Poore v. Simpson Paper Co. ( 2008 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CLAYTON R. POORE; DOROTHY ANN 
TESKE; SHARON RIGGS; DENNIS
HAWKE; MERRIE LOU HAWKE; JOHN
ANDERSON; BARBARA ANDERSON;
ROBERT ELLEDGE; MARY ELLEDGE;
ROBERT POSCHWATTA, MARIE
POSCHWATTA; JAMES GUNDIFF; No. 05-36060
MARIE GUNDIFF; JERRY CUSICK;
SELMA CUSICK; HAROLD HUIRAS;  D.C. No.
CV-03-00525-HA
LINDA HUIRAS; OWEN ENEVOLDSEN;
and DONNA ENEVOLDSEN, OPINION
Plaintiffs-Appellants,
v.
SIMPSON PAPER COMPANY, a
Washington corporation,
Defendant-Appellee.

Appeal from the United States District Court
for the District of Oregon
Ancer L. Haggerty, District Judge, Presiding
Argued and Submitted
December 5, 2007—Portland, Oregon
Filed September 22, 2008
Before: Diarmuid F. O’Scannlain, Susan P. Graber, and
Consuelo M. Callahan, Circuit Judges.
Opinion by Judge O’Scannlain;
Dissent by Judge Graber
13325
13328 POORE v. SIMPSON PAPER
COUNSEL
Thomas K. Doyle, Bennett, Hartman, Morris & Kaplan, Port-
land, Oregon, argued the cause for the plaintiffs-appellants
and filed briefs.
Douglas S. Parker, Preston Gates & Ellis LLP, Anchorage,
Alaska, argued the cause for the defendant-appellee and filed
a brief.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether we have subject matter jurisdic-
tion over this dispute about retirement benefits.
POORE v. SIMPSON PAPER 13329
I
Simpson Paper Company (“Simpson”) owned and operated
the Evergreen Mill in West Linn, Oregon from 1990 until
1996, when it closed for economic reasons. Plaintiffs are for-
mer workers in the mill, who retired at ages over 55 but under
65, and their dependent spouses (collectively referred to as
“early retirees” or “retirees”).
The Association of Western Pulp and Paper Workers (“the
Union”) represented the hourly employees at the mill, includ-
ing the early retirees, from the 1970s through the time of the
mill’s closure. Three collective bargaining agreements
(“CBAs”) were in force during the time Simpson owned the
mill: 1990-93, 1993-95, and 1995-2001. Simpson and the
Union negotiated a closure agreement in 1996, which termi-
nated the 1995-2001 CBA.
The first CBA incorporated by reference a benefit booklet,
as follows: “Subject to all the provisions of the Benefit Plan
Booklet the Company will provide for each eligible employee
and each eligible dependent the coverages agreed to in its
labor agreement dated November 27, 1990.” The incorporated
booklet provided that early retirees could continue medical
coverage that existed at the time of retirement and that they
could “change coverage at the annual open enrollment on the
same basis as active employees.” The booklet further pro-
vided that such coverage would continue until the retiree
“bec[ame] eligible for Medicare, attain[ed] age 65, or until . . .
death, whichever occurs first.” A similar extension period was
provided for continuation of medical coverage for the retirees’
spouses. During the time that such coverages continued, the
cost was “paid on the same basis as active employees.”
Finally, the benefits booklets specifically reserved to Simpson
the “right to alter, amend, delete, cancel or otherwise change”
the welfare plan benefits “at any time, subject to negotiation
with the Union.” (Emphasis added.)
13330 POORE v. SIMPSON PAPER
The latter two CBAs likewise incorporated the benefits
booklet. Such contracts stated that, “[u]nless otherwise speci-
fied, all participants covered by the health care plans will be
subject to the same level of contributions as active employees
and to the same health care plan provision changes which take
effect from time to time.” Though there were slight changes
to the benefits booklet over the years, the benefits Simpson
provided therein remained substantially the same.
Simpson’s closure agreement negotiated with the Union
provided that
[e]mployees who are curtailed as a result of the clo-
sure and begin receiving their Simpson pension ben-
efits as of the first of the month immediately
following curtailment, will be eligible for retiree
medical coverage in accordance with the provisions
of the Benefits Plan Booklet.
Then-active employees received a “Termination Checklist” at
meetings just before the closure. It contained essentially the
same provision just quoted. Neither the closure agreement nor
the information given to employees who remained employed
until closure referenced early retiree or dependent spouse ben-
efits for those who already had retired.
In 2002, Simpson notified all retirees that it intended to
phase out, and eventually to eliminate, retirement health bene-
fits, and on July 1, 2004, it carried out such intention and
stopped providing retirement health benefits. The present
action followed.
The early retirees assert that Simpson breached its duties
under the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1132, by terminating health benefits
without having obtained the Union’s agreement or having bar-
gained to impasse. They also assert breach of contract claims
under the Labor Management Relations Act (“LMRA”), 29
POORE v. SIMPSON PAPER 13331
U.S.C. § 185(a), arguing Simpson violated its obligations
under the CBAs. The district court granted summary judg-
ment to Simpson, concluding that the early retirees have no
vested right to the benefits they seek. This timely appeal fol-
lowed.
II
The parties do not question our jurisdiction; however, we
have an “independent obligation” to ensure that such exists.
Hernandez v. Campbell, 204 F.3d 861, 865 (9th Cir. 2000)
(per curiam).
A
[1] To establish standing to sue under ERISA, the early
retirees must show that they are plan “participants.” Burrey v.
Pac. Gas & Elec. Co., 159 F.3d 388, 392 (9th Cir. 1998).
ERISA defines a “participant” as “any employee or former
employee of an employer . . . who is or may become eligible
to receive a benefit of any type from an employee benefit plan
. . . .” 29 U.S.C. § 1002(7). The Supreme Court has clarified
that former employees satisfy this definition if they have “ ‘a
reasonable expectation of returning to covered employment’
or . . . ‘a colorable claim’ to vested benefits.” Firestone Tire
& Rubber Co. v. Bruch, 489 U.S. 101, 117 (1989) (emphasis
added) (quoting Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir.
1986)).
[2] However, ERISA does not require that welfare benefits,
including health benefits, actually vest. 29 U.S.C. § 1051(1);
Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78
(1995). Rather, whether such benefits are vested is a matter of
private contract. See Inter-Modal Rail Employees Ass’n v.
Atchison, Topeka & Santa Fe Ry. Co., 520 U.S. 510, 514-15
(1997); Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d
1154, 1160 (9th Cir. 2001) (“Simply put, an employee’s rights
under an ERISA welfare plan do not vest unless and until the
13332 POORE v. SIMPSON PAPER
employer says they do.”). Additionally, because vesting wel-
fare benefits is “an extra-ERISA commitment[, such] must be
stated in clear and express language.” Grosz-Salomon, 237
F.3d at 1160 (citation omitted).
[3] A “vested right” is commonly defined as a “right that
so completely and definitely belongs to a person that it cannot
be impaired or taken away without the person’s consent.”
Black’s Law Dictionary 1349 (8th ed. 2004).1 Such definition
suggests that unalterability, or at least unalterability in the
absence of consent from the person holding the right, is
required before a right is deemed vested.2 We have applied a
similar interpretation in at least two prior opinions.
[4] In Bower v. Bunker Hill Co., retirees sued their former
employer alleging that their retirement medical benefits were
improperly terminated. 725 F.2d 1221 (9th Cir. 1984). The
district court granted summary judgment in favor of the
employer, finding that the plaintiffs’ benefits were not vested.
On appeal, we explained that “if the pensioners’ medical
insurance constituted a vested benefit, that benefit could not
be ended without the pensioners’ consent.” Id. at 1223. Simi-
larly, in Grosz-Salomon, we concluded that the employee’s
rights under an insurance policy were not vested because the
employer retained the right to change the policy without the
employee’s consent. 237 F.3d at 1160.
[5] Several of our sister circuits have also taken this view.
The Third and Seventh Circuits have held that vesting a right
or benefit means to render it “forever unalterable.” Bland v.
1
For purposes of pension benefits, which must meet specific minimum
vesting requirements, ERISA equates “vested” with “nonforfeitable.” See
29 U.S.C. § 1053. The statute further defines a “nonforfeitable” right as
a right that is “unconditional, and which is legally enforceable against the
plan.” Id. § 1002(19).
2
Cf. Black’s Law Dictionary 1595 (8th ed. 2004) (defining “vested” in
a property law context as “not contingent; unconditional; [or] absolute”).
POORE v. SIMPSON PAPER 13333
Fiatallis N. Am., Inc., 401 F.3d 779, 784 (7th Cir. 2005); Int’l
Union, United Auto., Aerospace & Agr. Implement Workers
of Am., U.A.W. v. Skinner Engine Co., 188 F.3d 130, 139 (3d
Cir. 1999). Likewise, the Fifth Circuit has explained that “[a]n
employer ‘vests’ a benefit under ERISA when it intends to
confer unalterable and irrevocable benefits on its employees.”
Halliburton Co. Benefits Comm. v. Graves, 463 F.3d 360, 377
(5th Cir. 2006).
[6] Applying this interpretation of vesting, the district court
was correct in concluding that the early retirees’ health bene-
fits are not vested. The CBA and closure agreement both
incorporate the plan booklet, which expressly reserves to
Simpson “the right to alter, amend, delete, cancel or otherwise
change welfare . . . plan benefits at any time, subject to nego-
tiation with the Union.” Thus, while the plan booklet also pro-
vides a specific duration in which the benefits at issue apply,
which can in some circumstances indicate vesting, see Bland,
401 F.3d at 785-86, when read together with the reservation-
of-rights provision, the plan allows such benefits to be altered,
or even terminated, without the retirees’ consent, which
defeats vesting. Id. at 786; see also Abbruscato v. Empire
Blue Cross & Blue Shield, 274 F.3d 90, 100 (2d Cir. 2001)
(holding where durational language and reservation of rights
is included in same document, the language cannot be con-
strued as vesting benefits for the stated duration). The Seventh
Circuit explained such result as follows:
[T]he presence of a reservation of rights clause fun-
damentally alters the interpretation of [durational]
language; both the clause and the [durational] lan-
guage must be read together, creating a tension that
is best relieved by finding that retirees are entitled to
benefits for [the stated duration], but that this entitle-
ment is subject to change at the employer’s will.
Bland, 401 F.3d at 786.
13334 POORE v. SIMPSON PAPER
[7] The early retirees argue that the negotiation qualifier in
Simpson’s reservation of rights demonstrates that the
employer does not have a unilateral right to change their
retirement benefits, and thus the clause does not defeat vest-
ing. Even assuming such interpretation of the qualifying
clause is correct, as to which we express no opinion, it does
not get the early retirees to where they wish to be. Whatever
authority Simpson may have relinquished, on the express
terms of the clause, the retirees do not control their continued
receipt of benefits. A duty to negotiate is not of the same
character as a duty to secure consent. Regardless of what
Simpson is required to do in satisfying its obligation to nego-
tiate, it ultimately retains the exclusive authority to change
retirement health benefits irrespective of the outcome of such
negotiations.
[8] In addition to the reservation of rights, there are other
provisions in the plan documents showing the malleability of
the retirees’ benefits. The 1995-2001 CBA specifies that “all
participants covered by the health care plans will be subject
to the same level of contributions as active employees and to
the same health care plan provision changes which take effect
from time to time.” Likewise, the 1995 plan booklet, incorpo-
rated into the CBA, states that Simpson is only obligated to
pay for retiree health benefits to the same extent that it pays
for active employees’ benefits. These provisions, taken
together with the reservation of rights, establish that the retir-
ees’ rights to benefits are not “unalterable and irrevokable,”
but rather are subject to change by Simpson. Halliburton Co.
Benefits Comm., 463 F.3d at 377.
Because the early retirees do not have vested rights to the
retirement health benefits they seek, they lack standing under
ERISA, and we must dismiss such claims for lack of subject
matter jurisdiction. See Burrey, 159 F.3d at 392.
B
[9] The retirees also assert breach of contract claims under
the LMRA. The LMRA confers federal jurisdiction over
POORE v. SIMPSON PAPER 13335
“[s]uits for violation of contracts between an employer and a
labor organization representing employees in an industry
affecting commerce.” 29 U.S.C. § 185(a). As a general rule,
where the contract at issue has expired, the parties are “re-
leased . . . from their respective contractual obligations” and
any dispute between them cannot be said to arise under the
contract. Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 206
(1991). An exception to this general rule exists, however,
where the parties’ dispute concerns a “right that accrued or
vested under the agreement, or where, under normal princi-
ples of contract interpretation, the disputed contractual right
survives expiration of the remainder of the agreement.” Id.[10] Here, as discussed above, the retirees’ rights to health
benefits under the now expired CBAs were not vested. Thus,
their claim seeking recovery of such benefits does not arise
under contract sufficient to trigger the LMRA’s grant of fed-
eral subject matter jurisdiction because their contractual
rights to such benefits “no longer exist[ ].” Office & Prof’l
Employees Ins. Trust Fund, 783 F.2d at 921. See generally
Cement Masons Health & Welfare Trust Fund v. Kirkwood-
Bly, Inc., 520 F. Supp. 942, 943-46 (N.D. Cal. 1981), aff’d,
692 F.2d 641 (9th Cir. 1982) (explaining a court has jurisdic-
tion under the LMRA only “to enforce provisions” of a “le-
gally operative” agreement).
[11] The dissent seemingly concludes, in part, that because
the early retirees have a vested contractual right requiring
Simpson to negotiate with the Union before changing bene-
fits, their claims alleging that Simpson failed to satisfy this
requirement arise under the parties’ contracts sufficient to
confer federal jurisdiction. Even assuming the dissent were
correct on this point, the retirees here are not simply seeking
procedural relief; they seek the payment of benefits. Thus,
under Office & Prof’l Employees Ins. Trust Fund, we con-
clude that we lack subject matter jurisdiction over these
claims as well. 783 F.2d at 921.
13336 POORE v. SIMPSON PAPER
For the foregoing reasons, the appeal is
DISMISSED.
GRABER, Circuit Judge, dissenting:
I respectfully dissent.
A. The majority confuses subject matter jurisdiction with
the merits.
“Federal courts have an ‘unflagging’ duty to hear cases that
are properly before them.” Cinema Arts, Inc. v. County of
Clark, 722 F.2d 579, 582 (9th Cir. 1983) (quoting Colo. River
Water Conservation Dist. v. United States, 424 U.S. 800, 817
(1976)). The majority shirks this responsibility by closing the
courthouse door to plaintiffs who raise colorable claims under
federal law. See Firestone Tire & Rubber Co. v. Bruch, 489
U.S. 101, 117-18 (1989) (“In order to establish that he or she
may become eligible for benefits [under ERISA], a claimant
must have a colorable claim that (1) he or she will prevail in
a suit for benefits, or that (2) eligibility requirements will be
fulfilled in the future.”). In so doing, the majority ignores fun-
damental Supreme Court precedent and makes the mistake of
conflating our jurisdictional inquiry with an inquiry into the
merits of Plaintiffs’ claims.
We recently explored the distinction between a lack of sub-
ject matter jurisdiction and a failure to state a federal claim on
the merits, also in the ERISA context. In Cement Masons
Health & Welfare Trust Fund v. Stone, 197 F.3d 1003, 1005
(9th Cir. 1999), the district court had dismissed an ERISA
claim for lack of subject matter jurisdiction. We agreed that
the complaint should have been dismissed, but held that the
decision “should have been made on the merits rather than for
want of subject matter jurisdiction.” Id. We explained:
POORE v. SIMPSON PAPER 13337
The failure to state a federal claim, either on the
pleadings or the facts, is not the same thing as a fail-
ure to establish subject matter jurisdiction. Any non-
frivolous assertion of a federal claim suffices to
establish federal question jurisdiction, even if that
claim is later dismissed on the merits. As the
Supreme Court wrote in Bell v. Hood, 327 U.S. 678,
682, 66 S. Ct. 773, 90 L. Ed. 939 (1946),
Jurisdiction . . . is not defeated . . . by the
possibility that the averments might fail to
state a cause of action on which petitioners
could actually recover. . . . If the court . . .
exercise[s] its jurisdiction to determine that
the allegations in the complaint do not state
a ground for relief, then dismissal of the
case would be based on the merits, not for
want of jurisdiction.
See also Wheeldin v. Wheeler, 373 U.S. 647, 649, 83
S. Ct. 1441, 10 L. Ed. 2d 605 (1963) (“We agree . . .
that on the face of the complaint the federal court
had jurisdiction. . . . But on the undisputed facts, . . .
no federal cause of action can be made out.”).
Id. at 1008 (emphasis added) (ellipses and alteration in origi-
nal).
So, here, it may be that Plaintiffs eventually would lose on
the merits. But their federal claims are not frivolous. As I will
explain in the next section, this dispute arises under the rele-
vant collective bargaining agreements and benefit plans,
which explicitly provide that early retirees’ and spouses’
health care benefits are to continue after the agreements’ expi-
ration. That being so, we have federal question jurisdiction,
28 U.S.C. § 1331, over this action, which is brought pursuant
to the Labor Management Relations Act, 29 U.S.C. § 185(a),
and ERISA, id. § 1132(a)(1)(B).
13338 POORE v. SIMPSON PAPER
B. The collective bargaining agreements and benefit plans
guarantee certain medical benefits after expiration of the
contract.
Generally, when a collective bargaining agreement
(“CBA”) expires, its terms survive only to define an employ-
er’s obligations under the National Labor Relations Act,
which fall under the exclusive jurisdiction of the National
Labor Relations Board. Office & Prof’l Employees Ins. Trust
Fund v. Laborers Funds Admin. Office of N. Cal., Inc., 783
F.2d 919, 921-22 (9th Cir. 1986). Nevertheless, “the parties
may themselves set out by agreement or by private design, as
set out in plan documents, whether retiree welfare benefits
vest, or whether they may be terminated.” Cinelli v. Sec. Pac.
Corp., 61 F.3d 1437, 1441 (9th Cir. 1995) (internal quotations
marks omitted).
In other words, the parties may agree that the terms of a
CBA survive expiration of the CBA. As explained by the
Supreme Court, “an expired contract has by its own terms
released all its parties from their respective contractual obliga-
tions, except obligations already fixed under the contract but
as yet unsatisfied.” Litton Fin. Printing Div. v. NLRB, 501
U.S. 190, 206 (1991) (emphasis added).
Rights which accrue[ ] or vest[ ] under the agree-
ment will, as a general rule, survive termination of
the agreement. And of course, if a collective-
bargaining agreement provides in explicit terms that
certain benefits continue after the agreement’s expi-
ration, disputes as to such continuing benefits may
be found to arise under the agreement . . . .
Id. at 207 (emphasis added); see also Nolde Bros. v. Local No.
358, Bakery & Confectionery Workers Union, 430 U.S. 243,
249 (1977) (“[T]here is . . . no reason why parties could not
if they so chose agree to the accrual of rights during the term
of an agreement and their realization after the agreement had
POORE v. SIMPSON PAPER 13339
expired. . . . The dispute therefore, although arising after the
expiration of the collective-bargaining contract, clearly arises
under that contract.” (citation, footnote, and internal quotation
marks omitted)).
Here, Plaintiffs’ claims are contractual. They sued under
the Labor Management Relations Act “for violation of con-
tract[ ],” 29 U.S.C. § 185(a), and under ERISA “to recover
benefits due . . . under the terms of [their] plan,” id.§ 1132(a)(1)(B). They argue that they have a “right to retiree
health care benefits pursuant to the terms of the collective bar-
gaining agreements under which they retired.” They contend
that the CBAs “only allow[ ] changes to be made subject to
negotiation with the union,” that the term “negotiation” has
the usual labor law meaning of bargaining to impasse, see id.
§ 158(a)(5) & (d), and that the record on summary judgment
demonstrates a genuine issue of material fact as to whether
Defendant bargained in good faith. Defendant counters that
Plaintiffs’ right to benefits did not vest under the CBAs.
Alternatively, Defendant argues that, under the CBAs, “nego-
tiation” over termination of retiree health care benefits does
not require anything more than advance notification, which it
gave.
The relevant CBAs provide, in substance, that early retirees
will retain company health insurance benefits until age 65.
Similarly, their spouses are to receive coverage until age 65
or until certain other conditions occur. The contracts also
incorporate the terms of benefits booklets. The benefits book-
lets, in turn, provide that Defendant employer “reserves the
right to alter, amend, delete, cancel or otherwise change” the
welfare plan benefits “at any time, subject to negotiation with
the Union.” (Emphasis added.) The most reasonable reading
of that provision is that the CBAs grant Plaintiffs the continu-
ing benefit of health insurance until age 65, which Defendant
retains the right to end at any time, but not unilaterally.1
1
Although the bargained-for closure agreement does not address the sta-
tus of early retiree health benefits, it does appear to assume that retiree
13340 POORE v. SIMPSON PAPER
Under Litton and Nolde Brothers, the parties thus contracted
for a benefit to survive termination of the CBAs, and we
therefore have jurisdiction to examine this dispute that arises
under those CBAs.
On this record, both the interpretation of the “subject to
negotiation” clause and the extent to which that clause, how-
ever it is properly interpreted, was followed are disputed
issues of fact. The text of the CBAs requires that Defendant’s
right to terminate benefits is “subject to negotiation with the
Union,” but the CBAs do not explain what the parties
intended the term “subject to negotiation” to require. Parties’
past practices inform the meaning of terms in a CBA. See
Operating Eng’rs Pension Trusts v. B & E Backhoe, Inc., 911
F.2d 1347, 1352 (9th Cir. 1990) (“A collective bargaining
agreement is not governed by the same principles of interpre-
tation applicable to private contracts . . . and cannot be inter-
preted without considering the scope of other related
collective bargaining agreements as well as the practice,
usage and custom pertaining to all such agreements.” (citation
omitted)). But the district court did not allow the parties to
develop a factual record on what they considered “negotia-
tion” to require, nor did the court examine what actions
occurred in advance of the benefits’ termination that might
have constituted negotiation.
Because the CBAs granted Plaintiffs the right to continue
receiving health benefits until age 65 subject to Defendant’s
negotiating with the Union, which may or may not have
occurred, summary judgment in favor of Defendant was inap-
propriate. Genuine issues of material fact remain.
welfare benefits will continue under the terms of the superseded CBA:
“Employees who are curtailed as a result of the closure . . . will be eligible
for retiree medical coverage in accordance with the provisions of the Ben-
efits Plan Booklet.” (Emphasis added.)
POORE v. SIMPSON PAPER 13341
In refusing to entertain the present litigation at all, the
majority makes two further errors. First, it adopts an out-of-
context definition of vesting. Second, it ignores basic princi-
ples of contract law. Each error contravenes Supreme Court
precedent.
The majority holds that “unalterability in the absence of
consent from the person holding the right[ ] is required before
a right is deemed vested” because “[a] ‘vested right’ is com-
monly defined as a ‘right that so completely and definitely
belongs to a person that it cannot be impaired or taken away
without the person’s consent.’ ” Majority op. at 13332 (quot-
ing Black’s Law Dictionary 1349 (8th ed. 2004)). There is
nothing “common” about the majority’s definition of a vested
right; rather, its definition applies specifically to the vesting
of constitutional rights, not generally to contractual rights.2
See Black’s Law Dictionary 1349 (explaining the quoted defi-
nition of “vested right” by citing constitutional law sources).
As to contractual rights, the majority’s imposition of a
requirement of unalterability has no basis in precedent or
common usage.3
As the majority acknowledges, here, “whether such bene-
fits are vested is a matter of private contract.” Majority op. at
13331. In the context of private employment contracts, the
Supreme Court has stated that a right to a benefit is vested
simply if “the employee’s right to the benefit would survive
2
The majority also cites to ERISA’s equating of “vested” with “nonfor-
feitable” as evidence that a right must be unalterable in order to be vested.
Majority op. at 13332 n.1. But “under the ERISA definition, nonforfeita-
ble does not mean that the payments must be absolutely unconditional.”
Modzelewski v. Resolution Trust Corp., 14 F.3d 1374, 1378 (9th Cir.
1994).
3
The unalterability requirement also has no basis in logic. For example,
if a contract guaranteed pension payments of $X in year one, $X + $1,000
in year two, and $X + $2,000 in year three, we would have jurisdiction
over a claim to those benefits, just as we would if the contract gave retir-
ees $X each year.
13342 POORE v. SIMPSON PAPER
a termination of his employment.” Nachman Corp. v. Pension
Benefit Guar. Corp., 446 U.S. 359, 363-64 (1980); see United
States v. Weiland, 420 F.3d 1062, 1079 n.16 (9th Cir. 2005)
(“[W]e are bound to follow a controlling Supreme Court pre-
cedent until it is explicitly overruled by that Court.”). This
principle comports with the common, non-constitutional defi-
nition of a “vested” right as “a completed, consummated right
for present or future enjoyment.” Black’s Law Dictionary
1595 (emphasis added); see United States v. Wealth & Tax
Advisory Servs., Inc., 526 F.3d 528, 530 (9th Cir. 2008) (per
curiam) (“Courts often turn to dictionaries to determine the
plain, unambiguous, and common meaning of terms.”). In
other words, the CBAs vest whatever their terms state,
whether agreed to be paid in the present or in the future (after
expiration of the CBA).
The majority is mistaken that this court’s precedents and
our sister circuits’ precedents “have applied a similar interpre-
tation” of vesting. Majority op. at 13332. In Bower v. Bunker
Hill Co., 725 F.2d 1221, 1223 (9th Cir. 1984), we stated that,
“if the pensioners’ medical insurance constituted a vested
benefit, that benefit could not be ended without the pension-
ers’ consent.” See majority op. at 13332 (quoting Bower). But
this statement merely establishes what occurs if a benefit vests
—it does not explain how a benefit vests.4 Similarly, the other
precedents that the majority cites establish only that a vested
right is “forever unalterable,” not that a right must be forever
unalterable in order to vest. See Bland v. Fiatallis N. Am.,
Inc., 401 F.3d 779, 784 (7th Cir. 2005) (“Upon vesting, bene-
fits become forever unalterable . . . .” (emphasis added)); Int’l
Union, United Auto. Workers of Am. v. Skinner Engine Co.,
4
The majority’s citation to Grosz-Salomon v. Paul Revere Life Insur-
ance Co., 237 F.3d 1154 (9th Cir. 2001), is equally inapposite. In that
case, the benefit plan “could change . . . upon written request from the pol-
icyholder.” Id. at 1160. In other words, no consent or negotiation was
required from anyone—the contract had a standard, limitless reservation
of rights clause. Here, Defendant’s right to change the benefits is not
unfettered; it is subject to negotiation with the Union.
POORE v. SIMPSON PAPER 13343
188 F.3d 130, 139 (3d Cir. 1999) (“In applying these stan-
dards, it must be remembered that to vest benefits is to render
them forever unalterable.” (emphasis added)); see also
Sprague v. Gen. Motors Corp., 133 F.3d 388, 400 (6th Cir.
1998) (en banc) (“To vest benefits is to render them forever
unalterable.” (emphasis added)).
In short, the precedents unremarkably state that, if a benefit
is vested, then that bargained-for benefit cannot be changed.5
See 23 Williston on Contracts § 63:1, p. 434 (4th ed. 2002)
(“As a contract consists of a binding promise or set of prom-
ises, a breach of contract is a failure, without legal excuse, to
perform any promise that forms the whole or part of a con-
tract.” (footnote omitted)). The majority, on the other hand,
relies on the precedents to adopt the converse principle—only
if a benefit is unalterable does the benefit vest. The majority’s
precedential analysis thus relies on a logical fallacy.
The majority also quotes Halliburton Co. Benefits Commit-
tee v. Graves, 463 F.3d 360, 377 (5th Cir. 2006), majority op.
at 13333, but its quotation is incomplete. In Halliburton, the
Fifth Circuit wrote that “[a]n employer ‘vests’ a benefit under
ERISA when it intends to confer unalterable and irrevocable
benefits on its employees.” 463 F.3d at 377. The court went
on to hold: “The parties were free to impose contractual obli-
gations on the right to amend or terminate the [retiree bene-
fits], and they did. Because of these limitations, [the
employer] cannot alter the retiree program, except as consis-
tent with the plan . . . .” Id. at 378. Consequently, regardless
of the Fifth Circuit’s definition of vesting, the court exercised
jurisdiction over alterable benefits and bound the employer to
5
The Supreme Court stated as much when it required that a benefit be
“fixed under the contract but as yet unsatisfied.” Litton Fin. Printing Div.
v. NLRB, 501 U.S. 190, 206 (1991). What the majority fails to realize is
that Plaintiffs’ benefits are fixed. They have a right to benefits unless and
until Defendant negotiates with the Union (or they reach age 65). It is a
right that can be divested, but that does not change the fact that it is vested
until negotiation occurs.
13344 POORE v. SIMPSON PAPER
the bargained-for contractual limitations on its ability to
change retiree benefits—an approach in direct conflict with
the path taken by the majority.
Most importantly, the majority’s holding violates basic
principles of contract law. The majority holds that Plaintiffs’
benefits are not vested because Defendant can terminate them
“subject to negotiation with the Union.” But, under the terms
of the CBAs, Plaintiffs have an absolute contractual right to
their benefits unless and until such negotiation occurs (or
until they turn 65). The act of negotiation therefore operates
as a condition subsequent. See 13 Williston on Contracts
§ 38:9, p. 408 (“A condition subsequent has been defined as
a future event upon the happening of which the agreement or
obligations of the parties would be no longer binding.”).
Under contract law, “[t]he fact that rights are future and con-
ditional does not prevent their recognition and protection . . . .
A contract creating such rights is legally effective according
to its terms. . . . [T]hese rights are vested.” 8 Corbin on Con-
tracts § 30:5, p. 8 (rev. ed. 1999) (emphases added); see also
13 Williston on Contracts § 38:1 (stating that a condition that
qualifies a party’s duty to perform does not qualify the exis-
tence of a contract).
Consistent with this basic understanding, the Supreme
Court has held that benefits vest even if subject to a condition
subsequent and that the terms of the condition are enforce-
able. See Nachman, 446 U.S. at 378 (“[E]ven if the actual
realization of expected benefits might depend on the suffi-
ciency of plan assets, they were nonetheless considered vest-
ed.”); see also Modzelewski, 14 F.3d at 1378 (“The Supreme
Court . . . has noted that vested pension rights may still be
subject to certain conditions subsequent.” (citing Nachman));
Helwig v. Kelsey-Hayes Co., 93 F.3d 243, 250 (6th Cir. 1996)
(“[E]mployers may modify or terminate vested rights where
their power [to] do so was an explicit part of the agreement
between the parties.”). Consequently, under Litton, we have
POORE v. SIMPSON PAPER 13345
jurisdiction over “disputes as to such continuing benefits.”
501 U.S. at 207.
C. Conclusion
In summary, the CBAs gave Plaintiffs the vested right to
medical benefits until the age of 65, unless and until “negotia-
tion with the Union” resulted in a change. The interpretation
of that negotiation clause and the extent to which it was fol-
lowed are disputed issues of fact, which require us to reverse
and remand the case for further proceedings. We have federal
question jurisdiction because Plaintiffs’ non-frivolous claims
arise under the Labor Management Relations Act and ERISA.
The majority contravenes Supreme Court precedent and basic
principles of contract law in holding otherwise. I therefore am
compelled to dissent.