Barton v. Constellium Rolled Products-Ravenswood, LLC , 856 F.3d 348 ( 2017 )

ON REHEARING
PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1103
RONALD BARTON; NEIL KNOX; ELIJAH P. MORRIS; WAYNE MORRIS;
JOHN TABOR, on behalf of himself and all other persons similarly situated;
UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL & SERVICE WORKERS
INTERNATIONAL UNION AFL-CIO/CLC,
Plaintiffs - Appellants,
v.
CONSTELLIUM ROLLED PRODUCTS-RAVENSWOOD, LLC;
CONSTELLIUM ROLLED PRODUCTS-RAVENSWOOD, LLC EMPLOYEES
GROUP BENEFITS PLAN,
Defendants - Appellees.
Appeal from the United States District Court for the Southern District of West Virginia,
at Charleston. Joseph R. Goodwin, District Judge. (2:13-cv-03127)
Argued: January 24, 2017 Decided: May 11, 2017
Before MOTZ, DUNCAN, and HARRIS, Circuit Judges.
Affirmed by published opinion. Judge Motz wrote the opinion, in which Judge Duncan
and Judge Harris joined.
ARGUED: Joseph P. Stuligross, UNITED STEEL WORKERS OF AMERICA,
Pittsburgh, Pennsylvania, for Appellants. Christopher Alan Weals, MORGAN, LEWIS
& BOCKIUS LLP, Washington, D.C., for Appellees. ON BRIEF: Pamina Ewing,
McKean Evans, FEINSTEIN DOYLE PAYNE & KRAVEC, LLC, Pittsburgh,
Pennsylvania, for Appellants. Charles C. Jackson, Chicago, Illinois, Sean K. McMahan,
Abbey M. Glenn, MORGAN, LEWIS & BOCKIUS LLP, Washington, D.C., for
Appellees.
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DIANA GRIBBON MOTZ, Circuit Judge:
A class of retirees and their union filed this action after their former employer
unilaterally altered its retiree health benefits program. Because the governing collective
bargaining agreement does not provide for vested retiree health benefits, we affirm the
district court’s grant of summary judgment to the employer.
I.
A.
Constellium Rolled Products-Ravenswood, LLC operates an aluminum plant in
Ravenswood, West Virginia. The individual plaintiffs have retired from working in that
plant. The United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industry & Service Workers International Union AFL-CIO/CLC (“the Union”)
represented the retirees during their employment. As far back as 1988, the Union
negotiated collective bargaining agreements (“CBAs”) with Constellium (or its
predecessors) on the employees’ behalf.
Each individual class member retired during the operation of one of seven CBAs
between the Union and one of Constellium’s predecessors. These included the 1988
CBA between the Union and Kaiser Aluminum & Chemical Corporation; the 1992 CBA
between the Union and Ravenswood Aluminum Corporation of West Virginia, Inc.; the
1994 CBA between the Union and Ravenswood Aluminum; the 1999 CBA between the
Union and Century Aluminum Corporation; the 2002 CBA between the Union and
Pechiney Rolled Products; the 2005 CBA between the Union and Alcan Rolled Products-
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Ravenswood; and the 2010 CBA between the Union and Alcan. The 2010 CBA expired
on July 15, 2012.
Article 15 of each CBA, which appears in substantially the same form across all
seven, contained a provision for group health insurance benefits. The 2010 provision
reads as follows:
1. The group insurance benefits shall be set forth in booklets entitled
Employees’ Group Insurance Program and Retired Employees’ Group
Insurance Program, and such booklets are incorporated herein and made
a part of the 2005 Labor Agreement by such reference.
2. It is understood that this agreement with respect to insurance benefits is
an agreement on the basis of benefits and that the benefits shall become
effective on July 15, 2010, except as otherwise provided in the
applicable booklet, and further that such benefits shall remain in effect
for the term of this 2010 Labor Agreement.
The “booklet[]” to which Article 15 refers, entitled “Retired Employees’ Group
Insurance Program,” serves as the summary plan description (“SPD”) of the group health
insurance benefits program for retirees. The first edition of the SPD was issued in 1985,
with subsequent editions issued in 1990, 1992, 1995, and 2005. The 2005 SPD provides
that, with limited exceptions, “[t]he benefits described in this summary are effective as of
June 1, 2005,” the date of the start of the 2005 CBA, and that these benefits last “for the
term of the Labor Agreement.” Substantively identical language appeared in the previous
editions of the SPD.
B.
In addition to the various editions of Article 15 of the CBA and the SPD, the
Union and Constellium’s predecessors agreed, in another set of documents, which the
parties call “Cap Letters,” to further parameters governing retiree health benefits. In
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November 2002, one month before they signed the 2002 CBA, the Union and Pechiney
reached agreement on how they would allocate health care spending for employees who
retired on or after January 1, 2003. The parties agreed that Pechiney would annually
contribute up to $12,068 for each post-2002 retiree under the age of 65 and $3,912 for
those post-2002 retirees age 65 or over. The 2002 Cap Letter further provided that any
costs above this cap “shall be allocated evenly to all participants in such group, as an
annual individual contribution.” Additionally, the 2002 Cap Letter mandated that the
parties negotiate any cap on health benefits as part of subsequent collective bargaining
negotiations. Finally, this Cap Letter delayed implementation of the cost-sharing
requirement for post-2002 retirees until January 1, 2006, after the 2002 CBA’s expiration
date.
On August 2, 2005, roughly two months after the start of the 2005 CBA, the
Union and Pechiney signed a second Cap Letter, which adjusted Pechiney’s contribution
level for post-2002 retirees. The 2005 Cap Letter took effect on January 1, 2011, after
the 2005 CBA’s expiration date. Finally, on July 15, 2010, the same day they signed the
2010 CBA, the Union and Alcan executed a third Cap Letter. This one kept the 2005
Cap Letter’s employer contribution limit, again only for post-2002 retirees. Unlike the
previous two Cap Letters, which took effect after the implementation of their
concurrently-negotiated CBAs, the 2010 Cap Letter took effect on January 1, 2011, over
eighteen months before the expiration of the 2010 CBA.
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C.
In July 2012, during negotiations over a new CBA, Constellium proposed
amending Article 15 to extend the cap on its contributions to retiree health benefits to
employees who retired before January 1, 2003 and to freeze its Medicare Part B premium
reimbursement amount for all hourly retirees at $99.90. The Union, asserting that the
retiree health benefits had vested, refused to bargain on this issue. Constellium sent the
Union a written notice that it planned to make these changes beginning January 1, 2013.
When that day came, Constellium did so.
In February 2013, the individuals who retired during one of the above-mentioned
CBAs and the Union (collectively “the Retirees”) initiated this litigation against
Constellium (and its pension plan). On March 3, 2014, the Retirees filed their First
Amended Complaint, which contained both class and individual allegations. The class
allegations were on behalf of two subclasses — pre-2003 retirees whom the extension of
the contribution cap affected and hourly employees whom the Medicare premium
contribution freeze affected — who alleged a violation of Section 301 of the Labor
Management Relations Act, 29 U.S.C. § 185. The individual plaintiffs brought an
additional claim for violation of Section 502(a)(1) of the Employee Retirement Income
Security Act, 29 U.S.C. § 1132(a)(1)(B) (“ERISA”). All of these claims rested on the
contention that the retiree health benefits had vested.
Following discovery, the parties filed cross-motions for summary judgment. The
district court granted Constellium’s motion and dismissed the case. Barton v.
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Constellium Rolled Prods.-Ravenswood, LLC, No. 2:13-cv-03127, 2016 WL 51262 (S.D.
W. Va. Jan. 4, 2016). The Retirees subsequently noted this timely appeal.
We review de novo the district court’s grant of summary judgment. Henry v.
Purnell, 652 F.3d 524, 531 (4th Cir. 2011) (en banc). Summary judgment is proper only
if, viewing the evidence in the light most favorable to the non-moving party, there are no
genuine disputes of material fact and the moving party demonstrates the right to
judgment as a matter of law. Id.II.
The Retirees argue that the parties intended the Article 15 health benefits to vest,
and so continue beyond the duration of the CBA. Accordingly, they contend,
Constellium’s unilateral alteration of those benefits breached its obligations under the
CBA.
A.
The Supreme Court has recently held courts must “interpret collective-bargaining
agreements, including those establishing ERISA plans, according to ordinary principles
of contract law, at least when those principles are not inconsistent with federal labor
policy.” M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 933 (2015). Thus, in
Tackett the Court instructed “[w]here the words of a contract in writing are clear and
unambiguous, its meaning is to be ascertained in accordance with its plainly expressed
intent.” Id. (quoting 11 R. Lord, Williston on Contracts § 30:6, at 108 (4th ed. 2012)).
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Tackett involved review of a Sixth Circuit case that, in accord with prior circuit
precedent, held for a class of plaintiff retirees. See 135 S. Ct. at 932. That prior circuit
precedent, International Union, United Automobile, Aerospace, & Agricultural
Implement Workers of America v. Yard-Man, Inc., 716 F.2d 1476 (1983), directed courts
to apply a presumption that, barring unambiguous evidence to the contrary, parties
intended for benefits in a collective bargaining agreement to vest. Id. at 935. In Tackett,
the Supreme Court “reject[ed] the Yard-Man inferences as inconsistent with ordinary
principles of contract law.” Id. at 937; see also id. at 935–37 (explaining Yard-Man’s
incompatibility with general contract principles). It explained that Yard-Man clashed
with “the traditional principle that ‘contractual obligations will cease, in the ordinary
course, upon termination of the bargaining agreement.’” Id. at 937 (quoting Litton Fin.
Printing Div., Litton Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 207 (1991)). Indeed, the
Supreme Court in Tackett specifically mandated that “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.Thus, we must interpret Article 15 using ordinary contract principles. And in
doing so, we must recognize that these principles foreclose holding that the retiree health
benefits have vested unless unambiguous evidence indicates that the parties intended that
outcome.
B.
Article 15 of the CBA states that the retiree health benefits “shall remain in effect
for the term of this . . . Labor Agreement.” Article 15 also provides that the parameters
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of the retiree health benefits programs “shall be set forth in [the] booklet[]
entitled . . . Retired Employees’ Group Insurance Program.” That booklet, which serves
as the SPD for these benefits, similarly states that these benefits would last “for the term
of the Labor Agreement.” It is undisputed that the term of the 2010 CBA, the most
recent one relevant, ended in 2012. 1
The plain language of the CBA and SPD clearly indicates that the retiree health
benefits did not vest. First, Article 15 contains explicit durational language stating that
the retiree health benefits continue “for the term of” the governing CBA. Furthermore,
the SPD echoes this language, reiterating the benefits continue “for the term of the” CBA.
The contrast between the durational language in the retiree health benefits SPDs
and the more expansive language found in the pension benefits SPDs bolsters this
conclusion. With respect to pension benefits, the SPDs have generally provided that
“once pension payments commence they are payable monthly for the life of the
participant,” and are “not subject to reduction.” The use of this unambiguous language
in one section of an agreement indicates that the parties knew how to manifest their intent
to vest certain benefits. The absence of such language in another section in the same
agreement thus evidences an absence of such intent. See Trumball Invs. Ltd. I v.
Wachovia Bank, N.A., 436 F.3d 443, 447–48 (4th Cir. 2006). The contrast between the
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The 2005 SPD adds an additional sentence to its description of the benefits,
stating that “[n]o benefit described in this booklet is vested.” The Retirees contend that
Constellium unilaterally promulgated this language, rendering it irrelevant in determining
the mutual intent of the parties. Because we need not rely on this sentence in order to
affirm, we do not address this argument.
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retiree health benefits and pension plan SPD provisions demonstrates this point. See
Dewhurst v. Century Aluminum Co., 649 F.3d 287, 289, 291–93 (4th Cir. 2011).
The Retirees cannot overcome the clear language of Article 15 of the CBA and the
SPD. Given this language, the Retirees cannot demonstrate that their health benefits had
vested.
III.
The Retirees resist this contention, asserting that it improperly reads a single
phrase in isolation. See Quesenberry v. Volvo Trucks N. Am. Retiree Healthcare Benefit
Plan, 651 F.3d 437, 440 (4th Cir. 2011). They assert that the Cap Letters and other
provisions of the CBA evince an intent to vest the retiree health benefits. See id.(rejecting an employer’s argument that “one phrase in this particular collective
bargaining agreement conclusively resolves” whether the benefits vested because other
parts of CBA were incompatible with this conclusion). 2
2
The Retirees also argue that extrinsic evidence, including past conduct by
Constellium and its predecessors, demonstrates that the parties intended the benefits to
vest. Because, as explained above, we find that the language of the CBA and SPD
unambiguously forecloses this interpretation, we do not address the extrinsic evidence.
See Williston on Contracts § 55:23 (noting a “general agreement among most courts that
parol evidence of the parties’ bargaining history may be used to explain or supplement
the terms of the collective bargaining agreement, but may not be admitted to prove an
agreement at variance with the normal or customary meaning of the words chosen by the
parties to express their agreement”).
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A.
1.
We begin with the Cap Letters. The 2002 and 2005 Cap Letters set limits on
employer contributions to commence after the expiration of the CBA under concurrent
negotiation. The Retirees argue that this structure only makes sense if, notwithstanding
the language in Article 15 of the CBA and the SPD, the parties intended for the retiree
health benefits to continue beyond the termination of the CBA.
The Cap Letters themselves undermine the notion that the retiree health benefits
vested, for the Cap Letters indicate that the parties can change the benefits. For example,
the 2005 Cap Letter, by significantly reducing the employer contribution on behalf of
post-2002 retirees, effectively reduced the benefits for individuals who had already
retired between 2003 and 2005 from what the 2002 Cap Letter had provided them. And
the Cap Letters’ instruction that they are “a mandatory subject of collective bargaining in
any subsequent contract negotiations” underscores that the Retirees’ health benefits are
fluid and not set in stone.
Additionally, the 2010 Cap Letter memorializes the parties’ agreement to start
capping retiree benefits before the expiration of the CBA that the parties were then
negotiating. The Retirees would have us infer that the post-termination start dates of the
2002 and 2005 Cap Letters show an intention to continue the retiree health benefits after
the termination of the CBA. But despite no substantive change to Article 15 in the 2002,
2005, and 2010 CBAs, the parties did not give the 2010 Cap Letter a start date after the
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termination of the 2010 CBA. This strongly suggests that the parties did not seek to
manifest through the Cap Letters any latent intent to vest the retiree health benefits.
Given that Article 15 and the SPD maintain nearly identical durational language
across all seven CBAs, we see no reason to treat employees who retired between 2003
and 2010 differently from the rest based on the Cap Letters. The Cap Letters both fall far
short of Tackett’s requirement for a clear signal that parties intend for benefits to vest and
fail to negate the unambiguous durational language in Article 15 and the SPD cutting
against vesting. Accordingly, we cannot draw the inference the Retirees suggest.
2.
To buttress their contention about the Cap Letters, the Retirees rely on
Quesenberry and Keffer v. H.K. Porter Co., 872 F.2d 60 (4th Cir. 1989). Both cases
predate the Supreme Court’s 2015 directive in Tackett that “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.” 135 S. Ct. at 937. Moreover, the contracts in both cases differ
markedly from the one at issue here.
In Keffer, we held that the retirement benefits in question vested, thus outlasting
the CBA’s expiration, because the CBA provided that retirees’ benefits would terminate
when they became eligible for Medicare. 872 F.2d at 62–63. We concluded that this
language illustrated the parties’ understanding that the retirees’ benefits would survive
the CBA. Id. at 64. As we recognized in Dewhurst, “the collective bargaining agreement
in Keffer differed materially from” Article 15 because “[i]n Keffer, retiree health benefits
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were explicitly linked not to termination of the agreement, but to a post-termination
event, namely the date of the retiree’s eligibility for Medicare.” 649 F.3d at 292.
Quesenberry offers a stronger, although ultimately unpersuasive, argument for the
Retirees. The CBA at issue there established a trust fund to cover cost overruns in retiree
health benefits and obligated the employer to make a contribution to that trust fund on the
day the CBA terminated. 651 F.3d at 438–39. That provision also set forth a mechanism
to address cost overruns beyond what the trust fund could support; it allowed the
employer to charge retirees for excess costs, but only after the parties negotiated over
steps to reduce overall health costs. Id. at 439. Relying on the cost overrun provision,
we held that the employer breached the CBA by terminating health benefits. Id. at 440–
42. We explained that the cost overrun provision “makes no sense unless it operates as a
limitation on [the employer’s] right to modify benefits beyond the term of the
agreement.” Id. at 440. Because “the negotiated mechanism . . . is meaningless if it does
not extend past the expiration of the CBA,” we refused to read the coverage provision’s
durational language as relieving the employer of its duty to comply with the cost overrun
provision. Id. at 441.
In contrast to Keffer, and unlike in Quesenberry, here we have very strong
evidence that the retiree health benefits continue only as long as the CBA. First, the plain
language of the CBA and SPD so provides. Second, the disjunction between the pension
plan and the retired employees’ health benefits SPD provisions strongly indicates that the
parties did not intend the latter to vest. Additionally, the Cap Letters do not have the
same infeasibility problem as the trust fund in Quesenberry. The 2010 Cap Letter
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superseded the 2005 Cap Letter before the 2005 contribution provision came into effect
and set the new implementation date to before the 2010 CBA expired. The most
reasonable inference from the various effective dates is that the post-termination start
dates of the 2002 and 2005 Cap Letters were precautionary cost-containment measures in
the event the parties had not agreed to a new CBA before the expiration of the prior one,
but wanted to avoid a sudden cancellation of the retirees’ health benefits. The flexibility
to adjust the date and level of the cap and the stop-gap role the Cap Letters potentially fill
contrast strongly with Quesenberry, where adherence to the durational language would
effectively nullify a meticulous, detailed, and prominent part of that CBA.
If the CBA did not have the durational language of Article 15, the Cap Letters
would certainly not eliminate an inference that the parties intended the benefits to
continue past that CBA. But given Article 15’s actual robust durational language, the
other textual provisions which cut against this inference, and Tackett’s call for clarity in
providing for vesting, the Cap Letters do not show that the parties intended the benefits to
vest.
B.
Nor do the Retirees’ arguments related to other provisions persuade us. The
Retirees specifically point to language in the SPD regarding coverage for retirees’
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dependents and pensioned surviving spouses and the reimbursement of Medicare Part B
premiums. These provisions, they say, indicate that the retiree health benefits vested. 3
We start with the provision for dependent coverage. The CBA offered such
coverage, and all SPDs provided, in nearly identical language, that such coverage “shall
cancel on the date such person is no longer an eligible dependent as defined or upon your
death, whichever comes first.” The Retirees argue that the decision to link the
termination of the dependent coverage benefits to a retiree’s death evinces an intent for
the retiree health benefits to vest.
Given the unequivocal durational language, we cannot agree. One can reconcile
the dependent coverage provision with the durational language by reading the former to
terminate benefits for a retiree’s dependents at the time of the retiree’s death, while the
benefits for dependents of surviving retirees terminate at the end of the CBA. This
reading seems the likelier manifestation of the parties’ intent, both because it harmonizes
the purportedly conflicting provisions and because the dependent coverage sections of the
SPD contain nothing explicit about vesting.
The pensioned surviving spouses SPD provision similarly offers the Retirees little
help. Each edition of the SPD made clear that the pensioned surviving spouse of a retiree
is eligible to receive the benefits that would have gone to the retiree had he lived. This
language simply defines a category of people eligible to receive benefits; it says nothing
3
The Retirees also argue that in 1979, the parties replaced a six-month limitation
on dependent coverage with a promise of lifetime benefits, and that this supports their
interpretation of the CBA. Because they never raised this argument below, they have
waived it. See Pornomo v. United States, 814 F.3d 681, 686 (4th Cir. 2016).
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about the duration for which those benefits will last. This language cannot surmount the
durational language of Article 15 and the SPD, especially when compared to the ironclad
evidence of vesting that the language for the pension plan provides.
Finally, we also find unpersuasive the Retirees’ efforts to invoke Constellium’s
agreement to reimburse Medicare Part B premiums as evidence that the parties intended
the benefits to vest. The SPD provides that when a retiree or pensioned surviving spouse
age 65 or older “enrolls in Medicare Part B, [Constellium] will reimburse such
[individual] for the actual monthly cost for Medicare coverage . . . for the duration of the
Labor Agreement.” The emphasized clause, combined with language in the following
paragraph that this benefit lasts only while the individual is on Medicare Part B and “is
entitled to benefits under this Plan,” clearly shows a temporal limitation on this benefit,
defeating the Retirees’ argument.
IV.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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