In Grove, Sr. v. Johnson Controls, Inc., Civil No. 1:12-CV-02622 (M.D. Pa. March 31, 2016), in an action brought under ERISA and the LMRA, the plaintiffs allege that the defendants violated their rights to retiree health benefits. After reviewing the case, the District Court (the “Court”) granted summary judgment for the defendants.
In this case, every few years since 1973, the Union in question has negotiated a collective-bargaining agreement (“CBA”) with Johnson Controls, Inc. (“Johnson Controls” ) or its predecessors relating to, among other things, active and retiree health insurance benefits for both employees and former employees of the York Plant. Each CBA incorporated by reference a separate booklet, the “Group Insurance Program” (“GIP”), that specifically addressed health and welfare benefits. Throughout the years, these health benefits remained fairly consistent from agreement to agreement. However, in 2009, Johnson Controls unilaterally reduced retiree health benefits by instituting a $50,000.00 lifetime cap on benefits payable for each participant sixty-five years of age and older. As a result of the cap, some plaintiffs are no longer eligible for retiree healthcare benefits because they have reached the $50,000 lifetime coverage limit. This suit ensued.
In analyzing the case, the Court noted that, in its unanimous decision in the Tackett case, the U.S. Supreme Court rejected the inferences in favor of vesting set forth in the Sixth Circuit’s Yard-Man case and its progeny, and reaffirmed that collective bargaining agreements are to be interpreted according to ordinary principles of contract law, at least to the extent not inconsistent with Federal labor policy. The Supreme Court emphasized that a court’s objective when interpreting a collective bargaining agreement, as with any contract, is to give effect to the contractual rights and expectations of the parties.