Opinion ID: 174862
Heading Depth: 2
Heading Rank: 2

Heading: Continuing Obligation

Text: As an initial matter, we must decide whether Raytheon's obligation to pay the premiums for retiree medical insurance coverage survived the three-year term of each of the CBAs. We conclude that it did. In general, contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement. Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 207, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991); see also Poore v. Simpson Paper Co., 566 F.3d 922, 927 (9th Cir.2009). There are exceptions, however, which are determined by contract interpretation. Litton, 501 U.S. at 207, 111 S.Ct. 2215. As the Supreme Court has explained: Rights which accrued or vested under the agreement will, as a general rule, survive termination of the agreement. And of course, if a collective-bargaining agreement provides in explicit terms that certain benefits continue after the agreement's expiration, disputes as to such continuing benefits may be found to arise under the agreement. ... Id. at 207-08, 111 S.Ct. 2215. The CBAs explicitly provided that the retirees' rights to fully paid premiums for medical insurance would continue after the CBAs' expiration. Id.; Poore, 566 F.3d at 927 (An exception to this general rule exists, however, where the parties' dispute concerns a `right that accrued or vested under the agreement, or where, under normal principles of contract interpretation, the disputed contractual right survives expiration of the remainder of the agreement. ' (quoting Litton, 501 U.S. at 206, 111 S.Ct. 2215) (emphasis added)). Hughes and Raytheon expressly agreed to continue to provide premium-free medical insurance coverage for retirees until age 65 notwithstanding the CBAs' three-year terms. See Litton, 501 U.S. at 206, 111 S.Ct. 2215 (recognizing that obligations already fixed under the contract but as yet unsatisfied do not expire with the agreement). Unlike other group coverages in the CBAs, premium payments for retiree medical insurance coverage were not limited to the term of the agreement. [1] Compare United Mine Workers v. Brushy Creek Coal Co., 505 F.3d 764, 766-67 (7th Cir.2007) (concluding that retiree benefits, although described as for life in one provision of a CBA, were limited to the term of the CBA under a separate provision so stating expressly); Crown Cork & Seal Co., Inc. v. Int'l Ass'n of Machinists & Aerospace Workers, AFL-CIO, 501 F.3d 912, 917-18 (8th Cir. 2007) (holding that retiree benefits did not vest under a CBA in part because the CBA expressly precluded only modification for the life of the agreement). Retiree medical insurance coverage with premiums paid by Raytheon was not limited to the CBAs' expiration dates by virtue of the general integration clause, which applied the CBAs' term limits to group coverages that did not specify duration. [2] As the district court determined, retiree medical insurance coverage, with premiums paid by Raytheon, was the only group coverage under the CBAs that supplied a specific durationuntil the retiree attains age 65and therefore survived the expiration of the CBAs. Compare Turner v. Local Union No. 302, Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 604 F.2d 1219, 1225 (9th Cir. 1979) (concluding that the CBAs made no representation as to the length of the period during which[retiree] benefits would continue to be paid, other than `throughout the term of this agreement' and therefore could be terminated at the end of any one [CBA]); Int'l Union of United Auto., Aerospace & Agric. Implement Workers of Am. v. Rockford Powertrain, Inc., 350 F.3d 698, 705 (7th Cir.2003) (holding that a company could terminate ongoing retiree health benefits because the CBA contains no statement regarding the period of time during which retirees would be entitled to benefits). The language of the CBAs makes clear that Raytheon's agreement to pay retiree medical insurance premiums continued beyond the term of the CBAs even where its agreement to pay non-retired employee premiums did not. The CBAs provided retirees with medical insurance coverage for which they were covered while active employees, which was, undisputedly, premium-free. [3] In addition, letters from Raytheon to retirees between 1998 and 2002 support the understanding that retirees and their qualified dependents were eligible for Company-Paid retiree medical coverage until the age of 65. Thus, Raytheon agreed to continue providing retirees with the same premium-free medical insurance coverage they had as active employees, until they turned 65. While Raytheon argues that this promise was merely an agreement to pay some portion of retirees' medical coverage until age 65, the language of the CBAs supports the plaintiffs' contention that it obligated Raytheon to continue the premium-free coverage that retirees enjoyed as employees. The CBAs provide different retirement benefits to employees who enrolled in the contributory option of the Retirement Plan from those who enrolled in the non-contributory option, and the difference sheds light on the correct interpretation of Company-Paid. The CBAs exclude from the non-contributory benefit what they alternately called employer provided medical coverage and company-paid medical. Instead, employees opting for the non-contributory benefit were required to pay the full retiree COBRA Group Premium for the medical plan of benefits in which they are enrolled, if they wished to maintain coverage after retirement. The difference is clear. Retirees who elected the noncontributory benefit pay for their insurance, while retirees who elected the contributory benefit receive the same company-paid medical they received as employees until they turn 65.