Sixth Circuit Affirms Permanent Injunction Reinstating M&G Retirees in Health Care Plan

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By Jacklyn Wille  

Certain M&G Polymers USA retirees are entitled to vested lifetime health care benefits, the U.S. Court of Appeals for the Sixth Circuit ruled Aug. 12, affirming a permanent injunction ordering the retirees reinstated in M&G's health plan (Tackett v. M&G Polymers USA, LLC, 6th Cir., No. 12-3329, 8/12/13).

Senior Judge R. Guy Cole Jr., writing for the court, found that the U.S. District Court for the Southern District of Ohio reasonably concluded that the retirees' benefits had vested under the language of the plan and that certain side agreements between the union and various employers purporting to limit health benefits did not apply to the M&G plant that employed the retirees.

Cole also affirmed the district court's decision to reinstate the retirees in the current version of the M&G plan, despite the retirees' argument that they should have been reinstated in pre-2007 benefit levels.

Litigation History

The lawsuit stemmed from M&G's announcement in December 2006 that it would begin requiring its retirees to contribute to the cost of their health benefits. The retirees claimed that M&G's collective bargaining agreements with the United Steelworkers granted them free, lifetime health benefits. The lawsuit alleged that, by requiring the retirees to pay a portion of the health costs, M&G violated the Employee Retirement Income Security Act and the Labor Management Relations Act.

The district court dismissed the case in November 2007 (228 PBD, 11/29/07); 34 BPR 2835, 12/4/07; 42 EBC 2984), but the Sixth Circuit revived it in April 2009 by ruling that the retirees might have vested benefits in light of the language in their CBAs stating that they would receive “full company contribution” toward their health benefits (63 PBD, 4/6/09; 36 BPR 852, 4/7/09; 46 EBC 1901). The Sixth Circuit ruling was not dispositive, however, on whether the vested benefits were capped or uncapped.

On remand to the district court, M&G pointed to an “unbroken chain” of side agreements dating back to a 1991 cap letter that provided that M&G would have the ability, at some undetermined date, to impose caps on its contributions for the retirees' benefits. The district court was unable to come to a conclusion on whether the retirees' vested benefits were capped or uncapped, and the case proceeded to a bench trial (60 PBD, 3/29/11; 38 BPR 698, 4/5/11; 51 EBC 1080).

Following the bench trial, the court found that employees who retired from M&G and its predecessors' plant in Apple Grove, W.Va., who met eligibility requirements for retiree health benefits specified in agreements that were effective before Aug. 5, 2005, had a vested right to contribution-free lifetime health benefits. However, the court found that, after Aug. 5, 2005, retirees only had a right to capped lifetime health benefits, contingent on the qualifying retirees paying above-cap premiums (153 PBD, 8/9/11; 38 BPR 1508, 8/16/11; 51 EBC 2454).

Injunction and Appeal

In February 2012, the district court awarded a group of retirees a permanent injunction reinstating them in the existing version of M&G's health plan. The district court found that the retirees succeeded in showing that they had a vested right to lifetime, contribution-free medical benefits, and that they would suffer irreparable harm in the absence of a permanent injunction (35 PBD, 2/23/12; 39 BPR 414, 2/28/12; 52 EBC 1935).

The retirees argued that they had a vested right to the health plans as they existed before 2007, but the district court disagreed, finding the benefits available under the prior plan had not vested.

M&G appealed, arguing that the district court erred by finding that certain letters requiring retiree contributions to health care costs were not part of the relevant labor agreements. M&G also challenged the district court's conclusion that retirees' right to lifetime health care benefits vested at retirement.

The retirees cross-appealed, challenging the district court's decision to restore them to the current versions of their benefits plan, as opposed to the pre-2007 versions.

Sixth Circuit Affirms on Liability, Injunction

On appeal, the Sixth Circuit said that its earlier opinion found that the relevant CBA language “indicated a desire to vest benefits.” However, the earlier opinion “did not conclusively determine that Plaintiffs' retirement benefits had vested,” which was the conclusion reached by the district court on remand, the Sixth Circuit said.

On that point, the Sixth Circuit said that the district court's determination rested in part on its conclusion that certain side agreements between the union and employers that purported to cap health benefits did not apply to the M&G plant that employed the retirees. M&G argued that this was an error, because, among other things, “internal union conversations” indicated that at least some union representatives believed that the cap letters applied.

The Sixth Circuit said that, “[a]lthough these statements certainly have the potential to imply that cap agreements were applicable, they need not be dispositive.” The record contained conflicting evidence on this point, the Sixth Circuit said, finding that “several parties with authority to bind M&G and the union rejected or disputed cap letter applicability.”

M&G also pointed to the summary plan description as evidence that retiree benefits were capped, but the Sixth Circuit was not persuaded. It said that SPDs are neither legally binding nor part of the relevant plan document, and the district court was not required to find the SPDs persuasive. Therefore, “[i]n the face of such ambiguity,” the Sixth Circuit concluded that the district court did not err in finding the cap letters inapplicable.

Moreover, the Sixth Circuit found that the district court did not err by determining that the retirees had a vested right to health benefits. The court found that the relevant CBA language “specifically promised a 'full Company contribution' toward health care benefits” and that the district court's conclusion that benefits were vested was not unreasonable.

Cross-Appeal Unsuccessful

Finally, the Sixth Circuit considered the retirees' argument that the district court abused its discretion when it ordered them reinstated in the current plan and not the pre-2007 plan. The retirees relied on the Sixth Circuit's ruling in Reese v. CNH America, 574 F.3d 315, 47 EBC 1385 (6th Cir. 2009) (142 PBD, 7/28/09; 36 BPR 1827, 8/4/09), which held that retirees with vested lifetime health benefits could be subject to “reasonable changes” in benefits because the CBA did not contain any statements to the contrary. The retirees argued that, unlike the plan in Reese, their agreements specified the precise benefits to which they were entitled, and they were therefore vested in those specified benefit levels.

The Sixth Circuit disagreed, finding that the 2007 changes to the health plan were not unreasonable. The retirees pointed to an increase in the maximum out-of-pocket limit from $500 to $4,000 per family, which the court agreed was significant but “not so large that the district court clearly erred in finding it to be 'reasonable in light of changes in health care.'”

Senior Judge Damon J. Keith and Judge Boyce F. Martin Jr. joined in the opinion.

The retirees were represented by David M. Cook, Jennie G. Arnold, and Claire W. Bushorn of Cook & Logothetis, Cincinnati. M&G was represented by Christopher A. Weals of Morgan Lewis, Washington.


The full text of the opinion is at