On February 15, 2012, the Honorable Barbara J. Crabb of the United States District Court for the Western District of Wisconsin certified a class of retired Kraft Foods Global, Inc. (“Kraft”) employees at Kraft’s Madison, Wisconsin, meat processing plant over changes to the retirees’ health benefits.  The plaintiffs allege that Kraft’s decision to eliminate an HMO option and to increase prescription drug costs violated the vested rights of the retirees, in contravention of ERISA, and breached certain collective bargaining agreements in violation of the Taft-Hartley Act.

In first examining the four basic factors under Federal Rule of Civil Procedure 23(a) that all putative classes must satisfy, the Court held that the putative class of 311 retirees was sufficiently numerous to justify a class action.  With respect to the commonality requirement, the Court cited the Supreme Court’s recent decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), noting that the common injury “must be of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.”  However, the Court held that the legality of the changes under ERISA and the Taft-Hartley Act satisfied the commonality requirement.  There was no dispute among the parties as to the typicality and adequacy requirements of Rule 23(a).

Having resolved that the putative class satisfied Rule 23(a), the Court then turned to the question of whether the class should be certified under Rule 23(b).  The plaintiffs took the position that the class could be maintained under either Rule 23(b)(2) or (3).  The Court rejected  the contention that the class could be maintained under Rule 23(b)(2) because the Supreme Court’s holding in Dukes that Rule 23(b)(2) “does not authorize class certification when each class member would be entitled to an individualized award of monetary damages” and “individualized monetary claims belong in Rule 23(b)(3).”  The Court also noted that the Supreme Court had left open the question of whether there were any forms of monetary relief that were “incidental” to declaratory and injunctive relief available under Rule 23(b)(2).  In addition to seeking a restoration of the HMO option and lower prescription costs, the plaintiffs sought reimbursement of their costs incurred as a result of the changes, including increased co-pays, deductibles, prescription costs, and travel expenses.  As a result, the Court rejected the application of Rule 23(b)(2) because the requested monetary relief would require individualized determinations as to the amount of damages.

In order to resolve whether a class action satisfied Rule 23(b)(3), the Court examined the predominance and superiority requirements applicable under that Rule.  The Court held that the common questions, consisting of whether the changes to retiree health benefits satisfied ERISA and the Taft-Hartley Act, predominated over the individualized issues, which only related to damages.  The Court also held that a class action was superior to other methods of adjudicating the relevant claims.  Accordingly, the Court held that the class action was proper under Rule 23(b)(3).

The takeaway from this case is that, while the Supreme Court’s recent decision in Dukes has limited the availability of certain types of class actions (particularly where individualized damages calculations would be required), such class actions may still be available in the ERISA context where common questions predominate over those individualized calculations. 

The case is Bauer v. Kraft Foods Global, No. 11-cv-15-bbc (W.D. Wisc.).