Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_06-cv-00032/USCOURTS-azd-4_06-cv-00032-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.-Employee Benefits

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 1Specifically, the Employer agreed to continue providing “the Comprehensive Medical Plan

coverages for which they were covered while active employees, until the retired employee

attains age 65, his or her eligible spouse attains age 65, and the retired employee’s dependent

child reaches age twenty-one (21), or age twenty-five (25), if attending an accredited college,

university, or career-oriented educational institution.” (Ps’ MSJ, SOF, Ex. 7: 1990 CBA at

Article XIII, § D(1)).

WO

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

Frances Alday et al., 

Plaintiffs,

v.

Raytheon Company, a Delaware corporation, 

Defendant, _______________________________________

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CV 06-32 TUC DCB

O R D E R

The Court grants summary judgment for Plaintiffs and denies summary judgment for

Defendant. Having entered Judgment for Plaintiffs, the Plaintiffs’ Motion for Preliminary

Injunction is denied as moot.

A. Background

Plaintiffs, early retirees, seek relief under Section 301(a) of the Labor Management

Relations Act (LMRA) against Defendant, Raytheon, for allegedly breaching collective

bargaining agreements (CBAs) spanning a period of over fourteen years (beginning in 1990 and

ending in 2004). Plaintiffs allege these CBAs ensured that they and their spouses would have

company-paid health care coverage until age 65.1

 Plaintiffs also sue Raytheon under the

Employee Retirement Income Security Act of 1974 (ERISA), challenging the change in 2004

which requires them to contribute toward the cost of their retiree healthcare benefits. 

Case 4:06-cv-00032-DCB Document 125 Filed 08/05/08 Page 1 of 20
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 2The parties did not file crossmotions, which is appropriate when both parties seek summary

judgment on the same issue. Instead, the parties positions were fully briefed by separate

motions filed simultaneously on May 15, 2008. Instead of considering a motion, crossmotion,

response, and reply, this Court has considered two motions, two responses, and two replies.

Additionally, Raytheon filed a Sur-Reply.

Raytheon asks the Court to grant it summary judgment because Plaintiffs failed to

respond to Raytheon’s assertion that it prevails under ERISA and because Plaintiffs failed to

file a Statement of Facts in support of its Opposition to Raytheon’s Motion for Summary

Judgment. Under L.R. Civ. 56.1, a Statement of Facts is deemed admitted, unless otherwise

ordered by the Court, if it is “not specifically controverted by a correspondingly numbered

paragraph in the opposing party’s separate Statement of Facts.” Here, Plaintiffs relied on the

Statement of Facts submitted in support of its Motion for Summary Judgment. While the local

rule envisions Respondent’s filing a correspondingly numbered answering Statement of Facts

and a Statement of Facts supporting its Response, Fed. R. Civ. P. 56, requires only that material

assertions of fact must be controverted. This has been done, and the Court will not grant

summary judgment for Raytheon based on deemed admissions. Here, the one Statement of

Facts sufficed. Plaintiffs did respond to Defendant’s ERISA claim by arguing that if they

prevail under the LMRA based on the CBAs, they prevail as well under ERISA. Plaintiffs’

Response to Raytheon’s Motion for Summary Judgment was the same argument made in the

Plaintiffs’ Motion for Summary Judgment: whether or not Plaintiffs’ “free” medical benefits

are vested rights that cannot be changed by Raytheon. The question has been adequately briefed

by the parties.

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On January 4, 2008, this Court certified this case as a class action law suit after

dismissing Plaintiffs’ claims for extra-contractual and punitive damages. The parties jointly

agreed to a class definition, pursuant to parameters determined by the Court, which was

approved by the Court on February 15, 2008.

The parties filed motions for summary judgment,2

 and the Plaintiffs seek a Preliminary

Injunction. Plaintiffs argue that under the CBAs their retiree health care benefits were vested

rights, which could not be unilaterally modified by Raytheon and must be restored. Under

ERISA, these are the benefits due them. Raytheon argues that the retirees have no vested right

to “free” health care benefits under the CBAs and that under ERISA and the governing Plan

documents, it had the right to change Plaintiffs’ health care benefits, including requiring retirees

to pay a share of the health insurance premium. Raytheon asks the Court to enter judgment for

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it because it did not breach the CBAs, and the retirees have received all the benefits due them

under the terms of their ERISA plan.

It is undisputed that until 2004, Defendant provided “free” health care benefits for earlyretirees without any requirement that retirees pay any coverage premiums. Effective July 1,

2004, Defendant began charging retirees a share of the cost of coverage for their retirement

medical benefits.

B. Employee Retirement Income Security Act: (ERISA)

The parties agree that the retiree health benefits at issue here are “employee welfare

benefits” under ERISA and are not “employee pension benefits.” Unlike employee pension

benefit plans, employee welfare plans are exempt from ERISA automatic vesting requirements.

Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995); Massachusetts v. Morash, 490

U.S. 107, 119 (1989); DeVoll v. Burdick Painting, Inc., 35 F.3d 408 (9th Cir.1994); West v.

Greyhound Corp., 813 F.2d 951, 954 (9th Cir.1987). “Retiree medical benefits do not become

vested once an employee becomes eligible or retires.” Williams v. Caterpillar, Inc., 944 F.2d

658 (9th Cir.1991).

Consequently, unless established contractually by ERISA plan documents, employees

have no guaranteed right to continued medical benefits. Alday v. Container Corp., 906 F.2d

660, 665 (11th Cir.1990). Absent a contractual obligation, an employer may terminate a welfare

plan at will. Biggers v. Wittek Indus., Inc., 4 F.3d 291, 295 (4th Cir.1993).

Furthermore, ERISA recognizes the employer's inherent right to modify or terminate its

welfare plans, therefore, Plaintiffs bear the burden of proving that Raytheon waived this right

by committing to vested benefits. See, Tusting v. Bay View Fed. Sav. & Loan Ass'n, 789 F.Supp.

1034, 1041 (N.D.Cal.1992), (citing Howe v. Varity Corp., 896 F.2d 1107, 1109 (8th Cir.1990)).

Plaintiffs must show the grant exists “in the plan documents” in “clear and express” language.

Cinelli v. Security Pac. Corp., 61 F.3d 1437, 1441 (9th Cir. 1995).

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C. The Plan Documents. 

It is undisputed that under the ERISA Plan documents, Plaintiffs have no vested right to

medical benefits, including free medical coverage. Instead, the Plan contained anti-vesting

language, clearly and expressly, stating: “No Vested Right to Benefits. No Participant, or

person claiming through such participant, shall have any right to, or interest in, any benefits

provided under this Plan upon . . . retirement . . . except as specifically provided under a Benefit

Program.” (D’s Motion for Summary Judgment (MSJ) at 6; Statement of Facts (SOF) at 52

(citing 1999 and 2003 Plan)) (emphasis added). In 1997, the Employer reserved its “right to

alter, amend, modify, revoke or terminate in whole or in part the Plan, except as provided in any

agreement with a Collective Bargaining Agent.” (D’s SOF, Ex. D(2): 1997 Plan at 30)

(emphasis added).

It is undisputed that the Plan documents contained reservation of rights clauses, which

gave Raytheon the “absolute” right to “amend the Plan and any or all Benefit Programs

incorporated herein from time to time, including, but not limited to, the right to reduce or

eliminate benefits provided pursuant to the provisions of the Plan or any Benefit Program as

such provisions currently exist, or may hereafter exist.” (D’s MSJ at 6; SOF at 51 (citing

Second Amended Complaint at 17, 21.))

It is undisputed that the Summary Plan Description (SPD) contained the “no vesting”

language and the reservation of rights provisions. The 2003 SPD, expressly stated: “Raytheon

hopes to continue the Plans indefinitely, but as is customary in such plans, the right to amend,

suspend, or terminate the Plans in whole or in part at any time and for any reason is reserved

by Raytheon.” (D’s MSJ at 7; SOF at 59.) 

Raytheon argues that Plaintiffs’ medical benefits are “governed” by the terms of the Plan,

pursuant to express provisions in the CBAs which defer to the Plan, as follows: “All benefits

of employees, retired employees, laid off employees and insured dependents are subject in every

respect to the terms of the applicable Plan documents under which payment is claimed.” (D’s

MSJ at 14 (citing 1990 CBA, Article XIII, Section J(5)).)

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The Court considered this same argument in Raytheon’s Motion to Dismiss and rejected

it to the extent Raytheon argued that the Plan could circumvent or extinguish benefit rights

secured by a CBA. (Order, filed 8/8/2006, at 12.) As this Court explained in 2006, CBAs

negotiated by unions and employers establish the contractual relationship between employees

and employers and cannot be unilaterally changed because there would be a lack of mutuality.

Id. (citations omitted.) There is a distinction between entitlement to benefits under a CBA,

which have resulted from a process of collective bargaining as compared to entitlement to

benefits under an ERISA plan, which has been adopted by an employer at its discretion.

Baumgardner v. Smurfit-Stone Container, 347 F. Supp. 2d 927, 933 (Or. 2004) (citing Krishan

v. McDonnell Douglas Corp., 873 F. Supp. 345, 351 (Cal. 1994).

Again this Court finds that to the extent Raytheon suggests that an ERISA document can

override a collective bargaining document, the law is to the contrary. To the extent that

Raytheon suggests that an ERISA document can override a provision in a CBA, the Court

rejects this argument and notes that the Plan document provisions relied on by Raytheon

expressly provide exceptions in the anti-vesting and reservation of rights provisions for benefit

programs provided under a CBA. (See emphasis added above.) This Court will look to the Plan

documents as evidence of what the parties intended in the CBAs regarding vesting of health

care benefits for retirees.

Here, the CBAs control, and if Plaintiffs prevail under the LMRA they also prevail under

ERISA because the benefits due them under the CBAs are the benefits due them under ERISA.

D. The Labor Management Relations Act: (LMRA)

In 1971, the Supreme Court made it quite clear that retirees were not employees covered

by mandatory NLRA collective bargaining provisions requiring employers to negotiate all

“terms and conditions of employment.” Allied Chemical & Alkali Workers of America v.

Pittsburgh Plate Glass Comp., 404 U.S. 157, 164-170 (1971). In Allied Chemical, the Supreme

Court considered a unilateral change by an employer in retiree health insurance, covered by a

CBA. The Court held that the mandatory obligation to negotiate “conditions of employment”

under the NLRA applied to employees, distinguishing between active employees and retirees.

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Id. Only retirement benefits for active employees are a mandatory bargaining subject, retirees’

benefits are not and, therefore, the employer may unilaterally modify the retirees’ health

insurance plan without violating the mandatory bargaining requirements of the NLRA. Id. at

175-184. 

The Supreme Court noted, however, that nothing “precludes permissive bargaining over

the benefits of already retired employees.” Id. at 171 n. 11. Additionally, “[u]nder established

contract principles, vested retirement rights may not be altered without the pensioner's consent.”

Id. at 182 n. 20 (citation omitted). “Moreover, the retiree would have a federal remedy under

§ 301 of the Labor Management Relations Act for breach of contract if his vested benefits were

unilaterally changed. Id. (citing See Smith v. Evening News Assn., 371 U.S. 195, 200-201

(1962); Lewis v. Benedict Coal Corp., 361 U.S. 459, 470 (1960)).

Since Allied Chemical, it has been quite clear that bargained-for retirement benefits will

be subject to unilateral changes by employers, unless they are vested rights. See also, 

Toensing v. Brown, 528 F.2d 69, 72 (9th Cir. 1975) (a union is not required to negotiate benefits

for retirees, but it may do so, and if it does, vested retirement rights are not to be disturbed.) 

In 1979, the Ninth Circuit considered a class action law suit on behalf of retired dairy

employees who sued five labor organizations and six employers for restoration of health and

welfare benefits for retirees. A series of CBAs required the employer to maintain the benefits

“in effect, on the date of the agreement,” and throughout the term of each agreement. The

benefits continued in this sequential fashion through an established fund, which provided

medical and hospital benefits for retiring employees, and was funded by the necessary amount

of employee contributions based on the number of employee work hours required to so maintain

the retirees’ health benefits. Turner v. Union # 302, International Brotherhood of Teamsters,

604 F.2d 1219, 1222 (9th Cir. 1979).

This arrangement existed from 1966 to 1974, when financial problems in the dairy

industry resulted in the union and the employer agreeing to amend the CBA to delete the

requirement to maintain the present existing level of benefits for retirees. Id. at 1223. “The

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central question presented [was] whether . . . [the] retirees had a vested contractual right in the

collective bargaining agreement, and the unions and employer violated that right by amending

the agreement without the consent of the retirees.” Id. at 1224. The court concluded the

amendment to the CBA did not constitute a breach because the benefits were not vested rights.

Id. at 1226.

In discussing the contractual nature of the agreement, the court noted that CBAs are more

than a contract. They are a “generalized code” governing a myriad of situations which cannot

be wholly anticipated. As compared to a general contract, a CBA must be more flexible and

subject to change for the following reason: 

A collective bargaining contract operates prospectively over a substantial period

of time and the parties cannot be expected to foresee all the problems that will

develop in an industrial establishment within the period of the contract and more

scope must be left for decisions made in the course of performing the agreement.

The parties to the collective bargaining agreement share a degree of mutual

interdependence for the cost of disagreement is great and the pressure to reach

agreement is so intense that the parties are willing to contract with the thought in

mind of working out the problems of interpreting and amending when the

inevitable problems arise.

Id.

In 1983, the Ninth Circuit looked at the question of whether rights created by a CBA

were vested or subject to change, when airline pilots sued their union and employer for agreeing

to free the airlines from a buy-back program which paid additional compensation to pilots who

agreed to work during their vacation. Hendricks v. Airline Pilots Assoc., International and

United Airlines, 696 F.2d 673 (9th Cir. 1983). The court held that the application of general

contract law in a collective bargaining case is distinguishable because CBAs are essentially

instruments of government, not merely contracts of exchange. Id. at 676 (citations omitted).

The court explained that rights created by collective bargaining ordinarily are

extinguished by subsequent collective bargaining. A contrary irrevokable agreement must be

based on the conclusion that the parties intended to relinquish control over important aspects

of the employment relationship for a substantial period of time. “An intention to agree to such

an unusual abdication of collective bargaining responsibility should be attributed to the parties

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 3Some circuits following Yard-Man, apply a pro- retiree presumption of vesting, but other

circuits rely on ERISA and apply a presumption against vesting. E.g., Gable v. Sweetwater Cup

Co., Inc., 35 F.3d 851, 857-58 (4th Cir. 1994) (citing 29 U.S.C. 11101.0, ERISA, and noting that

Congress only mandated vesting for pensions and not retiree health benefits plans). This

ignores that ERISA was not designed to leave plan participants worse off than they were under

pre-ERISA state law, e.g., 29 U.S.C. 1114; Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987);

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only on the strongest of evidence.” Id. (citing Lewis v. Benedict Coal Corp., 361 U.S. 459, 470-

71 (1960)).

The collective bargaining relationship is a continuing relationship. “‘The assumption as

well as the aim of [the LMRA] is a process of permanent conference and negotiation between

[employers] on the one hand and the employees through their unions on the other.’” Id. at 676

(quoting International Ass'n of Machinists v. Street, 367 U.S. 740, 760 (1961) (quoting Elgin,

Joliet & Eastern Railway Co. v. Burley, 325 U.S. 711, 753 (1945) (Frankfurter, J., dissenting)).

Relying on Turner, the court noted the need for flexibility to modify the collective bargaining

agreement to meet changing conditions. Id. In Hendricks, as financial circumstances changed

the CBAs correspondingly changed to reflect the best interests of the majority of employees.

While some pilots lost buy-back benefits, more pilots’ jobs were saved. Finding that benefits

are vested and irrevokable is contrary to the majoritarian bias inherent in collective bargaining.

Id. at 677-678. The court declined to find vested benefits in the CBA, minus the strongest of

evidence that the parties intended to give up their flexibility.

Against this general background for interpreting whether or not a CBA provides vested

benefits and the holding in 1971 by the Supreme Court in Allied Chemical, this Court declines

to adopt any presumption, based on Local 134, UAW v Yard-Man, 716 F2d 1476 (6th Cir. 1983),

that health and welfare retirement benefits are vested benefits. See Anderson v. Alpha Portland

Industries, 836F.2d 1512, 1515-19 (8th Cir. 1988) (disagreeing with Yard-Man to the extent it

recognizes an inference of an intent to vest and criticizing cases that have extended dicta in

Yard-Man to create a presumption in favor of vesting); Yolton v. El Paso Tenn. Pipeline Co, 435

F.3d 571, 579 (6th Cir. 2006) (explaining that the inference discussed in Yard-Man does not

involve burden shifting).3

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see also Smith v. CMTA-IAM Pension Trust, 746 F.2d 587, 589 (9th Cir. 1984) (underlying

purposes of ERISA is to protect the interests of participants in employee benefit plans);

Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 114 (1989) (rejecting interpretation of

ERISA that would result in it affording less protection to employees than they enjoyed preERISA), and pre-ERISA, parties were allowed to contract for vested retirement benefits. 

Allied Chemical, 404 U.S. at 182 n. 20.

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This Court will look to Yard-Man as a contextual guide for interpreting the CBAs. 

Yolton, 435 F.3d at 579. Like this Court, the Yard-Man court recognized that after Allied

Chemical, retirees’ retirement health care benefits are not mandatory nor required to be included

in a CBA, therefore, when active employees bargain for retirement benefits it would be unlikely

that they would leave these benefits to the contingencies of future negotiations, especially

because retirement benefits are “typically understood as a form of delayed compensation or

reward for past services,” Id. at 579-80 (citing Yard-Man, 435 F.2d at 1482).

The legal frame work of the LMRA claim in respect to Defendant’s motion for summary

judgment is “fairly straightforward: “If each collective bargaining agreement unambiguously

limited medical benefits to the term of the agreement, no benefits were vested.” Bower v.

Bunker Hill Co., 725 F.2d 1221, 1223 (9th Cir. 1984) (citing Turner v. Local Union No. 302,

International Brotherhood of Teamsters, 604 F.2d 1219, 1225 (9th Cir.1979)). “The sole

question is whether the collective bargaining agreements unambiguously limited the term [or

cost] of the medical benefits.” Id.

It is exactly the opposite for the Plaintiffs: “If the pensioners' medical insurance

constituted a vested benefit, that benefit could not be ended without the pensioners' consent.”

Bower, 725 F.2d at 1223 (9th Cir. 1984) (citing Allied Chemical, 404 U.S. at 181 n. 20). For

Plaintiffs to prevail, the CBAs must have unambiguously obligated the employer to make

contributions beyond the term of the agreement, and it must have eliminated the employer’s

power to modify the type or level of benefits. 

In the Ninth Circuit, a court first looks to the language of the CBAs. Bowers, 725 F.2d

at 123-1224. “Written terms are ambiguous only if multiple reasonable interpretations exist.”

IBEW-NECA Pension Trust Fund v. Flores, 519 F.3d 1045, 1047 (9th Cir. 2008) (citation

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omitted). In other words, “A term is ambiguous if it is subject to reasonable alternative

interpretations.” Hickey v. A.E. Staley Mfg., 995 F.2d 1385, 1389 (7th Cir.1993) (internal

quotation and citation omitted). “[O]nly by excluding all alternative readings as unreasonable

may [a court] find that a plan's language is plain and unambiguous.” McDaniel v. Chevron

Corp., 203 F.3d 1099, 1110 (9th Cir.2000).

The CBA terms are interpreted in the context of the entire agreement’s language,

structure, and stated purpose. IBEW-NECA Pension, 519 F.3d at 1047. Terms should not be

isolated in a CBA in order to create an ambiguity where none exists. Id.

When contract language is not clear, a court can generally consider extrinsic evidence

to determine the intent of the parties, and this principle is applied with liberality in the case of

a CBA. Arizona Laborers, Teamsters and Cement Masons Local v. Conquer Cartage Co., 753

F.2d 1512, 1517-1518 (9th Cir. 1985). It is, nevertheless, error to consider extrinsic evidence

to contradict unambiguous terms. IBEW-NECA Pension, 519 F.3d at 1048 (citing Pace v.

Honolulu Disposal Services, Inc., 227 F.3d 1150, 1157-58 (9th Cir. 2000)). Consequently, this

Court first considers the contractual language to resolve the lawsuit before it will look to

extrinsic evidence to determine the intent of the parties. Cf., Bower, 725 F.2d at 1223-1224

(looking to extrinsic evidence to determine if summary judgment was proper after concluding

the contract language did not speak to the issue of vesting). 

If there is a dispute over a material fact necessary to interpret the contract, there is an

ambiguity that must be determined at trial. Bower, 725 F.2d at 1223 (citing National Union

Fire Insurance of Pittsburgh, Pennsylvania v. Argonaut Insurance Co., 701 F.2d 95, 97 (9th

Cir.1983)). Substantive law that governs a claim or a defense determines whether a fact is

material. Addisu v. Fred Meyer Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). If resolution of a

factual dispute would not affect the outcome of the claim, the fact is not material. Arpin v.

Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001).

Summary Judgment will only be granted if “the contract provision in question is

unambiguous.” Id. (citing Castaneda v. Dura-Vent Corp., 648 F.2d 612, 619 (9th Cir.1981)).

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E. Summary Judgment

On summary judgment, the moving party is entitled to judgment as a matter of law if the

Court determines that in the record before it there exists “no genuine issue as to material fact.”

Fed.R.Civ.P. 56(c). In determining whether to grant summary judgment, the Court views the

facts and inferences from these facts in the light most favorable to the non-moving party.

Matsushita Elec. Co. v. Zenith Radio Corp., 475 U.S. 574, 577 (1986).

Motions for summary judgment are not disfavored procedural shortcuts, but “rather are

an integral part of the Federal Rules as a whole, which are designed 'to secure just, speedy and

inexpensive determination of every action.'" Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986)

(citations omitted). Accordingly, the rules governing motions for summary judgment are

enforced with equal regard for the rights of both the nonmovant and the movant. Id. The

Judge’s role on a motion for summary judgment is not to determine the truth of the matter or

to weigh the evidence, or determine credibility, but to determine whether there is a genuine

issue for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). The inquiry mirrors

the standard for a directed verdict: whether the evidence reveals a factual disagreement

requiring submission of the case to a jury or whether evidence is so one sided that one party

must prevail as a matter of law.

The party with the burden of proof at trial also bears that same burden when making or

opposing a motion for summary judgment. Celotex, 477 U.S. at 322. The Plaintiffs bear the

burden of proving their case; Plaintiffs bear the burden of establishing unambiguously that the

contract provisions at issue, here, have vested. Bower, 725 F.2d at 1223.

F. The Collective Bargaining Agreements

It is undisputed that from 1972 to 1999, the CBAs, each covering three or four years,

provided for company-paid medical benefits for retirees, their spouses and eligible dependents.

It is undisputed that the 2003 CBA eliminated Raytheon’s obligation to pay medical premiums

for retirees, their spouses and dependents, and required retirees to make a monthly payment for

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health care benefits. Effective July 1, 2004, retired employees began receiving monthly bills

from Raytheon for health care benefits.

Plaintiffs are retirees under CBAs for 1990, 1993, 1996, and 1999. The 1990-1996

CBAs were negotiated with Raytheon’s predecessor, Hughes Missile Systems Group. Raytheon

Company merged with Hughes Aircraft Company in 1997, and Raytheon was substituted as the

employer to the 1996 CBA. Thereafter, Raytheon negotiated the CBAs with the Plaintiffs’

Union, International Association of Machinists and Aerospace Workers, AFL-CIO and its old

Pueblo Lodge, No. 933.

The 1990 CBA 

The CBA, effective October 23, 1990, Article XIII covered group benefit plans, as

follows: § A: Employee and Dependent Medical Coverage; § B: Basic Life Insurance; § C:

Retiree Group Life Insurance Plan; § D: Retired Employees Medical Benefits; § E: Optional

Group Life Insurance; § F: Income Insurance; § G: Voluntary Supplemental Accidental Death

and Dismemberment Insurance; § H: Vision Care; § I: Temporary Disability Benefits; § J:

General Provisions; § K: Dependent Life Insurance, and § L: Flexible Spending Account. (Ps’

MSJ, SOF, Ex. 7: 1990 CBA.)

Article XIX, General Provisions, § D, Maintenance of Benefits and Privileges, provided:

“No employee shall suffer a loss of any benefits or privileges previously enjoyed as a result of

this Agreement.” Section F, Current and Supplemental Agreements, specified that the 1990

CBA constituted the sole and entire existing agreement between the parties and superseded all

previous agreements between the Company and the Union and the covered employees, and

expressed all obligations of, and restrictions imposed on, the Company and the Union for the

period of the Agreement. Id.

In the 1990 CBA, Group Benefits for active employees were expressly limited for the

“term of this agreement” as follows: Employee and Dependent Medical Coverage, § A(1), (3);

Optional Group Life Insurance, § E(1); Income Insurance, § F(1); and Vision Care, § H(1). 

The CBA did not expressly limit to the “term of this agreement,” other active employee group

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benefits that the Employer promised to either make available or continue to make available, as

follows: Basic Life Insurance, § B(1); Retiree Group Life Insurance Plan, § C; Voluntary

Supplemental Accidental Death and Dismemberment Insurance, § G(1); Temporary Disability

Benefits, § I; Dependent Life Insurance, § K, and Flexible Spending Account, § L. These

agreements were, however, necessarily limited by “the term of this agreement” because the

1990 CBA included the integration clause that it was “the sole and entire existing agreement

between the parties and superseded all previous agreements between the Company and the

Union and the covered employees, and expressed all obligations of, and restrictions imposed

on, the Company and the Union for the period of the Agreement.” Id. at Article XIX(F).

Accordingly, all the Group Benefits were limited by the three-year term of the

agreement, except for Retired Employees Medical Benefits, which the Employer agreed to

provide for active employees as follows:

Section D. Retired Employees Medical Benefits

1. For employees who hereafter retire, with at least three (3) years of

continuous participation in the contributory option of the Retirement Plan

immediately preceding the employee’s date of retirement, and who are at least

age 55 but less than age 65 and who have five (5) or more years of continuous

employment with the Employer, the Employer agrees to continue to provide the

Comprehensive Medical Plan coverages for which they were covered while active

employees, until the retired employee attains age 65, and shall likewise continue

the same Comprehensive Medical Plan coverages for his or her eligible spouse

until the spouse attains age 65. Coverage shall be continued under this provision

for the retired employee’s dependent child until the child reaches age twentyone

(21), or age twenty-five (25), if attending an accredited college, university, or

career-oriented educational institution which requires regular full-time attendance

in a predetermined training syllabus with a set pattern of progression towards

completion of the program. (Emphasis added.)

Id. at Article XIII, § D at 73.)

Only this employee benefit included a specified time limit other than the term of the

agreement. Unequivocally and expressly, the Employer agreed to continue to provide employees

who retired during the term of the agreement, who were at least age 55 but less than age 65,

with the same Comprehensive Medical Plan coverages they were receiving while active

employees until the employee attained age 65, and the retired employee’s spouse attained age

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 4For the sake of brevity, the Court does not recite the full provision, which is “until the

employee attained age 65, and the retired employee’s spouse attained age 65, and the retired

employee’s dependent child reached the age of 21 or 25, if attending an accredited college or

university. . ..”

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65, and the retired employee’s dependent child reached the age of 21 or 25, if attending an

accredited college or university. There is no ambiguity in this language, which granted

employees retiring from 1990 to 1993 vested retirement medical benefits until the age of 65. 

Raytheon notes that it continues to provide these health benefits to the Plaintiffs. (D’s

Opposition to Ps’ MSJ (Opposition) at 5; D’s MSJ at 9.) The only change has been to the

premium structure, effective July 1, 2004, which Raytheon argues was authorized by the Plan

and the 2003 CBA because any vested right to medical benefits until the age of 65 did not

include a right to receive these benefits free of charge. Id.

Raytheon argues that it agreed to provide retirees with the same benefits they had as

active employees, which were not vested and could be changed or terminated at the Employer’s

discretion. (DR’s MSJ at 13.) Because these benefits were not vested, they terminated with

the CBA. Id. Raytheon’s arguments against Plaintiffs claim to vested “free” medical benefits

are aimed at the entirety of the retirees’ right to medical benefits and not just at their claim for

benefits at no cost.

According to Raytheon, the Employer agreed to provide medical benefits during the term

of the Agreement, until a retiree attained the age 65.4

 In other words, the Employer agreed to

provide medical benefits during the term of the Agreement to retirees who had not attained age

65. Under Raytheon’s interpretation the express provision “until age 65" does not operate to

establish the duration of benefits because benefits are limited by the term of the CBA. Under

Raytheon’s interpretation of the CBA, “until age 65" is a criteria for eligibility. This agreement

was made by active employees that were over age 55, but under age 65, who had not yet retired

and who would have no future bargaining rights to protect their interests after retirement.

Raytheon’s interpretation of the CBA is not reasonable given that retirement benefits are

delayed forms of compensation and there is such a great disparity between the value of health

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care benefits if a retiree receives benefits until the age 65 as compared to only receiving benefits

for the duration of the CBA. Raytheon’s interpretation is especially unreasonable given that the

active employees bargaining for these retirement benefits were already over age 55, but under

age 65, and had not yet retired. 

It is not reasonable to interpret the language in the CBA, “until the retired employee

attains age 65" as an eligibility criteria. Raytheon does not offer a reasonable alternative

interpretation of the language which this Court finds clearly and expressly establishes the

duration of the promised medical benefits to be “until the retired employee attains age 65.”

Since 1971 and Allied Chemical, it is clear any less express and specific commitment would

allow the Employer to unilaterally change or end the promised retirement benefit at the end of

the CBA.

The Court does not agree with Raytheon’s assertion that the “marked contrast” in

pension benefits which “were expressly referred to as being ‘vested’” is “telling,” (D’s MSJ

at 8), because these express vesting provisions are contained in Retirement Plan documents and

not in the CBAs. Like the Health Benefit Plans which expressly stated that medical benefits

were not vested, the Retirement Plan documents expressly stated that retirement pension

benefits were vested. While the latter vesting requirements are specifically provided for under

ERISA, the former are not and are instead exempt from ERISA vesting requirements. The

CBAs at issue here neither expressly declare the Retirement Benefits nor the Retired Employees

Medical Benefits to be “vested.” Raytheon offers no case law, and the Court has found no case

law, to support a requirement that a CBA must expressly state benefits are “vested.”

The Court finds that there is no ambiguity in the 1990 CBA, which grants employees

retiring from 1990 to 1993 vested retirement medical benefits “until age 65.” 

Employees retiring under the 1990 CBA have a vested right to “Comprehensive Medical

Plan coverages for which they were covered while active employees,” until age 65. Therefore,

the answer to the question of “free” medical benefits hinges on the medical coverage provisions

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for active employees in the 1990 CBA: Article XIII, § A, Employee and Dependent Medical

Coverage.

Under the 1990 CBA, from 1990 to 1993, active employees were entitled to medical

coverage, pursuant to the Comprehensive Medical Plan, which was “subject to the terms,

conditions and exclusions contained in the Plan documents and as summarized in the SPD. (Ps’

MSJ, SOF, Ex. 7: 1990 CBA at Article XIII, § A(1)). Under the CBA, the employer agreed to

offer employees specific HMO plans as alternatives to the Comprehensive Medical Plan. Id.

at § A(4). The Employer agreed to pay the lesser of the applicable premium for the alternative

HMO plan or the Comprehensive Medical Plan. Id. § A(5). “Effective January 1, 1992,

employees were to receive a weekly payment from the Employer, incur no cost, or pay a weekly

co-payment,” according to schedules specified in the CBA, which specified that there would

be “no cost” for the Comprehensive Medical Plan. Id. at § 5.

In the 1990 CBA, the Employer agreed to pay certain benefit premiums for active

employees during the term of the Agreement, including the “premiums for the . . .

Comprehensive Medical Plan (subject to the provisions of Article XIII, § A).” Id. at Article

XIII, § J(1). Nothing in the 1990 CBA was to change any provisions of the Group Benefit Plans

that were currently in effect, except as was specifically provided for in the 1990 CBA. Id. at

§ J(4). “All benefits of employees, retired employees, laid off employees and insured

dependents [were] subject in every respect to the terms of the applicable Plan documents under

which payment are claimed.” Id. at § J(5). These two provisions ensured that the Plan would

reflect the provisions agreed to in the CBA. 

The Plan documents are not to the contrary. The express “no vesting” provision in the

Plan, contains an express exception for benefits “specifically provided under a Benefit

Program.” (D’s MSJ, SOF, Ex. D(3)(4): 1999 Plan at 17; 2003 Plan at 26). The reservation of

rights provision in the Plan expressly excepts “benefits provided in any agreement with a

Collective Bargaining Agent.” Id. at D(2): 1997 Plan at 20. 

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Nothing in the CBA was to result in “a loss of any benefits or privileges previously

enjoyed as a result of this Agreement.” (Ps’ MSJ, SOF, Ex. 7: 1990 CBA at Article XIX, § D.

Raytheon explains that this maintenance clause “meant simply that active employees’ benefits

and privileges under a particular CBA could not be unilaterally reduced while that CBA was

in force. (D’s Opposition at 7.) Accordingly, if the CBA granted vested retirement benefits to

active employees retiring during the term of the CBA, such benefits and privileges could not

be unilaterally reduced or lost while that CBA was in force by making them “not vested” in Plan

documents.

Under the 1990 CBA, active employees were unambiguously entitled to Employer paid

premiums for medical benefits provided under the Comprehensive Medical Plan. This was a

binding agreement by the Employer, which could not be changed, altered, or amended by any

Plan document, during the term of the 1990 CBA. cf., (D’s Opposition at 7 (explaining that

active employees’ benefits and privileges under a particular CBA could not be unilaterally

reduced while that CBA was in force.) 

Raytheon argues that the Employer’s agreement to provide “coverages” was limited to

only the content of the insurance being provided active employees, not its cost, (D’s

Opposition at 5.) This is not a reasonable interpretation of the CBA because the CBA only

specified that coverage would be through the Comprehensive Medical Plan and did not specify

the content of the coverage. The term “coverages,” in Article XIII, § A: “Employee and

Dependent Medical ‘Coverage,’” included the Employer’s agreement to provide medical

benefits to employees through alternative health care plans or the Comprehensive Medical Plan,

id. at A(1)(4), and the Employer’s agreement to pay the cost of premiums for the

Comprehensive Medical Plan, id. at A(5).

The Court finds that there is no ambiguity in the 1990 CBA, which grants employees

retiring from 1990 to 1993 vested medical benefits until age 65 under the “Comprehensive

Medical Plan” at “no cost.” 

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Raytheon is correct that the “no cost” provisions expired with each CBA. (D’s

Opposition at 8.) Raytheon was free to change the Retired Employees Medical Benefits after

the 1990 CBA, which it did when it eliminated the “no weekly premium” clause in the 2003

CBA. While this ended free premiums as of 2003, this did not change the benefits received by

active employees from 1990 to 1993, which included medical benefits under the

“Comprehensive Medical Plan” at “no cost.” Under the express terms of the CBA, employees,

who retired under the 1990 CBA, have a vested right to receive the same medical benefits they

received while active employees, until they attain age 65, i.e., they are entitled to benefits under

the Comprehensive Medical Plan at no cost. (Ps’ MSJ, SOF, Ex. 7: 1990 CBA at Article XIII,

§ D.)

 Raytheon argues that language in the CBAs that the Employer agreed to continue to

provide certain coverages, including retiree medical benefits, reflects that the benefits were not

vested because if benefits are truly vested, it is unnecessary for each new CBA to provide that

they continue. (D’s MSJ at 13) (citations omitted). This argument ignores that agreements in

each CBA expire with each CBA and that the “Retired Employees Medical Benefits,” § D,

provision in the CBAs was a benefit for active employees, not retired employees. The

continuation clause ensured active employees, who would retire under a particular CBA, that

they too, like retiring employees under previous CBAs, would receive medical health care

benefits at no cost until age 65. In other words, Raytheon was free with each subsequent CBA

to change, modify, or stop providing any benefit, including the vested retirement medical

benefits or continue benefits. Until 2003, Defendant expressly stated in each CBA that it would

continue to provide vested retirement medical benefits at no cost to active employees retiring

during the term of the agreement. As of 2003, this benefit was no longer continued; instead, the

CBA provided for Raytheon to pay up to $256 per month towards the premium costs of medical

coverage under a Raytheon-sponsored Plan. (D’s MSJ, SOF, Ex. 9: 2003 CBA at Article XIV,

§ D(4(a)).

/////

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The Other CBAs: 1993, 1996 and 1999

The relevant provisions in the 1993 CBA were identical to the 1990 CBA. In the 1996

CBA, Article XIII, § D of the 1990 and 1993 CBAs became Article XII, § D, with the addition

of the following provision:

5. For employees retiring under . . . Section D, 1, . . . the retiree medical

benefit will be administered as follows: . . . (e) there is no weekly

premium/charge for the Preferred Plan, the Hughes Medical Plan, or an HMO.

(emphasis added)

(Ps’ MSJ, SOF, Ex. 9: 1996 CBA at Article XII, § D(5)). Section J, promising employer paid

premiums for active employees remained the same in the 1996 CBA as it was in 1990 and 1993

CBAs.

Under the 1996 CBA, there is no need to determine whether the retirees’ “coverages

while active employees” were at no cost by referring to the CBA’s provisions for active

employees: Section A: Employee and Dependent Medical Coverage. In the 1996 CBA, § D,

which provided medical benefits for retirees until age 65, included the express provision that

these benefits would be at “no weekly premium/charge.” Id. at Article XIX, § D(5).

The Raytheon merger with Hughes occurred in 1997, and Raytheon negotiated the 1999

CBA with mirror images of the 1996 CBA provisions for medical retirement benefits in § D,

except it reduced coverage for dependent children of retirees. The 1999 CBA contained the

same pertinent parts of preceding CBAs that this Court relied on to determine vesting, including

the addition of ¶ 5 in § D from the 1996 CBA which expressly provided that retiree benefits

would be at “no weekly premium/charge.” 

On January 26, 2004, Raytheon and the Union signed the 2003 CBA, which eliminated

the provisions for employer paid premiums in § D(5): Retiree Medical Benefits. Instead

employees retiring under the 2003 CBA pay up to $256 per month for themselves and up to

$256 per month for a spouse/same-sex domestic partner towards a Raytheon-sponsored plan.

The 2003 CBA also changed the language in § D, which linked retiree benefits to the coverages

they received while active employees and instead, the Employer agreed to “continue to provide

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the Raytheon Medical Plans available to active employees . . ., until the retired employee attains

age 65, and . . ..” (D’s MSJ, SOF, Ex. 9: 2003 CBA at Article XIV § D(1)).

G. Conclusion

 The Court finds that the 1990-1999 CBAs unambiguously provide vested medical

benefits for retirees until age 65 at no cost based on clear and express provisions discussed

above. See (D’s Opposition at 2 (citing UMW v. Brushy Creek Coal Co., 410 F. Supp. 2d 723,

733 (S.D. Ill. 2066) (intent to vest must be clear and express)). The Court finds no other

reasonable interpretation of the express and clear language in the CBAs. There being no

ambiguity in the CBAs, the Court does not consider any extrinsic evidence regarding the

parties’ intent to provide or not to provide these vested benefits.

Accordingly,

IT IS ORDERED that the Defendant’s Motion for Summary Judgment (document 105)

is DENIED.

IT IS FURTHER ORDERED that the Plaintiffs’ Motion for Summary Judgment

(document 106) is GRANTED.

IT IS FURTHER ORDERED that the Plaintiffs’ Motion for Preliminary Injunction

(document 79) is DENIED AS MOOT.

IT IS FURTHER ORDERED that the Clerk of the Court shall enter Judgment for

Plaintiffs, ordering the Defendant to restore retiree health care benefits to the levels that existed

prior to July 1, 2004, compensate class members for premiums that they paid since July 1, 2004,

and permanently enjoin the Defendant from, hereafter, eliminating or reducing retiree health

care benefits for the class members contrary to the CBAs.

DATED this 4th day of August, 2008.

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