CONTRACT INTERPRETATION.

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The Boeing Co. v. Spirit Aerosystems, Inc.

The Delaware Supreme Court affirms a lower court decision finding that the plaintiff aircraft manufacturer isn't entitled to reimbursement of pension and medical benefit costs from the defendant purchaser. The plaintiff is an aircraft manufacturer that has many manufacturing facilities throughout the world. The defendant is a manufacturer of airplane component parts. The plaintiff sold a few of its manufacturing facilities to the defendant. The defendant anticipated offering jobs to some of the plaintiff's employees, and the purchase agreement between the two parties provided that the defendant would credit the plaintiff's employees with past service for the purpose of determining eligibility under the terms of the defendant's own pension and medical benefit plans. The defendant also agreed to indemnify the plaintiff for any losses in connection with or arising from any of the liabilities that the defendant took on. After executing the purchase agreement, the plaintiff announced that it would deem any employees taking positions with the defendant as terminated due to divestiture. Some of the plaintiff's employees covered by a collective bargaining agreement (CBA) argued that under the applicable CBA, their separation from employment constituted a layoff and not a termination. As laid-off employees, they were entitled to certain pension and medical benefits, which the plaintiff now argues is the liability of the defendant. The lower court disagreed with the plaintiff's argument and found in...

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