The U.S. Court of Appeals for the Sixth Circuit reverses a district court judgment, finding that the applicable collective bargaining agreements are unambiguous and therefore there was no intent to vest retiree health care benefits for life.
The plaintiffs, retirees of a manufacturing company, filed suit on behalf of themselves and other similarly situated retirees, retirees' surviving spouses and eligible dependents who were covered under a series of collective bargaining agreements (CBAs) between their union and the company as their employer. The defendant is the company. The plaintiff retirees worked at one of the manufacturing plants owned by the company. The manufacturing plant was sold in 2011. While employed at the plant, the plaintiffs were covered by the CBAs, which included retiree health care benefits. The CBA expired in May 2014, but the defendant continued to provide retiree health care benefits after its expiration. It was not until December 2015 that the defendant informed the plaintiffs that retiree health care benefits would terminate at the end of December 2016. The plaintiffs filed suit, arguing that the defendant promised the plaintiffs lifetime retiree health care benefits. The district court held that the CBAs were ambiguous and therefore relied on extrinsic evidence to conclude that the parties intended for the retiree health care benefits to vest for life. The defendants appealed, and this court reviews the district court findings of fact for clear error and its conclusions of law de novo.
As established by M&G Polymers USA, LLC, et al. v. Tackett et al., 135 S.Ct. 926 (2015), courts must interpret CBAs, including those establishing plans under the Employee Retirement Income Security Act of 1974 (ERISA), according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy. First, the court looks at the explicit language of the contract for clear statements of the parties' intent. Then, if plain language is susceptible to more than one interpretation, extrinsic evidence is considered. Therefore, the plaintiffs can only succeed on the claims if they prove that either (1) the CBAs unambiguously provide retirees with lifetime health care benefits or (2) the CBAs are ambiguous and the extrinsic evidence demonstrates that the parties intended to vest retiree health care benefits.
In other cases, the Sixth Circuit has previously established a clear rule that a...