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SHULTZ v. TELEDYNE

March 27, 1987

Robert M. Shultz, David Sommerville, Howard Olson, Robert D'Antonio and John Gagliordony, for themselves and all persons similarly situated, Plaintiffs
v.
Teledyne, Incorporated; Teledyne Industries, Defendants


Weber, D.J.


The opinion of the court was delivered by: WEBER

This is an action alleging a Section 301 violation of the Labor-Management Relations Act, 1947 and ERISA violations which was brought by retirees against an employer who discontinued payment of their health insurance premiums during a strike by active employees. Plaintiff retirees have moved for preliminary injunction and a hearing has been held. Post-hearing submissions have been filed by the parties. Defendants, on their part, have moved to dismiss, and this motion has been fully briefed. Both motions are ready for our determination.

 PARTIES

 The named plaintiffs are retired former employees of defendant-employer, Teledyne Vasco. Plaintiffs filed this action on their own behalf and for all persons similarly situated. Teledyne Vasco is a division of Teledyne Industries, a California corporation which is wholly-owned by Teledyne, Inc., a Delaware corporation. Teledyne, Inc. acts as the Plan Administrator for the Benefit Plan at issue in this action.

 FACTS

 Upon the recent expiration of the collective bargaining agreement, defendant Teledyne Vasco notified retirees and surviving spouses that Teledyne Vasco would cease making contributions on their behalf to the medical insurance plan. The notice indicated that retirees would be required to pay the premium necessary to convert the policies to individual coverage before February 16, 1987 if their health coverage was to continue. Failure to convert would result in immediate loss of coverage after the aforesaid date. Plaintiffs immediately sued for injunctive relief and damages, claiming that the retirees' benefits were to continue throughout retirement, and that defendants had no right to terminate the benefits when the active employee contract expired. Defendants argue that the Insurance Agreement provides explicitly that in the event of a strike, the defendant Teledyne Vasco will advance premiums for 30 days of coverage, subject to reimbursement by covered participants, and that Teledyne Vasco performed its duty according to the agreement.

 MOTION FOR PRELIMINARY INJUNCTION

 Courts traditionally consider four factors in determining whether or not to grant injunctive relief:

 
1) Have plaintiffs shown a substantial probability of success on the merits of their claim?
 
2) Will plaintiffs suffer irreparable harm unless an injunction issues?
 
3) In the absence of an injunction, will the harm plaintiffs suffer exceed the harm an injunction may cause defendants?
 
4) Will injunctive relief comport with the public interest?

 If the court believes that the answer to these questions is affirmative, injunctive relief should issue. See, e.g., Mamula v. Satralloy, Inc., 578 F. Supp. 563 (S.D.Ohio 1984); Musto v. American General Corp., 615 F. Supp. 1483, 1494 (M.D.Tenn. 1985).

 PROBABILITY OF SUCCESS ON MERITS

 Plaintiffs' claims rely on both Section 301 of the Labor-Management Relations Act, 29 U.S.C. § 185, and ERISA provisions, 29 U.S.C. §§ 1132(a)(1)(B), 1132(a)(3), and 1104(a)(1)(D). The ERISA claim is one in which the court must determine whether retirees' rights, which were not statutorily established, but were negotiated for under a collective bargaining agreement, are entitled to federal protection by reason of ERISA. Therefore regardless of which claim we examine first, we must begin with the collective bargaining agreement in order to ascertain the nature and scope of retirees' rights and whether defendants had a right to terminate retiree insurance benefits. *fn1"

 The Insurance Agreement which provides certain life, accident, sickness and hospital insurance for active and retired employees under a Group Insurance Plan, was originally executed in February 1960 as part of the collective bargaining agreement between Vasco and the Union. The Agreement's provisions have been modified from time to time by collective bargaining, and it was only in 1974 that Vasco agreed for the first time to provide the group medical coverage for retirees. Prior to 1974, only active employees were covered. The language which provided medical care insurance for retirees is as follows:

 
Effective August 1, 1975 all past and future pensioners (except deferred vested) will be covered by a medical care program. The cost of this program will be paid by the company.
 
Specifically, those covered by the new retiree medical program include all pensioners (except deferred vested) who are not eligible for Medicare and their dependents, spouses who are not eligible for Medicare and their dependents, and individuals receiving Surviving ...

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