Opinion ID: 175175
Heading Depth: 2
Heading Rank: 1

Heading: A lifetime retiree medical benefit was the parties' intent.

Text: We review the district court's grant of summary judgment de novo, with the familiar standard that summary judgment should be granted if there is no genuine issue of material fact and the record shows that the law entitles the moving party to judgment. Chaklos v. Stevens, 560 F.3d 705, 710 (7th Cir.2009). The parties dispute whether they intended to create a lifetime entitlement to health benefits in their agreement. To resolve this contract dispute, we look to the labor contract in question and apply federal principles of contract construction. Cherry v. Auburn Gear, Inc., 441 F.3d 476, 481-82 (7th Cir.2006); Bland v. Fiatallis N. Am., Inc., 401 F.3d 779, 783 (7th Cir. 2005); Diehl v. Twin Disc, Inc., 102 F.3d 301, 305 (7th Cir.1996). A contract's meaning is a matter of law; where there is no contractual ambiguity, there is no need for extrinsic evidence and no factual dispute that precludes summary judgment. Diehl, 102 F.3d at 305. When interpreting contracts, terms are given their ordinary and popular meaning, GCIU Employer Retirement Fund v. Chi. Tribune Co., 66 F.3d 862, 865 (7th Cir.1995), the document is read as a whole with all its parts given effect, and related documents are read together. Bland, 401 F.3d at 783. The contract language is ambiguous if there is more than one reasonable interpretation of it, and only if the ambiguity is not clarified elsewhere in the document will a court resort to extrinsic evidence of the parties' intent. Id. at 784. Here, there are two potentially relevant documents that make up the agreement between the parties: the Closing Agreement and the last collective bargaining agreement negotiated between the parties. Because of this, we must consider, in addition to general contract principles, whether a right to lifetime health benefits is granted to retired workers by a terminated collective bargaining agreement. See Rossetto v. Pabst Brewing Co., Inc., 217 F.3d 539, 541 (7th Cir.2000) (listing cases considering the question of when a right to health benefits that is granted to retired workers by a collective bargaining agreement . . . survives the termination of the agreement.). Under ERISA, employee benefit plans are classified as either welfare benefit plans or as pension plans. 29 U.S.C. §§ 1002(1), 1002(2)(A). Pension plans, which provide benefits to employees upon retirement or termination, are subject to strict vesting requirements. 29 U.S.C. § 1051. In comparison, welfare benefits such as health care coverage only vest in a lifetime entitlement if the plan contract specifically provides for it. 29 U.S.C. § 1051(1); see also Bland, 401 F.3d at 783; Diehl, 102 F.3d at 305. Because employers are not legally required to vest welfare benefits, and because vested benefits are forever unchangeable, there is a presumption against vesting if the plan language is silent. Bidlack v. Wheelabrator Corp., 993 F.2d 603, 606-07 (7th Cir. 1993) (en banc). But, this is a default rule that exists only if the contract is silent, and it disappears in the face of objective evidence or ambiguity in the parties' intent. Bland, 401 F.3d at 784; Rossetto, 217 F.3d at 544 (If there is some positive indication of ambiguity, something to make you scratch your head . . . the presumption falls out.). As an initial argument, Bemis takes the position that the Closing Agreement is the contract in full, and the only document to analyze. This document, Bemis argues, is unambiguous and so there is no need to look to anything contained in the extrinsic CBA. Paragraph 4(d) of the Closing Agreement provides that retirees and soon-to-be retirees are eligible for the retired employee medical benefit. Nowhere in the Closing Agreement is there a definition or explanation of this retired employee medical benefit. In Bemis's reading then, the language in the closing agreement promises no benefit, let alone a lifetime benefit; it only states that certain people are eligible for an undefined benefit. We must remember, however, that all related documents are read together, Bland, 401 F.3d at 783, and the closing agreement references the CBA at multiple places. First, Paragraph 4(b) refers to the CBA when listing satisfied obligations, and the section defining the retired employee medical benefit is notably not on this list. [1] Furthermore, the Closing Agreement states it shall be the full and complete agreement and supersede the labor Contract, pension and insurance agreements, except and only to the extent that reference to the same may be necessary to effectuate the provisions of this agreement.  Plant Closing Agreement ¶ 6 (emphasis added). These references show an intent for the CBA and Closing Agreement to be read together. Contrary to Bemis's argument, the CBA is not extrinsic evidence, but a necessary document in gaining a complete understanding of the agreement between Bemis and the retirees. Only by reading the CBA can meaning be given to the retired employee medical benefit for which retirees are eligible. Reading the Closing Agreement in conjunction with the CBA clarifies the ambiguity caused by reading the Closing Agreement on its own. The common sense reading of the two documents is that the retired employee medical benefit referred to in the Closing Agreement is defined by the CBA's Retired Employee Medical Benefit provision. Section 9.02, the Retired Employee Medical Benefit, describes the level of coverage by stating that the medical benefit provided retirees, their spouse and dependents shall be the same as defined in § 9.01, which describes the Hospital, Surgical and Medical Insurance provided to current employees. Bemis argues that this is not enough to create a lifetime benefit. Neither the Closing Agreement nor the CBA use duration terms such as lifetime or vest when discussing medical benefits, and Bemis argues the parties knew how to vest benefits as it used the word vested in relation to pension benefits. However, the lack of an explicit vesting term is not determinative. We have previously rejected the position that magic words or unequivocal contract language must state that lifetime benefits were being created. Bidlack, 993 F.2d at 607; see also Bland, 401 F.3d at 784. And, we have on multiple occasions noted that before the rising cost of health benefits in the 1980s, little attention may have been given to language affecting a possible future change in benefits. Bland, 401 F.3d at 783 (citing Bidlack, 993 F.2d at 613 (Cudahy, J., concurring)). Moreover, there are straightforward indications of the parties' intent to create lifetime benefits. In Zielinski v. Pabst Brewing Company, we observed that a presumption against vesting is a natural fit with collective bargaining agreements because they are short-term agreements, and not presumed to create rights that continue past their termination date. 463 F.3d 615, 617-18 (7th Cir.2006). We compared that with a shutdown agreement, and found that applying the presumption in the context of a long-term contract without an end date was less persuasive. Id. at 618. The contract here differs from a typical collective bargaining agreement in the same way: the parties were aware they were establishing and settling claims for employees in a permanent and enduring fashion. That the parties were permanently settling claims in the Closing Agreement seems particularly true when comparing the clauses dedicated to medical benefits for terminated employees and retired employees. In discussing the health and medical benefits granted to employees terminated by the Closing Agreement, it states that employees can continue their present Blue Cross/ Blue Shield Medical coverage by paying the full monthly premium for a period of 12 months (1/1/86 to 1/1/87) or until they become covered by another medical insurance plan, whichever is sooner. It contains an ending date, and also provides for several circumstances in which the eligibility will cease immediately such as not paying premiums or being covered under another plan. The Closing Agreement also explicitly applies this time-limited benefit to all employees, with the exception of those eligible employees who apply for retirement benefits by 12/31/85. In stark contrast, the description of the retiree benefit contains no ending date, and it does not cease immediately upon qualification for another plan. Instead, the company plan becomes a secondary payer. Moreover, the corresponding CBA provision provides that in the event of the death of a retired employee, the dependent spouse will retain coverage until such time as they remarry or qualify for other primary coverage, strongly implying that retired employees (and their spouses) are covered until death. See Rossetto, 217 F.3d at 545 ([A]n employer might want to specify a time limit short of death for dependent benefits yet feel no similar need to limit the duration of retirees' benefits.). Bemis also argues that the plaintiffs have signed releases waiving all claims arising under the CBA. Upon each employee's termination, a document was signed releasing all claims under the previous CBA, and Bemis argues this includes any rights secured by § 9.02. A better understanding of the general release is that it relinquished any claim under the CBA that was not separately secured by the Closing Agreement; that the Closing Agreement secured the right to a lifetime benefit, but that the CBA defined the scope of the right. The release specifically lists an amount of payment received by each signee. The payment is the total pay due for payments such as severance, unused vacation pay and holidays. It also specifically lists premium payments for continued medical coverage either as a terminated employee or a future retiree. A thorough reading of the release undercuts Bemis's argument. The release acknowledges that terminated employees and retirees will continue to receive medical coverage, but releases Bemis from making any more premium payments for that coverage. The language contained in the Closing Agreement clearly entitles retirees to an eligibility for a specific medical benefit. The retirees represented in this action were eligible for these retiree medical benefits, and elected to commence their retirement benefits by the date indicated in the Closing Agreement. The benefit was defined by §§ 9.01-.02 of the CBA, which promised retirees' benefits to the level of those given to current employees, and specifically detailed added benefits effective July 1, 1982. The Closing Agreement was negotiated with the purpose of creating enduring rights, had no termination date, and no method through which retiree benefits could end. We find that the parties intended to grant retirees a lifetime entitlement to medical benefits and reverse the district court's grant of summary judgment to Bemis on this issue.