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International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America v. Visteon Corporation

United States District Court, D. Delaware

July 9, 2015

INTERNATIONAL UNION, UNITED AUTOMOBILE, AEROSPACE, AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA (UAW); and DOLORES GROMALSKI and PABLO GOMEZ, for themselves and others similarly situated, Plaintiffs,
v.
VISTEON CORPORATION; VISTEON SYSTEMS, LLC; VISTEON CARIBBEAN, INC.; VISTEON SYSTEMS LLC HEALTH AND WELFARE BENEFIT PLAN FOR HOURLY EMPLOYEES-NORTH PENN LOCATION; and VISTEON CARIBBEAN, INC. EMPLOYEE GROUP INSURANCE PLAN, Defendants.

Susan E. Kaufman, Esq., COOCH and TAYLOR P.A., Wilmington, DE; John G. Adam, Esq., LEGGHIO & ISRAEL, P.C., Royal Oak, MI, Attorneys for Plaintiffs.

Laura Davis Jones, Esq., James E. O'Neill, Esq., PACHULSKI STANG ZIEHL & JONES LLP, Wilmington, DE; Andrew B. Bloomer, Esq., Catherine L. Fitzpatrick, Esq., R. Allan Pixton, Esq., KIRKLAND & ELLIS LLP, Chicago, IL; Heather A. Bloom, KIRKLAND & ELLIS LLP, Washington, DC, Attorneys for Defendants.

MEMORANDUM OPINION

RICHARD G. ANDREWS, District Judge.

Before the Court is Defendants' Motion for Judgment on the Pleadings (D.I. 90), which seeks judgment as a matter of law on Plaintiffs' First Amended Complaint (D.I. 4). Plaintiffs' two-count Complaint asserts a claim for breach of contract and a claim for an ERISA violation under 29 U.S.C. §§ 1132(a)(1)(B) and (3).

I. BACKGROUND

The Visteon entities (hereinafter, "Visteon") filed voluntary petitions for chapter 11 bankruptcy relief in the United States Bankruptcy Court for the District of Delaware on May 28, 2009. ( See Bankr. Case No. 09-11786). Visteon is a manufacturer of automotive parts. (D.I. 91 at 4). Plaintiff UAW is the collective bargaining representative for Visteon's workers and retirees at the "North-Penn Plant" in Pennsylvania and the "Caribbean Plant" in Puerto Rico. (Id. ). The individually named plaintiffs, Gromalski and Gomez, are retired workers of Visteon's North-Penn and Caribbean plants, respectively, and purport to assert claims on behalf of an entire class of similarly situated workers. For convenience, I will refer to Plaintiffs as "the UAW."

In June 2009, Visteon moved the Bankruptcy Court for permission to terminate certain post-employment health care and life insurance benefits ("OPEB") provided to some of its retirees. (D.I. 92, Ex. F). The UAW and the IUE[1]-another collective bargaining unit that represents approximately 2, 100 retirees of Visteon's two Indiana plants-opposed the motion. The parties took discovery and presented evidence to the Bankruptcy Court over the course of a two-day hearing. (D.I. 92, Ex. A at VIST-2). On December 22, 2009, the Bankruptcy Court issued an order (the "Termination Order") allowing Visteon to terminate the OPEB. (Id. ). It reasoned that because the various benefit plans did not vest the OPEB, 11 U.S.C. § 363(b)(1), rather than 11 U.S.C. § 1114, governed the termination of the benefits. (Id. at VIST-3). Applying the § 363(b)(1) standard, the Bankruptcy Court found that terminating the OPEB was an exercise of reasonable business judgment and granted Visteon's motion.

IUE appealed from the Termination Order; UAW did not. This Court affirmed the Termination Order, but granted a limited one-month stay so that the IUE could seek an expedited appeal. On further appeal, the Third Circuit found that the Bankruptcy Court erred in applying 11 U.S.C. § 363 rather than 11 U.S.C. § 1114 to Visteon's motion to terminate. See In re Visteon Corp., 612 F.3d 210, 218-19 (2010) [hereinafter Visteon I ]. Visteon I reversed this Court's order affirming the Bankruptcy Court's Termination Order. Id. at 237.

On remand, UAW moved to reinstate the OPEB pursuant to Visteon I. (D.I. 92, Ex. K at VIST-110). The Bankruptcy Court granted this motion in part, ordering Visteon to reinstate the OPEB for certain UAW retirees (the "Reinstatement Order").[2] (D.I. 92, Ex. E at ¶ 1). Visteon appealed from that order, arguing that UAW could not reap the benefits of an appeal to which it was not a party.[3] This Court agreed with Visteon and reversed the Bankruptcy Court's Reinstatement Order as applied to UAW. (C.A. No. 10-918, D.I. 18). The Third Circuit affirmed this Court's decision. In re Visteon Corp., 579 F.Appx. 121, 123 (3d Cir. 2014) [hereinafter Visteon II ]. That Court reasoned that the Termination Order became final as to UAW once it failed to appeal from that order. Id. at 129. Despite the subsequent reversal on IUE's appeal, the Court held that UAW was bound by the Termination Order. Id.

On October 1, 2010, Visteon emerged from bankruptcy. (D.I. 93 at 5). Visteon's confirmed plan of reorganization ("the Plan") "reserved [Debtors'] rights to terminate all OPEB upon the Effective Date, subject to the right of any affected employee or retiree or representative of such employee or retiree to contest the lawfulness of such termination." (D.I. 94, Ex. A at Pl-2). On October 19, 2010, Visteon sent notice to UAW retirees that it would terminate healthcare benefits on November 1, 2010. ( Id., Ex. B at Pl-3). This prompted UAW to initiate this present action by filing a two-count Complaint in the United States District Court for the Eastern District of Michigan. (D.I. 1; as amended, D.I. 4). On October 22, 2013, the Michigan Court issued an opinion and order transferring the case to this Court. (D.I. 60). Visteon subsequently moved for Judgment on the Pleadings in this Court. (D.I. 90). The parties have extensively briefed the issues and it is now ripe for resolution.[4] ( See D.I. 91, 93, 95).

II. PARTIES' CONTENTIONS

Visteon asserts that UAW's claims are barred by issue preclusion and claim preclusion. (D.I. 91 at 3). It contends that the Bankruptcy Court's finding in the Termination Order that the OPEB were not vested is final for purposes of res judicata. (Id. ). Visteon argues that this settled issue of fact forecloses UAW's two causes of action and entitles Visteon to judgment on the pleadings. (Id. ).

UAW responds that Visteon's res judicata defenses are meritless for four reasons: (1) Visteon unsuccessfully raised these defenses in two prior instances, thus establishing the law-of-the-case, (2) Visteon's Plan reserved UAW's rights to reassert the two claims in its Complaint, (3) the issue of "vesting" was not essential to the Bankruptcy Court's Termination Order, and (4) the present claims against Visteon arose out of separate conduct that is distinct from the issue litigated within the bankruptcy case. (D.I. 93 at 1-2).

III. LEGAL STANDARDS

Federal Rule of Civil Procedure 12(c) provides that "[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings." Fed.R.Civ.P. 12(c). A moving party is entitled to judgment on the pleadings if he or she "clearly establishes there are no material issues of fact, and that he or she is entitled to judgment as a matter of law." DiCarlo v. St. Mary Hosp., 530 F.3d 255, 259 (3d Cir. 2008). In ruling on this motion, "[a] district court [i]s required to view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to plaintiff, the nonmoving party." Inst. for Scientific Info., Inc. v. Gordon & Breach, Sci. Publishers, Inc., 931 F.2d 1002, 1004 (3d Cir. 1991).

Res judicata encompasses two distinct doctrines known as claim preclusion and issue preclusion. In re Cont'l Airlines, Inc., 279 F.3d 226, 232 (3d Cir. 2002). "Claim preclusion generally refers to the effect of a prior judgment in foreclosing successive litigation of the very same claim, whether or not relitigation of the claim raises the same issues as the earlier suit." New Hampshire v. Maine, 532 U.S. 742, 748 (2001). "Claim preclusion requires: (1) a final judgment on the merits in a prior suit involving; (2) the same parties or their privities; and (3) a subsequent suit based on the same cause of action." CoreStates Bank, N.A. v. Huls Am., Inc., 176 F.3d 187, 194 (3d Cir. 1999). On the other hand, "[i]ssue preclusion generally refers to the effect of a prior judgment in foreclosing successive litigation of an issue of fact or law actually litigated and resolved in a valid court determination essential to the prior judgment, whether or not the issue arises on the same or a different claim." New Hampshire v. Maine, 532 U.S. at 748-49. "For a party to be estopped from relitigating an issue, the following elements must be present: (1) the issue sought to be precluded ...


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