Honeywell Loses Round Over Retiree Health Cuts, Moves to Trial

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By Carmen Castro-Pagan

Honeywell International Inc. violated ERISA by announcing it would terminate lifetime full medical coverage to retirees of a Stratford, Conn., company plant, a federal judge ruled ( Kelly v. Honeywell Int’l, Inc. , 2017 BL 37858, D. Conn., No. 3:16-cv-00543-VLB, 2/8/17 ).

The language “for the life of the retiree or surviving spouse,” included in collective bargaining agreements, unambiguously provided a contractually vested right to lifetime full medical coverage benefits, Judge Vanessa L Bryant of the U.S. District Court for the District of Connecticut held Feb. 8.

People who retired before the expiration of the CBA are entitled to lifetime benefits, but those who retired after the expiration date will move to trial to determine whether their benefits were vested at the time they retired and if the company breached its fiduciary duties under the Employee Retirement Income Security Act, Bryant said.

The decision is the latest development in Honeywell’s efforts to cut lifetime health benefits to its retirees. Honeywell’s 2015 announcement was followed by at least three other lawsuits in Ohio and Michigan. The retirees’ challenges have had mixed results with federal judges.

A federal judge in the Northern District of Ohio held in December that the cuts didn’t violate the retirees’ CBAs.

However, a federal judge in Michigan entered a preliminary injunction barring Honeywell from cutting health benefits for retirees who had worked at the company’s Boyne City, Mich., plant. Another federal judge in the Southern District of Ohio allowed retirees from a Greenville, Ohio, plant to move forward with their lawsuit against the company.

Different CBAs

Bryant took notice of other pending challenges against Honeywell and compared the CBAs at issue in those cases with the CBAs applicable to the Stratford retirees. She “recognized” that the agreements in this case didn’t contain the same language as those referenced in the other Honeywell cases, also noting that “some CBAs may be more favorable to employees than others.”

The agreements that covered the Stratford retirees unambiguously vested medical coverage benefits for life, Bryant said. However, the phrase “all past and future retired employees and surviving spouses shall continue to receive” was ambiguous as to whether the benefits vested prior to or after retirement, she said.

In evaluating some extrinsic evidence, Bryant said that because such evidence was insufficiently developed, it couldn’t rule on whether people who retired after the agreements expired on 1997 had vested rights.

Livingston Adler Pulda Meiklejohn & Kelly and William Wertheimer represent the retirees. Morgan Lewis & Bockius LLP represents Honeywell.

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

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