Augustine Pacheco; Vicki Hansen, for themselves and others similarly-situated Plaintiffs - Appellees
Honeywell International Inc. Defendant-Appellant
Submitted: December 12, 2018
Appeals from United States District Court for the District of
Minnesota - Minneapolis
LOKEN, MELLOY, and ERICKSON, Circuit Judges.
a class action filed in November 2017 by former Minnesota
employees of Honeywell International Inc. who retired before
age 65 during the terms of Honeywell's 2007 and 2010
collective bargaining agreements (CBAs) with Local 1145 of
the International Brotherhood of Teamsters. Plaintiffs
alleged that Honeywell's announced plan to terminate
early retiree healthcare benefits at the end of 2017 breached
the CBAs and violated the Employee Retirement Income Security
Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et.
seq, because those healthcare benefits vested when each
class member retired. On December 29, 2017, and January 31,
2018, the district court granted Plaintiffs a provisional and
then a final preliminary injunction, concluding they had a
"fair chance of prevailing" on their claims of
vested healthcare benefits. Honeywell appeals these orders.
On February 20, 2018, the Supreme Court issued its decision
in CNH Indus. N.V. v. Reese, 138 S.Ct. 761 (2018).
We agree with the Sixth Circuit that Reese is
controlling and conclude that, under Reese,
Plaintiffs' retiree healthcare benefits are not vested as
a matter of law. Therefore, we reverse.
collective-bargaining agreements create pension or welfare
benefits plans, those plans are subject to rules established
in ERISA." M & G Polymers USA, LLC v.
Tackett, 135 S.Ct. 926, 933 (2015). ERISA treats pension
plans and welfare benefit plans differently. The statute
"imposes elaborate minimum funding and vesting standards
for pension plans," but it "explicitly exempts
welfare benefits plans from those rules," leaving
employers generally free "to adopt, modify, or terminate
welfare plans" "for any reason at any time."
Id. (citation omitted). However, though welfare
benefits "do not automatically vest as a matter of
law" under ERISA, employers and unions may contractually
agree to extend welfare benefits beyond the expiration of a
CBA. Anderson v. Alpha Portland Indus., Inc., 836
F.2d 1512, 1516 (8th Cir. 1988). Whether the parties to a CBA
intended that the employer would provide vested welfare
benefits is a question of contract interpretation.
UAW v. Yard-Man, Inc., the Sixth Circuit held that,
when an employer and union "contract for benefits which
accrue upon achievement of retiree status, there is an
inference that the parties likely intended those benefits to
continue as long as the beneficiary remains a retiree."
716 F.2d 1476, 1482 (6th Cir. 1983), cert. denied,
465 U.S. 1007 (1984). Like most other circuits, we never
adopted the Yard-Man inference; indeed, we
explicitly rejected it as contrary to the statutory exemption
of welfare benefits from ERISA's vesting requirements.
See Anderson, 836 F.2d at 1517. Rather, we have
consistently held that "[t]he absence of any explicit
vesting language in [a CBA] is strong evidence of the
parties' intent to limit retiree benefits to the term of
the [CBA]." John Morrell & Co. v. UFCW, 37
F.3d 1302, 1307 (8th Cir. 1994); see Crown Cork &
Seal Co. v. AFL-CIO, 501 F.3d 912, 917-18 (8th Cir.
2007); Anderson, 836 F.2d at 1517-18.
Tackett, the Supreme Court expressly rejected the
Yard-Man inference "as inconsistent with
ordinary principles of contract law." 135 S.Ct. at 937.
Yard-Man and later Sixth Circuit decisions erred in
"refus[ing] to apply general durational clauses to
provisions governing retiree benefits," the Court
explained, "requiring a contract to include a specific
durational clause for retiree health care benefits to prevent
vesting." Id. at 936. "Similarly, the
Court of Appeals failed to consider the traditional principle
that contractual obligations will cease, in the ordinary
course, upon termination of the bargaining agreement."
Id. at 937 (quotation omitted). Applying this
traditional principle, "when a contract is silent as to
the duration of retiree benefits, a court may not infer that
the parties intended those benefits to vest for life."
Id. The Court reiterated these principles in
Reese, 138 S.Ct. at 766. Thus, our task in resolving
this appeal is to interpret the retiree healthcare benefit
provisions of Honeywell's 2007 and 2010 CBAs, applying
the ordinary contract principles articulated in
Tackett and Reese.
retiree healthcare benefit provisions at issue are found in
Article 24 of the 2007 and 2010 CBAs. Section 1 provided,
"The following insurance and benefit plans . . . shall
be implemented and maintained as specified by the time
periods outlined below for the duration of this
agreement." (Emphasis added.) Section 2 provided
that healthcare benefits for those who retired under age 65
prior to May 1, 2007 "will be provided . . . as
negotiated under the previous [CBA]." Sections 3 to 6
specified healthcare benefit and benefit contribution levels.
Section 8 specified Pension Benefit levels. Sections 9 to 12
provided savings plan and insurance benefits. Section 7,
which set forth the new "Retiree Health Care (Pre 65
only)" benefits at issue on appeal, provided:
The subject of health care benefits for existing and future
retirees, their dependents and surviving spouses . . . will
be a mandatory subject of bargaining for all future
collective bargaining agreement negotiations.
For all retirees prior to May 1, 2007, the Company will
provide healthcare benefits as per the prior collective
bargaining agreement, without regard to the limit described
[F]or all retirees after April 30, 2007 the limit upon the
Company's contribution for post retirement health
benefits shall be 2.0 times the 2007 ...