M&G Polymers USA v. Tacket

135 S.Ct. 926 (2015)

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Nature of the Case

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Facts

Ps represent a class of retired employees from the Plant. D is the current owner of the Plant. When D purchased the Plant in 2000, it entered a master collective-bargaining agreement with the Union. In December 2006, D announced that it would begin requiring retirees to contribute to the cost of their health care benefits. Exhibit B-1, which described the health care benefits at issue, opened with the following durational clause: “Effective January 1, 1998, and for the duration of this Agreement thereafter, the Employer will provide the following program of hospital benefits, hospital-medical benefits, surgical benefits and prescription drug benefits for eligible employees and their dependents . . . . ” The agreement provided for renegotiation of its terms in three years. In December 2006, D announced that it would begin requiring retirees to contribute to the cost of their health care benefits. Ps sued alleging that the decision to require these contributions breached the agreements. Ps alleged that D had promised to provide lifetime contribution-free health care benefits for them, their surviving spouses, and their dependents. Ps pointed to the language in the agreement providing that employees with a certain level of seniority “will receive a full Company contribution towards the cost of [health care] benefits described in . . . Exhibit B-1.” The District Court dismissed for failure to state a claim. It concluded that the cited language unambiguously did not create a vested right to retiree benefits. The Court of Appeals reversed. That court relied on Yard-Man wherein the court inferred that parties to collective bargaining would intend retiree benefits to vest for life because such benefits are “not mandatory” or required to be included in collective-bargaining agreements. On remand, the District Court conducted a bench trial and ruled in favor of Ps. The Court of Appeals affirmed. D appealed, and the Supreme Court granted certiorari.