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The Wagner Law Group

The Wagner Law Group is a nationally recognized practice in the areas of ERISA and employee benefits, estate planning, employment, labor and human resources and investment management.


Established in 1996, The Wagner Law Group is dedicated to the highest standards of integrity, excellence and thought leadership and is considered to be amongst the nation's premier ERISA and employee benefits law firms. The firm has seven offices across the country, providing unparalleled legal advice to its clients, including large, small and nonprofit corporations as well as individuals and government entities worldwide. The Wagner Law Group's 29 attorneys, senior benefits consultant and four paralegals combine many years of experience in their fields of practice with a variety of backgrounds. Seven of the attorneys are AV-rated by Martindale-Hubbell and six are Fellows of the American College of Employee Benefits Counsel, an invitation-only organization of nationally recognized employee benefits lawyers.  Seven of the firm's attorneys have been named to the prestigious Super Lawyers list for 2017, which highlights outstanding lawyers based on a rigorous selection process.




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   "Lifetime" Retiree Health Benefits Ended When CBA Expired

December 14, 2017




The Sixth Circuit Court of Appeals, in Watkins vs. Honeywell International Inc., determined that an employer's promise to provide healthcare benefits for its retirees expired when the collective bargaining agreement ("CBA") containing the commitment expired. In particular, the court found that the CBA's general-duration clause applied to the employer's promise to provide retiree healthcare benefits.  


Facts. The employer operated a manufacturing facility at which many union employees, including the plaintiffs, spent their entire careers. The plaintiffs retired at a time when the CBA between the employer and the plaintiffs' union obligated the employer to provide retiree healthcare benefits. According to the plaintiffs, when they retired, the employer sent them a letter to explain that their "healthcare will continue during your retirement" and is "for your lifetime." However, the final CBA provided that the duration of the employer's retiree healthcare program was limited to the to the end of the agreement.


When the CBA expired in 2011, the employer did not renew the agreement, and shortly thereafter sold the facility at which the plaintiffs had worked before retiring. Nonetheless, the employer continued to provide retiree healthcare benefits for the plaintiffs until late 2015. After the employer stopped paying for its retirees' healthcare, the plaintiffs filed suit seeking to require the employer to continue to pay for their healthcare.      


District Court. At trial, the plaintiffs claimed that the employer had breached the CBA when it stopped paying for their healthcare. The employer responded by asking the court to dismiss the claim on the basis that the CBA clearly provided that its retiree health program would end when the agreement expired. After reviewing the CBA, the district court agreed with the employer, finding that the CBA's general-duration clause applied to the obligation to provide retiree healthcare benefits, and dismissed the plaintiffs' claim. In turn, the plaintiffs' appealed to the Sixth Circuit.     


Sixth Circuit. Upon reviewing the matter, the Sixth Circuit explained that it would not consider evidence outside of the collective bargaining agreement unless its terms were ambiguous. The court noted that the Supreme Court (in M & G Polymers USA, LLC v. Tackett) had previously held that CBAs are contracts that should be interpreted in accordance with "ordinary principles of contract law", so long as such an interpretation is "not inconsistent with federal labor policy."


In the instant case, the Sixth Circuit determined that the CBA's general-duration clause unambiguously applied to its retiree healthcare program. Unlike previous cases that the court had reviewed where the parties had carved out certain benefits from being subject to the CBAs' general-duration clauses, the CBA at issue in Watkins expressly stated that its general-duration clause applied to the employer's obligation to provide retiree health benefits. In particular, the court found that the general-duration clause limited the employer's promise to pay retiree health benefits "for the duration of this Agreement."  Accordingly, the Sixth Circuit refused to consider the plaintiffs' extrinsic evidence and affirmed the lower court's decision, finding that the employer's obligation to pay retiree health benefits ended when the CBA expired.  


Watkins v. Honeywell International Inc. can be accessed at: http://www.opn.ca6.uscourts.gov/opinions.pdf/17a0253p-06.pdf









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This Newsletter is provided for information purposes by The Wagner Law Group to clients and others who may be interested in the subject matter, and may not be relied upon as specific legal advice.  This material is not to be construed as legal advice or legal opinions on specific facts. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered advertising.