Jack Reese v. CNH America LLC
694 F.3d 681
| 6th Cir. | 2012Background
- CNH America's proposed modifications to retiree health benefits are at issue; district court did not address reasonableness or develop a factual record; the panel previously remanded for factfinding on reasonableness; the 1998 CBA created a managed health care network that changed availability and cost structure for retirees; the court has recognized vesting of eligibility for health benefits but allows reasonable modification; the current opinion reverses the district court and remands for further proceedings to determine reasonableness with a fuller record.
- The panel in Reese I held that retiree health benefits vest for life but that modifications may be reasonable and not require new bargaining, and remanded to assess reasonableness based on specific criteria.
- Evidence showed that the 1998 shift to managed care reduced some choices, but improved coverage in some respects, and Medicare Part D was not treated as fixed veto on changes.
- The district court was asked to evaluate reasonableness using factors: benefits reasonably commensurate with old plan, reasonable in light of health-care changes, and roughly consistent with benefits for current employees.
- The East Moline Shutdown Agreement did not fix healthcare benefits; benefits are found in the 1998 CBA and remain subject to reasonable modification.
- The case may proceed to determine reasonableness on remand; attorney-fee issues are deferred.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Unilateral modification of vested retiree benefits possible? | Reese I: vesting fixes benefits for life. | CNH may modify reasonably. | Remand for reasonableness record. |
| What record is needed to decide reasonableness? | Record should support fixed expectation of benefits. | Record needed on costs, quality, and comparability. | Remand to gather detailed cost, coverage, and comparability data. |
| What test governs reasonableness of changes? | Test should reflect fixed, lifetime benefits. | Use Reese I’s framework: reasonably commensurate, reasonable in light of health-care changes, roughly consistent with current employees. | Apply Reese I framework on remand. |
| Is Zielinski standard applicable to this case? | Zielinski should govern due to gap-filling facts. | Not applicable; full contract details are known. | Not applicable; use Reese I framework on remand. |
Key Cases Cited
- Reese v. CNH America LLC, 574 F.3d 315 (6th Cir. 2009) (vested health benefits may be reasonably modified; remand for reasonableness)
- Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571 (6th Cir. 2006) (unilateral modification of vested welfare benefits as LMRA violation)
- UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983) (vesting and modifications in pension/health contexts)
- Noe v. PolyOne Corp., 520 F.3d 548 (6th Cir. 2008) (vesting and contract interpretation in CBAs)
- Maurer v. Joy Techs., Inc., 212 F.3d 907 (6th Cir. 2000) (interpretation of vesting and LMRA implications)
- Golden v. Kelsey-Hayes Co., 73 F.3d 648 (6th Cir. 1996) (vesting and modification principles in welfare plans)
- McCoy v. Meridian Auto. Sys., Inc., 390 F.3d 417 (6th Cir. 2004) (interpretation of vesting in health benefits)
- Allied Chem. & Alkali Workers of Am., Local Union No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157 (1981) (principles of contract/benefit vested rights under LMRA)
- Schreiber v. Philips Display Components Co., 580 F.3d 355 (6th Cir. 2009) (cited in context of health-benefit modifications)