Seyfarth Synopsis: Over the last several years, the law governing disputes on lifetime retiree health benefits in the Sixth Circuit has had many twists and turns. A recent decision may put an end to this uncertainty, confirming that a CBA’s general durational clause applies to healthcare benefits unless the CBA contains clear, affirmative language indicating the contrary.
The Sixth Circuit’s approach to retiree health benefits has been in flux since 2015, when the Supreme Court rejected the Circuit’s use of what is known as the Yard-Man inference, which courts used to infer that negotiated retiree benefits were intended to continue for the retirees’ lives. You can read about the Court’s decision in M&G Polymers USA, LLC v. Tackett, 135 S.Ct. 926 (2015), here. Post-Tackett, the Sixth Circuit’s continued use of a watered-down version of the Yard-Man inference prompted the Supreme Court to again step in and affirm the court’s duty to use ordinary principles of contract law when weighing retiree healthcare benefit disputes. You can read about CNH Industrial N.V. v. Reese, 138 S.Ct. 761 (2018), here.
On February 15, 2019, in Zino v. Whirlpool Corp., No. 17-3851/3860, the Sixth Circuit followed this line of precedent (and other more recent decisions from the Sixth Circuit) and reversed a 2017 Northern District of Ohio decision finding certain CBAs vested plaintiffs with lifetime healthcare benefits. The Court found that the CBAs covering the retirees lacked clear, affirmative language that Whirlpool had an obligation to fund their health benefits after the expiration of the agreements’ general durational clause. Thus, Whirlpool was under no obligation to continue to offer those benefits past the general durational clause’s expiration.
In Zino, the plaintiffs worked for a Hoover Company plant in Canton, Ohio and retired between 1980 and 2007. Following a reduction in their benefits, the plaintiffs filed suit alleging the CBAs vested retiree health benefits at unalterable levels. The Sixth Circuit clearly laid out how Sixth Circuit courts in retiree benefit vesting cases must first address a threshold issue: “either a CBA says clearly and affirmatively — that is unambiguously — that its general durational clause doesn’t control the termination of healthcare benefits, or the clause controls.” If a CBA does unambiguously disconnect certain benefits from the agreement’s general durational clause, the agreement might well vest those benefits, even absent clear vesting language, or there may be ambiguity as to whether vesting might exist. To make the call, a court would need to examine any “clues” that “spring from the CBA.” Because the relevant CBAs in Zino did not unambiguously disconnect healthcare benefits from the general durational clauses, they did not vest lifetime healthcare benefits even though plaintiffs claimed CBA otherwise had “clues” that show an intention to vest benefits.
Judge Jane B. Stranch dissented, stating that the Sixth Circuit’s approach fails to give effect to the parties’ intentions, which is the goal of ordinary contract interpretation.