MAURER v. JOY TECHNOLOGIES, INC. 907

Cite as 212 F.3d 907 (6th Cir. 2000)

Fifth Circuit has applied the Lauritzen–

Rhoditis factors to cases where neither the

seaman nor the vessel was engaged in

traditional, blue-water maritime activities

crossing through waters of competing nations. See Chiazor v. Transworld Drilling

Co., 648 F.2d 1015, 1019 (5th Cir.1981),

overruled on other grounds, In re Air

Crash Disaster, 821 F.2d 1147, 1163 n. 25

(5th Cir.1987). In Chiazor, the plaintiff

brought suit to recover damages resulting

from an accident which occurred on a submersible drilling rig off the Nigerian coast.

See id. at 1016. Given the permanent

location of the rig, we determined that

‘‘such factors as place of wrongful act,

allegiance or domicile of the injured and

place of contract, which may be less substantial in the shipping context, tend to

take on added significance under the present circumstances.’’ Id. at 1019. In sifting through the factors and determining

how to weigh them in a case involving a

fixed drilling platform, we relied on the

Ninth Circuit opinion in Phillips v. Amoco

Trinidad Oil Co., 632 F.2d 82 (9th Cir.

1980). Like Chiazor, Phillips concerned

an action for damages for personal injuries

occurring on a drilling platform in Trinidad’s territorial waters. See id. at 83–84.

Phillips held that the law of the flag

should not be accorded controlling weight

and the allegiance of the defendant shipowner had diminished importance, while

the place of the wrongful act, the allegiance and domicile of the plaintiff workers

and the place of contract should be given

greater weight. See id. at 87.

[6, 7] We conclude that the facts of this

case are more analogous to an injury occurring on a fixed drilling platform than on

a vessel in traditional maritime commerce.

For that reason, we find that the district

court erred in the weight it accorded the

Lauritzen-Rhoditis factors in this case.

When we discount the law of the flag and

allegiance of the defendants factors which

favor application of United States law, and

accord more weight to the Plaintiffs’ citizenship and residence, the place of the

employment contracts and the place of injury, all of which were in Nicaragua, it is

clear that the calculus ultimately dictates

application of Nicaraguan law. We note,

further, that the district court’s assumption that the application of United States

law would allow the Plaintiffs a more generous recovery, while almost certainly correct, was not a valid consideration in its

choice-of-law analysis. ‘‘The fact that the

law of another forum may be more or less

favorable to a plaintiff, however, does not

determine choice of law.’’ Fogleman, 920

F.2d at 284.

CONCLUSION

For the foregoing reasons, we reverse

the district court’s choice of law determination and remand this case for further

proceedings consistent with this opinion.

REVERSED and REMANDED.

,

Donald H. MAURER; Leslie T. Johnson; Warren H. Rees; William Pompey; Floyd F. Gladman; United

Steelworkers of America, Plaintiffs–

Appellees/Cross–Appellants,

v.

JOY TECHNOLOGIES, INC.,

Defendant–Appellant/Cross–

Appellee.

Nos. 98–3964, 98–4029.

United States Court of Appeals,

Sixth Circuit.

Argued Dec. 15, 1999

Decided and Filed May 12, 2000

Union and retirees brought class action against employer under Labor-Management Relations Act (LMRA), Employee

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908 212 FEDERAL REPORTER, 3d SERIES

Retirement Income Security Act (ERISA),

and doctrine of promissory estoppel, alleging that employer illegally altered their

vested retiree health benefits. The United

States District Court for the Northern

District of Ohio, Patricia A. Gaughan, J.,

entered summary judgment as to retirees

who had retired before employer sent letter to retirees stating that it reserved

right to make changes to retirement plans,

entered summary judgment for employer

as to retirees who had retired after issuance of letter, and denied retirees and

union attorney fees. Union, retirees, and

employer appealed. The Court of Appeals,

Alan E. Norris, Circuit Judge, held that:

(1) retiree health benefits extended beyond

durational terms of collective bargaining

agreements (CBA) in effect prior to employer’s explicit reservation of right to

amend such benefits, and (2) District

Court did not abuse its discretion in declining to award attorney fees.

Affirmed.

1. Federal Courts O776

A district court’s order of summary

judgment is reviewed de novo. Fed.Rules

Civ.Proc.Rule 56(c), 28 U.S.C.A.

2. Federal Courts O776

Contract interpretation is a question

of law subject to de novo review.

3. Federal Courts O202

The LMRA gives jurisdiction to federal courts over claims alleging the breach of

collective bargaining agreements (CBA).

Labor Management Relations Act, 1947,

§ 301(a), 29 U.S.C.A. § 185(a).

4. Pensions O62

A retiree health insurance benefit

plan is a ‘‘welfare benefit plan’’ under

ERISA, and thus, unlike a pension plan, is

not subject to mandatory vesting requirements. Employee Retirement Income Security Act of 1974, § 2 et seq., 29 U.S.C.A.

§ 1001 et seq.

 See publication Words and Phrases for other judicial constructions

and definitions.

5. Pensions O62

There is no statutory right under

ERISA to vested retiree health benefits,

and the parties must agree to vest a welfare benefit plan. Employee Retirement

Income Security Act of 1974, § 2 et seq.,

29 U.S.C.A. § 1001 et seq.

6. Labor Relations O264

 Pensions O62

If the parties intend to vest retiree

health benefits and the collective bargaining agreement (CBA) establishing this is

breached, there is an ERISA violation as

well as a LMRA violation. Employee Retirement Income Security Act of 1974, § 2

et seq., 29 U.S.C.A. § 1001 et seq.; Labor

Management Relations Act, 1947, § 1 et

seq., 29 U.S.C.A. § 141 et seq.

7. Pensions O62

Courts can find that rights to retiree

health benefits have vested under a collective bargaining agreement (CBA) even if

the intent to vest has not been explicitly

set out in the CBA.

8. Pensions O62

Collective bargaining agreements

(CBA) may contain implied terms, and the

parties’ practice, usage, and custom can be

considered in determining whether rights

to retiree health benefits have vested under a CBA.

9. Labor Relations O257.1

Retiree benefits are in a sense status

benefits which, as such, carry with them

an inference, for purposes of LMRA claim

for such benefits, that the parties likely

intended those benefits to continue as long

as the beneficiary remains a retiree; this is

because benefits for retirees are only permissive not mandatory subjects of collective bargaining, and it is unlikely that such

benefits would be left to the contingencies

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MAURER v. JOY TECHNOLOGIES, INC. 909

Cite as 212 F.3d 907 (6th Cir. 2000)

of future negotiations. Labor Management Relations Act, 1947, § 1 et seq., 29

U.S.C.A. § 141 et seq.

10. Pensions O62, 86

Although there is an inference that

the parties to a collective bargaining

agreement (CBA) intended for retiree benefits to vest, the burden of proof does not

shift to the employer, and it is not required that specific anti-vesting language

be used before a court can find that the

parties did not intend benefits to vest.

11. Labor Relations O257.1

In interpreting a collective bargaining

agreement (CBA), a court must discern

the intent of both parties.

12. Labor Relations O777.1

 Pensions O86

In invoking inference in LMRA and

ERISA action that retiree benefits specified in collective bargaining agreement

(CBA) were meant to vest, district court

did not improperly shift burden of proof to

employer; district court acknowledged in

its opinion that there was no legal presumption that benefits vested and that

burden of proof rested on retirees seeking

benefits. Employee Retirement Income

Security Act of 1974, § 2 et seq., 29

U.S.C.A. § 1001 et seq.; Labor Management Relations Act, 1947, § 1 et seq., 29

U.S.C.A. § 141 et seq.

13. Labor Relations O393

 Pensions O62, 65

Retiree health benefits extended beyond durational terms of collective bargaining agreements (CBA) in effect prior

to employer’s explicit reservation of right

to amend such benefits, and employer’s

alteration of such benefits thus violated

LMRA and ERISA, inasmuch as CBAs’

durational provisions were general in nature, referring only to agreements between parties, not to benefits created by

agreements, and CBAs’ promise to retirees as young as age 55 of Medicare Supplement at age 65 would have been illusory

absent vesting. Employee Retirement Income Security Act of 1974, § 2 et seq., 29

U.S.C.A. § 1001 et seq.; Labor Management Relations Act, 1947, § 1 et seq., 29

U.S.C.A. § 141 et seq.

14. Pensions O62, 65

The termination of a collective bargaining agreement (CBA) does not indicate

the termination of retiree benefits created

by it, if the benefits are intended to vest; if

benefits have vested, then retirees must

agree before the benefits can be modified,

even by a subsequent CBA between the

employer and active employees.

15. Pensions O65

Language of insurance plan booklet

reserving employer’s right to alter retiree

health benefits provided under collective

bargaining agreement (CBA) was not effective as to retirees to whom booklet was

never distributed, and thus did preclude

recovery on their LMRA and ERISA

claims challenging alteration of benefits;

plan booklet specified that retiree benefits

were contained in separate booklet, but no

separate booklet was created. Employee

Retirement Income Security Act of 1974,

§ 2 et seq., 29 U.S.C.A. § 1001 et seq.;

Labor Management Relations Act, 1947,

§ 1 et seq., 29 U.S.C.A. § 141 et seq.

16. Labor Relations O393

 Pensions O65

Language of insurance plan booklet

insert reserving employer’s right to alter

retiree health benefits precluded claims of

employees who retired after such insert

was issued that employer violated LMRA

and ERISA by altering their benefits, notwithstanding their argument that insert

was unilateral modification of their agreement; union was obligated to grieve or

enter suit over reservation of rights clause,

as it was conspicuously contained in insert,

but did not do so until approximately three

years after insert was issued. Employee

Retirement Income Security Act of 1974,

§ 2 et seq., 29 U.S.C.A. § 1001 et seq.;

Labor Management Relations Act, 1947,

§ 1 et seq., 29 U.S.C.A. § 141 et seq.

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910 212 FEDERAL REPORTER, 3d SERIES

17. Federal Courts O830

A denial of a motion for attorney fees

is reviewed for an abuse of discretion.

18. Pensions O88

A district court is given broad discretion in awarding attorney fees in an

ERISA action. Employee Retirement Income Security Act of 1974, § 502(g), 29

U.S.C.A. § 1132(g).

19. Pensions O88

Following factors are relevant to decision whether to award attorney fees under

ERISA: (1) degree of opposing party’s culpability or bad faith; (2) opposing party’s

ability to satisfy award of attorney fees; (3)

deterrent effect of award on other persons

under similar circumstances; (4) whether

party requesting fees sought to confer

common benefit on all participants and

beneficiaries of ERISA plan or resolve

significant legal questions regarding

ERISA; and (5) relative merits of parties’

positions. Employee Retirement Income

Security Act of 1974, § 502(g), 29 U.S.C.A.

§ 1132(g).

20. Pensions O88

An abuse of discretion exists with respect to the denial of attorney fees in an

ERISA action only when the court has the

definite and firm conviction that the district court made a clear error of judgment

in its conclusion upon weighing relevant

factors. Employee Retirement Income

Security Act of 1974, § 502(g), 29 U.S.C.A.

§ 1132(g).

21. Pensions O88

No single factor is determinative as to

whether attorney fees should be awarded

in an ERISA action. Employee Retirement Income Security Act of 1974,

§ 502(g), 29 U.S.C.A. § 1132(g).

22. Pensions O88

There is no presumption that attorney

fees will be awarded in an ERISA action.

Employee Retirement Income Security

Act of 1974, § 502(g), 29 U.S.C.A.

§ 1132(g).

23. Pensions O88

District court did not abuse its discretion in declining to award attorney fees to

retirees upon determining that employer

violated ERISA by altering their vested

retiree health benefits; district court considered all of relevant factors, found no

bad faith on employer’s part, determined

that attorney fees would not act as deterrent to other employers, and indicated that

no significant ERISA legal questions were

resolved. Employee Retirement Income

Security Act of 1974, § 502(g), 29 U.S.C.A.

§ 1132(g).

Melvin P. Stein (argued and briefed),

United Steelworkers of America, Pittsburgh, PA, for Plaintiffs–Appellees/Cross–

Appellants.

David P. Bertsch (briefed), Buckingham,

Doolittle & Burroughs, Akron, OH, Chris

J. Trebatoski (argued and briefed), Mitchell W. Quick (briefed), Michael, Best &

Friedrich, Milwaukee, WI, for Defendant–

Appellant/Cross–Appellee.

Before: RYAN and NORRIS, Circuit

Judges; FEIKENS, District Judge.*

OPINION

ALAN E. NORRIS, Circuit Judge.

Plaintiffs are the United Steelworkers of

America union and several retirees formerly employed by defendant, Joy Technologies, Inc. (‘‘Joy’’). After Joy changed

plaintiffs’ retiree health benefit plans,

plaintiffs filed suit alleging violations of

§ 301 of the Labor–Management Relations

Act of 1947 (‘‘LMRA’’), 29 U.S.C.A. § 185

(West 1998), § 502(a)(1)(B) and (a)(3) of

the Employee Retirement Income Security

Act of 1974 (‘‘ERISA’’), 29 U.S.C.A.

* The Honorable John Feikens, United States

District Judge for the Eastern District of

Michigan, sitting by designation.

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MAURER v. JOY TECHNOLOGIES, INC. 911

Cite as 212 F.3d 907 (6th Cir. 2000)

§ 1132(a)(1)(B) and (a)(3) (West 1999), and

the doctrine of promissory estoppel.

Plaintiffs’ complaint was based on their

claim that their benefits were vested and

could not unilaterally be altered by Joy.

The district court granted summary judgment to those plaintiffs that had retired

prior to August 19, 1991, on the LMRA

and ERISA claims. Summary judgment

was granted to Joy against those plaintiffs

retiring after August 19, 1991, under the

LMRA, ERISA, and promissory estoppel

claims. Plaintiffs’ motion for attorneys’

fees was denied. On appeal, Joy challenges the judgment against it on the

LMRA and ERISA claims. On cross-appeal, plaintiffs challenge the summary

judgment against those plaintiffs retiring

after August 19, 1991, and the district

court’s denial of attorneys’ fees. For the

following reasons, the district court is affirmed.

I.

Joy operates an industrial fan manufacturing plant in New Philadelphia, Ohio.

Plaintiffs are former Joy employees who

were represented by the United Steelworkers of America union (‘‘the union’’)

while active employees. The union served

as the collective bargaining representative

for the production and maintenance (‘‘P &

M’’) and clerical employees. The employment terms of these groups of workers

were jointly negotiated (and the employee

units were merged in 1980), but separate

agreements were produced. The parties

agree that the P & M and clerical units

were given the same benefits under the

collective bargaining agreements

(‘‘CBAs’’); therefore, this court will discuss

the CBAs for both units as if they were

one.

Every three years, the parties negotiated a new CBA. One of the features of the

CBAs was a provision for retiree benefits.

The question in this case is whether, in the

CBAs, the parties intended the retirement

benefits either to vest as lifetime benefits

or to terminate at the end of the threeyear term of the CBA granting the benefits. The relevant provisions are as follows:

1974

In 1974, the CBA contained the following relevant provisions:

Pensions, Group Insurance and Supplemental Unemployment BenefitsTTTT

A group insurance agreement is contained in a separate document.

 . . . . .

For pensioners and spouses, age 65 or

over, who are now covered by the Group

Insurance Program, the Company will

make available a Medicare Supplemental

Insurance Program. The cost is to be

paid entirely by the pensioner and will

be deducted from his pension check

upon submission of an appropriate written authorization.

For pensioners and spouses under age

65, the retiree Group Insurance Programs in effect on September 1, 1974

will be continued until replaced by a new

program on September 1, 1975.

 . . . . .

Previous Agreements. This [CBA]

when signed shall supersede all previous

supplements and agreements made between the parties except as provided for

under the terms of this [CBA].

 . . . . .

Termination Date. The basic [CBA],

the Pension Agreement, the Group Insurance Agreement, and the Supplemental Unemployment Benefit Agreement,

shall remain in full force and effect until

midnight August 31, 1977.

At least (60) days prior to August 31,

1977, either party may give notice to the

other party of its desire to negotiate

with respect to the terms and conditions

of a new Agreement, including the terms

and conditions of new Pension, Insurance, and Supplemental Unemployment

Benefit Agreements. If the parties

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912 212 FEDERAL REPORTER, 3d SERIES

shall not agree on the terms and conditions of such new agreements by midnight August 31, 1977, either party may

thereafter resort to strike or lockoutTTTT

A Memorandum of Agreement was also

executed by the parties in 1974. It contains the following pertinent language:

Retiree’s Insurance. 1. Effective September 1, 1975, for employees who retire

on or after August 31, 1974 TTT

a. The Company will establish a group

insurance program to provide hospital

benefits and physicians’ service benefits

coverage TTT for pensioners (and their

eligible dependents) who are not eligible

for MedicareTTTT

c. The Company will pay the cost of

such program coverage.

d. Participation in such program in the

case of pensioner TTT shall terminate

when such person first becomes eligible

for Medicare.

Finally, the 1974 Insurance Certificate

contains the following relevant provisions:

Section 13. Insurance after Retirement.

 . . . . .

FOR EMPLOYEES WHO ELECT

THE ACCIDENT AND HEALTH RETIREMENT PLAN EFFECTIVE

PRIOR TO SEPTEMBER 1, 1975TTTT

A retired Employee not eligible for

Medicare may continue his [hospital,

surgical, laboratory and x-ray and major

medical] Insurance for himself and his

spouse, with the retired Employee paying the full premium for these coverages.

 . . . . .

ACCIDENT AND HEALTH PLAN

FOR QUALIFIED RETIREES RETIRING ON OR AFTER SEPTEMBER 1, 1975, AND THEIR QUALIFIED DEPENDENTS. The following

shall be applicable to retired employees

TTT who are not eligible for Medicare

and are classified as:

1. Employees who retire on or after

August 31, 1974TTTT

 . . . . .

Section 14. MEDICARE SUPPLEMENTTTTT (2) On and after the date

on which an employee or dependent becomes eligible for benefits under Medicare, he shall not be eligible or insured

under this Policy for any coverage providing benefits for Hospital, Surgical,

Laboratory and X–Ray Expenses or Major Medical Expense InsuranceTTTT

The following benefits serve as a ‘‘Medicare Supplement’’ TTT [at a monthly cost

to the employee of $5.00].

 . . . . .

Termination. 1. This Agreement, and

the Group Insurance Plan established

hereunder shall remain in effect without

change until midnight, August 31, 1977.

1978

The 1978 CBA and Insurance Certificate

were essentially the same as those of 1974.

The 1978 Memorandum of Agreement did

not refer to any changes in retiree health

insurance benefits.

1980

The 1980 CBA contained the same Termination and Previous Agreements clauses. The following Pensions, Group Insurance and Supplemental Unemployment

Benefits clause was also contained in the

CBA:

For pensioners and spouses, age 65

and over, who are now covered by the

Group Insurance Program, the Company will make available and pay for a

Medicare Supplemental Insurance Program.

For pensioners and spouses under age

65, the retiree Group Insurance Programs in effect on September 1, 1975, as

outlined in the Certificate of Insurance,

will remain in effect.

The 1980 Memorandum of Agreement

stated that Joy would pay the full Medi2:09-cv-10918-PDB-MKM Doc # 101-12 Filed 05/14/12 Pg 6 of 14 Pg ID 4529
MAURER v. JOY TECHNOLOGIES, INC. 913

Cite as 212 F.3d 907 (6th Cir. 2000)

care Supplement cost for all then-current

retirees and those retiring under the 1980

CBA.

1983

The 1983 CBA contained relevant language identical to the 1980 CBA. In 1983,

however, an Insurance Certificate was not

prepared.

1986

The 1986 CBA was identical in all relevant respects to those of 1980 and 1983.

The 1986 Memorandum of Agreement indicates that there would be a change in the

Medicare Supplement deductible for those

retiring after September 1, 1986. Also in

1986, an Employee Benefits Plan booklet

(formerly the Insurance Certificate) was

issued with the following provision:

Termination of the Plan. Joy Manufacturing Company reserves the right to

terminate, suspend, withdraw, amend or

modify the Group Health Care Benefits

Plan in whole or in part at any time.

The booklet contained a clause stating that

‘‘[b]enefits provided during retirement are

described in a separate booklet.’’ Plaintiff

presented evidence suggesting that the

booklet was not distributed to retirees and

that no separate booklet describing retirement benefits was created.

1989

In 1989 the CBA was the same in relevant respects as those of the previous

three agreements. In addition, a handbook was prepared entitled ‘‘Your Benefits

Handbook—Hourly and Salaried Bargaining Employees.’’ Plaintiffs presented evidence that this handbook was not distributed to retirees until August 1991. It

contained the following provision:

Amendments. Joy reserves the right to

amend or terminate any of the plans.

The right to amend includes the right to

curtail or eliminate coverage for any

treatment, procedure, or service regardless of whether you are receiving treatment for an injury, illness, or disease

contracted prior to the effective date of

the amendment.

A supplement entitled ‘‘Health Care Coverage After Retirement,’’ sent with a letter

dated August 19, 1991, contained the following language:

Plan Changes. This insert summarizes

your current retiree health care coverage. However, since no one can predict

the future, Joy reserves the right to

make changes or terminate these Plans.

In March 1993, Joy sent letters to plaintiff retirees (who had retired under the

1974 through the 1989 CBAs), announcing

a new cost-sharing plan to replace their

insurance programs. In response to the

changes, plaintiffs filed this suit alleging

violations of § 301 of the LMRA, 29 U.S.C.

§ 185, § 502 of ERISA, 29 U.S.C. § 1132,

and of the doctrine of promissory estoppel.

The suit was filed as a class action, with

plaintiffs purporting to sue on behalf of

themselves, their spouses, dependent children, and other persons similarly situated.

Plaintiffs claimed that their retirement

benefits had vested under the prior CBAs,

and that Joy’s unilateral alteration of their

benefits therefore breached the CBAs in

violation of the LMRA and ERISA. They

also claimed that Joy had made representations to them that the benefits were to

last for their lifetimes, and that Joy was

now estopped from altering the benefits.

In a January 17, 1997, opinion, the district court found that retirement benefits

had vested for those retiring under the

1974, 1978, 1980, and 1983 CBAs. The

court found that, beginning in the 1986

agreement, Joy included a reservation of

rights clause and that, consequently, those

who retired under the 1986 CBA and

thereafter did not hold vested benefits.

On October 7, 1997, the district court

amended its opinion on plaintiffs’ motion.

The court found that the reservation of

rights clauses were ineffective as to those

who retired between 1986 and August 19,

1991, and held that those plaintiffs retiring

prior to August 19, 1991, had vested retir2:09-cv-10918-PDB-MKM Doc # 101-12 Filed 05/14/12 Pg 7 of 14 Pg ID 4530
914 212 FEDERAL REPORTER, 3d SERIES

ee benefits. The court noted that the 1986

booklets contained reservation of rights

language, but were apparently only applicable to active employees since the booklets indicated that ‘‘[b]enefits provided

during retirement are described in a separate booklet.’’ Further, the court pointed

to evidence that the booklets were not

distributed to active employees until 1988

and were never distributed to retirees.

No separate booklet dealing with retirement benefits was ever published during

the 1986 CBA term. A letter containing

an insert for a benefits handbook and expressly directed to retirees was distributed

in 1991 (dated August 19, 1991). This

insert, the court found, contained reservation of rights language applicable to retirees. For these reasons, the court held

that benefits were vested for those who

retired prior to August 19, 1991, but not

after.

Also in its October 7, 1997, opinion, the

district court granted Joy’s motion for

summary judgment on the promissory estoppel claims for plaintiffs who retired after August 19, 1991. The court held that

any reliance by plaintiffs on Joy’s representations concerning the vesting of retirement benefits was not reasonable in the

face of a clear reservation of rights clause

after August 19, 1991.

On March 17, 1998, Joy filed a motion to

amend the judgment based on Sprague v.

General Motors Corp., 133 F.3d 388 (6th

Cir.1998) (en banc), which the district

court denied. Finally, on July 31, 1998,

the district court awarded plaintiffs prejudgment interest, but denied attorneys’

fees and costs.

Joy appeals the district court’s determination that retiree benefits vested for

those retiring prior to August 19, 1991,

and the resulting judgment against it under the LMRA and ERISA. Plaintiffs

cross-appeal the district court’s determination that retiree benefits did not vest for

those retiring after August 19, 1991, and

the denial of attorneys’ fees.

II.

[1, 2] A district court’s order of summary judgment is reviewed de novo. Pope

v. Central States S.E. & S.W. Areas

Health & Welfare Fund, 27 F.3d 211, 212–

13 (6th Cir.1994). Contract interpretation

is a question of law, also subject to de novo

review. Boyer v. Douglas Components

Corp., 986 F.2d 999, 1003 (6th Cir.1993).

[3–6] Section 301(a) of the LMRA, 29

U.S.C. § 185(a), gives jurisdiction to federal courts over claims alleging the breach of

CBAs. See Armistead v. Vernitron Corp.,

944 F.2d 1287, 1293 (6th Cir.1991). A

retiree health insurance benefit plan is a

welfare benefit plan under ERISA. Boyer, 986 F.2d at 1005. Welfare benefit

plans are not subject to mandatory vesting

requirements under ERISA, unlike pension plans. Id. at 1004–05. Therefore,

there is no statutory right to vested retiree

benefits, and the parties must agree to

vest a welfare benefit plan. See id. at

1005. If the parties intended to vest benefits and the agreement establishing this is

breached, there is an ERISA violation as

well as a LMRA violation. See Armistead,

944 F.2d at 1298.

[7, 8] The central Sixth Circuit case on

CBA interpretation is UAW v. Yard–Man,

Inc., 716 F.2d 1476 (6th Cir.1983). Sixth

Circuit caselaw interpreting CBAs regularly quotes Yard–Man at length:

[W]hether retiree insurance benefits

continue beyond the expiration of the

collective bargaining agreement depends

upon the intent of the parties. Clearly

the parties to a collective bargaining

agreement may provide for rights which

will survive termination of their collective bargaining relationship. The parties may, for example, provide retiree

insurance benefits which survive the expiration of the collective bargaining

agreement. Any such surviving benefit

must necessarily find its genesis in the

collective bargaining agreement.

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Cite as 212 F.3d 907 (6th Cir. 2000)

The enforcement and interpretation

of collective bargaining agreements under § 301 [of the LMRA] is governed

by substantive federal law. However,

traditional rules for contractual interpretation are applied as long as their

application is consistent with federal labor policies.

Many of the basic principles of contractual interpretation are fully appropriate for discerning the parties’ intent

in collective bargaining agreements.

For example, the court should first look

to the explicit language of the collective

bargaining agreement for clear manifestations of intent. The intended meaning

of even the most explicit language can,

of course, only be understood in light of

the context which gave rise to its inclusion. The court should also interpret

each provision in question as part of the

integrated whole. If possible, each provision should be construed consistently

with the entire document and the relative positions and purposes of the parties. As in all contracts, the collective

bargaining agreement’s terms must be

construed so as to render none nugatory

and avoid illusory promises. Where ambiguities exist, the court may look to

other words and phrases in the collective

bargaining agreement for guidance.

Variations in language used in other durational provisions of the agreement

may, for example, provide inferences of

intent useful in clarifying a provision

whose intended duration is ambiguous.

Finally, the court should review the interpretation ultimately derived from its

examination of the language, context

and other indicia of intent for consistency with federal labor policy. This is not

to say that the collective bargaining

agreement should be construed to affirmatively promote any particular policy

but rather that the interpretation rendered not denigrate or contradict basic

principles of federal labor law.

Id. at 1479–80 (citations omitted). Courts

can find that rights have vested under a

CBA even if the intent to vest has not

been explicitly set out in the agreement.

See Golden v. Kelsey–Hayes Co., 73 F.3d

648, 655 (6th Cir.1996). CBAs may contain implied terms, and the parties’ practice, usage, and custom can be considered.

Consolidated Rail Corp. v. Railway Labor

Executives’ Ass’n, 491 U.S. 299, 311, 109

S.Ct. 2477, 105 L.Ed.2d 250 (1989).

[9, 10] Retiree benefits are ‘‘in a sense

‘status’ benefits which, as such, carry with

them an inference TTT that the parties

likely intended those benefits to continue

as long as the beneficiary remains a retiree.’’ UAW v. BVR Liquidating, Inc., 190

F.3d 768, 772 (6th Cir.1999), cert. denied, ––– U.S. ––––, 120 S.Ct. 1674, 146

L.Ed.2d 483 (2000) (quoting Yard–Man,

716 F.2d at 1482). This is because ‘‘[b]enefits for retirees are only permissive not

mandatory subjects of collective bargaining. As such, it is unlikely that such benefits, which are typically understood as a

form of delayed compensation or reward

for past services, would be left to the

contingencies of future negotiations.’’

Yard–Man, 716 F.2d at 1482 (citations

omitted). Although there is an inference

that the parties to a CBA intended for

retiree benefits to vest, the burden of

proof does not shift to the employer, and it

is not required that specific anti-vesting

language be used before a court can find

that the parties did not intend benefits to

vest. BVR Liquidating, 190 F.3d at 772

(quoting Golden, 73 F.3d at 656).

In BVR Liquidating, the plaintiff union

filed suit against an employer that had

terminated retiree health care benefits.

The plaintiff argued that the benefits had

vested, while the employer argued that the

benefits were limited to the duration of the

CBA. Id. at 769. The court found that a

clause providing that retirees shall have

health care benefits ‘‘continued for themselves, their spouses, surviving spouses

and eligible dependents,’’ considered in

conjunction with a clause indicating benefits continued after retirement until death,

could be interpreted as vesting lifetime

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health care benefits. Id. at 773. The

court speculated: ‘‘[i]ndeed, to what other

date than the death of the retiree or the

spouse could the word ‘continue’ apply?’’

Id. Noting that Yard–Man requires the

agreement to be read as a whole, the court

next considered the meaning of a separate

clause in the agreement stating that ‘‘benefits will be provided TTT for the term of

this Agreement except where the Plan specifically provides otherwise.’’ Id. at 774.

The court found that reading these two

provisions together made the CBA ambiguous as to whether retiree benefits were

intended to vest. See id. at 774. In light

of this ambiguity, the court turned to extrinsic evidence. It found that affidavits

from the plaintiff stating that there had

been no discussion of altering the duration

of the benefits during negotiating sessions

and in conversations between company

agents and retirees, along with evidence

that changes from prior CBAs increased

benefits, led to the conclusion that the

benefits were indeed vested. Id. at 774–

75.

Yard–Man also presented this court

with the question of whether retirement

benefits created in a CBA vested or were

terminable at the end of the CBA term.

The key provision in the CBA at issue

stated that ‘‘[w]hen the former employee

has attained the age of 65 years then: (1)

The Company will provide insurance benefits equal to the active group benefits TTT

for the former employee and his spouse.’’

Yard–Man, 716 F.2d at 1480 (omission in

original). The insurance plan provision

applicable to active group benefits specified that the benefits would terminate one

month after an employee’s layoff. Id. The

court found the intent of the parties to be

ambiguous because the ‘‘language ‘will provide insurance benefits equal to the active

group’ could reasonably be construed, if

read in isolation, as either solely a reference to the nature of retiree benefits or as

an incorporation of some durational limitation as well.’’ Id. As a result, the court

turned to other provisions of the CBA to

determine the parties’ intent:

[T]ermination of insurance benefits

for active employees was explicitly and

clearly set out and yet under conditions—the layoff of seniority employees—typically inapplicable to retirees.

Moreover, there are variations in the

duration of insurance benefits available

to active employees dependent upon

their seniority. These variations and

the impracticality of hinging retiree benefits to events as unpredictable and unstable as active worker layoffs make it

improbable that retiree benefits were

intended to depend in duration upon the

fortunes of the active employees.

 . . . . .

[T]he retiree insurance provisions TTT

contain a promise that the company will

pay an early retiree’s insurance upon

such retiree reaching age 65 but that the

retiree must bear the cost of company

insurance until that time. Since an employee is entitled under the collective

bargaining agreement to retire at 55,

the company’s promise could remain

outstanding for a ten-year period. If

retiree insurance benefits were terminated at the end of the collective bargaining agreement’s three-year term,

this promise is completely illusory for

many early retirees under age 62.

[T]he inclusion of specific durational

limitations in other provisions of the current collective bargaining agreement

suggests that retiree benefits, not so

specifically limited, were intended to

survive the expiration of successive

agreements in the parties’ contemplated

long term relationship.

 . . . . .

Finally, examination of the context in

which these benefits arose demonstrates

the likelihood that continuing insurance

benefits for retirees were intended.

Benefits for retirees are only permissive

not mandatory subjects of collective bargaining. As such, it is unlikely that such

benefits, which are typically understood

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as a form of delayed compensation or

reward for past services, would be left to

the contingencies of future negotiations.

Id. at 1481–82 (internal citations and footnotes omitted).

Joy claims that the CBAs at issue here

are not ambiguous, and that they establish

that retiree benefits were not intended to

extend beyond the end of the relevant

CBA term. Joy’s main argument is that

Sprague, supra, implicitly overruled Yard–

Man and established new, more stringent

standards as to what language must be

found in the parties’ agreements in order

to find vested benefits. Joy claims that,

under Sprague, express vesting language

is required before retirement benefits will

vest.

[11] Joy’s argument has been rejected

by this court. In BVR Liquidating, supra, we indicated that Yard–Man is still

good law and should be used by courts

interpreting CBAs. See BVR Liquidating,

190 F.3d at 772–73. We pointed out that

Sprague dealt with an employer that had

unilaterally instituted a retiree benefit program, so that the employer had to be

found to have clearly intended to vest benefits in order for employees to be entitled

to lifetime benefits. See id. at 773. The

BVR Liquidating court distinguished that

situation from the case in front of it, which

concerned a CBA. Id. at 772–73. In interpreting a CBA, the intent of both parties

to the agreement must be discerned, making Sprague inapposite. The court also

distinguished Sprague because it involved

an explicit reservation of rights clause permitting the employer to amend or terminate benefits. Id. at 773. BVR Liquidating reiterated Yard–Man’s directive that

there is an inference that retirement benefits were intended to vest. Id. The present case involves a CBA, rather than a

benefit plan unilaterally bestowed by the

employer. Therefore, Joy’s arguments

based on Sprague fail under the same

analysis applied in BVR Liquidating.

[12] Joy also argues that the district

court erred by turning the Yard–Man inference that retirement benefits were

meant to vest into a presumption that

shifted the burden of proof to Joy. The

court did not, however, shift the burden of

proof to Joy; the court acknowledged in

its opinion that there is no legal presumption that benefits vest and that the burden

of proof rests on plaintiffs.

Joy goes further and claims that there is

a ‘‘presumption under ERISA that employee welfare benefit plans do not vest.’’

However, the cases cited for this proposition, see, e.g., Curtiss–Wright Corp. v.

Schoonejongen, 514 U.S. 73, 115 S.Ct.

1223, 131 L.Ed.2d 94 (1995), merely state

that although ERISA does not require

vesting of such benefits, parties may agree

to create and vest them. Joy’s arguments

have already been addressed by this circuit in Golden, 73 F.3d at 655 (‘‘In [Curtiss–Wright Corp. v.] Schoonejongen, [cited by defendant] TTT [t]he vesting of

rights through agreements such as CBAs

was not at issueTTTT The Court simply

noted that ERISA does not mandate minimum vesting requirements for welfare

benefit plans, and that ERISA allows employers to adopt, modify, or terminate such

plans at will. The case bears no relation

to the issues in Yard–Man.’’) (citations

omitted). Curtiss–Wright, like Sprague,

dealt with a benefit plan unilaterally implemented by the employer, not with a CBA.

[13, 14] According to Joy, the CBAs’

language clearly terminated retiree insurance benefits along with the rest of the

CBA provisions by providing that ‘‘ [t]he

basic [CBA], the Pension Agreement, the

Group Insurance Agreement, and the Supplemental Unemployment Benefit Agreement, shall remain in full force and effect

until midnight [expiration date],’’ and that

‘‘[t]his [CBA] when signed shall supersede

all previous supplements and agreements

made between the parties except as provided for under the terms of this [CBA].’’

These clauses are general durational provisions for the entire agreement, and are not

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clearly meant to include retiree benefits.

See Yard–Man, 716 F.2d at 1482–83 (general durational clause not necessarily

meant to include retiree benefits). Even

though the clause makes clear that the

insurance agreement terminates after

three years, caselaw indicates that the termination of the agreement does not indicate the termination of benefits created by

it, if the benefits are intended to vest. See

id. If benefits have vested, then retirees

must agree before the benefits can be

modified, even by a subsequent CBA between the employer and active employees.

Joy next points to the reiteration in each

CBA that ‘‘[f]or pensioners and spouses

under age 65, the retiree Group Insurance

Programs in effect on September 1, 1975

TTT will remain in effect.’’ However, this

provision is also subject to the interpretation that it is repeated in each CBA because it specifies what benefits are available to those who retire during the term of

that CBA, and not what benefits are available for past retirees, whose rights have

already vested. Therefore, this provision

is not determinative.

Joy points to the clause requiring notice

from either party of ‘‘its desire to negotiate with respect to the terms and conditions of a new Agreement, including TTT

Insurance TTT Agreements.’’ Again, just

because an insurance agreement is ended

and renegotiated does not mean benefits

also end. Because active employee benefits are a subject of mandatory bargaining,

and retirement benefits are not, this provision was not necessarily meant to incorporate retirement benefits.

The CBAs provide that pre-Medicare

retirees receive certain benefits until

Medicare eligibility at age 65. Because

the CBAs permit retirement at age 55 and

promise insurance at age 65, the promise

is meaningless if it could be terminated in

three years. The same situation was present in Yard–Man, supra, where the court

inferred vested benefits partly from an

analogous provision. In addition, the

CBAs specify a termination of pre–65 benefits when the retiree ‘‘first becomes eligible for Medicare.’’ This clause makes

clear that pre–65 benefits were intended to

end only when the retiree becomes Medicare-eligible, not when the CBAs expire.

The CBAs also promise the continuation of

dependents’ benefits after the retiree

reaches Medicare eligibility. A determination that retiree benefits do not vest would

render these promises illusory, in contravention of Yard–Man’s directive. There is

also language in the insurance certificates

that gives Joy the unilateral right to terminate benefits for employees on leave of

absence, yet no similar provision was included for retiree benefits. These provisions indicate that the parties intended to

vest benefits.

Therefore, although the CBAs are not

models of clarity, caselaw of this circuit

leads to the conclusion that they do vest

retirement benefits for individuals retiring

before mid–1991, when reservation of

rights language applicable to retirees was

distributed to plaintiffs. The durational

provisions Joy cites are general in nature,

and only refer to agreements between the

parties, not to benefits created by the

agreements. Further, the CBAs promise

retirees (as young as age 55) a Medicare

Supplement at age 65. An analogous provision was found to create an illusory

promise unless benefits were vested in

Yard–Man. See Yard–Man, 716 F.2d at

1481. The language of the CBAs indicates

that retirement benefits were intended by

the parties to vest.

[15] The district court correctly found

that the reservation of rights language

printed in the 1986 Insurance Plan booklet, but never distributed to retirees, was

not effective as to plaintiffs. Joy claims

that there is no distribution requirement,

and that reservation of rights language is

effective when contained in the plan itself.

Joy bases these arguments on Sprague,

where reservation of rights language was

contained in the plan (unilaterally instituted by the employer), but not in all Summary Plan Descriptions distributed to ben2:09-cv-10918-PDB-MKM Doc # 101-12 Filed 05/14/12 Pg 12 of 14 Pg ID 4535
MAURER v. JOY TECHNOLOGIES, INC. 919

Cite as 212 F.3d 907 (6th Cir. 2000)

eficiaries. The Sprague court held that

because such language had always been in

the plan itself, it was clear that the employer did not intend to vest the benefits

when it created them. See Sprague, 133

F.3d at 401–02. As noted above, this case

is distinguishable from Sprague because it

concerns CBAs, which are two-party contracts, rather than a plan unilaterally implemented, and therefore unilaterally controlled, by the employer.

The reservation of rights language from

1986 was contained in an insurance booklet

that specified that retiree benefits were

contained in a separate booklet. Such a

separate retiree booklet, however, was

never created. The language in the 1986

insurance booklet directing that the booklet did not pertain to retirees, and that a

separate booklet did, precludes any argument that the provisions in the existing

insurance booklet (namely, the reservation

of rights language) applied to retirees.

Therefore, the reservation of rights clause

was not applicable to retirees under the

1986 agreement.

[16] The district court correctly found

that the reservation of rights language in

the August 19, 1991, booklet insert was

effective against the retirees because

‘‘[w]hile plaintiff argues that a bilateral

agreement is not subject to unilateral modification, the Union was obligated to grieve

or enter suit over the reservation of rights

clause as the clause was conspicuously contained in the 1991 insert and plaintiffs did

not dispute it until the filing of this lawsuit

in 1994.’’ The August 19, 1991, reservation of rights clearly included retirees and

was distributed to them. Therefore, those

plaintiffs retiring after August 19, 1991, do

not hold vested retirement benefits.

III.

[17–22] The district court’s denial of

plaintiffs’ motion for attorneys’ fees is reviewed for an abuse of discretion. Secretary of Dep’t of Labor v. King, 775 F.2d

666, 669 (6th Cir.1985). A district court is

given broad discretion in awarding attorneys’ fees in an ERISA action under 29

U.S.C. § 1132(g). Id. This court adopted

the following factors in King, 775 F.2d at

669, as relevant to the district court’s determination:

(1) the degree of the opposing party’s

culpability or bad faith; (2) the opposing

party’s ability to satisfy an award of

attorney’s fees; (3) the deterrent effect

of an award on other persons under

similar circumstances; (4) whether the

party requesting fees sought to confer a

common benefit on all participants and

beneficiaries of an ERISA plan or resolve significant legal questions regarding ERISA; and (5) the relative merits

of the parties’ positions.

An abuse of discretion exists only when

‘‘the court has the definite and firm conviction that the district court made a clear

error of judgment in its conclusion upon

weighing relevant factors.’’ Id. No single

factor is determinative. Schwartz v. Gregori, 160 F.3d 1116, 1119 (6th Cir.1998),

cert. denied, 526 U.S. 1112, 119 S.Ct. 1756,

143 L.Ed.2d 788 (1999). There is no presumption that attorneys’ fees will be

awarded. See Foltice v. Guardsman

Prods., Inc., 98 F.3d 933, 936 (6th Cir.

1996).

The district court addressed the King

factors in its opinion:

First, there was no degree of bad

faith on defendant’s part and this Court

cannot find a great degree of culpability

given the difficulty in determining

whether it was intended that benefits

vested. Additionally, the Court found

benefits to vest for only some of the

plaintiffs. Second, defendant admits

that it is able to satisfy an award of fees.

Third, the Court does not consider that

an award of fees would act as a deterrent to other employers under similar

circumstances given that defendant did

not necessarily act with bad faith. See,

for example, Foltice, supra, wherein the

court stated that the ‘‘deterrent effect

TTT is likely to have more significance in

a case where the defendant is highly

culpable TTT’’ Fourth, while this was a

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920 212 FEDERAL REPORTER, 3d SERIES

class action, plaintiffs did not seek to

confer a common benefit on all participants of Joy’s ERISA plan. Nor did

this lawsuit seek to resolve significant

ERISA legal questions inasmuch as this

issue has been addressed in numerous

cases as evidenced by this Court’s Opinions. Fifth, the Opinions in this case

reveal that both parties’ positions had

merit.

Plaintiffs claim that Joy ‘‘surreptitiously

inserted a non-bargained provision in its

insurance booklets and used this provision

as the centerpiece of its justification to

unlawfully alter retiree benefitsTTTT Not

to find bad faith in such conduct is an

abuse of discretion.’’ They also argue that

they ‘‘sought to convey a benefit on all

members of the ERISA plan affected by

Joy’s unlawful conduct.’’ Finally, plaintiffs

argue that retirees cannot afford to finance

protracted and expensive litigation, and

unions cannot afford to bring suit on behalf of all wronged retirees. They maintain that ‘‘[u]nless the expense of such

litigation is shifted, more retirees will suffer a loss of all or some of their pension

income or go without health insurance

and/or care they otherwise should obtain.’’

[23] The district court considered all of

the relevant factors as instructed by King.

The court found no bad faith on Joy’s part,

determined that attorneys’ fees would not

act as a deterrent to other employers, and

indicated that no significant ERISA legal

questions were resolved. The court did

not abuse its discretion either in its consideration of any of the King factors or in its

weighing of the factors to determine that

fees should not be awarded. Therefore,

the district court did not abuse its discretion in denying plaintiffs’ request for attorneys’ fees.

IV.

The judgment of the district court is

AFFIRMED.

,

UNITED STATES of America,

Appellee,

v.

SEARCH OF MUSIC CITY

MARKETING, INC.,

Appellant.

No. 99–5260.

United States Court of Appeals,

Sixth Circuit.

Argued March 7, 2000

Decided and Filed May 12, 2000

Owner of property that had been subject of search warrant seeking drug paraphernalia moved for return of seized property. The United States District Court for

the Middle District of Tennessee, Thomas

A. Higgins, J., denied motion, and owner

appealed. The Court of Appeals, Kennedy,

Circuit Judge, held that: (1) statute permitting seizure of drug paraphernalia was

not unconstitutionally vague as applied to

items of inventory seized from owner; (2)

findings that various items constituted

drug paraphernalia were supported by evidence; and (3) owner could not assert defense of entrapment by estoppel.

Affirmed.

1. Searches and Seizures O84

Where there was no criminal indictment or proceeding pending against property owner, owner’s motion for return of

property seized under search warrant was

in nature of a civil proceeding invoking the

court’s equitable powers, rather than a

criminal proceeding. Fed.Rules Cr.Proc.

Rule 41(e), 18 U.S.C.A.

2. Searches and Seizures O84

Under rule permitting motions for return of property seized under search war2:09-cv-10918-PDB-MKM Doc # 101-12 Filed 05/14/12 Pg 14 of 14 Pg ID 4537