e-Journal Summary

e-Journal Number : 56956
Opinion Date : 04/22/2014
e-Journal Date : 04/29/2014
Court : U.S. Court of Appeals Sixth Circuit
Case Name : United Steel, Paper, Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. Kelsey-Hayes Co.
Practice Area(s) : Employment & Labor Law
Judge(s) : Griffin and Merritt; Concurrence – Merritt; Concurring in part, Dissenting in part – Sutton
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Issues:

Retiree benefits; Labor-Management Relations Act (LMRA)(29 USC § 185 et seq.); Employee Retirement Income Security Act (ERISA)(29 USC § 1001 et seq.); Prior case law; Reese v. CNH Am. L.L.C. (Reese I & II); Determining the parties' intent; UAW v. Yard-Man, Inc.; Moore v. Menasha Corp.; Yolton v. El Paso TN Pipeline Co.; Sprague v. GMC; Whether the unilateral implementation of "Health Reimbursement Accounts" (HRAs) breached the collective bargaining agreements (CBAs); Whether the HRAs provided "better" coverage; Whether the plaintiffs assented to the unilateral changes and waived their ability to challenge the HRAs; Whether defendant-TRW was responsible for defendant-Kelsey-Hayes' liabilities; NLRB v. Burns Int'l Sec. Servs.; Nelson Elec. v. NLRB; Whether a "permanent injunction" was necessary; eBay Inc. v. MercExchange, L.L.C.; Attorney fees; Adcock-Ladd v. Secretary of Treasury; Barnes v. Cincinnati; Isabel v. City of Memphis; Auto Alliance Int'l, Inc. v. U.S. Customs Serv. (Unpub. 6th Cir.); Imwalle v. Reliance Med. Prod., Inc.

Summary

[This appeal was from the ED-MI.] Plaintiff-retired union workers were entitled to summary judgment, injunctive relief, and attorney fees in this case against their former employer because the employer's decision to replace health plans with HRAs breached their CBAs in this action under the LMRA and ERISA. As an initial matter, the court reviewed prior case law on retiree benefits and rejected defendant-Kelsey-Hayes' assertions that the Reese cases held that "all CBAs in the Sixth Circuit are always unilaterally alterable, regardless of a CBA's specific language." The court determined that the actual holding was that the parties' intent determined whether the vested right to health care could be unilaterally altered. "Under the CBAs at issue here, Kelsey-Hayes agreed to include certain medical services in their employees' health care coverages." The CBAs "provided that, once an employee retired, Kelsey-Hayes promised the now-retiree the 'continuance' of '[t]he healthcare coverages [that he or she] ha[d] . . . at the time of retirement.' And, Kelsey-Hayes agreed to pay the 'full premium or subscription charge for health care coverages continued in accordance with Article III, Section 5' for retirees." The court found "this language unambiguous" and held that "this CBA language alone, when construed in light of the Yard-Man inference, created a vested lifetime right to health care benefits." The court also held that "the unilateral implementation of the HRAs breached the CBAs, not because HRAs are 'unreasonable' under the Reese cases, but because the HRAs are simply not what the parties bargained for in the first instance." The HRAs "shifted the risk of excess cost from defendants to plaintiffs." It was not relevant whether the HRAs were "better" or "worse" - they were not the bargained-for plans. Further, the plaintiffs offered sufficient evidence the defendant-TRW was liable for Kelsey-Hayes' liabilities. The plaintiffs were also properly granted a permanent injunction. "Ultimately, compensating plaintiffs monetarily will not remedy the breaches of the CBAs - rather, the appropriate remedy is to require defendants to do what they agreed to do in the CBAs." The district court also did not abuse its discretion in granting the plaintiffs' attorney fees under the "lodestar" approach. While the defendants argued that the district court did not reduce the number of hours enough, their assertion "as to what constitutes a reasonable number of hours is itself arbitrary." For example, they offered no evidence to support their contention that the plaintiffs' counsel should have only spent 75 hours briefing for summary judgment. Affirmed.

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