United Steel, Paper & Forestry, Rubber, Manufacturing Energy, Allied Industrial & Service Workers International Union, AFL-CIO-DC v. Kelsey-Hayes Co.
750 F.3d 546
6th Cir.2014Background
- 400 retired union workers from the Jackson plant; plant closed 2006; CBAs (1995, 1999, 2003) promised health care continuation for retirees and dependents with company paying full premiums for group plans; 2011 TRW purchased Kelsey-Hayes and announced 2012 discontinuation of group coverages in favor of Health Reimbursement Accounts (HRAs) funded $15,000 (2012) and $4,800 (2013) per retiree/spouse; HRAs shift cost/risk to retirees and were not funded beyond 2013; retirees sued under LMRA and ERISA; district court granted summary judgment and permanent injunction to reinstate prior coverage and awarded fees; TRW/Kelsey-Hayes appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do CBAs vest lifetime retiree health care? | CBAs require continuation of the same coverage; Yard-Man inference supports vesting. | Reese allows unilateral modification of vested benefits where appropriate. | CBAs created a vested lifetime right to health care. |
| Are HRAs a lawful, reasonable replacement for vested benefits? | HRAs are not the bargained-for form of coverage and shift costs to retirees. | HRAs provide flexible, enhanced coverage and are a permissible alteration under Reese. | HRAs breached the CBAs as not the contemplated coverage. |
| Is TRW properly liable as successor to Kelsey-Hayes for retiree obligations? | Evidence shows TRW acquired Kelsey-Hayes and continued obligations; TRW implemented HRAs. | TRW not a party to the CBAs; separate entities. | TRW is a proper party; liable for Kelsey-Hayes obligations. |
| Is the permanent injunction appropriate and are attorney fees proper? | Injunction necessary to restore status quo; fees reasonable under lodestar. | Injunction overbroad; fees excessive. | Four-factor test satisfied; injunction upheld; attorney-fee award affirmed. |
Key Cases Cited
- Yard-Man, Inc. v. Unit Sch. Dist. No. 259, 716 F.2d 1476 (6th Cir. 1983) (vest/extend retiree benefits analyzed via contract language and context)
- Reese v. CNH America LLC (Reese I), 574 F.3d 315 (6th Cir. 2009) (retiree benefits vesting and scope depend on CBA language and conduct)
- Reese v. CNH America LLC (Reese II), 694 F.3d 681 (6th Cir. 2012) (factors for reasonable alterations to vested benefits; evolving health care delivery contemplated)
- Moore v. Menasha Corp., 690 F.3d 444 (6th Cir. 2012) (contract language and conduct govern post-retirement benefits; mutualized modification considerations)
- Yolton v. El Paso Tennessee Pipeline Co., 435 F.3d 571 (6th Cir. 2006) (Yard-Man framework and extrinsic evidence considered for vesting)
- Maurer v. Joy Technologies, Inc., 212 F.3d 907 (6th Cir. 2000) (inference of vesting does not shift burden; contract language controls)
- Sprague v. GMC, 133 F.3d 388 (6th Cir. 1998) (express promise to provide vested benefits deemed forever unalterable)
- Prater v. Ohio Education Ass’n, 505 F.3d 437 (6th Cir. 2007) (mutual consent/alteration provisions preempt unilateral modification)