Frances Alday v. Raytheon Company
693 F.3d 772
9th Cir.2012Background
- Retirees at a Tucson defense plant bargained with IAMAW for employer-paid health insurance under a contributory retirement option until age 65.
- Raytheon, after acquiring Hughes Missile Systems, continued the CBAs (1990, 1993, 1996, 1999) that obligated premium-free coverage for contributory retirees.
- The 2003 CBA limited Raytheon’s future contributions; in 2004 Raytheon began charging retirees premiums.
- ERISA welfare plans (1994, 1997, 1999, 2003) with reservation-of-rights provisions potentially affecting benefits were in place but not incorporated into the CBAs for all issues.
- The district court granted summary judgment for retirees on LMRA and ERISA claims; Raytheon appealed; retirees cross-appealed on punitive/extracontractual damages.
- The court analyzed whether CBAs unambiguously guaranteed premium-free coverage until 65, and whether Plans could unilaterally alter that obligation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether CBAs unambiguously require premium-free coverage until 65. | Retirees argue the CBAs expressly obligate Raytheon to pay premiums until 65. | Raytheon contends Plans’ reservation-of-rights could supersede or modify the obligation. | Yes to the retirees’ contract-right; plans do not override the CBA term. |
| Do ERISA/Plan reservation-of-rights provisions apply to retirees’ benefits? | Retirees contend Plan reservations do not cancel CBA commitments. | Raytheon argues reservations could alter benefits. | Plan reservations do not abrogate the CBAs’ premium-payment obligation. |
| Do zipper and integration clauses prevent unilateral modification of retiree benefits? | Retirees rely on zipper clause to maintain fixed rights. | Raytheon asserts Plan reservations modify rights. | Zipper clause precludes unilateral modification; CBAs control unresolved issues. |
| Are punitive or extra-contractual damages available for the retirees’ LMRA/ERISA claims? | Retirees seek punitive/extra-contractual damages. | Raytheon challenges availability; argues not entitled. | No; damages of that type not awarded. |
Key Cases Cited
- Turner v. Local Union No. 302, Int'l Bhd. of Teamsters, 604 F.2d 1219 (9th Cir. 1979) (benefits may survive expiration if tied to post-expiration events)
- Poore v. Simpson Paper Co., 566 F.3d 922 (9th Cir. 2009) (benefits may continue post-expiration under contract interpretation)
- Brushy Creek Coal Co. v. United Mine Workers, 505 F.3d 764 (7th Cir. 2007) (reservation-of-rights vs. bargaining integration language)
- Diehl v. Twin Disc, Inc., 102 F.3d 301 (7th Cir. 1996) (lifetime-benefit reservation analysis; interplays with CBAs)
- Prater v. Ohio Education Association, 505 F.3d 437 (6th Cir. 2007) (SPDs reservation-of-rights; enforceability when joint amendment clause exists)
- Int’l Ass’n of Machinists & Aerospace Workers v. Masonite Corp., 122 F.3d 228 (5th Cir. 1997) (plans’ reservation-of-rights interplay with CBAs)