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Carter v. Arkema, Inc

United States District Court, W.D. Kentucky, Louisville Division

April 2, 2018

ROGER D. CARTER, EDDIE DEAN HEWITT, DAVID WAYNE WARREN, RICKY LYNN WOODS, and a class others similarly situated PLAINTIFFS
v.
ARKEMA, INC., and ARKEMA INC. RETIREMENT BENEFITS PLAN DEFENDANTS

          MEMORANDUM OPINION AND ORDER

          Joseph H. McKinley, Jr., Chief Judge United states District Court.

         This matter is before the Court on a motion by the plaintiffs for class certification. (DN 81.) Fully briefed, this matter is ripe for decision.

         I. Background

         This case is a putative class action brought by former employees of Arkema, Inc. (“Arkema”) who are participants in the Arkema Inc. Retirement Benefits Plan (“Arkema Plan”) sponsored by Arkema and administered by the Arkema Inc. Pension Administration Committee. The named plaintiffs are former employees of M & T Chemicals. The plaintiffs were employed at the company's Carrollton, Kentucky, facility, which was sold to Arkema's corporate predecessor, Atochem North America, on December 31, 1989. Prior to the sale, the plaintiffs were participants in the M & T Chemicals pension plan. After the sale, the plaintiffs became participants in the Atochem North America Plan (now the Arkema Plan).

         On December 27, 2013, the named plaintiffs filed suit against the Defendants asserting that amendments to the Arkema Plan violate the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., because they unlawfully deprived the plaintiffs of certain rights they had accrued as M & T Chemicals employees. The amended complaint contains four counts, only two of which are relevant to the present motion for class certification.[1]Count I, “Deprivation of Vested Rights by Change of Initial Service Date, ” alleges that “employees who had been hired prior to their 25th birthdays, and who were already fully vested plan members with accrued service credit, had their initial service credit accrual dates ‘adjusted' to the first day of the calendar month next following their attainment of 25 years of age.” (Pl.'s Amended Compl. [DN 12] ¶ 16.) The amended complaint further alleges that “[b]ecause service credit is multiplied by average annual earnings to calculate benefits under [the Arkema Plan], and any other plans in which the individual plaintiffs were participating, the loss of accrued service credit reduced participants' accumulated benefits.” (Id. at ¶ 19.) For example, the plaintiffs contend that when Roger Carter and Eddie Hewitt were terminated in 2012, they each had over 36 years of service but were credited with only around 30 years of service, costing each around $4, 000 per year in retirement benefits. Additionally, David Warren and Ricky Woods were credited with only 23 years of service when each had accumulated around 29 years of service at the time of their termination, costing each thousands of dollars in retirement benefits per year and depriving these plaintiffs of the option to retire early with a 3% per year reduction in benefits, which was available to retirees with 25 years of service, rather than the 5.5% per year reduction available to members with only 10 years of service. Additionally, Warren and Woods were not permitted to participate in a retirement medical benefits program available to members with 25 years of service at the time of the plant sale or closing.

         Count II, “Deprivation of Vested Rights by Revocation of ‘85 Rule, '” alleges that “[i]n or around 1993, [the Arkema Plan], and any other plans in which the individual plaintiffs were participating, revoked the 85-year rule, depriving Plaintiffs of the option of early retirement without penalty.” (Id. at ¶ 24.) Specifically, the Rule of 85 contained in the M & T Combined Plan allowed participants to retire before normal retirement age without a reduction in benefits if the plan participants attained the age of 55 and had 30 years of accredited service. Similarly, under that plan, an employee could retire early with normal retirement benefits if he or she attained the age of 55, completed 10 years of accredited service, and retired due to the sale or closing of a company plant. Plaintiffs Carter and Hewitt both earned at least 30 years of service credit and reached age 55 before termination.

         The parties filed cross-motions for partial summary judgment. (DN 35, 36.) The Court granted summary judgment to the plaintiffs on Count I, as the defendants' use of an adjusted service date under its primary method of calculating retirement pension benefits violated ERISA's anti-cutback provision. (DN 53, at 4-12.) It also granted summary judgment to the plaintiffs on Count II as it pertained to the claims of Carter and Hewitt, as the defendants' denial of accrued early retirement benefits also violated ERISA's anti-cutback provision. (Id. at 12- 15.) But it granted summary judgment to the defendants on Count II as it pertained to the claims of Warren and Woods, as those plaintiffs had failed to meet all the eligibility requirements for early retirement benefits under the original, pre-amendment plan. (Id. at 15-17.)

         The plaintiffs have now moved for class certification on both Counts I and II, asking the Court to certify the following two subclasses:

[1] All participants in the Arkema, Inc. Retirement Benefits Plan, at any time from January 1, 1988 to the present, who were employed by Arkema, Inc. or its predecessors at Arkema's Carrollton, Kentucky plant, and whose initial service dates were “adjusted” to the first day of the month next following their attainment of 25 years of age.
[2] All participants in the Arkema, Inc. Retirement Benefits Plan, at any time from January 1, 1988 to the present, who were employed by Arkema, Inc. or its predecessors at Arkema's Carrollton, Kentucky plant, and who are eligible (or may become eligible) for the Rule of 85 due to termination of employment after reaching the age of 55 and 30 years of service.

(Pl.'s Mot. for Class Cert. [DN 81-1] at 5.)

         II. Standard for Class Certification

         Class action lawsuits are governed by Fed.R.Civ.P. 23. A district court must conduct a “rigorous analysis” into whether the prerequisites of Rule 23 are met before certifying a class. In re Am. Med. Sys., Inc., 75 F.3d 1069, 1078-79 (6th Cir. 1996). And while a district court has broad discretion in determining whether to certify a class, that discretion must be exercised within the framework of Fed.R.Civ.P. 23. Id. See also Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981); Coleman v. Gen. Motors Acceptance Corp., 296 F.3d 443, 446 (6th Cir. 2002). The party seeking certification bears the burden of proof. In re Am. Med. Sys., Inc., 75 F.3d at 1079. To meet this burden, the plaintiffs must first show that all four prerequisites of Rule 23(a) are satisfied, in that

(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).

         Additionally, if the plaintiffs have satisfied all four factors of Rule 23(a), they must also show that the action meets the requirements of one of the categories defined in Rule 23(b). Here, the plaintiffs only seek certification under Rule 23(b)(2), which allows a class action to be maintained if “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Fed.R.Civ.P. 23(b)(2).

         III. Analysis

         The plaintiffs seek certification of two subclasses: one including the plan participants who had their service date adjusted under the amended plan, and one including the participants who are eligible for early retirement benefits under the Rule of 85. See Fed. R. Civ. P. 23(c)(5) (“When appropriate, a class may be divided into subclasses that are each treated as a class under this rule”). The defendants take issue with the plaintiffs' argument that the two subclasses may be analyzed simultaneously, and the Court agrees. The two subclasses have different class representatives, different prospective members, and will entitle members to different relief. Thus, the Court must examine each proposed subclass separately.

         A. Adjusted Service Date Subclass

         The defendants do not oppose the proposed Adjusted Service Date subclass as strenuously as the proposed Rule of 85 subclass. However, the Court must still ensure that all of Rule 23's requirements for certification are met, even if there is no objection to the proposed subclass by the defendant. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 597 (1997).

         1. Rule 23(a) Requirements

         a. Numerosity

         The subclass must be “so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). According to the plaintiffs, discovery has revealed 75 individuals who would form this subclass. The defendants make no specific argument opposing certification of this subclass on the basis of its size.

         “There is no strict numerical test for determining impracticability of joinder.” In re Am. Med. Sys., Inc., 75 F.3d at 1079 (citations omitted). The plaintiffs cite to Pund v. City of Bedford, 2017 WL 3219710, at *3-4 (N.D. Ohio June 28, 2017), for the proposition that “a class of 40 or more members raises a presumption of impracticability of joinder based on numbers alone.”[2] Here, the plaintiffs have identified 75 potential subclass members and cited to numerous cases all finding that a similar number of class members is sufficient to satisfy Rule 23(a)(1). See Rodger v. Elec. Data Sys. Corp., 160 F.R.D. 532, 535 (E.D. N.C. 1995) (57 class members); Johns v. DeLeonardis, 145 F.R.D. 480, 483 (N.D. Ill. 1992) (70 class members). The Court finds that 75 potential subclass members is sufficient to meet Rule 23(a)(1)'s numerosity requirement; while there appear to be few issues with identifying which employees qualify as subclass members, the number of potential subclass members makes joinder impracticable, as it would impede the Court's ability to efficiently manage the case. Accord Wilson v. Anthem Health Plans of Ky., 2017 WL 56064, at *6 (W.D. Ky. Jan. 4, 2017) (finding numerosity requirement met, as joinder of 27 plaintiffs “would present several administrative complexities for the Court, rendering it highly impracticable to hold telephonic conferences, manage the electronic docket, and make scheduling decisions to the satisfaction of all parties”).

         b. ...


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