The opinion of the court was delivered by: MCNICHOLS
Robert J. McNichols, United States District Judge.
Plaintiffs represent a class of present and future retirees of the Bunker Hill Company. Hourly employees of the company were represented by several unions. In the collective bargaining sessions between Bunker Hill and the unions, Bunker agreed to provide medical benefits to its retirees. Salaried workers were not represented by unions. However, Bunker Hill agreed to provide them with the same medical benefits upon their retirement as were provided to the hourly employees.
This dispute arose in 1982 following Bunker Hill's decision to shut down its operations. Retirees were notified that their medical benefits would be terminated. Plaintiffs alleged that their rights to medical benefits were vested and could not be unilaterally terminated by Bunker Hill. They commenced this action pursuant to Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185 and Sections 502(A)(1)(B), (a)(2), and (a)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B), (a)(2), and (a)(3) seeking declaratory and injunctive relief and damages for the alleged wrongful termination of their benefits. Liability of Gulf Resources was predicated on an "alter ego" theory.
Trial of this case was bifurcated. Liability issues pertaining to the alleged breach of the collective bargaining agreements by Bunker Hill and the joint liability of Gulf Resources under the alter ego theory were tried to a jury which rendered its verdict in favor of the plaintiffs and against both defendants. Plaintiffs' ERISA claims and the damage phase of this litigation remain to be tried. Presently before the court are defendant Bunker Hill's motions for judgment notwithstanding the verdict or in the alternative, for a new trial pursuant to Rules 50 and 59, Fed.R.Civ.P.
The bases for the motions are that the verdict is not supported by the evidence and that the instructions given by the court contained certain errors and omissions. For reasons that follow, Bunker Hill's motions will both be denied.
A motion for judgment notwithstanding the verdict which is directed towards the sufficiency of the evidence can be granted "only when the evidence 'viewed most favorably to the party against whom the verdict is directed cannot support a verdict in that party's favor.' A verdict in the plaintiff's favor will be upheld if supported by substantial evidence." Criswell v. Western Airlines, Inc., 709 F.2d 544, 551 (9th Cir. 1983), aff'd, 472 U.S. 400, 105 S. Ct. 2743, 86 L. Ed. 2d 321 (1985). Substantial evidence means "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Transgo, Inc. v. Ajac Transmission Parts Corp., 768 F.2d 1001, 1014 (9th Cir. 1985), cert. denied, 474 U.S. 1059, 106 S. Ct. 802, 88 L. Ed. 2d 778 (1986).
A motion for a new trial invokes a standard which allows the trial court considerably more discretion. A verdict may be set aside and a new trial ordered when the verdict rendered is "contrary to the clear weight of the evidence, or to prevent, in the trial court's discretion, a miscarriage of justice." Peacock v. Board of Regents, etc., 597 F.2d 163, 165 (9th Cir. 1979). Motions for a new trial directed towards the sufficiency of the evidence may be granted if the verdict is against the "great weight" of the evidence or "it is quite clear that the jury has reached a seriously erroneous result." Digidyne Corp. v. Data General Corp., 734 F.2d 1336, 1347 (9th Cir. 1984) (citations omitted), cert. denied, 473 U.S. 908, 105 S. Ct. 3534, 87 L. Ed. 2d 657 (1985).
The course taken at the trial of this case was largely foreshadowed by Bower v. Bunker Hill Co., 725 F.2d 1221 (9th Cir. 1984) (reversing the summary judgment entered by this court in favor of Bunker Hill). The Court of Appeals held that the "contract language does not speak to the vesting issue" and directed this court to consider extrinsic evidence to determine the parties' intent. In this regard, the Circuit identified three specific areas of extrinsic evidence to be considered: (1) summary plan description; (2) management representations; and, (3) provision of benefits during the 1977 strike.
At trial, plaintiffs introduced a document entitled "Summary of Medical-Surgical-Hospital Benefits for Retired Employees, Surviving Spouses of Retired Employees and Their Eligible Children." As the Circuit previously observed, this document stated only one eligibility requirement for receiving insurance -- that the applicant be "receiving a pension from the Bunker Hill Company." The language of the document prompted the following comments by the court:
"Since the pension is lifelong, employees may have viewed the related insurance also to be a lifelong benefit. Moreover, the summary description assures pensioners that, upon their death, their 'children and surviving spouse may continue to be covered.' Such language suggests that retirement insurance benefits may not have been limited to the duration of the collective bargaining agreements."
Id. at 1224. The document contained a disclaimer which referred the reader to a copy of the contract at the company's personnel office. Prior to trial, the defendants argued that the referenced contract was the "Plan Document" which contained a reservation of rights clause allowing Bunker Hill to amend or terminate the plan at any time. However, the only evidence presented on the Plan Document at trial was that it was meant to govern the relationship between Bunker and its insurance carrier MSB. There was no evidence that the Plan Document itself had ever been distributed to any retiree. In any event, the adequacy of the disclaimer presented a question of fact. The jury would have been justified in finding that the disclaimer was insufficient or that it was intended only to govern the Bunker -- MSB relationship.
Plaintiffs also introduced copies of the "Summary Plan Descriptions" which were distributed to all employees in accordance with ERISA requirements. There was no indication in the documents that retiree benefits could be terminated in the event of a shutdown or at the expiration of the collective bargaining agreements. In fact, a specific section addressing the conditions which would result in termination was completely silent on the issue.
Several documents addressed to the trust department of the bank that was administering the pension plan were introduced. The documents were signed by Art Lennon and instructed the bank to make a deduction from the retiree's pension for his or her portion of the medical coverage. The last paragraph of one such letter states: "The above payment is to be made on July 1, 1978 and a similar amount on the first day of each month thereafter as long as the retired participant is living." Other letters were similar and some contained ...