Changes to Retiree Health Benefits

The Presumption of Vesting

Another area that is fundamentally unsettled is whether and in what circumstances retiree benefits 'vest' upon the retirement of an employee. The Sixth Circuit favors a presumption that retiree health benefits are vested. See UAW v. Yard-Man, Inc., 716 F.2d 1476, 1482 (6^th Cir. 1983), cert. denied, 465 U.S. 1007 (1984). According to the Sixth Circuit, since benefits for retirees are only permissive rather than mandatory subjects of collective bargaining, '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.' Id. at 1482. (In a more recent decision, the Sixth Circuit appeared to move away from the presumption of vesting, holding that 'This [c]ourt has never inferred an intent to vest benefits in the absence of either explicit contractual language or extrinsic evidence indicating such an intent ' All that Yard-Man and subsequent cases instruct is that the court should apply ordinary principles of contract interpretation.' Yolton v. El Paso Tennessee Pipeline Co., 453 F.3d 571, 580 (6th Cir. 2006). However, this assertion appears to mischaracterize previous Sixth Circuit holdings. See, e.g., Policy v. Powell Pressed Steel Co., 770 F.2d 609, 613 (6^th Cir. 1985), cert. denied, 475 U.S. 1017 (1986) (This court has recognized that normally retiree benefits are vested.'). It remains to be seen how Sixth Circuit courts will reconcile Yolton with Yard-Man and its progeny in the future.) Naturally, there are courts that have come to the opposite conclusion ' that there is a presumption that benefits have not vested in the absence of express and unambiguous language of intent for such benefits to vest. See Int'l Union, United Auto., Aero. & Agric. Implement Workers v. Skinner Engine Co., 188 F.3d 130, 142 (3d Cir. 1999); Gable v. Sweetheart Cup Co., 35 F.3d 851, 855 (4th Cir. 1994), cert. denied, 514 U.S. 1057 (1995). Some courts have applied the presumption of vesting only if there is some ambiguity in the language conferring the benefit. United Steelworkers of Am. v. Connors Steel Co., 855 F.2d 1499, 1505, reh'g denied en banc, 861 F.2d 1281 (11th Cir. 1988). The majority of circuits favor neither a presumption in favor of nor against vesting, but decide the question on the facts of each case, often relying on extrinsic evidence to discern the intent of the parties. Senior v. NSTAR Elec. & Gas Corp., 449 F.3d 206 (1st Cir. 2006) (rejecting Yard-Man presumption of vesting); Deboard v. Sunshine Mining & Ref. Co., 208 F.3d 1228, 1240-41, amended by, 2000 U.S. App. Lexis 8639 (10th Cir. 2000); Joyce v. Curtiss-Wright Corp., 171 F.3d 130, 134-35 (2d Cir. 1999); Bazzone v. Auto. Indus. Welfare Fund, No. 87-2175, 1988 WL 58340, at *4 (9th Cir. Oct. 4, 1988) (unpublished decision); Int'l Ass'n of Machinists & Aero. Workers, Woodworkers Div., v. Masonite Corp., 122 F.3d 228, 231-32 (5th Cir. 1997); Barker v. Ceridian Corp., 122 F.3d 628, 634 -38 (8th Cir. 1997), cert. denied, 529 U.S. 1109 (2000).