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6th Circuit Rules Against Caterpillar Retirees

(CN) - The 6th Circuit ruled against Caterpillar Inc. retirees who claimed the company reneged on a promise to give them free health care for life.

Retirees filed a class action against the Illinois-based company, seeking lifetime no-cost retiree medical benefits, which they claimed were outlined in a 1988 collective labor agreement between Caterpillar and the United Auto Workers (UAW).

Caterpillar argued that the retirees were covered by the terms of a contract the company unilaterally implemented in 1992, which rolled back the retiree health benefits for employees who retired on or after Jan. 1, 1992. The 1988 agreement had expired in 1991.

The UAW and Caterpillar disagreed about whether a successor agreement, reached in 1998, ratified the benefit caps implemented in 1992.

The district court concluded that the plaintiffs' right to benefits vest at the point when they "attained retirement or pension eligibility," even if they kept working past the expiration of the 1998 labor contracts.

The federal appeals court in Cincinnati disagreed, saying the benefits did not vest before workers retired. Neither the 1988 agreement, nor any related documents, discussed when benefits vested.

"[T]he controlling documents cannot reasonably be interpreted to vest retiree benefits while workers are still active and represented by the union," Judge Boyce Martin Jr. wrote.

The court remanded with instructions to dismiss all claims relying on the theory that benefits vested before retirement.

But Martin recognized the possibility that some subclasses, including surviving spouses, "may have claims that are based on separate contractual provisions."

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