Alcoa now contests the plaintiffs’ bid for class certification, arguing that the retirees are not similarly situated because they worked at different facilities, were covered by different collective bargaining agreements, and had different levels of benefits. Plaintiffs contend that they, nonetheless, suffered the same injury.
Fixed Benefit Plan to Health Reimbursement Account (HRA)
Before 2021, Alcoa had provided lifetime health insurance benefits to Medicare-eligible retirees and their dependents under the terms of contracts with the United Steel Workers. Under the new scheme, Alcoa provides funds through an annual HRA contribution. Previously covered individuals may use the HRA contribution to purchase their own healthcare plan through an insurance exchange. Disabled adult children of plan beneficiaries are not eligible for the HRA contribution, and thus lose all Alcoa-paid benefits.
Alcoa argues that it has not terminated benefits, as alleged in the Complaint and that, with the tax-free HRA contribution, the Alcoa retirees are actually better off, because:
- they can tailor how they spend healthcare dollars according to their needs;
- unused funds may be rolled over to subsequent years; and
- the dollar amount of its 2022 HRA contribution may be higher for some recipients than the sum previously required by the collective bargaining agreements. Alcoa increased the contribution for every putative class member to $3,400 for the 2022 plan year.
The biggest concern appears to be that the retirees, as well as losing coverage for disabled adult children, may lose the contractual right to enforce the minimum contribution level required by the collective bargaining agreements, notwithstanding any 2022 increase initiated by Alcoa.
Can the retirees bring a class action lawsuit?
The retirees’ power is in their numbers. Alcoa, therefore, has predictably moved to deprive them of that procedural advantage by arguing that they do not qualify as a single class under the requirements of the Federal Rules of Civil Procedure (FRCP). Alcoa’s argument about the retirees’ eligibility for class action status has 3 parts.
First, the company argues that there are insufficient questions of law or fact that are common to all members of the class, noting particularly that the retirees were covered by 48 different collective bargaining agreements and they retired from different facilities with different retirement dates. Alcoa further argues that the health benefits promised under these contracts should not be regarded as “vested” because the terms of the contracts and information disseminated to retirees are ambiguous.
Secondly, Alcoa argues that the named plaintiff has an insufficient incentive to litigate the issue vigorously on behalf of the other class members because they are not typical of the class. Lynnette Kaiser, now the sole class representative, is a spouse whose husband worked at and retired from only one of the many facilities. Alcoa speculates that she may, therefore, have conflicts of interest with the other covered retirees and spouses. Alcoa further argues that treating the retirees and spouses as a single class could result in inconsistent remedies.
Finally, Alcoa argues that individual questions predominate over common questions in the lawsuit, making it inappropriate for class certification. The company speculates that a separate damages hearing might be required for each member of the class.
The substantive issue
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The next step for the plaintiffs, on both the procedural and substantive fronts, will likely involve marshalling all available information on the many different collective bargaining agreements that were applicable at different dates, as well as other forms of communication disseminated to both employees and retirees about health benefits. This will be no small task.