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. )
) The Honorable Lynn Adelman
General Electric Co., )
)
Defendant. )

Plaintiffs' Reply in Support of their Motion for Class Certification

Introduction

Defendant GE opposes class certification on the same premises its substantive theory of

the case rests on. First, that the plaintiffs have to show individual, detrimental reliance to

proceed on their claim. That theory was raised in the motion to dismiss and rejected by the

Court, and by the Supreme Court in Amara. Second, that by some miracle, no one was actually

harmed when GE cancelled health care benefits in an act that allowed it to book $ 1.2 billion in

savings. That is implausible, and contradicted by GE's own analysis. Third, that the plaintiffs

and most class members are actually better off now than when they were covered by GE. That

argument reflects a basic and intentional misunderstanding of insurance and is not borne by

the facts.

Against that fractured bedrock of a defense is the plaintiffs' theory of the case: GE, acting

as a fiduciary, made a promise to continue to use the same level of efforts to provide retiree

health benefits, absent certain changes in circumstances. It broke that promise and cancelled

those benefits. In doing so, it was unjustly enriched by $1.2 billion, and deprived plaintiffs of

the risk protection to which ERISA entitles them. Because the fundamental issue in this case is

Case 2:14-cv-01358-LA Filed 07/18/16 Page 1 of 9 Document 88

whether GE did, or did not make that promise, it is precisely the type of case that should be

certified a class action.

I. Certification of a mandatory class under Fed. R. Civ. P. 23(b)(1) or (b)(2) is

warranted.

A class would be appropriate under Fed. R. Civ. P. 23(b)(1)(A) because a class is the

only way to avoid conflicting rulings as to whether GE did or did not make the promise

contained in Section 5.4. A class is appropriate under Fed. R. Civ. P. 23(b)(1)(B) for a similar

reason: once one person, e.g., Dennis Rocheleau, secures declaratory judgment that GE did make

that promise, GE would be precluded from arguing to the contrary in another court. Finally, a

class would be appropriate under Fed. R. Civ. P. 23(b)(2) because in refusing to honor its

promise, and by terminating benefits to everyone, GE "acted...on grounds that apply generally to

the class...[.]" Because of the nature of the question in the case, the possibility of GE having

65,000 discrete "sub plans" as GE suggests it could do is not plausible. Cf. In re Unisys Corp.

Retiree Medical Benefits ERISA Litig. No. 03-cv-3924, 2007 WL 2071876 (E.D. Pa. July 16,

2007).

Similarly, the facts here are different than the scenario in Kenseth v. Dean Health Plan,

Inc., 722 F.3d 869 (7th Cir. 2013), with respect to the availability of individual relief. In that

case, the plaintiff relied on a specific misrepresentation to her, about whether a particular

procedure was covered. Kenseth, 722 F.3d 884. There, individual relief was proper because no

one else was situated similarly to the plaintiff. But here, to the contrary, everyone faces the same

situation: by virtue of their participation in the plan and GE's SPD, they were entitled to have GE

continue to use roughly the same efforts to continue its retiree health plan. It didn't. Instead, it

cancelled the plan, which impacted all the class in the same way: they lost their health plan in a

Case 2:14-cv-01358-LA Filed 07/18/16 Page 2 of 9 Document 88

breach of GE's fiduciary obligations to them. How they were able to mitigate out of pocket costs

may vary, but the loss of protection was uniform.

In opposing class certification (which GE should want if it truly believes its own case),

GE desperately tries to transform the plaintiffs' suit into a claim for individual money damages.

It is not. Plaintiffs are the master of their own complaint, and they do not seek money damages

for individual harm. Instead, they seek the equitable remedy of reformation and surcharge,

consistent with controlling precedent for these types of ERISA cases. CIGNA Corp. v. Amara,

563 U.S. 421 (2011), and Kenseth v. Dean Health Plan, 610 F.3d 452 (7th Cir. 2010), and 722

F.3d 869 (7th Cir. 2013).

It is likely true that as a result of GE's broken promise, many of the 65,000 affected

persons will suffer different economic harm, and opt for different medical treatment, depending

unknown health contingencies and future needs. But that does not mean that a class cannot be

certified to rectify the harm complained of: the denial of the right to honest fiduciary services

and the loss of the insurance protection promised to them. Under that harm the harm

recognized by ERISA there is no "divergence of economic interests" that defeats class

certification, especially where the remedy sought would have the practical effect of giving more

money to each member of the class in the form of a surcharge.

II. Plaintiffs and the class suffered a cognizable injury and have standing.

To the extent that GE's opposition is premised on its allegation that either plaintiff was

not harmed, that the class was not harmed, or that the plaintiffs were harmed in some different

manner than the class, the plaintiffs rely on their summary judgment briefing in opposition. To

summarize the harm, GE's misleading statements harmed Rocheleau and others by denying them

the right to the loyal, honest services of a fiduciarya right to which they are entitled under 29

Case 2:14-cv-01358-LA Filed 07/18/16 Page 3 of 9 Document 88

U.S.C. 1104(a)(1). See Amara, 131 S. Ct. at 1881 (holding that harm mightcome from the

loss of a right protected by ERISA or its trust-law antecedents). They also suffered a loss of

their right to an accurate, non-deceptive SPD, especially as to the security of their benefits. See

id. (recognizing harm caused by failure to provide proper summary information); see

also Decision & Order of 6/5/15 (Doc. # 49) at 5 (same). Because GE made these misleading

statements about their intention to continue the plans, the cancellation of the plansin breach of

that promiseis inextricably intertwined with the misrepresentations. Finally, Rocheleau and

others were harmed because they likely would have sought higher compensation from GE if they

understood that the benefits they were being promised were not at all secure. See also, Pl's

Memo. in Opp. to GE's MSJ, Section III.

GE thinks that because some class members paid less in premiums (during a one-year

sample) to receive less insurance (for one year), some are better off. This leaves out a bushel of

facts. It ignores the fact that GE is paying less it is for the time paying roughly $1000 a person

where it used to pay roughly $1600 a person. See PSOF 7, 52. It leaves out what the change

in coverage is. It leaves out that the risk of under-coverage is borne by the class members and

not GE. It leaves out that no class member is a clairvoyant insurance shopper, and many will

undoubtedly end up under-insured. It leaves out that under GE's own rosy economic modeling,

22 percent of the class will incur more costs in any given year, not even accounting for the "cost"

associated by the shift in risk. DSOF 79-80. In other words, the plaintiffs and the class have

been equally harmed by the loss of the risk protection provided by the plan, and that harm to

each of them comes from a single act by GE: cancelling these very plans.

Case 2:14-cv-01358-LA Filed 07/18/16 Page 4 of 9 Document 88

 III. Typicality and Commonality are satisfied.

Plaintiffs' claims are typical of the class because they "arise from the same event...or

course of conduct that gives rise to the claims of other class members," and those claims "are

based on the same legal theory." Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584,

597 (7th Cir. 1993)(quoting H. NEWBERG, CLASS ACTIONS 1115(b) at 185 (1977)). In the

same paragraph, Retired Chicago Police Ass'n. added that typicality is satisfied "even if there are

factual distinctions between the claims of the named plaintiffs and other class members." Id.

Here, GE breached its fiduciary to each class member when it failed to conform its conduct to

Section 5.4. The legal theory is the same for everyone in the classGE had to continue to use

relatively the same efforts to continue its retiree health care plan absent certain circumstances,

and it did not. The claims of every class member "arise from the same event"GE cancelling its

retiree health plan. This is not a "detrimental reliance" case; plaintiffs do not seek estoppel.

Amara made clear detrimental reliance is not required where plaintiffs seek reformation and

surcharge.

GE's case of Spano v. Boeing Co., 633 F.3d 574, 586 (7th Cir. 2011) explains why

commonality is satisfied in this case, too. In Spano, it was asserted that Boeing imposed

excessive fees on all participants, among other breaches of its fiduciary duty. The Seventh

Circuit found class commonality was satisfied because the claims "describe problems that would

operate across the plan rather than at the individual level." Id. The same is true in this case. The

problem is that GE cancelled its health plan, not just for the plaintiffs, but for everyone. See

Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998)(commonality satisfied where "defendants

have engaged in standardized conduct towards members of the proposed class...[.]").

GE argues that Kauffman's claims are not typical because she did not receive or read the

Case 2:14-cv-01358-LA Filed 07/18/16 Page 5 of 9 Document 88

SPD containing Section 5.4. This argument has been rejected, and is re-argued in the summary

judgment briefs. GE's further argument that Kauffman and Rocheleau were not mislead again

tries to change the nature of the case. As argued in the motion for summary judgment, GE's

other attacks that Kauffman admits she was not harmed fail; as do the same attacks on

Rocheleau, as presented in the Rule 56 statement of facts and briefs.

GE argues that Rocheleau's claims are not typical in part because he participated in the

Elfun Plan, along with tens of thousands of other GE employees. But GE left out key facts: (1)

Rocheleau was enrolled in two of the four GE plans and (2) his participation in the Elfun Plan

required that he be enrolled in a GE Medicare Plan. The fact is, Elfun was a supplemental

"bump up" plan integrated into the GE system that was terminated concurrent with the GE Plan

and because of the end of the GE Plan. See, Exhibits A, B. Furthermore, under the Elfun plan,

Rocheleau had the right to drop the supplement and fully return to the GE Plan. Exhibit B., p.

41.

For these reasons, the requirements of typicality and commonality are met under Fed. R.

Civ. P. 23(a).

IV. Plaintiffs do not have "conflicting claims" with the class and are adequate
representatives.

Out of the debris left by its termination of a retiree benefits program, GE tries to create an

imagined divergence of economic interests among the class to justify its own $1.2 billion unjust

enrichment. Key to note from the outset: under the plaintiff's litigation plan, each class member

would be better off by the Court holding GE to the promise it made in Section 5.4, reforming the

plan to conform to that promise, and granting the corresponding equitable relief of a surcharge to

increase the retiree reimbursement account to $1600 for each participant. See, Jansen v.

Greyhound Corp., 692 F. Supp. 1022, 1027 (N.D. Iowa 1986)(certifying suit to protect retirees

Case 2:14-cv-01358-LA Filed 07/18/16 Page 6 of 9 Document 88

from change in benefits despite differences in each retiree's personal circumstances). The remedy

sought here leaves the participants in the exchange, but with a subsidy that does not leave GE

unjustly enriched by its fiduciary breach. No class member can possibly be worse off under this

remedy.

The facts is this case related to alleged conflicting interests are unlike those in Retired

Chicago Police Ass'n. That convoluted case had its genesis in a prior settlement, which had as its

primary term the agreement of all parties to a municipal labor agreement to seek relief in the

form of legislation. One of the parties to that agreement later sued to change the deal. There

was a concern, in that collective bargaining context, that some class members had benefitted

from the settlement while some had been harmed. But here, as shown in the summary judgment

briefing, everyone in the class has been harmed, and the remedy of increasing the RRA to $1600

a year benefits each member equally. It also avoids or at least mitigates a massive shift of risk to

the class from GE. PSOF 64. It is not a situation of a union weighing benefits of retirees vs.

non-retirees as in Retired Chicago Police Ass'n.

V. Class Membership is ascertainable.

GE knows the scope of the class down to the name. It includes everyone whose

eligibility was cancelled or terminated effective January 1, 2015, as a result of its changes to the

GE Medicare Plans in 2012 and 2014. This class may be large, but it is finite and discoverable.

Furthermore, the equitable nature of reformation and surcharge protect against the peculiarities

that were originally present in Spano.

VI. Wal-Mart shows the class is appropriate.

The plaintiffs have brought a suit for reformation and surcharge, not "legal damages." In

the face of this, defendant GE attempts to work some alchemy on the plaintiffs' claims by

Case 2:14-cv-01358-LA Filed 07/18/16 Page 7 of 9 Document 88

transforming them into a collection of individual claims for damages that must be certified under

Fed. R. Civ. P. 23(b)(3) rather than (b)(1) or (b)(2). But that is not their right, and it is simply

not the remedy the plaintiffs seek. As the Supreme Court stated in Wal-Mart:

The key to the (b)(2) class is the indivisible nature of the injunctive or
declaratory remedy warranted--the notion that the conduct is such that it can be
enjoined or declared unlawful only as to all of the class members or as to none of
them. Nagareda, 84 N. Y. U. L. Rev., at 132. In other words, Rule 23(b)(2)
applies only when a single injunction or declaratory judgment would provide
relief to each member of the class. It does not authorize class certification when
each individual class member would be entitled to a different injunction or
declaratory judgment against the defendant. Similarly, it does not authorize class
certification when each class member would be entitled to an individualized
award of monetary damages.

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2557 (U.S. 2011).

Here, the standards set out in Wal-Mart are satisfied. First, plaintiffs seek as "single

injunction or declaratory judgment." They seek to reform the plan to conform with the

representations made in the SPD and to secure a surcharge.1 Second, no member of the class

would be "entitled to a different injunction or declaratory judgment." The "expects and intends"

language of Section 5.4 either means something, or it does not. It does not "mean something for

some people." The harm to all class members is the same, and so is the relief: reformation and

surcharge. Third, no member of the class "would be entitled to an individualized award of

monetary damages." The suit is brought under an ERISA provision that expressly precludes

monetary damages. It is literally impossible as a matter of law for any member of the class to be

entitled to "monetary damages."

1
The relief sought is detailed in plaintiffs' brief in support of summary judgment (Dkt 80,
pp. 24-25). But to summarize, the Plaintiffs seek to reform the GE Medicare Plans to include
Section 5.4, and then to enforce the plan as reformed. However, because that enforcement is a
classic "Humpty Dumpty," plaintiffs instead seek a surcharge in the form of a uniform subsidy to
the plan participants and beneficiaries to hold GE to the financial commitment it made to the
class in July 2012.
8

Case 2:14-cv-01358-LA Filed 07/18/16 Page 8 of 9 Document 88

 While defendant GE at every turn endeavors to make this a case about individualized

inquiries, it simply isn't, and GE's defense of its broken promise has been, and should continue to

be rejected. For the remedy plaintiffs seek, they need not show detrimental reliance. This is a

case about fiduciary deception and bad faith. This is a case about GE breaking a promise it made

as trustee to the people who built it into one of the greatest businesses in our country.

Conclusion

It would be the odd ERISA suit for breach of fiduciary duty of this type cancelling a

plan benefitting 65,000 persons to proceed on other than a class basis. Mandatory classes are

particularly appropriate in cases like this. See, Specialty Cabinets & Fixtures, Inc. v. American

Equitable Life Ins. Co., 140 F.R.D. 474 (S.D. Ga. 1991); Gruby v. Brady, 838 F. Supp. 820, 828

(S.D.N.Y. 1993). This case should proceed as a class because it attacks the legality of uniform

conduct against a class of 65,000 people and seeks uniform relief in the form of reformation and

surcharge.

Dated: July 18, 2016 Respectfully submitted,

s/ Thomas H. Geoghegan
One of Plaintiffs Attorneys
Thomas H. Geoghegan
Michael P. Persoon
Sean Morales-Doyle
Carol T. Nguyen
Despres, Schwartz & Geoghegan, Ltd.
77 West Washington Street, Suite 711
Chicago, Illinois 60602
(312) 372-2511

Case 2:14-cv-01358-LA Filed 07/18/16 Page 9 of 9 Document 88