Bower v. Bunker Hill Co.

• Decision Date: 14 February 1984
• Docket Number: No. 83-3634,83-3634
• Citation: 725 F.2d 1221
• Parties: 115 L.R.R.M. (BNA) 3095, 100 Lab.Cas. P 10,811, 5 Employee Benefits Ca 1180 Russell BOWER; Jesse Collins; Lorenzo Bower; Frederick Flagel; Claude Becker; Robert Cantrell; Judson Williams; and Donald Hook, for themselves and all persons similarly situated, Plaintiffs-Appellants, v. The BUNKER HILL COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1221

725 F.2d 1221

115 L.R.R.M. (BNA) 3095, 100 Lab.Cas. P 10,811,

5 Employee Benefits Ca 1180

Russell BOWER; Jesse Collins; Lorenzo Bower; Frederick

Flagel; Claude Becker; Robert Cantrell; Judson Williams;

and Donald Hook, for themselves and all persons similarly

situated, Plaintiffs-Appellants, v. The BUNKER HILL COMPANY, Defendant-Appellee.

No. 83-3634.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 9, 1983.

Decided Feb. 14, 1984.

Daniel P. McIntyre, Pittsbury, Pa., for plaintiffs-appellants.

Eugene I. Annis, Lukins & Annis, P.S., Spokane, Wash., William F. Boyd, Brown, Peacock, Keane & Boyd, Kellogg, Idaho, for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Washington.

Before SNEED, NELSON and REINHARDT, Circuit Judges.

NELSON, Circuit Judge:

Former employees of The Bunker Hill Company brought suit alleging that the Company improperly discontinued retirement medical insurance when it ceased operations. The district court granted defendant's motion for summary judgment on the ground that these insurance benefits were not vested. The employees appeal this ruling. We vacate the grant of summary judgment and remand for additional proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

The Bunker Hill Company ("Bunker Hill") began a pension plan for its employees in 1940. In 1956, negotiations with the hourly employees' union resulted in a medical insurance plan for all unionized employees. Although not covered by the union agreement, non-union employees have always received benefits identical to those provided union members.

Since 1956, a number of unions have represented Bunker Hill employees, and a number of labor-management contracts have been negotiated. Generally, the contracts were renegotiated every three years and benefits for retirees were continually improved. From 1956 through 1972, each contract granted retired employees medical insurance identical to that provided active employees. The contracts incorporated by reference a separate insurance schedule.

In 1972, the United Steelworkers of America began to represent Bunker Hill employees. The labor-management contracts negotiated by the Steelworkers no longer incorporated an insurance agreement by reference. Instead, the insurance plan was an independent agreement, appended to the labor-management contract. The insurance plan no longer expired when the labor-management contract expired, but rather contained an independent expiration clause that was identical to the labor-management contract expiration clause. Retirement benefits were discussed in neither of these two documents, but were set forth in a third paper--a memorandum of agreement drafted at the conclusion of bargaining. This memorandum ran for a term of three years and granted insurance benefits that ran for an unspecified term.

The 1977 and 1980 labor agreements echoed the form of the 1973 agreement. A letter mailed to all employees described insurance coverage in terms of a "lifetime" maximum, and appellants argue that a summary description of the company's insurance plan implied that insurance coverage lasts for the life of retired employees.

On August 25, 1981, Bunker Hill announced that it was discontinuing its operations. Shortly thereafter, each active employee was notified that his medical insurance coverage would end on April 5, 1982. Retired employees were told that their medical coverage would end on May 15, 1982. Bunker Hill continues to pay all retirement benefits except for the medical coverage. It is retirement medical insurance, alone, that is the focus of this lawsuit.

On June 2, 1982, a number of pensioners filed this action in the Eastern District of Washington. Defendant's Motion for Summary

Judgment was granted on January 14, 1983, and it is this ruling the plaintiffs appeal.

DISCUSSION

I. STANDARD OF REVIEW.

This court reviews de novo decisions granting summary judgment. Bank of California, N.A. v. Opie, 663 F.2d 977, 979 (9th Cir.1981). Summary judgment is properly granted only if "the contract provision in question is unambiguous." Castaneda v. Dura-Vent Corp., 648 F.2d 612, 619 (9th Cir.1981). A dispute over a material fact necessary to interpret the contract may result in ambiguity. See National Union Fire Insurance of Pittsburgh, Pennsylvania v. Argonaut Insurance Co., 701 F.2d 95, 97 (9th Cir.1983). Thus, Bunker Hill must demonstrate that the documents underlying this lawsuit unambiguously establish a medical insurance plan limited to a three year term. All "possible inferences from the record" must be drawn in the retirees' favor. Gee v. Tenneco, Inc., 615 F.2d 857, 859 (9th Cir.1980).

The legal framework of this dispute is fairly straightforward: if the pensioners' medical insurance constituted a vested benefit, that benefit could not be ended without the pensioners' consent. See, e.g., Allied Chemical & Alkali Workers v. Pittsburgh Plate Glass Co., 404 U.S. 157, 181 n. 20, 92 S.Ct. 383, 398-399 n. 20, 30 L.Ed.2d 341 (1971). If each collective bargaining agreement unambiguously limited medical benefits to the term of the agreement, no benefits were vested. See, e.g., Turner v. Local Union No. 302, International Brotherhood of Teamsters, 604 F.2d 1219, 1225 (9th Cir.1979) (hereinafter cited as "Turner "). The sole question, then, is whether the collective bargaining agreements unambiguously limited the term of the medical benefits.

II. THE EXISTENCE OF MATERIAL ISSUES OF FACT RENDERS SUMMARY JUDGMENT IMPROPER.

The Sixth Circuit, presented with a similar issue and similar evidence, recently held that the collective bargaining agreement created a vested right to lifetime insurance benefits for retirees and affirmed the entry of summary judgment for the union. International Union, United Automobile, Aerospace & Agricultural Implement Workers v. Yard-Man, Inc., 716 F.2d 1476, 114 L.R.R.M. (BNA) 2489 (6th Cir.1983). Here, however, appellants do not seek an order directing an award of summary judgment in their favor. They claim only that there are material issues of fact that precluded the district court from granting summary judgment to appellees. It is clear from the record that there are a number of facts in dispute in the case before us. Cumulatively, those facts create ambiguities in the contract that render summary judgment improper. See National Union Fire Insurance of Pittsburgh, Pennsylvania v. Argonaut Insurance Co., 701 F.2d 95, 97 (9th Cir.1983).

A. The Contract Language Does Not Speak to the Vesting Issue.

The retirement medical insurance plan does not have an explicit expiration date. The labor-management agreement that endorses the plan does have an expiration date, but the insurance program itself is not necessarily bound by this date. See, e.g., E.L. Weigand Division v. National Labor Relations Board, 650 F.2d 463 (3d Cir.1981) (sickness and accident benefits are not limited to term of labor-management agreement), cert. denied, 455 U.S. 939, 102 S.Ct. 1429, 71 L.Ed.2d 649 (1982). Thus, the contractual language does not explicitly address the issue before us.

Inferences drawn from parallel contractual provisions provide no additional insights. In some instances, provisions that were to outlast the term of the labor-management agreement were made to do so explicitly. In other instances, however, provisions that were to expire at the end of the term of the labor-management agreement were made to do so explicitly. Accordingly, no inference can be drawn from the absence of an expiration date on the retirement insurance documents. Unable to resolve this lawsuit on the basis of contractual

                language, we look to extrinsic evidence to determine if summary judgment was properly granted in this case.   Cf. United States v. Erickson Paving Co., 465 F.2d 396, 399-400 (9th Cir.1972) (parol evidence only inadmissible where not essential to interpreting contract)
                

B. Extrinsic Evidence Suggests an Ambiguity in the Contract.

1. Summary Plan Descriptions

A small booklet distributed to all employees described Bunker Hill's retirement benefit plan. This "Summary Plan Description" stated only one eligibility requirement for receiving insurance: that the applicant be "receiving a pension from the Bunker Hill Company." Since the pension is lifelong, employees may have viewed the related insurance also to be a lifelong benefit. Moreover, the summary description assures pensioners that, upon their death, their "children and surviving spouse may continue to be covered." Such language suggests that retirement insurance benefits may not have been limited to the duration of the collective bargaining agreement.

The district court discounted these statements because a disclaimer printed on the last page of the summary description specifically noted that the booklet was "an illustration of benefits--not a contract" and instructed employees to "see a copy of the contract at the Personnel Office" for a full explanation of insurance benefits. The district court found that no reasonable person could infer from plan...