Vallone v CNA Financial Essay

Custom Student Mr. Teacher ENG 1001-04 8 January 2017

Vallone v CNA Financial

In Vallone v. CAN Financial, this lawsuit is a purported class action brought on behalf of individuals who elected early retirement from the Continental Insurance Company in 1992. Plaintiffs allege that health care benefits promised to them as part of the early retirement package were terminated in violation of federal and state law. Along with hundreds of other Continental employees nationwide, plaintiffs elected to accept the package from Continental known as the Voluntary Special Retirement Program (VSRP). The VSRP provided early retirees with special health care benefits that differed from the benefits extended to regular retirees under Continental’s Comprehensive Health Care and Dental Plan (the Plan).

One such feature involved the Retiree Health Care Allowance, a subsidy from Continental provided to help offset the cost of retiree health care benefits. Under the Plan, employees had to retire at age 62 or older and have 25 years or more of service to qualify for the maximum retiree health care allowance. An employee retiring before the age 62, or with less than 25 years of service, would receive a reduced health care allowance. Early retirees under the VSRP, however, were to receive the maximum health care allowance, regardless of their age or years of service. Features such as this one enticed plaintiffs and hundreds of others to take early retirement.

In August 1998, CNA informed all retired Continental employees that, as a result of the merger of health care plans, the retiree health care allowance contributions would end on December 31, 1998. Upset by the termination of the health care allowance, some early retirees under the VSRP decided to challenge CNA’s actions. In August and September 1998, plaintiffs Vallone and Heidemann telephoned officials at CNA, arguing that the early retirees were given a lifetime health care allowance and inquiring about whether there would be a review of the termination of benefits. They were informed that CNA’s actions were appropriate and final, and that no reconsideration or other remedy was available.

Dissatisfied with the responses they received from CNA officials, plaintiffs filed this purported class action lawsuit on behalf of the approximately 500 or more persons nationwide who retired under the VSRP. In their complaint, plaintiffs allege that the termination of the retiree health care allowance violated the Employee Retirement Income and Security Act (ERISA) and state common law. On December 28, 2000, the district court granted CNA’s motion for summary judgment on the plaintiffs’ claims of wrongful denial of benefits under ERISA (Count II), breach of ERISA and common law contract (Count IV) and equitable estoppel (Count V). On March 28, 2003, the district court granted CNA’s motion for summary judgment on the plaintiffs’ one remaining count, their breach of fiduciary duty claim (Count III).

The whole of this argument is to show that these individuals “retired” during the term of the agreement. No matter what new companies when merged or not does in the future you at-least have to fulfill and honor what agreement was in place before that time.

Five Star Transportation v. NLRB

In early January of 2003, nearing the expiration of the District’s contract with First Student, the District began organizing the bid process for awarding the 2003-2006 bus services contract.   As a part of the bid specifications distributed to potential vendors, the District required that any new vendor give current drivers “first consideration for employment.”   At the January 16, 2003 “bid opening” meeting, Five Star submitted the lowest bid.

Thereafter, on January 21, Clifford wrote to the District expressing his concern that Five Star’s bid was so low-nearly $300,000 lower than the then-current contract-that it was questionable whether it would be able to maintain the drivers’ wage and benefit levels, and the safe and effective service, then provided by First Student. Because of this a letter was sent out from the school board to Five Star Bus Company, saying that all employees must be paid the union wage and other items with no response. The school board also talked and had them write letters of the former Five Star employees, who were also trying to get back on board with the bus company if they are awarded the contract.

After Five Star was awarded the bus services contract, seventeen former First Student drivers who were members of the Union bargaining unit applied for a position at Five Star. Of these, only six were hired. The company admits that the sole reason the other eleven applicants were not hired or even considered was because they had written letters critical of Five Star. On August 14, the Union filed a charge against Five Star with the NLRB alleging that “by failing to hire former unionized Belchertown bus drivers, the Company had discriminated against them because of their protected and concerted activity.”

A three-member panel of the NLRB reviewed the ALJ’s findings and the parties’ exceptions and supporting briefs.   It divided the eleven drivers into three categories:  (1) those whose letters had failed to raise common employment-related concerns; (2) those whose letters primarily raised such concerns; and (3) those whose letters primarily disparaged Five Star. The NLRB concluded that Five Star had violated only as to the six drivers belonging to the second group, because only those drivers’ actions were protected by the Act. It ordered these drivers reinstated and granted back pay with interest.

This goes back to over a half century of established National Labor Relations Act both with its hiring and firing practices. Five Star was very in the wrong and should have been better about their hiring and what they used against the employees or hopeful employees to choose for hire.

Doing a bit more research on the Five Star bus company and for the contract from 2003-2006, I found that the company had a very bad reputation for poor maintained busses with many break downs. The school was very dissatisfied with the bus company over the three years and did not renew their contract.

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  • University/College: University of Arkansas System

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