Employee Benefits Committee Spring 2015 Newsletter | ABA Section of Labor & Employment Law

ABA Section of Labor and Employment Law

laborempllaw@americanbar.org
www.americanbar.org/laborlaw

Employee Benefits Committee Newsletter

Issue: Spring 2015

Collectively Bargained Retiree Health and the Demise of Yard-Man--Employer Perspectives

Over the past several decades, the divergent approaches of the various federal circuit courts of appeals has prevented the development of a uniform body of federal law defining when employee welfare plan benefits are vested for union retirees and their spouses. On January 26, 2015, in M&G Polymers USA LLC v. Tackett,1 the U.S. Supreme Court ruled that the Sixth Circuit's reliance on retiree-friendly inferences was incompatible with ordinary principles of contract interpretation and should not be used when determining whether a collective bargaining agreement promises vested, unalterable lifetime retiree health insurance benefits. This article describes the factual and legal background underlying the Tackett decision and addresses its potential impact from both the retiree and employer perspective.

Factual Background and Lower Court Rulings

In Tackett, retirees, their spouses and dependents, and the international union that had represented the retirees while they were employees (referred to collectively as retirees for simplicity) filed suit in February 2007 after M&G Polymers USA, LLC (M&G) required the individual plaintiffs to contribute towards the cost of their health insurance. Although the plant where the retirees had worked was located in Apple Grove, West Virginia, the class representatives lived across the Ohio River in Ohio. Consequently, the retirees sued M&G and the relevant benefit plans in the Southern District of Ohio.

The retirees asserted a breach of contract claim under §301 of the Labor Management Relations Act (LMRA) (Count I) and a claim for violation of an employee welfare benefit plan under §502(a)(1)(B) and (a)(3) of the Employee Retirement Income Security Act (ERISA) (Count II). Their third claim alleged that the modification to their benefits was a breach of fiduciary duty under §502(a)(3).

The retirees generally alleged that their health insurance benefits vested under collective bargaining agreements (CBAs) and "Pension, Insurance and Service Award Agreements" entered into between the union (or one of its predecessors) and M&G (or one of its predecessors). Specifically, the retirees relied on the following language:

Employees who retire on or after January 1, 1996 and who are eligible for and receiving a monthly pension under the 1993 Pension Plan ... whose full years of attained age and full years of attained continuous service ... at the time of retirement equals 95 or more points will receive a full Company contribution towards the cost of [health-care] benefits .... Employees who have less than 95 points at the time of retirement will receive a reduced Company contribution. The Company contribution will be reduced by 2% for every point less than 95. Employees will be required to pay the balance of the health care contribution, as estimated by the Company annually in advance, for the [health care] benefits .... Failure to pay the required medical contribution will result in cancellation of coverage.

M&G argued that a series of side-letters that capped the company's contributions towards the cost of the benefits were part of the parties' CBAs and demonstrated the benefits were not vested.

The district court granted M&G's motion to dismiss for lack of subject matter jurisdiction and failure to state a claim.2 On appeal, the Sixth Circuit reversed the dismissal of Counts I and II, but affirmed the dismissal of the §502(a)(3) fiduciary breach claim in Count III, which the court found to be a repackaged claim for benefits that could be fully remedied by Count II, which sought relief under §502(a)(1)(B).3 In reversing the dismissal of Counts I and II, the Sixth Circuit invoked several principles from UAW v. Yard-Man,4 including: the concept that retiree health-care benefits are "typically understood as a form of delayed compensation"5 and that vesting could be inferred because the CBAs "tied eligibility for health-care benefits to pension benefits."6

On remand, the district court denied M&G's motion for summary judgment.7 After a bench trial, the district court concluded that the retirees had a vested right to contribution-free health insurance benefits.8 In a separate order, the district court entered a permanent injunction, which required M&G to reinstate the retirees to the current versions of the health care plans, and not those plans that were in effect at retirement.9 Applying the Sixth Circuit's decision in Reese v. CNH America LLC,10 the court found that modifications to benefit plan details occurred over time and that there was "no vesting of fixed plan benefits and that the plan was susceptible to reasonable changes."11

On appeal once again, the Sixth Circuit affirmed.12 The court initially determined that the cap agreements were inapplicable to the Apple Grove plant. Next, purporting to apply traditional rules of contract interpretation, the court relied on Yard-Man and concluded that the retirees were entitled to contribution-free health benefits. The Sixth Circuit stated of the district court's "presumption that, in the absence of extrinsic evidence to the contrary, the agreements indicated an intent to vest lifetime contribution-free benefits was in accordance with both [the initial appellate decision] and the CBA language promising a 'full contribution' to qualifying employees."13 It further approved the district court's decision to presume vesting and shift the burden of proof to the employer:

[I]t was not the district court that, sua sponte, shifted the burden of proof, but rather the language of the CBA and its linkage of health care benefits to pension benefits, that led to the conclusion that retirees had a vested right to health care benefits and, in the absence of evidence to the contrary, a vested right to contribution-free health care benefits. Having reached the conclusion that benefits were vested, it was then reasonable for the district court to conclude that those benefits could not be bargained away without retiree permission.14

Finally, the Sixth Circuit approved the scope of the permanent injunction which, as noted above, only required the retirees to be reinstated to the current plan.

Summary of the Sixth Circuit's Approach Before Tackett

The unique path forged by the Sixth Circuit in the area of collectively-bargained retiree health benefits began with its decision in UAW v. Yard-Man.15 That case arose out of a collective bargaining agreement which was signed in 1974 between Yard-Man and the UAW with a stated expiration date of June 1, 1977. A year later the plant closed and in April, 1977 the company informed the retirees from the plant that their existing health and life insurance benefits would be terminated upon the expiration of the collective bargaining agreement. The UAW sued the company in federal district court alleging a violation of §301 of the Labor Management Relations Act and seeking, among other things, specific performance by the company of what the union viewed as its contractual obligation to maintain these retiree benefits. On cross-motions for summary judgment, the district court found for the union and ordered the company to reinstate health and life insurance for the retirees and their dependents.

On appeal, the Sixth Circuit affirmed, holding that the retirees had a vested right to the health and life insurance benefits. In doing so, the court insisted that it was employing "basic principles of contractual interpretation."16 Thus, for example, the court noted that the "collective bargaining agreement's terms must be construed so as to render none nugatory and avoid illusory promises."17 Nevertheless, the court noted that the "intended meaning of even the most explicit language can, of course, only be understood in light of the context which gave rise to its inclusion."18 Looking back, it may be said that this statement became the overriding principle of interpretation for the Sixth Circuit in subsequent retiree health benefit cases.

Thus, in Yard-Man, the court considered the fact that the labor agreement stated that the company would "provide [to retirees and dependents] insurance benefits equal to the active group." The employer argued that that included the CBA's three-year durational limitation. However, the court rejected the argument, finding the agreement's language to be ambiguous, since the actives, unlike the retirees, had their health benefits terminated prior to the end of the 1974 CBA. It also noted that under the contract, the company would pay an early retiree's insurance upon the retiree reaching age 65, but that the retiree must bear the cost until that time. Based on this, the court reasoned as follows:

Since an employee is entitled under the collective bargaining agreement to retire at age 55, the company's promise could remain outstanding for a ten-year period. If retiree insurance benefits were terminated at the end of the collective bargaining agreement's three-year term, this promise is completely illusory for many of the early retirees under age 62.19

In reaching this conclusion, the court made a fundamental mistake regarding ordinary contract principles. To begin with, it should be recalled that the CBA is a contract between the company and the union on behalf of the employees. Moreover, a promise is not illusory as long as the company has obligated itself to provide the promised benefit to those who qualify during the time of the agreement; it is not necessary that all of the early retirees receive the benefit.20

In addition, the Sixth Circuit's analysis in Yard-Man relied on a number of other assumptions for its conclusion that the retiree benefits vested and therefore would continue for the life of the employees who retired during the life of the labor agreement:

  • Benefits for retirees are only permissive and not mandatory subjects of collective bargaining and as such, it is unlikely that such benefits--which are typically understood as a form of delayed compensation for past services would be left to the contingencies of future negotiations.
  • The employees are presumably aware that the union owes no obligation to bargain for continued benefits for retirees and they would therefore assume that once they retire they would continue to receive to receive such benefits regardless of the bargain reached in subsequent labor agreements.
  • Retiree benefits are in a sense "status" benefits which, as such, carry with them an inference that they continue so long as the prerequisite status is maintained.
  • The labor agreement's general durational clause did not apply to the retiree health benefits, since the "clause does not specifically refer to the duration of [the retiree] benefits."

These assumptions eventually coalesced into what became known as the "Yard-Man inference." After Yard-Man, the Sixth Circuit attempted, from time to time, to explain away the importance of any such an inference, stating that this "inference" "does not create a legal presumption that retiree benefits are interminable."21 Another time, the court explained that "standing alone," the Yard-Man inference is "insufficient to find an intent to create interminable benefits."22 Nevertheless, some of the judges on the Sixth Circuit occasionally voiced concern over the court's repeated ability to find vested retiree health benefits. Thus, in Reese v CNH America,23 one of the panel judges noted that "on the other [hand], [the inference] must mean something or else there would be no point in having it. In the end, it may come to nothing more than this: a nudge in favor of vesting in close cases."24 Despite this limiting interpretation, the Sixth Circuit became the retirees' forum of choice because, in practice, Yard-Man had effectively turned into a presumption.25 The practical and legal result had been to shift the burden of proof to the employer to prove that the benefits were not lifetime. This forced the company to prove a negative and that it was not liable in a civil action.

Closely aligned with the "Yard-Man inference" and frequently used as part of the court's assessment of an employer's possible liability for vested retiree health benefits were rules of interpretation which, like the Yard-Man inference, skewed the Court's analysis in favor of the retirees. Thus, for example, where the language in the labor agreement tied eligibility for health care benefits to eligibility for pension benefits, then this pension "tie-in" language was found to demonstrate "an intent to provide lifetime benefits."26 Additionally, the Sixth Circuit held that general durational language at the end of the labor agreement or even at the end of a separate insurance program was insufficient to limit retiree health benefits to the duration of that agreement.272

Notwithstanding the Sixth Circuit's repeated denials that it had developed an inference in favor of finding collectively bargained retiree health benefits to be vested for life, the fact is that retirees have had over a 75% success rate in published decisions.28 No matter what language the employer pointed to in the labor agreement that arguably demonstrated that the benefits were not vested, the Sixth Circuit found a way to conclude that the benefits vested. Thus, for example, in Cole v. ArvinMeritor,29 the health benefit provisions were set forth in a separate document, attached to the CBA, entitled "Exhibit B, Supplemental Agreement (Insurance Program)." This provided for the creation and maintenance of a health benefits program which specifically identified the health benefits provided to actives as well as retirees. Each Supplemental Agreement expressly provided that the Agreement was limited in time: "This Agreement and Program [for health benefits], as modified and supplemented by this Agreement, shall continue in effect until the termination of the Collective Bargaining Agreement." Despite this express durational language within the separate Supplemental Agreement created by the parties to provide for health benefits (including retiree health benefits), the Sixth Circuit held that the retirees were entitled to lifetime health benefits because such a "durational limitation must include a specific mention of retiree benefits in order to apply to such benefits."30 In Cole, the Court nevertheless seemed to recognize, as it did on a couple of other occasions, that its actions belied any assertion by the Sixth Circuit that there was no presumption of vesting at work: "Indeed, there is a reasonable argument to be made that, while this Court has repeatedly cautioned that Yard-Man does not create a presumption of vesting, we have gone on to apply just such a presumption."31

The Approach of the Other Circuits Before Tackett

At the other end of the spectrum from the Sixth Circuit's Yard-Man inference favoring retirees is the Third Circuit's "clear and express language" standard, first adopted in Skinner Engine.32 The Third Circuit described its standard as follows: "Because vesting of welfare plan benefits constitutes an extra-ERISA commitment, an employer's commitment to vest such benefits is not to be inferred lightly and must be stated in clear and express language."33 In the non-union context, the Third Circuit has characterized its clear and express language requirement as a presumption against vesting.34

The Seventh Circuit has established a rebuttable presumption that "an employee's entitlement to such benefits expires with the agreement creating the entitlement."35 It further explained that "[t]he presumption that healthcare benefits do not exceed the life of an agreement imposes a high burden of proof upon the retirees."36 Although referred to as a "presumption," however, the Seventh Circuit's approach is consistent with the Supreme Court's decision in Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB, which was reaffirmed in Tackett and states "the traditional principle that 'contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.'"37

The remaining circuits apply different approaches to ascertaining an employer's obligation to continue providing retiree health benefits under a CBA.38 The First Circuit rejects the use of presumptions.39 Rather, the court reasoned, "[u]nder the federal law governing the interpretation of a labor contract under the LMRA, a court should resort to traditional principles of contract interpretation to the extent such principles are consistent with federal labor law."40 Nonetheless, employees bear the burden of proving their welfare benefits are vested and, if an agreement is ambiguous, the First Circuit considers extrinsic evidence without applying any presumptions.41

The Second Circuit does not expressly reject or accept the use of presumptions. It has stated that to reach a trier of fact, an employee does not have to "point to unambiguous language to support [a] claim."42 Instead, an employee must point to "specific written language that is reasonably susceptible to interpretation as a promise to vest benefits."43 The court has explained that it "will not infer an obligation to vest benefits absent some language that itself reasonably supports an interpretation."44 Thus, the absence of language alone is insufficient to vest benefits.45

In the union context, the Fourth Circuit clarified that it did not adopt the Yard-Man inference.46 In the non-union context, the Fourth Circuit requires that "any participant's right to a fixed level of lifetime benefits must be 'found in the plan documents and must be stated in clear and express language.'"47

The Fifth Circuit expressed disapproval of Yard-Man.48 However, the Fifth Circuit has also explained "that there is also no presumption that retiree health insurance benefits conferred by a CBA are coterminous with that CBA."49 The Fifth Circuit requires "clear an express language" in the non-union context.50

The Eighth Circuit also specifically declined to follow Yard-Man.51 It has explained, "[w]hen ERISA benefits are provided in a [CBA] that has no express vesting provision, 'the union shoulders a difficult, though not impossible, burden of persuasion . . . since courts are reluctant to read more benefits into an ERISA plan than its plain language confers."52

The Tenth Circuit has held that a plaintiff "cannot prove that his employer promised vested benefits unless he identifies 'clear and express language' in the plan making such a promise."53

The Tackett Ruling

In Tackett, a unanimous Supreme Court vacated the Sixth Circuit's affirmance of judgment for retirees because the lower court's analysis depended on the Yard-Man inference.54 The Court remanded and ordered the Sixth Circuit to apply in the first instance "ordinary principles of contract law" rather than inferences from Yard-Man and its progeny that were inconsistent with those principles.55 Justice Ginsburg authored a concurring opinion, which was joined by Justices Breyer, Sotomayor and Kagan.

The Supreme Court concluded in Tackett that the Yard-Man inference "violates ordinary contract principles by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements."56 Further, the inference "has no basis in ordinary principles of contract law and it distorts the attempt 'to ascertain the intention of the parties.'"57

The Court explained that "[w]e interpret collective-bargaining agreements, including those establishing ERISA plans, according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy."58

The Court further explained that when interpreting a contract to determine whether benefits are vested, "'as with any other contract, the parties' intentions control.'"59 The Yard-Man inference was improper because "it distorts the attempt 'to ascertain the intention of the parties.'"60

The Supreme Court cited its earlier ruling in Litton Financial, chiding the Sixth Circuit for failing to consider the traditional principle that "'contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.'"61 The Court cautioned that this "principle does not preclude the conclusion that the parties intended to vest lifetime benefits for retirees."62 Although the Court acknowledged that an agreement may provide in explicit terms that benefits vest, it also stated "when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life."63

The Supreme Court also found that the Sixth Circuit misapplied several additional contract principles. It concluded that the Sixth Circuit erred in refusing to consider the importance of "general duration clauses" that provide that the overall contract terminates on a certain date.64 According to the Court, the Sixth Circuit's prior decisions "distort the text of the agreement and conflict with the principle of contract law that the written agreement is presumed to encompass the whole agreement of the parties."65 Regarding the illusory promise doctrine, the Court explained that promises are not illusory "merely because they did not equally benefit all retirees."66 Instead, if the promise benefits some retirees, then there is adequate consideration.67 The Court also noted that the Sixth Circuit "failed even to consider the traditional principle that courts should not construe ambiguous writings to create lifetime promises."68

Throughout Tackett, the Supreme Court called for reliance on facts, not suppositions. The Court criticized Yard-Man for adopting inferences that "rest on a shaky factual foundation."69 For example, the Court explained that although Yard-Man assumed that retiree health benefits are not mandatory subjects of bargaining, parties can and do agree to make the benefits subject to mandatory bargaining.70 Additionally, the Court rejected the premise that retiree health benefits are a form of deferred compensation, stating that this was contrary to congressional intent.71 Thus, "Yard-Man's assessment of likely behavior in collective bargaining is too speculative and too far removed from the context of any particular contract to be useful in discerning the parties' intention."72 Likewise, where contract language itself does not clearly express the intent of the parties, the Supreme Court emphasized that courts are to resolve that ambiguity based on "affirmative evidentiary support" for what the particular parties to the particular contract in the particular industry intended, rather than "suppositions" about "likely behavior in collective bargaining."73

The Impact of Tackett from the Employer Perspective

Tackett alters the playing field for employers by removing an interpretive aid that for years made it difficult to defend a lawsuit challenging unilateral changes to union retiree insurance benefits in the Sixth Circuit. To be sure, the ruling does not automatically validate employer unilateral action. Instead, courts will need to interpret the relevant bargaining agreements and apply ordinary rules of contract interpretation to determine whether and to what extent retirees are entitled to health insurance. This should lead to a reduction in decisions granting summary judgment for retirees.

At the same time, Tackett left standing the Third Circuit's approach from Skinner Engine, which held that a determination of vesting "is not to be inferred lightly and must be stated in clear and express language."74 Although presented with the Third Circuit's approach during briefing, neither the unanimous Court opinion nor the concurring opinion cites Skinner Engine.75 Nevertheless, consistent with Skinner Engine, Tackett reaffirmed Litton's holding that "a collective bargaining agreement [may] provid[e] in explicit terms that certain benefits continue after the agreement's expiration."76 Additionally, when describing Yard-Man as a "deviation from ordinary principles of contract law," the Court contrasted Yard-Man with the Sixth Circuit's approach in Sprague v. General Motors Corp, which analyzed vesting in non-collectively bargained contracts.77 Under Sprague, "the intent to vest must be found in the plan documents and must be stated in clear and express language."78 Sprague comports with the principles that welfare benefit plans must be established pursuant to a written instrument79 and that contractual provisions should be enforced as written.80 Accordingly, Sprague, Skinner Engine and other decisions involving non-union retirees requiring "clear and express" language provide valid guideposts for lower courts in analyzing vesting.

In the absence of language that clearly vests retiree insurance benefits and faced with the elimination of retiree-friendly inferences, retirees will try to rely on vast amounts of extrinsic evidence to support their claims. Importantly, however, Tackett confirmed that a contract that is silent regarding the duration of benefits cannot be construed to provide vested benefits.81 Thus, silence as to duration should not create an ambiguity that would permit the admission of extrinsic evidence.82 Additionally, Tackett reaffirms "the traditional principle that courts should not construe ambiguous writings to create lifetime promises." Accordingly, courts should be less-inclined to find vesting on the basis of an alleged ambiguity where the "plainly expressed intent" of the CBA contains no evidence of vesting.83

Retirees will also be unable to create or identify ambiguities by relying on language tying eligibility for health care benefits to eligibility for pension benefits. This is because describing the class of those eligible for retiree health care benefits by referring to those eligible for pension benefits says nothing about the duration of the benefits. Thus, in the absence of an ambiguity about the duration of the benefits, courts should not consider extrinsic evidence and should focus on the written agreement, which, as noted, above, "is presumed to encompass the whole agreement of the parties."84

Moreover, provisions simply stating that health benefits for retirees "will continue" or that the employer "shall provide" the benefits should not create an ambiguity permitting a court to review extrinsic evidence. This is because, coupled with the general durational clause at the end of the contract, there would be only silence as to the duration of the benefits, but no ambiguity, permitting application of the general rule that contractual obligations ordinarily cease upon the expiration of the agreement.85 If unions and retirees want to escape this general rule, then they negotiate contracts containing "explicit terms" that benefits vest.86 Alternatively, the general durational clause would act to disambiguate any ambiguity presented by "shall provide"-type language.87 Such "will continue" language--which in the pre-Tackett realm had been cited as evidence of vesting88--contrasts sharply with a provision stating that benefits "will continue for the life of the retiree," which unambiguously vests benefits for life.89

Going forward, courts should also cast a skeptical look on attempts to rely on pre-Tackett Sixth Circuit decisions that purported to rely on ordinary principles of contract interpretation. In Tackett, the Court found there was "no doubt that Yard-Man and its progeny affected the outcome."90 In the same manner, the erroneous application of the Yard-Man inference invariably infected decades of Sixth Circuit jurisprudence.91 There are few, if any, Sixth Circuit decisions applying the correct ordinary principles of contract interpretation outlined by the Supreme Court untainted by Yard-Man. Therefore, pre-Tackett decisions that rely on Yard-Man should have little, if any, applicability.

Finally, logical application of Tackett will require courts to consider an often overlooked issue. While the parties often argue about whether the collective bargaining agreements provide vested benefits, few decisions involve a discussion about what benefits vested. A contract that promises "coverage" to retirees, but does not specify a certain level of coverage or the type of plan, should not automatically be viewed as providing retirees with a right to the coverage that was in effect at retirement.92 Similarly, a contract that is silent as to how much the employer is required to pay for the cost of that coverage, does not inevitably lead to the conclusion that employer pays the full premium share. And, a provision that requires an employer to pay the full amount of the insurance premium, but is silent on other cost sharing provisions (e.g., deductibles, co-pays, co-insurances), does not imply that the employer cannot impose any costs on the retirees.

Michael A. Alaimo and Brian Schwartz

Footnotes

1135 S.Ct. 926 (2015).

2523 F. Supp. 2d 684 (S.D. Ohio 2004).

3562 F.3d 478 (6th Cir. 2009).

4716 F.2d 1476 (6th Cir. 1983).

5 Tackett, 562 F.3d at 489 (quoting Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571, 580 (6th Cir. 2006)).

6Id. at 489-90.

72011 WL 1114281 (S.D. Ohio Mar. 24, 2011).

82011 WL 3438489 (S.D. Ohio Aug. 5, 2011). The district concluded, however, that one of the subclasses benefits were vested, but that they were required to pay the above-cap premium amounts (i.e., above what M&G was obligated contribute).

9853 F. Supp. 2d 697 (S.D. Ohio 2012).

10574 F.3d 315 (6th Cir. 2009).

11853 F. Supp. 2d at 722.

12733 F.3d 589 (6th Cir. 2013).

13Id. at 600.

14Id. (citing Reese v. CNH America LLC, 574 F.3d 315, 322 (6th Cir. 2009)).

15716 F.2d 1476 (6th Cir. 1983)

16Id. at 1479.

17Id. at 1480.

18Id. at 1479.

19Id., at 1481.

20See, Restatement (Second) of Contracts §77, Comment a., Illusory promises (Words of promise which by their terms make performance entirely optional with the 'promissor' do not constitute a promise)(emphasis added). See also Source Associates, Inc. v. Valero Energy Corporation, 273 Fed. Appx. 425 (6th Cir. 2008)([A] contract is illusory only when by its terms the promisor retains the unlimited right to determine the nature or extent of his performance; the unlimited right, in effect, destroys his promise thus makes its illusory); Stinger Industries, LLC v. Hill-Rom Company, Inc, 23 Fed. Appx. 472, 474 (6th Cir. 2001)(A promise that does not put any limitation on the freedom of the alleged promissor but leaves his future action subject only to his own will is illusory)(emphasis added).

21Noe v. PolyOne Corp, 520 F.3d 548, 552. See also Wood v. Detroit Diesel Corp., 213 Fed.Appx. 463, 466-67 (6th Cir. 2007) (The district court's reasoning is faulty. The court implicitly applied a presumption that the retirees' right to health care benefits was vested and then required Detroit Diesel to rebut the presumption by identifying contractual language specifically authorizing the modification it tried to implement. Detroit Diesel correctly argues that such a presumption is improper, as the burden of proving intent to vest rests on plaintiffs.)

22Yard-Man, 716 F.2d at 1482.

23574 F3d 315, 321 (6th Cir. 2009).

24574 F.3d at 321.

25Noe, 520 F.3d at 567 (Sutton, J., concurring) (quoting out-of-circuit cases characterizing Yard-Man as a presumption and stating, "What we continually disclaim presuming we continually seem to presume.)

26Yolton, 435 F.3d at 580, 584-85; Noe, 530 F.3d at 559 (pension tie-in language stating "Employees who retire and who are eligible under the 1979 Employee Benefit Agreement for a Pension . . . shall receive the benefits described in this Article.). In Witmer v. Acument Global Technologies, 694 F.3d 774, 776 (6th Cir. 2012), however, the Sixth Circuit concluded that a pension tie-in language did not result in vested benefits and that the reservation-of-rights language.

27Cole v. ArvinMeritor, 549 F.3d 1064, 1071 (6th Cir. 2008).

28Retirees secured victory in in seventeen preliminary injunction or merits decisions: United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO-CLC v. Kelsey-Hayes Co., 750 F.3d 546 (6th Cir. 2014); Tackett, supra; Moore v. Menasha Corp., 690 F.3d 444 (6th Cir. 2012); Bender v. Newell Window Furnishings, 681 F.3d 253 (6th Cir. 2012); Reese, supra; Cole, supra; Noe, supra; Prater v. Ohio Educ Ass'n, 505 F.3d 437 (6th Cir. 2007); Yolton, supra; McCoy v. Meridian, 390 F.3d 417 (6th Cir. 2004); Maurer v. Joy Tech, 212 F.3d 907 (6th Cir. 2000); UAW v. BVR Liquidating, 190 F.3d 768 (6th Cir. 1999); Golden v Kelsey-Hayes, 73 F.3d 648 (6th Cir. 1996); Smith v. ABS Industries, 890 F.2d 841 (6th Cir. 1989); Policy v. Powell Pressed Steel Co., 770 F.2d 609 (6th Cir. 1985); Weimer v. Kurz-Kasch, 773 F.2d 669 (6th Cir. 1985); and UAW v. Cadillac Malleable, 728 F.2d 807 (6th Cir. 1984). Four decisions (three separate cases) favoring employers either involved unique facts, a statute of limitations defense or did not provide the employer with a complete victory by finding that benefits were vested, subject to a contribution cap. Wood v. Detroit Diesel Corp., 607 F.3d 427, 434 (6th Cir. 2010)(negotiated "caps" on employer's contributions for vested retiree health benefits continued to apply after expiration of the agreement); Winnett v. Caterpillar, 609 F.3d 404 (6th Cir. 2010) (statute of limitations barred retiree claims); Winnett v. Caterpillar, 553 F.3d 1000 (6th Cir. 2008) (employees who retired after CBA expired not entitled to vested benefits); Witmer v. Acument Global Tech., 694 F.3d 774 (6th Cir. 2012) (express reservation of rights language in collective bargaining agreement precluded vesting).

29549 F.3d 1064 (6th Cir.2008).

30549 F.3d at 1074.

31Id. at 1074.

32UAW v. Skinner Engine Co., 188 F.3d 130, 137-138 (3d Cir. 1999).

33Skinner Engine, 188 F.3d at 139.

34Smathers v. Multi-Tool, Inc./Multi-Plastics, Inc. Employee Health and Welfare Plan, 298 F.3d 191, 196 (3d Cir. 2002); Lewis v. Allegheny Ludlum Corp., 579 Fed.Appx. 116, 119 (3d Cir. Aug. 27, 2014) (quoting Smathers when referring a "presumption against vesting," but not stating whether such a presumption exists for LMRA claims)

35Rossetto v. Pabst Brewing Co., 217 F.3d 539, 543 (7th Cir. 2000).

36Cherry v. Auburn Gear, 441 F.3d 476, 481 (7th Cir. 2006).

37Tackett, 135 S.Ct. at 937 (quoting Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB, 501 U.S. 190, 207 (1991)).

38In addition to the cases cited below, see also Alday v. Raytheon Co., 693 F.3d 772, 782 (9th Cir. 2012) and Stewart v. KHD Deutz of America, Corp., 980 F.2d 698, 702 (11th Cir. 1993).

39Senior v. NSTAR, 449 F.3d 206, 216-18 (1st Cir. 2006).

40Id.

41Id. at 216.

42American Federation of Grain Millers v. International Multifoods Corp., 116 F.3d 976, 980 (2d Cir. 1997).

43Bouboulis v. TWUA, 442 F.3d 55, 60 (2d Cir. 2006) (quotations omitted).

44Joyce v. Curtiss-Wright Corp., 171 F.3d 130, 135 (2d Cir. 1999).

45Bouboulis, 442 F.3d at 61.

46Dewhurst v. Century Aluminum Co., 649 F.3d 287, 291-92 (4th Cir. 2011).

47Gable v. Sweetheart Cup Co., 35 F.3d 851, 855 (4th Cir. 1994). See also Trull v. Dayco Prods., 178 Fed. Appx 247, 250 (4th Cir. 2006) (distinguishing Gable because it did not involve LMRA claims).

48UPIU v. Champion Int'l Corp., 908 F.2d 1252, 1261, n.12 (5th Cir. 1990); Nichols v. Alcatel, 532 F.3d 364, 378 (5th Cir. 2008) (the Yard-Man inference . . . has never been accepted by this court).

49IAM v. Masonite Corp., 122 F.3d 228, 231 (5th Cir. 1997).

50Wise v. El Paso Natural Gas Co., 986 F.2d 929, 937 (5th Cir. 1993).

51Anderson v. Alpha Portland Industries, 836 F.2d 1512, 1517 (8th Cir. 1988). See also Maytag Corp. v. UAW, 687 F.3d 1076 (8th Cir. 2012).

52Maytag, 687 F.3d at 1085 (internal citations omitted).

53Fulghum v. Embarq Corp., _ F.3d _, 2015 WL 1905798, *2 (10th Cir. Apr. 27, 2015) (citations omitted).

54135 S.Ct. at 935.

55Id. at 937.

56Id. at 935.

57Id. (citations omitted and emphasis in the original).

58Id. at 933.

59Id. (quoting Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662, 682 (2010)).

60135 S.Ct. at 935 (quoting 11 R. Lord, Williston on Contracts § 30:2, at 18 (4th ed. 2012))

61Id.. at 937 (quoting Litton Financial, 501 U.S. at 207).

62Id.. at 937.

63Id.

64Id. at 936.

65Id.

66Id.

67Id.

68Id. (citing See A. Corbin, Corbin on Contracts § 553, p. 216 (1960)).

69Id.

70Id.

71Id.

72Id. at 935.

73Id.

74188 F.3d at 139.

75Tackett explained that "Yard-Man violates ordinary contract principles" and "it distorts the attempt 'to ascertain the intention of the parties.'" 135 S.Ct. at 935 (emphasis added). Notably, the Court did not state that the "clear and express" requirement in Sprague distorts the intention of the parties.

76Tackett, 135 S.Ct at 937.

77Id. (citing Sprague,133 F.3d 388, 400 (6th Cir. 1998)).

78Sprague, 133 F.3d at 400.

79Tackett, 135 S.Ct. at 933 (citing29 U.S.C. §1102(a)(1)).

80Id. (citing Heimeshoff v. Hartford Life & Accident Ins. Co., 134 S.Ct. 604, 611-12 (2013)).

81Id.

82Id. at 936 (citing See A. Corbin, Corbin on Contracts § 553, p. 216 (1960)). See also Senn v. United Dominion Indus., 951 F.2d 806, 816 (7th Cir. 1992) (silence does not create an ambiguity); Rossetto, 217 F.3d at 547 (If a collective bargaining agreement is completely silent on the duration of health benefits, the entitlement to them expires with the agreement, as a matter of law (that is, without going beyond the pleadings), unless the plaintiff can show by objective evidence that the agreement is latently ambiguous, that is, that anyone knowledgeable about the real-world context of the agreement would realize that it might not mean what it says.).

83Tackett, 135 S.Ct. at 933

84Id. at 936.

85Id. at 930 (citing Litton Financial, supra).

86Id.

87Barnett v. Ameren Corp., 436 F.3d 830, 833 (7th Cir. 2006).

88See, e.g., Moore v. Menasha Corp., 690 F.3d 444, 453 (6th Cir. 2012) (relevant language stating "Company will provide medical coverage through the Menasha Corporation Retiree Medical Plan for persons retiring at or after age 65.)

89See, e.g., Skinner, 188 F.3d at 140.

90135 S.Ct at 937.

91For example, in Tackett, the Court noted that the Yard-Man inference derived from the Sixth Circuit's "assessment of likely behavior not from record evidence, but instead from its own suppositions about the intentions of employees, unions, and employers negotiating retiree benefits." Id. at 935. These prior decisions are effectively useless in determining the parties "customs or usage" because the inferences in Yard-Man were "applied . . . indiscriminately across industries." Id.

92See, e.g., Leannah v. Alliant Energy Corp., 607 F. Supp. 2d 946, 958 (E.D. Wisc. 2009) (even if the language relied on by plaintiffs did evidence an intent to vest any health benefits, the only portion of the benefit to vest would be the right to enjoy coverage equivalent to that of active employees, not premium pricing equivalent to that afforded active employees)

CONTENTS: Opening Page | Response to Collectively Bargained Retiree Health and the Demise of Yard-Man--Perspectives from Counsel for Retirees | The Multiemployer Pension Reform Act of 2014 | What Is Congress Hiding in its Mousetrap? Musings on King v. Burwell | Report from the Co-Chairs of the Employee Benefits Committee | Employee Benefit Lawyers Hold Law Student Outreach at University of San Diego Law School | Dining with Sarah Johnson | As We Go to E- Press--A Few Items from the Editors of the EBC Newsletter

American Bar Association Section of Labor and Employment Law
321 N Clark | Chicago, IL 60654 | (312) 988-5813 | Fax: (312) 988-5814