In Zino v. Whirlpool Corp., Nos. 17-3851/17-3860 (6th Cir. 2019) (Unpublished Opinion), in a class action by Hoover Company retirees, the district court ruled that numerous collective-bargaining agreements (the “CBAs”) vest plaintiffs with unalterable lifetime healthcare benefits. Upon reviewing the case, the Sixth Circuit Court of Appeals (the “Court”) found that the CBAs’ general durational clauses (which say when the agreements end) control when healthcare benefits end, and therefore reversed the district court’s ruling.
In this case, the plaintiffs had built vacuum cleaners for the Hoover Company at its plant in Canton, Ohio, and retired between 1980 and 2007. Over the years, a succession of CBAs governed employment terms and aspects of retirement, including healthcare benefits. As to those benefits, the agreements contained one of three promises:
▪ The Company “assumes responsibility for paying premiums . . . for future retiree’s [sic] medical insurance in accordance with the terms and conditions of the [Welfare Benefit] Plan”;
▪ An eligible “employee who retires . . . shall have the opportunity to continue elements of the medical insurance in accordance with [specified] principles”; and
▪ “[A]vailable medical benefits” for eligible retirees “shall be” for “pre-65 coverage only” with “no change in current coverage” except for increased cost sharing.
A series of acquisitions left Whirlpool responsible for providing healthcare benefits to plaintiffs. After the company announced drastic reductions to those benefits, plaintiffs sued the company and its Group Benefits Plan under the LMRA and ERISA, seeking a ruling that the CBAs vest retiree healthcare benefits at unalterable levels. The district court agreed with the plaintiffs and gave them the ruling.
In analyzing the case, the Court said that, to succeed here, the plaintiffs needed to prove that defendants violated a union contract that vests lifetime healthcare benefits. The rule in the Sixth Circuit is that a CBA’s general durational clause applies to the requirement that healthcare benefits be maintained, unless [the CBA] contains clear, affirmative language indicating the contrary. The Court found that none of the CBAs contain language under which vesting obtains. They state that the company will pay insurance premiums “in accordance with the terms and conditions of the [Welfare Benefit] Plan,” that retirees “shall have the opportunity to continue” healthcare coverage, or that coverage for retirees “shall be” for “pre-65 coverage only.” None of these statements says clearly and affirmatively that the relevant general durational clause doesn’t control the termination of healthcare benefits—whether by reference to the general durational clause itself or by other language stating explicitly that healthcare benefits continue past the relevant agreement’s expiration. And nowhere else in any of the CBAs does such language appear. This means the general durational clauses control the termination of Whirlpool’s obligation to provide healthcare benefits to plaintiffs, which means the obligation ended when the last CBA expired.
As such, the Court reversed the district court’s ruling that the CBAs vest retiree healthcare benefits at unalterable levels to all plaintiffs, vacated the district court’s judgment, and remanded for proceedings consistent with its opinion.