Weyerhaeuser Dodges Class Action Over Retiree Benefit 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

Oct. 13 — Weyerhaeuser Co., one of the world’s largest private owners of timberland, dodged a proposed class action by retirees alleging the company illegally terminated their vested lifetime health-care benefits ( Kepner v. Weyerhaeuser Co. , D. Or., No. 6:16-cv-01040-AA, 10/10/16 ).

The retirees failed to identify language in the plan documents that “clearly and expressly” manifested an intent to vest health-care benefits for life, Judge Ann Aiken of the U.S. District Court for the District of Oregon said in her Oct. 10 opinion. They therefore failed to state a claim for vested lifetime benefits under the Employee Retirement Income Security Act, Aiken concluded.

Lifetime health-care coverage for retirees has been a hot issue for years, and activity has picked up recently with retirees suing a number of companies this year, including Honeywell International Inc. and Raytheon Co. Federal courts, however, have been ruling against retirees. In March, a federal judge in Pennsylvania held that Johnson Controls Inc. retirees weren’t entitled to unlimited lifetime health-care benefits. The U.S. Court of Appeals for the Sixth Circuit reached a similar ruling against Moen Inc. retirees. A petition for review by Moen retirees is pending at the U.S. Supreme Court.

At issue in the Weyerhaeuser case was the language of a 1979 summary plan description, which described the health-care coverage then available to company retirees. The SPD was amended over the years and in 2015, the company unilaterally terminated some contributions to the plan.

‘Clear and Express’ Language

In dismissing the retirees’ lawsuit, Aiken said that the 1979 SPD failed to meet the standard for contractual vesting. The SPD didn’t include a promise for vested lifetime health-care benefits, she said.

The court followed the reasoning adopted by the Third, Fourth, Fifth, Sixth and Ninth circuits that retirees must point to “clear and express language” in plan documents to state a claim for contractually vested benefits. The First, Second and Seventh circuits have held otherwise, reasoning that the lack of explicit language isn’t determinative at the summary judgment stage.

Aiken rejected the retirees’ argument that the “clear and express” rule created a presumption against vesting and was irreconcilable with “ordinary principles of contract interpretation” and the U.S. Supreme Court decision in M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (U.S. 2015).

The clear-and-express rule requires a clear manifestation of the parties’ intent to vest benefits for life, a requirement consistent with Tackett, the judge said.

Weyerhaeuser didn’t intend to promise vested lifetime benefits. A clause giving employees the option to continue coverage for an indefinite period can’t reasonably be interpreted to vest employees with irrevocable lifetime benefits, Aiken concluded.

A Weyerhaeuser spokesman declined to comment. Counsel for the class didn’t immediately reply to Bloomberg BNA’s request for comment.

Haglund Kelley LLP represented the proposed class. Morgan Lewis & Bockius LLP and Arnold Gallagher Saydack Percell Roberts & Potter PC represented Weyerhaeuser.

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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