993 F.2d 603 (7th Cir. 1993), 91-2378, Bidlack v. Wheelabrator Corp.

Docket Nº:91-2378.
Citation:993 F.2d 603
Party Name:Kenneth P. BIDLACK, et al., Plaintiffs-Appellants, v. WHEELABRATOR CORPORATION, Defendant-Appellee.
Case Date:May 18, 1993
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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993 F.2d 603 (7th Cir. 1993)

Kenneth P. BIDLACK, et al., Plaintiffs-Appellants,



No. 91-2378.

United States Court of Appeals, Seventh Circuit

May 18, 1993

Argued Feb. 27, 1992.

Reargued En Banc Dec. 15, 1992.

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Barry A. Macey (argued), Macey, Macey & Swanson, Indianapolis, IN, Charles S. Leone, South Bend, IN, for plaintiffs-appellants.

James H. Pankow, Timothy W. Woods, Robert W. Mysliwiec, Jones, Obenchain, Ford, Pankow & Lewis, South Bend, IN, Robert P. Christenson, Roger K. Quillen (argued), David R. Kresser, Fisher & Phillips, Atlanta, GA, for defendant-appellee.

Bennett L. Epstein, Peter R. Bulmer, Donald H. Seifman, Mark Brian Wychulis, Hopkins & Sutter, Washington, DC, William H. Crabtree, Detroit, MI, for Motor Vehicle Manufacturers Ass'n, amicus curiae.

Stephen A. Bokat, Mona C. Zeiberg, Robin S. Conrad, National Chamber Litigation Center, Washington, DC, Steven J. Sacher, Evan Miller, Mark E. MacDonald, Johnson & Gibbs, Washington, DC, for Chamber of Commerce of U.S., amicus curiae.

Theodore E. Rhodes, Paul J. Ondrasik, Jr., Steptoe & Johnson, Steven J. Sacher, Evan Miller, Mark E. MacDonald, Johnson & Gibbs, Washington, DC, for Association of Private Pension and Welfare Plans, amicus curiae.

Steven J. Sacher, Evan Miller, Mark E. MacDonald, Johnson & Gibbs, Washington, DC, for Erisa Industry Committee, amicus curiae.


POSNER, Circuit Judge.

This is a class action on behalf of retired employees of the Wheelabrator Corporation. They claim that collective bargaining agreements between Wheelabrator and the union that represented employees at Wheelabrator's plant in Mishawaka, Indiana conferred upon the plant's retired employees lifetime rights to certain health benefits--hence rights that survived the expiration in 1988 of the last collective bargaining agreement between the company and the union applicable to the Mishawaka plant, which Wheelabrator closed that year. The plaintiffs base the suit primarily on section 301 of the Taft-Hartley Act, 29 U.S.C. § 185, which creates a private right of action to enforce collective bargaining agreements. The briefs devote much space to the federal pension law (Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq.) as well, which does in fact furnish an alternative jurisdictional basis to the Taft-Hartley Act for maintaining this suit in federal court, 29 U.S.C. § 1132(e)(1), but which has little bearing on the issues in contention. ERISA does not require the vesting of health or other "welfare" benefits,

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as it does pension benefits, Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91, 103 S.Ct. 2890, 2897, 77 L.Ed.2d 490 (1983); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 732, 105 S.Ct. 2380, 2385, 85 L.Ed.2d 728 (1985); Ryan v. Chromalloy American Corp., 877 F.2d 598, 603 (7th Cir.1989), but equally it does not forbid their vesting by a written contract, id., which could be part of a collective bargaining agreement. International Union, United Auto Workers v. Yard-Man, Inc., 716 F.2d 1476, 1479-80 (6th Cir.1983); United Steelworkers v. Fort Pitt Steel Casting, 598 F.2d 1273 (3d Cir.1979); cf. In re White Farm Equipment Co., 788 F.2d 1186, 1193 (6th Cir.1986).

The district court granted summary judgment for the company, and dismissed the suit, because "an examination of the formal plan documents and the collective bargaining agreements reveals no intention on Wheelabrator's part to provide pre-1986 retirees the same level of benefits at no cost for life" and he believed that the requisite intention could not be proved by extrinsic evidence, that is, evidence outside the written contracts themselves. 763 F.Supp. 396 (N.D.Ind.1991). The plaintiffs appealed and the appeal was argued, as is customary, before a three-judge panel. Before the panel issued its decision, the full court, in accordance with Circuit Rule 40(f), decided to hear the case en banc in order to reexamine an earlier decision of the court, Senn v. United Dominion Industries, Inc., 951 F.2d 806 (7th Cir.1992). Judge Cummings, a member of the original panel, has recused himself from further consideration of the case because of a transaction by Wheelabrator that occurred after the en banc vote.

The main question briefed and argued by the parties is whether the absence from the collective bargaining agreements of any provision that explicitly vests the health benefits of retired employees defeats those employees' claims even though some contractual language and a great deal of "extrinsic" evidence--evidence apart from the language of the agreements--suggest that the parties may have intended to confer vested rights on the retired employees, that is, rights that would outlast the expiration of the last collective bargaining agreement. If the answer is "yes"--the inexplicitness of the agreements is an insuperable obstacle to the suit--the district judge was right to grant summary judgment for the company. A second question, presented by Wheelabrator, is whether, even if the retired employees had vested rights, it is plain from the terms of the collective bargaining agreements that their rights were no greater than those of the active employees. For Wheelabrator did not cut off the retired employees of the Mishawaka plant when the last collective bargaining agreement applicable to employees at that plant expired and the plant was closed. It is continuing to pay their health benefits at the same level and cost as the health benefits that it pays the active employees at its other plants.

Beginning with the collective bargaining agreement signed in 1965, every agreement between the company and the union in this case up to and including the last one applicable to the Mishawaka plant, which was signed in 1985, contained a section which provided both that "those employees who have retired since September 22, 1959, will have the full cost of their Blue Cross-Blue Shield coverage paid by the Company after they attain sixty-five (65) years of age" and that they would be entitled to certain supplemental health benefits, also paid for by the company, "which, combined with Medicare, will provide a level of benefits equal to the Wheelabrator Blue Cross-Blue Shield plan for active and retired employees sixty-five (65) years of age or over" and which "shall be continued for the spouse after the death of the retiree." We have quoted from the final collective bargaining agreement but the corresponding language of the earlier agreements is materially identical. There are, however, other differences between the agreements. In particular, the final agreement contains a provision not found in the earlier ones. It is the section following the one from which we quoted and it provides explicitly for the "vesting" of certain health benefits for employees who retire after the new agreement takes effect, that is, after January 1, 1986. The immediately preceding section, the one at issue in this case, governs the rights of employees who retired earlier;

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it is only employees in this group, that is, employees who retired on or before January 1, 1986, who are members of the plaintiff class.

Another contractual provision to which the parties have referred us is found in the contract between Wheelabrator and Blue Cross-Blue Shield for the purchase by the former of health insurance sold by the latter. The provision in question authorizes the company to change the level of benefits insured by Blue Cross-Blue Shield. We do not think it has much relevance to the main issue in this case, that of the duration of benefits. The union was not a party to the contract between Wheelabrator and its insurer, and anyway the issue is not the obligations of Blue Cross-Blue Shield to Wheelabrator but Wheelabrator's obligations to its retired employees. Those obligations are defined by the collective bargaining agreements, not by the insurance contract. The latter however may be relevant to the dispute over the level of benefits to which the retired employees are entitled, assuming that they are entitled to any benefits at all after the last collective bargaining agreement in which these employees were mentioned expired.

There is evidence that, if believed (an important qualification, for there has been no trial), suggests that the language we quoted from the collective bargaining agreements was intended to confer lifetime benefits on employees who retired before 1986. For twenty years--from 1968 to 1988--Wheelabrator issued a form to each newly retired employee which under the subheading "Medical Insurance (Blue Cross-Blue Shield of Indiana)" stated without qualification that "both you and your spouse will be covered for the remainder of your lives" at no cost. And a Wheelabrator executive who participated in the negotiation of several of the collective bargaining contracts testified that he believed that they were intended to provide retired employees with vested rights to health benefits. We need not discuss the other extrinsic evidence in support of, or for that matter against, the plaintiff's interpretation. The issue is not what the contract in fact means but whether the plaintiffs are entitled to a trial on what it means.

Wheelabrator points out that ordinarily when a contract expires, it--expires. It is at an end. The parties have no more rights or duties under it. Sometimes, however, a contract creates entitlements that outlast it. At argument the plaintiffs' counsel gave the example of wages due under a contract of employment at will, a contract terminable at the whim of either party. Suppose the employer's practice is to pay employees at the end of each week for the work they have done during the week. Jones, an employee at will, is fired at noon on...

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