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Cole v. Meritor, Inc.

United States District Court, E.D. Michigan, Southern Division

September 6, 2017

ROBERT COLE, et al., Plaintiffs,
MERITOR, INC., f/k/a ARVINMERITOR, INC., et al., Defendants.


          Nancy G. Edmunds, United States District Judge.


         Back in 2003 and 2004, the plaintiff retirees and their union, the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (“UAW”), brought the two above-captioned suits against their former employers, Defendant Meritor, Inc. and its corporate predecessors (collectively “Meritor”), [1] alleging that the retirees, their surviving spouses, and their dependents (collectively “Retirees”) were entitled under a series of collective bargaining agreements (“CBAs”) to lifetime healthcare benefits.[2] On December 22, 2005, this Court entered a preliminary injunction directing Meritor to reinstate the Retirees' healthcare benefits and resume paying the full cost of these benefits. See Cole v. ArvinMeritor, Inc., 516 F.Supp.2d 850, 880 (E.D. Mich. 2005). The Court later granted the Retirees' motion for summary judgment as to liability, and awarded permanent injunctive relief in the Retirees' favor as to their entitlement to lifetime healthcare benefits. See Cole v. ArvinMeritor, Inc., 515 F.Supp.2d 791, 809 (E.D. Mich. 2006).

         In each of these rulings, the Court relied in significant part on the Sixth Circuit's decision in International Union, United Automobile, Aerospace, & Agricultural Implement Workers of America v. Yard-Man, Inc., 716 F.2d 1476, 1482 (6th Cir. 1983), which held that “when the parties [to a CBA] 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.” See Cole, 516 F.Supp.2d at 865-66 (applying this so-called “Yard-Man inference”); Cole, 515 F.Supp.2d at 797-99 (same). Similarly, when the Sixth Circuit subsequently affirmed this Court's award of summary judgment and permanent injunctive relief in the Retirees' favor, it determined that it was bound to apply the inference recognized in Yard-Man and its progeny that, absent countervailing evidence, retiree benefits are vested for life. See Cole v. ArvinMeritor, Inc., 549 F.3d 1064, 1069, 1073-74 (6th Cir. 2008).

         Meritor timely sought rehearing of the Sixth Circuit's decision, and the case remained in a holding pattern for several years while the parties pursued settlement negotiations. In the meantime, the law governing this litigation changed considerably when the Supreme Court abrogated the Yard-Man line of cases. See M & G Polymers USA, LLC v. Tackett, ___ U.S. ___, 135 S.Ct. 926, 935-37 (2015). Thus, when the parties' negotiations reached an impasse in 2016 and the Sixth Circuit restored Meritor's petition for rehearing to its active docket, the Court of Appeals found that due to “a sea change in the applicable law, ” this Court's ruling in favor of the Retirees was “no longer sustainable.” Cole v. Meritor, Inc., 855 F.3d 695, 696, 699 (6th Cir. 2017). The Sixth Circuit therefore reversed this Court's judgment in the Retirees' favor and remanded “for any further proceedings that might be necessary.” Cole, 855 F.3d at 702.

         In Meritor's view, no such further proceedings are necessary. Instead, through the present motion filed on July 19, 2017, Meritor requests that the Court dissolve its permanent injunction and enter a judgment in Meritor's favor. In support of this motion, Meritor argues that in light of the Sixth Circuit's rulings in this suit and in other cases decided in the wake of Tackett, the Retirees can no longer viably claim that they were granted healthcare benefits for life under the relevant terms of the CBAs negotiated by the parties. In response, the Retirees concede that the Sixth Circuit conclusively resolved the issue of “patent” CBA ambiguity in Meritor's favor, but they contend that they should be permitted to marshal evidence in support of a claim that there are “latent” ambiguities in the relevant CBA provisions that, once resolved, would demonstrate their entitlement to lifetime healthcare benefits.

         On August 30, 2017, the Court heard oral argument on Meritor's motion. For the reasons stated more fully below, the Court GRANTS this motion, dissolves its permanent injunction, and dismisses this case.

         II. ANALYSIS

         The disposition of Meritor's present motion turns entirely on the proper interpretation of the Sixth Circuit's recent decision reversing this Court's judgment and remanding “for any further proceedings that might be necessary.” Cole, 855 F.3d at 702. Accordingly, the Court begins its analysis with an examination of the Court of Appeals' ruling. This decision, in turn, relies substantially on Gallo v. Moen Inc., 813 F.3d 265 (6th Cir. 2016), another Sixth Circuit ruling issued in the wake of the Supreme Court's opinion in Tackett. As stated in Cole, the Sixth Circuit panel in Gallo was called upon “for the first time” to “interpret[] a specific CBA according to the contract principles espoused” by the Supreme Court in Tackett, and the application of these “ordinary principles of contract law” led the Gallo court to “conclude that the CBA before the court was unambiguous in not vesting retiree healthcare benefits for life.” Cole, 855 F.3d at 699 (citing Gallo, 813 F.3d at 273-74).

         Turning to this case, the panel in Cole found that “the facts of Gallo are materially indistinguishable from the facts before us, ” and that it therefore was bound to “reach the same conclusion.” Cole, 855 F.3d at 699. The court explained:

The Gallo court faced an identical issue: whether a series of CBAs entitled a class of retirees to lifetime healthcare benefits. Gallo's CBA contained terms stating that healthcare benefits for retirees “will be provided, ” “will be covered, ” and would “[c]ontinue.” [Gallo, 813 F.3d] at 269. These provisions were determined not to be specific enough to override the CBA's general durational clause and, therefore, the healthcare benefits did not vest for life. Id. The Gallo court held that “[a]bsent a longer time limit in the context of a specific provision, the general durational clause supplies a final phrase to every term in the CBA.” Id. In making that determination, this court did not look “beyond the contract's four corners” and ruled that, because the contract was unambiguous, the consideration of extrinsic evidence was inappropriate. Id. at 273-74.
In this case, the 1968 CBA and every subsequent CBA provided that retiree healthcare benefits “shall be continued.” There is no language in Exhibit B to the 1968 CBA that provides a specific expiration date for those benefits. All of the CBAs, however, included a general durational clause that terminated the agreement after three years. See, e.g., Article XVIII, 1968 CBA; Article XIX of the 2000 CBA. In addition, Exhibit B to each CBA had its own durational clause, identical in wording to that previously quoted from Section 8 of the 1968 CBA, [3]that explicitly tied healthcare benefits to the continuing existence of the CBA in question.
The “shall be continued” language in Exhibit B is thus not sufficient to vest the retirees with healthcare benefits for life. As stated in Gallo, “[i]f Tackett tells us anything, . . . it is that the use of the future tense without more - without words committing to retain the benefit for life - does not guarantee lifetime benefits.” Id. at 271. Like the CBAs at issue in Gallo, the CBAs between the UAW and Meritor made commitments for “approximately three-year terms - well short of commitments for life.” Id. at 269.
The CBAs also contained durational clauses that supplied a concrete date of expiration for retiree healthcare benefits. These durational clauses give meaning to the promise that healthcare benefits “shall be continued.” That is, Meritor guaranteed healthcare benefits only until the expiration of the final CBA, nothing more. See Id. This result is in line with the ordinary principles of contract law, which dictate that “contractual obligations will cease, in the ...

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