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Retiree Benefits Case Goes Back to Trial Court for the 3rd Time

By Jonathan R. Tung, Esq. on January 29, 2016 | Last updated on March 21, 2019

After what can only be called a meandering journey of legal issues through the courts, the Sixth Circuit remanded a collective bargaining agreement case back to the district court, again to re-evaluate the law consistent with SCOTUS's newly greenlit "ordinary principles of contract law."

Chief Judge Cole was quick to point out that the case of Tackett v. M&G Polymers had seen the inside of his courtroom before, and readers of his opinion could almost hear the weariness through his pen. This would have been the third time his court would be faced with making a substantive decision as to applicable law in this most ostensibly basic of CBA disputes.

Oh No, Not Again ...

In Tackett v. M&G, the plaintiffs were retirees' spouses from a plant owned by defendant M&G. Throughout 1991 to 2000, the plaintiffs entered into a series of CBAs with M&G and its predecessors that contained Pension and Insurance Agreements. The PIAs provided that M&G would make "a full Company contribution towards the cost of [health care] benefits" for particular retirees. In 2006, M&G demanded that the plaintiffs start contributing towards their health care costs.

Yard-Man and Company: Principles in Contract

Dispute arose between the parties as to the legal significance of "cap letters" -- communications made supposedly from defendants to plaintiffs over the years. The Sixth Circuit eventually applied contract-interpretation precedent established in a case known as Yard-Man: Look to the explicit language, look to the context of its use, interpret each provision in light of the whole, construe each provision consistently with the whole, avoid illusory promises, look to other words or phrases to resolve ambiguities, check against federal labor policy. This led to the Sixth Circuit to embrace Yard-Man principles as it applied to CBAs and PIAs.

SCOTUS Gets Its Say

Tackett eventually found itself before SCOTUS. There, the High Court essentially abrogated Yard-Man principles with regard to PIAs and declared that such analyses required courts to analyze CBAs with a "thumb on the scale" in favor or PIAs vesting in favor of retirees (meaning, contribution-free health care for life). No more. According to the Supreme Court, such contracts should be analyzed using "ordinary principles of contract law."

And what are those principles?

  • Party intent controls
  • Plain meaning of the words control
  • Customs and course of dealing may be considered
  • The doctrine of '4 corners' is presumed
  • Contracts should not be interpreted to lead to "no consideration" scenarios

In actuality, the principles go on. Nevertheless, the decision of the high court to remand Tackett back down to the lower Circuit, forces that court to remand further down to the original district court with an order to re-evaluate all the legal issues in light of being free from any Yard-Man pro-retiree bias.

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