7, 650, 000 to resolve the lawsuit, which will be distributed in a manner that will partially reimburse General Class members and Delaware Subclass members for the medical expenses and costs of medical coverage they incurred as a result of the benefit changes that were challenged in the lawsuit. Id. at ¶¶ 7.1-7.3. This lump sum will be distributed to all living General Class members (including those covered by the Axiall settlement) except those who are still covered by a health plan for active employees as set forth in a current CBA. Id. at ¶ 7.3; (ECF No. 414-1, the Plan of Allocation, at ¶¶ D and E).[10] One- half ($3, 825, 000) will be allocated to Delaware Subclass members, and the other half ($3, 825, 000) will be allocated to General Class members not in the Delaware Subclass. (ECF No. 414-1 at ¶ C). The proposed Plan of Allocation provides that, should any portion of the lump sum of $7, 650, 000 remain unclaimed by class members after it is distributed according to the Plan, one half of the remainder shall be paid to the Patient Advocate Foundation, and the other half to the Greater Pittsburgh Community Food Bank. Id. at D.6 and E.6.

         a. General Class members who are not in the Delaware Subclass

         All living General Class members who are not in the Delaware Subclass, except for those still covered by a health plan for active employees as set forth in a current CBA, will receive an equal share of the $3, 825, 000 allocated to this group. Id. at ¶ D.1. Based on the most recent class census information provided in the litigation, Plaintiffs currently estimate such payments to be approximately $1, 000. See Hurt Decl. ¶¶ 8-10 (ECF No. 411-8). Those who have a PPG HRA will receive their share through a one-time contribution to their HRA. (ECF No. 414-1 at ¶ D.2). Those who do not have a PPG HRA will be paid by check. Id. at ¶ D.3-5.

         b. Delaware ...


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