This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.
Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Honeywell International Inc.'s plan to cut retiree health benefits at the end of the year was approved by a federal judge in Ohio ( Watkins v. Honeywell Int’l, Inc. , 2016 BL 419276, N.D. Ohio, No. 3:16-cv-01925, 12/16/16 ).
The planned benefit cuts have spawned at least four proposed class actions by retirees from Honeywell plants in Connecticut, Michigan and Ohio. In ruling on Dec. 16 that the cuts didn’t violate the retirees’ collective bargaining agreements, Judge James G. Carr of the U.S. District Court for the Northern District of Ohio broke from both of the other judges who have ruled on these cases.
A federal judge in Michigan on Dec. 14 entered a preliminary injunction barring Honeywell from cutting health benefits for retirees who had worked at the company’s Boyne City, Mich., plant. In November, another federal judge allowed people who retired from a Honeywell plant in Greenville, Ohio, to move forward with their lawsuit against the company.
Carr’s decision approving the benefit cuts centered on the fact that the retirees’ bargaining agreement contained a three-year durational clause. According to Carr, this unambiguously meant that the retirees’ health benefits weren’t vested for life and could be changed by Honeywell.
This was true even though the bargaining agreement didn’t contain a reservation-of-rights clause giving Honeywell the authority to make changes, Carr said. In other cases, including the U.S. Court of Appeals for the Sixth Circuit’s recent decision in favor of Moen Inc., a reservation-of-rights clause was central to the court’s conclusion that retiree health benefits weren’t vested for life.
The final word on Honeywell’s proposed benefit cuts is likely to turn on how judges interpret the U.S. Supreme Court’s 2015 decision in M&G Polymers USA, LLC v. Tackett. In Tackett, the court held that disputes over collectively bargained retiree health benefits should be resolved through ordinary principles of contract interpretation, without the “thumb on the scale” in favor of retirees that some courts had used.
Many judges have read Tackett as favoring employers, giving wins to companies including BorgWarner Inc., Weyerhaeuser Co. and Johnson Controls Inc. in lawsuits over retiree health benefit cuts. Companies including FreightCar America Inc. and Kelsey-Hayes Co. have been less successful post- Tackett.
Honeywell was represented by Kirkland & Ellis and Faruki Ireland & Cox. The retirees were represented by Legghio & Israel.
To contact the reporter on this story: Jacklyn Wille in Washington at jwille@bna.com
To contact the editor responsible for this story: Jo-el J. Meyer at jmeyer@bna.com
Text of the decision is at http://www.bloomberglaw.com/public/document/Watkins_v_Honeywell_Intl_Inc_No_316CV01925_2016_BL_419276_ND_Ohio.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to books@bna.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to research@bna.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)