ERISA-Sixth Circuit Rules That Retiree Health Benefits Are Vested And Cannot Be Altered

In Tackett v. M & G Polymers USA, LLC, Nos. 12-3329/3407 (6th Cir. 2013), the defendants were appealing the judgment of the district court. The plaintiffs had brought this suit, in the form of a class action, against the defendants after their former employer, M & G Polymers USA, LLC (” M&G”), had announced that plaintiffs would be required to make health care contributions towards the cost of their retiree health benefits. After a bench trial, the district court found M&G liable for violating a labor agreement and an employee welfare benefit plan (the “Plan”) under which the retiree health benefits were paid.

The district court issued a permanent injunction, ordering the defendants to reinstate the plaintiffs to the version of the Plan in effect in 2007, under which they are to receive health care for life without contributions. In so ruling, the district court concluded that the plaintiffs’ right to lifetime healthcare vested upon retirement, since an agreement, proffered by the defendants, between the union and the employer to “cap” health benefits and several “side” letters were not a part of the applicable labor agreements.

In analyzing the case, the Sixth Circuit Court of Appeals (the “Court”) said that the case hinges on whether the collectively bargained agreements (the “CBAs”) between the plaintiffs and defendants vested in the plaintiffs a right to lifetime no-contribution health care benefits. Vesting obtains only if the parties so intended when they executed the applicable labor agreements. Here the Court found intent to vest in the language of the CBAs. An agreement and certain side letters, which showed a contrary intent, are not part of the CBAs-the district court did not make a clear error in determining this- and are not needed as extrinsic evidence because the CBAs’ language at issue is not ambiguous. Thus the agreement and letters not considered here. As such, the Court concluded that the plaintiffs had vested in their retiree health benefits, and it affirmed the district court’s judgment.

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