HARPER WOODS RETIREES ASSOCIATION, JUDITH DEKEYSER, DONALD KUCZBORSKI, JAMES MANOR, and JEFFREY MANOR, and Others Similarly Situated, Plaintiffs-Appellants,
CITY OF HARPER WOODS, Defendant-Appellee
opinion is subject to revision before final publication in
the Michigan Court of Appeals reports.
Circuit Court. LC No. 12-013098-CK.
HARPER WOODS RETIREES ASSOCIATION, Plaintiff-Appellant: MARK
A PROTER, MADISON HEIGHTS, MI.
WOODS CITY OF HARPER, Defendant-Appellee: SHARON A DEWAELE,
HARPER WOODS, MI.
FORT HOOD, P.J., and JANSEN and GADOLA, JJ.
Mich.App. 502] Michael F. Gadola, J.
appeal as of right from the trial court's order granting
defendant's motion for summary disposition under MCR
2.116(C)(8) (failure to state a claim) and (C)(10) (no
genuine issue of material fact). We reverse and remand for
further proceedings consistent with this opinion.
Harper Woods Retirees Association (HWRA) is a nonprofit
corporation composed of individuals who were once employed by
defendant, and who retired between the 1980s and early 2000s.
The individually named plaintiffs are retirees who hold the
following positions within the HWRA: Jeffrey Manor,
president; James Manor, treasurer; Judith DeKeyser,
secretary; and Donald Kuczborski, trustee. According to
plaintiffs' complaint, members of the HWRA obtained
vested healthcare benefits through multiple collective
bargaining agreements (CBAs) and personal contracts with
defendant. These agreements identified specific health
insurance plans, riders, and prescription [312 Mich.App. 503]
drug co-pays available to retirees. Plaintiffs alleged that
retirees previously received Blue Cross - Blue Shield of
Michigan (BCBS-M) " Traditional," " Master
Medical," or " Community Blue-1" insurance
plans, [312 Mich.App. 504] which guaranteed either no
deductibles for treatment or " first dollar"
deductibles of approximately $10 for office visits.
Plaintiffs also claimed that some of their original health
plans had a $2 deductible for generic prescriptions and a $5
deductible for name brand prescriptions.
April 12, 2012, defendant announced plans to unilaterally
alter its retirees' healthcare coverage. According to
plaintiffs' complaint, defendant sought to move retirees
under the age of 65 into a BCBS-M " Community
Blue-2" insurance plan, and retirees over the age of 65
into a BCBS-M " Medicare Advantage, Mid-Option"
insurance plan. Plaintiffs alleged that the new plans "
would include co-pays and deductibles amounting to $1,000.00
to $1,500.00 per year, per retiree" and would require
retirees who previously paid $2 and $5 co-pays for their
prescriptions to pay $5 for generic prescriptions and $20 for
name brand prescriptions.
2012, individual retirees established the HWRA to oppose
defendant's proposed changes. However, following two
meetings between defendant and the HWRA, defendant maintained
that its retiree healthcare benefits expired at the term end
of the relevant CBAs, giving defendant the discretion to
alter retiree health insurance coverage. On July 9, 2012, the
city council approved defendant's alterations, and on
August 1, 2012, the changes became effective.
Mich.App. 505] In October 2012, plaintiffs filed a complaint
alleging breach of contract including violation of the
Contract Clauses of the United States Constitution.
Plaintiffs sought a declaration that defendant breached its
contracts, an injunction against further alteration of
retiree benefits, and an order returning to retirees their
previous health insurance coverage. Plaintiffs also sought
class certification for the 88 members of the HWRA. The trial
court initially refused to certify the membership of the HWRA
as a class. However, following a motion hearing on June 28,
2013, the court instructed plaintiffs to reintroduce their
motion for class certification, and instructed defendant to
bring a motion for summary disposition on the question of
whether a municipality may unilaterally alter the healthcare
benefits of its retired employees.
hearing in September 2013, the court addressed both motions.
First, the court granted plaintiffs' motion for class
certification in part, defining the certified class to
include all of defendant's employees who (1) were covered
by a CBA at the time of retirement, or (2) had a personal
contract with defendant at the time of retirement. However,
the trial court did not identify the specific persons
included in the class certification. Next, addressing
defendant's motion for summary disposition, the court
relied on the Sixth Circuit Court of Appeals' holding in
Reese v CNH America LLC, 694 F.3d 681 (CA 6, 2012)
to conclude as a matter of law that employers may
unilaterally alter retirees' health insurance coverage