Retiree Health Benefits Are Not Presumed to Be Vested.

Applying the U.S. Supreme Court’s decision in M&G Polymers USA, LLC v. Tackett, the U.S. Court of Appeals for the 4th Circuit held that retiree health benefits did not vest under the language of the applicable collective bargaining agreements and summary plan descriptions, meaning that the employees were not entitled to the continuation of the same benefits after expiration of the CBAs.

In Tackett, which we discussed in our January 2015 E-Update, the Supreme Court held that ordinary principles of contract law govern the interpretation of collective bargaining agreements, including provisions about retiree health benefits, as long as such principles are not inconsistent with federal labor policy. The 4th Circuit applied Tackett in Barton v. Constellium Rolled Products – Ravenswood, LLC to find that the CBAs and SPDs each provided retiree health benefits for the term of the operative CBA, and further that these CBAs and SPDs contained durational language limiting the benefits to the term of the agreement. This clear contract language established that the benefits did not vest and could therefore be unilaterally altered by the employer once the CBAs had expired.