Carlstrom v. Decisionone Corp.

Citations: 217 F.R.D. 514; 30 Employee Benefits Cas. (BNA) 2372; 2003 U.S. Dist. LEXIS 23769; 2003 WL 21803147Docket: No. CV-02-26-GF-SEH

Court: District Court, D. Montana; June 20, 2003; Federal District Court

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Michael Carlstrom initiated a lawsuit against DecisionOne Corporation to recover benefits under an ERISA plan, specifically separation pay, following his termination as part of a cost-reduction initiative that began in January 1999. Carlstrom, alongside over 800 other employees, was deemed eligible for separation pay under the 1996 ERISA welfare benefit plan, which required a signed release to receive such benefits. Although Carlstrom initially signed the release, he later revoked it before payment. Most employees, except for 20, executed the release and received their separation pay. A subsequent plan, effective March 31, 1999, was produced in a related wrongful discharge case, which did not necessitate a release for separation pay eligibility, raising the question of which plan was applicable to Carlstrom's case.

Carlstrom seeks class certification to represent former DecisionOne employees terminated between March 31, 1999, and March 5, 2001, who qualify for separation benefits under the newer plan. The proposed class includes individuals whose terminations met specific criteria outlined in the ERISA Plan, particularly regarding reassignment offers prior to termination.

The discussion section outlines the requirements for class certification under Fed. R. Civ. P. 23, which necessitates satisfying four prerequisites (numerosity, commonality, typicality, and adequate representation) from Rule 23(a) and one of the conditions from Rule 23(b). The burden of proof lies with the party seeking certification, and failure to meet any requirement leads to denial of class certification.

Class certification is denied due to the absence of typicality and adequate representation by the proposed class representative, Carlstrom. The typicality requirement, which ensures the interests of the representative align with those of the class, is not met because 98% of proposed class members signed a release for separation pay, while Carlstrom did not. This distinction creates unique defenses for Carlstrom, further undermining typicality, as established in Hanon v. Dataproducts and Melong v. Micronesian Claims Commission. Additionally, Carlstrom failed to exhaust administrative remedies required by both the 1996 and 1999 Plans, introducing another unique defense that conflicts with class interests, as highlighted in Clancy v. Employers Health Ins. Co. 

Carlstrom's interests may contradict those of the class members who signed releases, particularly regarding which ERISA plan governs their rights. The 1996 Plan provided different medical coverage terms compared to the 1999 Plan, potentially impacting the financial interests of class members. If Carlstrom's position that the 1999 Plan governs is accepted, it could preclude class members who signed releases from claiming additional benefits under the 1996 Plan.

The court orders that the motion for class certification is denied and allows the parties 60 days to conduct discovery on whether DecisionOne adopted the 1999 Plan. Following this, briefs addressing the adoption issue will be filed, with a schedule for resolving remaining case issues to be set based on which ERISA plan was in effect at the time of termination. The court will also consider certification of an alternate class for former employees like Carlstrom after determining the effective ERISA plan.