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. )
)
General Electric Co., )
)
Defendant. )

REPLY IN SUPPORT OF GENERAL ELECTRIC COMPANYS

MOTION FOR SUMMARY JUDGMENT

Michael L. Banks
Joseph J. Costello
Morgan, Lewis & Bockius, LLP
1701 Market Street
Philadelphia, PA 19103-2921
Telephone: 215.963.5000
Facsimile: 215.963.5001
Email: michael.banks@morganlewis.com
joseph.costello@morganlewis.com

Daniel E. Conley Christopher A. Weals

Quarles and Brady LLP
411 East Wisconsin Avenue
Suite 2400
Milwaukee, Wisconsin, 53202
Telephone: 414.277.5609
Facsimile: 414.271.3552
Email: daniel.conley@quarles.com
Matthew J. Sharbaugh
Morgan, Lewis & Bockius, LLP
1111 Pennsylvania Avenue, N.W.
Washington, DC 20004
Telephone: 202.739.3000
Facsimile: 202.739.3001
Email: christopher.weals@morganlewis.com
matthew.sharbaugh@morganlewis.com

Attorneys for Defendant

General Electric Company

Case 2:14-cv-01358-LA Filed 08/08/16 Page 1 of 20 Document 91

 TABLE OF CONTENTS

Page
INTRODUCTION ......................................................................................................................... 1
ARGUMENT................................................................................................................................. 4
I. PLAINTIFFS WERE NOT HARMED BY THE JULY 2012 SPD .................................. 4
A. Plaintiffs Lack Article III Standing To Pursue Their Remaining Claim ............... 4
B. Plaintiffs Have Not Identified Any Legally Cognizable Harm From The
SPD ........................................................................................................................ 5
II. THE SPD WAS NOT INACCURATE OR MISLEADING ............................................. 9
III. PLAINTIFFS PRESENT NO EVIDENCE OF INTENTIONAL DECEPTION ............ 11
IV. PLAINTIFFS ARE NOT ENTITLED TO A SURCHARGE REMEDY ....................... 14
CONCLUSION............................................................................................................................ 15

-i-

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 TABLE OF AUTHORITIES

Page(s)

CASES

CIGNA Corp. v. Amara,

563 U.S. 421 (2011).............................................................................................................7, 11

Finley v. Marathon Oil Co.,

75 F.3d 1225 (7th Cir. 1996) ...................................................................................................15

Garza v. Wautoma Area Sch. Dist.,

984 F. Supp. 2d 932 (E.D. Wis. 2013).......................................................................................4

Hancock v. Urban Outfitters, Inc.,

No. 14-7047, 2016 WL 3996710 (D.C. Cir. July 26, 2016) ......................................................4

Howell v. Motorola,
633 F.3d 552 (7th Cir. 2011) .............................................................................................11, 12

In re Unisys Corp. Retiree Med. Benefits ERISA Litig.,

957 F. Supp. 628 (E.D. Pa. 1997) ..........................................................................................6, 7

Johnson v. U.S. Office of Pers. Mgmt.,

783 F.3d 655 (7th Cir. 2015) .....................................................................................................7

Kenseth v. Dean Health Plan Inc.,

610 F.3d 452 (7th Cir. 2010) .............................................................................................12, 14

M&G Polymers USA, LLC v. Tackett,

135 S. Ct. 926 (2015).................................................................................................................5

McClain v. Retail Food Emprs Joint Pension Plan,

413 F.3d 582 (7th Cir. 2005) .....................................................................................................7

Palmer v. City of Chicago,

755 F.2d 560 (7th Cir. 1985) .....................................................................................................8

Silva v. Metro. Life Ins. Co.,

762 F.3d 711 (8th Cir. 2014) ...................................................................................................14

Skinner v. Northrop Grumman Ret. Plan B,

673 F.3d 1162 (9th Cir. 2012) .................................................................................................14

Spokeo, Inc. v. Robins,

136 S. Ct. 1540 (2016)...............................................................................................................4

-ii-

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 TABLE OF AUTHORITIES
continued

Page(s)

Sullivan v. CUNA Mut. Ins. Socy,

649 F.3d 553 (7th Cir. 2011) ...................................................................................................12

Tardif v. Gen. Elec. Co.,

No. 98-cv-1374, 2000 WL 33376644 (D. Conn. Sept. 30, 2000)..............................................7

U.S. Bank Nat. Assn v. Long,

No. 13-cv-0257, 2014 WL 2050662 (E.D. Wis. May 19, 2014) ...............................................4

STATUTES

29 U.S.C. 1021(a), ERISA Section 101(a) ...................................................................................5

29 U.S.C. 1022, ERISA Section 102 ............................................................................................4

OTHER AUTHORITIES

29 C.F.R. 2510.3-3(d) ...................................................................................................................5

40 Fed. Reg. 24642 (June 9, 1975) ..................................................................................................5

-iii-

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 INTRODUCTION

Through its Motion for Summary Judgment, GE established by undisputed factual

evidence that Plaintiffs remaining claim for breach of fiduciary duty fails as a matter of law.

GE explained that Plaintiffs cannot prove they suffered any harm caused by the July 2012 SPD,

that the July 2012 SPD was not misleading, that GE did not intend to deceive Plaintiffs, and that

Plaintiffs are not entitled to the extraordinary relief they seek. Nothing in Plaintiffs opposition

brief changes these points. For all of Plaintiffs bluster and vitriol, they do not controvert the key

material facts and legal authorities that warrant the entry of summary judgment in GEs favor.

First, Plaintiffs have failed to show that they were harmed in any way by the July 2012

SPD. With regard to Kauffman, Plaintiffs admit:

Kauffman did not receive any SPD for the GE Medicare Plans or any SPD that
contained the expects and intends language in her capacity as a participant in the GE
Medicare Plans (Dkt. 87, Pl. Resp. to GE SOMF 25);

Kauffman did not read the July 2012 [SPD] or any statement in any SPD after she
retired in January 2011 (id. 118); and

Kauffman did not make any healthcare, financial, or other life decisions between the
time that the SPD was issued in July and the time she was notified of the 2012 Plan
Amendment in September 2012 (id. 121).

Kauffman cannot have been harmed by a document that she did not receive, that she did not

read, that was not directed to her, and upon which she took no actions.

While Rocheleau did receive the July 2012 SPD, Plaintiffs similarly admit:

Rocheleau cannot recall any specific provision [of the July 2012 SPD] he read upon
receipt (id. 136); and

[B]etween the time the SPD was issued in July 2012 and the time he was notified of the
2012 amendment in September 2012, Rocheleau did not make any healthcare, financial,
or other life decisions based on the SPD (id. 140).

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 Unable to identify any harm caused by the July 2012 SPD, Plaintiffs continue to harp on

three legally deficient and factually unsupported themes. One, Plaintiffs claim that the issuance

of an allegedly misleading statement is harm enough. The case law squarely holds to the

contrary. Having thus shown no tangible harm from the SPD, Plaintiffs cannot establish Article

III standing, prove an actionable breach of fiduciary duty, or obtain the equitable relief of

surcharge. In any event, this alleged harmreceipt of supposedly confusing informationwas

already rectified in September 2012, just weeks after the SPD was issued, when GE notified

Plaintiffs that benefits were changing.

Two, Plaintiffs claim they accepted lower wages in exchange for these future benefits.

Not only has the Supreme Court rejected this theory of harm, there is no evidence that Plaintiffs

lost any compensation or that any unestablished loss of compensation was due to an SPD that

was issued years after both Plaintiffs had retired.

Three, Plaintiffs claim they have been harmed by the benefit changes that GE adopted.

As a threshold matter, this harm is legally irrelevant because it was not caused by the alleged

wrongthe issuance of the July 2012 SPD. Instead it was caused by GEs modification of the

Plans, but the Court has already held that Plaintiffs do not allege that [GE] violated any

statutory provision or Plan term when it terminated or modified the Plans. (Dkt. 49 at 3.)

Plaintiffs cannot rely on harm that stems from an action that is not at issue in this case. But, in

any event, Plaintiffs now admit that:

Kauffman is paying less for her coverage and that she would be paying more for GE
Medicare Plans given her current state of health (Pl. Resp. to GE SOMF 124), and that
Kauffman sees the same doctors and can obtain the same prescriptions today under her
new coverage (id. 125).

Rocheleau pays less in premium payments alone for [his] New Plans (id. 145), has
not determined whether his total out-of-pocket costs have increased under the New

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 Plans (id.), and he sees the same doctors, and he has been able to secure all medical
procedures under his new coverage (id. 148).

Thus, neither Plaintiff has been injured by the Plan changes. While Plaintiffs assert that they

somehow are taking on more risk under their new policies, they offer no evidence that the new

policies they personally selected through OneExchange offer less coverage in any respect than

the GE Medicare Plans had offered. In short, there is a complete absence of any proof of harm

caused by the allegedly misleading SPD issued in July 2012 or by the actual Plan changes.1

Second, Plaintiffs fail to muster any evidence that Section 5.4 of the SPD was

misleading, let alone intentionally misleading. As explained in GEs prior briefing, the SPD

could not possibly have been misleading to Kauffman, because it did not apply to her, it was not

sent to her, she did not read it, and the SPD that she did receive in July 2012 for her pre-65

benefits did not contain the expects and intends language. As to Rocheleau, the SPD was

accurate at the time it was issued. In July 2012, when the SPD was sent, GE indisputably

planned to continue the GE Medicare Plans for Rocheleau and other post-65 retirees who

received the SPD. Moreover, the SPD highlights in multiple provisions that the GE Medicare

Plans were subject to termination or amendment at any time and for any reason. But even if the

language could be construed as misleading in some way, the undisputed facts make it clear that

GE certainly did not intend to deceive Plaintiffs or anyone else with the language of Section 5.4.

Absent deceptive intent, Plaintiffs cannot prevail on their misrepresentation-based claim.

Finally, Plaintiffs have expressly abandoned their request for reformation, and their

failure to prove any harm resulting from the July 2012 SPD is fatal to their claim for an equitable

1
Plaintiffs dire predictions at the outset of this casethat retirees would end up in inferior plans with
less coverage, will have significantly higher costs, or would be forced to forego some types of
medical treatmenthave proven to be incorrect. (Dkt. 27 at 1.) Not only are Plaintiffs costs lower, but
uncontroverted data from OneExchange shows that 70% of retirees are paying lower premiums (Dkt. 83,
GE Resp. to Pl. SOMF 64), and Professor Bakers unrefuted analysis demonstrates that 75% of retirees
are likely experiencing lower total out-of-pocket costs (id.).

Case 2:14-cv-01358-LA Filed 08/08/16 Page 7 of 20 Document 91

surcharge. Plaintiffs try to salvage their position with a new-found theory of unjust

enrichment, by which they propose a surcharge based not on any proven harm to them, but on

GEs alleged cost savings from the Plan changes. But Plaintiffs are not entitled to a remedy for

GEs lawful, non-fiduciary decision to amend the Plans, and they offer no evidence that GE was

unjustly enriched in any way by the allegedly misleading statements in the July 2012 SPD.

For these reasons and those discussed in prior briefs, the Court should grant GEs motion

and enter judgment in favor of GE on Plaintiffs remaining claim.

ARGUMENT

I. PLAINTIFFS WERE NOT HARMED BY THE JULY 2012 SPD

GE has already explained why Plaintiffs failure to prove harm caused by the July 2012

SPD compels the dismissal of their remaining claim. (Dkt. 71, GE MSJ Br. I.C, I.D; Dkt. 82,

GE Oppn I.) Plaintiffs recognize that they must prove harm to prevail, but they doggedly try

to sidestep the need to prove a tangible harm resulting from the only actionable claim in this

casean alleged breach of fiduciary duty resulting from the allegedly misleading statements in

the July 2012 SPD. None of Plaintiffs arguments has merit.

A. Plaintiffs Lack Article III Standing To Pursue Their Remaining Claim

Like the plaintiff in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), Plaintiffs base their

entire claim on a procedural violation of a statute ERISA Section 102that is divorced from

any concrete harm. (GE MSJ Br. I.D.1.)2 Plaintiffs ignore Spokeo and Article III standing,

and the Court should therefore deem the issue conceded in GEs favor. See, e.g., Garza v.

Wautoma Area Sch. Dist., 984 F. Supp. 2d 932, 940 (E.D. Wis. 2013); cf. U.S. Bank Nat. Assn v.

2
The D.C. Circuit recently applied Spokeo to conclude that two litigants lacked a cognizable injury-in-
fact for Article III purposes because, although a retailer had allegedly asked them for a zip code in
violation of a D.C. statute, the plaintiffs could not show any concrete consequences flowing from that
bare procedural violation. Hancock v. Urban Outfitters, Inc., No. 14-7047, 2016 WL 3996710, at *3
(D.C. Cir. July 26, 2016).

Case 2:14-cv-01358-LA Filed 08/08/16 Page 8 of 20 Document 91

Long, No. 13-cv-0257, 2014 WL 2050662, at *5 (E.D. Wis. May 19, 2014) (finding that party

waived argument by failing to assert it in opposition to summary judgment) (collecting cases).3

B. Plaintiffs Have Not Identified Any Legally Cognizable Harm From The SPD

Because Plaintiffs assert a claim for breach of fiduciary duty premised on allegedly

misleading statements in the July 2012 SPD, they must identify harm stemming from those

statements, but they cannot do so. Indeed, Plaintiffs admit that they made no financial,

healthcare or life decisions based on the July 2012 SPD, that Kauffman did not even receive the

SPD, and that Rocheleau does not even recall reading the language of which he now complains.

Plaintiffs strained theories of harm simply do not hold water, legally or factually.

Plaintiffs lost compensation argument fails for three reasons. First, retiree health care

benefits are not a form of deferred compensation. M&G Polymers USA, LLC v. Tackett, 135 S.

Ct. 926, 936 (2015). Second, Plaintiffs certainly did not lose compensation as a result of the

July 2012 SPD. Both were long retired when the SPD was issued.4 Third, there is no evidence

Plaintiffs worked for lower wages based on an expectation of retiree medical benefits or that GE

3
Kauffman also lacks statutory standing under ERISA. (See GE MSJ Br. I.D.2.) Plaintiffs argument
that Kauffman was a Plan participant in July 2012 due to her future eligibility for benefits misses the
point. First, Kauffman was not a participant at the time suit was filed as required for standing under
ERISA. By then, Plaintiffs admit, she was no longer eligible for future benefits. (See Pl. Resp. to GE
SOMF 51). Moreover, she lost her eligibility due to GEs lawful Plan amendment in September 2012,
not the alleged misrepresentations or breaches of duty by fiduciaries (Dkt. 86, Pl. Oppn 19-20), and
thus her lack of standing cannot be attributed to GEs alleged breach. Second, even in July 2012, GE did
not have the duty to issue an accurate SPD to all participants, but only a participant covered under the
plan, see 29 U.S.C. 1021(a). Plaintiffs cite to 29 C.F.R. 2510.3-3(d), but that provision confirms that
a participant is covered under the plan only when she becomes eligible to actually receive plan benefits
subject to the contingency of a medical event triggering receipt of such benefits. See 40 Fed. Reg. 24642,
24649 (June 9, 1975) (in the case of a plan providing hospital care, an individual becomes a
participant covered under the plan on the date on which the individual becomes eligible to receive
such care, regardless of whether he or she has a need for it on that date.). For Kauffman, that was
September 2015 when she turned 65, three years after the July 2012 SPD was issued. Thus, GE did not
owe Kauffman an SPD for the post-65 Plans nor a fiduciary duty with regard to that SPD.
4
Plaintiffs also could not have been relying on SPDs for the GE Medicare Plans issued during their years
of employment because those SPDs were not issued to employees. Indeed, the suggestion that GE
intended Section 5.4 as an inducement for employees makes no sense. (See Pl. Oppn 15.)

Case 2:14-cv-01358-LA Filed 08/08/16 Page 9 of 20 Document 91

would have paid higher wages if it had not provided those benefits. Their depositions and

declarations are silent on these issues.

Plaintiffs argument that they suffered a loss of honest fiduciary oversight is equally

unavailing. Controlling case law establishes that a misstatement in an SPD alone, without

evidence of a resulting concrete injury, is insufficient to demonstrate actual harm under ERISA.

(GE Oppn I.B; see also Section I.A, supra.) Nor can injury simply be presumed. (Pl. Oppn

16.) Plaintiffs cite no case support for this extraordinary assertion, and the case authorities

requiring them to prove harm as an element of their claim are directly to the contrary.

Finally, Plaintiffs spend pages asserting alleged injury from the cancellation of the GE

Plans. (Pl. Oppn 11-15.) But harm resulting from GEs lawful Plan changes is legally

irrelevant to Plaintiffs breach of fiduciary duty claim. [T]he loss of benefits cannot be the

resulting harm of the breach of fiduciary duty because the [alleged] misrepresentations neither

caused nor resulted in the loss of the benefits. In re Unisys Corp. Retiree Med. Benefits ERISA

Litig., 957 F. Supp. 628, 639 (E.D. Pa. 1997), affd in relevant part and revd in part on other

grounds, 242 F.3d 497 (3d Cir. 2001). Unisys is directly on point, and Plaintiffs do not even

attempt to address it.

Plaintiffs make a half-hearted attempt in their response to GEs statement of factsnot

their opposition briefto argue that the harm inflicted by the cancellation of the plan and the

harm inflicted by the misleading statements are inextricably intertwined. (Dkt. 87, 119,

141.) Putting aside that Plaintiffs response is argumentative in violation of the Courts Local

Rules,5 they do not offer any legal support for this position, because there is none. To the

contrary, as the Seventh Circuit recently confirmed, an alleged injury traceable to one kind of

5
See Committee Comment to Civil L.R. 56.

Case 2:14-cv-01358-LA Filed 08/08/16 Page 10 of 20 Document 91

conduct is distinct from injury stemming from other, even related, conduct. Johnson v. U.S.

Office of Pers. Mgmt., 783 F.3d 655, 660 (7th Cir. 2015). Because Plaintiffs claim springs from

an alleged misstatement in the July 2012 SPD, they must demonstrate harm flowing from that

act, and not from GEs lawful modification of its benefit plans. See Unisys, 957 F. Supp. at 639;

Tardif v. Gen. Elec. Co., No. 98-cv-1374, 2000 WL 33376644, at *9 (D. Conn. Sept. 30, 2000)

(rejecting ERISA fiduciary breach claim based on misrepresentation because the breach itself

could not have caused the loss of benefits). Moreover, Plaintiffs inextricably intertwined

theory is inconsistent with black-letter law requiring courts to distinguish between an employers

actions as the plans sponsor and the plans administrator. CIGNA Corp. v. Amara, 563 U.S.

421, 436 (2011).

But even if harm from GEs plan changes were legally relevant, the undisputed facts

overwhelmingly confirm that Plaintiffs have not suffered any such harm. (GE MSJ Br. I.C.2;

GE Oppn I.D.) Plaintiffs strain to construct a harm argument for Kauffman by isolating a

general statement in Professor Bakers report that retirees would have been harmed if GE had

stopped providing health care coverage for retirees altogether. (Pl. Oppn at 12.) Professor

Baker never said that Kauffman was harmed by the plan changes, and Kauffmans own

admissions indisputably establish that she now pays less for coverage while seeing the same

doctors and getting the same prescriptions. (Pl. Resp. to GE SOMF 124-125, 127.)6

Plaintiffs also admit that Rocheleau is paying less, while seeing the same doctors and

getting his same prescriptions. (Id. 144-45, 146, 148.) Rocheleaus principal complaint of

harm focuses on GEs cessation of the temporary IRMAA reimbursement, but that program was

6
Plaintiffs broader arguments about harm to other putative class members are irrelevant at this juncture
because no class has been certified. See McClain v. Retail Food Emprs Joint Pension Plan, 413 F.3d
582, 586 (7th Cir. 2005). Regardless, the evidence plainly establishes that the great majority of retirees
are saving money under the new program. (See GE Oppn 6-7; Dkt. 83, GE Resp. Pl. SOMF 64.)

Case 2:14-cv-01358-LA Filed 08/08/16 Page 11 of 20 Document 91

never part of the Plans and was not referenced in the July 2012 SPD. (GE MSJ Br. 23 n.8; GE

Oppn 14 n.8; Pl. Resp. to GE SOMF 56.)7 Rocheleau also suggests he was injured by the

cost-sharing increase announced in September 2012 for retired GE executives, but in the very

next sentence concedes that this increase never went into effect. (Pl. Oppn 12).

Finally, Plaintiffs essentially concede they have suffered no harmeven from the

benefits changesby arguing that the relevant point is that Kauffman and Rocheleau are at

greater risk to suffer harm in the future. (Pl. Oppn 15.) Such speculation of potential future

harm does not remotely satisfy Plaintiffs burden. See, e.g., Palmer v. City of Chicago, 755 F.2d

560, 571 (7th Cir. 1985) ([A] plaintiffs standing must be premised upon more than hypothetical

speculation and conjecture that harm will occur in the future.). Moreover, Plaintiffs point to no

differences in coverage between the policies they personally selected through One Exchange and

the GE Medicare Plans that even potentially could place them at greater risk in the future.8

Indeed, Plaintiffs go so far as to assert that, because sensible people pay [healthcare] premiums

to protect against [a] highly unlikely worst case, . Kauffman is harmed even though she now

has a zero-premium plan and has not yet experienced the type of health event that would make

the GE Medicare Plans more cost-effective. (Pl. Oppn 13-14.) Yet they ignore the fact that a

7
Plaintiffs try to argue that the initial creation of IRMAA was a Plan amendment. (Pl. Resp. to GE
SOMF 55-56.) Not only was this claim never pled, but Plaintiffs argument is based on a tortured
misreading of the 2011 and 2012 letters that GE sent affected participants. The 2011 letter (Dkt. 73-6)
does not reflect or refer to a Plan amendment, and it is not a Summary of Material Modification as
Plaintiffs insinuate. Nor did the letter promise participants that their costs would remain the same
going forward. It simply referred back to GEs prior statement that drug costs would remain the same
when GE switched to a Medicare Part D drug plan. And while the 2012 letter (Dkt. 73-8) announced GEs
cessation of the IRMAA reimbursement along with the 2012 Amendments, that does not make the
IRMAA reimbursement part of the Plansit was not.
8
Plaintiffs suggest they have greater future risk because they might fall in the 22-25% group that Towers
Watson and Professor Baker note may have higher costs in a given year, but they admit that this risk is
unknowable. (Pl. Oppn 13.) They also overlook the fact that in many other years, like 2015, they will
fall into the 75% group that achieves lower costs, likely resulting in lower overall costs in the long run.
Indeed, these same analyses show that under the old GE Medicare Plans, 75-78% of retirees were likely
to pay more in any given year than they will under the new program.

Case 2:14-cv-01358-LA Filed 08/08/16 Page 12 of 20 Document 91

sensible person like Kauffman chose a zero premium plan over more expensive options, and they

are unable to identify any future health event that might make the GE Medicare Plans more

cost effective for her.

In short, Plaintiffs do not and cannot offer any admissible evidence to prove they suffered

actual harm caused by the July 2012 SPD. Accordingly, their claim fails as a matter of law.

II. THE SPD WAS NOT INACCURATE OR MISLEADING

GE explained in its prior briefs why the July 2012 SPD was accurate and reasonably

apprised eligible post-65 retirees of their rights under the Plans. (GE MSJ Br. I.A; GE Oppn

II.) The SPD plainly was not inaccurate or misleading as to Kauffman because it: was not

directed to her; expressly stated that it did not apply to her; did not purport to describe her pre-65

medical benefits; and was not received or read by her. Significantly, the SPD that she did

receive did not contain the expects and intends language at all. Plaintiffs now admit all of

these facts. (Pl. Resp. to GE SOMF 13-15, 22-25).

As to Rocheleau, the July 2012 SPD accurately reflected GEs intention in July 2012 to

continue the GE Medicare Plans for its post-65 retirees, which it did until the September 2014

Amendment, and the SPD reasonably apprised Rocheleau and other recipients in multiple places

that GE reserved the right to amend or terminate the Plans at any time for any reason. While

Plaintiffs try to spin out a different story in their briefs, their factual response makes several key

admissions:

Contrary to Plaintiffs argument that it is reasonable to infer that the Board gave the
go-ahead on these changes in February [2012], (Pl. Oppn 2), Plaintiffs factual response
admits that that GE did not decide to finally adopt any of those changes to the GE
Medicare Plans at [the February] meeting and that GEs evaluation continued through
September 2012, after the July SPD had issued. (Pl. Resp. to GE SOMF 45-50).
Moreover, Plaintiffs do not and cannot contest that the February 2012 presentation
expressly identifies the discussion as simply actions under consideration that the GE
benefits team was evaluating, (Dkt. 73-1, Anderson Dec., Ex. 1), and they admit GEs
evaluation remained ongoing after February (Pl. Resp. to GE SOMF 46).
9

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 While Plaintiffs opposition implies that GE had a fixed intention to amend the Plans in
the June/July 2012 timeframe (Pl. Oppn 2), Plaintiffs factual response admits that (a)
only the full GE Board of Directors can amend the Plans, (b) [t]he minutes of the June
7, 2012 MDCC meeting reflect that the proposals under consideration were simply
preliminary recommendations and that GE would continue to develop and finalize its
design proposal and recommended actions for review with the Committee and the Board
later this year; (c) [b]etween June and September 2012, [GE] continued to refine its
understanding of the market and the impacts of potential benefit changes on GE and its
employees and retirees alike, and (d) GE ultimately finalized a proposal that was
submitted to the GE Board of Directors on September 7, 2012. (Pl. Resp. to GE SOMF
44, 47-49)

Contrary to Plaintiffs prior contention that GE intended to terminate the Plans at the time
the SPD was issued, Plaintiffs factual response further admits that (a) by June 2012,
termination of the Plans for post-65 retirees was no longer on the table, and instead the
proposal being evaluated contemplated a continuation of the Plans for post-65 retirees;
(b) GE in fact continued the Plans when it adopted the September 2012 amendment; and
(c) GE only revisited the concept of moving to a defined contribution plan in September
2013 when IBM announced that it had done so for its retirees (Pl. Resp. to GE SOMF
46-50, 65-66; Dkt. 81, Pl. SOMF 26).

In short, the uncontroverted record establishes that the GE Board of Directors had not reached

any decisions that would suggest it had a contrary intention in July 2012 to that which was

expressed in the SPD, and that GE certainly had no intention at that time to discontinue the GE

Medicare Plans.

Furthermore, both Plaintiffs admitted in their depositions that they understood GE could

change the GE Medicare Plans for any reason, (Dkt. 72, GE SOMF 115-16, 131), and

Plaintiffs opposition papers admit that both Plaintiffs were intimately familiar with past

changes to GEs retiree healthcare plans, including changes to the eligibility of future

participants (Pl. Resp. to GE SOMF 29-33, 34-35). Simply put, Plaintiffs knew that GEs

retiree medical benefits could change at any time for any reason.

In response, Plaintiffs invoke the doctrine of ejusdem generis and try to impute a

contractual best efforts clause into Section 5.4. GE previously addressed the ejusdem generis

10

Case 2:14-cv-01358-LA Filed 08/08/16 Page 14 of 20 Document 91

doctrine, and will not repeat those arguments here. (See GE Oppn 20-22.) Plaintiffs claim that

Section 5.4 constitutes a contractual commitment to use its best efforts to keep the Plans in

place requires no response because that claim was already dismissed by the Court. See Dkt. 49

at 2-3; see also Amara, 563 U.S. at 437 (rejecting contention that SPDs are legally binding).9

III. PLAINTIFFS PRESENT NO EVIDENCE OF INTENTIONAL DECEPTION

Even if the SPD could be construed as misleading, Plaintiffs still cannot prove that it was

intentionally misleading, as required by longstanding Seventh Circuit precedent to sustain a

claim for breach of fiduciary duty. Howell v. Motorola, 633 F.3d 552, 571 (7th Cir. 2011)

(affirming summary judgment on Section 404(a) claim because plaintiffs could not identify an

intentionally misleading statement). While Plaintiffs assert that GE did act with deceptive

intent (Pl. Oppn 1), they offer no supporting evidence and the facts are plainly to the contrary

as GE outlined in its opening papers. In fact, Plaintiffs admit every fact in GEs statement of

material facts describing the good faith preparation of the July 2012 SPD by GEs SPD Update

Team, which plainly contravenes any suggestion that GE was trying to mislead participants.

Faced with these insurmountable factual obstacles, Plaintiffs basically acknowledge they

cannot prove deceptive intent, and instead hammer away on the theory that GE acted with

contemptuous indifference to the interests of retirees. (Pl. Oppn 1.) GE is unaware of any

authority suggesting that indifference is an adequate substitute for intent. The Seventh

Circuit requires proof of intent in a fiduciary misrepresentation case, and Plaintiffs

inflammatory and unsupported accusations cannot dilute the controlling standard.

9
Contrary to Plaintiffs argument that the reassurances in Section 5.4 had been illusory all along (Pl.
Oppn at 3), Plaintiffs now admit that GE had issued identically worded SPDs since 1992, that GE had
continued the Plans as expressed for more than 25 years, and that GE only began to evaluate the issues in
dispute in late 2011 or early 2012. (Pl. Resp. to GE SOMF 18, 38, 82; Pl. SOMF 3, 12)

11

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 But even if the Court were inclined to consider a new and unrecognized legal standard,

Plaintiffs argument falls short. Relying on Kenseth v. Dean Health Plan Inc., 610 F.3d 452 (7th

Cir. 2010), Plaintiffs argue that GE breached its duty of care and failed to exercise appropriate

oversight because certain GE executives did not specifically consider or discuss Section 5.4 of

the SPD when they were reviewing potential plan design changes in 2012, and allegedly were

interested only in saving GE money.10 But studying, evaluating, and recommending potential

plan changes is plan sponsor activity, not plan administrator activity. As Judge Easterbrook has

explained, [t]he fiduciary duties created by ERISA are limited to the administration of a plan.

When deciding what benefits to include in a plan, an employer is free to prefer its own interest

(and that of its investors) over the interests of employees and retirees. Sullivan v. CUNA Mut.

Ins. Socy, 649 F.3d 553, 556 (7th Cir. 2011). Whether Mr. Lynch or Ms. Proestakes (or even

the GE Board) considered or discussed Section 5.4 in connection with the plan changes, or were

focused on saving GE money, is irrelevant to the question of whether GE breached its fiduciary

duty of care when it communicated with participants via the July 2012 SPD. Howell, 633 F.3d at

562 (reiterating that courts must be careful to respect the distinction between the capacity of

fiduciary or plan administrator, on the one hand, and employer or plan author on the other).

As for the issuance of the July 2012 SPD, Steve Zarelliwho supervised the SPD

Update Team in 2012, but was never deposed by Plaintiffssubmitted an uncontested

declaration outlining the good faith process and considerations undertaken by him and his team

in preparing the SPD. Plaintiffs have accused GE of trying to pin all the blame on Mr. Zarelli

(Pl. Oppn 7), but nothing could be further from the truth. GE never suggests that Mr. Zarelli did
10
GE has not argued that Kenseth was wrongly decided. (Pl. Oppn 6.) GEs point simply is that
Kenseth turned on evidence of gross negligence and detrimental reliance that bears no resemblance to the
undisputed facts here, and that Kenseth did not overrule the Seventh Circuits long line of precedent
requiring intentional misstatements, as confirmed by the courts subsequent discussion in Howell. (See
GE MSJ Br. 18-19; GE Oppn 25-27.)

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anything wrong in updating and issuing the July 2012 SPD. Instead, Mr. Zarellis undisputed

account of events is offered to show that he and his team in Schenectady took reasonable steps to

ensure the accuracy of the July 2012 SPD, including considering whether to modify its language

when Mr. Zarelli learned after the SPD had been finalized and sent to the printer that potential

benefits changes were under discussion. (See GE MSJ Br. I.B; GE Oppn III.)

It is Plaintiffs who attempt to blame Mr. Zarelli, and they do so by severely distorting his

account and the undisputed facts. They assert that in July 2012at the same time he is sending

the printer a new SPD with the Section 5.4 assurances[Mr. Zarelli] is literally drafting the

letters telling the same participants that the benefits are gone. (Pl. Oppn 7.) This is

blatantly untrue on at least two levels. First, it is undisputed that the July 2012 SPD was

finalized and sent to the printer by June 25, 2012 (Pl. Resp. to GE SOMF 97-98), and that Mr.

Zarelli did not become aware of the possibility that the Board would be considering benefits

changes until weeks later, in mid-July (id. 104). So it is demonstrably false to say that at the

same time he [was] working on both. (Pl. Oppn 7.) Second, the July 2012 SPD was not sent to

the same participants as those who, as Plaintiffs put it, were later notified that the benefits are

gone. (Id.) The July 2012 SPD was only sent to post-65 retirees like Rocheleau, who would

continue to receive benefits under the Plans after the 2012 Amendment. (Pl. Resp. to GE SOMF

10.) It was not sent to individuals, like Kauffman and other pre-65 retirees, who were informed

in September 2012 that their eligibility for the GE Medicare Plans had been eliminated. (Id.

13, 19-22.) In other words, the notion that Mr. Zarelli and his team were simultaneously creating

contradictory communications is completely belied by the undisputed record. These facts

certainly do not suggest any intent to mislead anyone. In fact, Plaintiffs admit the precise

oppositethat Mr. Zarelli had no such intent. (Id. 109.)

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 Thus, even if Plaintiffs could show that the July 2012 SPD was misleading to the average

participant (and they cannot), they still cannot prove intentional deception on the part of GE.

IV. PLAINTIFFS ARE NOT ENTITLED TO A SURCHARGE REMEDY

Plaintiffs have abandoned their request for reformation and now seek only a remedy of

surcharge. (Pl. Oppn at 20.) Plaintiffs do not dispute that surcharge requires a showing of harm

and causation flowing from the alleged breach of fiduciary duty, and they trot out the same

theories of harm addressed above. But for the reasons already discussed, Plaintiffs theories of

harm are legally and factually unsupported, and cannot sustain a remedy of surcharge.

Recognizing this fatal deficiency, Plaintiffs pivot to a new argument, asserting that

surcharge is warranted as a remedy for GEs alleged unjust enrichment, which Plaintiffs

purport to compute on the basis of GEs alleged cost savings resulting from the disputed Plan

changes. (Pl. Oppn 22.) But Plaintiffs again conflate plan sponsor and plan administrator

conduct. As discussed, Plaintiffs are not entitled to a remedy for GEs lawful, non-fiduciary act

in amending the Plans. See Skinner v. Northrop Grumman Ret. Plan B, 673 F.3d 1162, 1167

(9th Cir. 2012) (rejecting surcharge based on lack of evidence that the committee gained a

benefit by failing to ensure that participants received an accurate SPD); see also Kenseth, 722

F.3d at 881-82 (discussing possible recovery of profits plan administrators affiliates stood to

gain from [plan administrators] breach of fiduciary duty) (emphasis added); Silva v. Metro.

Life Ins. Co., 762 F.3d 711, 722 (8th Cir. 2014) (To obtain relief under the surcharge theory, a

plan participant is required to show harm resulting from the plan administrators breach of a

fiduciary duty.) (emphasis added). Plaintiffs put forward no argument, much less evidence, that

GE was unjustly enriched as a result of the July 2012 SPD.11

11
Plaintiffs are also wrong in contending that GE was unjustly enriched by the plan amendments. As
Professor Baker explains, cost savings to GE and to participants are not mutually exclusive: The switch
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 Additionally, this new-found claim for unjust enrichment was never pled in Plaintiffs

Complaint or Amended Complaint, nor was it revealed in Plaintiffs Rule 26(a) disclosures or

responses to GEs interrogatory requesting that Plaintiffs describe in detail the underlying facts

for any and all remedies they seek.12 Under Rule 37(c), the Court should bar Plaintiffs from

using unjust enrichment or GEs cost savings as a basis for the relief they seek. Exclusion under

Rule 37(c)(1) is automatic and mandatory unless the party to be sanctioned can show that its

violation of Rule 26(a) was either justified or harmless. Finley v. Marathon Oil Co., 75 F.3d

1225, 1230 (7th Cir. 1996). Plaintiffs offer no justification for their failure to disclose, and GE

will be significantly harmed by having to counter a different theory of relief after discovery is

closed and expert reports have been exchanged. Plaintiffs belated attempt to concoct a new

approach to computing a surcharge remedy should be rejected.

CONCLUSION

For the foregoing reasons, GE respectfully requests that the Court grant its motion for

summary judgment and dismiss the remaining count of Plaintiffs complaint.

to OneExchange gave most GE retirees the opportunity to pay less for coverage suitable to their needs
than they had been paying previously . [and] also enabled GE to better manage its health care cost
obligations. (Dkt. 77-1, Baker Rep. 19.)
12
See Fed. R. Civ. P. 26(a)(1)(A)(iii) (requiring plaintiffs to disclose a computation of each category of
damages); see also Dkts. 1, Compl.; Dkt. 58, Am. Compl.; Dkt. 66, Pls. Class Cert. Br.; Dkt. 75-6,
Rocheleaus Resps. to GEs Interrogatories, No. 10; Dkt. 81-33, Ex. HH, Friedman Rep. Plaintiffs Rule
26 disclosures and updated disclosures are submitted herewith as attachments to the Declaration of
Christopher A. Weals.

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 DATED: August 8, 2016 Respectfully submitted,

/s/ Michael L. Banks

Michael L. Banks
Joseph J. Costello
Morgan, Lewis & Bockius, LLP
1701 Market St.
Philadelphia, PA 19103-2921
Telephone: 215.963.5000
Facsimile: 215.963.5001
Email: mbanks@morganlewis.com
jcostello@morganlewis.com

Daniel E. Conley Christopher A. Weals

Quarles and Brady LLP
411 East Wisconsin Avenue
Suite 2400
Milwaukee, Wisconsin, 53202
Telephone: 414.277.5609
Facsimile: 414.271.3552
Email: daniel.conley@quarles.com
Matthew J. Sharbaugh
Morgan, Lewis & Bockius, LLP
1111 Pennsylvania Ave., N.W.
Washington, DC 20004
Telephone: 202.739.3000
Facsimile: 202.739.3001
Email: cweals@morganlewis.com
msharbaugh@morganlewis.com

Attorneys for Defendant

General Electric Company

DB1/ 88550249

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