Judges: Hamilton
Filed: Nov. 20, 2019
Latest Update: Mar. 03, 2020
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 19-1601 HAROLD STONE, et al., Plaintiffs-Appellees, v. SIGNODE INDUSTRIAL GROUP LLC and ILLINOIS TOOL WORKS INC., Defendants-Appellants. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:17-cv-05360 — Thomas M. Durkin, Judge. _ ARGUED SEPTEMBER 19, 2019 — DECIDED NOVEMBER 20, 2019 _ Before SYKES, HAMILTON, and BRENNAN, Circuit Judges. HAMILTON, Circuit Judge. Defendant
Summary: In the United States Court of Appeals For the Seventh Circuit _ No. 19-1601 HAROLD STONE, et al., Plaintiffs-Appellees, v. SIGNODE INDUSTRIAL GROUP LLC and ILLINOIS TOOL WORKS INC., Defendants-Appellants. _ Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:17-cv-05360 — Thomas M. Durkin, Judge. _ ARGUED SEPTEMBER 19, 2019 — DECIDED NOVEMBER 20, 2019 _ Before SYKES, HAMILTON, and BRENNAN, Circuit Judges. HAMILTON, Circuit Judge. Defendant S..
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19-1601
HAROLD STONE, et al.,
Plaintiffs-Appellees,
v.
SIGNODE INDUSTRIAL GROUP LLC and
ILLINOIS TOOL WORKS INC.,
Defendants-Appellants.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:17-cv-05360 — Thomas M. Durkin, Judge.
____________________
ARGUED SEPTEMBER 19, 2019 — DECIDED NOVEMBER 20, 2019
____________________
Before SYKES, HAMILTON, and BRENNAN, Circuit Judges.
HAMILTON, Circuit Judge. Defendant Signode Industrial
Group LLC assumed an obligation to pay health-care benefits
to a group of retired steelworkers and their families. Signode
then exercised its right to terminate the underlying benefits
agreement. When it terminated the agreement, Signode also
stopped providing the promised benefits to the retired steel-
workers and their families, despite contractual language
2 No. 19-1601
providing that benefits would not be “terminated … notwith-
standing the expiration” of the underlying agreement. This
appeal presents a single question of contract interpretation:
whether the agreement in question provided for vested bene-
fits that would survive the agreement’s termination. We hold
that the contract provided for vested lifetime benefits and af-
firm the district court’s permanent injunction ordering Sig-
node to reinstate the retirees’ benefits.
I. Factual and Procedural Background
The key language relevant to this dispute comes from a
1994 agreement and its 2002 successor. First, we describe the
two agreements and their contexts, focusing on the disputed
“Continuation of Coverage” and “Term of this Agreement”
provisions. We then describe the events that followed the ex-
ecution of the 2002 agreement and led to this lawsuit.
A. The Riverdale Plant and the Pensioners’ Agreements
Plaintiffs Harold Stone and John Woestman worked for
decades at the Acme Packaging Corporation plant in
Riverdale, Illinois. While they worked at the Riverdale plant,
they were represented by the union-plaintiff—United Steel,
Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union, AFL-
CIO-CLC.
On January 1, 1994, Acme and the union entered into a
“Pensioners’ and Surviving Spouses’ Health Insurance Agree-
ment.” The 1994 Pensioners’ Agreement provided health in-
surance benefits to retirees with at least fifteen years of con-
tinuous service and to their families. The Agreement’s “Con-
tinuation of Coverage” provision said:
No. 19-1601 3
Any Pensioner or individual receiving a Surviv-
ing Spouse’s benefit who shall become covered
by the Program established by this Agreement
shall not have such coverage terminated or re-
duced (except as provided in this Program) so
long as the individual remains retired from the
Company or receives a Surviving Spouse’s ben-
efit, notwithstanding the expiration of this
Agreement, except as the Company and the Un-
ion may agree otherwise.
The next provision was titled “Term of this Agreement.” It
read: “This Agreement shall become effective as of January 1,
1994 and shall remain in effect until December 31, 1999 and
thereafter subject to the right of either party on 120 days writ-
ten notice served on or after September 1, 1999 to terminate
this Agreement.”
The 1994 Pensioners’ Agreement remained in effect until
2002, when Acme Packaging was going through bankruptcy.
Acme negotiated a settlement agreement with the union to
ease some of its financial obligations. As a part of the settle-
ment, Acme and the union replaced the 1994 Pensioners’
Agreement with a nearly identical successor called the 2002
Pensioners’ Agreement. It left the Coverage Provision intact
and modified the Term Provision only to move the earliest ter-
mination date back to February 29, 2004, providing that the
agreement “shall remain in effect until February 29, 2004,
thereafter subject to the right of either party on one hundred
and twenty (120) days written notice served on or after No-
vember 1, 2003 to terminate the ‘Pensioners’ and Surviving
Spouses’ Health Insurance Agreement.’” The 2002 Pensioners’
Agreement and the larger settlement of which it was a part
4 No. 19-1601
were approved by the bankruptcy court in February 2002, and
Acme Packaging emerged from bankruptcy in November
2002.
In October 2003, defendant-appellant Illinois Tool Works
(ITW) acquired the Riverdale plant from Acme and assumed
its obligations under the 2002 Pensioners’ Agreement. In
April 2004, ITW decided to close the plant permanently and
entered into an agreement with the union establishing the
terms of the closure. Operations ceased completely in August
2004. For over a decade after the plant closed, ITW continued
to administer the health insurance program pursuant to the
2002 Agreement, providing health-care coverage for Stone,
Woestman, other Riverdale retirees, and their families.
B. This Lawsuit
In 2014, ITW created a new entity, Signode Industrial
Group LLC, and transferred its obligations under the 2002
Pensioners’ Agreement to Signode. It then sold Signode to
The Carlyle Group L.P. Signode continued to provide benefits
under the Agreement until August 2015, when it notified the
union that “effective January 1, 2016, the [health-care pro-
gram] and the Agreement will terminate and participants will
no longer be eligible for benefits thereunder.” It notified the
beneficiaries the next day. The union protested Signode’s uni-
lateral termination of benefits, citing the “notwithstanding ex-
piration” language of the 2002 Agreement. Signode went
ahead and discontinued the pensioners’ health-care plan. It
has not provided Riverdale retirees or their families with ben-
efits since the end of 2015.
Plaintiffs Stone and Woestman filed this suit on behalf of
a proposed class of similarly situated Riverdale retirees, their
No. 19-1601 5
dependents, and surviving spouses entitled to health-care
benefits under the 2002 Agreement. They alleged that ITW
and Signode had breached the 2002 Agreement in violation of
both § 301 of the Labor-Management Relations Act, 29 U.S.C.
§ 185, and § 502(a)(1)(B) of the Employee Retirement Income
Security Act of 1974 (ERISA), 29 U.S.C. § 1132(a)(1)(B). The
union sued for breach of the 2002 Agreement under § 301 of
the LMRA.
Both sides moved for summary judgment. The district
court granted plaintiffs’ motion and denied defendants’ mo-
tion, holding that the 2002 Agreement did not give Signode
the right to terminate the benefits. The district court entered a
permanent injunction ordering Signode to reinstate health-
care benefits under the 2002 Agreement. The district court has
not yet acted on the issue of class certification or entered a fi-
nal judgment, but we have jurisdiction over the defendants’
appeal of the injunction under 28 U.S.C. § 1292(a). A motions
panel of this court stayed the injunction pending appeal. After
full briefing and argument on September 19, 2019, this panel
vacated the stays. 1
II. Analysis
The only question before us is whether the health-care
benefits provided by the 2002 Pensioners’ Agreement sur-
vived the termination of that agreement. We review a district
court’s grant of a permanent injunction for abuse of discre-
tion. Minnesota Mining & Manufacturing Co. v. Pribyl,
259 F.3d
587, 597 (7th Cir. 2001). However, legal conclusions underly-
ing the grant of a permanent injunction, including issues of
1 On November 1, 2019, the district court ordered defendants to re-
store the health-care benefits no later than January 1, 2020.
6 No. 19-1601
contract interpretation, are reviewed de novo. Id.; Soarus L.L.C.
v. Bolson Materials International Corp.,
905 F.3d 1009, 1011 (7th
Cir. 2018). 2
A. Principles of Interpretation
ERISA does not require that retiree health-care benefits be
vested. Vesting of health-care benefits is determined accord-
ing to ordinary principles of contract law. M & G Polymers
USA, LLC v. Tackett,
135 S. Ct. 926, 933 (2015); see also Barnett
v. Ameren Corp.,
436 F.3d 830, 832 (7th Cir. 2006), quoting Pabst
Brewing Co. v. Corrao,
161 F.3d 434, 439 (7th Cir. 1998) (“[I]f
[benefits] vest at all, they do so under the terms of a particular
contract.”). Tackett and its successor, CNH Industrial N.V. v.
Reese,
138 S. Ct. 761 (2018), endorsed the application of ordi-
nary principles of contract law in such cases, and they rejected
the “Yard-Man” presumptions in favor of vesting that the
Sixth Circuit established in International Union, United Auto-
mobile, Aerospace, and Agricultural Implement Workers of America
v. Yard–Man, Inc.,
716 F.2d 1476 (6th Cir. 1983), and developed
in subsequent cases. In particular, the Supreme Court in Tack-
ett and Reese rejected the presumption of lifetime vesting
2 Because the permanent injunction was based on a legal conclusion
in the grant of summary judgment and this appeal challenges that conclu-
sion, we must decide that legal issue in this appeal. See Stone v. Signode
Industrial Group, LLC,
365 F. Supp. 3d 957 (N.D. Ill. 2019) (granting sum-
mary judgment to plaintiffs). In other words, we have jurisdiction under
28 U.S.C. § 1292(a) to review the relevant legal reasoning of the grant of
summary judgment insofar as it is necessary to review the permanent in-
junction even though we do not have jurisdiction over the grant of sum-
mary judgment itself. Cf. Cross Medical Products, Inc. v. Medtronic Sofamor
Danek, Inc.,
424 F.3d 1293, 1301 (Fed. Cir. 2005) (asserting jurisdiction over
the grant of summary judgment itself under similar circumstances);
LaVine v. Blaine School Dist.,
257 F.3d 981, 987 (9th Cir. 2001) (same).
No. 19-1601 7
where “a contract is silent as to the duration of retiree bene-
fits.”
Tackett, 135 S. Ct. at 937;
Reese, 138 S. Ct. at 763. The Su-
preme Court emphasized that “contractual obligations will
cease, in the ordinary course, upon termination of the bar-
gaining agreement.”
Tackett, 135 S. Ct. at 937, quoting Litton
Financial Printing Div., Litton Business Systems, Inc. v. NLRB,
501 U.S. 190, 207 (1991). Tackett and Reese are consistent with
the approach we have taken for decades. See, e.g., Cherry v.
Auburn Gear, Inc.,
441 F.3d 476, 481 (7th Cir. 2006), citing Bid-
lack v. Wheelabrator Corp.,
993 F.2d 603, 606–07 (7th Cir. 1993)
(en banc), and
Pabst, 161 F.3d at 439 (“Unless a contract pro-
vides for the vesting of benefits, the presumption is that ben-
efits terminate when a collective bargaining agreement
ends.”).
Employers, employees, and unions are free, however, to
provide that health-care benefits will survive the underlying
agreement, so that promised lifetime benefits will indeed sur-
vive for a lifetime. Tackett and Reese teach that courts may not
infer vesting from silence but also indicate that courts should
find vesting where the contract provides for it: “a collective-
bargaining agreement [may] provid[e] in explicit terms that
certain benefits continue after the agreement’s expiration.”
Tackett, 135 S. Ct. at 937, quoting
Litton, 501 U.S. at 207 (altera-
tions in Tackett). The contract may also provide for vesting
through implied terms: “‘[C]onstraints upon the employer af-
ter the expiration date of a collective-bargaining agreement’
… may be derived from the agreement’s ‘explicit terms,’ but
they ‘may arise as well from ... implied terms of the expired
agreement.’”
Id. at 938 (Ginsburg, J., concurring), quoting Lit-
ton, 501 U.S. at 203, 207; accord,
Reese, 138 S. Ct. at 765 (ob-
serving that a court may look to “explicit terms, implied
terms, or industry practice” for indications of vesting). And if
8 No. 19-1601
the contract is ambiguous—due to either a patent or latent
ambiguity—extrinsic evidence may be considered in deter-
mining whether the parties intended benefits to vest.
Reese,
138 S. Ct. at 765; see also Rossetto v. Pabst Brewing Co.,
217 F.3d
539, 545–46 (7th Cir. 2000) (looking to similar agreements with
same employer and identical agreements within industry to
find latent ambiguity on duration of health-care benefits).
B. Interpretation of the 2002 Pensioners’ Agreement
The 2002 Pensioners’ Agreement unambiguously pro-
vided retirees with vested lifetime health-care benefits. The
Coverage Provision said as plainly as possible that coverage
would survive expiration of the Agreement. Contrary to de-
fendants’ arguments, the Term Provision did not transform
the right to terminate the Agreement itself into a loophole that
nullified the plain promise that benefits would survive expi-
ration of the Agreement. And even if the Agreement were am-
biguous, industry usage and the behavior of the parties here
provide enough evidence to support vesting such that resolu-
tion of any ambiguity in favor of the plaintiffs as a matter of
law would still be correct.
1. The Vesting Language for Continuation of Coverage
The Agreement’s Continuation of Coverage paragraph
provided that covered individuals “shall not have such coverage
terminated or reduced (except as provided in this Program) …
notwithstanding the expiration of this Agreement, except as the
Company and the Union may agree otherwise.” (Emphasis
added.)
This language made clear that the promised health-care
benefits vested, i.e., they would survive the termination of the
underlying agreement. In Tackett, the Supreme Court
No. 19-1601 9
endorsed this approach: vested benefits are created when an
agreement “provid[es] in explicit terms that certain benefits
continue after the agreement’s
expiration.” 135 S. Ct. at 937,
quoting
Litton, 501 U.S. at 207. That is precisely what the 2002
Pensioners’ Agreement did.
If more support were needed, cases addressing similar
language provide persuasive support for the plaintiffs’ posi-
tion. In United Steelworkers of America, AFL-CIO-CLC v. Con-
nors Steel Co., the Eleventh Circuit held that an identical con-
tinuation-of-coverage provision created vested benefits.
855
F.2d 1499, 1505 (11th Cir. 1988) (“shall not have such coverage
terminated or reduced … so long as the individual remains
retired from the company or receives a surviving spouse’s
benefit, notwithstanding the expiration of this agreement”).
Contrary to defendants’ representations in their briefs and at
oral argument, the contract in Connors Steel also included a
termination provision like the one in the 2002 Pensioners’
Agreement.
Id. at 1502 (“Except as otherwise provided below,
this Agreement shall terminate [upon] the expiration of sixty
days after either party shall give written notice of termination
to the other party but in any event shall not terminate earlier
than September 1, 1983.”). In Keffer v. H.K. Porter Co., the
Fourth Circuit held that materially identical continuation-of-
coverage language also provided vested benefits.
872 F.2d 60,
63 (4th Cir. 1989). 3
3 Defendants suggest that the persuasive force of Connors Steel
and H.K. Porter Co. is tainted by reliance on the Yard-Man inferences
later rejected by the Supreme Court in Tackett and Reese. We disa-
gree; these cases did not depend on Yard-Man. Connors Steel held
that the unambiguous language of the agreement provided bene-
fits, explained that this interpretation was consistent with Yard-
10 No. 19-1601
We have described the agreements in Connors Steel and
H.K. Porter Co. as “specifically provid[ing] that the employer
was obligated to continue making benefit contributions after
the agreement expired,” albeit in the context of differentiating
them from a contract that did not vest benefits. Int'l Ass'n of
Bridge, Structural & Ornamental Iron Workers, Shopmen's Div.,
Local No. 473 v. SR Industries Corp.,
940 F.2d 665 (7th Cir. 1991)
(table of decisions without reported opinions),
1991 WL
151901, at *4 (7th Cir. Aug. 9, 1991).
2. The Term Provision
To avoid the clear language providing health-care benefits
that survive the expiration of the 2002 Agreement, defendants
rely on the Term Provision. But the Term Provision only pro-
vides the means of expiration (contemplated in the vesting
language of the Coverage Provision) by permitting either
party “to terminate the ‘Pensioners’ and Surviving Spouses’
Health Insurance Agreement.’” The Coverage Provision es-
tablished that the promised health-care coverage and the un-
derlying Agreement would run independently—that the
Man, and then clarified that the case for vesting was stronger than
in Yard-Man because of the explicit vesting language identical to the
language
here. 855 F.2d at 1505. H.K. Porter Co. indicated only that
the court’s determination—based on “the language in the parties’
agreements” and the conduct of the employer—was consistent with
Yard-Man. 872 F.2d at 64. The Fourth Circuit later clarified that “the
reference to Yard-Man was not necessary to [the holding in H.K. Por-
ter Co.] that the specific language of the CBA showed the parties
intended for benefits to continue beyond the expiration of the
agreement.” Dewhurst v. Century Aluminum Co.,
649 F.3d 287, 291–
92 (4th Cir. 2011).
No. 19-1601 11
duration of the coverage was not limited to the term of the
Agreement. Terminating the Agreement while leaving cover-
age intact was consistent with the vested benefits established
by the Coverage Provision. Indeed, separating the term of
coverage from the term of the Agreement clearly signaled that
it was possible—actually, expected—that the Agreement
could end without affecting the continued health-care cover-
age. That is what the Term Provision did.
Defendants argue that the term provision provided an ex-
ception to the promise that coverage would persist “notwith-
standing expiration” of the 2002 Agreement and that their ob-
ligation to provide health-care benefits was extinguished
upon termination of the Agreement. This interpretation of the
Term Provision conflicts with the Coverage Provision and dis-
regards ordinary principles of contract interpretation. Cf. Bar-
nett, 436 F.3d at 833 (“Contractual provisions must be read in
a manner that makes them consistent with each other.”).
Defendants rely on cases that addressed contracts that in-
cluded both “lifetime” language and reservation-of-rights
clauses expressly allowing alteration or termination of bene-
fits—but all without what we see here, express statements ex-
tending benefits beyond the term of agreement. See
Barnett,
436 F.3d at 834 (agreement explicitly reserved employer’s
right to “‘take such action as may be necessary to modify and
to continue for the life of the Labor Agreement’ the provisions of
the health-care plan”); Vallone v. CNA Financial Corp.,
375 F.3d
623, 638 (7th Cir. 2004) (agreement allowed employer “to pro-
spectively alter or amend its welfare benefits offered to retirees,
even after retirement”); Int'l Union of United Auto., Aerospace &
Agric. Implement Workers of Am. v. Rockford Powertrain, Inc.,
350
F.3d 698, 703 (7th Cir. 2003) (agreement “reserve[d] the right
12 No. 19-1601
to modify, amend, suspend or terminate [benefits] at any
time”).
These cases teach that “lifetime” language that might ap-
pear upon first reading to vest benefits should not be inter-
preted to do so if another provision reserves rights that are
inconsistent with vesting. This lesson, painfully applied in
many cases, does not apply here because the parties to the
2002 Agreement followed the lesson and made clear that the
health-care benefits would survive the termination of that
agreement. The Term Provision is not at all inconsistent with
vesting. The entire purpose of the “notwithstanding expira-
tion” language is to establish that termination of the Agree-
ment would not extinguish the benefits it promised.
To try to create a conflict in need of resolution, defendants
also propose that the Term Provision should be read to create
an implicit exception to the vesting rule of the Coverage Pro-
vision because the Term Provision would otherwise be super-
fluous. This argument fails on several grounds.
First, even if this reading did render the Term Provision
practically superfluous, this would not be enough to compel
a tortured reading of the Coverage Provision that would nul-
lify the parties’ clearly expressed choice to create vested re-
tirement health-care benefits. The principle that contracts
should be interpreted to avoid rendering language superflu-
ous or redundant is not absolute. Rather, it is a preference to
be employed to the extent possible given the range of reason-
able meanings that can be ascribed to the contractual lan-
guage. See 11 R. Lord, Williston on Contracts § 32:5 (4th ed.,
July 2019 update) (“An interpretation which gives effect to all
provisions of the contract is preferred to one which renders
part of the writing superfluous, useless or inexplicable. A
No. 19-1601 13
court will interpret a contract in a manner that gives reason-
able meaning to all of its provisions, if possible.”); see also
GNB Battery Techs., Inc. v. Gould, Inc.,
65 F.3d 615, 622 (7th Cir.
1995) (“A contractual interpretation that gives reasonable
meaning to all of the terms in an agreement is preferable to an
interpretation which gives no effect to some terms.”). Given
the clarity of the vesting language and the coherence of the
contractual scheme under the more natural reading of the
contract, defendants’ position is not persuasive.
Second, the superfluity argument at best cuts both ways.
If the Term Provision were read to allow the termination of
benefits provided by the Agreement, then it would render su-
perfluous the “notwithstanding the expiration of the Agree-
ment” language in the Coverage Provision. What would be
the point of establishing that benefits survive expiration of the
Agreement if the only contractual provision for terminating
the Agreement also terminated the benefits?
Third, the Term Provision simply is not superfluous when
read—consistent with the vesting language of the Coverage
Provision—to allow only for the termination of the Agree-
ment and not of the benefits it provides to those already eligi-
ble for them. Collective bargaining agreements generally ter-
minate at some point, giving the parties the opportunity to
renegotiate. For retirement health-care benefits, this gives em-
ployers and employees the opportunity to change the scope
of benefits for future retirees. As a general rule, an agreement
like this one covers only those who retire while it is still in
effect. If ITW had not closed the plant in 2004, it might have
decided to scale back retirement benefits promised in the 2002
Pensioners’ Agreement and exercised its termination right to
14 No. 19-1601
force the negotiation of a new Pensioners’ Agreement, for fu-
ture retirees.
The case law in this area—and indeed our very under-
standing of what it means for benefits to vest—is built upon
the idea that collective bargaining agreements do not last for-
ever. That is implicit in the Supreme Court’s observation that
“provid[ing] in explicit terms that certain benefits continue af-
ter the agreement’s expiration” vests those benefits.
Tackett,
135 S. Ct. at 937, quoting
Litton 501 U.S. at 207. It is also im-
plicit in our cases. See, e.g., Auburn
Gear, 441 F.3d at 481 (“Un-
less a contract provides for the vesting of benefits, the pre-
sumption is that benefits terminate when a collective bargain-
ing agreement ends.”).
The Term Provision here was nothing more than a dura-
tional limit. Instead of setting a firm end date to the 2002 Pen-
sioners’ Agreement, it used a unilateral termination right to
give the parties flexibility to extend the Agreement past a soft
termination date. Defendants’ superfluity theory—which by
its reasoning would apply to all durational limits on benefits
agreements—would lead to the impractical conclusion that
no health-care benefits program could create vested benefits
if it even contemplated the expiration of the agreement. The
better reading of the 2002 Pensioners’ Agreement thus favors
plaintiffs.
3. Extrinsic Evidence
Even if the contract were ambiguous on the vesting issue,
undisputed evidence of industry usage and the behavior of
the parties makes clear that they understood the Agreement
provided vested pension benefits. We interpret collective bar-
gaining agreements in light of “relevant industry-specific
No. 19-1601 15
‘customs, practices, usages, and terminology.’” Tackett, 135 S.
Ct. at 937–38 (Ginsburg, J., concurring), quoting 11 R. Lord,
Williston on Contracts § 30:4, pp. 55–58 (4th ed. 2012); accord,
Reese, 138 S. Ct. at 765 (“when a contract is ambiguous, courts
can consult extrinsic evidence to determine the parties’ inten-
tions”). We have applied this principle to interpret collective
bargaining agreements in light of similar agreements with
other employers. In Rossetto v. Pabst Brewing Co.,
217 F.3d 539
(7th Cir. 2000), we interpreted a collective bargaining agree-
ment between a brewery and the union of the plaintiff ma-
chinists. That agreement did not provide expressly for vesting
and was silent regarding duration.
Id. at 544–45. Nevertheless,
we held that extrinsic evidence showed there was a latent am-
biguity in the contract; we reversed summary judgment and
remanded for trial.
Id. at 545–47. We also found that another
employer’s continued provision of benefits under an identical
but expired contract amounted to substantial evidence sup-
porting the plaintiff-employees’ interpretation of the agree-
ment as promising vested benefits.
Id. at 546.
The Steelworkers’ agreements in Connors Steel and H.K.
Porter Co.—and the Eleventh and Fourth Circuits’ holdings
that those agreements vested health-care benefits—provide
compelling evidence of industry-specific usage here. See
Transportation-Commc'n Employees Union v. Union Pacific R.R.
Co.,
385 U.S. 157, 161 (1966) (“In order to interpret such an
agreement it is necessary to consider the scope of other related
collective bargaining agreements, as well as the practice, us-
age and custom pertaining to all such agreements.”). For
years before the negotiation of the 1994 Pensioners’ Agree-
ment here, the union used similar language in its health-care
benefits agreements with other employers in the steel indus-
try. Both the Fourth and Eleventh Circuits concluded that
16 No. 19-1601
such language created a vested right to health-care benefits.
We characterized these agreements similarly in SR Industries
Corp.,
940 F.2d 665,
1991 WL 151901, at *4.
Based on these precedents, the parties to the 2002 Pension-
ers’ Agreement would have reasonably understood the lan-
guage they chose to have the same effect it had been given by
those courts. The background provided by these other agree-
ments in the industry and their interpretation by courts sup-
port plaintiffs’ interpretation, just as the provision of benefits
in the parallel agreement in Rossetto supported the plaintiff-
employees in that case.
This principle is similar to the prior-construction canon in
statutory interpretation. See Antonin Scalia & Bryan Garner,
Reading Law 322 (2012) (“If a statute uses words or phrases
that have already received … uniform construction by inferior
courts … they are to be understood according to that con-
struction.”). While contract interpretation differs from statu-
tory interpretation in some ways, this principle applies in
both: the actions of courts have given the phrase a meaning
that parties knowledgeable in the relevant areas of law are
presumed to use. See
id. at 324.
The actions of a key Acme and ITW manager also reflect
an understanding that benefits would vest. “How the parties
to a contract actually perform their contractual undertakings
is often … persuasive evidence of what the parties understood
the contract to require.” Zielinski v. Pabst Brewing Co.,
463 F.3d
615, 618 (7th Cir. 2006); see also, e.g., Mercury Sys., Inc. v.
Shareholder Representative Servs., LLC,
820 F.3d 46, 52 (1st Cir.
2016) (applying Massachusetts law) (“Extrinsic evidence may
include the parties’ … course of performance under the con-
tract.”). Here, Anthony Kuchta was a benefits program
No. 19-1601 17
administrator for Acme and ITW who helped negotiate the
1994 Pensioners’ Agreement, the 2002 Pensioners’ Agree-
ment, and the 2004 Closing Agreement. He testified not only
that he understood the 2002 Pensioners’ Agreement to create
vested lifetime benefits, but also that he advised employees
that if they wanted those benefits, “they must retire under the
2002 Pensioners’ Agreement and should do so before the ‘last
day’ when the plant closed and the 2002 Pensioners’ Agree-
ment expired.”
In other words, a manager who played a significant role in
benefits administration—and who signed the 2004 Closing
Agreement with the union—assured employees that the
health-care benefits would last for their lifetimes, but only if
they retired under the 2002 Agreement. This is not inadmissible,
self-serving testimony offered in an attempt to vary the mean-
ing of an unambiguous contract. Cf.
Rossetto, 217 F.3d at 546.
The testimony came from a now-neutral non-party who par-
ticipated in negotiations on the side of the employer. Defend-
ants have not rebutted this testimony, which is all the more
powerful because the contemporaneous statements it de-
scribes invited employees to rely upon them when making re-
tirement decisions.
The permanent injunction issued by the district court is
AFFIRMED.