throbber
(Slip Opinion)
`
`
`
` OCTOBER TERM, 2014
`
`
`Syllabus
`
`1
`
` NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
`
`
`
` being done in connection with this case, at the time the opinion is issued.
`
`
`
` The syllabus constitutes no part of the opinion of the Court but has been
`
` prepared by the Reporter of Decisions for the convenience of the reader.
`
` See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
`
`
`SUPREME COURT OF THE UNITED STATES
`
`
`
` Syllabus
`
` M&G POLYMERS USA, LLC, ET AL. v. TACKETT ET AL
`
`
`
`CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
`
`THE SIXTH CIRCUIT
`No. 13–1010. Argued November 10, 2014—Decided January 26, 2015
`
`When petitioner M&G Polymers USA, LLC (M&G), purchased the
`Point Pleasant Polyester Plant in 2000, it entered a collective-
`bargaining agreement and related Pension, Insurance, and Service
`Award Agreement (P & I agreement) with respondent union. As rel-
`evant here, the P & I agreement provided that certain retirees, along
`with their surviving spouses and dependents, would “receive a full
`Company contribution towards the cost of [health care] benefits”;
`that such benefits would be provided “for the duration of [the]
`Agreement”; and that the agreement would be subject to renegotia-
`tion in three years.
`
`
`Following the expiration of those agreements, M&G announced
`that it would require retirees to contribute to the cost of their health
`care benefits. Respondent retirees, on behalf of themselves and oth-
`ers similarly situated, sued M&G and related entities, alleging that
`the P & I agreement created a vested right to lifetime contribution-
`free health care benefits.
`
`
`The District Court dismissed the complaint for failure to state a
`claim, but the Sixth Circuit reversed based on the reasoning of its
`earlier decision in International Union, United Auto, Aerospace, &
`Agricultural Implement Workers of Am. v. Yard-Man, Inc., 716 F. 2d
`1476. On remand, the District Court ruled in favor of the retirees,
`and the Sixth Circuit affirmed.
`
`Held: The Sixth Circuit’s decision rested on principles that are incom-
`
`patible with ordinary principles of contract law. Pp. 5–14.
`
`(a) The Employee Retirement Income Security Act of 1974 (ERISA)
`governs pension and welfare benefits plans, including those estab-
`lished by collective-bargaining agreements. ERISA establishes min-
`imum funding and vesting standards for pension plans, but exempts
`
`
`
`
`
`
`
`
`
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`

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`M&G POLYMERS USA, LLC v. TACKETT
`
`
`Syllabus
`welfare benefits plans—which provide the types of benefits at issue
`here—from those rules. See 29 U. S. C. §§1051(1), 1053, 1081(a)(2),
`1083. “[E]mployers have large leeway to design . . . welfare plans as
`they see fit.” Black & Decker Disability Plan v. Nord, 538 U. S. 822,
`
`833. Pp. 5–7.
`
`(b) This Court interprets collective-bargaining agreements, includ-
`ing those establishing ERISA plans, according to ordinary principles
`of contract law, at least when those principles are not inconsistent
`with federal labor policy. See Textile Workers v. Lincoln Mills of Ala.,
`353 U. S. 448, 456–457. When a collective-bargaining agreement is
`unambiguous, its meaning must be ascertained in accordance with its
`plainly expressed intent. 11 R. Lord, Williston on Contracts §30:6, p.
`108. P. 7.
`(c) In Yard-Man, the Sixth Circuit found a provision governing re-
`tiree insurance benefits ambiguous as to the duration of those bene-
`fits; and, looking to other provisions of the agreement, purported to
`apply ordinary contract law to resolve the ambiguity. First, the court
`inferred from the existence of termination provisions for other bene-
`fits that the absence of a termination provision specifically address-
`
`ing retiree benefits expressed an intent to vest those benefits for life.
`
`The court then purported to apply the rule that contracts should be
`interpreted to avoid illusory promises, reasoning that, absent vesting,
`the promise would be illusory for the subset of retirees who would not
`
`
`become eligible for those benefits before the contract expired. Final-
`ly, the court relied on “the context” of labor negotiations to resolve
`the ambiguity, inferring that the parties would have intended such
`benefits to vest for life because they are not mandatory subjects of
`collective bargaining; are “typically understood as a form of delayed
`compensation,” 716 F. 2d, at 1482; and are keyed to the acquisition of
`retirement status. The court concluded that these contextual clues
`“outweigh[ed] any contrary implications derived from a routine dura-
`tion clause.” Id., at 1483. The Sixth Circuit has since extended its
`Yard-Man analysis in a series of other cases. Pp. 7–10.
`
`
`(d) The inferences applied in Yard-Man and its progeny do not rep-
`resent ordinary principles of contract law. Yard-Man distorts the at-
`tempt to ascertain the intention of the parties by placing a thumb on
`the scale in favor of vested retiree benefits in all collective-bargaining
`agreements. Rather than relying on known customs and usages in a
`particular industry as proven by the parties, the Yard-Man court re-
`lied on its own suppositions about the intentions of parties negotiat-
`
`ing retiree benefits. It then compounded the error by applying those
`
`suppositions indiscriminately across industries. Furthermore, the
`Sixth Circuit’s refusal to apply general durational clauses to provi-
`sions governing retiree benefits distorts an agreement’s text and con-
`
`
`
`
`
`
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`
`
`2
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`

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` Cite as: 574 U. S. ____ (2015)
`
`
`Syllabus
`flicts with the principle that a written agreement is presumed to en-
`compass the whole agreement of the parties.
`
`Perhaps tugged by its inferences, the Sixth Circuit also misapplied
`the illusory promises doctrine. It construed provisions that admitted-
`ly benefited some class of retirees as “illusory” merely because they
`did not benefit all retirees. That interpretation is a contradiction in
`terms—a promise that is “partly illusory” is by definition not illusory.
`
`And its use of this doctrine is particularly inappropriate in the con-
`text of collective-bargaining agreements, which often include provi-
`sions inapplicable to some category of employees.
`
`The Sixth Circuit also failed even to consider other traditional con-
`
`tract principles, including the rule that courts should not construe
`ambiguous writings to create lifetime promises and the rule that
`
`“contractual obligations will cease, in the ordinary course, upon ter-
`
`mination of the bargaining agreement,” Litton Financial Printing
`Div., Litton Business Systems, Inc. v. NLRB, 501 U. S. 190, 207.
`
`Pp. 10–14.
`(e) Though there is no doubt that Yard-Man and its progeny affect-
`
`
`ed the outcome here, the Sixth Circuit should be the first to review
`the agreements under ordinary principles of contract law. P. 14.
`
`733 F. 3d 589, vacated and remanded.
`
` THOMAS, J., delivered the opinion for a unanimous Court. GINSBURG,
`
`
`
`J., filed a concurring opinion, in which BREYER, SOTOMAYOR, and KAGAN,
`
`
`
`
`JJ., joined.
`
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`3
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`

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` Cite as: 574 U. S. ____ (2015)
`
`Opinion of the Court
`
`1
`
`
` NOTICE: This opinion is subject to formal revision before publication in the
`
`
`
` preliminary print of the United States Reports. Readers are requested to
`
` notify the Reporter of Decisions, Supreme Court of the United States, Wash-
`
` ington, D. C. 20543, of any typographical or other formal errors, in order
`
`
` that corrections may be made before the preliminary print goes to press.
`
`
`
`
`SUPREME COURT OF THE UNITED STATES
`
`
`
`_________________
`
` No. 13–1010
`_________________
` M&G POLYMERS USA, LLC, ET AL., PETITIONERS v.
`
`
`HOBERT FREEL TACKETT ET AL.
`
`
`
`ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
`
`
`APPEALS FOR THE SIXTH CIRCUIT
`
`
`[January 26, 2015]
`
` JUSTICE THOMAS delivered the opinion of the Court.
`
`This case arises out of a disagreement between a group
`of retired employees and their former employer about the
`meaning of certain expired collective-bargaining agree-
`ments. The retirees (and their former union) claim that
`these agreements created a right to lifetime contribution-
`free health care benefits for retirees, their surviving
`spouses, and their dependents. The employer, for its part,
`claims that those provisions terminated when the agree-
`ments expired. The United States Court of Appeals for
`the Sixth Circuit sided with the retirees, relying on its
`conclusion in International Union, United Auto, Aerospace,
`& Agricultural Implement Workers of Am. v. Yard-Man,
`Inc., 716 F. 2d 1476, 1479 (1983), that retiree health care
`
`benefits are unlikely to be left up to future negotiations.
`We granted certiorari and now conclude that such reason-
`ing is incompatible with ordinary principles of contract
`law. We therefore vacate the judgment of the Court of
`Appeals and remand for it to apply ordinary principles of
`contract law in the first instance.
`
`
`
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`

`
`2
`
`
`M&G POLYMERS USA, LLC v. TACKETT
`
`Opinion of the Court
`I
`
`A
`
`Respondents Hobert Freel Tackett, Woodrow K. Pyles,
`
`and Harlan B. Conley worked at (and retired from) the
`Point Pleasant Polyester Plant in Apple Grove, West
`Virginia (hereinafter referred to as the Plant). During
`
`their employment, respondent United Steel, Paper and
`Forestry, Rubber, Manufacturing, Energy, Allied Indus-
`trial and Service Workers International Union, AFL-CIO-
`CLC, or its predecessor unions (hereinafter referred to as
`the Union), represented them in collective bargaining.
`Tackett and Pyles retired in 1996, and Conley retired in
`
`1998. They represent a class of retired employees from
`the Plant, along with their surviving spouses and other
`dependents. Petitioner M&G Polymers USA, LLC, is the
`current owner of the Plant.
`
`When M&G purchased the Plant in 2000, it entered a
`
`master collective-bargaining agreement and a Pension,
`Insurance, and Service Award Agreement (P & I agree-
`ment) with the Union, generally similar to agreements the
`Union had negotiated with M&G’s predecessor. The P & I
`agreement provided for retiree health care benefits as
`follows:
`
`“Employees who retire on or after January 1, 1996
`and who are eligible for and receiving a monthly pen-
`sion under the 1993 Pension Plan . . . whose full years
`
`of attained age and full years of attained continuous
`service . . . at the time of retirement equals 95 or more
`points will receive a full Company contribution to-
`wards the cost of [health care] benefits described in
`this Exhibit B–1 . . . . Employees who have less than
`95 points at the time of retirement will receive a re-
`duced Company contribution. The Company contribu-
`tion will be reduced by 2% for every point less than
`95. Employees will be required to pay the balance of
`
`
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`
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`

`
`
`
` Cite as: 574 U. S. ____ (2015)
`
`Opinion of the Court
`the health care contribution, as estimated by the
`
`Company annually in advance, for the [health care]
`benefits described in this Exhibit B–1. Failure to pay
`the required medical contribution will result in can-
`cellation of coverage.” App. 415–416.
`
`Exhibit B–1, which described the health care benefits at
`issue, opened with the following durational clause: “Effec-
`tive January 1, 1998, and for the duration of this Agree-
`ment 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 . . . . ” Id., at 377–378
`(emphasis deleted). The P & I agreement provided for
`renegotiation of its terms in three years.1
`
`B
`In December 2006, M&G announced that it would begin
`
`requiring retirees to contribute to the cost of their health
`care benefits. Respondent retirees, on behalf of them-
`selves and others similarly situated, sued M&G and re-
`lated entities, alleging that the decision to require these
`contributions breached both the collective-bargaining
`agreement and the P & I agreement, in violation of §301 of
`the Labor Management Relations Act, 1947 (LMRA) and
`§502(a)(1)(B) of the Employee Retirement Income Security
`Act of 1974 (ERISA), 88 Stat. 891.2 Specifically, the retir-
`ees alleged that M&G had promised to provide lifetime
`contribution-free health care benefits for them, their
`surviving spouses, and their dependents. They pointed to
`——————
`1In accordance with this provision, M&G and the Union began bar-
`gaining anew in 2003, ultimately reaching a new agreement in 2005.
`The provisions of the existing agreements remained in effect during the
`
` course of those negotiations. See App. to Pet. for Cert. 25, n. 1.
`2The Union was a plaintiff in the suit and is a respondent here. For
`ease of reference, we refer to the respondents collectively as “the
`retirees.”
`
`
`
`
`
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`3
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`

`
`4
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`
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`
`
`M&G POLYMERS USA, LLC v. TACKETT
`
`Opinion of the Court
`the language in the 2000 P & I 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 retirees
`alleged that, with this promise, M&G had created a vested
`right to such benefits that continued beyond the expiration
`of the 2000 P & I agreement.
`
`
`
`The District Court dismissed the complaint for failure to
`state a claim. 523 F. Supp. 2d 684, 696 (SD Ohio 2007). It
`concluded that the cited language unambiguously did not
`create a vested right to retiree benefits.
`
`The Court of Appeals reversed based on the reasoning of
`
`its earlier decision in Yard-Man. 561 F. 3d 478 (CA6
`2009) (Tackett I). Yard-Man involved a similar claim that
`an employer had breached a collective-bargaining agree-
`ment when it terminated retiree benefits. 716 F. 2d, at
`1478. Although the court found the text of the provision in
`that case ambiguous, it relied on the “context” of labor
`negotiations to resolve that ambiguity in favor of the
`retirees’ interpretation. Id., at 1482. Specifically, 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, are “typically understood as a
`
`form of delayed compensation or reward for past services,”
`
`and are keyed to the acquisition of retirement status.
`Ibid. The court concluded that these inferences “out-
`weigh[ed] any contrary implications [about the termina-
`tion of retiree benefits] derived from” general termination
`clauses. Id., at 1483.
` Applying the Yard-Man inferences on review of the
`District Court’s dismissal of the action, the Court of Ap-
`peals concluded that the retirees had stated a plausible
`claim. Tackett I, 561 F. 3d, at 490. “Keeping in mind the
`
`context of the labor-management negotiations identified in
`Yard-Man,” the court found “it unlikely that [the Union]
`
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`

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` Cite as: 574 U. S. ____ (2015)
`
`Opinion of the Court
`would agree to language that ensures its members a ‘full
`
`Company contribution,’ if the company could unilaterally
`
`change the level of contribution.” Ibid. The court con-
`
`strued the language about “employees” contributing to
`their health care premiums as limited to employees who
`had not attained the requisite seniority points to be enti-
`
`tled to a full company contribution. Ibid. And it discerned
`an intent to vest lifetime contribution-free health care
`benefits from provisions tying eligibility for health care
`benefits to eligibility for pension benefits. Id., at 490–491.
`
`On remand, the District Court conducted a bench trial
`and ruled in favor of the retirees. It declined to revisit the
`question whether the P & I agreement created a vested
`right to retiree benefits, concluding that the Court of
`Appeals had definitively resolved that issue.
`It then
`issued a permanent injunction ordering M&G to reinstate
`contribution-free health care benefits for the individual
`respondents and similarly situated retirees. 853 F. Supp.
`2d 697 (SD Ohio 2012).
`
`
`The Court of Appeals affirmed, concluding that, al-
`
`
`
`though the District Court had erred in treating Tackett I as
`a conclusive resolution of the meaning of the P & I agree-
`ment, it had not erred in “presum[ing]” that, “in the ab-
`sence of extrinsic evidence to the contrary, the agreements
`indicated an intent to vest lifetime contribution-free bene-
`fits.” 733 F. 3d 589, 600 (CA6 2013) (Tackett II). And
`because the District Court had concluded that the prof-
`fered extrinsic evidence was inapplicable, it had not clearly
`erred in finding that the agreement created those vested
`
`rights.
`
`We granted certiorari, 572 U. S. ___ (2014), and now
`vacate and remand.
`
`
`
`
`
`
`II
`
`This case is about the interpretation of collective-
`bargaining agreements that define rights to welfare bene-
`
`
`
`
`
`
`
`5
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`

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`6
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`M&G POLYMERS USA, LLC v. TACKETT
`
`Opinion of the Court
`fits plans. The LMRA grants federal courts jurisdiction to
`resolve disputes between employers and labor unions
`about collective-bargaining agreements. 29 U. S. C. §185.
`When collective-bargaining agreements create pension or
`welfare benefits plans, those plans are subject to rules
`established in ERISA. ERISA defines pension plans as
`plans, funds, or programs that “provid[e] retirement in-
`come to employees” or that “resul[t] in a deferral of in-
`come.” §1002(2)(A). It defines welfare benefits plans as
`plans, funds, or programs established or maintained to
`provide participants with additional benefits, such as life
`insurance and disability coverage. §1002(1).
`
`ERISA treats these two types of plans differently.
`
`
`Although ERISA imposes elaborate minimum funding and
`vesting standards for pension plans, §§1053, 1082, 1083,
`1084, it explicitly exempts welfare benefits plans from
`those rules, §§1051(1), 1081(a)(1). Welfare benefits plans
`must be “established and maintained pursuant to a writ-
`ten instrument,” §1102(a)(1), but “[e]mployers or other
`plan sponsors are generally free under ERISA, for any
`reason at any time, to adopt, modify, or terminate welfare
`plans,” Curtiss-Wright Corp. v. Schoonejongen, 514 U. S.
`73, 78 (1995).
`As we have previously recognized,
`“[E]mployers have large leeway to design disability and
`other welfare plans as they see fit.” Black & Decker Dis-
`ability Plan v. Nord, 538 U. S. 822, 833 (2003). And, we
`have observed, the rule that contractual “provisions ordi-
`narily should be enforced as written is especially appro-
`priate when enforcing an ERISA [welfare benefits] plan.”
`
` Heimeshoff v. Hartford Life & Accident Ins. Co., 571 U. S.
`___, ___ (2013) (slip op., at 7). That is because the “focus
`on the written terms of the plan is the linchpin of a system
`that is not so complex that administrative costs, or litiga-
`tion expenses, unduly discourage employers from offering
`[welfare benefits] plans in the first place.” Id., at ___ (slip
`
`op., at 8) (internal quotation marks, brackets, and citation
`
`
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`

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` Cite as: 574 U. S. ____ (2015)
`
`Opinion of the Court
`
`7
`
`
`
`omitted).
`
`We interpret collective-bargaining agreements, includ-
`ing those establishing ERISA plans, according to ordinary
`principles of contract law, at least when those principles
`are not inconsistent with federal labor policy. See Textile
`
`
`Workers v. Lincoln Mills of Ala., 353 U. S. 448, 456–457
`(1957). “In this endeavor, as with any other contract, the
`parties’ intentions control.” Stolt-Nielsen S. A. v. Animal-
`
`Feeds Int’l Corp., 559 U. S. 662, 682 (2010) (internal quo-
`
`tation marks omitted). “Where the words of a contract in
`writing are clear and unambiguous, its meaning is to be
`ascertained in accordance with its plainly expressed in-
`tent.” 11 R. Lord, Williston on Contracts §30:6, p. 108 (4th
`
`ed. 2012) (Williston) (internal quotation marks omitted).
`
`In this case, the Court of Appeals applied the Yard-Man
`inferences to conclude that, in the absence of extrinsic
`evidence to the contrary, the provisions of the contract
`indicated an intent to vest retirees with lifetime benefits.
`Tackett II, 733 F. 3d, at 599–600. As we now explain,
`those inferences conflict with ordinary principles of con-
`
`tract law.
`
`
`
`
`
`
`III
`A
`1
`
`The Court of Appeals has long insisted that its Yard-
`Man inferences are drawn from ordinary contract law. In
`Yard-Man itself, the court purported to apply “traditional
`rules for contractual interpretation.” 716 F. 2d, at 1479.
`The court first concluded that the provision governing
`retiree insurance benefits—which stated only that the
`employer “will provide” such benefits—was ambiguous as
`to the duration of those benefits. Id., at 1480. To resolve
`that ambiguity, it looked to other provisions of the agree-
`ment. The agreement included provisions for terminating
`active employees’ insurance benefits in the case of layoffs
`
`
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`

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`8
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`M&G POLYMERS USA, LLC v. TACKETT
`
`Opinion of the Court
`and for terminating benefits for a retiree’s spouse and
`dependents in case of the retiree’s death before the expira-
`tion of the collective-bargaining agreement, but no provi-
`sion specifically addressed the duration of retiree health
`care benefits. Id., at 1481–1482. From the existence of
`these termination provisions and the absence of a termi-
`nation provision specifically addressing retiree benefits,
`the court inferred an intent to vest those retiree benefits
`
`for life.
`
`The court then purported to apply the rule that con-
`tracts should be interpreted to avoid illusory promises. It
`noted that the retiree insurance provisions “contain[ed] a
`promise that the company will pay an early retiree’s in-
`surance upon such retiree reaching age 65 but that the
`retiree must bear the cost of company insurance until that
`
`time.” Id., at 1481. Employees could retire at age 55, but
`
`the agreement containing this promise applied only for a
`3-year term. Ibid. Thus, retirees between the ages of 55
`and 62 would not turn 65 and become eligible for the
`company contribution before the 3-year agreement ex-
`pired. In light of this fact, the court reasoned that the
`promise would be “completely illusory for many early
`retirees under age 62” if the retiree benefits terminated
`
`when the contract expired. Ibid.
`
`Finally, the court turned to “the context” of labor nego-
`tiations.
`Id., at 1482.
`It observed that “[b]enefits for
`retirees are . . . not mandatory subjects of collective bar-
`gaining” and that “employees are presumably aware that
`the union owes no obligation to bargain for continued
`benefits for retirees.” Ibid. Based on these observations,
`the court concluded that “it is unlikely that such benefits
`. . . would be left to the contingencies of future negotia-
`tions.” Ibid. It also asserted that “retiree benefits are in a
`
`sense ‘status’ benefits which, as such, carry with them an
`inference that they continue so long as the prerequisite
`
`status is maintained.” Ibid.
`
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`9
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` Cite as: 574 U. S. ____ (2015)
`
`Opinion of the Court
`Although the contract included a general durational
`
`clause—meaning that the contract itself would expire at a
`set time—the court concluded that these contextual clues
`“outweigh[ed] any contrary implications derived from a
`routine duration clause.” Id., at 1483.
`2
`
`
`Two years after Yard-Man, the court took this analysis
`even further. In a dispute between retirees and a steel
`company over retiree health insurance benefits, it con-
`strued the language “will continue to provide at its ex-
`pense, supplemental medicare and major medical benefits
`for Pensioners aged 65 and over” to “unambiguously con-
`fe[r]” lifetime benefits. Policy v. Powell Pressed Steel Co.,
`770 F. 2d 609, 615 (CA6 1985) (emphasis added). Yet it
`
`had interpreted similar language—“will provide insurance
`benefits equal to the active group”—to be ambiguous in
`Yard-Man. The court refused to give any weight to provi-
`sions that supported a contrary construction—namely, one
`establishing a fund to pay pension, but not welfare, bene-
`fits, and another providing for the continuation of pension,
`but not welfare, benefits after the agreement expired.
`Policy, 770 F. 2d, at 615–616. According to the court, a
`contrary interpretation “would render the Company’s
`promise [of benefits for retirees aged 65 and over] in sub-
`stantial part nugatory and illusory” to retirees who were
`62 or younger when the 3-year agreement was signed.
`Ibid. And it faulted the District Court for failing “to give
`effect” to Yard-Man’s admonition “that retiree benefits
`normally . . . are interminable.” 770 F. 2d, at 616.
`
`The Court of Appeals has continued to extend the rea-
`soning of Yard-Man. Relying on Yard-Man’s statement
`that context considerations outweigh the effect of a gen-
`eral termination clause, it has concluded that, “‘[a]bsent
`specific durational language referring to retiree benefits
`themselves,’ a general durational clause says nothing
`
`

`
`10
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`M&G POLYMERS USA, LLC v. TACKETT
`
`Opinion of the Court
`about the vesting of retiree benefits.” Noe v. PolyOne
`Corp., 520 F. 3d 548, 555 (CA6 2008) (emphasis added). It
`has also held that a provision that “ties eligibility for
`retirement-health benefits to eligibility for a pension . . .
`
`[leaves] little room for debate that retirees’ health benefits
`ves[t] upon retirement.” Id., at 558 (internal quotation
`marks omitted). Commenting on these extensions of
`Yard-Man, the court has acknowledged that “there is a
`reasonable argument to be made that, while th[e] court
`has repeatedly cautioned that Yard-Man does not create a
`presumption of vesting, [it] ha[s] gone on to apply just
`such a presumption.” Cole v. ArvinMeritor, Inc., 549 F. 3d
`
`1064, 1074 (CA6 2008).
`
`
`
`B
`
`We disagree with the Court of Appeals’ assessment that
`
`the inferences applied in Yard-Man and its progeny repre-
`
`
`sent ordinary principles of contract law.
`
`As an initial matter, Yard-Man violates ordinary con-
`tract principles by placing a thumb on the scale in favor of
`vested retiree benefits in all collective-bargaining agree-
`ments. That rule has no basis in ordinary principles of
`contract law. And it distorts the attempt “to ascertain the
`intention of the parties.” 11 Williston §30:2, at 18 (empha-
`
`sis added); see also Stolt-Nielsen, 559 U. S., at 682. Yard-
`
`Man’s assessment of likely behavior in collective bargain-
`ing is too speculative and too far removed from the context
`of any particular contract to be useful in discerning the
`parties’ intention.
`
`And the Court of Appeals derived its assessment of
`likely behavior not from record evidence, but instead from
`its own suppositions about the intentions of employees,
`unions, and employers negotiating retiree benefits. See
`Yard-Man, 716 F. 2d, at 1482. For example, it asserted,
`without any foundation, that, “when . . . parties contract
`for benefits which accrue upon achievement of retiree
`
`
`
`
`
`
`
`

`
`
`
` Cite as: 574 U. S. ____ (2015)
`
`Opinion of the Court
`status, there is an inference that the parties likely in-
`tended those benefits to continue as long as the benefi-
`ciary remains a retiree.” Ibid.; see also ibid. (“[I]t is unlikely
`that [retiree] benefits . . . would be left to the contingen-
`
`cies of future negotiations”). Although a court may look to
`
`known customs or usages in a particular industry to de-
`termine the meaning of a contract, the parties must prove
`
`those customs or usages using affirmative evidentiary
`support in a given case. 12 Williston §34:3; accord, Robin-
`son v. United States, 13 Wall. 363, 366 (1872); Oelricks v.
`Ford, 23 How. 49, 61–62 (1860). Yard-Man relied on no
`record evidence indicating that employers and unions in
`that industry customarily vest retiree benefits. Worse, the
`Court of Appeals has taken the inferences in Yard-Man
`and applied them indiscriminately across industries. See,
`e.g., Cole, supra, at 1074 (automobile); Armistead v. Ver-
`nitron Corp., 944 F. 2d 1287, 1297 (CA6 1991) (electron-
`ics); Policy, supra, at 618 (steel).
`
`Because the Court of Appeals did not ground its Yard-
`
`Man inferences in any record evidence, it is unsurprising
`that the inferences rest on a shaky factual foundation.
`
`For example, Yard-Man relied in part on the premise that
`retiree health care benefits are not subjects of mandatory
`collective bargaining. Parties, however, can and do volun-
`tarily agree to make retiree benefits a subject of mandato-
`ry collective bargaining. Indeed, the employer and union
`in this case entered such an agreement in 2001. App.
`435–436. Yard-Man also relied on the premise that re-
`tiree benefits are a form of deferred compensation, but
`that characterization is contrary to Congress’ determi-
`nation otherwise. In ERISA, Congress specifically defined
`plans that “resul[t] in a deferral of income by employ-
`ees” as pension plans, §1002(2)(A)(ii), and plans that offer
`medical benefits as welfare plans, §1002(1)(A). Thus,
`retiree health care benefits are not a form of deferred
`compensation.
`
`
`
`
`
`
`
` 11
`
`
`
`
`
`

`
`12
`
`
`
`
`M&G POLYMERS USA, LLC v. TACKETT
`
`Opinion of the Court
`Further compounding this error, the Court of Appeals
`
`has refused to apply general durational clauses to provi-
`sions governing retiree benefits. Having inferred that
`parties would not leave retiree benefits to the contingen-
`cies of future negotiations, and that retiree benefits gener-
`ally last as long as the recipient remains a retiree, the
`court in Yard-Man explicitly concluded that these infer-
`ences “outweigh[ed] any contrary implications derived
`from a routine duration clause terminating the agreement
`generally.” 716 F. 2d, at 1482–1483. The court’s subse-
`quent decisions went even further, requiring a contract to
`include a specific durational clause for retiree health care
`benefits to prevent vesting. E.g., Noe, supra, at 555.
`
`These decisions distort the text of the agreement and
`conflict with the principle of contract law that the written
`
`agreement is presumed to encompass the whole agreement
`of the parties. See 1 W. Story, Law of Contracts §780 (M.
`Bigelow ed., 5th ed. 1874); see also 11 Williston §31:5.
`
`
`Perhaps tugged by these inferences, the Court of Ap-
`
`peals misapplied other traditional principles of contract
`law, including the illusory promises doctrine. That doc-
`trine instructs courts to avoid constructions of contracts
`that would render promises illusory because such promises
`cannot serve as consideration for a contract. See 3
`Williston §7:7 (4th ed. 2008). But the Court of Appeals
`construed provisions that admittedly benefited some class
`of retirees as “illusory” merely because they did not equally
`benefit all retirees. See Yard-Man, supra, at 1480–
`1481. That interpretation is a contradiction in terms—a
`promise that is “partly” illusory is by definition not illusory.
`If it benefits some class of retirees, then it may serve
`as consideration for the union’s promises. And the court’s
`interpretation is particularly inappropriate in the context
`
`of collective-bargaining agreements, which are negotiated
`on behalf of a broad category of individuals and conse-
`quently will often include provisions inapplicable to some
`
`
`
`
`
`
`
`
`
`

`
`
`
` 13
`
`
`
`
`
`
`
`
`
`
`
` Cite as: 574 U. S. ____ (2015)
`
`Opinion of the Court
`
` category of employees.
`The Court of Appeals also failed even to consider the
`
`traditional principle that courts should not construe am-
`biguous writings to create lifetime promises. See 3 A.
`Corbin, Corbin on Contracts §553, p. 216 (1960) (explain-
`ing that contracts that are silent as to their duration will
`ordinarily be treated not as “operative in perpetuity” but
`as “operative for a reasonable time” (internal quotation
`marks omitted)). The court recognized that “traditional
`rules of contractual interpretation require a clear manifes-
`tation of intent before conferring a benefit or obligation,”
`but asserted that “the duration of the benefit once clearly
`conferred is [not] subject to this stricture.” Yard-Man,
`
`supra, at 1481, n. 2. In stark contrast to this assertion,
`
`however, the court later applied that very stricture to
`
`noncollectively bargained contracts offering retiree bene-
`fits. See Sprague v. General Motors Corp., 133 F. 3d 388,
`400 (CA6 1998) (“To vest benefits is to render them forever
`unalterable. Because vesting of welfare plan benef

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