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Nearly a decade after class action certification was granted in an ERISA suit brought on behalf of 32,000 retirees of Unisys Corp. who said they were falsely promised lifetime medical benefits, a federal judge in Philadelphia has now ruled that the class must be decertified because the claims of the remaining 8,000 members present too many “individual issues.” In a 16-page opinion handed down last week, U.S. District Judge Bruce W. Kauffman found that the plaintiffs who weren’t included in one of three court-approved settlements must now clear a few legal hurdles that will require individualized proof. As a result, Kauffman concluded that the class is no longer “cohesive” and fails to satisfy the requirements of Rule 23 of the Federal Rules of Civil Procedure. “The court finds that the individual issues presented by plaintiffs’ breach of fiduciary duty claims and Unisys’s statute of limitations defense pervade the entire action and preclude continuing as a class action,” Kauffman wrote in In Re: Unisys Corporation Retiree Medical Benefits Litigation. Lead plaintiffs’ attorney Alan M. Sandals of Sandals & Langer said he has not yet decided whether to file an immediate appeal of Kauffman’s ruling or instead to file new lawsuits that list each of the remaining plaintiffs who wish to go forward. In its decade of litigation, the Unisys case has resulted in settlements worth nearly $130 million. From the beginning, the plaintiffs in the case fell into one of three groups named for the companies that had joined to form Unisys in 1986. The “Sperry” plaintiffs were those who had originally worked for Sperry Corp. and retired before 1989, the year that employee benefits of the merged company were unified. Likewise, the “Burroughs” plaintiffs originally worked for Burroughs and retired before 1989. Those who retired in 1989 or later were termed “Unisys” plaintiffs. The Sperry plaintiffs have so far fared the best. In 1994, Unisys agreed to pay $111 million to a group of 7,500 Sperry retirees who said they were tricked into taking early retirement with the false promise that they would be entitled to lifetime medical benefits. Another 1,000 Sperry retirees who did not take advantage of any early retirement package were paid $12.5 million in 1998. And early this year, Kauffman approved a $6 million settlement in which 6,000 Sperry plaintiffs, many of whose claims suffered from possible statute-of-limitations problems. Many of the Burroughs and Unisys plaintiffs suffered a major setback in 1997 when former Chief U.S. District Judge Edward N. Cahn of the Eastern District of Pennsylvania granted summary judgment in favor of Unisys for plaintiffs who retired more than six years prior to the filing of the complaint, because their claims were barred by the statute of limitations. Cahn also dismissed the claims of plaintiffs who left the company involuntarily, finding they had failed to establish detrimental reliance. But Cahn’s rulings were reversed in 2001 when the 3rd U.S. Circuit Court of Appeals ruled that some of the class members may have detrimentally relied on the alleged material misrepresentations in reaching important life decisions made after their retirements and thus may have timely claims, depending upon the date and nature of their reliance. The appellate court also revived the claims of retirees who had left the company involuntarily, saying there may be decisions other than choosing to retire that could support a breach of fiduciary duty claim. Since Cahn had left the bench, the case was reassigned to Kauffman who sent the lawyers to U.S. Magistrate Judge Jacob P. Hart for settlement talks. But Hart was able to settle only the claims of the remaining Sperry plaintiffs. Soon after global settlement talks ended, the team of lawyers representing Unisys — Joseph J. Costello, Joseph B.G. Fay and Richard G. Rosenblatt of Morgan, Lewis & Bockius — filed a motion seeking to decertify the class. In the motion, Unisys argued that the 2001 decision by the 3rd Circuit had dramatically changed the case by reviving claims on the grounds that individual plaintiffs might be able to meet the test for defeating a statute-of-limitations defense and for showing detrimental reliance. As a result, Unisys argued, the plaintiffs can no longer press their claims in a class action in which a “others stand in their shoes.” In response, the plaintiffs’ team — Alan Sandals and Kay E. Sickles of Sandals & Langer, along with Sarah E. Siskind of Miner Barnhill & Galland in Madison, Wis., and Joseph F. Roda of Roda & Nast in Lancaster, Pa. — argued that the case should remain a class action since the plaintiffs continue to share significant common legal issues. The plaintiffs argued that Unisys was moving to decertify the class “in the apparent hope that this will so confuse class members and complicate management of this case that justice will be delayed and justice will be denied.” The plaintiffs’ lawyers agreed that factual differences exist among the class members, but argued that the differences did not alter the cohesiveness of their claims because Unisys engaged in a systematic and pervasive common course of conduct of misrepresenting to employees that they would have lifetime retiree medical benefits. As a result, they said, the entire class’ claims actually revolve around a common course of conduct directed at class members, all of whom received the same messages, were led to the same erroneous understanding about the durability of their benefits, made the same kinds of personal decisions and suffered the same kinds of harm. The statute-of-limitations defense also doesn’t warrant decertification, they argued, because it merely requires that the court apply classwide legal standards established by the 3rd Circuit to a relatively small number of uncomplicated factual possibilities presented by the retirees. But Kauffman found that Unisys was right on the law since the case will now require individual evidence from each of the plaintiffs. “A large number of plaintiffs base their claims on representations made by their co-workers or supervisors. In order for those individuals to qualify as fiduciaries, they must have had actual or apparent authority to advise the company’s employees of their rights under the plan,” Kauffman wrote. “The court will therefore have to determine as to each claimant whether a particular co-worker or supervisor possessed the requisite authority to act as a fiduciary when he or she made the alleged misrepresentation. Accordingly, the court finds that this element of plaintiffs’ breach of fiduciary duty claims will require individualized proof as to each retiree.” The individual retirees also claim “a variety of written and oral misrepresentations on which they allegedly relied to their detriment,” Kauffman found. As a result, Kauffman said, the court “will have to examine the circumstances surrounding each communication (i.e., the timing, content and context) in order to determine whether a particular communication rises to the level of a material misrepresentation.” Such an analysis, Kauffman said, “necessarily will entail individualized evidence, including the retiree’s own testimony as to what he or she heard or read.” On the issue of detrimental reliance, Kauffman found that the court “will have to examine the specific decisions allegedly made by the individual retirees in order to determine whether each one is sufficient to establish detrimental reliance.” As a result, he said, “proving detrimental reliance will involve factual disparities among the retirees and thus present issues that preclude litigation as a class.” Statute-of-limitations issues, too, will require “a myriad of individual determinations,” Kauffman found. “For example, in each case the evidence may vary as to when a Unisys representative last told the employee falsely that his or her retirement health benefit was secure and when and how he or she ultimately learned that retiree medical benefits were no longer free,” Kauffman wrote. “Indeed, there may be cases in which the employee learned the truth only when the bill came in the mail. Each of these individualized determinations could affect when the statute of limitations began to run for a given class member.”

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