We’ve commented in this blog before about the Sixth Circuit’s holdings regarding retiree healthcare under collective bargaining agreements.  Starting with the case of UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983), the Sixth Circuit began to apply an “inference” that collectively bargained retire welfare benefits, primarily paid health insurance, would “vest” and would survive the clear expiration of the agreement.  Since that time, the Sixth Circuit has published many decisions in favor of the retirees and vesting, but very few in favor of the employer.  Just such a case has now been decided and should be of use to Sixth Circuit employers.

In Witmer v. Acument Global Technologies, Inc.pdf., Case No. 11-1793 (6th Cir. 2012), the company provided paid health insurance to its retired employees pursuant to a series of collective bargaining agreements.  These benefits were contained in an appendix to the contracts that contained a reservation of rights clause, a not uncommon arrangement.  In 2008, the last collective bargaining agreement expired and the employer discontinued providing the benefits.  A class of 64 retirees brought suit, contending that the benefits had vested under Yard-Man, but the district court granted summary judgment in the employer’s favor.

In a rare published pro-employer decision, the Sixth Circuit affirmed.  The court found that the plaintiffs were relying on an appendix that itself contained disclaimer language and could not meaningfully divorce that language from their claims.  Of equal significance, the court rejected much of the routine evidence used by plaintiffs in Yard-Man cases.  Perhaps most importantly, the court found that in light of the disclaimer, the contract was unambiguous and thus the plaintiffs could not rely upon extrinsic evidence, the core of virtually every garden-variety Yard-Man claim. 

The court also limited some of its prior rules of construction such as the plaintiffs’ argument that the benefits were “vested” because they were “tied” to pension benefits.  The court actually turned that rule against the plaintiffs, finding that limits on other types of retiree benefits also suggested that health insurance benefits did not vest.

Particularly in the wake of the decision two weeks ago in Reese v. CNH America LLC., Case Nos. 11-1359/1857/1969 (6th Cir. Sept. 13, 2012), employers in the Sixth Circuit may have greater flexibility to make changes to collectively bargained retiree health insurance benefits than they had only a few months ago.

The Bottom Line:  The Sixth Circuit has now upheld the use of disclaimer language, at least in some contexts, to change or eliminate retiree health insurance benefits in the collective bargaining context.