International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW); James Ward; Marshall Hunt; Richard Gordon, Plaintiffs-Appellees,
Kelsey-Hayes Company; TRW Automotive Holdings Corporation; Northrop Grumman Systems Corporation, Defendants-Appellants.
Argued: September 28, 2016
from the United States District Court for the Eastern
District of Michigan at Detroit. No. 2:11-cv-14434-Julian A.
Cook, District Judge.
Gregory V. Mersol, BAKER & HOSTETLER LLP, Cleveland,
Ohio, for Appellants.
William Wertheimer, LAW OFFICE OF WILLIAM WERTHEIMER, Bingham
Farms, Michigan, for Appellees.
Mersol, BAKER & HOSTETLER LLP, Cleveland, Ohio, for
William Wertheimer, LAW OFFICE OF WILLIAM WERTHEIMER, Bingham
Farms, Michigan, Stuart M. Israel, John G. Adam, LEGGHIO
& ISRAEL, P.C., Royal Oak, Michigan, for Appellees.
Before: GILMAN, GIBBONS, and STRANCH, Circuit Judges.
SMITH GIBBONS, Circuit Judge.
Kelsey-Hayes, TRW Automotive Holdings, and Northrop Grumman
appeal the grant of plaintiffs' motion for summary
judgment and the permanent injunction entered in
plaintiffs' favor. Plaintiffs are retirees who brought a
class action alleging breach of a collective bargaining
agreement ("CBA") under Section 301 of the Labor
Management Relations Act ("LMRA"), 29 U.S.C. §
185, and violations of the Employee Retirement Income
Security Act ("ERISA"), 29 U.S.C. §§ 1001
et seq., including breach of fiduciary duty. For the
reasons that follow, we affirm the district court's award
of summary judgment and modify the permanent injunction.
are Medicare-eligible retirees from a Detroit automotive
plant owned and operated by defendant Kelsey-Hayes Company,
all of whom retired from the plant prior to its closing in
2001. Pre-retirement, plaintiffs were production and
maintenance workers at the plant and members of a bargaining
unit represented by United Automobile, Aerospace, and
Agricultural Implement Workers of America ("UAW").
owned and operated the plant from 1992 until 2000; the plant
closed its doors in 2001. UAW negotiated and signed a CBA with
Kelsey-Hayes in 1998. This was the last CBA signed between
UAW and Kelsey-Hayes on behalf of the plaintiffs. The CBA
incorporated two separate documents related to
health-insurance benefits: Supplement H and Supplement H-1.
The CBA and its Supplements provided for comprehensive
healthcare for retirees and their surviving spouses. When the
plant closed in 2001, the UAW negotiated a Plant Closing
Agreement ("PCA") with ACI that addressed benefits
provided to retirees at the time of the plant's closing,
the impact of the PCA on previous CBAs, and a method for
resolving any disputes that arose from the PCA. Also party to
the PCA was Kelsey-Hayes's parent corporation at the
included a provision whereby the UAW and its members waived
all claims against ACI, TRW, and Kelsey-Hayes. It also
included an exception to the UAW waiver, which stated that
the closing agreement did not extinguish pension or retiree
healthcare obligations owed by ACI or TRW Inc., to the extent
that either entity had obligations "under applicable law
and benefit plans (including those provisions contained in
collective bargaining agreements)."
Grumman acquired TRW in 2002. Northrop Grumman sold a portion
of TRW's automotive assets to a private equity firm, and
these assets were then conveyed to a new entity, TRW
Automotive Holdings Corp. ("TRW
AHC"). TRW AHC went public in 2004 and presently
continued to provide healthcare coverage for its retirees and
their surviving spouses for ten years following the PCA,
consistent with the terms for coverage contained in the 1998
CBA. While coverage has remained consistent, it has undergone
multiple changes. In 2007, Kelsey-Hayes changed insurance
carriers from Blue Cross Blue Shield of Michigan to Meritain,
and in 2009, it switched to Humana. According to
Kelsey-Hayes, "[e]ach change in carrier was accompanied
by a possible change in networks, providers, and/or the
explained in a September 14, 2011 letter that, effective
January 1, 2012, it was replacing retirees' current
group-insurance plan with an "HRA" model. Under
this model, Kelsey-Hayes created company-funded health
reimbursement accounts ("HRAs") from which retirees
could purchase individual plans for Medicare supplemental
insurance. The letter stated that, due to the evolving
healthcare and insurance market, there were "now
numerous cost effective and valuable plans on the open market
. . . . Given this expanded market and increased competition
. . . health-insurance carriers have stepped forward to offer
a variety of [Medicare supplement options] that in many cases
offer the same or better coverage than you currently have
from the TRW Retiree Health Care Plan." In 2012,
Kelsey-Hayes contributed $15, 000 to each participant's
HRA and in 2013 and 2014, it contributed $4, 300 per year.
Summary Plan Description for the new HRA plan included
language that Kelsey-Hayes "may, at any time, increase,
decrease or eliminate the amount that is allocated to your
HRA account each year" and that it "reserves the
right to amend, modify, suspend, replace or terminate any of
its plans, policies or programs (including the HRA), in whole
or in part, at any time and for any reason by appropriate
company action." It also included the specific language
that retirees "are neither vested in your retiree
benefits nor does TRW Automotive intend to vest you in
retiree healthcare benefits."
the HRAs, Kelsey-Hayes has been able to provide insurance to
its retirees at a substantially lower cost to the company.
The HRAs, as funded from 2012 through 2014, have provided
$49, 200 for each retiree and eligible spouse to purchase
notice of these changes, plaintiffs filed for relief against
Kelsey-Hayes, TRW AHC, and Northrop Grumman in the district
court under Section 301 of the Labor Management Relations Act
("LMRA"), 29 U.S.C. § 185, and under the
Employee Retirement Income Security Act ("ERISA"),
29 U.S.C. §§ 1001 et seq.
and TRW moved for an order to compel arbitration, relying on
the PCA's arbitration clause. Northrop Grumman filed a
separate motion to compel arbitration. The district court
initially granted the motions to compel arbitration in their
entirety, but upon reconsideration reversed in part, finding
that a subset of plaintiffs-those who had retired before the
2001 plant closing-could not be bound by the PCA because
their rights had already vested under the 1998 CBA and that
their healthcare-related disputes were thus exempt from the
CBA's arbitration clause. Kelsey-Hayes appealed the
district court's order. We affirmed, holding that
employees who retired prior to the 2001 PCA did not consent
to the PCA's terms and could not be compelled to
arbitrate pursuant to it. UAW v. Kelsey-Hayes Co.,
557 F.App'x 532, 535 (6th Cir. 2014).
moved to stay litigation pending the Supreme Court's
decision in M&G Polymers USA, LLC v. Tackett,
135 S.Ct. 926 (2015), and we agreed. Tackett
involved how to interpret silence concerning the duration of
retiree healthcare benefits when construing CBAs, which would
directly impact our decision in the case at hand. Following
the Supreme Court's ruling in Tackett, which
explicitly overruled decades of Sixth Circuit precedent
established by UAW v. Yard-Man, Inc., 716 F.2d 1476
(6th Cir. 1983), the parties re-filed cross-motions for
summary judgment and re-briefed their arguments to
incorporate the decision. The district court denied
defendants summary judgment and granted the
plaintiff-retirees partial summary judgment, as well as a
permanent injunction ordering defendants to reinstate the
retirees' group-insurance plan. Defendants timely
review a district court's grant of summary judgment
de novo. Rose v. State Farm Fire & Cas.
Co., 766 F.3d 532, 535 (6th Cir. 2014). "Summary
judgment is appropriate 'if the pleadings, depositions,
answers to interrogatories, and admissions on file, together
with the affidavits, if any, show that there is no genuine
issue of material fact and that the moving party is entitled
to judgment as a matter of law.'" Meridia Prods.
Liab. Litig. v. Abbott Labs., 447 F.3d 861, 866 (6th
Cir. 2006) (citing Fed.R.Civ.P. 56(c)). We construe all
reasonable inferences in favor of the nonmoving party.
Ramsey v. Penn Mut. Life Ins. Co., 787 F.3d 813, 818
(6th Cir. 2015) (citing Matsushita Elec. Indus. Co. v.
Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
considering a district court's order for a permanent
injunction, we review factual determinations for clear error,
legal conclusions de novo, and the injunction's
scope for abuse of discretion. ACLU of Ky. v. McCreary
Cty., 607 F.3d 439, 445 (6th Cir. 2010).
301 of the LMRA provides a federal right of action for
'violation[s] of contracts between an employer and a
labor organization representing employees.'"
Moore v. Menasha Corp., 690 F.3d 444, 450 (6th Cir.
2012) (citing 29 U.S.C. § 185(a)). It also creates
"a derivative ERISA claim, because the disputed
healthcare benefits were agreed upon pursuant to a
union-negotiated contract." Id. (citing
Schreiber v. Philips Display Components Co., 580
F.3d 355, 363 (6th Cir. 2009)). The primary inquiry here is
"whether the retirement health care benefits vested for
life" and whether they are "fully funded" by
the employer. See Yolton v. El Paso Tenn. Pipeline
Co., 435 F.3d 571, 574 (6th Cir. 2006). "We
interpret collective bargaining agreements, including those
establishing ERISA plans, according to ordinary principles of
contract law, at least where those principles are not
inconsistent with federal labor policy."
Tackett, 135 S.Ct. at 933.
to Tackett, we applied principles first announced in
Yard-Man, which stated that "when the parties
contract for benefits which accrue upon achievement of
retiree status, there is an inference that the parties likely
intended those benefits to continue as long as the
beneficiary remains a retiree." 716 F.2d at 1482. In
Tackett, however, the Supreme Court found that the
Yard-Man inference "violates ordinary contract
principles by placing a thumb on the scale in favor of vested
retiree benefits in all collective-bargaining
agreements." Tackett, 135 S.Ct. at 935. The
Tackett court found that Yard-Man was based
on "suppositions" about all collective bargaining
and distorted attempts to discern the intention of the
parties. Id. The Yard-Man inference was