Honeywell Gets Mixed Results in Courts Over Retiree Health Cuts

Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...

By Carmen Castro-Pagan

Honeywell International Inc. can’t cut lifetime health-care benefits to retirees of a Greenville, Ohio, plant, a federal judge held Feb. 28 ( Fletcher v. Honeywell Int’l, Inc. , 2017 BL 62370, S.D. Ohio, No. 3:16-CV-00302, 2/28/17 ).

The retirees showed that Honeywell agreed to provide health benefits for life, Judge Walter H. Rice of the U.S. District Court for the Southern District of Ohio said. Collective bargaining agreement negotiations since at least 2000 and the company’s decision to continue providing health benefits to retirees after the CBA expired provided strong support for the court’s finding that Honeywell agreed to provide lifetime benefits, Rice said.

The decision is the latest setback for Honeywell in its efforts to reduce health-related expenses by eliminating lifetime coverage for retirees and their dependents. Honeywell’s 2015 plan to terminate retirees’ health benefits resulted in four lawsuits in federal courts in Connecticut, Michigan and Ohio. So far, two courts have ruled in favor of the retirees and one in favor of Honeywell. Another court gave a partial win to the company, holding that the cuts were allowed for some retirees.

Mixed Outcomes

In early February, a federal court in Connecticut barred Honeywell from terminating health benefits to retirees of a Hartford, Conn., plant who retired before the expiration of a CBA in 1997. However, the same court handed a victory to Honeywell when it ruled Feb. 28 that those who retired after the CBA expired weren’t entitled to lifetime health-care benefits.

A court in Michigan also ruled in favor of the retirees when it entered an order in December forcing Honeywell to continue health coverage for 32 Michigan retirees. Shortly after, a federal court in Ohio dismissed the retirees’ lawsuit against Honeywell, holding that the health cuts didn’t violate the retirees’ CBAs. Both decisions were appealed to the U.S. Court of Appeals for the Sixth Circuit.

In the latest ruling, Rice took into account Honeywell’s conduct after the final CBA expired in 2014. He noted that after a 2015 U.S. Supreme Court decision, Honeywell reassessed its position concerning its obligation to continue providing retiree health-care benefits.

Honeywell’s conduct in continuing to pay for health benefits after it was allegedly not contractually required to do so is an “objective manifestation of the parties’ earlier intent to vest” lifetime benefits to retirees, Rice said in ruling for the retirees.

Retirees who allegedly were promised lifetime health benefits have gone to court to challenge their companies’ efforts to terminate those benefits. Major companies, including BorgWarner Inc., Moen Inc., Weyerhauser Co. and Johnson Controls Inc., have been successful in getting courts to uphold those cuts. Similar challenges are pending against Kraft Heinz Food Co., CONSOL Energy Inc. and Raytheon Co.

Martens Ice Klass Legghio & Israel PC and William Wertheimer represented the retirees. Livingston Adler Pulda Meiklejohn & Kelly and Wertheimer represented the Connecticut retirees. Faruki Ireland & Cox and Kirkland & Ellis LLP represented Honeywell in Ohio. Morgan Lewis & Bockius LLP represented Honeywell in Connecticut.

To contact the reporter on this story: Carmen Castro-Pagan in Washington at ccastro-pagan@bna.com

To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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