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The Wagner Law Group Description 

The Wagner Law Group, A Professional Corporation, is a nationally recognized ERISA & employee benefits, estate planning, employment, labor & human resources practice. 

 

Established in 1996, The Wagner Law Group has 22 attorneys engaged exclusively in employee benefits, estate planning and employment law. Six of our attorneys are AV rated by Martindale-Hubbell as having very high to preeminent legal abilities and ethical standards. The firm is among the largest ERISA boutiques in the country. Our practice is national in scope, with clients in more than 40 states and several foreign countries.

 

 

 

 

 

Contact Info

The Wagner Law Group

 

  Integrity | Excellence

  

Massachusetts Office 

Tel: (617) 357-5200 

Fax: (617) 357-5250 

99 Summer Street 

13th Floor

Boston, MA 02110


Florida Office 

Tel: (561) 293-3590
Fax: (561) 293-3591
7108 Fairway Drive
Suite 125
Palm Beach Gardens, FL 33418

   

San Francisco Office

Tel: (415) 625-0002

Fax: (415) 358-8300

315 Montgomery Street

Suite 904

San Francisco, CA 94104

 

www.wagnerlawgroup.com

 

 

 

 

January 29, 2015

 

 Health and Welfare Law Alert

 

 

 

Supreme Court: Ordinary Contract Law Determines whether Retiree

Health Benefits Vest

 

 

 

The United States Supreme Court recently considered a case that directly questioned whether retiree health benefits vest under a collective bargaining agreement. In M&G Polymer U.S.A. v. Tackett, the plaintiffs, a group of retirees, claimed that their right to receive free retiree medical benefits vested as of the date of their retirement because the applicable collective bargaining agreement was silent as to the duration of these benefits. The Court ruled that ordinary contract principles, as opposed to special judicial inferences, control whether collective bargaining agreements provide vested lifetime medical benefits for union retirees.  

 

Background. In 2006, the defendant-employer announced that it would begin to require retirees to contribute to the cost of their health benefits. In response, a group of retirees filed a lawsuit alleging that the collective bargaining agreement between the employer and their union guaranteed them free lifetime health benefits.

 

The plaintiffs prevailed in the district court, and the judge reinstated the original benefits. In response, the employer appealed to the Sixth Circuit Court of Appeals.

 

On appeal, the Sixth Circuit agreed with the lower court, finding that silence in a collective bargaining agreement regarding the duration of bargained-for retiree health benefits should be construed as evidence of the parties' intention that those benefits vest and continue indefinitely for current retirees. (In reaching this determination, the Sixth Circuit applied its "Yard-Man" inference, a retiree-friendly judicial inference that retiree health benefits are vested for life in the absence of specific language to the contrary in the plan document or collective bargaining agreement.) In turn, the employer appealed to the Supreme Court.

 

Supreme Court. The Court limited its review to the question of whether courts construing collective bargaining agreements in Labor Management Relations Act cases should presume that silence concerning the duration of retiree medical benefits means that the parties intended those benefits to vest for life.

 

A unanimous Court disagreed with the Sixth Circuit's opinion, ruling that courts should apply ordinary contract principles, not special judicial preferences such as the Yard-Man inference, when determining whether union retirees have vested lifetime health benefits. Rather than determine whether the plaintiffs were entitled to lifetime benefits, the Court remanded the case to the Sixth Circuit for further consideration using ordinary principles of contract interpretation.

 

In reaching this decision, the Court took issue with the Sixth Circuit's conclusion that parties negotiating post-retirement benefits "likely intended those benefits to continue as long as the beneficiary remains a retiree." The Court noted that the Sixth Circuit "derived its assessment of likely behavior not from the record evidence, but instead from its own suppositions about the intentions of the employees, unions, and employers negotiating retiree benefits."    

 

 

 

 

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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.