Opinion ID: 729947
Heading Depth: 2
Heading Rank: 2

Heading: The Interpretation of the Consent Judgment

Text: 46 We review a district court's interpretation of a settlement agreement de novo, King v. Allied Vision, Ltd., 65 F.3d 1051, 1058 (2d Cir.1995), mindful that the consent decree is a contract between the parties, and should be interpreted accordingly, see United States v. ITT Continental Baking Co., 420 U.S. 223, 236-37, 95 S.Ct. 926, 934-35, 43 L.Ed.2d 148 (1975) (noting that consent judgments are to be construed as contracts). Furthermore, a district court may not impose obligations on a party that are not unambiguously mandated by the decree itself. King, 65 F.3d at 1058.
47 The district court concluded that the Consent Judgment cannot be fairly read to bar an increase in the cost of coverage for the Comprehensive Medical Plan, so long as any such increase was justified by medical cost escalation and plan experience in providing benefits. We agree. As Judge Nevas put it: 48 By expressly incorporating the Comprehensive Medical Plan's summary plan description into the Stipulation of Settlement and by failing to define the term level of benefits to include cost of coverage or to expressly prohibit an increase in the cost of coverage charged to the plaintiffs, the parties incorporated all of the summary plan description's terms and conditions, including its cost of coverage provision, into the Stipulation of Settlement. Construing the Stipulation of Settlement in this manner, the court finds that Uniroyal and its successors, like UGTC, cannot terminate or materially reduce the retirees' level of benefits as described in the summary plan description to the Comprehensive Medical Plan, but they may increase the cost of coverage for such benefits in accordance with plan experience and medical cost escalation. 49 The language of the parties' agreement leaves room for no other interpretation. 50 Notwithstanding our agreement with the district court regarding the authority of the Consent Judgment over UGTC and UGTC's authority to increase the rates it charges retirees (subject to the parameters of the Consent Judgment), we disagree with the district court's conclusion that rate increases must be justified only by plan experience in providing benefits to this class as a subset of all the plan participants. 51 We can find no indication in the Settlement Agreement that the parties intended the price of benefits to any subset of retirees to be justified by the cost of providing benefits to that subset. Indeed, the Comprehensive Medical Plan description, which was incorporated by the Settlement Agreement, states that the plan covers active or retired employees, a group much larger than the plaintiff class. Furthermore, allowing price increases based on cost increases relating to a small subset of plan participants (those earliest retired and on average oldest) would deprive the plaintiff class of one chief benefit of the consent decree: insurance under the overall plan, with the attendant risk spreading that inhere in such benefit plans. 52 Accordingly, we hold that UGTC may increase the price it charges its retirees for receiving benefits under the plan only in so far as that increase is justified by plan experience and medical cost escalation (not limited to plaintiffs' plan experience), and as otherwise dictated by the Settlement Agreement. 53 We express no view as to whether UGTC's proffered plan experience cost data justifies the increase UGTC seeks to impose on the Tire retirees. Ultimately, there may be no dispute on that question that the parties need to litigate. In any event, any such issue would be for the district court on remand.