IUE-CWA v. General Electric Co., 081618 FED6, 17-3885

Docket Nº:17-3885
Party Name:IUE-CWA, et al., Plaintiff-Appellant, v. GENERAL ELECTRIC CO., Defendant-Appellee.
Judge Panel:BEFORE: CLAY, STRANCH, and LARSEN, Circuit Judges. JANE B. STRANCH, Circuit Judge, concurring. LARSEN, Circuit Judge, concurring in part and concurring in the judgment.
Case Date:August 16, 2018
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

IUE-CWA, et al., Plaintiff-Appellant,


GENERAL ELECTRIC CO., Defendant-Appellee.

No. 17-3885

United States Court of Appeals, Sixth Circuit

August 16, 2018



BEFORE: CLAY, STRANCH, and LARSEN, Circuit Judges.


Plaintiffs filed suit against Defendant General Electric Company ("GE") under Section 301 of the Labor Management Relation Act, 29 U.S.C. § 185; Section 502 of the Employee Retirement Income Security Act, 29 U.S.C. § 1132(a)(1)(B), (a)(2), and (a)(3); and the Declaratory Judgment Act, 28 U.S.C. § 2201(a) to enforce their rights to retirement healthcare benefits under a collective-bargaining agreement ("CBA"). The district court granted Defendant's motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), holding that the CBA did not vest lifetime retirement healthcare benefits. Because the controlling case law compels the conclusion that the CBA does not vest healthcare benefits for life, we AFFIRM.


Factual Background

Plaintiffs are a group of unions1 who represent GE employees and twenty-six individual retirees who were represented by those unions when they worked for GE. Since 1973, GE and the unions have negotiated a new CBA every three to four years. Each negotiation results in the execution of a Memorandum of Settlement ("MOS") between GE and the unions that establishes the terms of the new CBA. In connection with each CBA from 1973 to 2011, GE and the unions bargained the terms of Retiree Benefit Plans, which were incorporated into each CBA through the applicable Pension & Insurance Agreement ("PIA"). The PIAs formed Part Two of each MOS, and they constituted "the exclusive and definitive Agreement between the parties with respect to Pensions and Insurance." (R. 46-3, PIA, PageID # 648.) Each PIA attached black-lined versions of the Retiree Benefit Plans reflecting the changes described in the MOS.

For many years, GE provided eligible retirees over 65 years of age with supplemental healthcare coverage over and above that provided by Medicare. This case concerns four of GE's Retiree Benefit Plans in effect prior to 2016: the GE Pensioners Prescription Drug Plan ("Drug Plan"), the GE Medical Care Plan for Pensioners ("Medical Plan"), the GE Medicare Insurance Plan for Part B Benefits ("Medicare B Plan"), and the GE Pensioners Hospital Indemnity Plan ("Hospital Plan"). The Drug Plan and Medical Plan were set forth as Parts VIII and VII of the GE Life, Disability, and Medical Plan ("LDM Plan"). The other two Plans, the Hospital Plan and the Medicare B Plan, were identified as separate plans in the PIAs. The Retiree Benefit Plans covered prescription drugs as well as certain costs not covered by Medicare for eligible medical care and hospital visits. GE offered the Retiree Benefit Plans to all eligible retirees, including those who had retired before the effective date of the PIA. In each PIA, GE agreed to make the Retiree Benefit Plans available, and the unions "on their own behalf and on behalf of the employees" accepted them and "the terms and conditions thereof." (R. 46-3, PIA, PageID # 636.)

The Hospital and Medicare B Plans and the LDM Plan each contained a nearly identical reservation-of-rights clause, providing: This Plan may be amended, suspended, or terminated by the [GE] Board of Directors, in whole or in part, at any time without limitation, except as may be otherwise provided in collective bargaining agreements and except further that no such amendment, suspension, or termination shall adversely affect to a material degree any short term disability benefit payable with respect to any sickness, injury, or Covered Medical Expenses incurred prior to the effective date of such amendment, suspension, or termination, or affect the amount of GE Life Insurance Benefits and/or Trust Death Benefits for those employees who have retired, as described in Part I, Section D.

(R. 46-4, LDM Plan, PageID # 840 (emphasis in original); see R. 46-6, Hospital Plan, PageID # 872 (similar); R. 46-5, Medicare B Plan, PageID # 861-62 (similar).)

Each PIA contained two other provisions of significance to this case-one governing Defendant's right to change the Benefit Plans and the other governing the duration of the parties' obligations. First, each PIA contained a specific durational clause, which provided that none of the Benefit Plans, "to the extent applicable to employees, shall be amended or terminated by [GE] so long as [the PIA] remain[ed] in effect." (R. 46-3, PIA, PageID # 638.) By its terms, this provision limits the promises to "employees"-which Plaintiffs acknowledge does not include preexisting retirees-and restricts the time-limit of the promises to while "this Agreement remains in effect." (Id.) Second each PIA also contained a general durational clause, which provided that the PIA would "continue in full force and effect" for an initial fixed term of three or four years, "and from year to year thereafter," but also authorized either side to notify the other during a specified period of "its intention to terminate th[e] Agreement" upon a certain date. (Id. at PageID # 648.) The initial fixed term for the 2011 PIA ended on June 21, 2015.

On September 5, 2014, during the term of the 2011 CBA, the GE Board of Directors adopted a resolution effective January 1, 2015 stating that "all retiree healthcare benefits provided under the [LDM Plan and other Plans] are hereby transferred to separate ERISA benefit plans for retirees which are hereby established." (R. 1-10, Extracts from Minutes of Meeting of the GE Board, PageID # 215.) Plaintiff unions were not informed of the new plan structure until after the conclusion of the 2015 negotiations with GE and never consented to the change in the Benefit Plans.

In June 2015, the 2011 CBA expired, and GE and the unions entered into negotiations for a new CBA. According to Plaintiffs, as part of the negotiations, the unions agreed to changes in retiree medical benefits for those retirees who retired after the new agreement took effect on June 22, 2015. The new CBA took effect on June 22, 2015. And on January 1, 2016, GE replaced the existing Retiree Benefit Plans with an annual $1, 000 Retiree Reimbursement Account. As part of this program, GE also provides access to counselors to assist eligible retirees in selecting and purchasing health insurance through a private exchange. This new program applies to all retirees, even those who retired under earlier CBAs. Plaintiffs allege that, under the new plan, retirees who are over the age of 65 will pay up to $4, 850 annually in co-pays for critical prescription medicine.

Procedural History

On November 9, 2015, Plaintiffs filed suit under Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185; Section 502 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B), (a)(2), and (a)(3); and the Declaratory Judgment Act, 28 U.S.C. § 2201(a), alleging breaches of the CBA and violations of ERISA, and seeking damages, declaratory judgment, and an injunction preventing GE from altering the medical benefits provided under the CBA. They argued that GE breached the agreements by altering the terms of retiree benefits that had already vested.

As evidence that the parties intended for unalterable medical benefits to vest for the life of union retirees, Plaintiffs pointed to language in the CBAs stating that the Drug Plan and Medical Plan "shall be made available" and also stating that GE "agrees . . . it will make available [the Hospital Plan and the Medicare B Plan] to pensioners when they attain age 65 and after they have retired." (R. 46-3, PIA, PageID # 635-36.) Plaintiffs also identified several features of each MOS that allegedly demonstrated that the unions and GE both understood that the Retiree Benefit Plans provided lifetime benefits that would continue throughout a GE worker's retirement in the same way that his or her pension did: 1. Each MOS referred to "Lifetime Maximum Benefits" available to pensioners under the Retiree Benefit Plans;

2. Before 2007, the MOS and PIAs capped the amount of GE's post-contract financial responsibility for its Retiree Benefit Plans after the CBAs expired;

3. The Retiree Benefit Plans incorporated the GE pension plan provisions, reflecting the "mutual understanding that GE retirees were entitled to both their GE pension and their GE retiree health benefits throughout their lifetimes";

4. "The terms of the 2011 MOS between [the unions] and GE show that the terms of the Prescription Drug Plans for existing retirees were left intact for pre-2004 retirees and changed only for post-2004 retirees with the permission of the [unions]";

5. "Title...

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