Opinion ID: 3171236
Heading Depth: 2
Heading Rank: 2

Heading: ordinary principles of contract law

Text: Our review begins with the Supreme Court’s decision in M&G Polymers, which unanimously concluded we should review the Agreements applying “ordinary principles of contract law.” See id. at 935–37; id. at 938 (Ginsburg, J., concurring). Such “ordinary principles” include the following:  [A]s with any other contract, the parties’ intentions control.  Where the words of a contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance with its plainly expressed intent.  Although a court may look to known customs or usages in a particular industry to determine the meaning of a contract, the parties must prove those customs or usages using affirmative evidentiary support in a given case.  [T]he written agreement is presumed to encompass the whole agreement of the parties.  Courts [should] avoid constructions of contracts that would render promises illusory because such promises cannot serve as consideration for a contract. . . . [A] promise that is “partly” illusory is by definition not illusory.  [C]ourts should not construe ambiguous writings to create lifetime promises. . . . [C]ontracts that are silent as to their duration will ordinarily be treated not as “operative in perpetuity” but as “operative for a reasonable time.”  [T]raditional rules of contractual interpretation require a clear manifestation of intent before conferring a benefit or obligation. No. 12-3329 Tackett, et al. v. M&G Polymers USA, et al. Page 6  Contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.  When a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life. M&G Polymers, 135 S. Ct. at 933–37 (unanimous op.) (citations omitted). The Court did not purport to discuss all of the ordinary principles of contract law. See id. at 935–37 (noting only those ordinary contract principles that Yard-Man violated). Justice Ginsburg’s concurrence identified additional “ordinary principles of contract law”:  Under the cardinal principle of contract interpretation, the intention of the parties, to be gathered from the whole instrument, must prevail.  [W]hen the contract is ambiguous, a court may consider extrinsic evidence to determine the intentions of the parties. . . . [F]or example, the parties’ bargaining history.  No rule requires “clear and express” language in order to show that parties intended health-care benefits to vest.  Constraints upon the employer after the expiration date of a collectivebargaining agreement . . . may be derived from the agreement’s “explicit terms,” but they may arise as well from implied terms of the expired agreement. M&G Polymers, 135 S. Ct. at 937–38 (Ginsburg, J., concurring) (citations omitted).2 Still, the parties identified additional “ordinary principles of contract law” that may be relevant here, including that contracts incorporate existing law, Norfolk & W. Ry. Co. v. Am. Train Dispatchers Ass’n, 499 U.S. 117, 130 (1991); see also 11 Williston on Contracts § 30:19; 3 Corbin, Contracts § 551, and that subsequent changes in the law are not incorporated unless the contract so 2 The M&G Polymers majority did not purport to disregard or disavow all other ordinary principles of contract law that it did not expressly identify. Reliance on Justice Ginsburg’s concurrence is appropriate in this instance because it identifies other principles of contract law. Compare J.P. v DeSanti, 653 F.2d 1080, 1089 (6th Cir. 1981) (relying on concurrences in two Supreme Court cases to “assure that there would be no misunderstanding” as to the meaning of the Court’s opinion and to remove “any doubt about the Court’s analysis”), with Alexandar v. Sandoval, 532 U.S. 275, 285 n.5 (2001) (noting that a concurrence that is merely “consistent with” the majority, but not “coextensive,” cannot “force the majority to address a point they found it unnecessary (and did not wish) to address, under compulsion of [a] new principle that silence implies agreement.”). No. 12-3329 Tackett, et al. v. M&G Polymers USA, et al. Page 7 indicates, Kia Motors Am., Inc. v. Glassman Oldsmobile Saab Hyundai, Inc., 706 F.3d 733, 738 (6th Cir. 2013) (quoting 11 Williston on Contracts § 30:23). Importantly, the Court rejected Yard-Man’s inferences in favor of retirees, but also declined to adopt an “explicit language” requirement in favor of companies. See M&G Polymers, 135 S. Ct. at 937 (unanimous op.), 938 (Ginsburg, J., concurring); Litton Fin. Printing Div., a Div. of Litton Bus. Sys., Inc. v. N.L.R.B., 501 U.S. 190, 207 (1991) (“[A] collectivebargaining agreement [may] provide[] in explicit terms that certain benefits continue after the agreement's expiration,” but nevertheless, “constraints upon the employer after the expiration date of a collective-bargaining agreement . . . may arise as well from the express or implied terms of the expired agreement itself.”) (emphasis added).3 Thus, while the Supreme Court’s decision prevents us from presuming that “absent specific durational language referring to retiree benefits themselves, a general durational clause says nothing about the vesting of retiree benefits,” we also cannot presume that the absence of such specific language, by itself, evidences an intent not to vest benefits or that a general durational clause says everything about the intent to vest. See M&G Polymers, 135 S. Ct. at 935, 937 (unanimous op.) (noting that Sprague v. General Motors Corp., 133 F.3d 388, 400 (6th Cir. 1998) and Yard-Man were decided using different principles of contract construction as to the requirement for “clear and express” language, but falling short of endorsing or denouncing Sprague). We need not decide here whether Sprague’s “clear and express language” requirement comports with ordinary principles of contract law.