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SPENCER v. CENTRAL STATES

December 5, 1991

DAVE SPENCER, LOWELL TIPPIT, ROBERT GAHR and THOMAS ZEHNDER, individually and on behalf of all similarly situated persons, Plaintiffs,
v.
CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, Defendant.


ASPEN


The opinion of the court was delivered by: MARVIN E. ASPEN

MARVIN E. ASPEN, District Judge:

 Plaintiffs Dave Spencer, Lowell Tippit, Robert Gahr, and Thomas Zehnder bring this action against Central States, Southeast and Southwest Areas Pension Fund ("Central States, the "Fund, or the "Plan") pursuant to the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 101 et seq., and the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 186(c)(5). Presently pending before the court are plaintiffs' motion for class certification and Central States' motion for summary judgment. For the reasons as set forth below, plaintiffs' motion for class certification is denied, and Central States' motion for summary judgment is granted.

 I. Background

 This lawsuit has been filed by three former employees and one current employee of the Kroger Company ("Kroger"). All four are members of various International Brotherhood of Teamsters ("IBT") local unions. Plaintiffs Spencer, Tippit, Gahr, and Zehnder seek to represent a class including

 Prior to 1971, Kroger provided its employees with a profit sharing and pension plan. Approximately 6500 of the employees covered under the pension plan were represented by the IBT. In 1970, Kroger's collective bargaining agreement ("CBA") with the IBT expired, prompting a new agreement for the term 1971-1973 (the "1971 agreement"). The 1971 agreement contained a "pension supplement," providing that, upon ratification by the union membership, all 6500 Kroger employees would switch from the Kroger pension plan to the Fund administered by Central States.

 Plaintiffs contend that they were induced to ratify the 1971 agreement based on representations made by various individuals to local union bargaining committee members. Specifically, the employees claim that several union officials and Fund administrators orally promised that, under the 1971 agreement: (1) Kroger employees "would always be eligible for the highest benefits in their respective age-and-service categories"; (2) pre-1971 service "would count as full service credit, although no contributions were made for it"; and (3) Kroger "would thereafter make contributions to the Plan for plaintiffs at the highest possible (weekly) rate." In addition, plaintiffs have directed our attention to a letter from the Fund's executive director, Edward Murtha, dated May 28, 1970. This letter, which confirmed the terms under which the employees would be accepted into the Central States Fund, allegedly "reflected" the oral promises to the employees at the several local union meetings.

 At the time plaintiffs joined the Central States Plan in 1971, they were in the highest benefit category. That category, the "Twenty-Year Service Pension," required the employee to accumulate twenty years of service credit to qualify, but the service credit need not be "contributory." In addition, to be eligible for benefits the employee had to be fifty-seven years old and have a minimum of 8.6 years of actual paid-in service. Plaintiffs assert that they meet these requirements.

 In 1982, the Fund created a new category that paid higher benefits. The new "Twenty-Year Deferred Benefit Plan" was based exclusively on the number of years of "contributory service" held by the employee. An employee accumulated "contributory service credit" for the years in which he worked for an employer that actually contributed to the Fund. In 1985 and 1987, the Fund created additional categories of higher paying benefits. Once again, these new categories were exclusively based on contributory service."

 In November 1986, Kroger closed its St. Louis plant, dismissing thousands of employees. Finding themselves unemployed, many of the dismissed employees chose to retire. Upon filing for benefits from the Fund, the employees discovered that they did not receive contributory service credit for the years prior to 1971, and thus were not eligible for the higher paying benefits. Subsequently, the employees learned that, in 1986, the Fund had begun awarding contributory service credit to new participants for years preceding their involvement with the Fund. Plaintiffs allege, for instance, that the Fund retroactively granted an average of three years of contributory service credit to approximately 2200 United Parcel Service employees. Similarly, plaintiffs assert that the Fund induced CSX Company employees to join the Plan by offering such credit.

 II. Class Certification

 Rule 23 of the Federal Rules of Civil Procedure establishes a two-step procedure to determine if a class action is appropriate. The court must first inquire into whether the class meets the four preliminary requirements of Rule 23(a):

 (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.

 Additionally, a class action that satisfies all four of the Rule 23(a) requirements must also qualify under one of the three subsections of Rule 23(b). In the instant case, plaintiffs seek certification of the class under Rule 23(b)(2), which provides that a class action is proper if "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole."

 In evaluating the motion for class certification, the allegations made in support of certification are taken as true, and we do not examine the merits of the case. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78, 94 S. Ct. 2140, 2152-53, 40 L. Ed. 2d 732 (1974); Riordan v. Smith Barney, 113 F.R.D. 60, 62 (N.D. Ill. 1986). The burden of showing that the requirements for class certification have been met rests with the plaintiffs. General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 161, 102 S. Ct. 2364, 2372, 72 L. Ed. 2d 740 (1982); Trotter v. Klincar, 748 F.2d 1177, 1184 (7th Cir. 1984); Riordan, 113 F.R.D. at 62.

 The first two prerequisites of Rule 23(a) are clearly met in this case, i.e., numerosity *fn1" and commonality. *fn2" As such, we direct our attention to Rule 23(a)(3), which mandates "that the claims or defenses of the representative parties [be] typical of the claims or defenses of the class."

 Typicality, like the commonality and adequacy-of-representation requirements, "is intended as a safeguard to insure that the named plaintiff[s'] interests are substantially coextensive with the interests of the class." Deutschman v. Beneficial Corp., 132 F.R.D. 359, 373 (D. Del. 1990); see also General Tel. Co., 457 U.S. at 157 n.13, 102 S. Ct. at 2370 n.13. Accordingly, the court must determine if "the named representatives' claims have the same essential characteristics as the claims of the class at large." De La Fuente v. Stokely-Van Camp, Inc., 713 F.2d 225, 232 (7th Cir. 1983); Patrykus v. Gomilla, 121 F.R.D. 357, 361-62 (N.D. Ill. 1988). The typicality requirement is satisfied, and factual differences will not render a claim atypical, " if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members and his or her claims are based on the same legal theory." De La Fuente, 713 F.2d at 232 (citations omitted); Riordan, 113 F.R.D. at 63. To be sure, "the named representatives must be able to establish the bulk of the elements of each class member's claims when they prove their own claims." Brooks v. Southern Bell Tel. & Tel. Co., 133 F.R.D. 54, 58 (S.D. Fla. 1990) (citing General Tel. Co., 457 U.S. 147, 102 S. Ct. 2364, 72 L. Ed. 2d 740 ). "If defendants' course of conduct gives rise to the claims of all class members, and defendants have not taken any action unique to the named plaintiff[s], then the representative[s'] claim[s] [are] typical." Deutschman, 132 F.R.D. at 373 (citations omitted).

 Plaintiffs argue that the legal issues raised in their amended complaint are identical to, and therefore typical of, the claims of the other class members. Specifically, they focus on the elements necessary to sustain their claims and argue that they are the same elements that all class members must prove to prevail against the Fund. Be that as it may, merely pointing to common issues of law is insufficient to meet the typicality requirement when the facts required to prove the claims are markedly different between class members. Contrary to plaintiffs' assertion, the typicality requirement can be satisfied notwithstanding factual discord between class members only when the representatives' claims arise from the "same event or practice or course of conduct that gives rise to the claims of [the] other class members." De La Fuente, 713 F.2d at 232. In other words, while having the same legal theory as all other class members is a necessary element of the typicality requirement, it is insufficient standing alone.

 All four of plaintiffs' claims hinge on representations made by various union officials and Fund trustees to the approximately 2,000 class members. Plaintiffs claim that these representations entitle them to treat pre-1971 service with Kroger as contributory service, and seek a declaration to that effect under § 502(a)(1)(B) of ERISA. Moreover, their structural defect and fiduciary duty claims rest on the fact that Central States, contrary to its promise, did not count the Kroger employees' pre-1971 service as contributory. while granting UPS employees contributory service credit for years prior to entering the Plan. Finally, plaintiffs' equitable estoppel claim explicitly alleges that the Fund, through various trustees and IBT officials, made representations upon which plaintiffs relied to their detriment.

 The representations supporting plaintiffs' claims, however, were not uniformly communicated to all 2,000 class members. Indeed, these representations were communicated orally at 27 different local union meetings. *fn3" Further, it is undisputed that no two presentations to the various local unions were the same. For instance, Secretary Treasurer Saffo of Local 610 allegedly made the statements regarding pension rights to the St. Louis employees. Gahr Dep. at 36-39; Spencer Dep. at 66, 84-85; Tippit Dep. at 21-25. Plaintiff Zehnder, however, relied on statements made by one or more of the local representatives in Cincinnati--Cooper, Meyers, and Greer--and possibly by an unidentified representative from the IBT. Zehnder Dep. at 21-23. Further, while Zehnder believed that nothing was passed out in writing at the Cincinnati meeting, Zehnder Dep. at 28-29, Tippit was certain that a written summary was distributed in St. Louis setting forth the terms that Saffo was describing orally. Tippit Dep. at 12. Therefore, questions such as what representations were made, by whom, and whether the speaker had any relationship with the Fund thereby justifying attribution of the statement to Central States will require evidence that ...


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