Filed: Sep. 17, 2012
Latest Update: Mar. 26, 2017
Summary: RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 File Name: 12a0338p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _ KENNETH WITMER; JOSEPH OLEX; RALPH W. X - - WILLIAMSON; EDWARD PFANNES; RAYMOND OWENS, - Plaintiffs-Appellants, - No. 11-1793 , > - - v. - - ACUMENT GLOBAL TECHNOLOGIES, INC.; - Defendants-Appellees. N PLATINUM EQUITY; TEXTRON, INC., Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:08-cv-12795—Pat
Summary: RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 File Name: 12a0338p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _ KENNETH WITMER; JOSEPH OLEX; RALPH W. X - - WILLIAMSON; EDWARD PFANNES; RAYMOND OWENS, - Plaintiffs-Appellants, - No. 11-1793 , > - - v. - - ACUMENT GLOBAL TECHNOLOGIES, INC.; - Defendants-Appellees. N PLATINUM EQUITY; TEXTRON, INC., Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:08-cv-12795—Patr..
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RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0338p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
KENNETH WITMER; JOSEPH OLEX; RALPH W. X
-
-
WILLIAMSON; EDWARD PFANNES; RAYMOND
OWENS, -
Plaintiffs-Appellants, -
No. 11-1793
,
>
-
-
v.
-
-
ACUMENT GLOBAL TECHNOLOGIES, INC.;
-
Defendants-Appellees. N
PLATINUM EQUITY; TEXTRON, INC.,
Appeal from the United States District Court
for the Eastern District of Michigan at Detroit.
No. 2:08-cv-12795—Patrick J. Duggan, District Judge.
Argued: July 17, 2012
Decided and Filed: September 17, 2012
Before: SUTTON and GRIFFIN, Circuit Judges; DOWD, District Judge.*
_________________
COUNSEL
ARGUED: John R. Canzano, KLIMIST, McKNIGHT, SALE, McCLOW &
CANZANO, P.C., Southfield, Michigan, for Appellants. Donald A. Van Suilichem,
VAN SUILICHEM & ASSOCIATES, P.C., Bloomfield Hills, Michigan, for Appellees.
ON BRIEF: John R. Canzano, KLIMIST, McKNIGHT, SALE, McCLOW &
CANZANO, P.C., Southfield, Michigan, for Appellants. Donald A. Van Suilichem,
Kelly A. Van Suilichem, VAN SUILICHEM & ASSOCIATES, P.C., Bloomfield Hills,
Michigan, for Appellees.
SUTTON, J., delivered the opinion of the court in which, GRIFFIN, J., joined.
DOWD, D. J. (pp. 11–12), delivered a separate dissenting opinion.
*
The Honorable David D. Dowd, Jr., United States District Judge for the Northern District of
Ohio, sitting by designation.
1
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 2
_________________
OPINION
_________________
SUTTON, Circuit Judge. At stake is whether Acument Global Technologies
promised lifetime, unchangeable healthcare benefits to its retired employees. Because
the company expressly reserved the right to modify or terminate benefits, we agree with
the district court that no such promise was made.
I.
A collective bargaining agreement governs the relationship between Acument
Global Technologies and its retired employees. Prior to 2008, the company paid
healthcare and life-insurance benefits to qualified retirees. When Acument ended these
benefits in 2008, a class of sixty-four retirees claimed that the company had violated the
CBA in violation of the Employee Retirement Income Security Act and the Labor
Management Relations Act. The district court granted Acument’s motion for summary
judgment, and the plaintiffs appealed.
II.
Although the plaintiffs bring this claim under ERISA and the LMRA, their
entitlement to health benefits is “a matter of contract.” Reese v. CNH America, LLC, 574
F.3d 315, 321 (6th Cir. 2009). The contractual question is this: Did the governing CBA
create unalterable lifetime—“vested”—healthcare and life-insurance benefits? The
contractual answer is no. The CBA reserved Acument’s right to modify or terminate
future benefits.
The relevant language appears in “Appendix E” to the CBA, R.98-1 at 22–24,
reprinted as its own appendix to this opinion. It starts by saying that “the Company will
revise the pension plan established in 1955, hereinafter referred to as the ‘Plan,’ as
follows.” It then contains five numbered paragraphs. The first three deal with the use
of an insurance company to manage the pension fund and with the company’s lack of
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 3
responsibility for the insurance company’s treatment of contributions and pay outs.
Paragraph four contains a reservation-of-rights clause. “The Company,” it says,
“reserves the right to amend, modify, suspend, or terminate the Plan.” The fifth
paragraph introduces the benefits provided under the Plan, saying that the “[p]rincipal
provisions of the pension plan are shown below.” What follows are several listed
retirement benefits: retiree medical coverage; retirement income; disability income; and
life insurance. In addition to describing the benefits, this section of the Appendix
identifies the minimum years of service needed to obtain each benefit as well as other
eligibility requirements and qualifications.
The key problem for plaintiffs is that the same document that contains the
promise on which they rely (“continuous health insurance” at retirement) contains a
reservation-of-rights clause (“reserv[ing] the right to amend . . . or terminate the Plan”).
Their claim for benefits gets nowhere without Appendix E, and yet Appendix E broadly
reserves the company’s right to change the Plan benefits, using language that is
incompatible with a promise to create vested, unchangeable benefits. See Maurer v. Joy
Techs., Inc., 212 F.3d 907, 919 (6th Cir. 2000).
The language and structure of Appendix E show that the reservation-of-rights
clause applies to all benefits listed there, not just to some of them. After describing the
company’s reservation of rights in paragraph four, paragraph five says that the
“[p]rincipal provisions of the pension plan are shown below.” Below that are provisions
for “retiree medical coverage” and “continued life insurance” alongside retirement-
income and disability-income provisions. What Appendix E broadly gives in the form
of a wide range of retirement benefits it thus broadly reserves the right to take away or
modify.
Nor is the mingling of healthcare and retirement-income provisions an unusual
thing to find in a CBA. In point of fact, several of our decisions in this area rely on the
tying of eligibility for and vesting of healthcare benefits to the same requirements for
retirement-income benefits. See Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571, 585
(6th Cir. 2006); see also Tacket v. M&G Polymers, USA, LLC,
561 F.3d 478, 490
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 4
(6th Cir. 2009); Reese, 574 F.3d at 322–23; Noe v. PolyOne Corp.,
520 F.3d 548,
558–59 (6th Cir. 2008); McCoy v. Meridian Auto. Sys., Inc.,
390 F.3d 417, 422 (6th Cir.
2004); Golden v. Kelsey-Hayes Co.,
73 F.3d 648, 656–57 (6th Cir. 1996). “[L]anguage
tying health care benefits” to retirement-income benefits, we have held, demonstrates
the parties’ intent to create vested healthcare benefits as well. Yolton, 435 F.3d at 584.
If that is true, so too is the opposite: When retirement-income benefits have not vested
due to a reservation of rights, “language tying health care benefits” to retirement-income
benefits demonstrates that the employer did not promise lifetime, unchangeable benefits.
Id. Just so here. To rule otherwise would alter the neutral premise of our decisions: by
using tying as a relevant benchmark when it shows vesting but treating it as an irrelevant
benchmark when it shows lack of vesting. That cannot be.
That particularly cannot be here. This plan not only generally ties eligibility
requirements for retirement-income benefits and healthcare benefits together, but it also
explicitly provides for them in the same plan and with the same reservation-of-rights
clause. More than that, Appendix E provides that some funding for the two benefits may
come from the same source. In providing that the company will reimburse the retiree
for the monthly cost of Medicare Part B as part of the “retiree medical coverage,” the
plan says that the company will pay for the benefit “either directly or from the pension
fund.” The company and the employees thus had one more reason to provide all of these
benefits under the same Appendix E umbrella: Some of the healthcare benefits could
be funded by the pension fund.
The plaintiffs respond that the “pension plan established in 1955” did not
originally cover retiree healthcare benefits. That is true but irrelevant. When the
company and the union modified Appendix E to the CBA in the 1970s, they added
healthcare benefits and did so by expanding the benefits provided under the pension
plan—making healthcare benefits a “[p]rincipal provision of the pension plan.” Nothing
prevents the parties from defining “the Plan” however they wish and above all from
changing it from time to time. That the 1955 plan has been continuously revised is borne
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 5
out by the preamble to Appendix E, which explains that “the Company will revise the
pension plan established in 1955 . . . as follows.” (Emphasis added.)
The plaintiffs also claim that the “formal pension plan documents” support their
position. Br. at 27. Nothing in those documents covers retiree healthcare benefits, they
point out, meaning that “the Plan” mentioned in Appendix E must not do so either. That
is backwards. The “retirement income plan” documents do not define the scope of
Appendix E; Appendix E defines the scope of the relevant plan documents and how and
when they can be modified. Because Appendix E contains a healthcare provision, the
underlying healthcare documents together with the underlying retirement-income
documents provide a complete picture of the “pension plan.” The retirement-income
documents tell half of the story, and the words of Appendix E require us to consider all
of it.
Observing that the healthcare provision grants “[c]ontinous health insurance” to
retirees and their spouses “during the life of the retiree,” plaintiffs reason that this
language creates vested, unchangeable benefits. But this thinking chases the tail of the
inquiry. Surely a company can promise “continuous health insurance” and reserve the
right to modify or end that coverage if it becomes unaffordable. That is all the
reservation-of-rights clause does. The continuous-coverage clause at all events serves
another purpose: It shows that benefits do not automatically terminate when the CBA
expires.
Plaintiffs’ invocation of durational layoff benefits submits to the same answer.
The CBA gives laid-off employees healthcare benefits “for one year.” R.98-1 at 16, 18.
Comparing this language to Appendix E’s “continuous health insurance” language, the
plaintiffs reason that the company must have meant to make retiree medical benefits
survive indefinitely. Retiree healthcare benefits, true enough, do not automatically
terminate after one year or upon expiration of the CBA. But this adds nothing to what
we already know. Appendix E grants lifetime (“continuous”) healthcare to retirees,
unless, as Appendix E also provides, the company later modifies or ends the benefit.
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 6
The plaintiffs make much of the fact that the first three paragraphs of Appendix
E speak only in terms of traditional pension (read retirement-income) benefits,
suggesting (as they see it) that the reservation-of-rights clause in paragraph four applies
only to traditional pension benefits. That might be true in some settings, but it is not true
here. The heading the parties gave to Appendix E itself contains this traditional
reference, as it is labeled in bold in capital letters: “PENSION PLAN.” Yet plaintiffs
must agree that this phrase covers non-traditional pension benefits—namely the retiree
healthcare and life-insurance benefits listed in Appendix E. Otherwise, they have no
claim. The unvarnished reality is that the pension plan, started as a traditional pension
plan but over time, and most especially through the revision in the 1970s, the company
and the union extended the plan to other benefits. In contracts, as in statutes, it is not
unusual for language over time to cover new technologies and new benefits not
contemplated when the language first came into being. See OfficeMax, Inc. v. United
States, 428 F.3d 583, 593 (6th Cir. 2005). Unless the parties provide otherwise in the
agreement, the original language and reservation of rights travels with the plan through
each revision. That is all that happened.
Nor does it make a difference that Appendix E sometimes refers to the “pension
plan” and sometimes to the “Plan.” As the first sentence of the document indicates, the
“pension plan” will be thereafter referred to as the “Plan.” That there is a later mention
of “pension plan” in paragraph five, where the parties describe all of the retirement
benefits, does not create a material ambiguity. The short-hand term and the two-word
phrase cover the same thing. Indeed, there is no other coherent way to read the
document. Surely the parties did not mean the “Plan” to refer only to traditional pension
benefits and the “pension plan” only to refer to non-traditional pension benefits, thereby
omitting “pension” when they meant to refer to pensions and adding “pension” when
they meant to refer to other benefits. All benefits are covered by both terms, and the
reservation of rights necessarily applies to all of them.
Everything else raised by the plaintiffs—a declaration from Acument’s former
general counsel, CBA drafting history, plant-closure agreements, retiree
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 7
letters—amounts to extrinsic evidence. Such extra-contractual intimations of meaning
cannot alter the straightforward meaning of the language found within the four corners
of Appendix E.
III.
For these reasons, we affirm.
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 8
APPENDIX “E”
PENSION PLAN
Subject to approval of the Board of Directors and Stockholders, the Company will revise
the pension plan established in 1955, hereinafter referred to as the “Plan”, as follows:
1. An insurance Company shall be designated by the Company, and a contract executed
between the Company and such insurance company, under the terms of which, a pension
fund shall be established to receive and hold contributions payable by the Company,
interest, and other income, and to pay the pensions provided by the Plan.
2. The Company by payment of the contributions or amounts provided in the above
mentioned insurance company contract shall be relieved of any further liability, and
pensions shall be payable only from the insurance fund.
3. In the event of termination of the Plan, there shall be no liability or obligation on the
part of the Company to make any further contributions to the pension fund. No liability
for the payment of pension benefits under the Plan shall be imposed upon the Company,
the Officers, Directors, or Stockholders of the Company.
4. The Company reserves the right to amend, modify, suspend, or terminate the Plan by
action of its Board of Directors provided, however, that no such action shall alter the
Plan or its operation, except as may be required by the Internal Revenue Service for the
purpose of meeting conditions for qualification and tax deductions under Sections 401,
404, and 501(a) of the Internal Revenue Code in respect of employees who are
represented under a collective bargaining agreement in contravention of the provisions
of any such agreement pertaining to pension benefits as long as any such agreement is
in effect.
5. Principal provisions of the pension plan are shown below, but the individual booklets
which will be furnished each participant contain full information and will be based on
the contract entered into with the insurance company.
Effective Date
January 5, 2000
ELIGIBILITY
All employees who will have completed five (5) or more years of continuous credited
service at retirement.
NORMAL RETIREMENT DATE
The normal retirement of all employees will be age sixty-five (65). All employees will
be retired on the first day of the month following their 70th birthday or later if required
by Federal law.
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 9
EARLY RETIREMENT
If you have completed at least five (5) years of credited service, you may retire between
age sixty (60) and sixty-five (65). You may elect to receive:
(a) A pension at age sixty-five (65) based on your credited service up to
your early retirement date.
(b) A pension beginning at your early retirement date based on your
credited service up to that date but reduced in accordance with the early
retirement table as detailed in the master pension contract as amended
effective January 5, 2000 to provide a new reduction schedule as follows:
100% at age 62
85% at age 61
75% at age 60
RETIREE MEDICAL COVERAGE
Continuous health insurance and prescription drug coverage will be provided to current
retirees and those who elect early retirement with fifteen (15) years of service at age
sixty two (62) or twenty five (25) years of service at age sixty (60) and regular
retirement with fifteen (15) years of service who are sixty-five (65) years of age or older.
This coverage is provided for the spouse of retirees only during the life of the retiree,
except as provided below. In order to receive this payment, retirees may not be
employed full time when Medical/RX coverage is available.
Retirees will be required to apply for Medicare parts (A) and (B). The Company will
reimburse the retiree for the maximum of the current monthly cost of Medicare part (B)
coverage either directly or from the pension fund at the option of the company. Eligible
employees hired after 12/31/99 will be ineligible to receive company funded retiree
medical benefits, except the reimbursement for Medicare part (B) which will be capped
at the monthly rate of $45.50. Employees hired before 12/31/99 who retire will be
covered for health insurance through (HMO), (PPO), SelectCare Gold, Care Choice
Gold or similar plan available at the option of the Company. (Benefits will be
coordinated with Medicare and all benefits will cease upon death of retiree, unless
retiree’s spouse is under 65 years of age, in which case benefits for the spouse and
dependents children of the retiree, will not cease until spouse remarries or reaches age
65.
RETIREMENT INCOME
Pensions will be in the amounts set forth below per month for each year of credited
service at retirement with a maximum of thirty-eight (38) years. Current retirees 1985
through 1987 thirty-seven (37) years maximum 1980 through 1984 thirty-five (35) years
maximum, 1974 through '1979 thirty-three (33) years maximum, 1973 and prior thirty
(30) years maximum.
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 10
An employee retiring with less than five (5) years of credited service is not eligible for
benefits.
BENEFIT effective January 5, 2000
$32.43 times each credited service year 0 thru 9
Plus
$34.75 times each .credited service year 9.1 thru 14
Plus
$42.75 times each credited service year 14.1 thru 19
Plus
$43.20 times each credited service year 19.1 thru 24
Plus
$43.2 times each credited service year 24.1 thru 38
PAST RETIREE BENEFIT
*Retirees’ increased benefits if applicable as set forth in the company proposal will be
payable as soon as the program can be revised but not later than May 1, 2000.
VESTED PENSION RIGHTS
Minimum continuous Credited Service - 5 years
DISABILITY INCOME
Employees with at least fifteen (15) years of service who are between the ages of 40 and
65 will be eligible for a pension of $30.00 per month for each year of service in the event
of total and permanent disability. At age 65, the employee will receive the regular
retirement income based on service at disability date. The maximum payment shall be
25 years of service, less workmen’s compensation benefits or any other disability
payments as provided in the master pension contract, exclusive of social security
disability payments. Subject to Internal Revenue Service approval.
No matter respecting the plan or any differences arising hereunder shall be subject to the
grievance procedure established in the collective bargaining agreement between the
Company and the Union.
CONTINUED LIFE INSURANCE
Continued life insurance shall be provided for employees who are retired under the
pension plan in the amount of $12,000.00.
Retired employees will be permitted to purchase additional insurance by buying an
individual policy up to a maximum of $38,000 currently without a medical examination
at the insurance company’s rates.
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 11
______________
DISSENT
______________
DOWD, District Judge, dissenting. Whether the language of a contract is
ambiguous is a question of law for the court. Appendix E is at the core of that question
in this case.
Appendix E begins by creating a defined term - “Plan” - and uses that defined
term consistently in paragraphs 1-4, which includes the reservation of rights clause.
Paragraph 5 then switches to the generic undefined term - “pension plan” - below which
is listed the “principal provisions of the pension plan.”
Following numbered paragraph 5 are three pages of titled, but unnumbered
sections. Among those sections is a provision for “RETIREE MEDICAL
COVERAGE,” which provides “[c]ontinuous health insurance and prescription drug
coverage will be provided to current retirees . . . This coverage is provided for the spouse
retirees only during the life of the retiree, except as provided below. . . . (Benefits will
be coordinated with Medicare and all benefits will cease upon death of retiree, unless
retiree’s spouse is under 65 years of age, in which case benefits for the spouse and
dependents [sic] children of the retiree, will not cease until spouse remarries or reaches
age 65.[)]”
Also following paragraph 5 are two unnumbered sections addressing eligibility
and vesting. The vesting section is titled “VESTED PENSION RIGHTS,” and requires
minimum continuous credited service of 5 years.
The language of Appendix E is poorly drafted and not a model of clarity. At the
summary judgment stage, ambiguities and inferences are to be drawn in favor of the non-
moving party. In this judge’s view, when that standard is applied to Appendix E, its
references to “Plan” and “pension plan” and “continuous health insurance and
prescription drug coverage [for] current retirees and . . . spouses of retirees . . .” and
No. 11-1793 Witmer, et al. v. Acument Global Tech., et al. Page 12
“vested pension rights” are subject to more than one plausible interpretation on the
question of whether the benefits at issue are vested or subject to termination.
As a consequence, I would remand this case to the district court for consideration
of extrinsic evidence to determine the intent of the parties on the issue of vesting.
For these reasons, I respectfully dissent.
