ERISA-Sixth Circuit Rules That, In Deciding Whether Parties’ Agreements Vest Retirees In Unalterable Health Benefits, Ordinary Principles Of Contract Interpretation Apply

In Tackett v. M & G Polymers USA, LLC, No. 12-3329 (6th Cir. 2016), the Plaintiffs are Ohio residents, retirees, and spouses of retirees (“Retirees”) from a plant owned by Defendant M&G Polymers USA, LLC (“M&G”).

From 1991 to 2005, the Retirees entered into several collective bargaining agreements (the “CBAs”) with M&G and its predecessors, which included Pension and Insurance Agreements outlining retiree health care benefits (collectively, “Agreements”). The Agreements provide that the employer will make a full Company contribution towards the cost of health care benefits for certain retirees. In December 2006, M&G announced that Retirees would, for the first time, be required to contribute to their health care costs or risk being dropped from the plan. The Retirees brought this suit, contesting the announced contributions, on the grounds that the Agreements granted a vested right to lifetime contribution-free health care benefits. This case reached the Sixth Circuit Court of Appeals (the “Court”) three times, this time on remand from the Supreme Court.

In reviewing the case, the Court began with the Supreme Court’s decision in the case, M&G Polymers, in which the Supreme Court concluded that the Agreements should be examined using ordinary principles of contract law. Importantly, the Supreme Court rejected the Sixth Circuit’s Yard-Man‘s inferences in favor of retirees, but also declined to adopt an “explicit language” requirement in favor of companies. However, applying these principles requires the district court to make certain determinations. Therefore, the Court remands the case back to the district court to decide: (1) what particular documents make up the parties’ Agreements; (2) whether reference to extrinsic evidence is appropriate; and (3) whether the Agreements, and any extrinsic evidence that may be considered, vests with Retirees lifetime contribution-free health care benefits. The district court should use ordinary principles of contract law to answer these questions, without a “thumb on the scale” in favor of either party.

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