Opinion ID: 799219
Heading Depth: 3
Heading Rank: 2

Heading: Vesting of Bargained-for Welfare BenefitsLegal Framework

Text: Retiree healthcare benefit plans are welfare benefit plans under ERISA, but, unlike pension plans, are not subject to mandatory vesting requirements. Maurer, 212 F.3d at 914. As a result, vesting of retiree welfare benefits is a matter of contractual agreement. Id. If the parties intend for welfare benefits to vest and the agreement to that effect is breached, there is an ERISA violation as well as an LMRA violation. Id. Vesting occurs upon retirement, not eligibility for retirement, see Winnett v. Caterpillar, Inc. (Winnett I), 553 F.3d 1000, 1011 (6th Cir. 2009), while an employer is free to terminate any unvested welfare benefits upon the expiration of the relevant CBA, Noe, 520 F.3d at 552 (emphasis added). Significantly, in this circuit, a court may find vested welfare benefits under a CBA even if the intent to vest has not been explicitly set out in the agreement. Maurer, 212 F.3d at 915; see also Noe, 520 F.3d at 552. [6] Although governed by substantive federal law, we apply traditional rules of contract interpretation as long as their application is consistent with federal labor policies. UAW v. Yard-Man, Inc., 716 F.2d 1476, 1479 (6th Cir.1983). Under Yard-Man, the seminal case governing whether parties to a CBA intended welfare benefits to vest, courts must first examine the CBA language for clear manifestations of an intent to vest. [ Yard-Man, 716 F.2d at 1479]. Furthermore, each provision of the CBA is to be construed consistently with the entire CBA and the relative positions and purposes of the parties. Id. The terms of the CBA should be interpreted so as to avoid illusory promises and superfluous provisions. Id. at 1480. Our decision in Yard-Man also explained that retiree benefits are in a sense `status' benefits which, as such, carry with them an inference ... that the parties likely intended those benefits to continue as long as the beneficiary remains a retiree. Id. at 1482. With regard to the  Yard-Man inference, later decisions of this court have clarified that Yard-Man does not create a legal presumption that retiree benefits are interminable. Yolton, 435 F.3d at 579. Rather, Yard-Man is properly understood as creating an inference only if the context and other available evidence indicate an intent to vest. Id. When an ambiguity exists in the provisions of the CBA, then resort to extrinsic evidence may be had to ascertain whether the parties intended for the benefits to vest. [ UAW ] v. BVR Liquidating, Inc., 190 F.3d 768, 774 (6th Cir.1999). If an examination of the available extrinsic evidence fails to conclusively resolve the issue and a question of intent remains, then summary judgment is improper. [ United Mine Workers ] v. Apogee Coal Co., 330 F.3d 740, 744 (6th Cir.2003). Noe, 520 F.3d at 552. If the issue cannot be resolved by summary judgment, it is now settled that there would be no right to a jury trial of these claims. Reese v. CNH Am., LLC, 574 F.3d 315, 327-28 (6th Cir. 2009). Although no legal presumption arises and plaintiffs continue to bear the burden of proving that vesting has occurred, this court will apply the Yard-Man inference so long as we can find either explicit contractual language or extrinsic evidence indicating an intent to vest. Reese, 574 F.3d at 321 (citing Yolton, 435 F.3d at 580) (internal quotation marks omitted). While application of Yard-Man has led to differing results, this court has described the inference as acting like a thumb on the scales or nudge in favor of vesting. Id. [7] As the district court explained, although many CBAs were entered into during the period from 1971 to 1998, the plaintiff class can be divided into three subgroups who claim benefits based on an employee's retirement: (1) before 1986; (2) from 1986 through the end of 1993; and (3) after 1993 (or more precisely, on or after January 1, 1994, but on or before July 31, 1998). The first two groups were found to have vested (although somewhat different) rights to lifetime health insurance benefits, and all three groups were found to have vested rights to full reimbursement of Medicare Part B premiums for retirees and spouses (but not dependents). Although both health insurance and Medicare Part B reimbursements are contractually based welfare benefits, they are discussed separately because the provisions and arguments are distinct.