High Court Shears Claim by Retirees for Lifetime Vestment of Benefits

WASHINGTON (CN) – The U.S. Supreme Court ruled summarily Tuesday against a group of retirees who claimed their union contract entitled them to lifetime health care benefits.

Jack Reese brought the underlying class action after CNH Industrial’s collective-bargaining agreement with its workers expired in May 2004. Joined by fellow retirees and their spouses, Reese sought a declaration that their health care benefits were vested for life, and that CNH should be enjoined from changing them.

Though a federal judge in Michigan awarded summary judgment to CNH initially, the court reconsidered in 2015 and sided with the retirees.

The Sixth Circuit affirmed, prompting an appeal to the U.S. Supreme Court.

Without even holding oral argument, the high court in Washington reversed for CNH on Tuesday.

The 8-page opinion notes that reversal is unavoidable after M&G Polymers USA LLC v. Tackett, a 2015 ruling that said collective-bargaining agreements must be interpreted according to “ordinary principles of contract law.”

Applying a series of inferences before Tackett, courts presumed that collective-bargaining agreements vested retiree benefits for life.

“But Tackett ‘reject[ed]’ these inferences ‘as inconsistent with ordinary principles of contract law,’” Tuesday’s unsigned opinion states.

Yard-Man inferences, as they were known, took their name from the 1983 case International Union, United Auto, Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man Inc.

Quoting the dissent penned by U.S. Circuit Judge Jeffrey Sutton to the Sixth Circuit’s ruling, the high court called CNH’s Michigan defeat: “Yard-Man re-born, re-built, and re-purposed for new adventures.”

At the ruling’s conclusion, the court noted that CNH’s case is straightforward when “shorn of Yard-Man inferences.”

“If the parties meant to vest health care benefits for life, they easily could have said so in the text,” it states. “But they did not. And they specified that their agreement ‘dispose[d] of any and all bargaining issues’ between them. Thus, the only reasonable interpretation of the 1998 agreement is that the health care benefits expired when the collective-bargaining agreement expired in May 2004.”

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