Court Opinion

ID: 9487438
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:16:27.624618+00
Date Added: 2024-06-11T17:52:16.044945
License: Public Domain

HEANEY, Senior Circuit Judge,
dissenting.
I agree that vesting is not mandatory under ERISA for employee welfare benefit plans. I also agree that the Union waived its right to compel arbitration. My agreement ends there, however. The Union does, of course, have the burden of proving that the employee welfare benefits were contractually vested, but this burden is no greater and no less than in any other contract case. See Howe v. Varity Corp., 896 F.2d 1107, 1109 (8th Cir.1990); Anderson v. Alpha Portland Indus., Inc., 836 F.2d 1512, 1517 (8th Cir.1988), *1309cert. denied, 489 U.S. 1051, 109 S.Ct. 1310, 103 L.Ed.2d 579 (1989); Local Union No. 150-A, United Food & Commercial Workers Int’l Union v. Dubuque Packing Co., 756 F.2d 66, 70 (8th Cir.1985). In my view, the Union has more than sustained its burden. Thus, I respectfully dissent.

The Collective Bargaining History

The single most powerful, undisputed fact in this record is that every hourly employee who retired between 1957 and January 1, 1989, received health benefits from Morrell from the time of retirement until death. The retirees received these benefits without interruption even though the collective bargaining agreement terminated on several occasions during this period and even though the Union went on strike on some occasions. The health benefits did change from time to time, usually to the benefit of the retirees, during the forty-two-year period, but always by agreement between Morrell and the Union. No retiree complained about the changes that were made.
A second undisputed fact is that, upon retirement, each hourly employee was given the option of selecting a joint survivor form of benefits. Upon the death of a retiree who elected joint survivorship benefits, Morrell informed the surviving spouse that health benefits would continue until the spouse died or remarried. Jt.App. 823, 919 (§ 9.1(b)(2) of Appendix B of 1979 Master Agreement), 946. Larry McFarland, a retired employee of Morrell, testified that “I was told by [La-Vonne Hoffman, Butch Anderson, Gary Jun-so, and Tim Sinsky] that I would have the benefits for the rest of my life as well as at the time of my death. If I left the percentage in there for my wife, she would receive the benefits for the rest of her life.” Id. at 590. In his affidavit dated April 21, 1992, Les Sundermann, another retired employee of Morrell, stated:
I selected a joint and survivor pension option because I knew that this form of pension would guarantee medical insurance for my wife after my death.... [T]he form given to me to take home and fill out ... also said at the bottom that my wife would have the health insurance after my death if I selected the joint and surviv- or option.
Id. at 1733. Another retired employee of Morrell, Bob Smelser, stated in his affidavit dated April 20, 1992, as follows:
I chose an optional form of pension (joint and survivor pension) specifically so that my wife would be covered by the benefits after my death. The outline of the pension options which I received in the mail from the Company contained a statement, in large capital letters at the bottom, as follows:
HEALTH INSURANCE BENEFITS FOR YOUR SURVIVING SPOUSE WOULD BE PROVIDED BY THE COMPANY ONLY IF YOU CHOOSE A JOINT AND SURVIVOR PENSION.
Id. at 1741. In addition, Paragraph F of a form entitled “Retirement Information” states that “[f|or continued health care benefits for an employee’s spouse and dependents beyond the life of the retiree, employee must select a Joint & Survivor Form of Pension.” Id. at 1743; see also Trial Testimony of Rodger Tibke, id. at 601; Affidavit of Francis Krier (Apr. 20, 1992), id. at 1749; Affidavit of George Zuraff (Apr. 21, 1992), id. at 1752. Again, it is undisputed that Morrell continued these spousal benefits without interruption during those times that the union employees were on strike and no, collective bargaining agreement was in effect.
A third undisputed fact is that not once during the period from 1957 through December 19, 1985, did Morrell inform the Union, the active employees, or employees about to retire that it had the right to terminate retiree health benefits. In his affidavit of April 21,1992, Jim Jarman, a retired employee of Morrell, states:
Neither Lavonne Hoffman or any other person ever advised me that my pension was guaranteed and fixed but that my health insurance benefits were not. I have never at any time heard any representative of John Morrell & Co. make that statement or any statement that the health insurance benefits for employees who have retired are not guaranteed, fixed, and vested in accordance with the agreements between Morrell and the UFCS Union.
*1310Id. at 1729. Another retired employee of Morrell, Jerry Nelson, stated in his affidavit of April 20, 1992, that “[n]o one told me that my health benefits were not guaranteed, fixed or vested and. no one ever told me that it was the Company’s position that those benefits could be modified or terminated by the Company. In fact, I have never at any time heard any representative of the Company make such a claim.” Id. at 1736; see also Affidavit of Don Reiter (Apr. 23,1992), id. at 1738; Affidavit of Ronald Christianson (Apr. 21, 1992), id. at 1758; Affidavit of Marcene Williscroft (Apr. 21, 1992), id. at 1763. Indeed, it was not until July 12, 1979, that Morrell intimated that health benefits for employees and retirees was a matter of “employer grace” rather than a matter of contract. On that date Morrell wrote to the Union:
The Company has taken the position that it has no legal obligation to bargain with the Union with respect to the benefits of past retirees.
Without any waiver of the legal position of either party, however,'... the Company will extend the following benefit programs to retirees currently covered by a Company H.M.S. Plan and who have retired prior to September 1, 1979, under the [retirement provisions] of the 1957, 1959, 1961, 1964, 1967, 1970, 1973, and 1976 Supplemental Agreements on Pensions.
Id. at 932 (emphasis added). By the terms of this letter, which the Union signed and accepted, the Union fully preserved its legal position that no changes could be made in the health benefits of currently retired employees without its consent.
A fourth undisputed fact is that all during the years in question, health benefits for active and retired employees alike were the subject of negotiations between Morrell and the Union. Although it is true that after the Supreme Court’s decision in Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 92 S.Ct. 383, 30 L.Ed.2d 341 (1971), Morrell was not legally required to bargain with the Union over retiree health benefits, it is equally true that it did bargain over this issue and it must keep the bargain it made. Even Morrell’s chief negotiator, M. Lee Bishop, conceded that “it was in the company’s best interests to provide past hourly retirees with certain benefit improvements. And it related largely to the contract negotiations that were going on at that time.” Jt.App. 1712. Simply stated, retiree health benefits were an element, along with wages, hours, pensions, and other fringe benefits, to be considered in reaching an agreement.
A fifth fact is that many employees testified that they were told at the time of their retirement that their health benefits would be continued until they died and beyond that for their spouses if they elected joint surviv-orship benefits. The following colloquy between the attorney for the Union and Virgil Grace, a retired Morrell employee, during the trial of this matter illustrates what Mor-rell supervisors told employees about their retiree health benefits:
Q. (By Mr. King) Go ahead. What else was said?
A. And I decided to take it all and [Bob Worcamp] explained to me that, “Do you know what you are doing?” And I says, “I hope that I do; I think that I do.” And I asked for what I was going to get in fringe benefits. He handed me a piece of paper and says, “Read that on the back.” And it said that if I took it all, my wife wouldn’t get anything and she would lose all of her insurance plus the PCS if I passed away. And if I took partial — part of it she would get those for the rest of her life if I passed away.
Q. She would get what for the rest of her life?
A. The insurance, health benefits, and the PCS. And I said that — after I read it, and it said that I would get my insurance and PCS for the rest of my life, I said that I questioned that and wanted to be sure that I knew what I was getting because in our condition — she has had rheumatoid arthritis for 17 years, and I have arthritis, and we are both in tough shape, and I wanted to be sure and clarify that, that if this — if there was any way that I could lose that health insurance. He said, “The only way you can lose that health insurance is if the company went belly up and went broke.” I said I’d just wanted to clarify that be*1311cause I believe a person is only as good as their word.
Id. at 595-96. Don Sinning, another retired employee of Morrell, stated in his affidavit of April 21, 1992, that “Lavonne Hoffman told us that if I did select a Joint and Survivor form of pension, my wife and I would both be covered by the health benefits during my lifetime and thereafter my wife would, be continued to be covered until the end of her life.” Id. at 1754; see also Affidavit of Ronald Christianson (Apr. 21, 1992), id. at 1758. Not a single witness for Morrell testified that retirees were told at the time of retirement that Morrell could terminate their health benefits at the expiration of a collective bargaining agreement.
Lavonne Hoffman, the Assistant Manager of Benefits for Morrell in Sioux Falls, South Dakota, submitted an affidavit in which she stated that “it was our standard practice to advise [retirees] that their pensions were guaranteed and fixed, but their [health] benefits were not.” Id. at 1723. Hoffman did not state that she explicitly advised employees that Morrell reserved the right to terminate the retiree health benefits after retirement. Morrell did not call a single retiree to support Hoffman’s statement that retiree health benefits were not guaranteed, nor did Hoffman herself identify any retiree whom she told that health benefits were not guaranteed.
In sum, the record supports the view that both the Union and Morrell intended that health benefits would vest when an employee retired. The retirees knew that health benefits could be modified by Morrell and the Union, but they also knew that it was an article of faith with the Union that the health benefits of retirees would be protected.
Faced with hard times in the intensely competitive meat industry, Morrell’s position began to change in 1984. On December 19, 1985, Morrell stated in a letter to a retiree that “benefits are subject to change.” Id. at 1180. Enclosed with the letter was a summary of retiree health benefits that stated, “This Benefit Program is subject to modification and termination in accordance with applicable law.” Id. at 1182. Note that Mor-rell does not explicitly claim that it has the unilateral right to change retiree health benefits. In fact, Morrell was obligated by contract not to do so.
On November 16, 1989, Morrell wrote all retirees a self-serving letter in which it stated that “as always the Company reserves the right to change health care benefits from time to time.” Id. at 1251. This letter was followed by others in a similar vein in which Morrell’s position hardened, culminating in its decision on December 7, 1991, to continue coverage for all retirees but largely at the retirees’ expense.
In the face of this history of collective bargaining and representations to individual retirees, I am unable to find any support in the record for the majority’s view that the history of collective bargaining indicates that retiree health benefits could be terminated by Morrell unilaterally. Obviously Morrell retained the right to deny health benefits to future retirees, but it did not have the right to terminate the health benefits of already retired hourly employees.

The Master Agreement Provisions

I cannot agree with the majority that the Master Agreements contain many provisions that reflect an intent to confer only nonvest-ed retiree health benefits. To the contrary, the agreements failed to include a single provision that informed the Union, the active employees, or the retirees that the four-decade practice of providing health benefits could be discontinued at the end of any collective bargaining agreement.
In my opinion,- there are two reasons Mor-rell never told the interested parties that it retained the right to terminate retiree health benefits at the end of a collective bargaining agreement. First, Morrell knew that it had no right to do so, and only asserted this purported right when conditions in the industry became difficult. Second, Morrell knew that its assertion of such a right after more than forty years of give-and-take bargaining involving this issue would certainly trigger a work stoppage. Morrell had a perfect opportunity to assert the right to unilaterally terminate health benefits for retirees in 1971 when Pittsburgh Plate Glass was decided by *1312the Supreme Court. It failed to do so and instead continued to bargain with the Union with respect to retiree health benefits and to honor retirees’ health benefit claims without interruption.
The majority next claims that this court held in Anderson v. Alpha Portland that language similar to that used here limited retiree health benefits to the duration of the Master Agreement and that such language is inconsistent with an intent to vest retiree health benefits. There are at least two responses to this claim. First, the language here is identical to that in Dubuque Packing, in which our court held that contract language plus a course of dealing indicated an intent that the right to health benefits vest upon retirement. We stated:
While the agreements are not unambiguous, we believe plaintiffs have carried their burden of proof. As noted previously, there are many indications in the agreements and course of dealing that the parties intended the right to benefits would vest upon retirement. The right to receive health and welfare benefits arises from the retiree’s status as a past employee. It is not dependent on a continued or current relationship with the Company. The status of a retiree cannot be affected by fu-time negotiations or agreements between the Company and the Union; neither can act on behalf of retirees. There is simply •no evidence that the Company and the Union did not intend to vest the right to benefits in the retirees. There is, on the other hand, evidence that the parties implicitly intended to provide lifetime benefits to retirees.
Dubuque Packing, 756 F.2d at 70. This panel has no right to overrule Dubuque Packing; only this court en banc can take that action.1
Second, the facts in Anderson v. Alpha Portland are clearly distinguishable from our case.
1. In Anderson v. Alpha Portland both the union and the company testified that retiree health benefits were-not guaranteed beyond the life of the current collective bargaining agreement. The International Union president, Thomas Miechur, and Alpha Portland personnel manager, Robert J. Bonstein, “testified that under the language they prepared and agreed upon, retiree welfare benefits were not guaranteed beyond the expiration of the CBA.” Anderson v. Alpha Portland, 836 F.2d at 1515. Here the Union has always taken the position that retiree health benefits are guaranteed for life, and Morrell acceded to that position for many years.
2. Alpha Portland unilaterally created a group insurance plan for active employees in 1946 and extended the plan to retirees in 1948. Here Morrell and the Union negotiated the health plan for both active and retired employees.
3. Beginning in 1955 the terms of the Alpha Portland plan became subject to bargaining between the company and the union. The booklet describing the initial negotiated plan stated that Alpha Portland reserved the right to discontinue the plan. No such language appeared in Morrell’s booklet until 1985.
4. In 1965 the union submitted a proposal to Alpha Portland that retiree benefits be paid to a retiree’s spouse after the retiree’s death, but Alpha Portland rejected it. Here, spouses of Morrell retirees who elected the *1313joint option received health benefits until they died or remarried.
5. In Alpha Portland benefits for both strikers and retirees continued during the strike. This court stated, “The fact that Alpha treated retirees and striking employees equally negates any inference of intent to vest retiree benefits.” 836 F.2d at 1518 n. 3. In contrast, when strikes occurred at Mor-rell, the health benefits of striking employees were discontinued but health benefits for retirees continued.
The majority makes two additional arguments. First, it states that the durational clause limits all benefits to the life of the collective bargaining agreement. This argument was considered and rejected in International Union, United Auto., Aerospace & Agric. Implement Workers of Am. v. Yard-Man, Inc., 716 F.2d 1476 (6th Cir.1983), cert. denied, 465 U.S. 1007, 104 S.Ct. 1002, 79 L.Ed.2d 234 (1984). In Yardr-Man the collective bargaining agreement provided that active employees’ benefits terminated one month after an employee’s layoff. Thus, the benefits of all active employees terminated on plant closure. The company argued that retirees’ benefits could thus be terminated at plant closure or with the expiration of the collective bargaining agreement. The court looked to the conduct of the company in determining what the parties intended. It noted that Yard-Man had continued retirees’ insurance benefits for a time after plant closure beyond the point where such benefits could have been terminated for active employees. It stated that this conduct indicates that the company “did not consider retiree benefits to be tied to the durational limitations of that active group.” Id. at 1481. The court went on to say:
Benefits for retirees are only permissive not mandatory subjects of collective bargaining. As such, it is unlikely that such benefits, which are typically understood as a form of delayed compensation or reward for past services, would be left to the contingencies of future negotiations. The employees are presumably aware that the union owes no obligation to bargain for continued benefits for retirees. If they forego wages now in expectation of retiree benefits, they would want assurance that once they retire they will continue to receive such benefits regardless of the bargain reached in subsequent agreements. Contrary to Yard-Man’s assertions, the finding of an intent to create interminable rights to retiree insurance benefits in the absence of explicit language, is not, in any discernible way, inconsistent with federal labor law.
Id. at 1482 (citations omitted). Here, retiree health benefits were continued during strikes while active employees’ health benefits were not.
Second, the majority asserts that “the fact that modifications were routinely negotiated is fundamentally inconsistent with the notion that any retirement health benefits were ever vested.”2 While I agree that later modifications may be evidence of an intent not to vest, I believe that the evidence of intent in this case is overwhelmingly to the contrary. Most of the changes in benefits were favorable to the retirees or were made to coordinate benefits with newly enacted Medicare. The mere fact that there were subsequent negotiated modifications to retiree health benefits does not prove that such benefits did not vest at the level in effect when the employee retired. Rather, all it indicates is that retirees did not necessarily have any incentive to object to modifications of their benefits if the changes increased their benefits or if the changes were otherwise viewed as beneficial because they contributed to Morrell’s long-term prosperity.
During the forty-plus years of negotiations between Morrell and the Union not a single retiree objected to the changes that had been .negotiated by Morrell and the Union. If an individual retiree believed that his vested right to health benefits had been diminished, that retiree, had a right to commence an *1314action under section 301 of the Labor Management Relations Act to assert his right to receive the benefits that existed at the time of his retirement.3 Benard J. Aning, a retired employee of Morrell, personally and as a representative of the defendant class, is a party to this action. Prior to this action, no retiree had commenced an action to challenge any of the negotiated changes to the retiree health plan.

Conclusion

For four decades Morrell and the Union negotiated retirees’ health benefits. In 1991, for economic and competitive reasons, Mor-rell decided to charge retirees for health benefits. Were it not for its bargain with the Union to continue to provide health benefits to retirees, it would have a right under ERISA to make that change. Morrell certainly had the right to make this decision with respect to future retirees, but not with respect to employees who had already retired. Morrell made the bargain, and no court may refuse to enforce this bargain, which was entered into freely and which cost active employees higher wages and better working conditions, which they agreed to because they were concerned about hospital and medical bills for themselves and then-spouses after they retired.
I dissent not because I feel sympathy for the retirees, although I do, and not because I question that the meat packing industry is an intensely competitive one, but simply because a bargain is a bargain, and we should not absolve either party from their bargain. I would reverse the judgment of the district court.

. Dubuque Packing Co. made the same argument to this court as is being made by Morrell.
Plaintiffs' analysis of selected portions of contractual language simplistically and, at times, fancifully, suggests that the parties clearly intended to provide retiree health benefits beyond the terms of the relevant collective bargaining agreements. The retiree benefit provisions of the subject agreements quite simply contain coverage and eligibility provisions which are applicable during the contract term. Due to the absence of language specifying that such benefits shall survive the contract term, they are subject to the general durational provisions of the agreement. Plaintiffs fail to suggest why parties who are manifestly capable of clearly indicating their intention with respect to the termination of rights and obligations were tunable to specify that rights shall not terminate with the agreement in the context of retiree welfare benefits. Instead, Plaintiffs would have this Court believe that the contract provisions specifically describing the coverage of these welfare benefits also prescribes their duration.
Dubuque Packing Co. Reply Br. 4-5.

. In III.3., the majority states that Morrell's unilateral "adoption of a modified health benefits package for past retirees with the signing of each master agreement” is evidence that prior benefits were not vested. In fact, Morrell did not unilaterally adopt a modified health benefit package for past retirees with the signing of each new master agreement. In every case until the very end, the benefits package for retirees was negotiated by Morrell and the Union.

. The Court in Pittsburgh Plate Glass stated:
This does not mean that when a union bargains for retirees — which nothing in this opinion precludes if the employer agrees — the retirees are without protection. Under established contract principles, vested retirement rights may not be altered without the pensioner’s consent. The retiree, moreover, would have a federal remedy under § 301 of the Labor Management Relations Act for breach of contract if his benefits were unilaterally changed.
404 U.S. at 181 n. 20, 92 S.Ct. at 398 n. 20 (citations omitted).