Rumor About D 24/37
Rumor has it that . . .
Sears is to announce this week the
elimination of the custom drapery and the carpet departments. Total
lay-offs, including sales, buying, installation - about 1500.
__________________________________________________________________
Editor's
Comment: If this report proves true, it's very sad day.
D/37 had been downsized under Martinez's regime. The turnover in the sales
force left few knowledgeable personnel which made costly mistakes until
trained. The department lacked excitement, a saley atmosphere, and traffic
and transaction producing items. We used to "own" the carpeting business
which is now rapidly being taken over by Home Depot and Lowes. We were
once second behind Penney's in Custom Drapery. Based on personal
experience, I doubt if a monitored successful lead program was in force in
D/24C. It hurts to see them go!
Another
Comment: D/37 was destroyed
long before Martinez ... it was destroyed by the Monitor Group (one of
those idiot MBA consultant groups the company brought in to save Sears)
... in 1987 they convinced senior management that the way to make profit
was to avoid owning any inventory and to shift as much expense onto the
sources as possible ... (like the sources weren't going to overbill for
all this service) ... so they convinced Sears management to:
1) discontinue all of
Sears proprietary carpet lines
2) toss $3 million worth of carpet samples
into the garbage
3) close Sears 3 distribution centers
4) sell only factory cut order, open line
merchandise
The problem with this approach was:
1) Sears lost the very effective good, better, best
marketing ability that they depended upon for success
2) Sears average cost of goods increased 28% ... exactly
the number I predicted before the conversion
3) Sears lost most of their 2,500 installed salesmen who
rebelled at the notion
4) Sears found itself trying to sell the exact same
merchandise as the competition ... but Sears MU was 42% while the
competition was selling at 30%
5) Sears still tried to make 28% on top of the
installation charges while competition charged installation at cost
Further, Monitor Group convinced Sears management to
liquidate inventory of the very lucrative Decorator Rug line which had a
Markup on Receipts of 78% .... by selling their inventory to a third party
who warehoused and distributed it for them ... and then charged it back to
them at 20% higher cost than Sears had originally paid for it.
The result ...
1) Sears installed carpet business dropped from close to
$500 million in 1988 to less than $200 million
2) Sears Decorator, Colonial and Accent rug business
dropped from over $60 million to less than $20 million
Alternatively, at the same time the Monitor Group was
giving such bad advice to Senior Management, D/637 (me) offered a plan to
close its three existing distribution centers ... because all were located
in high cost, high expense locations and were operating at 17-21% of the
cost of goods ... and build a single new facility in North Georgia, close
to all mfgs in Dalton,GA ... which would have operated at 7% of the cost
of goods ... the site had been selected and area political leaders had
promised everything from site preparation and roads to tax holidays to
utility installation to you-name-it .... for the jobs such a facility
would produce for the area.
1) Sears would have maintained its proprietary
good-better-best product structure
2) Sears would have enjoyed the quantity cost advantages
legally available (about 30% less than competition)
3) Sears would have maintained it professional sales
force
4) Sears installed carpet would have been competitively
priced for the consumer AND profitable to the company
In addition, a secret study was undertaken by D/637 (me)
in 1987 and a recommendation was made to Senior Management to purchase
Color Tile ... which would have added their $500 million non-competing
hard surface business to Sears $500 million soft surface business thus
creating an unassailable $1 billion floor covering super store ... Senior
Management said Color Tile was too "pipe rack" looking (they were far
prettier than Sears at that time) and declined ... a month later they
bought Western Auto!!!!!! Go figure!!!!!!!
As much as I'd like to tar Martinez with this brush, and
as much as I hate the *&^#%$!#!, THIS debacle had its roots in a prior
time ... and ... I told them so!
When is Sears going to learn that every dollar you take
OUT of the net cost of goods goes right to the bottom line ... if you
force sources to absorb more and more of the cost of doing business, they
are going to load their profit factor on top of the cost to provide those
services and they WILL overbill the cost of the product to reflect this
... the key to making profit is to MANAGE ALL the costs of doing business
better than the other guy ... Sears is now so far behind in this that even
if they woke up to the fact they would not survive ... too bad ... I told
them so! ... but I am still heartbroken ...
James Wilson Button, age 84,
retired Sears Marketing Executive and Navy Veteran, beloved husband of
Lurena Stubbs Button, loving father of James W. Button, Jr., of St.
Louis, MO, Douglas S. Button, of Louisville, TN, and Katherine Button
Bell, of St. Louis, MO; dear grandfather of eight; great-grandfather of
five; brother of the late Bland Ballard Button, Jr.
During his career, he ran
Sears' New York office and was President of Simpson Sears in Canada,
before returning to serve as Vice President of Merchandising and finally
as Senior Vice President of Sears in Chicago. Mr. Button served as
Director on the Boards of Sears, Simpson Sears, Allstate Insurance,
Chemical Bank Granger, Harris Bank, GTE Telephone as well as the Council
of Economic Education.
Visitation will be held from
5:30 to 9 p.m. Wednesday, December 12, at Wm. H. Scott Funeral Home,
1100 Greenleaf Ave., Wilmette. Services and interment will be private.
In lieu of flowers, memorials may be made to The Palliative Care Center
and Hospice of the North Shore, 2821 Central St., Evanston, IL 60201 and
to the University of Chicago, c/o Gwen Jessen, 1116 E. 59th St.,
Chicago, IL 60637. For info: 847-251-8200.
Representative Tierney Needs Help for
Hearings on HR 1322
November 28, 2001
Congressman Tierney, sponsor
of HR 1322 (the Emergency Retiree Health Benefits Protection Act of
2001), needs your help. He needs e-mails (snail mail is NG at present)
that support the bill.
The Association asks you to
email the Congressman, thank him for his leadership in sponsoring this
bill and for his efforts in pushing for the bill's passage. Add a
personal note as to why this bill is important to you. You can also give
him a story about how your healthcare coverage has been reduced, or the
cost increased, since your retirement.
1. Go to
www.house.gov/tierney
2. Scroll down the left side
of the home page to "E-mail Congressman Tierney" and click on the
mailbox.
3. Fill in your name,
address and other information in the mask. If you are not in the
Congressman's area, put your city, state and zip in the second line of
the address box.
4. Type your message and
send.
Sears Retiree Group
Life Insurance
Litigation Notice and Claim Form
November 1, 2001
The Notice and Claim Form that is being sent to Sears Retirees is
also set
forth in Settlement. You may download the Claim
Form which appears after the Notice by clicking on "Get
Claim Form" below.
The Claim Form must be signed and submitted according to the mailing
instructions on the Claim Form. Alternatively, if you are
not able to print the claim form from you computer, or if you do not receive a
Notice and claim form in the mail in the next few days, you can
phone 800-347-0716 - press option 2 - and
Sears will
mail you a claim form.
Please keep in mind that the claim forms must be signed and returned
by the January 17, 2002 deadline.
Notice of Proposed Settlement
Get Claim Form
Narse Proposed Life
Insurance Settlement
Important Dates
October 31, 2001
Court Hearing
The Court Hearing originally scheduled for July 31, 2001 was rescheduled several times before actually being held on October 10, 2001. It was attended by ten NARSE members.
During the hearing Judge Moran expressed his pleasure that the two sides had reached an agreement and noted that the law was not on the side of the retirees. We are to receive from the lawyers a transcript of his exact comments.
After the hearing, the plaintiffs’ lawyers met with NARSE for over two hours of discussion,
expanded explanations, questions, expression of feelings, etc. The lawyers feel that “nothing was
left on the table”.
The below is the best understanding that NARSE can make of what we have read and/or heard. We are NOT lawyers and are NOT advising or suggesting what any individual's actions or choices should be. Each Sears Retiree should make his/her decision and may wish to seek legal counsel
before making the final decision.
PROPOSED SETTLEMENT
Sears CEO Alan Lacy said it was settling because
management ''wants to reunite the Sears family and believes that this
settlement constitutes an important first step in consolidating the
confidence and goodwill of its large retiree base.''
Sears Roebuck and Co. workers who retired between 1978
and 1997 will retain more of their life insurance benefits under a
settlement plan between retirees and the company tentatively approved
Wednesday (October 10, 2001) by a federal judge in Chicago.
The proposed Settlement extends to all Sears Retirees
who are subjected to Sears’ reductions of their retiree life insurance
benefit and who prior to the reductions had more than
$5,000 in Sears Retiree Group Life Insurance.
1. At a minimum, the 10% Life Insurance reduction
scheduled for the Year 2003 would not be taken for retirees who file
claims. Depending on the claims experience (the number of retirees filing
claims and the size of their life insurance benefits) some additional
planned reductions beyond 2003 could possibly occur.
2. The minimum 10% and the $5,000 life insurance under
the “1997 Plan” could never be reduced later by Sears
3. In addition, the estates of retirees who have died
since Jan. 1, 1998, or who die before Dec. 31, 2002, will receive a Sears
gift card of $100, according to court documents.
Proposed Settlement - Critical Times **
November 1, 2001 **
Mailed Notice.
This should be an envelope clearly marked on the outside stating: “Important Class Action
Settlement Notice and Claim Form For The Sears Retiree Group Life Insurance Litigation from the
Clerk of the United States District Court.”
November 8, 2001 **
Publish Newspaper Notices.
December 10, 2001 **
Deadline for receipt of objections and Requests for Exclusion.
Sears can cancel the Settlement if more than 1,000 class members validly request exclusion
from the Class.
January 7, 2002 **
Deadline for Sears to exercise option to cancel settlement.
January 17, 2002 **
Deadline for submission of Claims Forms.
March 5, 2002 **
Court hearing on the fairness of the Settlement.
Objections to the settlement will be heard by the judge at this hearing. You will want to read the
Settlement Notice carefully as it presents you with several choices:
** Sign and Send In Blue Claim Form Before January 17, 2002:
You must file a claim to receive 10% more life insurance and eliminate Sears planned reduction
for 2003. Eg.: Insurance was $17,000, total 10 year reductions were $12,000, one year
10% savings = $1,200. One year savings of $1,200 plus the $5,000 now guaranteed. In this example
Sears cannot reduce the final insurance amount in the ten year reduction program to less than $6,200.
** Do Nothing.
If you do not file a claim or request exclusion and the Settlement is finally approved by the Court,
the reductions will continue as scheduled for all ten years. Sears cannot reduce the final
insurance amount to less than $5,000.
** Object to the Settlement.
You may file an objection or otherwise comment on the Settlement. If you file an objection
you may also wish to file a claim because if your objection is overruled and you have not
filed a claim, you will not benefit from the 10% savings resulting from the elimination of
Sears’ planned reduction for 2003.
NOTE: Whether you file a claim form or not, you are bound by the terms of this settlement,
including release of life insurance claims against Sears, unless you request exclusion.
** Request exclusion.
You will not participate in or benefit from the Settlement if it is approved. Sears can cancel the
Settlement if more than 1,000 class members validly request exclusion from the Class.
If you request exclusion you can not file a claim form or benefit in any way from the Settlement.
You can retain counsel and file your own suit against Sears. You will want to consult your attorney
concerning the deadline for filing your suit. The temporary stay of the statute of limitations ends for
class members requesting exclusion as of the date of the Final Approval of the Settlement.
Reminder:
Review carefully the proposed settlement information when received to determine your
course of action(s).
NARSE has presented this to help you better understand the situation and your choices, but it is your
choice to make. A member who had missed a couple of meetings but attended the October 10th
hearing and the meeting after with the lawyers sent this email: “If Dick Bruce and Tom Dowd
endorsed the settlement, I am going with their vote. I believe these two persons were in the best
position to win their case and they opt for the settlement - at least that is what I perceive,
and I don't have every little detail.”
(Editor’s note: Dick and Tom were in D/707 Human Relations, have been very active in NARSE,
and were involved in the negotiations. It appears that they might have won more on an
individual basis, but chose a group settlement.)
Again, each Sears Retiree should make his/her decision and may wish to seek legal counsel
before making the final decision.
NARSE was organized to protect benefits earned by and available to Sears Retirees.
Preliminary Approval to Settlement
October 11, 2001
U.S. District Judge James Moran gave
preliminary approval to a proposed settlement between Hoffman
Estates-based Sears, Roebuck and Co. and 80,000 of its retirees that
partially restores company-paid life insurance benefits. A final
hearing is scheduled for March 5, 2002.
Sears has agreed to forgo one year of life
insurance cuts in 2003, which will cost the retailer somewhere
between $22 million and $34 million, depending on how many retirees
participate. The value of the restored benefits is between $47
million and $106 million, according to actuarial estimates. Sears
also has agreed to never reduce life insurance benefits below $5,000
per retiree.
Attorneys from 16 different firms
representing retirees have asked for a maximum of $5.4 million in
fees, costs and expenses, which would be paid solely by Sears.
For
more details,
Insurance Settlement Approval
Willowbrook's O'Hare is
Making a Splash
By Alice
Hencinski - Liberty Suburban Chicago - October
10, 2001
(Ed. Note: George O'Hare former
Sears Executive and current VP Media Relations for narse was recognized in
a surburan Chicago newspaper.)
From Rockford to Quincy, George O'Hare has been making
quite a splash. In just two months, the Willowbrook resident has earned 12
gold medals while competing in five Senior
Olympics contests.
At the spry age of 74, O'Hare also has received
recognition as the oldest honorary member of the Hinsdale South Hornet
Swim Team. Although he belonged to swim teams at
Austin High School and the University of
Illinois, his alma mater, O'Hare last competed with the Great Lakes U.S.
Naval Training Station swim team in 1944.
But when asked to deliver a keynote address to the
Rockford Area Senior Citizen Olympics in 1991, O'Hare felt a sudden urge
to enter the 50- and 100-yard swimming contests.
"I won a gold medal for each of the events without
practicing. After the contest I could barely get out of the water because
I was so beat," O'Hare recalled. "But I thought that the Senior Olympics
was one hobby I might want to pursue someday."
Ten years later, O'Hare finally took the plunge and
registered for numerous Senior Olympic events throughout Illinois. Since
August the Ridgemoor resident has dived into aquatic activities with
energy and enthusiasm.
In August, O'Hare won three gold medals for the 50-,
100- and 200-yard breastroke meets at the Rockford
Area Senior Olympics. In the weeks that followed,
O'Hare earned nine more gold medals in backstroke contests, including the
Southland Senior Games at the Oak Lawn Park District, Great River Golden
Games in Quincy and South" western Illinois Senior Olympics in Fairview
Heights.
During the most recent event held Sept. 29 in
Springfield, O'Hare felt humbled upon receiving his first silver medal for
the 50-yard backstroke contest.
"I was a bit surprised to be beaten by an 87-year-old
man! But then I learned he was a former Olympic backstroke swimmer. And I
did get the gold medal in the 100-yard race,'' O'Hare quipped.
Clearly, the 3 "Rs" common to some septuagenarians _
retirement, relaxation and rest remain foreign to O'Hare's vocabulary.
Since retiring from Sears, Roebuck and Co. in 1984, O'Hare embarked on his
second career as a motivational speaker. His message is familiar to Lions,
Rotary, AARP, and Kiwanis groups, who are taught to "accentuate the
positive."
In 1989, former Illinois Attorney General Neil Hartigan
appointed O'Hare director of senior citizen advocacy, a position he
maintained under former Illinois Attorney General Roland Burris. In his
speeches, O'Hare presents his theory of
longevity. "Two things cause premature death. They are inactivity and bad
diet, or both," he said.
O'Hare, who has enjoyed 50 years of marriage to his
wife, {Jean}, considers himself "the luckiest man alive." He regards
comedian-activist Dick Gregory as his mentor. "I am very grateful to him
for changing my life physically and spiritually. Because of him I'm a
better Catholic. He brought me the gift of humor,'' O'Hare said.
"I'm 74 years old and don't get sick. I've been a
vegetarian for 28 years. I eat only fresh
fruits, vegetables, vitamins, herbs and drink bottled water."
To prepare for the contests, O'Hare swims 400 yards
daily at the Oak Brook Park District. While
training for the Spring" field competition, he was dismayed to discover
the Oak Brook pool had been closed for
renovations. Quickly, O'Hare visited Frank Kuchta, swim coach at Hinsdale
South, his sons' alma mater. Kuchta allowed O'Hare to swim daily in
the campus pool after school hours. Impressed
with his athletic commitment, Kuchta feted
O'Hare by naming him an honorary member of the Hornet Swim Team.
Response from Sears Regarding
the
Increased Costs
of Medical Premiums
Understanding Your Medical Costs
October 9, 2001
Below is a response from Sears regarding the increased
costs of medical premiums:
Sears contribution to retiree medical coverage is frozen
based on 1995 levels or the year of retirement, if later. Because retirees
bear the full cost of premium increases, a 20% increase in the overall
premium results in a higher percentage increase in retiree contributions.
For instance, let’s assume the total monthly premium for
HMO coverage is $200. Let’s assume that in 2001, Sears paid $100 of this
and the retiree paid $100. Let’s also assume that the total cost increases
by 20% to $240 in 2002. Since the retiree pays the entire increase, the
retiree’s contribution will rise to $140 in 2002, which is a 40% increase.
As outlined in the annual election materials, and as you
can read in almost any newspaper, these increasing costs are being
experienced by employers in every industry across the country. The only
alternatives Sears has are to (1) change plan benefits and (2) eliminate
those plans that propose unreasonable premium. Sears has used both
strategies to keep premium increases as low as possible.
One way retirees can help cut their costs is by asking
their physicians to prescribe generic or preferred brand drugs and by
requesting convenient home delivery of up to a 90-day supply of these
drugs. With prescription drug costs soaring Sears has provided these
options to keep plan costs down while providing retirees with additional
savings.
Sears retiree Dan Fapp asked the following question
and Sears response is below his comment:
While I understand Sears response (above), the example in the first
line of the second paragraph concerns me. It was my understanding, as far
as a pre-2000 retiree was concerned, Sears pays 75% and the retiree 25%.
Sears portion, in dollars, never increases from that point on. With this
example, it looks like 50/50 at year one.
Sears response:
Here's some additional explanation from Benefits on how
the split works. Hope this helps clarify.
1) Prior to 2000 retirees, Sears contributions in the
year of retirement were 75, 65, 55 or 45% based on length of service. Not
all retirees got a 75/25 split.
2) Because retirees pick up the cost of increases, a
split that starts out as 75/25 in year one is going to migrate to
something different in year 2, year 3 and year 4. For instance, if a $100
premium is split $75 company and $25 retiree in year one and the rate goes
up 20% the next year, in year two the premium will be $120; the company's
share will be $75 and the retiree's will be $45. The split is now 62%
company and 38% retiree. etc.
New
Court Date for Proposed Life Insurance Settlement
Wednesday - October 10, 2001
Sept. 29, 2001
The attorney for the plaintiffs, Mike Mulder, called to advise
that another, and we hope final court date and time has been set.
Judge Moran has scheduled 10:30 a.m. on Wednesday, October 10,
2001 for his determination as to whether the proposed settlement
should be released to Sears Retirees. The hearing will be held in
the US District Court Dirkson Building in Chicago.
As noted previously, we believe that it would be favorable for as
many NARSE members available to be in the Courtroom. There may not
be an opportunity for those present to be heard. Objections are
presented to the presiding judge at a fairness
hearing probably late 2001 or early 2002. The judge will consider
any objections raised at that time, and has the option of refusing
to approve the proposed settlement because the Court agrees with the
objecting parties, or agreeing to approve the settlement over their
objections.
In
Memoriam -
Peter Malloy
October 1, 2001
Peter Malloy, was a retiree of Sears. He worked for them for 35 years
having retired in 1982. He worked in the Southwest Territory in Purchasing
for Store Planning. He was Manager of Dept 806SW.
He passed away on September 28, 2001 at the age of 82 and will be
buried in the National Cemetary in Dallas October 1,
2001.
Pertinent Facts on the
Proposed
Retiree Life Insurance Settlement
Information from Attorney - September 7, 2001
Latest Court Delay
The August 31 court date was canceled for the
following reason: When Met Life searched the Sears retiree file in
preparation to mail every retiree the proposed settlement, they found that
approximately 1,800 retiree names were not included in the current retiree
data base. These individuals were on a medical leave of absence, workers
compensation leave, etc. at the time Sears made the decision to dismantle
our promised benefit. In fairness to each of the overlooked retirees, it
was decided by both parties (Sears and attorneys for the plaintiffs) to
delay the hearing and present the Judge with the full and correct
database. While some may question this as a delaying tactic, in NARSE’s
opinion it was justified and proper.
NARSE is not and has not been a plaintiff in the class
action suit against Sears. NARSE does not have a vote in the approval
process. NARSE was given an opportunity to “endorse” the proposed
settlement. The final approval will be made by approximately 80,000 Sears
retirees after they have an opportunity to review the proposed settlement,
return their approval/rejection or choose to disregard the offer.
DISCLAIMER
The following
information has been supplied by Attorneys' for the plaintiffs. NARSE is
not responsible for the contents or any claims or damages resultant to the
release of the information.
Latest information from the
plaintiffs attorneys
It is expected that within the next six weeks,
retirees should receive a formal notice of the terms of the settlement.
The Court is scheduled to consider the preliminary approval of the
settlement very soon. A mailing date for the formal notice of settlement
is currently set for approximately October 1.
From the attorneys, below are some attachments that will
make it easier for retirees to understand what has been going on. It
includes a “case history” and a list of the reasons given by some of the
named plaintiffs and class counsel in the settlement agreement itself as
to why they believe this is a prudent settlement. Also, is a summary
description of the settlement terms and an information sheet in a Q & A
Format on “opting out” of the settlement, which is one of the options
retirees have as they look ahead. If a retiree decides to “opt out”,’ it
is suggested that they contact either the plaintiffs attorneys as listed
below, or any other attorney of their choosing before making the decision
to be excluded from the settlement. If there are further questions after
retirees have reviewed the information supplied by the attorneys, contact
Ann Watson at 612-339-7131.
Primary attorneys are:
Michael M. Mulder
Meites, Mulder, Berger & Mollica
208 South LaSalle Street, Suite 1410
Chicago, IL 60604
Ph: 612-339-7131 Fax: 612-339-6591
Wood R. Foster, Jr.
Siegel, Brill, Greupner, Duffy & Foster
1300 Washington Square
100 Washington Ave. S.
Minneapolis, MN 55402
Ph: 612-339-7131 Fax: 612-339-6591
“HISTORY” OF THE CASE
Origination of Suit: In September 1997, Sears
announced that retiree life insurance benefits under the Plan would be cut
back for all Plan participants who retired after January 1, 1978, at the
rate of 10% per year on each retiree's life insurance amount in excess of
$5,000. At the end of ten years, each retiree would have a $5,000 retiree
life insurance policy, regardless of original amount. Sears reserved the
right to reduce benefits even further, or to terminate the Plan entirely.
Thereafter, a number of suits were filed against Sears by retirees who
alleged they had been promised “free” or “paid up” life insurance for the
rest of their lives. All lawsuits were eventually consolidated in the
United States District Court for the Northern Distract of Illinois and
were assigned to Judge James B, Moran.
Claims: Sears retiree life insurance benefits
were (and are) governed by the terms of a plan set up by Sears many years
ago. In general, the complaints alleged that Sears had breached the terms
of the Plan by cutting back the amount of the life insurance: that Sears
had entered into - and breached - a separate contract with Class Members
concerning life insurance: and that Sears had breached its fiduciary duty
to Plan participants by making materially misleading and incorrect
statements about retiree benefits to Plan participants before they
retired.
Defenses: Sears denied that it violated any
statutory or common law obligation, to its retirees. and asserted that it
had a full legal and contractual right at all times to modify or terminate
the terms of the Plan.
Judgment Granted For Sears On Certified Claims:
In order for Plaintiffs to proceed on behalf of all retirees as a class,
they were required to satisfy Judge Moran that the case met all of the
requirements provided to the Federal Rules of Civil Procedure for
“certification” of class actions. After extensive briefing, the Court
certified a class action only with respect to the “plan enforcement”
aspects of the case. but denied class certification with respect to the
breach of fiduciary duty claims and other claims brought by the
Plaintiffs, The Court ultimately granted Sears’ summary judgment on the
“plan enforcement” claims.
Uncertified Claims Set for Trial: What remained
were claims for breach of fiduciary duty - claims that were not certified
by Judge Moran for class action treatment, proposed conditional class be
certified and the Settlement be finally approved, There were initially 71
named Plaintiffs in the various consolidated cases, five of whom have
since died. At the Plaintiffs’ request, the Court directed the parties to
select 12 of the 66 Plaintiffs whose cases would be tried in September
2001 on the issue of breach of fiduciary duty and promissory estoppel. The
parties engaged in extensive discovery, including dozens of depositions
throughout the United States of present and former Sears employees and
upper level executives, in preparation for the trial.
Mediation and Negotiations: During ongoing trial
preparations, the parties began a process of negotiation and formal
mediation, using a professional mediator to assist them in moving toward a
settlement. In the settlement negotiations, several of the named
Plaintiffs were regular participants, along with representatives of NARSE,
the National Association of Retired Sears Employees, which had taken a
very active interest in the prosecution of the case.
Settlement: On July 5, 2001, after three months
of mediation and negotiations, the parties agreed to settle the lawsuit
and signed a Memorandum of Understanding. At a hearing to occur in the
near future, the Court will be asked to give preliminary approval to the
proposed Settlement, to approve a proposed Notice to all Class Members of
the terms thereof and to set a date for a Fairness Hearing. At the
Fairness Hearing, the Court will consider the request of the parties that
the proposed conditional class be certified and the Settlement be finally
approved. The Court will also consider any objections to the Settlement
and any requests for exclusion as well as rule on the petition for
attorneys’ fees, costs. expenses, and class representative incentive
awards.
REASONS FOR SETTLEMENT
Plaintiffs and Class Counsel recommend the Settlement to
all Class Members for the following reasons:
1. As noted in the case history, Judge Moran has denied
class certification with respect to the only claims that remain viable in
the case. Unless the case is settled on a “class” basis, which is what
this settlement contemplates, retirees would be left with only the right
to file individual suits against Sears. Such suits would be time
consuming, costly, and procedurally complex. Plaintiffs and their advisors
believe that only a relatively small percentage of the approximately
80,000 retirees affected by the insurance cutback would file individual
suits. There would, of course, be no guarantee as to the outcome of those
individual cases.
2. This settlement prevents Sears from further
increasing the rate of cutback for all retirees, and it prevents Sears
from reducing the final insurance benefit below $5,000. Without the
settlement, Sears continued to reserve the right to amend or terminate the
plan. Sears could have accelerated the cutback or changed the final amount
to zero, or both, at any time. This benefit accrues to all Class Members,
whether or not they file a Claim Form.
3. The settlement provides an additional benefit to
those who believe they were significantly misled by Sears and who sign the
Claim Form. All such persons will, without having to engage in further
litigation, receive at least one less annual reduction in the amount of
coverage, and perhaps more (depending on the number of persons filing
Claim Forms).
4. The settlement was achieved with the participation -
and endorsement - of the National Association of Retired Sears Employees
(NARSE), which has offered steady assistance in communicating the terms of
the settlement to Sears retirees, as well as several retired Sears
employees not affiliated with NARSE.
5. All costs of suit will be borne by Sears; the benefit
negotiated for Class Members is not diminished to pay for attorneys’ fees,
costs, expenses, representative plaintiff incentive awards, or costs of
administration.
SUMMARY OF SETTLEMENT TERMS
1. Whether or not you file a Claim Form, the Settlement
Agreement provides that Sears cannot further accelerate the life insurance
reduction schedule that began in 1998 and it cannot reduce the final
insurance amount to less than $5,000.
2. Timely submitted Claim Forms shall be considered
approved unless Sears challenges a claim based upon substantial evidence
of fraud, in which case the validity of the claim will be resolved by a
mediator.
3. Class members who timely mail Claim Forms that are
approved are guaranteed at least one less annual reduction than the
scheduled ten reductions. Their final insurance amount will therefore be
at least $5,000 plus the amount of one year's reduction. The “skipped”
reduction will be the reduction previously scheduled for the year 2003.
EXAMPLE
If you started with $15,000 of retiree life insurance, your insurance
amount has decreased $1,000 per year since January 1, 1998. Under this
Settlement, if you timely file an approved Claim Form, the previously
scheduled reduction for year 2003 will be skipped, and the final amount of
insurance in year 2007 and thereafter will be $6,000 instead of $5,000.
The table below show this works:
TABLE 1
6. The benefits under this proposed Settlement apply to
all Class Members, whether or not they paid “replacement premiums” to
avoid Sears’ cutbacks. However, Class Members must file Claims Forms to
obtain the benefits its paragraphs 3-5.
7. The estates of retirees who die (or have died)
between January 1, 1998 and December 31, 2002 will receive a $100
unrestricted Sears gift certificate. (The gift certificate will be sent to
the beneficiary receiving the highest percentage of the life insurance
payment for that retiree, or, if all beneficiaries for that retiree
receive an equal percentage, the beneficiary whose first name comes first
alphabetically.) Disputes about entitlement will be decided by a mediator.
8. Sears will pay each of the 71 named plaintiffs who
brought the lawsuits a $5,000 special payment for the risk, time and
efforts they expended in bringing the case. The activities the named
plaintiffs participated in included obtaining counsel, working with
counsel, filing suits, producing documents, answering written questions
from Sears lawyers and traveling to depositions, where they answered oral
questions under oath asked by the lawyers for Sears.
9. Attorneys fees and costs of the litigation will be
paid by Sears, not the class. The Court will decide the amount of fees and
costs Sears must pay, which cannot exceed $5.4 million.
10. If the Settlement is approved, it will be binding on
all Class Members who do not request exclusion. If more than 1,000
retirees request exclusion, Sears has the right to terminate the proposed
Settlement.
“OPTING OUT”
THE IMPLICATIONS OF REQUESTING
EXCLUSION
FROM THE SEARS CLASS ACTION SETTLEMENT
What does it mean to “opt out”?
If you “opt out” (which is exactly the same
thing as “requesting exclusion”) from this or any class action settlement,
it basically means you will not receive any of the settlement benefits,
and you will not release Sears from any claims you might have. The
settlement will go forward without you, and you will retain all legal
nights you have to sue the defendant - in this case, Sears.
Why do people opt out?
There are several reasons why people might opt
out of this lawsuit:
I. People who genuinely want and intend to sue Sears
individually must opt out if they want to pursue their individual suit. If
people who wish to sue Sears individually fail to opt out, they are bound
by the settlement, and lose their right to sue individually.
2. Some people may opt out simply because they do not
wish to take part in the settlement. This might be a matter of principle,
because they believe they should receive more than the settlement offers
them, or because of personal religious or social convictions concerning
participation in lawsuits generally.
3. People who believe that Sears was right all along and
that the lawsuit should not have been brought in the first place may wish
to opt out.
4. There could be a myriad of other reasons, many of
them personal to the class member faced with the decision.
Is opting out the same thing as objecting to
the settlement?
No. Class members who intend to participate in
the settlement if it is approved may still object to the settlement as a
whole. Objections are presented to the presiding judge at the time of the
fairness hearing, which will occur in late 2001 or early 2002. The judge
will consider any objections raised at that time, and has the option of
refusing to approve the settlement because he agrees with the objecting
parties, or agreeing to approve the settlement over their objections. The
formal notice that you will receive explains how and when objections can
be asserted.
People who opt out are no longer part of the class
action suit. They do not have a right to object to the settlement, because
they are no longer affected by the settlement.
What are the actual legal ramifications of
opting out?
If you opt out, the settlement benefits are not
available to you. You cannot file a claim form. You do not release any
rights against Sears, and Sears does not release any rights against you.
You retain the right to sue Sears individually. If you do not sue
individually, you will eventually lose your right to sue because of the
statute of limitations.
If I opt out, can Sears reduce my remaining
insurance benefit even further?
In theory, yes. Sears has always claimed the
right to amend or terminate the plan, and the judge has upheld the
validity of the way Sears preserved that right. The fact that Sears has
the right to terminate does not mean Sears will exercise that right, but
there is no way to know in advance.
What is involved if I want to opt out and sue
Sears individually?
We strongly advise you to discuss this directly
with an attorney before deciding to opt out. In general, you should expect
that there will be “up front” costs of at least several hundred dollars
involved, as well as a substantial amount of your own time and energy
required. You should consult an attorney to determine whether the
individual facts of your case are likely to produce a favorable result.
Individual attorneys may or may not be willing to take the case on a
“contingent fee” basis. You should also have your attorney call one of the
attorneys for the class to discuss certain timing and deadlines that must
be considered.
There is no guarantee that the attorneys who have
represented the class in this case will represent individuals who opt out
and wish to sue individually. While they are not prevented from doing so,
class counsel would wish to review each case on its merits before agreeing
to represent one or more people who opt out. It is important to understand
that a private fee arrangement would have to be made by each individual
retaining counsel.
Gordon’s Comments:
DISCLAIMER:
JUST A REMINDER THAT ALL THE ABOVE INFORMATION HAS BEEN SUPPLIED BY
ATTORNEYS FOR THE PLAINTIFFS. NARSE IS NOT RESPONSIBLE FOR THE CONTENTS OR
ANY CLAIMS OR DAMAGES RESULTANT TO THE RELEASE OF THE ABOVE INFORMATION.
In Memoriam
William Wallace Tudor, Sr.
Philadelphia Inquirer - September 5, 2001
WILLIAM WALLACE TUDOR, SR., on Sept. 3, 2001, age 90, of Cherry Hill, N.J.,
formerly of River Forest, Illinois, husband of the late Mildred E. (nee
Galloway), survived by son Thomas G. Tudor and his wife Francine, of Cherry
Hill, grandchildren Wesley and Tasha, son William Wallace Tudor, Jr. and
wife Marie of Monrovia, Indiana, grandsons Gregory and Bradley, great
grandchildren Betsy, Braden, Whitney, and Zachary. He was employed by Sears,
Roebuck and Company from 1936 until his retirement in 1974, having been
Vice-President of Personnel and Employee Relations and a Director of the
company for many years.
He was active in a number of charitable activities, most notably as National
Crusade Chairman for the American Cancer Society in 1960. Friends are
invited to attend his Viewing on Thur. 7 P.M., to be followed by the Funeral
Service at 8 P.M., at the McCHESNEY FUNERAL HOME, 30 West Main Street,
Moorestown, N.J. Int. will be in Indiana. In lieu of flowers, family
requests that contributions be made to the American Cancer Society, 401
White Horse Pike, Haddon Heights, N.J. 08035.
Notice from NARSE Attorney
August 29, 2001
I am writing to inform you that the hearing on the
motion to preliminary approve the
settlement which was scheduled for August 31, 2001 has been
postponed. The Court has not yet set a new date for the hearing. As
you know, the parties filed a joint Memorandum of Understanding with
the Court on July 5, 2001. Since
that time, Sears and the class attorneys have been
drafting a formal settlement stipulation, notice to class
members to be sent by mail, summary notice
to be published in newspapers, a motion to
approve the settlement, and memorandum in support of the settlement.
The parties expected to file these
documents on August 28. However, because further time is necessary
for their completion, the hearing has been postponed by the Court.
As soon as the new hearing date is rescheduled, class counsel will
advise NARSE.
Very truly yours,
Michael M. Mulder
_______________________________________
Gordon's Comment:
The above is a copy of text just received from the plaintiff's
lead attorney. I believe this is the seventh reschedule of the
action. NARSE will keep you informed as to future developments.
Is
Sears Serious About Settling with Retirees?
Let
Us Know Your Thoughts!
Thursday,
May 24, 2001 - N.A.R.S.E. Communications
Prior to the Sears Annual Meeting,
it was widely published in the news media that Sears has been
working to negotiate and resolve the life insurance fiasco. Two
weeks have now passed without any word from Sears. As a NARSE
Director, Tom Dowd pointed out to Sears' CEO Lacy at the Annual
Shareholders Meeting, "Our patience is not everlasting",
and warned that retirees will not walk away from this issue.
We'd like to have your comments and
sentiments. "Is Sears serious about resolving our retiree
life insurance fiasco?"
info@narse.org
Alan
Lacy's Letter to Associates
April 12, 2001
Dear Sears Associate,
Sears issued today a rather complex news release covering four significant
financial topics - our March sales results, a pre-announcement of
first-quarter earnings, the adoption of a new accounting standard for how we
report our credit results and a change in how Sears reports financial
results to our investors.
I would like to provide some perspective on these four topics. Our March
sales were disappointing, a decrease of 5.3 per cent for comparable
stores.
This was below our expectations for the month. The weather played a role
in
this decrease. So did the stall in the economy, as customers are being
cautious with their spending. Many other retailers also had a difficult
month.
But some will post gains. In order to grow during tough economic times,
we
must take share away from our competitors.
Primarily related to domestic
retail performance, Sears announced
anticipated first-quarter earnings per share will be approximately $0.53,
compared with $0.65 for the first quarter last year. These results were
below what the investment community expected.
Sears also announced an accounting change that will require Sears to take
a
$520 million non-cash charge to earnings. Adopting this new accounting
standard is desirable to simplify the accounting for our important credit
business, and we expect our analysts and investors will welcome the
change.
Please see our intranet site, InSide Sears, for more information.
Since this is an accounting change, this
charge to earnings will have no impact on our 2001 incentive. However, our
operating performance does.
Needless to say, our first-quarter performance was not up to our
expectations. We must redouble our efforts to improve our performance for
the rest of the year.
Sears announced a new structure for reporting our results by business
segment that better reflects our strategic direction and structure. These
segments now include:
What can you do? Focus on three
things - serving the customer, productivity
and profitable sales growth. The full-line stores are featuring our Sears
Days promotion, offering some of the year's best values. On May 6, there
is
an associate appreciation event. Every associate should encourage friends
and family to shop.
We are in the process of developing a new marketing plan that will be
implemented this summer. We are also working to re-assort the merchandise
in our stores, giving more space to merchandise categories that are
winning
with customers and eliminating those in which we do not have customer
relevance. That program also will be implemented this summer.
New programs will drive better trends in the future. But there is much
that
needs to be done now. We must all work better together as a team to
increase productivity and profitable sales.
Please submit your ideas to my website, Alan Online. These thoughts
automatically go to managers in the appropriate areas and to me.
I look forward to hearing from you.
Update:
Sears Retiree Group Life Insurance Litigation
March 5, 2001
Federal Judge
James B. Moran of the United States District Court for the
Northern District of Illinois, has set a trial date in the Sears
Retiree case for September 4, 2001.
The court will
try the individual breach of fiduciary duty and promissory
estoppel claims of about a dozen Sears retirees. The retirees who
will go forward in this first trial will be selected from the
sixty-seven plaintiffs named in the suit. The case will be heard
by the Judge in Chicago.
According
to the Court's order it will take about six days to try the plaintiff's
claims. NARSE will keep you updated on developments as it continues to
monitor the case.
Write
Your Congressman
Re: HR 1322 Health Insurance
We have made arrangements with the National
Association of Bell Telephone retirees to use their website to write your
Congressman regarding the above bill.
To use their website simply click here www.belltelretirees.org
Once into their site scroll down to
"Write to Congress (enter your zip code) Enter your zip code again in
the area entitled "Action Alert" Choose the letter you wish to
send (4 choices) Modify the letter taking out reference to Bell and insert
Sears Roebuck and Co. Retiree and member of narse (National Association of
Sears Retirees) Change bill to HR1322 Follow directions to send.
Any questions contact narse website
WE NEED YOUR SUPPORT
narse
and Amazon.com
As you can see we have formed a
relationship with Amazon.com. Amazon will pay narse 8.0% commission for
all merchandise ordered from our website. To do so simply click on the
Amazon icon and place your order.
If you have any suggestions for other
dot.coms let us know.
Annual
Meeting Notice
Important: Requires Your Immediate Attention
On September 4, 2001 the Federal
District Court of Northern Illinois, Judge Moran presiding, will
conduct the first trial for about twelve of the named plaintiffs
in the Sears Retirees Group Life Insurance Litigation. The
plaintiffs' breach of fiduciary duty claim will be heard.
THESE CLAIMS ARE NOT CLASS
ACTION CLAIMS.
The district court has ruled that "breach of duty"
claims must proceed on an individual-by-individual basis. You may
have to make a decision about whether to file an individual claim
before the outcome of the September trial is known, in order to
timely reserve your claim.
AGAIN, you must decide whether
to pursue individual legal action or lose your insurance benefits.
To help you in your decision the National Association of
Retired Sears Employees, Inc. is hosting a special meeting on May
9, 2001. Attorneys Foster and Mulder will discuss the status of
the lawsuit case and address any questions you may have about what
is necessary for you to do to proceed with your breach of
fiduciary duty claim.
Please! Mark your calendar. Plan
to attend these meetings:
|
N.A.R.S.E. Annual
Meeting
Wednesday, May 9, 2001
|
| Location: |
Stonegate Conference and
Banquet Centre
2401 W. Higgins Rd., Hoffman Estates, IL |
| Time: |
2:00 p.m. - 5:00 p.m. |
Agenda
|
| Welcome: |
Ev Buckardt |
Nomination
of officers: |
Clif Hooks |
| ERISA &
Retirees: |
Mary Signorille,
AARP Sr. Counsel |
| Retiree-Rights
Bill: |
Congressman
Tierney from Massachusetts will discuss his pending
legislation. |
| Litigation: |
Attorneys Foster
& Mulder will explain the litigation |
| Adjourn |
Ev Buckardt |
| Social Hour: |
5 p.m. Cash Bar |
| Dinner: |
6 p.m. -
$20/person |
|
Sears Annual
Shareholders Meeting
|
| Date |
Thursday,
May 10, 2001 |
|
Location |
Sears Corporate
HQ.
3333 Beverly Rd.,
Hoffman Estates, Il |
|
Time |
10:00 a.m. - 11:30 a.m.
We have been informed that no Admittance pass is required.
Complete details & plans for the meeting will be provided at
Wednesday's NARSE meeting. |
| Motel |
La
Quinta Inn,
2280 Barrington Rd., Hoffman
Estates, Il |
|
Reservations |
Call 1-800-531-5900 |
|
Rate |
Double
Occupancy - Ask for NARSE rate - $71
plus tax. |
|
Transportation |
Southwest has a
senior fare to Chicago for $129 each way, no advance purchase
required. We fly into Midway Airport in Chicago. If you choose to
fly SWA let us know so we can make ground transportation
arrangements together, if possible. |
Your participation at
these meetings is needed and appreciated. Space is limited, so
please contact Ev Buckardt ASAP to confirm your attendance,
arrangements, dinner, special needs, etc. Call 1-847-323-6702 or
e-mail at beks@ameritech.net.
Thank you for your continuing
support.
Ev Buckardt, Chairman
Claude Ireson, Vice Chairman
Clif Hooks, President
Lost
Sears Friend - Kelly Hodges
I am looking for a lost Sears friend. I
last heard he was a Store Manager in Phoenix, Arizona and that was 4-5
years ago. If you have any information, please email me. loudolores@webtv.net
Thank you for any assistance you might have
in locating him.
Louis Huggins, President
Sears Retirees,
Tallahassee, Florida
Quick
Review:
Fiduciary Trust Relationship Explanation
By
Gordon Muschett - March 20, 2001
Such a relationship exists when a
person or entity, such as Sears, acts primarily for another's
benefit and well being. An example might be administering a life
insurance program as a benefit to attract and retain employees, or
as an inducement to retire. This status gives rise to certain
legal obligations including to act in the best interests of the
other person. In other words, when one places his/her trust and
relies upon another to their detriment, such relationship is
breached and the person or entity breaching this relationship,
such as Sears, may be held legally accountable.
Federal Judge James B. Moran, of
the United States District Court for the Northern District of
Illinois, has set a trial date in the Sears Retiree case for
September 4, 2001. The Judge will take some time to consider
the case and then issue his decision. The documentation and
depositions regarding this lawsuit are quite large. The
information applies to the Sears Retirees effected by the life
insurance reduction by Sears.
Remember, this lawsuit was not given
class action status. If the ruling is for the twelve Sears Retiree
plaintiffs we believe that further action will have to be taken by
each of us. NARSE is trying to determine what action by you, as an
individual, will be necessary if the current lawsuit is successful.
Our goal is to receive answers by the NARSE Annual Meeting on
Wednesday, May 9, 2001. NARSE will follow the case and will try to
keep you updated on developments.
Passing
of Two Former Executives
March 10, 2001
We are sad to report the
dea
