Filed: May 12, 2000
Latest Update: Mar. 02, 2020
Summary: RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 ELECTRONIC CITATION: 2000 FED App. 0166P (6th Cir.) File Name: 00a0166p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _ ; DONALD H. MAURER; LESLIE T. JOHNSON; WARREN H. REES; WILLIAM POMPEY; Nos. 98-3964/4029 FLOYD F. GLADMAN; UNITED STEELWORKERS OF AMERICA, > Plaintiffs-Appellees/ Cross-Appellants, v. JOY TECHNOLOGIES, INC., Defendant-Appellant/ Cross-Appellee. 1 Appeal from the Unit
Summary: RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 ELECTRONIC CITATION: 2000 FED App. 0166P (6th Cir.) File Name: 00a0166p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _ ; DONALD H. MAURER; LESLIE T. JOHNSON; WARREN H. REES; WILLIAM POMPEY; Nos. 98-3964/4029 FLOYD F. GLADMAN; UNITED STEELWORKERS OF AMERICA, > Plaintiffs-Appellees/ Cross-Appellants, v. JOY TECHNOLOGIES, INC., Defendant-Appellant/ Cross-Appellee. 1 Appeal from the Unite..
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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
ELECTRONIC CITATION: 2000 FED App. 0166P (6th Cir.)
File Name: 00a0166p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
;
DONALD H. MAURER; LESLIE
T. JOHNSON; WARREN H.
REES; WILLIAM POMPEY;
Nos. 98-3964/4029
FLOYD F. GLADMAN; UNITED
STEELWORKERS OF AMERICA, >
Plaintiffs-Appellees/
Cross-Appellants,
v.
JOY TECHNOLOGIES, INC.,
Defendant-Appellant/
Cross-Appellee.
1
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 94-02015—Patricia A. Gaughan, District Judge.
Argued: December 15, 1999
Decided and Filed: May 12, 2000
Before: RYAN and NORRIS, Circuit Judges; FEIKENS,
District Judge.*
*
The Honorable John Feikens, United States District Judge for the
Eastern District of Michigan, sitting by designation.
1
2 Maurer, et al. v. Joy Nos. 98-3964/4029
Technologies, Inc.
_________________
COUNSEL
ARGUED: Chris J. Trebatoski, MICHAEL, BEST &
FRIEDRICH, Milwaukee, Wisconsin, for Appellant. Melvin
P. Stein, UNITED STEELWORKERS OF AMERICA,
Pittsburgh, Pennsylvania, for Appellees. ON BRIEF: Chris
J. Trebatoski, Mitchell W. Quick, MICHAEL, BEST &
FRIEDRICH, Milwaukee, Wisconsin, David P. Bertsch,
BUCKINGHAM, DOOLITTLE & BURROUGHS, Akron,
Ohio, for Appellant. Melvin P. Stein, UNITED
STEELWORKERS OF AMERICA, Pittsburgh, Pennsylvania,
for Appellees.
_________________
OPINION
_________________
ALAN E. NORRIS, Circuit Judge. Plaintiffs are the United
Steelworkers of America union and several retirees formerly
employed by defendant, Joy Technologies, Inc. (“Joy”). After
Joy changed plaintiffs’ retiree health benefit plans, plaintiffs
filed suit alleging violations of § 301 of the Labor-
Management Relations Act of 1947 (“LMRA”), 29 U.S.C.A.
§ 185 (West 1998), § 502(a)(1)(B) and (a)(3) of the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29
U.S.C.A. § 1132(a)(1)(B) and (a)(3) (West 1999), and the
doctrine of promissory estoppel. Plaintiffs’ complaint was
based on their claim that their benefits were vested and could
not unilaterally be altered by Joy. The district court granted
summary judgment to those plaintiffs that had retired prior to
August 19, 1991, on the LMRA and ERISA claims.
Summary judgment was granted to Joy against those plaintiffs
retiring after August 19, 1991, under the LMRA, ERISA, and
promissory estoppel claims. Plaintiffs’ motion for attorneys’
fees was denied. On appeal, Joy challenges the judgment
against it on the LMRA and ERISA claims. On cross-appeal,
plaintiffs challenge the summary judgment against those
Nos. 98-3964/4029 Maurer, et al. v. Joy 3
Technologies, Inc.
plaintiffs retiring after August 19, 1991, and the district
court’s denial of attorneys’ fees. For the following reasons,
the district court is affirmed.
I.
Joy operates an industrial fan manufacturing plant in New
Philadelphia, Ohio. Plaintiffs are former Joy employees who
were represented by the United Steelworkers of America
union (“the union”) while active employees. The union
served as the collective bargaining representative for the
production and maintenance (“P&M”) and clerical employees.
The employment terms of these groups of workers were
jointly negotiated (and the employee units were merged in
1980), but separate agreements were produced. The parties
agree that the P&M and clerical units were given the same
benefits under the collective bargaining agreements
(“CBAs”); therefore, this court will discuss the CBAs for both
units as if they were one.
Every three years, the parties negotiated a new CBA. One
of the features of the CBAs was a provision for retiree
benefits. The question in this case is whether, in the CBAs,
the parties intended the retirement benefits either to vest as
lifetime benefits or to terminate at the end of the three-year
term of the CBA granting the benefits. The relevant
provisions are as follows:
1974
In 1974, the CBA contained the following relevant
provisions:
Pensions, Group Insurance and Supplemental
Unemployment Benefits. . . .
A group insurance agreement is contained in a separate
document.
...
4 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 21
Technologies, Inc. Technologies, Inc.
For pensioners and spouses, age 65 or over, who are Joy’s ERISA plan. Nor did this lawsuit seek to resolve
now covered by the Group Insurance Program, the significant ERISA legal questions inasmuch as this issue
Company will make available a Medicare Supplemental has been addressed in numerous cases as evidenced by
Insurance Program. The cost is to be paid entirely by the this Court’s Opinions. Fifth, the Opinions in this case
pensioner and will be deducted from his pension check reveal that both parties’ positions had merit.
upon submission of an appropriate written authorization.
Plaintiffs claim that Joy “surreptitiously inserted a non-
For pensioners and spouses under age 65, the retiree bargained provision in its insurance booklets and used this
Group Insurance Programs in effect on September 1, provision as the centerpiece of its justification to unlawfully
1974 will be continued until replaced by a new program alter retiree benefits. . . . Not to find bad faith in such conduct
on September 1, 1975. is an abuse of discretion.” They also argue that they “sought
to convey a benefit on all members of the ERISA plan
... affected by Joy’s unlawful conduct.” Finally, plaintiffs argue
that retirees cannot afford to finance protracted and expensive
Previous Agreements. This [CBA] when signed shall litigation, and unions cannot afford to bring suit on behalf of
supersede all previous supplements and agreements made all wronged retirees. They maintain that “[u]nless the
between the parties except as provided for under the expense of such litigation is shifted, more retirees will suffer
terms of this [CBA]. a loss of all or some of their pension income or go without
health insurance and/or care they otherwise should obtain.”
...
The district court considered all of the relevant factors as
Termination Date. The basic [CBA], the Pension instructed by King. The court found no bad faith on Joy’s
Agreement, the Group Insurance Agreement, and the part, determined that attorneys’ fees would not act as a
Supplemental Unemployment Benefit Agreement, shall deterrent to other employers, and indicated that no significant
remain in full force and effect until midnight August 31, ERISA legal questions were resolved. The court did not
1977. abuse its discretion either in its consideration of any of the
King factors or in its weighing of the factors to determine that
At least (60) days prior to August 31, 1977, either fees should not be awarded. Therefore, the district court did
party may give notice to the other party of its desire to not abuse its discretion in denying plaintiffs’ request for
negotiate with respect to the terms and conditions of a attorneys’ fees.
new Agreement, including the terms and conditions of
new Pension, Insurance, and Supplemental IV.
Unemployment Benefit Agreements. If the parties shall
not agree on the terms and conditions of such new The judgment of the district court is AFFIRMED.
agreements by midnight August 31, 1977, either party
may thereafter resort to strike or lockout . . . .
A Memorandum of Agreement was also executed by the
parties in 1974. It contains the following pertinent language:
20 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 5
Technologies, Inc. Technologies, Inc.
King, 775 F.2d at 669, as relevant to the district court’s Retiree’s Insurance. 1. Effective September 1, 1975,
determination: for employees who retire on or after August 31, 1974 . . .
a. The Company will establish a group insurance
(1) the degree of the opposing party’s culpability or bad program to provide hospital benefits and physicians’
faith; (2) the opposing party’s ability to satisfy an award service benefits coverage . . . for pensioners (and their
of attorney’s fees; (3) the deterrent effect of an award on eligible dependents) who are not eligible for Medicare
other persons under similar circumstances; (4) whether ....
the party requesting fees sought to confer a common c. The Company will pay the cost of such program
benefit on all participants and beneficiaries of an ERISA coverage.
plan or resolve significant legal questions regarding d. Participation in such program in the case of pensioner
ERISA; and (5) the relative merits of the parties’ . . . shall terminate when such person first becomes
positions. eligible for Medicare.
An abuse of discretion exists only when “the court has the Finally, the 1974 Insurance Certificate contains the
definite and firm conviction that the district court made a following relevant provisions:
clear error of judgment in its conclusion upon weighing
relevant factors.” Id. No single factor is determinative. Section 13. Insurance after Retirement.
Schwartz v. Gregori,
160 F.3d 1116, 1119 (6th Cir. 1998),
cert. denied,
119 S. Ct. 1756 (1999). There is no presumption ...
that attorneys’ fees will be awarded. See Foltice v.
Guardsman Prods., Inc.,
98 F.3d 933, 936 (6th Cir. 1996). FOR EMPLOYEES WHO ELECT THE ACCIDENT
AND HEALTH RETIREMENT PLAN EFFECTIVE
The district court addressed the King factors in its opinion: PRIOR TO SEPTEMBER 1, 1975. . . . A retired
Employee not eligible for Medicare may continue his
First, there was no degree of bad faith on defendant’s [hospital, surgical, laboratory and x-ray and major
part and this Court cannot find a great degree of medical] Insurance for himself and his spouse, with the
culpability given the difficulty in determining whether it retired Employee paying the full premium for these
was intended that benefits vested. Additionally, the coverages.
Court found benefits to vest for only some of the
plaintiffs. Second, defendant admits that it is able to ...
satisfy an award of fees. Third, the Court does not
consider that an award of fees would act as a deterrent to ACCIDENT AND HEALTH PLAN FOR
other employers under similar circumstances given that QUALIFIED RETIREES RETIRING ON OR
defendant did not necessarily act with bad faith. See, for AFTER SEPTEMBER 1, 1975, AND THEIR
example, Foltice, supra, wherein the court stated that the QUALIFIED DEPENDENTS. The following shall be
“deterrent effect . . . is likely to have more significance in applicable to retired employees . . . who are not eligible
a case where the defendant is highly culpable . . .” for Medicare and are classified as:
Fourth, while this was a class action, plaintiffs did not 1. Employees who retire on or after August 31, 1974 . . . .
seek to confer a common benefit on all participants of ...
6 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 19
Technologies, Inc. Technologies, Inc.
Section 14. MEDICARE SUPPLEMENT. . . . (2) On when it created them. See Sprague, 133 F.3d at 401-02. As
and after the date on which an employee or dependent noted above, this case is distinguishable from Sprague
becomes eligible for benefits under Medicare, he shall because it concerns CBAs, which are two-party contracts,
not be eligible or insured under this Policy for any rather than a plan unilaterally implemented, and therefore
coverage providing benefits for Hospital, Surgical, unilaterally controlled, by the employer.
Laboratory and X-Ray Expenses or Major Medical
Expense Insurance. . . . The following benefits serve as The reservation of rights language from 1986 was contained
a “Medicare Supplement” . . . [at a monthly cost to the in an insurance booklet that specified that retiree benefits
employee of $5.00]. were contained in a separate booklet. Such a separate retiree
booklet, however, was never created. The language in the
... 1986 insurance booklet directing that the booklet did not
pertain to retirees, and that a separate booklet did, precludes
Termination. 1. This Agreement, and the Group any argument that the provisions in the existing insurance
Insurance Plan established hereunder shall remain in booklet (namely, the reservation of rights language) applied
effect without change until midnight, August 31, 1977. to retirees. Therefore, the reservation of rights clause was not
applicable to retirees under the 1986 agreement.
1978
The district court correctly found that the reservation of
The 1978 CBA and Insurance Certificate were essentially rights language in the August 19, 1991, booklet insert was
the same as those of 1974. The 1978 Memorandum of effective against the retirees because “[w]hile plaintiff argues
Agreement did not refer to any changes in retiree health that a bilateral agreement is not subject to unilateral
insurance benefits. modification, the Union was obligated to grieve or enter suit
over the reservation of rights clause as the clause was
1980 conspicuously contained in the 1991 insert and plaintiffs did
not dispute it until the filing of this lawsuit in 1994.” The
The 1980 CBA contained the same Termination and August 19, 1991, reservation of rights clearly included
Previous Agreements clauses. The following Pensions, retirees and was distributed to them. Therefore, those
Group Insurance and Supplemental Unemployment Benefits plaintiffs retiring after August 19, 1991, do not hold vested
clause was also contained in the CBA: retirement benefits.
For pensioners and spouses, age 65 and over, who are III.
now covered by the Group Insurance Program, the
Company will make available and pay for a Medicare The district court’s denial of plaintiffs’ motion for
Supplemental Insurance Program. attorneys’ fees is reviewed for an abuse of discretion.
Secretary of Dep’t of Labor v. King, 775 F.2d 666, 669 (6th
For pensioners and spouses under age 65, the retiree Cir. 1985). A district court is given broad discretion in
Group Insurance Programs in effect on September 1, awarding attorneys’ fees in an ERISA action under 29 U.S.C.
1975, as outlined in the Certificate of Insurance, will § 1132(g). Id. This court adopted the following factors in
remain in effect.
18 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 7
Technologies, Inc. Technologies, Inc.
eligible for Medicare.” This clause makes clear that pre-65 The 1980 Memorandum of Agreement stated that Joy would
benefits were intended to end only when the retiree becomes pay the full Medicare Supplement cost for all then-current
Medicare-eligible, not when the CBAs expire. The CBAs retirees and those retiring under the 1980 CBA.
also promise the continuation of dependents’ benefits after the
retiree reaches Medicare eligibility. A determination that 1983
retiree benefits do not vest would render these promises
illusory, in contravention of Yard-Man’s directive. There is The 1983 CBA contained relevant language identical to the
also language in the insurance certificates that gives Joy the 1980 CBA. In 1983, however, an Insurance Certificate was
unilateral right to terminate benefits for employees on leave not prepared.
of absence, yet no similar provision was included for retiree
benefits. These provisions indicate that the parties intended 1986
to vest benefits.
The 1986 CBA was identical in all relevant respects to
Therefore, although the CBAs are not models of clarity, those of 1980 and 1983. The 1986 Memorandum of
caselaw of this circuit leads to the conclusion that they do vest Agreement indicates that there would be a change in the
retirement benefits for individuals retiring before mid-1991, Medicare Supplement deductible for those retiring after
when reservation of rights language applicable to retirees was September 1, 1986. Also in 1986, an Employee Benefits Plan
distributed to plaintiffs. The durational provisions Joy cites booklet (formerly the Insurance Certificate) was issued with
are general in nature, and only refer to agreements between the following provision:
the parties, not to benefits created by the agreements. Further,
the CBAs promise retirees (as young as age 55) a Medicare Termination of the Plan. Joy Manufacturing Company
Supplement at age 65. An analogous provision was found to reserves the right to terminate, suspend, withdraw, amend
create an illusory promise unless benefits were vested in or modify the Group Health Care Benefits Plan in whole
Yard-Man. See Yard-Man, 716 F.2d at 1481. The language or in part at any time.
of the CBAs indicates that retirement benefits were intended The booklet contained a clause stating that “[b]enefits
by the parties to vest. provided during retirement are described in a separate
The district court correctly found that the reservation of booklet.” Plaintiff presented evidence suggesting that the
rights language printed in the 1986 Insurance Plan booklet, booklet was not distributed to retirees and that no separate
but never distributed to retirees, was not effective as to booklet describing retirement benefits was created.
plaintiffs. Joy claims that there is no distribution 1989
requirement, and that reservation of rights language is
effective when contained in the plan itself. Joy bases these In 1989 the CBA was the same in relevant respects as those
arguments on Sprague, where reservation of rights language of the previous three agreements. In addition, a handbook
was contained in the plan (unilaterally instituted by the was prepared entitled “Your Benefits Handbook — Hourly
employer), but not in all Summary Plan Descriptions and Salaried Bargaining Employees.” Plaintiffs presented
distributed to beneficiaries. The Sprague court held that evidence that this handbook was not distributed to retirees
because such language had always been in the plan itself, it until August 1991. It contained the following provision:
was clear that the employer did not intend to vest the benefits
8 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 17
Technologies, Inc. Technologies, Inc.
Amendments. Joy reserves the right to amend or agreement, and are not clearly meant to include retiree
terminate any of the plans. The right to amend includes benefits. See Yard-Man, 716 F.2d at 1482-83 (general
the right to curtail or eliminate coverage for any durational clause not necessarily meant to include retiree
treatment, procedure, or service regardless of whether benefits). Even though the clause makes clear that the
you are receiving treatment for an injury, illness, or insurance agreement terminates after three years, caselaw
disease contracted prior to the effective date of the indicates that the termination of the agreement does not
amendment. indicate the termination of benefits created by it, if the
benefits are intended to vest. See id. If benefits have vested,
A supplement entitled “Health Care Coverage After then retirees must agree before the benefits can be modified,
Retirement,” sent with a letter dated August 19, 1991, even by a subsequent CBA between the employer and active
contained the following language: employees.
Plan Changes. This insert summarizes your current Joy next points to the reiteration in each CBA that “[f]or
retiree health care coverage. However, since no one can pensioners and spouses under age 65, the retiree Group
predict the future, Joy reserves the right to make changes Insurance Programs in effect on September 1, 1975 . . . will
or terminate these Plans. remain in effect.” However, this provision is also subject to
the interpretation that it is repeated in each CBA because it
In March 1993, Joy sent letters to plaintiff retirees (who had specifies what benefits are available to those who retire
retired under the 1974 through the 1989 CBAs), announcing during the term of that CBA, and not what benefits are
a new cost-sharing plan to replace their insurance programs. available for past retirees, whose rights have already vested.
In response to the changes, plaintiffs filed this suit alleging Therefore, this provision is not determinative.
violations of § 301 of the LMRA, 29 U.S.C. § 185, § 502 of
ERISA, 29 U.S.C. § 1132, and of the doctrine of promissory Joy points to the clause requiring notice from either party
estoppel. The suit was filed as a class action, with plaintiffs of “its desire to negotiate with respect to the terms and
purporting to sue on behalf of themselves, their spouses, conditions of a new Agreement, including . . . Insurance . . .
dependent children, and other persons similarly situated. Agreements.” Again, just because an insurance agreement is
Plaintiffs claimed that their retirement benefits had vested ended and renegotiated does not mean benefits also end.
under the prior CBAs, and that Joy’s unilateral alteration of Because active employee benefits are a subject of mandatory
their benefits therefore breached the CBAs in violation of the bargaining, and retirement benefits are not, this provision was
LMRA and ERISA. They also claimed that Joy had made not necessarily meant to incorporate retirement benefits.
representations to them that the benefits were to last for their
lifetimes, and that Joy was now estopped from altering the The CBAs provide that pre-Medicare retirees receive
benefits. certain benefits until Medicare eligibility at age 65. Because
the CBAs permit retirement at age 55 and promise insurance
In a January 17, 1997, opinion, the district court found that at age 65, the promise is meaningless if it could be terminated
retirement benefits had vested for those retiring under the in three years. The same situation was present in Yard-Man,
1974, 1978, 1980, and 1983 CBAs. The court found that, supra, where the court inferred vested benefits partly from an
beginning in the 1986 agreement, Joy included a reservation analogous provision. In addition, the CBAs specify a
of rights clause and that, consequently, those who retired termination of pre-65 benefits when the retiree “first becomes
16 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 9
Technologies, Inc. Technologies, Inc.
on Sprague fail under the same analysis applied in BVR under the 1986 CBA and thereafter did not hold vested
Liquidating. benefits.
Joy also argues that the district court erred by turning the On October 7, 1997, the district court amended its opinion
Yard-Man inference that retirement benefits were meant to on plaintiffs’ motion. The court found that the reservation of
vest into a presumption that shifted the burden of proof to rights clauses were ineffective as to those who retired
Joy. The court did not, however, shift the burden of proof to between 1986 and August 19, 1991, and held that those
Joy; the court acknowledged in its opinion that there is no plaintiffs retiring prior to August 19, 1991, had vested retiree
legal presumption that benefits vest and that the burden of benefits. The court noted that the 1986 booklets contained
proof rests on plaintiffs. reservation of rights language, but were apparently only
applicable to active employees since the booklets indicated
Joy goes further and claims that there is a “presumption that “[b]enefits provided during retirement are described in a
under ERISA that employee welfare benefit plans do not separate booklet.” Further, the court pointed to evidence that
vest.” However, the cases cited for this proposition, see, e.g., the booklets were not distributed to active employees until
Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995), 1988 and were never distributed to retirees. No separate
merely state that although ERISA does not require vesting of booklet dealing with retirement benefits was ever published
such benefits, parties may agree to create and vest them. during the 1986 CBA term. A letter containing an insert for
Joy’s arguments have already been addressed by this circuit a benefits handbook and expressly directed to retirees was
in
Golden, 73 F.3d at 655 (“In [Curtiss-Wright Corp. v.] distributed in 1991 (dated August 19, 1991). This insert, the
Schoonejongen, [cited by defendant] . . . [t]he vesting of court found, contained reservation of rights language
rights through agreements such as CBAs was not at issue. . . . applicable to retirees. For these reasons, the court held that
The Court simply noted that ERISA does not mandate benefits were vested for those who retired prior to August 19,
minimum vesting requirements for welfare benefit plans, and 1991, but not after.
that ERISA allows employers to adopt, modify, or terminate
such plans at will. The case bears no relation to the issues in Also in its October 7, 1997, opinion, the district court
Yard-Man.”) (citations omitted). Curtiss-Wright, like granted Joy’s motion for summary judgment on the
Sprague, dealt with a benefit plan unilaterally implemented promissory estoppel claims for plaintiffs who retired after
by the employer, not with a CBA. August 19, 1991. The court held that any reliance by
plaintiffs on Joy’s representations concerning the vesting of
According to Joy, the CBAs’ language clearly terminated retirement benefits was not reasonable in the face of a clear
retiree insurance benefits along with the rest of the CBA reservation of rights clause after August 19, 1991.
provisions by providing that “ [t]he basic [CBA], the Pension
Agreement, the Group Insurance Agreement, and the On March 17, 1998, Joy filed a motion to amend the
Supplemental Unemployment Benefit Agreement, shall judgment based on Sprague v. General Motors Corp., 133
remain in full force and effect until midnight [expiration F.3d 388 (6th Cir. 1998) (en banc), which the district court
date],” and that “[t]his [CBA] when signed shall supersede all denied. Finally, on July 31, 1998, the district court awarded
previous supplements and agreements made between the plaintiffs prejudgment interest, but denied attorneys’ fees and
parties except as provided for under the terms of this [CBA].” costs.
These clauses are general durational provisions for the entire
10 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 15
Technologies, Inc. Technologies, Inc.
Joy appeals the district court’s determination that retiree continuing insurance benefits for retirees were intended.
benefits vested for those retiring prior to August 19, 1991, Benefits for retirees are only permissive not mandatory
and the resulting judgment against it under the LMRA and subjects of collective bargaining. As such, it is unlikely
ERISA. Plaintiffs cross-appeal the district court’s that such benefits, which are typically understood as a
determination that retiree benefits did not vest for those form of delayed compensation or reward for past
retiring after August 19, 1991, and the denial of attorneys’ services, would be left to the contingencies of future
fees. negotiations.
II. Id. at 1481-82 (internal citations and footnotes omitted).
A district court’s order of summary judgment is reviewed Joy claims that the CBAs at issue here are not ambiguous,
de novo. Pope v. Central States S.E. & S.W. Areas Health & and that they establish that retiree benefits were not intended
Welfare Fund,
27 F.3d 211, 212-13 (6th Cir. 1994). Contract to extend beyond the end of the relevant CBA term. Joy’s
interpretation is a question of law, also subject to de novo main argument is that
Sprague, supra, implicitly overruled
review. Boyer v. Douglas Components Corp.,
986 F.2d 999, Yard-Man and established new, more stringent standards as
1003 (6th Cir. 1993). to what language must be found in the parties’ agreements in
order to find vested benefits. Joy claims that, under Sprague,
Section 301(a) of the LMRA, 29 U.S.C. § 185(a), gives express vesting language is required before retirement
jurisdiction to federal courts over claims alleging the breach benefits will vest.
of CBAs. See Armistead v. Vernitron Corp., 944 F.2d 1287,
1293 (6th Cir. 1991). A retiree health insurance benefit plan Joy’s argument has been rejected by this court. In BVR
is a welfare benefit plan under ERISA. Boyer, 986 F.2d at
Liquidating, supra, we indicated that Yard-Man is still good
1005. Welfare benefit plans are not subject to mandatory law and should be used by courts interpreting CBAs. See
vesting requirements under ERISA, unlike pension plans.
Id. BVR Liquidating, 190 F.3d at 772-73. We pointed out that
at 1004-05. Therefore, there is no statutory right to vested Sprague dealt with an employer that had unilaterally instituted
retiree benefits, and the parties must agree to vest a welfare a retiree benefit program, so that the employer had to be
benefit plan. See
id. at 1005. If the parties intended to vest found to have clearly intended to vest benefits in order for
benefits and the agreement establishing this is breached, there employees to be entitled to lifetime benefits. See
id. at 773.
is an ERISA violation as well as a LMRA violation. See The BVR Liquidating court distinguished that situation from
Armistead, 944 F.2d at 1298. the case in front of it, which concerned a CBA.
Id. at 772-73.
In interpreting a CBA, the intent of both parties to the
The central Sixth Circuit case on CBA interpretation is agreement must be discerned, making Sprague inapposite.
UAW v. Yard-Man, Inc.,
716 F.2d 1476 (6th Cir. 1983). Sixth The court also distinguished Sprague because it involved an
Circuit caselaw interpreting CBAs regularly quotes Yard-Man explicit reservation of rights clause permitting the employer
at length: to amend or terminate benefits.
Id. at 773. BVR Liquidating
reiterated Yard-Man’s directive that there is an inference that
[W]hether retiree insurance benefits continue beyond the retirement benefits were intended to vest. Id. The present
expiration of the collective bargaining agreement case involves a CBA, rather than a benefit plan unilaterally
depends upon the intent of the parties. Clearly the parties bestowed by the employer. Therefore, Joy’s arguments based
to a collective bargaining agreement may provide for
14 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 11
Technologies, Inc. Technologies, Inc.
turned to other provisions of the CBA to determine the rights which will survive termination of their collective
parties’ intent: bargaining relationship. The parties may, for example,
provide retiree insurance benefits which survive the
[T]ermination of insurance benefits for active expiration of the collective bargaining agreement. Any
employees was explicitly and clearly set out and yet such surviving benefit must necessarily find its genesis
under conditions – the layoff of seniority employees – in the collective bargaining agreement.
typically inapplicable to retirees. Moreover, there are
variations in the duration of insurance benefits available The enforcement and interpretation of collective
to active employees dependent upon their seniority. bargaining agreements under § 301 [of the LMRA] is
These variations and the impracticality of hinging retiree governed by substantive federal law. However,
benefits to events as unpredictable and unstable as active traditional rules for contractual interpretation are applied
worker layoffs make it improbable that retiree benefits as long as their application is consistent with federal
were intended to depend in duration upon the fortunes of labor policies.
the active employees.
Many of the basic principles of contractual
... interpretation are fully appropriate for discerning the
parties’ intent in collective bargaining agreements. For
[T]he retiree insurance provisions . . . contain a example, the court should first look to the explicit
promise that the company will pay an early retiree’s language of the collective bargaining agreement for clear
insurance upon such retiree reaching age 65 but that the manifestations of intent. The intended meaning of even
retiree must bear the cost of company insurance until that the most explicit language can, of course, only be
time. Since an employee is entitled under the collective understood in light of the context which gave rise to its
bargaining agreement to retire at 55, the company’s inclusion. The court should also interpret each provision
promise could remain outstanding for a ten-year period. in question as part of the integrated whole. If possible,
If retiree insurance benefits were terminated at the end of each provision should be construed consistently with the
the collective bargaining agreement’s three-year term, entire document and the relative positions and purposes
this promise is completely illusory for many early retirees of the parties. As in all contracts, the collective
under age 62. bargaining agreement’s terms must be construed so as to
render none nugatory and avoid illusory promises.
[T]he inclusion of specific durational limitations in Where ambiguities exist, the court may look to other
other provisions of the current collective bargaining words and phrases in the collective bargaining agreement
agreement suggests that retiree benefits, not so for guidance. Variations in language used in other
specifically limited, were intended to survive the durational provisions of the agreement may, for example,
expiration of successive agreements in the parties’ provide inferences of intent useful in clarifying a
contemplated long term relationship. provision whose intended duration is ambiguous.
Finally, the court should review the interpretation
... ultimately derived from its examination of the language,
context and other indicia of intent for consistency with
Finally, examination of the context in which these federal labor policy. This is not to say that the collective
benefits arose demonstrates the likelihood that
12 Maurer, et al. v. Joy Nos. 98-3964/4029 Nos. 98-3964/4029 Maurer, et al. v. Joy 13
Technologies, Inc. Technologies, Inc.
bargaining agreement should be construed to “continued for themselves, their spouses, surviving spouses
affirmatively promote any particular policy but rather that and eligible dependents,” considered in conjunction with a
the interpretation rendered not denigrate or contradict clause indicating benefits continued after retirement until
basic principles of federal labor law. death, could be interpreted as vesting lifetime health care
benefits. Id. at 773. The court speculated: “[i]ndeed, to what
Id. at 1479-80 (citations omitted). Courts can find that rights other date than the death of the retiree or the spouse could the
have vested under a CBA even if the intent to vest has not word ‘continue’ apply?”
Id. Noting that Yard-Man requires
been explicitly set out in the agreement. See Golden v. the agreement to be read as a whole, the court next considered
Kelsey-Hayes Co.,
73 F.3d 648, 655 (6th Cir. 1996). CBAs the meaning of a separate clause in the agreement stating that
may contain implied terms, and the parties’ practice, usage, “benefits will be provided . . . for the term of this Agreement
and custom can be considered. Consolidated Rail Corp. v. except where the Plan specifically provides otherwise.”
Id. at
Railway Labor Executives’ Ass’n,
491 U.S. 299, 311 (1989). 774. The court found that reading these two provisions
together made the CBA ambiguous as to whether retiree
Retiree benefits are “in a sense ‘status’ benefits which, as benefits were intended to vest. See id. at 774. In light of this
such, carry with them an inference . . . that the parties likely ambiguity, the court turned to extrinsic evidence. It found
intended those benefits to continue as long as the beneficiary that affidavits from the plaintiff stating that there had been no
remains a retiree.” UAW v. BVR Liquidating, Inc., 190 F.3d discussion of altering the duration of the benefits during
768, 772 (6th Cir. 1999), cert. denied, No. 1548, 2000 WL negotiating sessions and in conversations between company
156923 (U.S. Apr. 17, 2000) (quoting Yard-Man, 716 F.2d at agents and retirees, along with evidence that changes from
1482). This is because “[b]enefits for retirees are only prior CBAs increased benefits, led to the conclusion that the
permissive not mandatory subjects of collective bargaining. benefits were indeed vested.
Id. at 774-75.
As such, it is unlikely that such benefits, which are typically
understood as a form of delayed compensation or reward for Yard-Man also presented this court with the question of
past services, would be left to the contingencies of future whether retirement benefits created in a CBA vested or were
negotiations.”
Yard-Man, 716 F.2d at 1482 (citations terminable at the end of the CBA term. The key provision in
omitted). Although there is an inference that the parties to a the CBA at issue stated that “[w]hen the former employee has
CBA intended for retiree benefits to vest, the burden of proof attained the age of 65 years then: (1) The Company will
does not shift to the employer, and it is not required that provide insurance benefits equal to the active group benefits
specific anti-vesting language be used before a court can find . . . for the former employee and his spouse.” Yard-Man, 716
that the parties did not intend benefits to vest. BVR F.2d at 1480 (omission in original). The insurance plan
Liquidating, 190 F.3d at 772 (quoting Golden, 73 F.3d at provision applicable to active group benefits specified that the
656). benefits would terminate one month after an employee’s
layoff. Id. The court found the intent of the parties to be
In BVR Liquidating, the plaintiff union filed suit against an ambiguous because the “language ‘will provide insurance
employer that had terminated retiree health care benefits. The benefits equal to the active group’ could reasonably be
plaintiff argued that the benefits had vested, while the construed, if read in isolation, as either solely a reference to
employer argued that the benefits were limited to the duration the nature of retiree benefits or as an incorporation of some
of the CBA.
Id. at 769. The court found that a clause durational limitation as well.”
Id. As a result, the court
providing that retirees shall have health care benefits
