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CNH Industrial N.V. v. Reese

United States Supreme Court

February 20, 2018

CNH INDUSTRIAL N.V., ET AL.
v.
JACK REESE, ET AL.

         ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

          PER CURIAM.

         Three Terms ago, this Court's decision in M&G Polymers USA, LLC v. Tackett, 574 U.S. __ (2015), held that the Court of Appeals for the Sixth Circuit was required to interpret collective-bargaining agreements according to "ordinary principles of contract law." Id., at __ (slip op., at 1). Before Tackett, the Sixth Circuit applied a series of "Yard-Man inferences, " stemming from its decision in International Union, United Auto, Aerospace, & Agricultural Implement Workers of Am. v. Yard-Man, Inc., 716 F.2d 1476 (1983). In accord with the Yard-Man inferences, courts presumed, in a variety of circumstances, that collective-bargaining agreements vested retiree benefits for life. See Tackett, 574 U.S., at __ - __ (slip op., at 7-10). But Tackett "reject[ed]" these inferences "as inconsistent with ordinary principles of contract law." Id., at __ (slip op., at 14).

         In this case, the Sixth Circuit held that the same Yard-Man inferences it once used to presume lifetime vesting can now be used to render a collective-bargaining agreement ambiguous as a matter of law, thus allowing courts to consult extrinsic evidence about lifetime vesting. 854 F.3d 877, 882-883 (2017). This analysis cannot be squared with Tackett. A contract is not ambiguous unless it is subject to more than one reasonable interpretation, and the Yard-Man inferences cannot generate a reasonable interpretation because they are not "ordinary principles of contract law, " Tackett, supra, at __ (slip op., at 14).

         Because the Sixth Circuit's analysis is "Yard-Man re-born, re-built, and re-purposed for new adventures, " 854 F.3d, at 891 (Sutton, J., dissenting), we reverse.

         I

         A

         This Court has long held that collective-bargaining agreements must be interpreted "according to ordinary principles of contract law." Tackett, 574 U.S., at __ (slip op., at 7) (citing Textile Workers v. Lincoln Mills of Ala., 353 U.S. 448, 456-457 (1957)). Prior to Tackett, the Sixth Circuit purported to follow this rule, but it used a unique series of "Yard-Man inferences" that no other circuit applied. 574 U.S., at __ (slip op., at 7). For example, the Sixth Circuit presumed that "a general durational clause" in a collective-bargaining agreement "'says nothing about the vesting of retiree benefits'" in that agreement. Id., at __ - __ (slip op., at 9-10) (quoting Noe v. PolyOne Corp., 520 F.3d 548, 555 (CA6 2008)). If the collective-bargaining agreement lacked "a termination provision specifically addressing retiree benefits" but contained specific termination provisions for other benefits, the Sixth Circuit presumed that the retiree benefits vested for life. Tackett, supra, at __ - __ (slip op., at 7-8) (citing Yard-Man, supra, at 1480). The Sixth Circuit also presumed vesting if "a provision . . . 'tie[d] eligibility for retirement-health benefits to eligibility for a pension." 574 U.S., at __ (slip op., at 10) (quoting Noe, supra, at 558).

         This Court's decision in Tackett "reject[ed] the Yard-Man inferences as inconsistent with ordinary principles of contract law." 574 U.S., at __ (slip op., at 14). Most obviously, the Yard-Man inferences erroneously "refused to apply general durational clauses to provisions governing retiree benefits." 574 U.S., at __ (slip op., at 12). This refusal "distort[ed] the text of the agreement and conflict[ed] with the principle of contract law that the written agreement is presumed to encompass the whole agreement of the parties." Ibid.

         The Yard-Man inferences also incorrectly inferred lifetime vesting whenever "a contract is silent as to the duration of retiree benefits." 574 U.S., at __ (slip op., at 14). The "traditional principle, " Tackett explained, is that "'contractual obligations will cease, in the ordinary course, upon termination of the bargaining agreement.'" Id., at __ (slip op., at 13) (quoting Litton Financial Printing Div., Litton Business Systems, Inc. v. NLRB, 501 U.S. 190, 207 (1991)). "[C]ontracts that are silent as to their duration will ordinarily be treated not as 'operative in perpetuity' but as 'operative for a reasonable time.'" 574 U.S., at __ (slip op., at 13) (quoting 3 A. Corbin, Corbin on Contracts §553, p. 216 (I960)). In fact, the Sixth Circuit had followed this principle in cases involving noncol-lectively bargained agreements, see Sprague v. General Motors Corp., 133 F.3d 388, 400 (1998) (en banc), which "only underscore[d] Yard-Man's deviation from ordinary principles of contract law." Tackett, supra, at __ (slip op., at 13).

         As for the tying of retiree benefits to pensioner status, Tackett rejected this Yard-Man inference as "contrary to Congress' determination" in the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 891. 574 at __ (slip op., U.S., at __ (slip op., at 11). The Sixth Circuit adopted this inference on the assumption that retiree health benefits are "'a form of delayed compensation or reward for past services, '" like a pension. Id., at __ (slip op., at 4) at __ (slip op., (quoting Yard-Man, supra, at 1482). But ERISA distinguishes between plans that "resul[t] in a deferral of income, " §1002(2)(A)(ii), and plans that offer medical benefits, §1002(1)(A). See Tackett, 574 U.S., at __ (slip op., at at __ (slip op., 11). Tackett thus concluded that this and the other "inferences applied in Yard-Man and its progeny" do not "represent ordinary principles of contract law." Id., at __ (slip op., at 10).

         B

         Like Tackett, this case involves a dispute between retirees and their former employer about whether an expired collective-bargaining agreement created a vested right to lifetime health care benefits. In 1998, CNH Industrial N. V. and CNH Industrial America LLC (collectively, CNH) agreed to a collective-bargaining agreement. The 1998 agreement provided health care benefits under a group benefit plan to certain "[e]mployees who retire under the . . . Pension Plan." App. to Pet. for Cert. A-116. "All other coverages, " such as life insurance, ceased upon retirement. Ibid. The group benefit plan was "made part of" the collective-bargaining agreement and "r[an] concurrently" with it. Id., at A-114. The 1998 agreement contained a general durational clause stating that it would terminate in May 2004. Id., at A-115. The agreement also stated that it "dispose[d] of any and all bargaining issues, whether or not presented during negotiations." Ibid.

         When the 1998 agreement expired in 2004, a class of CNH retirees and surviving spouses (collectively, the retirees) filed this lawsuit, seeking a declaration that their health care benefits vested for life and an injunction preventing CNH from changing them. While their lawsuit was pending, this Court decided Tackett. Based on Tackett, the District Court initially awarded summary judgment to ...


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