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November 21, 2017
  DiBiase v. SPX Corp. -- Fourth Circuit
Court Affirms Status Quo for Healthcare Benefits Case

Areas of Law: Employee Benefits Law

Issues Presented: (1) Whether the motion for preliminary injunction was moot. (2) Whether the district court abused its discretion in denying the Plaintiffs' motion for a preliminary injunction?

Brief Summary: In a published opinion, the United States Court of Appeals for the Fourth Circuit held that the motion for preliminary injunction was not moot; but concluded further that the district court did not abuse its discretion in denying the motion since the Plaintiffs failed to meet the requirements for a preliminary injunction.

Extended Summary: In November 2014, the individual plaintiffs, retirees of SPX Corporation ("SPX"), their spouses and eligible dependents, and their labor union, the International Union United Automobile, Aerospace and Agricultural Implement Workers of America, UAW ("UAW"), (collectively, "Plaintiffs"), filed a class action law suit against SPX. They alleged that the healthcare reimbursement account ("HRA") accounts offered by SPX were not "substantially equivalent" to their current healthcare benefits, and that the implementation of SPX's new arrangement would breach two court-approved settlement agreements in violation of Section 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185, and Section 502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132(a)(1)(B).

The settlement agreements between the Plaintiffs and SPX required SPX to provide lifetime healthcare coverage to identified retirees and their eligible family members through (a) specified group health insurance plans, or (b) through "coverage which is substantially equivalent in benefits." The Plaintiffs signed this agreement in 2003, and SPX provided them with insurance coverage for the retirees and their family members through various group health plans between 2004 and 2015. However, in mid-2014, SPX announced to UAW representatives and Medicare-eligible retirees its plan to terminate and replace the original arrangement effective January 1, 2015. The new arrangement would provide each beneficiary an HRA containing up to $5,000 for beneficiaries to purchase their own healthcare plan from an insurance exchange secured and identified by SPX, as well as the means to cover other expenditures.

Subsequently, the Plaintiffs filed a class action suit against SPX alleging a violation of the settlement agreements because the healthcare reimbursement account ("HRA") accounts offered by SPX were not "substantially equivalent" to their current healthcare benefits. Additionally, on December 15, 2014, the Plaintiffs moved for a preliminary injunction to enjoin SPX from terminating their current SPX plan provided under the settlement agreements and from implementing the HRA accounts during the pendency of the action or until the court ordered it. On September 29, 2015, the district court denied the Plaintiffs' motion, concluding that the issue was moot since the HRAs had already gone into effect. The court also held that Plaintiffs failed to meet the four standards required to grant a preliminary injunction.

On review, the Fourth Circuit held that the motion for preliminary injunction was not moot. However, the Fourth Circuit affirmed the district court's denial of the motion because the Plaintiffs failed to meet the requirements for a preliminary injunction.

The court first analyzed the issue of mootness. The court stated that the primary function of a preliminary injunction is to maintain the status quo and that a request for an injunction to prohibit an act is moot if the act already happened. However, relying on Pashby v. Delia, 709 F.3d 307, 319 (4th Cir. 2013) and Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 378 (4th Cir. 2012), the court found that the motion for preliminary injunction was not moot because the Plaintiffs filed the motion before the policy change occurred, and subsequently intended to restore the status quo.

Nevertheless, the Fourth Circuit found that the Plaintiffs failed to establish the four criteria necessary to grant a preliminary injunction. In order to succeed, the Plaintiffs needed to prove that (1) they were likely to succeed on the merits of the underlying healthcare coverage dispute; (2) they were likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tipped in their favor; and (4) an injunction was in the public interest. Among other things, the court found the Plaintiffs failed to make a case that would demonstrate the likelihood of success on the merits. Therefore, the Fourth Circuit affirmed the district court's denial of the motion for preliminary injunction and remanded for further proceedings.

To read the full opinion, click here.


Panel: Chief Judge Gregory, and Circuit Judges King and Keenan

Argument Date: 05/09/2017

Date of Issued Opinion: 09/28/2017

Docket Number: 15-2340

Decided: Affirmed and remand for further proceedings by published opinion.

Case Alert Author: Nneka Adibe, Univ. of Maryland Carey School of Law

Counsel: ARGUED: Narendra K. Ghosh, PATTERSON HARKAVY LLP, Chapel Hill, North Carolina, for Appellants. Mark A. Hiller, ROBINSON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina, for Appellee. ON BRIEF: Michael L. Fayette, PINSKY, SMITH, FAYETTE & KENNEDY, LLP, Grand Rapids, Michigan, for Appellants. David C. Wright, III, Cary B. Davis, Amanda R. Pickens, ROBINSON, BRADSHAW & HINSON, P.A., Charlotte, North Carolina, for Appellee.

Author of Opinion:
Chief Judge Gregory

Case Alert Supervisor:
Professor Renée Hutchins

    Posted By: Renee Hutchins @ 11/21/2017 02:43 PM     4th Circuit  

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