The United Mine Workers union, along with 63 retired coal mine workers, appeals from the grant of summary judgment to the Brushy Creek Coal Company, the workers’ former employer. The plaintiffs argue that they are entitled by the Taft-Hartley Act and ERISA to a trial to try to prove that a health plan negotiated by the parties in 1998 guaranteed the company’s workers lifetime health benefits that the company could not unilaterally reduce even after the collective bargaining agreement that had created the plan expired. If the district judge was correct that the plan unambiguously does not grant the plaintiffs аny entitlements after the agreement expired, the union is not entitled to a trial. E.g.,
Rossetto v. Pabst Brewing Co.,
The defendant overargues its case by contending that for the plaintiffs to prevail the plan must “clearly” demonstrate аn entitlement to lifetime benefits. A plan that does not specify the duration of benefits is presumed not to grant benefits beyond the end of the agreement creating the plan.
Vallone v. CNA Financial Corp.,
Brushy bought a cоal mine in Galatia, Illinois, in 1991. At first it adopted the nationwide collective bargaining agreement with the UMW to which the company that sold the mine to Brushy had been a party. Later it negotiated two successive individual collective bargaining agreements with the union. But in 1998, upon the expiration of the second agreement, Brushy and the union executed a “memorandum of understanding” that brought Brushy back under the nationwide collective bargaining agreement for the next three years. The memorandum also created the ERISA welfare plan that promised the mine’s employees the health benefits at issue in this case. At the еnd of 1999, however, Brushy closed the mine, and after the three years during which it had agreed to be bound by the nationwide collective bargaining agreement were up in 2001 it made changes in the health plan to whiсh the union objected. This suit challenging the changes is on behalf of employees who retired while Brushy was bound by the nationwide agreement. So there are three key documents to interpret: the nationwidе collective bargaining agreement, the memorandum of understanding, and the health plan.
The collective bargaining agreement entitles employees who retire during its term, such as the 63 individual plaintiffs, to hеalth benefits “for life.” The memorandum of understanding creates the health plan that lists the benefits to which the employees are entitled for life. But the plan, in turn, expressly entitles Brushy to terminate it or alter its terms, “subject to the Collective Bargaining Agreement,” that is, the nationwide collective bargaining agreement. That would make a quick end to the plaintiffs’ claim were it not for a provision of that agreеment which states (as it has since 1993) that “the benefits and benefit levels provided by an Employer under its Employer plan are established for the term of this Agreement only, and may be jointly amended or modified in any *767 mаnner at any time after the expiration or termination of this agreement.”
The first clause of the provision, ending in the word “only,” reinforces the right of termination or alteration that the health plan confers on Brushy; it makes the benefits terminate when the agreement expires. But the union argues that the second clause, and in particular the words “after the expiration or termination of this agreement,” imрly that the benefits persist beyond the end date of the collective bargaining agreement, that is, beyond 2001. For if the benefits did not outlive the agreement, why would the parties have to agree to modify or amend them after that date? There would be nothing to modify or amend.
As the district judge noted, however, another provision of the nationwide collective bargaining agreement states that “the specifiс provisions of the plans will govern in the event of any inconsistencies between the general description and the plans.” The health plan is one of the “plans” to which this provision refers and the “jointly amended” clause quoted above on which the plaintiffs found their claim appears in the part of the nationwide agreement captioned “general description of the health and rеtirement benefits.” Were there no “jointly amended” clause there would be no inconsistency between the termination provision in the health plan and the nationwide agreement; and since it is only in the general description that the clause appears, the clause must be disregarded to eliminate the inconsistency.
This point can be grasped more clearly by supposing that the benefits prоvision in the collective bargaining agreement stated flatly that “retirees are entitled to benefits for their lifetime even if they outlive this and any successor collective bargaining agreement.” The рrovision would then be clear. But it would be inconsistent with the provision in the health plan itself entitling the coal company to terminate or alter the plan at any time; and so, being at once inconsistеnt with the plan and contained in the general-description part of the collective bargaining agreement, it would have no force. The fact that the provision does not clearly confer lifetime benefits, but is ambiguous, cannot bolster the union’s position. And it makes sense that the detailed provisions of the health plan would prevail over inconsistent language in a collective bargaining аgreement that deals with a variety of other subjects, such as notice or change of ownership, that might pertain to Brushy’s right to change the plan.
In short, the “subject to” clause in the health plan takes us to the collective bargaining agreement, where we find that a conflict between the general description in the agreement and the health plan is to be resolved in favor of the plan, and so we go back to the plan and find that the plan administrator is explicitly authorized to terminate, modify, etc., the plan.
This interpretation might seem to make the grant of lifetime benefits in the collective bargaining agreement and the health plan illusory. But that is not true. Val
lone v. CNA Financial Corp., supra,
*768
That is not quite the end of the case, because a contract that is clear on its face cаn be shown by objective evidence to be ambiguous (to contain, in the language of contract law, a “latent” as distinct from a “patent” ambiguity), e.g.,
ConFold Pacific, Inc. v. Polaris Industries, Inc.,
The plaintiffs 50-page brief devotes only three and a half pages to trying to establish the existence of a latent ambiguity. The evidenсe consists of cash offers that Brushy made to its employees after the mine closed in 1999 but before the company modified the health plan. The cash was offered “in lieu of the lifetime benefits provided pursuant to the collective bargaining agreement.” (Some of the offers use a different but equivalent wording.) The timing is critical. When the offers were made, the plaintiffs were entitled to lifetime benefits, and at the level fixed in the health plan, because the company had not yet exercised its right to modify the plan. Having closed the mine, the company was unlikely to want to continue providing health benefits аt the same level as when the mine was operating and generating revenue. But it knew that if it terminated or modified the health plan, it would be inviting a lawsuit — this lawsuit. Naturally it wanted to settle with as many of the employeеs as possible before a lawsuit was brought, and perhaps by settling avoid being sued at all. The making of the offers was an acknowledgment of legal jeopardy but not an acknowledgment that the benefits contract formed by the nationwide collective bargaining agreement, the memorandum of understanding, and the health plan was ambiguous, for what is more common than a breach of contract suit that ends in a ruling that the contract unambiguously demonstrates the absence of a breach?
The offers were not, so far as appears, offers in settlement of claims, within the meaning of Rule 408 of the Federal Rules of Evidence. If they had been, they would be inadmissible in evidence in this case, as the union seeks to use them as a confession of liability.
Alexander v. City of Evansville,
AFFIRMED.