Opinion ID: 3175569
Heading Depth: 3
Heading Rank: 1

Heading: Language of the Agreements

Text: The majority serially examines and rejects each contract argument of Retirees as insufficient to show either a contractual commitment to provide lifetime healthcare benefits or an ambiguity in the contract documents that would allow for examination of extrinsic evidence. But this divide and conquer analysis transgresses the “cardinal principle” of contract interpretation: the intention of the parties to a contract is “to be gathered from the whole instrument.” Id. (quoting 11 Williston § 30:2, p. 27). Characteristics and particulars of the whole instrument—the collective bargaining agreements and the plant closing agreement—must be considered together. I turn now to examination of these agreements. Retirees argue that the use of future tense language throughout the collective bargaining agreements evidences intent to vest retiree healthcare. The majority opines that, “[i]f Tackett tells us anything,” it is that the future tense language used by the parties, without more, “does not guarantee lifetime benefits.” (Maj. Op. at 8 (citing Tackett, 135 S. Ct. at 937).) But Tackett did not address what may be implied from the use of future tense and expressly chose not to answer Nos. 14-3633/3918 Gallo, et al. v. Moen Inc. Page 18 the vesting question but to remand it for this court to do so, absent the Yard-Man inferences. See Tackett III, 2016 WL 240414, at . In Litton Financial Printing Division, a Division of Litton Business Systems, Inc. v. NLRB, moreover, the Supreme Court explained that duties in a contract may arise from its “express or implied terms.” 501 U.S. 190, 203, 207 (1991). Consistent with the “cardinal principle” of contract interpretation, we must look to both express and implied terms in all the agreements to determine the intention of the parties. See Tackett III, 2016 WL 240414, at  (citing Litton, 501 U.S. at 207). The majority dismisses out of hand the standalone argument based on future tense language and instead specifies an additional requirement to point to “words committing to retain the benefit for life”—an addition at odds with Litton. (Maj. Op. at 8.) The future tense language used in the agreements, however, could imply intent that retiree healthcare be vested—especially if other aspects of the “whole instrument” point in that direction. Both are true here. The 2005 collective bargaining agreement, for example, provides that “[c]ontinued hospitalization, surgical and medical coverage will be provided without cost to past pensioners and their dependents”; “future retirees will be covered under the new medical plan”; “[t]he co-premium amount for the retiree will be frozen at the co-premium in effect at the time of retirement”; and “[t]he Company will pay the monthly premium charge . . . for all retirees and future retirees . . . and their eligible dependents under the terms of the policy.” It is appropriate to consider the presence of this future tense language in the agreements, along with their other characteristics and particulars, to ascertain the intention of the parties. The majority’s blanket conclusion otherwise amounts to a clear statement rule in favor of employers, a position that it correctly disavowed as contrary to Tackett. (Maj. Op. at 12.) See Tackett III, 2016 WL 240414, at . Turning to other evidence of intent to vest that can be gleaned from the “whole instrument,” Retirees cite the link in the agreements between retiree healthcare benefits and pensioner status. The 2005 collective bargaining agreement states that health benefits “will be provided without cost to past pensioners and their dependents” and includes Medicare Part B reimbursements in “pension payments.” The majority presumes this language to refer to eligibility and then concludes that “Tackett rejected this kind of ‘tying’ analysis.” (Maj. Op. at 9.) The Supreme Court did reject as an improper inference the conclusion that “the tying of Nos. 14-3633/3918 Gallo, et al. v. Moen Inc. Page 19 eligibility for health care benefits to receipt of pension benefits suggested an intent to vest health care benefits.” Tackett, 135 S. Ct. at 937. But the contract language before us does not refer to eligibility. Justice Ginsburg’s concurrence illustrates a proper examination of contractual language that specifies the relationship between healthcare and pension benefits: “[b]ecause the retirees have a vested, lifetime right to a monthly pension . . . a provision stating that retirees ‘will receive’ health-care benefits if they are ‘receiving a monthly pension’ is relevant to the examination.” See id. at 938 (Ginsburg, J., concurring). The majority posits the necessity for magic language (“for as long as”) (Maj. Op. at 9), but the agreement at issue in Tackett did not contain that language, the majority did not require that language, and Justice Ginsburg’s example did not include that language. Tracking Justice Ginsburg’s example, the contract language here specifies that Retirees have a vested, lifetime right to a monthly pension and “will receive” healthcare benefits if they are “pensioners.” This is durational tying language that is relevant to our examination of the “whole instrument.” Retirees also argue that intent to vest is suggested by the agreements’ inclusion of explicit durational limitations for other benefits but not retiree healthcare. For example, the 2005 collective bargaining agreement limits the time in which terminated and laid-off employees may receive healthcare, and the plant closing agreement gives healthcare benefits to employees for certain time periods based on the employee’s length of service. The majority dismisses this argument based on the collective bargaining agreements’ inclusion of general durational clauses. Noting that “we should not expect to find lifetime commitments in time-limited agreements,” the majority presumes that when a specific provision of a collective bargaining agreement does not include an explicit end date that provision must be governed by the general durational clause of the agreement. (Maj. Op. at 5–6 (citing Tackett, 135 S. Ct. at 936).) As acknowledged by Tackett III, the majority’s formulation is neither authorized nor compelled by Tackett and improperly places a thumb on the employers’ scale. See Tackett III, 2016 WL 240414, at . The Supreme Court did criticize Yard-Man and its progeny for creating presumptions of vesting “not from record evidence, but instead from its own suppositions about the intentions,” including the presumptions that “a general durational clause says nothing about the vesting of retiree benefits” and that a contract must “include a specific durational clause for Nos. 14-3633/3918 Gallo, et al. v. Moen Inc. Page 20 retiree health care benefits to prevent vesting.” Tackett, 135 S. Ct. at 935–36 (quoting Noe v. PolyOne Corp., 520 F.3d 548, 555 (6th Cir. 2008)). But those criticisms do not authorize the majority’s opposite inferences—that a general durational clause says everything about vesting and that vesting occurs only if the contract includes a “longer time limit” in the “specific provision.” (Maj. Op. at 5–6.) See Tackett III, 2016 WL 240414, at  (“[W]e also cannot presume that the absence of such specific language, by itself, evidences an intent not to vest benefits or that a general durational clause says everything about the intent to vest.”). Having noted that “contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement,” the Supreme Court explained that this “principle does not preclude the conclusion that the parties intended to vest lifetime benefits for retirees.” Tackett, 135 S. Ct. at 937 (citing Litton, 501 U.S. at 207). Litton teaches that “[e]xceptions [to this ordinary course] are determined by contract interpretation. Rights which accrued or vested under the agreement will, as a general rule, survive termination of the agreement,” Litton, 501 U.S. at 207, and “constraints upon the employer” may arise “from the express or implied terms of the expired agreement,” id. at 203. Thus, we must “consider all relevant contractual language in light of industry practices,” seeking the express or implied intention of the parties. Tackett, 135 S. Ct. at 938 (Ginsburg, J., concurring). Relevant contract language also includes the 2008 plant closing agreement, which states that the 2005 collective bargaining agreement shall cease to exist, “except for items as agreed to in this agreement,” when “all bargaining unit employees cease working at the facility.” Retiree healthcare is identified as an item that will not cease to exist upon plant closure: “Healthcare, Sub and Pension and related benefits shall continue . . . for all retirees and spouses as indicated under the [2005 agreement].” Retirees argue that the only way to make this benefits continuation clause not redundant or superfluous is to interpret it as recognizing the intent to vest retiree healthcare benefits in the collective bargaining agreements and authorizing provision after the plant’s closing. See TMW Enters., Inc. v. Fed. Ins. Co., 619 F.3d 574, 578 (6th Cir. 2010) (holding that courts, to deal with ambiguity, should interpret contracts to avoid superfluous words). Nos. 14-3633/3918 Gallo, et al. v. Moen Inc. Page 21 The majority rejects Retirees’ argument by concluding that the plant closing agreement simply incorporates the terms of the 2005 collective bargaining agreement and, because that agreement did not provide for vested benefits, “an agreement that incorporates it by reference does not do so either.” (Maj. Op. at 11.) The majority then denies applicability of the rule against superfluous words on the basis that the rule is a “tool[] for dealing with ambiguity, not a tool for creating ambiguity in the first place,” and that the plant closing agreement’s clause incorporating the 2005 agreement is unambiguous. (Id. (quoting TMW Enters., Inc., 619 F.3d at 578).) Again, contract principles dictate that we seek the intention of the parties from the whole of the contract language—here, both the collective bargaining agreements and the plant closing agreement. Interpreting the collective bargaining agreements as not vesting retiree healthcare benefits renders the plant closing agreement’s “shall continue” clause superfluous. If retiree healthcare was not vested by the 2005 collective bargaining agreement, then the benefits would have terminated pursuant to the plant closing agreement’s general provision that the 2005 agreement will cease to exist upon plant closing. There would have been no reason for the parties to reiterate, in the same document, that the benefits “shall continue” for as long as the 2005 agreement permits. It did not do so for any other non-vested provisions. Interpreting the 2005 agreement as vesting retiree healthcare, on the other hand, would give the plant closing agreement’s “shall continue” clause meaning. Specifically, the clause would confirm that retiree healthcare benefits, as vested by the 2005 agreement, are not subject to the plant closing agreements’ general provision that the 2005 agreement will cease to exist upon plant closing. The rule against superfluous words thus resolves ambiguity that could have arisen in the language of the two contracts. As a final point, the majority construes the collective bargaining agreements’ reservationof-rights clauses as evidencing an intent not to vest. (Maj. Op. at 7.) The answer to that is simple: that provision does not unambiguously apply to Retirees. In each of the collective bargaining agreements, the reservation-of-rights clause is contained in a separate paragraph furnishing insurance for Moen’s “employees,” not their “retirees,” while different contract paragraphs govern retiree health insurance. The term “employee” has meaning: “[t]he ordinary Nos. 14-3633/3918 Gallo, et al. v. Moen Inc. Page 22 meaning of ‘employee’ does not include retired workers; retired employees have ceased to work for another for hire.” Allied Chem. & Alkali Workers of Am., Local Union No. 1 v. Pittsburgh Plate Glass Co., Chem. Div., 404 U.S. 157, 168 (1971). But even if the reservation of rights clause did apply to Retirees, the other provisions evidencing intent to vest renders the agreements as a whole ambiguous. Applying ordinary contract principles and the Supreme Court’s instructions in Tackett to all of the relevant contract language viewed in light of industry practices reveals ambiguity within the various contract provisions. Because the parties’ intentions cannot be derived unambiguously from the language of the agreements, I turn to the extrinsic evidence to see whether the ambiguity may be resolved.