Blogging Employee Benefits

January 18, 2006

6th Circuit Upholds Injunction to Continue CBA-Defined Retiree Health Benefits

Filed under: Collective Bargaining, Litigation, OPEBs — Fuguerre @ 4:37 am

“This Court has never inferred an intent to vest benefits in the absence of either explicit contractual language or extrinsic evidence indicating such an intent. Rather, the inference functions more to provide a contextual understanding about the nature of labor-management negotiations over retirement benefits. That is, because retirement health care benefits are not mandatory or required to be included in an agreement, and because they are ‘typically understood as a form of delayed compensation or reward for past services’ it is unlikely that they would be ‘left to the contingencies of future negotiations.'”

A district court did not abuse its discretion by issuing a preliminary injunction requiring continuation of payment of retiree health care benefits, according to a ruling by the U.S. Court of Appeals for the Sixth Circuit. The appeallate court agreed with the district court that retirees are likely to succeed on the merits of their claim of entitlement to lifetime health benefits, based on a review of relevant collective bargaining agreements and group insurance contracts. [Yolton v. El Paso Tennessee Pipeline Co., CA6, Nos. 04-1182/1818/1821/2492 (1/17/06)]

Both court decisions considered and amplified the 6th Circuit’s 1984 decision in UAW v. Yardman Inc., which characterized retiree benefits as “status” benefits that carry an inference, barring clear evidence to the contrary, that parties to a collective bargaining agreement intend those benefits to survive the end of the current bargaining cycle. Seeing no need to overturn the Yard-Man standard, as was requested by defendants in the current case, yet without relying unnecessarily on the Yard-Man “inference,” the appellate court concurred with the lower court’s finding in the bargaining agreement sufficient evidence of intent to provide lifetime retiree health benefits.

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