On November 6, 2017, Business Roundtable, U.S. Chamber of Commerce, National Association of Manufacturers and the American Benefits Council filed an amicus brief in CNH Industrial N.V. v. Reese, asking the U.S. Supreme Court to review an important case involving retiree health benefits.
The friend-of-the-court brief supported the request by CNH Industrial that the Supreme Court review a Sixth Circuit Court of Appeals decision that interpreted a collective bargaining agreement as granting vested, lifetime retiree health benefits despite the absence of specific language granting such rights. The decision also created limits on an employer’s ability to make changes to those benefits. The appellate court's decision in Reese was at odds with the Supreme Court’s 2016 decision in M&G Polymers v. Tackett, in which the Court reversed a long-standing Sixth Circuit rule construing collective bargaining agreements in favor of lifetime benefits for employees. (Business Roundtable and the Chamber also filed an amicus brief in that case.)
As the brief argued:
Employers and employees cannot meaningfully bargain or reliably plan for the future in the chaotic legal landscape the Sixth Circuit has created. The massive unexpected costs and unpredictable benefits packages that will result (and, indeed, have already resulted) hurt employers and retirees alike. Flexible benefits packages are, more and more, an attractive option for both sides, as they allow leeway to accommodate changing regulatory regimes and medical technology. And the Sixth Circuit’s effective presumption in favor of vested, frozen-in-time benefits makes it more difficult for parties to achieve the flexibility they intended. Moreover, the Sixth Circuit’s outlier rule will undoubtedly result in large-scale forum shopping.
Download the brief here.
UPDATE: February 20, 2018
On February 20, 2018, the Supreme Court granted the petition in CNH Industrial, along with the Business Roundtable motion to file an amicus brief, and reversed and remanded. In a per curiam opinion, the Supreme Court agreed with Business Roundtable and again repudiated the Sixth Circuit’s Yardman principle, affirming Tackett. The Court rejected the Sixth Circuit’s notion that “there is surely a difference between finding ambiguity from silence and finding vesting from silence," and noting the Tackett ruling, wrote that the "‘traditional principle,’ . . . is that ‘contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.’” In addition, “The 1998 agreement contained a general durational clause that applied to all benefits, unless the agreement specified otherwise. No provision specified that the health care benefits were subject to a different durational clause.”
Thus, under normal principles of contract interpretation, the retiree health benefits at issue in CNH Industrial expired when the collective bargaining agreement expired.