Compliance

Successor Employer Bound to Retiree Health Benefits by CBAs

By Rebecca Moore editors@plansponsor.com | August 09, 2012

August 9, 2012 (PLANSPONSOR.com) – A federal appellate court has agreed that retirees of a window furnishings manufacturer and their dependants are entitled to employer-paid health benefits for life.

The 6th U.S. Circuit Court of Appeals found a district court did not err in finding that Newell Window Furnishings is the successor in interest to the pre-1998 collective bargaining agreements (CBAs) between the retirees’ union and their employers. The retirees originally worked for Kirsch Company, and through a series of mergers and acquisitions, Newell Window was their employer when their plant was shut down.  

The appellate court also agreed with the district court that the provisions of the CBAs granting retiree health insurance benefits suggested that, once retired, those benefits would continue indefinitely and without cost; except for those who retired under the CBAs that expressly limited the duration or required specific contributions toward the cost. The court found that unlike the specific limitation on the duration of health insurance for those retiring on or after January 1, 1994, the language of the CBAs was general in nature and did not create ambiguity regarding the intention that medical insurance benefits continue for those who had already retired.   

In addition, the 6th Circuit determined the district court did not err in rejecting Newell Window’s incorporation-by-reference argument that the CBAs' mention of a “booklet and policy” defers the question of intention to vest benefits to a summary plan description (SPD), which the company said allowed it to amend benefits. The court found that the SPD did not include an unqualified assertion of a unilateral right to end retiree medical insurance benefits without regard for existing or future CBAs (see “Court Rules for Retirees on Health Benefits”).  

The opinion in Bender v. Newell Window Furnishings, Inc. is at http://www.ca6.uscourts.gov/opinions.pdf/12a0116p-06.pdf.