                                                                                                                           Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-28-1995

In Re: Unisys Corp
Precedential or Non-Precedential:

Docket 94-1800




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                          ___________

                             No. 94-1800
                             ___________

          IN RE: UNISYS CORP. RETIREE
          MEDICAL BENEFIT "ERISA" LITIGATION

               *Gerald E. Pickering, Fred Tonnies,
               William Leonhardt, Evelyn Schmidt,
               Dudley Keyes, David Kahl, Paul Wright,
               Robert Wilt, Clay Bernichon, Edward Valle,
               Robert B. Welsh, Solveig Tschann, Bernard
               J. Jansen, Donald I. Klippenstein,
               Frederick W. Hoppe, Ludson F. Worsham,
               Edwin Marjala and Warren Hall, individually
               and on behalf of all members of the Sperry
               Class previously certified by the Court whose
               claims have not been settled,
                                     Appellants

               *(Pursuant to F.R.A.P. 12(a))
                           ___________

          Appeal from the United States District Court
            for the Eastern District of Pennsylvania
                    (D.C. Civil No. MDL 969)
                          ___________

                             Argued
                           May 4, 1995
     Before:   MANSMANN, SCIRICA and McKEE, Circuit Judges.

                    (Filed      June 28, l995)
                             ___________

Alan M. Sandals, Esquire
Berger & Montague
1622 Locust Street
Philadelphia, PA 19103

Joseph R. Roda, Esquire (Argued)
36 East King Street
301 Cipher Building
Lancaster, PA 17602

J. Dennis Faucher, Esquire
Miller, Faucher, Chertow,
Cafferty & Wexler
One Penn Square West
Suite 1801
Philadelphia, PA 19102

Seymour J. Mansfield, Esquire
Mansfield & Tanick
900 Second Avenue South
Suite 1560
Minneapolis, MN 55402

Sarah E. Siskind, Esquire
Davis, Miner, Barnhill & Galland
44 East Mifflin Street
Suite 803
Madison, WI 53703

          Counsel for Appellees
               Gerald E. Pickering, Fred Tonnies,
               William Leonhardt, Evelyn Schmidt,
               Dudley Keyes, David Kahl, Paul Wright,
               Robert Wilt, Clay Bernichon, Edward Valle,
               Robert B. Welsh, Solveig Tschann, Ludson F.
               Worsham, Edwin Marjala,       Warren J. Hall,
          individually and on behalf of all members of
               the Sperry Class previously certified by the
               Court whose claims have not been        settled

James F. Roegge, Esquire
Julie L. Levi, Esquire
Meagher & Geer
33 South Sixth Street
4200 Multifoods Tower
Minneapolis, MN 55402

          Counsel for Appellees
               Gerald E. Pickering, Fred Tonnies,
               William Leonhardt, Evelyn Schmidt,
               Dudley Keyes, David Kahl, Paul Wright,
               Robert Wilt, Clay Bernichon, Edward Valle,
               Robert B. Welsh, Solveig Tschann,
               Bernard J. Jansen, Donald I. Klippenstein,
               Frederick W. Hoppe

Joseph J. Costello, Esquire
Francis M. Milone Esquire (Argued)
Morgan, Lewis & Bockius
2000 One Logan Square
Philadelphia, PA 19103
Joseph A. Teklits
UNISYS Corporation
P.O. Box 500
M.S. C2NW 14
Blue Bell, PA 19424


Kevin P. Roddy,   Esq.
Milberg, Weiss,   Bershad, Hynes & Lerach
355 South Grand   Avenue
Suite 4170
Los Angeles, CA   90071

Henry H. Rossbacher, Esq.
Rosbacher & Associates
445 South Figueroa St.,
Union Bank Plaza
24th Floor
Los Angeles, CA 90071

                 Counsel for Appellant
                             ___________

                          OPINION OF THE COURT
                               __________


MANSMANN,   Circuit Judge.

            This class action arises out of the termination of

post-retirement medical benefit plans, sponsored by Unisys for

retirees and disabled former employees of Unisys and its

corporate predecessors, Sperry Corporation and Burroughs

Corporation.    The retirees seek to recover post-retirement

medical benefits under the terms of their welfare benefit plans

and under the Employee Retirement Income Security Act's

("ERISA's") provisions for appropriate equitable relief.
          We are asked to decide in this particular appeal1

whether the district court erred in holding, on this breach of

contract claim, that summary plan descriptions that used the

terms "lifetime" or "for life" to describe the duration of

medical benefits, while at the same time reserving the employer's

right to modify or terminate at "any time" and "for any reason"

the plans under which these benefits are provided, were

unambiguous.   We also address whether the district court erred in

refusing to reinstate the retirees' estoppel claims upon which


1
 .        This appeal concerns some of the claims of the Sperry
regular retirees, and the claims of a sub-group of Sperry early
retirees.

          The appeals docketed at Nos. 94-1801, 94-1875, 94-1912
and 94-2216 concern the claims of the Unisys and Burroughs
retirees, as well as the remaining claims of the Sperry retirees.
In appeal No. 94-1801, the Unisys early retirees have appealed
from an adverse judgment rendered after trial on their claims for
breach of contract, breach of fiduciary duty and estoppel. The
claims of the Burroughs early retirees and many of the claims of
the Sperry early retirees were settled pursuant to a partial
settlement agreement between Unisys and these retirees. In
appeal No. 94-1875, Unisys has appealed from an order of the
district court reinstating the Sperry retirees' claims for breach
of fiduciary duty. In appeal No. 94-1912, the Burroughs and
Unisys regular retirees have appealed from the district court's
grant of summary judgment in favor of Unisys on their breach of
contract and estoppel claims. In appeal No. 94-2166, a sub-group
of Sperry retirees attempted to challenge the partial settlement
between Unisys and the Sperry and Burroughs early retirees which
did not include them.

          On October 3, 1994 we granted the parties' joint motion
to consolidate appeal Nos. 94-1800, 94-1801, 94-1875 and 94-1912
for purposes of filing a single joint appendix and for
disposition. All of these appeals have now been resolved, either
by our decisions in published opinions see Nos. 94-1800 and 94-
1875, or by memorandum opinions rendered in Nos. 94-1801, 94-1912
and 94-2216.
Unisys had earlier been granted summary judgment.    We will affirm

the judgment of the district court.



                                  I.

             In September of 1986, Sperry Corporation and Burroughs

Corporation merged to form Unisys Corporation.     Prior to the

merger, Sperry consisted of a number of business units or

divisions.    Until 1984 each Sperry division maintained its own

medical benefits program, with each described in a separate

summary plan description.    In 1984, in an attempt to streamline

the medical benefits plans and in response to rising medical

costs, Sperry implemented Medflex, a corporate-wide medical

benefits plan that applied to the entire Sperry Corporation.2

Medflex was applied to future retirees only; existing retirees

continued to receive coverage under the pre-Medflex plans which

applied when they retired.

          Following the merger in 1986, Unisys continued the

Medflex plan for active employees and for those who retired after

its implementation but prior to April 2, 1989.    Unisys also

continued all of the pre-Medflex plans for those who retired

prior to Medflex's implementation.3    In 1989, Unisys effected the

2
 .        Medflex applied to all Sperry business units by January
1, 1984, with the exception of one sub-group of the Sperry
Division, which commenced participation in Medflex on January 1,
1985.
3
 .        Following the merger, Unisys maintained all of the
separate medical benefit plans for its retirees -- approximately
75 plans, a situation described by one Unisys executive as a
"royal administrative headache." This abundance of plans was due
primarily to Sperry's corporate structure which consisted of
consolidation of its retiree medical benefit plans when it

created the Unisys Post-Retirement and Extended Disability

Medical Plan to cover all employees who retired after April 1,

1989, most of whom were former Sperry and Burroughs employees.

            On November 3, 1992, Unisys publicly announced that

effective January 1, 1993, it was terminating all existing

medical benefit plans and replacing all of the pre-existing

medical plans with the new Unisys Post-Retirement and Extended

Medical Disability Plan.    Under the new plan, retirees would be

responsible for increasing levels of contributions until January

1, 1995, when they would have to pay the full cost of their

premiums.    Thus, the new plan sharply contrasted with earlier

plans, under the majority of which Unisys paid the entire premium

for an individual's life and provided benefits for the

individual's spouse as well.4
(..continued)
several business units or divisions, with each division having
its own medical plan. Further, the district court found that
even in a single Sperry division, several plans often existed due
to the company's practice of maintaining the plan under which an
individual retired and implementing new plans prospectively only.
4
 .        Unisys' decision to terminate the benefit plans under
which it had provided coverage and to replace those plans with
the new Unisys Post Retirement and Extended Disability Medical
Plan was challenged in nine separate actions which the Judicial
Panel on Multidistrict Litigation transferred to the Eastern
District of Pennsylvania and consolidated for disposition
pursuant to 28 U.S.C. § 1407. On June 9, 1993, after determining
that Unisys "acted on grounds generally applicable to the class,"
the district court certified the case as a class action pursuant
to Fed. R. Civ. P.23(b)(2). The class consists of approximately
21,000 former non-union employees of Sperry, Burroughs and
Unisys. The court certified three distinct classes: Unisys
retirees, Sperry retirees or Burroughs retirees. The claims of
each class were adjudicated separately.
          The appellees in this case are former employees of

Sperry Corporation (and their eligible dependents) who retired

between 1969 and April 1, 1989, from Sperry Corporation or

Unisys, Sperry's successor.   Following Unisys' termination of

their post-retirement medical benefit plans in late 1992, the

retirees sought relief based on three theories:   breach of

contract, equitable estoppel, and breach of fiduciary duty.     The

Sperry retirees argued that Unisys' termination of their

respective medical plans violated ERISA.   They argued first that

Unisys had denied them "vested" benefits in violation of 29

U.S.C. § 1132(a)(1)(B) because the summary plan descriptions

("SPDs") explaining their medical benefits contained the term

"lifetime" benefits.   Regarding their contract claims, the

retirees relied on the explicit lifetime language in the plans,

e.g., "when you retire, your medical benefit will be continued

for the rest of your life", and on statements made by the company

both orally and in writing to the same effect.5
(..continued)
          The retirees asserted two sets of claims: general
claims on behalf of all retirees, and separate claims on behalf
of "early" retirees who retired under various early retirement
incentive programs offered by the company throughout the 1980s.
Many of the claims of the early retirees were settled after
trial, but not the claims of a subgroup of Sperry early retirees
denominated as VRIFs, who are part of this appeal. See also
appeal No. 94-2166.
5
 .        A subgroup of Sperry retirees who retired pursuant to a
voluntary reduction in force asserted a separate contract claim
of their own that the company had induced them to retire earlier
than they would have done by representing that if they retired,
they would preserve the post-retirement coverage in effect under
then current plans. These "VRIF" retirees argued that they
accepted Unisys' "offer" by retiring early, thus forming separate
bilateral contracts.
          The Medflex SPD is illustrative.   A Sperry employee who

retired during the period January 1, 1984 through April 1, 1989

received medical benefits under this plan.   The SPD for Medflex

is set forth in a booklet titled, "Your Company and You."

Included in this plan was the following description of retiree

medical benefit coverage:
          If you're eligible, Medical Plan benefits
          continue without cost after you terminate
          active employment. Benefits also may
          continue on a contributory basis for your
          eligible dependents who are covered when your
          employment terminated. . . . Coverage
          continues for you for life and for your
          dependents while they remain eligible
          provided you don't stop the contributions for
          their coverage. After your death, your
          eligible dependents may continue coverage by
          making the require contributions. Their
          coverage continues until your spouse dies or
          remarries.


(A 2227) (emphasis added).

          The retirees argued alternatively, that even if the

court were to find that "lifetime" is not synonymous with

"vested", the evidence established that Unisys intended that a

reservation of rights clause in the plan, enabling the company to

change the plan at will, only applied to active employees and not

to retirees; thus, the company never intended to reserve its

right to terminate the plans as far as retirees are concerned.

In addition, the retirees contended that Unisys breached its

fiduciary duty by systematically misrepresenting the plans and
should be equitably estopped from exercising any right to

terminate their benefits.6

          Unisys responded that it had indeed reserved the right

to terminate the retirees' medical plans due to the "reservation

of rights clauses" or "RORs" located in other sections of the

plans.   Typical of these clauses is the one set forth in the SPD

describing the Medflex plan.   The Medflex SPD booklet, "Your

Company and You," was distributed to all employees and contained

the following reservation of rights clause:
          Plan Continuation

          The Company expects to continue the Plans,
          but reserves the right to change or end them
          at any time. The Company's decision to
          change or end the Plan may be due to changes
          in federal or state laws governing welfare or
          retirement benefits, the requirements of the
          IRS or ERISA, the provisions of a contract or
          policy involving an insurance company or any
          other reason . . . .


(A 2750) (emphasis added).

           In addition to the provisions set forth in the summary

plan descriptions, information about retiree medical benefits was
also conveyed to the Sperry retirees through various informal

oral and written communications.   As in the summary plan

descriptions, the duration of medical benefits was described as

being "for life" or for the "lifetime" of the retiree and spouse.




6
 .        The Sperry retirees' breach of fiduciary claim is not
implicated in this appeal. It is the subject of the appeal
docketed at 94-1875.
Sperry did not include in these informal communications a

reference to the reservation of rights clause.

           Notwithstanding these communications, Unisys denied

having created vested medical benefits through its use of the

words "lifetime" or "for life", and early in the litigation filed

a motion for summary judgment seeking dismissal of all of the

regular retirees' claims based on the unambiguous reservation of

rights clauses in the plans.    Although the district court granted

Unisys' motion on the retirees' breach of fiduciary duty and

estoppel claims, it denied summary judgment on the retirees'

contract or plan-based claim.   The district court initially found

that the internal inconsistency between the lifetime promises and

the reservations of rights clauses made the plans ambiguous and

thus a trial on the extrinsic evidence was necessary to resolve

the ambiguity.   In re Unisys, 837 F. Supp. 670, 679 (E.D. Pa.

1993).   After trial,7 the district court reversed its position on

both the contract and breach of fiduciary duty claims, entering

judgment against the Sperry regular and VRIF retirees on their

contract claims but reinstating the Sperry retirees' breach of

fiduciary claim.8
7
 .        Although the retirees have also appealed from the
district court's order striking their demand for a jury trial, we
need not address this issue on appeal given our disposition of
the contract ambiguity issue.
8
 .        On October 13, 1993, the district court granted summary
judgment in favor of Unisys on the Sperry retirees' claim that
Unisys had breached its fiduciary duty. In re Unisys, 837 F.
Supp. at 670, 679-80. At trial, the Sperry retirees moved for
reconsideration of their breach of fiduciary duty claim in light
of our decision, rendered during trial, in Bixler v. Central Pa.
Teamsters Health and Welfare Fund, in which we held that a direct
          The district court had jurisdiction pursuant to 28

U.S.C. § 1331 and 29 U.S.C. § 1132(e)(1).     We have jurisdiction

pursuant to 28 U.S.C. § 1291.



                                 II.

                                  A.

          ERISA is a comprehensive statute enacted "to promote

the interests of employees and their beneficiaries in employee

benefit plans," Shaw v. Delta Airlines, Inc., 463 U.S. 85, 90

(1983), and "to protect contractually defined benefits,"

Massachusetts Mutual Life Ins. v. Russell, 473 U.S. 134, 148

(1985).   See also 29 U.S.C. § 1001.   ERISA recognizes two types

of employee benefit plans:     pension plans and welfare plans.

Deibler v. Local Union 23, 973 F.2d 206, 209 (3d Cir. 1992).      In

general, welfare plans provide "medical, surgical or hospital

care or benefits, or benefits in the event of sickness, accident,

disability, death or unemployment . . . ."     29 U.S.C. § 1002(1).

Pension plans provide:    (i) retirement income to employees or

(ii) result in a deferral of income by employees for periods

extending to the termination of covered employment or beyond.       29

U.S.C. § 1002(2)(A).     Both Unisys and the retirees agree that the

retiree medical benefit plans at issue in this case are welfare

benefit plans under 29 U.S.C. § 1002(1).

(..continued)
action for breach of fiduciary duty is available under section
1132(a)(3)(B). 12 F.3d 1292 (3d Cir. 1994). Relying on Bixler,
the district court granted this motion and reinstated the Sperry
retirees' claims for breach of fiduciary duty.
          The implications of this are significant.    Although

ERISA contains elaborate vesting requirements for pension plans,

ERISA does not require automatic vesting of welfare benefit

plans.   Alexander v. Primerica Holdings, Inc., 967 F.2d 90, 95

(3d Cir. 1992); Smith v. Hartford Ins. Co., 6 F.3d at 136 (3d

Cir. 1994).   Congress did not impose vesting requirements on

welfare plans because it determined that "[t]o require the

vesting of those ancillary benefits would seriously complicate

the administration and increase the cost of plans whose primary

function is to provide retirement income."   Hozier v. Midwest

Fasteners, Inc., 908 F.2d 1155, 1160 (3d Cir. 1990) (citing

H.Rep. No. 807, 93rd Congr., 2d Sess. 60, reprinted in 1974 U.S.

Code Cong. & Admin. News 4670, 4726).   In rejecting the automatic

vesting of welfare plans, Congress evidenced its recognition of

the need for flexibility with regard to an employer's right to

change medical plans.   As the Court of Appeals for the Second

Circuit observed:
          Automatic vesting was rejected because the
          costs of such plans are subject to
          fluctuating and unpredictable variables.
          Actuarial decisions concerning fixed
          annuities are based on fairly stable data,
          and vesting is appropriate. In contrast,
          medical insurance must take account of
          inflation, changes in medical practice and
          technology, and increases in the cost of
          treatment independent of inflation. These
          unstable variables prevent accurate
          prediction of future needs and costs.


Moore v. Metropolitan Life Ins. Co., 856 F.2d 488, 492 (2d Cir.

1988).   See also 29 U.S.C. § 1051.
            Nonetheless, in some situations, a welfare plan may

provide a vested benefit.   Alexander, supra, 967 F.2d at 95;

Schoonejongen v. Curtiss-Wright, 18 F.3d 1034, 1042 (3d Cir.

1994), rev'd and remanded on other grounds, ___ U.S. ___, 115 S.

Ct. 1223 (1995).    The plan participant bears the burden of

proving, by a preponderance of the evidence, that the employer

intended the welfare benefits to be vested.    Howe v. Varity

Corp., 896 F.2d 1107 (8th Cir. 1990).

            ERISA's framework ensures that employee benefit plans

be governed by written documents and summary plans descriptions,

which are the statutorily established means of informing

participants and beneficiaries of the terms of their plan and its

benefits.   See, e.g., Hozier v. Midwest Fasteners, Inc., supra;

Confer v. Custom Engineering Co., 952 F.2d 41 (3d Cir. 1991);

Hamilton v. Air Jamaica, Ltd., 945 F.2d 74 (3d Cir. 1991), cert.

denied, 112 S. Ct. 1479 (1992); 29 U.S.C. § 1022(a)(1).

Accordingly, any retiree's right to lifetime medical benefits

under a plan can only be found if it is established by the terms

of the ERISA-governed employee benefit plan.

            A court must examine the plan documents.   Boyer v.
Douglas Components Corp., 986 F.2d 999 (6th Cir. 1993).     Extra-

ERISA commitments, such as the right to receive free lifetime

coverage, must be found in the plan documents and stated in clear

and express language.    Wise v. El Paso Natural Gas, 986 F.2d 929

(5th Cir.), cert. denied, 114 S. Ct. 196 (1993).    See also Alday
v. Container Corp. of America, 906 F.2d 660, 665 (11th Cir. 1990)

("[A]ny retiree's right to lifetime medical benefits at a
particular cost can only be found if it is established under the

terms of the Erisa-governed benefit plan document"), cert.

denied, 498 U.S. 1026 (1991).    The written terms of the plan

documents control and cannot be modified or superseded by the

employer's oral undertakings.    See Hozier v. Midwest Fasteners,

Inc., 908 F.2d at 1163 (citing Musto v. American General Corp.,

861 F.2d 897, 910 (6th Cir. 1988), cert. denied, 490 U.S. 1020

(1989) (the unambiguous written provisions of a plan must

control, and extrinsic evidence may not be introduced to vary the

express terms of a plan)) and Gordon v. Barnes Pumps Inc., 999

F.2d 133, 137 (6th Cir. 1993) (a basic principle of ERISA is that

a plan may not be modified or superseded by oral statements or

other extrinsic evidence).

          To determine whether Sperry intended to confer vested

benefits upon its retirees in this case, we must analyze the

provisions of the retiree medical benefit plans at issue.     Unisys

and the Sperry retirees agree that the Sperry summary plan

descriptions are the controlling documents that we must

interpret.    The threshold issue in this case, whether the Sperry

plans were ambiguous, is a question of law.    Taylor v.
Continental Group, 933 F.2d 1227, 1232 (3d Cir. 1991).     We turn

now to the exact language of the plans in question and apply

these principles of law.



                                  B.

             Although Sperry maintained many different medical

benefit plans for its separate divisions or business groups, all
of these plans conveyed the same message:    that post-retirement

medical benefits would be provided for life.    There were slight

variations in the exact language utilized to convey this message.

For instance, the Sperry Univac plan contained the following

language:
            When you retire . . . the comprehensive
            medical expense benefits then in force for
            you and your eligible dependents under this
            plan will be continued for the rest of your
            life.


SPD for Sperry Univac (A 2232).    Another plan provided: ". . .

coverage continues for you for life and for your dependents while

they remain eligible . . . ."    Sperry Medflex SPD (A 2749).

            Unisys offered the same defense for all Sperry

divisions, namely that this lifetime language was subject to

reservation of rights clauses located elsewhere in the plans.

Although some reservation of rights clauses were more detailed

than others, each clause provided that the company could

terminate the plan "at any time" and "for any . . . reason."     See

Sperry Medflex Plan, A 2750.    Based on these provisions, the
retirees asserted that the retiree medical benefit plans were

ambiguous and that the ambiguity arose not merely from the

reservation of rights clauses themselves, but also from the

inconsistency between the reservation of rights clauses and the

plan's lifetime promises.    According to the retirees, the plans

were ambiguous because they were susceptible to either of two

interpretations:    the retirees' interpretation that the lifetime

language limited the scope of the reservations of rights, or the
company's interpretation that the reservation of rights limited

the lifetime language.    If the court finds "but one reasonable

interpretation, then a fortiori there can be no ambiguity."

Curcio v. John Hancock Life Ins. Co., 33 F.3d 226, 231 (3d Cir.

1994).    However, if the language is susceptible to more than one

reasonable interpretation, then it will be found to be ambiguous.

Id.9
            In Schoonejongen v. Curtiss-Wright, supra, we reviewed

summary plan descriptions which stated in varying forms that

health insurance benefits would terminate "upon death" or when

"you cease to be a member of a class eligible for insurance . . .

[or] upon discontinuance of the group policy."    18 F.2d at 1036-

37.    Some years later, Curtiss-Wright amended the language in its

summary plan description to provide that "[c]overage under this

plan will cease for retirees and their dependents upon the

termination of business operations of the facility from which

they retired."    Id. at 1037.   The affected retirees argued that

this reservation on its face referred only to employees and not

to retirees.     Because the reservation did not unambiguously

reserve the right to terminate retiree benefits, the district
court held a trial to resolve the ambiguity.    18 F.3d at 1041.


9
 .        Although the district court originally agreed, at the
summary judgment stage, that the presence of lifetime language
and the reservation of the right to end the plans at any time
made the plans "internally inconsistent," and therefore,
ambiguous, it subsequently reversed this position in light of our
decision in Curtiss-Wright, 18 F.2d at 1042, which the court
interpreted as suggesting that "there is nothing inconsistent
about having lifetime language and a ROR in the same documents."
Based on the extrinsic evidence, the district court found that

the clause did apply to retirees.   We affirmed the district

court's holding that Curtiss-Wright had reserved the right to

terminate retiree benefits, but held that Curtiss-Wright lacked a

formal amendment procedure in violation of section 402(b)(3) of

ERISA, 29 U.S.C. § 1102(b)(3), and therefore the amendment to the

plan was invalid.   We responded to the retirees' argument that

the plan's description of the duration of benefits as ceasing

"upon death" created vested benefits:
          It seems to us, however that our conclusion
          [that Curtiss-Wright had a reserved right to
          amend] is a complete answer to this argument.
          Even if the plan contained unambiguous
          assurances that all retirees would have
          health insurance benefits for so long as
          Curtiss-Wright maintained a post-retirement
          health insurance program, the general
          reserved right to amend the terms of the plan
          in whole or in part would render the right of
          any retiree or group of retirees terminable
          by the adoption of a legally effective
          amendment.


Curtiss-Wright, 18 F.3d at 1042 (emphasis added).   Although the
Supreme Court reversed our conclusion that a formal amendment

procedure was lacking under section 402(b)(3) of ERISA, the

Court's decision is consistent with our conclusion that Curtiss-

Wright had expressly reserved the right to amend its plan to

effect a termination of benefits under the plan, as well as our

conclusion that "an important and proper purpose of reserving a

general right to amend is to permit the conditioning or cessation

of any participant's benefits, not vested by virtue of the
mandate of ERISA, in ways not originally foreseen in order to

meet unanticipated changes of circumstance."   Id.10

          We agree with the district court that the fact that the

Sperry plans used terms such as "lifetime" or "for life" to

describe the duration of retiree medical benefits, while at the

same time expressly reserving the company's right to terminate

the plans under which those benefits were provided, did not

render the plans "internally inconsistent" and therefore

ambiguous here.11   An employer who promises lifetime medical

benefits, while at the same time reserving the right to amend the

plan under which those benefits were provided, has informed plan

10
 .        In Curtiss-Wright, ___ U.S. ___, 115 S. Ct. 1223
(1995), the issue of enforcing a reservation of rights clause
notwithstanding "lifetime" assurances was not before the Supreme
Court.
11
 .        We do not hold that a reservation of rights will always
prevail over a promise of benefits. Due to the abundance of
ERISA plans and the differing benefits these plans provide, each
case must be considered fact specific and the court must make its
determination of the benefits provided based on the language of
the particular plan it has been called upon to review.

          For instance, in Curtiss-Wright, supra, the district
court required extrinsic evidence in order to determine that the
reservation clause in that case "was a general right to amend any
or all" provisions of the plan. 18 F.3d at 1041, 1042 n.6.
Thus, we held there that the reservation of rights clause
overcame or "trumped" the promise of lifetime benefits.

          Thus, Curtiss-Wright contemplated situations in which a
reservation of rights in the plan documents are ambiguous.
Where, as here, however, the reservation of rights is broad and
unequivocal, it will prevail over a promise of lifetime benefits.
Thus we agree with the district court's conclusion that the
presence of lifetime language and the reservation of rights
clauses here did not necessarily render the Sperry retiree
medical benefit plans ambiguous.
participants of the time period during which they will be

eligible to receive benefits provided the plan continues to

exist.   In this case, the Sperry retirees' eligibility for

benefits was qualified because it was subject to Unisys' reserved

right to terminate the plan under which those benefits were

provided.12

           Other courts have reached the same conclusion,

recognizing that an employer can qualify the provision of

"lifetime" benefits by reserving the right to terminate the plan

under which those benefits are provided.   Thus, in DeGeare v.

Alpha Portland Indus., Inc., 652 F. Supp. 946 (E.D. Mo. 1986),

aff'd, 837 F.2d 812 (8th Cir. 1988), vacated and remanded on

other grounds, 489 U.S. 1049 (1989), the court found that

seemingly inconsistent provisions, such as those permitting

modification of the plan and those indicating that benefits last

for life, must be construed to be harmonious.   The court

specifically found "harmonious and reasonable the interpretation

12
 .        The Sperry retirees argued that "the Curtiss-Wright
panel did not consider the specific issue of whether an
unqualified statement of lifetime benefits can limit the scope of
a ROR." They maintain that the promise of lifetime benefits in
Curtiss-Wright was expressly qualified by the phrase "so long as
CW maintained a post-retirement health insurance program." See
18 F.3d at 1042. Here they suggest that the promise of lifetime
benefits were, in contrast, completely unqualified. See A 2276.
Thus, the Sperry retirees argue that the Curtiss-Wright case is
distinguishable from theirs.

          We disagree. Here, too, the promise made to retirees
was a qualified one: the promise that retiree medical benefits
were for life provided the company chose not to terminate the
plans, pursuant to clauses which preserved the company's right to
end them at any time or for any reason.
of [the employer] of the written documents to provide lifetime

benefits subject to [the employer's] reserved right to amend."

652 F. Supp. at 961.   See also Anderson v. Alpha Portland Indus.,

Inc., 836 F.2d 1512, 1518 (8th Cir. 1988), cert. denied, 489 U.S.

1051 (1989) (plaintiffs did not meet their burden of proving

vested welfare benefits where an employer promised to provide

welfare benefits "until death of retiree" where the employer had

expressly reserved the right to terminate or amend the plan);

Alday v. Container Corp. of America, 906 F.2d 660 (11th Cir.

1990), cert. denied, 498 U.S. 1026 (1991) (where summary plan

description also clearly provided that retiree health insurance

could be terminated or modified, terms of description were

controlling); Gable v. Sweetheart Cup Co., Inc., 35 F.3d 851, 856

(4th Cir. 1994), cert. denied, ___ U.S. ___, 115 S.Ct. 1442

(1995) (company's express reservation of its right to modify or

terminate the participants' benefits is plainly inconsistent with

any alleged intent to vest those benefits).

          Here Sperry, and later Unisys, stated clearly and

unequivocally in their summary plan descriptions that the company

reserved the right to "change or end [the plans]" "at any time"

and for "any . . . reason."   Due to this broad and unambiguous

language, we hold that the district court did not err when it

concluded that the Sperry retiree medical benefit plans were not

internally inconsistent because they contained "lifetime"

language but also reserved the right to terminate benefits at any

time.
                                C.

          Notwithstanding its legal conclusion based on Curtiss-

Wright that the Sperry plans unambiguously reserved Unisys' right

to terminate its retiree medical benefit plans, the district

court analyzed the extrinsic evidence in order to determine

whether the company intended the reservation of rights to apply

to the retirees' medical benefits.13   Given the retirees'

concerns that Curtiss-Wright did not foreclose the inquiry into

extrinsic evidence, and because a trial had already been held in

the case, the district court made a factual determination that

the reservation of rights clause was intended to apply to the

retirees' medical benefits, as well as a legal determination that

the retirees had not sustained their burden of proving that the

employer intended to vest retiree benefits.

          The district court analyzed, first, the extrinsic

evidence with respect to the intent of the plan sponsor, Unisys.

Although the retirees argued that when the company used the term

"lifetime," its true intent was to vest benefits, the district

court found that the use of the word "lifetime" did not manifest

an intent on the part of the plan sponsor to create "vested"

benefits, because the evidence did not support this argument.

The district court concluded that because the company had used


13
 .        In Alexander v. Primerica, 967 F.2d at 93, we held that
where there is an ambiguous ERISA plan, a court may consider,
inter alia, the intent of the plan's sponsor, the reasonable
understanding of the beneficiaries, and past practice in
interpreting the plan. Accordingly, the district court heard the
retirees' evidence presented on each of these subjects.
the word "vested" in its medical plan for its top level Sperry

executives, but not in the rank and file plans, the company must

have intended not to vest the rank and file benefits.    Rather, as

the language of the executive plan revealed, when the company

wanted to create vested benefits, it knew how to do so.14

            The district court also found that the retirees'

assertion that the reservation of rights, which did not facially

distinguish between actives and retirees, applied only to actives

was not supported by a preponderance of the evidence.     (A 2278-

79).   While the court found that the company had "locked in"

retirees' benefits in practice in the past, it was "not

persuaded" that the company had embraced the "active/retiree"

distinction as a matter of actual policy due to the fact that not

a single document corroborated the testimony that an

active/retiree distinction was in force; the distinction was not

incorporated into the reservation of rights or summary plan

descriptions or reduced to writing as an official policy.      (A

2278-80).    The district court found significant the facts that

the alleged policy of restricting the RORs to active employees

had never been formally discussed by the Board of Directors, and

that a board resolution did not exist confirming the creation of

this policy.    Id.   We agree with the district court that all of

14
 .        The district court further found that the retirees had
conceded, throughout trial, that an active employee's benefits
could always be amended or terminated even though lifetime
language was similarly used to describe that benefit. This
concession suggested to the court that the retirees implicitly
recognized that "lifetime" was not synonymous with "vested." (A
2278).
these factors militate against the idea that Unisys intended to

restrict the application of the RORs to active employees.

            Numerous retirees testified at trial that they

understood that their benefits could not be reduced after

retirement.    Indeed, the district court found that there was "no

question that the defendant routinely spoke of the medical

benefits as continuing `for life.'"    (A 2281).   The district

court specifically found that "this message was conveyed time and

time again through informal communications that were sent out to

retirees, and by oral statements that were made to these

individuals both at private exist interviews and in group

retirement sessions.   Id.   Nonetheless, the district court

concluded that the retirees' reasonable understanding of their

benefits must be limited to the reasonable understanding of the

summary plan descriptions or plan documents, due to our strong

precedent which precludes informal amendments to ERISA benefit

plans.   See, e.g., Hozier v. Midwest Fasteners, Inc., 908 F.2d at

1164; Haberen v. Kaupp Vascular Surgeons Ltd. Defined Benefit

Pension Program, 24 F.3d 1491 (3d Cir. 1994) (and cases cited

therein).

            Finally, the retirees' submitted evidence of past

practice which demonstrated that Sperry had never reduced retiree

medical benefits prior to this litigation.    For example, when the

Medflex plan was implemented, it applied to future retirees only.

The retirees argued that this evidence established the existence

of a policy pursuant to which benefits were "locked-in" upon

retirement.   The district court found that "merely because the
company had never chosen to exercise its reservations of rights

prior to this litigation, did not mean that the company had

waived its right to terminate the plans pursuant to these broad

and unequivocal reservation of rights clauses."    (A 2283) (citing

Alexander, 967 F.2d at 93 (rejecting the defendant's argument

that the company's past practice of changing benefits rendered

the amendment clause unambiguous); and Howe v. Varity Corp., 896

F.2d at 1116 ("merely because defendants chose to exempt retirees

from plan changes in the past does not mean that defendants

considered themselves forever bound to do so")).

          Because the record before us firmly supports all of

these findings, we cannot say that they are clearly erroneous.15

Therefore, the district court did not err in concluding that the

reservation of rights applied to the Sperry retirees' medical

benefits and that the retirees' medical benefits were not

intended by the company to be vested based upon this evidence.16


15
 .        We do not understand the Sperry retirees to dispute any
of the findings of fact upon which the district court relied in
concluding that the alleged policy of applying the reservation of
rights clause only to active employees was not supported by the
evidence or the court's conclusion that the retiree medical
benefits were not vested. Rather, the retirees dispute the
inferences from or the weight accorded these findings.
16
 .        We reject the Sperry retirees' argument that the
district court erred when it analyzed the extrinsic evidence
because the court gave "too much weight to the subjective
intentions of some company executives that were not disclosed to
the employees, while ignoring the uncontradicted evidence of what
the company said in explaining the plans to its employees, how
the company applied the plans in practice and what the company
knew its employees understood the plans to mean." (Appellants'
brief at p. 37).
                                III.

          The Sperry retirees additionally contend that the

district court erred in failing to sustain the separate contract

claims of the "early retirees" or "VRIF" ("Voluntary Reduction in

Force") retirees.   The VRIFs asserted a claim separate from that

of the regular retirees:   that the company offered them certain

benefits to induce them to retire which they accepted by retiring

earlier than they would have.   They contend that this offer and

their acceptance formed a binding contract, independent of the

contract rights asserted by the other retirees founded upon the

basic plans.   See Sprague v. General Motors Corp., 768 F. Supp.

605 (E.D. Mich. 1991).17
(..continued)
          In Taylor v. Continental Group, 933 F.2d 1227, 1233 (3d
Cir. 1991), we recognized that non-bargained ERISA plans (in that
case, severance plans) raise special interpretational problems.
To the extent that the retirees relied on extrinsic evidence of
"what the company said in explaining the plans to its employees,"
and "how the plans were applied in practice," this evidence
cannot be used to contradict the unambiguous written terms of an
ERISA plan. Reliance on this evidence conflicts with Congress'
intent that plan documents and SPDs exclusively govern an
employer's obligations with respect to an ERISA plan. Thus, the
district court did not err in its analysis of this extrinsic
evidence here.

          Further, while the informal statements made by the
company that the benefits would continue for "life" do not alter
the contractual analysis, as the district court found, "given the
consistency and frequency that such communications were made,
they would appear to support the retirees' other claims, such as
their BOFD [Breach of Fiduciary Duty] claim." (A 2282). See
appeal No. 94-1875.
17
 .        The district court rejected this claim because the
court found that the VRIF retirees were in no different position
with respect to the contract claim than the other retirees:
          Although it is true that the VRIFs retired early,

foregoing future salary and pension accruals in order to secure

the retiree medical benefits under their existing plans, the

plans pursuant to which the VRIFs received retiree medical

benefits contained clear and unequivocal reservation of rights

clauses that permitted the company to end the plans at any time.

See, e.g., the 1988 VRIF offering document advising the

prospective participant of the entitlement to "coverage under the

Post-Retirement Medical Plan in effect at the time your first

[pension] check becomes payable."   (A 4395).   Medflex, the plan

pursuant to which the VRIF retiree medical coverage was to be

provided, contained an unambiguous reservation of rights

clause.18 (A 3011). While the VRIFs point out that the offering
(..continued)
            . . . [F]ollowing closing arguments,
          plaintiffs made a belated request in an
          attempt to distinguish a small group of class
          members from the class of Sperry regular
          retirees. These were individuals who retired
          under a voluntary reduction in force program
          ("VRIF"), not a VERIP. (See Supplemental
          Briefs, filed May 27, 1994.) The court
          allowed the parties to take some sample
          depositions and to brief the issue, in order
          to discover whether this small group did have
          any "special" claims. The court, however,
          finds that the VRIF individuals are in no
          different position than any of the other
          Sperry plaintiffs. Rather, any differences
          that do exist only go to bolster their
          [breach of fiduciary duty] claim.

(A 2264 n. 54).
18
 .        Those employees who retired pursuant to a 1984 VRIF
were likewise eligible to receive only those medical benefits
under "the current health insurance plans" whose SPDs contained
unambiguous RORs. (A 3029).
materials for their incentive plans promised the incentive

benefits without any reference to a reserved right by the company

to amend or terminate the plans, we find that this is not

dispositive of their claim because the benefits which the VRIFs

were to receive were described in summary plan descriptions

containing unambiguous RORs.   Consequently, the district court

did not err in rejecting the VRIFs' separate bilateral contract

claim.



                                IV.

          We turn to the retirees' final argument that the

district court erred in concluding that the estoppel claims of

all of the regular retirees failed as a matter of law and erred

in refusing to reconsider its grant of summary judgment on that

claim.   In re Unisys, 837 F. Supp. 670, 680-81 (E.D. Pa. 1993).

          An ERISA beneficiary may recover benefits under an

equitable estoppel theory upon establishing a material

misrepresentation, reasonable and detrimental reliance upon the

representation, and extraordinary circumstances.   Curcio v. John
Hancock Mutual Life Insurance Co., supra, 33 F.3d at 235; Smith

v. Hartford Ins. Croup, 6 F.3d 131, 137 (3d Cir. 1993).19    The

retirees contend that they can establish these elements.20

19
 .        We reject Unisys' threshold argument that an estoppel
claim is not cognizable under ERISA after the Supreme Court's
decision in Mertens v. Hewitt Assoc., ___ U.S. ___, 113 S. Ct.
2063 (1993). We have recently reaffirmed the viability of this
claim by our decisions in Curcio, supra, and Smith, supra.
20
 .        Regarding the requirement of a material
misrepresentation, the district court found that the company had
            While we acknowledge that many retirees may have relied

to their detriment on their interpretation of the summary plan

descriptions as promising vested or lifetime benefits, we

nonetheless must reject their estoppel claim.    Due to the

unambiguous reservation of rights clauses in the summary plan

descriptions by which Unisys could terminate its retiree medical

benefit plans, the regular retirees cannot establish "reasonable"

detrimental reliance based on an interpretation that the SPDs

promised vested benefits.    The retirees' interpretation of the

plans as providing lifetime benefits is not reasonable as a

matter of law because it cannot be reconciled with the

unqualified reservation of rights clauses in the plans.

            Our sister courts of appeals have also rejected

estoppel claims because of the presence of unambiguous

reservation of rights clauses on the basis that a participant's

reliance on employer representations regarding benefits may never

be "reasonable" where the participant is in possession of a

written document notifying him of the conditional nature of such

benefits.   See, e.g., Gordon v. Barnes Pumps, Inc., 999 F.2d 133,

137 (6th Cir. 1993) ("[a]ll plan participants knew or should have
(..continued)
misinformed the retirees regarding the duration of their medical
benefits coverage and that this misrepresentation was material.
Indeed, the district court found that the company engaged in a
"systematic campaign of confusion" which led employees to believe
that their benefits were to continue for life. The retirees
contend that the record clearly establishes that many of the
retirees, including the early retirees or "VRIFs", relied to
their detriment on the company's misrepresentations because many
employees accelerated their retirement and gave up salary and
pension accruals they would have gained if they had continued to
work.
known from the express terms of the Pullman plan that benefits

could be altered at any time").    Accord Alday v. Container Corp.

of America, 906 F.2d 666 (11th Cir. 1990) (promissory estoppel

did not bar employer from modifying terms of retiree medical

insurance plans despite participant's claim that employer induced

him into believing that plan's terms would not change; plan

unambiguously stated that the employer reserved the right to

modify or terminate the plan), cert. denied, 498 U.S. 1026

(1991).

          While our decisions have not required an express

finding of plan ambiguity as an element for establishing an

estoppel claim, we have required that reliance be reasonable.

Because our decisions require that any detrimental reliance on

plan language also be "reasonable," our finding that the RORs are

unambiguous undercuts the reasonableness of any detrimental

reliance by the retirees.   Accordingly, we hold that the district

court did not err in concluding, on summary judgment, that the

retirees' estoppel claim failed as a matter of law.



                                  V.

          For the foregoing reasons, we will affirm the judgment

of the district court.
