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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF WISCONSIN


MILWAUKEE DIVISION

Evelyn Kauffman and Dennis Rocheleau, )


)
Plaintiffs, )
) Case No. 14-cv-1358
v. )
)
General Electric Co., )
)
Defendant. )

DEFENDANT GENERAL ELECTRIC COMPANYS OPPOSITION TO


PLAINTIFFS MOTION FOR SUMMARY JUDGMENT

Michael L. Banks
Joseph J. Costello
Morgan, Lewis & Bockius, LLP
1701 Market Street
Philadelphia, PA 19103-2921
Telephone: 215.963.5000
Facsimile: 215.963.5001
Email: michael.banks@morganlewis.com
joseph.costello@morganlewis.com

Daniel E. Conley Christopher A. Weals


Quarles and Brady LLP Matthew J. Sharbaugh
411 East Wisconsin Avenue Morgan, Lewis & Bockius, LLP
Suite 2400 1111 Pennsylvania Avenue, N.W.
Milwaukee, Wisconsin, 53202 Washington, DC 20004
Telephone: 414.277.5609 Telephone: 202.739.3000
Facsimile: 414.271.3552 Facsimile: 202.739.3001
Email: daniel.conley@quarles.com Email: christopher.weals@morganlewis.com
matthew.sharbaugh@morganlewis.com

Attorneys for Defendant


General Electric Company

Case 2:14-cv-01358-LA Filed 07/18/16 Page 1 of 34 Document 82


TABLE OF CONTENTS

Page

INTRODUCTION ......................................................................................................................... 1
BACKGROUND ........................................................................................................................... 4
ARGUMENT................................................................................................................................. 7
I. PLAINTIFFS FAIL TO ESTABLISH ANY HARM CAUSED BY THE
ALLEGED BREACH........................................................................................................ 7
A. Plaintiffs Admitted They Were Not Harmed By The July 2012 SPD ................... 7
B. An Allegedly Misleading SPD, By Itself, Does Not Excuse Plaintiffs From
Proving That the July 2012 SPD Caused Them Concrete Harm ........................... 9
C. Plaintiffs Lost Earnings Argument Is Completely Lacking In Support.......... 12
D. Plaintiffs Assertion That The Class Has Suffered Billions In Losses Is
Not Supported By The Record And Irrelevant As A Matter Of Law.................. 13
II. THE JULY 2012 SPD WAS NOT MISLEADING......................................................... 16
A. GE Did Not Misrepresent Its Intention To Continue The GE Medicare
Plans Described In The SPD Indefinitely ............................................................ 17
B. GE Did Not Mislead Kauffman, Rocheleau, Or Any Other Retiree By
Including In Section 5.4 Examples Of Circumstances That Might Result In
The Amendment Or Termination Of The Plans .................................................. 19
III. THERE IS NO EVIDENCE THAT GE INTENDED TO MISLEAD
PLAINTIFFS OR ANY OTHER RETIREES ................................................................. 23
IV. PLAINTIFFS REMEDY-FOCUSED ARGUMENTS ARE WITHOUT MERIT......... 27
A. Plaintiffs Are Not Entitled To Reformation Of The Plans To Include Any
Alleged Promises In Section 5.4 ...................................................................... 28
B. Plaintiffs Are Not Entitled To Surcharge On This Record .................................. 28
CONCLUSION............................................................................................................................ 30

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TABLE OF AUTHORITIES

Page(s)

CASES

Ali v. Fed. Bureau of Prisons,


552 U.S. 214 (2008).................................................................................................................20

Brosted v. Unum Life Ins. Co. of Am.,


421 F.3d 459 (7th Cir. 2005) ...................................................................................................23

Circuit City Stores, Inc. v. Adams,


532 U.S. 105 (2001).................................................................................................................22

Clark v. Feder, Semo & Bard, P.C.,


895 F. Supp. 2d 7 (D.D.C. 2012) .........................................................................................8, 10

Gabriel v. Alaska Elec. Pension Fund,


773 F.3d 945 (9th Cir. 2014) ...................................................................................................10

Hooven v. Exxon Mobil Corp.,


465 F.3d 566 (3d Cir. 2006).......................................................................................................9

Howell v. Motorola, Inc.,


633 F.3d 552 (7th Cir. 2011) ...................................................................................................23

In re Airadigm Communications, Inc.,


616 F.3d 642 (7th Cir. 2010) .............................................................................................21, 22

In re Unisys Corp. Retiree Med. Benefits ERISA Litig.,


837 F. Supp. 670 (E.D. Pa. 1993),
affd in relevant part, 61 F.3d 896 (3d Cir. 1995) ...................................................................20

In re Unisys Corp. Retiree Med. Benefits ERISA Litig.,


957 F. Supp. 628 (E.D. Pa. 1997), affd in relevant part, revd in part on other
grounds, 242 F.3d 497 (3d Cir. 2001) .....................................................................................13

Kenseth v. Dean Health Plan, Inc.,


610 F.3d 452 (7th Cir. 2010) .............................................................................................25, 27

Kenseth v. Dean Health Plan, Inc.,


722 F.3d 869 (7th Cir. 2013) .............................................................................................11, 29

Killian v. Concert Health Plan,


742 F.3d 651 (7th Cir. 2013) ...........................................................................................7, 8, 12

Lockheed Corp. v. Spink,


517 U.S. 882 (1996).................................................................................................................26

-i-

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TABLE OF AUTHORITIES
(continued)
Page(s)

M&G Polymers USA, LLC v. Tackett,


135 S. Ct. 926 (2015)...............................................................................................................12

McClain v. Retail Food Employers Joint Pension Plan,


413 F.3d 582 (7th Cir. 2005) .....................................................................................................4

Naeem v. McKesson Drug Co.,


444 F.3d 593 (7th Cir. 2006) ...................................................................................................15

Norfolk & W. Ry. Co. v. Am. Train Dispatchers Assn,


499 U.S. 117 (1991).................................................................................................................21

Pegram v. Herdrich,
530 U.S. 211 (2000).................................................................................................................26

Perry v. Intl Bhd. of Teamsters,


118 F. Supp. 3d 1 (D.D.C. 2015) .............................................................................................10

Plummer v. Consol. City of Indianapolis,


No. 03-cv-567, 2004 WL 2278740 (S.D. Ind. Aug. 17, 2004) ................................................23

Precision Indus., Inc. v. Qualitech Steel SBQ, LLC,


327 F.3d 537 (7th Cir. 2003) ...................................................................................................20

Skinner v. Northrop Grumman Ret. Plan B,


673 F.3d 1162 (9th Cir. 2012) .................................................................................................10

Spokeo, Inc. v. Robins,


136 S. Ct. 1540 (2016)...................................................................................................7, 11, 12

Tourdot v. Rockford Health Plans, Inc.,


439 F.3d 351 (7th Cir. 2006) ...................................................................................................21

STATUTES

29 U.S.C. 1022.......................................................................................................................12, 21

Medicare Access and CHIP Reauthorization Act of 2015.............................................................15

OTHER AUTHORITIES

NORMAN J. SINGER, 2A SUTHERLAND STATUTORY CONSTRUCTION


47:22 (7th ed. 2014)..............................................................................................................21

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INTRODUCTION

A motion for summary judgment is supposed to be a recitation of undisputed facts and a

set of legal conclusions that flow from those facts. Plaintiffs submission is anything but. It

relies on rhetoric and emotion rather than facts and law. Many of its assertions are unadorned by

citation either to the record or to legal authority. And the propositions Plaintiffs urge on the

Court as the basis for granting summary judgment range from the merely unsupported to the

truly disingenuous. To take only a few of the more egregious examples:

Plaintiffs assert that it is an undisputed fact that they lost their health benefits as a
result of GEs plan changes. (Dkt. 80 (Pl. Br.) 12.) But the fact is that both Kauffman
and Rocheleau continue to have health insurance and prescription drug coverage, just as
they did before GEs changes. The only things that changed are the way they access and
purchase that coverage, and the way GE supports those purchases financially. Not
surprisingly, Plaintiffs cite nothingnot one snippet of deposition testimony or a single
documentwhen they make this assertion. And both admitted to the contrary in their
depositions.

Plaintiffs claim that GE retirees have lost the security of coverage in the case of serious
illness because there is no longer any guaranty of protection, but instead only $1,000
maximum to cover the medical expenses attendant to such an illness. (Pl. Br. 14.) This,
too, is a misrepresentation of the facts. To begin with, Plaintiffs present no evidence that
the insurance they personally selected and purchased through OneExchange deprives
them of coverage in the case of serious illness. It does not. Furthermore, GEs $1,000
payment (the Retiree Reimbursement Account or RRA) is not a capped reimbursement
for medical expenses; it is a contribution toward the cost of the insurance retirees
purchase through OneExchange, which then protects retirees in the event of serious
illness. For prescription drugs, GE instituted a further protectionthe GE Pharmacy
Assistance Fund (GEPAF), which covers 100% of retirees uncovered drug costs after
they exceed the threshold established by Medicare.

Plaintiffs spin out a conspiracy theory in which Section 5.4 of the July 2012 SPD is part
of a decades-long scheme to defeat union organizing. (Pl. Br. 14-15.) The theory is
entirely unsupported factually and ludicrous on its face. The idea that anyones decision
whether to join a union would turn on a few words on page 58 of an SPD, especially
when the inside cover of the same document made clear that GE fully reserved its right to
change or terminate the benefits at any time, does not pass the straight-face test. And it
ignores that the salaried employees in question include highly compensated professionals
like Rocheleauwho receives more than $1 million per year in pension and other post-
retirement benefits from GE (Dkt. 72, GE SOMF 149)for whom union membership
realistically would never have been an option.

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Plaintiffs brief, in short, represents a barely concealed effort to manufacture outrage or

sympathy or both to compensate for the absence of facts and law. It falls far short of the rigorous

requirements for summary judgment for at least four basic reasons:1

First, harm is an essential element of Plaintiffs claim, a precondition to establishing

constitutional standing, and a prerequisite to obtaining equitable relief. Yet Plaintiffs present no

evidence they were harmed by the allegedly misleading statements in the July 2012 SPD, which

is the sole basis for their remaining claim. Plaintiffs had retired well before GE distributed that

SPD, and they both admit that they made no financial, medical, or life decisions based on any

alleged belief that GE expected or intended to continue the GE Medicare Plans. Moreover,

Kauffman cannot establish harm from the July 2012 SPD because she was not covered by the

Plans described in the SPD and GE did not send the SPD to her.

Second, the July 2012 SPD was not inaccurate or misleading. That SPD (1) could not

have been misleading to Kauffman, as it did not apply to her and was not sent to her, and the

SPD that she did receive did not contain the expects and intends language; and (2) was

accurate in July 2012 when it was issued to Rocheleau because, at that time, GE was planning to

continue the GE Medicare Plans for Rocheleau and the other post-65 retirees who received the

SPD, and did in fact continue the Plans when the GE Board adopted the 2012 Amendment in

September 2012. Moreover, the SPD repeatedly highlights that the Plans allow GE to amend or

terminate them at any time and for any reason, both in the IMPORTANT INFORMATION

section on the very first page of the SPD and twice in Section 5.4 itself. An average plan

participant reading the SPD would have readily understood that their benefits were subject to

1
GE incorporates by reference the arguments it made in support of its Motion for Summary Judgment
(Dkt. 71 (GE SJ Br.)) and the accompanying Statement of Proposed Undisputed Material Facts (Dkt. 72
(GE SOMF).) GE will also reference its Response to Plaintiffs Statement of Facts (R SOMF).

Case 2:14-cv-01358-LA Filed 07/18/16 Page 6 of 34 Document 82


change at GEs discretion at any time and for any reason. Resort to rules of statutory

construction or contract interpretation, as Plaintiffs propose, is not appropriate or needed because

Section 5.4 of the July 2012 SPD was indisputably true and non-misleading at the time the SPD

was issued.

Third, Plaintiffs are required under Seventh Circuit law to show that GE intended to

deceive retirees when it issued the July 2012 SPD, but there is no record evidence of any such

intent. Both Plaintiffs testified they had no specific information that GE put the language in the

SPD for the purpose of misleading retirees, and discovery revealed none. The only record

evidence regarding GEs intent demonstrates that the plan administration team responsible for

preparing the July 2012 SPD acted with complete good faith. Moreover, GE could not possibly

have intended to mislead Kauffman when the July 2012 SPD was never even sent to her. There

simply is no evidence at all of any deceptive intent.

Finally, Plaintiffs are not entitled to reformation or surcharge as a remedy for the

supposedly misleading language in Section 5.4 of the July 2012 SPD. Reformation requires

mutual mistake or mistake coupled with fraud (as well as harm), and Plaintiffs do not even

contend those elements are present here. As for surcharge, CIGNA Corp. v. Amara makes clear

that a fiduciary can be surcharged under ERISA only upon a showing of actual harm. 563 U.S.

421, 444 (2011). Plaintiffs suffered no harm and have no right to a court-imposed surcharge,

which would in any event result in improper windfalls to Plaintiffs and thousands of retirees who

have been financially advantaged by the changes.

The Court should deny Plaintiffs motion for summary judgment.2

2
Plaintiffs purport to move for summary judgment not only for themselves, but on behalf of the entire
putative class. (Dkt. 79.) Plaintiffs class certification motion is still pending, and GE maintains that no
class should be certified. (Dkt. 76.) Regardless of class certification, the only evidence before the Court
pertains to the two named Plaintiffs, and summary judgment must be decided on the basis of the evidence
3

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BACKGROUND

The relevant facts are set forth fully in GEs Statement of Proposed Undisputed Material

Facts in Support of Its Motion for Summary Judgment. (Dkt. 72.) However, GE is compelled to

correct Plaintiffs highly selective and misleading description of the benefit changes at issue in

this case and the landscape at the time of the issuance of the July 2012 SPD.

In 2007, GEs long-term retiree medical liabilities increased by $4.7 billion as a result of

changes in its benefit plans. (R SOMF 16.) Like many companies, GE explored ways to

reduce retiree medical costs while balancing the interests of retirees, employees, and

shareowners, and, over the next several years, implemented a series of incremental measures to

try to contain costs. (GE SOMF 28-32.)

As to subsequent events, the claims of Kauffman and Rocheleau must be considered

separately because they pose two very different factual scenarios. Kauffman retired in 2011 but

did not turn 65 until 2015, after the amendments at issue were adopted and implemented, and

after this lawsuit was filed. (GE SOMF 110, 122.) As a pre-65 retiree, Kauffman was never

eligible for or enrolled in the GE Medicare Plans. (Id. 3, 117.) In September 2012, GEs

Board amended the Plans to eliminate future eligibility for Kauffman and other pre-65 retirees

who were not yet covered by the Plans (2012 Amendment), and they were promptly notified of

that change. (Id. 51.) However, because Kauffman was not covered by the Plans, (a) the July

2012 SPD at issue did not apply to her, (b) GE was not required to send her the SPD, and (c) she

thus did not receive the SPD with the expects and intends language at issue in this case. (Id.

99.) Kauffman instead was covered by a completely different GE medical plan, and the SPD for

these Plaintiffs present. See, e.g., McClain v. Retail Food Employers Joint Pension Plan, 413 F.3d 582,
586 (7th Cir. 2005) (The lack of a certification ruling merely means that the scope of the district court's
judgment is limited to this particular plaintiff.).

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that plan did not contain the expects and intends language. (Id. 24, 117.) As such, she

simply has no claim.

Rocheleaus situation is different: he turned 65 in 2007, was enrolled in the GE Medicare

Plans, and was sent the July 2012 SPD. (Id. 99, 135.) However, the undisputed facts show

that his misrepresentation claim also lacks merit. In the critical language emphasized by

Plaintiffs, the July 2012 SPD expresses GEs intention to continue the GE Medicare Benefit

Plans described in this handbook indefinitely. (Id. 17.) It is now clear beyond dispute that, in

July 2012, when the SPD was issued, GEs Board of Directors expected to continue the Plans for

post-65 retirees like Rocheleau to whom the SPD applied. The minutes of the June 7, 2012

meeting of the Management Development and Compensation Committee of the GE Board

(MDCC) clearly show that the proposal under discussion at that time was still just a

preliminary recommendation, and, even so, it did not include elimination of the Plans as an

element. (Id. 48.)3 The MDCC presentation slides confirm this. (Id.; R SOMF 28.)

Although GEs benefits team had briefly raised elimination of the Plans entirely as one option to

consider in early 2012, that option was no longer under consideration as of June 2012. (Id.)

Thus, the statement in the July 2012 SPD that GE expects and intends to continue the GE

Medicare Benefit Plans described in the handbook indefinitely was completely accurate at the

time it was made. It was not until the fall of 2013more than a year after the SPD was issued

that GE revisited the possibility of replacing the GE Medicare Plans with a private exchange,

culminating in the Boards decision in September 2014yet another year laterto amend those

Plans accordingly (2014 Amendment). (GE SOMF 65-66.) There is simply no evidence
3
The provision of the 2012 Amendment that would have required Rocheleau and other high-income
retirees to pay a marginally higher percentage of premium costs under the Plans beginning in January
2015 never went into effect. (R SOMF 9.). Instead, as a result of the 2014 Amendment, Rocheleau and
other post-65 retirees were shifted to a different form of supplemental Medicare coverage that was
purchased through OneExchange and subsidized by GE.

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that GE was contemplating elimination of the Plans for post-65 retirees in July 2012 when the

SPD in question was issued and, therefore, the SPD was accurate when it was sent.

Plaintiffs also misrepresent the impact of the changes on GE retirees. As a threshold

matter, ERISA requires that any harm must be caused by the alleged breach of fiduciary duty,

which in this case is the July 2012 SPD, not GEs lawful, non-fiduciary act of amending the

Plans. Ignoring that point, Plaintiffs offer an expert opinion from Professor Gerald Friedman

that suggests retirees will suffer billions of dollars of losses over the next thirty years, but

Friedman admits that he did not examine the actual coverage choices made or the premiums or

other expenses actually incurred by a single GE retiree. (R SOMF 61-63.) He did not even

inquire about the experiences of the two Plaintiffs in this case, talk to them, or read their

testimony. (Id.) Instead, he constructs a speculative hypothetical based upon a series of faulty

assumptions compounded by mathematical errors, assumes that all retirees will fit these same

assumptions, and then multiplies his hypothetical result by 65,000 to approximate the loss

suffered by the putative class. (Id.)

In reality, however, data produced by OneExchange on the enrollment choices actually

made by GE retirees demonstrates that nearly 70% of retirees are now paying lower annual

premiums for their insurance under the new system than they had been paying under the old

system. (Id. 64.) In addition, GEs expert, Dr. Laurence C. Baker, a Professor of Health

Research and Policy at Stanford University, analyzed a range of potential coverage choices using

actual plan coverages and costs and concluded that more than 75% of retirees are likely to

experience lower total out-of-pocket costs (premiums plus co-pays and deductibles) under the

new system. Even among older retirees (including those in their 80s), Professor Bakers

comprehensive analysis shows that a majority have benefited from the switch to OneExchange.

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(Id.) Importantly, Professor Bakers analysis is not disputed in any way by Plaintiffs or

Professor Friedman (who filed no report in rebuttal of Professor Baker). As for Plaintiffs, the

undisputed evidence shows that they, personally, were not harmed. (GE SOMF 124, 126-127,

145-146.)

ARGUMENT

I. PLAINTIFFS FAIL TO ESTABLISH ANY HARM CAUSED BY THE ALLEGED


BREACH

Proof of harm caused by the alleged breach is an essential element of Plaintiffs breach of

fiduciary duty claim. Killian v. Concert Health Plan, 742 F.3d 651, 658 (7th Cir. 2013) (en

banc) (explaining that plaintiff must prove that the breach resulted in harm to the plaintiff).

Harm and causation are also prerequisites to establishing that Plaintiffs have suffered an injury-

in-fact that gives rise to Article III standing to pursue their claims, see Spokeo, Inc. v. Robins,

136 S. Ct. 1540, 1549 (2016), and for the equitable relief Plaintiffs seek, see infra IV. The

breach of fiduciary duty alleged in this case is the issuance of allegedly misleading statements in

the July 2012 SPD. (See Dkt. 60, Am. Compl. 2, 39-40.) As explained in GEs Motion for

Summary Judgment, however, the record here is devoid of evidence that Plaintiffs suffered any

harm caused by the alleged misrepresentations in the July 2012 SPD. (GE SJ Br. 19-23). The

lack of proof on this essential element is fatal to Plaintiffs claim, and it not only compels denial

of their motion, it requires the granting of GEs motion.

A. Plaintiffs Admitted They Were Not Harmed By The July 2012 SPD

Plaintiffs cannot show they suffered any harm caused by the statements in the July 2012

SPD. Both Plaintiffs admitted in their depositions that they were not harmed in any tangible way

by the supposedly misleading SPD. They were already retired when the SPD was issued. (GE

SOMF 110; R SOMF 5.) They made no financial, benefits-related, or important life

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decisions based on the SPD, nor did they incur any concrete injury as a result of the language

discussing GEs right to amend or terminate the plans. (GE SOMF 121, 126, 140-141.) See

also Killian, 742 F.3d at 658 (affirming summary judgment because plaintiff could not show that

defendants alleged failure to provide an SPD caused his harm). Plaintiffs fail to identify, let

alone prove, any way in which they would have been in a different or better position had the July

2012 SPD omitted the disputed language.

Moreover, while they tried to hedge, both Plaintiffs ultimately conceded they understood

that GE had the right to amend or terminate the GE Medicare Plans for any reason. (Id. 114,

116, 131.) [A] plaintiff who is fully knowledgeable of whatever information was missing from

an SPD cannot fairly be said to have been harmed by the SPDs inadequacies. Clark v. Feder,

Semo & Bard, P.C., 895 F. Supp. 2d 7, 43 (D.D.C. 2012).

Kauffman cannot establish harm from the July 2012 SPD for the additional reason that

she did not receive, or even see, the SPD before the 2012 Amendment was adopted. (Id. 13.)

At the time the July 2012 SPD was issued, Kauffman was not yet covered by the GE Medicare

Plans, had no right to receive the July 2012 SPD, and was owed no fiduciary duty with respect to

that SPD. In fact, the SPD stated it did not apply to her. (Id. 14-15.) The SPD that Kauffman

did receive, for the GE Health Choice Plan in which she participated, did not contain the

language in Section 5.4 Plaintiffs claim is misleading. (Id. 23-24.) Kauffman cannot show

she was harmed by an SPD she did not receive and which did not describe her benefits.

Plaintiffs contend that under Amara, a participant does not need to read an SPD in

order to be harmed by it. (Pl. Br. 12-13.) But in Amara, all of the plaintiffs were covered by

the plan and received a misleading SPD from the plan administrator, while Kauffman was never

covered by the GE Medicare Plans or sent the July 2012 SPD. (GE SOMF 13-15, 22.)

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Plaintiffs do not cite a single case in which a court has found that a person who was not an

intended recipient of a SPD and who did not receive it can nonetheless claim to have been

harmed by it.

B. An Allegedly Misleading SPD, By Itself, Does Not Excuse Plaintiffs From


Proving That the July 2012 SPD Caused Them Concrete Harm

Plaintiffs try to circumvent the harm requirement by alleging that they lost a right to

receive an accurate, non-deceptive SPD. (Pl. Br. 13). They argue that this is enough under

Amara to warrant a finding of a breach of fiduciary duty and the ordering of a remedy. This

argument fails for several reasons.

First, Kauffman cannot attribute any lost right under ERISA to the July 2012 SPD

because ERISA did not require GE to prepare or send her an SPD for plans in which she was not

enrolled. (GE SJ Br. I.D.2.) Instead, GE sent her an SPD that no one disputes fully and

accurately described her medical coverage at that time. (GE SOMF 23-24.)

Second, Rocheleau could not have been harmed by the July 2012 SPD because it

accurately stated the intentions of GEs Board of Directors at that time to continue the GE

Medicare Plans for him and the other post-65 retirees to whom the SPD applied and was sent

and, in fact, the Plans were not discontinued until more than two years later. (See infra II.A.)

Further, even if the language had been misleading, which is was not, any ERISA right to

accurate information Rocheleau purportedly lost would have been quickly cured by the summary

of material modifications (SMM) he received weeks later, immediately following the GE

Boards approval of the 2012 Amendment. (GE SOMF 60.) This is in stark contrast to

Amara, where the district court found that CIGNA intentionally misled employees by

misrepresenting in both the SPD and SMM the effect of a plan amendment. 563 U.S. at 426-32.

Rocheleau suffered no such injury here. See Hooven v. Exxon Mobil Corp., 465 F.3d 566, 577-

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78 (3d Cir. 2006) (stating that issuance of SPD errata notice foreclosed claims for breach of

fiduciary duty and equitable relief because error was corrected and Plaintiffs were well aware

they were not entitled to [the benefits]).

Third, although the Supreme Court suggested in dicta in Amara that harm might also

come from the loss of a right protected by ERISA or its trust-law antecedents, 563 U.S. at 444,

there is no basis to conclude that the Court intended to excuse plan participants from proving that

they suffered actual, concrete harm in connection with that loss.4 Indeed, a number of courts that

have addressed the issue since Amara have rejected the proposition that an inaccurate SPD alone

constitutes actionable harm under ERISA Section 502(a)(3). See Skinner v. Northrop Grumman

Ret. Plan B, 673 F.3d 1162, 1167 (9th Cir. 2012) (Appellants argue that the harm of being

deprived of their statutory right to an accurate SPD is compensable harm, but we disagree.);

Gabriel v. Alaska Elec. Pension Fund, 773 F.3d 945, 965 (9th Cir. 2014) (Kozinski, J.,

concurring) (I cant see how Gabriel could prevail on a surcharge claim. The claimed harm

must be something more than the mere violation of a statutory right to accurate statements;

otherwise, ERISA fiduciaries would be strictly liable for every mistake.) (quoting Skinner,

673 F.3d at 1167); Clark, 895 F. Supp. 2d at 41 ([T]his Court agrees with Skinners rejection of

the argument that the harm of being deprived of [a] statutory right to an accurate SPD is a

compensable harm); cf. Perry v. Intl Bhd. of Teamsters, 118 F. Supp. 3d 1, 5 (D.D.C. 2015)

(concluding that, under Amara, a plaintiff who alleges a failure to receive appropriate plan

documents still must separately show harm and causation).

4
It is worth noting the Supreme Court said harm might come from a loss of an ERISA-protected right,
not that it necessarily would. This word choice, coupled with the fact that the Courts discussion of this
point was dicta, cuts against Plaintiffs argument that any SPD deficiency is per se harm under ERISA.

10

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The Seventh Circuits analysis of the plaintiffs harm in Kenseth v. Dean Health Plan,

Inc., 722 F.3d 869, 879-84 (7th Cir. 2013) (Kenseth II), demonstrates this same point. There,

Kenseth received an SPD that was ambiguous as to her health coverage for a particular surgical

procedure. As directed by the SPD, Kenseth called a customer service number and was told the

procedure was covered. In reliance on that assurance, Kenseth had the surgery at a cost of over

$77,000. Later, the health plan administrator told her the procedure was not covered and denied

her claim. Id. at 871-72. In addressing the harm element, the court noted Amaras statement that

harm might also come from the loss of a right protected by ERISA, id. at 879, but it did not

find that the failure to provide Kenseth with correct information was itself compensable harm.

Instead the court analyzed the evidence that Kenseth would not have had the surgery if she had

known the plan would not pay for it: she might have considered other options, checked to see if

her husbands policy would cover the surgery, or waited to have the surgery at a later date when

she had insurance that would cover it. Id. at 884. If, as Plaintiffs contend, a deficient SPD or

similar failure by a fiduciary to provide accurate information, standing alone, is sufficient to

establish harm, there would have been no reason for the Seventh Circuit to consider the actual

harm that Kenseth suffered in evaluating whether she could pursue her claim. There could

hardly be a clearer case than Kenseth of precisely the type of concrete harm that is absent here.

Finally, a recent Supreme Court decision directly undermines Plaintiffs harm

argument. In Spokeo, the Court considered whether a consumer could sue a website operator

over inaccurate information published on the website where the consumer could not identify any

concrete injury resulting from the publication. The Court explained that while an erroneous

communication may trigger a procedural violation of a statute if the violation is divorced from

any concrete harm to the plaintiff, then there is no constitutional injury-in-fact and no Article III

11

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standing. 136 S. Ct. at 1549. Here, Plaintiffs did not suffer any concrete injury as a result of the

alleged procedural violation of ERISAs SPD disclosure rules, and, therefore, they lack even

constitutional standing to assert the present claim for breach of fiduciary duty or violation of

ERISA Section 102, 29 U.S.C. 1022.5

For all of these reasons, Plaintiffs cannot rely on the allegedly misleading statements in

the July 2012 SPD as the sole harm supporting their breach of fiduciary duty claim. Actual

harm stemming from the allegedly misleading statement is required, and there is no evidence in

this record that Plaintiffs suffered any.

C. Plaintiffs Lost Earnings Argument Is Completely Lacking In Support

Plaintiffs next make the strained argument that they suffered lost earnings during their

employment at GE because the GE Medicare Plans allegedly represented a form of deferred

compensation. (Pl. Br. 14.) In M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015), the

Supreme Court emphatically rejected the notion that retiree medical benefits are a form of

deferred compensation, so this theory is dead on arrival as a legal matter. Id. at 936 (Thus,

retiree health care benefits are not a form of deferred compensation.). In any event, there is

absolutely no evidence that these Plaintiffs received lower wages because of some expectation of

retiree medical benefits, or that GE wages increased after the alleged reduction in post-65

retirement benefits. Indeed, the allegedly misleading SPD was issued in July 2012, after both

Plaintiffs had retired, and therefore could not have caused lost earnings years before. See

Killian, 742 F.3d at 658 (plaintiff must prove that the breach resulted in the harm).6

5
A more extensive discussion of Spokeo and the issue of constitutional standing was included in GEs
Motion for Summary Judgment. (GE SJ Br. 23-25.)
6
For the first time, Plaintiffs now try to argue that statements made in SPDs issued prior to 2012 were
also misleading, presumably at some unspecified time prior to the Plaintiffs retirements. But no such
claim was pled. (See Dkt. 56, Am. Compl. 2, 39-40 (referencing the July 2012 SPD as the sole
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The only support cited by Plaintiffs is the report of their expert, who opines generically

that certain labor economists have concluded workers prepay for their benefits with lower

earnings. (Dkt. 81-33, Friedman Rep. 18a.) But Friedman does not attempt to analyze, let

alone conclude, that the Plaintiffs in this case did so, and he makes no attempt to identify or

quantify any lost earnings for Plaintiffs. (See infra I.D.)

D. Plaintiffs Assertion That The Class Has Suffered Billions In Losses Is Not
Supported By The Record And Irrelevant As A Matter Of Law

In a final, desperate attempt to show harm, Plaintiffs argueagain based on Friedmans

reportthat retirees will pay billions in additional premiums and out-of-pocket costs over the

next thirty years as a result of the move to OneExchange. (Pl. Br. 22.) But saying it does not

make it so.

As a threshold matter, these losses are not relevant to Plaintiffs breach of fiduciary

duty claim because, to the extent they exist at all, they were the result of the lawful change in

GEs benefits, not the allegedly misleading SPD. See In re Unisys Corp. Retiree Med. Benefits

ERISA Litig., 957 F. Supp. 628, 639 (E.D. Pa. 1997), affd in relevant part, revd in part on other

grounds, 242 F.3d 497 (3d Cir. 2001) (The benefits were lost because of a non-fiduciary

decision by Unisys to terminate the plans. The plan would have been terminated regardless of

whether the misrepresentations had occurred; the breach of fiduciary duty involved was not the

but-for cause or even a substantial factor in the decision to terminate the old plans.).7

Second, since no class has been certified, purported losses to the larger retiree

population are immaterial to the present motion. All that matters is whether these two Plaintiffs

were harmed, and the evidence is undisputed that they were not. Both Plaintiffs are now paying

fiduciary duty breach).) Moreover, Plaintiffs have offered no evidence that the changes at issue were
contemplated or planned at the time of these earlier SPDs.
7
See also GE SJ Br. 21-23.

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less for supplemental Medicare coverage than they would have paid under the GE Plans, and

they cannot point to any aspect of their new coverage that is lacking. (GE SOMF 124-26,

145, 148.)8 Friedman admits that he did not consider, much less investigate, Plaintiffs actual

costs under their new insurance plans as compared to the GE Medicare Plans, nor did he attempt

to calculate any individual losses for the two Plaintiffs. (R SOMF 61-63.) Friedman admitted

he never even communicated with Plaintiffs, and he did not even review their depositions. (Id.)

Third, Friedman also ignores the actual enrollment choices and premiums of all other GE

retirees who elected coverage through OneExchange. (Id.) Almost 70% of GE retirees paid

lower premiums under OneExchange in 2015 than they paid for their GE Medicare Plan

coverage in 2014. (Id. 64.) In addition, Professor Bakers undisputed analysis demonstrates

that more than 75% of GE retirees will have lower total costs under OneExchange, including

copays and deductibles. This is true for retirees of virtually every age in each of the four

coverage scenarios studied by Professor Baker. (Id.)

Fourth, Friedmans report is in any event so filled with errors and faulty assumptions that

his opinions are inherently unreliable and could not be credited even if they were relevant.

Friedman purports to estimate the losses to all affected retirees for the next thirty years by

calculating Kauffmans and Rocheleaus individual lifetime costs of switching from the GE

Medicare Plans to OneExchange (although without considering their actual costs), and then

multiplying that figure by 65,000. His accompanying analysis is flawed on many levels:

8
In his deposition, Rocheleau complained that the 2012 Amendment terminated his approximately $800
per year IRMAA reimbursement effective January 1, 2015. IRMAA is a federal Medicare tax that
was levied on certain high-income retirees beginning in 2011seven years after Rocheleau retired. In
response, GE unilaterally implemented a program to reimburse affected retirees for this charge. (GE
SOMF 53.) However, no claim is asserted in the Amended Complaint regarding this change, nor could
there be. The IRMAA reimbursement was a voluntary program that was not a feature of the GE Medicare
Plans at all, and was not referenced in the July 2012 SPD (Id. 55-56), and thus the expects and
intends language can in no way be read as applying to the IRMAA reimbursement.

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He ignores Kauffmans actual choice of a zero-premium Medicare Advantage plan and
instead assumes, contrary to the undisputed facts, that she would have chosen a much
more expensive Medicare supplement plan and a Medicare Part D prescription drug plan.

He improperly assumes that all retirees would have selected these two Medicare plans,
even though Kauffman did not choose them and the record shows that most retirees
selected other plans under OneExchange, many of which were less expensive.

His methodology projects increased costs for Kauffman and Rocheleau in 2015 and 2016
that neither has actually experienced in the real world.

He improperly assumes that higher income retirees like Rocheleau would continue to
receive an IRMAA reimbursement, even though GE unquestionably had the right to
terminate that voluntary reimbursement program at any time.

He uses a rate of healthcare inflation that is flatly inconsistent with the Medicare Access
and CHIP Reauthorization Act of 2015.

He ignores the fact that retirees are likely to experience years when health care
expenditures are higher and years when they are lower; instead, he incorrectly assumes
that retirees will have losses in every single year of their lives.

He makes critical mathematical errors which have an enormous impact on his


calculations, and which he admitted in his deposition, but never fixed because to do so
would vastly undercut his opinions.

(See Dkt. 77-1, Baker Rep. 120-39.) These are only a few of the numerous errors in

Friedmans report, but more than enough to show that Friedmans opinions should be given no

weight in this Courts assessment of whether Plaintiffs satisfied their burdens of proving harm

resulting from the statement in the July 2012 SPD. See Naeem v. McKesson Drug Co., 444 F.3d

593, 608 (7th Cir. 2006) ([E]xperts work is admissible only to the extent that it is reasoned,

uses the methods of the discipline, and is founded on data.).9

In its motion to dismiss decision, this Court properly cautioned that even if Plaintiffs

could establish that the July 2012 SPD violated ERISAs disclosure rules, they may be required

to show that they were misled by, relied upon, or were actually harmed by the

9
See also Dkt. 77-1, Baker Rep. 140-53 (discussing other flaws and errors in Friedmans analysis).

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misrepresentations in order to obtain the form of equitable remedy they ultimately seek. (Dkt.

49 at 5 n.3 (emphasis added).) Despite months of discovery, Plaintiffs have not come forward

with any evidence that they were harmed by the alleged misrepresentations in the July 2012

SPD. Without proof of harm, Plaintiffs cannot prevail on their motion for summary judgment.

On the contrary, because they cannot establish this essential element of their fiduciary breach

duty claim, summary judgment must be granted in favor of GE.

II. THE JULY 2012 SPD WAS NOT MISLEADING

To prevail on summary judgment, Plaintiffs must also establish through admissible

evidence that the July 2012 SPD was misleading to the average plan participant. (GE SJ Br. 7-

8.) Based on the record now before the Court, Plaintiffs cannot meet this burden. The SPD read

as a whole reasonably informed retirees that their benefits could be modified by the GE Board at

any time for any reason. (GE SJ Br. 9-14.) No reasonable participant would read the isolated

language in Section 5.4, which appears more than 50 pages after the inside front cover of the

SPD that clearly reserved GEs rights to alter the Plans, as a binding promise to forever maintain

the Plans or to change them only in certain circumstances. Certainly the two Plaintiffs did not

read Section 5.4 that waythey both admitted they understood the Plans could be changed for

any reason. (GE SOMF 115-16, 131.) Indeed, Plaintiffs have not come forward with

evidence of a single participant who read it that way or was otherwise misled by the SPD. The

interpretation of Section 5.4 upon which Plaintiffs case depends is objectively unreasonable and

unsupported by the factual record.

Nevertheless, Plaintiffs maintain that Section 5.4 was misleading in two ways: (1) it

falsely represented GEs intent to continue the benefits as described in the Handbook

indefinitely, and (2) it falsely represented that GE might use its power to terminate in the event

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of certain types of force majeure or similar circumstances outside of its control. (Pl. Br. 6).

Neither argument has merit.

A. GE Did Not Misrepresent Its Intention To Continue The GE Medicare Plans


Described In The SPD Indefinitely

Throughout their brief, Plaintiffs repeatedly misquote the first sentence of Section 5.4,

asserting that GE falsely represented its intent to continue the benefits as described in the

Handbook indefinitely. (See Pl. Br. 1, 6, 7, 13, 17, 19, 20 (emphasis added).) In fact, Section

5.4 states that GE expects and intends to continue the GE Medicare Benefit Plans described in

this handbook indefinitely, but reserves the right to terminate, amend or replace the plans, in

whole or in part at any time and for any reason. (GE SOMF 17 (emphasis added).) This is

not mere semantics. Section 5.4 plainly refers to GEs expected continuation of the GE

Medicare Plans (while reserving the right to terminate or amend them at any time and for any

reason), not an expectation that every single benefit and feature of the Plans will remain the

same over time. Indeed, the undisputed record demonstrates that individual benefits and features

of the Plans (including eligibility requirements) had changed several times during the mid to late

2000s; in fact, Rocheleau had negotiated some of these changes. (Id. 27-34). The fact that

Plaintiffs felt compelled to repeatedly misquote the SPD as expressing an intent to continue the

benefits rather than the GE Medicare Benefit Plans confirms the speciousness of their

argument regarding the SPD language.

Recognizing that Section 5.4 pertains to the continuation of the Plans themselves,

Plaintiffs argue that the expects and intends language was nevertheless false because long

before GE reissued the Handbook, GE had been planning to terminate the coverage not just of

participants like Kauffman but to get rid of the Plans generally. (Pl. Br. 7 (emphasis added).)

While this Court was obliged to accept such an allegation as true when it considered the motion

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to dismiss, the record on summary judgment now establishes beyond dispute that this central

conceit of Plaintiffs claimthat GE re-issued the SPD with the expects and intends language

at the very same time it was planning to terminate the Plansis untrue. The chronology of

events is clear and uncontroverted:

On February 10, 2012, CEO Jeffrey Immelt gave a presentation to the GE Board in
which he identified various actions under consideration. For retirees age 65 and
over (such as Rocheleau), the proposal under discussion was to eliminate the GE-
sponsored plans and replace them with a fixed subsidy to purchase prescription drug
coverage and a 100% retiree-paid hospital supplement. (R SOMF 24.)10

On April 24, 2012, Senior Vice President of Human Resources John Lynch made a
presentation to the MDCC in which he outlined Changes under Evaluation for
retiree medical. For post-65 retirees like Rocheleau, the presentation now identified
two more limited components: Convert GE paid coverage for Medicare hospital
deductible to retiree pay-all and Convert Prescription Drug Plan (EGWP) to annual
DC subsidy to purchase in the commercial market. (GE SOMF 47.)

Two months later, on June 7, 2012, Mr. Lynch gave another presentation to the
MDCC on retiree healthcare. The minutes and the slides from this meeting reveal
that the preliminary recommendations for the post-65 group had changed
significantly. Management was now recommending to introduce new [Plan]
contribution for the executive population that would increase the cost of healthcare
coverage for certain current retirees age 65 and older but leave the GE Medicare
Plans in place. (GE SOMF 48.) Termination of the GE Medicare Plans for the
post-65 group was no longer on the table. (Id.; R SOMF 28.)

On September 7, 2012, the GE Board voted to adopt the recommendations discussed


at the June 7, 2012 MDCC meeting, which did not eliminate the GE Medicare Plans.
(GE SOMF 50-51.) Thereafter, Rocheleau and other post-65 retirees continued to
receive benefits under the Plans. (Id. 52; R SOMF 9.)

Plaintiffs deliberately ignore these facts in an effort to make it appear that termination of

the Plans was still being considered in June 2012. It was not. At that point in timebefore the

10
Citing the deposition of John Lynch, Plaintiffs contend that GE had been considering making [the
2012 Amendment] changes since September 2011. (Pl. SOMF 12.) The cited testimony does not
support this assertion, and the record evidence establishes that GE first began to consider changes to post-
65 medical benefits in early 2012. (R SOMF 12.) But whether GE began to consider these changes in
September 2011 or February 2012 is ultimately irrelevant, since the July 2012 MDCC minutes
conclusively demonstrate that, in July 2012, GE was not planning to discontinue the GE Medicare Plans
for the retiree population to whom the July 2012 SPD applied.

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July 2012 SPD was issuedGE indisputably was not contemplating termination of the GE

Medicare Plans for Rocheleau and other post-65 retirees who received the July 2012 SPD, and

no termination occurred when Plan changes were announced two months later. Therefore, GEs

statement of intent in the July 2012 SPD was entirely accurate and certainly not meaningless

as Plaintiffs contend. (Pl. Br. 5, 6.)11

In fact, GE continued the GE Medicare Plans for more than two years after the July 2012

SPD was issued. Plaintiffs do not even try to argue that the 2014 Amendment, which shifted

coverage from GE to a private exchange-based program, was somehow being planned at the time

of the July 2012 SPD. It is undisputed that GE did not begin to plan for that potential change

until September 2013at least fourteen months after the SPD was issued. (GE SOMF 65-

66.) The summary judgment record thus establishes beyond dispute that the SPD was accurate

when issued: GE had no intention contrary to the language at issue, even if read in isolation.

B. GE Did Not Mislead Kauffman, Rocheleau, Or Any Other Retiree By


Including In Section 5.4 Examples Of Circumstances That Might Result In
The Amendment Or Termination Of The Plans

Plaintiffs also allege that GE intentionally misled retirees into believing the Company

would only exercise its right to amend or terminate the Plans in certain circumstances, relying on

the second paragraph of Section 5.4, which states: A decision to terminate, amend or replace a

plan may be due to changes in federal law or state laws governing qualified retirement or welfare

benefits, the requirements of the Internal Revenue Service, ERISA or any other reason. (Dkt.

31-5, at 58 (emphasis added).) This argument requires the Court to embrace a dubious theory:

11
In assessing whether GE expected to continue the Plans in July 2012, one must look to the intent of
the GE Board, which, under the terms of the Plans, is the only GE body authorized to terminate or amend
the Plans. (GE SOMF 44.) There is no evidence that the GE Board expected or intended to terminate
the Plans in July 2012. In fact, when the SPD was issued, even the potential 2012 Amendment was still
very much under evaluation, and it was possible that it would not be adopted. (Id. 48-49, 97-98.)

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that an average Plan participant would focus on the specific reasons in this sentence (Pl. Br. 9)

and conclude that the Plans could only be terminated for those reasons, while ignoring:

1) the catchall phrase that closes the sentence: or any other reason;

2) the unfettered reservation of rights language that appears in the immediately


preceding sentence: GE reserves the right to terminate, amend or replace the
programs or plans, in whole or in part at any time and for any reason; and

3) the completely unconditional reservation of rights appearing on the very first page of
the SPD under the prominent caption IMPORTANT INFORMATION: [GE]
reserves the right to terminate, amend, eliminate or replace the GE Medicare Benefit
Plans and any related program, plan or benefit at its discretion and at any time. (GE
SOMF 16-17 (emphasis added).)

The Supreme Court has explained that, when read naturally, the word any has an

expansive meaning. Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 219 (2008) (quoting United

States v. Gonzales, 520 U.S. 1, 5 (1997)). The Seventh Circuit has likewise said that the use of

the term any counsels in favor of a broad interpretation. Precision Indus., Inc. v. Qualitech

Steel SBQ, LLC, 327 F.3d 537, 545 (7th Cir. 2003). Judged against these standards, it would be

improper to conclude that the average plan participant would think that Section 5.4s reference to

any other reason means only some reasons, as Plaintiffs suggest. At least one court rejected

this very argument, holding that an SPDs reference to government regulations in the

reservation of rights clause did not create confusionbut was instead unambiguous as to the

companys rightswhen the same sentence ended by stating the plan could be terminated for

any other reason. In re Unisys Corp. Retiree Med. Benefits ERISA Litig., 837 F. Supp. 670,

676 (E.D. Pa. 1993), affd in relevant part, 61 F.3d 896 (3d Cir. 1995); see also GE SJ Br. 11-12.

Plaintiffs rely on ejusdem generisa canon of statutory constructionto support their

reading of Section 5.4. (Pl. Br. 10-12.) However, that principle has no application here. This is

not an exercise in statutory construction or contract interpretation. The question here is whether

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the language was sufficiently accurate and comprehensive to reasonably apprise an average

plan participant that the GE Medicare Plans could be terminated or amended at any time at the

discretion of the GE Board. 29 U.S.C. 1022(a). There is simply no reasonable way to read the

three provisions together as not doing so.

Even if ejusdem generis were relevant, it is well established that the maxim does not

control when the whole context dictates a different conclusion. Norfolk & W. Ry. Co. v. Am.

Train Dispatchers Assn, 499 U.S. 117, 129 (1991); see also NORMAN J. SINGER, 2A

SUTHERLAND STATUTORY CONSTRUCTION 47:22, at 401 (7th ed. 2014) (general words are not

restricted in meaning to objects ejusdem generis if there is a clear manifestation of a contrary

intent or purpose). Here, both the language and the context of Section 5.4 belie Plaintiffs

reading of the sentence. The use of any to modify reason manifests a clear intention not to

limit a decision to modify or terminate the Plans to the type of reasons listed. See Tourdot v.

Rockford Health Plans, Inc., 439 F.3d 351, 353-54 (7th Cir. 2006) (explaining that ejusdem

generis applies only when it is not possible to determine the meaning of the words unless one

focuses on context and may not be used to defeat the obvious purpose or plain meaning of the

text). Moreover, the preceding sentence clearly states that GE reserves the right to amend or

terminate the Plans at any time and for any reason. And the first page of the July 2012 SPD,

under the heading IMPORTANT INFORMATION, states that GE can amend the Plans at its

discretion and at any time. (GE SOMF 16-17 (emphasis added).) Together, these words

convey a broad power to amend or terminate.

The few cases cited by Plaintiffs simply confirm that the broader context controls. In In

re Airadigm Communications, Inc., 616 F.3d 642 (7th Cir. 2010), the court concluded that the

phrase all other rights in a bankruptcy stipulation was limited to the specific examples

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referenced, because the broader context of the language, including counsels descriptions of the

stipulation during a hearing, indicated as much. See id. at 657. Similarly, in Circuit City Stores,

Inc. v. Adams, 532 U.S. 105 (2001), the Court applied ejusdem generis to limit the scope of an

exemption under the Federal Arbitration Act based on the broader context of the statute,

including the legislative history and similar language in another part of the statute. See id. at

113-15.

Finally, Plaintiffs have presented ever-changing, contradictory explanations of what the

second paragraph of Section 5.4 means. Their self-serving interpretations lack any evidentiary

support and speak volumes about what they are actually trying to accomplishto impose a

backdoor vesting obligation on GE that they concede does not exist under the terms of the Plans.

They originally asserted that the language permits changes only for a serious and good faith

reason. (Dkt. 1, Compl. 34.) Later, they argued that it restricts GEs reservation of rights

only to a force majeure situationa change in federal or state law or regulatory requirements

over which GE has no control. (Dkt. 27 at 7). Elsewhere, Plaintiffs have said that this phrase

means that GE can only change the Plans because of some major shift in the way the world or

the company was running or a cataclysm. (Dkt. 75-6, Resp. No. 3; Dkt. 75-1 at 217:2-17).

Even in their current motion, Plaintiffs propose inconsistent meanings: they first say the

language means that GE will act only in response to changes in law, beyond GEs control, but

then, in the very next paragraph, claim it is only triggered in life threatening, unforeseen or

devastating situations, whatever that means. (Pl. Br. 9-10.) The lack of consistency in

Plaintiffs position underscores the implausibility of their interpretation and the extent to which

they are straining to distort the language of Section 5.4 to suit their ends in this litigation.12 See

12
Even if this Court were to adopt any of Plaintiffs proposed readings, there would be at least an issue of
fact whether the circumstances facing GEan increase of $4.7 billion in its long-term retiree medical
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Plummer v. Consol. City of Indianapolis, No. 03-cv-567, 2004 WL 2278740, at *11 n.5 (S.D.

Ind. Aug. 17, 2004) (Hamilton, J.) (observing that plaintiffs vagueness regarding how long a

plan sponsor should be estopped from modifying plan due to alleged misrepresentation

suggests a troubling uncertainty about the force of plaintiffs logic).

Neither the language nor the context of Section 5.4 supports Plaintiffs interpretation, and

there is no evidence in the record that any participant found the July 2012 SPD misleading.

Certainly Plaintiffs themselves did not: they both admitted that they understood GE had a right to

change the Plans. (GE SOMF 115-16, 131.)13

III. THERE IS NO EVIDENCE THAT GE INTENDED TO MISLEAD PLAINTIFFS


OR ANY OTHER RETIREES

Even if this Court were to conclude that the July 2012 SPD was somehow misleading,

Plaintiffs claim would still fail because, as GE demonstrated in its Motion for Summary

Judgment, there is no evidence that GE intended to mislead Plaintiffs or other retirees. (GE SJ

Br. 16-19.) The Seventh Circuit requires that misrepresentation-based claims for breach of

fiduciary duty be premised on a statement that was intentionally misleading. Howell v.

Motorola, Inc., 633 F.3d 552, 571 (7th Cir. 2011); see also Brosted v. Unum Life Ins. Co. of Am.,

421 F.3d 459, 466 (7th Cir. 2005) ([A] breach of fiduciary duty claim premised on a

misstatement requires an intent to deceive).

obligations, the healthcare design changes adopted by its competitors, and the availability of expanded
prescription drug coverage under the Affordable Care Act and new coverage options from private
insurerswould meet the vague restrictions on Plan changes that Plaintiffs purport to impose.
13
Plaintiffs falsely state that GE admits that its SPD was not an accurate description of the Plans. (Pl.
Br. 5.) GE has never made such a statement, and Plaintiffs cite nothing to support their contention (as is
true throughout their motion). In fact, GEs Statement of Material Facts makes clear that the Plan
documents contain substantially the same reservation of rights language as the July 2012 SPD. (GE
SOMF 7-8.) Moreover, as the Supreme Court pointed out in Amara, an SPD is not a verbatim
recitation of the plan but a summary. 563 U.S. at 437. Finally, the July 2012 SPD expressly stated that in
the event of any inconsistency between the SPD and the Plan document, the Plan document prevails. (Id.
16.)

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Plaintiffs acknowledge that they must establish GEs intentional deception and that GE

did intend to mislead (Pl. Br. 8, 10), yet they have failed to marshal any evidence to support

the suggestion that GE intended to mislead its retirees. Indeed, both Rocheleau and Kauffman

admitted they had no specific information that GE put Section 5.4 in the July 2012 SPD for the

purpose of misleading retirees. (GE SOMF 120, 138.) And Plaintiffs never explain how GE

could have intended to deceive Kauffman or other pre-65 retirees when the July 2012 SPD was

not even sent to them. (Id. 100.)

Plaintiffs resort to the bare accusation that GE intended to mislead retirees because the

hidden purpose of the expects and intends language was to ensure that more salaried

employees like Plaintiffs did not seek union representation. (Pl. Br. 14-15.) This theory is odd,

to say the least, given that Rocheleau was GEs lead union negotiator and, like many others in

the salaried population, a highly compensated white collar worker who realistically would never

have joined a union. Also, the recipients of the July 2012 SPD were already retired. But beyond

the basic illogic of this claim, it is nothing more than sheer speculation unsupported by a single

piece of evidence. The expects and intends language has been in the SPD for at least 20 years;

there is no evidence from any witness about why Section 5.4 was first drafted that way. What is

clear is that nothing in the record supports Plaintiffs farfetched theory about a union-avoidance

scheme.

The only record evidence on the issue of intent comes from GE, and it confirms that GE

did not intend to mislead its retirees. The expects and intends language has been in GEs post-

65 SPDs since the early 1990s. (GE SOMF 18.) The SPD Update Team that was responsible

for reviewing and revising the July 2012 SPD was not part of the Corporate Benefits Team that

was evaluating the potential 2012 Amendment. (Id. 95.) The leader of the SPD Update Team,

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Steve Zarelli, gave the final approval on June 25, 2012 to print and distribute the July 2012 SPD.

(Id. 98.) At that time, he was not aware of any changes being considered: Mr. Zarelli was not

involved in evaluating changes to the GE Medicare Plans and learned only in mid-July 2012 that

the Corporate Benefits Team was considering amendments to the Plans. (Id. 102-03.) By that

point, the July 2012 SPD was already at the printer and Mr. Zarelli concluded that no

modification was needed because the benefit changes were still under evaluation, and he knew

that GE would provide a prompt communication to affected individuals if the Board ultimately

decided to adopt these changes. (Id. 106). The Board voted on September 7, 2012 to amend

the GE Medicare Plans, and, shortly thereafter, GE issued an SMM to retirees describing the

changes. (Id. 50, 60.) These facts demonstrate reasonable behavior and good faith, not

deceptive intent.

Perhaps implicitly recognizing this, and seemingly as an afterthought, Plaintiffs fall back

to arguing that a negligent misrepresentation is enough to create liability for disclosure-based

fiduciary breach claims under ERISA, citing the Seventh Circuits decision in Kenseth v. Dean

Health Plan, Inc., 610 F.3d 452 (7th Cir. 2010) (Kenseth I). (Pl. Br. 8-9.) GE addressed this

issue in its Motion for Summary Judgment, explaining that Kenseth I carved out a narrow

exception to the intent requirement based on a unique set of facts not present here. (GE SJ Br.

18-19.) Kenseth I did not otherwise disturb the Seventh Circuits longstanding rule that a

negligent failure to provide accurate plan information is not actionable.

Plaintiffs nonetheless try to equate GEs conduct to the defendants in Kenseth I, arguing

that the GE Board and top management like [Senior Vice President of Human Resources John]

Lynch modified the GE Medicare Plans with no knowledge of what GE had been saying to

participants in Section 5.4. (Pl. Br. 9.) Plaintiffs contend, without authority, that the fact that

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no one in authority either knew or took account of Section 5.4 is the most extraordinary breach

of all. (Id.) This argument is flawed on multiple grounds. First, it is well settled that ERISA

imposes no fiduciary duty on employers, their directors, or their employees in connection with

plan design or modification. This is plan sponsor activity. See Lockheed Corp. v. Spink, 517

U.S. 882, 890-91 (1996) (holding that employer and its board of directors did not act as

fiduciaries when amending a benefit plan). This same principle applies to employers that wear

two hats, serving as both plan administrator and plan sponsor, as GE does here. They have a

fiduciary duty to plan participants only when wearing their plan administrator hat, not when

amending or terminating a benefit plan. See Pegram v. Herdrich, 530 U.S. 211, 22526 (2000).

The GE Board and Mr. Lynch were not acting in a fiduciary capacity when planning and

adopting the 2012 and 2014 Amendments to the GE Medicare Plans.

Second, Plaintiffs play fast and loose with the facts. Mr. Lynch testified that, while he

had not read the specific language in Section 5.4 prior to this lawsuit, he had always been aware

of broadly the language [in Section 5.4] and the companys right to terminate, amend or replace

the plans. (R SOMF 32.) 14 More importantly, a GE director or a senior executive like Mr.

Lynch, who is responsible for overseeing 350,000 employees worldwide, cannot reasonably be

expected to read cover-to-cover and know the contents of every one of the dozens of SPDs the

Company issues for its many benefit plans. That is not their job. GE takes the job of

communicating with participants seriously, which is why it has a team of benefits and

communications specialists who are responsible for reviewing and issuing SPDs. (GE SOMF

14
Lynch also testified he did not know whether any member of the Board had read Section 5.4 (R SOMF
33.) There is no evidence that the Board was unaware of or failed to take into account Section 5.4 or
any other language in the July 2012 SPD.

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61.) There is nothing improper or unlawful about this arrangement and, not surprisingly,

Plaintiffs fail to cite any case support for their unjustified attack on Mr. Lynch and GEs Board.

Plaintiffs misleading portrayal of the facts does nothing to bring this case within the fact

pattern addressed in Kenseth I. Kenseth I addressed employer actions as plan administrator, not

as plan sponsor. In contrast to Kenseth I, here there is no evidence that GE acted negligently in

its fiduciary capacity as plan administrator. For example, there was no inquiry from Rocheleau

or Kauffman prompted by the July 2012 SPD, and no erroneous information communicated to

them by a GE representative to any such inquiry. It was that interactionbetween a plan

participant and plan representative providing information about the planthat led the court in

Kenseth I to conclude that the plan administrator could be liable for the mistakes that plan

representatives might make in answering questions on that subject. 610 F.3d at 412.

Moreover, unlike the plan administrator in Kenseth I, GE took care to ensure that

Plaintiffs and other retirees had complete and accurate information about the 2012 and 2014

Amendments by issuing SMMs shortly after those amendments and investing in extensive

educational and counseling efforts to assist retirees in selecting alternative coverage. (GE SOMF

60-62, 83-87.) The undisputed facts demonstrate that GE exercised due care and did not act

negligently in its fiduciary capacity as plan administratoreven if negligence were sufficient to

ground liability, which it is not.

IV. PLAINTIFFS REMEDY-FOCUSED ARGUMENTS ARE WITHOUT MERIT

As explained above and in GEs Motion for Summary Judgment, Plaintiffs breach of

fiduciary duty claim fails on the merits for several independently dispositive reasons, so the

Court need not even reach the issue of remedy. But to the extent the Court believes those

arguments warrant any attention, Plaintiffs also cannot show they are entitled to appropriate

equitable relief under ERISA Section 502(a)(3), 29 U.S.C. 1132(a)(3).


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Plaintiffs talk past themselves on the issue of remedies. They first assert they are

entitled to a reformation of the Plans to include both of the promises GE made in Section 5.4.

(Pl. Br. 16-17.) Just a few pages later, however, Plaintiffs jettison reformation and declare that

what they seek instead is a surcharge. (Id. at 25.) Although it is unclear exactly which remedy

Plaintiffs are seeking, they are not entitled to either remedy.

A. Plaintiffs Are Not Entitled To Reformation Of The Plans To Include Any


Alleged Promises In Section 5.4

Plaintiffs are not entitled to the equitable remedy of reformation under the Supreme

Courts decision in Amara. Even Plaintiffs recognize that reformation is only available as a

potential remedy in cases of mistake or fraud (Pl. Br. 15)more precisely, mutual mistake or

mistake coupled with fraud. As GE explained in its Motion for Summary Judgment, Plaintiffs

cannot make either showing, nor have they demonstrated the necessary prerequisite of harm.

(GE SJ Br. 27-30.) Even Plaintiffs acknowledge that Plan reformation would be disruptive,

impractical, and potentially confusing to participants. (Pl. Br. 24.)

B. Plaintiffs Are Not Entitled To Surcharge On This Record

While Plaintiffs now shift their focus to pursuing an equitable surcharge remedy against

GE (Pl. Br. 24-25), the Court also cannot award a surcharge on this record.

First and foremost, Plaintiffs cannot obtain an equitable surcharge without establishing

that they were harmed by the July 2012 SPD. Amara, 563 U.S. at 444. As discussed above, they

have offered no such evidence. (See supra I; see also GE SJ Br. II.B.).

Second, Plaintiffs requested surchargeforcing GE to put approximately $1,600

annually into RRAsbears no relationship to any arguable harm that Plaintiffs (or other

retirees) claim to have suffered, whether or not the harm is tied to the allegedly misleading SPD

(as it must be) or to the ultimate benefits changes implemented more than two years later (which

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it cannot be). Plaintiffs claim that this amount is appropriate because it represents the

average subsidy provided by employers who switched to defined-contribution plans, and

because they believe that GE was paying approximately that in costs per retiree before the Plans

were changed. (Pl. Br. 25.) But that is not a lawful basis for awarding a surcharge remedy.

An equitable surcharge must be measured by the alleged harm to the Plaintiffs. See, e.g.,

Kenseth II, 722 F.3d at 882-83 (describing surcharge as make-whole relief in the form of money

damages, potentially available where a plaintiff can demonstrate that a defendant breached its

fiduciary duty to her and that the breach caused her damages). Yet it is undisputed that

Kauffman is now paying less for her benefits than she would have paid under the GE Medicare

Plans, so it would be a pure windfall to award her $1,600 annually on a going-forward basis.15

(GE SOMF 124, 126.) And Plaintiffs proposed surcharge would give Rocheleau an

additional $600 per year toward supplemental Medicare coverage, despite the lack of any

evidence that he is paying even a single dollar more for coverage under OneExchange. (Id.

145-46.) In short, these Plaintiffs have not suffered any financial harm that would warrant the

imposition of an equitable surcharge for make-whole money damages. Kenseth II, 722

F.3d at 882-83. Even for the minority of retirees whose costs might have increased as a result of

the shift to OneExchange, there is no uniform, one-size-fits-all method to calculate a surcharge.

Plaintiffs certainly have not proven that every affected retiree was similarly harmed in the

amount of $1,600 annually.

15
This would also be the case for thousands of other putative class members given the conclusion of GEs
expert, Professor Baker, that a substantial majority of GE retirees across all age bands are likely to
experience lower total out-of-pocket costs under the new OneExchange system. (R SOMF 64.) This is
a key component of GEs opposition to class certification. (Dkt. 76 at 10-11.)

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In short, Plaintiffs cannot satisfy the legal standard to secure an equitable surcharge, and

certainly not on summary judgment. The proposal that Plaintiffs urge on the Court in their

motion is utterly without factual support in any event.

CONCLUSION

For the foregoing reasons, GE respectfully requests that the Court deny Plaintiffs motion

for summary judgment and enter summary judgment in favor of GE on the remaining count of

the amended complaint.

DATED: July 18, 2016 Respectfully submitted,

/s/ Michael L. Banks


Michael L. Banks
Joseph J. Costello
Morgan, Lewis & Bockius, LLP
1701 Market St.
Philadelphia, PA 19103-2921
Telephone: 215.963.5000
Facsimile: 215.963.5001
Email: mbanks@morganlewis.com
jcostello@morganlewis.com

Daniel E. Conley Christopher A. Weals


Quarles and Brady LLP Matthew J. Sharbaugh
411 East Wisconsin Avenue Morgan, Lewis & Bockius, LLP
Suite 2400 1111 Pennsylvania Ave., N.W.
Milwaukee, Wisconsin, 53202 Washington, DC 20004
Telephone: 414.277.5609 Telephone: 202.739.3000
Facsimile: 414.271.3552 Facsimile: 202.739.3001
Email: daniel.conley@quarles.com Email: cweals@morganlewis.com
msharbaugh@morganlewis.com

Attorneys for Defendant


General Electric Company

DB1/ 88415242

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