Opinion ID: 724895
Heading Depth: 3
Heading Rank: 1

Heading: Vesting of Benefits

Text: 21 The first issue to be addressed is whether or not the benefits in question are vested benefits. In other words, were the benefits complete and consummated upon the retirement of each Plaintiff such that they cannot now be divested without the consent of those to whom they belong? Until benefits have vested, employers may modify them or terminate them, whether or not they have reserved the right to do so. Curtiss-Wright Corp. v. Schoonejongen, --- U.S. ----, ----, 115 S.Ct. 1223, 1228, 131 L.Ed.2d 94 (1995). 22 Under ERISA, welfare benefits, unlike pension benefits, do not automatically vest. Id. In addition, this Court has a rejected a per se rule which held that all welfare benefits vest at retirement regardless of whether a termination clause was included in the agreement between the employer and employee. In re White Farm Equip. Co., 788 F.2d 1186, 1193-94 (6th Cir.1986). Employers and employees are therefore free to set out, by agreement, welfare benefit plans which vest irrevocably at retirement. Id. at 1192. 23 In order to determine if welfare benefits have vested, federal courts must assess the intention of the parties. Armistead v. Vernitron Corp., 944 F.2d 1287, 1298 (6th Cir.1991). In doing so, the court looks first to the written instruments which formed the agreement for clear manifestations of intent. Policy v. Powell Pressed Steel Company, 770 F.2d 609, 614 (6th Cir.1985), cert. denied, 475 U.S. 1017, 106 S.Ct. 1202, 89 L.Ed.2d 315 (1986). The written instruments to be examined in this case are the SPDs and the master insurance agreements. The SPDs told employees that, 24 When you are retired, your Health Care coverages, except for vision, are continued without cost to you. 25 If you terminate employment with Kelsey-Hayes at age 65 or older for any reason other than discharge, all of your Health Care coverages, except vision care, will be continued for the rest of your life without cost to you. 26 Jt.App. at 39. This statement, and similar ones made in the 1984 SPD, demonstrate an intent to vest benefits in employees when they retire. See Policy, 770 F.2d at 614 (statement in collective bargaining agreement that provided health coverage  'during the life of the pensioner at no cost to the pensioner' ... clearly means that the pensioner will receive health benefits for the remainder of his life, regardless of when the collective bargaining agreement expires....). Defendant relies on the cancellation clauses of the master agreements to support its assertion that it never intended for the benefits to vest. Giving effect to the master agreement cancellation provisions, they argue, would not violate the rule in Edwards that the SPDs control, because of the provisions in the SPDs themselves which designate the master agreements as controlling. 27 This attempt to bootstrap the cancellation clauses into the SPDs through the SPD provisions designating the master agreements as controlling fails for two reasons. First, the plain language of the master agreements indicates that the cancellation clauses were included merely to reserve the right of the employer or the carrier to end their commercial relationship. Therefore, as the District Court concluded, it is doubtful that the cancellation clauses are even relevant to the scope of employee benefits. Thus, even if the master agreement cancellation clauses were controlling (which, under Edwards, they are not), an objective look at the plain language of the documents leads to the conclusion that the Defendants intended for the rights to vest. Second, even if we assume that the cancellation clauses were intended to regulate the obligations of the employer to the employees, this Court has held quite clearly that promises made in SPDs are binding on the employer regardless of conflicting language in a master agreement. Edwards, 851 F.2d at 136. In Edwards, there was no dispute about the intent of the definitions in the Plan document, upon which the defendant sought to rely. This Court assumed that under the Plan documents, Edwards could legitimately be denied disability benefits. What mattered in Edwards, and what matters today, is the language actually given to the employees and upon which they could reasonably have relied. In both Edwards and the case at hand, the SPDs were the only documents which were written by the employer and were distributed to the employees. Just as the plaintiff in Edwards reasonably relied on the promises made by State Farm regarding his eligibility for disability benefits, it was reasonable for the Plaintiff employees in this case to believe that if they retired while the 1977 or 1984 SPDs were in effect, they would be entitled to the specified health benefits promised at no cost to them. By retiring from Kelsey-Hayes, they indicated their intent to accept those benefits as they were then defined. In this circuit, under Edwards, Companies are held to the promises they make in their SPDs. 851 F.2d at 136. 28 As in Edwards, we may also turn to the legislative history of ERISA for guidance. The purpose of the ERISA legislation was to remedy certain defects in the private retirement system which threatened individual pension and benefits rights. H.R. Rep. 533, 93rd Cong., 2d Sess. (1974), reprinted in 1974 U.S.C.C.A.N. 4639, 4639. One of the concerns addressed in the legislation was the inadequacy of the limited data available to employees under pre-ERISA law. Id. at 4649. Congress sought to create disclosure requirements which would enable the individual participant to know[ ] exactly where he stands with respect to the plan--what benefits he may be entitled to, [and] what circumstances may preclude him from obtaining benefits ... Id. at 4649. Congress chose to implement its goal of full disclosure by requiring that all employers create and distribute Summary Plan Descriptions (SPDs) of all benefit plans. 29 U.S.C. § 1022. The statute, cited in Edwards, provides that the Summary Plan Descriptions, shall be written in a manner calculated to be understood by the average plan participant, and shall be sufficiently accurate and comprehensive to reasonably apprise such participants and beneficiaries of their rights and obligations under the plan. 29 U.S.C. § 1022(a)(1). In addition, the statute requires that the Summary Plan Descriptions include information explaining circumstances which may result in disqualification, ineligibility, or denial or loss of benefits. 29 U.S.C. § 1022(b). According to the legislative history, these statutory requirements were imposed to arm employees with enough information to enable them to enforce their rights. H.R.Rep. No. 533, reprinted in 1974 U.S.C.C.A.N. at 4649. Following the same reasoning we used in Edwards, we conclude that it would make no sense for Congress to require employers to provide clear, simple, complete descriptions of benefits plans if the employee were expected to also know and understand every clause in the voluminous, complex, and legalistic document the SPD was intended to accurately describe. Edwards, 851 F.2d at 136-37. 29 The SPDs in this case, like all SPDs, were produced under a statutory obligation of comprehensiveness and accuracy. Kelsey-Hayes made promises of certain lifetime health benefits to retirees. Even if this court were to find that the cancellation clauses in the master agreements were originally intended to reserve the Company's right to modify or terminate employee benefits, the plain language of the contracts, the statutory language and legislative history of ERISA dictate that employers may not construct SPDs in such a manner that they mislead employees into thinking they have a right to benefits when other documents obliquely negate those rights. See H.R.Rep. No. 533, supra, at 4639, 4646, 4349; Edwards, 851 F.2d at 136. When making decisions about where and how long to work, employees, like the plaintiffs in this case, rely on the promises made to them, particularly when those promises are in writing. This Court has previously refused to accept employer interpretations of benefits documents where the employee was not given any notice of the adverse interpretation and had no reason to know of it. Edwards, 851 F.2d at 136; Rhoton v. Central States, Southeast and Southwest Areas Pension Fund, 717 F.2d 988, 992 (6th Cir.1983). For these reasons, we hold that the district court was reasonable in concluding that the documents indicate an intent by Kelsey-Hayes to create retirement health care benefits which would vest in the employees when they retired. Kelsey-Hayes may not now shirk the responsibilities it created by retroactively reinterpreting complex legal documents in a manner adverse to its retirees. See id. 30