Opinion ID: 724895
Heading Depth: 3
Heading Rank: 2

Heading: Right to Modify or Terminate Vested Benefits

Text: 31 Once it is determined that the benefits promised by the Company vested in the Plaintiffs at retirement, it becomes necessary to decide what terms and conditions were properly placed on the benefits prior to the time they vested. We have held that employers may modify or terminate vested rights where their power do so was an explicit part of the agreement between the parties. Boyer v. Douglas Components Corp., 986 F.2d 999, 1001 (6th Cir.1993); Musto v. American General Corp., 861 F.2d 897, 904-06 (6th Cir.1988), cert. denied, 490 U.S. 1020, 109 S.Ct. 1745, 104 L.Ed.2d 182 (1989); In re White Farm Equip. Co., 788 F.2d 1186, 1189, 1192-94 (6th Cir.1986). However, this question is also controlled by Edwards, which held that the language of SPDs is binding, and where there is a conflict between the language of the SPD and the other official plan documents, it is the SPD which is controlling. Edwards, 851 F.2d at 136. Thus, unless the modification/termination provision was explicitly contained in the SPD, the benefits are not subject to such a provision. 32 Defendants assert that our holding in Edwards has been limited by two subsequent cases: Boyer v. Douglas Components Corp., 986 F.2d 999, 1001 (6th Cir.1993), and Gill v. Moco Thermal Industries, Inc., 981 F.2d 858, 860 (6th Cir.1992). In Boyer, the defendant explicitly reserved the right to modify or terminate benefits in the summary description. That case, therefore, does not apply to the situation at hand. 986 F.2d at 1001 ([P]lan booklet provided: 'It is hoped that this Plan will be continued indefinitely, but, as is customary in group plans, the right of change or discontinuation at any time must be reserved.' ). In Gill, there were no SPDs at issue. Therefore, we held that an unambiguous cancellation clause in an insurance agreement between an employer and an insurance carrier was an effective reservation of the right of the employer to modify employee health benefits. 981 F.2d at 860. In that case, plaintiffs appear to have relied on the verbal assurances made to them by their employer in support of their equitable estoppel claim. Id. While reliance upon boiler plate cancellation clauses from insurance contracts to determine employee rights is troubling under any circumstances, it is understandable that this Court would choose to do so where the agreement is the only available written source of guidance. That is not the case here. 33 We note that in finding for the Plaintiffs, the district court relied, alternatively, on this Court's opinion in UAW v. Yard-Man, 716 F.2d 1476, 1480-82 (6th Cir.1983). Under Yard-Man, when the language in a Plan document is ambiguous, the Court may use extrinsic evidence in order to clarify the terms of the agreement. 716 F.2d at 1480-82. Thus, if an ambiguity in the SPD had been created in this case by the promises made, the reference to the master agreement, and the cancellation clause in that agreement, the court could use extrinsic evidence to determine the terms of the benefits at the time the Plaintiffs retired. Id. In this case, however, the language of the master agreements neither conflicts with nor creates an ambiguity in the SPD. The language of the cancellation clauses appears simply to contemplate a cessation of the commercial relationship between the Company and the insurance carrier. These clauses were, in fact, used by the Company on numerous occasions when it chose to change the insurance company with which it did business. There is no evidence that the clauses were originally intended to have some dual purpose of reserving the right of the Company to terminate employee benefits. Thus, Yard-Man is not applicable to the case at hand. 34 The analysis of the Defendant's purported modification/termination provisions is therefore similar to the analysis of the intent to vest benefits; the court looks to the plain language of the documents, the ERISA statute, and legislative intent. Edwards, 851 F.2d at 136-37; Boyer, 986 F.2d at 1005; Musto, 861 F.2d at 909-10; White Farm, 788 F.2d at 1191-93. As to the reservation of the right to modify or terminate benefits, the legislative history also weighs against allowing employers to promulgate SPDs which they can disavow even though they did not reserve such a right up front. Congressional intent cannot be carried out unless employers are required to adhere to the language of their own Summary Plan Descriptions. In Edwards, this Court refused to allow a Company to issue Summary Plan Descriptions which make all sorts of promises and then bury escape clauses in highly technical and inaccessible insurance agreements. Similarly, we can not, in this case, permit the goals of the ERISA SPD provisions to be thus undermined. Other circuits have come to similar conclusions. See, e.g., Aiken v. Policy Management Sys. Corp., 13 F.3d 138, 141 (4th Cir.1993); Heidgerd v. Olin Corp., 906 F.2d 903, 907 (2nd Cir.1990); McKnight v. Southern Life and Health Ins. Co., 758 F.2d 1566, 1570 (11th Cir.1985).