Pension & Benefits Daily™ covers all major legislative, regulatory, legal, and industry developments in the area of employee benefits every business day, focusing on actions by Congress,...
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 benefits.
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.
The full text of the opinion is at http://op.bna.com/pen.nsf/r?Open=jwie-8y8l5b.
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 firstname.lastname@example.org.
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 email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)