Navlet v. Port of Seattle, No. 78866-9.

• Court: United States State Supreme Court of Washington
• Writing for the Court: Owens
• Citation: 164 Wn.2d 818,194 P.3d 221
• Parties: Jack M. NAVLET, Andrew E. Jenkins, Jack Godfrey, Louis Barrow, B.J. Schwartz, Arthur Camp, Ronald Newenhof, Timothy O'Brien, and Michael Miller, individually and on behalf of a class of others similarly situated, Appellants, v. The PORT OF SEATTLE, Respondent.
• Docket Number: No. 78866-9.
• Decision Date: 16 October 2008

194 P.3d 221 164 Wn.2d 818 Jack M. NAVLET, Andrew E. Jenkins, Jack Godfrey, Louis Barrow, B.J. Schwartz, Arthur Camp, Ronald Newenhof, Timothy O'Brien, and Michael Miller, individually and on behalf of a class of others similarly situated, Appellants,
v.
The PORT OF SEATTLE, Respondent. No. 78866-9. Supreme Court of Washington, En Banc. Argued September 14, 2006. Decided October 16, 2008.

[194 P.3d 224]

James D. Oswald, Law Offices of James D. Oswald, Seattle, WA, for Appellants.

Richard J. Birmingham, Davis Wright Tremaine LLP, Seattle, WA, for Respondent.

OWENS, J.

¶ 1 This case requires the determination of whether retirement, health care and welfare benefits (welfare benefits) provided in a collective bargaining agreement vested for life with employees who reached retirement eligibility during the term of the agreement. The appellants are nine current or retired employees (Appellants) of the Port of Seattle (Port), who were eligible to receive retirement welfare benefits pursuant to a collective bargaining agreement (CBA) between the Port and the International Longshore and Warehouse Union Local 9 (Local 9). After the CBA expired, the Port ceased contributing to the welfare trust fund (Welfare Trust), which administered the welfare benefits provided for eligible employees and retirees. Upon ceasing contributions, the trustees terminated the Welfare Trust's coverage for all employees and retirees, including Appellants. The Port offered Appellants the opportunity to participate in the Port's own employee benefits plan but did not offer to pay the premiums for such coverage.

¶ 2 We hold that state law governs the vesting principles for retirement welfare benefits conferred through a collective bargaining agreement with a state employer and therefore decline to interpret such rights under Title I of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001-1461. Applying the applicable vesting principles to the CBA, we further hold that the Port is obligated to provide retirement welfare benefits for life to Appellants who have satisfied the eligibility requirements to receive such benefits. Accordingly, we reverse the trial court's summary judgment order, enter partial summary judgment in favor of Appellants, and remand for further proceedings.

FACTS

¶ 3 In 1997, the Port and Local 9 entered into the CBA, which superseded the parties' previous collective bargaining agreements covering the terms and conditions of employment. Clerk's Papers (CP) at 41-61. Under section XVIII of the CBA, the Port promised to "maintain the current level of medical, welfare, dental and related benefits during the duration of this contract and ... continue to provide the same level of coverage currently provided to eligible employees, eligible retirees, and dependents." CP at 52.¹

¶ 4 The Port further agreed in section XVIII "to be party to the Agreement and Declaration of Trust of the ILWU Local 9 Warehouse Welfare Trust Fund" (Welfare Trust Agreement or Trust Agreement) that would govern the terms of the Welfare Trust.

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CP at 52, 86-123. The Welfare Trust was created to receive contributions from participating employers in order to administer a welfare benefits plan for participating employees. CP at 91. The Welfare Trust Agreement stated that the terms of the CBA determined the employer's obligation to make contributions to the Welfare Trust. CP at 92. In section XVIII of the CBA, the Port agreed "to pay the premium necessary to maintain the current level of benefits to that Trust." CP at 52. The Port was the principal participating employer making contributions to the Welfare Trust for several years prior to the termination of the CBA. CP at 288.²

¶ 5 The Trust Agreement further provided that the parties intended to organize and operate the Welfare Trust pursuant to the provisions of ERISA as well as other applicable federal and state laws. CP at 91. The Port and Local 9 each appointed three trustees to administer the Welfare Trust, and the Trust Agreement established procedures for participants to challenge a denial of benefits. The Trust Agreement stated that it would continue indefinitely but would "automatically terminate[ ] upon the expiration of all collective bargaining agreements and special agreements requiring the payment of contributions to the Trust Fund." CP at 91, 119.

¶ 6 In addition, the Welfare Trust Agreement defined an "employee welfare benefit plan" as "any lawful employee pension benefit plan created and administered by the Trustees." CP at 92. The parties signed a Warehousemen's Pension Trust Fund Industry Pension Agreement (Pension Agreement), which they incorporated by reference into the CBA, obligating the Port to make contributions for an employee pension trust fund. CP at 299-300. The Welfare Trust Agreement conditioned retiree eligibility for retirement welfare benefits on the eligibility requirements for the Pension Agreement. The Pension Agreement specifically provided eligibility requirements for pension as well as retirement welfare benefits: "[A]n employee who elects to retire before age 62 ... shall not be entitled to retiree health and welfare benefits until such retiree reaches age 62. At that time, benefits will be provided under the terms and conditions that are in effect at the time of entitlement." CP at 300.

¶ 7 Local 9 provided participant-employees with a copy of a summary plan description (SPD), which described the terms of the welfare benefits plan that would be administered by the Welfare Trust. CP at 125-68.³ As with the Trust Agreement itself, the SPD contained a section purportedly explaining the participants' rights under ERISA. The SPD also contained a provision purporting to reserve the Welfare Trust trustees' right to terminate the trust:

The Retired Employee Program is not Guaranteed

The Board of Trustees is providing retiree health and welfare benefits to the extent that monies are currently available to pay the cost of such programs. The Board of Trustees retains sole and exclusive authority, at its discretion, to determine the extent, if any, to which monies are available for this program and to determine the manner of expenditure of such monies for the program. The program is not guaranteed to continue indefinitely. The Board of Trustees reserves the right to change the eligibility rules of the benefits, reduce the benefits, or eliminate the Plan entirely, as may be required by future circumstances.

CP at 166.

¶ 8 On March 3, 2003, the Port informed the trustees that it would immediately "cease paying for retiree Health and Welfare benefits."⁴ CP at 68. On April 1, 2003, the

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trustees then informed participants that retiree welfare benefit coverage would cease as of April 30, 2003. The Port advised participants they could obtain continued welfare coverage through the Port's own plan at a monthly cost ranging from $399.08 to $482.12 for an individual retiree not yet covered by Medicare.

¶ 9 Appellants filed a complaint against the Port, claiming a right to lifetime retirement welfare benefits under the terms of the CBA. Appellants fall into two categories: (1) those who have retired, have satisfied the length of service requirements for eligibility, and have been covered by the Welfare Trust; and (2) those who have not yet retired but have completed sufficient length of service to qualify for retirement welfare benefits.

¶ 10 On August 8, 2005, the trial court granted summary judgment in favor of the Port, determining that the CBA did not expressly grant Appellants with retirement welfare benefits for life:

[T]he Plaintiff's [sic] have no statutory basis for their claims to medical benefits. Nor do the unambiguous terms of the [SPD], or union contracts at issue in this case give rise to a contractual claim to the benefits sought by the plaintiffs. The fact that the plaintiffs may have become vested in their benefits does not change the nature and duration of the benefits, which are set forth and limited in the [SPD].

CP at 479-80. Appellants sought review by the Court of Appeals. Division One certified this case for review by this court pursuant to RCW 2.06.030. This court's commissioner accepted certification and transferred the entire case to this court for determination on the merits. RAP 4.4.

ANALYSIS I

¶ 11 We review summary judgment de novo, engaging in the same inquiry as the trial court. City of Sequim v. Malkasian, 157 Wash.2d 251, 261, 138 P.3d 943 (2006). Summary judgment is appropriate when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." CR 56(c).

II

¶ 12 This case requires us to determine the extent to which the CBA obligated the Port to provide retirement welfare benefits to eligible retirees. The parties agree that the CBA created a right to retirement welfare benefits for certain eligible retirees. However, the parties disagree whether the CBA created a vested right in welfare benefits or whether the right expired at the termination of the CBA.⁵ The Port contends that the right to retirement welfare benefits was not expressly guaranteed for any definite period of time in the CBA or the Welfare Trust Agreement, and therefore the Port had no obligation to make contributions for such benefits beyond the duration of the CBA itself. In addition, the Port argues that its obligation under the CBA was limited to making contributions to the Welfare Trust and that the Welfare Trust Agreement and the SPD defined the extent to which the benefits would be provided. Conversely, Appellants urge that the welfare benefits promised in the CBA constituted deferred compensation for years of continued service to the Port and therefore they could not lose such benefits once they became eligible.

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¶ 13 While federal law generally preempts the field of labor law, it does not govern over collective bargaining...