In Windstream Corporation v. Lee, No. 13-1723 (8th Cir. 2014), the Eighth Circuit Court of Appeals (the “Court”) faced the following situation. In 2009, Windstream Communications (the “Windstream”) modified the premium subsidy it paid to former employees enrolled in its medical benefits plan for retirees. Windstream filed this action in November 2009, against retirees, and subsequently their union, who challenged Windstream’s authority to modify retiree benefits unilaterally, seeking a declaratory judgment that it has the authority to modify retiree benefit premium contributions without violating either the applicable collective bargaining agreement (the “CBA”) or ERISA. The district court granted summary judgment to Windstream. The retirees and the union appealed.
In analyzing the case, the Court said that, under ERISA, an employer may unilaterally modify or terminate retiree health and other welfare benefits unless they have been vested. Retiree health and welfare benefits are not vested unless the employer has contracted an agreement to the contrary. The burden is on the retiree or union to prove vesting languages exists in the plan documents. Vesting promises may be found in a collective bargaining agreement if they are incorporated into the formal written ERISA plan.
Here, the Court continued, because the summary plan description for the plan containing the retiree health benefits say that the plan is maintained pursuant to the CBA, the Court must determine if the CBA contains a contractual promise to provide vested retiree health benefits. The Court concluded that the CBA language does not contain any such contractual promise. It said that the CBA is not “reasonably susceptible of the meaning” that the retiree health benefits were permanently vested. As such, the Court affirmed the district court’s summary judgment in Windstream’s favor.