In Barton v. Constellium Rolled Products-Ravenswood, LLC, No. 16-1103 (4th Cir. Mar. 22, 2017), the Fourth Circuit affirmed the Southern District of West Virginia’s grant of the Defendants’ motion for summary judgment, finding that the plain language of the parties’ collective-bargaining agreement (“CBA”) limited the duration of the retirees’ health benefits to the term of the agreement.
As far back as 1988, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industry & Service Workers International Union (“Union”) had negotiated CBAs with Constellium, an aluminum plant operator, on its employees’ behalf. Specifically, there had been seven (7) CBAs between the parties up to 2010. Article 15 of the 2010 CBA stated, “[B]enefits shall become effective on July 15, 2010, except as otherwise provided in the applicable booklet, and further that such benefits shall remain in effect for the term of this 2010 Labor Agreement.” The central issue at play dealt with the interpretation and application of this latter clause.
A “booklet,” which served as the summary plan description (“SPD”) of the group health insurance benefits program for the retirees accompanied each edition of the CBA. The latest edition of the SPD stated similarly, “The benefits described in this summary are effective as of June 1, 2005,” and last “for the term of the Labor Agreement.”
In July 2012, while negotiating over a new CBA, Constellium proposed amending Article 15 to extend the cap on employer contributions to retiree health benefits for employees who retired before January 1, 2003, and to freeze Medicare Part B reimbursement issuances. In response, the Union asserted that its employees’ benefits had vested, and accordingly refused to budge on this issue. After providing notice of its intent to proceed, Constellium promptly made the stated changes. Several of the retirees, who retired under the prior CBA (“Retirees”), soon after brought suit against Constellium, alleging violations of 29 U.S.C. § 185 (Labor Management Relations Act) and 29 U.S.C. § 1132(a)(1)(B) (ERISA). The District Court granted Constellium’s motion for summary judgment and the Retirees timely appealed.
On appeal, the Retirees contended that the parties had intended for the Article 15 benefits to vest, continuing beyond the term of the CBA, and asserted that Constellium’s unilateral modification breached its obligations under the CBA. For its principal authority, the Fourth Circuit relied on the Supreme Court’s decision in M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 (2015), which held that courts must “interpret collective-bargaining agreements, including those establishing ERISA plans, according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy.”
Additionally, the Tackett Court specifically mandated, “When a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life.” Id. at 937. Applying ordinary contract principles to its interpretation of Article 15, the Court determined that the Article’s plain language indicated that the benefits did not vest. Both the Article and the SPD’s used the same “for the term of” language.
To help bolster this position, the Court noted that the pension benefits SPDs, as opposed to the above-discussed retiree health benefits SPDs, contained more expansive language: “Once pension payments commence they are payable for the life of the participant,” and are “not subject to reduction.” The Court explained that the use of this unambiguous language in the pension benefits SPDs indicated that the parties knew how to manifest their intent to vest certain benefits. The absence of the identical language in the other provided evidence of the absence of such an intent.
In opposition to these arguments, the Retirees asserted that several associated materials, specifically the parties’ several contribution cap letters, and other provisions of the CBA evinced intent to vest the benefits. The Court quickly dismissed this contention, however, because the cap letters indicated specifically that the parties could change the benefits, and historically had changed the benefits in the past. Without further evidence as to the underlying intent to have the cap letters represent a manifestation of the parties’ intent to have the benefits vest, this argument failed to negate the unambiguous durational language of Article 15 and the SPD.
After finding the Retirees’ attempted analogizing of case law factually dissimilar and thus unpersuasive, the Court held that the Retirees’ benefits had not vested and, accordingly, no breach of the CBA’s obligations had occurred. As such, the Court affirmed the lower court’s grant of summary judgment.