Jack M. NAVLET, Andrew E. Jenkins, Jack Godfrey, Louis Barrow, B.J. Schwartz, Arthur Camp, Ronald Newenhof, Timothy O'Brien, and Michael Miller, individually and on behalf of a class of others similarly situated, Appellants,
v.
The PORT OF SEATTLE, Respondent.
Supreme Court of Washington, En Banc.
*224 James D. Oswald, Law Offices of James D. Oswald, Seattle, WA, for Appellants.
Richard J. Birmingham, Davis Wright Tremaine LLP, Seattle, WA, for Respondent.
OWENS, J.
ś 1 This case requires the determination of whether retirement, health care and welfare benefits (welfare benefits) provided in a collective bargaining agreement vested for life with employees who reached retirement eligibility during the term of the agreement. The appellants are nine current or retired employees (Appellants) of the Port of Seattle (Port), who were eligible to receive retirement welfare benefits pursuant to a collective bargaining agreement (CBA) between the Port and the International Longshore and Warehouse Union Local 9 (Local 9). After the CBA expired, the Port ceased contributing to the welfare trust fund (Welfare Trust), which administered the welfare benefits provided for eligible employees and retirees. Upon ceasing contributions, the trustees terminated the Welfare Trust's coverage for all employees and retirees, including Appellants. The Port offered Appellants the opportunity to participate in the Port's own employee benefits plan but did not offer to pay the premiums for such coverage.
ś 2 We hold that state law governs the vesting principles for retirement welfare benefits conferred through a collective bargaining agreement with a state employer and therefore decline to interpret such rights under Title I of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461. Applying the applicable vesting principles to the CBA, we further hold that the Port is obligated to provide retirement welfare benefits for life to Appellants who have satisfied the eligibility requirements to receive such benefits. Accordingly, we reverse the trial court's summary judgment order, enter partial summary judgment in favor of Appellants, and remand for further proceedings.
FACTS
ś 3 In 1997, the Port and Local 9 entered into the CBA, which superseded the parties' previous collective bargaining agreements covering the terms and conditions of employment. Clerk's Papers (CP) at 41-61. Under section XVIII of the CBA, the Port promised to "maintain the current level of medical, welfare, dental and related benefits during the duration of this contract and ... continue to provide the same level of coverage currently provided to eligible employees, eligible retirees, and dependents." CP at 52.[1]
ś 4 The Port further agreed in section XVIII "to be party to the Agreement and Declaration of Trust of the ILWU Local 9 Warehouse Welfare Trust Fund" (Welfare Trust Agreement or Trust Agreement) that would govern the terms of the Welfare Trust. *225 CP at 52, 86-123. The Welfare Trust was created to receive contributions from participating employers in order to administer a welfare benefits plan for participating employees. CP at 91. The Welfare Trust Agreement stated that the terms of the CBA determined the employer's obligation to make contributions to the Welfare Trust. CP at 92. In section XVIII of the CBA, the Port agreed "to pay the premium necessary to maintain the current level of benefits to that Trust." CP at 52. The Port was the principal participating employer making contributions to the Welfare Trust for several years prior to the termination of the CBA. CP at 288.[2]
ś 5 The Trust Agreement further provided that the parties intended to organize and operate the Welfare Trust pursuant to the provisions of ERISA as well as other applicable federal and state laws. CP at 91. The Port and Local 9 each appointed three trustees to administer the Welfare Trust, and the Trust Agreement established procedures for participants to challenge a denial of benefits. The Trust Agreement stated that it would continue indefinitely but would "automatically terminate[ ] upon the expiration of all collective bargaining agreements and special agreements requiring the payment of contributions to the Trust Fund." CP at 91, 119.
ś 6 In addition, the Welfare Trust Agreement defined an "employee welfare benefit plan" as "any lawful employee pension benefit plan created and administered by the Trustees." CP at 92. The parties signed a Warehousemen's Pension Trust Fund Industry Pension Agreement (Pension Agreement), which they incorporated by reference into the CBA, obligating the Port to make contributions for an employee pension trust fund. CP at 299-300. The Welfare Trust Agreement conditioned retiree eligibility for retirement welfare benefits on the eligibility requirements for the Pension Agreement. The Pension Agreement specifically provided eligibility requirements for pension as well as retirement welfare benefits: "[A]n employee who elects to retire before age 62 ... shall not be entitled to retiree health and welfare benefits until such retiree reaches age 62. At that time, benefits will be provided under the terms and conditions that are in effect at the time of entitlement." CP at 300.
ś 7 Local 9 provided participant-employees with a copy of a summary plan description (SPD), which described the terms of the welfare benefits plan that would be administered by the Welfare Trust. CP at 125-68.[3] As with the Trust Agreement itself, the SPD contained a section purportedly explaining the participants' rights under ERISA. The SPD also contained a provision purporting to reserve the Welfare Trust trustees' right to terminate the trust:
The Retired Employee Program is not Guaranteed
The Board of Trustees is providing retiree health and welfare benefits to the extent that monies are currently available to pay the cost of such programs. The Board of Trustees retains sole and exclusive authority, at its discretion, to determine the extent, if any, to which monies are available for this program and to determine the manner of expenditure of such monies for the program. The program is not guaranteed to continue indefinitely. The Board of Trustees reserves the right to change the eligibility rules of the benefits, reduce the benefits, or eliminate the Plan entirely, as may be required by future circumstances.
CP at 166.
ś 8 On March 3, 2003, the Port informed the trustees that it would immediately "cease paying for retiree Health and Welfare benefits."[4] CP at 68. On April 1, 2003, the *226 trustees then informed participants that retiree welfare benefit coverage would cease as of April 30, 2003. The Port advised participants they could obtain continued welfare coverage through the Port's own plan at a monthly cost ranging from $399.08 to $482.12 for an individual retiree not yet covered by Medicare.
ś 9 Appellants filed a complaint against the Port, claiming a right to lifetime retirement welfare benefits under the terms of the CBA. Appellants fall into two categories: (1) those who have retired, have satisfied the length of service requirements for eligibility, and have been covered by the Welfare Trust; and (2) those who have not yet retired but have completed sufficient length of service to qualify for retirement welfare benefits.
ś 10 On August 8, 2005, the trial court granted summary judgment in favor of the Port, determining that the CBA did not expressly grant Appellants with retirement welfare benefits for life:
[T]he Plaintiff's [sic] have no statutory basis for their claims to medical benefits. Nor do the unambiguous terms of the [SPD], or union contracts at issue in this case give rise to a contractual claim to the benefits sought by the plaintiffs. The fact that the plaintiffs may have become vested in their benefits does not change the nature and duration of the benefits, which are set forth and limited in the [SPD].
CP at 479-80. Appellants sought review by the Court of Appeals. Division One certified this case for review by this court pursuant to RCW 2.06.030. This court's commissioner accepted certification and transferred the entire case to this court for determination on the merits. RAP 4.4.
ANALYSIS
I
ś 11 We review summary judgment de novo, engaging in the same inquiry as the trial court. City of Sequim v. Malkasian,
II
ś 12 This case requires us to determine the extent to which the CBA obligated the Port to provide retirement welfare benefits to eligible retirees. The parties agree that the CBA created a right to retirement welfare benefits for certain eligible retirees. However, the parties disagree whether the CBA created a vested right in welfare benefits or whether the right expired at the termination of the CBA.[5] The Port contends that the right to retirement welfare benefits was not expressly guaranteed for any definite period of time in the CBA or the Welfare Trust Agreement, and therefore the Port had no obligation to make contributions for such benefits beyond the duration of the CBA itself. In addition, the Port argues that its obligation under the CBA was limited to making contributions to the Welfare Trust and that the Welfare Trust Agreement and the SPD defined the extent to which the benefits would be provided. Conversely, Appellants urge that the welfare benefits promised in the CBA constituted deferred compensation for years of continued service to the Port and therefore they could not lose such benefits once they became eligible.
*227 ś 13 While federal law generally preempts the field of labor law, it does not govern over collective bargaining agreements with state public employers. See 29 U.S.C. § 152(2); Davenport v. Wash. Educ. Ass'n, ___ U.S. ___,
ś 14 Our determination of whether the retirement welfare benefits vested largely turns on what legal principles govern the vesting of retirement benefits conferred through collective bargaining. Although the CBA itself is governed by state law, the Port urges us to apply vesting principles consistent with ERISA in construing the rights conferred in the CBA. On the other hand, the Appellants contend that federal law is inapplicable and that vesting principles under our state employment law must apply. This court has construed retirement benefits conferred through collective bargaining as compensatory and therefore vested at the time they are created.
A
ś 15 Congress enacted ERISA to provide comprehensive and uniform federal regulation for employee benefits plans. 29 U.S.C. § 1001; see generally Andrew M. Campbell, Construction and Application of Employee Retirement Income Security Act of 1974 (29 U.S.C.A. §§ 1001 et seq.) by United States Supreme Court,
ś 16 ERISA generally preempts state law relating to employee benefit plans. 29 U.S.C. § 1144(a). However, ERISA does not apply to "a governmental plan," 29 U.S.C. § 1003(b)(1), meaning "a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing," 29 U.S.C. § 1002(32). A "governmental plan" includes a plan established pursuant to a collective bargaining agreement and jointly maintained by an employer and union representatives so long as the governmental entity exclusively funds the plan. See, e.g., Gualandi v. Adams,
ś 17 The parties do not dispute whether the Port is a state government entity. Instead, the Port maintains that it did *229 not exclusively maintain the Welfare Trust because private employers had made contributions to the trust in previous years. However, the status of a plan is determined by the entity that currently maintains the plan. See Rose v. Long Island R.R. Pension Plan,
ś 18 The Port further argues that it did not exclusively maintain the Welfare Trust because Local 9 made contributions to the trust for its secretary treasurer, who was the only non-Port employee to participate in the trust's plan. The participation in a plan by a "de minimis" number of nongovernmental employees does not defeat a plan's status as a governmental plan.[9] Dep't of Labor, Employee Benefits Sec. Admin., Op.2005-21 A, 2005 ERISA LEXIS 23, at *7 (Dec. 21, 2005), Op.2005-17 A, 2005 ERISA LEXIS 18, at *4 (June 22, 2005); Dep't of Labor, Pension & Welfare Benefit Programs, Op.2002-11 A, 2002 ERISA LEXIS 4, at *5 (Oct. 17, 2002); see also Nowell v. Cent. Serv. Ass'n,
ś 19 The Port goes on to argue that even if the Welfare Trust is a governmental plan, we should nevertheless determine the applicability of ERISA by examining the intent of the parties. The Port concedes that the parties cannot contractually confer ERISA jurisdiction on a governmental plan. Resp't's Answering Br. at 9; see, e.g., Hightower v. Tex. Hosp. Ass'n,
ś 20 This language indicates the parties' intent to interpret the operation and organization of the Welfare Trust, not how to interpret the rights created under the CBA. As discussed below, the underlying obligation to provide welfare benefits derives from the CBA, not the Welfare Trust. The interpretation of the Trust Agreement does not determine the vested nature of the benefits conferred in the CBA.
ś 21 In any event, the Welfare Trust Agreement language itself does not establish that the parties intended to restrict our interpretation of the Welfare Trust exclusively under ERISA. The language expressly includes the intent to organize and operate the Welfare Trust under ERISA "as well as any other applicable federal or state laws." Id. State law would apply here because the Welfare Trust is expressly exempted from coverage under ERISA, and nothing in the Trust Agreement indicates that the parties intended to prevent us from applying state law in the absence of ERISA jurisdiction. Tellingly, the parties significantly deviated from ERISA's own requirements in the Welfare Trust Agreement, indicating their intent that ERISA would not exclusively control the interpretation of the Welfare Trust. For example, the Trust Agreement defines an "employee welfare benefit plan" as "any lawful employee pension benefit plan created and administered by the Trustees." CP at 92 (emphasis added). As discussed above, ERISA defines welfare benefits separately *230 from pension benefits and applies different vesting requirements for each type of benefit. 29 U.S.C. § 1002(1), (2)(A). Here, the parties rejected application of ERISA's distinction between pension and retirement welfare benefits by defining a welfare benefits plan as concomitant with a pension benefits plan.
ś 22 We hold that ERISA does not govern our determination of whether the retirement welfare benefits were vested. As the benefits were created under the CBA, which is governed as a matter of state law, we look to applicable state law to determine the vested nature of the welfare benefits at issue in this case.
B
ś 23 This court has a long history of protecting an employee's vested right to retirement benefits, prior to and independent of any reliance on federal law. See Crabtree v. Dep't of Ret. Sys.,
ś 24 In the seminal Bakenhus case, this court held that pension benefits conferred in an employment relationship constitute deferred compensation. Bakenhus v. City of Seattle,
ś 25 Later, in Dorward v. ILWU-PMA Pension Plan,
ś 26 As with Bakenhus, the Dorward court rejected a strict interpretation of the contractual language of the agreement itself and recognized that the compensatory nature of the pension created a vested right once the employee continues working under the contract. The court went on to hold that the obligation "will arise in such instances even though the pensioner does not know the precise terms of the pension agreement." Dorward,
ś 27 Most recently, in Firefighters, this court again focused on the compensatory nature of the benefits as defining the contractual obligation to provide a vested benefit.
ś 28 Despite our holding in Firefighters, the Port argues that the Bakenhus line of cases applies only to pension benefits and should not extend to retirement welfare benefits. However, our precedent under Bakenhus and its progeny offers no distinction between pension and other compensatory retirement benefits similarly negotiated though collective bargaining.
ś 29 Collective bargaining creates a relationship through which the employee who negotiates for retirement benefits forgoes the full present value of his or her service with the expectation of receiving that value after he or she completes the service. Dorward,
We think that that same form of reasoning [that pension benefits are deferred compensation] applies to all employee benefits. Few of them are mere gratuities or a result of unadulterated altruism. Most are for services rendered or for the purpose of inducing the further rendering of services. They help to guarantee a competent and happy labor force.
Vizcaino v. Microsoft Corp.,
ś 30 In the reality of the employment relationship, welfare benefits make up part of the core compensatory benefits package offered in exchange for continued service. See, e.g., Cockle v. Dep't of Labor & Indus.,
ś 31 An employee has a legitimate expectation that retirement benefits vest when conferred as compensation through a collective bargaining agreement. Collective bargaining is a term of art, authorizing employees to negotiate their conditions of employment through a single representative at the bargaining table with their employer. RCW 41.56.080; see Wash. State Patrol Lieutenants Ass'n v. Sandberg,
ś 32 The implications of the limitation on retiree representation in collective bargaining were examined in International Union, United Automobile, Aerospace & Agricultural Implement Workers of America v. Yard-Man, Inc.,
ś 33 We hold that retirement welfare benefits conferred in a collective bargaining agreement constitute deferred compensation where the parties negotiate for such benefits as part of the total compensatory package. The compensatory nature of the benefits creates a vested right in the retirees who reached eligibility under the terms of the applicable collective bargaining agreement. Once vested, the right cannot be taken away and will survive the expiration of the agreement. See Litton,
III
ś 34 Applying our vesting principle, we now must determine whether the Port fulfilled its obligation to provide retirement welfare benefits conferred in the CBA. The Port maintains that the CBA required it to contribute to the Welfare Trust only for the duration of the CBA itself. We apply contract law to the interpretation and construction of collective bargaining agreements *234 created under the PECBA. Barclay v. City of Spokane,
A
ś 35 The CBA does not express the parties' intent to alter the vesting of the retirement welfare benefits conferred in the CBA. The CBA created the obligation to provide retirement welfare benefits but does not express a durational limit on the Port's obligation to provide welfare benefits to eligible retirees. Under section XVIII of the CBA:
The Port shall maintain the current level of medical, welfare, dental and related benefits during the duration of this contract and shall continue to provide the same level of coverage currently provided to eligible employees, eligible retirees, and dependents.
CP at 52. While the first clause creates a right to the current level of coverage for the duration of the CBA, the second clause provides only that the Port "shall continue to provide" the same level of coverage to eligible employees and eligible retirees. The phrase "shall continue to provide" is unmodified.
ś 36 This phrase cannot simply relate back to the duration period of the first clause, as such an interpretation would render the second clause redundant. See Wagner v. Wagner,
ś 37 The "continue to provide" language more directly relates to the eligibility requirement in the second clause. The obligation of the Port to continue to provide benefits for eligible employees and retirees limits the obligation to provide benefits so long as the employee or retiree is eligible to receive such benefits. An employee maintains eligibility to receive benefits as long as he or she continues employment with the Port. The Port would end its obligation to provide coverage for an employee when the employee loses eligibility explicitly by ending work for the Port or necessarily by negotiating a new collective bargaining agreement with the Port.[14]See Litton,
ś 38 As discussed above, an employee reasonably would expect that retirement welfare benefits in effect at the time he or she becomes eligible will survive the expiration of the agreement, given that the employee has no right to negotiate for continued benefits once he or she retires. See Allied Chem. & Alkali Workers of Am.,
B
ś 39 Beyond the terms of the CBA itself, the Port argues that the right to retirement welfare benefits conferred in the CBA could not have vested because the Welfare Trust Agreement and SPD specifically reserved the right to such benefits. Under section XVIII of the CBA, the Port agreed to be a party to the Welfare Trust Agreement and to pay the necessary premiums to the Welfare Trust in order to maintain the current level of benefits. CP at 52. The Welfare Trust Agreement provided that the trustees could terminate the Welfare Trust at any time, but in any event the Welfare Trust would terminate "upon the expiration of all collective bargaining agreements and special agreements." CP at 119. The SPD also contained language explaining that "[b]enefits under this Retired Employee Program are not guaranteed for any definite period of time and benefits will be provided only to the extent that sufficient funds are available in the Trust." CP at 134. The Port concludes that such language unambiguously indicates that welfare benefits were not guaranteed for life.[15]
*236 ś 40 On the other hand, in the SPD the trustees informed participants that they "fully intend[ed] to continue this Plan indefinitely," and that they reserved the right to terminate it only in order "[t]o guard against unforeseen circumstance." CP at 166. The Port's decision to stop making contributions to the Welfare Trust would not seem to be an unforeseen circumstance that would give rise to the trustees' stated purpose for reserving the right to terminate the trust. Furthermore, the SPD statement that the benefits would be provided only to the extent to which funds were available simply directs the focus back to terms of the CBA, under which the Port promised to continue to provide retirement welfare benefits. Moreover, as discussed above, the Trust Agreement defined "employee welfare benefit plan" as "any lawful employee pension benefit plan." CP at 92. The Pension Agreement also sets eligibility requirements for retirement welfare benefits. CP at 300. The definition of a welfare benefits plan as a pension benefits plan and the establishment of welfare benefits eligibility in the Pension Agreement strongly indicate the parties' intent to treat both welfare and pension benefits as part of the total compensation package. Firefighters,
ś 41 Apart from the internal inconsistencies with the reservation language, the Port's argument ultimately fails because it incorrectly assumes that the terms of the Trust Agreement and SPD could define the Port's underlying obligation to provide welfare benefits conferred in the CBA. The termination language in the Trust Agreement only defined the duration of the Welfare Trust, not the underlying contractual obligation to provide the benefits. See id. ("[T]he contractual obligation to fund a retirement system arises from the employment relationship."). The Trust Agreement stated its purpose as creating "an entity to which contributions from participating employers ... can be paid." CP at 91. It expressly defined the CBA as the source of the Port's obligation to make such payments. CP at 92 ("`Collective bargaining agreement' â a written agreement... by the terms of which the employer is obligated to make contributions to the Trust Fund."). The Port agreed in the CBA to contribute to the Welfare Trust to the extent necessary to maintain the current level of benefits. Therefore, the terms of the CBA determined the extent of the Port's obligation to provide benefits, not the Welfare Trust Agreement. While the Trust Agreement granted the trustees the power to terminate the Welfare Trust, such discretion did not affect the Port's obligations arising under the CBA to provide welfare benefits.[16] The Trust Agreement could not limit the vested rights conferred in the CBA.
ś 42 Our interpretation of the CBA does not imply that the Welfare Trust was an ineffective tool to deliver the Port's underlying obligations during its existence. We note that the Welfare Trust was structured to protect the interests and rights of plan participants by including an equal number of employer and union representatives on the board of trustees and creating an administrative procedure for challenging the denial of benefits. When the Port stopped contributing to the Welfare Trust, the trust could not continue to offer welfare benefits to eligible retirees. These eligible retirees still have the right to receive benefits even though they can no longer be provided through the Welfare Trust.[17]
*237 ś 43 Even assuming that the reservation of rights language in the Trust Agreement and the SPD indicated the Port's intent to not provide a vested right to retirement welfare benefits in the CBA, we cannot give effect to such an attempted reservation of rights by an employer. In Jacoby we held that:
[E]ven though the employer has reserved the right to amend or terminate the plan, once an employee, who has accepted employment under such plan, has complied with all the conditions entitling him to participate in such plan, his rights become vested and the employer cannot divest the employee of his rights thereunder.
ś 44 If the Port wanted to limit its obligation to provide welfare benefits, then it could have insisted on limiting the right to retirement welfare benefits in the CBA itself. Instead, it chose to accept the benefit of the employees' long-term service without establishing that eligible retirees would have no continued right to receive benefits from the Port after the expiration of the CBA. The conferral of such benefits induced the employees to provide service to the Port for the requisite number of years under the reasonable expectation of receiving welfare benefits once they retired. See Jacoby,
ś 45 Without limiting the vested right to retirement welfare benefits in the CBA, the Port remains obligated to provide such benefits for the lives of the eligible retirees who satisfied the years of service and contribution requirements before April 30, 2003, the period through which the terms of the CBA extended. The obligation must be comparable *238 to the level of benefits provided at the time the CBA was signed.
C
ś 46 We recognize that administration of a welfare benefits plan requires flexibility to account for changing economic conditions. The Bakenhus court specifically recognized that pension plans themselves are flexible concepts that may be modified "for the purpose of keeping the pension system flexible and maintaining its integrity." Id. The court was mindful not to impose strict contractual guarantees on employers who provide pensions in order to allow "the freedom necessary to improve the pension system and adapt it to changing economic conditions." Id. We believe that the Port's ongoing obligation to provide welfare benefits will require the same kind of flexibility.
ś 47 We hold that the obligation to provided vested retirement welfare benefits does not require the Port to revive and fund the Welfare Trust. While the Port used the Welfare Trust as the tool to deliver its obligation to provide benefits, it may continue to fulfill its obligations through another vehicle that provides a sustainable way of delivering benefits reasonably commensurate with the level of benefits promised in the CBA. Id. at 701-03,
Conclusion
ś 48 The trial court held that Appellants had no vested right to receive retirement welfare benefits because the CBA did not "unambiguously" vest the welfare benefits beyond the duration of the CBA itself. The court misconstrued our precedent regarding the creation of a vested right to retirement benefits. The conferral of compensatory retirement welfare benefits through a collective bargaining agreement creates a vested right for eligible retirees absent express language in the agreement specifically limiting the right to such benefits. For these reasons, we reverse the trial court and remand for further proceedings consistent with this opinion.
WE CONCUR: GERRY L. ALEXANDER, Chief Justice, CHARLES W. JOHNSON, MARY E. FAIRHURST, and TOM CHAMBERS, Justices.
MADSEN, J. (dissenting).
ś 49 The majority's decision cannot be justified by the parties' written agreement, which expressly allows for change or termination of retiree health care benefits. It cannot be justified by our case law because there is not a single Washington case that applies the implied contract vesting theory on which the majority relies to health care benefits. Nor is there any basis for extending the vesting theory that heretofore has been applied only in the context of pension rights. Pensions are deferred compensation because the benefits are earned during the working years and payable after retirement. In this context an implied vesting rule makes sense. But health care benefits are generally present compensation, not deferred compensation, because the employee actually receives benefits while still employed â he or she does not wait until retirement to begin receiving benefits. If, however, health care coverage is provided for retirees, it is because the parties have contractually agreed to such an arrangement. The majority's rule, however, would impose a vesting requirement on all employment relationships where health care coverage is provided to employees, thereby usurping the parties' right to address retirees' coverage by private contract. The majority opinion imposes a policy choice that more properly lies within the province of the legislature.
ś 50 I have great sympathy for the workers in this case, but the fact is that their contractual agreement with the Port does not authorize the benefits they seek. The unfortunate result of the majority opinion is that many employers will cease providing any health care benefits at all to employees in order to avoid the possibility of incurring an *239 obligation to provide benefits for life â at the least they will cease providing retiree health care benefits. The majority opinion is likely to affect a great many employees who, although not before us in this case, will suffer loss of health coverage and possibly loss of jobs before they acquire vested rights under the majority opinion.
ś 51 I dissent.
ANALYSIS
ś 52 The welfare benefits plan at issue is a governmental plan exempt from the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461 (Title I). The question is whether the appellants are entitled to vested rights to continuation of substantially the same medical benefits at the same cost as they enjoyed under their collective bargaining agreement and related documents. There is no state or federal statute that applies to answer this question. The great majority of cases addressing the issue of whether a retiree has vested rights to lifetime health care benefits are federal cases that address the question as a matter of contract law. What the court should do is examine the parties' contract to determine whether the parties contractually agreed to vest rights to lifetime health care benefits and, in doing so, the court should follow the lead of federal courts holding that intent to vest lifetime benefits must be clear and express in the parties' agreement.
ś 53 The majority, however, refuses to consider the large body of federal case law addressing the issue as a contract matter. Its refusal is on the mistaken ground that the federal cases are tainted by an inference against vesting. The majority also refuses to enforce the parties' contract as written on the ground that a vesting theory previously applied only in pension cases should be substituted for the parties' actual agreement.
ś 54 This court frequently considers federal case law when deciding labor cases, and more specifically has found federal labor cases persuasive, but not controlling, when deciding cases under the Public Employees Collective Bargaining Act (PECBA), chapter 41.56 RCW.[1]E.g., Nucleonics Alliance, Local Union No. 1-369 v. Wash. Pub. Power Supply Sys.,
ś 55 The majority's reasons for declining to do so do not withstand scrutiny. The majority incorrectly concludes that the federal cases apply inferences for or against vesting and are therefore inapplicable under state law and incorrectly concludes that federal courts decide the issue as a matter of "ERISA law." The majority quotes language out of context from some cases in which the federal court in fact applied a traditional contractual analysis and quotes other language that on its face does not suggest that "ERISA law" or any inference drove the federal court's reasoning.
ś 56 In fact, many federal courts specifically reject any presumptions or inferences. In International Union, United Automobile, Aerospace & Agricultural Implement Workers of America v. Skinner Engine Co.,
ś 57 In addition, far from being a matter of "ERISA law" or any "interpretation of ERISA law," numerous cases are decided on the basis of contract law. See, e.g., John Morrell,
ś 58 Although federal cases address the fact that ERISA does not provide for vested health care benefits, this does not mean the cases are inapposite. It is critical to consider the reasons why there is no vesting of welfare *241 benefits under ERISA. Congress rejected automatic vesting of health care benefits under ERISA because of the hardships such a requirement would impose:
Automatic vesting was rejected because the costs of such plans are subject to fluctuating and unpredictable variables. Actuarial decisions concerning fixed annuities are based on fairly stable data, and vesting is appropriate. In contrast, medical insurance must take account of inflation, changes in medical practice and technology, and increases in the cost of treatment independent of inflation. These unstable variables prevent accurate prediction of future needs and costs.
Moore v. Metro. Life Ins. Co.,
ś 59 If in ERISA Congress had imposed a vesting requirement for welfare benefits, including health care benefits, it would have imposed an onerous burden, one so onerous that the vesting requirement would act to defeat rather than protect employees' enjoyment of welfare benefits, including health care benefits. This, ultimately, is the reason why federal courts have required as a matter of contractual interpretation that there be clear language of intent to vest rights in lifetime health care benefits before such an obligation will be imposed.
ś 60 The same reasons that Congress considered when rejecting a requirement of vesting under ERISA are relevant under state law. Imposing a vesting requirement under state law means that employers must provide lifetime health care benefits in the face of rapidly rising, unpredictable health care costsâ costs exacerbated by advances in treatment methods and methodology. A vesting requirement is also very likely to convince employers that it is not wise to establish a health care benefit plan at all, and more particularly a retiree health care benefit plan, because to do so might be to incur the obligation to fund a plan whose costs are unpredictable and liable to become exponential. It must be remembered that the majority's "deferred compensation" analysis does not distinguish between present health care coverage and retiree health coverage, provides no basis for making such a distinction, and provides no hint that only the latter is encompassed by its analysis.
ś 61 For the same reasons that federal courts require clear intent to vest, this court should follow their cases and conclude that under state law the appropriate contractual approach is to require clear, express language showing intent to provide vested rights to lifetime health care benefits. See, e.g., Skinner,
ś 62 Courts in other states have reached this same conclusion, following the federal analysis. See, e.g., Island Creek Coal Co. v. Wells,
ś 63 We should be assured in every case that the parties' clearly intended that lifetime health care benefits vest. Here, there is no express language showing intent to vest rights to lifetime health care benefits. That should be the end of the case. In fact, the parties' agreement expressly shows the oppositeâ there was no intent that these benefits vest.
ś 64 Before turning to the parties' agreement, two additional points are important. First, the majority severs the collective bargaining agreement itself from other related documents and reads it in isolation. But as explained below, the collective bargaining agreement expressly refers to the other documents and it should be interpreted as incorporating the relevant documents by reference. See, e.g., W. Wash. Corp. of Seventh-Day Adventists v. Ferrellgas, Inc.,
ś 65 Second, under state law the burden of proving that the employer intended the benefits to vest must be placed on the plan participant. See generally Baldwin v. Sisters of Providence in Wash., Inc.,
ś 66 Bearing these principles in mind, the beginning point is the language of the collective bargaining agreement between the Port of Seattle (Port) and the International Longshore and Warehouse Union Local 9 (Union). Determining whether the Port is contractually obligated to provide lifetime health care benefits at little or no cost hinges on the intent of the parties as expressed in the documents that bind them. The collective bargaining agreement on which the parties rely includes "SECTION XVIII," which governs "WELFARE" and states in full:
The Port shall maintain the current level of medical, welfare, dental and related benefits during the duration of this contract and shall continue to provide the same level of coverage currently provided to eligible employees, eligible retirees, and dependents. The Port agrees to be party to the Agreement and Declaration of Trust of the ILWU Local 9 Warehouse Welfare Trust Fund, and to pay the premium necessary to maintain the current level of benefits to that Trust. Quarterly work hour reports are due and payable the 15th of the month following the end of each quarter.
"AGREEMENT between PORT OF SEATTLE and INTERNATIONAL LONGSHORE and WAREHOUSE UNION, LOCAL #9" covering "July 1, 1997â June 30, 2000" (hereinafter collective bargaining agreement) (emphasis added). Ex. 1 to Aff. of Richard Birmingham, Clerk's Papers (CP) at 52.
ś 67 The first sentence of this section contains two clauses. The first is the Port's promise to maintain the "current level of medical, welfare, dental, and related benefits." This clause thus identifies what benefits will be provided, i.e., the same benefits that had been provided, specifically medical, welfare, dental, and related benefits, and it identifies the duration of the benefits, i.e., during the period the collective bargaining agreement applies. The second clause tells who will receive the benefits, specifically, eligible employees, eligible retirees, and dependents, and also makes clear that each category will continue to receive the same level of coverage currently provided. Contrary to the majority's strained construction, the words "shall continue to provide" mean that *243 the Port promises that benefits preexisting this collective bargaining agreement will continue to be provided to the identified classes, not that the Port promises that it will provide benefits beyond the duration of the collective bargaining agreement.
ś 68 This reading is the only reasonable one given the reference in the second clause to "employees." The Port's promise to provide benefits to "employees" and "retirees," as opposed to just "retirees," makes sense only if the promise is limited to the contractual period of the collective bargaining agreement itselfâ no employer would agree to provide health care coverage to active employees beyond the term of their agreed services. As one court has explained, the phrases "shall remain" and "will continue" when read in context are used in the parties' collective bargaining agreements to indicate a continuation of prior practices and policies, not to provide such coverage prospectively. Skinner,
ś 69 Here, since the clause refers to retirees and active employees, the only reasonable way to read it is that the Port's promise to provide health care benefits to employees through the term of the collective bargaining agreement is the same promise it made to retirees: a promise to provide health care benefits through the term of the collective bargaining agreement. The collective bargaining agreement does not promise benefits beyond the period covered by the collective bargaining agreement to current employees. "Shall continue to provide" is thus not a promise of indefinite duration, i.e., lifetime benefits, for retirees any more than it is for active employees. It is instead a promise of continuing such benefits as had previously been provided and continuing them only for the duration of the collective bargaining agreement. So too, the promise by the Port to "continue to provide" must be read the same wayâ that the benefits will continue only for the duration of the agreement.
ś 70 In Joyce v. Curtiss-Wright Corp.,
ś 71 The language in the collective bargaining agreement here shows even less intent to provide for vested rights than language other courts have held does not show intent to vest. For example, in Wise,
ś 72 Section XVIII of the collective bargaining agreement contains additional terms. The second sentence states that the Port is a party to the Welfare Trust Agreement. The collective bargaining agreement therefore explicitly defines the obligations of the Port to include the terms of Welfare Trust Agreement. It states that the Port will be party to the Agreement and Declaration of Trust of ILUW Local 9 Warehouse Trust Fund (Welfare Trust Agreement) and will have to pay premiums necessary to maintain current benefits. This sentence is extremely important because it shows that the union-employees and the Port agreed that the terms of the Welfare Trust Agreement describe the Port's obligations under the collective bargaining agreement.
ś 73 The Welfare Trust Agreement contains several provisions that bear on the scope of the promises binding the Port. It describes the Trust Fund's purpose to provide an entity for "participating employers" to pay contributions and through which the Welfare Trust Board of Trustees (Trustees) "can create and administer one or more employee welfare benefit plans for the participating employees on whose behalf the contributions have been paid." CP at 91. It defines "welfare benefits" or "employee welfare benefits" as "the benefits provided in an employee welfare benefit plan established by the Board of Trustees." CP at 93. The Welfare Trust Agreement provides for joint administration by an equal number of employer and labor organization Trustees. CP at 94. Among other powers, the Trustees have "full and exclusive authority to control and administer the Trust Fund and the employee welfare benefit plans which they create." CP at 107. They also "have the authority to determine the details of the benefit plans, including the determination of rules under which participating employees shall be eligible for benefits and the nature and amount of such benefits." Id. (emphasis added).[4] Because the Port was by contractual agreement a party to the Welfare Trust Agreement, it was a party to this term, which specifically states that the trustees had authority to determine the "nature" of the benefits, as well as the amounts. In the agreement, "participating employee" is defined to include those covered by a collective bargaining agreement and for whom the employer makes contributions to the Trust Fund and "any individual who may have been so employed but is subsequently... retired." CP at 92.
ś 74 Thus, by agreeing in the collective bargaining agreement that the employer will be bound by the Welfare Trust Agreement, the parties agreed that the Port would be subject to discretion in the Trustees to determine the details of benefits plans, including eligibility requirements and the nature and amount of benefits. Necessarily, this includes the discretion to change these terms and conditions of the benefit plan. See Boyd,
ś 75 As mentioned earlier, the Welfare Trust Agreement also states that it will automatically terminate "upon the expiration of all collective bargaining agreements and special agreements requiring the payment of contributions to the Trust Fund." CP at 119. Thus, the Welfare Trust Agreement to which the Port is bound plainly acknowledges that all welfare benefit plans administered under its terms can automatically terminate. Accordingly, by binding the Port to the Welfare Trust Agreement, the parties to the collective bargaining agreement contemplated the possibility that welfare benefits under the Welfare Trust Agreement could terminate upon termination of collective bargaining agreements.
ś 76 The Welfare Trust Agreement also provides:
*245 The Trustees may, if deemed appropriate, prepare and file with the Department of Labor a summary plan description and any modifications or changes in the information contained in such description.
The Trustees shall also furnish to participating employees and to each beneficiary receiving benefits copies of the summary plan description and copies of any modifications or changes in the information in such description.
CP at 103-04. In accord with this provision, the appellants were provided a summary plan description, which the parties also rely on. This document, "SUMMARY PLAN DESCRIPTION for I.L.W.U. LOCAL 9 WELFARE TRUST FUND," effective April 1, 1998 (the SPD), CP at 331, discloses the details of the plan applying to the plaintiffs. It states that the program is not guaranteed:
The Board of Trustees is providing health and welfare benefits to the extent that monies are currently available to pay the cost of such programs. The Board of Trustees retains sole and exclusive authority, at its discretion, to determine the extent, if any, to which monies are available for this program and to determine the manner of expenditure of such monies for the program. The program is not guaranteed to continue indefinitely. The Board of Trustees reserves the right to change the eligibility rules of the benefits, reduce the benefits, or eliminate the Plan entirely for active employees, retirees, or both, as may be required by future circumstances.
The Board of Trustees has the sole discretionary authority to determine eligibility for benefits and to interpret the terms of this Plan.
CP at 334 (emphasis added). The summary plan description (SPD) also explains, as to active employees, that coverage will terminate, unless otherwise required by law, at the earliest of several events, including, among others, the date the Plan terminates and the date the employer ceases to make contributions or premium payments. CP at 343. As to retired employees, the SPD states in a bolded, italicized paragraph:
Benefits under this Retired Employee program are not guaranteed for any definite period of time and benefits will be provided only to the extent that sufficient funds are available in the Trust The Trustees reserve the right to make any changes in this retiree Plan they deem necessary, and to terminate the retiree Plan.
CP at 348.
ś 77 As provided in the Welfare Trust Agreement, the Trustees established requirements for eligibility for retired employee benefits, which are set out in the SPD. Eligibility for benefits for those who opted for early retirement at age 62 required 15 years of creditable service, and normal retirement at age 65 required 25 years of service; in each case, employer contributions to the Trust Fund had to have been paid on the employee's behalf for a minimum of 10 years. CP at 347. The SPD established self-payments for health care benefits dependent on retirement eligibility and years of service.
ś 78 The eligibility requirements and other provisions in the SPD were obviously coordinated with the Warehouse Pension Trust Fund Industry Pension Agreement (Industry Pension Agreement), which was an amendment to and incorporated by reference into the collective bargaining agreement. The pension agreement states that employees who elect to retire before age 62 are not eligible for retiree health and welfare benefits until they reach age 62, at which time "benefits will be provided under the terms and conditions that are in effect at the time of entitlement." CP at 300 (agreement dated Feb. 7, 1997).
ś 79 This provision in the Industry Pension Agreement plainly contemplates that benefits could vary, depending on what terms and conditions were in effect at the time of an individual's retirement, and changes made by the Trustees in accord with plan documents. The Industry Pension Agreement thus accords with the terms of the Welfare Trust Agreement, which, as noted, provides for the Trustees exercising discretion to determine available benefits and eligibility requirements. It also accords with terms and conditions outlined in the SPD, including the terms explaining that benefits could be *246 changed or terminated depending upon future circumstances, including the sufficiency (or lack) of funds.
ś 80 Importantly, becoming eligible for benefits under the SPD is not the same as becoming vested in rights to lifetime health care benefits. Rather, unless a retiree meets the eligibility requirements, he or she is not entitled to any benefits under the plan at all. If he or she meets the requirements, then health care benefits are available under the planâ which includes the terms stating the possibility that the plan may be amended or terminated.
ś 81 Thus, all of the plan documents consistently recognize that health care benefits are subject to change or termination. This could happen through expiration of the collective bargaining agreement or through amendment or termination of the plan. There is no language in any of the documents expressly stating that employees will have vested rights to lifetime health care benefits.
ś 82 The appellants maintain, however, that the reservation of rights language in the SPD is ineffective and the majority agrees. Initially, it is clear the reservation of rights language applies. The collective bargaining agreement contractually requires the Port's agreement to the Welfare Trust Agreement, and the Trustees issued the SPD in compliance with that agreement. The appellants argue, however, that the reservation of rights language contravenes this court's holding in Jacoby v. Grays Harbor Chair & Mfg. Co.,
ś 83 Jacoby is founded on the implied contract theory set out in Bakenhus v. City of Seattle,
ś 84 However, every case this court has decided in the Bakenhus line has involved pension rights and the effect of various employer actions on pension rights. The court has never applied the Bakenhus analysis to health care benefits, and it should not do so here.[5] While the majority quotes a great deal of language from this court's cases, there is no precedent compelling its result. Not one single case applies the Bakenhus vested rights theory outside the pension context, and the two cases outside this context that the majority quotes plainly do not support its result. First is International Association of Firefighters, Local 1789 v. Spokane Airports,
ś 85 But the majority leaves out critical facts. Firefighters does not support the majority's approach, and in fact it supports my conclusion that the collective bargaining agreement and related documents control the issue in this case.
ś 86 There were two issues in Firefighters. The first was whether the employer had to refund contributions it made to its employees' Social Security and Medicare accounts from 1995 through 1998. This involved past payments made by the employer to the government *247 for these purposes on behalf of the employees. The second issue was whether the employer had to continue to make comparable contributions to the employees' pension accounts under that part of the Bakenhus analysis that states that if changes are made with respect to a pension plan that disadvantages the employee, there must be a corresponding benefit provided. Bakenhus,
ś 87 Because payments to the employees' Social Security and Medicare funds were compensation agreed to through the collective bargaining negotiation process, the court held, as to the first issue, that the employer's share of Social Security and Medicare fund contributions had to be refunded to the employees. The court held, as to the second issue, that the employer had to "fund the employees' pension plan for the duration of the collective bargaining agreement" because that would provide equivalent compensation in lieu of Social Security and Medicare contributions for the period covered by the collective bargaining agreement, i.e., a corresponding benefit. Id. at 224,
ś 88 Firefighters thus stands for the proposition that if, based on the evidence, a particular benefit is compensatory in nature, then the employer cannot withhold those benefits when the employee has performed the services for which the compensation is due. But Firefighters did not address any obligation to pay any benefits for life or any issue related to vesting of lifetime benefits. It was specifically limited to a past period of time for which the employer obtained refunds of Social Security and Medicare moneys from the government after the firefighters opted out of the system and for which the employees claimed these refunds, and the period of time remaining under the parties' collective bargaining agreement in effect at the time suit was filed. Firefighters simply does not support the majority's view that all forms of compensation existing at the start of an employee's relationship with the employer are subject to vesting for life. Firefighters does not say or even suggest that any benefits that are compensatory in nature are, merely because they are compensatory, vested for life.[6]
ś 89 To the contrary, Firefighters supports my dissent.
ś 90 Firefighters also directly contradicts the majority in another respect. The majority relies on Dorward v. ILWU-PMA Pension Plan,
ś 91 The second case decided by this court that the majority relies on that is not a pension case is Cockle v. Department of Labor & Industries,
ś 92 There is another flawed theme running through the majority's analysis. The majority speaks of the cases in the Bakenhus line as concerning the vested right to "retirement benefits." Majority at ____. By misrepresenting what the cases concern, the majority easily encompasses any possible retirement benefit within the Bakenhus line. But this sleight of hand cannot change precedent, and the fact remains that all of the cases have involved pension rights, until today, when the majority turns the theory on its ear. The sleight of hand cannot change the past but, sadly, it alters the future.
ś 93 The majority's analysis also upsets employers' and employees' ability to privately negotiate a term that they should be entitled to negotiate. It must be remembered that the Bakenhus "implied contract" theory is a contract theory. Here, one can look to the parties' agreement to determine whether they have a contract providing for vested rights in lifetime health care benefits. The parties have already established the contract terms and this court has the written documents expressing the agreement of the parties. The court's responsibility is to enforce the contract as written, not to imply a contract that is contrary to the terms of the contract that the parties actually entered.
ś 94 Reservation of rights clauses should also be given effect because, as other courts have concluded, they evidence the employer's intent that no vested benefits have been promised. For example, courts have even rejected claims of vested rights where contracts described "lifetime" benefits or benefits "for life" if they also contain reservation of rights clauses permitting the employer to amend to terminate the plans. E.g., In re Unisys,
An employer who promises lifetime medical benefits, while at the same time reserving the right to amend the plan under which those benefits were provided, has informed plan participants of the time period during which they will be eligible to receive benefits provided the plan continues to exist.... [The] retirees' eligibility for benefits was qualified because it was subject to [the employer's] reserved right to terminate the plan under which the benefits were provided.
Similarly, in Vallone,
ś 95 As explained, the SPD's reservation of rights is completely in accord with the Welfare Trust Agreement and the discretion it lodges in the Trustees. It is also consistent with the collective bargaining agreement, which itself does not promise any benefits beyond the term of the collective bargaining agreement itself (and any extensions agreed to by the parties, of course). The reservation of rights language is evidence that the parties did not contemplate vested rights in retiree health care benefits.
ś 96 Contrary to the majority's bald statement that there is no principled basis on which to distinguish between pension benefits *249 and welfare benefits that include health care benefits, there are highly significant differences between the two that counsel against extending the Bakenhus theory to health care benefits. First, unlike pensions, which usually involve generally predictable amounts reasonably reflecting deferred compensation for services rendered, health care is a changeable concept. Health care coverage changes and expands as new procedures and treatment are adopted and become part of reasonably necessary health care, and health care costs are extremely volatileâ in recent times they have risen far, far in excess of cost of living increases generally. This court should not impose the obligation of vested rights by extending the Bakenhus theory of deferred compensation to encompass health care benefits and by denying recognition of reservation of rights clauses. Instead, it should find an obligation to provide lifetime health care benefits only when an employer clearly and unequivocally agrees to provide vested health care benefits.[8]
ś 97 Second, although the majority repeatedly equates pensions and welfare benefits such as health care benefits, saying that both are compensatory and therefore must be treated the same, the two are not equivalent. The purpose of pension benefits is to provide retirement income; by their nature pension benefits are not payable to the employee in the usual course of events until retirement. As the court said in Bakenhus, pension benefits are in the nature of deferred compensation. Bakenhus,
ś 98 Although health care coverage is generally present compensation for employees, this does not mean the parties cannot by agreement provide for health care coverage for retirees. Hence the importance of what a collective bargaining agreement actually says, and the importance of looking to the parties' agreement to see whether they expressly agreed to retiree health care benefits, and, if so, for what period of time. Only if there is clear, express language showing the intent to vest lifetime retiree health care benefits should a court conclude that they vest.
ś 99 The majority also maintains, however, that employees are powerless to assure that benefits will exceed the period of their collective bargaining agreement, given that the employees have no right to negotiate for continued benefits after retiring. This hypothetical predicament is of the majority's own doing however, and several courts have dismissed this specific argument. As one court stated, "those who fear that their unions will not bargain for continued benefits for retirees need only see to it that specific vesting language protecting those benefits is incorporated into collective bargaining agreements." Skinner,
*250 ś 100 And if the court does impose a vesting requirement despite the lack of an agreement, then it is clearly taking for itself a policy decision that belongs in the hands of the legislature. Ultimately, in the absence of anything in the parties' agreement that states that a vested right to health care benefits for life is intended by the employer, the court is asserting itself as a super-legislature. The court should refrain from overstepping its constitutional role in this way.
ś 101 When all of the documents that comprise the parties' agreement are considered as a whole, it is obvious that no promise was made by the Port to provide lifetime benefits to retirees. Instead, the Port promised to make contributions to the Welfare Trust Fund for the duration of the collective bargaining agreement for the purpose of funding retiree health care benefits, and no more.[9] At a minimum, there is no express language affirmatively showing intent to vest lifetime health care benefits. Once the collective bargaining agreement and agreements requiring payment of contributions ended, the Welfare Trust Fund automatically terminated. At the same time, and as an alternative basis for cessation of welfare benefits, the Board of Trustees did not abuse discretion in terminating the plan, in light of expiration of the collective bargaining agreement and the Port's termination of contributions.
CONCLUSION
ś 102 The court should conclude that the question of whether the Port promised vested rights to receive medical benefits beyond the end of the collective bargaining agreement depends upon the intent of the parties as expressed in the collective bargaining agreement and the related documents. The express language in all of the plan documents consistently recognizes that health care benefits are subject to change or termination through expiration of the collective bargaining agreement or through amendment or termination of the plan. Most importantly, there is no express language showing the parties intended that rights to lifetime benefits vest. The court should uphold the reservation of rights provision because it does not come within the proscription of a reservation of rights clause in the case of pension rights that vest under an implied contract theory. The Bakenhus theory of implied contractual vested rights should not be extended to cases involving health care benefits. The court should hold that the health care benefits plan, including the provisions for retiree health care benefits, was lawfully terminated and the appellants do not have vested rights in retiree health care benefits.
ś 103 The court should affirm the trial court's grant of summary judgment in favor of the Port. Because it does not, I dissent.
WE CONCUR: JAMES M. JOHNSON, RICHARD B. SANDERS, Justices, and BOBBE J. BRIDGE, Justice Pro Tem.
NOTES
[1] Although originally scheduled to expire in 2000, the parties extended the CBA to June 30, 2002.
[2] As discussed below, Local 9 made contributions to the Welfare Trust for its secretary treasurer who participated in the trust. CP at 287-90.
[3] The SPD stated that employees were eligible for retiree benefits as early as age 62 if they met the years of service requirement. CP at 134. For example, an employee with 15 years of service was eligible for benefits at a maximum monthly cost of $20.35 per employee beginning when the participant reached age 62.
[4] Between October 2002 and April 2003, Local 9 filed several unfair labor practice charges against the Port, alleging that the Port improperly made unilateral changes to the terms of employment. The Welfare Trust trustees initiated arbitration concerning the Port's obligations to Local 9's members. The Port and Local 9 reached a settlement in which Local 9 agreed to adopt resolutions stating "that the Port of Seattle owes no contribution(s) to the I.L.W.U. Local 9 Welfare Trust Fund relating to any maintenance of benefits thereunder." CP at 77. However, the Port did not terminate the pension plan and agreed to fund the pension plan "to the extent necessary... to pay the vested accrued benefits of participants." CP at 78.
[5] Generally, a "vested right" cannot be taken away once created. In the employment context, an employee who renders service in exchange for compensation has a vested right to receive such compensation. Leonard v. City of Seattle,
[6] The PECBA applies to "any political subdivision of the state of Washington," RCW 41.56.020, including port districts, RCW 53.18.015 ("Port districts and their employees shall be covered by the provisions of chapter 41.56 RCW except as provided otherwise in this chapter."); see Ryder v. Port of Seattle,
[7] See In re Unisys Corp. Retiree Med. Benefit "ERISA" Litig.,
[8] See Sprague v. Gen. Motors Corp.,
[9] The Port claims that the governmental plan exemption is inapplicable because Appellants "can not establish that all or substantially all the participants who are or may be entitled to retiree medical benefits under the Trust are governmental employees." Suppl. Br. of Resp't at 12. This claim is unfounded. Attached to Appellants' cross motion for summary judgment is an affidavit from Tony Hutter, the secretary treasurer of Local 9. CP at 287-90. Hutter attested that "[t]o my knowledge, since the mid-1990's, no contributions have been made to the Welfare Plan other than the contributions by the Port of Seattle, and the contributions on my behalf by Local 9." CP at 288. The Port has offered no evidence to rebut Hutter's assertion. Thus, the Port's evidentiary argument is without merit.
Notes
[10] The dissent attempts to distinguish Firefighters by pointing out that the benefits in that case were limited to the duration of the collective bargaining agreement. The dissent then jumps to the conclusion that "Firefighters shows that other benefits can be limited to the terms of a collective bargaining agreement." Dissent at 247. However, in that case the duration of the benefits was limited because the union had specifically sought the employer's contributions only up to the expiration of the current collective bargaining agreement. Firefighters,
[11] We reject the Port's argument that Washington law does not provide for vesting of welfare benefits under RCW 41.04.208. a statute governing local government retirees. RCW 41.04.208 applies only to "[d]isabled" and "[r]etired" employees â those employees satisfying the eligibility and years of service requirements under the "Washington law enforcement officers' and firefighters' retirement system plan 2 and the public employees' retirement system [(PERS)]." RCW 41.04.208(1)(a), (c). Appellants did not participate in PERS. Moreover, the aforementioned statute did not go into effect until January 1, 2003, and explicitly states that its provisions do not affect any health plan contained in a collective bargaining agreement in existence as of January 1, 2003. RCW 41.04.208(11). Thus, RCW 41.04.208 does not apply and the Port's reliance on RCW 41.04.208 is unavailing.
[12] In fact, a union would likely breach its duty to fairly represent its current members if it attempted to secure benefits for retirees out of the employer's resources that otherwise would be spent on compensation for the current employees. See Pittsburgh Plate Glass Co.,
[13] Notably, Yard-Man established an opposite conclusion from Skinner and other cases adopting an inference against vesting. Whereas those cases are based on ERISA's distinction between pension and welfare benefits, Yard-Man and its progeny more closely resemble our case law by focusing directly on the collective bargaining process as the foundation for the employee's expectation.
[14] Collective bargaining requires the employer and employee representative to meet at reasonable times, negotiate, and execute a written agreement that covers certain terms of employment. RCW 41.56.030(4). While the obligations created in a collective bargaining agreement may cease at some point beyond the termination of the agreement, RCW 41.56.123, an employer must continue to bargain with the employees' certified representative beyond the term of any one collective bargaining agreement, RCW 41.56.100. Therefore, the negotiation of terms for a current collective bargaining agreement necessarily contemplates the perpetuation of such rights in future negotiations.
[15] The dissent argues that the CBA should be interpreted as incorporating the Welfare Trust Agreement and SPD by reference. However, "[i]ncorporation by reference must be clear and unequivocal." W. Wash. Corp. of Seventh-Day Adventists v. Ferrellgas, Inc.,
[16] Likewise, the CBA limited the trustees' authority to establish eligibility requirements. While the Trust Agreement contained specific eligibility requirements, the Welfare Trust did not determine the employees' right to eligibility. The CBA obligated the Port to continue to provide the same coverage that was currently being provided to eligible retirees. CP at 52. Therefore, the CBA fixed eligibility to the requirements in effect at the time the CBA went into effect. The Pension Agreement also established requirements for retirement welfare benefits eligibility. CP at 300.
[17] Our conclusion disposes of the Port's justiciability claims as well. The Port argues that the Welfare Trust is the proper defendant in a suit for retirement welfare benefits, not the employer. See Madden v. ITT Long Term Disability Plan for Salaried Employees,
[1] Pursuant to RCW 53.18.015, the provisions of chapter 41.56 RCW apply to ports, unless provided otherwise.
[2] The "Yard-Man presumption is ... an inference that the parties intended benefits to vest" and applies in the context of a collective bargaining agreement. Int'l Union, United Auto., Aerospace & Agric. Implement Workers of Am. v. BVR Liquidating, Inc.,
[3] Also, with regard to ERISA itself, courts also note that "`[t]o require the vesting of those ancillary benefits would seriously complicate the administration and increase the cost of plans whose primary function is to provide retirement income.'" Hozier v. Midwest Fasteners, Inc.,
[4] The Trustees also "have the authority to determine whether benefits shall be extended to beneficiaries of participating employees and, if so, to determine which class or classes of beneficiaries shall be eligible for benefits, the eligibility rules which will apply to such class or classes of beneficiaries, and the nature and amount of such benefits." CP at 107.
[5] This court's cases upon which the majority relies are pension cases. Crabtree v. Dep't of Ret. Sys.,
[6] The majority erroneously believes I read Firefighters as involving benefits provided by contract and therefore limited to the term of the contract. Then, having set up this "straw man," the majority knocks it down, saying this reading is "misplaced." Majority at ____ n. 10. However, the majority misstates my analysis. As I explain, the problem with the majority's reliance on Firefighters is that this court agreed that the employer had to provide compensation equivalent to social security and Medicare contributions for the duration of the collective bargaining agreement because that was the period for which the compensation was due. As correctly stated herein, Firefighters does not suggest that concluding that benefits are compensatory requires also concluding that benefits are deferred compensation payable for the lifetime of the employee.
[7] In contrast, where a promise of "lifetime" benefits was made and no reservation of rights was included in the plan documents, the Seventh Circuit found the contract ambiguous as to whether some or all of retiree benefits vested. Bland,
[8] The majority's reference to flexibility in pension benefits should not be confused with the unpredictability and volatile costs associated with health care coverage. Flexibility in the Bakenhus analysis refers to the ability to make changes in pension benefits as needed for administrative and other reasons, with the concomitant obligation to make other changes that provide an equivalent benefit to the employee/retiree should the change to the pension benefits be one having a negative impact on the employee/retiree.
[9] The record contains the testimony of plaintiffs who stated their belief that they were entitled to medical care for life. None was able to point to any document embodying a promise by the Port to provide such benefits, however. Courts have rejected similar testimony of plaintiffs-employees and union officials as extrinsic evidence that cannot create ambiguity where there otherwise is none. E.g., Skinner,