COLLECTIVE BARGAINING AGREEMENTS

collective bargaining

M&G Polymers USA, LLC v. Tackett

Issues

In determining whether retiree health-care benefits provided under collective bargaining agreements should continue indefinitely, how should courts interpret collective bargaining agreements that are silent on the duration of retiree health-care benefits?

When interpreting a collective bargaining agreement that is silent on the duration of retiree health-care benefits, the Sixth Circuit inferred that the health-care benefits are vested (and therefore continue indefinitely). This approach, however, differs from the interpretative approach of other federal appellate courts. The Supreme Court will now resolve this circuit split. M&G Polymers USA, LLC argues that health-care benefits should terminate when the collective bargaining agreement ends unless there is a clear and explicit statement that such benefits should continue indefinitely. In opposition, several M&G retirees argue that, notwithstanding contractual silence, the parties’ intent that health-care benefits should continue indefinitely can be presumed. The resolution of this case will impact both the retention of retiree health-care benefits and the operational costs of American companies. 

Questions as Framed for the Court by the Parties

  1. Whether, when construing collective bargaining agreements in Labor Management Relations Act (LMRA) cases, courts should presume that silence concerning the duration of retiree health-care benefits means the parties intended those benefits to vest (and therefore continue indefinitely), as the Sixth Circuit holds; or should require a clear statement that health-care benefits are intended to survive the termination of the collective bargaining agreement, as the Third Circuit holds; or should require at least some language in the agreement that can reasonably support an interpretation that health-care benefits should continue indefinitely, as the Second and Seventh Circuits hold.
  2. Whether, as the Sixth Circuit has held in conflict with the Second, Third, and Seventh Circuits, different rules of construction should apply when determining whether health-care benefits have vested in pure ERISA plans versus collectively bargained plans.

In 1992, Shell Chemical Company (“Shell”) purchased a West Virginia polyester plant from The Goodyear Tire & Rubber Company (“Goodyear”). See Tackett v. M & G Polymers USA, LLC, 733 F.3d 589, 593 (6th Cir. 2013).

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