Sprague v. General Motors Corp.

General Motors Corporation (GM) (defendant) covered the full cost of basic health insurance for its salaried retirees and their spouses. GM provided employees and retirees with information about healthcare coverage via booklets summarizing GM’s plan. Many of the booklets informed plan participants that the plan obligated GM to pay health-insurance costs for life during retirement. However, the booklets also stated that GM had the right to change or terminate the plan at any time. In the 1970s and 1980s, GM used early-retirement programs to incentivize employees to retire before retirement age. Early retirees signed documents stating that they accepted the applicable benefits being offered by GM. During early-retirement discussions between retirees and supervisors, benefits staff, and plant managers, one of the benefits orally referenced was GM’s lifetime healthcare coverage. However, most of the retirees also received written summaries explaining that GM’s healthcare obligations were subject to GM’s right to change or terminate the plan. In 1987, GM announced changes to its healthcare plan, rendering plan participants liable for up to $750 per year in copays and deductibles previously covered by GM. A group of salaried retirees (plaintiffs), some general retirees and some early retirees, sued GM, claiming that GM had obligated itself to provide free healthcare coverage for life, the retirees’ right to that coverage vested at retirement, and GM therefore could not change the coverage. The retirees sought certification of a class action and asserted various claims against GM, including violation of the Employee Retirement Income Security Act of 1974 (ERISA) and estoppel. The district court granted class certification for early but not general retirees. Both GM and the retirees appealed. During en banc review, the Sixth Circuit concluded that class certification was not appropriate for either general or early retirees, and it then considered the merits of the claims as to the named plaintiff-retirees.