UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

WILLARD L. SLOAN, EUGENE J. 

WINNINGHAM, and JAMES L. KELLEY,

Plaintiffs,

v.

BORGWARNER INC., BORGWARNER 

DIVERSIFIED TRANSMISSION 

PRODUCTS INC., and BORGWARNER 

FLEXIBLE BENEFITS PLANS,

Defendants.

Case 2:09-cv-10918-PDB-MKM

U.S. District Judge Paul D. Borman

U.S. Magistrate Judge Mona K. Majzoub

BORGWARNER’S NOTICE OF SUPPLEMENTAL AUTHORITY

BorgWarner Inc., BorgWarner Diversified Transmission Products Inc., and BorgWarner 

Flexible Benefits Plans—referred to collectively as “BorgWarner”—hereby notify the Court of 

Reese v. CNH America LLC, Nos. 11-1359, 11-1857, 11-1969, 2012 WL 4009695, at *1 (6th Cir. 

Sept. 13, 2012) (Reese II) (attached), a supplemental authority relevant to BorgWarner’s pending 

motion for summary judgment. 

BorgWarner has argued that it is entitled to summary judgment because the changes made 

to Plaintiffs’ health benefits in May 2009 were reasonable and permissible under Reese v. CNH 

America LLC, 574 F.3d 315, 324–27 (6th Cir. 2009) (Reese I). (R. 95, Defs.’ Mot. 16–19.) 

Plaintiffs responded by contending that Reese I is limited to the facts of that case or situations in 

which the benefit agreements are lost (R. 112, Pls.’ Opp’n 10–11 & n.10) and that benefit 

changes cannot be unilateral (id. at 12).

Reese II addresses directly Plaintiffs’ criticisms. First, it confirms the central holding of 

Reese I, which was that “CNH could make ‘reasonable’ changes to the healthcare plan covering 

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2

eligible retirees.” 2012 WL 4009695, at *2. Second, the Sixth Circuit made clear that employer 

changes to retiree health benefits need not be negotiated to be permissible: “In holding that 

‘CNH . . . may reasonably alter’ the plaintiffs’ benefits, we recognized that CNH could alter them 

on its own, not as part of a new collective-bargaining process.” Id. at *3 (quoting Reese I, 574 

F.3d at 327).

Dated: September 27, 2012

Elisa Angeli Palizzi (P52088)

(angeli@millercanfield.com)

Miller, Canfield, Paddock and Stone, P.L.C.

150 West Jefferson, Suite 2500

Detroit, Michigan 48226

313.496.7635

313.963.6420 fax

Respectfully submitted,

s/Bobby R. Burchfield

Bobby R. Burchfield

(bburchfield@mwe.com)

Joshua David Rogaczewski 

(jrogaczewski@mwe.com)

McDermott Will & Emery LLP

600 13th Street, Northwest

Washington, D.C. 20005

202.756.8000 

202.756.8087 fax

Attorneys for BorgWarner Inc., BorgWarner Diversified Transmission Products Inc., and 

BorgWarner Flexible Benefits Plans

2:09-cv-10918-PDB-MKM Doc # 116 Filed 09/27/12 Pg 2 of 11 Pg ID 7188
CERTIFICATE OF SERVICE

I hereby certify that on September 27, 2012, I electronically filed the foregoing 

BorgWarner’s Notice of Supplemental Authority with the Clerk of the Court using the ECF 

system which will send notification of such filing to all ECF participants.

s/Bobby R. Burchfield

Bobby R. Burchfield

(bburchfield@mwe.com)

McDermott Will & Emery LLP

600 13th Street, Northwest

Washington, D.C. 20005

202.756.8000 

202.756.8087 fax

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Only the Westlaw citation is currently available.

United States Court of Appeals,

Sixth Circuit.

Jack REESE, Frances Elaine Pidde, James Cichanopsky, Roger Miller and George Nowlin, Plaintiffs–

Appellees (11–1359), Plaintiffs–Appellees/Cross–

Appellants (11–1857 & 11–1969),

Ronald Hitt, Plaintiff,

v.

CNH AMERICA LLC, fka Case Corporation and 

CNH Global NV, Defendants–Appellants 11–1359), 

Defendants–Appellants/Cross–Appellees (11–1857 & 

11–1969).

Nos. 11–1359, 11–1857, 11–1969.

Argued: June 5, 2012.

Decided and Filed: Sept. 13, 2012.

Background: Retirees brought action against employer, seeking declaration that they were entitled to 

lifetime health-care benefits, an injunction requiring 

employer to maintain level of retiree health-care 

benefits then in effect, and damages for injuries retirees might sustain if benefits were terminated. The 

district court, 2007 WL 2484989, granted summary 

judgment in favor of retirees and awarded attorney's 

fees to retirees, 2008 WL 2546936. Employer appealed. The Court of Appeals, 574 F.3d 315, affirmed 

in part and reversed in part. On remand, the United 

States District Court for the Eastern District of 

Michigan, Patrick J. Duggan, J., 2011 WL 824585,

granted summary judgment for retirees. Employer 

appealed.

Holdings: The Court of Appeals, Sutton, Circuit 

Judge, held that:

(1) employer was entitled to reasonably, but unilaterally, alter lifetime health-care benefits for retirees and

(2) reasonableness of employer's unilateral alteration 

of lifetime health-care benefits had to be informed by 

facts that were not in record.

Reversed and remanded.

Bernice B. Donald, Circuit Judge, filed dissenting opinion.

West Headnotes

[1] Labor and Employment 231H 445

231H Labor and Employment

 231HVII Pension and Benefit Plans

 231HVII(B) Plans in General

 231Hk443 Amendment of Plan

 231Hk445 k. Right to Amend. Most 

Cited Cases

Employer was entitled to reasonably, but unilaterally, alter lifetime health-care benefits for retirees, 

even though employer could not terminate benefits 

because retirees' right to lifetime benefits vested upon 

retirement pursuant to collective bargaining agreement (CBA) which provided that employees who 

retired under employer's pension plan were eligible to 

receive health-care benefits.

[2] Labor and Employment 231H 1203

231H Labor and Employment

 231HXII Labor Relations

 231HXII(D) Bargaining Representatives

 231Hk1200 Extent of Authority and Duties 

of Representative in General

 231Hk1203 k. Representation of NonMembers. Most Cited Cases

A union does not represent retired employees 

when it bargains a new contract for its employees.

[3] Labor and Employment 231H 484(1)

231H Labor and Employment

 231HVII Pension and Benefit Plans

 231HVII(C) Fiduciaries and Trustees

 231Hk479 Notice and Disclosure Requirements

 231Hk484 Amendment or Termination 

of Plan

 231Hk484(1) k. In General. Most 

Cited Cases

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Reasonableness of employer's unilateral alteration of lifetime health-care benefits for retirees under 

collective bargaining agreement (CBA) had to be 

informed by amount that retirees paid for their health 

care under old plan and amount that employer paid, 

amount that retirees and employer would each pay 

under new plan and how quickly each side's costs 

were likely to grow, quality of care provided under 

old plan compared to quality of care under new plan, 

material difference in retirees' benefits from those 

offered to current employees and people retiring today, and comparing retiree's benefits to benefits offered by other companies in similar industries.

Appeal from the United States District Court for the 

Eastern District of Michigan at Detroit. No. 2:04–

CV–70592–Patrick J. Duggan, District 

Judge.ARGUED:Bobby R. Burchfield, McDermott, 

Will & Emery LLP, Washington, D.C., for Appellants and Appellants/Cross–Appellees. Roger J. 

McClow, McKnight, McClow & Canzano, P.C., 

Southfield, Michigan, for Appellees and Appellees/Cross–Appellants. ON BRIEF:Bobby R. 

Burchfield, Joshua David Rogaczewski, McDermott, 

Will & Emery LLP, Washington, D. C., for Appellants and Appellants/Cross–Appellees. Roger J. 

McClow, McKnight, mcClow & canzano, P.C., 

Southfield, Michigan, for Appellees and Appellees/Cross–Appellants.

Before GIBBONS, SUTTON and DONALD, Circuit 

Judges.

SUTTON, J., delivered the opinion of the court in 

which GIBBONS, J., joined. DONALD, J. (pp. 9–

15), delivered a separate dissenting opinion.

OPINION

SUTTON, Circuit Judge.

*1 In litigation, as in film, sequels rarely satisfy. 

This case is no exception. Three years ago, we remanded this dispute to the district court for factfinding necessary to determine whether CNH America's 

proposed modifications to its retiree healthcare benefits are reasonable. The district court did not reach 

the reasonableness question and did not create a factual record that would permit us to answer the question on our own. As a result, we reverse and remand 

for further proceedings.

I.

Our previous opinion makes it unnecessary to 

recount the protracted history of this litigation. See 

Reese v. CNH America LLC, 574 F.3d 315, 318–20

(6th Cir.2009). There, we considered two questions: 

“Did [CNH] in the 1998 CBA agree to provide 

health-care benefits to retirees and their spouses for 

life? And, if so, does the scope of this promise permit 

CNH to alter these benefits in the future?” Id. at 321.

In answering the first question, we rejected CNH's 

claim that the CBA permitted the company to terminate the benefits, holding that eligibility for lifetime 

healthcare benefits had “vested.” Id. at 322; see 

Yolton v. El Paso Tenn. Pipeline Co., 435 F.3d 571, 

580 (6th Cir.2006); UAW v. Yard–Man, Inc., 716

F.2d 1476, 1482 (6th Cir.1983).

In answering the second question (“What does 

vesting mean in this setting?”), we rejected the suggestion that the scope of this commitment in the context of healthcare benefits, as opposed to pension 

benefits, meant that CNH could make no changes to 

the healthcare benefits provided to retirees. Unlike 

pension obligations, we explained, healthcare benefits cannot readily be monetized at retirement or for 

that matter practically fixed. See Reese, 574 F.3d at 

324. Doctors and medical-insurance providers come 

and go. Medical plans change from year to year. And 

fixed, unalterable medical benefits at all events are 

not what retirees want. Nothing, indeed, would make 

employers happier than to know that vesting in the 

healthcare-benefits context meant the same thing as 

vesting in the pension context. For then, a company 

faced with the obligation could account for what it 

had spent on each employee for healthcare benefits 

on the day of retirement, then commit to spend no 

less through the end of the retiree's (and spouse's) 

life. Nor would most employers be troubled if this 

commitment, like most defined-benefit pension plans, 

increased based on inflation as measured by the consumer-price index. The reality is that, even though 

we have relied on language tying healthcare benefits 

to pension benefits as a basis for determining that 

healthcare benefits have vested, vesting in the context 

of healthcare benefits provides an evolving, not a 

fixed, benefit. See Yolton, 435 F.3d at 583 (relying on 

language in the summary plan descriptions saying 

that “continued coverages will be the same as those 

that were in effect on the day preceding your retirement”); see also Noe v. PolyOne Corp., 520 F.3d 

548, 558 (6th Cir.2008); McCoy v. Meridian Auto. 

Sys., Inc., 390 F.3 417, 422 (6th Cir.2004); Golden v. 

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Kelsey–Hayes Co., 73 F.3d 648, 656 (6th Cir.1996).

*2 The rub for retirees and employers alike is 

that healthcare benefits—what is provided and what 

it costs—have not been remotely static in modern 

memory. The reason has little to do with traditional 

causes of inflation and more to do with the expansion 

of the benefit: the remarkable growth in modern lifesaving and comfort-improving medical procedures, 

devices and drugs. New and better medical procedures arise while others become obsolete. And it is 

the rare medical innovation that costs less than the 

one it replaces. Retirees, quite understandably, do not 

want lifetime eligibility for the medical-insurance 

plan in place on the day of retirement, even if that 

means they would pay no premiums for it. They want 

eligibility for up-to-date medical-insurance plans, all 

with access to up-to-date medical procedures and 

drugs. Whatever else vesting in the healthcare context means, all appear to agree that it does not mean 

that beneficiaries receive a bundle of services fixed 

once and for all. Companies want the freedom to 

change health-insurance plans. And beneficiaries 

want something more than a fixed, unalterable bundle 

of services; they want coverage to account for new 

and better, yet likely more expensive, procedures and 

medications than the ones in existence at retirement.

All of this was borne out by the parties' implementation of the relevant collective bargaining 

agreements—in at least two respects. As explained in 

our prior opinion, the 1998 CBA “created a Managed 

Health Care Network Plan for past and future retirees. In other words, it imposed managed care on all 

of them, which represented a reduction in the effective choices of coverage available for all retirees and 

the coverage actually provided to many, if not most, 

of them.” Reese, 574 F.3d at 325. “Pre–1998 retirees 

thus saw their coverage downgraded in at least one 

respect: Unlike the prior plan, under which they 

could choose any doctor without suffering a financial 

penalty, they generally had to pay more for choosing 

an out-of-plan doctor.” Id. Other cases reach the 

same conclusion. Winnett v. Caterpillar, Inc., 609

F.3d 404, 412–13 (6th Cir.2010) (explaining that a 

change to managed care is a “significant change” 

representing a “reduction” in benefits); cf. UAW v. 

Aluminum Co. of Am., 932 F.Supp. 997, 1011

(N.D.Ohio 1996) (challenging employer's adoption of 

a managed-care plan as a reduction in benefits).

Also confirming that the parties did not perceive 

the relevant CBAs as establishing fixed, unalterable 

benefits was the passage of the Medicare Prescription 

Drug, Improvement, and Modernization Act of 2003, 

Pub.L. No. 108–173, 117 Stat.2066. No one batted an 

eye when the healthcare plans for which retirees were 

eligible were modified to account for the creation of 

Medicare Part D, the prescription-drug benefit for 

seniors.

In view of the distinction between the vesting of 

eligibility for a benefit and the scope of that commitment and in view of the parties' practice under the 

1998 CBA of altering healthcare benefits under 

CBAs with materially identical language, we concluded that CNH could make “reasonable” changes to 

the healthcare plan covering eligible retirees. Reese,

574 F.3d at 325–27; see also Zielinski v. Pabst Brewing Co., 463 F.3d 615, 619 (7th Cir.2006) (distinguishing the vesting of healthcare benefits from the 

scope of that commitment and holding that the employer was obligated to provide benefits “reasonably 

commensurate” with pre-retirement plans). We listed 

three considerations: Does the modified plan provide 

benefits “reasonably commensurate” with the old 

plan? Are the proposed changes “reasonable in light 

of changes in health care”? And are the benefits 

“roughly consistent with the kinds of benefits provided to current employees”? Reese, 574 F.3d at 326. 

We remanded the case to the district court to take 

evidence and to decide in the first instance the legal 

question whether CNH's proposed modifications 

were reasonable. Id. at 327.

*3 Back in the district court, CNH moved for 

approval of its proposed modifications to the benefits, introducing evidence (including affidavits from 

its employee-benefits director and an employeebenefits consultant and attorney) that the changes 

were reasonable. The plaintiffs introduced little new 

evidence on the issue of reasonableness. They instead 

relitigated several questions our court had already 

decided, moving for summary judgment on the 

ground that CNH lacks the ability to modify any 

benefits, save at the approval of the union that once 

represented them. The district court agreed and 

granted their motion.

II.

[1][2] The plaintiffs and the district court misread the panel opinion. In holding that “CNH ... may 

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reasonably alter” the plaintiffs' benefits, we recognized that CNH could alter them on its own, not as 

part of a new collective-bargaining process. Reese,

574 F.3d at 327. Past changes to retiree healthcare 

benefits, we noted, had not been collectively bargained, which comes as no surprise since “a union 

does not represent retired employees when it bargains 

a new contract for its employees.” Id. at 324; see 

Allied Chem. & Alkali Workers of Am., Local Union 

No. 1 v. Pittsburgh Plate Glass Co., 404 U.S. 157, 

172, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971). The district court, in short, erred when it disregarded our 

holding that the company may make reasonable 

modifications to the plaintiffs' healthcare benefits.

[3] That leaves two options: remand the case to 

the district court yet again or resolve the reasonableness question as a matter of law based on the evidence in the record. It is tempting to resolve the case 

now. This long-running dispute needs to come to an 

end, and it is particularly unfair to prolong the dispute when the status quo—a preliminary injunction in 

favor of the plaintiffs—not only favors just one party 

but also risks mooting the economic stakes of the 

case for the other party. Yet this sticky reality remains. The case turns in part on facts not in the record: How much did retirees pay for their health care 

under the old plan? How much did CNH pay? How 

much will the retirees and CNH each pay under the 

new plan, and how quickly are each side's costs likely 

to grow? How does the quality of care provided under the old plan compare to the quality of care under 

the new plan? Do the retirees' benefits differ in material respects from those offered to current employees 

and people retiring today? How do the benefits compare to benefits offered by other companies in similar 

industries? In the absence of a record on these points, 

the answer to the reasonableness question is a shot in 

the dark.

To gauge whether CNH has proposed reasonable 

modifications to its healthcare benefits for retirees, 

the district court should consider whether the new 

plan provides benefits “reasonably commensurate” 

with the old plan, whether the changes are “reasonable in light of changes in health care” (including 

access to new medical procedures and prescriptions) 

and whether the benefits are “roughly consistent with 

the kinds of benefits provided to current employees.” Reese, 574 F.3d at 326. In doing so, the district 

court should take evidence on the following questions 

(and others it considers relevant to the reasonableness 

question):

*4 • What is the average annual total out-of-pocket 

cost to retirees for their healthcare under the old 

plan (the 1998 Group Benefit Plan)? What is the 

equivalent figure for the new plan (the 2005 Group 

Benefit Plan)?

• What is the average per-beneficiary cost to CNH 

under the old plan? What is the equivalent figure 

for the new plan?

• What premiums, deductibles and copayments 

must retirees pay under the old plan? What about 

under the new plan?

• What difference (if any) is there between the 

quality of care available under the old and new 

plans?

• What difference (if any) is there between the new 

plan and the plans CNH makes available to current 

employees and people retiring today?

• How does the new plan compare to plans available to retirees and workers at companies similar to 

CNH and with demographically similar employees?

It is not lost on us that the reasonableness inquiry 

is a vexing one. But the difficulty of the inquiry flows 

at least in part from the vagueness of the commitment 

underlying this litigation. It is well to remember the 

language of the relevant commitment: “Employees 

who retire under the Case Corporation Pension Plan 

for Hourly Paid Employees after 7/1/94, or their surviving spouses eligible to receive a spouse's pension 

under the provisions of that Plan, shall be eligible for 

the Group benefits as described in the following 

paragraphs.” Id. at 318. What that means in the context of ever-changing medical-care developments, 

and ever-changing healthcare plans, is not easy. But 

if the parties cannot resolve the point on their own, 

we (and the district court) will do our best to resolve 

it for them.

One other thing on this score: the district court 

concluded that the East Moline Shutdown Agreement 

created “unalterable and irreducible” healthcare bene-

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fits for those who retired under it. R .304 at 22. The 

Moline Agreement, however, governs only the “economic closedown benefits and the eligibility rules 

established and set forth in” that agreement. R.290–2 

at 19. Nothing in the agreement speaks to healthcare. 

It neither establishes nor sets forth healthcare benefits, which are instead found in the 1998 CBA, which 

are vested, and which remain subject to reasonable 

modification.

In view of this disposition of the appeal, we 

think it premature to address the parties' attorney-fees 

arguments. For one, this case is not over. For another, 

the district court may wish to revisit its attorney-fee 

decision based on its resolution of the questions identified above.

The dissent proposes a different path—that we 

reconsider our decision in Reese I and go back to 

square one. Unlike Judge Gibbons and me, Judge 

Donald did not sit on Reese I, so it would not be fair 

to call this an about-face or buyer's remorse. At the 

same time, the law-of-the-case doctrine presents a 

serious impediment to this approach. And the reality 

that neither party to this dispute has invoked an exception to the law-of-thecase doctrine presents a conclusive impediment to it.

III.

*5 For these reasons, we reverse and remand for 

proceedings consistent with this opinion.

DISSENTBERNICE B. DONALD, Circuit Judge, 

dissenting.

My review of the issues presented here leads me 

to the conclusion that the majority's approach to 

modifying the scope of the retirees' vested health care 

benefits, both past and present, involves a misapprehension of the relevant law. While reasonableness is 

a common standard in the law, I cannot agree that 

resorting to what is reasonable provides the proper 

analytical framework in the instant case. When faced 

with contract terms that result in unanticipated consequences for the parties, courts are naturally tempted 

to play the role of arbiter and seek to resolve the case 

equitably. This Court, however, is one of law and not 

equity. Because the resolution of this case, as well as 

the prior appeal, represents a departure from current 

law, I respectfully dissent.

When affirming in part the district court's first 

grant of summary judgment to Plaintiffs in the instant 

dispute, this Court held that the retirees “have a 

vested right to receive health care benefits for life.” 

Reese I, 574 F.3d at 327. On this issue, Reese I was 

consistent with prior decisions of this Court holding 

that when an employer ties eligibility for welfare 

benefits to eligibility for pension benefits those welfare benefits vest for life. Noe v. PolyOne Corp., 520

F.3d 548, 558 (6th Cir.2008); Yolton v. El Paso Tenn. 

Pipeline Co., 435 F.3d 571, 582–83 (6th Cir.2006); 

McCoy v. Meridian Auto. Sys., Inc., 390 F.3d 417, 

422 (6th Cir.2004); Golden v. Kelsey–Hayes Co., 73

F.3d 648, 656 (6th Cir.1996).

At the same time, the Court reversed the district 

court's holding that “these [vested health care] benefits must be maintained precisely at the level provided for in the 1998 CBA.” Reese, 574 F.3d at 327. 

The Court remanded to the district court to determine 

“how and in what circumstances CNH may alter such 

benefits.” Id. Upon close reexamination, I have determined that our holding that CNH may unilaterally

alter Appellees' vested health care benefits was in 

error, and the majority's resolution of the case fails to 

correct this error.

While the “law of the case” doctrine typically 

prevents an appellate court from reconsidering a prior 

decision on a subsequent appeal, that doctrine is 

“salutary” and designed to support a specific policy 

rationale: bringing an end to litigation. General Am. 

Life Ins. Co. v. Anderson, 156 F.2d 618–19 (6th 

Cir.1946). Accordingly, our holding in Reese I is not 

immutable. This Court's precedent recognizes that 

there is “no occasion to doubt the abstract power of 

an appellate court, upon a second review, to reach a 

result inconsistent with its decision on the first review of the same case.” Chesapeake and Ohio R.R. 

Co. v. McKell, 209 F. 514, 516 (6th Cir.1913) (citing 

Messinger v. Anderson, 225 U.S. 436, 444, 32 S.Ct. 

739, 56 L.Ed. 1152 (1912)). Furthermore, revisiting 

Reese I's holding on the scope of retirees' vested 

health care benefits and affirming the district court's 

grant of summary judgment to Plaintiffs would bring 

an end to this protracted litigation. I would, therefore, 

take the unusual step of correcting our past error with 

the aim of deciding the case in a manner more firmly 

grounded in the law.

*6 Several decisions of this Court, as well as Supreme Court precedent, express the principle that, 

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once a retiree's health care benefits have vested for 

life, an employer's unilateral modification of the 

scope of those benefits is a violation of the Labor 

Management Relations Act. Yolton, 435 F.3d at 578

(“If a welfare benefit has vested, the employer's unilateral modification or reduction of those benefits 

constitutes a LMRA violation.”); see also Allied 

Chemical & Alkali Workers of America, Local Union 

No. 1 v. Pittsburgh Plate Glass Co., Chemical Division, 404 U.S. 157, 181 n. 20, 92 S.Ct. 383, 30

L.Ed.2d 341 (1971) (“Under established contract 

principles, vested retirement rights may not be altered 

without the pensioner's consent. The retiree, moreover, would have a federal remedy under § 301 of the 

Labor Management Relations Act for breach of contract if his benefits were unilaterally changed.” (citation omitted)); Schreiber v.Philips Display Components Co., 580 F.3d 355, 364 (6th Cir.2009); Winnett 

v. Caterpillar, Inc., 553 F.3d 1000, 1009 n. 5 (6th 

Cir.2009); Maurer v. Joy Techs., Inc., 212 F.3d 907, 

914 (6th Cir.2000); UAW v. Loral Corp., 107 F.3d 

11, 1997 WL 49077 at *3 (6th Cir.1997) (“It might 

well be sensible for the parties to agree to allow the 

employer to retain some flexibility to deal with future 

vicissitudes, but such an arrangement must be agreed 

to in the contract. It cannot be imposed unilaterally 

by the employer or the courts.”); UAW v. Yard–Man, 

Inc., 716 F.2d 1476, 1482 n. 8 (6th Cir.1983).

The Maurer case is especially relevant to this 

discussion because the Maurer court confronted the 

same issues, in the same procedural posture, that this 

Court dealt with in Reese I: whether unclear language 

in a CBA indicated that “the parties intended the retirement benefits either to vest as lifetime benefits or 

to terminate at the end of the ... term of the CBA 

granting the benefits.” Maurer, 212 F.3d at 911. After setting out the relevant contractual language, the 

Maurer court elucidated the principles applicable to 

interpretation of CBAs. One of those principles 

squarely applies to the instant case: “If the parties 

intended to vest benefits and the agreement establishing this is breached, there is ... a LMRA violation.” 

Id. at 914.

Thus, clearly established precedent in this Circuit 

leads to the conclusion that, because retirees' health 

care benefits vested for life, the level of those benefits must be deemed vested in scope and not subject 

to unilateral modification by CNH. Accordingly, the 

district court correctly applied the law of this Circuit 

when it held on remand that “even if changes can be 

made to retiree vested health care benefits, those 

changes must be reached through negotiation and 

agreement between the union and the employer.” 

Reese v. CNH Global N.V., No. 04–70592, 2011 WL 

824585, at * 10 (E.D.Mich. March 3, 2011).

The district court's conclusion is also consistent 

with this Circuit's principle that “basic rules of contract interpretation apply” when federal courts fashion a body of federal common law for interpretation 

of collective bargaining agreements. Noe, 520 F.3d at 

552. As a general rule, contracts containing continued 

performance obligations cannot be modified unless 

“the modification is fair and equitable in view of circumstances not anticipated by the parties when the 

contract was made....” RESTATEMENT (SECOND) 

OF CONTRACTS § 89(a) (1981). Such a modification, furthermore, must comply with the general rules 

of contract formation, including mutual assent: “Obligations under a collective bargaining agreement, 

like those under contracts in general, rest ultimately 

on the principle of mutual assent....” Operating 

Eng'rs Pension Trust v. Gilliam, 737 F.2d 1501, 1503

(9th Cir.1984). Because the retirees have not consented to the modifications proposed by CNH, I 

would hold under traditional principles of contract 

law that CNH cannot unilaterally modify the retirees' 

vested health care benefits.

*7 I recognize that the terms of the 1998 CBA, 

as interpreted according to Sixth Circuit precedent, 

pose a fundamental problem for the employer: how to 

fulfill its open-ended obligation to provide the health 

care benefits described in the CBA in spite of the 

rapid change and growth in the health care and health 

insurance industries. While this case presents a difficult choice between diametrically opposed interpretations of the 1998 CBA, it is the parties to the contract—not the court—who bear the burden of solving 

this dilemma. Presumably the parties have a shared 

interest in reaching an accommodation which ensures 

the retirees the continuity of health care coverage to 

which they are contractually entitled without bankrupting the employer or obligating it to provide services which are no longer appropriate. The Court's 

role in this context is to underscore that such an accommodation cannot be imposed by one party on the 

other, or by the court. Loral Corp., 1997 WL 49077

at *3. The majority's thoughtful analysis of the policy 

issues thoroughly addresses the concerns of the par-

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ties, especially the employer. However, while those 

issues are important, it is the law that should determine the outcome of this case.

As mentioned above, the majority relies on our 

conclusion in Yolton v. El Paso Tennessee Pipeline 

Co. and other cases to support Reese I's conclusion 

that the retirees' health care benefits vested for life. 

The majority, however, does not apply Yolton's plain 

statement of the law regarding unilateral modification 

of vested welfare benefits: “If a welfare benefit has 

vested, the employer's unilateral modification or reduction of those benefits constitutes a LMRA violation.” 435 F.3d at 578. Additionally, the other cases 

the majority cites to support its statement that “the 

vesting conclusion in the context of healthcare benefits provides an evolving, not a fixed, benefit” say 

nothing about the scope of welfare benefits. Those 

cases deal only with this Court's rule that tying eligibility for welfare benefits to eligibility for pension 

benefits evidences an intent to vest those welfare 

benefits for life. Id. at 583; see also Noe, 520 F.3d at 

558; McCoy, 390 F.3d at 422; Golden, 73 F.3d at 

656.

The majority also errs in its choice of standard 

for determining whether CNH's modifications to the 

scope of the retirees' health care benefits are reasonable. The majority relies on the United States Court 

of Appeals for the Seventh Circuit's opinion in 

Zielinksi v. Pabst Brewing Co., 463 F.3d 615 (7th 

Cir.2006). The standard articulated in Zielinski, however, is not applicable to this case for two reasons. 

First, as discussed above, this Circuit's case law prohibits CNH from unilaterally modifying the retirees' 

vested health care benefits. Second, as the district 

court set forth in its opinion, Zielinski is factually 

distinguishable from the instant dispute. Reese,

2011 WL 824585, at *7 n. 9. In Zielinski, the Seventh 

Circuit confronted a situation where the only evidence of the retiree benefits package was an old brochure describing the retirees' prescription drug coverage in very general terms; neither party could provide 

the court with a copy of the contract alluded to in the 

brochure. 463 F.3d at 619. Accordingly, the Seventh 

Circuit had to step in and fill the gaps related to coverage in the shutdown agreement that granted vested 

health care benefits to the retirees. Id. at 619–20. In 

order to fill the gap, Judge Posner relied on the Seventh Circuit's “reasonably commensurate” test. Id. at 

619–21.

*8 Unlike the Seventh Circuit in Zielinski, however, this Court has no gap filling role to play in the 

instant case. We know exactly what the parties 

agreed to in 1998: “The Group [Benefit] Plan over 

forty-one pages sets forth in extensive detail the types 

of benefits and levels of coverage that the [retirees'] 

and [CNH] agreed to through collective bargaining.” 

Reese, 2011 WL 824585, at *7. Accordingly, 

Zielinski does not provide the appropriate lens for our 

review of this case.

In addition to the above legal errors, the majority 

also mischaracterizes the nature of the shift from the 

indemnity plan to managed care under the 1998 

Group Benefit Plan, as well as how the parties previously modified the retirees' benefits. The majority 

claims that the negotiated and collectively bargained 

shift from an indemnity plan to a managed care plan 

in 1998 supports its conclusion that “the parties did 

not perceive the relevant CBAs as establishing fixed, 

unalterable benefits.” Both Reese I and the majority 

opinion, however, are incorrect in their assertion that 

“managed care ... represented a reduction in the effective choices of coverage available for all retirees 

and the coverage actually provided to many, if not 

most, of them.” Reese I, 574 F.3d at 325. This erroneous conclusion is central to the majority's reasoning: retirees' benefits can be unilaterally modified 

now because they did not previously object to a “reduction” in those benefits. The district court, however, embarked on a thorough analysis of both the 

indemnity and managed care plans and reached the 

opposite conclusion as to both effective choices and 

coverage.

On the issue of choice, the district court found, 

based on evidence submitted by the retirees, that, 

under the managed care plan, “close to 100% of the 

providers who had treated [CNH] employees were 

participants in the network and 100% of the hospitals 

in the area were within the network. Promises also 

were made that doctors not in the network would be 

approached to join.” Reese, 2011 WL 824585, at *9. 

Virtually all of the same doctors, in the same facilities, were available to the retirees after shifting from 

the indemnity plan to managed care. This evidence 

does not support the majority's conclusion that the 

managed care plan “represented a reduction in the 

effective choices of coverage available for all retirees.” Reese I, 574 F.3d at 325. The same is true of the 

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coverage actually provided to retirees.

On the issue of coverage, the district court found 

that while the indemnity plan covered 100% of the 

“reasonable and customary charges” for Type A 

(hospital expenses) and Type B (surgery and inpatient procedures) benefits, it only covered 80% of 

the more common Type C benefits (out-of-hospital 

doctor visits). Reese, 2011 WL 824585, at *9. The 

indemnity plan also included a $50,000 per person 

lifetime maximum cap on benefits. Id. The managed 

care plan, conversely, required no retiree contributions, contained no “reasonable and customary” limitation, and had no lifetime maximum: “Thus Plaintiffs obtaining care ‘in-network’ under the managed 

care plan received better coverage than they did under the indemnity plan; those obtaining care for routine services ‘out-of-network’ were responsible for 

the same 20% of the costs that they were paying under the indemnity plan.” Id. The evidence thus bears 

out CNH's contemporaneous claim that the negotiated shift to managed care in 1998 actually provided 

“improvements” for the retirees. Id. So, while I agree 

with Reese I's assertion that “the resetting of healthcare benefits for previously retired employees might 

not concern anyone if each change upgraded the existing package of benefits,” Reese I, 574 F.3d at 325,

I cannot join the majority's conclusion that the 1998 

shift from the indemnity plan to managed care resulted in a reduction of the retirees' benefits.

*9 Finally, the majority also reasoned that 

“[p]ast changes to retiree healthcare benefits ... had 

not been collectively bargained,” and this fact supports its conclusion that CNH may unilaterally modify retirees' benefits now. This statement, however, is 

not followed by factual support; the assertion is followed by a citation to the legal proposition that a 

union is not required to negotiate on behalf of its 

retirees in collective bargaining. Even accepting 

Reese I's claim that those CNH employees who retired between 1994 and 1998 did not consent to shifting from the indemnity plan to managed care, Reese 

I, 574 F.3d at 324, the agreement which led to the 

change was collectively bargained between the union 

and current employees, a far cry from CNH's attempt 

to unilaterally modify those benefits.

Because Plaintiffs have demonstrated they are 

entitled to judgment as a matter of law, I would affirm the district court's grant of summary judgment to 

Plaintiffs and overrule our previous holding that 

CNH may unilaterally modify the scope of Plaintiffs' 

retirement health benefits under the 1998 CBA. Because the majority adheres to its original decision 

regarding the scope of the retirees' benefits, I respectfully dissent.

C.A.6 (Mich.),2012.

Reese v. CNH America LLC

--- F.3d ----, 2012 WL 4009695 (C.A.6 (Mich.))

END OF DOCUMENT

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