In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-2324

UNITED MINE WORKERS, et al.,

Plaintiffs-Appellants,

v.

BRUSHY CREEK COAL COMPANY, et al.,

Defendants-Appellees.

____________

Appeal from the United States District Court

for the Southern District of Illinois.

No. 04-cv-4249-JPG—J. Phil Gilbert, Judge.

____________

ARGUED SEPTEMBER 28, 2007—DECIDED OCTOBER 18, 2007

____________

Before POSNER, FLAUM, and SYKES, Circuit Judges.

POSNER, Circuit Judge. The United Mine Workers union,

along with 63 retired coal mine workers, appeals from the

grant of summary judgment to the Brushy Creek Coal

Company, the workers’ former employer. The plaintiffs

argue that they are entitled by the Taft-Hartley Act and

ERISA to a trial to try to prove that a health plan negotiated by the parties in 1998 guaranteed the company’s

workers lifetime health benefits that the company could

not unilaterally reduce even after the collective bargaining agreement that had created the plan expired. If the
2 No. 06-2324

district judge was correct that the plan unambiguously

does not grant the plaintiffs any entitlements after the

agreement expired, the union is not entitled to a trial. E.g.,

Rossetto v. Pabst Brewing Co., 217 F.3d 539, 547 (7th Cir.

2000); Chiles v. Ceridian Corp., 95 F.3d 1505, 1511 (10th Cir.

1996).

The defendant overargues its case by contending that

for the plaintiffs to prevail the plan must “clearly” demonstrate an entitlement to lifetime benefits. A plan that does

not specify the duration of benefits is presumed not to

grant benefits beyond the end of the agreement creating

the plan. Vallone v. CNA Financial Corp., 375 F.3d 623, 632

(7th Cir. 2004); Rossetto v. Pabst Brewing Co., supra, 217 F.3d

at 543; see also Gable v. Sweetheart Cup Co., 35 F.3d 851, 855

(4th Cir. 1994). But in this case benefits “for life” were

promised and the question is whether the promise was

withdrawn elsewhere in the documentation constituting

the parties’ overall agreement. As to that question no

presumption is warranted. Bland v. Fiatallis North America,

Inc., 401 F.3d 779, 784 (7th Cir. 2005).

Brushy bought a coal mine in Galena, Illinois, in 1991. At

first it adopted the nationwide collective bargaining

agreement with the UMW to which the company that sold

the mine to Brushy had been a party. Later it negotiated

two successive individual collective bargaining agreements with the union. But in 1998, upon the expiration

of the second agreement, Brushy and the union executed

a “memorandum of understanding” that brought Brushy

back under the nationwide collective bargaining agreement for the next three years. The memorandum also

created the ERISA welfare plan that promised the mine’s

employees the health benefits at issue in this case. At the

end of 1999, however, Brushy closed the mine, and after

the three years during which it had agreed to be bound by
No. 06-2324 3

the nationwide collective bargaining agreement were up

in 2001 it made changes in the health plan to which the

union objected. This suit challenging the changes is on

behalf of employees who retired while Brushy was bound

by the nationwide agreement. So there are three key

documents to interpret: the nationwide collective bargaining agreement, the memorandum of understanding, and

the health plan.

The collective bargaining agreement entitles employees

who retire during its term, such as the 63 individual

plaintiffs, to health benefits “for life.” The memorandum of

understanding creates the health plan that lists the benefits to which the employees are entitled for life. But the

plan, in turn, expressly entitles Brushy to terminate it or

alter its terms, “subject to the Collective Bargaining

Agreement,” that is, the nationwide collective bargaining

agreement. That would make a quick end to the plaintiffs’

claim were it not for a provision of that agreement which

states (as it has since 1993) that “the benefits and benefit

levels provided by an Employer under its Employer

plan are established for the term of this Agreement only,

and may be jointly amended or modified in any manner

at any time after the expiration or termination of this

agreement.”

The first clause of the provision, ending in the word

“only,” reinforces the right of termination or alteration that

the health plan confers on Brushy; it makes the benefits

terminate when the agreement expires. But the union

argues that the second clause, and in particular the

words “after the expiration or termination of this agreement,” imply that the benefits persist beyond the end date

of the collective bargaining agreement, that is, beyond

2001. For if the benefits did not outlive the agreement, why
4 No. 06-2324

would the parties have to agree to modify or amend

them after that date? There would be nothing to modify or

amend.

As the district judge noted, however, another provision

of the nationwide collective bargaining agreement states

that “the specific provisions of the plans will govern in

the event of any inconsistencies between the general

description and the plans.” The health plan is one of the

“plans” to which this provision refers and the “jointly

amended” clause quoted above on which the plaintiffs

found their claim appears in the part of the nationwide

agreement captioned “general description of the health and

retirement benefits.” Were there no “jointly amended”

clause there would be no inconsistency between the

termination provision in the health plan and the nationwide agreement; and since it is only in the general description that the clause appears, the clause must be disregarded to eliminate the inconsistency.

This point can be grasped more clearly by supposing

that the benefits provision in the collective bargaining

agreement stated flatly that “retirees are entitled to benefits

for their lifetime even if they outlive this and any successor

collective bargaining agreement.” The provision would

then be clear. But it would be inconsistent with the provision in the health plan itself entitling the coal company

to terminate or alter the plan at any time; and so, being

at once inconsistent with the plan and contained in the

general-description part of the collective bargaining

agreement, it would have no force. The fact that the

provision does not clearly confer lifetime benefits, but is

ambiguous, cannot bolster the union’s position. And it

makes sense that the detailed provisions of the health

plan would prevail over inconsistent language in a col-
No. 06-2324 5

lective bargaining agreement that deals with a variety of

other subjects, such as notice or change of ownership,

that might pertain to Brushy’s right to change the plan.

In short, the “subject to” clause in the health plan takes

us to the collective bargaining agreement, where we find

that a conflict between the general description in the

agreement and the health plan is to be resolved in favor of

the plan, and so we go back to the plan and find that the

plan administrator is explicitly authorized to terminate,

modify, etc., the plan.

This interpretation might seem to make the grant of

lifetime benefits in the collective bargaining agreement and

the health plan illusory. But that is not true. Vallone v. CNA

Financial Corp., supra, 375 F.3d at 633; UAW v. Rockford

Powertrain, Inc., 350 F.3d 698, 703-04 (7th Cir. 2003);

Abbruscato v. Empire Blue Cross & Blue Shield, 274 F.3d 90,

99-100 (2d Cir. 2001); Sprague v. General Motors Corp., 133

F.3d 388, 401 (6th Cir. 1998). As long as the health plan is

in effect, the retirees are entitled to benefits until they

die. Indeed, as far as we know, they are still receiving

benefits, albeit at a reduced level. If the plan did not

create benefits “for life,” it would be unclear when the

benefits ended. Terminable benefits for life are benefits that

go on regardless of the age of the worker or how long ago

he retired, but that cease if the plan conferring those

benefits ends.

That is not quite the end of the case, because a contract that is clear on its face can be shown by objective

evidence to be ambiguous (to contain, in the language of

contract law, a “latent” as distinct from a “patent” ambiguity), e.g., ConFold Pacific, Inc. v. Polaris Industries, Inc., 433

F.3d 952, 955-56 (7th Cir. 2006); Connect Communications

Corp. v. Southwestern Bell Telephone, L.P., 467 F.3d 703, 709-
6 No. 06-2324

10 (8th Cir. 2006), as in the much-cited case of Raffles v.

Wichelhaus, 2 H. & C. 906, 159 Eng. Rep. 375 (Ex. 1864). The

defendant agreed to ship cotton to the plaintiff on the

ship Peerless. But there were two ships of that name and

it was unclear to which one the contract referred. The

contract was clear on its face; it was the fact that there

were more than one ship of the same name, a fact not

apparent from reading the contract yet established by

objective evidence rather than by the self-serving testimony

of an interested party, that made the contract ambiguous.

And once a contract is shown to be ambiguous, evidence

outside the language of the contract itself becomes admissible to disambiguate the language. Rossetto v. Pabst

Brewing Co., supra, 217 F.3d at 546-47; Charter Oil Co. v.

American Employers’ Ins. Co., 69 F.3d 1160, 1168-69 (D.C.

Cir. 1995).

The plaintiff’s 50-page brief devotes only three and a

half pages to trying to establish the existence of a latent

ambiguity. The evidence consists of cash offers that

Brushy made to its employees after the mine closed in

1999 but before the company modified the health plan. The

cash was offered “in lieu of the lifetime benefits provided

pursuant to the collective bargaining agreement.” (Some of

the offers use a different but equivalent wording.) The

timing is critical. When the offers were made, the plaintiffs were entitled to lifetime benefits, and at the level

fixed in the health plan, because the company had not

yet exercised its right to modify the plan. Having closed the

mine, the company was unlikely to want to continue

providing health benefits at the same level as when the

mine was operating and generating revenue. But it knew

that if it terminated or modified the health plan, it

would be inviting a lawsuit—this lawsuit. Naturally it

wanted to settle with as many of the employees as possible
No. 06-2324 7

before a lawsuit was brought, and perhaps by settling

avoid being sued at all. The making of the offers was an

acknowledgment of legal jeopardy but not an acknowledgment that the benefits contract formed by the nationwide collective bargaining agreement, the memorandum

of understanding, and the health plan was ambiguous,

for what is more common than a breach of contract suit

that ends in a ruling that the contract unambiguously

demonstrates the absence of a breach?

The offers were not, so far as appears, offers in settlement of claims, within the meaning of Rule 408 of the

Federal Rules of Evidence. If they had been, they would

be inadmissible in evidence in this case, as the union

seeks to use them as a confession of liability. Alexander v.

City of Evansville, 120 F.3d 723, 728-29 (7th Cir. 1997). But

the spirit of the rule would be affronted by using offers

intended to head off litigation as evidence that the offerees

had a triable claim against the offeror, which is what the

plaintiffs are trying to do. In any event, although conduct

in the performance stage of a contract can cast light on the

parties’ understanding of what the contract required, the

cash offers by the coal company were not even arguably

required by the contract. There is nothing to suggest

that they were anything more than an attempt to head off

a dispute.

AFFIRMED.

A true Copy:

Teste:

 _____________________________

Clerk of the United States Court of 

Appeals for the Seventh Circuit 

USCA-02-C-0072—10-18-07