When retirees at M&G Polymers USA were asked to start contributing to the health benefits they were receiving, they sued. But the Supreme Court’s backing the employer — and, in a way, possibly other employers as well.
In 2000, the Point Pleasant Polyester Plant in Apple Grove, WV, was purchased by M&G. And at that time retirees were receiving health insurance at no cost to them.
But when M&G took over, it began asking retirees to contribute to their health benefits.
As a result, the retirees sued, claiming the collective bargaining agreement their union had with M&G guaranteed them no-cost healthcare coverage for life.
The retirees won at both the district court and appellate court levels. But the employer brought to the Supreme Court the issue of whether the appellate court correctly made the presumption that the health benefits were meant to vest for life.
The crux of the employer’s argument: The bargaining agreement didn’t clearly state the duration of the benefits.
The Supreme Court agreed to hear the case, and in a unanimous decision sent the case back to the appeals court. It ruled the lower court hadn’t used the correct legal analysis.
It said just because a contract doesn’t specifically spell out the duration of benefits, a court can’t infer the benefits are supposed to vest for life.
The High Court’s ruling is important for this reason: It’s possible it could be applied to various forms of agreements between employers and employees — and may not be limited to collective bargaining agreements and health benefits.
Ambiguity doesn’t mean forever
Here’s what Justice Clarence Thomas had to say about the issue:
“Courts should not construe ambiguous writings to create lifetime promises.”
The ruling here, however, doesn’t guarantee victory for M&G. Justice Ruth Bader Ginsburg said the retirees could still prevail because other aspects of the contract may show that the parties under the collective bargaining agreement meant for the health benefits to vest for life.
Example: Ginsburg said that the retirees had vested pensions, and the contract tied health benefits to those getting a monthly pension — i.e., if the pensions vest for life, the health benefits might, too.
But that’s an issue for the appellate court to work out. Stay tuned.
