RESPONDENT:Hobert Freel Tackett, et al.
LOCATION: M&G Polymers, Point Pleasant Polyester Plant
DOCKET NO.: 13-1010
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Sixth Circuit
CITATION: 574 US (2015)
GRANTED: May 05, 2014
ARGUED: Nov 10, 2014
DECIDED: Jan 26, 2015
Julia P. Clark – for the respondent
Allyson N. Ho – for the petitioner
Facts of the case
Retirees from the Point Pleasant Plant in Apple Grove, West Virginia⎯owned by M&G since 2000⎯sued after M&G announced that the retirees would be required to contribute to the cost of their medical benefits. The retirees, who had been employees of Apple Grove before the plant was bought by M&G, entered into a series of collective bargaining negotiations through their unions regarding healthcare benefits. Just as earlier versions had included, the 2005-2008 collective bargaining agreement (CBA) included a provision that “capped”, or limited, the company’s annual contribution towards employee healthcare benefits. In 2006, M&G announced it was requiring employees to cover their individual costs once that cap was exceeded in response to the shifting healthcare landscape. The retirees claimed that language in the effective CBA promised full coverage of healthcare benefits for life without any contribution requirement and sued the company because that “capping” provision was not included in the pension and insurance booklet or adopted by the union on behalf of employees in the latest agreement. The retirees sued under the Labor Management Relations Act (LMRA) and the Employee Retirement Income Security Act of 1974 (ERISA).
The district court dismissed the retirees’ claim, and they appealed to the U.S. Court of Appeals for the Sixth Circuit, which reversed and remanded the case back to the district court. The district court found in favor of the retirees but ordered that their healthcare benefits be reinstated to the post-2007 version that included employee contributions. Both parties appealed the decision, and the Court of Appeals affirmed the district court’s judgement.
When courts interpret collective bargaining agreements as part of LMRA claims, should they interpret silence as to the duration of retiree healthcare benefits within the agreement to mean the original terms continue indefinitely, or should they require an explicit statement, or some language that would support the inference that benefits were meant to go undisturbed?
Media for M&G Polymers USA, LLC v. Tackett
Audio Transcription for Opinion Announcement – January 26, 2015 in M&G Polymers USA, LLC v. Tackett
John G. Roberts, Jr.:
Justice Thomas has our opinion this morning in Case 13-1010, M&G Polymers v. Tackett.
This case comes to us on a writ of certiorari to the United States Court of Appeals for the Sixth Circuit.
Respondents are retired employees of a polyester plant owned by petitioner M&G Polymers USA.
In 2006 M&G announced that it would begin requiring retirees to contribute to the cost of their healthcare benefits, which they had previously received contribution free under certain collective bargaining agreements.
The retirees sued M&G, alleging that this decision breached those collective bargaining agreements.
Although those agreements had expired before 2006, the retirees claimed that the agreements had guaranteed them a vested right to contribution free healthcare benefits for the rest of their lives.
The District Court dismissed the complaint concluding that the agreements were unambiguous and that they created no such vested right.
The Sixth Circuit reversed based on its reasoning in an earlier decision known as Yard-Man.
In Yard-Man the Sixth Circuit had drawn several inferences in favor of vested retiree benefits and had concluded that parties would not have left such benefits to the uncertainties of future negotiations.
Relying on Yard-Man’s reasoning the Sixth Circuit concluded that the retirees in this case had stated a claim.
On remand the District Court held a bench trial and ruled in favor of the retirees.
The Sixth Circuit affirmed.
In an opinion filed with the clerk today, we now reverse the judgment of the Sixth Circuit.
Under our precedence, collective bargaining agreements must be interpreted according to ordinary principles of contract law, at least where those principles are not inconsistent with federal labor policy.
The Sixth Circuit’s Yard-Man inferences are inconsistent with those principles, because they place a thumb on the scale in favor of vested benefits, even when an agreement expressly provides that it expires on a certain date.
For these reasons and others set forth in our opinion, we reverse the judgment of the Sixth Circuit and remand for that Court to apply ordinary principles of contract law in the first instance.
The opinion of the Court is unanimous.
Justice Ginsburg has filed a concurring opinion, in which Justices Breyer, Sotomayor and Kagan join.