Barbara Fletcher v. Honeywell Int'l, Inc.

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 18a0108p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
BARBARA FLETCHER; TIMOTHY PHILPOT; MARCIA ┐
FINK; LUCINDA SMITH, │
Plaintiffs-Appellees, │
> No. 17-3277
│
v. │
│
│
HONEYWELL INTERNATIONAL, INC., │
Defendant-Appellant. │
┘
Appeal from the United States District Court
for the Southern District of Ohio at Dayton.
No. 3:16-cv-00302—Walter H. Rice, District Judge.
Argued: December 5, 2017
Decided and Filed: June 8, 2018
Before: CLAY, GIBBONS, and BUSH, Circuit Judges.
_________________
COUNSEL
ARGUED: K. Winn Allen, KIRKLAND & ELLIS LLP, Washington, D.C., for Appellant.
John G. Adam, LEGGHIO & ISRAEL, P.C., Royal Oak, Michigan, for Appellees. ON BRIEF:
K. Winn Allen, Craig S. Primis, P.C., Matthew P. Downer, KIRKLAND & ELLIS LLP,
Washington, D.C., for Appellant. John G. Adam, Stuart M. Israel, LEGGHIO & ISRAEL, P.C.,
Royal Oak, Michigan, William Wertheimer, LAW OFFICE OF WILLIAM WERTHEIMER,
Bingham Farms, Michigan, for Appellees.
GIBBONS, J., delivered the opinion of the court in which CLAY and BUSH, JJ., joined.
CLAY, J. (pg. 16), delivered a separate concurring opinion.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 2
_________________
OPINION
_________________
JULIA SMITH GIBBONS, Circuit Judge. Plaintiffs, on behalf of themselves and other
similarly situated retirees, retirees’ surviving spouses, and eligible dependents, filed suit against
Defendant Honeywell International, Inc. to enforce their rights to retirement healthcare benefits
under a series of Collective Bargaining Agreements (“CBAs”). The district court held that the
CBAs were ambiguous and relied on extrinsic evidence for its conclusion that the parties
intended retiree healthcare benefits to vest for life. Because we hold that the CBAs are
unambiguous, we reverse the district court’s judgment.
I.
A.
Plaintiffs are retirees who worked at Honeywell’s plant in Greenville, Ohio. Honeywell
owned and operated the Greenville plant from 1960 until it sold the plant in 2011. While
employed at the Greenville plant, plaintiffs were members of a bargaining unit represented by
the Fram Employees’ Independent Union (“FEIU”) until 2000, and after 2000 by the
International Union, United Automobile, Aerospace and Agricultural Implement Workers of
America (“UAW”) and UAW Local 2413.
The bargaining unit and Honeywell negotiated a series of CBAs containing the terms that
would govern employer-employee relations. Although Honeywell sold the plant in 2011, the
final CBA did not expire until May 22, 2014. Honeywell continued to provide healthcare
benefits for retirees and their spouses after the CBA expired, but on December 28, 2015, it sent
them a letter informing them that it “intend[ed] to terminate the retiree medical and prescription
drug coverage currently provided to you and your covered dependents as of December 31,
2016.” DE 15-2, Defendant’s Ex. B: 12/28/2015 Letter, Page ID 393. Plaintiffs filed suit on
behalf of themselves and other similarly situated retirees, retirees’ surviving spouses, and eligible
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 3
dependents1 under Section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C.
§ 185, and Section 502 of the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C.
§ 1132, claiming that Honeywell was obligated under the CBAs to provide retirees with lifetime
healthcare benefits.
Honeywell argued that the 2011 CBA’s general durational clause, which stated that the
agreement remained in effect until May 22, 2014, governed its duty to provide retiree healthcare
benefits. Thus, it claimed that plaintiffs had no right to healthcare benefits beyond May 22,
2014. It did promise to continue providing healthcare coverage to certain surviving spouses and
dependents since the 2011 CBA expressly promised that “[u]pon the death of a retiree, the
Company will continue coverage for the spouse and dependent children for their lifetime,”
provided that particular conditions were met. JA 18, 2011 CBA, at GR001053.
B.
Honeywell filed a 12(b)(6) motion to dismiss for failure to state a claim, arguing that
under M&G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015) and Gallo v. Moen Inc.,
813 F.3d 265 (6th Cir. 2016), the district court was required to dismiss plaintiffs’ LMRA and
ERISA claims. Honeywell argued that the Greenville CBAs are legally indistinguishable from
those in Gallo: they contain no clear language promising to provide lifetime retiree healthcare
benefits while explicitly vesting other benefits for life, and they are governed by general
durational clauses. The district court denied Honeywell’s motion to dismiss.
Although the district court acknowledged that the CBAs did not expressly provide for
vested retiree healthcare benefits, it pointed to language from this circuit emphasizing that the
Supreme Court’s Tackett decision does not mean that “the absence of such specific language, by
itself, evidences an intent not to vest benefits . . . .” Tackett v. M&G Polymers USA, LLC,
811 F.3d 204, 209 (6th Cir. 2016). The district court thus found that the lack of express vesting
language was not dispositive.
1Plaintiffs
filed their complaint as a class action complaint, but no motion for class certification was filed.
However, the district court reasoned that plaintiffs’ failure to file a class certification motion would not alter the
outcome of the case, since a verdict in plaintiffs’ favor would impact all similarly-situated individuals.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 4
The district court further identified “critical differences” between the instant case and
Gallo. DE 29, Decision and Entry Overruling Mot. to Dismiss, Page ID 953. The most
important difference, the court reasoned, was the language in Honeywell’s CBA promising
lifetime healthcare benefits to retirees’ surviving spouses and dependents. Article 33, Section
D.5 of the 2011 CBA states: “[u]pon the death of a retiree, the Company will continue coverage
for the spouse and dependent children for their lifetime,” provided certain conditions are met.
JA 18, 2011 CBA, at GR001053. According to the district court, such express vesting of lifetime
healthcare benefits for surviving spouses and dependents strongly implied that the parties also
intended to vest lifetime healthcare benefits for the retirees themselves. While not dispositive,
the court found that the express language vesting healthcare benefits for surviving spouses and
dependents was “highly unusual” and created ambiguity about the parties’ intentions. DE 29,
Decision and Entry Overruling Mot. to Dismiss, Page ID 957.
The district court also noted that the Gallo CBA contained a reservation-of-rights clause,
while the 2011 Honeywell CBA does not. Furthermore, unlike the Gallo CBA, the Honeywell
CBA does not have a provision stating that “continued [healthcare benefits] will be
provided . . . .” Gallo, 813 F.3d at 269 (emphasis added). In Gallo, we held that the use of
“continued” as a modifier suggested that retiree healthcare benefits were not vested because if
they were, the CBA would not need to “continue” them.
Lastly, the district court relied on Article 33, Section D.1 of the 2011 Honeywell CBA,
which provides: “[e]mployees ages 50–55 with 30 years of service, who leave the company prior
to becoming pension eligible, will be eligible for retiree health care benefits when they
commence their pension benefits (age 55 or later).” JA 18, 2011 CBA, at GR001051. The court
agreed with plaintiffs that intent to vest could be implied from the fact that eligibility for
healthcare benefits could arise years after the CBAs expired.
C.
Based on its conclusion that the CBAs were ambiguous under ordinary principles of
contract law, the district court conducted an evidentiary hearing to resolve the ambiguities. It
considered extrinsic evidence from both the pre- and post-2000 CBA negotiations that largely
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 5
consisted of testimony from various participants in the negotiation process. After the hearing,
the district court concluded that plaintiffs proved by a preponderance of the evidence that
Honeywell agreed to provide lifetime healthcare benefits to retirees at the Greenville plant. It
permanently enjoined Honeywell from terminating healthcare benefits for all putative class
members who retired from the Greenville plant before June 1, 2012, and for their eligible
spouses and dependents. Honeywell appealed.
II.
A.
After a bench trial, this court reviews the district court’s findings of fact for clear error
and its conclusions of law de novo. T. Marzetti Co. v. Roskam Baking Co., 680 F.3d 629, 633
(6th Cir. 2012). Questions of contract interpretation are legal questions that this court reviews de
novo. See Royal Ins. Co. v. Orient Overseas Container Line Ltd., 514 F.3d 621, 634 (6th Cir.
2008).
B.
Plaintiffs filed suit under LMRA § 301 and ERISA § 502. LMRA § 301 gives federal
district courts jurisdiction over “[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. ERISA § 502 allows a participant in an “employee welfare benefit plan” to bring a civil
action “to enforce his rights under the terms of the plan . . . .” 29 U.S.C. §§ 1002, 1132. ERISA
“explicitly exempts welfare benefits plans” from its detailed rules for vesting pension plans, so
employers are “generally free under ERISA, for any reason at any time, to adopt, modify, or
terminate welfare plans.” Tackett, 135 S. Ct. at 933 (quoting Curtiss-Wright Corp. v.
Schoonejongen, 514 U.S. 73, 78 (1995)). Unlike pension plans, then, health benefits are purely a
matter of contract and must be “established and maintained pursuant to a written instrument.”
Id. (citations omitted). Thus, finding for plaintiff-retirees in this case requires us to determine
that Honeywell violated a contract between itself and the labor organization representing the
retirees—a contract that gave the retirees “rights” to lifetime healthcare benefits.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 6
The contracts governing this case are the CBAs negotiated by Honeywell and the labor
organizations representing Honeywell’s employees. We 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.”
Tackett, 135 S. Ct. at 933. “[W]e look first to the CBAs’ explicit language for clear
manifestations of the parties’ intent . . . . If, however, the plain language is susceptible to more
than one interpretation, we then consider extrinsic evidence to supplement the parties’ intent.”
Moore v. Menasha Corp., 690 F.3d 444, 451 (6th Cir. 2012). Plaintiffs can succeed on their
claims only if they prove one of two things: (1) the CBAs unambiguously provide retirees with
lifetime healthcare benefits, or (2) the CBAs are ambiguous, and the extrinsic evidence
demonstrates that the parties intended to vest retiree healthcare benefits.
C.
Our circuit’s law on interpreting CBAs to determine whether retiree healthcare benefits
have vested has recently undergone significant changes. Until 2015, we followed the “Yard-Man
framework,” named for the case UAW v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir. 1983). In
Yard-Man, this court interpreted a CBA to provide for vested lifetime healthcare benefits for
retirees. Id. at 1479. As it evaluated the CBA, the Yard-Man court purported to apply
“traditional rules for contractual interpretation [as long as they are] consistent with federal labor
policies.” Id. However, in Tackett, the Supreme Court found numerous faults with Yard-Man
and its progeny, specifically noting that “Yard-Man violates ordinary contract principles by
placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining
agreements.” Tackett, 135 S. Ct. at 935.
The Court admonished the Sixth Circuit to look to record evidence of industry customs or
usages, not to our own assumptions about the intentions of employees, unions, and employers
negotiating retiree benefits. Id. It then criticized the Yard-Man cases for their “refus[al] to apply
general durational clauses to provisions governing retiree benefits,” id. at 936, emphasizing “the
traditional principle that contractual obligations will cease, in the ordinary course, upon
termination of the bargaining agreement,” id. at 937 (internal quotation marks and citation
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 7
omitted). It stressed that “courts should not construe ambiguous writings to create lifetime
promises.” Id. at 936.
In April 2017, we released a trio of decisions, all addressing the issue of whether
particular CBAs provided for vested retiree healthcare benefits: Int’l Union, United Auto.,
Aerospace and Agric. Implement Workers of America (UAW) v. Kelsey-Hayes Co., 854 F.3d 862
(6th Cir. 2017), Reese v. CNH Indus. N.V., 854 F.3d 877 (6th Cir. 2017), and Cole v. Meritor,
Inc., 855 F.3d 695 (6th Cir. 2017). In Cole, we found the CBA to be materially indistinguishable
from the one in Gallo; thus, we held that the CBA unambiguously did not provide for vested
retiree healthcare benefits. Cole, 855 F.3d at 700–02. However, in Kelsey-Hayes and Reese, we
found the CBAs ambiguous and looked to extrinsic evidence, ultimately concluding that the
parties intended retiree healthcare benefits to vest. Kelsey-Hayes, 854 F.3d at 869–71; Reese,
854 F.3d at 883. In Kelsey-Hayes, we relied chiefly on the fact that the CBA at issue “include[d]
three distinct kinds of durational language for specific provisions”: specific-duration periods for
less than life, specific-duration periods for life, and the healthcare provisions, which stated that
healthcare “shall be continued” without clarifying for how long. Kelsey-Hayes, 854 F.3d at 868.
Lastly, in Reese, we held that the CBA’s general durational clause and the absence of specific
durational language for healthcare benefits created ambiguity because “the parties in this case
carved out certain benefits, such as life insurance and healthcare insurance, and stated that those
coverages ceased at a time different than other provisions of the CBA.” Reese, 854 F.3d at 882.
We emphasized that under Tackett, we could not infer an affirmative intent to vest from the
absence of specific durational language for healthcare benefits, but reasoned that such absence
did create ambiguity, allowing us to consult extrinsic evidence. Id. 882–83.
But on February 20, 2018, the Supreme Court reversed our decision in Reese and in a per
curiam opinion explained that “[Reese’s] analysis cannot be squared with Tackett.” CNH Indus.
N.V. v. Reese, 583 U.S. ___ (2018), slip op. at 1. The Court saw Reese as impermissibly
applying “the same Yard-Man inferences [the Sixth Circuit] once used to presume lifetime
vesting . . . to render a collective bargaining agreement ambiguous as a matter of law.” Id.
Absent the Yard-Man inferences, the Court reasoned that Reese was “straightforward”—the
CBA contained a general durational clause, and “[n]o provision specified that the health care
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 8
benefits were subject to a different durational clause.” Id. at 8. Therefore, the CBA did not
provide retirees with vested healthcare benefits. Id. And on February 26, 2018, in light of this
decision, the Court also vacated our judgment in Kelsey-Hayes and remanded the case “for
further consideration.” Kelsey-Hayes Co. v. Int’l Union, 138 S. Ct. 1166 (2018).
The Court’s Reese opinion indicates that where a CBA has a general durational clause,
that clause must be enforced absent a specific alternative end date provided for retiree healthcare
benefits, or some other clear indication in the CBA that the general durational clause is not
intended to apply to retiree healthcare. Two of our most recent cases align with this principal,
Watkins v. Honeywell International, Inc. and Cooper v. Honeywell International, Inc.
In Watkins, the CBA stated, “[f]or the duration of this Agreement, the Insurance Program shall
be that which is attached hereto, hereinafter referred to as the Program.” 875 F.3d 321, 325 (6th
Cir. 2017). Based on the language expressly limiting insurance benefits to “the duration of this
Agreement,” we unanimously held that the CBA was unambiguous and thus, “Honeywell’s
obligation to pay for its Fostoria retirees’ healthcare ended when the agreement expired.” Id. at
322.
In Cooper, unlike in Watkins, the CBA did not contain express language limiting retiree
healthcare benefits to the agreement’s expiration date; in fact, it stated that “Retirees under age
65 . . . will continue to be covered under the [health insurance plan], until age 65 . . . .” 884 F.3d
612, 614 (6th Cir. 2018) (emphasis added). Nonetheless, we reversed the district court’s grant of
a preliminary injunction enjoining Honeywell from terminating healthcare benefits. Id. In
reversing the preliminary injunction, we held that the retirees were unlikely to succeed on the
merits because the CBA was governed by a general durational clause and the “until age 65”
language “did not clearly provide an alternative end date” for the healthcare benefits. Id.
Instead, we concluded that the promise to continue providing benefits until the retirees reached
age 65 only lasted until the CBA expired. Id. at 618–21.
Thus, from all of this circuit’s precedent and the Supreme Court’s holdings in Tackett and
Reese, we can distill a clear rule—a CBA’s general durational clause applies to healthcare
benefits unless it contains clear, affirmative language indicating the contrary.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 9
III.
Two sets of CBAs are at issue in this case: the CBAs negotiated before 2000, when the
FEIU was the union representing the plant employees, and the CBAs negotiated after 2000,
between Honeywell and the UAW. After reviewing the CBAs in light of the applicable case law,
we conclude that neither set is ambiguous.
A.
In its order granting plaintiffs a permanent injunction, the district court stated that “[i]t is
undisputed that [the] pre-2000 CBAs contain no language indicating that retiree healthcare
benefits were vested, or that Honeywell was obligated to provide lifetime coverage to retirees or
their family members.” DE 58, Op. and Order, Page ID 2993. Despite this finding—which the
retirees do not challenge in their brief—the court’s injunction applied to all “putative class
members who retired from the Greenville, Ohio, plant before June 1, 2012, and for their eligible
spouses and dependents.” DE 58, Op. and Order, Page ID 3023–24. Thus, its injunction
prevents Honeywell from terminating benefits even for those putative class members who retired
before 2000, under the unambiguous CBAs.
Since health benefits are purely contractual in nature, see, e.g., Cole, 855 F.3d at 698, if
the pre-2000 CBAs are in fact unambiguous in their failure to provide for vested retiree
healthcare benefits, the district court’s injunction should be modified. A review of the pre-2000
CBAs confirms the district court’s statement that they are unambiguous. For example, the 1997
CBA contained only the following two provisions regarding retiree health benefits:
G. Employees retiring on or after January 1, 1985 (except those eligible for
deferred vested pension benefits) will be eligible to enroll for the Blue Cross/Blue
Shield Gold Standard Comprehensive Health Care Plan.
H. The Company agrees to pay the premium cost of single coverage for any
retiree enrolled for Blue Cross/Blue Shield Health Care Coverage. Retirees
enrolled for family coverage will be required to pay the difference in premium
costs between single and family coverage.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 10
JA 14, 1997 CBA, at GR000758–59. The 1997 CBA also had a general durational clause
providing that it would remain in effect until May 22, 2000. The other pre-2000 CBAs contain
language that is materially the same.
Nothing in these provisions suggests intent to vest healthcare benefits. They contain no
promise to provide benefits for the lifetime of the retiree and no indication that they are exempt
from the general durational clause governing the agreement. They simply provide that retirees
will be eligible for a particular healthcare plan and that the company will pay the premium costs
for that plan. Further, the pre-2000 CBAs do expressly provide for other kinds of vested
benefits—for example, the 1997 CBA refers to “deferred vested pension benefits.” JA 14, 1997
CBA, at GR000758 (emphasis added). “[W]e must assume that the explicit guarantee of lifetime
benefits in some provisions and not others means something.” Gallo, 813 F.3d at 270. Absent
any suggestion to the contrary, both provisions are time-limited by the CBA’s general durational
clause. The pre-2000 CBAs therefore unambiguously do not provide for vested retiree
healthcare benefits.
B.
We also hold that the post-2000 CBAs are unambiguous and do not provide for vested
retiree healthcare benefits. The 2011 CBA2 states: “Employees ages 50–55 with 30 years of
service, who leave the company prior to becoming pension eligible, will be eligible for retiree
health care benefits when they commence their pension benefits (age 55 or later).” JA 18, 2011
CBA, at GR001051. The agreement also contains a provision capping Honeywell’s healthcare
contributions, not to take effect until 2012. Finally, Honeywell promises to “continue coverage
for the spouse and dependent children for their lifetime” after the retiree’s death. Id. at
GR001053. There is no similar promise to provide lifetime healthcare for the retirees
themselves.
As an initial matter, the district court was correct when it noted that the absence of
specific vesting language does not automatically signify intent to terminate those benefits when
the agreement expires. See Tackett, 811 F.3d at 209. However, the absence of such language
2The language in the other post-2000 CBAs is the same in all material respects.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 11
also does not automatically signify ambiguity. See Reese, 583 U.S. ___ (2018), slip op. at 5–7.
After reviewing the CBAs, we conclude that the features of the post-2000 CBAs that the district
court used to find ambiguity actually suggest that the CBAs are unambiguous.
In finding the post-2000 CBAs ambiguous, the district court relied primarily on their
provision of lifetime healthcare benefits for surviving spouses and dependents. Honeywell
argues that contrary to the district court’s interpretation, the fact that the agreement explicitly
provides lifetime healthcare benefits for surviving spouses and dependents shows that the parties
knew how to communicate their intent to vest such benefits for life. In response to the district
court’s conclusion that providing benefits to surviving spouses and dependents but not the actual
retirees is “inconceivable,” Honeywell points out that “limiting [its] lifetime obligation to only
surviving spouses and dependents would have made eminent sense,” because it would be much
less expensive than providing lifetime healthcare for all retirees but still protect “the most
vulnerable population in its care.” CA6 R. 19, Appellant Br., at 34.
We have not yet considered a CBA that grants lifetime healthcare benefits to surviving
spouses and dependents but is silent on the duration of healthcare benefits for the retirees
themselves. Honeywell refers us to a Second Circuit case, Bouboulis v. Transp. Workers Union
of America, 442 F.3d 55 (2d Cir. 2006). In Bouboulis, spouses were promised lifetime health
benefits “upon the death of a plan participant.” 442 F.3d at 62. The Second Circuit held that
“the promise to the surviving spouses does not require lifetime benefits for the Retirees, and does
not constitute affirmative language that could reasonably be interpreted as creating a promise to
vest the Retirees’ benefits.” Id. at 62–63. It affirmed the district court’s grant of summary
judgment to the employer since the disputed language “concerns only the benefits of spouses of
deceased participants, not the benefits of the participants themselves.” Id. at 63 (citing
Bouboulis v. Transp. Workers Union, 2004 WL 1555129, at *4 (S.D.N.Y. July 9, 2004)).
Honeywell’s arguments, and the reasoning of the Second Circuit, are persuasive. If the
parties included language expressly granting lifetime healthcare benefits to surviving spouses
and dependents in the CBA, this tends to show that they knew how to provide for vested benefits
and chose not to for retirees. As we reasoned in Gallo, “we must assume that the explicit
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 12
guarantee of lifetime benefits in some provisions and not others means something.” Gallo, 813
F.3d at 270. The CBA here explicitly provides for lifetime benefits for surviving spouses and
dependents only, and so the retirees cannot claim a contractual right to such benefits.
The cases that plaintiff-appellees cite in support of the district court’s conclusion that the
surviving-spouse provision creates ambiguity are unavailing. They cite an unpublished decision
from this circuit, Winnett v. Caterpillar, Inc., where we stated that “there is no reason for the
spouses to have thought they would get benefits that exceeded those of the retirees from whom
their benefits derive . . . .” 510 F. App’x 417, 421 (6th Cir. 2013). Not only was Winnett
decided before the Supreme Court abrogated Yard-Man in 2015, see Tackett, 135 S. Ct. at 933,
but the facts of that case are completely different from the facts here—in Winnett, surviving
spouses challenged Caterpillar’s deduction of healthcare premiums from retirees’ pensions, and
the issue was whether the statute of limitations had expired for their claim. 510 F. App’x at 418–
19. Nor do the other two cases from this circuit help plaintiffs. UAW v. Loral Corp., which the
district court cited favorably in its decision overruling Honeywell’s motion to dismiss, was
decided when Yard-Man was the governing case for CBA interpretations. See Int’l Union,
United Auto., Aerospace & Agric. Implement Workers of Am., UAW v. Loral Corp., 873 F. Supp.
57, 62–64 (N.D. Ohio 1994) (citing Yard-Man numerous times). And Sloan v. Borgwarner, Inc.
actually granted summary judgment for the employer, not the retirees. No. 09-cv-10918, 2016
WL 7107228, at *1 (E.D. Mich. Dec. 5, 2016).3
We acknowledge that the arrangement in the CBA—lifetime benefits for surviving
spouses and dependents but not for retirees—is, as the district court put it, “highly unusual.”
DE 29, Decision and Entry Overruling Mot. to Dismiss, Page ID 957. The average person would
find it very strange if her spouse and dependents were to receive lifetime healthcare benefits only
after she has died, while prior to her death neither she nor her family is entitled to any benefits.
But this strangeness cannot overcome the simple fact that the agreements expressly provide
lifetime healthcare for surviving spouses and dependents but not for the retirees themselves.
Additionally, as Honeywell points out, CBA terms are often the product of compromise. As a
3The other cases plaintiff-appellees cite are not from this circuit, were decided before the Supreme Court’s
decision in Tackett, and are of otherwise limited usefulness.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 13
compromise, Honeywell may have decided it would be much cheaper to provide lifetime
healthcare benefits only to a limited class rather than to all retirees and their spouses and
dependents. The important point, however, is that the CBA clearly promises lifetime benefits to
surviving spouses and dependents but not to retirees. We also find it noteworthy that the
2011 CBA refers to “deferred vested pension benefits” several times, but never uses “vested” to
describe retiree healthcare benefits. Such a distinction points to the conclusion that we reached
in Gallo—“[t]he difference in language demands a difference in meaning.” Gallo, 813 F.3d at
270.
There is only one feature of the surviving-spouse provision that arguably raises an
ambiguity: it states, “[u]pon the death of a retiree, the Company will continue coverage for the
spouse and dependent children for their lifetime . . . .” JA 18, 2011 CBA, at GR001053
(emphasis added). Read naturally, this phrase implies that lifetime healthcare benefits for the
spouse of a deceased retiree proceed from the period during which the retiree was receiving
healthcare benefits. Thus, if the retiree did not have healthcare when he died, then his spouse’s
lifetime healthcare would not be a continuation of coverage. Why, then, doesn’t this “continue”
language create ambiguity as to whether the retirees had healthcare for life? Because not all
spouses of retirees are guaranteed healthcare for life upon the death of their retiree-spouse.
The post-2000 CBAs promised to provide lifetime healthcare to a retiree’s spouse
“[u]pon the death of a retiree.” But like the other promises in the CBAs, this promise expired
when the CBA expired, on May 22, 2014. Thus, if a retiree died during the term of a CBA that
contained the surviving spouse promise, the surviving spouse is entitled to lifetime healthcare
benefits. But if a retiree died after the last CBA expired, then Honeywell’s promise has expired,
and Honeywell is not obligated to provide the surviving spouse with lifetime healthcare benefits.
The reality for plaintiffs here is that the CBAs expressly promise to provide lifetime benefits for
particular surviving spouses of retirees—those whose retiree-spouse died during the term of a
CBA that contained the surviving spouse provision. They do not make that promise to the
retirees themselves. In the absence of such a promise, the general durational clause should
govern the agreement.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 14
Aside from the surviving spouse provision, the district court identified several other
features of the post-2000 CBAs that it believed contributed to their ambiguity. These features
are insufficient to overcome the presence of a general durational clause. The fact that
Honeywell’s contribution caps became effective after the CBAs expired has been rejected by this
circuit as a justification for finding ambiguity. See Cole, 855 F.3d at 701 (“[T]he caps section of
the 2000 CBA indicates that the parties contemplated that retiree healthcare benefits would
continue . . . . But the fact that they anticipated, or even hoped, that these benefits would
continue does not mean that Meritor is bound to provide these benefits for the life of the
retirees.”); Watkins, 875 F.3d at 327 (“[T]hat the caps contemplated healthcare benefits into the
future did not mean that Honeywell had promised to provide benefits forever.”). Furthermore, as
Honeywell pointed out in its 12(b)(6) motion and as we stated in Watkins:
There is a good reason for a company to adopt healthcare caps, even if caps take
effect only far in the future: because companies must recognize as a liability on
their balance sheet the present value of their anticipated future healthcare costs,
caps keep companies from needing to recognize millions (or more) in future
potential liability.
Watkins, 875 F.3d at 327 (citing Wood v. Detroit Diesel Corp., 607 F.3d 427, 428–29 (6th Cir.
2010)).
The district court also gave weight to plaintiffs’ argument that Art. 33, Section D.1 of the
CBA, tying eligibility for pension benefits to eligibility for healthcare benefits, implied intent to
vest because a retiree could become eligible for healthcare benefits up to fifteen years after the
CBA expired. The district court’s rationale here is erroneous because, as we have held, the fact
that Honeywell anticipated providing healthcare benefits in the future does not mean that
Honeywell is bound to provide such benefits forever. See Cole, 855 F.3d at 701; Watkins, 875
F.3d at 327. While there are minor differences between the Honeywell CBA and the CBA in
Gallo, such as the absence of a reservation-of-rights clause in the Honeywell CBA, both
agreements share one crucial feature: a general durational clause. None of the features to which
the district court points are sufficient to overcome that clause here.
Under the general durational clause in the 2011 Honeywell CBA, the agreement expired
on May 22, 2014. Although “a contract’s general-durational clause will not always apply to a
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 15
promise to provide healthcare,” Watkins, 875 F.3d at 325, “ordinary principles of contract
law . . . dictate that ‘contractual obligations will cease, in the ordinary course, upon termination
of the bargaining agreement.’” Cole, 855 F.3d at 700 (quoting Gallo, 813 F.3d at 279). Because
the post-2000 CBAs do not contain any features overriding the general durational clauses, the
general durational clauses should govern. We therefore hold that the district court erred by
finding the CBAs ambiguous.
IV.
The parties devote a great deal of time to disputing the significance of the extrinsic
evidence in this case. Because the CBAs in this case are unambiguous, however, the parties’
arguments about the extrinsic evidence can no longer be considered. See, e.g., Tackett, 135 S.
Ct. at 938 (Ginsburg, J., concurring) (“[W]hen the contract is ambiguous, a court may consider
extrinsic evidence to determine the intentions of the parties.”); Watkins, 875 F.3d at 323 (“We do
not look at extrinsic evidence unless the contract is ambiguous.”). Thus, our finding that the
CBAs unambiguously do not provide for lifetime retiree healthcare benefits ends the inquiry.
V.
For the foregoing reasons, we reverse the judgment of the district court.
No. 17-3277 Fletcher, et al. v. Honeywell Int’l, Inc. Page 16
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CONCURRENCE
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CLAY, Circuit Judge, concurring. I reluctantly concur because I am required to do so by
binding case law. However, it is not obvious that the intent of the parties was as clearly
expressed as our cases indicate. Indeed, the agreements at issue appear on their face to be
ambiguous, and they were drafted prior to the line of cases beginning with the Supreme Court’s
decision in M & G Polymers USA, LLC v. Tackett, 135 S. Ct. 926 (2015), which completely
upended the way that our Circuit interprets the vesting of benefits in collective-bargaining
agreements. I believe that the Court should permit the admission of extrinsic evidence in this
case in order to ascertain the intent of the parties. Nonetheless, our cases preclude us from doing
so.
Now, at least, the unions and the retirees that they represent are on notice as to what their
agreements must say in order to vest retiree healthcare benefits. Although it seems less than fair
to impose this new, heightened standard upon these retirees, that is what the cases require, and I
therefore reluctantly concur in the majority opinion.