On Monday, a unanimous United States Supreme Court issued its decision in M & G Polymers USA, LLC v. Tackett, Supreme Court Case No. 13-101, vacating and remanding the Sixth Circuit’s holding that a group of retirees was entitled to lifetime healthcare benefits per the terms of various collective bargaining agreements. In doing so, the Supreme Court rejected UAW v. Yard-Man Inc., 716 F.2d 1476 (6th Cir. 1983), and its progeny, and directed lower courts to determine whether retiree health benefits vest based on ordinary contract principles without any presumption or inference in favor of vesting.
For employers located in the 46 states outside the Sixth Circuit, it may be unclear why this case is a big deal. For the lucky majority, a brief history lesson is in order. Outside the Sixth Circuit, a collective bargaining agreement, and the obligations it contains, expires on its expiration date. Thus, the parties must come to agreement as to the new terms at relatively regular intervals, taking into account market forces, changes in their relative bargaining positions, and their respective interests. However, in 1983, the United States Court of Appeals for the Sixth Circuit rendered its decision in Yard-Man, in which it manufactured an “inference” that retiree welfare benefits, primarily paid health insurance, would “vest” and would survive the clear expiration of the agreement. Continue Reading