Facts of the Case
In 1998, CNH agreed to a collective-bargaining agreement, which provided health care benefits under a group benefit plan to certain employees retiring under the pension plan. Other benefits, including life insurance, ceased upon retirement. The agreement also contained a clause stating that it would terminate in May 2004. When it did expire in 2004, a class of CNH retirees and surviving spouses filed a lawsuit seeking a declaratory judgment that their health care benefits vested for life and asking the district court to enjoin CNH from changing them. While that lawsuit was pending, the US Supreme Court issued a decision in M&G Polymers USA, LLC v. Tackett, holding that collective-bargaining agreements must be interpreted according to ordinary principles of contract law. The Court’s holding in Tackett specifically targeted the Sixth Circuit, in which there was precedent for courts to presume that collective-bargaining agreements vested retiree benefits for life.
Because of the intervening ruling by the US Supreme Court in Tackett, the district court initially awarded summary judgment in favor of CNH, but then it awarded summary judgment to the retirees. The Sixth Circuit affirmed the court’s award of summary judgment to the retirees, using the same precedents the Court proscribed in Tackett to find the collective-bargaining agreement ambiguous as a matter of law and thus susceptible to interpretation based on extrinsic evidence about lifetime vesting.
Question
Did the Sixth Circuit err in using a series of inferences to conclude that a collective-bargaining agreement was ambiguous as a matter of law, thus allowing courts to consult extrinsic evidence about whether retiree benefits were vested for life?
Conclusion
In a per curiam opinion, the Court reversed the Court of Appeals and remanded the case for further proceedings. The Sixth Circuit’s use of inferences to interpret the collective-bargaining agreement is inconsistent with the Court’s holding in Tackett. Under Tackett, the collective-bargaining agreement must be interpreted using ordinary principles of contract law. Under its clear terms, the agreement unambiguously terminated the benefit of health care to retirees in 2004, rather than vesting them for life.