A class of retired union employees of Acument Global Technologies Inc. are
not entitled to lifetime health care benefits because of a collective bargaining
agreement that contained a reservation-of-rights clause allowing their employer
to modify or terminate benefits, the U.S. Court of Appeals for the Sixth Circuit
ruled Sept. 17 in a
2-1 decision (Witmer v. Acument Global
Technologies Inc., 6th Cir., No. 11-1793, 9/17/12).
Writing for the majority, Judge Jeffrey S. Sutton found that the CBA's
reservation-of-rights clause was “incompatible” with a promise to provide
lifetime benefits and that the CBA's mention of “continuous health insurance”
did not change the fact that the employer was free to modify or terminate health
benefits at any time.
In so holding, the Sixth Circuit affirmed a decision of the U.S. District
Court for the Eastern District of Michigan.
The plaintiffs were former employees of Acument who retired under a series of
CBAs that included provisions for retiree health care and life insurance
coverage. The CBAs all contained a reservation-of-rights clause giving Acument
the right to amend, modify, suspend, or terminate the plan after the CBAs
expired. In addition, some of the retirees at issue were covered by plant
closing agreements that acknowledged their right to certain benefits.
In January 2008, Acument reduced health benefits for retirees and their
spouses. Four months later, Acument announced it would terminate retiree health
and life insurance benefits, and the retirees brought a lawsuit seeking
reinstatement of their benefits at pre-2008 levels.
In January 2009, the U.S. District Court for the Eastern District of Michigan
certified the case as a class action (21 PBD, 2/4/09; 36 BPR 312, 2/10/09). In
November 2010, the district court struck the retirees' request for a jury trial
(222 PBD, 11/19/10; 37 BPR 2551, 11/23/10), and in May 2011, it granted summary
judgment to Acument, finding that the retirees were not entitled to receive
lifetime health care and life insurance benefits (104 PBD, 5/31/11; 38 BPR 1062,
6/7/11). The retirees appealed to the Sixth Circuit.
In upholding the district court's ruling that the retirees could not claim
lifetime benefits, the Sixth Circuit found that the CBA in question contained a
reservation-of-rights clause providing that Acument “reserves the right to
amend, modify, suspend, or terminate the Plan.” This language was “incompatible
with a promise to create vested, unchangeable benefits,” the court found.
Further, the CBA language granting “continuous health insurance” did not
create vested lifetime benefits, the court found, because this language appeared
in the same section as the reservation-of-rights clause. The purpose of the
phrase “continuous health insurance” was to show that benefits did not
automatically terminate upon expiration of the CBA, not to vest the retirees
with lifetime coverage that could never be modified, the court found.
The court also rejected the retirees' contention that the relevant CBA
section's references to the “pension plan” signaled that health care benefits
were not subject to the reservation-of-rights clause. Instead, the court found
that the “pension plan” references necessarily referred to both retirement
income benefits and retiree health care benefits, and that the
reservation-of-rights clause applied equally to both.
John R. Canzano of McKnight McClow Canzano Smith & Radke, counsel for the
retirees, told BNA Sept. 17 that he disagreed with the Sixth Circuit's
application of the summary judgment standard.
“In the summary judgment context, all doubts should be resolved against the
moving party,” Canzano said. “Here, the appeals court engaged in what can only
be described as fact finding--which is the district court's job--which
contravenes the summary judgment standard and is an act of inappropriate
judicial activism.” Canzano said that, because “there were two reasonable
interpretations of the contract language,” the court should have considered the
“extensive extrinsic evidence” to resolve the ambiguity.
Judge Richard A. Griffin joined in the court's opinion.
Judge David D. Dowd Jr., sitting by designation from the U.S. District Court
for the Northern District of Ohio, authored a separate dissent, concluding that
the language of the CBA was “poorly drafted” and “not a model of clarity” and
that the case should be remanded to the district court for consideration of
extrinsic evidence of the parties' intent with respect to vesting of health care
The retirees were represented by John R. Canzano of McKnight McClow Canzano
Smith & Radke, Southfield, Mich. Acument was represented by Donald A. Van
Suilichem and Kelly A. Van Suilichem of Van Suilichem & Associates,
Bloomfield Hills, Mich.
By Jacklyn Wille
The full text of the opinion is at http://op.bna.com/pen.nsf/r?Open=jwie-8y8l5b.
To view additional stories from Pension & Benefits Daily™ register for a free trial now