Court Opinion

ID: 9576036
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:19:58.667149+00
Date Added: 2024-06-11T12:55:24.946571
License: Public Domain

Opinion by Judge O’SCANNLAIN; Dissent by Judge GRABER.
O’SCANNLAIN, Circuit Judge:
We must decide whether we have subject matter jurisdiction over this dispute about retirement benefits.
I
Simpson Paper Company (“Simpson”) owned and operated the Evergreen Mill in West Linn, Oregon from 1990 until 1996, when it closed for economic reasons. Plaintiffs are former workers in the mill, who retired at ages over 55 but under 65, and their dependent spouses (collectively referred to as “early retirees” or “retirees”).
The Association of Western Pulp and Paper Workers (“the Union”) represented the hourly employees at the mill, including the early retirees, from the 1970s through the time of the mill’s closure. Three collective bargaining agreements (“CBAs”) were in force during the time Simpson owned the mill: 1990-93, 1993-95, and 1995-2001. Simpson and the Union negotiated a closure agreement in 1996, which terminated the 1995-2001 CBA.
The first CBA incorporated by reference a benefit booklet, as follows: “Subject to all the provisions of the Benefit Plan Booklet the Company will provide for each eligible employee and each eligible dependent the coverages agreed to in its labor agreement dated November 27, 1990.” The incorporated booklet provided that early retirees could continue medical coverage that existed at the time of retirement and that they could “change coverage at the annual open enrollment on the same basis as active employees.” The booklet further provided that such coverage would continue until the retiree “bec[ame] eligible for Medicare, attain[ed] age 65, or until ... death, whichever occurs first.” A similar extension period was provided for continuation of medical coverage for the retirees’ spouses. During the time that such coverages continued, the cost was “paid on the same basis as active employees.” Finally, the benefits booklets specifically reserved to Simpson the “right to alter, amend, delete, cancel or otherwise change” the welfare plan benefits “at any time, subject to negotiation with the Union.'” (Emphasis added.)
The latter two CBAs likewise incorporated the benefits booklet. Such contracts stated that, “[ujnless otherwise specified, all participants covered by the health care plans will be subject to the same level of contributions as active employees and to the same health care plan provision changes which take effect from time to time.” Though there were slight changes to the benefits booklet over the years, the benefits Simpson provided therein remained substantially the same.
*1065Simpson’s closure agreement negotiated with the Union provided that
[e]mployees who are curtailed as a result of the closure and begin receiving their Simpson pension benefits as of the first of the month immediately following curtailment, will be eligible for retiree medical coverage in accordance with the provisions of the Benefits Plan Booklet.
Then-active employees received a “Termination Checklist” at meetings just before the closure. It contained essentially the same provision just quoted. Neither the closure agreement nor the information given to employees who remained employed until closure referenced early retiree or dependent spouse benefits for those who already had retired.
In 2002, Simpson notified all retirees that it intended to phase out, and eventually to eliminate, retirement health benefits, and on July 1, 2004, it carried out such intention and stopped providing retirement health benefits. The present action followed.
The early retirees assert that Simpson breached its duties under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1132, by terminating health benefits without having obtained the Union’s agreement or having bargained to impasse. They also assert breach of contract claims under the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185(a), arguing Simpson violated its obligations under the CBAs. The district court granted summary judgment to Simpson, concluding that the early retirees have no vested right to the benefits they seek. This timely appeal followed.
II
The parties do not question our jurisdiction; however, we have an “independent obligation” to ensure that such exists. Hernandez v. Campbell, 204 F.3d 861, 865 (9th Cir.2000) (per curiam).
A
To establish standing to sue under ERISA, the early retirees must show that they are plan “participants.” Burrey v. Pac. Gas & Elec. Co., 159 F.3d 388, 392 (9th Cir.1998). ERISA defines a “participant” as “any employee or former employee of an employer ... who is or may become eligible to receive a benefit of any type from an employee benefit plan .... ” 29 U.S.C. § 1002(7). The Supreme Court has clarified that former employees satisfy this definition if they have “ ‘a reasonable expectation of returning to covered employment’ or .... ‘a colorable claim’ to vested benefits.” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 117, 109 S.Ct. 948, 103 L.Ed.2d 80 (1989) (emphasis added) (quoting Kuntz v. Reese, 785 F.2d 1410, 1411 (9th Cir.1986)).
However, ERISA does not require that welfare benefits, including health benefits, actually vest. 29 U.S.C. § 1051(1); Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78, 115 S.Ct. 1223, 131 L.Ed.2d 94 (1995). Rather, whether such benefits are vested is a matter of private contract. See Inter-Modal Rail Employees Ass’n v. Atchison, Topeka & Santa Fe Ry. Co., 520 U.S. 510, 514-15, 117 S.Ct. 1513, 137 L.Ed.2d 763 (1997); Grosz-Salomon v. Paul Revere Life Ins. Co., 237 F.3d 1154, 1160 (9th Cir.2001) (“Simply put, an employee’s rights under an ERISA welfare plan do not vest unless and until the employer says they do.”). Additionally, because vesting welfare benefits is “an extra-ERISA commitment, such] must be stated in clear and express language.” Grosz-Salomon, 237 F.3d at 1160 (citation omitted).
A “vested right” is commonly defined as a “right that so completely and definitely belongs to a person that it cannot be impaired or taken away without the person’s *1066consent.” Black’s Law Dictionary 1349 (8th ed.2004).1 Such definition suggests that unalterability, or at least unalterability in the absence of consent from the person holding the right, is required before a right is deemed vested.2 We have applied a similar interpretation in at least two prior opinions.
In Bower v. Bunker Hill Co., retirees sued their former employer alleging that their retirement medical benefits were improperly terminated. 725 F.2d 1221 (9th Cir.1984). The district court granted summary judgment in favor of the employer, finding that the plaintiffs’ benefits were not vested. On appeal, we explained that “if the pensioners’ medical insurance constituted a vested benefit, that benefit could not be ended without the pensioners’ consent.” Id. at 1223. Similarly, in Grosz-Salomon, we concluded that the employee’s rights under an insurance policy were not vested because the employer retained the right to change the policy without the employee’s consent. 237 F.3d at 1160.
Several of our sister circuits have also taken this view. The Third and Seventh Circuits have held that vesting a right or benefit means to render it “forever unalterable.” Bland v. Fiatallis N. Am., Inc., 401 F.3d 779, 784 (7th Cir.2005); Int’l Union, United Auto., Aerospace & Agr. Implement Workers of Am., U.A.W. v. Skinner Engine Co., 188 F.3d 130, 139 (3d Cir.1999). Likewise, the Fifth Circuit has explained that “[a]n employer ‘vests’ a benefit under ERISA when it intends to confer unalterable and irrevocable benefits on its employees.” Halliburton Co. Benefits Comm. v. Graves, 463 F.3d 360, 377 (5th Cir.2006).
Applying this interpretation of vesting, the district court was correct in concluding that the early retirees’ health benefits are not vested. The CBA and closure agreement both incorporate the plan booklet, which expressly reserves to Simpson “the right to alter, amend, delete, cancel or otherwise change welfare ... plan benefits at any time, subject to negotiation with the Union.” Thus, while the plan booklet also provides a specific duration in which the benefits at issue apply, which can in some circumstances indicate vesting, see Bland, 401 F.3d at 785-86, when read together with the reservation-of-rights provision, the plan allows such benefits to be altered, or even terminated, without the retirees’ consent, which defeats vesting. Id. at 786; see also Abbruscato v. Empire Blue Cross & Blue Shield, 274 F.3d 90, 100 (2d Cir.2001) (holding where durational language and reservation of rights is included in same document, the language cannot be construed as vesting benefits for the stated duration). The Seventh Circuit explained such result as follows:
[T]he presence of a reservation of rights clause fundamentally alters the interpretation of [durational] language; both the clause and the [durational] language must be read together, creating a tension that is best relieved by finding that retirees are entitled to benefits for [the stated duration], but that this entitlement is subject to change at the employer’s will.
Bland, 401 F.3d at 786.
The early retirees argue that the negotiation qualifier in Simpson’s reservation of *1067rights demonstrates that the employer does not have a unilateral right to change their retirement benefits, and thus the clause does not defeat vesting. Even assuming such interpretation of the qualifying clause is correct, as to which we express no opinion, it does not get the early retirees to where they wish to be. Whatever authority Simpson may have relinquished, on the express terms of the clause, the retirees do not control their continued receipt of benefits. A duty to negotiate is not of the same character as a duty to secure consent. Regardless of what Simpson is required to do in satisfying its obligation to negotiate, it ultimately retains the exclusive authority to change retirement health benefits irrespective of the outcome of such negotiations.
In addition to the reservation of rights, there are other provisions in the plan documents showing the malleability of the retirees’ benefits. The 1995-2001 CBA specifies that “all participants covered by the health care plans will be subject to the same level of contributions as active employees and to the same health care plan provision changes which take effect from time to time.” Likewise, the 1995 plan booklet, incorporated into the CBA, states that Simpson is only obligated to pay for retiree health benefits to the same extent that it pays for active employees’ benefits. These provisions, taken together with the reservation of rights, establish that the retirees’ rights to benefits are not “unalterable and irrevokable,” but rather are subject to change by Simpson. Halliburton Co. Benefits Comm., 463 F.3d at 377.
Because the early retirees do not have vested rights to the retirement health benefits they seek, they lack standing under ERISA, and we must dismiss such claims for lack of subject matter jurisdiction. See Burrey, 159 F.3d at 392.
B
The retirees also assert breach of contract claims under the LMRA. The LMRA confers federal jurisdiction over “[sjuits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce.” 29 U.S.C. § 185(a). As a general rule, where the contract at issue has expired, the parties are “released ... from their respective contractual obligations” and any dispute between them cannot be said to arise under the contract. Litton Fin. Printing Div. v. NLRB, 501 U.S. 190, 206, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991). 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.” Id.
Here, as discussed above, the retirees’ rights to health benefits under the now expired CBAs were not vested. Thus, their claim seeking recovery of such benefits does not arise under contract sufficient to trigger the LMRA’s grant of federal subject matter jurisdiction because their contractual rights to such benefits “no longer exist[ ].” Office & Prof'l Employees Ins. Trust Fund, 783 F.2d at 921. See generally Cement Masons Health & Welfare Trust Fund v. Kirkwood-Bly, Inc., 520 F.Supp. 942, 943-46 (N.D.Cal.1981), aff'd, 692 F.2d 641 (9th Cir.1982) (explaining a court has jurisdiction under the LMRA only “to enforce provisions” of a “legally operative” agreement).
The dissent seemingly concludes, in part, that because the early retirees have a vested contractual right requiring Simpson to negotiate with the Union before changing benefits, their claims alleging that Simpson failed to satisfy this requirement *1068arise under the parties’ contracts sufficient to confer federal jurisdiction. Even assuming the dissent were correct on this point, the retirees here are not simply seeking procedural relief; they seek the payment of benefits. Thus, under Office & Prof'l Employees Ins. Trust Fund, we conclude that we lack subject matter jurisdiction over these claims as well. 783 F.2d at 921.
For the foregoing reasons, the appeal is
DISMISSED.

. For purposes of pension benefits, which must meet specific minimum vesting requirements, ERISA equates "vested” with “nonfor-feitable.” See 29 U.S.C. § 1053. The statute further defines a “nonforfeitable” right as a right that is "unconditional, and which is legally enforceable against the plan.” Id. § 1002(19).

. Cf. Black’s Law Dictionary 1595 (8th ed.2004) (defining "vested” in a property law context as "not contingent; unconditional; [or] absolute”).