Opinion ID: 750104
Heading Depth: 3
Heading Rank: 2

Heading: Early Retirees

Text: 150 The early retirees base their claims for vested rights to health care on the bilateral contracts they signed with General Motors. The en banc majority determined that such extra-plan documents carried no weight under ERISA. This Court, however, had left the question of the validity of extra-plan documents open in Musto v. American Gen. Corp., 861 F.2d 897 (6th Cir.1988). In Musto this Court noted: Whether, under ERISA, employees can ever obtain vested rights in welfare plan benefits on the strength of written representations outside the official plan document is a question we need not decide. Id. at 907. I believe the answer should be in the affirmative in this case. 151 The early retirees' claims are founded on the early retirement agreements they signed and other representations General Motors made to them at retirement. These agreements, they argue, constitute binding, bilateral contracts with General Motors for lifetime health care--a bargained-for agreement. The early retirees not only gave up their jobs, but some also surrendered the right to bring causes of action, including civil rights and age discrimination claims, against the company. They argue that this mutual consideration entitles them to bring a breach of bilateral contract claim. Typically a breach of contract claim falls under state law, and ERISA preempts state law. 29 U.S.C. § 1144(a). Preemption need not sound the death knell for a contract-based claim, though. As the district court recognized, plaintiffs can make claims beyond state law. 152 The district court in Sprague II found the early retirement agreements for early retiree subclasses (1) and (2) enforceable under ERISA as independent bilateral contracts, or as modifications of GM's health care benefit plan. 843 F.Supp. at 299. In Sprague II, the district court also quoted Justice Brennan:  'The legislative history demonstrates that Congress intended federal courts to develop federal common law in fashioning' relief under ERISA. Massachusetts Mutual Life Insurance Co. v. Russell, 473 U.S. 134, 156, 105 S.Ct. 3085, 3097, 87 L.Ed.2d 96 (1985) (Brennan, J., concurring), quoted in 843 F.Supp. at 301. These contracts are best enforced under federal common law. 153 Given that the contracts are enforceable under federal common law, the focus then turns to divining the contracts' terms. The district court in Sprague II argued that the agreements were not fully integrated, which opens the door to extrinsic evidence. 843 F.Supp. at 301. This extrinsic evidence, as discussed above, includes written materials showing that General Motors personnel used almost virtually every possible permutation of the words free lifetime health care when presenting future benefits to employees. The district court in Sprague II found enforceable contracts for the subclass (1) and (2) early retirees, 843 F.Supp. at 299, and the district court noted in its Final Judgment that the subclass (4) early retirees also had enforceable contracts. That judgment should have been affirmed.