1 (Slip Opinion) OCTOBER TERM, 2014

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337. 

## SUPREME COURT OF THE UNITED STATES

Syllabus

M & G POLYMERS USA, LLC, ET AL

. v . TACKETT ET AL

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

No. 13–1010. Argued November 10, 2014—Decided January 26, 2015
When petitioner M&G Polymers USA, LLC (M&G), purchased the

Point Pleasant Polyester Plant in 2000, it entered a collectivebargaining agreement and related Pe nsion, Insurance, and Service Award Agreement (P & I agreement) with respondent union. As rel

evant here, the P & I agreement prov ided that certain retirees, along with their surviving spouses and de pendents, would “receive a full Company contribution towards the cost of [health care] benefits”; that such benefits would be prov ided “for the duration of [the] Agreement”; and that th e agreement would be subject to renegotia

tion in three years.

Following the expiration of those agreements, M&G announced that it would require retirees to cont ribute to the cost of their health care benefits. Respondent retirees , on behalf of themselves and oth

ers similarly situated, sued M&G and related entities, alleging that the P & I agreement created a vested right to lifetime contributionfree health care benefits.

The District Court dismissed the complaint for failure to state a claim, but the Sixth Circuit revers ed based on the reasoning of its earlier decision in International Union, United Auto, Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man, Inc. , 716 F. 2d 1476. On remand, the District Cour t ruled in favor of the retirees, and the Sixth Circuit affirmed.
Held : The Sixth Circuit’s decision rest ed on principles that are incom

patible with ordinary principles of contract law. Pp. 5–14.

(a) The Employee Retirement Income Security Act of 1974 (ERISA) governs pension and welfare benefits plans, including those estab

lished by collective-bargaining agr eements. ERISA establishes min

imum funding and vesting standards for pension plans, but exempts2 M&G POLYMERS USA, LLC v. TACKETT

Syllabus
welfare benefits plans—which provide the types of benefits at issue here—from those rules. See 29 U. S. C. §§1051(1), 1053, 1081(a)(2), 1083. “[E]mployers have large leeway to design . . . welfare plans as they see fit.” Black & Decker Disability Plan v. Nord , 538 U. S. 822, 833. Pp. 5–7.

(b) This Court interprets collect ive-bargaining agreements, includ

ing those establishing ERISA plans, according to ordinary principles of contract law, at least when thos e principles are not inconsistent with federal labor policy. See Textile Workers v. Lincoln Mills of Ala., 353 U. S. 448, 456–457. When a collective-bargaining agreement is unambiguous, its meaning must be ascertained in accordance with its plainly expressed intent. 11 R. Lord , Williston on Contracts §30:6, p. 108. P. 7.

(c) In Yard-Man, the Sixth Circuit found a provision governing re

tiree insurance benefits ambiguous as to the duration of those bene

fits; and, looking to other provisio ns of the agreement, purported to apply ordinary contract law to resolve the ambiguity. First, the court inferred from the existence of termination provisions for other bene

fits that the absence of a terminat ion provision specifically address

ing retiree benefits expressed an intent to vest those benefits for life. The court then purported to apply th e rule that contracts should be interpreted to avoid illusory promis es, reasoning that, absent vesting, the promise would be illusory for the subset of retirees who would not become eligible for those benefits before the contract expired. Final

ly, the court relied on “the context” of labor negotiations to resolve the ambiguity, inferrin g that the parties would have intended such benefits to vest for life because they are not mandatory subjects of collective bargaining; ar e “typically understood as a form of delayed compensation,” 716 F. 2d, at 1482; and are keyed to the acquisition of retirement status. The court concluded that these contextual clues “outweigh[ed] any contrary implicat ions derived from a routine dura

tion clause.” Id., at 1483. The Sixth Circuit has since extended its Yard-Man analysis in a series of other cases. Pp. 7–10.

(d) The inferences applied in Yard-Man and its progeny do not rep

resent ordinary principles of contract law. Yard-Man distorts the at

tempt to ascertain the intention of the parties by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agreements. Rather th an relying on known cu stoms and usages in a particular industry as pr oven by the parties, the Yard-Man court re

lied on its own suppositions about th e intentions of parties negotiat

ing retiree benefits. It then comp ounded the error by applying those suppositions indiscriminately across industries. Furthermore, the Sixth Circuit’s refusal to apply general durational clauses to provi

sions governing retiree benefits dist orts an agreement’s text and con

-3 Cite as: 574 U. S. ____ (2015)

Syllabus

flicts with the principle that a wr itten agreement is presumed to en

compass the whole agreem ent of the parties.

Perhaps tugged by its inferences, the Sixth Circuit also misapplied the illusory promises doctrine. It construed provisions that admitted

ly benefited some class of retirees as “illusory” merely because they did not benefit all retirees. That interpretation is a contradiction in terms—a promise that is “partly illuso ry” is by definition not illusory. And its use of this doctrine is pa rticularly inappropriate in the con

text of collective-bargaining agr eements, which often include provi

sions inapplicable to some category of employees.

The Sixth Circuit also failed even to consider other traditional con

tract principles, including the rule that courts should not construe ambiguous writings to create lifet ime promises and the rule that “contractual obligations will cease, in the ordinary course, upon ter

mination of the bar gaining agreement,” Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB , 501 U. S. 190, 207. Pp. 10–14.

(e) Though there is no doubt that Yard-Man and its progeny affect

ed the outcome here, the Sixth Circuit should be the first to review the agreements under ordinary princi ples of contract law. P. 14. 733 F. 3d 589, vacated and remanded.

T HOMAS , J., delivered the opinion for a unanimous Court. G INSBURG , J., filed a concurring opinion, in which B REYER , S OTOMAYOR , and K AGAN , JJ., joined._________________

_________________ 1 Cite as: 574 U. S. ____ (2015)

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Wash

ington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press. 

## SUPREME COURT OF THE UNITED STATES

No. 13–1010

M&G POLYMERS USA, LLC, ET AL ., PETITIONERS v. HOBERT FREEL TACKETT ET AL

.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
[January 26, 2015]

J USTICE T HOMAS delivered the opinion of the Court. This case arises out of a disagreement between a group of retired employees and their former employer about the meaning of certain expired collective-bargaining agree

ments. The retirees (and their former union) claim thatthese agreements created a right to lifetime contributionfree health care benefits for retirees, their surviving spouses, and their dependents. The employer, for its part, claims that those provisions terminated when the agree

ments expired. The United States Court of Appeals for the Sixth Circuit sided with the retirees, relying on its conclusion in International Union, United Auto, Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man, Inc. , 716 F. 2d 1476, 1479 (1983), that retiree health care benefits are unlikely to be left up to future negotiations. We granted certiorari and now conclude that such reason

ing is incompatible with ordinary principles of contract law. We therefore vacate the judgment of the Court of Appeals and remand for it to apply ordinary principles of contract law in the first instance.2 M&G POLYMERS USA, LLC v. TACKETT

Opinion of the Court

I A Respondents Hobert Freel Tackett, Woodrow K. Pyles, and Harlan B. Conley worked at (and retired from) the Point Pleasant Polyester Plant in Apple Grove, West Virginia (hereinafter referred to as the Plant). During their employment, respondent United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Indus

trial and Service Workers International Union, AFL-CIO

CLC, or its predecessor unions (hereinafter referred to as the Union), represented them in collective bargaining. Tackett and Pyles retired in 1996, and Conley retired in 1998. They represent a class of retired employees from the Plant, along with their surviving spouses and other dependents. Petitioner M&G Polymers USA, LLC, is the current owner of the Plant. When M&G purchased the Plant in 2000, it entered a master collective-bargaining agreement and a Pension, Insurance, and Service Awar d Agreement (P & I agree

ment) with the Union, generally similar to agreements the Union had negotiated with M&G’s predecessor. The P & I agreement provided for retir ee health care benefits as follows: “Employees who retire on or after January 1, 1996 and who are eligible for and receiving a monthly pen

sion under the 1993 Pension Plan . . . whose full years of attained age and full years of attained continuous service . . . at the time of retirement equals 95 or more points will receive a full Company contribution to

wards the cost of [health care] benefits described in this Exhibit B–1 . . . . Employees who have less than 95 points at the time of retirement will receive a re

duced Company contribution. The Company contribu

tion will be reduced by 2% for every point less than 95. Employees will be required to pay the balance of3 Cite as: 574 U. S. ____ (2015)

Opinion of the Court

the health care contributio n, as estimated by the Company annually in advance, for the [health care] benefits described in this Exhibit B–1. Failure to pay the required medical contribution will result in can

cellation of coverage.” App. 415–416.
Exhibit B–1, which described the health care benefits at issue, opened with the following durational clause: “Effec

tive January 1, 1998, and for the duration of this Agree

ment thereafter, the Employer will provide the following program of hospital benefits, hospital-medical benefits, surgical benefits and prescriptio n drug benefits for eligible employees and their dependents . . . . ” Id., at 377–378 (emphasis deleted). The P & I agreement provided for renegotiation of its terms in three years. 1

B In December 2006, M&G announced that it would begin requiring retirees to contribute to the cost of their health care benefits. Respondent retirees, on behalf of them

selves and others similarly situated, sued M&G and re

lated entities, alleging that the decision to require these contributions breached both the collective-bargaining agreement and the P & I agreement, in violation of §301 of the Labor Management Relations Act, 1947 (LMRA) and §502(a)(1)(B) of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 891. 2 Specifically, the retir

ees alleged that M&G had pr omised to provide lifetime contribution-free health care benefits for them, their surviving spouses, and their dependents. They pointed to

——————

1 In accordance with this provis ion, M&G and the Union began bar

gaining anew in 2003, ultimately reaching a new agreement in 2005. The provisions of the exis ting agreements remained in effect during the course of those negotiations. See App. to Pet. for Cert. 25, n. 1.

2 The Union was a plaintiff in the suit and is a respondent here. For ease of reference, we refer to the respondents collectively as “the retirees.”4 M&G POLYMERS USA, LLC v. TACKETT

Opinion of the Court the language in the 2000 P & I agreement providing that employees with a certain level of seniority “will receive a full Company contribution towards the cost of [health care] benefits described in . . . Exhibit B–1.” The retirees alleged that, with this promise, M&G had created a vested right to such benefits that co ntinued beyond the expiration of the 2000 P & I agreement. The District Court dismissed the complaint for failure to state a claim. 523 F. Supp. 2d 684, 696 (SD Ohio 2007). It concluded that the cited language unambiguously did not create a vested right to retiree benefits. The Court of Appeals reversed based on the reasoning of its earlier decision in Yard-Man . 561 F. 3d 478 (CA6 2009) ( Tackett I ). Yard-Man involved a similar claim that an employer had breached a collective-bargaining agree

ment when it terminated retiree benefits. 716 F. 2d, at 1478. Although the court found the text of the provision in that case ambiguous, it relied on the “context” of labor negotiations to resolve that ambiguity in favor of the retirees’ interpretation. Id., at 1482. Specifically, the court inferred that parties to collective bargaining would intend retiree benefits to vest for life because such benefitsare “not mandatory” or required to be included in collectivebargaining agreements, are “t ypically understood as a form of delayed compensation or reward for past services,” and are keyed to the acquisition of retirement status. Ibid. The court concluded that these inferences “out

weigh[ed] any contrary implications [about the termina

tion of retiree benefits] deri ved from” general termination clauses. Id. , at 1483. Applying the Yard-Man inferences on review of the District Court’s dismissal of the action, the Court of Ap

peals concluded that the retirees had stated a plausible claim. Tackett I , 561 F. 3d, at 490. “Keeping in mind the context of the labor-management negotiations identified in Yard-Man ,” the court found “it unlikely that [the Union]5 Cite as: 574 U. S. ____ (2015)

Opinion of the Court would agree to language that ensures its members a ‘full Company contribution,’ if the company could unilaterally change the level of contribution.” Ibid. The court con

strued the language about “employees” contributing to their health care premiums as limited to employees who had not attained the requisite seniority points to be enti

tled to a full company contribution. Ibid. And it discerned an intent to vest lifetime contribution-free health care benefits from provisions tying eligibility for health care benefits to eligibility for pension benefits. Id. , at 490–491. On remand, the District Court conducted a bench trial and ruled in favor of the retirees. It declined to revisit the question whether the P & I agreement created a vested right to retiree benefits, co ncluding that the Court of Appeals had definitively resolved that issue. It then issued a permanent injunction ordering M&G to reinstate contribution-free health care benefits for the individual respondents and similarly situated retirees. 853 F. Supp. 2d 697 (SD Ohio 2012). The Court of Appeals affirmed, concluding that, al

though the District Court had erred in treating Tackett I as a conclusive resolution of the meaning of the P & I agree

ment, it had not erred in “presum[ing]” that, “in the ab

sence of extrinsic evidence to the contrary, the agreements indicated an intent to vest lifetime contribution-free bene

fits.” 733 F. 3d 589, 600 (CA6 2013) ( Tackett II ). And because the District Court had concluded that the prof

fered extrinsic evidence was inapplicable, it had not clearly erred in finding that the agreement created those vested rights. We granted certiorari, 572 U. S. ___ (2014), and now vacate and remand.

IIThis case is about the interpretation of collectivebargaining agreements that define rights to welfare bene

-6 M&G POLYMERS USA, LLC v. TACKETT

Opinion of the Court fits plans. The LMRA grants federal courts jurisdiction to resolve disputes between employers and labor unions about collective-bargaining agreements. 29 U. S. C. §185. When collective-bargaining agreements create pension or welfare benefits plans, those plans are subject to rules established in ERISA. ERISA defines pension plans as plans, funds, or programs that “provid[e] retirement in

come to employees” or that “resul[t] in a deferral of in

come.” §1002(2)(A). It defines welfare benefits plans as plans, funds, or programs established or maintained to provide participants with additional benefits, such as life insurance and disability coverage. §1002(1). ERISA treats these two types of plans differently. Although ERISA imposes elaborate minimum funding and vesting standards for pension plans, §§1053, 1082, 1083, 1084, it explicitly exempts welfare benefits plans from those rules, §§1051(1), 1081(a)(1). Welfare benefits plans must be “established and maintained pursuant to a writ

ten instrument,” §1102(a)(1), but “[e]mployers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans,” Curtiss-Wright Corp. v. Schoonejongen , 514 U. S. 73, 78 (1995). As we have previously recognized, “[E]mployers have large leeway to design disability and other welfare plans as they see fit.” Black & Decker Dis

ability Plan v. Nord , 538 U. S. 822, 833 (2003). And, we have observed, the rule that contractual “provisions ordi

narily should be enforced as written is especially appro

priate when enforcing an ERISA [welfare benefits] plan.” Heimeshoff v. Hartford Life & Accident Ins. Co. , 571 U. S. ___, ___ (2013) (slip op., at 7). That is because the “focus on the written terms of the plan is the linchpin of a system that is not so complex that administrative costs, or litiga

tion expenses, unduly discourage employers from offering [welfare benefits] plans in the first place.” Id., at ___ (slip op., at 8) (internal quotation marks, brackets, and citation7 Cite as: 574 U. S. ____ (2015)

Opinion of the Court
omitted). We interpret collective-bargaining agreements, includ

ing those establishing ERISA plans, according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy. See Textile Workers v. Lincoln Mills of Ala. , 353 U. S. 448, 456–457 (1957). “In this endeavor, as with any other contract, the parties’ intentions control.” Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp. , 559 U. S. 662, 682 (2010) (internal quo

tation marks omitted). “Where the words of a contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance with its plainly expressed in

tent.” 11 R. Lord, Williston on Contracts §30:6, p. 108 (4th ed. 2012) (Williston) (internal quotation marks omitted). In this case, the Court of Appeals applied the Yard-Man inferences to conclude that, in the absence of extrinsic evidence to the contrary, the provisions of the contract indicated an intent to vest reti rees with lifetime benefits. Tackett II , 733 F. 3d, at 599–600. As we now explain, those inferences conflict with ordinary principles of con

tract law.

III A 1 The Court of Appeals has long insisted that its YardMan inferences are drawn from ordinary contract law. In Yard-Man itself, the court purported to apply “traditional rules for contractual interpretation.” 716 F. 2d, at 1479. The court first concluded that the provision governing retiree insurance benefits—whi ch stated only that the employer “will provide” such benefits—was ambiguous as to the duration of those benefits. Id., at 1480. To resolve that ambiguity, it looked to other provisions of the agree

ment. The agreement included provisions for terminating active employees’ insurance bene fits in the case of layoffs8 M&G POLYMERS USA, LLC v. TACKETT

Opinion of the Court and for terminating benefits for a retiree’s spouse and dependents in case of the retiree’s death before the expira

tion of the collective-bargaining agreement, but no provi

sion specifically addressed the duration of retiree health care benefits. Id., at 1481–1482. From the existence of these termination provisions and the absence of a termi

nation provision specifically addressing retiree benefits, the court inferred an intent to vest those retiree benefits for life. The court then purported to apply the rule that con

tracts should be interpreted to avoid illusory promises. It noted that the retiree insurance provisions “contain[ed] a promise that the company will pay an early retiree’s in

surance upon such retiree re aching age 65 but that the retiree must bear the cost of company insurance until that time.” Id., at 1481. Employees could retire at age 55, but the agreement containing this promise applied only for a 3-year term. Ibid. Thus, retirees between the ages of 55 and 62 would not turn 65 and become eligible for the company contribution before the 3-year agreement ex

pired. In light of this fact, the court reasoned that the promise would be “completely illusory for many early retirees under age 62” if the retiree benefits terminated when the contract expired. Ibid. Finally, the court turned to “the context” of labor nego

tiations. Id., at 1482. It observed that “[b]enefits for retirees are . . . not mandator y subjects of collective bar

gaining” and that “employees are presumably aware that the union owes no obligation to bargain for continued benefits for retirees.” Ibid. Based on these observations, the court concluded that “it is unlikely that such benefits . . . would be left to the co ntingencies of future negotia

tions.” Ibid . It also asserted that “retiree benefits are in a sense ‘status’ benefits which, as such, carry with them an inference that they continue so long as the prerequisite status is maintained.” Ibid.9 Cite as: 574 U. S. ____ (2015)

Opinion of the Court
Although the contract included a general durational clause—meaning that the contract itself would expire at a set time—the court concluded that these contextual clues “outweigh[ed] any contrary implications derived from a routine duration clause.” Id., at 1483.

2 Two years after Yard-Man , the court took this analysis even further. In a dispute between retirees and a steel company over retiree health insurance benefits, it con

strued the language “will conti nue to provide at its ex

pense, supplemental medicare and major medical benefits for Pensioners aged 65 and over” to “ unambiguously con

fe[r]” lifetime benefits. Policy v. Powell Pressed Steel Co.

, 770 F. 2d 609, 615 (CA6 1985) (emphasis added). Yet it had interpreted similar language—“will provide insurance benefits equal to the active group”—to be ambiguous in Yard-Man . The court refused to give any weight to provi

sions that supported a contrary construction—namely, one establishing a fund to pay pension, but not welfare, bene

fits, and another providing for the continuation of pension, but not welfare, benefits after the agreement expired. Policy, 770 F. 2d, at 615–616. According to the court, a contrary interpretation “would render the Company’s promise [of benefits for retirees aged 65 and over] in sub

stantial part nugatory and illusory” to retirees who were 62 or younger when the 3-year agreement was signed. Ibid. And it faulted the Distri ct Court for failing “to give effect” to Yard-Man ’s admonition “that retiree benefits normally . . . are interminable.” 770 F. 2d, at 616. The Court of Appeals has continued to extend the rea

soning of Yard-Man . Relying on Yard-Man ’s statement that context considerations outweigh the effect of a gen

eral termination clause, it has concluded that, “ ‘[a]bsent specific durational language re ferring to retiree benefits themselves,’ a general durational clause says nothing10 M&G POLYMERS USA, LLC v. TACKETT

Opinion of the Court about the vesting of retiree benefits.” Noe v. PolyOne Corp. , 520 F. 3d 548, 555 (CA6 2008) (emphasis added). It has also held that a provis ion that “ties eligibility for retirement-health benefits to eligibility for a pension . . . [leaves] little room for debate t hat retirees’ health benefits ves[t] upon retirement.” Id. , at 558 (internal quotation marks omitted). Commenting on these extensions of Yard-Man , the court has acknowledged that “there is a reasonable argument to be made that, while th[e] court has repeatedly cautioned that Yard-Man does not create a presumption of vesting, [it] ha[s] gone on to apply just such a presumption.” Cole v. ArvinMeritor, Inc. , 549 F. 3d 1064, 1074 (CA6 2008).

B

We disagree with the Court of Appeals’ assessment that the inferences applied in Yard-Man and its progeny repre

sent ordinary principles of contract law. As an initial matter, Yard-Man violates ordinary con

tract principles by placing a thumb on the scale in favor of vested retiree benefits in all collective-bargaining agree

ments. That rule has no basis in ordinary principles of contract law. And it distorts the attempt “to ascertain the intention of the parties. ” 11 Williston §30:2, at 18 (empha

sis added); see also Stolt-Nielsen

, 559 U. S., at 682. Yard

Man ’s assessment of likely behavior in collective bargain

ing is too speculative and too far removed from the context of any particular contract to be useful in discerning the parties’ intention. And the Court of Appeals derived its assessment of likely behavior not from record evidence, but instead from its own suppositions about the intentions of employees, unions, and employers negotiating retiree benefits. See Yard-Man , 716 F. 2d, at 1482. For example, it asserted, without any foundation, that, “when . . . parties contract for benefits which accrue upon achievement of retiree11 Cite as: 574 U. S. ____ (2015)

Opinion of the Courtstatus, there is an inference that the parties likely intended those benefits to continue as long as the beneficiary remains a retiree.” Ibid. ; see also ibid. (“[I]t is unlikely that [retiree] benefits . . . would be left to the contingen

cies of future negotiations”). Although a court may look to known customs or usages in a particular industry to de

termine the meaning of a contract, the parties must prove those customs or usages using affirmative evidentiary support in a given case. 12 Williston §34:3; accord, Robin

son v. United States , 13 Wall. 363, 366 (1872); Oelricks v. Ford , 23 How. 49, 61–62 (1860). Yard-Man relied on no record evidence indicating that employers and unions in that industry customarily vest retiree benefits. Worse, the Court of Appeals has taken the inferences in Yard-Man and applied them indiscriminately across industries. See

, e.g., Cole

, supra , at 1074 (automobile); Armistead v. Ver

nitron Corp. , 944 F. 2d 1287, 1297 (CA6 1991) (electron

ics); Policy

, supra , at 618 (steel). Because the Court of Appeals did not ground its YardMan inferences in any record evidence, it is unsurprising that the inferences rest on a shaky factual foundation. For example, Yard-Man relied in part on the premise that retiree health care benefits are not subjects of mandatory collective bargaining. Parties, however, can and do volun

tarily agree to make retiree benefits a subject of mandato

ry collective bargaining. Indeed, the employer and union in this case entered such an agreement in 2001. App. 435–436. Yard-Man also relied on the premise that retiree benefits are a form of deferred compensation, but that characterization is con trary to Congress’ determi

nation otherwise. In ERISA, Congress specifically defined plans that “resul[t] in a deferral of income by employ

ees” as pension plans, §1002(2)(A)(ii), and plans that offer medical benefits as welfare plans, §1002(1)(A). Thus, retiree health care benefits are not a form of deferred compensation.12 M&G POLYMERS USA, LLC v. TACKETT

Opinion of the Court Further compounding this error, the Court of Appeals has refused to apply general durational clauses to provi

sions governing retiree benefi ts. Having inferred that parties would not leave retir ee benefits to the contingen

cies of future negotiations, and that retiree benefits gener

ally last as long as the recipient remains a retiree, the court in Yard-Man explicitly concluded that these infer

ences “outweigh[ed] any contrary implications derived from a routine duration clause terminating the agreement generally.” 716 F. 2d

, at 1482–1483. The court’s subse

quent decisions went even further, requiring a contract to include a specific durational clause for retiree health care benefits to prevent vesting. E.g., Noe

, supra , at 555. These decisions distort the text of the agreement and conflict with the principle of contract law that the written agreement is presumed to encompass the whole agreement of the parties. See 1 W. Story, Law of Contracts §780 (M. Bigelow ed., 5th ed. 1874); see also 11 Williston §31:5. Perhaps tugged by these inferences, the Court of Ap

peals misapplied other traditional principles of contract law, including the illusory promises doctrine. That doc

trine instructs courts to avoid constructions of contracts that would render promises illusory because such promises cannot serve as consideration for a contract. See 3 Williston §7:7 (4th ed. 2008). But the Court of Appeals construed provisions that admittedly benefite d some class of retirees as “illusory” mere ly because they did not equally benefit all retirees. See Yard-Man

, supra , at 1480– 1481. That interpretation is a contradiction in terms—a promise that is “partly ” illusory is by definition not illusory. If it benefits some class of retirees, then it may serve as consideration for the union’s promises. And the court’s interpretation is particularly inappropriate in the context of collective-bargaining agreements, which are negotiated on behalf of a broad category of individuals and conse

quently will often include provisions inapplicable to some13 Cite as: 574 U. S. ____ (2015)

Opinion of the Court category of employees. The Court of Appeals also failed even to consider the traditional principle that courts should not construe am

biguous writings to create lifetime promises. See 3 A. Corbin, Corbin on Contracts §553, p. 216 (1960) (explain

ing that contracts that are silent as to their duration will ordinarily be treated not as “operative in perpetuity” but as “operative for a reasonabl e time” (internal quotation marks omitted)). The court recognized that “traditional rules of contractual interpreta tion require a clear manifes

tation of intent before conferring a benefit or obligation,” but asserted that “the duration of the benefit once clearly conferred is [not] subje ct to this stricture.” Yard-Man

, supra , at 1481, n. 2. In stark contrast to this assertion, however, the court later app lied that very stricture to noncollectively bargained con tracts offering retiree bene

fits. See Sprague v. General Motors Corp. , 133 F. 3d 388, 400 (CA6 1998) (“To vest benefits is to render them forever unalterable. Because vesting of welfare plan benefits is not required by law, an employer’s commitment to vest such benefits is not to be infe rred lightly; the intent to vest must be found in the plan documents and must be stated in clear and express language” (internal quotation marks omitted)). The different treatment of these two types of employment contracts only underscores Yard-Man ’s devia

tion from ordinary principles of contract law. Similarly, the Court of Appeals failed to consider the traditional principle that “contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.” Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB , 501 U. S. 190, 207 (1991). That principle does not preclude the conclusion that the parties intended to vest lifetime benefits for retirees. Indeed, we have already recognized that “a collective-bargaining agreement [may] provid[e] in explicit terms that certain benefits continue after the agreement’s14 M&G POLYMERS USA, LLC v. TACKETT

Opinion of the Court
expiration.” Ibid. But when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life.

C
There is no doubt that Yard-Man and its progeny af

fected the outcome here. As in its previous decisions, theCourt of Appeals here cited the “context of . . . labormanagement negotiations” and reasoned that the Union likely would not have agreed to language ensuring its members a “full Company contribution” if the company could change the level of that contribution. Tackett I , 561 F. 3d, at 490 (internal quotation marks omitted). It simi

larly concluded that the tying of eligibility for health care benefits to receipt of pensio n benefits suggested an intent to vest health care benefits. Ibid. And it framed its anal

ysis from beginning to end in light of the principles it announced in Yard-Man and its progeny. See 561 F. 3d, at 489; see also Tackett II , 733 F. 3d, at 599–600. We reject the Yard-Man inferences as inconsistent with ordinary principles of contract law. But because “[t]his Court is one of final review, not of first view,” Ford Motor Co. v. United States , 571 U. S. ___, ___ (2013) ( per curiam ) (slip op., at 2) (internal quotation marks omitted), the Court of Appeals should be the first to review the agree

ments at issue under the correct legal principles. We vacate the judgment of the Court of Appeals and remand the case for that court to apply ordinary principles of contract law in the first instance. It is so ordered._________________

_________________ 1 Cite as: 574 U. S. ____ (2015)

G INSBURG , J., concurring 

## SUPREME COURT OF THE UNITED STATES

No. 13–1010

M&G POLYMERS USA, LLC, ET AL ., PETITIONERS v. HOBERT FREEL TACKETT ET AL

.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
[January 26, 2015]

J USTICE G INSBURG , with whom J USTICE B REYER , J USTICE S OTOMAYOR , and J USTICE K AGAN join, concurring. Today’s decision rightly holds that courts must apply ordinary contract principles, shorn of presumptions, to determine whether retiree health-care benefits survive the expiration of a collective-bargaining agreement. Under the “cardinal principle” of contract interpretation, “the intention of the parties, to be gathered from the whole instrument, must prevail.” 11 R. Lord, Williston on Con

tracts §30:2, p. 27 (4th ed. 2012) (Williston). To determine what the contracting parties intended, a court must exam

ine the entire agreement in light of relevant industryspecific “customs, practices, usages, and terminology.” Id

., §30:4, at 55–58. When the intent of the parties is unam

biguously expressed in the co ntract, that expression con

trols, and the court’s inquiry should proceed no further. Id ., §30:6, at 98–104. But when the contract is ambigu

ous, a court may consider extrinsic evidence to determine the intentions of the parties. Id ., §30:7, at 116–124. Contrary to M&G’s assertion, Brief for Petitioner 25, no rule requires “clear and express” language in order to show that parties intended health-care benefits to vest. “[C]onstraints upon the employer after the expiration date of a collective-bargaining agreement,” we have observed,2 M&G POLYMERS USA, LLC v. TACKETT

G INSBURG , J., concurring may be derived from the agreement’s “explicit terms,” but they “may arise as well from . . . implied terms of the expired agreement.” Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB , 501 U. S. 190, 203, 207 (1991). On remand, the Court of Appeals should examine the entire agreement to determine whether the parties in

tended retiree health-care benefits to vest. 11 Williston §30:4, at 55–57. Because the retirees have a vested, life

time right to a monthly pension, App. 366, a provision stating that retirees “will rece ive” health-care benefits if they are “receiving a monthly pe nsion” is relevant to this examination. Id ., at 415. So is a “survivor benefits” clause instructing that if a retiree dies, her surviving spouse will “continue to receive [the retir ee’s health-care] benefits . . . until death or remarriage.” Id ., at 417. If, after consider

ing all relevant contractual language in light of industry practices, the Court of Appeals concludes that the contract is ambiguous, it may turn to extrinsic evidence

— for ex

ample, the parties’ bargaining history. The Court of Ap

peals, however, must conduct the foregoing inspection without Yard-Man ’s “thumb on the scale in favor of vested retiree benefits.” Ante, at 10; see International Union, United Auto, Aerospace, & Agricultural Implement Work

ers of Am. v. Yard-Man, Inc. , 716 F. 2d 1476 (1983). Because I understand the Court’s opinion to be con

sistent with these basic rules of contract interpretation, I join it.